Midterm Blood Bath, $4T AI Sell Off, Data Center Freeze, What's Next for Trump

What It Covers

The All-In hosts conduct a post-mortem on a fictional future midterm election where Democrats sweep both chambers and 29 governorships, analyzing how the Iran war, persistent inflation at 3.7%, and a K-shaped economy drove voters away from Republicans. The episode also covers a $4 trillion AI market selloff and data center permitting freezes threatening U.S. compute infrastructure.

Key Questions Answered

• •Midterm Causation — War + Affordability, Not Ideology: Exit polling showed 74% of voters rated the Iran war as either crucial or a major factor in their vote, and those voters broke heavily Democratic. Trump's net approval rating tracked almost perfectly with gas prices throughout his term. The war pushed Brent crude to $117/barrel, drove inflation from 2.4% back to 3.7%, triggered a rate hike bringing mortgages to 7.5%, and erased the 3.1% real household income gains achieved in year one.
• •Economic Populism as the 2028 Playbook: Chamath argues that voters have moved past partisan ideology entirely — the same bloc delivered landslides for Biden, Trump, and now Democrats in sequence. Campaign spending and gerrymandering both failed completely, with Democrats winning 11 of 15 redrawn Republican seats. The winning formula for 2028 is a candidate, from either party, who centers their platform on measurable economic fairness for wage earners rather than asset owners.
• •DOGE Failure as Structural Turning Point: Friedberg identifies June 5, 2025 — the day Elon Musk exited DOGE — as the moment the presidency's trajectory was sealed. Congressional members across both parties showed no interest in reducing government spending as a percentage of GDP. The One Big Beautiful Bill passed in July 2025 contained minimal entitlement cuts while the deficit remained at $2 trillion annually, leaving the cost-of-living crisis structurally unresolved and politically exploitable.
• •Data Center Freeze — Hyperscalers Win, Neo-Clouds Lose: New Democratic governors signaling permitting moratoriums create asymmetric outcomes across the AI stack. Hyperscalers — Amazon, Meta, Microsoft, Google, SpaceX — hold existing permitted capacity and can redirect compute to their own models. Neo-clouds, which rent capacity, face potential bankruptcy. Foundational model companies like Anthropic and OpenAI, which depend on rented compute to train frontier models, are most exposed to supply constraints and spot price spikes.
• •The SpaceX-Anthropic 90-Day Termination Clause: SpaceX holds a mutual 90-day termination option on its compute contract with Anthropic. If data center constraints drive spot GPU pricing to two or three times current contract rates, SpaceX faces a spreadsheet-driven decision to terminate and reprice. This single contract represents a disproportionate share of Anthropic's compute needs. Exercising the clause would force Anthropic to pay market rates, potentially double or triple current costs, while signaling to all hyperscalers that existing contract pricing is underoptimized.
• •U.S. Token Import Risk — Offshore Data Center Migration: If state-level permitting freezes persist, hyperscalers and foundational model companies will relocate data center construction to Canada, Mexico, Malaysia, Singapore, and the Gulf states once the Iran war ends. Modern fiber infrastructure and CDN technology make latency a non-issue. The consequence is that high-paying construction jobs, local tax revenue, and strategic compute capacity migrate offshore, turning the U.S. into a net importer of AI tokens — a position Sacks compares to energy dependence.
• •AI Regulation Trajectory — Federal Surveillance Risk: Sacks predicts with near certainty that Democrats will push for a federal AI department requiring frontier model approval before release. The regulatory framework will mirror COVID-era social media pressure campaigns, targeting outputs labeled as misinformation or disinformation. Closed model companies like OpenAI and Anthropic are likely to accept regulatory capture in exchange for competitive moats. Friedberg frames this as a state-power consolidation play — whoever controls AI access controls a force multiplier that undermines the individual liberty principles embedded in the U.S. founding structure.