“Affordability”: Democrats and Republicans
“Affordability” is the word du jour, fastened on by the left and considered by them to be a winning approach in the wake of Mamdani’s victory. To the right, that’s puzzling, because it seems quite clear that the Biden administration made things worse in that regard, and it’s been getting at least somewhat better under Trump.
But “somewhat better” isn’t “all better,” even though to expect the latter would be unrealistic.
Here’s a good discussion of this issue, and why it is that people don’t seem to see that electing Democrats isn’t the solution. They discuss it for about 37 minutes, but there’s no need to watch for that long to get the gist of it (and these guys are always entertaining, too):
Then again, the solution to “affordability” means something different to left and right. To the right, it means getting inflation under control and getting wages up. To the left, it means “we give the virtuous among you subsidies,” and “virtue” is defined by the identity group to which you belong.
NOTE: David Foster of Chicago Boyz deals with the issue of “affordability” here.
Related:
“They Think Their Voters Are Idiots”—
https://hotair.com/david-strom/2025/12/10/they-think-their-voters-are-idiots-n3809733
The may well be right…but I prefer to believe that they’ve perfected “The Art of the Big Lie”.
See, for the Griftocrats…it’s ALWAYS Trump’s fault, even if they have to lie spectacularly and perpetually to “prove” it.
I think this is a great strategy by the Ds. Outside of people that come to Neo’s, most folks just look at their income vs outlays and judge the economy on solely that. Has it improved? Yes, but not enough for most people to celebrate and thank Trump.
The real question is what the situation will look like September 2026. We know turning an economy around takes time, but people want results now. And that’s why the Ds are winning on this issue.
“Affordability” is a term which generates confusion. Always and everywhere, what you can afford is dictated by your income. Your income is influenced by several factors, but none so salient as your skill set. People are perturbed by unexpected changes in the general price level (you had Jerome Powell and his accomplices to thank for that), perturbed by unexpected price changes in particular markets, and perturbed by unexpected changes in the distribution of their expenditures between particular categories of the world of goods and services.
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NB, real incomes in general may not change, but the real incomes of particular households may be injured if price changes are concentrated in markets which have a peculiar prominence in their family’s consumption bundle. Of course, other people are uninjured and may benefit. People are more motivated when they are injured.
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NB, you may have deadweight losses from public policy in particular markets. Right now, there are two markets which have been injured by poor public policy: housing and medical care. Repairing those markets would take time even if you had a good plan. You’ll recall what Glitch McConnell and Paul Ryan had on deck after seven years of kvetching about Obamacare: nothing. Maybe there’s a salutary idea in that Mandate for Leadership about which partisan Democrats professed to be so agitated. The notion it would see the light of day is an eschatological notion. As for the Democrats, they have no non-destructive ideas.
Whilst agree with your points Art Deco, I’d say the current affordability crisis isn’t income based, or at least in the way you’ve set out. What people are experience isn’t that their skills have dropped or gone away. Rather the purchasing power of their income has been eroded by inflation, meaning their income IN REAL TERMS has been decreasing, whilst nominally the number on the paycheck remains the same.
One only needs to peruse social media to see we are in a value crisis. Businesses are having to put up prices due to increases in costs, however wages are remaining stagnant. This is leading to people seeing that the value of purchases going down. i.e. my income hasn’t changed, but the price of things is going up along with quality going down – so the value proposition is getting butchered on two fronts.
Looking at the restaurant/dining industry this is very very obvious. These markets depend on operating at scale. What is happening is costs are being pushed up, which increases prices. People are thus buying less because they see less value, which in turn reduces scale, thus necesitating even more price rises to recover in revenue per customer what they are losing by having fewer customers.
From a recent visit to Thailand this is what I can see happening there – attempts to make up a shortfall in revenue from fewer customers by charging existing customers even more, thus leading to even fewer customers. It is a death spiral with an obvious conclusion. its jokingly referred to as the thai business model because there is no understanding that price impacts demand, because historically the THB has been so low compared to other currencies thai prices were seen as very cheap even if they were doubled. Its gotten so bad in tourist areas that thai prices are reaching parity for the home countries of tourists.
