Top Issues in the Midterms

The US midterm elections have been dominated by concerns over affordability, economic effects of the war in the Gulf, and other issues such as health care, AI data centers, and perceptions of public corruption. This Backgrounder reviews the debate on several key issues and implications for progress in Congress.

• The US midterm elections have focused on questions around affordability of basic goods such as gasoline and food, broader concerns over the cost of health care and housing, the impact of the war in the Gulf, and rising concerns over what a large majority sees as public corruption. Only 2% of voters see the national debt as the top issue facing the country.
• Health care is a major concern of voters, but budget constraints may make action difficult in the new Congress. Immigration has grown as an issue of focus as the election approaches.
• Polls showing AI concerns common to voters of both parties are now shaping the policy debate. For example, nearly 80% of Americans believe AI will reduce jobs and 71% say the government isn’t doing enough to regulate AI. In addition, about 80% of Americans oppose data center construction in their area.
• Trade and tariffs have been most important in states with large US-Canada trade.
• Given pressures on the budget as well as expected narrow majorities in each chamber, passing a budget and legislation will likely remain difficult in the new Congress. If there is a change in control in one or both houses of Congress, expect strong oversight of the Administration, including the possibility that relevant businesses will be called to testify in   oversight hearings.

Beyond Election Day

Whatever the election results, Congress will likely face difficulties in delivering action that voters want. In particular, with the national debt having crossed $40 trillion – and a looming debt ceiling crisis – spending options are constrained. For business, there are four dynamics that will likely shape the policy environment in 2027 and 2028.

• Expected narrow majorities in each chamber mean that passing legislation could be difficult, particularly if control of Congress is divided.
• However, growing bipartisan concerns around affordability, health care, AI, and infrastructure may offer opportunities for targeted legislation, in which the two parties might see it in their common interest to find at least some areas for bipartisan compromise, while states continue to advance their own policies in areas (such as AI) where Congress has not acted.
• The Administration will retain significant authority to advance its priorities through independent Executive Branch action, regulation, and enforcement. The Administration, which has sought to expand the boundaries of its authority, may even feel more emboldened to use new tools to expand its authority further.
• Finally, a change in control in either or both chambers of Congress could bring far greater oversight of the Administration and greater scrutiny of businesses operating in regulated industries or working in some capacity with the Administration. This could easily mean that contractors and other businesses associated with regulatory changes pushed by the Administration could be called to testify in oversight hearings.

For business, these dynamics will shape the regulatory environment, investment decisions, operating costs, and broader economic uncertainty they must navigate in the years ahead.

Despite the likely difficulties of enacting major legislation, the campaign this year has featured several important issues that will continue to shape policy debates in 2027, even if enactment is challenging, particularly if the election delivers a divided Congress or divided government.

Fiscal Responsibility

The US midterm elections have focused on questions around affordability of basic goods such as gasoline and food, broader concerns over the cost of health care and housing, the impact of the war in the Gulf, and rising concerns over what a large majority sees as public corruption.

Most discussion of the Federal budget and the national debt in the campaign concerns the tax policy changes and spending impacts of Public Law 119-21 (H.R. 1, 2025), also referred to as the “One Big Beautiful Bill Act” (OBBBA) and Social Security. Although the national debt has now crossed $40 trillion, there has been little specific on the debt and deficits. Only 2% in a September 2026 survey regard the debt as the most important problem facing the country.¹

OBBBA is the signature legislative achievement of the President’s second term, a combination of tax cuts, spending offsets from health and human services programs, increased border security and defense spending, and changes to energy policy. Nevertheless, polling suggests that fewer than 10% of voters highlighted the OBBBA tax cuts as one of the President’s successes and only a similar proportion believe taxes are the most important issue in this election.² In response, Republican candidates have re-branded the law as “Working Families Tax Cuts.” While polling shows voters have a more favorable view of the new name, voters are more likely to want to repeal the law when it is described as OBBBA.³

In competitive races in Georgia, Iowa, and Pennsylvania, Republican candidates focus on the more popular (temporary through 2028) provisions of a deduction for tips of up to $25,000 (“no tax on tips”), for overtime compensation of up to $12,500 (“no tax on overtime”), and for taxpayers age 65 and older of $6,000 (“no tax on Social Security”).⁴ However, Republicans are struggling to defend the cuts to Medicaid and nutrition programs. In states that are more rural or have a high proportion of residents covered by Medicaid, Republicans have replied to criticism of impending hospital closures, benefit reductions, and less access to care by highlighting the $50 billion fund in OBBBA for rural health.⁵

