Democrats Win Control of Congress in Midterm Elections

Democrats have won control of both the House of Representatives and the Senate in the midterm election, setting up a shift in power on Capitol Hill that could reshape household budgets across the United States. Experts note that rising costs were a top concern for voters during the election.

What Happened

Daniel Bunn, president and CEO of the Tax Foundation, described the election results as a repudiation of the Trump administration's anti-affordability agenda, pointing to concerns over tariffs and the conflict in the Middle East. In response, White House spokesman Matthew Middleton stated in an email that the administration has delivered tangible wins to make life more affordable and will continue putting hardworking Americans first. With their new majority, Democrats can advance legislation, use hearings and investigations to question federal agencies, and exert leverage over the confirmation of President Donald Trump's nominees. However, turning these plans into reality will be difficult because Trump can veto bills passed by a Democrat-controlled Congress, and projections indicate Democrats lack the numbers to override a presidential veto. Newly elected members of Congress will also not take office until January.

Healthcare and Taxes

Zach Gaumer of the Bipartisan Policy Center notes that Democrats will focus heavily on healthcare affordability. Meanwhile, lawmakers must address the federal budget deficit, which the Treasury announced in October ballooned to nearly $2 trillion for fiscal year 2026. Newly elected Democratic senators James Talarico of Texas, Troy Jackson of Maine, and Annie Andrews of South Carolina all campaigned on expanding the child tax credit. The OBBBA previously made Trump's 2017 tax cuts permanent and added temporary tax breaks like deductions for tip income, overtime earnings, seniors, and auto loan interest that expire after 2028. While Democrats may support extending these, Bunn warns that narrowing the tax base will strain spending priorities.

Student Loans and Housing

Higher education expert Mark Kantrowitz expects Democrats to hold hearings and subpoena Trump officials over student loan policies, including pushing the Education Department to fix the Public Service Loan Forgiveness program after Trump officials delayed some repayment timelines over the summer. Broad student loan forgiveness remains unlikely due to presidential veto powers and Supreme Court rulings, but bipartisan support may emerge for restoring tax-free treatment of forgiven debt, raising borrowing caps, expanding repayment options, and capping federal student interest rates. In the housing sector, an October analysis by Desjardins indicates Democrats will explore relief for first-time buyers, though direct congressional impact on home prices and mortgage rates remains limited by market forces, the 10-year Treasury yield, and geopolitical factors like the Iran war. Jake Krimmel of Realtor.com points to the bipartisan 21st Century ROAD to Housing Act as a model for encouraging construction and limiting purchases by large institutional investors.

Social Security and Credit Cards

The incoming Senate class must also tackle Social Security insolvency. Trustees project the Old-Age and Survivors Insurance Trust Fund may be depleted in the fourth quarter of 2032, leading to a potential 22% across-the-board benefit cut if Congress takes no action. Lawmakers have suggested increased payroll taxes on high earners to shore up the program, alongside a potential SECURE 3.0 bill to expand workplace retirement access. Regarding consumer debt, Aaron Klein of the Brookings Institution suggests a Democratic Congress might pursue a credit card interest rate cap, though financial analyst Jaret Seiberg of TD Cowen notes any enacted cap would likely be closer to 36% than Trump's proposed 10% limit. While a cap could benefit lower- and middle-income Americans who carry balances, Klein warns it could lead to lower credit limits and reduced rewards.

Context

Midterm elections in the United States occur midway through a presidential term and frequently result in the party currently holding the White House losing seats in Congress. This shift in legislative control creates a divided government where executive and legislative branches are run by opposing political parties, making major policy compromises or legislative gridlock standard practice. Budget deficits, entitlement programs like Social Security, and federal tax laws are perennial subjects of intense legislative debate between lawmakers and the executive branch.