Make Affordability Real

Originally published on Substack.

Some in Washington have suddenly discovered affordability while the Trump administration continues to blame Biden or say people “feel” okay.

Americans are right to be upset.
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As the new Cato Institute affordability handbook (authored by Cato scholars, such as Ryan Bourne, Romina Boccia, Norbert Michel, Scott Lincicome, Travis Fisher, Colin Grabow, and others) notes, by early 2026 consumer prices were still about 24 percent higher than five years earlier, while borrowing costs on mortgages, car loans, and credit cards had also jumped.

Families do not experience the economy through press releases. They experience it through rent, groceries, insurance, health care, child care, and monthly payments that still do not fit comfortably inside a paycheck.
But here is the problem Washington keeps refusing to face: most of the political class wants to solve affordability with the same tools that made it worse.
Cap prices. Punish profits. Expand subsidies. Add mandates. Restrict trade. Pick winners. Manage outcomes.
That is not a cure. It is just more politics in place of markets.
As I argued in Affordability Is the Test—and Washington Keeps Failing It, families do not care whether economists say inflation has cooled if the cost of everyday life is still elevated. Affordability is the issue because it decides whether households can actually live, save, build, and plan. The answer is not more management from above. It is more room for the private economy to work.
The North Star
A key insight in Cato’s handbook is that affordability is not one problem. It is several: the aftermath of persistent inflation, expensive credit, and supply restrictions in housing, energy, health care, transportation, food, and finance.

But the policy North Star is still simple. If you want lower costs and more options, you have to make it easier to produce, easier to build, easier to invest, easier to compete, and easier to adapt.

That lines up closely with what I have been writing.

In Families Flourish Under Free-Market Capitalism, I made the point that affordability is not primarily a demand problem. People will always want more and better things. The real issue is whether policy allows enough supply, innovation, and competition to meet those wants at lower cost. In The State of the Economy: Texas, DFW, and Beyond, I put it even more plainly: affordability is a supply problem. That is the lens policymakers should use.

Housing Is the Clearest Example

Cato’s housing chapter makes the point Washington still struggles to say out loud: housing is expensive because too many governments make it hard to build housing.

Zoning rules, minimum lot sizes, parking mandates, accessory dwelling restrictions, manufactured-housing barriers, and other local rules suppress supply and push up prices. That is not a market failure. That is a policy choice failure.

That is why I have emphasized in my housing testimony before the Texas Senate and in Rethinking Housing Affordability that affordability gets worse when government blocks supply and then blames investors, demand, or capitalism. You do not make homes cheaper by preserving scarcity. You make them cheaper by letting more homes get built.

Health Care Is No Different

The health-care section of Cato’s handbook is just as blunt: subsidies do not solve affordability problems. In many cases, they are the problem because they separate consumers from prices and drive spending through third parties. The result is more spending without real cost discipline.

That tracks directly with my own work in Solving the Healthcare Affordability Crisis, where I argued that we do not need more bureaucratic middlemen controlling dollars and decisions. We need more direct relationships, more price transparency, and more consumer control. If you keep subsidizing a broken financing structure, you do not get affordability. You get a more expensive version of the same broken system.

Tariffs and Price Controls Make It Worse

This is where both parties really go off the rails.

Cato’s handbook points to tariffs, transportation restrictions, and food-market interventions as drivers of higher prices. That should not surprise anyone. Tariffs are taxes. Protectionism is a hidden cost on households. And price controls do not make things cheaper to produce; they just distort supply, access, and investment.

I have made that case repeatedly in my own work. In Price Controls Won’t Fix America’s Insurance Crisis, I argued that politicians keep reaching for caps and controls instead of addressing the barriers and distortions causing the problem. In my free-trade writing, I have also stressed that tariffs may sound tough, but they squeeze working households and raise costs across the economy. If the goal is affordability, you do not tax the things people buy and the inputs businesses need.

Markets, Not Mandates

The broader lesson from the Cato handbook is one I think policymakers need to hear again and again: affordability does not come from smarter political micromanagement. It comes from freer markets.

That means tighter fiscal and monetary discipline so Washington does not reignite inflation. It means fewer subsidies and mandates that mask costs instead of lowering them. It means fewer tariffs and trade barriers that raise everyday prices. It means clearing away the rules that choke off housing, energy, health care, and transportation supply. And it means respecting the role of prices and profits in guiding decisions better than politicians ever can.

That is the North Star.

Americans do not need more affordability theater. They need the freedom to produce, build, compete, and choose.

Three Takeaways for Policymakers

1. Affordability is mostly a policy problem, not a market failure.

Cato’s handbook shows that today’s cost pressures come from inflation, expensive credit, and supply restrictions across key sectors.

2. The cure is more supply and competition, not more control.

That is true in housing, health care, and trade.

3. The North Star should be economic freedom.

If policymakers want lower prices and more opportunity, they should stop replacing markets with politics and start letting people prosper.

Washington may call this the year of affordability.

Good.
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Now it should stop doing the very things that make life unaffordable.