Reid made the decision to scrap the bipartisan jobs measure just hours after Baucus and Grassley announced it and after the White House praised it.
Meanwhile, others said the lack of action on health care after Sen. Scott Brown (R-Mass.) won the special election to replace the late Sen. Edward Kennedy (D) has continued to add to the deflated mood of the caucus.
Passing health care is absolutely important, another Senate Democratic aide said. If we dont deliver this bill, its going to viewed as a failure of leadership.
One Senate Democratic leadership aide said leaders believe they can turn everything around by pushing a jobs agenda, which will allow for a series of votes on jobs over the next several months and which will put us back on the offensive.
Reid already set up the first test vote on jobs today with his pared-down bill, and more jobs measures are likely to come, the leadership aide noted.
The aide also predicted a resolution on health care ... that will be a huge weight off Democrats shoulders. The White House is expected to unveil a slightly revamped health care proposal ahead of a bipartisan summit Thursday to discuss solutions to the nations high-cost health care system.
Finally, the leadership aide noted that Senate Democratic leaders would be pushing Members resolve their differences on legislative strategy. Democrats have been debating whether to pursue a generally bipartisan strategy that they fear might result in watered-down legislation or to stick closer to Democrats ideals at the potential expense of failing to enact anything substantive.
Another senior aide predicted that Members would return to work this week more united around the focus on jobs and eager to settle on a strategy.