Obama wins re-election

Unemployment is falling. The housing market is rebounding. Consumers are paying off their debts. And the big banks are healthy.

The U.S. economy that earned President Barack Obama a second term looks nothing like the mess that he inherited four years ago. Instead of shrinking and shedding jobs, the country is growing at an annual rate of 2 percent and businesses are handing out new paychecks at a monthly average of 157,000 so far this year.

That doesn't mean the world's largest economy is thriving. The United States has been growing below its historical trend since March, according to the three-month moving average of the Chicago Federal Reserve Bank's National Activity Index, a blend of 85 indicators measuring employment, production, housing and consumption.

Danger looms in the form of $607 billion automatic spending cuts and tax increases known as the fiscal cliff, scheduled to take effect at the beginning of 2013. A simmering sovereign debt crisis that has sapped Europe's commercial strength poses another risk. Few economists, in any event, expect a return to the robust growth of the late 1990s, when median household income rose for six consecutive years.

"The economy is OK right now, but there are worries about potential headwinds next year," said economist Chris Rupkey of the Bank of Tokyo-Mitsubishi in New York.

Obama's election victory Tuesday night erases a question mark that has shadowed the economy all year while he and Republican Mitt Romney, two candidates with sharply divergent views of government's appropriate role in the economy, dueled for the presidency.

While the specifics of tax, spending and regulatory policies remain to be written, investors now at least know what direction will be taken by the White House. Obama's victory means renewed political pressure to raise taxes on high-income individuals and on investment income.

Though Republicans in Congress have pledged to oppose tax increases, the president will claim a fresh mandate to eliminate the George W. Bush administration's tax cuts for the wealthy and raise taxes on capital gains income.

Obama also is likely to fulfill campaign promises to protect spending on infrastructure , we are the youth of the nation — indeed.

Democratic Senatorial Campaign Committee: At the start of the 2012 election, the chances that Democrats would pick up seats in the Senate was roughly equivalent to the chances that Alex Rodriguez would get a clutch playoff hit. So, virtually zero. That Democrats not only held their Senate majority but wound up picking two seats — including holding onto a seat in heavily Republican North Dakota and turning over seats in Massachusetts, Maine and Indiana — is one of the most remarkable developments in a night filled with good news for Democrats. Huge credit goes to Democratic Senatorial Campaign Committee Chairwoman Patty Murray (Wash.) and DSCC executive director Guy Cecil.

Marco Rubio/Jeb Bush: What Tuesday’s election proved beyond a shadow of a doubt is that Republicans have a Hispanic problem roughly the size of the United States. Obama won Hispanic voters by more than 40 points and in several states — Florida and Nevada to name two — Latinos proved decisive for the Democratic nominee. Both Rubio, Florida’s junior senator, and Bush, the Sunshine State’s former two-term governor, have been saying for quite some time that the GOP must find ways to recast its positions on immigration. (Rubio released a statement early Wednesday morning to that effect.) Watch for both men to emerge as the leaders of an attempt to re-make their party on the issue — and watch for them to get more traction than they did pre-election 2012. And, oh by the way, both men are potential 2016 presidential candidates.

Bill Clinton: Aside from Obama, did anyone have a better 2012 campaign than Bubba? He was the star of the Democratic National Convention and the most valuable surrogate for Obama in swing states in the final week(s) of the campaign. For someone who loves politics in a gut way, Clinton was in his glory during this race. And, is there any doubt he is going to want to stay in the mix? Like, in 2016 as the leading surrogate for his wife’s presidential campaign?

Empathy: One in five voters said that the most important trait in picking their candidates was that he “cares about people like me.” Obama won that group 81 percent to 18 percent over Mitt Romney. That number illustrates how the Obama campaign effectively turned this election from a referendum on the incumbent’s economic policies to a choice as to which of the two men “gets” you.

Political polling by big media organizations: For all of the questions surrounding the party identification in national surveys conducted by the mainstream media, they wound up getting it pretty close to right. The final Washington Post-ABC News tracking poll had a D+6 sample; the national exit poll showed a D+6 edge. So, yeah.

Nate Silver: Nerds rule! Nate has a model, stuck to it and was proven right.

The Boss: Bruce Springsteen got off the sidelines late in the 2012 campaign but went all in for Obama — even touring around on Air Force One in the final days of the campaign. And, he picked a winner.

2016 political junkies: Obama’s victory means that we won’t have an incumbent running in 2016. And, we could very well have the possibility of a totally wide open primary race on both sides if Vice President Joe Biden decides not to run ala Dick Cheney in 2008.

Losers:

Republican party: There’s almost nothing in the results — either in terms of wins and losses or in terms of demographics — that contains good news for Republicans. This was an across-the-board beating from the presidential level on down and presaged future struggles at the national level for Republicans unless the party can find a way to broaden its coalition beyond white voters. If Republicans continue to lose Hispanics at a 70-30 clip, states like Arizona and even Texas will be swing states in the presidential contest by 2016 or 2020 at the latest. There’s no doubt that this should be a moment of reflection and re-assessment for the Republican party. What is in doubt is how the party’s leaders — most of whom acknowledge privately that things have to change — reconcile the positions of the base on things like immigration, gay rights and abortion to the political reality. While the GOP won’t — and shouldn’t — abandon its principles, to win Republicans have to find a way to put the emphasis on issues (job creation, debt reduction) they can win and not on issues that are now proven stone-cold losers.