The standoff between President Barack Obama and congressional Republicans over taxes and spending isn’t entirely unprecedented, but the underlying dynamics shaping federal spending, particularly entitlement programs for the aging Baby Boom generation, could make it harder for Washington’s leaders to resolve.

They and their predecessors have been in something like this predicament before: unable to agree on a mix of spending reductions or changes in entitlement programs, and carrying the disagreement to the point of a government shutdown. It happened in 1995 when House Speaker Newt Gingrich took on President Bill Clinton.

Then, as now, one of the underlying causes of the dispute was the attempt by Republicans to bring market principles to the Medicare program.

Jewel Samad / AFP - Getty Images

Speaker of the House John Boehner, R-Ohio, speaks to reporters following a meeting with President Barack Obama on March 1, 2013 in Washington, DC.

The 1995 standoff ended with a Clinton victory, but once he’d won re-election in 1996 and was still faced with a Republican-controlled House, Clinton came to terms with Republicans on a deal to try to control Medicare’s spending growth.

That 1997 accord came at a time when the economy was robust — with the unemployment rate dipping under 5 percent by the summer of 1997 — and federal revenues were growing faster the economy itself.

By 2000, the $236 billion federal budget surplus — yes, surplus — was creating political pressure to cut income taxes – prominent Democrats such as Sens. Max Baucus of Montana and Dianne Feinstein of California supported the idea and voted for it in 2001.

“I strongly believe that when the government is in position to be able to return money to the American taxpayers, we should,” Feinstein said then.

That 2001 tax cut — accelerated in 2003 due to the post-Sept. 11 economic downturn — became an entrenched part of the government’s finances. Many Democrats complained about it, especially after the costs of the Afghanistan and Iraq wars mounted, but they couldn’t undo it.

And the tax law that Obama signed on Jan. 2 preserves much of that 2001-03 income tax structure. Middle-income earners go largely unscathed.

The tax accord Obama signed into law will produce revenues smaller than he and congressional Democrats had hoped for. That’s one reason Obama is again urging Republicans to agree to another round of tax increases.

Much has changed since 2001 and 2003 — and fiscally it has changed for the worse. The federal government’s debt burden today and over the next 10 years “is very high by historical standards” and greater than at any time since just after World War II, the Congressional Budget Office said in its annual budget outlook in January.

Even though that debt burden is high, the interest rate at which the government is borrowing money is extraordinarily low, due to Federal Reserve policy. Hanging over the budget standoff is the risk that interest rates will at some point in the next few years revert to their 30-year norm and drive up the government’s borrowing costs.

Clinton himself warned last year, “If interest rates were the same today as they were when I was president, the payment on the debt, that is, what the taxpayers have to pay every year, the financial debt (payments) would go from $250 billion to $650 billion a year.”

Unlike in 1997 when Clinton and Gingrich reached their deal, the demographic cost crunch produced by the Baby Boom is no longer in the distant future. It’s happening now.

The peak of the Baby Boom came in 1947 (the year Hillary Clinton was born and the year after her husband was born): 26.6 births per 1,000 people.

Compare that to 14.6 births per 1,000 people in 1975 and you see why, in fiscal terms, there are too few workers and too many beneficiaries.

Many of the cuddly newborns of 1947 are now wrinkled retirees collecting the Social Security and Medicare benefits that were promised to them.

The budget standoff is partly the result of those Baby Boom and Baby Bust demographics and of Democrats’ belief in expansive government – best symbolized by President Lyndon Johnson’s creation of Medicare in 1965.

The Affordable Care Act is Obama’s signature domestic accomplishment, just as Medicare was Johnson’s. “Obamacare” – which includes efforts to curb the growth of Medicare outlays – is still in its earliest stages, a massive and unproven experiment in trying to control costs of the already insured while simultaneously expanding benefits to the uninsured.

The backlash against “Obamacare” led to the Republican takeover of the House in 2010. That tenacious Republican House majority is what stymies Obama today.

