WASHINGTON - President Barack Obama on Wednesday faced a fight to save his legislative agenda and keep his healthcare overhaul alive after his Democratic Party lost a key Senate seat, underscoring the challenges he faces at the one-year mark of his presidency.

Dealing a stunning blow to Obama, Republican Scott Brown won a bitter election battle in Massachusetts on Tuesday seen by some analysts as a sign of voter anxiety over the president's policies amid double-digit unemployment and a sluggish economic recovery.

Brown's win deprived Democrats of a crucial 60th Senate vote they need to pass the healthcare bill -- Obama's top legislative priority -- and push through other big measures on climate change and financial regulatory reform.

It also sent shudders of fear through Democrats facing tough races in November's midterm elections, when Republicans hope weaknesses exposed in Massachusetts, a liberal stronghold, will help erode Democratic control of Congress.

The election upset in Massachusetts compounded the problems confronting Obama as he reached the one-year anniversary of the day he took office with soaring paeans to hope and change.

Since then, Obama's public approval rating has fallen from 70 percent-plus at his inauguration to around 50 percent now, among the lowest of recent presidents at this stage in their tenure.

The morning after the special election to fill the Senate seat left vacant by the death of liberal Democratic icon Edward Kennedy, the mood among White House staff was gloomy as Obama aides huddled in meetings to plot strategy.

What once seemed an easy Democratic victory turned into a desperate scramble in the last few weeks as Brown surged ahead of Democratic state Attorney General Martha Coakley on voter fears over the economy, healthcare and Obama's agenda.

After his victory, Brown, a Massachusetts state senator, said he would be the pivotal 41st Republican vote against the healthcare overhaul in the 100-member Senate.

People don't want this trillion-dollar healthcare plan that is being forced on the American people, Brown told cheering supporters at a Boston hotel.

He said voters rejected the closed-door deals that were driving the healthcare debate, and he took satisfaction in proving the experts -- and Democrats -- wrong.


Brown's upset with 52 percent of the vote in heavily Democratic Massachusetts raised the specter of large losses for Democrats across the country in November and left the party scrambling to find answers.

Anyone who has been out on the campaign trail has seen the anger, Coakley, who was criticized for running a weak campaign, told a room of dispirited supporters at a Boston hotel. I am heartbroken at the result.

Obama, who won almost 62 percent of the state's vote in the 2008 presidential election, made a last-minute appeal in Massachusetts on Sunday to try to ignite enthusiasm for Coakley's campaign to replace Kennedy, a longtime champion of healthcare reform.

But mindful of the threat of a Democratic defeat in the state, the White House has steadfastly denied it would be a referendum on Obama's first year or that a loss there would represent a repudiation of his policies.

Asked whether voters had rendered a verdict on Obama, Brown told NBC's Today Show, It's bigger than that. People are angry. ... They want people to start working and solving their problems.

In Washington, Obama spokesman Robert Gibbs said the president called Brown after the result.

The president told Senator Brown that he looks forward to working with him on the urgent economic challenges facing Massachusetts families and struggling families across our nation, Gibbs said in a statement.

Expectations the Brown victory could be the death knell for healthcare reform drove health insurance and drug company stocks higher on Tuesday, lifting the Dow and the S&P 500 to 15-month closing highs.

U.S. Senate Democratic leader Harry Reid said he would welcome Brown to the Senate as soon as he received the paperwork from Massachusetts officials.

I believe it would only be fair and prudent that we suspend further votes on healthcare legislation until Senator-elect Brown is seated, Democratic Senator Jim Webb said.

Massachusetts last elected a Republican to the Senate in 1972, but the shift could not have come at a worse time for Obama. Democrats control 60 votes in the Senate to 40 for the Republicans, and the loss of one Democrat could doom the healthcare bill.


Democratic leaders vowed to push healthcare reform through Congress despite the results, but several Democrats cautioned the party to reconsider its stance.

It wouldn't be the worst thing in the world to take a step back and say we're going to pivot to do a jobs thing, Representative Anthony Weiner of New York told reporters.

Republicans said the results confirmed the public's distaste for Obama's healthcare overhaul and their anger at being ignored by Democratic lawmakers.

The voters in Massachusetts, like Americans everywhere, have made it abundantly clear where they stand on healthcare. They don't want this bill and want Washington to listen to them, Republican Senate leader Mitch McConnell said.

(Additional reporting by Ross Krasny and Scott Malone in Boston, Dan Trotta in New York; writing by John Whitesides and Matt Spetalnick; editing by Todd Eastham)