Both of the US presidential candidates portrayed the election as a battle for the soul of the US. For Republicans, it was a question of freedom to succeed, untrammelled by government. Democrats saw it as an opportunity to right the imbalance between the wealthiest Americans and the poor and middle classes.

Obama’s victory, by 332 electoral college seats to 206 for Romney, and by 51 per cent to 48 per cent of the popular vote, was almost a landslide. The main lesson of that victory was the extent to which the US is becoming a more diverse and tolerant nation.

The census last May showed that, for the first time in US history, births among ethnic minorities outnumber those of Caucasians. Last year, 50.4 per cent of infants under the age of one were Hispanic, black, Asian or other minorities.

Eighty per cent of minority voters chose Obama. He won 93 per cent of the black vote; 73 per cent of the Asian vote; 71 per cent among Hispanics; 76 per cent of the gay, lesbian and bisexual vote and 55 per cent of women’s votes.

Republicans whinged about Obama voters “wanting stuff” (in the words of Fox News pundit Bill O’Reilly on election night) from the federal government. Romney’s post-election analysis was that Obama won by “promising gifts”.

But the 2012 election was a wake-up call: if the Republican party wants to survive, it must cease to be the party of angry old white men. The election laid bare divisions between the fiscally conservative Tea Party, war-mongering neo-conservatives, morality-obsessed evangelical Christians and the moderate establishment wing of the Grand Old Party.

The aftermath of the election confirmed the decline of the more extreme elements of the GOP. Sen Jim DeMint, the godfather of the Tea Party, resigned to lead the conservative Heritage Foundation think tank. Dick Armey, the head of FreedomWorks, another mainstay of the Tea Party, cited mismanagement when he resigned. Several Tea Party congressmen were expelled from key committees for refusing to toe the Republican party line.

For the first time three states, Maine, Maryland and Washington , voted by popular ballot to legalise same-sex marriage. The Supreme Court affirmed the importance of the issue when it agreed on December 7 to hear two gay-marriage cases next March. Two states, Colorado and Washington, voted to legalise marijuana for recreational use. Americans, it seems, care less about what people do in their bedrooms and on their own time.

Obama’s determination to pass healthcare reform was the chief manifestation in his first term of his ambition to be a historic, transformational president. But his grand vision was then constricted by partisan warfare, chiefly over budgetary issues.

Obama begins his second term still mired in the issues of taxation, debt and the deficit, but to some extent liberated by his victory. He is more strident in insisting that taxes must go up for the wealthiest Americans, and has embarked on a new strategy of taking arguments directly to the people in campaign-like appearances.

Republicans were fighting a losing battle in defending tax cuts for the top two per cent, and polls showed twice as many Americans would blame them as Obama if the US went off the “fiscal cliff” – automatic spending cuts and tax increases on January 1st – that would send the US back into recession. An agreement appeared likely to combine higher taxes and lower deductions for the wealthy with some cuts in health and retirement programmes. Obama may face objections from his left flank, particularly if he attempts to raise the retirement age.

Immigration reform

Straitened finances in the US mean ambitious government programmes are not an option in Obama’s second term. Comprehensive immigration reform is the area where he is most likely to succeed, now that many in the Republican leadership have understood that continued opposition would constitute political suicide.

If Obama obtains immigration reform, climate change is the next big issue he is likely to tackle. One idea being floated is to devote the proceeds from a carbon tax to reducing the deficit.

Obama also hopes to appoint one or two new Supreme Court justices in his second term. But the departure of ageing justices is uncertain, and Obama wants a Democrat, possibly Hillary Clinton, to succeed him in 2016 to ensure the transformation of the court into a more liberal body.

The transformation Obama envisages is domestic, not international. Beyond bringing the troops home from Afghanistan, concluding trade agreements with the EU, Latin America and the Pacific region and avoiding World War III, Obama has little foreign policy ambition. His choice of secretary of state to replace Clinton is the most keenly anticipated appointment of the new administration.

Obama wants to prevent Iran from obtaining nuclear weapons and resist getting sucked into civil war in Syria. Speculation suggests he might appoint former president Bill Clinton as Middle East envoy, in the hope of advancing a settlement between Israelis and Palestinians – Obama’s biggest foreign policy failure to date.