Shape of the House and Senate Races

Change elections seem to be the new normal considering how polarized and divided the US has become. Over the course of the year, we’ve mentioned that a large number of House races will determine control of the currently Republican-held House fall in blue states such as California and New York where there is no substantial presidential campaign taking place. And the most critical races that will decide control of the currently Democratic-held Senate this cycle are mainly in red states—Montana, Ohio, and West Virginia.

Since Labor Day, Republicans have expanded the Senate map and are currently on track to pick up 2-4 seats. With West Virginia all but a foregone conclusion, Montana has moved from toss-up to leaning Republican, and Ohio is a pure toss-up. Michigan and Wisconsin are tightening up with Republicans closing the polling gaps on Democrats in those states.

With the switch to Harris, enthusiasm for the Democratic ticket has given a much-needed boost to down-ballot House races, especially in California and New York. Republicans are trying to stem that tide with appearances from Trump in those blue strongholds as well as an influx of outside money.

Should We Expect a Divided Government?

This recent political phenomenon of the House, the Senate, and the White House all changing party hands is more likely than many people realize—and may last through the next few election and mid-term election cycles. While most voters may not love divided government, particularly when the US faces multiple fiscal and policy challenges, they certainly prefer it to the alternative of seeing a party with which they don’t fully sync take full control of Washington.

Our current view is that we’re trending toward divided government in 2025-26 that would check the ability of Harris or Trump to fully enact their respective agendas. Big ideas such as renewing the 2017 Tax Cuts and Jobs Act or rewriting the tax code will be nearly impossible if the person in the White House is dealing with a House controlled by the other party. Just getting a budget passed and raising the debt ceiling without triggering a government shutdown will be extremely challenging in this environment.

On the other hand, we’ve seen both the presidential candidates and current members of Congress trending toward common ground (emphasis on trending) on a handful of issues: Deglobalization and incentivizing US manufacturing; increasing domestic-energy production; expanding the Child Care Tax Credit; and taking a hard line on China and Big-Tech regulation. We’re not suggesting there’s total agreement on these issues but, optimistically, the candidates and many in their respective parties are migrating in the same direction.

What’s clear to us at this juncture is how difficult the partisan dynamic will be in Washington once a bitter, divisive, and potentially razor-thin election is over. To better understand the partisan divide, the House map above illustrates just how red or blue the country is. Approximately 17-21 districts are considered “purple” or “toss-ups,” and when you add in a handful of the “lean Democrat/lean Republican” districts, we’re looking at a total of 42 out of 435 House seats. This means only 10% of the seats in the US House of Representatives aren’t royal blue or ruby red!

To that end, we foresee a swing of up to a four-seat majority for the Democrats or a six-seat majority for the Republicans. Either way, we’re looking at slim, hard-to-govern majorities with centrists on the endangered list.

Despite the handful of areas in which the two parties agree, major pieces of legislation hang in the balance. In the near term this includes the budget, disaster assistance, farm legislation, and defense policy. And, when looking toward 2025, we expect tax policy and immigration to dominate most of the year—and one critical arena both parties continue to neglect: the US debt and deficit.