Democrats won both chambers of Congress in the midterm elections on 3 November 2026. CBS News projected the House at 10:29 pm Eastern, and before midnight the Associated Press reported that Democrats had retaken the Senate, where they flipped seven Republican-held seats. Counting is not finished. By the afternoon of Thursday 5 November, AP’s tally, as relayed by Yahoo News, gave Democrats 247 House seats to 153 with 35 races uncalled, and NBC News projected a final majority of about 259. The Senate stood at 54 to 44 with two races open: Mississippi, separated by little more than a thousand votes ahead of certification on 13 November, and Alaska, which goes to a ranked-choice count on 18 November if nobody passes 50%.
None of that makes Washington Democratic. The president keeps the veto, and on 4 November he told reporters how he intends to use it: “They’ll send over things that are insane and I’ll veto them.”
For a company that buys software, data and AI work, that sentence matters more than the seat count. A Congress facing a veto changes what gets investigated, funded and blocked far more than what becomes law. What follows is the policy and not the politics, because our clients sit on both sides of the result and the engineering consequences are the same for all of them. Every claim links to its source, and where something is still moving, I say so.
For 2027 the short version is this. A federal ban on state AI regulation is harder to enact, so the California, Colorado and New York AI obligations that begin on 1 January 2027 are the baseline. The $100,000 H-1B fee stays in the courts, and DHS has proposed a separate $103,265 fee through rulemaking. The 25% Section 232 duty on certain chips and computing hardware stays. GENIUS Act stablecoin requirements take effect by 18 January 2027, whoever controls Congress. Federal funding runs out on 11 December 2026, and for most companies a subpoena is more likely than a statute.
What can a Congress do against a veto?
Less than the headlines suggest, and more than nothing.
Overriding a veto takes two-thirds of both chambers: 290 House votes and 67 in the Senate. Democrats will hold well under that in either, so anything that becomes law in 2027 will be something the White House is willing to sign. Bipartisan bills still pass under those conditions. Partisan ones become messages.
What a majority does control is the agenda, and the investigations. Committee chairs decide which bills get hearings and markups, and they hold subpoena power. Holland & Knight’s guide to the new majority puts the consequence for business in one of its headings: “Companies May Become Sources of Evidence When Their Conduct Is Not the Focus.” IAPP’s analysis expects that power to revive privacy, children’s safety and AI bills, every one of which still needs a signature or a veto-proof majority. The Senate majority also controls confirmations, which shapes the agencies that write and enforce technology rules.
The same night changed the states. Brownstein’s tally of attorney-general races has Democrats leading 29 to 22 in 2027 if the close contests hold, and attorneys general are the officials who enforce state AI and privacy laws. For most of our clients that matters more than anything Congress does, which is why I have written a separate piece on building for the state AI laws.
Before any of that, the outgoing Congress has one more session. Government funding under H.R. 6500, signed on 2 September, runs out on 11 December. The defence authorisation bill is stuck: the House passed its version 216 to 212 in July, while in the Senate, “On July 14, cloture failed (50-46) on the motion to proceed”, per the Congressional Research Service. Amendments filed to it include export licensing for advanced AI chips and an AI bill of materials for defence contractors, according to the AI Policy Network’s summary. Health extenders lapse on 31 December. The new Congress is seated in early January.
Who will chair the tech committees in 2027?
Chairs are settled by party votes over the coming weeks, and the senior Democrat on a committee usually, though not automatically, takes the gavel, as K&L Gates points out. On that basis, and on their own announcements:
| Committee | Expected chair | What they have signalled on technology |
|---|---|---|
| House Energy and Commerce | Frank Pallone | Announced on 4 November that he will seek the chair; Holland & Knight links him to AI, data-centre power demand and consumer data |
| House Science | Zoe Lofgren | Seeking the chair: “We need to build responsible regulations for AI while also fostering innovation.” |
| House Judiciary | Jamie Raskin | Expected to take it; government use of AI, surveillance and data brokers |
| Senate Commerce | Maria Cantwell | Her October AI framework calls for NIST standards, continuous testing and independent audits, and as reported is silent on preemption |
| Senate Banking | Elizabeth Warren | Digital assets and the stablecoin rules now being written |
| Senate Homeland Security | Maggie Hassan | Expected to succeed Gary Peters as the committee’s top Democrat |
| House Financial Services | Contested | Maxine Waters faces challengers for the gavel |
For a technology buyer the table matters in one way: these are the people who will ask vendors, and sometimes their customers, to testify. Cantwell’s framework is the nearest thing to a Democratic AI bill, and its line that “Independent audits would confirm compliance with federal standards” is a fair preview of the questions a hearing will ask about any AI system you run.
AI regulation: will federal law preempt state AI laws?
Overriding state AI laws has always needed Congress, and Congress has never done it.