Politically, the best-case scenario for Democrats is that Obama leads them to victory in the 2014 midterm elections and turns the clock back to 2009, when Democrats enjoyed a majority in the House and a supermajority in the Senate – which allowed them to enact the Affordable Care Act.  If that happened, there’d be no need for Obama to haggle with GOP congressional leaders.

But White House spokesman Jay Carney denied Monday that Obama was primarily focused on 2014 and on using Republican blocking of his agenda as a theme for the midterms.

“It goes without saying that a president wants those in his party to do well, but it is not a focus of his, particularly at this point,” Carney said.

Even with Obama campaigning for them in 2014, it will hard for Democrats to recover some of the districts they lost in 2010 — resilient incumbents such as Rep. Ike Skelton in Missouri and Rep. Rick Boucher in Virginia were swept out by the 2010 wave and their old districts seem unlikely to revert to Democratic control.

Redistricting plays a role, too, in Obama’s predicament.

Republicans were better prepared than Democrats for the 2010 state legislature races that determined which party controlled the drawing of new lines for House districts in most states.

“Republicans enjoy a 33-seat margin in the U.S. House having endured Democratic successes atop the ticket and over one million more votes cast for Democratic House candidates than (for) Republicans,” noted a memo in January from the Republican State Leadership Committee, which organized the $30 million Redistricting Majority Project in 2010.

Obama may have exaggerated when he complained in January that “the House Republican majority is made up mostly of members who are in sharply gerrymandered districts,” but he can’t get a do-over for what happened in 2010. And it is 2010’s outcome that is driving 2013’s bargaining.

This story was originally published on Tue Mar 5, 2013 11:22 AM EST

UPDATED 4:09 p.m. ET -- The Congressional Budget Office projected Tuesday that the national debt will continue to grow over the next ten years even as the economy recovers, the unemployment rate falls, and tax revenues increase.

The report said, "At an estimated $845 billion, the 2013 imbalance would be the first deficit in five years below $1 trillion" and would be only half as large as the deficit was in 2009, relative to the size of the economy. But that improvement will be merely temporary: in the next several years, an aging population will drive entitlement spending higher at the very same time that rising interest rates increase the government’s debt-service costs, the CBO warned.

Recommended: Obama calls for at least short-term fix with cuts, revenue to avoid sequester 

In its annual Budget and Economic Outlook, the CBO said debt held by the public will be bigger by 2023 than in any year since 1951 and will be at 77 percent of gross domestic product (GDP) by 2023, far above the 40-year average of 39 percent of GDP.

As a result, the CBO report said, the federal government’s interest costs “will be very high” and will be rising. Interest costs will more than double by the end of the ten-year forecasting period and will be at their highest share of GDP in the past five decades.

CBO director Douglas Elmendorf emphasized to reporters Tuesday that in the past several years, the federal government has benefited from “an extraordinarily long period of extraordinarily low interest rates.”

Elmendorf also stressed that the pressures on the federal budget continue to be driven by the cost of the entitlement programs for older Americans.

Even though the rate of increase in health care spending – including Medicare spending -- has slowed in the past few years, “we still see substantial growth in federal health care spending” over the next ten years and beyond, Elmendorf said.

He noted that in the next ten years the number of people eligible for Social Security retirement benefits will jump by 40 percent. Most of those people will be eligible for Medicare benefits as well. 

“We are confronting now in our country changes of a sort we have not had to make in the past,” he said. If one looks at the 20 years before the 2007-2008 financial crisis, he said, “we had rising spending on Social Security and on the major health care programs that was offset as a share of GDP (gross domestic product) by a decline in defense spending.”

But “that’s not a strategy that can be repeated at that magnitude over the next 40 years, because defense spending has come way down as a share of GDP and because the demographic pressures” that are driving up Medicare, Medicaid and Social Security outlays “are so intense,” Elmendorf said. 

“We have a large budget imbalance, we have large projected deficits, a debt that will remain at a historically high share of GDP and will be rising at the end of the coming decade. What that implies is that small changes in budget policy will not be sufficient to put the budget on a sustainable path,” he warned. 

