Latest / Trumponomics / Democrats Find a Potent Political Weapon Named ‘Affordability’

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Democrats Find a Potent Political Weapon Named ‘Affordability’ · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
0:08
Speaker 2: Real disposable income is up seventeen percent since twenty eighteen.
0:12
Speaker 2: Americans are very wealthy, but I think that they're still
0:16
Speaker 2: living in this paradigm where everything feels really unaffordable, and
0:20
Speaker 2: I think it's going to be really hard for any
0:22
Speaker 2: politician to fax.
0:33
Speaker 3: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
0:36
Speaker 3: and this is Trumppomics, the podcast that looks at the
0:38
Speaker 3: economic world of Donald Trump, how he's already shaped the
0:42
Speaker 3: global economy, and what on earth is going to happen next.
0:47
Speaker 3: This week, we're taking a closer look at the affordability
0:51
Speaker 3: question in the US, how Democrats flipped Donald Trump's cost
0:55
Speaker 3: of living message to their advantage during the recent off
0:58
Speaker 3: year elections, and whether anyone is closer to having a solution.
1:03
Speaker 3: One feature that the Democrats very different winning campaigns in
1:07
Speaker 3: New York, Virginia, and New Jersey all had in common
1:10
Speaker 3: the other week was a focus on high prices. Recent
1:14
Speaker 3: polling show a majority of Americans aren't feeling great about
1:17
Speaker 3: what is squarely now Donald Trump's economy, and in the
1:21
Speaker 3: wake of the longest ever shut down in the US
1:23
Speaker 3: federal government. Many more voters are also worried about the
1:27
Speaker 3: cost of their health insurance going up even higher. Whether
1:30
Speaker 3: you call it affordability or the cost of living, It's
1:33
Speaker 3: a theme that's coming to dominate politics in many industrial economies,
1:37
Speaker 3: but it's taken on a new residence in the US
1:40
Speaker 3: now that Democrats see an opportunity to play all of
1:43
Speaker 3: last year's criticisms of President Biden against Donald Trump. The
1:47
Speaker 3: President floated a couple of his own solutions in the
1:50
Speaker 3: past week. Two thousand dollar checks for every American minus
1:53
Speaker 3: the really rich ones, funded out of higher tariff revenues,
1:57
Speaker 3: and the introduction of fifty year mortgages. The numbers on
2:01
Speaker 3: the first of those don't really add up, to put
2:04
Speaker 3: it mildly, and his own Treasury Department doesn't seem super
2:07
Speaker 3: enthusiastic so far about the fifty year mortgage plan. We
2:11
Speaker 3: may come back to those in a future episode, but
2:13
Speaker 3: given that it is now the Democrats putting the issue
2:16
Speaker 3: front and center, I wanted to focus on what policies
2:19
Speaker 3: could really make America more affordable for ordinary families and
2:24
Speaker 3: what it will take for Democrats to credibly promise to
2:27
Speaker 3: deliver them well to help me answer some of these questions.
2:34
Speaker 3: We've invited Annie Lowry, as staff writer at The Atlantic,
2:37
Speaker 3: onto the podcast. Annie has done more than anyone, arguably
2:40
Speaker 3: to put affordability on the agenda in recent years, initially
2:43
Speaker 3: with an essay for The Atlantic in twenty twenty on
2:47
Speaker 3: the Great Affordability Crisis. She's also the author of Give
2:50
Speaker 3: People Money, which was shortlisted for the Financial Times of
2:53
Speaker 3: McKinsey Business Book of the Year award. Thanks so much
2:55
Speaker 3: for joining Trump and Nomics for the first time, Annie.
2:57
Speaker 4: Lowry, Thank you so much for having me and.
3:00
Speaker 3: Nancy Cook not coming on for the first time on
3:02
Speaker 3: Trump and Onomics, a frequent participant, a senior national political
3:06
Speaker 3: correspondent for Bloomberg who wrote an essay for US this
3:09
Speaker 3: weekend looking at, in her words, how Democrats have turned
3:13
Speaker 3: Donald Trump's economic playbook against him. Nancy, great to have
3:17
Speaker 3: you on again.
3:18
Speaker 4: Thanks for having me.
3:26
Speaker 3: I'm going to just start quickly with you, Nancy, just
3:29
Speaker 3: to kind of set the scene in terms of the
3:31
Speaker 3: motivation for you writing that essay. You know, we had
3:34
Speaker 3: these good results for the Democrats last week in the
3:37
Speaker 3: off year elections, and although there's plenty of people arguing
3:41
Speaker 3: about what lessons are for the party political lessons. There
3:45
Speaker 3: does seem to be a sort of message lesson, which
3:48
Speaker 3: was that playing the affordability agenda against Donald Trump has
3:52
Speaker 3: been a potent PLA's call weapon for Democrats of all
3:56
Speaker 3: kinds in those races. So just give me a sort
3:59
Speaker 3: of quick summary of your peace and how you think
4:03
Speaker 3: affordability is now driving politics in Washington conversations around the country.
