Democrats win both chambers in US midterms, but Trump-style politics and his remaining powers remain a threat

Martin Wolf opens by saying the United States has wrecked its military credibility and its diplomatic credibility.

He says he does not want his country to become a pitiful, helpless former giant, yet in just two years it has gone a long way down that road.

Wolf says American voters have delivered a resounding defeat to Donald Trump's Republicans. The Democrats now control both the House of Representatives and the Senate, but Trump still has two years in the White House.

Wolf poses the open questions of how much the Democrats can constrain him and whether the election has changed the course of American democracy. He then introduces Krugman, a longtime critic of Trump, to discuss whether the result signals a turning point.

Wolf recalls that after the 2006 midterms and Obama's 2008 win, many thought America had changed, yet Trump became president two terms later. He asks whether the kind of politics seen recently is now gone or might come back, possibly worse.

Krugman says that, as best they can tell, something like 25 to 30% of the US electorate is fundamentally comfortable with authoritarianism and fundamentally uncomfortable with democracy. That is a large enough share that under the right circumstances the bad side can win.

Krugman adds that a similar proportion appears to hold the same attitude in almost every Western nation, so the US is more exceptional in how the situation played out than in the underlying support.

Krugman says there are structural reasons why authoritarians tend to govern badly when in power. However, he argues the lurid incompetence and lurid corruption that Trump has displayed is not something one can count on.

He concludes that the bad side cannot always be relied upon to be that bad at doing its job.

Wolf suggests that the reasons given sound more like reasons for voting against Trump and the Republicans than an enthusiastic embrace of what the Democrats stand for. Krugman agrees that the vote was very much against Trump.

Krugman notes that the Democrats have fielded charismatic, inspiring, younger politicians, much more so than since Obama, and describes John Ossoff as Obama with more edge. He says the party's agenda is somewhat more solidly center-left than before but is not well defined, so it lacks a thrilling agenda, at least so far.

Krugman says the first thing that matters that has changed hands is the investigative power. Congressional investigations with subpoena power and sanctions against witnesses who refuse to testify will now be possible on scandals.

He explains that the power of office and control of Congress had been used to keep a lid on wrongdoing, and that Democrats can now go after it. In earlier periods of Democratic control there was always a sense of moving forward rather than back, but he says this time they seem ready to act.

Krugman notes that the prospective head of the House Oversight Committee has tweeted 'lawyer up'. He argues that officials who had simply followed Trump's orders, even clearly illegal ones, may now ask whether they will land in jail, and that businesses that accommodated Trump's agenda may start worrying about personal exposure.

Krugman says the Democrats will now be able to pass legislation. They will most of the time be unable to get it past a presidential veto, but they can force Trump to use the veto pen on extremely popular proposals and force Republicans upholding the veto to go on record against things the public wants.

He sees a few areas where some Republicans may defect, particularly on policy towards Ukraine, where enough might defect to override a presidential veto.

Krugman is clear that Obamacare 2.0, Medicare for all, and a nationwide wealth tax on billionaires will not happen in the next two years, though he says this does not mean the Democrats will be ineffectual.

Wolf asks about impeachments, noting a long list of people some Democrats would like to impeach, starting with the president and including the secretary of war as an obvious candidate.

Krugman says his big concern is about Hegseth, who he notes is legally still the secretary of defense whatever he wants to call himself. He worries the Democrats will not be able to impeach him because Trump will fire him first.

He adds that several figures are much hated within their own party and may be scapegoated and removed by Trump, so impeachment may be short-circuited by summary dismissal. Even so, he argues that forcing Republicans to vote against impeachment is itself a political win.

Wolf says finance and budgets will be fiercely contested. An administration needs a budget to keep operating, and it seems plausible the parties will not agree one. Trump will not have the legislature he had when he passed the One Big Beautiful Bill Act.

Wolf raises the possibility of a government shutdown, another cliff edge over the ability to service debt, and large fiscal shenanigans, noting there is already worry about the American fiscal position.

Krugman says that although he has been a deficit dove over the years, he is not happy that the US is running deficits of 6% of GDP at full employment with debt at 100% of GDP. He says that by the numbers the US and France look identical, and only the fact that it borrows in its own currency, the world's dominant currency, keeps it from seeing a rise in spreads.

