Vice President Vance stepped out of President Trump's shadow Wednesday, seizing on the GOP's midterm catastrophe to begin the explosive task of claiming MAGA as his own.

• "The reason we lost is the war," Vance wrote in an extraordinary 600-word postmortem on X, blaming Trump's Iran campaign for Republicans' historic collapse.

Why it matters: Vance's presidential ambitions are entangled in the wreckage of a war he privately opposed but publicly defended. His path to 2028 demands a delicate political calculation.

Vance must convince MAGA's disillusioned voters that he understands their sense of betrayal, even as he remains a central figure in the administration responsible for the Iran war.

• His maneuvering will take place under the gaze of a president who doesn't seem particularly eager to leave the stage — and who isn't shy about reining in those on his team who overstep.
• "Today, JD Vance became president — or acted like he wanted to become one," a source close to the administration told Axios.

Zoom in: Vance argued that defections from Trump's 2024 coalition — not lack of turnout — drove the GOP's collapse in Tuesday's midterms. Citing polling of disaffected Trump voters, he identified four demands:

1. "End the war."
2. "Focus on cost of living/inflation."
3. "Put America First."
4. "Change our relationship to Israel."

Those happen to be the four hottest topics among top MAGA podcasters and activists. So Vance is aligning with those leaders on topics where MAGA anger with Trump is raging.

What they're saying: "If you'd like to argue [the war] was worth it, that losing the Senate for the next 6 years was worth it, then do so," Vance wrote. "Argue it was a worthwhile cost to pay. Agree or disagree, that's at least honest."

• Trump accepted that challenge Wednesday, acknowledging that the war had hurt Republicans but insisting it was worth the cost. "If I had to do it again, I'd have to do it again," he told reporters. "As far as that war is concerned, I would have done nothing different."
• As for Vance's post, Trump said: "I know how he feels about it. I think it was fine. I thought it was good."

Behind the scenes: Vance's commentary caught some in the White House by surprise. But insiders said the vice president worked with senior administration officials on the post.

• "These were his words and thoughts," one insider said. "He's leading."
• Said another: "It pains me to say this, but Tuesday showed the emperor had no clothes, and Vance knew he should just state the obvious. There are going to be a lot of other Republicans putting a lot more distance between them and the president."
• One Republican consultant representing a potential rival in the 2028 presidential race offered a blunter assessment: "The VP had to show he's not a dead man walking out there."

Zoom out: Trump's second term has been riven by a bitter ideological feud between MAGA's anti-interventionist wing and the pro-Israel hawks who championed the Iran war.

• Vance privately questioned the war's objectives and duration, then publicly defended the campaign and led peace negotiations with Iran. His postmortem now puts him squarely in the anti-interventionists' camp.
• That could help him fend off potential 2028 challengers who also are skeptical of foreign intervention.
• It also gives Vance an opening against more hawkish Republicans, particularly Texas Sen. Ted Cruz. If Cruz runs in 2028, as many expect, and argues that it's time for the party to move on from Trump administration figures, Vance could try to argue that Cruz was on the wrong side of the issue that helped cost Republicans the midterms.

The midterm results have unleashed a fresh wave of recriminations, with MAGA influencers blaming Laura Loomer, Ben Shapiro, Mark Levin and other hawks for betraying Trump's America First promises.

• Those influencers, in turn, have generally accused their critics of antisemitism or disloyalty to Trump.

By the numbers: A GOP political group that surveyed 12 key congressional races in January found that a plurality of voters blamed Democrats for inflation.

• By October, the numbers flipped and Trump and Republicans bore the blame.
• "What changed? The war in Iran. The cost of gas. It's that simple," a Republican consultant who provided the polling to Axios said.

The intrigue: Donald Trump Jr., an influential voice in MAGA's grassroots movement, threw his weight behind Vance's postmortem, writing on X: "Every word of this is 💯 💯 💯."

Between the lines: For all his professed straight talk, Vance's postmortem is strikingly selective.