The CBO chief said a $4 trillion reduction in cumulative deficits over ten years would result in a balanced budget by the end of the ten-year period but to get that deficit reduction entirely from spending would require a two-thirds cut in all non-defense discretionary spending.

“The gap between spending and revenues is very large, and that means that changes you would need to eliminate that gap will be large relative to either outlays or taxes. It would even require large changes even if one split the impact between spending and taxes,” Elmendorf noted.

The CBO’s ten-year forecast assumes that the automatic spending cuts, or sequester, required by Congress and President Obama in the 2011 Budget Control Act, will remain in place.

But if Obama and Congress cancel the sequester’s spending cuts, the CBO said about $1.2 trillion more would be added to cumulative budget deficits over the next ten years.

The Budget Control Act’s spending cuts, which are scheduled to begin on March 1, will reduce defense outlays by about 8 percent and non-defense discretionary outlays by about 5 percent in the current fiscal year, the CBO report said.

On Tuesday Obama called on Congress to pass "a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months" while it comes up with a longer-term alternative.

If the Budget Control Act’s spending cuts are left in place, projected federal spending in the CBO’s forecast will average 22.1 percent of Gross Domestic Product over the period from 2014 to 2023, which is CBO's ten-year forecasting window.

That figure is less than the spending level in 2012, but it is high by the standards of the past 30 years, during which federal spending has averaged 21 percent of GDP.

The CBO estimates that tax revenues will increase by about $260 billion, or 11 percent, in the current fiscal year. About half of that increase in revenues is due to the Social Security payroll tax reverting to its normal 6.2 percent rate at the start of this year, after being cut to 4.2 percent as an economic stimulus measure in 2011 and 2012.

Elmendorf said the economy is growing stronger. “The good news is that the effects of the housing and financial crisis appear to be gradually waning,” he told reporters, predicting “a virtuous cycle of faster growth in employment, income, consumer spending and business over the next few years.”

But the tax increases enacted at the end of last year and spending curbs in the Budget Control Act will depress economic growth this year.

The CBO said the economy will grow at a real, inflation-adjusted rate of 1.4 percent this year and 3.4 percent next year, with the unemployment rate remaining high through 2014.

If the CBO forecast is correct, 2014 will be the sixth consecutive year with unemployment exceeding 7.5 percent, “the longest such period in the past 70 years.”

But the CBO forecast assumes that the jobless rate will fall to 5.5 percent by 2018. It was last at that level in the summer of 2008.

Each January, the CBO issues its budget projections for the next 10 years. The forecast is intended to guide Congress as it designs fiscal policy. The CBO projections assume that current law remains in place and that no new tax increases, spending cuts or fundamental restructuring of federal programs such as Medicare are enacted.

The Senate approved a three-month suspension of the debt limit on Thursday, sending it to the White House for President Barack Obama’s likely signature.

The upper chamber voted 64 to 34 to add its approval to a plan conceived by House Republicans, which would push the deadline at which the government runs out of authority to borrow money to finance its obligations until May 18. The government would have otherwise run out of money within a matter of weeks.

In exchange for the extension of borrowing authority, both the House and Senate must now draft and approve separate budget resolutions by mid-April. The legislation approved Thursday by the Senate and last week by the House would place lawmakers’ pay into escrow if they were to fail to pass a budget.

The Obama administration has indicated that while the president would have preferred a longer-term extension of the debt ceiling, it did not oppose the short-term extension. Obama is expected to sign the legislation into law.

Attention will now turn to the normal budgeting process that typically dominates the first few months of the calendar year in Congress. Republicans’ gambit in offering this proposal was to highlight how Senate Democrats had failed to pass a formal budget resolution in the last four years. (Democrats argue they were working off of a de-facto budget stipulated by various spending cut agreements passed by Congress.)

Leaders of both chambers have suggested they’ll push ahead with ambitious, and markedly different, budgets.

Wisconsin Rep. Paul Ryan, the chairman of the House Budget Committee, will lead the GOP’s efforts; he’s vowed to produce a budget that would balance the budget in the next 10 years without raising any new taxes.

