This Just In!
The midterm elections are just days away, and a shift in the balance of power in Washington could be coming. But what would a divided Congress mean for small businesses?
While the election results could change who’s in charge on Capitol Hill, some of the biggest economic challenges facing business owners — including high energy costs, tariffs, and healthcare expenses — may prove harder to change.
For some quick perspective on what small businesses can expect in 2027, I asked Ben Johnston, COO of Kapitus, a small business lender and marketplace, to share his outlook.
“With the Democrats poised to take the House and contend for the majority in the Senate, it is reasonable to expect divided government for the coming two years. As a result, it is unlikely that any signature pieces of legislation sponsored by either party will be enacted.
“We expect Congress will struggle in 2027 to pass legislation that raises the debt limit, allowing the government to meet its existing financial obligations. However, we do ultimately expect this legislation to pass.
“We also do not expect a new Congress to have any greater ability to end the War in Iran through a resolution than the previous Congress has. However, a new Congress could use its power to regulate spending to restrict the defense budget or cut funds used for the War. Whether that would allow for oil to again flow freely through the Strait of Hormuz is an open question.
“What this means for small business is more of the same. The current tax regime is likely to stay in place, and the War in Iran seems to have no realistic short-term solution. This means Federal taxes will remain low while energy prices stay high.
“The tariff strategy is also likely to remain in place, while restrictions on Medicaid put in place through the Big Beautiful Bill will go into effect over the next several years. Loss of Medicaid coverage will have a negative impact on the country’s most vulnerable and may place increasing pressure on small businesses to provide healthcare for lower-wage and part-time employees who once qualified for Medicaid.”
Rieva Lesonsky is the founder of Small Business Currents, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
