If you suspect that the oft-repeated meme that last week’s elections were about local concerns, rather than national politics is a bit overstated, The New Republic has a couple of posts that add some clarity. First up is
WaPo columnist E.J. Dionne, Jr., author of the recently published Souled Out: Reclaiming Faith and Politics After the Religious Right and a senior fellow at the Brookings Institution, who explains:

Democrats will highlight Obama’s continued strong approval ratings in New Jersey as part of their larger argument that these contests were local in character. But the disaffection in both Virginia and New Jersey–and the unexpected narrowness of New York City Mayor Mike Bloomberg’s re-election margin, despite his record-breaking campaign spending — should worry all incumbents, particularly governors seeking re-election next year. And after their strong showings in the last two national elections, Democrats happen to constitute a large share of the pool of incumbents.
Sen. Frank Lautenberg, as he made his way to Corzine’s concession speech at a hotel here, said he sees an electorate in a dark mood. “There are two things happening,” the New Jersey Democrat noted. “One is fear. The other is punishment. Voters fear for themselves and their families, and they want to punish anyone who got them into this condition.”
What Lautenberg underscored is a spirit far different than the buoyant confidence Barack Obama inspired a year ago. And the Obama change-agents, particularly the young, were notably absent from the voting booths this week. In Virginia, a state Obama carried comfortably last year, a majority of those who showed up to vote on Tuesday said they had backed John McCain. This much more Republican electorate produced a GOP landslide all the way down the Virginia ballot.
That is the fact from this week that Democrats would be fools to ignore. It’s not a resurgent right wing that should trouble Obama’s party…for the moment, the thrill is gone from politics, and that is very dangerous for the mainstream progressive movement that Obama promised to build.

TNR Sr. Editor John B. Judis also cites Democratic base-neglect, and the economy in particular. According to Judis,

There are two reasons, I think, for the lack of enthusiasm. The first is the continuing economic slump (according to some economists, we can no longer say “recession.”) As I have argued before, rising unemployment almost inevitably makes presidents unpopular. And if unemployment rises above ten percent, and stays there for 2010, the Democrats are going to be in trouble in 2010. Their base will not come out, and swing voters will decide to take a chance on the other party.
The economists in the White House may have good grounds for believing that unemployment will begin to fall by next June without the equivalent of a second stimulus. But if they don’t believe this, or are not sure about it, then the Obama administration better find ways to dole out more money. Increases in spending like this will cause howls of disbelief from the far right and from the would-be centrists, but these kind of measures–and not a further urge to compromise–are what will help the party’s prospects in 2010.
The second reason has more to do with the administration’s political style. While making much of his community organizing background, Obama has failed to keep the Democratic–and more broadly, liberal–base enthusiastic and committed. There is simply no feeling of a political movement or a crusade among the Democratic grassroots the way there was, say, among Republicans and conservatives during a comparable time in Ronald Reagan’s first term.

And the best response, according to Judis:

…Obama has cultivated an insider style of politics aimed at Congress rather than the public. This is not to say that Obama should hold out for a single-payer health insurance program or nationalize the banks. Like Reagan, Obama should be ready to compromise–and also, obviously, to propose actions that will actually work. But in putting forward their programs, Obama and the White House have to begin to wage more of a public campaign that touches upon the ideals of social justice that got him into office. He has to make clear to voters and to what remains of a political movement that he is not just on their side, but fighting for them. He hasn’t quite done so, and that is one reason for the difficulties he and the Democrats encountered in this month’s elections.

With respect to next year’s mid-terms, the challenge to re-ignite the base is clear for Obama, the Democratic Party — and progressive activists alike.