President Obama survived a grueling campaign to defeat his GOP challenger, Mitt Romney, on Tuesday, but he won't have much time to savor his win. The nation will go over the so-called fiscal cliff unless Obama can help a divided Congress negotiate a debt deal before the end of the year, when $600 billion worth of automatic tax hikes and spending cuts are scheduled to take effect. Economists warn the hit will trigger another recession. Americans are bitterly split on whether Obama's victory — decisive enough in the Electoral College, but narrow in terms of the popular vote — gives him a mandate to push his agenda. Will he be able to broker a deal to stave off another economic disaster?
Brace for the fiscal cliff: With Obama hanging on to the presidency, the Dems holding the Senate, and Republicans retaining their majority in the House, says Aaron Task at Yahoo Finance, the markets are certainly bracing for a running jump off the fiscal cliff (the Dow had plummeted by 300 as of mid-day Wednesday). Obama is threatening to veto a deal that doesn't hike taxes on the rich "and Republicans [are] saying they won't agree to any tax hikes (period), [so] it's hard to see a consensus emerging anytime soon."
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Obama could break the impasse: The conventional wisdom was that Romney was better equipped to handle this, says Joe Weisenthal at The Business Insider. Conservatives trusted him to hold the line against tax hikes for the rich. The thing is, Democrats, who like those hikes as well as some defense cuts, would have had "zero incentive" to compromise. Obama, as the "man in charge," has the "incentive to compromise with Republicans" and the liberal cred to get Dems to go along.
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The fiscal cliff isn't even Obama's biggest problem: "The fiscal cliff may actually be the easiest one" for Obama to deal with, says Ed Yardeni at Dr. Ed's Blog. That just involves getting Republicans and Democrats to make a deal, and neither wants to go over the precipice. Resolving "the conflicts between Israel and Iran, China and Japan, and the already warring factions in Syria could be much more challenging." If just one of these crises worsens, the global recovery could crumble.
"The fiscal cliff might be the easiest problem Obama has to deal with"