Sadly this seems to be the fate of alot of businesses these days. They worked fine when they had a growing customer base, but they are scaled to a size that they will likely not survive a contracting market.
The David Foster essay cited by Neo is nominally about affordability, but a component of that is medical care and David provides a link, in one of his comments to that essay, to a great reality-checking Substack article addressing the need for real personal healthcare savings since healthcare costs are expected to rise with age, even as (real risk mitigating) insurance may also be needed for catastrophic events/situations. It also contains a great graphic of cost type vs. age.
https://x.com/JahangirAsgha10/status/1997650044732756026
Affordability an issue?
Here’s one creative solution:
“Gaming The System: Huge Proportion Of ‘Elite’ University Students Claiming Disabilities”—
https://www.zerohedge.com/political/gaming-system-huge-proportion-elite-university-students-claiming-disabilities
Pretty clever. (So maybe getting a good college education IS worth something.)
(Guess they don’t call ‘em the I.V. league for nothing…)
+ Bonus:
If they don’t succeed at first in destroying you and your health, they’ll keep at it with vigor.
“As vaccine orthodoxy crumbles, cancel culture allegedly hits federal immunization advisory panel”—
https://justthenews.com/accountability/cancel-culture/vaccine-orthodoxy-crumbles-cancel-culture-allegedly-hits-federal
File under: Summud State
Rather the purchasing power of their income has been eroded by inflation, meaning their income IN REAL TERMS has been decreasing,
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If nominal incomes are increasing faster than the price level, no their real income is not decreasing.
Somewhere at Zerohedge (yesterday?) I read that Treasury Secretary and Team Trump are very alive to this issue and its importance to the next election.
Meanwhile, inflation is around 3%, instead of the Biden years of 5%. Gas is lower. With illegal aliens leaving, rents are soft, and various house buying markets are soft, very soft in much of Florida and spreading elsewhere.
And the Bypureaus of Labor Statistices is updating reports after the end of the Federal shutdown.
“How to make sense of this [new] data? On the surface, the JOLTS report suggests that the jobs market is much stronger than some had feared, and certainly the bottom is not falling out. It also suggests that anyone expecting an aggressive easing cycle [in interest rates by the Federal Reserve Bank] in the immediate future will be disappointed…
“At the same time, the continued collapse in both hires and quits is concerning and indicates that we can now add low quits to the ‘low fire, low hire’ economy, which is rapidly finding a new equilibrium now that millions of illegal aliens aren’t polling the statistics, or artificially depressing wages….”
https://www.zerohedge.com/markets/job-openings-unexpectedly-soar-even-number-quits-plunges-5-year-low
Yet the GDP Now index at the Atlanta based Fed Bank says GDP is high at practically 4%!
When will this growth find consumers pockets better filled?
David Foster writes
“So, for discussion:
–What are the practical things that the Trump administration and its Congressional supporters can do in order to improve Affordability, prior to the 2028 election and ideally even before the midterms?
–Trump has embarked on a cross-country tour devoted to discussing Affordability. What is the best way to position this issue with voters?”
President Trump and Congress Republican need to get in front of this and deal with it straight on. My ideas follow;
Housing – not a lot to be done in the short term as each locality has its own roadblocks to affordability – look to LA fire rebuild as an example. What Trump could do prior to the ’26 elections is to propose a program that young, married couples up to say 35 years old would be entitled to a 50% grant to cover the cost of a first-time home. The grant would be interest free and would be paid back at the time of sale or title transfer in the future. This proposal would have great appeal to the young who feel frozen out of home ownership.
Education – Trump needs to take this head on. Where is Elizabeth Warren’s Consumer Protection agency when it is needed. For too long higher ed facilities have been overcharging (ripping off) students for degrees whose cost can never be paid back. Trump should initiate a proposal to have the schools pay off or reduce the student debt they have incurred from the endowment funds of the schools. Furthermore, the US government will no longer underwrite student loans. The schools themselves will be required to provide student loans or lose access to federal funds. I think this proposal would be popular with young voters and would have the schools put skin in the game as they would hold the bag for unpaid student loans.
Medical Costs –
• Tort reform – caps on payouts for lawsuits. Fear of lawsuits drive up costs and contribute to over prescription of costly diagnostic tests often not necessary.