4:08
Speaker 1: Well, so, Donald Trump really won power again by relentlessly
4:12
Speaker 1: going after Joe Biden in the twenty twenty four election
4:16
Speaker 1: over inflation, his handling of the economy, and that was
4:20
Speaker 1: really his message. He positioned himself as the best steward
4:23
Speaker 1: of the US economy an he won. One of my
4:25
Speaker 1: top priorities will be to quickly defeat inflation and make
4:29
Speaker 1: America affordable again.
4:31
Speaker 2: We will quickly defeat it.
4:32
Speaker 4: We have to bring down prices.
4:34
Speaker 1: And what has happened is that prices haven't really gone down.
4:38
Speaker 1: Americans still feel very frustrated by their buying power, their
4:42
Speaker 1: inability to afford a home, college prices are still very high.
4:46
Speaker 1: Every aspect of their life still feels unaffordable. And there's
4:50
Speaker 1: sort of new areas where we're seeing that with electricity
4:53
Speaker 1: prices going up because of AI data centers. But basically
4:56
Speaker 1: Democrats took what Trump had done against Biden on the
5:00
Speaker 1: enemy and did it to him in several sort of
5:02
Speaker 1: key local elections around the country in the US. This
5:05
Speaker 1: is not a typical electioneer. It's an off cycle electioneer.
5:10
Speaker 1: But it did give us a foreshadowing of a potentially
5:13
Speaker 1: very potent message that they'll have for the twenty twenty
5:15
Speaker 1: six midterms and then again for the twenty twenty eight
5:18
Speaker 1: presidential cycle.
5:19
Speaker 3: Annie, the essay that you wrote for The Atlantic five
5:22
Speaker 3: years ago, I thought was the first time where someone
5:25
Speaker 3: had pulled together why people were feeling so downbeat about
5:31
Speaker 3: the economy and priced out of things that they want
5:35
Speaker 3: the kind of life they want to despite on the
5:37
Speaker 3: surface it seeming like a pretty strong economy when you're
5:40
Speaker 3: sort of hearing all these politicians now banging the drum
5:43
Speaker 3: for affordability. How did you get drawn to it five
5:46
Speaker 3: years ago? And how much do you think has actually
5:48
Speaker 3: changed since then? Has anything got better? Has everything got worse?
5:52
Speaker 4: It's a good question.
5:53
Speaker 2: And when I was writing the piece, I had been
5:57
Speaker 2: writing for thirteen years at that point, and I know
6:00
Speaker 2: all of us had been covering for thirteen years. At
6:03
Speaker 2: that point, the problem in the United States economy as
6:07
Speaker 2: being insufficient demand right, high unemployment, low wage growth, and
6:13
Speaker 2: anemic middle class. And you had the Obama administration which
6:18
Speaker 2: was aimed really squarely at increasing demand and giving people
6:22
Speaker 2: more money to buy the things that they need. And
6:24
Speaker 2: I think it really snuck up on us that actually
6:27
Speaker 2: we had supply problems, we had pricing problems, and so
6:31
Speaker 2: in some ways I think that that piece now it
6:33
Speaker 2: seemed so blatantly obvious. But at the time, I remember
6:38
Speaker 2: I was talking to some housing economists that were talking
6:40
Speaker 2: about housing shortages starting in like twenty twelve, twenty thirteen.
6:44
Speaker 2: I remember being like, what are you talking about a
6:46
Speaker 2: housing shortage? Didn't you just see what happened with the collapse?
6:49
Speaker 2: But you know, economists, I think had been noting this
6:51
Speaker 2: for a while, that there were price problems, that there
6:54
Speaker 2: were supply problems, and they've only gotten worse. Really, what
6:58
Speaker 2: I think brought this to the four wasn't the underlying
7:01
Speaker 2: and really serious problem with housing costs, childcare costs, higher
7:06
Speaker 2: ed costs, healthcare costs which were really big. It was
7:10
Speaker 2: the big surgeon inflation and the cost of like eggs, right.
7:13
Speaker 2: It made people notice, I think, and the fact that
7:16
Speaker 2: you had this just very big jump in rents into
7:18
Speaker 2: everything else, that all of a sudden this became really salient.
