Exactly one year after President Obama was inaugurated, Republican Scott Brown rocked the political establishment by defeating Democrat Martha Coakley to win the U.S. Senate seat held by for 46 years by Ted Kennedy, the so-called Liberal Lion. Channeling voter fury about the economy and dissatisfaction with President Obama’s domestic policies, Brown won decisively, by a margin of 52% to 47%.

Brown’s victory — in which independents flocked to the upstart candidate — had been expected, indeed feared, by the Democratic establishment, after weeks of increasingly dire poll numbers. The outcome immediately complicates Democrats’ push to pass their prized health-care bill, because Senate Democrats will lose their 60-vote filibuster-proof super-majority when Brown is seated in the next few weeks.

Just two months ago, it seemed inconceivable that Brown, a previously obscure state senator, could defeat Coakley, the state’s attorney general, who had been hand-picked by Massachusetts’ powerful Democratic establishment to run for the seat previously held by Kennedy, a beloved figure in the state. But Democratic power-players appear to have severely underestimated the groundswell of anger bubbling up from the electorate — anger that has manifested itself through the so-called Tea Party reaction to President Obama. For months, Democrats have dismissed that movement as a fringe publicity stunt. No more.

Wave of Seething Fury

Brown rode a wave of seething voter fury at Wall Street and the federal government — all against the backdrop of the inevitable letdown after Obama’s election. Across the country, voters blame the recession on Wall Street bigwigs and their pals in Washington, and recoil at each new disclosure of billion-dollar banker bonuses. Meanwhile, voters have grown increasingly annoyed by the sense that President Obama and the Democrats are cutting backroom deals in order to ram the health reform bill through Congress.

For weeks, frustrated reporters have tried in vain to pry an explanation from White House spokesman Robert Gibbs about why the Obama administration refuses to televise the ongoing health-care negotiations — after Obama campaigned by promising to put any such talks on C-SPAN. Now, the entire health-reform issue has gone nuclear as Democrats have lost their 60-vote lock on the Senate — the key to pushing through their agenda. Minutes after Brown’s victory, Sen. Jim Webb, a respected Senate Democrat, called on his party not to have any more votes on health care before Brown is seated.

A president’s party typically gives back seats during the two years into his first term — but the idea that Massachusetts, with its powerful Democratic machine, has just elected a Republican to replace Ted Kennedy is simply shocking. Further exacerbating matters is the fact that Coakley ran what is quickly being labeled one of the worst high-profile Senate campaigns in recent memory. One could sense that when she referred to Red Sox legend Curt Schilling as a “Yankees fan,” she had crossed the Rubicon — or the Charles, as it were — into political oblivion.

Operating in a Bubble

Abysmal campaign aside, Coakley ran smack into “the times,” as Machiavellli would have observed: the idea that sometimes the prevailing national situation may prove too powerful to overcome by sheer will alone. Thus, politicians must be as well-prepared as possible to take advantage of existing circumstances, and not make yawning gaffes like mistaking Curt Schilling’s baseball loyalty. Yes, the political environment was bad for Coakley, but her ineptitude as a candidate sealed her political doom.

Another way of saying this is that Coakley was overtaken by events on the ground, and what’s happening on the ground in America is bleak, even as Wall Street bankers continue to roll in the dough and Silicon Valley is revving up for a huge year. Brown’s victory illustrates just how out of touch the Obama administration and Democratic establishment is with the tenor of the American public. For months, Obama and his team have operated as if in a bubble — behaving as if they knew better than the public, and dismissing the increasingly strident complaints from the Democratic activists who elected him.

Most people agree about the need for Americans to have affordable health care. What Obama and the Democrats have failed to realize — amid the worst recession since the Great Depression — is the more immediate need that millions of Americans feel for a job. Even as the national unemployment rate has cruised past 10% — add 8% to account for the underemployed — the stock market has soared, increasing the perception that fat cats are getting rich while the American people suffer.

Brown’s victory is a body blow for President Obama’s ambitious domestic agenda. Health-care reform is sure to be circumscribed, carbon emissions cap-and-trade — already on the ropes — is likely dead. Forget about immigration reform. Obama had already alienated his left flank by seeming to cave on the public health option — which would have created a competitive national exchange — not to mention his apparent absence from the debate over key abortion language in the bill. In fact, Obama seemed aloof and removed throughout much of the health-care debate — odd considering it was his stated top national priority. While he was popular, Obama’s diffidence seemed like an asset — a cool detachment allowing him to address the country’s grave problems rationally. Now, Obama just looks arrogant and out of touch, and unless the Democratic party addresses that — and pronto — Republicans in Congress could be looking at their best year since the Gingrich Revolution of 1994.