Tuesday’s midterm elections were momentous – enough to get me writing again. This “blue wave” is less a vote of trust in the Democratic Party and more a repudiation of the current administration. Its policies brought a higher cost of living, a war with Iran and no end to the one in Ukraine, immigration agents killing and arresting people, and a growing political swamp.
What inspires me is that the voting public succeeded where the House, the Senate, the Universities, the Law Firms and Fortune 50 companies could not – placing a limit on the expansion of Presidential power. In doing so, voters picked strong candidates who showed they care about the needs of the country.
It feels like a country shaking off a 10-year infection. The US is a patient stumbling out of a fever dream and returning to reality.
My question is whether the newly elected leaders will take this opportunity to govern and make significant changes to the economy and society. As the Presidency enters a lame duck period, the renewed Congress and State Governments will need to regain trust that legislation can address the top issues that motivated voters.
I see three hard economic activities necessary to conduct in the next two years and three even harder ones after the next election. For the next two years:
1. Lowering Costs – Costs are rising because of the ongoing wars that have disrupted global supply chains; increased tariffs that act as a tax on consumers; and cuts to health care and food programs. Congress has levers to address all three, and the States can help with the last.
2. Accounting for Corruption – A large part of the President’s time is focused on fixing national treasures, building new monuments and a ballroom, much of it funded with public money. At the same time, the President’s own wealth has grown by about $2.7 billion since the 2024 election, mostly from cryptocurrency, while his family has invested in AI and rare-earth companies that depend on federal policy. Congress can hold hearings to make these dealings transparent to the public.
3. Reducing Incompetence – The administration promised to eliminate undocumented immigration and ended up with federal agents shooting US citizens in the streets. Loyalty tests mean officials are replaced if they refuse the President’s requests, even when those requests are illegal or unconstitutional. Congress can put guardrails on ICE, impeach cabinet members and confirm only nominees who are fit for the job.
If the newly elected Democrats prevail on these three issues, they will next need to tackle three existential challenges that threaten US society and other countries.
1. Placing Guardrails on AI – AI is not just a threat to the economy, where it could replace the jobs of millions of workers; it also raises a fundamental question of what makes humans human. The government regulates several industries that impact on human welfare – air transportation, insurance, banks, pharmaceuticals, utilities like water and electricity. There is no reason not to set guidelines for AI. Many leaders in AI also agree.
2. Supporting the Environment – The administration has gutted environmental protection programs and cut the EPA’s staff by about a quarter. Climate change will not go away by drilling more oil in protected areas. When the US walks away from climate pacts, that hurts everyone. Globally agreed policies to address climate change have to be restarted.
3. Addressing Income Inequity – The US has not had this much income inequality since the 1920s. America was built on the premise that anyone can make it if they work hard enough. But this bootstrap philosophy requires investments in education, health care and nutrition so that everyone has a fair chance to succeed.
Addressing these challenges will come at a cost – increased taxes, renewed alliances, restrictions on corporations and a rebuilt government. These are difficult choices. Americans want the results – a cleaner environment, sustained employment, opportunities for success – but may not be willing to put in the effort to realize them. Let’s hope that is not true.
As society breaks free of this fever, let’s hope the fever has not broken society.