Obama 2.0: Deficit Deal Tops Day-One Agenda

Nov. 7, 2012 -- CHICAGO -- He won a second term by a narrower margin than he won his first, but President Barack Obama believes his victory Tuesday night delivered a mandate that will reinvigorate his stalled legislative agenda and resolve a partisan impasse over taxes.

Obama will waste little time putting his perceived new influence to the test, aides say, making negotiations over expiring tax cuts, looming spending cuts and deficit reduction his immediate priority after the electoral smoke clears.

A double dose of deep reductions to defense and social spending, plus across-the-board tax hikes for all Americans, will automatically kick in 54 days from now unless Obama can broker a deal.

Read more about election results.

"First thing we're going to have to do is to, once and for all, determine how we're going to reduce our deficit and our debt coming out of this terrible crisis we've had now that the economy has begun to grow again, we're adding jobs again," Obama told a local Des Moines, Iowa, TV affiliate Tuesday.

"If we can get that done early, then my sense is not only will the economy grow and see more jobs added, but I think it will take a lot of the rancor out of our politics," he said.

But despite that sanguine view, there are signs that a compromise on taxes with Republicans -- who retained majority control of the House of Representatives -- won't come easily.

Transcript: read Obama's election night acceptance speech.

Obama remains insistent that existing tax cuts on individuals earning more than $200,000 a year and families making more than $250,000 should expire on Jan. 1, 2013. Republicans remain staunchly opposed to any increase in taxes.

"We're not raising taxes on small-business people," House Speaker John Boehner told Politico in an interview on the eve of the vote.

After it became clear Obama would win the election, Boehner released a statement pointing out that Republicans held onto the House of Representatives.

"If there is a mandate, it is a mandate 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," Boehner said early Wednesday morning.

Finding that common ground will be difficult since both men have made such specific declarations about taxes. They tried - and failed - to achieve a "grand bargain" to reduce the deficit in 2011. Through a complicated legal agreement, that failure is what led to the automatic spending cuts and tax hikes Boehner and Obama will now have to work quickly before the end of the year to avoid.

Wasting no time, Boehner has scheduled a press conference to discuss the fiscal cliff on Capitol Hill on Wednesday afternoon.

Analysis: For Obama, a mandate only if he can earn one.

However the fiscal debate is resolved will largely set the tone for a raft of domestic policy debates to follow.

Obama has said he plans a big push for a comprehensive immigration reform bill, a stimulus package for states to help hire public school teachers, and a massive infrastructure upgrade that he says will provide jobs to thousands of construction workers.

He has also signaled plans to consolidate progress on financial regulatory and health care reform by more aggressively implementing the outstanding provisions of the Wall Street reform law and Obamacare.