A Generational Win for Democrats Sends the GOP Reeling

0:00Isn't home where we all want to be? Reba here for Realtor.com. The pros number one most trusted app. Finding a home is like dating. You're searching for the one. With over 500 ,000 new listings every month, you could find the one today. Download the Realtor.com app because you're nearly home. Make it real with Realtor.com. Pros, number one most trusted app based on August 2025 proprietary survey. Over 500 ,000 new listings every month based on average new for sale and rental listings. July 2024 to June 2025. From the opinion pages of The Wall Street Journal, this is Potomac Watch. Well, that was something.

0:40Democrats win one of the biggest midterm election victories in decades. They sweep Republicans out of the House and the Senate majority and make historic gains in state houses and state legislatures that will affect American policy and politics for years to come? What's behind this epic Republican loss? What do Democrats do with their majority? And how does Donald Trump respond this morning? That is our subject for today on Potomac Watch. I'm Paul Gigo, and I'm here with Kim Strassel and Matt Continetti to wander through the rubble of the Republican majority and tell you what we think we can find to build for the future and where this goes from here.

1:26Let's start with the magnitude of this defeat, Matt. It really is stunning. I was telling you before we went on air that you're too young. Both of you are too young to remember 1974, the Watergate year. I am not. And this has a lot of similarities, not quite the same numbers. But give our listeners an indication of what's so stunning. Sure. Well, this is definitely shaping up to be the best midterm for Democrats since 1974, since that election, you know, done in the context of the Watergate scandal, President Nixon's resignation, President Ford's controversial pardon, Richard Nixon brought a whole slew of liberal congressmen to Capitol Hill and really shifted American politics to the left.

2:10The Democrats are on track to win the national House vote, that is, you just count all the votes cast in House races by a significant margin, much more than 10 points. And that's going to translate by some projections to anywhere between 258 seats is what one network is calling it. Some say maybe even a little bit higher, 260 for Democrats. That would be their largest majority since 2008. So in some ways, a generational win for the Democratic Party. And then there's a Senate, of course. They're up seven seats at the moment. They're, of course, races still counting ballots in Mississippi. Yes, I said Mississippi.

2:51And in Alaska, which I'm sure Kim will want to discuss. So that could bring them up to nine. That's a considerable Democratic majority, a healthy one. And I think just briefly on that, important for where it's drawing from, which is that Democratic Senate candidates really succeeded throughout the country, including in places not just where Donald Trump won by double digits three times. That's, you know, Iowa, Texas, but also states no one really had on the map, like, say, South Carolina or Kansas, which hasn't sent a Democrat to the Senate since the New Deal in the 1930s. So at the federal level, Democrats walloped Republicans, and they also made key gains, Paul, at the state level in governor's mansions, including in important states.

3:37I mentioned Texas, a huge, huge loss for Republicans, but also in swing states like Georgia, like Nevada. And then, of course, states that are a little swingy, like Michigan and Wisconsin, where they held. So up and down the ballot across the country, every sector of the population, every part of the country, urban, suburban, rural, Democrats won, Republicans lost. So if they do end up with 258, what's that, Kim, gain of 43 seats in the House, which is really significant, and all the more so because Republicans had specifically gerrymandered states to be able to minimize the losses even in a bad year for Republicans.

4:19It didn't seem to stop the deluge. Prior to Tuesday, most analysts, by the way, on the right and on the left, said that it would be very hard for Democrats to reach more than about 20 to 25 seats because both parties had so significantly gerrymandered the map. But what we have learned from yesterday is when the electorate is that mad, they are willing to turn districts that might well be gerrymandered for one party or the other by 10 points or 12 points. We saw that. We saw that very specifically in the Republican gerrymander, where they had hoped because of their operations that they would pick up as many as 15 seats or flip 15 seats, which would minimize Democratic gains.

5:03That did not really turn out in most places. In Florida, where they had gerrymandered four seats, they lost three of them. Kathy Castor, Pia Dandia, and Jared Moskowitz all won in their redrawn districts. They had redrawn a district in North Carolina, but Don Davis held on to it, even though it was gerrymandered anywhere between eight to 12 plus Republicans in that district. They lost a redrawn district in Alabama, which was remarkable. They lost four of the five seats in Texas that they had gerrymandered. Now, they still picked up some seats that they wouldn't have otherwise. You know, one in Florida, one in Texas, Louisiana, Tennessee, Ohio.