Senate Democrats, meanwhile, have said they plan to seek additional revenues from taxes in the budget they will produce. Washington Sen. Patty Murray, D, the chairwoman of the Senate Budget Committee, will lead that effort.

With inaugural festivities over, President Barack Obama and members of Congress have returned to budget trench warfare.

House Republicans will vote Wednesday on suspending the federal government’s debt limit until May 19 in the latest chapter of this ongoing saga that has consumed Washington for the better part of the last two years.

GOP leaders hope that by passing their bill, they will not only postpone another debt limit confrontation with Obama, but will put the onus on the Democratic-controlled Senate to pass a budget resolution which would set spending levels for federal programs for the coming fiscal year. The Senate hasn't passed a budget resolution since 2009.

At a press conference Tuesday evening, House Speaker John Boehner reminded reporters that although House Republicans have passed budget resolutions for the past two years, “it’s been nearly four years since the Senate has done a budget.”

He said that the Republican debt limit bill will include a provision that if the Congress doesn't enact a budget resolution, members should not be paid.

House Majority Leader Eric Cantor added, “If this country needs to incur more debt, Senate, please show us your plan to repay that debt, please show us your plan to control spending.”

Passing a Senate budget resolution, Republicans argue, will require Democrats to show their hand: they will need to vote for additional tax increases.

That theory was given some credibility by comments by the Senate’s third-ranking Democrat, Sen. Charles Schumer, D- N.Y., who said on NBC’s “Meet the Press” on Sunday that Senate adoption of a budget resolution is “going to be a great opportunity for us. Because in our budget that we will pass, we will lift tax reform, which many of my Republican colleagues liked, but it’s going to include (additional) revenues. It’s a great opportunity to get us some more revenues … You’re going to need more revenues as well as more (spending) cuts to get the deficit down.”

Susan Walsh / AP

House Speaker John Boehner of Ohio waits for the start of a Joint Session of Congress in the House Chamber on Capitol Hill in Washington, Friday, Jan. 4, 2013.

He added, “We’re going to do a budget this year. And it’s going to have revenues in it. And our Republican colleagues better get used to that fact.”

By eliminating some tax credits, deductions and preferences, tax reform could make the tax system more efficient, helping spur economic growth and generating increased tax revenues.

Senate Democrats could use a budget procedure known as “reconciliation” to enact tax increases – and they would need no Republican votes in order to do so. Under Senate rules, changes considered under reconciliation can’t be filibustered, so they could be enacted by a simple majority, instead of requiring a 60-vote majority.

Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor Tuesday morning that he wanted senators to “work to end wasteful tax loopholes and (to) balance thoughtful spending reductions with revenue from the wealthiest among us.”

A few hours later, Reid sidestepped a direct question from a reporter about whether the Democrats plan to use the budget reconciliation process to enact tax increases, referring reporters to Senate Budget Committee chairwoman Sen. Patty Murray, D- Wash.

And in comments to reporters Tuesday, Senate Finance Committee chairman Sen. Max Baucus, D-Mont., pointedly refused to make any commitment to using the budget reconciliation procedure to undertake tax reform. He said he was committed to working on tax reform and “I want to try to find the process that works best.”

In his response to Reid on the Senate floor, Senate Republican Leader Mitch McConnell signaled his opposition to any new tax increases on top of those which Obama signed into law on Jan. 2 and those included in the 2010 Affordable Care Act. McConnell said: “the revenue question has been settled.” Later in comments to reporters, he added, “the tax issue is over.”

McConnell complained that Obama’s “far left-of-center inauguration speech” was “not designed to deal with the transcendent issue of our era, which is deficits and debt.”

He and other Senate GOP leaders sounded like they were on the same page as their House GOP counterparts, thanking the House leaders for putting the focus on the need to enact a budget and to deal with the growing debt.

One reason for a Republican delay in a debt standoff with Obama is to allow the post-inaugural afterglow and Obama’s popularity some weeks to fade. But it’s not clear the Republicans will be in a stronger position politically in May than they are now. And it is also not clear how GOP leaders plan to handle two March spending deadlines which remain in place: the March 1 start of automatic spending cuts and the March 27 expiration of a continuing spending resolution that funds government operations.

