Tag Archives: Congress

U.S. midterm elections approach: What will be the policy implications?

As the U.S. midterm elections approach on Tuesday 3 November, plenty of election forecasters are making their predictions of which candidates in the House and Senate will win or lose. But what will be the public-policy implications of the midterms for U.S.-focused investors and corporates? Erin Caddell of GK Strategy’s American partner Anchor Advisors looks below briefly at three scenarios: Democrats win both the House and Senate; Democrats win the House, but not the Senate; and Republicans hold both chambers. 

Scenario #1: Both House and Senate flip. This is the most likely outcome based on most non-partisan election prognosticators, as well as betting markets: as of 2 November, Polymarket and Kalshi ascribe a 94-95% likelihood to a shift in power in the House, and a 73-74%+ chance of the same in the Senate. Should both houses flip, domestic policy would change substantially in the next Congress. With control of both houses of Congress, Democrats would gain key blocking votes over the budget. Firstly, while Democrats will almost certainly not gain a veto-proof majority, the party will use its leverage to agree to top Republican priorities (think defense) only if the GOP makes concessions on Democratic demands. For clues as to where these asks could fall, look to where Republican candidates in tough re-election races are breaking with Trump: tariffs, immigration enforcement, and healthcare (a key contributor to rising costs for families) all come to mind.  

Secondly, Republican candidates for president in 2028 would immediately pivot to distance themselves from Trump if the blue wave indeed leads to a Democratic-controlled House and Senate. Winning Republican candidates returning to Washington will be more likely to disavow the most controversial elements of the Trump 2.0 agenda. Thirdly, the turnover in Administration staff that often occurs after midterm elections will accelerate if the House and/or Senate flip. White House staffers and other Administration officials will not want to be dragged before congressional committees month after month, which is the agenda Democrats have already telegraphed they will employ should they win one or both chambers.  

Finally, if both houses of Congress flip, federal agencies will face much more scrutiny from a hostile Congress in the final two years of Trump’s presidency. Trump Administration officials will be asked to testify regularly before Democrat-led House and/or Senate committees. While one might think the Trump Administration would welcome such confrontations, these hearings, and the process of responding to the numerous data requests that accompany them, occupies agency time and resources that would otherwise be spend on additional regulatory actions. We have seen this occur with both Democratic and Republican lame-duck presidencies in the past where agencies largely move to defend in court and on the Hill the rules they promulgated in the first two years of the Administration, rather than attempting to finalize new ones in a more hostile political environment.  

Scenario #2: Democrats win House but not Senate. Should Republicans hold the Senate – and note that even a 50-50 split would be enough as the VP breaks ties – Trump and the GOP can say their agenda remains popular with the electorate despite near-term headwinds (gas prices, inflation etc.), and that retaining the House is nearly impossible for the president’s party in midterms. MAGA would remain a force into 2028, with Vice President J.D. Vance and Secretary of State Marco Rubio the most likely standard-bearers for the party as it enters the post-Trump era. 

Even without Senate control, Democrats would gain substantial oversight/subpoena powers should they win the House. Democrats are already planning an active agenda for investigations of Trump, his family and Administration allies in 2027. The question is how far will they want to push before upsetting Trump voters who crossed over to vote Democrat in 2026? Democrats and Republicans in Congress alike will be under pressure from voters to act on “affordability”, the buzzword in the 2024 and now 2026 elections. House Democrat working groups that were established to create action plans for the next Congress should the party win a majority give an indication of the party’s priorities. Energy permitting reform, the Farm Bill, AI regulation, healthcare and the “care economy” (childcare, early-childhood education, etc.) are all are potential areas for bipartisan agreement – and where Trump might be able to be brought along to support a deal struck in Congress, however reluctantly. 

House Democrats’ “Cost of Living” Planning Groups 

Working Group  Heads 
Healthcare  Alexandria Ocasio-Cortez (D-NY) & Terri Sewell (D-AL) 
Housing  Laura Friedman (D-CA) & Emilia Sykes (D-OH) 
Groceries and Goods  Marie Gluesenkamp Perez (D-WA), Hillary Scholten (D-MI) & Jill Tokuda (D-HI) 
Gas and Utilities  Nikki Budzinski (D-IL) & Mike Levin (D-CA) 
Care-giving  Sarah McBride (D-DE) and Morgan McGarvey (D-KY) 

 

