The most important word in politics and economics right now is “affordability.” Americans want it, and political candidates attack incumbents for failing to provide it, but economists grumble that the government can’t deliver it. Political commentators warn that candidates who exploit Americans’ frustration with high costs risk quickly losing public support if they enter office and fail to help, as has happened to President Trump.
The naysaying economists and commentators are right, if “affordability” means cutting prices across the board. Only a long and deep recession can reduce prices on most goods and services. But Americans still want prices to drop. They won’t be satisfied to hear that the rate at which prices are rising — inflation — is lower.
Fortunately, politicians can embrace a more realistic affordability agenda defined by two simple criteria: First, it is focused on a narrow set of essential, big-ticket items that define the affordability problem for many consumers — including child care, housing, health care and electricity. Second, it highlights how these essentials are unnecessarily expensive because the markets for them are flawed in some way.
For most of what we buy, markets work well, and government price setting would do more harm than good. Though food production could benefit from more competition, there is not much the government can do about grocery prices, for example (obviously, reversing Republicans’ recent cuts to food support would help low-income families).
The market for child care, however, doesn’t work well. In the most expensive counties, child care can cost more than $20,000 a year, a burden for even relatively high-income families. Those who need it most, young parents, often don’t earn enough to prompt the market to supply plentiful quality child care. So, unless a young family is uniquely wealthy, the government must subsidize their child care purchases. Recent research reveals that robust public investment in the child care sector quickly elicits new supply, and new supply restrains price growth.
Housing is also essential but undersupplied. About a quarter of homeowners and half of renters spent more than 30 percent of their gross income on housing in 2023, according to the Congressional Research Service. Government policies have warped the market. Zoning rules and other regulatory sludge discourage developers from building affordable homes. Tariffs are raising the cost of building — adding, by one estimate, nearly $11,000 to the construction cost of the typical home. The government needs to boost the supply of affordable housing, fast.
A new plan from the Center for American Progress that I helped write argues that the federal government should use its leverage to encourage undersupplied communities to finance new affordable multifamily housing, expand the production of modular housing and scale up existing local programs that are eliminating barriers to affordable home building.
The emphasis on increasing housing supply is crucial. If the government just gave money to people to buy or rent homes, the result of more money chasing the same number of units would be just higher prices.
Much of the same logic applies in our broken health care market. The government plays a huge role in this market through the Affordable Care Act, Medicare, Medicaid, the Children’s Health Insurance Program, drug negotiations and more. These programs enable millions of people to get health care they otherwise couldn’t afford. But people and the government still pay too much.
Our health system is twice as expensive as those of our international peers, suggesting that the government could spend less and consumers could pay less — though many with their hands in the U.S. health-care cookie jar would earn less. As the Stanford University economist Neale Mahoney and I recently argued, that would require loosening rules that restrict the supply of medical professionals, capping hospitals’ and doctors’ charges, lowering the Medicare eligibility age and allowing federal agencies to negotiate lower prices on many more drugs.
The market for electricity, too, is highly regulated and often fails to prioritize consumers. Electricity costs were essentially flat for the five years before the Covid-19 pandemic, then climbed about 40 percent between 2020 and 2025. Politicians are starting to run, successfully, on capping electricity rates and forcing energy-gobbling data centers to pay more of the costs of adding them to the grid. Reversing Mr. Trump’s drive to halt the building of renewable energy projects would also help. Despite his efforts to pull the plug, renewables are, by far, the fastest-growing and least expensive sources of increased supply.
Each of these ideas — providing young parents with the resources to afford quality child care, increasing the supply of affordable housing, capping health care costs, expanding the supply of clean energy enough to lower electricity bills — is realistic. The party that promises and delivers on this agenda would position itself at that all-too-rare intersection of good policy and good politics.
Jared Bernstein was the chair of President Joe Biden’s Council of Economic Advisers from 2023 to 2025 and is a policy fellow at the Stanford Institute for Economic Policy Research and the Center for American Progress.
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