7:22
Speaker 2: And I think that we're still in this moment where
7:25
Speaker 2: you know, at this point, real disposable income is up
7:28
Speaker 2: seventeen percent since twenty eighteen. Americans are very wealthy, but
7:33
Speaker 2: I think that there's still living in this paradigm where
7:36
Speaker 2: everything feels really unaffordable, and I think it's going to
7:39
Speaker 2: be really hard for any politician to fix.
7:42
Speaker 3: Well, there are also things that have got cheaper over
7:45
Speaker 3: the last sort of twenty years, and people always use
7:47
Speaker 3: the example of you toys and all these things that
7:49
Speaker 3: we were getting from China. But there's these very big
7:53
Speaker 3: ticket items that are expensive in many countries, many developed economies,
7:58
Speaker 3: but seem to be have a particular issue in the US.
8:01
Speaker 3: I was thinking particularly childcare. You've mentioned housing, medical costs,
8:06
Speaker 3: which have clearly been front and center now. So do
8:09
Speaker 3: you think that politicians are in a position where the
8:13
Speaker 3: governors or congress people or the White House, is there
8:17
Speaker 3: actually a capacity to pull the leavers on this? And
8:20
Speaker 3: he talks about underlying supply issues Traditionally, presidents like to
8:24
Speaker 3: throw money at staff. Often governors and congress people want
8:28
Speaker 3: to do that. Do you get a sense when you
8:30
Speaker 3: talk to the people on the hill that they actually
8:33
Speaker 3: are looking at solutions that aren't just about throwing money
8:36
Speaker 3: at things, I mean putting increasing demand in at its
8:38
Speaker 3: point rather than addressing supply.
8:41
Speaker 1: Well, I don't think that Republicans in Washington, DC right
8:45
Speaker 1: now are really focused on the solutions to this. I
8:48
Speaker 1: do think that governors and local politicians and people in
8:50
Speaker 1: Congress could do some things. One of the issues that's
8:53
Speaker 1: facing New Jersey voters that was really salient in their
8:56
Speaker 1: gubernatorial election last week was electricity prices, and that's a
9:01
Speaker 1: huge issue in New Jersey. I think it will become
9:03
Speaker 1: an increasing issue as these AI data centers sort of
9:06
Speaker 1: take up more and more power and electricity prices will rise.
9:09
Speaker 1: But part of the tricky thing about that is that
9:11
Speaker 1: President Biden had stood up a whole sort of green
9:14
Speaker 1: economy through the Inflation Reduction Act and a lot of
9:17
Speaker 1: policies to try to incentivize the private sector to create
9:21
Speaker 1: more jobs there and create more solar power and incentivize
9:25
Speaker 1: people to buy electric cars. And then Trump has basically
9:28
Speaker 1: undone a lot of that those policies in the economy,
9:31
Speaker 1: and so it just makes it means that we're sort
9:33
Speaker 1: of back to electricity as the main source of power
9:37
Speaker 1: for people, and that means that there's going to be
9:39
Speaker 1: less alternatives, less competitiveness, and that will drive up prices,
9:42
Speaker 1: and so there are things people can do sort of
9:45
Speaker 1: at the margins, but it means that you know, you
9:48
Speaker 1: can't sort of have this partisan flip flopping every four
9:51
Speaker 1: years when or every two years when a new party
9:53
Speaker 1: comes to power and they undo everything that the previous
9:56
Speaker 1: party did.
9:58
Speaker 3: And it risks and I mean you s yourself sometimes
10:01
Speaker 3: what's brought it to the center of people's attention is
10:04
Speaker 3: actually not some of the really longer lasting structural issues
10:08
Speaker 3: that you've identified in that piece. And currently what's quite
10:11
Speaker 3: potent for Democrats is blaming all the high inflation, high
10:14
Speaker 3: prices on tariffs, when as you know, and we've discussed
10:18
Speaker 3: many times on trumps, the evidence on that is pretty uneven.
10:20
Speaker 3: It certainly doesn't explain the kind of squeezes on living
10:26
Speaker 3: standards and affordability that people are feeling day to day.
10:30
Speaker 3: But obviously it's a fantastic thing to beat the administration
10:33
Speaker 3: with if you're a Democrat, you can just blame it
10:35
Speaker 3: all on tariffs. But fast forward a year from now,
10:40
Speaker 3: people will still feel things are very expensive and the
10:43
Speaker 3: tariffs may not be as salient. What are the practical
10:46
Speaker 3: ways that Democrats can be talking about solutions to the
10:50
Speaker 3: affordability crisis rather than only sort of hoping that there
10:55
Speaker 3: will be ways that they can constantly throw this back
10:58
Speaker 3: at the administration.
11:00
Speaker 4: Yeah.
