Barack Obama's re-election as U.S. president set the stage Wednesday for a fresh political battle over the year-end "fiscal cliff" budget crunch which threatens to force the economy back to recession.
U.S. markets plunged more than 2% at the prospect that the White House and Republicans, who retained control of the House of Representatives, would be unable to compromise to avert the harsh austerity plan programmed to take effect on January 1.
Republicans left Obama little time to savor his victory, after having foiled multiple attempts at a long-term deal to bring down U.S. debt and deficits through a combination of moderate spending cuts and tax increases.
House Speaker John Boehner drew a line in the sand Tuesday night even before Obama's win was sealed.
"The American people want solutions -- and tonight, they've responded by renewing our House Republican majority," Boehner said.
"With this vote, the American people have also made clear that there is no mandate for raising tax rates."
Boehner scheduled a statement for Wednesday afternoon on the fiscal cliff "and the need for both parties to find common ground and take steps together to help our economy grow and create jobs, which is critical to solving our debt."