The wording of the GOP leaders’ statements leaves the inference that they might well be willing to pass a series of short-term debt limit increases – even though Obama has said he opposes raising the debt limit in short-term increments.

If Republicans think they can use the budget process to enact curbs in the growth of entitlement spending and if Democrats believe they can use the budget process to enact tax increases, then perhaps both sides will end up disappointed.

It all hinges on the willingness of each side to accept trade offs.

It was significant that in his inaugural address Obama said, “We must make the hard choices to reduce the cost of health care and the size of our deficit.” But he said nothing about the danger of the growth of federal debt and addressed entitlement spending only by presenting its virtues. Medicare, Medicaid and Social Security, he declared, "do not make us a nation of takers; they free us to take the risks that make this country great.” 

Slideshow: Obama's first term

Robin Buckson / AP

The president's first four years at the White House in pictures.

Launch slideshow

Just 11 weeks removed from a sweeping re-election victory, President Barack Obama has hit the ground running with an ambitious second-term agenda that includes tackling the mounting national debt, immigration and gun control.

But the window in which the president has any hopes of meeting his aggressive goals has already begun to close.

Confronting the fading effectiveness of a second-term presidency, dogged opposition from Republicans in Congress and unexpected hurdles that will inevitably arise over the next four years, Obama must act with a sense of urgency on his plans, particularly amid the fiscal cliff negotiations.

“Second-term presidents generally get eight months or so ... where there's a honeymoon to push an agenda,” said James Thurber, the director of Center for Congressional and Presidential Studies at American University. “He doesn't even have a month.”

Newly armed with “Organizing for Action” – the remnants of the president’s campaign structure, converted to a nonprofit for advocacy purposes – Obama has suggested he will indeed act quickly on his top priorities.

But the next few months might well test the limits of the political capital that the president won in November, which saw Obama score a decisive victory over Republican opponent Mitt Romney and Democrats add seats in the House and the Senate.

If this past December’s lame duck Congress – in which Obama won higher tax rates for the wealthy, but only after a bitter fight with Republicans – offers any lessons, it’s that the GOP is equally committed to pursuing its own priorities, making compromise just as elusive as before.

The fiscal cliff fight will extend into this spring, when the government hits a series of major deadlines to keep the government funded and prevent a default on the national debt. That bare-knuckled fight could make or break Obama’s hopes of accomplishing much else on his agenda.

“I don't believe that he can wait until the last minute to deal with the debt ceiling and sequestration,” said Martin Frost, a former Democratic congressman from Texas. “That's got to be worked out during February.”

That fight would threaten to consume much of the political oxygen in Washington in any normal year. And Obama’s ability to pivot toward his other major priorities, gun violence and immigration, may well hinge upon how quickly and cleanly he can dispense with this spring’s spending fight.

History suggests that many presidents cannot hope to accomplish much in the last two years of their term, when the jockeying for the next presidential campaign begins. And with midterm elections looming in 2014, lawmakers will inevitably turn at some point from governing to politicking.

"There's kind of an arc of achievement in presidential administrations. Usually the first few months of a new administration is where most of the accomplishment takes place," said Ross Baker, a presidential historian at Rutgers University. "It's hard to imagine getting another piece of legislation of the magnitude of the Affordable Care Act in the second term."

And Obama’s hopes of significant reforms to immigration and gun laws might well depend upon how well (or how poorly) the spending fight with Congress proceeds.

The president last week laid out a series of measures intended to curb gun violence, most significantly proposals to limit the size of ammunition magazines, ban assault weapons and require universal background checks on firearm purchases. That plan won little praise from Republicans, and Obama might have to lean upon any reservoir of goodwill he has left after the spending fight to reach his goals.

Obama is practically obligated to attempt immigration reform after soothing the Latino community during last year’s election about his inability to follow through with a pledge to accomplish immigration reform in his first term. If re-elected, Obama told Hispanic voters, he would make immigration reform a priority in this second term.