5:45Then you look at the fact that Democrats gerrymandered California for five seats, and they're kind of just a little ahead of a wash. And I think the question Republicans have to ask themselves amid many, many other questions is whether this operation was worth the political time and capital, at least in terms of opportunity cost, how much better would it have been using that non-infinite time and capital to maybe come up with, say, a health care agenda? But that is not what they chose to do. And this particular stratagem did not play out for them. Well, just to put one example on the table, the Republican Party, the GOP held 10 of the 14 North Carolina House seats going into this.

6:26They may end up with five. Right. That's it. And they might be lucky to get that. OK, it's amazing. And it's just it's not just the number of seats. It's the margin. I mean, Tolerico won by double digits in Texas. Republicans lost the Georgia Senate seat by, hold on to your hats, 18 percentage points. In Georgia, you know, you can't do that unless you have not only a tremendous enthusiasm from Democrats, but essentially Republicans who either changed and voted for the opposition or just stayed home. It's remarkable. And the other thing I'd mention here is the down ballot into the state legislative races.

7:08There are literally hundreds of state legislative races that have turned in this election. And just to give you an indication of the turning of the majorities in these states, Democrats now have a majority in both houses in Wisconsin, both in Arizona. First time since, I think, 1966. They won the Texas House. They had the governorship, too. So the last real bastion of Republican hold there is the state Senate. The Georgia House. They lost the Georgia House. They lost both houses in New Hampshire. I could go on. But the point to make here is that this was a seismic victory that went deep down ballot.

7:48And, you know, those legislative seats really matter because the states have been, for the Republicans since, say, 2010, real places of reform. Cutting taxes, reforming the tax code, disciplining public unions, controlling their dominance in Wisconsin, for example. school choice experiment. Those are gone as possibilities in these states, and much of it will be reversed. We're going to take a break, and when we come back, I'll be back with Matt Continetti and Kim Strassel. Isn't home where we all want to be? Reba here for Realtor.com, the pro's number one most trusted app. Finding a home is like dating.

8:30You're searching for the one. With over 500 ,000 new listings every month, you could find the one today. Download the Realtor.com app because you're nearly home. Make it real with Realtor.com. Pros, number one most trusted app based on August 2025 proprietary survey. Over 500 ,000 new listings every month based on average new for sale and rental listings, July 2024 to June 2025. This is Matthew Hennessey, the editor of Free Expression. I want to personally invite you to come check out what we're doing. signing up for the newsletter couldn't be easier. Just go to our homepage. Directly below the Wall Street Journal logo, you'll find the magic words, free expression wedged between opinion and arts.

9:12There's an option to sign up for the newsletter right at the top of our section. Just hit that button and you'll start getting the world's hardest working newsletter delivered directly to your inbox Monday through Friday. If you aren't a journal subscriber, the newsletter is free, but we are gonna need your email address. There's a lot of fun stuff in the newsletter that you can only read in the newsletter, and I don't want you to miss any of it. Sign up for free expression today. We'll see you in your inbox. Welcome back. I'm here on Potomac Watch. Paul Gigo with Kim Strassel and Matt Continetti trying to break down the election.

9:47Now let's talk about Donald J. Trump. Let's listen first to Donald Trump's explanation of what happened. He didn't like the candidates, and some of the candidates that I enduced fought me, and they didn't like that they fought me. I mean, this MAGA base is incredible. The most loyal people, the greatest people, the people that built America. And I've had, you know, I was trying to get people in that were people that, frankly, let's say, that I didn't get along with. But for purposes of the party, I went along with it. And the base would tell me, you know, hundreds of thousands of people would just say, sir, they weren't for you.

10:25And, you know, this fell out all the flaws. They knew more than I did about these people in some cases. In other cases, they just didn't inspire the people to get out and vote. And I wasn't on the ballot. If I was on the ballot, they would have gotten out. Well, of course, he had told us, I am on the ballot. Treat me as if I pretend I am on the ballot. Now he wants off the ballot. So, Matt, what's your take on Trump's share of responsibility here? Yeah, so unlike President Trump to point the finger elsewhere when something goes wrong. So I can't say I'm surprised by his comments. I think the most predictive indicator in midterms is presidential job approval.

