Democrats Promised to Fix the Economy. What Can They Really Do?

COLUMBUS, Ohio—Tom Green had a wish list when he cast his vote in the Democratic Party’s midterm landslide last week: Tougher rules on AI data centers. Universal healthcare. Better job protections. The new majority may struggle to stop the war in Iran, which has driven up energy prices in the months since President Trump’s decision to attack.The 29-year-old software engineer helped elect Sherrod Brown to the Senate and Amy Acton to the governor’s office.

Both Democrats pledged to stop energy-hungry AI data centers from raising consumers’ electricity bills. Brown aims to cap utility rate increases and control prescription-drug prices. Acton promises to forgive medical debt and deliver tax breaks to families.

The voters who powered the Democrats’ triumph in the midterms delivered a blunt message: Make the economy work for us. Now, Democrats must deliver. Whether they can isn’t assured, despite the party’s pending control of the House and Senate.

Many demands are beyond the reach of lawmakers to fix. The main tools of Congress, taxes and spending, are limited and slow-moving—and lawmakers still face Trump’s veto. The new majority may struggle to stop the war in Iran, which has driven up energy prices in the months since President Trump’s decision to attack.

Gasoline prices, largely set by global energy markets, could remain high even if the war ends. In the Senate, Democrats are teeing up votes to repeal Trump’s tariffs on Canada, part of his global trade war that has contributed to rising prices.

Yet they acknowledge that stricter limits to presidential tariff authority—which Trump has taken to its limits worldwide—could be vetoed and would likely have to wait for another administration. Satisfying voter wishes also could have unintended consequences.

Curbing data centers and slowing AI, for instance, might dent the U.S. economy, harming many of the same voters who want to rein them in. The Nasdaq plunged on Thursday, driven by investor fears that the new Democratic-controlled Congress will crush the AI boom that has powered the markets.

One of the first goals for House Democrats is reversing Trump’s cuts to Medicaid and Affordable Care Act subsidies, which were part of last year’s One Big Beautiful Bill, said Rep. Debbie Dingell (D., Mich.). She is huddling with fellow lawmakers about ranking their legislative priorities.

“We’re going to have a 100-hour agenda, and a 100-day agenda” after Democrats take control of Congress on Jan. 3, Dingell said in an interview. Expanding benefits, while providing immediate relief to struggling households, could goose inflation in the longer term, as well as add to the deficit if not offset with higher taxes.

The U.S. economy’s overall strength has failed to change the glum mood of Americans who are sharing little in its growth. A larger share of America’s growing national income has gone to investors, not to employees. The Labor Department reported that the proportion of economic output going to workers in salary and benefits is at its smallest share in data that go back 80 years.

Borrowing costs are high and, with mortgage rates around 7%, many would-be home buyers are locked out of a prized piece of the American dream. Those rates are heavily influenced by moves from the Federal Reserve, which raises rates to tamp down inflation or lowers them to boost employment.

Right now, inflation is the problem, not unemployment, and investors expect rates to move higher. Over the past three months, the U.S. has added an average of 137,000 jobs a month, and unemployment has remained low. Yet, hiring has cooled compared with past years, and millions of Americans can’t find full-time employment in their fields.

Green, the Ohio voter, was laid off from his $89,000-a-year job as a software engineer at a bank seven months ago. After sending out 500 résumés, he has been invited to only a dozen interviews—a common complaint among job seekers.

He put his home-buying plans on hold and, without healthcare coverage, pays cash for his medications. “The economy doesn’t seem great, at least from my perspective,” said Green, a Democrat. Democratic state lawmakers and elected officials around the U.S.

might have more leeway than their congressional counterparts to set new policies on housing, wages, taxes and data-center development. Democrats won control of the governor’s seat and both houses of the state legislature in at least six states, including Michigan, Arizona and Nevada.

Newly elected Democratic governors Gina Hinojosa in Texas, Acton in Ohio, and Keisha Lance Bottoms in Georgia all campaigned on restricting data centers. In Michigan, Jocelyn Benson successfully ran for governor on promises to lower costs, raise wages and end corruption.

Benson plans to pass a $5,000 tax credit for caregivers, expand medical debt relief and establish a prescription-drug affordability board with the authority to approve price increases. Benson also wants to guarantee teachers a minimum starting salary of $60,000 a year, she said.

Simple math explains why affordability became a driving force in the midterm election. Inflation was 3.7% for the 12 months through September, lifted by surging gasoline prices from the Iran war, tariffs and price spikes tied to the AI boom, according to the Labor Department.

Through October, average earnings rose 3.1%.