WASHINGTON - The loss of a key Democratic Senate seat will likely strengthen the resolve of President Barack Obama to press ahead urgently with a package of targeted proposals to spur U.S. job creation.

Sending shockwaves through the Obama White House, Republican Scott Brown emerged the winner in Tuesday's special U.S. Senate race in Massachusetts, a state staunchly in the camp of Obama's Democrats.

The loss imperils Obama's drive to pass healthcare reform by depriving Democrats of a crucial 60th Senate vote. But the setback could be the impetus for popular job growth ideas Republicans would be reluctant to challenge.

The ideas, such as tax credits for business hiring, aid to cash-strapped states and an extension of unemployment benefits, are as American as baseball and apple pie.

It really energizes the White House to deal with the problems that most Americans think are important, said Ross Baker, a political scientist at Rutgers University in New Jersey.

This would be an emergency bill for the economy. The president is trying to clear the airways and get the patient breathing again, Baker said. That's a pretty hard thing for the Republicans to oppose.

IT'S THE ECONOMY

Baker said the White House was no doubt focusing anew on the campaign slogan made famous in the Bill Clinton presidential campaigns: It's the economy, Stupid. The Massachusetts setback followed Democratic losses in gubernatorial races in New Jersey and in Virginia.

There was a very clear message in the results -- that jobs matter and unemployment is too high, said Sung Won Sohn, an economics lecturer at California State University in the Channel Islands.

The problem remains, though, that while everyone agrees the focus should be on job creation, there are real differences ideologically over how to go about it.

Democrats still dominate both houses of Congress despite the latest defeat, though a key worry for the party is whether more losses are in store in November when Americans elect all 435 members of the House and about a third of the 100-member Senate.

Even if measures are enacted to create jobs, it often takes months for them to bolster the economy.

Economist Diane Swonk of Chicago-based financial services firm Mesirow Financial said: The bigger obstacle is not the political totals but the lag involved -- if there was a silver bullet to fire to create jobs now, it would have been fired by now.

ECONOMIC STIMULUS

Obama, who inherited an economy in deep recession when he took office a year ago, signed a $787 billion stimulus package into law last February. Any new targeted measures to spur job growth would come on top of the stimulus package.

The House of Representatives passed a $155 billion jobs measure last month. The Senate is expected to offer its own version of the legislation.

The size of the package, which is much smaller than the February stimulus, would make it harder for the Republicans to oppose. Ideas such as the tax cuts for business hiring would be potentially less controversial than some of the spending programs in the big stimulus package.

Analysts have said Obama may have erred politically in deciding to push the sweeping healthcare bill and legislation to cap carbon emissions in his first year in office. Some said he should instead have kept the economy as the central focus of his agenda.

Though the economy is now in recovery and is no longer hemorrhaging jobs at the alarming rate of 700,000 a month seen a year ago, companies are still not hiring and the unemployment rate is stuck at 10 percent.

The White House sees the double-digit unemployment rate as a key factor behind Democrats' recent struggles and the drop in Obama's own approval ratings to below 50 percent.

Obama has got to communicate that he understands that the economy is his singular focus going forward, said Calvin Jillson, a political scientist at Southern Methodist University in Dallas, Texas.

The targeted policy initiatives on jobs would show people he understands their deepest concerns, Jillson added.

(Reporting by Caren Bohan and Glenn Somerville, Editing by Howard Goller)

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