• He blames the Iran war and acknowledges voters' anger over inflation, but makes no mention of Trump's tariffs, corruption controversies or fixation on White House construction projects as Republicans' political fortunes collapsed.
• The omissions are revealing: Vance offers a diagnosis of the defeat that validates MAGA's "America First" wing, while shielding Trump from a broader reckoning with his presidency.

What to watch: Trump has yet to anoint Vance as his successor, and the Republican collapse is already exposing the contours of a potential succession fight.

• Asked Wednesday whether he had discussed a presidential run with Vance, Trump said the two talk about "a lot of things," before adding: "Maybe he won't run. I don't know who's going to run."

Florida Gov. Ron DeSantis (R), a Trump primary rival in 2024, seized on his state's narrow Republican victories — a rare GOP bright spot amid Tuesday's rout — to offer his own diagnosis of the party's failures.

• "This is close to an extinction-level event for Republicans," DeSantis said at a news conference.
• "In January, when everyone in office leaves, who were either term-limited or got voted out of the 10 largest states in this union, only one state will have Republican control of their state — the state of Florida."

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It's a de facto motto in the Trump White House: "Somebody's gotta take the fall." Lately, that person looks like Secretary of Defense Pete Hegseth.

Why it matters: From the unpopular war in Iran to his bad bipartisan relations with members of Congress, Hegseth's record has made him the most vulnerable member of Trump's Cabinet after Tuesday night's midterm shellacking.

• "Hegseth is definitely on thin ice," a Trump adviser told Axios. "It doesn't mean the president forces him out. But there are complications."

Driving the news: As early as next week, the House could impeach Hegseth for allegedly defying Congress and illegally continuing the U.S. war in Iran.

• The measure is sponsored by Rep. Thomas Massie (R-Ky.), a vociferous critic of Israel and foreign wars.

Zoom in: Iran is at the center of both Hegseth's possible impeachment and Republicans' midterm collapse. Many voters oppose the war and its byproduct: higher gas prices that spiked after Iran closed the Strait of Hormuz.

• Before Trump attacked Iran on Feb. 28, Hegseth was the most gung-ho about the conflict, and he gave the rosiest projections about how quickly and easily it would be resolved, according to sources familiar with the discussions.
• By August, a senior administration official said, U.S. Central Command was reportedly soliciting new approaches to pressure Iran, suggesting that military leaders were still reassessing how to achieve strategic results.
• CentCom was also asking: "At what point did Hegseth recognize that our original strategy wasn't going to produce the outcome he expected and pitched?"
• Trump stood by Hegseth on Wednesday, telling reporters that the secretary is "doing a very good job."

Between the lines: Trump has been known to praise an embattled Cabinet secretary, only to seek their ouster shortly thereafter. With Hegseth, four factors are weighing on Trump:

1. The impeachment threat. Democrats already have tried to impeach Hegseth, and with their new House majority in January, those efforts could intensify. The last thing Trump wants is a series of distracting impeachment hearings focused on Hegseth's rocky tenure — and, inevitably, Trump's decision to attack Iran.

• "Tonight would have looked very different without the Iran war," one administration official told Axios late Tuesday. "I believe you'll ultimately see POTUS hold Pete Hegseth accountable, and that will play out in the lame duck," a reference to the period between the midterms and the new Congress' first day, Jan. 3.

2. Trump needs a scalp. Presidents have a long history of shaking up their administrations after disastrous midterms. George W. Bush notably ousted Defense Secretary Donald Rumsfeld after the 2006 elections.

• It wouldn't be surprising to see Trump make a high-profile personnel change after a defeat of this magnitude. Hegseth, whose tenure has been marked by controversy, is one potential target.
• "Somebody's gotta take the fall, and Pete is moving to the top of the list," a U.S. official said.

3. The lame-duck window. If Trump is going to replace Hegseth, there's a compelling reason to do it before January. Confirmations in a Democrat-controlled Senate will be impossible. That gives Trump a narrow window to push through a new defense secretary while Republicans still hold the majority.

• "No one's getting confirmed" in the new Congress, a senior White House official said. "We're operating under that premise."

