Mapped: Socialists Just Captured America's Two Biggest Cities - As 'Blue Wave' Knocks The Market's Teeth In

If Nithya Raman's lead in Los Angeles holds, about 14.4 million Americans will live under a socialist mayor, up from 9.4 million before Tuesday, and the country's two largest cities will both be run by members of the Democratic Socialists of America. Decision Desk HQ projected Wednesday that Raman, a DSA member on the City Council, unseated Mayor Karen Bass, as we reported. The AP has not called the race.

Tuesday also sent eight DSA members to the House: six newcomers plus Reps. Alexandria Ocasio-Cortez and Rashida Tlaib, who were re-elected. Washington, D.C., Providence and Ann Arbor elected socialist mayors, and socialists won or lead in a dozen city council races from Burbank to Providence.

The newcomers are Claire Valdez (NY-7), Darializa Avila Chevalier (NY-13), Chris Rabb (PA-3), Donavan McKinney (MI-13), Melat Kiros (CO-1) and Angela Gonzales-Torres (CA-34). Four of the six unseated sitting Democrats: Avila Chevalier beat Rep. Adriano Espaillat, McKinney beat Rep. Shri Thanedar and Kiros ousted 15-term Rep. Diana DeGette in primaries, while Gonzales-Torres beat Rep. Jimmy Gomez 59% to 41% on Tuesday, according to LAist.

In the mayors' races, Janeese Lewis George, a DSA member on the D.C. Council, won the race to succeed Muriel Bowser. David Morales, a self-described democratic socialist who ousted Providence Mayor Brett Smiley in September, took 80.6% of the vote. Yousef Rabhi had no opponent in Ann Arbor after beating 12-year Mayor Christopher Taylor in August. In Richmond, Calif., East Bay DSA member Claudia Jiménez leads with about 53%.

The Ceiling In Washington

The new members arrive in a Democratic House and Senate, but keep in mind that nothing they pass becomes law thanks to President Trump's veto threat. Dems won at least 54 Senate seats - short of the 60 needed to break a filibuster and the two-thirds needed to override a veto. CBS News projects a House majority of 251 to 268 seats, which makes eight socialists about 3% of the caucus; leadership could lose more than 30 votes and still pass a bill.

Losing the House also killed a Republican plan to keep Avila Chevalier and Valdez away from intelligence. Rep. Nicole Malliotakis (R-N.Y.), calling them "dangerous," had urged Speaker Mike Johnson to limit which committees they could join if the GOP kept its majority.

The Tax-The-Rich Scorecard

While the spread of socialism is alive and well, voters split on taxing the rich. California's one-time 5% tax on billionaires' net worth was failing, with just over 56% voting no in Tuesday night's count, after billionaires poured a record $612 million into the state's elections to fight it. A measure to make the state's top income-tax brackets permanent passed with about 59%, and Prop. 42, which would ban new taxes on financial assets and most other wealth, was ahead with more than 54%.

In Washington state, voters refused to repeal a new 9.9% tax on income over $1 million, 58% to 42%, keeping a levy expected to raise more than $11 billion over five years, with revenue starting in 2028. Starbucks founder Howard Schultz announced he had moved to Miami hours after the tax cleared the state House in March, as we reported.

Mayor Zohran Mamdani asked Albany for $5.5 billion in new taxes on the wealthy and big corporations and came away with a surcharge on expensive second homes worth about $500 million next year, NYS Focus reported, after he dropped his threat to raise property taxes. The surcharge has been tied up in court since August.

In Los Angeles, Raman tried in January to shrink the city's "mansion tax." She proposed exempting new apartments and commercial projects for 15 years from Measure ULA, the city's 4% to 5.5% tax on property sales over $5 million, arguing that construction had slowed and lenders were pulling back. The council sent it back to committee, and any change needs voters' approval. ULA has raised more than $1 billion, according to CalMatters.

In D.C., Lewis George says closing "a loophole that benefits Maryland and Virginia" could raise $500 million, without saying how. The Home Rule Act bars the District from taxing commuters' income, and a House Republican bill requiring Congress to approve D.C. tax or fee increases cleared committee in July. It would need 60 votes in a Senate that Democrats take over in January.

Where Mayors Move Fast

Housing is where a socialist mayor has moved fastest so far, through a board the mayor appoints. New York's Rent Guidelines Board, where Mamdani had appointed six members, voted 7-1 in June to freeze rents on about 1 million stabilized apartments, six months into his term.

Providence's council passed a 4% annual cap on rent increases 9-6, but Smiley's veto stood. Morales has pledged to work with the council to enact it and set up a board to enforce it. In Los Angeles, California's Costa-Hawkins Act exempts newer buildings and single-family homes from rent control and bars caps on rents between tenants. Raman will, however, appoint the commissions that run the Port of Los Angeles, LAX and the Department of Water and Power, the largest city-owned utility in the country.

Getting Blue Wave'd...

The first market casualty of Tuesday's vote was the AI power trade: on Wednesday Vistra fell 13.8% and Vertiv 12.9%, while the S&P 500 ETF rose 1.7%. Constellation Energy fell 6.7% and Nvidia 3.2%, while DTE Energy, Michigan's regulated utility, rose 2.4%.

Analysts tied the selloff to the broader Democratic sweep rather than to the socialists. Texas Gov.-elect Gina Hinojosa, a Democrat who unseated Greg Abbott, campaigned on a moratorium on new data centers, and KeyBanc cut Vistra to Sector Weight over the policy risk. Texas holds about 27% of U.S. data center capacity, according to a Wells Fargo estimate cited by CNBC, and the Democratic wave there also hit Tesla. Democrats also took control of Georgia's Public Service Commission.

On Thursday the selloff spread to chips and then to the whole market: by late morning the S&P 500 was down 3.2% and the Nasdaq 5%, with the S&P on track for its worst drop since President Trump shook markets in April 2025. AMD fell 15.9%, CoreWeave 14.9%, GE Vernova 9.1% and Nvidia 8.3%.

Goldman Sachs economist Alec Phillips estimated that moratoriums could touch about 45% of planned U.S. data center capacity expansion, though he expects them to be brief, and Goldman's Ismail Abbas said the new backdrop is "good for those who own compute (hyperscalers) and bad for those who have to build out." UBS warned that "Data center pauses will slow the pace of buildout into 2028." Qualcomm also sank about 10% before the open on a weak forecast, and South Korea's Kospi fell 5.8% overnight, triggering a trading halt, as Samsung and SK Hynix tumbled.

The AI Data Center Moratorium Act from Sen. Bernie Sanders and Ocasio-Cortez would halt new data centers nationwide until federal protections for workers, consumers and the environment are in place. The House version has 15 Democratic sponsors, Tlaib among them, and dies when this Congress ends on Jan. 3, so it would have to be reintroduced. Most lawmakers in both parties have rejected a moratorium, and Sen. John Fetterman (D-Pa.) wrote, "I refuse to help hand the lead in AI to China."

Before the vote, Wells Fargo warned of a fourfold jump in active data center moratoriums, as we reported. Denver Mayor Mike Johnston, who is not a socialist, proposed a pause on new data centers in February in what is now Kiros's district. Outside Ann Arbor, OpenAI, Oracle and Related Digital are building a 250-acre campus in Saline Township, beyond the new mayor's reach, and the city's voters rejected a plan to replace DTE with a city-owned utility by 951 votes.

A Brooklyn appeals court is due to rule by Tuesday on whether New York can keep rolling out its second-home surcharge, after a Staten Island judge ordered the rollout scrapped in September over how the city flagged homeowners. The appeals court has let the city proceed in the meantime.