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Voters have sent a strong election-year message to the new Democratic congressional majority and President Trump: Repair the damage inflation has done to the economy.

Trump, who campaigned on the idea that a Democratic victory in the midterms would trigger a 1929-style economic depression, has maintained that the economy is booming. Since his party lost in Tuesday’s voting, he has claimed he is willing to work with Democrats in the House and Senate, though that’s not something he has done much of in the past.

“I’ll get along, probably, with the Democrats, unless they want to be destructive,” Trump told reporters last week.

After Friday’s strong jobs report showed employers adding 165,000 jobs and the unemployment rate dipping to 4.1%, Trump was defiant. “Democrats may control Congress, but I will NEVER stop fighting for you, and I will VETO anything that hurts America,” he said in a text message to his supporters.

Democrats are seeking to check Trump’s power and are preparing for early fights on government spending. Other challenges include chronic budget deficits, tariffs, artificial intelligence and difficult choices about a Social Security system that could run short of money in as little as six years.

But as long as rising prices keep making middle-class lives less affordable, Democrats and Republicans alike face the risk of angering and alienating voters in the next election cycle.

“Until inflation and interest rates are under control, the likelihood of change elections is going to be high on an ongoing basis,” said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget.

Americans want lower prices

Trump’s tariffs and the war against Iran that he launched in February contributed to the consumer price index climbing to 3.7% annually. The president also tried to bully the Federal Reserve, an independent body tasked with keeping inflation low, to slash its benchmark interest rate in ways that could have worsened inflation.

The gridlock of a Republican White House and Democratic Congress gives the Fed more room to maneuver, possibly smoothing the central bank’s ability to return inflation to the 2% target it has failed to reach for nearly six years.

“I think that one of the surprise winners Tuesday was the Fed,” said Douglas Holtz-Eakin, an economist and president of the center-right American Action Forum.

The Democratic Senate could block Trump’s ability to fill potentially open spots on the Fed board, Holtz-Eakin said, removing “Trump’s incentives to meddle with the Fed” and clearing a path for Fed Chair Kevin Warsh “to follow his instincts and aggressively reduce inflation.”

Trump has maintained that the costs of oil, gasoline and diesel will all plummet once the Iran war ends. The problem is he refuses to say when or how the war will come to a conclusion.

John Cochrane, an economist at Stanford University’s Hoover Institution, stressed that the Fed’s efforts to combat inflation would be helped if the federal government reduced budget deficits.

“It takes monetary and fiscal restraint,” he said.

Federal government keeps borrowing

The U.S. government keeps amassing debt as tax revenues fall short of burgeoning spending on Medicare, Medicaid, Social Security and other programs. Paying the interest on the national debt now tops $1 trillion annually and exceeds spending on the military. The problem could spiral because investors have pushed up the interest rates charged on government debt over the past year.

Neither the White House nor Democrats ran on spending cuts. The president wants an additional $500 billion a year for the military, while some Democratic candidates have pushed for restoring Affordable Care Act subsidies that lapsed under Trump.

Since August, Treasury Secretary Scott Bessent has repeatedly said the administration would put forward a plan to trim the roughly $2-trillion annual budget deficit. Bessent is working with White House budget director Russell Vought on cuts they’re branding as a “fiscal consolidation plan,” to be released after the election.

Deficit reduction would likely require some combination of tax increases and spending cuts, Goldwein said. But he said that the lowest hanging fruit would be to trim Medicare expenditures in ways that save money for both the government and patients.

“It’s not rocket science,” he said. “The most important thing you can do is reduce healthcare costs and find policies that lower the costs of Medicare, which will reduce deficits and interest rates.”

AI poses a dilemma for economy

When Harvard University economist Jason Furman thinks about the most important economic issues facing the United States, AI is at the top of his list.

“It’s the most screamingly obvious investment boom this country has ever had, or, possibly, second to railroads” in the late 19th century, Furman said.

Using AI, Furman has built an economic analysis tool called Econvitals that replicates some of the work done when he was chairman of the White House Council of Economic Advisers in Democratic President Obama’s administration.

