Two Chambers, Three Seats, and a Congress That Has Not Been Governing
The 119th Congress reaches November with narrow margins, unresolved budget questions and an economy being managed almost entirely from the Federal Reserve.
The 119th Congress approaches the 3 November midterms with a narrow Republican House majority — narrow enough that a net swing of three seats would transfer control.
Margins that thin have a consistent effect on legislating: they make it very difficult. A handful of members on either side can block anything, which raises the price of every vote and reduces the range of what can pass to whatever nobody objects to strongly.
The consequence for economic policy
With fiscal policy effectively stalled, the burden of economic management has fallen almost entirely on the Federal Reserve — an institution with one instrument, applied to an inflation problem it cannot address at source.
The Fed held rates at its 29 July meeting on a divided 9-3 vote. Futures now price roughly a two-in-three chance of an increase, following August payrolls of 162,000 against a 53,000 forecast and energy costs driven by six months of war.
A central bank raising rates to suppress domestic demand against an imported supply shock is doing the only thing it can do. It is not obviously the right thing, and there is no fiscal counterpart operating alongside it.
Where policy has moved
The action has been executive rather than legislative:
- Drug pricing — nine further manufacturers signed most-favored-nation agreements on 31 August, bringing the total to 26.
- Tariffs — an effective rate around 7.2%, with pharmaceutical duties reaching all remaining companies on 29 September.
- Energy — an agreement with Venezuela under which Chevron is expanding operations, including a Pentagon profit stake.
Each was achieved without legislation. That is what policymaking looks like when a legislature cannot assemble majorities.
What November changes
Less than the campaign will suggest. A three-seat House swing produces a majority just as narrow in the other direction, with the same difficulty passing anything. The Senate's four-seat threshold is harder still.
The likeliest outcome of a close election is another closely divided Congress — and a continuation of governing by executive action and monetary policy, because those are the levers that still work.