Voters demanded economic relief. Trump and Democrats face tough choices
on how to deliver
[November 09, 2026] By
JOSH BOAK
WASHINGTON (AP) — Voters have sent a strong election-year message to the
new Democratic congressional majority and President Donald Trump: Repair
the damage inflation has done to the economy.
Trump, who campaigned on the idea that a Democratic victory in the
midterms would trigger a 1929-style economic depression, has maintained
that the economy is booming. Since his party lost in Tuesday's voting,
he has claimed he is willing to work with Democrats in the House and
Senate, though that's not something he has done much of in the past.
“I’ll get along, probably, with the Democrats, unless they want to be
destructive,” Trump told reporters last week.
After Friday’s strong jobs report showed employers adding 165,000 jobs
and the unemployment rate dipping to 4.1%, Trump was defiant. “Democrats
may control Congress, but I will NEVER stop fighting for you, and I will
VETO anything that hurts America,” he said in a text message to his
supporters.
Democrats are seeking to check Trump's power and are preparing for early
fights on government spending. Other challenges include chronic budget
deficits, tariffs, artificial intelligence and difficult choices about a
Social Security system that could run short of money in as little as six
years.
But as long as rising prices keep making middle-class lives less
affordable, Democrats and Republicans alike face the risk of angering
and alienating voters in the next election cycle.
“Until inflation and interest rates are under control, the likelihood of
change elections is going to be high on an ongoing basis,” said Marc
Goldwein, senior vice president at the Committee for a Responsible
Federal Budget.
Americans want lower prices
Trump's tariffs and the war against Iran that he launched in February
contributed to the consumer price index climbing to 3.7% annually. The
president also tried to bully the Federal Reserve, an independent body
tasked with keeping inflation low, to slash its benchmark interest rate
in ways that could have worsened inflation.
The gridlock of a Republican White House and Democratic Congress gives
the Fed more room to maneuver, possibly smoothing the central bank's
ability to return inflation to the 2% target it has failed to reach for
nearly six years.
“I think that one of the surprise winners Tuesday was the Fed,” said
Douglas Holtz-Eakin, an economist and president of the center-right
American Action Forum.
The Democratic Senate could block Trump's ability to fill potentially
open spots on the Fed board, Holtz-Eakin said, removing “Trump's
incentives to meddle with the Fed” and clearing a path for Fed Chair
Kevin Warsh “to follow his instincts and aggressively reduce inflation.”
Trump has maintained that the costs of oil, gasoline and diesel will all
plummet once the Iran war ends. The problem is he refuses to say when or
how the war will come to a conclusion.
John Cochrane, an economist at Stanford University's Hoover Institution,
stressed that the Fed's efforts to combat inflation would be helped if
the federal government reduced budget deficits.
“It takes monetary and fiscal restraint,” he said.
The federal government keeps borrowing about $2 trillion annually
The U.S. government keeps amassing debt as tax revenues fall short of
burgeoning spending on Medicare, Medicaid, Social Security and other
programs. Paying the interest on the national debt now tops $1 trillion
annually and exceeds spending on the military. The problem could spiral
because investors have pushed up the interest rates charged on
government debt over the past year.
Neither the White House nor Democrats ran on spending cuts. The
president wants an additional $500 billion a year for the military,
while some Democratic candidates have pushed for restoring Affordable
Care Act subsidies that lapsed under Trump.
Since August, Treasury Secretary Scott Bessent has repeatedly said the
administration would put forward a plan to trim the roughly $2 trillion
annual budget deficit. Bessent is working with White House budget
director Russell Vought on cuts they're branding as a “fiscal
consolidation plan,” to be released after the election.
Deficit reduction would likely require some combination of tax increases
and spending cuts, Goldwein said. But he said that the lowest hanging
fruit would be to trim Medicare expenditures in ways that save money for
both the government and patients.
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A motorist puts gas in the tank of a vehicle at a Costco gasoline
station Thursday, Oct. 29, 2026, in Lone Tree, Colo. (AP Photo/David
Zalubowski)
 “It’s not rocket science,” he said.
“The most important thing you can do is reduce healthcare costs and
find policies that lower the costs of Medicare, which will reduce
deficits and interest rates.”
AI could power stronger growth, but voters have
concerns about the technology
When Harvard University economist Jason Furman thinks about the most
important economic issues facing the United States, AI is at the top
of his list.
“It’s the most screamingly obvious investment boom this country has
ever had, or, possibly, second to railroads” in the late 19th
century, Furman said.
Using AI, Furman has built an economic analysis tool called
Econvitals that replicates some of the work done when he was
chairman of the White House Council of Economic Advisers in
Democratic President Barack Obama's administration.
Econvitals parsed construction spending data on Tuesday and found an
80.6% increase in data center construction over the past year, while
spending on building homes, schools, factories and offices had
fallen.
The stock market sold off last week on concerns that Democrats could
restrict the construction of data centers and impose guardrails on
AI. But the American economy still needs the technology to keep
fueling growth now and into the future.
Trump has been vociferous in promoting the sector and has taken a
hands-off stance on regulating AI, insisting that existing laws and
voluntary agreements signed by tech companies are enough. He has
shrugged off public concerns about the risks of job losses and
large-scale cyberattacks, but a majority in The AP Voter Poll, a
sweeping survey of the American electorate conducted in all 50
states, say AI does more harm than good for the economy.
The dilemma is that AI is helping to propel demand in the economy
and sustain the stock market. If those slipped, there could be less
consumer spending, lower growth and many in the U.S. feeling even
worse off financially.
“Every time you have a single strength in an economy you are also
having a big vulnerability,” Furman said.
Social Security needs to be rescued
Senators who won six-year terms last week will face the politically
fraught challenge of working with Trump's successor to find ways to
save Social Security, which is projected to be unable to pay full
benefits at the end of 2032.
Removing the cap on payroll taxes and increasing the retirement age
are among the possible lifelines for sustaining the program that
provides income to older Americans and those with disabilities. But
any changes would likely need to be bipartisan to get enough votes
to clear the Senate because Social Security overhauls cannot be made
by party-line votes through the reconciliation process.
Sen. Elizabeth Warren, D-Mass., said she saw an opening earlier this
year to fix Social Security when she overheard Sen. Bernie Moreno,
an Ohio Republican, talk about the need to lift the cap on payroll
taxes. “I reached out to him in a matter of days,” she said in an
interview this summer. The two senators went public with a plan that
is still being formulated as legislation.
Warren, who worked with the Republicans on a law this year to
encourage the construction of more homes, said other bipartisan
efforts had failed because Republican lawmakers had been afraid to
cross Trump.
But with Social Security, there is a need to act now. Experts say
“the checks that go out to seniors will drop by nearly a quarter”
after 2032, Warren said.
“Think what that means, literally, to millions and millions of
Americans, who depend on those Social Security checks, or who have
parents who depend on them. And Congress is doing nothing,” she
said.
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