Abby Joseph Cohen Talks Eco Outlook Post US Midterms

Cohen Sees Deficit and Executive Power as Post-Midterm Risks

The midterms delivered a decisive Democratic win and a repudiation of the do-nothing Republican Congress, but Abby Joseph Cohen says the economic impact is not yet knowable. The real tests are fiscal and institutional. The One Big Beautiful Bill has ballooned the deficit and the debt limit must be raised in early December. The executive branch has ignored appropriations and hollowed out regulators, and Congress can investigate but restoring guardrails depends on the executive.

Takeaways

• Midterms delivered a decisive Democratic repudiation. Cohen calls it a decisive Democratic win in Congress and at state houses, a repudiation of Republican leadership and of a Johnson-Thune Congress she says passed very little legislation. She reports a sigh of relief in many parts of the country.
• Economic impact remains unknown, Cohen says. She declines to forecast growth over the next two years, saying too little is known, including how President Donald Trump will respond the day after the election. She was pleased there was no violence at the polls.
• Budget deficit is the next big test. The One Big Beautiful Bill produced an enormous run-up in deficits in dollars and as a percentage of GDP. The country runs out of running room in early December, when the debt limit must be raised and Trump must negotiate with the existing Congress.
• Executive power has grown enormously, Cohen warns. She says cabinet positions and agencies have ignored the Constitution, and points to Russell Vought at OMB refusing to pay appropriations passed and signed into law. Staff has been cut at the IRS and the SEC, while the CFTC and CISA have been hollowed out.
• Restoring guardrails is the executive's job. Asked whether the incoming Congress can reverse current trends or whether people must wait for 2028, Cohen says Congress may pursue investigations, but the relevant powers sit with the executive. Re-establishing guardrails is under the purview of the executive, not Congress.
• Health and food cuts are still coming. Cohen says the ugly parts of the One Big Beautiful Bill have not yet been seen. Higher health care costs and hospital closures including in rural areas are coming, along with cuts to SNAP and the Women and Infant Children program.
• Congress should reclaim tariff power. Cohen hopes the incoming Congress takes back congressional control of tariffs and re-establishes US soft power and global alliances, saying soft power is economic power. She wants moderate leadership and more realistic economic policy, and questions treating Canadian wood chips as a security risk.