In July 2025 the Senate voted 99 to 1 to strip a moratorium on state AI laws out of the reconciliation bill. In December 2025 the White House tried a different door: Executive Order 14365 created a Justice Department AI Litigation Task Force “whose sole responsibility shall be to challenge State AI laws inconsistent with the policy set forth in section 2 of this order.” In March 2026 the White House’s national AI policy framework asked Congress to preempt state AI laws that “impose undue burdens”. A House discussion draft in June proposed freezing state rules on AI development for three years and went no further.
The results since have been thin. The Commerce Department’s evaluation of “onerous” state laws, due in March, has not been published. The Task Force’s one visible move was joining xAI’s challenge to Colorado’s AI Act, which ended in an agreed pause rather than a ruling, after which Colorado rewrote the law. The FTC has proposed a policy statement arguing that its ban on deception applies “even when a company engages in a deceptive act or practice in order to comply with a State law”, a preemption argument by another route, and so far only a proposal.
TIME’s reading of the result is that “the ban on state AI regulation Republicans have sought will be harder to enact.” So the planning assumption for 2027 is the state map. California, Colorado and New York all have AI obligations that begin on 1 January 2027, and Connecticut’s began phasing in on 1 October. I have set out what those laws ask of a system, and how to build for all of them once.
Immigration: the H-1B fee is in court, and so is the plan
The $100,000 H-1B payment introduced in September 2025 is the policy our US clients ask about most, and it is now a litigation story more than a policy one. A federal judge in Massachusetts vacated it in June, treating the fee as a tax that only Congress can impose. The First Circuit refused to pause that ruling in July, and USCIS said it could not collect while the order stands. A court in Washington had upheld the fee in December 2025, and the appeal there was argued in March with no decision since. A second proclamation extended the fee to September 2027, and on 30 September a court in California vacated the agencies’ policies for collecting it.
The administration has also opened a second front. In August DHS proposed a separate $103,265 fee on cap-subject H-1B petitions through formal rulemaking, under different legal authority. It would be owed on top of the proclamation payment, not instead of it. Senators Grassley and Durbin’s bipartisan H-1B reform bill has had no committee action and lapses when this Congress ends, and anything the next one writes would still need a signature. Rujen, who runs our delivery, has set out where each case stands, what a US engineer now costs, and what engineering abroad gets right and wrong.
Tariffs: the Supreme Court already moved the biggest piece
The largest change to trade policy this year did not come from Congress. On 20 February the Supreme Court held 6 to 3 that the International Emergency Economic Powers Act gives the president no power to impose tariffs. A replacement surcharge under Section 122 of the Trade Act ran its statutory maximum of 150 days and lapsed on 24 July. About $166 billion of IEEPA duties had been collected, and by 2 October the government reported more than three-quarters of it refunded with interest, according to Davis Wright Tremaine.
What remains rests on other statutes. Since 15 January a 25% Section 232 duty has applied to certain semiconductors and computing hardware, with exemptions that include US data centres adding more than 100 MW of AI load, per Customs and Border Protection. A broader second phase had not been issued by mid-October. Baker McKenzie expects oversight rather than repeal from the new majority, and notes that “None of these authorities requires annual congressional approval.” The Atlantic Council’s Josh Lipsky is blunter: “Tariffs, meanwhile, are not likely to change.”
For technology buyers the practical effect sits in hardware: servers, networking gear and anything built around imported chips. Anyone budgeting on-premises infrastructure for 2027 should treat the Section 232 duties as the stable part of the price, and anything that depended on IEEPA as gone.
Crypto: stablecoin rules arrive on schedule, market structure waits
Stablecoins already have a statute, and its rules are landing. The OCC issued its final GENIUS Act rule on 21 October, effective on 18 January 2027. The Federal Reserve proposed two rules in September, and Treasury issued an interim final rule on 30 September. The Act’s requirements take effect on the earlier of 18 January 2027 or 120 days after final regulations, as Willkie Farr & Gallagher sets out. A change of majority does not move that date.
The market-structure bill is a different story. The CLARITY Act passed the House in July 2025, and in September “the Senate rejected cloture on the motion to proceed on the bill by a vote of 49-50”, per Troutman Pepper Locke. The agencies are not waiting: the SEC proposed its own crypto-asset rules in August, and the CFTC sent draft rules for review in September. The White House’s Patrick Witt told CoinDesk that “There’s no holding them back in hopes of a lame duck passage of the bill”, and after the election TD Cowen’s Jaret Seiberg told CNBC: “We did not think Clarity could advance over the next two years.”
For a business that plans to accept or settle in stablecoins, that combination is workable. The rules for the instrument are fixed; the rules for exchanges and tokens will come from agencies, not Congress. Build against GENIUS-compliant issuers, keep the custody and exchange layer swappable, and treat anything that waits on CLARITY as a 2029 question. We have written about what payments code has to assume and what actually failed at Binance, and both apply more after 18 January than before it.
Privacy and children’s safety: hearings before bills
There is still no general federal privacy law, and the result does not change the arithmetic for passing one. The Republican SECURE Data Act would preempt all related state laws and had no Democratic cosponsors, so it is very unlikely to move now. Children’s safety is different. The House passed the KIDS Act, H.R. 7757, built around versions of KOSA and COPPA 2.0, by 267 to 117 in June, and in August the Senate Commerce Committee advanced KOSA unanimously. That is the bipartisan support a signature needs.
