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Last week's midterm election results signaled a massive powershift in Washington, as Republicans are facing substantial losses in Congress while Democrats are looking forward to holding majorities in both chambers.
What that means for the legislative agenda is unclear. The 119th Congress, set to return today, already has a full docket including the extension of government funding and the National Defense Authorization Act, and it's unclear if Democrats will look to cut any deals with their GOP counterparts in this period.
On top of that, there are other critical priorities coming out of the election cycle, including calls for legislation around AI, foreign policy, tarrifs and trade and immigration and ICE oversight.
Former House Speaker Paul Ryan experienced what it was like trying to legislate under a divided government, with his tenure as speaker overlapping with the final year of President Barack Obama's term, which featured a divided government after the Republicans took control of the Senate and expanded their majority in the House — a midterm election that was considered a 'red wave.'
That period, Ryan told CNBC's David Faber at the CNBC Connect: Balance of Power event on November 5, 2026, was filled with "Venn diagram conversations," where there were arguments, discussions and then the opportunity to "figure out where we had common ground."
"Then, we'd say 'Okay, let's do that'" Ryan said. "If we were kind of close on issues, we'd say let's get the right people in the room and see if they can work something out … we had a mechanistic professional relationship that worked out fine. Mutual respect, kept our words to each other."
So will we see a repeat of that in 2027 as Trump finishes out his lame-duck term?
"I don't think this one's going to go like that," Ryan said.
Trump governed a divided government in the second half of his first presidential term; however, in that instance, Republicans kept a majority in the Senate.
Ryan has been across the table from Trump plenty of times. Despite frosty moments, they endorsed each other's campaigns in 2016: Ryan endorsed Trump's presidential bid in June; Trump endorsed Ryan's House reelection bid in August, after initially withholding support. Ryan served as speaker of the House for the first two years of Trump's first term.
Knowing what he knows about Trump, Faber asked Ryan how he believes the president will handle this new political environment in Washington.
"Probably not well," Ryan said. "I think he's going to get really frustrated."
Ryan pointed to Trump's first term, where he had the first two years under unified government and then a divided government for the latter two.
"He's seen this movie before," Ryan said. "They impeached him twice; my guess is it's not going to go well from a temperament standpoint."
The Democrats' seismic victory has largely been viewed as a referendum on Trump, especially with his repeated messaging to supporters to vote as if he was on the ballot. Top Democrats have already signaled that they intend to use their majority position to ramp up oversight of Trump, the administration and its dealings more broadly.
Following the results, Trump's public statements, at least, have been more conciliatory than perhaps expected.
Last week, Trump told CNBC's Eamon Javers that he can work with Democratic majorities in the next Congress on "many more things than people understand."
In his first on-camera remarks after the GOP's resounding defeat on last Wednesday, Trump focused on construction projects he has made a priority, including the partially built White House ballroom and a new helipad on the South Lawn. He did not mention or acknowledge the election drubbing in his remarks until reporters asked for his thoughts.
In an appearance on "60 Minutes" on Sunday, Trump said he was open to working with Democrats, and explicitly mentioned striking a deal around immigration.
Ryan echoed that point at the CNBC Connect event, and said bipartisan legislation around immigration may have found a path forward thanks to the Democratic landslide.
"This hawkish immigration president doing a deal on reforming legal immigration and securing the border with a Democratic Congress would be a good thing for America," Ryan said. "Fixing immigration would be good."
On "60 Minutes," Trump said his administration's deportation policy was "too tough," and expressed interest in reforms that would open up legal status for people who have been here for "ten and 15 years." Trump said that Democrats have already called him to discuss such a deal.
Faber asked Ryan if he believed that Trump and the rest of the administration could get on board with a bipartisan immigration deal, given the obvious tensions with Democrats on this topic.
"Trump's staff wouldn't be there, but he himself, I think," Ryan said. "I've had a lot of conversations with him. I think he's more amenable to fixing legal immigration than the people around him."
Notably, Ryan's comments came before Trump appointed Stephen Miller his new chief of staff, who was an architect of Trump's controversial mass-deportation efforts.
A big determiner of how Trump tries to work with Democrats will be based upon how Democrats look to provide oversight of the president for the remainder of his term, as well as how the party balances its own internal rising groups.
Ryan said that Hakeem Jeffries will have to "manage expectations" of members, especially some of the new wings likely to be formed by first-term electees. While Democrats have a "big oversight plan … they would be foolish to say we're going to impeach [Trump]. They'll just make this thing partisan, that would be a ridiculous move," Ryan said.
Instead, Jeffries should "work hard at building a message of what they're for, in addition to who they're opposing and how you oppose the president," Ryan said. "The other party matters, and so he's going to have to work on that."
"That means he's going to have to say no to a lot of people who are out for blood," Ryan said of Jeffries.
However, Ryan did say he expects, given the voter focus on corruption, for there to be a lot of oversight hearings "coming our way."
Ryan said he is watching for a Russian sanctions bill that would be "more airtight" than the Graham Act passed this year, enforcing less waiver authority or a veto-proof threshold.
