The US mid-term elections, to be held on November 8th, will be the main focus for US domestic politics this year. All 435 seats in the House of Representatives (the lower house of Congress) are up for grabs, as well as a third of those in the Senate (the upper house). The Democratic Party, which now controls the House, the Senate and the presidency, has many reasons to be concerned. One is historical: since 1946 the party of the sitting president has lost seats in the House in all but two mid-term elections (in 1998 and 2002), with an average loss of 25 seats. This alone suggests a defeat for the Democrats, as it would only take a net loss of about five seats to lose their majority. Other causes for concern include Mr Biden’s low polling numbers, the announcement by several House Democrats (about 30 currently, some in competitive districts) that they will not seek re-election, and the party’s poor performance in high-profile gubernatorial elections in November 2021.

A landslide victory by the Republican Party is far from guaranteed

Although the Democrats face an uphill battle, a landslide victory by the Republican Party is far from guaranteed. Our current forecast is that the Republicans will narrowly retake the House. The Senate race remains too close to call; the chamber is split 50-50 at the moment (the Democratic vice-president, Kamala Harris, casts the tie-breaking vote), and a handful of the seats up for election will be a toss-up.

How would a Repulican win affect the policy climate?

The stakes for the Democrats are extremely high. Even if they lose just one house of Congress, the legislative agenda of the president, Joe Biden, would hit a wall—with the US political climate deeply polarised and the Republicans eyeing additional victories in the 2024 elections, there would be no chance of generating bipartisan support for Democratic policy priorities. Defeat in the mid-term elections would also obliterate any remaining possibility of the Democrats securing major legislative victories during the rest of Mr Biden’s term. This would put him and the Democrats on an extremely weak footing ahead of the 2024 presidential election.

This year is dominated by a series of important elections. Uniquely positioned to intersect politics, policy and the economy, EIU Country Report’s should be vital reading when assessing how decisions at the ballot box will affect your business operations. All our reports are available to explore here.