11:00The exit poll had President Trump's job approval at 38 percent, extremely low. And we also saw an electorate that wanted to oppose Trump. Forty three percent of voters told the exit pollsters they were voting to oppose Trump. Sixty two percent said that Trump puts his personal interests above the public interest. Amazing figure. Amazing figure. It's amazing. 65 % say that Trump's policies have worsened economic conditions. And 62 % said his policies are to blame for high prices. And of course, the economy was the most important issue, something that we've been tracking, you know, for years. And it was the most important issue during the Biden midterm and in 2024 and remains the most important issue.

11:45Inflation and prices being the most significant factor in that prioritization. And the voters not only unaware of any good economic news or progress that undergone by Trump, but not willing to accept it and blaming Trump for a worse economy. And here I think the fact that Trump often stumbles on his own feet really curtailed any chance that Republicans might have had to minimize Democratic gains. Because if you just step back, it's more likely that voters know more about the renovations to the East Wing and the reflecting pool and Trump's fight over putting his name on the Kennedy Center than they do any of the reforms, whether they were tax reforms, welfare reforms, education reforms, energy reforms that were part of last year's One Big Beautiful Bill Act.

12:35Truly amazing. So just to kind of expand on this a little, Kim, is what happened to the Republican coalition. The Hispanic vote just turned from 2024. What had been a historic gain in Hispanic votes for Republicans and President Trump in 2024 really did reverse. and in majority Hispanic counties in the United States, that's where the majority of Hispanic identified voters, it was a 28-point turn from two years ago, 28 points. And that led to many of these defeats in Texas in particular, but also other places around the country, Nevada, for example. And so, I mean, what happened there? Is it mostly economics or is there also some immigration?

13:22What else? It's entirely economics and management. And we know that for a reality. Look back to four years ago when Ron DeSantis ran for reelection in Florida and just won by double digit margins, won every category was out there, including Hispanic. He won a majority of the Hispanic demographic. Why? Because and this was a guy I just want to remind everyone that, you know, Florida was not always an easy GOP call. and in 2018 DeSantis barely won election for the first time with you know 10 or 20 ,000 votes it was very it was a squeaker and that turned into a massive landslide and it was because he had kept his eye on economic questions and good management in the state and he was rewarded by in particular a lot of minority voters by saying hey I like what I see here and I'm willing to give Republicans a chance.

14:18Those numbers you also saw reflected to a similar extent in 2024 with Donald Trump for the same reason Hispanic voters said, we remember the end of the first, well, not the COVID period, but much of the Trump administration from the first term, great economic times. We would like to see a repeat of that, especially after the Biden inflation era. Instead, what they got, They got tariffs that hiked prices in the country. They got a president who was unable to explain his exit strategy for the Iranian war. And so they were left with nothing but the prospect of higher fuel prices. They saw all the hobby horses that Matt just explained, the Kennedy senator, the reflecting pool, and a president who continued to tell them that the economy was amazing, even though they knew that that was not the case.

15:08Talk about a disconnect. They got no forward-looking agenda. What were the Republicans going to do for them in the next two years? They talked a lot about a bill they passed more than a year ago. But some 85 % of voters, I would note, Paul, in NBC exit polls said that they were very concerned or somewhat concerned about the cost of health care. Like, what was the GOP's plan for that? There wasn't one. And they saw a president as well that I would know spent all of his time talking almost exclusively to the mega base that was already prepared to come out and vote for him. Not at all to these newcomers to the party, the moderate, the soft, the new Republicans and the independents totally missed that audience.

15:48And so their attitude was, what have you done for me lately? What are you going to do for me? Nothing looks good here. And we'll go back to the way we were voting beforehand, which is largely for Democrats. No doubt all those voters in Brownsville, Texas, along the border were waiting to see if they could get their seat to the Kennedy Center when it's redesigned because that was no doubt a top priority. Also take the kids and see the new reflecting pool. The misplaced priorities here, of course, is the big question. I want to bring up, Matt, and get your comment on the Iran war and its influence.

