Democrats gain more oversight on US domestic policies

WASHINGTON (The Straits Times/ANN) - Democrats take control of the House in midterm elections while Republicans widen Senate majority.

American voters applied the brakes to the direction President Donald Trump is taking their country in midterm elections on Tuesday, handing control of the House of Representatives to the Democratic Party and taking seven Democratic state governor aspirants to victory over Republican incumbents.

In a bitter contest that became a referendum on Mr Trump and his divisive politics, Democrats, campaigning on issues such as healthcare, inclusiveness and the ballooning deficit, gained at least 26 seats in the House, with more races to be called.

Republicans widened their majority in the 100-seat Senate by three seats and won key races in Texas and Florida.

Taking to Twitter the morning after, Mr Trump sounded a triumphant note, saying: "Received so many Congratulations from so many on our Big Victory last night, including from foreign nations (friends) that were waiting me out, and hoping, on Trade Deals. Now we can all get back to work and get things done!"

Nonetheless, the fact is that while the results will not have much bearing on foreign policy, they give the Democrats more oversight on the President and his policies.

Their majority enables them to block legislation, for instance, for more tax cuts or if it imperilled healthcare, and launch investigations into Mr Trump that they have long clamoured for.

In a report by Schroders, Mr Frank Thormann, portfolio manager for multi-regional equity, said: "Two important implications from this election will be stronger presidential oversight and increased political gridlock. Democrats now have a much larger ability to put a check on the President's power and have promised to intensify investigations into allegations such as the Russian 2016 election interference.

"Because both Houses are required to pass legislation, future policy will require much greater bipartisan support, which is a dramatic change from the past two years and is likely to materially alter the remainder of the Trump presidency."

However, Mr Trump will see the Senate verdict as an endorsement for his policies, particularly on immigration and trade. The Senate has a key role in confirming judges, and analysts expect the Republican Party to double down on stuffing the judiciary with conservative judges.

But while the results do not directly affect foreign relations, they may present Mr Trump with a dilemma, said analysts.

Said Schroders' chief economist Keith Wade: "Faced with a potential block on fiscal policy, the President may turn to trade policy and look to strike a deal with China and so prevent a further damaging escalation in the trade war. From an economic perspective, that would be the logical step. However, Trump will have to weigh up whether the economic costs outweigh the political benefits of playing to his base support - many of whom see tariffs as an essential part of putting America first."

In short, the United States and China could be in for a full-blown cold war, warned former US Treasury Secretary Henry Paulson in Singapore at a forum yesterday.

While both sides celebrated their victories, the verdict also highlighted the deepening rural-urban split, with Democrats gaining largely in cities and suburbs, but losing in rural areas.

And as the political parties shift their focus to 2020, the President is likely to double down on the divisive rhetoric that has served him so far.

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