Scenario #3: Republicans hold both House and Senate. If Trump and the GOP defy the polls and hold both the House and Senate, it would be read as a validation of the Trump Administration’s policies in his second term – that a corporate-first approach, bolstered by aggressive immigration enforcement and protectionist trade policy is supported by the electorate even in the face of near-term economic headwinds. Republican candidates would embrace MAGA policies in their 2028 campaigns, led by VP Vance and Secretary of State Rubio, the two most visible standard-bearers of the post-Trump MAGA movement. Defense firms would be a clear winner of a GOP congressional hold in 2026, as Republicans would push through a large increase in defense spending to finance the Iran war as well as overall military readiness. Similarly, Big Tech and large AI data-center developers and infrastructure providers would receive a boost, as a GOP win would be viewed as supportive of Trump 2.0’s no-holds-barred AI strategy. 

View from the US: Independent candidates reclaiming the center in U.S. politics

Erin Caddell of GK Strategy’s American partner Anchor Advisors examines whether a new cohort of independent congressional candidates can capitalise on voter dissatisfaction with the two main parties, and what their influence could mean for investors and businesses

Independent American political movements have a colorful history. In 1828, the Anti-Masonic Party was founded with the sole purpose of dismantling the American Freemason Society, a fraternal organization that counted several of the Founding Fathers among its members and was thought by some to have undue influence in the young nation. Though it disbanded in 1840 (while the Freemasons kept going), the Anti-Masonic Party was the first in the US to hold nominating conventions and publish a platform, setting a precedent followed to this day. Founded in 1879 by former Confederate general William Mahone, the Readjuster Party reacted to economic stress in post-Civil War Virginia by working to cancel around one-third of that state’s debt. In the 20th century, Activist Symon Gould ran for president in 1960 and 1964 exclusively to promote vegetarianism. And then there was the hippie-era Youth International Party, or “Yippies”, which used irony and theatrics – in 1968 the party nominated a pig for president – to underline a serious message: that both major parties had allowed the Vietnam War to become a disaster for America.

Wonderful anecdotes all. But their quirkiness also highlights the dominance of the Republican and Democratic parties and their predecessors over much of American history. The best showing for an independent came in 1912, when the newly formed Progressive Party finished second in the presidential election with 27% – its candidate was Teddy Roosevelt, who had previously served two terms as a Republican president.

Despite this checkered history, some argue a new moment has arrived for American independent candidates, driven by dissatisfaction among many voters toward the Republican and Democratic parties. Gallup reported in January 2026 that a record-high 45% of U.S. voters surveyed characterized themselves as independents over Republicans or Democrats (27% each); a majority of Millennials (born 1981-1996) and Generation Z (1997-2007) identified as independent in the survey.

Motivated by distaste with the status quo and hoping to capitalize on the demographic trends cited above, a small but ambitious cohort of independent candidates has emerged to run for federal and state office in November. Over the summer, Anchor Advisors was invited to participate in a gathering of nine such candidates, as well as independent donors and activists, hosted in West Virginia by political-action groups Americans Together and the Independent Leadership Council.

One candidate featured at the event was Rep. Kevin Kiley, 41, the only current Member of the U.S. House registered as an independent, representing a suburban district outside Sacramento. Running for his third U.S. House term, Kiley switched his party affiliation from Republican to independent in March 2026 following California’s decision to redraw its congressional map in an attempt to make it easier to elect Democrats (part of a national tit-for-tat gerrymandering among both Democrat- and Republican-leaning states this year). Even before leaving the GOP, Kiley demonstrated a heterodox political ideology. A longtime critic of Democratic California Governor Gavin Newsom, Kiley introduced a bill in Congress to block a proposed tax on wealthy individuals in California, while breaking with the Republican party on issues such as tariff and reductions in federal health insurance. Freed from the party label, Kiley has embraced his independent status even more, criticizing Trump’s recent decision to ban select media outlets from attending White House events, while urging Newsom to accept new Republican-supported federal funding to support school-choice programs, a frequent target of Democratic criticism. A September poll found Kiley tied in his re-election race at 37% with Democrat Richard Pan, with 26% undecided.

Another candidate who spoke at the West Virginia event is Seth Bodnar, 47, a first-time candidate running as an independent for U.S. Senate in Montana. Bodnar boasts a CV that politicians from any party would envy: an Army Green Beret with multiple overseas deployments, Rhodes Scholar, and president of the University of Montana for eight years. Bodnar’s platform represents a mix of conservative and progressive ideas (see below).

Select Platform Items of Seth Bodnar, Independent U.S. Senate Candidate – Montana

“End the costly and unauthorized war in Iran”

No further strikes or ground troop deployments without congressional authorization.