4. A potential soft landing. There also is a conceivable exit ramp for Hegseth: Tennessee Sen. Marsha Blackburn is about to become that state'e governor, and she will have the power to appoint a replacement to her Senate seat. Hegseth owns a home in Tennessee, giving him a connection there.

• Trump expressed approval for the idea Wednesday: "I actually think he'd be very popular if he did that. But I haven't heard that at all."

What they're saying: Asked about a possible impeachment vote and efforts to remove Hegseth, a spokesperson said the secretary will "not back down or be deterred by politicians seeking to score partisan points or launch phony investigations where no wrongdoing exists."

• "The Department of War has followed the law and our secretary will continue to stand and fight every single day to support and defend the Constitution, lead our troops, and protect America."

The intrigue: Trump allies in Congress have asked the administration to get rid of Hegseth, but they acknowledge that even if Democrats captured 55 Senate seats, an effort to remove the secretary probably would fail because it would take 12 more votes in the 100-member chamber.

• "There are some Republican chairs in the Senate who just hate Pete, but that isn't enough," an administration official said.

Behind the scenes: Hegseth critics leaked to Politico that the secretary's new financial disclosure report showed his wife worked for a consulting firm with Defense Department ties.

• One Hegseth ally called the campaign against the secretary "an op."
• In a statement, Hegseth's department said he's in "full compliance with all ethics laws and regulations ... Any insinuations or claims otherwise are ridiculous slander."

Democrats of all political stripes won so big on Tuesday that the party didn't settle its long-running civil war between moderates and progressives.

• Instead, the party's historic victories gave each faction some reasons to claim that its brand of Democrats can defeat the GOP in 2028.

Driving the news: Democratic operatives are sure of one thing, though: Tuesday's blowout wins mean that more party leaders will be willing to run for the White House than if the midterms hadn't gone so well.

• Barack Obama's 2012 campaign manager, Jim Messina, told Bloomberg TV this week that he's already met with 29 potential candidates.

Zoom in: On Tuesday, moderate Democrats won. Progressives won. Even one-time socialists won.

• In Michigan, for example, unapologetic progressive Senate nominee Abdul El-Sayed won by 7 points after running on Medicare for All.

In the same state, William Lawrence, a member of the Democratic Socialists of America before he let his membership lapse recently, flipped a key swing district.

• Those results were good news for New York Rep. Alexandria Ocasio-Cortez, the democratic socialist with a national profile who went all-in on electing El-Sayed — and is considering a run for president in two years.

More moderate Senate candidates who frequently talked about their faith on the campaign trail — such as Texas' James Talarico and Kansas' Adam Hamilton — pulled off huge upsets in deep-red states, and in the process created a model for some Democrats to follow.

• Their mild-mannered, religion-infused campaigns mirrored former Transportation Secretary Pete Buttigieg's 2020 presidential run.

For the past year, AOC, Buttigieg and other Democrats eyeing the White House have been laying the groundwork to turn the 2026 elections into a springboard for their potential presidential campaigns.

• Some put their chips on specific candidates — and virtually all of them succeeded.
• Pennsylvania Gov. Josh Shapiro, a centrist technocrat who campaigned on "getting sh*t done," won reelection by 22 points. His long coattails helped Democrats win four new House seats and a trifecta in his state's government.

Former Vice President Kamala Harris, who urged voters to push back against the Supreme Court's ruling threatening Black representation in Congress, saw her efforts to help boost Black turnout across the South pay off.

• Harris also campaigned with Black gubernatorial candidates in Nevada and Wisconsin who won — and a third Black Senate contender who's on the cusp of flipping a Senate seat in Mississippi in what would be a historic win.
• Also good for Harris: Georgia's Keisha Lance Bottoms made history as the first Black woman in the country to win a governor's race.

In Georgia, Sen. Jon Ossoff won a second term by 18 points.

• Because Bottoms as governor would be able to appoint a replacement to a vacated Senate seat, Ossoff — or Georgia Sen. Raphael Warnock, another potential White House contender in 2028 — wouldn't have to worry about a Republican temporarily filling his position if he were to win the presidency.