Econvitals parsed construction spending data on Tuesday and found an 80.6% increase in data center construction over the past year, while spending on building homes, schools, factories and offices had fallen.

The stock market sold off last week on concerns that Democrats could restrict the construction of data centers and impose guardrails on AI. But the American economy still needs the technology to keep fueling growth now and into the future.

Trump has been vociferous in promoting the sector and has taken a hands-off stance on regulating AI, insisting that existing laws and voluntary agreements signed by tech companies are enough. He has shrugged off public concerns about the risks of job losses and large-scale cyberattacks, but a majority in the AP Voter Poll, a sweeping survey of the American electorate conducted in all 50 states, say AI does more harm than good for the economy.

The dilemma is that AI is helping to propel demand in the economy and sustain the stock market. If those slipped, there could be less consumer spending, lower growth and many in the U.S. feeling even worse off financially.

“Every time you have a single strength in an economy you are also having a big vulnerability,” Furman said.

Social Security needs to be rescued

Senators who won six-year terms last week will face the politically fraught challenge of working with Trump’s successor to find ways to save Social Security, which is projected to be unable to pay full benefits at the end of 2032.

Removing the cap on payroll taxes and increasing the retirement age are among the possible lifelines for sustaining the program that provides income to older Americans and those with disabilities. But any changes would likely need to be bipartisan to get enough votes to clear the Senate because Social Security overhauls cannot be made by party-line votes through the reconciliation process.

Sen. Elizabeth Warren (D-Mass.) said she saw an opening earlier this year to fix Social Security when she overheard Sen. Bernie Moreno, an Ohio Republican, talk about the need to lift the cap on payroll taxes. “I reached out to him in a matter of days,” she said in an interview this summer. The two senators went public with a plan that is still being formulated as legislation.

Warren, who worked with the Republicans on a law this year to encourage the construction of more homes, said other bipartisan efforts had failed because Republican lawmakers had been afraid to cross Trump.

But with Social Security, there is a need to act now. Experts say “the checks that go out to seniors will drop by nearly a quarter” after 2032, Warren said.

“Think what that means, literally, to millions and millions of Americans, who depend on those Social Security checks, or who have parents who depend on them. And Congress is doing nothing,” she said.

Boak writes for the Associated Press.

Rates will remain 3.75-4 percent even as inflation continues to rise.

The United States Federal Reserve is set to hold interest rates steady in its final monetary policy decision before the US midterm elections.

The central bank will maintain rates at 3.75-4 percent, following a 10-2 vote, in line with expectations.

CME FedWatch, which tracks the likelihood of monetary policy decisions, indicated that there was more than a 90 percent chance rates would remain unchanged.

“Economic activity is expanding at a strong pace,” the Fed said in its press release announcing the decision on Wednesday. “While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

The Fed noted how inflation continues to rise.

It also added, “The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal.”

The most recent Consumer Price Index (CPI) report showed the annual inflation rate increasing to 3.7 percent in September, up from 3.4 percent in August, with energy prices largely accounting for the monthly surge.

There were signs earlier this month that the central bank would maintain benchmark interest rates, with the Fed’s chair for supervision, Michelle Bowman, advocating a “wait and see” approach.

“I don’t feel any urgency for taking further action at this point,” she said at this month’s International Monetary Fund-World Bank meetings in Bangkok, Thailand. “We really need to take some time and understand how things will evolve.”

The decision comes before Thursday’s release of the Personal Consumption Expenditures (PCE) Price Index report, which is used by the central bank to assess inflation and inform its decisions.

Today’s Fed announcement follows an interest-rate hike rise last month, amid surging inflation – the first increase by the central bank since July 2023. The move drew criticism from US President Donald Trump, who has repeatedly pressed the Fed to cut rates since taking office. At the time, he wrote on Truth Social that “interest rates in the United States should be 1% or less.”

The Fed’s next monetary policy meeting is scheduled for December 8-9, when it will give its final rate decision of the year.

Current forecasts point to a quarter-point interest rate increase.

In what may be one of the most comical self-owns in recent politics, the esteemed attorneys of the U.S. Department of Justice announced Monday that despite the extravagant and terrifying misuse of their investigative power under the Trump administration, they have so far been able to identify only 28 people in all of California who may have voted illegally.

