Mood on the Hill post-Coakley

Just hours into the first day on Capitol Hill following the Democratic loss in the Massachusetts Senate race, one former congressional staffer and Hill veteran described the situation as "very fluid."

"I've seen the survival instincts kick in before, and that's what will be driving public policy," said the source, who spoke on the condition of anonymity.

Facing a grim national mood and apparent backlash over the protracted push on health reform, Democratic congressional members' thinking is evolving quickly.

Last night the source said there was a lot of chatter about the House simply passing the Senate bill in whatever form it comes to them and then being done with health reform. That way the bills from the two chambers would not have to be reconciled, though it would be a bitter pill to swallow for many progressive members of the House.

By this morning new thinking had emerged about potentially passing a scaled-back health initiative that had more immediate benefits for the middle class. For instance, instead of the prohibition on insurers denying coverage for preexisting conditions kicking in after a few years, it would kick in immediately.

"The middle class is saying, 'What's in it for me?'" said the source, noting that revenue increases and higher taxes were set to kick in almost immediately. "The 'me' question has to be answered. For Democrats, the question is, What can they pass now that they can run on in November?"

In terms of LGBT agenda items, the source said the situation was still very much in flux. It remains to be seen if Democrats will try to score points with the progressive base or if they will walk a more moderate line until November.

The source noted that repealing "don't ask, don't tell" polls well with the progressive base and it polls as well with independents as it does Democrats. Making that point will be the challenge for the LGBT community.

"If they do a few ancillary things for the progressive base, will 'don't ask, don't tell' be one of them -- that's the question," said the source.