Can the divide be mended?

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Newly re-elected, President Barack Obama moved quickly Wednesday to open negotiations with congressional Republican leaders over the main unfinished business of his term -- a major deficit-reduction deal to avert a looming fiscal crisis -- as he began preparing for a second term that will include significant Cabinet changes.

Mr. Obama, while still at home in Chicago at midday, called House Speaker John Boehner, R-Ohio, in what was described as a brief and cordial exchange on the need to reach some budget compromise in the lame-duck session of Congress starting next week. Later at the Capitol, Mr. Boehner responded before assembled reporters with his most explicit and conciliatory offer to date on Republicans' willingness to raise tax revenues, but not top rates, as part of a spending cut package.

"Mr. President, this is your moment," said Mr. Boehner, a day after congressional Republicans suffered election losses but kept their House majority. "We're ready to be led -- not as Democrats or Republicans, but as Americans. We want you to lead, not as a liberal or a conservative, but as president of the United States of America."

His statement came a few hours after Senate Majority Leader Harry Reid, D-Nev., whose party made unexpected gains in his chamber, extended his own olive branch to the opposition. While saying Democrats would not be pushed around, Mr. Reid, a former boxer, added, "It's better to dance than to fight."

Both men's remarks followed Mr. Obama's own overture in his victory speech after midnight Wednesday. "In the coming weeks and months," he said, "I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together: reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil."

After his speech, Mr. Obama tried to call both Mr. Boehner and Senate Minority Leader Mitch McConnell, R-Ky., but was told that they were asleep. The efforts from both sides, after a long and exhausting campaign, suggested the urgency of acting in the few weeks before roughly $700 billion in automatic tax increases and across-the-board spending cuts take effect at year's end -- the so-called fiscal cliff. A failure to reach agreement could arrest the economic recovery.

The president flew back to Washington from Chicago late Wednesday, his post-election relief reflected in a playful race up the steps of Air Force One with his younger daughter, Sasha. At the White House, he prepared to shake up his staff to help him tackle daunting economic and international challenges. He will study lists of candidates for various positions that a senior adviser, Pete Rouse, assembled in recent weeks as Mr. Obama crisscrossed the country campaigning.

The most prominent members of his Cabinet will leave soon. Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner long ago said they would depart after the first term, and Defense Secretary Leon Panetta, previously head of the CIA, has signaled that he wants to return to California sometime in the coming year. Also expected to depart is David Plouffe, one of the president's closest political confidants.

Mr. Obama is expected to reshuffle both his inner circle and his economic team as he accommodates the changes. For example, Jacob J. Lew, Mr. Obama's current White House chief of staff and former budget director, is said to be a prime candidate to become Treasury secretary. For the foreseeable future, the holder of that job is likely to be at the center of budget negotiations, and Mr. Lew has experience in such bargaining dating to his work as a senior adviser to congressional Democrats 30 years ago in bipartisan talks with President Ronald Reagan.

Both Presidents Bill Clinton and George W. Bush ended up replacing about half of their Cabinet members between terms, and Mr. Obama could end up doing about the same, especially since his team has served through wars and economic crises. John Podesta, a chief of staff for Mr. Clinton as well as Mr. Obama's transition adviser, said, "There's a certain amount of new energy you want to inject into any team."

There is talk about bringing in Republicans and business executives to help rebuild bridges to both camps. The one Republican in the Cabinet now, Transportation Secretary Ray LaHood, has said he will leave. One possible candidate, advisers say, could be retiring Maine Sen. Olympia Snowe, a Republican moderate.

A front-runner for secretary of state appears to be Sen. John Kerry, D-Mass., and Democrats said worries about losing his Senate seat to the Republicans in a special election had diminished with Tuesday's victories.

Among other Cabinet officers who may leave are Ron Kirk, the trade representative; Steven Chu, the energy secretary; Ken Salazar, the interior secretary; Tom Vilsack, the agriculture secretary, and Lisa Jackson, the Environmental Protection Agency chief. But Valerie Jarrett, the president's longtime friend and senior adviser, plans to stay, according to Democrats close to her.

It may be weeks before Mr. Obama starts making personnel announcements. His first priority is policy, and its politics -- positioning for the budget showdown in the lame-duck session, to try to avoid the fiscal cliff by agreeing with Republicans to alternative deficit-reduction measures.

Specifically, Mr. Obama has called -- over Republicans' objections -- for extending the Bush-era income tax cuts, which expire Dec. 31, only for households with taxable income below $250,000 a year.



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