Barack Obama flies straight back into Washington deficit storm

Barack Obama returned to Washington today and straight into a fierce battle with Republican leaders over the scale of the deficit amid fears of a damaging political deadlock.

Emotional celebrations of the President’s historic second-term victory quickly gave way to hard politics as Right-wingers denied that he had been mandated by the voters to get his way on borrowing and spending.

Mr Obama had key decisions to make on his team, too, including finding a replacement for Hillary Clinton, who has decided to step down as Secretary of State and take a break from front-line politics while she considers whether to run for president in 2016.

With billions wiped off Wall Street overnight by the fear of another impasse over money between the White House and the Republican-controlled House of Representatives, both sides were under pressure to appear to be ready to compromise.

Republican leaders made clear the president could not expect them to bow to his will having themselves retained control of the House.

Senate minority leader Mitch McConnell said that “the voters have not endorsed the failures or excesses of the president’s first term”. He urged Mr Obama “to propose solutions that actually have a chance of passing the Republican-controlled House”.

House Speaker John Boehner hinted at the possibility of compromise, saying Republicans were “willing to accept new revenue” to pull the nation back from a fiscal cliff.

But he suggested that tax reform was the price, saying Republicans would continue to oppose Mr Obama’s plan to take “a larger share of what the American people earn through higher tax rates”.

Mr Obama telephoned Mr Boehner last night before flying from Chicago to the capital to emphasise the importance of a budget deal being struck when Congress returns next week.

A deadline exists because tax cuts set in the Bush era are due to expire at the end of this year, and automatic cuts to military and domestic spending will kick in unless talks succeed.