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Key takeaways:
The 2026 midterm elections may clarify political control but not reduce business uncertainty.
Boards should test strategy, capital plans, and areas of exposure against multiple policy scenarios.
Directors need forward-looking, decision-useful information to challenge management effectively.
Introduction
The 2026 midterm elections may bring greater clarity about the balance of power in Washington, but they are unlikely to bring greater certainty for business. Management should be prepared for multiple policy scenarios, understand where the business is most exposed, and maintain the agility to respond as conditions change.
For boards, that preparedness has a direct connection to strategy oversight. PwC’s 2026 Annual Corporate Directors Survey found that 81% of directors believe their boards could challenge management more effectively on corporate strategy. Directors pointed to greater use of scenario analysis, clearer visibility into strategic alternatives and trade-offs, and better metrics and benchmarking as ways to strengthen the board’s strategic dialogue.
Policy environment at a glance
- The election outcome will influence how policy moves. Possible configurations range from a divided Congress to control of both chambers by either party. A divided Congress would likely bring greater congressional oversight and may push the White House to seek bipartisan agreements on select issues, while also increasing the importance of executive action. Democratic control of both chambers could similarly increase reliance on executive action and rulemaking, while continued Republican control would provide greater opportunity to advance the current policy trajectory. Lame-duck dynamics could further influence the balance between congressional and executive action.
- Affordability is becoming connective tissue across the policy agenda. Pressure around household costs can spill into debates over taxes, tariffs, healthcare, labor, energy, and government spending, creating momentum for populist policy responses across party lines. AI and data centers are increasingly part of that debate as concerns about jobs, higher utility bills, and quality of life concerns intersect with technology investment and growth.
- Fiscal pressures may shape the choices available to policymakers. Large federal deficits, rising debt, and growing interest costs will coexist with pressure to address affordability and other voter concerns. Longer-term fiscal pressures, including Social Security funding needs, could add to the focus on revenue, tax, and transparency measures. Regardless of the election outcome, the next debt ceiling debate—likely to occur in 2027—could become an important legislative inflection point, while early legislative proposals tied to 2028 positioning may provide signals about where both parties’ economic agendas are heading.
- Policy change is only part of the story. A shift in congressional control could bring greater scrutiny of companies even without significant new legislation, while diverging state approaches to tax, AI, and energy could create additional complexity. Trade and tariff volatility, largely driven by the executive branch, are also likely to remain important business considerations regardless of the election outcome.
What this means for boards
Management cannot plan for every possible development, but boards can focus the discussion on the policy scenarios most relevant to the company, the strategic assumptions they could affect, and the choices management may need to make as conditions evolve. That includes understanding where policy shifts could change the economics, timing, or viability of significant investments, capital allocation, or other strategic priorities, and whether credible alternatives are available if assumptions change. The board does not need a comprehensive policy briefing; it needs decision-useful context on which developments could materially affect the business or increase scrutiny, what management is watching, and when a response may be required.
Questions for board discussion
Strategy and scenario planning
Which policy scenarios could most materially affect our strategy, which assumptions would they challenge, and where are we most exposed?
What developments would trigger a change in course, what decisions would need to be made, and how quickly would we need to act?
If key assumptions change, what strategic alternatives has management considered, and what are the trade-offs?
Business exposure and capital
Where could affordability-focused policies affect our cost structure, pricing, workforce, customers, or capital plans?
Which changes in AI, data center, energy, or trade policy could materially alter the economics of our technology, supply chain, infrastructure, or investment plans?
For major investments and M&A, are the expected returns and strategic rationale still compelling under the scenarios we are planning for, and are they consistent with our capital allocation priorities?
Scrutiny and transparency
Which elements of our tax profile, incentives, geographic footprint, or other business practices could face greater scrutiny or disclosure expectations as policymakers look for revenue?
Where could our government relationships, contracts, public commitments, or participation in government initiatives attract heightened attention or create reputational risk?
Are we prepared to explain the rationale for those positions and relationships to policymakers, investors, and other stakeholders?
Board information and decision-making
Does the board receive the forward-looking context needed to challenge management’s assessment of which external developments matter most to strategy?
Do board materials make clear the potential business impacts, key assumptions, and decision triggers underlying management’s recommendations?
Where do relevant functions differ in their assumptions or risk assessments, and are those differences being surfaced for board consideration?
The bottom line
The midterms will provide more direction but will not settle what comes next. Effective board challenge means moving beyond the policy update to understand where changing conditions could affect strategy, capital allocation, or management’s range of options.
From uncertainty to decision confidence
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