The Democrats' success in winning back control of the House comes after an election in which economic issues were often overshadowed. Still, the change on Capitol Hill will make a difference on some spending priorities and tax policy.
House Democrats are in a position to block Republicans from extending the temporary tax cuts and provisions enacted last year, and from giving further breaks to businesses. President Donald Trump even talked at his Wednesday news conference about working with Democrats to raise business taxes to pay for a middle-class tax cut.
Teaming up to rebuild infrastructure is another possibility, the president said.
The momentum on health care has shifted toward shoring up and improving the Affordable Care Act and reining in prescription drug costs. Republican efforts to shrink spending on what are known as entitlement programs — Medicare, Social Security and Medicaid — will also be shunted aside with Democrats pushing to patch up the safety net.
Prospects for agreement, though, are still sketchy. Republicans and Democrats "can have overlapping positions," said William G. Gale, co-director of the nonpartisan Urban-Brookings Tax Policy Center in Washington. "But any compromise requires trust, and I just don't think there's any trust available right now."
What kind of legislation can we expect? With control of only one chamber, and an antagonist in the White House, the Democrats won't be able to push through initiatives on their own. Instead, they are likely to highlight their priorities for the future by passing a lot of bills — think of them more as billboards, designed to shape an agenda and deliver a message. An increase in the minimum wage, an expansion of health care coverage and an infrastructure build-a-thon are obvious candidates.
Democrats will be able to block efforts to trim safety net programs like food stamps and Medicaid. They are also likely to focus on investigating the administration.
What about tax policy? A few weeks ago, Trump started talking about a 10 percent tax cut for the middle class. Then on Wednesday, he spoke of backtracking a bit on last year's corporate tax cut as part of a broader deal to give the middle class a tax cut. "If Democrats come up with an idea for tax cuts," he said, he would consider the options. "I would certainly be willing to do a little bit of an adjustment."
Raising taxes would be a repudiation of the agenda of House Republicans. They laid out a plan in September to make permanent most of the temporary cuts and provisions for individuals and small businesses enacted last year.
Are there other possible areas of agreement? You may remember that for the blink of an eye last year, it seemed that the Democratic leadership in Congress might make a deal with Trump to tie tax reform to a proposal to repair roads, bridges, waterways and airports.
Infrastructure has often been hospitable ground for bipartisan initiatives. Trump has always been enthusiastic about building on a grand scale, and in many ways, the Democrats are more willing partners than Republicans, who have consistently objected to the kind of spending required.
Trump noted the potential on Wednesday, saying, "We have a lot of things in common on infrastructure."
The Democrats have put together a trillion-dollar infrastructure proposal aimed at everything from broadband to waterways. But financing remains a problem.
Will trade policy change? Trump has paid little attention to critics in either party in pursuing a confrontational trade policy. The administration has the power to impose tariffs without congressional approval, and that is exactly what it has done. The White House has indicated that it will present tariffs on all other Chinese imports — worth an additional $257 billion — if talks between the United States and China at the G-20 summit this month fail to produce progress.
Congress will have the chance to weigh in on the United States-Mexico-Canada Agreement, which is to replace the North American Free Trade Agreement. But the accord could come up for a vote before the Democrats take control, heading off any push by House Democrats for a tougher deal.
Will the government keep running? There are two issues that Congress must confront next year: the debt ceiling and the legally mandated limits on spending approved annually by Congress. Failure to address the budget limits could prompt deep spending cuts and a partial government shutdown. And without an accord on the debt ceiling, the government would default on its payments and risk injuring its credit rating and causing a global panic.
Since a shutdown can tar both parties, Democrats and Republicans are likely to strike some deal. The wild card is Trump. The president has said that "I would have no problem doing a shutdown" to force Congress to fund a wall along the Mexican border. He may have even less of a problem with it if he could more easily blame the Democrats.