An analysis of ads in competitive Congressional races found Republicans spent more than seven times as much as Democrats on ads on Social Security, primarily to highlight the OBBBA’s temporary tax deduction for older Americans.⁶ Faced with the impending insolvency of Social Security’s primary Trust Fund as early as 2032, Republican candidates have focused more on demonstrating they support Social Security recipients as a group rather than promoting policies to shore up the program’s finances. A national survey of likely voters revealed that 88% of respondents consider Social Security important when deciding their vote in the midterms, with voters trusting Democrats more than Republicans (47% to 40%) to handle the program.⁷ In terms of specific proposals, several Republican Senate candidates in key races highlighted combatting fraud, waste, and abuse in the program and establishing an independent commission to develop recommendations to improve the financial solvency of Social Security.⁸

Democrats, in contrast, frame OBBBA as tax cuts at the expense of the social safety net. Candidates in competitive states such as Georgia are coming out against some of the OBBBA business tax deductions to expand AI infrastructure, leveraging increasing voter preferences for higher taxes on billionaires and large corporations.⁹ The cuts to Medicaid are proving salient for voters, particularly in states with large rural populations or a high proportion of Medicaid beneficiaries, such as Alaska, Maine, New Mexico, and Ohio. Democratic Congressional candidates have highlighted the temporary nature of the $50 billion rural health fund compared to the permanent cuts to the Medicaid program, claiming the fund is insufficient in the face of continued closures of rural hospitals and other health care facilities.¹⁰ Some candidates have also vowed to repeal the changes to Medicaid eligibility, work requirements, and provider taxes in OBBBA. Democratic candidates for Governor are promising to address the Medicaid changes by potentially backfilling the program with state funds and supporting beneficiaries with navigating the administrative burden of the new work requirements.¹¹

The President has promoted higher spending in the campaign, including announced payments to select groups ahead of the midterms, including $90 to Medicare recipients to offset premiums, $500 to Affordable Care Act enrollees in some states to reimburse what it terms excessive fees, and $8 billion in direct payments to farmers.¹² The President has also promised $5,000 to every American adult if Republicans retain control of Congress, a proposal that requires Congressional approval and would cost over $1 trillion.

On Social Security, Democratic candidates focus less on specific policy proposals to address the program’s financial solvency, instead promising to preserve benefits and questioning whether Republicans can be trusted with reforming the program.¹³ The few Senate candidates who discussed specific proposals mentioned increasing revenues from wealthy Americans by taxing billionaires and raising the cap on earned income subject to the payroll tax.¹⁴ Some Democrats in traditionally Republican states have highlighted the national debt as an issue. Senate candidates in South Carolina and Texas have called for a balanced budget amendment and for treating the national debt as a moral emergency, noting the intergenerational impacts of high levels of debt and calling for closing of tax loopholes to raise additional revenues.¹⁵

At the state level, California will vote on a ballot initiative that would impose a one-time wealth tax equal to five percent of net worth of billionaires resident in the state on January 1, 2026, and use 90% of the proceeds for health care services for the public.¹⁶ Polling on the issue has recently shifted, and some analysts expect it will be defeated.¹⁷

Health Care

Health care policy has factored prominently this election cycle. The share of Americans identifying health care costs as the nation’s most urgent health problem rose from 23% to 29% over the past year—the highest level in more than two decades—and satisfaction with the cost of US health care has fallen to a record low.¹⁸ Recent polling also finds that two-thirds of adults worry about affording care, including insurance premiums and out-of-pocket costs.¹⁹ Equally, employers’ health care costs will also rise in this year’s open season.²⁰

Democrats hold a 24-point advantage on which party voters trust to handle those costs,²¹ although many independents trust neither party. Democrats argue that higher premiums (expected to average 15%), the expiration of enhanced Affordable Care Act (ACA) tax credits, and cuts to Medicaid in OBBBA have made coverage less affordable.²² Relatedly, they also argue that despite bipartisan proposals being offered, the failure to extend enhanced ACA premium subsidies compounds pressures for families and providers.²³ In several competitive races, candidates are attacking Republican votes for the law and the failure to extend ACA subsidies.²⁴ Public frustration with health care costs is now even reviving the Democratic debate over Medicare for All. Sixty-six percent of adults say they favor a national single-payer plan, and several Senate candidates in competitive states have made it central to their campaigns.²⁵ However, most Democrats in competitive races remain focused on premiums, ACA subsidies, Medicaid, and prescription drug costs rather than adoption of a single-payer system.