11:00
Speaker 2: Look, I think that one thing that is going to
11:03
Speaker 2: become very obvious next year is if the ACA special
11:08
Speaker 2: subsidies that are due to expire remain expired, millions and
11:15
Speaker 2: millions and millions of Americans we're going to see their
11:17
Speaker 2: healthcare premiums rise really sharply.
11:19
Speaker 3: This is on the Obamacare, the health insurance that we've
11:21
Speaker 3: heard so much about.
11:22
Speaker 2: Yeah, and so I think that that is one place
11:25
Speaker 2: where they'll be able to continue to hammer the Trump
11:28
Speaker 2: administration and allied Republicans on Oh okay, they say that
11:32
Speaker 2: they want you to have cheap prices and everything that
11:36
Speaker 2: you want, but hey, they're raising the price of your electricity.
11:39
Speaker 2: Hey you're uninsured now because you can't afford your premium. Hey,
11:43
Speaker 2: those tariffs, you know, that cost sixteen hundred dollars per family.
11:47
Speaker 2: And I do think that the Trump administration is going
11:49
Speaker 2: to be in a bit of a bind if they
11:50
Speaker 2: try to do stimulative policies to sort of relieve some
11:54
Speaker 2: of these pressures. Right, If Trump ends up being allowed
11:58
Speaker 2: to and writing these two thousand dollar checks and that
12:01
Speaker 2: leads to interest rates remaining as high as they've been,
12:06
Speaker 2: you know, that's not going to be good. And I
12:07
Speaker 2: think it points to this broader problem, which is that
12:10
Speaker 2: politicians have a tremendous toolbox when it comes to demand
12:14
Speaker 2: side policies. They really do. They have a ton of
12:17
Speaker 2: stuff that they can do, both you know, in terms
12:20
Speaker 2: of the realm of monetary policy and the FED, but
12:22
Speaker 2: also then in terms of Congress and even things that
12:24
Speaker 2: individual governors can do. Demand, Right, supply is hard. It's
12:30
Speaker 2: often inflationary to create news supply, it's often really really slow,
12:35
Speaker 2: and prices are hard too. One place where the government
12:39
Speaker 2: does have some price and control that I really do
12:41
Speaker 2: think that you've seen both parties start to exert some
12:44
Speaker 2: interest and some power is in terms of healthcare costs. Right,
12:47
Speaker 2: we actually have healthcare supply for the most part in
12:50
Speaker 2: this country. We could probably use more doctors and nurses.
12:53
Speaker 2: I'm not saying that that's not a problem. But the
12:55
Speaker 2: real problem is the prices. And so you know, as
12:58
Speaker 2: you both know, the federal govern has its hands tied
13:01
Speaker 2: in terms of things like negotiating the price of pharmaceuticals
13:05
Speaker 2: for almost all but a very small subset of drugs.
13:07
Speaker 2: Congress has notably tied its own hands. It was John
13:10
Speaker 2: Bayner who did this like twenty years ago. I think
13:13
Speaker 2: that you could see a policy something like, hey, we're
13:16
Speaker 2: going to do uniform negotiations for prescription drugs. We are
13:19
Speaker 2: going to cap prescription drug monthly copas at thirty five
13:22
Speaker 2: dollars a month. I don't think that there's any policy
13:26
Speaker 2: that could be more popular among both Democrats and Republicans,
13:30
Speaker 2: and I do think that's actually something that the government
13:33
Speaker 2: could do. Whereas bringing housing costs down, that's going to
13:37
Speaker 2: take a long time. You face this issue of not
13:41
Speaker 2: having a lot of federal control over that. Although there
13:44
Speaker 2: are ways to set policies up to concentivize states and
13:47
Speaker 2: cities to tie financing to ones that sort of make
13:50
Speaker 2: themselves code compliant, but we've seen tremendous resistance in city
13:54
Speaker 2: after city after city after city, and state after state
13:57
Speaker 2: after state to doing this, California being the priming. I
14:00
Speaker 2: think that there's some real policy change happening now, but
14:03
Speaker 2: you know, they've had a housing crisis for forty.
14:05
Speaker 4: Years, so it's going to take a really, really long time.
14:08
Speaker 2: And I do note that behind all of this, I
14:10
Speaker 2: think again is the fact that obviously interest rates are
14:13
Speaker 2: coming down, but they're really high still, right So thirty
14:16
Speaker 2: year mortgage rate is six point two percent right now,
14:18
Speaker 2: most people are still mortgage locked if they own their home.
