The much-awaited Midterm Elections in the US was along expected lines, but I don’t think even the Democrats expected the margin of victory to be so huge. Especially when you take into account the gubernatorial races as well as winning control of the House and the Senate in the US Congress. And for a change, the pollsters were right, this time.
Considering the elections were a kind of referendum on the Trump regime and its policies – from tariffs and immigration crackdowns to the economy and the Iran war – the Democrats ought to capitalize quickly on this victory. The US electorate is not feeling good about their own economic condition, irrespective of how much the Republicans say that the economy is growing strongly and that inflation is down from the Biden era. US GDP for Q3 of 2026 came in much higher at 3.4%, and this time it was not driven as much by AI as by private investment in inventory and equipment as well as government investment besides consumer spending, according to the BEA. Remember, that Biden too faced a similar negative sentiment among Americans on the economic front, even though inflation was ticking down and the economy was beginning to improve after the Covid-19 pandemic shock.
How can the Democrats capitalize on the election victory, and actually win back the confidence of the American people for a considerable length of time and until the next Presidential election in 2028? I think they can do this best by addressing the economy first and foremost and therefore, finding a way to end the war in Iran. Of course, there will be Dems who will want to start investigations into Trump policies, his corrupt practices including those involving the Trump family, ICE excesses and more. I think this would be counterproductive, if the Democrats don’t first fix the economy, especially the causes of the inflation pain that consumers are feeling. And this necessarily means doing away with the import tariffs as well as ending the Iran war.
I am not aware of the procedural requirements of this arduous task, in terms of how quickly the US lawmakers can get Trump to roll back his tariffs and to end the Iran war. It was widely reported at the start of Trump’s term last year that he deliberately made tariffs the centre-piece of his economic and foreign policies precisely so that he can avoid Congressional approval and concentrate more powers in his own office. That American Presidents hold immense power is well-known, but there are checks and balances too and those need to be exercised into action quickly. For example, on executing wars outside America, he might need Congressional approval on increasing spends and they can enforce the War Powers Resolution in order to curb Trump’s ability to launch a full-scale attack on Iran and escalate hostilities.
Of course, it is one thing to curb the escalation of the US-Iran war, and quite another to stop it altogether. If low-level hostilities continue – such as repeated US strikes on Qeshm island and others – it will impede the movement of goods through the Strait of Hormuz and the trade slowdown will continue. As it is, there are conflicting reports on whether the Strait of Hormuz is actually open to trade traffic, and even if it is, the number of ships going through are so few that supply constraints and high prices, including of shipping costs, are still issues that economies around the world are having to deal with. Therefore, to return to normalcy, the Dems will have to find ways to wind down the war with Iran soon.
On tariffs, the Dems will have to push for more sensible and sustainable policies, even though this might take longer than ending the war. It’s not just that higher tariffs are causing inflation in the US, it is also that they are not bringing down US’s trade deficit all that much. Besides, since Trump is relying on tariffs to generate revenue while lowering taxes through his One Big Beautiful Bill, the effect of all this on US public finances is not going to be beautiful at all! Both the US fiscal deficit and the debt levels are at all-time highs, and nobody is addressing these critical issues. The latest CBO Report says the US Federal Budget Deficit is 6.2% of GDP for the fiscal year 2026, at US$ 2 trillion, that is US$ 217 billion or 12% higher than the budget deficit for 2025. The markets are already demanding a much higher cost of borrowing, and the US surely doesn’t wish to have its credit rating lowered once again, as happened after the 2008 Financial Crisis.
Then, come issues of immigration crackdowns, the excesses of ICE personnel across the country, and of course, AI regulation. These must be addressed as well, though in terms of priority, the Dems’ focus ought to be on the US economy. Taking action against Trump’s corruption including with his family business and their crypto-currency trade, etc. can wait and ought to proceed with caution after initiating a thorough investigation. This is not the time for retribution, but for healing the economy and making Americans feel better about their day-to-day lives and their future.
On the AI front, US lawmakers from both parties need to put in place sensible regulations, and not give in to lobbying by tech firms that US must keep up the pace of AI development for fear of losing out to China. This is a bogus argument, since China too needs to regulate the pace and direction of AI innovation. This is where the two superpowers need to work together, along with the UN and other countries of the global community to frame global rules and guidelines for AI, and I think the UN needs to create a dedicated agency for AI and digital technology, as I had written in my blog post on reforming the UN for the 21st century. AI regulation should be given time and serious consideration as well as wide consultation.
The Democrats have their tasks cut out for the rest of the President’s term. Plenty will depend on how well they can prioritise the economy, reset tariffs and taxation policy, as well as end the Iran war. If possible, end the Ukraine war as well. Their strategic and diplomatic skills will be tested, as will their tolerance of an aggressive Israel, irrespective of what kind of government is formed there. America needs to seriously reconsider its unconditional support of Israel and its policies if it wishes to be on the right side of history.
The Democrats need to justify their win in the US Midterm elections, and follow through with action on policies that demonstrate to the American public as well as to the rest of the world that they are capable of setting the economy right and of governing sensibly.
The animated owl gif that forms the featured image and title of the Owleye column is by animatedimages.org and I am thankful to them.