“Stop reckless tariffs driving up prices”

Support strategic tariffs used as leverage against countries cheating on trade, not

blanket tariffs on allies like Canada.

“Fight data centers and stand up to Big Tech”

Give local communities authority to block proposed data centers.

Bar utilities from raising bills for residential ratepayers due to data-center development.

“Protect the Second Amendment”

Opposes a federal assault weapons ban or a universal background check mandate.

“End dark money in our elections”

Overturn Citizens United [US Supreme Court decision that liberalized election spending].

Increase transparency requirements for dark money spending in elections.

“Secure our border and enforce immigration laws”

Giving the northern border the same attention and resources as the southern border.

Source: Sethformontana.com 

What does this mean for U.S.-focused investors and corporates? The emergence of independent candidates in the current election cycle is a reminder that despite the powerful forces driving American politics to extremes on both the right and the left, centrism remains an important dynamic that will well shape policy and politics in the next Congress and beyond. At the West Virginia gathering, former U.S. Senator Joe Manchin, a co-founder of Americans Together and co-host of the event in his native state, told the group that in a legislature narrowly divided among two parties, even a small number of independents can wield substantial power as both parties seek their votes. Manchin speaks from experience: the three-term moderate Democrat Senator became a key swing vote during Biden’s presidency. Manchin killed the Biden-backed Build Back Better proposal of green-energy and social-spending programs in 2021, then helped revive portions of the bill into what was signed into law as the Inflation Reduction Act in 2022, the biggest legislative achievement of Biden’s presidency.

Regardless of the outcome of next month’s elections, members of Congress will be under pressure to respond to voters’ concerns in 2027 and 2028. Top of the list will be “affordability”, a catch-all for the many ways in which stuff is costing more across the U.S. Here, the deal-making spirit of a small group of independents could help jump-start proposed bills that have gotten bogged down by partisanship. A short list of possible areas for agreement: Energy permitting reform to speed up and ease regulation on energy and other construction projects; a full reauthorization of the Farm Bill (which has been subject to short-term extensions for the last six years), providing policy certainty to an agricultural sector currently racked by rising input costs and tariff volatility; and governance of data-centers, which if Congress does not act will surely be subject to a patchwork of state and local rules as public outcry against data centers rises. Unbeholden to the legacies of the two parties, independent candidates are also more willing to discuss ways to reduce the federal deficit and debt, a source of potential near-term disruption in the form of spending cuts and/or tax increases, but a welcome development for any long-term investor or operator of U.S. assets.

Can a new crop of independent candidates shake up the two-party system? Or will they suffer the short-lived fates of American third-party political movements of the past? We’ll see starting in a couple of weeks.

View from the US: A Blue Wave is taking form

Erin Caddell of GK Strategy’s American partner Anchor Advisors examines the shifting US midterm landscape and the implications of a potential Democratic resurgence.

Like a surfer looking out at the ocean for the next big swell, US political observers are seeing signs of a gathering political “Blue Wave” – a potential shift in control of the House of Representatives and/or the Senate to Democrats in the midterm elections on 3 November. At this point, it is difficult to tell whether the wave will be big or small, and in the rapidly shifting seas of American politics, it could dissipate before it hits the shore. But US-focused investors and corporates should start paddling now to position themselves for the policy changes likely to occur.

As with most US political analysis these days, the midterm election outlook begins and ends with one man: President Trump. Arriving at the halfway point of the president’s term, midterms are often viewed as referenda on the incumbent administration’s progress. And with Trump dominating his party and the political debate as few have, midterm campaigns have been more focused on Trump than on the individual House and Senate candidates.

Here, the news is not good for Trump and the GOP. Continuing a trend we’ve noted in this column in recent months, Trump’s approval rating continues to grind lower due to high fuel prices driven by the unpopular US war with Iran, sticky inflation, and more recently, by a reacceleration of a trade war with Canada. An FT poll released on 6 September is indicative of the trend of recent US voter surveys: The poll of 1,914 registered voters found that 33% approved of Trump’s performance at the end of August, down from 39% in May. Equally troubling for the GOP, the survey found that independent voters’ approval of the president dropped from 32% in May to 26% in August.

Trump’s sagging popularity is being felt on the campaign trail. In the House, Republicans hold a slim majority of 218-214, meaning Democrats need to flip three seats to seize control. 270towin, an election forecaster, pegs 215 House seats as leaning Democratic, and 201 Republican equivalents, with 19 toss-ups in the 435-member body.  Since 1946, the incumbent party has lost an average of 25 House seats in the midterms. Betting markets ascribe a 90% likelihood of a House flip in November.

