Economists Say Every Affordability Fix Being Offered Will Backfire
The big picture: Both parties are pushing policies to address the cost-of-living crisis: grocery price caps, rent freezes, credit card interest limits, property tax suspensions, and more. Economists across the political spectrum are warning that nearly all of these create new problems while failing to solve the underlying one.
Why it matters: These proposals are designed to win elections, not fix the economy. The experts say affordability is a structural problem that requires higher incomes and stronger labor protections, not price manipulation. BUT politicians answer to voters, not economists, and the policies that poll best are the ones most likely to backfire.
The proposals: On one side: capping credit card rates, 50-year mortgages, eliminating taxes on tips, car-loan interest, and overtime. On the other: rent freezes, grocery price caps, suspending property taxes and the gas tax. Both sides have even found common ground on forcing institutional investors out of housing. All framed as making life cheaper.
The domino effects:
Grocery price caps: Josh Bivens, chief economist at the Economic Policy Institute, saying “If you try to push down grocery prices, you could actually start reducing supply. People might start going out of business, or grocery stores close.”
Rent control: Economists warn landlords become reluctant to invest in properties, leading to degraded housing and less supply overall.
Property tax freezes: Lost revenue shifts to everyone else, meaning younger homeowners and renters subsidize the freeze.
Credit card interest caps: Could make it harder for low-income consumers to get approved for credit at all.
What economists actually want: More income. Reducing unemployment. Strengthening unions. Adapting to a problem that’s here to stay rather than legislating it away with price caps. Harvard economist Jason Furman, who led Obama’s Council of Economic Advisers, saying “I think we are seeing more bad economic ideas than before because people are trying to solve a problem that doesn’t have a solution.”
The corporate problem: Reports show the Trumps have made almost $4 billion “off of the presidency” in about a year. Tariffs have been weaponized. You have unprecedented interventions in companies like Intel. Neera Tanden, head of the Center for American Progress, saying “I haven’t seen, in my lifetime, a president use the powers of the federal government to interfere with the market more than Trump.”
The bottom line: Both parties are offering affordability fixes designed to survive a campaign ad, not an economics textbook. The short-term solutions create long-term costs that nobody mentions on the trail. Economists are begging them to focus on incomes instead of prices. AND the corporate money flowing through Washington ensures the policies most likely to help are the ones least likely to get a vote. At some point this comes to a head. The question is whether voters will support solutions that actually work, even if they’re harder to fit on a bumper sticker.
Thanks for reading! Comment your thoughts & reactions | Share to spread the word | Follow to stay in the loop