Republicans frame health care around fiscal discipline, program integrity, rural access, and opposition to “socialized medicine” as well as efforts to lower prescription drug costs through government programs such as TrumpRx. An analysis of Republican campaign ads in competitive districts found that most discuss health care by concentrating on Medicaid fraud, rural hospitals, and affordability.²⁶ The Administration also points to the law’s $50 billion Rural Health Transformation Program as evidence of investment in rural hospitals, workforce, and local access; candidates highlight awards under this program in competitive races.²⁷

The White House has made program integrity central to the Administration’s campaign record.²⁸ In September, the Vice President announced the removal of roughly 750,000 people whom the Administration described as fraudulently or improperly enrolled in ACA Marketplace coverage, with projected savings of $2.2 billion. This reinforces the Administration’s broader case for tougher verification and enforcement.²⁹

Workforce

Workforce policy features in the midterms in a broader debate over labor supply, wages, skills, and immigration enforcement. Employers continue to face uneven hiring conditions across sectors, while workers remain focused on job security, pay, and the availability of affordable housing, care, and other essentials.³⁰ Immigration has become a central part of this debate because it affects the size and composition of the labor force, particularly important in certain industries such as health care, construction, hospitality, agriculture, and transportation, while intersecting with broader questions about training, worker protections, and employer practices.

Republicans generally frame workforce policy around an “American workers first” message. Their campaign advertising has featured immigration more prominently than Democratic advertising, typically linking it to border control, crime, and public safety.³¹ The Administration’s expanded enforcement agenda also includes employer accountability. A September Executive Order directs agencies to consider recent or anticipated layoffs and labor-market conditions in decisions on H-1B visas, arguing this would prevent employers and staffing firms from using the program to undercut or displace US workers.³² The broader argument is that employers should invest in recruiting, training, and retraining US workers before relying on foreign labor.

As the campaign concludes, Democratic candidates increasingly argue that the Administration’s immigration enforcement practices have gone too far. In districts affected by heightened enforcement, candidates are tying raids, detention activity, and uncertainty around work authorization to labor shortages, business disruption, and higher costs for consumers. This places immigration within the larger affordability debate: abrupt losses of workers can affect local employers’ ability to operate.³³

AI and Data Centers

Public anxiety about the potential effects of AI, particularly on employment, and rising opposition to data center construction have driven debates about the appropriate policy response. However, the political landscape is complicated with differing perspectives not only between but also within parties. As the policy debate took shape after the launch of ChatGPT in 2022, Republicans generally argued that rapid AI development is core to US economic growth, productivity, and geopolitical competitiveness, particularly with China. Conversely, Democrats emphasized concerns about employment effects, the environmental and infrastructure impacts of data center construction, and what responsibility model developers and data center operators held to offset negative externalities.

However, polls showing AI concerns common to voters of both parties are now shaping the policy debate. For example, nearly 80% of Americans believe AI will reduce jobs and 71% say the government isn’t doing enough to regulate AI. In addition, about 80% of Americans oppose data center construction in their area. These concerns are increasingly translating into campaign positions for candidates of both parties that seek to balance continued AI investment with greater protections for consumers and communities.

In Ohio, for example, the Democratic Senate candidate has described his opponent as the “face of data centers,” criticizing his support for state tax incentives for data center construction. The Republican responded by proposing legislation that would direct utility regulators to consider standards for ensuring large electricity users pay for grid upgrades required to serve them.

Likewise, in Texas, the Republican Senate candidate argues data centers are important for economic growth and competition with China but expressed concern about the impact of data centers on electricity prices and supports building off-grid power production to avoid impacting other users. (The Republican Governor in Texas also imposed a moratorium on interconnection of data centers to the Texas grid pending comprehensive audits.)³⁴ The Democratic candidate has also called for requiring large data centers to pay for the grid infrastructure they require, eliminating certain tax preferences, limiting water consumption, and giving communities greater authority over siting decisions. Issues connected with data centers are also impacting races for state legislatures as well.³⁵ In response to these attacks, the AI industry has begun running ads in key states including Kansas, Ohio, and Wisconsin promoting data centers.³⁶

Beyond data center construction and cybersecurity, there is less political alignment. For example, in Michigan, the Democratic Senate candidate has supported a freeze on frontier AI model development while a strong Federal regulatory framework is developed. The Republican candidate favored a narrower approach centered on national security while supporting a one-year pause in data center construction.