Wolf calls the question of how the Democrats handle a looming debt ceiling fight an interesting and difficult strategic one. Krugman says that historically, brinkmanship that shut down the government has tended to backfire on the party that brought about the halt.

Krugman notes that when Republicans pressed this against Obama, Obama was still a relatively popular president. The situation is different with a president whose approval rating is around 35% with almost zero strong approval, so the strategic calculation is very tough.

Krugman adds that even Trump, with his loyalists and veto power, wants half a trillion dollars for defense and wants to keep the government running, and it is unclear whether the power of the purse still holds.

Wolf says the Democrats will need to be very careful with the budget because they have the wind in their sails but do not want to trigger something that can plausibly be presented as a forced fiscal crisis that they caused. Krugman says this area takes finesse and that he does not trust his own instincts on it.

Krugman says the Democrats will certainly try to defund specific things, such as the ballroom project and probably ICE. Whether to provoke a full-blown fiscal crisis is a tough call, and it may depend partly on how outrageous Trump's demands and behavior are.

Krugman says one of the more amusing vignettes of the post-election period is Donald Trump blaming Fox News for his defeat. He describes this as a rather beautiful moment of falling-out among those involved, in his view.

Krugman says it is worth noting that although the Democrats' huge victory might suggest democracy is safe, the election was heavily rigged. Republicans had gerrymandered so that the Democrats probably needed a four to five percent majority in the vote to take the House, yet they actually won by about 13 points.

He says that in some cases the gerrymanders may have turned into dummy manders that hurt Republicans, but this is not something to count on. He compares the situation to Hungary, where the Orban regime had rigged the system so it could not lose unless facing an absolute tsunami of voter revulsion, which he says is essentially what happened in the United States too.

Wolf says the institutional damage can be subsumed under credibility. He asks whether normal relations with other countries can be rebuilt when everyone knows America elected Trump twice and that Trump completely ripped up its international agreements.

Wolf argues that any agreement with the United States now looks like a suggestion that a future Trump-like figure could simply ignore. He raises doubts about whether good people will want to enter government institutions, noting that civil servants who once accepted lower pay for a sense of meaning are leaving, and that many military officers are leaving or considering it.

Wolf notes that even routine government functions have been politicized, saying the Social Security administration has been sending checks accompanied by political messages lavishing praise on Trump. He adds that long-term reconstruction of lawyers at the Justice Department, the foreign service, and the Internal Revenue Service will be required and will not happen quickly.

Wolf observes that America used to have a bipartisan elite that agreed on certain things, but now everything is political. He asks how the US can create continuity and credibility for its policy without that group, and says the effort to blow up the so-called deep state has in practice been blowing up the state itself.

Wolf says Trump still has immense powers, partly because of the constitution and the Supreme Court, particularly on foreign policy. He asks how much damage Trump can still do, given that he may feel he has nothing to lose.

Krugman recalls widespread speculation, which he says has diminished somewhat, that Trump would resume bombing Iran as soon as the midterms were over, partly to assert his masculinity. He also reports rumors, which he cannot verify, that the use of a tactical nuke was under serious consideration because Iranian nuclear facilities are very deep underground.

Krugman suggests the sheer scale of the Democratic victory may have deterred such action, though he says we do not know. He says foreign policy and military action are where Trump can do immense damage, while it is not clear how much he can do domestically now.

Krugman notes that the House and Senate are now split differently from before the midterms, with Democrats in control of both chambers. He says this limits even Trump's ability to do horrible things, but it is not gone.

Krugman says the election result is much stronger and more decisive than one might have expected, which he calls wonderful. He says it gives the new Congress a tremendous opportunity to lay down markers, investigate, and continue the educational process, though there are tricky decisions about how far to push.

Krugman notes that Trump is still president and can still drop bombs on people, though he may feel somewhat constrained. Wolf says the long-term future of the United States and its ability to rebuild its institutions and credibility remain in question.

Krugman adds that he is concerned the internal threat is not gone by a long shot, and that America is enormously weakened compared with three years ago. He says the country has wrecked its military and diplomatic credibility and done enormous damage to its scientific institutions.