16:24No question it hurt. Voters in the exit polls said 63 % said it was a wrong decision to go to war. 37 % said it was the right decision. I actually thought it would be worse than that, given the high gas prices and diesel prices and the fact that, as Kim said, the president's never really explained what he's doing there and how he's going to get out. But it was a factor. But I think there are a lot of other factors in there, too. To think, as J.D. Vance suggested in a Twitter post today, that the dominant, if not the only factor is a big mistake. You know, I was struck by just looking at the voter priorities in the exit poll.

17:00The economy, as I mentioned, by far the most important. Below that was democracy, you know, a very amorphous term, but probably encompasses some of the corruption charges against Trump, some of the lawfare, some of the other more eccentric aspects of his personal style of rule. And then dropping down by almost 18 points, you get to immigration as the third most important issue. And those people who said immigration was the most important backed Republicans because they appreciate Donald Trump's efforts at the border. Foreign policy was way behind at 4 % of the voters who said foreign policy was most important.

17:36And those voters, Paul, broke for Republicans. So it wasn't necessarily a big hindrance. Now, that said, as you point out, people don't like the war. They don't like the way it's going. They don't, understandably, because as Trump often points out, it's a war where there's actually very little fighting. And instead, we have this standoff in the Strait of Hormuz. We have the constant threat of Iranian attacks on Gulf oil infrastructure, which is really, I think, the dominant factor now, the perception of threat moving oil markets. And we have this increase in gas prices, which every American feels.

18:10And then diesel prices, even more of an increase, which, of of course, are passed through to the consumer through transport and then also hurt the farm belt, which really backed Democrats this time. So there's no question to me that the Iran war has played a part in this epical defeat. It's a question of how great a part it played. And to counter the J.D. Vance's of the world, I would just point to another finding in the exit poll, which I thought was interesting, which is that they asked, you know, should the United States remain as active as we are in the world or be more active, or should we be less active in the world?

18:43And 56 % of voters said that the United States should either maintain our current level of activity in the world or increase it. And only 43 % said America should play a less active role in world affairs. So the idea that there's a majority there for American retreat, for American withdrawal, and for basically tossing aside the burdens of American world leadership, I think is just wrong. We are going to take another break. And when we come back, we'll talk about how Donald Trump might respond to this Democratic route on Tuesday when we come back. At Janice Henderson, we strive to deliver better outcomes through insight-led investing, innovation for clients, and a partnership approach that's core to our identity.

19:29I'm Jessica Lianzini, head of fixed income client portfolio management. I'm passionate about my role in investments. It allows me to partner with our clients, simplify fixed income, and support them in achieving better outcomes for their clients. Janice Henderson, investing in a brighter future together.

19:50Don't forget, you can reach the latest episode of Potomac Watch anytime. Just ask your smart speaker, play the Opinion Potomac Watch podcast. That is, play the Opinion Potomac Watch podcast. From the opinion pages of The Wall Street Journal, this is Potomac Watch. Welcome back. I'm Paul Gigo here, and we're breaking down the election with Matt Continetti and Kim Strassel. I just want to point to two other issues that I think made a big difference. If you look at tariffs, 63 % of the voters said that tariffs hurt the U.S. economy. They broke for Democrats 80 to 18. OK, that's two thirds basically saying tariffs hurt.

20:37And you can see the devastating effect they had in Kansas and Iowa politically. And then immigration policy. I may disagree with the two of you guys in this. I mean, one question was, has immigration enforcement gone too far? And 57 percent said, yes, it has gone too far versus 20 percent who said it is not gone far enough. That 20 percent, I think, safely all voted for Republicans. But of the 57 percent who said it's gone too far, it was 89 to 9 for Democrats. So those two issues, I think, were also a big factor, Kim. Yeah, absolutely. Look, the question of the border, this was what drove a lot of voters toward Donald Trump in 2024.

21:22But it was about an uncontrolled border. The president had that sorted out within months of getting into office. It was a policy coup. And had he stopped there, things might look kind of different right now. In fact, I think that even if the administration had been very strategic in its deportation policy and truly focused on going after folks that really were bad guys in targeted operations and could have heralded that, that would have been one thing, too. But instead, you've got these sweeping deportation efforts that involved sending entire teams of places into, for instance, Minneapolis. You had these shootings that happened, killings that happened, which sat very sourly with the public.

