What the Midterms Mean for Technology and AI

The 2026 midterm elections have delivered a decisive shift in Washington. For technology policy, the new dynamic between Congress and the White House will likely affect a broad range of issues. Here is what R Street’s technology and innovation scholars will be watching as the 120th Congress takes shape.

Adam Thierer – Resident Senior Fellow

AI Governance – A Democratic Congress is not likely to deliver comprehensive federal AI legislation. They are more likely to focus on investigations and subpoenas than working with the White House. This will leave the states to continue building on the growing patchwork of AI laws that ballooned over this past session. Chatbots, deepfakes, and algorithmic pricing will again be major growth categories, while a new class of robotics mandates will likely start to spread across the nation. Data center moratoriums will become more onerous as state and local governments tack on an expanding list of mandates before any permits are issued. These compounding mandates will create an even more confusing and costly compliance regime for national innovators across the AI stack. This will significantly burden smaller application providers, and the fate of open source AI now also hangs in the balance as this patchwork of fear-based red tape expands. 

Nicholas Thielman – Resident Fellow

AI and Labor Markets – Growing societal concerns over AI-driven mass-unemployment has resulted in several proposed bills aimed at helping workers adapt, including new job training programs, enhanced unemployment benefits, and financial assistance for the costs of acquiring an occupational license. With Democrats in control of both chambers, these sorts of “AI New Deal” proposals are likely to gain steam. This is despite the lack of clear evidence showing that AI is having any effect on labor markets currently. If the goal is to help workers adjust, Congress should first start by encouraging states to remove government-created barriers to adaptation like restrictive occupational licensing laws, for instance by conditioning federal workforce dollars on recognizing out-of-state licenses, before implementing costly new programs.

FCC Equipment Policy – Over the last year, the Trump administration has implemented several broad-based bans on the importation and use of various foreign-manufactured communications equipment and drone technologies, ostensibly for national security reasons. The most notable of these was the Commission’s decision to block the sale of new foreign-produced consumer routers unless they received a limited “conditional approval.” Subsequent analysis has shown these bans to be both economically disruptive and disconnected from the underlying national security rationale. Pending legislation before Congress would require the FCC to explain the specific national security concern to Congress before listing new equipment, limit listings to entities controlled by foreign adversaries, and subject class-wide listings to congressional review. While this would not reach existing bans, such a reform would provide an important brake on an underappreciated, but costly, source of executive discretion. 

Spectrum Policy – While the implications of the mid-term results for spectrum issues are unclear, what can be expected is that Democrats will scrutinize Chairman Carr’s recent efforts to muzzle critics of the administration via the transaction review process. Moreover, Democratic control of both chambers will likely bring renewed equity concerns into spectrum policy. Either way, this will likely take the Commission’s focus off making more spectrum available for commercial use, in as short a time as possible.

Josh Withrow – Resident Fellow

Antitrust – Concerns about AI have recently caused a renewed surge of calls for antitrust enforcement against large tech companies by the likes of former FTC Chair Lina Khan, and echoed by many Democratic state and federal lawmakers. There will likely be a number of Congressional hearings meant to set the stage for future antitrust cases, both by federal enforcement agencies if the White House changes parties in 2028 and by state attorneys general.

AI, Social Media, and Kids’ Safety – It is likely that 2027 will see dozens of state-level proposals to regulate or even ban youth access to AI chatbots and agents, similar to the push for restrictions on social media over the last several years. With more state legislatures under Democratic control, those proposals seem more likely to hew to more of a California age-appropriate design model that focuses on regulating platform design features but would likely result in an effective age verification mandate similar to proposals in GOP-led states. At the federal level, it is likely that the new Democratic majority will attempt to advance something like the Kids Online Safety Act, perhaps grafted with additional requirements specific to AI platforms–and this effort would likely attract a degree of bipartisan support. Hanging over all of these efforts are a number of active court cases that may finally settle whether these platform design mandates and age verification requirements are–as R Street contends–unconstitutional.