Expect hearings first. Nextgov/FCW expects more oversight of cybersecurity and surveillance under new chairs, and reports that the FITARA scorecard on agency IT could return. For companies that hold personal data, the practical work does not change: the state laws are the binding ones, and a subpoena is more likely than a statute.
Data centres were on the ballot 41 times
AI infrastructure was the surprise issue of the election. Scientific American, counting from Ballotpedia, found that “the artificial intelligence boom was on the ballot 41 times in 10 states”, and opponents of new data centres won 40 of those measures. In NBC’s exit poll, 76% of voters said they opposed building data centres in their communities, 57% said AI will do more to hurt society than help it, and 56% rated AI and data centres at least a major factor in their House vote.
Washington had already started to respond. In September the House passed the Ratepayers Protection Act 417 to 3, a federal standard for making large data centres, not households, carry the cost of new generation and grid upgrades. Pulling the other way, Executive Order 14318 of July 2025 fast-tracks permits for data-centre projects above $500 million or 100 MW.
For companies running heavy compute, the result is a siting and energy question before it is a regulatory one: local approval is harder to get, and power will be priced more honestly. For everyone else it is a reason to care about efficiency. A data platform that reprocesses data it did not need to is now a political cost as well as a line on a cloud bill, which is the argument of our pieces on why warehouse bills climb on flat data and why falling token prices raised the bill.
Federal IT: a record request meets a funding deadline
Agencies asked for $75.7 billion of civilian IT in the FY2027 request, up from $67.9 billion, but no new money for the TMF, the fund agencies borrow from to replace old systems. The stopgap bill keeps it running on about $5 million and extends the 2015 cyber information-sharing law to 11 December, per Nextgov/FCW. Nothing is settled until the outgoing Congress passes something before that date.
Contractors have recent reason to plan for a lapse. The Department of Homeland Security went unfunded from 14 February to 30 April this year, which PBS called “the longest agency shutdown in history”. Plan for a short continuing resolution, the chance of another gap, and slower new starts while new chairs decide what to fund.
VJ Sahi of Clark Street Associates put it plainly to Nextgov: “Overall, the election changes the political map more than it changes the underlying defense technology requirements.” The same holds for most civilian work. Old systems still need replacing, and the oversight that arrives with a new majority tends to favour vendors who can show what they delivered and what it cost.
What to plan for in 2027
Most of the change is in which questions get asked, not in which laws pass. For a company buying engineering work, it turns into five practical positions.
| If you… | Plan for |
|---|---|
| Use AI in decisions about people | State obligations from 1 January 2027 in California, Colorado and New York, Connecticut’s phased duties, and attorneys general with new mandates |
| Rely on H-1B hiring in 2027 | A fee that moves in and out of court, a separate $103,265 fee proposed by rule, and lottery and wage rules that favour senior roles |
| Move money in stablecoins | GENIUS requirements by 18 January 2027, and market-structure rules written by agencies rather than Congress |
| Buy or run heavy compute | Local opposition, honest power pricing, and Section 232 duties on hardware |
| Sell to federal agencies | An 11 December funding deadline, no new TMF money, and more scrutiny of IT spending |
None of those needs a forecast of what Congress passes. Each needs systems that hold up under any of the plausible outcomes: AI that keeps its own decision records, engineering capacity that does not hang on one visa route, payment code that treats the regulator as a dependency.
Building systems like that is our work. AI and automation, data platforms and software, contracted through our New York corporation and built by senior engineers who scope what they build. If any row above is on your 2027 plan, tell us what you’re weighing and we’ll tell you honestly what it takes.
Questions buyers are asking
Will a Democratic Congress pass a federal AI law in 2027?
Only one the president will sign. A partisan bill meets a veto, and a bipartisan one has to bridge Cantwell’s testing-and-audit framework and the White House’s wish to preempt state rules. For the next two years, plan as if the state laws are the federal law.
Is the $100,000 H-1B fee being charged now?
Not while the Massachusetts vacatur stands; USCIS said in July 2026 that it cannot require the payment. DHS has separately proposed a $103,265 fee on cap-subject petitions through formal rulemaking, which would be owed on top of it, and appeals are pending in three circuits, so the answer can change quickly.
Do the tariff changes affect software or cloud costs?
Mostly through hardware. Tariffs apply to imported goods, and the Section 232 duties cover certain chips and computing equipment, with an exemption for large US AI data centres. Software and engineering services are not tariffed, though cloud providers set their own prices on top of their hardware costs.
Could there be a government shutdown in December 2026?
Federal funding runs to 11 December 2026, and the outgoing Congress has to pass something before then. The Department of Homeland Security went unfunded from 14 February to 30 April 2026, so contractors should plan for a gap measured in weeks rather than days.
Saurav Raj Joshi is the founder and CEO of Crimson Umbrella Technologies and a principal data and BI engineer. You can find Saurav on LinkedIn.