22:08And you had way too many stories of deportations that were happening of people that were mistaken or that did not fall into the category of felons or criminals. And it really undermined the administration's claim that this was just about getting rid of bad people in the country. It looked like overreach, looked like overkill. And that wasn't what Americans voted for when they went to the polls. The president has taken a lot of very bad advice from a lot of his advisers over the last couple of years because he knows as well that some of this has been undermining him in his own economic agenda. And for proof, I would point to the fact that he has waffled, for instance, on raids of some of these corporate sites and farms.

22:53Workers are absolutely needed. And he said, oh, no, we got to stop that. And then pretty soon they were back to doing it again. And none of this has served him in terms of economic numbers, but it's also not obviously served him in terms of public opinion. So let's listen to Donald Trump talk on Fox News on Tuesday night about whether or not he can work with Democrats. I'm a person that likes getting things done and there are things that we can work with we can't work on everything there are some things like some of the things I just named I don't think we can work I don't know if they really believe in the fact you know I've always really never understood how they could you know believe in the things I mentioned like as an example the men playing in women's sports I can't believe they really believe that's a good thing but maybe they do I don't understand that thinking But I can work with them on a lot of things.

23:44I mean, we can work with them on immigration, I think. Immigration's a big deal. I've always felt we should be able to work on immigration. Well, the president holding out something of an olive branch to the Democrats, except on transgender issues, that's going to be never the twain shall meet. But immigration, well, I guess hope springs eternal that something could be done on that. If anybody could do it from the right, it would be President Trump, given his hawkish positions in history on immigration. But, you know, from the Democratic point of view, Matt, let's take them first. This is their huge victory.

24:17What do you see them doing with this new power that they have? Are they going to want to cut deals with Trump or are they going to simply work to investigate the hell out of them, as the president might say, and then set everything up for sweeping the table in 2028? I think 2028 is definitely the goal. And so, you know, An election like 1974, of course, led to a Democratic win in 1976, an election like 2014, where Obama was shellacked by the Republicans. That set the stage for the 2016 victory for Republicans across the board. These midterms do seem to kind of indicate where the next cycle is going to go, especially when you have an open presidential race, right, and not an incumbent.

25:04Second term. Exactly right. And so we're having an open race in 2028. Both parties will have open nominating processes. So I expect that to be the Democrats' priority. And I think they'll approach it in a couple ways, Paul. One will be the investigations you mentioned, not just of President Trump, but of cabinet members, of people in the broader Trump circle, such as Elon Musk. There's possibly going to be an impeachment. I think the drive now, because the majorities are so large, there may be more enthusiasm for impeachment than there was certainly among Democratic elites just as recently as a week ago.

25:39Then you're going to have kind of the messaging aspects. So you're going to be sending a lot of bills to Trump on the assumption that he's going to veto them. This is bills like the famous H.R. 1, you know, which imposes a racist voter ID across the country and relaxes all the requirements on registration and ballots that Republican states have imposed. Forced ballast harvesting. Exactly. California rolls for 50 states. That's a perennial for Democrats. It's always their first and their first bill. Then we have things like the Equality Act, which, of course, would get to that issue of biological men and women's sports by permitting it and by federalizing the law.

26:16Those are bills that they're going to be having for the base. I think restoring the Affordable Care Act subsidies, that will be part of that effort. Trump's likely to veto that. Rescinding all of the work requirements on Medicaid recipients. That was part of the one big, beautiful bill. That's another thing you'll have. But then you have the third track, and that is just funding the government. And I think in funding the government, there will be room for some type of deal making between Trump and the Congress. Democrats like government. That's what they're about. So they're going to want to see it funded.

26:47One possible compromise where you might see bipartisan action is in a minimum wage increase. Minimum wage has not been increased almost for 20 years. And I think Democrats very much want that. I think Trump might think it's a gimme. something similar happened with George W. Bush in 2007, the last time we raised the minimum wage and the last time the Democrats took control of Congress. There's also the dreamers, finally, that Trump has often remarked about doing something about regularizing the status of illegal immigrants who are brought to the country as children. That would certainly be a priority for the Democrats as well.