“The announcement today by the United States DOJ makes the point that there is no widespread voter fraud,” California Atty. Gen. Rob Bonta said after the news conference announcing the results of “Operation Protect the Vote.”

Twenty-eight people out of about 23 million registered voters in the state — and not all of them even tried to vote, according to the feds. That’s about 1 in 820,000 folks allegedly registering or voting illegally, a rate that roughly matches how often people in the United States get struck by lightning in a given year.

So much for Trump’s endless claims that there is a vast, organized conspiracy between Democrats and undocumented people to have them vote in large numbers to steal elections. I’ll point out here that none of those charged Monday have been accused of colluding with one another or with Democratic overlords.

All the power of the government — investigative, technological, legal — has been thrown at finding these mysterious, diabolically clever ballot baddies. And now, thanks to Bill Essayli, first assistant U.S. attorney for the Central District of California, and his colleagues across this great state, we now know that all 28 of them will be held accountable, if the government can prove wrongdoing. And let’s be clear — people who vote illegally should be held accountable.

But wait, there’s more, because this election-stealing plot by immigrants certainly doesn’t stop at the state line. Seamus Hughes of Court Watch, an excellent site that tracks federal litigation, reported Monday that since the start of this administration, 169 people have been charged federally with illegally registering or voting.

That number includes the new California cases, so it means an additional 141 potentially illegal voters have been charged across the U.S. — all told about 1 in 1.25 million registered voters being accused of illegally registering or voting, making this crime slightly less likely than guessing a six-digit pin code on the first try.

There. Is. No. Election. Stealing.

But that’s where the funny part ends, because this attack on California elections is serious and just getting started.

The federal government, you’ve probably read, is suing California, claiming it gave the state a janky thumb drive with 20,000 names of registered voters that it sort of strongly suspects maybe aren’t legal voters. Important note here: The government has been very careful not to claim that these people voted illegally, just that it might be so based on questionable data, which I’ll get to in a minute.

The feds gave the state a silly 48-hour deadline to agree to change constitutional law, dump common sense and sequester these 20,000 ballots, if they were even returned, to double-check they were cast by valid voters.

When California rightfully refused — because elections are run by states, not the federal government — the federal government sued on the thinnest of legal grounds. It basically claimed that voting illegally is illegal, and if California doesn’t do exactly what Trump wants, it could be violating the Supremacy Clause of the Constitution by impeding the feds from enforcing the crime of voter fraud.

First Assistant U.S. Atty. Bill Essayli speaks at a news conference Monday at which officials announced that 28 people in California had been charged with voter fraud.

(David Butow / For The Times)

Which is basically arguing that if the state government fails to stop voter fraud using the flawed methods Trump likes, then the state is somehow stopping federal authorities from prosecuting voter fraud themselves. But didn’t they just enforce it with 28 cases?

Get ready, because “state-facilitated voter fraud,” is a new right-wing thing.

California is “being complicit in non-citizens voting in our elections, and as they were warned last week, not only is it a civil violation, but they could also face criminal consequences,” Essayli said, which if it happened would give Trumped-up charges a whole new meaning.

Essayli said state officials are not being “good faith actors,” but I’ll argue that shoe is on the other foot. The list of 20,000 alleged, suspected, maybe-maybe-not illegal voters was likely drawn from the Systematic Alien Verification for Entitlements (SAVE) program, created by Elon Musk’s Department of Government Efficiency, if you can remember that unfortunate relic.

It sought to draw data from more than a dozen government databases that were not only not compatible with such information sharing, but which had been kept separate until now for privacy reasons. Americans in general did not want the government collecting unified, know-all records of every citizen.

Luckily for us, I guess, the SAVE system can’t actually create reliable, unified records. It confuses people, convolutes them, merges records of people with similar names, and in general has been deemed unreliable by data experts.

In September, the good folks at the UCLA Voting Rights Project joined with the Coalition for Humane Immigrant Rights to sue the federal government over its use of that system to target naturalized citizens for removal from voter rolls. Turns out, the government appears to be targeting immigrants who are now citizens with these voter fraud accusations.

