11/07/2012 05:11 EST | Updated 01/07/2013 05:12 EST

Will the Fiscal Cliff Unite Romney and Obama?

2012-11-05-HP_World_Graphic_300x70.png Obama's victory was critical because it's the only way the Congressional gridlock regarding the deficit can be overcome. That is because Obama belled the cat in 2011 with his eleventh hour deal that imposed a deadline now nicknamed the "fiscal cliff."

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US President Barack Obama (R) speaks during his debate with Republican Presidential candidate Mitt Romney (L), who greets the audience at the conclusion in Denver, Colorado, on October 3, 2012. AFP PHOTO / Nicholas KAMM (R)/SAUL LOEB (L) (Photo credit should read STF/AFP/GettyImages)

President Obama made history again as the first incumbent since 1936 to be re-elected even though unemployment exceeded 7.2 per cent.

His victory was critical because it's the only way the Congressional gridlock regarding the deficit can be overcome. That is because Obama belled the cat in 2011 with his eleventh hour deal that imposed a deadline now nicknamed the "fiscal cliff."

This is how it works: The deadline of Dec. 31, 2012 is when Bush tax cuts end and when $500 billion in automatic tax hikes and spending cuts begin annually -- $100 million a year in Medicare cuts and $100 million in Pentagon cuts. This was agreed to by Congress and Obama in August 2011 to try and force an end to the logjam.

It didn't work and Republicans became intractable in the year leading up to the election.

So the "fiscal cliff" looms, forcing both parties back to the table. The President proposes a mix of spending cuts and higher taxes on the privileged, a principle of "shared responsibility" toward deficit fighting.

This election is not more of the same but makes resolution more possible for two reasons. The popular vote was won narrowly by Obama, which gives him some moral authority, but not enough to allow him to radicalize his policies. And the electorate rejected dozens of Tea Party candidates, which should make Republicans shift away from extremes.

Besides the "fiscal cliff" issue, there are other interesting takeaways from this vote:

-- Excessive campaign spending and inaccurate, unethical advertising -- such as Romney's Jeep scaremongering in Ohio -- backfired.

-- Stock markets rose on election day but fell yesterday adjusting to the fact that the Obama victory means capital gains taxes will increase, and loopholes will close for high-income earners and for private equity types like Mitt Romney and others who pay 14 per cent tax rates on gigantic incomes of $40 million plus. Europe's problems also lowered markets globally. Athens is burning.

-- Military spending will abate in the United States, and the Obama shift toward cyber security, multilateralism and robotized armies/air forces will accelerate. The US military budget is a bloated US$700 billion or equal to the next 20 biggest spending nations combined.

-- America will embed universal healthcare, joining the ranks of civilized and developed nations. This will lead to cost-cutting reforms, already begun, as a result of more government oversight.

-- A new War on Drugs will launch now that voters have legalized marijuana in Colorado and Washington. This pits the wishes of their electorates against federal law, and will lead to both states mounting a court challenge to gain states' rights over drug prohibition or, alternatively, to a national movement to legalize.

-- Two more states also made social history by legalizing same-sex marriage -- Maine and Maryland. Some 16 states recognize such marriages already but will likely move toward outright legalization.

-- Financial markets will be bridled because Dodds-Frank will remain. Wall Street and US banks will look like Canada's with solvency and good governance as goals.

-- The Republicans will soul search and have to mute or reject right-wing extremists (religious, racist, misogynist or homophobic), split into two parties or face years in the political wilderness.

-- The Hispanic voting bloc has firmly established itself as the most powerful in the country. Any serious federal candidate must now take Spanish lessons. And the youth vote was a record one.

-- This guarantees Jeb Bush the Republican nomination for President in 2016 because he speaks Spanish and has a Mexican wife. He is also a moderate, not Tea Partier, which will be another essential for the Republicans if they ever want to contend nationally.

-- A vote in Michigan will cost Canadian taxpayers $500 million. This was promised by Ottawa to the state to help defray the cost of building a second bridge between Windsor and Detroit. Manny Moroun, owner of the current bridge, spent millions on a referendum on the ballot to scuttle the second bridge but Michigan voters rejected his referendum.

-- The Keystone XL Pipeline from the oil sands to Texas will likely proceed, in some guise, now that Obama has won. He postponed the project only because of the election and has changed its route. It should be remembered that in 2009 Obama approved the Alberta Clipper, an oil sands pipeline to Chicago even bigger than Keystone.

-- Worrisome identity politics (voting by race or ethnic group) contributed to this outcome, but fortunately Obama garnered nearly 40% of the white vote, an indication that the racial divide is not growing.

-- The "Divided America" theme is irrelevant: Since 1972, the two-party system has turned into a two-coalition system. Only two out of nine Presidents have captured 53% or more of votes.

Lastly, President Obama is lucky too because he has a new opportunity to fix fiscal problems and, at the same time, preside over an anticipated economic expansion. A forecasted by the majority of economists, the US economy is expected create 12 million jobs by 2016.

The electorate in 2012 certainly spoke loudly and now that the smoke and noise clears it's obvious that the United States is evolving into a more socially liberal, and economically conservative, country.

Photo gallery Barack Obama's Victory See Gallery