What’s behind Trump’s affordability drive?

Facing growing public pessimism about his handling of the economy, US President Donald Trump has launched a series of proposals to address consumer concerns.

Trump has previously downplayed concerns about the cost of living, insisting that the outlook has improved during his nine months in office. He said affordability was a “new word” and a “con job” by Democrats.

But he has focused on this issue with some urgency since his Republican Party’s poor performance in the elections that took place last week in a number of states.

He again proposes the idea of ​​giving most Americans a $2,000 (£1,500) “subsidy”.

In effect, the payments would be more like a rebate on federal revenue generated by tariffs on foreign imports.

He said the rest of the tariff revenues would go toward reducing the federal budget deficit.

However, according to economists, the tariff revenue is not nearly enough to cover the $2,000 rebate plan, even with the most generous assumptions and narrow definition for those with qualifying income.

“If we take something like cutting income by $100,000 a year, the minimum cost would be about $300 billion, which would absorb all the tariff revenues taken so far and would require some deficit financing,” says Erika York, vice president of tax policy at the nonpartisan Tax Foundation.

Moreover, according to Ms. York, a tariff drawback could end up backfiring by raising prices while pushing more money into the US economy. Covid-era stimulus payments may have created a similar dynamic, albeit on a larger scale.

“This will give large sums of money to families who are more likely to consume it than save it,” she said. “So we will have more dollars to buy goods in the economy.”

On Sunday, Treasury Secretary Scott Besent appeared to play down the likelihood of such payments, saying revenue gains from tariffs would be reflected in lower tax rates the Americas pay next year under provisions of Trump’s 2025 “big, beautiful bill” spending package, which Congress passed in July.

In last week’s election, when Democrats achieved a string of victories, exit polls indicated that the economy once again topped all issues as a topic of concern for American voters.

Zahran Mamdani made affordability the key to his successful campaign for mayor of New York City, as did Abigail Spanberger in Virginia and Mikie Sherrill in New Jersey after they won the governorship.

The poll results match recent polls that indicate the public is angry with Trump’s handling of the economy and his inability, in their view, to follow through on campaign promises to cut costs for American consumers.

Another of Trump’s ideas is to promote fifty-year mortgages – an alternative to the thirty-year mortgages that are the standard for American home purchases.

The president has touted the extended payment schedule as a way to make homeownership easier for Americans.

However, many in his party view it as a boon for lenders who will collect higher fees and higher interest.

“I don’t like the 50-year mortgage as a solution to the housing affordability crisis,” Republican Congresswoman Marjorie Taylor Greene of Georgia wrote on X.

“It will ultimately reward banks, mortgage lenders and home builders as people pay much more in interest over time and die before they pay off their homes.”

Trump appears to have floated this idea without consulting senior White House advisers – a reflection of his willingness to move quickly on new ideas, but at the risk of giving his advisers too little time to provide their input.

Trump also proposed taking government health insurance subsidies that will expire at the end of the year — which Democrats fought unsuccessfully to extend during the 43-day government shutdown — and turning them into direct cash payments to consumers.

During an interview with Fox News, the president said this would allow American consumers to be more like “businessmen” and “go out and negotiate their own insurance.”

All of these proposals will likely require implementation by Congress, which is far from guaranteed given the narrow Republican majorities in both chambers.

Trump has floated other, more modest cost-cutting proposals, such as ordering a federal investigation into beef prices and reaching an agreement with drug manufacturers to lower the prices of obesity drugs for uninsured buyers.

“Now they seem to be coming up with all sorts of ideas to test to see if they look good,” Ms. York says.

Trump’s electoral success – his ability to challenge entrenched conservative orthodoxy and overcome massive public fears – demonstrates his attuned political instincts.

When he felt weak in the past, he often used his political rallies and public appearances to put forward new ideas and gauge public support.

But it’s difficult to do that from inside the Oval Office, which is why the White House is debating whether he should travel to the country to give speeches about the economy, according to CNN.

Some of Trump’s other actions risk undermining his attempts to reset his policies to reflect the dark public mood.

For example, Trump continues to insist on lower prices. And in some cases – such as eggs and dairy products – he was right.

But in others – such as the beef mentioned above, as well as coffee and electricity – costs are rising.

The president has repeatedly pointed out that the price of a Thanksgiving meal at Walmart is lower than last year.

But he did mention that the retail chain’s dinner package this season contains half the number of items and a smaller turkey.

All the while, his administration has fought in court to end food aid during the government shutdown, and the president has been relentlessly promoting the multibillion-dollar renovations he is overseeing at the White House.

Four years ago, Joe Biden’s White House was insisting that the economy was strong even as post-Covid consumer costs rose.

Over the next three years of his administration, the Democratic president and his aides pointed to economic indicators and data in vain as the public mood remained bleak.

At 3%, inflation under Trump is still well below the 9.1% rate that peaked under Biden, which was the worst cost-of-living crisis in decades.

Trump has effectively exploited this disconnect between Democratic leadership in Washington and the feelings of American voters during his 2024 presidential campaign.

But now Trump finds himself facing similar circumstances, as Republicans seek to avoid a similar fate in the upcoming election.

Follow the twists and turns of Trump’s second term with weekly North America correspondent Anthony Zurcher American politics is not woven Newsletter. Readers in the UK can Register here. Those outside the UK can Register here.