Similar differences have emerged regarding Federal preemption of state AI regulations. In Wisconsin, the Democratic gubernatorial candidate has proposed a broad state AI regulatory framework that would restrict some AI chatbot use by children, create new liability for technology companies whose products harm minors, penalize companies that profit from fraudulent advertisements, and expand state enforcement. The Republican candidate has also supported AI guardrails, particularly age verification, parental consent, privacy protections, and protections against exploitation of children and older adults, but has favored a more limited approach and as a member of Congress previously voted for Federal legislation that included a moratorium on enforcement of state and local AI regulations.

Trade and Tariffs

Issues of international trade and the impact of tariffs play into broader voter concerns about affordability, with Democratic candidates highlighting the impact of tariffs on higher prices for food and energy. The principal impact on elections of tariffs concerns the impact of US tariffs on Canada in border states such as Michigan and Maine and other states such as Ohio that depend on US-Canada trade in industries such as autos.

Democracy & Free Enterprise

Americans continue to express support for democracy, even as assessments of its performance have worsened. In a 2026 survey of more than 23,000 US adults, 66% consider democracy the best form of government, essentially unchanged from 67% a year ago.³⁷ However, perception of how the system is working is deteriorating. The share of Americans who say democracy is performing “very” or “moderately” poorly nationally rose from 51% in 2025 to 56%, while the share saying it is performing “very” or “moderately” well fell from 23% to 19%. Sixty percent believe US democracy was stronger 50 years ago. Looking ahead, 45% expect democracy to weaken, compared to 31% who expect it to become stronger, in the next 50 years.

Despite weakening trust in government, most Americans expect the midterm elections will be administered well. A Pew Research Center survey conducted between September and October 2026 found a majority of voters confident that ballots would be handled securely, voter intimidation would be stopped, election systems would be protected from hacking and other technological threats, and the results would be known within a day or two of Election Day.³⁸ However, partisan differences emerged. Voters who back Democratic candidates were much more confident that noncitizens who attempted to cast a ballot would be stopped, at 90% compared with 45% of voters who back Republican candidates. Access also exposed a strong partisan divergence, with Republican voters far more confident that all eligible voters will be able to cast a ballot, 90% compared with 72% of Democratic voters. Democratic voters also had greater confidence in mail and absentee voting, although only 64% believed those ballots would be counted as intended, compared with 42% of Republicans.

Democratic voters also hold greater confidence in vote-by-mail (VBM), although that confidence has declined in recent years.³⁹ Sixty-four percent said they believe mail ballots will be counted as intended, down from 88% during the 2022 midterms. Forty-two percent of Republican voters say they are confident mail and absentee votes will be counted as intended, slightly higher than in past recent elections. Democratic voters remain more likely to use VBM at 34% compared to 17% of Republican voters.

In this election, the concept of socialism has gained significant visibility and popularity, a shift reflected both in recent polling and in the success of progressive candidates in several high-profile Democratic primary races. Some progressive candidates have chosen to emphasize affordability issues, along with growing income disparities and the power of technology companies in an effort to avoid being defined simply as “socialist.”⁴⁰ In response, both the President and some outside groups have focused on “communism” as a threat, seeking to redefine some Democratic candidates further left and shift the debate from affordability.⁴¹ In response, over 60 Democratic candidates, including some current Members of Congress, signed a “Promise to America” stating “we are capitalist, not socialist” and pledging action on issues such as the national debt.⁴²

More broadly, attitudes towards “socialism” have shifted (in one poll, only 33% of voters under 30 viewed socialism negatively),⁴³ and on some issues, members of both parties have shifted to favor a more active role for government, such as regulation of prescription drug prices and rent, regulation of data centers and AI and efforts to tax the highest earners, with one progressive candidate noting that “politics now is more about top v. bottom than left v. right.”⁴⁴

Perceptions of public corruption have become an increasingly important concern of voters, and this is reflected in trends in sharply increased political advertising on the issue.⁴⁵ This ranges from concerns over the use of public funds for construction projects in Washington at a time of rising prices to allegations relating to specific races, such as the Senate races in Texas and Kansas.⁴⁶ One October poll showed that 88% of registered voters polled were “extremely or very concerned” about “corruption in government,” beating “inflation and high prices” at 85%.⁴⁷

Endnotes