Lawmakers have left Washington to campaign back home, leaving an unfinished legislative agenda. The midterms will shape what Congress can accomplish in the lame-duck session, including whether lawmakers can reach deals on taxes, defense spending and other priorities. POLITICO’s policy and politics teams are tracking the campaigns and what the results could mean for Washington’s agenda. |
— Transportation Secretary Sean Duffy is calling for billions more to revamp the nation’s air traffic control system, after Congress approved $12.5 billion for the effort last year.
— The midterm results could determine whether Congress takes up President Donald Trump's $1.5 trillion defense budget in the lame duck.
— White House officials are hoping to announce a trade deal with Mexico before Election Day. |
Agriculture— Midterms looming: The results of November’s midterms will have sweeping impacts on Congress’ committee leadership and the odds of passage for any agriculture policy. Democrats are already eyeing oversight of the Trump administration’s sweeping cuts to USDA staff and farmer-facing programs.
— Committee shake-up: Lawmakers are already angling to replace three of four leaders on the House and Senate Agriculture Committees.
Sen. Amy Klobuchar (D-Minn.), the ranking member of the Senate’s Agriculture Committee, is running for Minnesota governor and expected to clear the way for Sen. Michael Bennet (D-Colo.) to take over her post. Former Sen. Sherrod Brown (D-Ohio) could also take over for Klobuchar if he wins in November because he would retain his committee seniority.
Rep. Angie Craig (D-Minn.) will leave the House after an unsuccessful bid for Minnesota’s open Senate seat. Rep. Shontel Brown (D-Ohio) has launched a run for the job, but Rep. Jim Costa (D-Calif.) is also eyeing a challenge.
House Agriculture Chair G.T. Thompson (R-Pa.) wants a waiver from GOP leaders to stay atop the panel, as he’s set to hit the caucus-imposed time limit on committee leadership. It’s not yet clear if leaders will grant his wish, and Rep. Austin Scott (R-Ga.) is already in talks to succeed Thompson.
— Farm bill: The Senate Agriculture Committee — on its second try — advanced a GOP-led farm bill in September.
The lingering question is whether Senate Republicans will be able to hold a vote on the bill on the chamber floor after the election. They’ll need support from several Senate Democrats to meet the 60-vote threshold.
Senate Democrats remain united behind a demand to give states two years before the implementation of a new requirement that will force states to pay for part of Supplemental Nutrition Assistance Program benefits. The Senate Republican farm bill would delay the implementation by one year.
— Farm aid: The Senate might advance reconciliation plans that include $12 billion in farm aid after the election.
If the Senate acts quickly in December to pass House-approved legislation that includes the aid, money would start going to farmers in early spring. Some agriculture industry groups argue that timing would be too late to avoid another year of increased farm bankruptcies and closures. — Grace Yarrow |
Trade— Trump turns to Mexico for trade win: With President Trump’s trade war with Canada at a stalemate and his trade détente with China extended until January, administration officials are now turning their attention to talks with Mexico, where they are hoping for a pre-midterm win.
The U.S. has made clear to Mexican officials that it wants to announce an early harvest deal before Election Day, according to a Mexican industry figure briefed on the negotiations. The person, like others, was granted anonymity to discuss them.
The two sides have been talking as part of the six-year review of the U.S.-Mexico-Canada Agreement. U.S. Trade Representative Jamieson Greer told lawmakers in July that he was aiming to secure an interim deal before the end of the year.
Mexican President Claudia Sheinbaum has said that the talks have been progressing and that she spoke with Trump directly by phone to move a deal along.
The next round of bilateral negotiations, the fourth between the two countries, was supposed to begin this week but has been postponed amid a busy late September for U.S. trade policymaking. Mexican officials are hoping it will be the last and that a deal will be ready to announce in the coming weeks, the person added.
But some sticking points remain, particularly around agriculture, according to three people familiar with the talks.
U.S. lawmakers have pushed the Trump administration to address seasonal imports of fruits and vegetables that compete with U.S. growers during their harvest periods. But the U.S. and Mexico have not agreed on a path forward for addressing their concerns, the people said. — Oliver Ward |
Financial Services— Fed-Rates: The Federal Reserve's interest rate-setting committee will meet Oct. 27-28 to decide whether to raise borrowing costs again, after moving last month to tame inflation. Investors expect the central bank to hike rates, but the meeting is fraught with political tension because it will take place just days before the midterm elections.