• Medical Insurance should be valid across state lines
• Medical insurance stays with the individual. When a young person leaves their parent’s insurance, they decide on an insurance provider that they may keep for life regardless of if they change jobs or move to different states. The individual pays 50% the employer pays the remainder. Premiums are a % of salary. When unemployed, the individual pays 50% and the govt picks up the remainder. When retired the individual pays 100% of the premium as a % of retirement income.
These are several ideas I have to tackle the “unaffordability” crisis. President Trump may not be able to put everything into effect but at least he will take control of the discussion with viable solutions that will gain support of the disaffected voters.
Suggest that real estate prices exceed what they otherwise would due to several factors:
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A. Wildly excessive immigration.
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B. Substantive and procedural impediments in land use planning.
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C. Substantive and procedural impediments in building codes.
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D. The property tax regime
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E. The labor relations regime in the building trades.
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F. Episodic bubbles.
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G. Undue impediments to implementing evictions and undue transfer of rights to tenants.
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H. Prescribing the custom of landlords and property owners and regulating rents and real estate prices.
The first of these is in the realm of federal policy. The thing is, we need both executive action (vigorous enforcement) and legislative action. The Democrats will not agree to the latter and the McConnell wing of the Republican Party would allow the Democrats to erect procedural impediments even if there was a majority in favor of statutory changes (which they’re is not because there is a critical mass of uniparty betrayers in the Republican caucuses).
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In regard to the third of these, the one defensible federal intervention is health-and-safety standards on manufactured housing and building materials shipped across state lines. There are invariably trade-offs in regard to health-and-safety regulation.
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In regard to the fifth, it might be agreeable for federal labor legislation to prescribe amendments to the mode of collective bargaining in this sector in commuter belts including territory from multiple states or in re construction companies which take on projects in multiple state or have employees in multiple states. Not sure that would reduce the premium which is attributable to collective bargaining in the building trades.
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With regard to the sixth of these, we might do the Federal Reserve and ourselves a favor by giving them clear mandates: (a) maintain price stability through adjustments in the discount rates, adjustments in the monetary base, and adjustments in the interest paid on reserves on deposit and (b) provide liquidity and other services during banking crises. Let the unemployment rate go where it will, let prices in particular markets go where they will, and (under ordinary circumstances) let nominal interest rates, exchange rates, and balance-of-payments deficits go where they will. The last effort on the part of the Fed to prick a bubble did not work out too well.
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With regard to the 7th and 8th, repeal of anti-discrimination law applicable to the real estate sector would be agreeable. An eschatological concept, I know.
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DJT improvises and may just suggest what Xylourgos suggests. IMO, the following ought to be public policy observed at all levels.
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A. Governments have employees (who, one hopes, obtained their position by performing well on a series of examinations). Governments have contractors (who, one hopes do not have a disqualifying history as service providers and obtained their contracts by placing sealed bids).
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B. Governments issue vouchers and governments finance insurance programs. These are to be used to purchase the services of qualified providers. What is salient in such programs is that the consumer choses the provider.
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C. Government agencies and government corporations provide services which might be readily provided by private enterprise on the open market.
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D. Subsidized services might be provided by public agencies, government corporations, governments letting out contracts to private providers, governments issuing vouchers, or governments erecting and financing insurance programs. If we are prudent, we limit sectoral subsidies (leaving aside short-term emergencies) to medical care, long-term care, schooling, legal services, and shipping and transportation. In regard to the last two, the subsidies should apply to the edges of the sector. There should be a clear bias in favor of vouchers and insurance programs without categorically excluding other tools.
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E. Apart from subsidized services (and emergency relief), governments provide cash transfers and indemnities. Eligibility criteria have to be written to contain perverse incentives. Two rules: you have a clear and sensible conception of how disability is defined and any transfer to those neither elderly nor disabled is term-limited, event-specific, or comes in the form of matching funds for earned income.
