Voters demanded economic relief. Now Trump and Democrats face tough choices on how to deliver it
Photo: ReutersVoters 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. Now both sides face hard choices on prices, deficits, Social Security and artificial intelligence — with little agreement on how to get there.
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 is 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.
The message from voters was unmistakable. In The AP Voter Poll, a sweeping survey of the American electorate conducted in all 50 states, about nine in ten voters said the cost of living was a crucial or major factor in their congressional vote. Roughly two-thirds blamed President Trump for high prices.
“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.
The latest official figures show consumer prices rose 3.7% over the twelve months ending in September. Trump's tariffs and the war against Iran that he launched in February contributed to that climb, according to the Associated Press. The president also tried to pressure the Federal Reserve, the independent body tasked with keeping inflation low, to slash its benchmark interest rate in ways that could have worsened inflation. The Fed has failed to return inflation to its 2% target for nearly six years. The October inflation report is due Tuesday, November 10.
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 bring inflation back down. “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. He said the Democratic Senate could block Trump's ability to fill potentially open spots on the Fed board, 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 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. 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 are 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 the lowest hanging fruit would be to trim Medicare expenditures in ways that save money for both the government and patients. “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.”
Artificial intelligence could power stronger growth, but voters have concerns about the technology. Harvard University economist Jason Furman called AI “the most screamingly obvious investment boom this country has ever had, or, possibly, second to railroads” in the late 19th century. Using AI, Furman built an economic analysis tool called Econvitals that 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 a majority in The AP Voter Poll 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 also 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. 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. 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.
The new Congress is scheduled to take office on January 3, 2027. Until then, the October inflation report on Tuesday will be the next hard test of whether the price pressures voters punished at the ballot box are easing — or intensifying.
Sources: Associated Press, "Voters demanded economic relief. Trump and Democrats face tough choices on how to deliver" by Josh Boak (Nov. 8, 2026, full text verified); U.S. Bureau of Labor Statistics, September 2026 Consumer Price Index; Barron's, "Economy Remains Top Issue, Early Exit Polls Indicate Pessimism" (Nov. 3, 2026, AP Voter Poll figures); Reuters, October jobs report (Nov. 6, 2026).
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