Both proposals could engender significant Republican resistance, a phenomenon familiar to any observers of Obama’s first four years in office.

Another significant – and unpredictable – variable that could ruin even the best-laid plans involves the unknown crises that will inevitably arise during Obama’s second term.

A foreign policy crisis could always erupt and consume the president’s attention. Uprisings in Egypt, Libya and Syria, for instance, proved to major developments during Obama’s first four years in office.

If anything, the president’s first term offered a cautionary tale of how difficult it can be to navigate the obstacles to success that can arise.

The president nearly saw his signature health reform law go down to defeat after the advent of the Tea Party movement, for instance.

And external events – a near-meltdown of the economy, mass shootings, the Gulf of Mexico oil spill and other crises – consumed as much of the president’s first term as anything else.

Just as foreign policy could prove to be a diversion from policy making, it’s one of the few policy areas where a lame-duck president can leave a legacy.

For instance, Bill Clinton, in the waning days of his presidency, concentrated on achieving an elusive peace deal between Israelis and Palestinians.

“He's got a whole range of things on his plate right now,” Frost said of Obama, “it just really depends on how he prioritizes things.”

If the U.S. government ends up careening off the "fiscal cliff," Republicans in Congress stand to shoulder most of the blame, according to a new poll released Tuesday.

A majority of Americans said in a new, post-election poll that they do not expect President Barack Obama and members of Congress to reach an agreement to avoid the effects of the fiscal cliff, the combination of automatic spending cuts and tax hikes set to take effect at the beginning of the year.

Fifty-three percent of Americans said Republicans in Congress would be more to blame in that instance, according to a Pew Research Center poll conducted in the days following the election. Twenty-nine percent said that Obama would be more to blame, while 10 percent said both the president and Republicans would share blame.

Those kinds of numbers help set the political landscape heading into the impending fight to resolve the long-running fiscal standoff, which features an emboldened Obama fresh off a re-election victory and a Republican Party looking to regain its footing in Washington after losing seats in the House and Senate in addition to Mitt Romney's White House loss.

Recommended: Republicans hunt for election lessons as wounds heal

Lawmakers on Capitol Hill returned to work on Tuesday to begin sorting out these issues and beginning to work on some internal affairs, including choosing their own leadership teams for the next two years.

But just a few weeks separate the U.S. from the onset of the fiscal cliff, as the 2001 Bush tax cuts and the 2010 payroll tax cut are set to expire at the end of this calendar year. On top of that, the automatic spending cuts -- which fall heavily on the defense budget -- will also take place beginning in January unless Congress acts first.

Win Mcnamee / Getty Images

Speaker of the House John Boehner, R-Ohio, speaks at a press conference as Rep. Diane Black, R-Tenn., and Rep. Eric Cantor, R-Va., listen on Capitol Hill Sept. 20, 2012 in Washington, DC.

Sixty-eight percent of Americans said in the Pew poll that they would expect the impact of the fiscal cliff to be major, and 70 percent said they expect the fallout from the fiscal cliff to be mostly negative.

The president hosted labor leaders at the White House on Tuesday morning in anticipation of the upcoming negotiations, and Obama will host business leaders on Wednesday. Leaders in Congress from both parties head to the White House for talks on Friday.

Recommended - First Thoughts: Like sands through the hourglass...

Both Obama and Republicans in Congress have begun laying out parameters for those negotiations, and White House press secretary Jay Carney reiterated on Tuesday afternoon that the president would not sign any law extending tax cuts for the wealthiest Americans. Obama has instead called on Congress to extend all tax rates except for those in the top income bracket.

(Republicans have called for broader talks that link an overhaul in the tax code to entitlement program reforms.)

The Pew poll was conducted Nov. 8-11 and has a 3.7 percent margin of error.

J. Scott Applewhite / AP

Speaker of the House John Boehner, R-Ohio, finishes a prepared statement to reporters about the elections and the unfinished business of Congress, at the Capitol in Washington, Wednesday, Nov. 7, 2012.

