GOP Memo Warns of Midterm Bloodbath as Democrats Gain Edge on Economy

This is a lightly edited transcript of the May 1 episode of the Daily Blast podcast. Listen to it here.

Podcast Transcript: Democrats Surge Ahead on Economy as GOP Warns of Midterm Risks

Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR Network. I’m your host, Greg Sargent.

Public polls are now showing that Democrats are more trusted on the economy than Republicans—a shift with major implications for the midterm elections. A new memo from Republican operatives acknowledges this shift and warns that the GOP risks losing control of the Senate. Fresh economic data further highlights the struggles of ordinary Americans, suggesting their financial challenges may be worsening.

The New Republic staff writer Monica Potts has been reporting on how voters perceive the economy. We spoke with her about these developments.

Monica Potts Joins the Discussion

Monica Potts: Thanks for having me.

Sargent: Let’s start with the latest data. GDP grew at 2% in the first quarter of 2024, an improvement over last year but still below expectations. Meanwhile, inflation saw its largest spike in nearly three years, driven by rising gas prices and geopolitical tensions. Monica, does this mean we’re economically stuck?

Potts: I think so. The economy was on a path to recovery at the end of the Biden administration. The post-COVID era was unprecedented—people’s incomes and spending habits changed dramatically. Inflation rose rapidly, and things were gradually returning to normal. However, a recent Federal Reserve report found that inflation might have stabilized had it not been for new tariffs imposed during the Trump administration and other economic shocks under his tenure.

Sargent: This economy is largely shaped by one person: Donald Trump. Let’s discuss that next.

Republican Memo Highlights Democratic Edge on Economy

Sargent: Politico reports on a new Republican memo with striking findings. It’s from Americans for Prosperity, the Koch-backed group, and it concedes a major shift in voter trust. Here’s a key line from the memo:

“Our internal polling in several battleground states and one-on-one conversations with voters show that, for the first time, Democrats are more trusted on the economy and inflation.”

Monica, this is a dramatic turnaround. In 2024, Trump’s victory was built on the economy and inflation—yet Democrats were severely weakened by post-COVID inflation shocks. What explains this shift?

Potts:

It’s a combination of factors. The post-COVID economy was volatile, and people’s priorities shifted. Many voters now associate Republicans with instability due to policy decisions like tariffs and trade wars. Meanwhile, Democrats have framed economic recovery in terms of resilience, not just growth. Voters seem to be responding to that narrative.

Economic Data Underscores Voter Struggles

Sargent: The latest data paints a mixed picture. While GDP growth is positive, inflation remains a top concern. Gas prices and global conflicts continue to drive costs higher. How are ordinary Americans feeling about this?

Potts:

Many families are still catching up from the pandemic’s financial toll. Wages haven’t kept pace with inflation, and essentials like groceries and utilities are eating into budgets. The Fed’s report suggests that without recent economic shocks, inflation might have eased sooner. Voters are noticing these pressures, and it’s reflected in their trust in economic leadership.

GOP Memo Warns of Senate Loss Risk

Sargent: The Republican memo doesn’t just acknowledge Democratic trust on the economy—it warns of a potential Senate loss. What’s the GOP’s strategy moving forward?

Potts:

The memo suggests Republicans are pivoting to other issues, like immigration and cultural concerns, to regain momentum. But the economic trust gap is a serious hurdle. If voters believe Democrats handle the economy better, it’s going to be an uphill battle for Republicans in key races.

Looking Ahead to the Midterms

Sargent: With the midterms approaching, how do you see this playing out?

Potts:

Democrats have a clear advantage on economic messaging right now. But the race could tighten if inflation cools further or if Republicans successfully shift the conversation to other issues. For now, the GOP’s internal warnings suggest they’re deeply concerned about their prospects.

Sargent: Monica Potts, thank you for joining us.

Potts: Thanks for having me.