President Obama believes there is a reasonable chance that congressional Republicans will feel enough public pressure to compromise with him on key parts of his 2012 agenda, White House aides say.
"They can be productive," a senior White House official told me. "Substantively, there can be accomplishments with Congress even though this is an election year."
Among the initiatives that White House officials are considering for possible areas for compromise: more investment in infrastructure projects such as roads and bridges, tax breaks for small businesses, tax breaks for businesses that relocate jobs from overseas to the United States and making it easier for some homeowners to refinance their mortgages at lower interest rates.
All of these initiatives are popular with voters, Obama strategists say.
The president and his senior advisers were happy that Congress approved an extension of a payroll tax cut and longer-term unemployment benefits last week. They consider this a sign that progress can be made on other issues this year.
Overall, administration officials say that Americans seem to be more optimistic about where the economy is headed as unemployment slowly decreases, more private sector jobs are created month-to-month, and the Dow Jones industrial average rises. Americans seem to feel that "things are getting better," a top Obama aide told me, but the president believes "we are not near to being out of the woods."