02 Feb Affordability
Joe Biden said the economy under his leadership (“Bidenomics”) was strong, and that Americans could well afford everything they needed. Americans thought otherwise, and the Democratic party lost the presidency. Now, President Biden’s successor, who vowed to “Make America Affordable Again” by “rapidly driving prices down” (including bringing back $2 gas) and reducing mortgage rates to 2%, says he has fixed the economy.
Nevertheless, most Americans still don’t agree that necessities are affordable. In the few major elections held in November of 2025 – New York City, New Jersey, and Virginia – Democrats won by exploiting voters’ affordability concerns.
If voters believe there is an affordability problem, no matter who says there isn’t one, the voting public will win that argument every time. Therefore, we do have an affordability problem, and politicians (mostly those in Congress) need to acknowledge it. The voter is always right, at least when it comes to their pocketbooks.
The “Affordability Issue”
While egg prices are way down and gas is down some, rents and mortgages are up, home insurance is more expensive, electricity costs are up, coffee and ground beef prices are much higher than a year ago, and now health insurance premiums and medical out-of-pockets are skyrocketing. I won’t even mention the increasing cost of services, such as haircuts and childcare (neither of which apply to me at this point😉).
When all politicians in Congress and elsewhere start focusing on the affordability issue – whether they want to or not – I have some thoughts on the subject.
At the outset, I note that affordability is a two-pronged issue. The first involves how much money the consumer has. The second prong is how much the needed product or service costs. Politicians should focus on both prongs: available cash, as well as prices. Sometimes these are referred to as increasing incomes and decreasing expenses.
I think the easier and most appropriate political task is to increase the amount of money in people’s hands. Let me state right up front, however, that I do not believe in the government simply giving people money. Except in extreme circumstances, federal handouts generally hurt the recipient, especially in the long term. Instead, there are several things our politicians could do to help workers receive higher pay and to help retiree incomes increase.
Let’s start with workers. I’m not referring here to increasing the minimum wage. What I do think is that the best way to increase wages is by allowing businesses to be profitable. That can be achieved by politicians in various ways:
- reduce business taxes
- reduce regulation and unnecessary investigations of businesses
- reduce tariffs
- enact tort reform
- increase legal immigration
Next come retirees, like my wife, me, and many of you readers. Baby boomers are rapidly retiring, and we are a huge voting bloc. What can our elected representatives in government do to protect or increase the fixed incomes and investments of retired folks? Here are some ideas:
- preserve full Social Security
- reduce federal, state, and local taxes, including property taxes, by cutting government spending
Most discussion of affordability naturally centers on reducing consumer costs. Governmental price caps, rent freezes, and “free stuff (paid for by the government)” are not the answer. In place of these free/not free, easy/too easy answers, here are some things politicians actually could do to reduce consumer costs in a helpful and sustainable way:
- decrease or eliminate tariffs, which ultimately are passed on to consumers
- increase the housing supply through easy permitting and zoning
- increase the housing supply by eliminating capital gains taxes on primary home sales
- enable energy companies to increase production
- promote competition in consumer goods and services, through antitrust enforcement
- promote competition in medical products and services by enabling health savings accounts as a substitute for Obamacare subsidies
- promote economic growth and reduced inflation, so that interest rates can by decreased
Your Thoughts, Please
If it is not too personal of an ask, please let other readers know in the comments your current affordability experience – or that of your (unnamed) friends and loved ones. Further ideas for political solutions are welcome, too.
Politicians should be taking notes.
Written by Quentin R. Wittrock, founder of Principle Based Politics.
Look for his periodic posts, as this blog and the Extremely Non-Extreme podcast explore and promote the ideas of principles and non-extremism in politics.
Principle Based Politics does not endorse or support any particular political candidate or party.
Gary Russell
Posted at 21:32h, 30 JanuaryQuentin outlines a few sensible items that ARE under Gov’t control (mostly). No disagreements with the list. Nearly all of them involve a “hands off” – or – at least a “lighter hands” approach. This said, we can travel back a few blogs ago where the subject was “essential services” of the USG. The Federal Reserve (note the word “federal”) does indeed have a stated charter and for the most part, they do a decent job with it. However, it’s not the Gov’t’s job to regulate prices for consumers. So blaming (or rewarding) any president for “affordability” is silly in my opinion. I get it…it’s what moves the needle on national elections. But it shouldn’t. It’s neither Biden’s – nor – Trump’s fault that we have rising and falling prices – with the exception of the areas mentioned on regulation.
To the question asked, my own experience on “affordability” is that I notice when steak and McDonalds prices go up. And our kids are challenged on buying a home in Calif. We are fortunate that this can be absorbed into the family finances and I feel for those where it’s a much bigger bite. Just as I do with those experiencing health care problems. Going back to every election since 1980 (my first vote) I have resisted the temptation to base the decision on this thing called “affordability”. I know others who do.
Raymond J Lynch
Posted at 14:10h, 03 FebruarySpeaking on the affordability issue from a social security point the average benefit is around $200, and the point I would make is that this amount is vastly different for the person who lives in a metro higher taxed state than the person who lives in a rural lower taxed state. If you happen to live in a rural area and happen to receive closer to $3000 per month it makes a big difference on the cost of living.
