ONE BIG THING

Midterm Season Underway

The Big Picture: The final primaries have concluded, and the sprint to the November 3 midterm election is underway. With control of Congress turning on narrow margins, both parties are focused on turning out their voters and prevailing in election administration court fights.

Republicans Look to Change the Dynamic: The president’s party historically loses seats in midterm elections, and Democrats currently lead in national polling. Against that backdrop, Republicans gathered in Dallas for the party’s first-ever midterm election national convention to boost enthusiasm among their base. Reflective of the headwinds Republicans are facing, President Trump promised a $5,000 “Trump Dividend” to American adults if Republicans retain control of Congress, despite a huge price tag and the need for Congressional approval. Those in the most competitive races chose to skip the event to avoid being tied too closely to the President as Democrats seek to make the election a referendum on the administration.

Rules of the Road: With control of Congress expected to turn on narrow margins, election administration changes and court challenges could affect the balance of power. The Supreme Court’s decision blocking new USPS requirements settles mail-ballot procedures for now, but the Trump Administration is still pursuing voter records and federal citizenship lists. A year of redistricting battles is finally concluding now that courts have ordered Missouri to use the map passed in 2022 after the last census, despite voters using a different map in the primary. Stay tuned for continued battles over election rules as both parties seek an advantage.

What We're Watching: Attention is turning to Trump's campaign activity and how his political operation deploys its massive election war chest of over $400 million. Democrats are trying to expand the number of competitive races and force the GOP to defend more territory; they are now targeting 40 House seats, up from 12 seats in February. Where each side spends their resources will offer an indication of how large, or narrow, the November battlefield is.

ABOVE THE FOLD

Congress Returns, Briefly

A Pre-Midterm Agenda: Congress returned to Washington with a short calendar and a clear incentive to avoid political landmines before Election Day. Lawmakers quickly funded the government through December 11, taking a shutdown off the table. House leaders canceled the final two weeks of scheduled September votes, giving members more time to campaign at home.

Priorities: The House passed the bipartisan Ratepayer Protection Act with a near-unanimous vote, requiring states to consider making large power users cover the costs of grid upgrades. The bill heads to the Senate, where its path forward is uncertain. With data center costs emerging as a voter concern ahead of the midterms, the lopsided House vote signals growing bipartisan consensus on addressing the impacts of AI, even as lawmakers remain divided over how. The CLARITY Act, a top-priority pre-election cryptocurrency bill, failed to advance in the Senate after Democrats and four Republicans blocked the procedural vote. Negotiations stalled over ethics provisions, community bank concerns, and safeguards against illicit crypto use.

What’s Next: Everything else will be left until after the election. The December agenda includes full-year government funding and a debate over the Pentagon's request for higher defense spending. Lawmakers could revisit health care costs after the expiration of enhanced Affordable Care Act tax credits increased premiums for many marketplace enrollees. In December, Congress will return to those fights knowing which party will control Washington in January, potentially reshaping the substance of the negotiations and each side's willingness to compromise.

BY THE NUMBERS – Mixed Signals headed into the Mid-Term Elections

The Affordable Housing Gap

With 11 million extremely low-income renter households and just 4 million affordable units, the shortage remains a top financial pressure on Americans.

A Bright Spot for the Economy

U.S. employers added 162,000 jobs in August, beating expectations amid broader economic uncertainty.

BELOW THE FOLD

Looking Forward

October marks the final stretch before Election Day. We’ll be watching out for any October surprises, election-related legal developments, and administration actions. While Congress will be out of session, planning for the post-election lame-duck session will be underway.

For a PDF version of the September Capital Currents Newsletter click here