How Democrats can tackle affordability without breaking the budget

Public opinion polls show that American households have been concerned about cost-of-living issues since the COVID-19 pandemic struck. The spike in inflation in 2021-2022 helped catapult Donald Trump to the presidency in the last election, as he campaigned on bringing prices down. However, inflation has increased since Trump assumed office due to the impact of tariffs and higher oil prices. 

Meanwhile, Trump claims the issue of affordability is a hoax. Therefore, Democrats need to elaborate what they would do to improve affordability for Americans without increasing the budget deficit that is around 6 percent of GDP. 

At the outset, Democrats should not claim they can lower prices overall. During the early 1980s, a severe recession ensued when the Federal Reserve raised interest rates to record levels to combat double-digit inflation. Fortunately, large rate increases are not necessary today, as inflation is considerably lower.  

Rather, the goal should be to keep inflation near the Fed’s 2 percent target and to pursue policies that support growth of household income. During Trump’s first term, wages for low-and middle-income workers outpaced inflation by a considerable margin, but this is not the case in his second term.  

One reason why lower-income families are feeling squeezed is the budget bill enacted last year included large cuts in Medicaid and food assistance. The bill also extended tax cuts that predominantly benefited high-income earners, and it widened income disparities between the rich and poor. The policies of the Trump administration — including the so-called “One, Big, Beautiful Bill Act” and........

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