What do Democrats have to offer on affordability?
Thus far, it is more of a repackaging than a rethink.
Democrats believe that they have found the formula for success in the mid-terms. Between now and when the last ballot is cast in the 2026 election, every other word uttered by a Democratic candidate is likely to be “affordability”.
In the recent election, Democrats had three big winners: Zohran Mamdani for New York mayor, Mikie Sherrill for New Jersey governor, and Abigail Spanberger for Virginia governor. All three ran prominently on an affordability agenda.
As a political stratagem, this is likely to work. In today’s American politics, elections tend to be referendums on whoever occupies the White House. If there is dissatisfaction with the status quo, as is almost always the case, it is usually enough just to be the other guy. Since Reagan, swing voters have serially toggled between the two major parties. “Affordability” gives Democrats, this election’s other guys, something to talk about other than the woke cultural issues that animate social conservatives and alienate swing voters.
Substantively, however, there is irony in this, as there often is in American politics. Republicans control the presidency and both chambers of Congress in substantial part because of dissatisfaction with the Biden presidency over the cost of living.
Substantively, there is also a lot of misdirection in the Democratic embrace of an affordability agenda. Historically, Democrats have been terrible on the fundamentals that generally influence living standards, and there is no reason to believe that their position on them has changed, with one exception.
The fundamentals that generally influence the standard of living are monetary policy, fiscal policy, and private sector productivity.
Inflation has been the main factor in the perception, and to some extent the reality, of an erosion in living standards. Inflation reduces what an earned dollar can buy. A stable dollar is an anchor, for an economy and for individual consumers. Donald Trump is an easy money guy. But, historically, so have been Democrats. What prominent Democrat is calling on the Fed not to reduce their interest rate and give priority to bringing inflation at least down to the Fed’s 2% target, which has now been exceeded for half a decade?
Trump’s erratic tariffs are also pushing up prices and engendering economic sluggishness. Democrats are critical of the effects of Trump’s tariffs, but that’s just political opportunism. There isn’t a free trade wing of the Democratic Party anymore. There used to be, but it was finished off when Hillary Clinton, as the Democratic presidential nominee in 2016, disavowed the Trans-Pacific Partnership trade agreement negotiated by the Obama administration. Biden largely kept the tariffs he inherited from the first Trump administration. Both of our two major parties are now generally protectionist regarding trade.
On fiscal policy, Democrats passed Biden’s big-spending stimulus and industrial policy bills even though some prominent Democratic economists warned that they would be inflationary. And, indeed, they unleashed inflationary pressures which the Fed accommodated by effectively monetizing the resulting oversized deficits.
A private sector that produces more goods and services less expensively is one way to improve living standards. Democrats, however, have little appreciation for the importance of private sector investment capital in making that happen. They consistently advocate taxing away more of the return on investment and innovation. And they are generally in favor of more regulation, not less. There may be other rationales for greater regulation, but it isn’t a path for greater private sector productivity that raises living standards.
Now, Republicans, under Trump, aren’t really any better than Democrats on these fundamentals. Trump is an easy money guy. Trump’s fiscal policy is only slightly less incontinent than was Biden’s. Trump’s erratic tariffs and creeping crony capitalism are also barriers to productivity growth in the private sector. The differences between the parties on these fundamentals have narrowed and become blurred.
That said, Democrats aren’t really moving in any new direction regarding these fundamentals with their affordability epiphany. Rather than addressing policies that would generally temper price pressures, they are focusing on some specific sectors and advocating reforms that nibble around the edges of price pressures, if that. The affordability agendas of Mamdani, Sherrill, and Spanberger illustrate the point.
All three target health care and housing, with differing additions. Their proposed reforms are a combination of increased regulation directed at providers and government subsidies and incentives to underwrite consumption or induce some alternative supply. This is basically political scapegoating and suppressing or manipulating price signals.
Mamdani famously proposes to freeze some rents, have government grocery stores, and free bus service and daycare. He would pay for it with increases in New York’s already eye-wateringly high marginal income tax rates for individuals and corporations. There is a part of me that would like for the entire Mamdani agenda to get enacted. A domestic example of the failures of socialism would be much more impactful than the numerous foreign ones.
Mamdani’s affordability agenda is more serious than that of Sherrill and Spanberger, if also more destructive of the things that actually produce a higher standard of living. Sherill’s grocery agenda provides the best specimen of the general vacuity.
Sherrill’s grocery agenda starts out with this: “Go after large corporations who jack up food prices….” No specificity as to what “go after” constitutes. The whole of the rest of the agenda consists of incentives for smaller food retailers and locally produced food. There may be many benefits to smaller grocers and locally produced food. But lower prices aren’t one of them. That comes from the economies of scale found in the large corporations Sherrill wants to “go after”.
The sole exception to the lack of a true rethink, rather than a repackaging, among Democrats is to be found in housing. A common feature in the affordability agendas of the three big Democratic winners is reducing the red tape constricting new home construction. In Arizona, several legislative Democrats voted for a bill that would have largely overridden local zoning and design restrictions and substantially deregulated new housing construction.
I suppose that’s a start. But Democrats have a very long way to go before their profession of an affordability agenda can be regarded as more than a political stratagem and dodge.
Reach Robb at robtrobb@gmail.com.