What they're saying: What happens next for the party is "a big question mark," said Lauren Hitt, a Democratic strategist who advises moderates and progressives.

• "We're going to spend a year fighting out who actually has the mandate — left/center/populist — and then in 2028 we'll have our answer."
• Some Democratic operatives believe that the through-line of their wins was simply change — and that the next presidential nominee should represent a new direction more than any policy, identity or ideology.

The other side: Some Democrats hope that Tuesday's results signal that the factional warfare that has defined their party for much of the past decade might be coming to an end — or at least entering a new phase.

• "We've just come to this place as a Democratic Party where it's not one wing — it's all of the wings," said Jane Kleeb, president of the Association of State Democratic Committees.
• In 2028, "it will be interesting to see which candidates can communicate to the primary voter that they are not only from one wing of the party," she added.
• "That's going to be the big test."

Americans made it very clear on Tuesday that health care is too expensive. The challenge for Democrats is to agree on the quickest way to deliver some relief.

Why it matters: Voters can't wait until 2029 for life to get cheaper — but any short-term action to meaningfully lower health costs will require Democrats to make deals with President Trump.

The big picture: There's already speculation about what a Democratic unity health care agenda would look like, and what progressives' midterms success means for Medicare for All.

• But that's largely geared toward the 2028 presidential race or a possible Democratic administration.
• The short-term reality is that any ambitious policies that significantly expand the government's role in health care are almost certain to collide with Trump's veto pen.
• Strategists say the Democrats' most realistic option is to find piecemeal affordability fixes next year and play the long game when it comes to reshaping the health system.

"If you read history, people make the biggest mistakes when they win. That's when they take their eye off the ball and they don't do the right thing," said Zeke Emanuel, an adviser in the Obama White House and a professor of medical ethics and health policy at the University of Pennsylvania.

• "This is an affordability election. We need to do affordability, but I do agree with the idea that this is a two-step process," he added. "There's going to have to be longer-term reforms."
• "For those debating whether the new Congress should consider big and bold reforms or pass practical help for people right away, the answer is yes. Voters can and should expect action on multiple fronts," Families USA executive director Anthony Wright said in a statement.

Between the lines: Democrats' top priorities for the next Congress are restoring enhanced Affordable Care Act subsidies and reversing the Medicaid funding cuts in last year's GOP reconciliation law.

• Their unexpectedly large majorities in each chamber will give them leverage, but no guarantee of a victory, if there's a standoff with Trump.
• Even if they prevail, it won't help the 157 million Americans with workplace coverage who are feeling the strain of higher premiums, deductibles and other out-of-pocket costs.
• "Congress thinks of Medicare, Medicaid, and to some extent the exchanges. But they have to remember half the American population and a lot of people complaining about affordability are in the private sector," Emanuel said.

What they're saying: Senate Democratic Leader Chuck Schumer told MS NOW yesterday that health costs will be a top focus for Democrats.

• Incoming Senate Finance Committee Chair Ron Wyden (D-Ore.) said his committee "will create a new foundation for America's health care system that guarantees health care for all, gives Americans cheaper and better health care, and ends the corporate chokehold on our nation's health care system."
• And House Energy and Commerce Committee senior Democrat Frank Pallone of New Jersey called for "an agenda that puts working people first and focuses on resolving the outrageous price increases."

The intrigue: Drug pricing could be one area ripe for a deal, considering the Trump administration's efforts to get the Republican Congress to write into law the "most favored nation" deals it struck with major manufacturers.

• "It's very hard for the public to hear both Democrats and the president say they care about this issue and fail to find a way to ... provide greater cost relief for their medications," said Democratic health care consultant Chris Jennings.
• Emanuel said Democrats should also push for site-neutral hospital payment policies, caps on hospital costs and an end to copays and deductibles for generic drugs in Medicare and ACA markets.
• The question is whether many Democrats are willing to scale back their ambitions for the sake of striking a deal with a weakened president. Many of those policy options would generate budgetary savings that could instead be used to help pay for sweeping coverage expansions.