— Global finance meeting: Treasury Secretary Scott Bessent says he plans to attend the IMF-World Bank annual meetings in Bangkok this month, where finance chiefs from around the world will gather to discuss economic growth. Bessent is pushing to remake both institutions around the Trump administration's priorities, calling on them to abandon what he calls "mission creep." Among other things, he has pressed the World Bank to scrap its climate targets and curtail lending to China.
— HUD-Environment: The Department of Housing and Urban Development plans to publish an interim final rule intended to “update and streamline” environmental requirements under the National Environmental Policy Act — a target for congressional efforts to cut red tape in homebuilding. The department is also slated to release a proposal to ease regulations in the Community Development Block Grant Program, which helps states and localities pay for rehabilitating housing and infrastructure.
— Financial regulation: It’s set to be a busy autumn for regulators. As the torch of crypto regulation has passed from Congress to the SEC and CFTC, we are awaiting a blitz of new guidance and rules from the two agencies on how crypto can be traded and used. On the bank side, regulators are still working on several rules, including a long-awaited liquidity proposal and finalizing capital rules, which should land in mid-December. — Victoria Guida, Michael Stratford, Cassandra Dumay |
Tax— Paving the way for a year-end deal? It was no sure thing that House Ways and Means Chair Jason Smith (R-Mo.) would be able to get a crypto tax bill through his committee in September — but he pulled it off, and with a big bipartisan vote to boot.
The Ways and Means Committee’s crypto markup was the last big step that lawmakers took on tax legislation before ditching Washington to campaign back home.
Now, the big question in tax world is whether Congress will be able to pass one last bill before the year ends.
That’s far from a sure thing, too. Everyone acknowledges that the November midterm results will influence how willing lawmakers are to cut a year-end tax deal.
But plenty of proposals with bipartisan support that could be cobbled together for a lame-duck package, including tax administration legislation, a tax framework for digital assets and reviving a hodgepodge of already-expired incentives.
Democrats could be reticent to work too closely with Republicans after the election, given their tensions with the Trump administration — particularly if they have a successful Election Night.
For instance, Sen. Ron Wyden of Oregon, the top Democrat on the tax-writing Finance Committee, said in late September that one potential roadblock for a crypto tax bill is that President Trump and his family have profited so much from virtual currency ventures. Trump himself reported earning more than $1 billion from cryptocurrency projects in his first year back in office.
— Staffing up: The Senate Finance Committee cleared a couple of tax-related nominees in September, potentially setting them up for confirmation after the election.
Neither nominees, however, received any support from Democrats.
James Gadwood, Trump’s pick to be IRS chief counsel, comes from Miller & Chevalier, a law firm with deep ties to the president. The IRS chief counsel during Trump’s first term, Michael Desmond, chairs the firm’s tax practice. Miller & Chevalier also recently hired one of the president’s longtime personal tax attorneys, Sheri Dillon.
Gadwood himself also declined to tell the Finance Committee whether one of Trump’s companies had ever been a personal client.
Trump also chose Andrew De Mello, a former acting IRS chief counsel, to fill the remaining vacancy on the Tax Court. De Mello served as acting chief counsel last year, as the IRS and immigration authorities were trying to strike an agreement to share confidential taxpayer data. — Bernie Becker |
Education— Federal student aid updates: The first group of borrowers in a Biden-era repayment plan that has been sunset has reached a key deadline to switch repayment plans.
The Education Department has been telling borrowers for months that they need to switch since the plan, known as SAVE, was overturned by the courts after a coalition of Republican attorneys general sued Biden’s Education Department over it.
Loan servicers have been notifying borrowers in waves since July 1. Borrowers have 90 days to switch plans. The first batch of borrowers reached the deadline to switch Sept. 29.
Student loan servicers are contacting at least 250,000 borrowers every two weeks. Each groups will get 90 days to switch.
Roughly 7 million people are enrolled in the SAVE plan. Education Undersecretary Nicholas Kent said this summer at the National Association of Student Financial Aid Administrators conference that borrowers are being notified in waves to avoid overwhelming the system.
