Trump's 'Mr. Veto' plan meets blue wave in AI data center states

The midterm results handed Democrats control of both chambers of Congress and a majority of governorships — 28, the first such majority since 2010. While a divided Congress lowers the odds of major tax or spending legislation between January 2027 and January 2029, keeping the 21% corporate rate in place, the more consequential shift may be at the state level. Texas, Ohio and Georgia rank among the top states for AI data center planning and construction, and the governorships there flipped to Democratic control.

That matters because state approvals sit outside the president's veto. Democratic Governor-Elect Gina Hinojosa of Texas has proposed a ban on data center approvals until the legislature passes laws governing electricity, water, air and property rights. Such state-level friction could slow the AI infrastructure build-out even as Trump promises to veto federal AI bills.

The timing is delicate. The stock market entered 2026 at its second-highest valuation since January 1871, and credit markets are already repricing AI risk: Oracle's market-implied five-year default risk has risen above 20%, compared with around 16% for SpaceX and more than 7% for Nvidia. With Goldman Sachs projecting hyperscaler debt issuance to jump from $250 billion in 2026 to $420 billion in 2027, a slower approval pipeline in key states could test both equity valuations and credit spreads.