I started to write a reply arguing that a big enough setback in the war might have been able to swing the midterm elections enough for Peace Democrats to be able to block funding for the war in 1863, but in researching it I found two big problems with my idea:
- It would have taken a huge setback to swing public opinion enough to elect a Peace Democrat majority: the OTL 1862 elections were not close (Republicans and Unionists combined for about 79% of the Senate and about 60% of the House), and not all Democrats in Congress were Peace Democrats. The Republican/Unionist/War Democrat coaltion would have held a majority of the Senate no matter what, and it would take something on the level of Lee outright winning the Maryland Campaign to put the House in play.
- Even if Peace Democrats won a House majority in the 1862 elections, the old Congress would still have had their lame duck session to pass legislation. They could have passed an "emergency" war appropriations bill authorizing funding for the war in advance, which would have required a positive act of legislation to repeal (a majority in both houses plus Lincoln's signature, or a 2/3 majority in both houses to override a veto, neither or which is happening no matter how badly the midterm elections went). And by the time the lame duck Congress's emergency appropriations run out, we're into 1864 at least, which isn't really an "early" Confederate victory.
Basically, an early victory for the Confederacy would require enough outright wins on the battlefield to convince even Lincoln and all but the most fervent of Congressional Republicans and Unionists that the war was hopelessly lost, and that's a very hard POD to contrive.