The bottom line: Voters couldn't have been clearer about how they're being squeezed by the health affordability crisis. Democrats have to figure out how to respond to pressure to act now.

The AI industry is scrambling to repackage a $10 trillion infrastructure buildout to appease a hostile electorate that overwhelmingly voted to restrict data center construction in ballot measures across the country.

• It's not just changing the name of data centers to "compute campuses," but offering communities real money, including dividends, benefits for schools or cities, environmental concessions and labor protections.

Why it matters: Tuesday's election proved voters won't tolerate unchecked growth, although the market and many analysts see the blue wave slowing — but not stopping — data center construction around the U.S. To prevent an existential threat, the world's biggest companies are working on a rebrand.

• How well they execute on their promises will determine the pace of the global AI race.

What they're saying: Chris Lehane, OpenAI's chief global affairs officer, compared the turnaround AI must make to the 1996 election, which came shortly after Republicans routed Democrats in a historic midterm election.

• "A lot happens in two years," he told Axios in an interview. "Smart, talented folks take messages from voters and react and respond to them."
• Getting community buy-in for data centers will require "really making clear that these can be long-term, durable, economically transformative projects for communities," he said.

Driving the news: There's no question about how voters feel about data centers after Election Day, with restrictive measures across 10 states going 43-1 at the ballot box. The margins weren't close, with an average of 75% of people favoring restrictions.

• In Texas, a new Democratic governor has promised to keep a moratorium in place until the legislature passes comprehensive reforms.
• Candidates who won in other emerging data center states also favor similar restrictions. Analysts say about 60% of planned 2028 capacity across the U.S. faces a risk of delay.

Between the lines: Incoming Democrats aren't going to kill data centers. Virginia, run entirely by Democrats, is the biggest data center hub in the U.S. Unions are also among the buildout's biggest supporters. But many of the new crop of winning candidates have similar demands.

• Tech companies must pay for infrastructure and bring their own power, ensuring that new strains on the grid from the boom won't hit ratepayers.
• Tax breaks are dead and face repeal, and the companies will have to show that they will ensure environmental and labor protections. Voters also won't tolerate any more nondisclosure agreements or what look like secret deals.

What we're watching: Amazon, Google, Microsoft, OpenAI and other major data center developers began laying out a new vision for winning public approval before Tuesday's "AI earthquake."

• Many of their proposals already include efforts to meet these demands, including commitments to ensure data center developers cover their infrastructure and power costs.
• These concessions may make data centers more costly, but a slower pace could also make it easier to absorb higher costs.

Zoom in: Jobs won't be enough, since they are temporary. Look for more payments akin to the $50,000 teacher bonuses that followed the construction of a massive Meta data center in Louisiana.

• Amazon allocated $1 billion for investing in data center communities over five years, and Microsoft also has its "Datacenter Community Pledge."
• OpenAI on Thursday unveiled a "Compute Campus Policy Blueprint" and outlined tens of millions of dollars of commitments for free school lunches, parks, first responders and other priorities.
• Lehane added that renaming data centers to compute campuses—viewed as a gimmick by some policymakers and consumer advocates—was an intentional effort to "provoke that conversation."

Yes, but: It's far from clear whether Democrats who are poised to take control of powerful congressional committees in Washington will buy the talking points, and some new state leaders campaigned on the importance of binding agreements.

• A report last month from Sen. Elizabeth Warren (D-Mass.) found that major tech companies aren't covering the full infrastructure costs of their data centers, and companies continue seeking billions in tax breaks as well as using nondisclosure agreements.

The bottom line: Data center construction is set to slow, but it won't stop. The race is on to see whether Democrats can translate election momentum into binding restrictions or if the industry tries to head off tougher rules.

Democrats are on track to take control of a majority of legislative chambers, ending 16 years of Republican dominance over America's statehouses.

• If current leads hold, 75% of Americans will live in a state with a Democratic governor, and 53% will live in Democratic trifectas.

