The midterm elections are over, with the Democrats retaining their slim lead in the Senate but losing the House of Representatives to the Republicans.
Election results impact the national economy and you, but there were also statewide ballot measures that could affect people’s wallets.
For example, a victory for Medicaid expansion in South Dakota will make health care available to 42,500 more Americans next year.
Here’s a look at what the midterm election results mean for people across the country.
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Medicare expansion is winning
Forty-two thousand five hundred Americans. That’s roughly the number of South Dakotans who will be offered Medicaid health insurance coverage next year after more than 56% of voters said yes to expanding the program midterm in november.
The win makes South Dakota the seventh Republican-controlled state in the past five years to expand the insurance program for low-income people at the polls and now there are only 11 states left that haven’t expanded. Medicaid. The remaining states are Texas, Florida, Georgia, Pennsylvania, North Carolina, South Carolina, Alabama, Tennessee, Mississippi, Kansas, Wyoming, and Wisconsin.
Wisconsin is the only non-Expanding Medicaid state that does not have a coverage gap. All low-income residents of the state have access to Medicaid or subsidies to help them purchase private coverage in the exchange. North Carolina lawmakers backed Medicaid expansion in the 2022 session, but the state’s two legislative houses couldn’t agree on specifics
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Because not all states have expanded Medicaid, more than two million low-income Americans fall into what’s called the “Medicaid divide.” These people are too poor to qualify for health insurance subsidies through the Affordable Care Act exchange, but earn too much to qualify for Medicaid.
“It will help people afford screenings and other preventative health issues, instead of going to the emergency room (ER), which is more expensive,” said Doug Sombke, president of South Dakota Farmers. Union. “It will reduce the premiums too, because the population is healthier.
Rural communities in South Dakota have also bled health care facilities, especially in recent years, that cannot afford to stay open, and Sombke said he hopes that will stop that.
Social Security cuts?
Cuts to Social Security were announced in a late-stage Republican budget proposal ahead of the party’s takeover of the House and Senate. The proposal included raising the age at which you can start collecting Social Security benefits from 67 to 70.
The authors of the proposal said the cuts were intended to make Social Security “solvent” for a longer period.
It comes as the historic cost-of-living adjustment for 2023 could push back the exhaustion date of a trust fund that pays social security benefits to pensioners, people with disabilities and their dependants.
A June report from the Social Security Board of Trustees found the funds will run out by 2035.
Since Republicans won’t have control of the Senate, cuts to Social Security benefits are unlikely to materialize, said Alicia Munnell, director of Boston College’s Center for Retirement Research. But even if they took control of both chambers, President Joe Biden has indicated he will prevent any cuts.
“Bottom line, nothing is going to happen in the next two years, with a divided Congress,” Munnell said, referring to changes in Social Security.
If a recession hits, don’t expect a recovery
If the recession comes next year, as most economists are predicting, Americans could be on their own.
“If the United States enters a recession in 2023, a divided Congress will struggle to pass a fiscal stimulus bill, which will leave the Federal Reserve as the primary institution responsible for setting the country’s economic policy,” Brian Gardner said. , Washington policy chief of the Stifel. strategist.
And we already know from Fed Chairman Jerome Powell that the Fed is firmly committed to bringing inflation back to its 2% target, from 7.7% in October, even if it’s “painful for the public. we serve,” he said in September. Powell said allowing inflation to climb even higher would ultimately be even more painful.
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On Wednesday, Goldman Sachs even added another quarter-point interest rate hike to its May forecast, raising its overall expectation for the Fed’s benchmark short-term federal funds rate to hit 1. next year a range of 5% to 5.25%, compared to 3.75% to 4% now. He also does not expect a rate cut next year.
Instead, Morgan Stanley says people will have to rely on items already in the U.S. budget that cut revenue and increase spending in a downturn without further action from Congress. These include the Supplemental Nutrition Assistance Program (SNAP, commonly known as food stamps), unemployment insurance, and Medicaid.
Actions could defy history
Even though the stock market typically rallies after a midterm election, there’s nothing typical about this economic cycle and investors may want to continue to hold value stocks rather than growth stocks, John said. Lynch, Chief Investment Officer of Comerica Wealth Management.
Since 1950, the average return of the Standard & Poor’s 500 broad stock market benchmark in the 12 months following a midterm election has been 15%, surprisingly with no down years, but “the current global environment, with all its challenges, suggests next year may be an exception to the rule,” he said.
The big difference is that most economists predict a recession.
“One of the main reasons for the strength of the stock market in the third year of the presidential cycle was the absence of recessions,” Lynch said.
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From 1929 to 2021, a study by Strategas Research Partners shows that the third year of a presidency has never seen a recession, likely because a sitting president typically loses seats in Congress and quickly adopts favorable economic policies up for re-election, he said.
Moreover, monetary policy generally supported the economy in the third year. Since 1960, the Fed has eased an average of 1.18% in that year, while raising rates by just 0.98% on average, Lynch noted.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at email@example.com and sign up for our free Daily Money newsletter for personal finance tips and business news Monday through Friday mornings.
Elisabeth Buchwald is personal finance and markets correspondent for USA TODAY. You can FFollow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here
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