Ryan also said he believes there is potential bipartisan support for data center or AI-focused legislation stemming from the work of the Jay Clayton-led Super Intelligence Force effort that began in October. That could lead to the establishment of a FINRA-type agency for AI, he said.
Any sort of deal related to the debt limit or debt reduction, Ryan said he is "not holding out hope for that."
AI was certainly on the ballot in the midterms, and voters on both sides of the aisle made their preferences clear by overwhelmingly backing restrictions on data center development or rejecting measures that would have eased their construction, as well as electing officials who have pledged to do the same.
That happened most notably in Texas, where the largest data center buildout in the U.S. is taking place. Democrat Gina Hinojosa, who defeated incumbent Republican Governor Greg Abbott. has said she wants to enact an immediate moratorium on data centers in the state. However, she has since softened her stance to potentially allow ongoing construction to continue.
"There is no way to sugarcoat that Democrats taking control especially over the Senate will create some major hurdles for AI and tech legislation in the Beltway over the next 2 years," Dan Ives, partner at Yorkville Ives & Co., said in a note on Wednesday morning.
"There's a right way to do this, but I do think, given these elections, data centers just got a little more expensive, and the buildout's going to be a little longer," Ryan told Faber.
Ryan said the country is so divided on this that he doesn't see bipartisan legislation on data center regulation coming out of Congress.
"There are bills that people have put into the hopper," he said. "There's going to be an attempt. I have a hard time seeing it get done, just because I think the place is going to be so fractious. I think it's going to be very, very bitter," he said, referring to the relationship between Trump and Congress.
Some proposed legislation on data centers is calling for, among other things, disclosures on electricity and water usage.
"That's going to happen no matter what," Ryan said, saying that hyperscalers have made multiple missteps in the way they approached communities, failing to address concerns about water, electricity, and AI technology itself and to communicate the benefits, like lower property taxes.
In order to get community buy-in, Ryan said, these companies will be forced to change the way they work with local jurisdictions.
"If the midterm means more focus on data centers and communities, we're going to keep doing the work to get into those communities and to build trust with them," Open AI CFO Sarah Friar told CNBC's Sara Eisen, saying that OpenAI plans to continue investing in the data center buildout.
Regulation, Ryan said, will likely be done on a "state by state, county by county, regulation by regulation, zoning ordinance by zoning ordinance" basis.
Despite the midterm results, National Economic Council Director Kevin Hassett said Friday he expects data center growth to continue as projected.
"We respect the localities that decide [to restrict development]," Hassett told CNBC's Carl Quintanilla. "But America is a big place, and right now, the data centers scheduled over the next couple of years aren't affected by these ballot initiatives."
In Ryan's view, the benefits of having data centers on American soil far outweigh the costs.
"They're going to get built," he said, adding that the question is if the U.S. wants data centers to be "American infrastructure for the world" or built by another country.
"What I hope doesn't happen is they only go to red states that are accommodating and don't go to new blue states that aren't. That would be wrong. It would be nice to see this spread across the country," he said.
Ryan has more hope for bipartisan efforts on AI and the future of work. It's an issue he is working with think tank the American Enterprise Institute in partnership with the Urban Institute. "We're trying to build a bipartisan consensus on ... how we handle displaced workers," he said.
Ryan said it is inevitable that some jobs will be destroyed, but that ultimately, new opportunities will be created.
"The question is, how do we bridge ourselves from here to there?" he said. Potential solutions, he said, could include employment stabilization policies, revamping unemployment insurance and reworking the job training system.
"The policy tools we have today are literally like 100 years old, written back in the Industrial Revolution. So, I think that needs to be modernized and updated. That's what our commission is working on," he said.
On the broader question of AI regulation, Ryan said it's needed to ensure that "we protect against the downside and enjoy the upside."
"I'm not a doomer by any means, but I'm also not a total accelerationist, total techno optimist. There's somewhere in between here," he said. "The question is, can we make sure that we protect against the downside and enjoy the upside? The answer is definitely yes. Good policy can do that. Proper regulation can do that."
While the shocking results of the midterm elections may suggest that Washington may be stuck in a gridlock until 2028, Ryan was more optimistic, and said the results would allow Republicans and Democrats to "deliver some bipartisan packages that you can bring to the White House as sort of fait accompli efforts. That would be a nice thing to see."
However, Ryan also noted that if the Republicans want "any chance of winning the White House in 2028, let alone making back gains in Congress, we're going to have to get some brand separation from what our brand is now."
"I think that's going to be really difficult to do because the brand is the president of the United States for the next two years," Ryan said. "He sucks up a lot of the oxygen and he's going to have a massive impact in picking the next nominee. So, I don't know exactly how we get out of that."
But as for those next two years, which Ryan said will feel "like dog years," he said the thing to watch from Trump is "what will the distractions be that he comes up with while all these investigations are coming out."
"He's pretty good at trying to change the subject and he's really good at moving the culture and moving the dialogue in America about things," Ryan said. "What will those distractions be? Will they be cultural war distractions? Will they be things about the Kennedy Center and arches? Or will they be bigger, more material things that affect the economy."
"That's, to me, the key question," Ryan said.