WASHINGTON -- No one envies John Cornyn's job as chairman of the National Republican Senatorial Committee in a daunting election cycle when the GOP will likely lose more Senate seats in 2010.

Soon after the two-term Texas senator took over the No. 4 Republican leadership post, five GOP-held Senate seats became open contests as a result of four retirements in New Hampshire, Missouri, Ohio and Florida and a devastating party switch in Pennsylvania -- states that are trending Democratic and where his party's prospects of holding them look bleak.

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"History has dealt Cornyn a bad hand," veteran elections forecaster Stuart Rothenberg told me last week. "The Republican brand is damaged, they have a number of vulnerable seats. If Cornyn can break even in this cycle, I'm sure, privately, he'd be thrilled."

But Cornyn is a never-say-die kind of guy who knows it's still very early in the two-year midterm cycle and the political landscape could significantly change before next year. Rothenberg predicts Democrats "are positioned to pick up two to three Senate seats," but the senator thinks otherwise.

"I wouldn't agree with that. It's a mixed bag. Will there be losses? It's too early to say. If we're lucky to have the candidate recruitment fall into place, those numbers will change dramatically," he told me in an interview.

Sure, it's a tough cycle with some overwhelming challenges for a party that is on the ropes right now. But Cornyn expects, with some justification, that the national political climate may look very different in the fall of 2010 than it does right now.

"Given the overreaching of the administration on spending, borrowing, nationalizing big sectors of our economy, I think the elections will be a referendum on the administration's policies," he said.

"Unemployment will remain very high next year. There is a very real danger we will see inflation take off. There will still be massive government debt, and unfunded liabilities are looming. I think the economy will remain weak at a minimum," he said.

Cornyn isn't talking through his hat. With unemployment rising to 9.4 percent last month and forecasts of further job losses to come, the U.S. economy could be in for a long and anemic recovery, with slow economic growth, weak job creation and a volatile stock market.

Making matters worse, is an unprecedented $2 trillion deficit this fiscal year alone and the prospects of trillion-dollar deficits as far as the eye can see as weak growth begets weak tax revenues and deeper debt.

As reported in my last column, polls show that Obama's weakest numbers point to his handling of the economy and government spending, and Cornyn already sees evidence that "Obama's personal popularity no longer carries over into the popularity of his policies."

Republican strategists also think that the looming healthcare battle will hand Republicans a major political issue, just as it did against Hillarycare in the mid-1990s that led to their political comeback in the 1994 elections.

The administration's plan could become a minefield for Obama and his party. Taxing employee healthcare premiums for the first time, restricting Medicare coverage, reducing hospital subsidies, and imposing mandates and price controls on the private healthcare industry are just a few of the poisonous issues that could work to the GOP's advantage next year.

Cornyn, a former state supreme-court judge, is one of his party's sharpest strategists who has risen quickly up the leadership ladder. He admits he has been given "a tough job," but makes it clear that he relishes the challenge.

"I didn't come to Washington to be a wallflower, but to show what one person can do to turn things around. I felt this was the place where I could be most productive," he told me.

Cornyn has history on his side. The party in power tends to lose seats in midterm elections, and Obama's presidency may be no exception. Only two presidents have reversed that trend: Franklin D. Roosevelt in 1934 and George W. Bush in 2002.

Senate Minority Leader Mitch McConnell gives Cornyn "an A-plus" for the way he has handled the campaign chairmanship so far -- particularly his success at fundraising. "He raised almost 40 percent more than his committee raised two years ago and eliminated the committee's debt," McConnell told me.

Meantime, it remains to be seen whether candidate recruitment proves to be as successful, though Cornyn's record thus far has been impressive: former Bush budget director Rob Portman in Ohio, Gov. Charlie Crist in Florida and former Rep. Rob Simmons, who is mounting a strong challenge against Sen. Chris Dodd of Connecticut.

People close to Cornyn say he's politically ambitious and has his eyes on the minority leader's post if he succeeds as campaign chairman next year.

Can success in his new job help Cornyn climb further up the leadership ladder one day? I asked McConnell. "It has for some members, and not for others. I don't think it will be a deterrent for him in the future," he said.