In what has been a stunning rebuke of Donald Trump’s second term, the U.S. midterm elections delivered the Democratic Party a historic victory.
In this briefing, we hear from both sides of the aisle on the results: Democratic strategist Michael P. Meehan, President and CEO of Squared Communications, and Republican strategist Colin Reed, Co-Founder of South & Hill Strategies.
To get in touch with either of our strategic partners please email Michael at michael@sqcomms.com and Colin at colin@southandhill.com.
The power dynamics in Washington underwent a seismic shift on Tuesday night as the expected blue wave reached tsunami status. The Democrats now have their largest Congressional majorities in both chambers since 2008, and they could still grow. The wave carried Democrats up and down the ballot with several governors races and state legislatures also flipping blue. This powerful change will have major implications for policymaking across key sectors.
To the relief of the polling industry, the errors of the past few cycles were not repeated. Prognosticators adjusted and if anything, underestimated voting trends, with Democrats winning every competitive race from coast to coast by weaving a Trump corruption message and building on Americans’ concerns about affordability and the Iran war. So expect cost-of-living relief up front, plus a push for quick bipartisan wins. Undoing the Canadian tariffs could be one.
Indeed, Democrats are already pledging action on affordability and, with strong majorities in place, they will not be shy about their oversight of the Trump administration. However, many soon-to-be members will surely remind party leaders to home in on pocketbook issues as well.
It is important to resist a third Trump impeachment and focus on ending the war and getting prices down. On the committee front, there will be investigations into how the White House is spending money and, likely, subpoenas. We can expect the Democratic Congress next year to be constantly at odds with the Trump administration over spending. President Donald Trump is demanding a huge $1.5 trillion Pentagon budget, a nonstarter for Democrats. With government funding currently scheduled to run out on Dec. 11 - only 37 days away - there could be more government shutdowns.
It’s unclear if the President will push another party-line reconciliation bill with a debt limit increase. And some Democrats may want to wait until next year, when they have much more leverage, to write some of the spending bills. Elsewhere, the Democratic knockout in the House and Senate puts much of the traditional finance and crypto sectors on the defensive. For tax and trade, expect oversight and legislative efforts directed at the IRS and the White House tariff agenda.
Sen. Ron Wyden (D-Ore.), incoming chair of the Senate Finance Committee, made his priorities clear late Tuesday when he posted one word on X - “Subpoenas.”
The tech sector should be on high alert. Oversight is coming for Silicon Valley. The upcoming Democratic Congress will place the industry under heavy scrutiny after many of its leaders cozied up to President Donald Trump. But Democrats’ internal disputes and stark differences with the Trump White House will likely mean policy gridlock for AI regulation and other top tech issues in the near future.
The Democratic flip in the Senate means Sen. Maria Cantwell (D-Wash.) will likely once again lead the chamber’s Commerce, Science and Transportation Committee. The emergence of AI as a central political and policy issue will make it a more significant post than the last time she held the gavel.
Make no mistake - the 2028 race is already underway. Strong returns for Democrats in several key states will make for a crowded Democratic presidential field.
While the repudiation of the Republican Party took some by surprise on Wednesday morning, the political undercurrents spelling doom for the GOP had been in plain sight for months: an unpopular second-term president; an ongoing Middle East conflict; elevated prices for fuel, food, and housing; the absence of a clear forward-looking economic agenda; and damaging headlines involving allegations of corruption.
As Democrats take control of the House and the Senate, Republicans are looking at a case of second-term blues and the results are consistent with the historical pattern of second-term presidents facing midterm voters.
Compounding this, Trump put himself front and center, despite his growing unpopularity. The September midterm convention in Dallas and nonstop campaigning down the stretch - “pretend like I’m on the ballot” - made the election a direct referendum on him. Voters responded accordingly.
This lack of judgment was repeated with White House intervention in candidate selection, resulting in weaker Republican nominees in several places such as Texas, North and South Carolina. Quality still matters.
Just two years ago, the President performed strongly among voters highly concerned about food, housing, and healthcare costs and made gains with lower- and middle-income households. This cycle, pre-election and exit polling showed a sharp reversal. A CBS poll found that 65% of voters believed his policies had made economic conditions worse, with the economy ranking among the leading issues driving vote choice. Perceptions of ethical lapses and self-dealing in the administration also amplified the broader anti-incumbent sentiment and helped drive turnout against the President’s party.
Part of this can also be attributed to Trump’s misguided focus on vanity projects like algae removal at the Lincoln Memorial Reflecting Pool and the ballroom construction. This reinforced the perception of a White House detached from the cost-of-living pressures facing ordinary voters.
To get back on track, Republicans need to maximize the ‘lame duck’ legislative session. The balance of power does not change hands until January, and there is still time for the outgoing Republican majorities to deliver wins before adjournment. While the focus immediately turns to confirming nominations, there are other pending pieces of legislation that have the potential to pass through both chambers and get signed by the White House. Expect both attendance and morale on the GOP side to create challenges.
They must also seize back the narrative. Announcing personnel changes (either Cabinet or executive branch) will help turn the page. While immediate speculation has focused on the future of Secretary of War Pete Hegseth, Trump has stood by his Pentagon chief so far.
Divided government makes the executive branch the White House’s most reliable path to action. Barack Obama faced the same dynamic after the 2014 midterms, when he told the country he would use “a pen and a phone” to move his agenda around a hostile Congress. President Trump can do the same, and Democrats will have limited tools to stop him: they will not have the two-thirds majorities needed to override a veto, which leaves executive orders, regulatory action, personnel moves, and diplomacy largely in the president’s hands.
Democratic socialism is not popular with the electorate that just handed Democrats both chambers. The NBC News exit poll found that 54% of voters have an unfavorable view of socialism and 33% a favorable one, with 41% strongly unfavorable. That gives Republicans a foil.
Voters rejected Republicans; they didn’t endorse a left-wing agenda. Democrats who treat the result as a mandate for subpoenas and progressive priorities give Republicans their best contrast and 2028 starts now. With a wide-open field, Vice President Vance remains the frontrunner but not the prohibitive favorite. The 2026 loss makes the 2028 race a policy contest as much as a personality one. The candidates who define the post-Trump agenda earliest will have the advantage.