DKnight
Posted at 15:27h, 03 February“Affordability” is the latest politically correct word of the left. What exactly does it mean? Does anyone know?–It is a new term that is malleable–or means nothing. We all want a solid economic structure, which allows people to work, pay bills, achieve and live similar lives, with similar opportunities. “Affordability” is a new demand for redistribution of resources and more destructive/leftist government. Say “Affordability” over and over again–and you get Mamdami–and socialism/communism–or worse. Your list of things to reduce cost of living covers the bases well. Some key items on your list, including reducing regulation to allow lower energy costs and actions to ease the cost of housing will require blue government–especially in cities–to reform. Most people don’t know that Cities are a prime blocker of affordable single family housing–city managers and planners all over the nation want everyone to live in multi-family housing and ride trains–and that is not an overstatement. Ironically, these same government types usually live in single family homes, with 2 car garages–and drive cars. But–they want to social engineer the rest of us. This unhealthy city gov vibe is especially demonstrated in large metro areas–and inner ring suburbs–although it is forced on the folks even in red areas. Overbearing overregulation is a real problem–and cities are the tip of the leftist spear. When responding to polls and surveys, people like to complain. Thus, nobody seems to be happy with the state of the economy. There is always room for improvement. A restrained government that does not create dependency is best–but–unfortunately–the limited government horse may have left the barn. Blue areas are the biggest problem when it comes to “Affordability”–so what do people do?–vote for more of it. Makes no sense–but either does electing fools like Mamdami, Frey and Walz and Newsom, etc…… Good luck.
Lu Slettedahl
Posted at 17:49h, 03 FebruaryLet’s tackle the affordability calculation for housing … Traditionally, the consumer perceives that when the Fed reduces the Fed Funds rate then long-term fixed mortgage rates should decrease to the same degree – that’s not the case. Consumers are hit with a narrowing spread between personal income, expenses and their ability to own a home. No longer is it a simple concept that rates fall and an individual can buy a home – pressures that did not exist ten – fifteen years ago are having a significant impact. These include hazard insurance, car insurance, medical insurance, property taxes, and the overall cost of living. Local governments can have an impact in the way they solve for the correct property tax assessment. as the math doesn’t make sense. Can anyone tell me that when property taxes rise x 50% that the actual cost basis to serve the community went up by that same amount? The answer is no. Then, those individuals voted into office in the Senate and House have a role in solving for the medical insurance crisis which is the result of many factors. Medical insurance for a self-employed family of 4 in Colorado went up by nearly 150% – now who can really afford this – the answer is no one. If you’ve had a family member, that is in the hospital for more than a week, ask the hospital to give you a copy of what they bill insurance for, and then how much the hospital writes off as it is a non-profit, though posts profit levels that are eye-opening. Insurance companies who insure properties and vehicles also need to look at their cost basis to determine what the projected losses are and needed loss reserves. Premiums should be rated by claims rating, by age, and then arrive upon the premium that is due. Honestly, I am a baby boomer, drive less than 7,500 miles a year, have had no accidents in the past ten years and the premium has doubled. Must be that my premium level is subsidizing the overall claim rates / reserves needed. Without a consolidated approach to solving the other impacts that consumers have to absorb in their monthly budgeting for an “all-in” approach for the housing affordability issue, nothing will change. The BEST solution would be if our local, state, and federal – might I say elected individuals would look for a common solution that benefits all. That’s my 2 cents ….
Quentin
Posted at 17:52h, 03 FebruaryGreat comment, Lu! Thanks for your educated analysis.
Jennifer Cousins
Posted at 18:10h, 03 FebruaryPersonal preferences, discipline, and time horizons never align in practice – choosing between what you want and what you want now often becomes the question. In politics one side represents Santa and the other represents the sensible grand-parent.
May I ask for the corresponding numbers associated with the normative suggestions in the article? For this homework exercise use the budget as of 1/1/1026. Relativity works for both sides.
Empirical observation and other challenges:
Wealthy people buy time and poor people sell time.
Wealthy people sell distractions and poor people purchase distractions.
Wealthy people buy skills while poor people purchase entertainment.
Rich people invest in growth and poor people invest in comfort.
Wealthy people plan for the future and poor people live for the moment.
Michael Hoffman
Posted at 20:22h, 03 FebruaryDKnight provided a well-written post. Thank you.
While, I spent 40-some years as a practicing CPA, I also spent a decade in the real estate development industry. We developed, owned and managed commercial real estate (primarily shopping centers) and developed and sold residential developments (single-family and multi-family developments). Our biggest obstacle (and biggest driver of unnecessary costs) always came from various units of government (local, county, state and Federal).
As DKnight, correctly, said in his post: “Overbearing over-regulation is a real problem – and cities are the tip of the leftist spear.”
However, the Trump administration is taking a positive course of action regarding two key areas in which the government can provide good influences on price and affordability. The two factors are: 1) Lowering interest costs, and 2) Eliminating burdensome over-regulation.
Tariffs, in some cases, might temporarily increase certain costs. However, the ultimate goal of Trump’s tariffs are to encourage production and manufacturing of key products here in the USA rather than our country having an over-reliance on foreigners for manufacturing. Once U.S. manufacturing plants are up and running, they will be a great source of stable, middle-income jobs here in the USA.
Lastly (regarding polls), has there ever been a time when people said, “Gosh! Everything is so affordable these days”?