President Donald Trump’s utter failure to address the cost-of-living concerns that put him back in the White House has once again made them the top issue for voters heading into this year’s midterm elections. And the budget-busting policies he’s pitched as his solution to the problem are actually making it worse.
In the short term, high budget deficits fuel inflation and push the Federal Reserve to raise interest rates in response, as it did last week for the first time since 2023. That leads to higher borrowing costs for mortgages, credit cards, and other types of credit that Americans rely on to meet their needs. In the long term, high debt accumulation crowds out investment spending and slows economic growth, thereby reducing household incomes.
National policymakers who actually want to tackle the cost-of-living challenge will need to tackle our government’s growing fiscal imbalance. Unfortunately, both parties’ “affordability agendas” are pushing in the opposite direction.
The president’s first move was to put more money in people’s pockets via a giant tax cut in the One Big Beautiful Bill Act, which is responsible for roughly a quarter of this year’s roughly $2 trillion budget deficit. Now, he’s promised (somewhat unconvincingly) to send every adult a $5,000 check if Republicans keep Congress in November. That would add another trillion dollars on top.
Although far less reckless, Democrats are campaigning on some expensive plans of their own, including sweeping middle-class tax cuts and subsidies for health care, child care, housing, energy, and virtually every other source of strain on Americans’ pocketbooks. House Minority Leader Hakeem Jeffries will likely draw from that pool of ideas to craft Democrats’ first major bill should they take the majority. Many in the party have proposed raising taxes on the rich to pay for some of these proposals, but those are unlikely to cover the full cost.
