Air Of Unpredictability As New Obama-McConnell Relationship Begins

(Repeats earlier story with no changes to text)

By Steve Holland

WASHINGTON, Jan 6 (Reuters) - President Barack Obama and Senate Republican leader Mitch McConnell are warily looking for areas of agreement as they begin a new chapter in a relationship that is likely to remain frosty but businesslike.

With both men trying to position their parties for 2016 elections to choose a successor to Obama, the president and the Senate majority leader will need to find ways to work together if they want to overcome legislative gridlock and reach agreements on trade, tax and economic issues.

It will not be easy. Obama, 53, and McConnell, 72, are not close and have little in common. McConnell set a chilly tone to their relationship by declaring in 2010 that his top priority was to make sure Obama was a one-term president, a dream that was shattered when the Democrat won re-election.

That creates an air of unpredictability about Tuesday, when McConnell takes over as Senate majority leader and Republicans welcome a bigger majority in the House of Representatives, giving them a powerful counterweight to Obama in his final two years in office.

"Both of them have to walk a tight rope," said Andy Smith, director of the University of New Hampshire Survey Center.

Obama, who will lay out a broad agenda in his State of the Union speech late this month, will seek agreement with Republicans on tax reform and trade deals, areas that will test both parties.

He will push Republicans to agree to overhaul the tax code in ways that will increase revenue, which they oppose, and try to persuade pro-labor Democrats to go along with trade legislation that they have long opposed.

"We're going to disagree on some things, but there are going to be areas of agreement and we've got to be able to make that happen," he said in a news conference last month.

McConnell wants to ease regulations as a way to boost the U.S. economy and will try to get approval of the Keystone XL Canada-to-Texas pipeline. But he also wants fellow Republicans to resist scaring voters with far-right proposals.

"I don't want the American people to think that if they add a Republican president to a Republican Congress, that's going to be a scary outcome. I want the American people to be comfortable with the fact the Republican House and Senate is a responsible, right-of-center governing majority," McConnell told the Washington Post.

The two men may meet as early as next week. (Reporting By Steve Holland; Editing by John Whitesides and Andrew Hay)

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