President Obama’s heady reelection victory is about to run smack into cold political realities of Congress, where both parties remain deeply divided over taxes, spending and debt policy as the government veers toward the looming “fiscal cliff.”
Congressional leaders in both parties offered conciliatory words yesterday, after Obama scored a strong Electoral College rout over Mitt Romney and beat him by about 2 percentage points in the national popular vote.
But no side sounded ready to surrender, as Democrats expanded their Senate majority to an expected 55 out of 100 seats in a chamber where a determined minority can grind business to a halt.
The end of a long and contentious election put the focus back on the looming “fiscal cliff” — across-the-board spending cuts to the Pentagon and other agencies and the expiration of Bush-era tax cuts that combined would total $800 billion next year.
Some economists have said the one-two punch could send the economy spiraling back into recession unless Congress acts before Jan. 1. Rather than calm Wall Street, Obama’s re-election and fears he won’t be able to reach across the aisle to fend off the fiscal cliff sent the Dow tumbling 312 points yesterday.
The 2.4 percent sell-off on the day after a presidential election was second only to the 5 percent drop that followed Obama’s 2008 election amid fears in the financial sector that he would push for tax hikes.
Leaders in Washington yesterday were quick to respond and some sounded rare calls for compromise. Obama called congressional leaders from both parties to urge “bipartisan solutions” for the rest of the year.
House Speaker John Boehner — who engaged in prolonged negotiations with Obama and his team during the last debt crisis — offered conciliatory language of his own and said he was open to raising new revenue, something Obama campaigned on all year.
“Mr. President, this is your moment. We’re ready to be led — not as Democrats or Republicans, but as Americans,” Boehner said. “We want you to succeed. Let’s challenge ourselves to find the common ground that has eluded us.
“We’re willing to accept new revenue under the right conditions,” Boehner said — but he explained that this meant through tax reforms and closing loopholes, not the top-bracket rate hikes that Obama is insisting on.
But Senate Majority Leader Harry Reid warned there will have to be give and take.
“I want to work together, but I also want everyone to also understand, you cannot push us around,” Reid said. But the former boxer added: “It’s better to dance than fight.”
Negotiating a deal to stave off the fiscal cliff is only one of several major policy issues facing a second term of the Obama administration. At his election-night rally, Obama laid out some of his agenda that includes: “Reducing our deficit. Reforming our tax code. Fixing our immigration system. Freeing ourselves from foreign oil.”
He has promised Latinos, who helped return him to the White House, that he’ll push comprehensive immigration reform, and he has vowed to let the Bush tax cuts expire for individuals making more than $250,000 per year — one of his policy goals that he is vowing not to budge on.
With Obama’s political future no longer an issue and fresh off an election victory, the administration is hoping it will have more clout and fewer roadblocks in pushing Republicans to compromise.
“I think it’s a different day,” Vice President Joe Biden told reporters on Air Force Two as he made his way home from Chicago. “How it’s going to turn out, I don’t know, but the president and I are getting to work.”
“Barack’s re-elected, so this sort of cause to keep a second term from happening’s done,” Biden continued.
Obama returns to DC, where the power dynamic hasn’t dramatically changed. Boehner keeps his gavel in the House, and Democrats keep Senate control.
“The president is going to have to change, and he’s going to have to take more of a lead in the legislative process,” said Jim Manley, a former aide to Reid and the late Democratic Sen. Ted Kennedy.
Republicans say there’s only so far they will go to compromise.
“The president asking for rate hikes is just simply not going to happen. The speaker can only get what he can get through the house,” said Antonia Ferrier, an aide to Sen. Orrin Hatch (R-Utah).
Meanwhile, officials in the South Asian nation of Myanmar said Obama will make the first visit there by a US president later this month.