No one needed a surprise result from Massachusetts or unexpected Congressional retirements to figure out that the dynamics of the 2010 election season are volatile. With an unstable economy, an ill-defined "war on terror" and polls showing Americans who thought the country was steered off course by Republicans now think it’s headed in the wrong direction under Democrats, this is shaping up as a wild race through uncharted territory. For progressives–as frustrated by Democratic compromises and missteps as they are frightened by the extremism of a reconstituted right and suddenly swaggering Republicans–it’s an unsettling moment.

With Washington Democrats wrangling among themselves and spinning off-message, and with Republicans shape-shifting with agility, it’s easy to imagine the worst. But the 2010 cycle, while complex and demanding, need not be a nightmare for us: it should be understood as a multi-tiered challenge with opportunities to get things right. Here are seven ways to think about the fight for Congress and the statehouses:

1. It’s Not About Sixty Senators. The obsession in 2009 with building a caucus big enough to thwart Republican filibusters made it seem like a substantial Democratic majority was meaningless. Democrats handcuffed themselves by adhering to rules that gave power to "moderate" Republicans, corporate-toady Democrats like Nebraska’s Ben Nelson and Montana’s Max Baucus, and Connecticut Independent Joe Lieberman. It’s unlikely that a GOP tidal wave will shift control of the chamber, but it is equally unlikely, given the retirements and incumbent vulnerability, that Democrats will get to, let alone beyond, sixty. Worrying about either scenario is madness. For progressives, the point should be to make the Democratic caucus more left-leaning and activist. Don’t fret too much about the fate of Southern and border-state compromisers (Arkansas’s Blanche Lincoln, Indiana’s Evan Bayh). Worry about re-electing progressives like California’s Barbara Boxer and Wisconsin’s Russ Feingold. Think about helping progressive, or at least mainstream, Democrats win seats vacated by GOP incumbents in Missouri, New Hampshire and Ohio. The point is not merely to elect Democrats but to forge a caucus that is less tied to the old ways of doing things and more inclined to scrap antidemocratic Senate rules and start governing.

2. Don’t Just "Keep" the House; Make It More Populist. President Obama’s State of the Union address noted that Speaker Nancy Pelosi’s House has done a far better job of passing legislation than the Senate. But it wasn’t easy. Blue Dogs and New Democrats erected every obstruction they could. This year they’ll try to suggest that the only way to "save" the House is to run to the right, while their consultant allies will peddle the fantasy that the best response to the Supreme Court’s Citizens United ruling allowing corporations to spend more freely on elections is to be more business-friendly. That would be disastrous. The Democrats’ greatest vulnerability is not in the South, where Blue Dog seats are in play (and will in many instances be lost), but in the upper Midwest and the Northeast, where Democrats must preserve recently won seats representing hard-hit manufacturing towns and farm regions. Whether or not the White House is prepared to deliver it, the most effective message for Democratic incumbents–and challengers for the thirty-four Republican-held districts that backed Obama in 2008–is a progressive populist one that emphasizes job creation, smart farm policy and radically altering trade rules that have battered the heartland and the Northeast.

3. Democrats Will Define Themselves in Primaries. To hear major media tell it, the only primary fights are Republican battles between mainstream conservatives and tea party rebels. In fact, some of the most critical fights of 2010 are Democratic primaries: the California Congressional contest between incumbent Jane Harman, a frequent Republican ally on foreign policy, and progressive Marcy Winograd; a potential challenge from the right to Maryland progressive Donna Edwards; and Senate contests in Ohio, Pennsylvania, Kentucky and a number of other states–perhaps even New York. Savvy groups like Progressive Democrats of America and Democracy for America and websites like Firedoglake recognize that the first step to electing progressives is to nominate them in primaries.

4. State Races Matter. State and local governments maintain the social safety net and pay for education. For that reason alone, the thirty-seven gubernatorial and several thousand state legislative races are important. But this year’s state contests matter even more because immediately after election day Congressional district lines will be redrawn using data from the 2010 Census. In states like Ohio, Michigan, California and Florida, electing the right governor could do more to define the character of Congress in the 2010s than winning a particular US House or Senate seat.

5. Direct Democracy Works. The spin says Americans are in an anti-tax, cut-government frenzy. But Oregonians just voted by overwhelming margins to tax the rich and big corporations in order to preserve social services and public education. As the Ballot Initiative Strategy Center reminds us, referendums and initiatives are no longer the province of right-wing zealots. When politicians go cautious, direct democracy becomes a powerful tool. Progressives should be far more engaged with referendum fights, from California to Maine, that will focus more than ever on taxes, spending and economic policy.

6. It’s Not Just Democrats and Republicans. If this becomes a throw-the-bums-out year, some of the most exciting runs may be against the two-party system. There will be too much talk about tea party renegades; there are far more significant–if underreported–campaigns: former Senator Lincoln Chafee’s independent run for governor of Rhode Island, Green Party gubernatorial candidate Rich Whitney (who won 10.5 percent of the vote four years ago) in Illinois, and those of the Vermont Progressive Party and the Working Families Party in New York and Connecticut.

7. Issues Are Important; Narratives Are More Important. The top issue in 2010 is the economy. But there’s a difference between chirping about green shoots and outlining a bold agenda to create family-supporting jobs and swing the policy pendulum from Wall Street toward Main Street. There can be only one party of change in an election. Democrats proved in 2006 and ’08 that they could be that party merely by offering an alternative to those in power; Republicans will try to do the same in 2010. Progressives must pressure Democratic leaders and candidates, in primaries and with their general election resources and energy, to stand for something more than managing the status quo–and to recognize that talking up the Obama administration’s record will not be enough.

There’s going to be a great wrestling match for control of the Democratic message this year. Those who say the party should present itself as a management team that will do a better job than the Republicans on cutting domestic spending, worrying about the deficit and promoting free trade aren’t writing a platform; they’re penning a political suicide note. Voters are frightened and frustrated. If scared Republicans and conservative independents pack the polls while disenchanted Democrats and liberal independents stay home, it could be 1994 all over again. But if Democrats present a progressive populist message about what must be done to win not just an election but the fight for jobs, education and healthcare, they can still be the party of change, and perhaps even of hope.