If borrowers don’t act before their 90-day window is up, they will be moved into the standard repayment plan, which would likely require them to make a much higher monthly payment.
But the department is trying to encourage repayment by extending the window for student loan borrowers to enroll in autopay and receive a discount on their interest rate by another three months.
The department announced over the summer it would cut borrowers’ interest rate by 1%— an increase from the usual 0.25% discount. The interest rate reduction will last for roughly two years, ending June 30, 2028.
Initially, borrowers had until the end of September to take advantage of this benefit. The department is now giving them until the end of the calendar year to enroll.
So far, nearly 2 million have enrolled in autopay, according to the agency. — Rebecca Carabello |
Defense— The $1.5T question: Lawmakers left Washington for the campaign trail no closer to enacting Trump's record-shattering $1.5 trillion defense budget. Now the fate of a major military spending is in voters’ hands.
Senior Pentagon officials were still making the case to senators last week for the roughly 50 percent hike in defense spending. But few concrete steps have been taken toward that higher budget topline. Annual appropriations bills have stalled, and efforts to enact GOP-only reconciliation bills that would provide hundreds of billions of dollars for the Pentagon haven't materialized. The Senate also has declined to address a House-approved framework to finance the Iran war, punting major spending decisions to the lame duck session.
Already a heavy political lift under narrow GOP majorities, a Democratic sweep in the midterm elections would doom hopes for a major defense spending boost. Top Democrats have said they won't support further defense hikes without increases to domestic programs.
The lame-duck session could bring action on defense spending if Republicans look to lock in more funding while they still control the White House and both chambers of Congress. — Connor O’Brien |
Health Care— 'No Surprises' rewrite: Lawmakers in both the House and Senate are considering revisions to a 2020 law, the No Surprises Act, which shields patients from unexpected medical bills.
Those bills were a problem when patients seeking emergency care were treated by physicians outside their insurance networks. Congress set up a system in which doctors and insurance companies ask an independent arbitrator to decide how much doctors are owed.
The system triggered a surge of disputes lawmakers didn’t anticipate. A recent Georgetown University report found doctors — some backed by private equity firms and contractors hired to make the claims — initiated 2.6 million disputes last year, far above the 22,000 annual claims Congress expected. Arbitration costs surpassed $16 billion last year, more than triple the spending in 2024.
In some cases, doctors have won judgments far above the typical costs for their services. In others, insurers have refused to pay arbitration judgments.
Health, Education, Labor and Pensions Chair Bill Cassidy, author of the 2020 law, is seeking input from Senate colleagues and stakeholders about how to fix it. The House Ways and Means Committee is also examining it.
Lawmakers are still far from rewriting the law, but a variety of ideas are under discussion, including setting benchmark rates for medical services to avoid outsized payment judgments and removing non-emergency services from the dispute process.
Doctor groups want any deal to include penalties for insurers who don’t pay up.
— Remote monitoring rule opposition: Sen. Marsha Blackburn (R-Tenn.) has joined Democrats in asking Centers for Medicare and Medicaid Services Administrator Mehmet Oz to nix a proposal to curtail reimbursement for remote patient monitoring, in which digital devices like blood pressure cuffs monitor patients at home and alert a doctor when something goes wrong.
The proposal could force some doctors and hospitals to shutter their monitoring programs and prevent them from expanding into rural areas, she says.
“Remote monitoring services are especially important in rural communities, where patients often face long travel distances, transportation barriers, clinician shortages, hospital closures, and limited access to timely follow-up care,” Blackburn wrote in a Sept. 23 letter to Oz co-signed by Sen. Mark Warner (D-Va.).
The CMS proposal, part of a larger proposed payment rule released in July, would not reimburse doctors and hospitals for using remote-patient monitoring vendors’ clinical staff to monitor patients and alert providers of problems. Providers would have to use their own staff, which provider groups worry would cost more money, create staffing issues and ultimately result in remote monitoring programs being shuttered.
The proposed rule stems from findings of the Health and Human Services Department inspector general, who warned in 2023 that unscrupulous companies were signing seniors up for remote monitoring who didn’t need it, and a 2024 IG report that found Medicare spending on monitoring had increased 20-fold between 2019 and 2022.
