US elections 2010: Democratic losses and Obama's agenda

President Barack Obama gives a press conference the day after the mid-term election Mr Obama acknowledged he had taken "a shellacking" and said he was open to compromise on some key issues

The Republican Party has taken control of the US House of Representatives and significantly diminished the Democratic majority in the Senate. As President Barack Obama enters the second half of his term, the BBC looks at how the shift in power will affect his agenda on some of the major issues facing America.

Healthcare

One of Mr Obama's chief campaign issues was a promise to extend health insurance to the estimated 40m who lacked it and find a way to counter ever-rising healthcare costs.

A reform package was passed this year in the face of united opposition from the Republicans, who derided it as a government takeover of a crucial sector of the economy and an unacceptable intrusion into people's lives.

Republicans campaigned for the mid-term elections on a pledge to put a halt to the reforms. Within hours of his party taking the House, Representative John Boehner, the House Speaker-to-be, called it a "monstrosity" and declared he had a mandate to repeal it.

But the chances of Republicans doing so are virtually nil, since Democrats still control the Senate and Mr Obama wields a veto pen. It is also unclear whether American voters have the stomach for another protracted fight on the issue.

Mr Obama told reporters he was happy to listen to Republican ideas but defended his reforms as "the right thing to do". He said he was willing to work on specific concerns about the legislation, such as a tax-reporting provision said to be onerous to small businesses.

However, Republicans have several options apart from outright repeal.

The US constitution gives Congress significant powers over purse-strings, and Republicans have said they will seek to slash funding for implementation or to chip away at the package in other ways, possibly by attaching provisions to crucial bills like the federal budget.

"We're going to do everything we can to repeal the bill, to delay the bill, to de-fund the bill," Republican Congressman Eric Cantor said over the summer.

Also, newly elected Republican governors and state legislators could refuse to implement portions of the law left up to the states.

Taxes

Big tax cuts pushed through by President George Bush and the Republicans in 2001 and 2003 that largely favour high earners are due to expire at the end of the year.

Mr Obama wants to preserve temporarily the lower rates for individuals earning less than $200,000 (£123,869) and families making less than $250,000. But he says they should be allowed to expire for Americans earning more, arguing the debt-ridden US government needs the revenue.

The Republicans, meanwhile, want to preserve all the tax cuts. They argue allowing rates to rise would imperil the fragile economic recovery.

"We continue to believe that extending the current tax rates for all Americans is the right policy at this time," Mr Boehner said.

But the rare area of agreement - on maintaining the tax cuts for lower-income earners and the middle class - might herald some co-operation on the issue. On Wednesday, Mr Obama said he was open to negotiation.

"My goal is to make sure we don't have a huge spike in taxes for middle class families," he told reporters at the White House. "It's the right thing to do for the economy as a whole."

Immigration reform

An estimated 11 million undocumented migrants live in the US, many of them the parents of native-born American citizens or young people brought here illegally as children.

If Republicans' past actions are any guide, it is unlikely the US will see a comprehensive reform of its immigration system in the next two years.

The Republican Party has a strong constituency that opposes any policies it thinks smack of amnesty for "illegals" and favours an approach based on law enforcement crackdowns.

Bipartisan attempts to offer undocumented immigrants some path to legal status failed in 2006 and 2007 amid opposition from conservative Republicans. As a presidential candidate, Barack Obama promised to give it another go if he were elected.

But the Democrats spent Mr Obama's first year and more fighting for economic stimulus measures, healthcare reform, financial regulation and other priorities, and had little energy or political capital left over for immigration.

And in September, Senate Republicans blocked narrower legislation that would have allowed young people brought to the US illegally as children to remain in the country after two years of university or military service.

Energy

The Democrats' signature energy legislation, the so-called cap and trade bill to limit carbon emissions, passed the House of Representatives but stalled in the Senate amid Republican opposition.

There is virtually no chance the bill will be enacted into law in the next two years, and the Republicans staunchly oppose energy policies that would increase regulation of industry or result in new costs.

Both Republicans and Mr Obama have called for expanded use of nuclear power and "clean coal" technology, so any forthcoming energy legislation is likely to focus on those areas.

On Wednesday, Mr Obama acknowledged there was no way forward for cap and trade but said he hoped to see co-operation between Republicans and Democrats on reducing carbon emissions and promoting clean energy.

"Cap and trade was just one way of skinning the cat," he said. "It was a means, not an end, and I'm going to be looking for other means to solve this problem."

The Environmental Protection Agency, part of the executive branch of government under his control, is empowered under a 2007 Supreme Court ruling to regulate greenhouse gas emissions. But Mr Obama on Wednesday indicated he would prefer not to rely on the agency.

"I think EPA wants help from the legislature on this," he told reporters. "I don't think that the desire is to somehow be protective of their powers here."

China

The mid-terms election campaign was fought almost entirely on domestic policy issues rather than foreign policy, so it remains to be seen what approach the newly strengthened Republican Party proposes outside US borders.

China is the largest single holder of US sovereign debt and is one of the largest US trading partners, so debate may begin there. One of the chief tensions in the US-China relationship is the allegation by some in the US that Beijing artificially undervalues its currency in order to boost its own exports at the expense of US manufacturing.

The Obama administration has pushed China to allow the value the yuan to rise, but has declined officially to label the country a currency manipulator. Several Democratic members of Congress have introduced measures that would press China to reform its currency policy, but none have passed.

Free trade agreements

The US has trade deals pending with South Korea, Colombia and Panama that have been signed but require Congressional approval to go into effect.

In June, Mr Obama said he would present Congress with legislation to implement the South Korea trade deal in the months following the meeting of the G20 this month in Seoul.

The Republican congressional leadership strongly backs these trade agreements, but some new, more populist, Republicans may hesitate.

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