By Steve Holland
WASHINGTON (Reuters) - Just a few short weeks ago, Republican elders could only hope that time would make voters forget about the government shutdown the party engineered in October.
Now, with millions of Americans in an uproar over health insurance policies canceled because of President Barack Obama's health care law, Republicans believe they could seize control of the Senate and build on their majority in the House of Representatives in the November 2014 congressional elections.
Republican strategist Karl Rove, architect of George W. Bush's two presidential victories, said Obamacare could hurt Democratic candidates more than in 2010.
"In 2014, it's likely to be a bigger, more obvious and equally deadly issue for Democrats, especially incumbent Democrats in red, even purple states and districts who voted for the monstrosity," he told Reuters.
Groups allied to Republicans are already running digital ads against vulnerable Democrats, with TV ads coming in the months ahead.
"2014 will be a referendum on the failures of this administration," said Representative Greg Walden, head of the House Republican campaign committee.
Some in the party, however, are warning conservative Tea Party Republicans not to push the government into another shutdown or risk a debt default in upcoming budget talks, out of fear of voter backlash.
"Republicans need to play it smart," said Republican strategist Charlie Black. "We can shift the focus to our own vulnerabilities if we participated in another government shutdown or resisted extending the debt limit."
Democrats already would have to beat historical odds to pick up congressional seats next November, since the party that controls the White House usually loses seats in these so-called mid-term elections.
The Democrats' chances appear even worse when the president's approval rating is below 50 percent, and a Quinnipiac University poll this week put Obama at 39 percent.
Support for congressional Democrats has dropped nearly 4 percentage points from a month ago, when the government was shut down and the debt ceiling fight was unresolved, according to a compilation by website Real Clear Politics of so-called "generic" congressional race polls, which test voter preferences by party. Republicans' support dropped 1 percentage point.
Democrats control the 100-member Senate by a margin of 55-45, meaning a six-seat swing would tilt the chamber to Republicans. Of the 33 Senate seats that will be on the ballot next November, 20 are held by Democrats, and many of them are seen as vulnerable.
Indeed, five Democrats who face voters in 2014 - Oregon's Jeff Merkley, Louisiana's Mary Landrieu, North Carolina's Kay Hagan, Arkansas' Mark Pryor and California's Dianne Feinstein -were among the sponsors last week of a Senate bill designed to stem the wave of health insurance cancellations.
Republicans control the House by 234 to 200, and could see their majority increased despite the lingering hangover from the Tea Party-backed shutdown in October that sent the approval rating of Congress down to historic lows.
"Obamacare has essentially neutralized the Democrats' momentum from the shutdown. It's offset it," said Dave Wasserman, a political analyst at the nonpartisan Cook Political Report.
"All things being equal Republicans ought to be able to gain seats in 2014 because the composition of the electorate will be more favorable to Republicans," he said. Lower turnout in non-presidential elections often favors the GOP.
November 2014 is still a long way away, though.
A repeat performance of the government shutdown this winter - when congress will confront new deadlines for raising the debt ceiling and funding the government - could turn the tables once again.
So could a dramatic improvement in the implementation of Obamacare or a turnaround in the economy that speeds up growth and creates more jobs.
But Republicans see things playing out in their favor next year.
Obama's bid to persuade insurers to extend policies through 2014 for people whose insurance plans are being canceled means there could be a repeat of the current chaos just in time for the election.
Americans could face a perfect storm, losing coverage, shopping for new plans or suffering sticker shock from higher premiums, all while deciding on who to vote for during the heat of the 2014 campaign season.
Democrats dismiss such talk as political bravado and believe Obamacare could provide a net plus for Democratic candidates next November, assuming the troubled HealthCare.gov website is functioning smoothly.
"They don't want Obamacare to work," said Democratic National Committee spokesman Mo Elleithee. "They are actually afraid of it working. Why? Because they know once people begin to enjoy the benefits that come with a better and more affordable healthcare system, they won't want to give them up."
Still, even Obama sees the issue as a drag on Democrats who support his Affordable Care Act.
"There is no doubt that our failure to roll out the ACA smoothly has put a burden on Democrats, whether they're running or not, because they stood up and supported this effort through thick and thin," he told a news conference on Thursday.
He spoke just before 39 Democrats in the U.S. House of Representatives joined with anti-Obamacare Republicans to pass a "fix" to the insurance cancellations that Obama said he would veto. Twenty-nine of the Democrats are in potentially competitive races in 2014.
Obamacare woes are already hitting the re-election campaign of North Carolina's Hagan, an Obamacare booster who had a big lead over her Republican challengers but has seen them draw nearly even with her. The Obamacare rollout is seen as a factor.
Allies of Kentucky Republican Senator Mitch McConnell have been running TV and radio ads in the state tying his Democratic challenger, Alison Lundergan Grimes, to Obamacare.
"The DNC thinks they are going to run on Obamacare in 2014, but all of the activity we've seen from Democrats running in 2014 shows us just how scared they are," said Republican National Committee Chairman Reince Priebus.
Republicans' ability to focus on a core issue and keep from being sidetracked will test the party in the months ahead, if the past is any guide.
"I think the ground shifted this week in a pretty dramatic way," said Republican strategist Scott Reed. "It just feels like things are changing for the better, and there will be no more government shutdown silliness."
(Additional reporting by Thomas Ferraro; editing by Fred Barbash and Jackie Frank)