The Washington Post cited two senior Democratic strategists who said Baucus will not run for a seventh term in 2014. Baucus is the longest-serving senator in Montana history and currently the third in seniority in the Senate.
Baucus is the chairman of the Senate Finance Committee and has been the senior Democrat on the committee for more than a decade.
President Obama praised Baucus as a "leader on a broad range of issues" and thanked him for nearly 35 years of service.
Republican presidential nominee Mitt Romney carried Montana in 2012 with more than 55 percent of the vote. While Baucus racked up 73 percent of the vote in 2008 against Robert Kelleher, a perennial candidate who won an upset in the Republican primary, he had been expected to have a difficult time next year, The Hill reported.
Baucus has opposed most of his fellow Democrats on a series of issues from President George W. Bush's tax cuts to gun control to the bill now before the Senate that would impose Internet sales taxes. He played a major role in winning Senate approval of President Obama's healthcare plan but last week predicted a bad outcome for it.
"I just see a huge train wreck coming down," the senator told Health and Human Services Secretary Kathleen Sebelius. "You and I have discussed this many times and I don't see any results yet."
Sources told the Post Brian Schweitzer, whose second term as Montana governor ended in January, is expected to be the Democratic nominee. Schweitzer is popular in the state, giving the party a fighting chance of holding on to the seat.
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