Obama faces hard work in second term

Last updated 06:30 08/11/2012

Americans hand Obama a second term, challenges await. Deborah Lutterbeck reports.

Obama's victory speech

Romney concedes

Americans in NZ celebrate election

US President Barack Obama celebrates on stage as confetti falls after his victory speech.
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US President Barack Obama celebrates on stage as confetti falls after his victory speech.

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Fresh from a decisive re-election win, US President Barack Obama returns from the campaign trail today with little time to savour victory, facing urgent economic challenges, a looming fiscal showdown and a still-divided Congress able to block his every move.

Obama defeated Republican challenger Mitt Romney yesterday in a gruelling presidential race and used his acceptance speech in front of a huge cheering crowd in Chicago to strike a conciliatory note toward his political opponents.

But in the cold light of the 2012 election's morning-after, it was clear that even though voters have endorsed a second Obama term, the president will have a hard time translating that into a mandate to push forward with his agenda.

His most immediate concern is confronting a "fiscal cliff" of automatic tax increases and spending cuts that could crush the US economy recovery - a prospect that weighed heavily on global financial markets today and sent Wall Street stocks into a post-election swoon.

Voters chose to preserve the status quo of divided government in Washington. Obama's fellow Democrats retained control of the Senate and Republicans kept their majority in the House of Representatives, giving them power to curb the president's legislative ambitions on everything from taxes to immigration reform.

This is the political reality that Obama - who won a far narrower victory over Romney than his historic election as the country's first black president in 2008 - faces when he returns to Washington later today.

But that did not stop him from basking in the glow of re-election together with thousands of elated supporters in his hometown of Chicago early this morning.

"You voted for action, not politics as usual," Obama said, calling for compromise and pledging to work with leaders of both parties to reduce the deficit, to reform the tax code and immigration laws, and to cut dependence on foreign oil.

Obama told the crowd he hoped to sit down with Romney in the coming weeks and examine ways to meet the challenges ahead - though the president may be more in need of mending fences with Republican congressional leaders who wield clout in Washington.

The problems that dogged Obama in his first term, which cast a long shadow over his 2008 campaign message of hope and change, still confront him. He must tackle the US$1 trillion annual deficits, rein in the US$16 trillion national debt, overhaul expensive social programmes and deal with the split Congress.

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The most urgent focus for Obama and US lawmakers will be to deal with the "fiscal cliff," a mix of tax increases and spending cuts due to extract some US$600 billion from the economy at the end of the year, barring a deal with Congress. Economists warn it could push the United States back into recession.

House Majority Leader John Boehner moved swiftly on the fiscal cliff issue, saying he would issue a statement on it today, citing "the need for both parties to find common ground and take steps together to help our economy grow and create jobs, which is critical to solving our debt."

Post-election concern about festering US fiscal problems contributed to a fall in global financial markets as jittery investors scrambled for less-risky assets. All three major US stock indexes were down more than 2 per cent in late morning, with the Dow Jones industrial average down nearly 300 points. Eurozone debt worries were also a factor in the market decline.

Obama is expected to make a push for a bipartisan solution to the emerging fiscal crisis in coming days, but Boehner has made it clear he intends to stand firm against any income tax increases on wealthier Americans, which Obama has demanded.

Obama also faces international challenges like the West's nuclear standoff with Iran, the civil war in Syria, the winding down of the war in Afghanistan and dealing with an increasingly assertive China.


Romney, a multimillionaire former private equity executive, came back from a series of campaign stumbles to fight a close battle after besting Obama in the first of three presidential debates.

But the former Massachusetts governor failed to convince voters of his argument that his business experience made him the best candidate to repair a weak US economy.

The nationwide popular vote remained extremely close with Obama taking about 50 per cent to 49 per cent for Romney after a campaign in which the candidates and their party allies spent a combined US$2 billion. But in the state-by-state system of electoral votes that decides the White House, Obama notched up a comfortable victory.

By early morning, Obama had 303 electoral votes, well over the 270 needed to win, to Romney's 206. Florida's close race was not yet declared, leaving its 29 electoral votes still to be claimed.

Romney, 65, conceded in a speech delivered to disappointed supporters at the Boston convention centre. "This is a time of great challenge for our nation," he told the crowd. "I pray that the president will be successful in guiding our nation."

He warned against partisan bickering and urged politicians on both sides to "put the people before the politics."

The Republican Party, after losing two presidential contests, is now likely to go through a period of painful soul-searching, especially over how it has alienated Hispanic voters, an important constituency in Obama's victory.

"The fact is Republicans are going to have to do a lot of rethinking at the presidential level," Newt Gingrich, a former House speaker who lost the Republican nominating race to Romney, told CBS's "This Morning" programme.


In the election aftermath, there were indications that partisan gridlock would persist in Washington.

Senate Republican leader Mitch McConnell gave no sign that he was willing to concede his conservative principles, signalling potential confrontations ahead.

"The voters have not endorsed the failures or excesses of the president's first term, they have simply given him more time to finish the job they asked him to do together with a Congress that restored balance to Washington after two years of one-party control," McConnell said.

Obama's win puts to rest the prospect of wholesale repeal of his 2010 healthcare reform law, which aims to widen the availability of health insurance coverage to Americans, but it still leaves questions about how much of his signature domestic policy achievement will be implemented.

Obama, who took office in 2008 as the ravages of the financial crisis were hitting the US economy, must continue his efforts to ignite strong growth and recover from the worst downturn since the Great Depression of the 1930s. An uneven recovery has been showing some signs of strength but the country's jobless rate, currently at 7.9 per cent, remains stubbornly high.

Obama's re-election puts him in the company of three of his past four predecessors whom voters granted a second term. He now faces the task of reshuffling his cabinet. Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton plan to step down soon.

Democrats widened their control of the 100-member Senate by one, seizing Republican-held seats in Massachusetts, Indiana, and Montana, and retaining most of those they already had, including in Virginia and Missouri. The Republican majority in the 435-member House means that Congress still faces a deep partisan divide.

"That means the same dynamic. That means the same people who couldn't figure out how to cut deals for the past three years," said Ethan Siegel, an analyst who tracks Washington politics for institutional investors.

International leaders offered their congratulations.

Prime Minister John Key responded to the result by saying he would send the president a letter of congratulations today and relay those sentiments in person at the East Asian Summit in Phnom Penh later this month.

"I have enjoyed working with President Obama during his first term as president and welcome the opportunity to continue our strategic partnership over the coming years."

Israeli Prime Minister Benjamin Netanyahu, who has had a testy relationship with the US leader, vowed to work with Obama "to ensure the interests that are vital for the security of Israel's citizens."

British Prime Minister David Cameron said Britain and the United States should make finding a way to solve the Syrian crisis a priority following Obama's re-election.

Russian President Vladimir Putin welcomed Obama's re-election and hoped it would have a positive impact on US ties.

In the Middle East, where the Obama administration has taken a cautious approach to while the Arab Spring has shaken the region, Obama's win was met with more of a sense of relief than happiness.

A tweet from one of Saudi Arabia's most influential clerics summed up the Middle East's response. "Obama isn't good," tweeted Salman al-Oudah, "But he is the lesser evil."

- Reuters, with John Hartevelt

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