Divided government at the national level may be the best election outcome we could have hoped for. Why? Because one party controlling both Congress and the presidency has not worked out all that well in recent decades when it comes to deficits and debt.
In 2001, former President George W. Bush and a Republican Congress enacted huge tax cuts, which — along with the unfunded cost of the war in Afghanistan — ended three years of budget surpluses and returned us to deficit spending.
In 2010, former President Barack Obama and the Democrats enacted Obamacare, which — while paired with offsetting tax increases and spending cuts at the time — greatly increased the size of our federal healthcare budget, with private health insurance costs rising in the years after. Not to mention, several of the offsetting taxes or spending cuts were ultimately repealed.
In 2017, President Donald Trump and a Republican Congress enacted another huge tax cut that increased our federal debt by $1.9 trillion, including interest.
Then, in 2021, former President Joe Biden and a Democratic Congress passed the $2.1 trillion deficit-financed American Rescue Plan Act, fueling inflation (which exceeded 9%).
Finally, in 2025, Trump and Republicans both extended and expanded the 2017 tax cuts, adding about $4 trillion to our national debt over a decade.
One-party rule generally worsened our fiscal picture. But it bears noting that in each case voters punished the party in power in the midterm election.
This midterm pattern reflects an inherent wisdom on the part of the electorate when either party goes too far. However, too often the party winning the midterm mistakes their victory for a mandate by going too far in the other direction — and then the cycle repeats itself.
What if — for once — both sides decided to put country before party?
They might find that there is a lot that can be done when working across the aisle.
For example, my guess is that — despite other differences on immigration — Trump would agree to a path to citizenship for so-called dreamers, a policy position he offered to Democrats in his first term.
After spending his life in the commercial real estate world, Trump is a builder — and, accordingly, Democrats could easily find common ground with Trump on much-needed infrastructure improvements.
In his first term, Trump fully funded Historically Black Colleges and Universities for a decade. It is likely that he would agree with Democrats to extend that funding.
Now back to fiscal issues. The Government Accountability Office estimates that the federal government loses between $200 billion and $500 billion annually (or more than $3 trillion over a decade) due to fraud and even more when including waste and abuse. Much of this occurs in programs designed to serve the poor or infirm. Waste, fraud, and abuse therefore divert dollars that were meant to meet real needs. Working with Vice President JD Vance’s Task Force to Eliminate Fraud should be a bipartisan priority.
Finally, the Social Security trustees warn that by 2032, our Social Security system will be in financial crisis — able to pay only 78% of promised benefits. When faced with a similar shortfall in the early 1980s, Republican President Ronald Reagan partnered with Democratic leaders in Congress to create a bipartisan commission to save Social Security and return the program to solvency. Trump and a Democratic Congress should again establish a commission for the sake of the 70 million Americans who rely on Social Security. Time is of the essence.
THE DEMOCRATS HAVE A CHRISTIANITY PROBLEM — TRUMP’S GOP IS JUST AS LOST
The good fiscal news is that, with divided government, we may not be as likely to see additional deficit-financed tax cuts or new spending programs. Unless, of course, both sides shake hands and agree to include costly political sweeteners in bills that do necessary things such as fund the government or raise the debt ceiling. But combatting fraud and fixing Social Security can help reduce long-term deficits and debt.
Clearly, the midterm election was in many respects a rejection of Trump and his policies — just as previous midterms were a referendum on earlier presidents. But simply opposing Trump is not going to accomplish anything. Most Americans instead expect their leaders to get things done. And as difficult as it is to imagine after results like these, real fiscal compromise may not be far-fetched after all.
Tim Penny is a co-chair of the Committee for a Responsible Federal Budget. He represented Minnesota’s 1st Congressional District in the U.S. House from 1982 to 1994.