The US president gets most of the headlines, but Congress holds many of the levers that matter most to markets. Taxes, government spending, borrowing limits and many of the rules companies operate under all go through the House of Representatives and the Senate. That is why the balance of power in Congress can move shares, bonds and the dollar, sometimes as much as the race for the White House.
How Congress is made up
Congress has two chambers. The House of Representatives has 435 members, all elected every two years. The Senate has 100 members, two per state, serving six-year terms, with about a third elected every two years. To become law, a bill generally needs to pass both chambers and then be signed by the president. In the Senate, many bills effectively need 60 votes to overcome a procedural delaying tactic called the filibuster, which makes big changes harder still.
Taxes and spending
All tax bills must start in the House, and Congress decides how much the government spends each year. Changes to corporate tax rates affect company earnings directly, as we explain in our guide to how corporate tax rates affect share prices. Spending decisions influence which sectors benefit, from defence and infrastructure to healthcare. The overall balance of taxes and spending also affects how much the government needs to borrow.
Borrowing and the bond market
When the government spends more than it raises in tax, it borrows by selling Treasury bonds. Bigger deficits can mean more bonds for investors to absorb, which can push up yields. Congress also controls the debt ceiling, a legal limit on total borrowing that has led to tense stand-offs in the past.
Regulation
Congress writes the laws that govern banks, technology companies, energy producers and drugmakers. It also oversees the agencies that enforce those rules and can hold hearings that put company bosses under pressure. A Congress keen on tougher regulation can weigh on the sectors in its sights, even before any new law passes.
Why the balance of power matters
When one party controls the White House and both chambers, it has a much easier path to passing its agenda. When power is split, big changes become harder and compromise or deadlock is more likely. Markets have often been comfortable with political gridlock, because it limits surprises, though it can also raise the risk of budget fights.
That is why election results for Congress can move markets overnight. After the 2026 midterms, projections of a Democratic sweep sent futures lower and the dollar weaker, as covered in our Morning Market Brief.
The beginner’s takeaway
Congress controls taxes, spending, borrowing and much of the regulation that shapes company profits. Its balance of power changes what is likely to become law, and markets price those odds quickly. For traders, the key is to focus on what can realistically change, not just on the drama of the result.
Understanding how politics feeds into prices is a core part of market literacy. If you want to see how your own knowledge measures up, try the free Samuel & Co Trading Trader Assessment.
