Democratic control reshapes White House budget authority

The Associated Press forecasts Democrats will flip Senate seats in Iowa, Kansas, North Carolina, Ohio, South Carolina, and Texas. This shift gives the party a majority in the chamber and secures control of the House. With both houses under Democratic leadership, the new Congress gains the power to shape spending and investigate the administration. This structural change directly impacts the fiscal constraints on President Donald Trump's foreign policy agenda.

Laurel Rapp, director of Chatham House's U.S. and North America Programme, stated that the president remains somewhat constrained on matters of oversight. However, she noted that he retains a lot of latitude on foreign policy. Rapp identified the war in Iran as a major issue of the election cycle. She pointed to soaring fuel prices, food costs, and inflation as key factors. The conflict began on Feb. 28, when Trump launched joint strikes with Israel. Rapp said Republicans do not really have an off-ramp at this stage. She added that Democrats are expected to seek votes in both chambers to restrain the administration on Iran war powers.

Democrats can use the power of the purse to limit spending on the U.S. military. They may also target other Iran related costs. With control of both chambers, the party could pass legislation seeking to direct Trump to end U.S. involvement in the conflict. Making such a measure binding over a presidential veto would require enough votes in Congress to override it. This legislative path offers a concrete method for the new majority to check executive action.

Berenberg Chief Economist Holger Schmieding published a note on Wednesday. He predicted a final round of bombing in Iran. He expects Trump to strike a deal to reopen the Strait of Hormuz by 2027. Schmieding argued that voters feel the sting from high prices and fuel costs. This economic pressure may force a diplomatic resolution to the ongoing military engagement.

J.C. Lintzenich, a visiting senior fellow at the German Marshall Fund, rejected the notion that Trump has become a lame duck. He told CNBC's Squawk Box Europe on Wednesday that the election changes the Congress. It does not change the president. Lintzenich stated that the President of the United States still has lots of power and authority. He noted that there is still pending action in Iran. He also cited the unresolved situation with Russia and Ukraine.

Lintzenich observed that the outgoing Congress was more willing to let the White House slide. Democratic control of both chambers will produce a more assertive legislature. This body will use its Article I powers over legislation, spending, and oversight. The goal is to hold the administration more closely to existing law. Lintzenich noted that congressionally required funding for Ukraine would face closer application of statute under the new majority.

Schmieding warned of potential trouble as Trump loses control of the Senate. He described the president as a perennial attention seeker without a consistent long-term strategy. Schmieding suggested that Trump may become eager to pursue dangerous geopolitical adventures. He wrote that Congress will most likely not grant him the money for an expensive campaign similar to the Iran war. He added that observers probably have to brace themselves for significant foreign policy noise in the two final years of the Trump presidency.

On Russia and Ukraine, Schmieding called the war the tail risk. He said Trump will likely try to pressure Ukraine to de facto surrender to Russian demands. Schmieding considers this outcome unlikely because the president has lost support on the matter from his own party. He noted that most Republicans, including Secretary of State Marco Rubio, do not share Trump's sympathy for Putin. Schmieding concluded that this internal party division can help contain the risk of Trump trying to impose an unacceptable deal on Ukraine. He sees it as a tail risk rather than a likely outcome.