Download App

[ING: Democrats Control Congress, Trump May Turn to Veto Role] ⑴ A Democratic-controlled Congress will likely obstruct Trump's domestic agenda during his final two years in office. Bills must pass both houses before being sent to the president for signature or veto, and Trump has warned he could become "Mr. Veto." Democrats have failed to secure a two-thirds majority in both houses. ⑵ Spending and tax proposals, like most domestic legislation, are likely to stall. There is potential room for compromise between healthcare affordability and increased defense spending, but major tax and spending changes seem unlikely. ⑶ This is seen as providing a stabilizing backdrop for the business community, but also means that the US fiscal situation is unlikely to change substantially. There will be no further fiscal expansion, but the massive fiscal deficit and deteriorating debt dynamics will continue. ⑷ The fiscal situation will remain a concern. Reaching the debt ceiling may act as a temporary brake, and the issue could reach a critical point by mid-summer 2027, with limited room for compromise between the two parties in Congress. (5) This could trigger a government shutdown lasting longer than last October, which reduced GDP growth by 1 percentage point in the fourth quarter of 2025, and the Federal Reserve could again "fly blindly" due to a lack of government economic data. (6) Key sectors of the U.S. business community will be nervous due to Democratic control of important oversight committees, congressional hearings involving leaders of artificial intelligence and technology companies will increase, local Democratic leaders may be more confident in shelving unpopular data center construction, and fossil fuel producers may face similar challenges. (7) Democrats may be more confident in opposing Trump's policies on Iran, support for Israel, and tariff escalation, and may pressure the president to be tougher on Russia and support Ukraine, but the final decision rests with the president. (8) With Democrats wielding greater power, investigations into Trump, his family, and government members may intensify, financial and business investigations could lead to subpoenas, and the likelihood of the House initiating impeachment proceedings increases, although the Senate requires 67 votes to convict and remove him from office, making it unlikely. (9) Democratic control of the Senate could block or at least delay judicial and executive nominees, including heads of government agencies, ambassadors, and cabinet members, which could make it difficult for the president to replace senior officials he has dismissed. (10) A key question is whether Trump, entering the final stages of his term and facing constraints, is more willing to accept political or market turmoil in order to achieve his goals. If compromise is not possible, the president may focus on areas of executive power such as foreign policy and trade, national security and defense, law enforcement and regulation, personnel appointments, and administration.