In the fight for the Senate, with Republicans holding a 53-47 edge, Democrats need to win a net four seats to gain control (the Vice President breaks ties). The Democrat candidate is leading in the latest polls for GOP-held seats in Alaska, Maine, Iowa, North Carolina, Ohio and Texas, according to RealClearPolitics, though the margins are within a point or two in several, and a couple of Democrat-controlled Senate seats are also close. Betting markets peg odds of a Democratic Senate flip at 62-3%, up from 30% a year ago.

A lot can change in two months. But the data begs the question: What would it mean for US-focused investors and corporates for Democrats to win one or both houses of Congress in November? We focus here on two sectors: healthcare and renewable energy:

Healthcare. The healthcare and health insurance sectors have faced stiff headwinds throughout the second Trump Administration. The One Big Beautiful Bill (OBBB) – the centerpiece of the Republican legislative agenda in the first half of Trump’s second term – approved US$911 billion in spending cuts in the Medicaid health-insurance program for the poor over 10 years (some 15% of projected spending before the bill’s passage) and tightened eligibility requirements. Trump’s health secretary, Robert F. Kennedy Jr., has also pursued an anti-vaccine agenda that has hurt large pharmaceutical companies as well as primary-care physicians who administer vaccines to young children.

Democrats would not gain the ability to overturn administrative decisions even if the party wins the House or Senate in November. But through the appropriations process, a Democrat-led congressional chamber would dig out an old DC playbook: delay and live to fight another day. Democrats would attempt to delay the mandated spending cuts and tougher eligibility requirements for Medicaid recipients, many of which are not scheduled to come into effect until 2027. Democrats would also push back through budget tactics and oversight hearings against RFK Jr.’s moves to water down vaccine mandates and appoint anti-vaccine members of government health advisory panels. Beneficiaries could include hospitals (which receive substantial revenue from serving Medicaid recipients), Medicaid-focused insurers, primary-care physicians’ practices and drug manufacturers.

Renewable Energy. It is a worthwhile debate whether healthcare or renewable energy has been a bigger punching bag for Trump 2.0. We’ll give the nod to renewables, as not even health providers have been paid by the government not to provide their service. The Trump Administration has taken this unusual step, offering to pay more than US$2 billion to offshore wind developers sponsors to stop and invest in fossil-fuels projects instead. The Administration reported it approved new oil and gas leases on federal lands at a pace 55% greater in 2025 than in the last year of the Biden Administration in 2024. Yet the advantages of renewable development over fossil fuels – notably lower costs and faster speed to market – have meant that renewable production has still been growing despite the Trump Administration’s stance. The U.S. Energy Information Administration (EIA) reported that total U.S. energy production grew 3.4% y/y in 2025, with natural gas production increased by 4%. Renewable energy production rose 3%, equal to the growth in crude oil output, with both solar and wind setting new records (see below). Despite Trump’s constant anti-renewable, pro-fossil-fuels rhetoric, 61% of Republicans told Pew Research Center in 2025 they support more solar power (77% for all respondents), while 48% favor more wind (68% overall).

This bipartisan base of support could lead to improved market conditions for renewables firms under a Democrat House and/or Senate. As part of broader negotiations over the federal budget or on raising the debt limit, Democrats could push to restore tax credits for renewables projects passed during the Biden Administration in the Inflation Reduction Act (IRA) that the Trump Administration and the GOP-controlled Congress have reversed or limited thus far in Trump’s second term. Democrats would also use their investigative powers in Congress to scrutinise the payments the Trump Administration has made to halt offshore wind developments. Ultimately, market demand may lead policy: The new data centers necessary to power the AI boom are expected to increase total U.S. electricity demand by 5-10% by 2028, according to estimates by the University of California’s Lawrence Laboratory. As loyal Westminster Unwrapped readers know, the data-center boom has been met by a sudden public backlash across the U.S. (see our August 2026 note “Can’t buy me love: American public opinion turns against data centers – what’s next?”). But even if actual data-center construction is half that of projected, the U.S. will need significantly more renewables capacity to meet demand even if oil and gas development proceeds apace.

If Republicans rebound and hold both houses of Congress in November, the healthcare and renewables sectors would face a challenging policy landscape, but one no more hostile than the one they have managed through since January 2025. But a small blue wave could materially improve the operating environment for sectors out of favor thus far in Trump’s second White House stint, even better if a big one crashes to shore.