Special Report: The Future of American Politics

To help you understand what's going on in politics, the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

2028 will mark another milestone in American history: The first presidential race since 2012 without Donald Trump on the ballot. Since becoming the GOP nominee a decade ago, Trump has reshaped both the Republican Party and U.S. politics writ large.

What do the next 10 years of U.S. politics have in store? Expect both parties to struggle in sorting out their post-Trump identities.

Republicans have an obvious heir apparent in Vice President JD Vance, though it’s unclear if he can hold together the singular Trump coalition of voters, which ranges from religious conservatives to working-class whites. Also unclear is whether Trump’s successor can continue making inroads with minority voters, particularly Latinos, who swung hard toward the GOP in recent election cycles.

Democrats must decide between moderation and populism. The party has had lots of success in the Trump era with so-called national security moms — middle-of-the-road female candidates, often with some sort of military background, who do well in formerly Republican suburban areas. But the Democratic base is increasingly keen on left-wing candidates like NYC Mayor-elect Zohran Mamdani.

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Keeping politics local remains a major challenge. National party identities have made it difficult for Republicans and Democrats to run the right candidates in the right places. This especially hurts moderates trying to win in hostile territory. Until that changes, two-party competition will only become more cutthroat, as they both vie for a diminishing number of swing states and congressional districts.

The current midterm redistricting push offers a preview of what is to come. Democrats and Republicans will squeeze every seat possible out of the states that they control, a reflection of how closely contested the House has been recently. Recent election cycles have seen smaller gains for both parties. Since 2016, the average number of House seats gained has been 14.2, vs. 27.0 the decade prior. The only wave election of the last decade was the Democrats’ 41-seat pickup in 2018.

Republicans will retain a structural advantage in the Senate, since the GOP boasts more than 40 safe seats in the chamber, much more than the Dem total. At the presidential level, expect the current list of swing states to persist for at least a couple of election cycles. Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin all stand at the center of some crucial demographic divides that show no sign of going away, specifically education and race. All feature some electorally volatile combinations of college-educated suburban white voters (who have trended left in the Trump era), working-class white voters (who have trended right), and swingy minority voters.

But a single election can quickly reshuffle the political order. Democrats are hoping that sharply divided North Carolina and white whale Texas can become competitive over the next decade. Republicans, meanwhile, like the party’s odds in Minnesota, demographically similar to neighboring Wisconsin and even New Jersey, where Donald Trump had the best GOP presidential performance in nearly four decades last year. Political power will continue to shift with the population to the Sun Belt. The region has accounted for 80% of U.S. population growth over the past decade and has gained both electoral votes and House seats accordingly. That bodes well for Republicans and ups the onus on Democrats to make inroads in those states.

The issue that will most likely define the next decade in politics: Affordability. Voters are already angry about the escalating cost of living. Electricity prices are up more than 30% over the last four years. Housing prices are up more than 26%. Nominal wages, on the other hand, have increased by only 18% over the same period. Many barriers stand in the way of new housing, factories and infrastructure. Washington has so far been willing to throw money at these problems, as evidenced by the Biden-era bipartisan infrastructure bill and CHIPS Act. However, lawmakers have struggled to address various regulatory barriers to construction.

Congress faces an early test on this front with its fight over permitting reform legislation. Addressing some of these barriers is likely to become even more difficult. Take artificial intelligence. It has fueled a data center construction boom that has driven up electricity prices and sparked a political backlash in some parts of the country. For now, Washington backs the build-out, viewing AI as the future of the U.S. economy. The question is whether it will remain politically viable to do so, especially if AI also winds up having a disruptive effect on labor markets. AI will also further test America’s ability to maintain its edge over China, whose economy has proved increasingly innovative and can build at scale better than the U.S. when it comes to making consumer goods or weapons of war. Beijing has notably struggled to catch up with the U.S. in several crucial areas, including advanced semiconductors. The Chinese are pushing hard to change that.

The U.S. will struggle to maintain the remnants of its global hegemony, amid fraying relations with longtime allies and a host of adversaries who are eager to take advantage of the situation. The Trump administration is setting the tone for the next decade, pushing fellow members of the North Atlantic Treaty Organization (NATO) to spend more on defense and fend for themselves more against a hostile Russia. That raises questions about how Washington would react if China tried an invasion of Taiwan, as it has repeatedly threatened. The tiny island-nation is important to Beijing as a status symbol and as the center of semiconductor supply chains.

At the same time, Washington faces mounting fiscal pressures. Federal debt now exceeds 100% of GDP. Uncle Sam routinely runs big budget deficits. The most expensive line items: Health care programs like Medicare and Medicaid, plus Social Security, which together account for more than 40% of federal spending. Both have proved politically difficult, if not impossible, to address, and Washington has not made a serious attempt to rein in federal spending in roughly a decade.

For now, the dollar’s status protects the U.S. from the worst consequences. The greenback remains the world’s reserve currency, along with being the top choice for international payments, insulating America from the effects of its debt and deficits. Even persistent efforts by China have done little to undermine the dollar’s dominance. But if anything dents demand for dollars, Washington will face the same tough choices over spending that many of its European allies, such as the U.K. and France, do now.

These are far from the only problems that the U.S. will face going forward. Washington will continue to face tough policy choices over immigration and other issues that lawmakers have long made a habit of putting off until later. But they may be the defining ones. Gone are the days when Washington could take its place in the world for granted. Instead, there are unsettled questions, the answers to which will have a huge impact on American power and prosperity.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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