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F. Government grants to corporate bodies and persons with institutional addresses should be eschewed except in discrete circumstances. Such might be permissible as follows: (1) to service providers and injured parties in the course of disaster relief, (2) to carefully vetted inter-governmental agencies, (3) to foreign governments in certain contingencies (not typically); (4) to local governments in whose jurisdiction state or federal real estate is located (provided said governments have a compliant system of tax assessment), (5) as re-imbursement to philanthropic agencies who have paid property taxes to local governments, (6) as unrestricted formulaic general revenue sharing to a subordinate government (i.e. the federal government to state and territorial governments, state governments to counties and school districts, and counties to municipalities).
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G. The federal government has a central bank which lends to other banks to contain crises. Governments let out contracts which stoke the development of useful technologies by the firm winning the contract. Governments make capital investments in public works (roads, bridges, sewers, public buildings). In the society at large, we have banks, credit unions, finance companies, bourses, securities underwriters, private equity firms, and venture capital firms. Finance is their business, not the government’s business.
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H. A government can raise revenue via real property taxes, final sales taxes, value-added taxes, corporation taxes, payroll taxes, personal income taxes, capital gains taxes, and gift-and-inheritance taxes. Ideally, in imposing these taxes, the government eschews sectoral preferences. (Property taxes will be more injurious to real estate intensive sectors and payroll taxes to labor-intensive sectors. Nothing you can do about that). Tariffs, particular excises, tolls and other service charges, Pigou levies, &c cannot be sectorally neutral and their proceeds (ideally) are placed in dedicated funds for on-point services or they are placed in a holding fund whose contents are distributed to the public on a per capita basis. Fines, forfeitures, and restitution to the government are properly placed in holding funds.
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Federal authorities did get the ball rolling on the 20% down 30 year mortgage. That task was completed sixty years ago. That aside, it is IMO prudent for the federal government to withdraw from housing markets and for state and local governments to limit their intervention to regulatory matters. One thing you don’t want to do is second-guess the business decisions of lenders unless they are threatening the actuarial soundness of a bank.
People have a tendency to resent it when opaque costs are made transparent. That’s an impediment to making policy in the public interest.
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In the medical sector, we might attempt the following:
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(1) requiring providers to publish their chargemaster,
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(2) requiring providers to make use of a controlled vocabulary in describing their charges,
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(3) requiring providers commit to their published prices with out-of-pocket customers,
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(4) having publicly financed insurance for medical care and l/t care which kicks in over a high deductible.
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(5) limiting public financing to a particular % of total personal income flow and adjusting deductibles annually to maintain that.
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(6) authoritatively sequestering household income (much as you’d tax it) in savings accounts for medical care and long-term care. The assets in such accounts could be expended for qualified services from qualified providers. Such accounts would have ‘fill’ lines. The fill line would be a function of nominal personal income per capita in the economy at large and adjusted each years. The contents of the account in excess of the fill line could be withdrawn and used for general expenditures. The assets in such accounts would still be the property of the account holder and could be partitioned in the event of a divorce, partitioned when a dependent reached his majority, bequeathed to someone else’s account, &c. The medical service accounts might be household accounts, while the LTC account would be individual accounts. (Deductibles in the case of LTC insurance might be stated in terms of one’s attachable assets and income up to a dollar value maximum, rather than in terms of a specific dollar amount). Also, you live in a small town you’re aware of benefits for people with medical issues; such benefits could be held for contributions to a persons medical savings account.
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(7) prescribing in law a standard monthly service charge for outstanding balances with medical and ltc service providers. This might be calculated with the following formula [((1.02 x (1+g)) ^ (1/.65))]^(1/12) where ‘g’ is the change in the GDP deflator over the last 12 months. In return, medical service providers would be at the head of the line of creditors in bankruptcy proceedings.
In WA, the state will periodically adopt the current version of the International Residential Code with modifications and then the county adopts the state regulations also with modifications.
Example of IRC 2021
This comprehensive code comprises all building, plumbing, mechanical, fuel gas and electrical requirements for one- and two-family dwellings and townhouses up to three stories. The 2021 IRC® contains many important changes such as:
Braced wall lines must be placed on a physical wall or placed between multiple walls.
The rated separation for two-family dwellings is 1 hour whether or not a lot line exists between units.
Emergency escape and rescue openings require a clear 36-inch-wide path to a public way.
An engineered design is required for storm shelters.
A habitable attic is limited to one-half the area of the story below and the dwelling requires sprinklers.