House Speaker John Boehner, R-Ohio, emerged in the aftermath of Tuesday’s presidential election to strike a conciliatory note, offering to work with President Barack Obama on a grand bargain to avert the impact of the coming fiscal cliff.

The top House Republican argued for new negotiations with Democrats and the newly re-elected Obama administration on an overarching fiscal deal linking together reforms to entitlements and the tax code.

Boehner said that Republicans would be “willing to accept new revenue, under the right conditions,” though those very conditions could be as beguiling as ever.

The speaker offered no clue as to whether Republicans would relent from their insistence (made during fiscal negotiations last year) that any sort of tax reform package not constitute anything even remotely resembling a tax hike.

Obama has spoken favorably about tax reform – including during his victory speech last night in Chicago – but in such a way that wealthier Americans would face the increased tax burden.

Resolving that very open question could prove the key to resolving – or exacerbating – the fiscal impasse that has plagued Washington for the better part of the last two years.

Romney never overcame bailout opposition

“Shoring up entitlements and reforming the tax code – closing special interest loopholes and deductions, and moving to a fairer, simpler system – will bring jobs home and result in a stronger, healthier economy,” Boehner said during a Wednesday afternoon statement on Capitol Hill.

By the same token, the speaker suggested that a deal was untenable during the coming lame-duck Congress, calling for a “down payment” on fiscal reform that would give both parties ample space to negotiate in early 2013.

Full national election results

Boehner’s words reflected the immediacy of the challenge before lawmakers in the coming weeks if they are to successfully avoid the “fiscal cliff,” the nickname for the automatic tax hikes and spending cuts set to spring into place at the beginning of next year.

Economists have warned that this combination, the byproduct of legislative gridlock on issues of tax and spending during the last two years, would imperil the economic recovery in the U.S.

The election on Tuesday maintained Republican control of the House, Democratic control of the Senate and, Obama’s control of the White House – the same basic makeup of government that produced gridlock on fiscal issues for the past two years.

The White House said Wednesday that Obama, just hours after securing re-election, phoned leaders of both parties in the House and the Senate. During those call, the president “reiterated his commitment to finding bipartisan solutions to: reduce our deficit in a balanced way, cut taxes for middle class families and small businesses and create jobs.”

But as Boehner called for more time to address the looming fiscal crisis, Senate Majority Leader Harry Reid suggested he was disinclined to extend the timeline for reaching a deal.

“I’m not for kicking the can down the road. I think we’ve done that far too much,” he said at a press conference on Capitol Hill. “Waiting for a month, six weeks, six months – that’s not going to solve the problem. We know what needs to be done, so I think we should just roll up our sleeves and get it done.”

First Thoughts: Obama's demographic edge

The dueling statements, though, set the parameters for fiscal talks that are set to dominate political discourse in the coming months.

The fight plays out amid election results that, as Vice President Joe Biden asserted on Wednesday, provided the administration with a “clear sort of mandate about people coming much closer to our view about how to deal with tax policy.”

Almost two-thirds of voters, according to national exit polls, said “no” when asked whether taxes should be raised to help cut the budget deficit. But 47 percent of voters, a plurality, said that taxes should increase only on those earning more than $250,000 – a centerpiece of Obama’s re-election campaign on which Obama stumped this fall.

Barring any action by Congress, tax rates would spring upward for all income brackets as the 2001 Bush-era tax cuts, which were extended for two years in 2009, expired.

The spending “sequester,” established by Congress during the 2011 debt ceiling deal as an incentive for lawmakers to reach a compromise budgetary solution, is also set to take effect at the beginning of next year absent an agreement by Congress. Republicans have grown especially worrisome about the sequester because of the heavy cuts it would make to the defense budget.

As the business of legislating resumes, a key actor in the process could be Wisconsin Rep. Paul Ryan, the former Republican vice presidential nominee who lost Tuesday as Mitt Romney’s running mate. Ryan simultaneously won re-election to Congress, and said Wednesday in a statement that he intends to resume his post as chairman of the House Budget Committee.

