Midterm elections are over, with the Democrats saving its slim lead in the Senate but losing the House of Representatives to Republicans.
The election results have repercussions for the national economy and you, but there were also some smaller statewide ballot measures that could affect people’s pocketbooks.
For example, a victory for Medicaid expansion in South Dakota will make healthcare available to 42,500 more Americans next year.
Here’s a roundup of what the midterm election results means for people across the country.
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Medicare expansion gets a win
Forty-two thousand five-hundred Americans. That’s about how many South Dakotans will be offered Medicaid health insurance coverage next year after more than 56% of voters said yes to expand the program in November’s midterm.
The win makes South Dakota the seventh Republican-controlled state in the past five years to expand the low-income insurance program at the ballot box and now, leaves only 11 states that haven’t expanded Medicaid. Those remaining states are Texas, Florida, Georgia, Pennsylvania, North Carolina, South Carolina, Alabama, Tennessee, Mississippi, Kansas, Wyoming, and Wisconsin.
Wisconsin is the only non-Medicaid-expansion state that doesn’t have a coverage gap though. All low-income residents in the state either have access to Medicaid or subsidies to help them purchase private coverage in the exchange. Lawmakers in North Carolina supported Medicaid expansion during the 2022 session, but the state’s two legislative chambers couldn’t agree on the specifics
Because not all states have expanded Medicaid, more than two million low-income Americans fall into what is called the “Medicaid gap.” Those people are too poor to qualify for subsidies for health insurance through the Affordable Care Act exchange but earn too much to qualify for Medicaid.
“It will help people afford screenings and other health care issues that are preventive, instead of going to the ER (emergency room), which costs more money,” said Doug Sombke, president of South Dakota Farmers Union., “It’ll lower premium costs, too, because the population’s healthier.”
South Dakota’s rural communities have also been bleeding health care facilities, especially in the last few years, that can’t afford to stay open, and Sombke said he hopes this will stop that.
Social Security cuts?
Social Security cuts were floated around in a late-stage Republican budget proposal in anticipation of the party securing control of the House and the Senate. The proposal called for raising the age at which you can begin to collect Social Security benefits to 70 from 67.
The authors of the proposal said the cuts were aimed at making Social Security “solvent” for a longer period of time.
This comes as the historic cost-of-living-adjustment for 2023 could push up the depletion date for a trust fund that pays Social Security benefits to retirees, disabled people and their dependents.
A June report published by the Social Security Board of Trustees found that the funds will be depleted by 2035.
Since Republicans will not have control of the Senate, it’s unlikely that any cuts to Social Security benefits will materialize, said Alicia Munnell, director of the Center for Retirement Research at Boston College. But even if they did gain control of both chambers, President Joe Biden indicated he would prevent any cuts from occurring.
“Bottom line is nothing’s going to happen in the next two years, with a divided Congress,” Munnell said referring to Social Security changes.
If a recession comes, don’t expect stimulus
If the recession comes next year as most economists predict, American may be on their own.
“If the US enters a recession in 2023, a divided Congress will struggle to pass a fiscal stimulus bill, which will leave the Federal Reserve as the main institution responsible for setting economic policy in the country,” said Brian Gardner, Stifel chief Washington policy strategist.
And we already know from Fed Chairman Jerome Powell that the Fed is firmly focused on pushing inflation back down to its 2% target from 7.7% in Octobereven if it’s “painful for the public that we serve,” he said in September. Powell said allowing inflation to run even hotter would, in the end, be even more painful.
On Wednesday, Goldman Sachs even added another quarter-point interest rate hike to its forecast in May that raises its overall expectation for the Fed’s short-term benchmark fed funds rate to reach next year a range of 5% to 5.25%, from 3.75% to 4% now. It also doesn’t forecast any rate cuts next year.
Instead, Morgan Stanley says people will have to rely on items already in the US budget that decrease revenues and increase spending in a downturn without additional action from Congress. Those include Supplemental Nutrition Assistance Program (SNAP, commonly referred to as food stamps), unemployment insurance and Medicaid.
Stocks could defy history
Even though the stock market typically rallies after a midterm election, there’s been nothing typical in this economic cycle and investors may want to keep holding value stocks over growth stocks, John Lynch, Comerica Wealth Management’s chief investment officer, said.
Since 1950, the average return for the broad stock market benchmark Standard & Poor’s 500 index in the 12 months after a midterm election is 15%, surprisingly with no down years, but “the current global environment, with all its challenges, suggests next year may prove an exception to the rule,” he said.
The big difference is that most economists predict a recession.
“A major reason for the strong equity market in the third year of the Presidential cycle has been the lack of recessions,” Lynch said.
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From 1929 through 2021, a Strategas Research Partners study shows the third year of a presidency has never experienced recession, likely because a sitting president has typically lost seats in Congress and quickly embraces economic polices favorable for reelection, he said.
Plus, monetary policy has typically been supportive of the economy in the third year. Since 1960, the Fed has eased by an average of 1.18% during this year, while raising rates by an average of just 0.98%, Lynch noted.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at email@example.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can ffollow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here