President Barack Obama was re-elected this week as his campaign prevailed in the crucial swing states. In Congress, there were no changes. The Democrats remain in charge of the Senate and the Republicans lead the House. Stocks rose and the dollar fell on the news.
What the commentators said
Markets were relieved that the presidential election had delivered a clear result. But the uptick dissipated later on Wednesday, suggesting that investors had already returned to “worrying about being hostage to the whims of a bickering and indecisive Congress”, as Pimco’s Mohamed El-Erian put it.
As the law stands, a series of tax hikes and spending cuts worth around 4% of GDP will automatically kick in on 1 January 2013. So there are only a few weeks left for the government to make a new deal averting this “fiscal cliff” that would wipe out American growth and, given America’s huge size, “disembowel the global recovery”, said Ben Chu in The Independent.
The trouble is that America “has just spent an entire year and $2bn to end up with the same president, the same House and the same Senate”, said Andrew O’Hehir on Salon.com. And the bitter campaign means the main players are hardly likely to be more inclined to compromise now. They will all “feel entirely vindicated in their strategic decisions”, said Mike Franc of the Heritage Foundation. “Call it the election of many mandates.”
Expect a messy deal that “kicks the issue down the road”, perhaps as far as autumn next year, rather than starting to tackle America’s long-term fiscal problems, said Andrew Ross Sorkin in The New York Times. That will, of course, just create another deadline to worry about, “providing a new cloud of uncertainty over the economy”.