Cliff edge

T HE excitement generated by the closeness of the US presidential election obscured the concurrent voting for the Senate and House of Representatives.
The Democrats strengthened their small majority in the Senate while the Republicans had no difficulty in holding their comfortable majority in the House. The latter is the more immediately significant outcome since it is with the House that President Obama will need to try to reach a compromise in dealing with serious financial problems ahead. The Republican House leader, John Boehner, has said that the result of Tuesday's elections was “a sign that that ordinary Americans want their leaders to work together” -- a welcome change, if it proves to be more than just words, from Mr Boehner's rigid refusal to agree compromises with the White House over the past two years.

The most threatening looming crisis is the so-called “financial cliff” when in January several tax cuts dating from President Bush's administration will end and spending cuts, especially in military expenditure, will coincide. The result could be to take some 600bn dollars, about four per cent of GDP, out of the economy. The credit ratings agencies think the overall effect on the economy would be such as to push unemployment up again to 10 per cent which was last seen in 2009. President Obama can only propose solutions; the House Republicans have to turn them into action.