Midterm elections could decide how easily President Trump can deliver on his legislative agenda
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Analysts say the November midterms will show whether President Trump gets a cooperative Congress or one that manufactures gridlock, while markets are expected to react to the result.
U.S. voters will decide on November 5 whether the Republican Party retains control of both chambers of Congress for the remainder of President Donald Trump’s term. A Republican victory would allow the administration to advance its policy agenda with limited congressional obstruction, while a Democratic gain in one or both chambers could create more legislative gridlock and restrict the president’s remaining priorities.
Polls and betting markets currently give Democrats an edge, especially in the race to flip the House, which is currently under Republican control. The Senate race is expected to be close, and final tallies in states such as Alaska could delay a definitive outcome.
"The election results could trigger an immediate market reaction, particularly as the Senate outcome becomes clearer," the Washington Policy Strategy Group of Stifel wrote in a recent analyst report. "However, the market's knee-jerk trade could reverse as investors recognize that gridlock remains the most likely policy outcome in either case."
Stifel added that if Republicans keep a Senate majority, a short-term rally could occur in sectors sensitive to a Democratic victory, but overall gridlock would likely remain. The report noted that a divided Congress would force the majority party to depend on bipartisan negotiations for essential legislation such as government funding, defense spending, and debt-ceiling adjustments.
Democrats are expected to use any congressional majority to pursue investigations of the White House and businesses linked to the Trump administration, using subpoena authority in committee hearings. Even with a Democratic sweep of both chambers, the president would retain veto power, limiting the chances of Democratic bills becoming law without bipartisan support.
Analysts also project that congressional stalemate could prompt President Trump to increase the use of executive orders to advance his agenda, regardless of which party controls Congress.