14:21
Speaker 2: So it's a really complicated set of issues, and I
14:23
Speaker 2: think the interplay between interest rates and the amount of
14:26
Speaker 2: demand in the economy is a really important thing to
14:28
Speaker 2: be watching. You know, the high interest rates are part
14:31
Speaker 2: of the reason, along with high construction costs, that we've
14:34
Speaker 2: seen just a complete cratering of housing starts at a
14:37
Speaker 2: time when we really really want to start feeling that.
14:40
Speaker 2: I think it's a seven and a half million unit
14:42
Speaker 2: housing gap that we have, and we'll presumably still have
14:45
Speaker 2: ten or twenty years from now.
14:47
Speaker 3: So you're focusing on health, which obviously I mean that
14:49
Speaker 3: is clearly the area where in theory everyone agrees, certainly
14:54
Speaker 3: in the broader public. There's just a sort of general
14:57
Speaker 3: understanding that they say are in total high costs. I
15:01
Speaker 3: guess a couple of things I would say in sort
15:03
Speaker 3: of caution is if you look historically, there's been wide
15:07
Speaker 3: agreement in the US for having a different kind of
15:10
Speaker 3: healthcare system. You know, famously, for years and years people
15:13
Speaker 3: have actually said they quite like try a single payer,
15:16
Speaker 3: though that's obviously has never been remotely conceivable in terms
15:19
Speaker 3: of legislation. And yet there have been things that have
15:23
Speaker 3: got in the way, and every reform has managed to
15:26
Speaker 3: be described in a way that makes it less popular,
15:29
Speaker 3: thanks to lobbying and other things, that somehow the lesson
15:32
Speaker 3: gets taken that it's going to increase costs or put
15:35
Speaker 3: your insurance at risk. The extraordinary thing to me and
15:38
Speaker 3: to anyone who doesn't live in the US all the time,
15:42
Speaker 3: is that you have Obamacare, having had considerable success in
15:46
Speaker 3: lowering the growth of costs, People, even with what you
15:50
Speaker 3: would consider to be a good employer insurance scheme, are
15:54
Speaker 3: still paying twenty five thousand dollars a year for their insurance.
15:57
Speaker 3: They're still paying significant copays of outlays over the course
16:01
Speaker 3: of the year. Millions of people still don't have insurance.
16:05
Speaker 3: So I guess even when you've had effective intervention like
16:09
Speaker 3: Obamacare and some of the things that the Biden and
16:11
Speaker 3: Obama administration did to slow the cost of drug prices,
16:15
Speaker 3: increasing drug prices, it doesn't feel remotely like a success
16:20
Speaker 3: to the people on the other end of it. And
16:22
Speaker 3: I sort of one that it's a very risky thing
16:24
Speaker 3: to try and take on because even when you succeed,
16:27
Speaker 3: everyone still thinks that their healthcare is really expensive.
16:31
Speaker 2: The average American spends fifteen hundred dollars a year out
16:35
Speaker 2: of pocket, So Americans collectively spend half a trillion dollars
16:40
Speaker 2: a year out of pocket on health costs. It's just
16:42
Speaker 2: an extraordinary amount of money. And that's not including insurance costs.
16:47
Speaker 2: That's not including Medicare, Medicaid, Tricare, all of the you know.
16:52
Speaker 4: The public policies.
16:53
Speaker 2: You know, the place that has worked I think most
16:56
Speaker 2: successfully in the ACA is the Medicaid expansion. And now
17:00
Speaker 2: that is very very much at risk because Republicans took
17:05
Speaker 2: a trillion dollars from the program.
17:08
Speaker 4: They're going to kick millions of people off.
