Biden arrives back in Washington to a political nightmare

(CNN)President Joe Biden on Wednesday received an unwelcome wake up call for his still-new presidency as the Democrat arrived back in Washington from a European excursion suddenly facing a transformed political landscape.

Republican Glenn Youngkin's projected victory over Democratic former Gov. Terry McAuliffe in Virginia, which Biden won by 10 points, and a too-close-to-call race in New Jersey made for dispiriting news for the Democratic President as he flew over the Atlantic.

Returning to the White House in the dark, Biden declined to answer questions about the race, which he'd incorrectly predicted Democrats would win eight hours earlier. The results had been called a half-hour before Biden touched down at Joint Base Andrews. Aboard Air Force One, people familiar with the matter said the mood was grim as a weary team returned to what has become a swirl of recrimination and second-guessing.

Questions remain over how the shifting dynamic will play out in the coming days, weeks and months.

Biden has for months been locked in a repeating cycle of pressure-packed weeks for his legislative agenda as his party has failed to pass his sweeping domestic agenda, comprised of a $1.2 trillion bipartisan infrastructure plan and a $1.75 trillion social safety net expansion bill. Those priorities remain unfinished -- and a potential government shutdown and default on the nation's debt looms in early December.

It all adds up to a potential turning point in Biden's presidency before he has reached a full year in the job. The White House already feels a new sense of urgency to both pass the agenda and provide direction for a party in panic, and an official tells CNN it is possible Biden will directly address the American people on Wednesday.

"Hopefully lights a fire under our team on the bill to act," a senior administration official told CNN, but added, "I think it's a mistake to overreact here."

The official also said, "But clearly voters are frustrated by the pace of action and we need to pick up that pace."

Lack of progress on Biden's agenda in the spotlight

After months of infighting over Biden's multitrillion-dollar legislative agenda, which laid bare the divisions in the Democratic Party, it has not taken long for finger-pointing and panic to set in among Biden's allies. A source close to the White House argued the results showed that voters are frustrated with the lack of action in Washington.

"Voters were clear that they were unhappy with inaction and nitpicking," the source said. "And Democrats widely agree that there is greater impetus to go ahead, faster, with bills that will be economic game-changers for middle-class families and ensure the economy delivers for hardworking people in their daily lives, not just those at the top."

"If voters are frustrated with inaction, the obvious response is to be more decisive and pass bills based on an agenda for the middle class that received a record-breaking 81 million votes last year," the source added. "And there's a strong consensus about that across the party. Doing less is plainly the opposite of what people want."

On Wednesday morning, a source close to House progressives pushed back on criticism from moderate Democrats that McAuliffe lost because they held up Biden's agenda.

"That doesn't even begin to pass the sniff test. Voters did not base their choice between McAuliffe and Youngkin off of infrastructure negotiations in DC. A state did not just swing by more than 10 points in a single year because of some bill moving through Congress," the source said.

Still, over the final weeks of the campaign, McAuliffe and his allies repeatedly raised warnings that Biden's inability to pass a sweeping social safety net expansion was hindering his race.

Some of Biden's advisers have chafed at the notion the President's stalled domestic agenda was to blame, pointing instead to a lingering pandemic and its economic aftereffects. Some Democrats close to Biden have also privately lamented at McAuliffe's stumbles, including sparking outrage with a comment on education that came to define the closing weeks of the race.

"Virginia is just the first step," GOP leader says

The Virginia governor's race in particular was seen as a referendum on the first year of Biden's presidency, even though the President said he didn't view it that way, and Tuesday's loss could lead to second-guessing on the Democrats' strategy on Biden's economic agenda. More moderate Democrats could join Sen. Joe Manchin of West Virginia in raising concerns about Biden's massive economic and climate spending bill, which would further draw out the process and complicate the path forward.

Biden, who campaigned for McAuliffe in Virginia, had expressed confidence on Tuesday that McAuliffe would win.

"We're gonna win. I think we're gonna win in Virginia," Biden said during a news conference in Glasgow, while also acknowledging it would be a tight race.