Proposals range from price controls and “price gouging” crackdowns to targeted subsidies, tariff dividends, and industry-specific relief (e.g. to farmers), alongside attempts to claim that the affordability crisis is a “hoax.” The administration is further doubling down on tariffs to pressure allies, despite their effect of raising consumer prices.
Politicians seem more focused on reallocating costs or assigning blame rather than addressing the policies driving up prices.
Fiscal policy sits at the center of America’s affordability challenge. Massive pandemic-era spending, followed by a failure to restore budgetary discipline, left households coping with higher prices, rising interest rates, and uncertainty about the future. Persistent deficits above 6 percent of the gross domestic product, with federal interest payments now surpassing the entire defense budget, continue to reinforce those price pressures. When government spending grows far in excess of revenues and economic growth, the result is a rising debt burden, depressing the economy and increasing policy uncertainty that dampens confidence.
The Trump Administration has taken some steps that, in isolation, should support growth. The extension of lower marginal tax rates on work, saving, and investment, through the One Big Beautiful Bill Act (OBBBA), likely contributes to stronger economic performance. Deregulatory efforts have slowed the growth of federal rules and reduced compliance burdens in affected sectors, from energy to transportation and health care. These are welcome developments.
But pro-growth policies cannot deliver their full benefits when they are paired with actions that work in the opposite direction. The tariffs imposed over the past year have functioned as taxes on American consumers, raising prices on a wide range of goods and inputs, offsetting many of the economic gains from recent tax legislation. Households are stretched thin by higher prices in grocery bills, housing, and childcare.
The administration is further undermining fiscal credibility with outsized spending increases for defense and homeland security in a deficit-fueling tax cut package, while adding political pressure to lower interest rates and risk higher inflation. Repeated attacks on the Federal Reserve, combined with the acceleration of large, unfunded entitlement commitments, have contributed to elevated long-term interest rates. Higher borrowing costs translate directly into more expensive mortgages, car loans, and credit-card balances, further eroding purchasing power.
Other policy choices reinforce the sense that economic outcomes are increasingly shaped by politics rather than fundamentals. Immigration restrictions have reduced labor supply in industries such as construction, agriculture, and caregiving, driving up costs in sectors that dominate household budgets. Industrial policy, from taking stakes in companies to favoring certain sectors, signals that success depends less on productivity and competition than on political access.
Polling shows growing support for price controls. But this shift in opinion should worry policymakers not because price caps are sound policy — they are not — but because they reflect a loss of trust in the rules that make markets work. When policy constrains supply and distorts competition, public anger often targets businesses rather than the price-increasing policies at fault.
Sustainable affordability requires course correction. Fiscal restraint is essential. Slowing the growth of federal spending, stabilizing the debt, and restoring a credible commitment to budget discipline would ease pressure on interest rates and reduce uncertainty about future taxes and inflation.
Policymakers should also reverse the turn toward protectionism. Rolling back tariffs would provide immediate relief to consumers and businesses alike, lowering prices and improving the economy’s capacity to grow through competition and specialization. Free markets remain one of the most effective tools for raising real incomes and reducing prices through growing supply.
America’s affordability problem is not a failure of markets, nor is it a “hoax.” It is the result of fiscal excess and politicized policymaking that have raised costs and undermined trust in economic fundamentals. Restoring purchasing power in 2026 will require recommitting to free markets, fiscal discipline, and policies that allow supply to grow and prices to fall. That is how policymakers can rebuild both affordability and confidence, without slaughtering the goose that lays the golden eggs: by allowing the market economy to work.