17:10
Speaker 2: By basically increasing the procedural requirements requiring folks to comply
17:16
Speaker 2: with a work requirement in Medicaid, which some states have tried,
17:20
Speaker 2: not terribly successfully. We've not had a national work requirement
17:23
Speaker 2: in that program. But people on Medicaid, it's been fairly
17:27
Speaker 2: stable in cost and it's proven itself to be pretty
17:30
Speaker 2: good insurance. I remember again, fifteen years ago in the
17:33
Speaker 2: ACA debates, people would be like, oh, you know, Medicaid
17:36
Speaker 2: isn't really worth having, and now it's like, oh no,
17:39
Speaker 2: it's really great. The copays are essentially zero, it very
17:42
Speaker 2: much covers care. And that's not to say, you know,
17:44
Speaker 2: it can be sometimes hard to find a doctor, they're
17:46
Speaker 2: wait lists, all of these other issues, not to negate that,
17:49
Speaker 2: but yeah, you know, it's it's really really tough in
17:52
Speaker 2: terms of health insurance. But there are a lot of
17:55
Speaker 2: policy answers. What I would say is that I think
17:58
Speaker 2: that if you we're trying to create a bipartisan bill
18:02
Speaker 2: that would start to solve some of these problems. A
18:05
Speaker 2: lot of the fixes are quite technical, and I think
18:08
Speaker 2: that you're completely right to say that anything that can
18:10
Speaker 2: be cast as socialism is sort of immediately ejected out
18:13
Speaker 2: of hand. But I do think that for instance, covering
18:16
Speaker 2: all children under Medicare right, just up to the age
18:20
Speaker 2: of eighteen you get Medicare great, or expanding Medicaid coverage,
18:26
Speaker 2: lowering the Medicare age so more people get onto those plans,
18:30
Speaker 2: which tend to be much more cost controlled, are all
18:33
Speaker 2: policy solutions, and again, I think that you just need
18:36
Speaker 2: something that sells it to the American people. It's why
18:38
Speaker 2: I think drug prices are probably a really really good
18:41
Speaker 2: place to start. And you know, Trump is trying to
18:43
Speaker 2: do this, right, We're going to negotiate drug costs. You're
18:46
Speaker 2: going to get ozebic for seventy dollars a month, like
18:49
Speaker 2: I think that people would be okay with that, Whereas
18:52
Speaker 2: we're going to take away your private insurance and push
18:55
Speaker 2: you onto a public option. And yeah, you know, the
18:57
Speaker 2: ACA was a real Frankenstein bill. Well, the American health
19:00
Speaker 2: system is not what anybody would design if you were
19:03
Speaker 2: effort designing it. I do think that there's like a
19:05
Speaker 2: set of really really good, effective policies that are not
19:09
Speaker 2: going to win anybody in election, and then some like
19:12
Speaker 2: treats and goodies that I think could really help help
19:14
Speaker 2: folks win an election, regardless of whether they were a
19:17
Speaker 2: Democrat or a Republican.
19:35
Speaker 3: Nancy. When you're listening to people in DC and Democrats
19:40
Speaker 3: are lighting on this affordability agenda, how much of people
19:47
Speaker 3: thinking of this as a positive agenda leavers that they
19:51
Speaker 3: could say they're going to pull if they get back
19:53
Speaker 3: a retake control of Congress, And how much is this
19:57
Speaker 3: is purely negative? This is of opportunism. You know, you
20:01
Speaker 3: did this to Biden, now we're going to do it
20:03
Speaker 3: to you.
20:04
Speaker 1: Well, I think the politicians, for politicians, it's just an opportunity.
20:08
Speaker 1: It's a political opportunity to sort of bash Trump. Democrats
20:12
Speaker 1: have been looking for a way to counter Trump for
20:14
Speaker 1: a long time successfully and they haven't really found a
20:17
Speaker 1: message that sticks and that doesn't make them sound trill,
20:20
Speaker 1: and so this is a message that they feel like
20:23
Speaker 1: can work. I do think that there's policy people in
20:26
Speaker 1: Washington who are thinking through what an affordability agenda could
20:30
Speaker 1: look like, and you know, are sort of light like
20:34
Speaker 1: fixating on different buckets than policy people had before. So
20:38
Speaker 1: I do think people are thinking about how to make
20:40
Speaker 1: housing more affordable, how to make electricity more affordable. You know,
20:43
Speaker 1: when I've covered past elections or past presidential campaigns, a
20:47
Speaker 1: lot of the economic policy has revolved around things like
20:51
Speaker 1: what should the tax rates be or how much stimulus
20:54
Speaker 1: should we do? And I do think that the policy
20:57
Speaker 1: questions that policy people are focusing on now are a
21:00
Speaker 1: little bit different and just really tied to kind of
21:03
Speaker 1: the cost of living things. And so I think that's
21:05
Speaker 1: a discussion going on in the Democratic Party. And you know,
21:09
Speaker 1: one of the most interesting things about the Trump White
21:11
Speaker 1: House to me is that he is trying to do
21:14
Speaker 1: some things to bring the cost of living down and
21:16
Speaker 1: doing things that actually are supported by Democrats. I mean,
21:20
Speaker 1: you know, trying to negotiate drug prices is like something
21:23
Speaker 1: that Democrats are into, or you know, the White House
21:26
Speaker 1: taking stakes in different companies, particularly related to you know,
21:32
Speaker 1: some national security areas. We saw them do it with Intel,
21:35
Speaker 1: we saw them do it with US deal with some
21:37
Speaker 1: critical mineral companies. Those are policies that Bernie Zanders and
21:41
Speaker 1: Elizabeth Warren have applauded. And so I do think the
21:45
Speaker 1: Trump administration is kind of walking this dance of like,
21:48
Speaker 1: you know, being very Republican and sort of very huing
21:51
Speaker 1: to their mega agenda, but also trying to dip their
21:54
Speaker 1: toe into things that you know, other people would view
21:57
Speaker 1: as definitely kind of in this socialist vein, but it's
22:00
Speaker 1: it's all these politicians kind of trying to figure out
22:03
Speaker 1: how to tackle these very very complicated and nuanced issues, which,
22:08
Speaker 1: by the way, are just changing as the US economy
22:10
Speaker 1: changes and evolves, and you know, as we're seeing more
22:13
Speaker 1: AI in the mix, we're seeing corporate people gain laid off.
