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A recent U.S. survey found small business owners cared twice as much about obtaining operating licences than they did taxes. (JIM YOUNG/JIM YOUNG/REUTERS)
A recent U.S. survey found small business owners cared twice as much about obtaining operating licences than they did taxes. (JIM YOUNG/JIM YOUNG/REUTERS)

Congress

Partisan gridlock poised to continue after election Add to ...

A re-elected President Barack Obama faces a strong Republican majority in the House of Representatives as Tuesday’s vote failed to produce any easy solutions to the fierce partisan brinkmanship that has left Congress gridlocked.

A near tie in the popular vote between Mr. Obama and Republican nominee Mitt Romney highlights the divided priorities of Americans over how to give the economy a boost.

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Mr. Obama’s interventionist approach to the auto sector was rewarded by Midwest voters, yet the small-government message of House Republican candidates also found broad support from coast to coast.

Now the blue and red forces will have to find some form of common ground as the world urges Washington to produce a fiscal plan that will avoid another shock to the global economy.

Tuesday’s results likely mean Democrats will reject out-of-hand Republican calls for changes to “Obamacare” health reforms. But the solid Republican majority in the House will force the Democrats to compromise on spending.

During the first two years of his presidency, Mr. Obama enjoyed solid majorities in both the Senate and the House of Representatives, allowing him to pass controversial health reforms over the objections of Republicans.

But the President struggled to get his initiatives though Congress after the 2010 midterm elections, which gave Republicans majority control of the House.

Campaign promises of bipartisanship from both sides will now quickly be put to the test. And the focus of Congress will now shift quickly to crafting plans to avert a so-called “fiscal cliff.”

That’s the stark term given for the automatic tax hikes and $1.3-trillion in spending cuts that will be triggered on Jan. 1 unless Congress approves a new plan for addressing Washington’s deficit troubles.

Failure to reach a deal risks sending the U.S. – and ultimately Canada – back into recession, given the magnitude of the automatic measures and the hit they would cause to economic growth.

In addition to fighting “Obamacare,” Republicans have also strongly resisted the inclusion of tax increases as part of a long-term deficit-fighting plan. Democrats and Republicans have strongly divergent views on defence spending, with Republicans saying they would spend considerably more.

While Tuesday’s results will ultimately have an impact on which party’s ideas win out, the newly elected men and women won’t actually have a vote on how to avert the fiscal cliff.

Their terms won’t start until Jan. 1, 2013, meaning it is up the current “lame duck” Congress to reach a deal. These are the same Democrats and Republicans that have tried and failed several times to produce a bipartisan spending plan. House Speaker John Boehner – a Republican – has said the most likely outcome would be a short-term “bridge” deal that would push off big decisions into 2013 for the new Congress.

Follow on Twitter: @curryb

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