As President Barack Obama celebrates his election night victory, he faces a second term that presents both immediate and longer-term challenges, some with deadlines that must be confronted in the seven weeks before New Years’ Eve.

And he'll do it with a Senate still in Democratic control and a House of Representatives again ruled by Republicans.

Here's a look at the six splitting headaches awaiting Obama:

Automatic spending cuts
Congress passed and Obama signed into law the 2011 Deficit Control Act which will cut more than $100 billion in outlays in 2013, starting in January. These cuts were intended to be so unpalatable that they’d spur Congress and the president to strike a deficit reduction deal, but the plan seems about to backfire. Congress and the president in 2013 will be getting more deficit reduction than they really want. The director of the Congressional Budget Office, Douglas Elmendorf, said in August that the cuts in spending, combined with scheduled increases in taxes at the year's end would cause “a significant tightening of fiscal policy” which would “probably lead to a recession early next year.”

Taxes going up, by a significant amount – and not just on the rich
The current income tax rates expire on Dec. 31. A popular middle-class tax break, the $1,000-per-child tax credit for each child age 17 and younger, will be cut in half unless Congress and the president take action before the end of the year. The temporary reduction in the Social Security payroll tax is also set to expire. As a result of all this, according to the Tax Policy Center, the average tax burden will increase by almost $3,500 per taxpayer in 2013. In addition, the Affordable Care Act, starting on Jan. 1, imposes a $20 billion tax increase in 2013 on people with incomes above $200,000, or $250,000 for joint filers.

Debt limit
According to the Bipartisan Policy Center, by sometime in February the federal government will reach its borrowing limit, even with the use of extraordinary stopgap accounting measures by the Treasury Department to push back that date. The House Republicans only very reluctantly voted to raise the debt limit in 2011 after the impasse between Obama and the House GOP over debt had severely shaken the confidence of investors in U.S. financial markets. The new House may be even more resistant to a debt ceiling increase with Obama winning a second term.

Slideshow: On the campaign trail

Reuters, Getty Images

In the final push in the 2012 presidential election, candidates Mitt Romney and Barack Obama made their last appeals to voters.

Launch slideshow

Confirmation of pivotal Cabinet members and regulatory chiefs
After securing a second term, Obama will, at a minimum, need to nominate a new Treasury Secretary to replace outgoing Tim Geithner and a new secretary of state to replace Hillary Clinton. Depending on the mood and membership of the Senate, the nomination hearings could prove contentious. Obama will also need to win Senate confirmation for those nominees selected to fill 82 judicial vacancies.

Implementing the Affordable Care Act and appointing the members of the Independent Payment Advisory Board
The administrative mechanism to carry out “Obamacare” needs to be designed, refined and run. Congressional Republicans are especially hostile to the Independent Payment Advisory Board, an outside body of experts, picked by the president, which is supposed to propose cuts in Medicare spending, with those cuts getting special fast-track consideration in Congress. So far Obama has appointed none of IPAB’s 15 members. Those nominees will be subject to Senate confirmation. 

Chaos in Syria, WMD – and don't forget Iran
The phrase “weapons of mass destruction” may have gone out of fashion after U.S. forces failed to find any in Iraq after they invaded in 2003, but there’s no dispute that the Syrian regime does possess a large arsenal of chemical weapons, including nerve gas. Some of those weapons and ingredients might go missing as the civil war grinds on. Meanwhile Syria’s ally Iran has carried on work to build nuclear weapons and is not cooperating with the UN’s International Atomic Energy Agency which is trying to find out more about the Iranians’ secret research.

More election coverage from NBCNews.com:

• Obama wins re-election; Ohio, Iowa, Wisconsin prove pivotal
• Democrats retain control of Senate with series of hard-fought wins
• Rape remarks sink two Republican Senate hopefuls
• In costliest-ever Senate race, Warren beats Brown for Mass. seat
• Maine's Harley-riding King vowed to 'shake up' D.C.
• Republicans easily maintain control of House
• Colorado, Washington approve recreational marijuana use
• Pence in as governor of Indiana; Hassan wins in N.H.
• Majority of voters see American on wrong track

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