The proposed rule would require patients to visit a doctor’s office before receiving remote patient monitoring. Currently, a patient must have a preexisting relationship with a provider for one year before getting the service, but need not visit the doctor in person. — Health Care Pro Team |
Transportation— Renewed push for air traffic control dollars: After months of relative quiet, Transportation Secretary Sean Duffy is doubling down on his call for billions more in funding for his department’s ambitious effort to revamp the infrastructure and technology underpinning the nation’s air traffic control system. He’s upped his total ask to $30 billion, which is on top of the $12.5 billion that Republicans pushed through Congress via the party-line budget reconciliation process in summer 2025. He’s also gotten some congressional backing recently in the form of a bill from Sen. Eric Schmitt (R-Mo.) that would fund the effort. But finding a viable vehicle to secure these additional dollars is easier said than done, especially as a lame duck session looms and Capitol Hill braces for potentially big shifts in power next year.
— The surface waiting game: Reauthorizing expiring highway and transit programs is low on Congress’ to-do list heading into the election, increasing the likelihood that lawmakers will need to extend those authorities for a second time this year. The current deadline of Dec. 11 gives Capitol Hill little room to maneuver: The Senate has yet to release any text or hold markups, the House Ways and Means Committee’s plans remain unclear and floor time will be at a premium after the midterms. Some factors could spur action, such as President Trump taking an interest in the bill. The few weeks that lawmakers are in town in November will be crucial.
— Committees’ scramble: Focus is shifting to what Congress will look like in 2027. On the House side, the Transportation Committee faces major turnover, and the race for the gavel appears to be down to Rep. Rick Larsen (D-Wash.), the current ranking member, and Rep. David Rouzer (R-N.C.), who currently chairs the highways and transit subcommittee. In the Senate, if Republicans retain the majority, there isn’t much of a shake-up anticipated on panels that oversee such topics, though who will be the top Democrat on the Environment and Public Works Committee is worth watching. Sen. Sheldon Whitehouse (D-R.I.), the current ranking member, is planning a bid to become the Judiciary Committee’s top Democrat. — Sam Ogozalek |
Technology— White House AI policy in limbo: Watch for President Trump’s response to an industry-wide call to slow down AI development following concerns that Silicon Valley is unable to mitigate the technology’s risks. Trump has met with tech executives, including Meta CEO Mark Zuckerberg, Anthropic chief Dario Amodei, OpenAI President Greg Brockman and Google CEO Sundar Pichai, but it remains uncertain whether these exchanges have led the president to in any way alter his light-touch regulatory approach to the technology.
The discussions followed new disclosures about AI agents acting against government systems. OpenAI models attempted to access the websites of the Commerce Department and the Securities and Exchange Commission, while an OpenAI agent earlier this summer breached an Australian national health database.
Fears of such incidents led the United Nations to host a Security Council meeting on AI security risks, where OpenAI CEO Sam Altman and Dario Amodei both addressed the risks and called for global cooperation on AI safety. A recent summit between Trump and Chinese leader Xi Jinping also failed to lead to concrete policies on AI development.
— Midterm tech messaging: With Democrats increasingly likely to take control of the House, and possibly the Senate, they must decide how to wield their newfound gavels to shape tech policy.
But Democrats are increasingly splintered. They broadly agree on the need for more government oversight, but they are not aligned on exactly how to do so.
The campaign trail may provide some clarity as candidates test out different messages with voters.
Those on the party’s left flank have railed against the potential job loss that could result from AI adoption, tech CEOs’ accumulation of wealth and data centers. Centrists, meanwhile, have favored regulation they say will put adequate safeguards on emerging technology without stifling innovation.
— Data center wars: These hulking AI structures have taken center stage in the 2026 midterms cycle, dominating races in places such as Wisconsin, Michigan, Georgia and Ohio. And Democratic Gov. J.B. Pritzker of Illinois as well as incumbent Sen. Jon Husted (R-Ohio) are feeling particularly squeezed by the messy politics surrounding data centers heading into October.
— All eyes on Ohio: A deluge of political attack ads against Husted for his past support of these AI hubs — and the tough-on-data centers message his Democratic opponent former Sen. Sherrod Brown has embraced — has Husted searching for a life preserver in a deadlocked race that could determine which party controls the Senate. Brown, meanwhile, is facing blow back from his labor allies who view these facilities as job creators.
