The 112th US Congress convenes Wednesday, January 5, with a large Republican majority in the House of Representatives and a diminished Democratic majority in the Senate. This division is the outcome of the November 2010 election, in which the Republicans made a net gain of 63 seats and took control of the House while picking up six Senate seats but falling short of a majority in the upper chamber.

The Republican leadership, headed by incoming Speaker of the House John Boehner, is more attuned to the requirements of the financial markets, and plans to use the intransigence of the ultra-rightists in its bargaining with the White House over what spending cuts will accompany an increase in the debt ceiling.

The House Republicans will also adopt new budget rules which will allow unlimited tax cuts for the wealthy, regardless of the impact on the deficit, but forbid any increase in social spending or tax cuts for working people, like the Earned Income Tax Credit, without offsetting cuts elsewhere, wsws.org reported.