22:16
Speaker 1: You know, the US economy I feel like, has really
22:18
Speaker 1: eded this huge moment of transition, and companies are trying
22:22
Speaker 1: to deal with it, and economists and policy people, but
22:25
Speaker 1: more politicians.
22:28
Speaker 3: And ane. I mean, one point about this agenda is
22:33
Speaker 3: that although it's a very national debate, you know, the
22:36
Speaker 3: kinds of things that you talked about at the beginning
22:39
Speaker 3: just sound inherently local, and in fact, some of the
22:42
Speaker 3: sort of failings, the supply side failings, if you like,
22:45
Speaker 3: have been bigger in some of these big Democrat controlled
22:50
Speaker 3: cities San Francisco and elsewhere New York for that matter,
22:55
Speaker 3: then they have been in Republican states and localities. So
22:59
Speaker 3: I just want to, you know, is there a disconnect
23:02
Speaker 3: there that although we might be talking nationally about affordability,
23:06
Speaker 3: actually the Democrats still have a challenge to show that
23:09
Speaker 3: they can do the local things that you're actually going
23:11
Speaker 3: to need to do to fix these problems.
23:14
Speaker 2: Yeah, one thing that I think that we've seen since
23:18
Speaker 2: COVID roughly and probably a little bit before that, is
23:22
Speaker 2: that what was originally really a problem of you know,
23:28
Speaker 2: your Seattle, your San Francisco, your Los Angeles, your DC
23:32
Speaker 2: or Boston has really become a national problem. So we
23:36
Speaker 2: have pretty severe housing shortages in rural counties in the
23:40
Speaker 2: United States. Now we have seen our big cities squeezing
23:44
Speaker 2: families not only to the suburbs, but to less populated areas.
23:48
Speaker 4: So, you know, since COVID, we've seen.
23:51
Speaker 2: Rural population growth for the first time in a long time,
23:54
Speaker 2: facilitated by the shift to work from home, but also
23:58
Speaker 2: just by this tremendous squeezing of the loon. Right, people
24:01
Speaker 2: have to go someplace, and people are moving to these
24:04
Speaker 2: lower cost areas, most notably in the south right Arizona, Texas,
24:09
Speaker 2: where the cost of living is lower.
24:11
Speaker 4: But you know, I have talked to.
24:13
Speaker 2: Folks who live in the suburbs outside of San Antonio,
24:16
Speaker 2: for instance, and prices are going up a lot there.
24:20
Speaker 4: Which is really pretty remarkable.
24:22
Speaker 2: So the crisis is everywhere, and I do think that
24:24
Speaker 2: the cost of other things like childcare is downstream from
24:28
Speaker 2: housing costs, right, and the fact that you have a
24:31
Speaker 2: relatively low unemployment rate, and also the high cost of
24:34
Speaker 2: things like materials and electricity, all of this is part
24:37
Speaker 2: of one system. And so I do think that that
24:39
Speaker 2: has shifted the conversation for Democrats that they can make
24:42
Speaker 2: this argument, Yeah, we're not just doing this for people
24:45
Speaker 2: who are complaining about the cost of rent in Providence,
24:47
Speaker 2: Rhode Island. We're doing this for you because we see
24:50
Speaker 2: that you're getting squeezed by the same forces. And so
24:54
Speaker 2: I think that we've now seen even just a rural
24:57
Speaker 2: eviction crisis. We're in some rural areas the eviction rate
25:00
Speaker 2: is matching that you have in some of the big cities,
25:03
Speaker 2: which is really remarkable.
25:04
Speaker 4: So I do think that this is nationalized as a problem.
25:07
Speaker 2: On top of the fact that the media environment has nationalized,
25:10
Speaker 2: the parties have obviously nationalized in terms of their focus.
25:14
Speaker 2: That said, I do think that a lot of the
25:15
Speaker 2: answers are going to be local on housing, and I
25:19
Speaker 2: think that it will be a really really big puzzle
25:22
Speaker 2: for Democrats and Republicans to figure out the best way
25:26
Speaker 2: to incentivize localities to harmonize their building codes, to change
25:33
Speaker 2: zoning rules.
