Obama blames economy for heavy defeat in elections...

REPUBLICANS swept to victory in the US House of Representatives yesterday, picking up 60 seats – well over the 39 needed to take control.

President Barack Obama blamed the Democrats’ worst drubbing since 1948 on the fact that unemployment remains at 9.6 per cent, saying he takes “direct responsibility for the fact that we have not made as much progress as we need to make” on the economy. Others suggested that his policy stance on healthcare was more to blame.

However, his party managed to hang onto power in the Senate where only 37 seats were being contested. Republicans took six seats, short of the 10 they needed to gain a majority.

And some of the most prominent Republican candidates riding the populist wave of the anti-tax tea party movement failed to to take advantage of the nationwide swing away from the Democrats.

Delaware senate candidate Christine O’Donnell lost to Christopher Coons by a decisive 17 per cent, Alaska senate candidate Joe Miller lost to an independent and Nevada senate hopeful Sharren Angle failed to decapitate senate leader Harry Reid.

Questioned by press, Obama would not be drawn on the specific policy implications of the race. He refused to specify a potential compromise on tax cuts. The tax cuts brought in by former President George W Bush will expire this year without an affirmative vote in both houses, but the parties are deeply divided over how to extend them. Democrats want an extension only for those earning under $250,000 a year, whereas Republicans want to extend them for everyone.

The strength of feeling on both sides has fuelled concern that, without a deal, Americans will face inadvertent tax rises of around two per cent even as the Federal Reserve has decided to pump $600bn of quantitative easing into the economy.

On the US’s yawning deficit, forecast to hit 11 per cent of GDP this year, Obama promised to set up a bipartisan deficit commission to address the issue. “Hopefully, we can streamline government and cut back on programmes that are inefficient, but not cut into the core investments,” he said.

But he said that certain spending plans were “essential to increase job growth”, saying that the US needed to spend on key infrastructure and educational programmes in order to compete with China. The Congressional Budget Office has forecast that even without further spending, the stimulus plan passed in June 2009 will increase the deficit by $814bn over the next decade.

Republican representative John Boehner, slated to be the new House majority leader, has called for discretionary spending to be reigned back to 2008 levels. But he has also drawn fire for advocating policies that would in fact increase the deficit further, like plans to extend the Bush tax cuts for the highest taxpayers as well as the middle classes.