Trump may have lost but don't bet Democrats can fix the economy

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It was the economy, again. Although Donald Trump largely ignored it, voters' acute concerns over the rising cost of living fuelled a political upheaval for the ages that is likely to deliver the biggest swing toward Democrats since Watergate, granting them the largest House majority in nearly four decades alongside their biggest edge in the Senate since 2008.

Still, having come to power promising to restore affordability, the new crop of Democrats are soon to discover that there is not much they can do over the next couple of years to alleviate angry voters' stress over pricey gas and groceries, exorbitant mortgages and unaffordable healthcare.

Democrats would do well to recall that the affordability strains that helped deliver them to power are not dissimilar to those that delivered the presidency to Trump two years ago. And they could again quickly become their enemy.

"First, Americans want Washington to bring down the cost of living," said Chuck Schumer, Senate majority leader-in-waiting. Likely House speaker Hakeem Jeffries added that "we've promised to fight for an affordable America, and that's exactly what we will do". They will soon discover the limits to their power to undo Trump's economic blunders and steer an economy that is largely driven by forces outside their control.

Take gas prices, the single most powerful motivation for voters' rebellion against the Republicans enabling Trump's policy choices. Reining them in will require reaching an understanding with Iran that reopens the strait of Hormuz. Schumer thinks Democrats can achieve that. "We are going to end the war," he said.

Trump may disagree, however. And while it is true that Congress is legally entitled to end wars - it is the only branch of government entitled to start one - it is unclear what such legal niceties might mean in practice. Republicans have controlled Congress since Trump went to war. Still, he has pursued it without asking for their approval. Democrats could now try to cut war funding, but they do not have the requisite 60 Senate votes to prevent a filibuster.

Trump's trade war has similar characteristics. When the supreme court struck down Trump's "national security" tariffs because they exceeded presidential authority, the administration reimposed many of them under a different statute, deploying a new, also spurious rationale. There is also little that Democrats can do to stop Trump's war on immigration. It is fully funded and can carry on unimpeded, further disrupting construction and other immigrant-reliant industries.

Even the low-hanging fruit hangs rather high. While it may seem easy to reinstate federal subsidies for health insurance programs under the Affordable Care Act, or undo or postpone cuts to Medicaid and food stamps in Trump's One Big Beautiful Bill Act, Democrats will be hard-pressed to find the money, given a budget deficit that is already running at a whopping 6% of the nation's gross domestic product.

Just preventing further damage will be an uphill battle. A lame duck Trump who no longer feels the need to please voters is likely to give free rein to his most destructive urges. While Democrats will be able to block Trump's new legislative proposals, they don't have the votes to overcome presidential vetoes.

Optimists may believe that after Tuesday's shellacking, sufficient Republicans in Congress could be convinced to buck their president's wishes. But most of those who survived the bloodbath come from the most faithful Maga districts and states and are the least likely to abandon their leader.

The economy itself - driven almost exclusively by a frenzied artificial intelligence investment boom - is unlikely to help Democrats achieve their goal of easing voters' economic strains.

Wall Street is already doubting that the massive investments to build data-processing centers to train powerful AI models will pay off in time to justify the money. The tech-heavy Nasdaq stock index has fallen by more than 10% in the last month.

Goldman Sachs estimates that the large AI hyperscalers have raised almost $200bn in bond markets so far this year, almost twice as much as in all of 2025. Altogether, the bank added, AI-related firms have raised nearly $500bn in debt so far in 2026.

Were this bubble to pop and the funding to stop, it would likely deliver an economic downfall to beat even the Great Recession sparked by the housing bubble in 2008. When the time comes, a government hamstrung by $40tn in debt and interest rates hovering near 20-year highs will have little fiscal space to soften the blow.

Can voters' newfound love for Democrats survive the likely turbulence ahead? Justin Wolfers, an economist at the University of Michigan who runs Platypus Economics, observes that neither the unemployment rate nor inflation are bad enough to justify Americans' extreme pessimism about the economy. So what's driving the sour mood? A collapse in confidence in economic leadership.

Tuesday's Republican bloodbath might, on its own, improve Americans' spirits. Limited though their powers may be, Democrats will at least offer some resistance to Trump's most destructive impulses. But the economy will likely pose a greater challenge for the new Democratic Congress than it has to the Republicans currently in charge. In two years' time, Democrats might be facing anger over an economic scenario that has gotten palpably worse.

They might then come to embrace the limits of their power and hope voters blame the president - not Congress - for their economic unhappiness.

• Eduardo Porter is a journalist focused on economics and politics. He writes the newsletter Being There on Substack