27:21That's another possibility. If it goes like the last two years of Trump's first term, however, all of those deals are going to easily be shunted aside in favor of just brawling, bare-knuckled political trench warfare. And that would be my bet as well, that that's probably going to be the dominant thing that the theme we hear. I'm a little worried, Kim, that he would sign some bad bills that sound, spending bills in particular, blowout spending bills that he can advertise as being giveaways. I would say, Matt, I think I disagree with you on the Affordable Care Act subsidies. J.D. Vance is going to be whispering in his ear and maybe telling the country, you know, he supports that.

28:06And he's also going to probably be telling Trump a tax increase. Yep, tax increase. Go along with that. So I think there's going to be some real debate in the White House about whether or not Trump should sign on to some of these Democratic priorities or negotiate them in a way that he could assign them. The other thing is that impulse may all be blown away, as Matt suggests, by the investigations. And a lot of it is going to focus on the so-called corruption issue, which was in the exit polls clearly showed through Kim. And I think the Trump family businesses are going to be front and center.

28:41The cryptocurrency stuff, the deal with the PACs, the deal with Pentagon companies, all of that. Yeah, corruption. The numbers were stunning in the exit polls, Paul. 90 percent of those in the exit polls said that corruption was a crucial, a very important issue for them. Now, part of that is Republican voters who view government corruption as a different thing other than than Trump. But Democrats are going to be very focused on this. I will tell you, Paul, I would actually love it if, in fact, even though this sounds strange to say, the best case scenario would be if Democrats obsessed on investigations and impeaching Trump because what could come out of cooperation is actually terrifying to me.

29:22No, it is. It would be far worse in the long term for the country and for a couple of reasons. One, Donald Trump realizes he's in his last two years. So the only victories he's going to be able to cement out of Congress are ones that he can agree to with Democrats. That is going to involve enormous amounts of money and spending. And a couple are going to come up, by the way, already in the lame duck. Everybody is going to come back to Congress and be all eager to give some sort of aid and comfort to farmers. And there's a farm bill reauthorization coming up. Both sides have their eyes on a highway surface transportation bill, which is just another word for pork, but which we've got a new word for these days.

30:04It's infrastructure, Paul. So they're going to have a lot of talk about that. That's one problem is just the president's desire. You're going to have J.D. Vance and again, I would say other poorly informed advisers when it comes to free market policy, whispering to Trump that his coalition and the Republican coalition going forward is one that looks very much like what Democrats are courting to. So labor unions, working families, and you are going to have Democrats trying to play on that. Expect, you know, more demands for regulation that help out labor unions or more gimmies to the union cause.

30:45Expect more subsidies targeted at, quote, working families, whether that be the ACA tax credits or whether it be new forms of subsidies that are meant to give working families, you know, a leg up. This is very much the Vance operating agenda. This is a guy, there's been a great clip online circulating of him, of a J.D. Vance from, you know, a few years ago being asked, who are your favorite Democrats? And he says, you know, Bernie Sanders, Elizabeth Warren and Tulsi Gabbard. I don't see any reason why that's changed. And those guys know it, too. And smart Democrats, if they're being smart, they're going to try to use this opportunity to get some of their own priorities based on a brief Republican willingness for this in the final two years of this administration.

31:30I want to Matt briefly before I wrap it up. But one of the things that always happens when you have divided government, Republicans want more defense spending, Democrats want more social spending. They agree. Let's spend more on both. And so let's see if we can get that annual deficit up to two and a half trillion, maybe. Why not? Well, they have an opportunity for that in the lame duck as well, because Donald Trump's defense bill has still not passed. And, you know, that's, I think, a priority for national security hawks in both parties, it should be. So we get the defense spending through before this new Congress arrives.

32:03I think that'd be a win for the administration and the world. That would be a huge win. And it's very good advice. All right, Matt Continetti and Kim Strassel, thank you so much. Thank you all for listening. There's an awful lot to unpack here from this very significant election. We'll have it for you in the coming days, looking at specific aspects of it. Also, much more on how the president and the Democrats are likely to move forward. Thank you all for listening. We are here every day on Potomac Watch. I'm Mike McNerney, equity investment strategist. Markets move fast. My mission is to provide market insights to our clients that help turn uncertainty into opportunity.

32:41Janice Henderson, investing in a brighter future together.