— The long game? Pritzker, meanwhile, is walking a tight rope, faced with the choice of selling business leaders on his ability to keep Illinois on an economic glidepath pegged to advanced manufacturing and corporate expansion, and embracing public opinion that has turned against these AI outposts. Pritzker has not ruled out a 2028 presidential run, so how his data center messaging strategy fares in November would almost certainly help sharpen his and other contenders' AI playbooks. |
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— Disney's day in court: The Federal Communications Commission and Disney will face off Oct. 6 in a sweeping court fight that could shape Chair Brendan Carr’s legacy.
ABC sued the FCC in August to challenge Carr’s early review of its eight TV station licenses, calling it a "retaliatory campaign” for its coverage of the administration. The network has pointed to President Trump’s many attacks on the media, including his calls to revoke licenses from broadcasters including ABC. The FCC, which initiated the accelerated review of these licenses in April over concerns with Disney’s diversity hiring practices, has dismissed the First Amendment arguments and argued it’s holding broadcasters to the public interest obligations of its licenses.
The hearing comes as the FCC weighs escalating its fight with Disney across multiple proceedings, including possibly referring the ABC license review to an administrative hearing and exposing daytime show “The View” to equal airtime requirements for political candidates. — John Hewitt Jones, Owen Dahlkamp, John Hendel, Gabby Miller |
Cybersecurity— Keeping it secure: The midterm elections are almost here, and they will dominate the Beltway cyber policy landscape in the coming weeks.
For starters, Congress will be out of town all month for the final campaign sprint, so don’t expect much federal legislative activity until the lame duck session. Federal, state and local officials will also spend the month preparing to ensure the critical midterm vote isn’t hampered by rising physical or digital threats, such as potential AI-fueled cyberattacks aimed at vulnerabilities in election machines.
And unlike in past years, states are largely on their own to ensure election infrastructure is secure. CISA finally released a national election security plan last month, though it largely restates the responsibilities the cyber agency has undertaken for years to ensure U.S. elections run smoothly and without interference.
— Eye on the NSPM: A critical deadline also comes due this month for the White House's bold new plan to create a pathway for private companies to launch cyberattacks against foreign cybercrime gangs.
The presidential policy memorandum announcing the watershed policy shift gave the Justice and Homeland Security Departments until mid-October to write a detailed blueprint describing how private sector firms would work with the government to design, execute and run offensive cyber operations against foreign cyber criminals.
The details of that document could determine whether the initiative succeeds or leaves the private sector worried the White House has not thought deeply enough about the legal, economic and political risks of having private firms assist in digital combat.
— New strategy: The Pentagon is also due to release two highly anticipated cyber policy documents.
The first is the DOD’s new cybersecurity strategy, which is expected to chart a more aggressive course for the military’s cyber response and include instructions for better tapping the resources and skills of private sector contractors, as POLITICO first reported.
The Pentagon is also nearing a deadline to brief Congress about any changes to a nearly four-year-old autonomous weapons policy. The current version of the policy was drafted before the technology advanced enough to become a bona fide cyber threat. And as POLITICO’s cyber team has noted, the original policy included a carve-out exempting autonomous cyber weapons from strict human oversight — a measure that may be reconsidered following a string of incidents involving rogue AI agents. — John Sakellariadis and Maggie Miller |
Energy— Climate at the court: The Supreme Court will open its new term on Oct. 5 with arguments in the long-simmering climate lawsuits brought against oil and gas companies by a number of states, cities, counties and tribes. Suncor v. Boulder asks whether claims made under state tort laws — such as public nuisance, product liability and failure to warn — are preempted by the federal Clean Air Act. A win for oil companies could shut down more than two dozen lawsuits across the country.
Justice Samuel Alito, a conservative member of the court who has previously ruled in unrelated cases for federal preemption of state laws, recused himself from the case just one week before arguments. The move followed pressure from environmentalists, who argued he had a financial conflict because of his holdings in major oil and gas companies, though not the specific defendants in the Suncor case.
It is also possible the court could sidestep the issue on jurisdictional grounds. If it does, oil companies would have to make it through an actual liability trial before appealing. — Alex Guillen |
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