Midterms Put Corporate Power, Medicaid and AI in Play

Trump’s 2025 tax and spending law is projected to cut federal Medicaid spending by $911 billion through 2034. Voters now prepare to decide whether Democrats gain control of Congress. The election could change who investigates companies and negotiates budgets, but it won’t give either chamber the power to repeal the law on its own.

Who Holds the Levers

The Nov. 3 midterm vote has investors watching how federal policy could affect defense contractors, healthcare companies, banks and technology firms. A Democratic win in either or both chambers could put committee gavels and subpoena power in party hands, allowing Democrats to demand documents, compel testimony and summon executives to public hearings. President Donald Trump would keep his veto and broad authority over tariffs, immigration and federal regulation.

That balance of power matters to companies with close ties to government decisions. Lockheed Martin gets about 70% of its sales from the U.S. government. Medicaid accounts for three-quarters of Molina Healthcare’s premium revenue, while Coinbase is waiting for Congress to write cryptocurrency rules. “There are some policy changes that might be market moving, at least for certain segments,” said Jeff Buchbinder, chief equity strategist at LPL Financial.

A congressional probe can consume executives’ time and expose internal communications, even when donations don’t prove wrongdoing or favorable treatment. On Oct. 21, Sen. Richard Blumenthal, D-Conn., sought records about Trump’s White House ballroom from donors including Cisco, Salesforce, ServiceNow and Kraken. Apple and Nvidia each committed $25 million to the project, according to records The Washington Post obtained. Rep. Jamie Raskin, D-Md., separately sought records about tariff exclusions, including communications involving Apple’s former CEO Tim Cook.

“It creates volatility because you get a negative headline,” said Monica Guerra, Morgan Stanley’s head of policy and geopolitical strategy. Democrats have signaled interest in Trump family businesses, government contractors, firms tied to Donald Trump Jr.’s 1789 Capital and companies associated with Elon Musk and DOGE. The committee hearing room can become a stage. The subpoena still reaches into corporate offices.

The Costs Don’t Stay on Wall Street

KFF’s analysis of Congressional Budget Office estimates says the 2025 law is projected to reduce federal Medicaid spending by $911 billion through 2034. New Medicaid work requirements were scheduled to take effect Jan. 1, or earlier in some states. Tighter state budgets could leave fewer people covered and put more pressure on provider payments. Molina reported $32.2 billion, or 75% of its 2025 premium revenue, from Medicaid. The company warned that losing government contracts or failing to renew them on favorable terms could materially reduce premium revenue.

A Democratic-controlled chamber couldn’t repeal the law alone, but it could seek funding changes or delays to some cuts during must-pass budget negotiations. “They’re probably going to push back on those Medicaid cuts,” Buchbinder told CNBC. KFF said fewer insured patients can mean more uncompensated care for hospitals, while state budget pressure can lower reimbursement rates. Congress created a $50 billion rural health fund over five years, but KFF and medical providers said it wouldn’t fully offset the broader Medicaid reductions.

Households face a different ledger from investors. Consumer prices and average hourly earnings had each risen about 5.5% since January 2025, leaving workers no better or worse off in purchasing-power terms than when Trump took office. In September, inflation rose to 3.7% from a year earlier, while wages increased 3%, according to the Bureau of Labor Statistics. Millions of Americans still struggled to cover monthly expenses, even as the S&P 500 had risen more than 26% during Trump’s second term.

Local Pushback, Federal Limits

The data-center boom brings electricity bills, water use and infrastructure into local disputes. CNBC’s October All-America Economic Survey found 63% of registered voters opposed a data center within 10 miles of their home, compared with 13% who supported one. Voters were set to decide 41 local data-center ballot measures on Tuesday, covering developer requirements and possible construction bans. All six measures already decided that year in New Hampshire, Wisconsin, Michigan and California had gone against development.

The House voted 417-3 to require state regulators to consider making large data centers pay additional electricity infrastructure costs. The proposal stalled in the Senate, 57-43, on a procedural vote after Democrats called it too weak and demanded mandatory protections. Democratic gains could shift more grid-upgrade costs to technology developers, but state regulators, utilities and local governments would still decide where projects connect and which facilities get built. “We think the election can have meaningful consequences, but on a highly localized basis,” said Ariana Salvatore, head of U.S. public policy research at Morgan Stanley.

The election also touches military spending and finance. The White House requested $1.5 trillion for national defense in fiscal 2027 and separately sought an $87.6 billion supplemental appropriation for fiscal 2026, driven primarily by military operations related to Iran. A Democratic Congress could challenge some Iran- and Israel-related spending, while bipartisan support for China deterrence, nuclear modernization and missile defense could protect other programs.

The Senate failed in September to advance the Trump-backed Clarity Act, a sweeping cryptocurrency market-structure bill. Democratic gains could give the party more leverage to seek stricter consumer safeguards and closer scrutiny of Trump’s crypto businesses. “They just want to know what the rules are going to be for the coming year,” said Sam Stovall, chief investment strategist at CFRA Research. For people facing health cuts, rising costs and infrastructure decisions, the rules are already being written in rooms they don’t control.