The racial controversy stirred up by Senate GOP leader Trent Lott (Miss.) is likely to shape the early legislative and political battles of the 108th Congress and may affect the relationship between the White House and congressional Republicans, but Lott's resignation yesterday also could return longer-term dividends to President Bush and the Republican Party.

The Lott affair could not have ended in a way more helpful to the White House, with the damaged GOP leader out and Sen. Bill Frist (R-Tenn.), a man with close ties to the administration, the likely successor as the new majority leader of the Senate. With Frist at the helm, Bush would have a more appealing ally in his effort to recast the image of the Republican Party.

But judging by the efforts of White House officials to disavow any involvement in the demise of Lott and the elevation of Frist, and by the reactions of Democrats, who made clear there will be no free ride for either the president or his party on matters that even touch on racially sensitive issues, the aftermath of the Lott controversy has left Bush with problems to clean up and potential obstacles in his path.

The uproar over Lott's suggestion that the country would have been better off if Sen. Strom Thurmond (R-S.C.), who ran on a segregationist platform in 1948, had been elected president, and the Democrats' victory in the Senate runoff election in Louisiana, have helped wipe out much of the momentum Bush and the Republicans had coming out of last month's midterm elections.

But one White House official said the fact that the whole thing happened now and not sometime next year gives the administration plenty of time to recover. "With the way things are moving, the recovery will happen sooner and quicker than it would have otherwise," the official said. "I think that, given the way that January is structured, the agenda will be able to move forward in a timely fashion."

Bush's spokesmen said the Lott controversy would have no impact on the president's agenda for the new Congress. White House press secretary Ari Fleischer told reporters there would be "no change whatsoever" in Bush's upcoming proposals. "The agenda that the president proposes is the agenda that he believes in, and he doesn't change it because one person is in office or a different person is in office," he said.

But Republicans outside the White House and Democrats predicted that the president would find ways to tweak his domestic proposals to accentuate the compassionate conservative agenda that he campaigned on in 2000 but has had trouble turning into law.

"It will change their tone if not so much the substance," said one Republican on Capitol Hill. "[White House senior adviser Karl] Rove will view it as a packaging problem. They'll have to focus more on the 'compassionate' rather than the 'conservative' for the next two years."

One GOP strategist said the controversy would "put an exclamation point" on the importance of passing legislation to reform health care and provide help with prescription drug costs for the elderly, something Bush has promised since the campaign. The strategist also said the administration would be under greater pressure to get domestic legislation through the Congress.

"This probably ups the ante because we have the House and the Senate and now a majority leader who will be friendly to the White House, and that means the bar is being raised about getting things done," the strategist said.

Democrats, however, may be more aggressive about offering an alternative agenda than they would have been, from challenging Bush on judgeships to pressing the White House to tailor an economic stimulus package to benefit lower-income workers more than wealthy taxpayers. The turmoil caused by Lott's remarks may make Democrats feel confident that Republicans will be more reluctant to oppose some of these proposals. "I think it leaves the Republicans in a position where they have to be sensitive in a way they've never cared to be, at least in the early phases of the next Congress," one Democrat close to the leadership said.

Sen. Edward M. Kennedy (D-Mass.) and Rep. George Miller (D-Calif.), both of whom worked closely with Bush to pass an education bill, sent a letter to the president challenging him to file a friend-of-the court brief supporting the University of Michigan and its affirmative action policy in a case that will be argued before the Supreme Court this term.

Senate Democratic leader Thomas A. Daschle (S.D.), who initially gave Lott a pass on his comment about Thurmond, issued a statement challenging the next GOP leader to demonstrate a commitment to racial equality through legislation, not rhetoric. "The new Republican leader in the Senate must do more now than merely disavow Senator Lott's words," Daschle said. "He or she must confront the Republican Party's record on race, and embrace policies that promote genuine healing and greater opportunity for all Americans."

Democrats also sought to blame Frist for what they charged was a GOP-led effort to suppress the African American vote in November's midterm elections. Rep. John Conyers Jr. (D-Mich.) asked Attorney General John D. Ashcroft to investigate what happened, and Democratic National Committee Chairman Terence McAuliffe, in a statement, said Bush should insist that Frist give "a full accounting" of what he knows about any attempts to frustrate black voters.

But other Democrats warned against trying to pin the racist label on Frist personally, and Republicans predicted that Democrats, in their desire to keep the Lott controversy going, would overplay their hand and create a backlash.

John Podesta, who served as President Bill Clinton's White House chief of staff, said, "I think the party's position on how they vote and where the bulk of the Republican caucus has been is fairly criticized, but I think that personalizing it to Frist is harder." Lott and Frist, he said, "are not cut from the same cloth. The real question is what program are they pushing, and will Frist show real progressive leadership."

Republican lobbyist Ed Gillespie said, "Democrats could try to continue the story line somehow in the course of [judicial] nominations, but they run the risk of overreaching."

White House officials mounted a full-court press yesterday to say there was no direct or indirect involvement by administration officials to orchestrate Lott's fall or Frist's rise. "It's hard to undo impressions, and we've done our best in making sure the record is clear that the White House understands the importance of not playing a role in leadership elections," communications director Dan Bartlett said.

But a Senate Republican aide said, "There will be lingering resentment towards the 101st senator, Karl Rove. Even those who support Frist feel uncomfortable with the role of the White House. I'm not saying they'll abandon the White House, but it will play out in subtle ways. There's going to be some pushback."

Republicans said they hoped Lott's demise signaled a new chapter in the party's history. "This is a different Republican Party where a guy who makes a statement like that is gone as majority leader," one strategist said. "Twenty years ago, I don't know if that would have been the case."

Republicans believe Bush has the opportunity to move the party farther away from its heritage of appealing to southern racists during the civil rights era. If he is successful, Republicans predict it will increase their support among white moderates in the suburbs and among Hispanics, and could provide modest inroads in the African American community.

But some Republicans noted yesterday that Bush himself injected race into the 2000 nomination battle with his visit to Bob Jones University in South Carolina, and that when racial violence erupted in Cincinnati early in his presidency, he was passive in his initial response. Bush's condemnation of Lott's remarks helped undermine the GOP leader's standing, but even with Lott gone, the spotlight will remain on Bush.

Sen. George Allen (R-Va.), who backed Sen. Bill Frist (R-Tenn.) for majority leader, acknowledged a "painful" conversation with Sen. Trent Lott (R-Miss.). In Dallas, Sen. Kay Bailey Hutchison (R-Tex.) discusses the state of GOP leadership after Sen. Trent Lott said he would step down as majority leader.