Updated Wind Speed maps match IBC and ASCE 7 maps.
Deck design now considers snow load, tributary area for footing and post height, and guard details.
Specific requirements for deck guardrails were added.
Component and cladding wind pressures in Table R301.2(2) are updated for new design wind speeds and hip or gable roof profiles.
Minimum footing size tables are revised to more accurately reflect current practice.
Cripple wall requirements apply only to exterior cripple walls.
New appendices for cob construction and 3D printed construction are added.
A 30 percent reduction of airflow is permitted for balanced ventilation systems.
Commercial gas cooking appliances are prohibited.
The head pressure for a water test of DWV systems increased to 10 feet.
Air vacuum testing is now permitted for plastic piping DWV systems.
Section P2904 for dwelling sprinklers is expanded to more closely align with NFPA 13D.
An emergency service disconnect is required in a readily accessible outdoor location.
A surge-protective device (SPD) is now required at the service panel.
The number of receptacle outlets required for peninsular and island countertops in kitchens is determined by the area of the countertop surface.
GFCI protection is now required for damp and wet locations not included in the other 10 areas requiring GFCI protection.
Art Deco’s post may indicate he is a wannabe federal employee. Maybe in the IRS.
My take: Most people fail to realize the higher prices from the post-COVID inflation are never going to go back down. If we can keep inflation low and economic growth high, salaries will eventually increase enough to return real prices to pre-COVID levels, but even when that works, it takes time.
Democrats, and Biden in particular, undoubtedly bear the lion’s share of the blame for the post-COVID inflation. But in 2024, both candidates promised to bring down prices. Given that, it was inevitable that whoever won in 2024 was going to face some blow back for failing to deliver.
Trump has two big things going against him, though. First, Trump bought responsibility for the economy, lock, stock and barrel with his liberation day tariffs. As a matter of basic politics (not economics) you simply cannot take an economic action that big and completely unprecedented and then, two years later, claim that the state of the economy is someone else’s fault (even if it is).
Second, Trump II is arguably the most hyperactive administration since the New Deal. And what have they don’t about prices? The best they can do is to argue, implausibly, that the other things they’re doing are addressing inflation (i.e., tariffs, immigration enforcement, etc.)
So Trump has placed himself in a position where blaming his predecessor and insisting that things really aren’t that bad is the best political strategy that he has. This even has the benefit of being (mostly) true. But I don’t think that’s going to save his political bacon. It sure didn’t for Biden.
Another piece – are we in the early stages of monetizing $38T in debt? Ignoring fiscal warning bells for two-plus decades might have made that necessary. If that’s the case, prices aren’t going down for a while.
Art Deco’s post may indicate he is a wannabe federal employee. Maybe in the IRS.
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Huh?
Most people fail to realize the higher prices from the post-COVID inflation are never going to go back down.
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There has in this country been no sustained deflation since 1938. Deflation as a phenomenon is actually destructive if unanticipated. Most people aren’t completely clueless even if you fancy they are.
“Most people fail to realize the higher prices from the post-COVID inflation are never going to go back down.”– Bauxite
More accurate would be to say most younger people are economically illiterate and will be susceptible to the siren call of government subsidies to make their lives affordable.
Older generations are more likely to understand inflation, but are still fairly economically illiterate.
The average college student loan debt is around $42,000 at an average interest rate of 6.39%. While not exactly mortgage levels, it still puts pressure on budgets. That’s assuming younger people even know how to budget, or would be willing to. Case in point– door dash. When young people are paying to have fast food delivered, it’s hard to feel very sympathetic to their economic plight.
Prices for many sectors of the economy have stabilized or come down, thanks to the administration focus on reducing energy costs.
Brian E – You’re whistling past the graveyard. Gasoline prices are pretty good right now, but not that much less than during the Biden years. Everything else is still high.
“Gasoline prices are pretty good right now, but not that much less than during the Biden years.” -Bauxite
We were traveling this fall and gas was $3.08 in Montana. Driving through Idaho, it was $3.29– which normally has very low gas prices. I just saw a picture from a friend in Idaho which showed prices at $2.95. Prices in some parts of Texas as nearing $2. That is considerably less than during the Biden years– especially 2022 and 2023. Still less than 2024.