Affordability Is the Test—and Washington Keeps Failing It

Originally published on Substack. 

​Affordability is the issue that decides elections because it decides everyday life.

Families don’t measure success by press releases or selective charts. They measure it by whether housing, groceries, insurance, healthcare, childcare, and borrowing costs fit inside a paycheck.

That’s why recent claims celebrating lower inflation metrics ring hollow for so many Americans.

For example, the White House recently shared this post on X claiming that “core inflation at its lowest in nearly five years.”

That claim may be technically true for a narrow slice of price data—but it misses the broader reality: the general price level remain far higher than before 2020, core inflation rates are currently running fast at near 3% y/y, and the damage to purchasing power has not been undone.

​Inflation isn’t gone. It’s much higher than pre-Trump-Fauci-COVID lockdowns. It’s being managed, delayed, and quietly socialized. And unless we change the rules that created this mess, affordability will remain out of reach.

Who Broke Affordability—and Why It Matters

Let’s be clear about responsibility, because pretending this is a one-party problem is how we repeat it.
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The affordability crisis is the product of serial policy failures across administrations and institutions:

• Republican leadership, including during Trump’s first term, embraced protectionist tariffs, raising costs and uncertainty while allowing trade taxes to be imposed without full congressional accountability.
• Democratic leadership, especially under President Biden, layered on regulatory expansion and spending growth, pushing costs higher across energy, housing, healthcare, and finance.
• Congress—controlled by both parties at different times— normalized trillion-dollar deficits, turning “emergency” spending into a permanent baseline.
• The Federal Reserve under Chair Jerome Powell accommodated it all, expanding and maintaining a massive balance sheet to suppress interest rates and monetize fiscal excess.
• State and local governments, regardless of party, followed Washington’s lead and locked in higher spending that now crowds out private activity.

Each actor contributed. Each avoided hard limits. And each relied—explicitly or implicitly—on inflation to paper over bad decisions.
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That’s why affordability collapsed.

The Fed’s Balance Sheet Tells the Real Story

If inflation were truly beaten, the Federal Reserve wouldn’t still be sitting on a $6.6 trillion balance sheet filled with Treasury debt, mortgage-backed securities, and agency debt.

The data from the Federal Reserve’s balance sheet on FRED make the problem obvious:

• About $0.8 trillion in 2008
• Roughly $4.0 trillion in 2020
• Up to $9.0 trillion during the lockdowns
• Total $6.6 trillion today—roughly 20% of GDP, compared to about 5% before the 2008 Global Financial Crisis

That expansion isn’t neutral. It reshaped the economy.

Here’s the uncomfortable truth often missing from official messaging: The Fed isn’t maintaining this balance sheet because inflation has been defeated. It hasn’t.

The Fed is trapped because allowing interest rates to fully clear would sharply raise federal debt-service costs. So yields are suppressed, Treasury issuance is absorbed, and rates are kept artificially lower than they otherwise would be.

That’s not independent monetary policy.

That’s fiscal dominance.

Why Inflation Fuels Inequality by Design

New money and the resulting inflation never hit everyone equally.

New money enters the economy unevenly. It flows first into:

• Financial markets
• Asset prices
• Housing
• Large firms with access to capital markets

Wages, savings, and fixed incomes adjust last.

That’s how you get:

• Asset bubbles
• Higher rents and home prices
• Distorted capital allocation
• A widening divide between large firms and small businesses

Families feel squeezed. Entrepreneurs struggle. Meanwhile, firms closest to capital markets adapt just fine.

Then politicians—on both sides—blame “greed” or “capitalism” for outcomes driven by policy.

Let’s be precise: this isn’t free-market capitalism.

It’s government-managed finance layered on top of regulatory and trade intervention.
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What a Pro-Affordability Agenda Requires: Three Rules

If affordability is the goal—and it should be—policy must be anchored to rules, not discretion.

1) A Spending Rule (Fiscal Discipline)

Government spending growth should be capped below population growth plus inflation—a Sustainable Budget rule, long advanced by my work at Ginn Economic Consulting, Americans for Tax Reform (ATR), Club for Growth Foundation, and others. This forces prioritization, prevents structural deficits, and restores credibility that debt will be managed through restraint rather than higher taxes and inflation.

2) A Monetary Rule (Sound Money)

The Fed needs a binding constraint—either a fixed growth rule for high-powered money or a cap on its balance sheet tied to the size of the economy. Returning toward ~5% of GDP, where the Fed stood before 2008, would end permanent “emergencies,” reduce asset inflation, and protect purchasing power.

3) A Trade Rule (Constitutional Accountability)

Tariffs are taxes. Under the Constitution, only Congress has the authority to raise taxes. The executive branch can make the case when action is warranted, but unilateral tariff authority undermines accountability, raises prices quietly, and fuels uncertainty. Restoring congressional control over tariff taxation could directly support affordability.

Why This Matters for Trump—and the Country

President Trump is right to focus on affordability. That’s where voters live. But lasting affordability cannot be built on protectionism, discretionary monetary policy, or unchecked spending.

A pro-growth agenda must also be pro-rules on government:

• Rules that restrain spending
• Rules that discipline money
• Rules that limit hidden taxes

That combination doesn’t just tame inflation. It restores competition, lowers barriers to entry, and expands opportunity—especially for small businesses and households without access to robust financial markets.

The Bottom Line

Affordability is not a slogan. It is an outcome. And outcomes follow incentives.

If policymakers want prices to stabilize, wages to rise in real terms, and opportunity to broaden, they must bind themselves to rules that work—even when inconvenient.

That’s how trust is rebuilt.

That’s how growth becomes durable.

And that’s how we let people prosper.