Can Obama keep on winning?

Barack Obama waves to supporters after his victory speech. After a hard election, the real job is now before him. Picture: Win McNamee/Getty Images Source: Getty Images

RE-ELECTED US President Barack Obama and his country are headed for "fiscal cliff" negotiations and a potential double-dip recession which could have serious implications for Australia, experts say.

As Prime Minister Julia Gillard joined other prominent Australians in congratulating Mr Obama on his second term, concerns were raised at what the result would mean for this country.

There was also speculation Mr Obama could pluck a new Cabinet member from Australia, with US Ambassador Jeffrey Bleich tipped for promotion from Canberra.

Election Day: Blow by blow

Yesterday, Democrats regained control of the Senate, with Republicans maintaining their power in the House of Representatives as the country prepares to enter a tense period of debate over the future of Bush-era tax cuts.

Americans face a tax hike in January and severe spending cuts that could prompt another recession, with resolution of the economic "fiscal cliff" drama problematic with a divided Congress.

Americans hand Obama a second term, challenges await. Deborah Lutterbeck reports.

"This victory will not dispel the deep divisions. The tough decisions on the economic front to restructure the economy to relieve the deficit aren't going to get done," Professor Bates Gill from Sydney University's US Studies Centre said.

"That will have some negative implications for Australia."

Lowy Institute Executive Director Dr Michael Fullilove said the US system "was becoming almost ungovernable".

"The fiscal cliff is directly relevant to us because we are a US ally," he said.

Ms Gillard offered the re-elected president "warm congratulations" and wished him "every success for his second term".

Supporters of U.S. President Barack Obama cheer after networks project Obama as reelected. (Photo by Chip Somodevilla/Getty Images)

Opposition Leader Tony Abbott said that "Australia can look forward to a continuation of the best possible relations with the United States."

Mr Obama will face the same divided Congress in 2013 that has bedeviled efforts to enact his major legislation.

Republicans were dealt a bitter blow in the Senate races by the Democrats, who were seen as vulnerable to losing control of the chamber since they had more seats to defend. Democrats were assured of retaining or even increasing their 53-47 advantage in the Senate.

But Republican candidates in Missouri and Indiana - both states won by Republican presidential nominee Mitt Romney - were defeated after making damaging comments about rape and abortion. An incumbent Republican fell in liberal Massachusetts. Republicans also lost a seat in Maine, where an independent who is expected to caucus with the Democrats won.

Only a dozen or so Senate races out of the 33 on the ballot Tuesday were seen as competitive, and almost all of those that were called Tuesday - in Wisconsin, Virginia, Connecticut, Missouri, Ohio, Pennsylvania, New Mexico and Florida - went the Democrats' way. Republicans did pick up a Democratic-held seat in Nebraska.

President Barack Obama pauses as he speaks at the election night party at McCormick Place, Wednesday, Nov. 7, 2012, in Chicago. Obama defeated Republican challenger former Massachusetts Gov. Mitt Romney. (AP Photo/Carolyn Kaster)

More than $2 billion was spent on the nasty fight for Congress. All 435 House seats were on the ballot, and Republicans retained control there, though Democrats made a few gains.

With almost 90 percent of the 435 House races called by The Associated Press, Republicans had won 227 seats and were leading in nine more. For a majority in the chamber, a party must control 218 seats. Democrats had won 178 seats and were leading in 19 others. That means the party mix in the new House will resemble the current one, which Republicans control by 240-190, with five vacancies.

House Speaker John Boehner, who gets to keep his job, offered to work with any willing partner, Republican or Democrat, to get things done. "The American people want solutions - and tonight, they've responded by renewing our majority," he told a gathering of Republicans.

But he also said that by keeping Republicans in control of the House, voters made clear there is no mandate for raising taxes. Obama has proposed imposing higher taxes on households earning over $250,000 a year.

Control of the Senate at the very least gives Democrats a firewall against Republican attempts to overturn Obama's signature legislative achievement, his health care reform law, before it is fully implemented in 2014. Republicans had promised to repeal it.

A supporter cries as President Barack Obama speaks during an election night party. (AP Photo/Matt Rourke)