Why it matters: Statehouses are the front line of American federalism, and Tuesday's gains dramatically expand Democrats' power to increase minimum wages, protect abortion access, and set voting rules ahead of 2028 for most Americans.

Driving the news: The party is set to flip 12 legislative chambers, dismantle five Republican state trifectas, shatter 11 GOP supermajorities and build 12 of its own, according to AP returns as of 6pm ET on Wednesday.

• If leads hold, Democrats will control the governor's office and both chambers in five of the seven 2024 presidential battlegrounds: Arizona, Michigan, Nevada, Pennsylvania and Wisconsin.
• They have also broken Republican one-party rule in the sixth (Georgia) and flipped the House in the seventh (North Carolina).

Democrats flipped five GOP-held governorships (Georgia, Iowa, Nevada, Ohio and Texas) and lead in Alaska.

• Republicans haven't flipped any, despite targeting Arizona, Michigan, Oregon and Wisconsin. Kansas, where Democrat Cindy Holscher was leading by about half a point Wednesday evening, is uncalled.

The big picture: Ever since the 2010 Tea Party wave, Republicans have used their grip on statehouses to reshape American life: banning abortion, loosening gun laws, restricting collective bargaining and expanding private-school vouchers.

• They drew maps that kept them in power even in years Democrats won more votes statewide.
• Tuesday's Democratic gains broke that firewall.

By the numbers: Republicans entered Election Day with 23 trifectas (control of the governor's office and both chambers) to Democrats' 16. If leads hold, Democrats will have 22 and Republicans 18.

• 24% of Americans will live under a GOP trifecta, down from 42%.
• Democrats will control 51 of 99 chambers, up from 39. Republicans will control 46, down from 57. (Minnesota's House was tied, and Alaska's Senate and House have been controlled by a bipartisan coalition.)

A combined 5,000-vote swing across six states would have given Democrats control of six more legislative chambers.

Zoom in: Democrats won veto-proof majorities against Republican governors in both Vermont chambers and the New Hampshire House, and sit one seat short in the New Hampshire Senate.

• Republicans lost two-thirds majorities in eight chambers, including the Iowa and Kansas Houses, where Democratic governors' vetoes would now stick. In Kansas, that depends on Holscher winning.
• Democrats built supermajorities in nine more chambers, including Arizona's Senate and in states they already govern.

Policies Democrats could reshape

Paychecks: Pennsylvania and Wisconsin still use the $7.25 federal minimum wage.

• Pennsylvania's House has passed increases before, and the GOP Senate didn't take them up.
• Wisconsin Democrats can repeal what's left of Act 10, the 2011 law that stripped most public workers of collective bargaining. A judge struck down most of it in 2024, and that ruling is on appeal.
• Nevada Democrats can revive a paid leave bill the Republican governor vetoed.

Abortion: New Democratic attorneys general in Georgia and Texas will decide how hard to defend their states' abortion bans in court and whether Texas keeps pursuing doctors who mail pills from shield-law states.

• In Iowa and Ohio, and in Kansas if Holscher wins, Democratic governors can veto new restrictions.

Schools: Arizona Democrats can cap the state's universal voucher program, which Gov. Katie Hobbs has tried and failed to rein in.

• Texas' new $1 billion voucher program might survive because the GOP held the state Senate, but now Democrats will have a say in how it's funded.

Elections: Pennsylvania and Wisconsin bar officials from processing mail ballots before Election Day. That rule is a big reason both states' counts can drag on for days.

• Democratic trifectas in both states can change it before 2028.
• New Democratic secretaries of state in Georgia, Ohio and Indiana will run those states' presidential elections.

Yes, but: In Texas, Georgia, Ohio, Iowa and Kansas, divided government means more vetoes than new laws.

• Several new majorities are razor-thin. Pennsylvania's Senate is 26-24 and Wisconsin's is 18-15.
• New Democratic governors also inherit the Medicaid and SNAP cuts in last year's GOP megabill, and backfilling them would come out of state budgets.

The bottom line: Republicans spent 16 years building a statehouse majority. Democrats erased it in one night, and now have two years to show voters what they'll do with it.