As I wrote about a few weeks ago, naturalized citizens make up about 1 in 10 eligible voters, and nearly a quarter of them live in California. But they also live in swing states such as Michigan, where Democrat Abdul El-Sayed may draw such voters, and in other places such as Georgia and Nevada where races might be decided by only a few votes.

These arrests and lawsuits while voting is already underway in the midterms are a not-subtle form of voter suppression. Imagine being a naturalized citizen in the Central Valley, where ICE is driving rampant fear and where Republican Rep. David Valadao is running against Democrat Randy Villegas in California’s 22nd Congressional District — one of the nation’s most closely contested races.

Would you consider sitting this election out just in case your ballot draws the frightening eye of the federal government? Even knowing that your vote is legal, what if you lived in a mixed-status household? Would it be worth risking voting if it meant a knock at the door from immigration checking on your status, and maybe finding that family member who lacks it?

Why take the risk?

“Basically, what they’re doing now is just completely harassing and intimidating naturalized citizens who are legally eligible to vote through these actions,” said Matt Barreto, co-founder of the Voting Rights Project.

And if the vote isn’t suppressed enough to give Trump the results he wants, these prosecutions and lawsuits feed the beast of conspiracy, giving Trump fodder to claim the results are fake, the election stolen.

And round and round we go, reckoning with Trump’s claims that lightning is striking everyone, everywhere, all at once, because the vote didn’t go his way.

Oct. 14, 2026 10:49 AM PT

WASHINGTON — Federal Reserve governor Lisa Cook’s lawyers say that a committee set up by the White House last week to investigate an accusation against her is “demonstrably biased,” though they did not close the door on the possibility that she would appear before the panel.

Lawyer Abbe Lowell also said in a letter Tuesday that Cook would not be able to participate in a hearing Nov. 5 because she “will be executing her official duties as Governor at financial and monetary policy meetings in Europe.”

The earliest that Cook could appear before a “committee of inquiry” that the White House set up last Friday would be after the Fed’s policy meeting Dec. 8-9, the letter said. The letter was sent to William Scharf, a counsel to President Trump.

Lowell’s comments are the latest turn in the Trump administration’s extended efforts to fire Cook from her position as one of seven members of the Fed’s board of governors. Trump has accused Cook of committing mortgage fraud in 2021, before she joined the board, a claim she has denied. No criminal charges have been filed.

No president has fired a Fed governor before, a reflection of the Fed’s traditional independence from politics. Yet Trump, who has repeatedly demanded that the central bank lower its key interest rate, has taken numerous steps that economists say have threatened that independence. The Justice Department earlier this year sought to investigate then-Chair Jerome Powell over brief testimony he had given about an extensive building renovation, though a judge threw out subpoenas in the case and it was later dropped.

Cook was appointed by former President Biden and is the first Black woman on the Fed’s board.

Trump first tried to fire Cook in August 2025, but the Supreme Court ruled earlier this year she could remain in her position while litigation continued. The court also suggested, in a footnote to the ruling, that Trump could try again to fire her if the administration provided her adequate notice and an opportunity to respond. The committee of inquiry announced by the White House last Friday is an effort to meet those conditions.

Under the law governing the Fed, the president can only fire a Fed governor “for cause,” but the Supreme Court didn’t address whether Cook’s actions met that standard. The committee of inquiry will ultimately recommend whether there is cause to fire Cook, a White House memo last week said.

Lowell also said in the Tuesday letter that “we have significant concerns regarding the objectivity and fitness of the committee for its assigned purpose.”

One of its three members, Kevin Hassett, a top economic adviser to Trump, has already said the president has “cause” to fire Cook, the letter noted. The other two members — Labor Secretary Keith Sonderling and chair of the Equal Employment Opportunity Commission Andrea Rich — are also Trump appointees.

“A hearing with demonstrably biased members, unspecified additional allegations, and an unclear schedule for the disclosure of any additional evidence – with no explanation for why it was not previously produced – is not a process that respects the appearance or history of independence,” Lowell’s letter said.

Rugaber writes for the Associated Press.