Algorithmic Pricing Regulations – With retail price inflation at the top of everyone’s minds, lawmakers at both the state and federal levels will likely continue to assign some blame for these costs to the use of what has been dubbed “surveillance pricing.” In spite of a paucity of evidence that algorithmic pricing is being used to gouge consumers to any large degree, legislation to regulate the use of customer data was introduced in half the states in 2026, and this will likely increase in 2027. A set of new proposed enforcement guidelines by the Federal Trade Commission regarding the use of algorithmic pricing will continue in development next year as well. 

Mark Dalton – Senior Director of Technology and Innovation Policy

Export Controls – Export controls on the sale of advanced technology to China is an issue that garners bipartisan support, and the next Congress will likely push even harder on these measures. Due to the complexity of the issue, it will be important that Congress scrutinizes whether existing controls are having their intended effect on China’s progress before passing bills that seek to address their unintended consequences. There is a real danger that legislative momentum will push bills that hurt America’s long-term competitiveness in the interest of feeling like something is being done.

Transition to Post-Quantum Cryptography – One of the most important, but least flashy, technology development stories has been the administration’s progress on the transition to post-quantum cryptography in government systems. The transition plan is sound, but ambitious, and if Congress is looking to assert oversight simply because it was built by the Trump administration, there is a real risk of slowing progress. The threats against encrypted data are not a future concern, and implementing the known solutions with haste is extremely important.

Spence Purnell – Resident Senior Fellow

New Scrutiny of Prediction Markets – As prediction markets become more popular, questions around their legality and prevalence remain outstanding. The predictive power they displayed on election night suggests they are accurate at what they do, calling some 98% of elections correctly. However, Democrats are much more likely to embrace regulations against these platforms. If progressive regulatory interests align with conservative apprehension about gambling, we could see new rules for prediction platforms. 

GRANITE Act Loses Steam – The “blue tsunami” is unlikely to take the GRANITE Act issue seriously, as the administration will surely turn its attention to more pressing matters, and democrats will push on other more popular issues. There may still be an opportunity for it before Congress changes, but that window is likely closing very rapidly. While democrats have been critical of Brendan Carr, the FCC, and the administration’s other censorship efforts, they are unlikely to carry forward a principle of free speech that satisfies our concerns on these issues. Overall, I don’t think this election shows any sign of improving the environment around free speech on the internet. 

Ed Tarnowski – Resident Fellow

Cybersecurity and Access to Frontier Models – In recent months, as high-profile AI-related cybersecurity breaches become more common, so does the conversation around who ought to have access to capable cyber tools. In the new Congress, this topic is likely to receive even more scrutiny, and, in turn, pressure on companies to restrict who may access their frontier models is likely to increase too.

Concerns about the ever-evolving cybersecurity landscape are certainly legitimate, but reactive, misguided legislation driven by the impulse to “do something” risks producing policy that will not only fail to address many of those legitimate concerns but also weaken the ability of defenders to prepare for and address cyberattacks.

Mythos’s FreeBSD vulnerability discovery is a classic high-profile example, and it caught countless headlines. While not insignificant, context is important. When tested, several open-weight models successfully detected the same vulnerability. Furthermore, just last month, Vals AI, an independent AI benchmarking company, found that DeepSeek’s publicly available model, V4.1 Flash, outperformed ChatGPT-6 Sol on a benchmark evaluating cybersecurity capabilities.

In short, available, advanced AI models capable of sophisticated cyber discoveries are not going anywhere, and restraining defenders from using American frontier models to find and patch their own vulnerabilities puts them at a disadvantage. AI is undoubtedly speeding up the cybersecurity game, but U.S. policy on model access does not operate in a vacuum, and lawmakers should focus on ensuring that American frontier AI continues to lead in equipping defenders with the tools to find and patch vulnerabilities more quickly than attackers can exploit them.

Wayne Brough – Resident Senior Fellow

Patent Reform – There will be new leadership in the House and Senate on Judiciary. Drug pricing remains an important issue, so there may be opportunities to pass the ETHIC Act. PERA and PREVAIL still pose threats, but not nearly as much with Senator Thom Tillis retiring. Patent issues don’t follow partisan lines, so from a policy perspective, the landscape doesn’t really change that much.

AI/Copyright – The courts are leading on this issue, with 145 cases filed, so Congress will most likely refrain from acting for now. The content industry is well represented in the Democratic Party, so there may be efforts to introduce legislation, particularly related to piracy.