By Thomas Ferraro
WASHINGTON (Reuters) - The key number in next year's U.S. congressional election may be the unemployment rate, which last month hit a 26-year high of 9.8 percent.
The figure helps explains why creating jobs is a top priority in the Democratic-led Congress where lawmakers know their own jobs are at stake if they fail to deliver.
Democrats will get an early whiff of whether they are being blamed for the economy on Tuesday, when voters go to the polls to elect governors of New Jersey and Virginia and a congressman in a conservative-leaning New York district bordering Canada.
In next year's election, the Democrats face a head wind. The party in power typically loses seats in the election after a new president -- in this case Barack Obama -- takes office.
The wind could become a storm if the ranks of the unemployed swell. The rate is widely forecast to top 10 percent before going down.
Analysts say a double-digit jobless rate on Election Day in November 2010 could help cost Democrats upward of two dozen seats in the House of Representatives, which they now hold, 256-177, with two vacancies. It could also cost them in the Senate, which they control, 60-40.
"The election is going to be about three issues: Jobs. Jobs. Jobs," said Ethan Siegal of The Washington Exchange, a private firm that tracks Congress and the White House for institutional investors.
Signaling the end to the deepest recession since the 1930s Great Depression, the government said last week the U.S. economy grew at a robust 3.5 percent pace in the third quarter.
Democrats credit the recovery, in part, to the $787 billion economic stimulus package that was passed this year over Republican objections.
But the job market, often a lagging indicator, is taking far longer to show improvement. How long it lags could be pivotal. The White House is bracing for unemployment to stay high through the first half of next year.
The first sign of how the economy fared in the fourth quarter comes on Friday, when October's unemployment figures are released.
REFERENDUM ON OBAMA?
Obama won't be on the ballot next year. But Democrats acknowledge the election will be a referendum on his presidency, and that they need his help to retain their big majorities in Congress.
If the jobless rate is sinking late next year, Obama's approval rating, now a little more than 50 percent, could be on the rise, making him more of a political force.
If the unemployment figure remains high, Obama's numbers may fall and that could hurt his ability to help raise campaign contributions and get out the vote for Democrats.
More so than Obama's top priority of healthcare reform, polls show Americans concerned about the economy.
"The economy and jobs have always been strong predictors of the tides of an election," said Michael Dimok of the Pew Research Center, a nonpartisan survey research group.
"But the problem is so big that it is unclear what the public wants the government to do about it," Dimok said. "There's always a concern about 'too much government.'"
With polls showing the public opposed to another massive stimulus package, Obama and members of Congress are exploring a series of smaller and more limited steps.
"Everything is on the table" is the White House's refrain.
One proposal would extend and possibly expand a popular tax credit for home buyers.
Lawmakers may also extend a program that allows laid-off workers to continue to buy health insurance through their former employers, and businesses hope Congress will renew a 20 percent tax credit for research and development.
PARTY IN POWER 'GETS THE BLAME'
Democrats are also trying to extend unemployment benefits to as many as 2 million people whose assistance may be exhausted by year's end.
Senate Republicans have tied up the legislation for weeks, offering unrelated amendments and saying they want spending cuts to offset the cost of extended benefits.
Democrats contend the cost would be covered by a fund that workers and employers pay into to finance such relief. They also say the benefits would help spur economic growth.
The Senate is expected to pass the jobless bill this week, and then send it to the House for concurrence, clearing the way for Obama to sign it into law.
Polls show only about one if four Americans approves of Congress. Surveys also show frustrated voters just about divided on which party they prefer.
Dean Debnam of Public Policy Polling, a private firm, said the split would likely hurt Democrats more than Republicans.
"There's a lot of discontent out there and when that's the case the party in power pretty inevitably gets the blame," Debnam said.
(Additional reporting by Caren Bohan; Editing by Peter Cooney)