25:34
Speaker 4: All of those kinds of things.
25:36
Speaker 2: Childcare, it's a bit different because I do think that
25:39
Speaker 2: you just need a big pump of money to create supply.
25:42
Speaker 2: These are very low wage jobs. Childcare is still very
25:46
Speaker 2: unaffordable for parents. No other country has ever solved this
25:49
Speaker 2: problem except with a lot of cash. New York is
25:52
Speaker 2: obviously trying to do this at the municipal level, but
25:55
Speaker 2: it means a fairly large tax increase on a relatively
25:58
Speaker 2: small base. So there's a lot of looking at these
26:02
Speaker 2: kind of laboratories of democracy to figure out if states
26:04
Speaker 2: and localities can figure it out for themselves.
26:07
Speaker 3: My experience, and I suspect yours too, but certainly as
26:10
Speaker 3: a TV correspondent in the UK, and these are obviously
26:14
Speaker 3: these cost of living issues were are now very resonant
26:17
Speaker 3: in the UK and some other countries as well. My
26:20
Speaker 3: experience is that no one ever recognizes that things have
26:22
Speaker 3: got better, at least from a price standpoint. You know,
26:25
Speaker 3: you can have like all the data can say the
26:27
Speaker 3: cost of this has gone down, We've slowed the rise
26:30
Speaker 3: in this, that and the other. You will never find
26:33
Speaker 3: anyone who admits that anything has got easier or cheaper.
26:36
Speaker 3: So I just wonder on you, once we've now got
26:39
Speaker 3: everybody on this affordability train, I mean, nobody is going
26:42
Speaker 3: to start thinking that their lives have got cheaper, and
26:45
Speaker 3: no one's really going to notice to your point, and
26:47
Speaker 3: that wages have more than kept up with some of
26:51
Speaker 3: these increases. So I mean, how the Democrats, particularly if
26:55
Speaker 3: they're going to really push this agenda, guard against that,
26:58
Speaker 3: because it seems to me we're just going to get
27:00
Speaker 3: into a cycle where one side promises to resolve the
27:05
Speaker 3: affordability crisis and then the other side beats them up
27:08
Speaker 3: for not having done it a couple of years later.
27:10
Speaker 1: Well, I think that that's going to be a huge
27:12
Speaker 1: challenge for Democrats. I think that's what we've seen over
27:14
Speaker 1: the last few years, and I'm not super optimistic that
27:17
Speaker 1: it will change. Just to be really honest with you,
27:20
Speaker 1: the Biden administration had a really mixed record on the economy.
27:24
Speaker 1: They pulled the US out of the pandemic, which was
27:27
Speaker 1: a huge feat, and unemployment was pretty low. That big
27:31
Speaker 1: rescue package was probably overly inflationary, so it was a
27:35
Speaker 1: mixed picture. But like all Americans, saw were higher prices
27:38
Speaker 1: for you know, paper towels and eggs and milk, and
27:41
Speaker 1: that's what they held them accountable for. And so I
27:43
Speaker 1: just think it's very hard to, you know, in any
27:47
Speaker 1: type of political campaign, sort of messaged the nuance there.
27:50
Speaker 1: And you know, we're seeing Trump have that challenge now.
27:53
Speaker 1: You know, immediately after the election last week or the elections,
27:56
Speaker 1: he was talking about how Republicans needed to do a
27:59
Speaker 1: better job of talking about the economy. You're talking about
28:01
Speaker 1: the tax bill. He was sort of lashing out, treating
28:04
Speaker 1: this like a messaging problem and not a policy problem.
28:07
Speaker 1: I think the biggest problem is Republicans don't talk about it.
28:10
Speaker 2: They don't talk about the word affordability.
28:12
Speaker 1: And so I think it will be really tricky for
28:15
Speaker 1: people at the federal level in Congress and the White
28:18
Speaker 1: House to sort of solve these things. And you know,
28:21
Speaker 1: Republicans control everything right now in Washington, and they're not
28:24
Speaker 1: able to control these things.
28:26
Speaker 4: Now.
28:26
Speaker 3: He's the also to focus on a couple of visible
28:30
Speaker 3: things at the federal level. Do they need to be
28:33
Speaker 3: kind of ruthless about just focusing on a handful of
28:36
Speaker 3: concrete things that people will notice rather than taking responsibility
28:41
Speaker 3: for what happens to the price of chicken and eggs.
28:44
Speaker 2: Yeah, So I think that there is a real lesson
28:48
Speaker 2: in Zurnmum Donnie's candidacy, and that a lot of things
28:53
Speaker 2: to note about his talent as a politician, right, really
28:58
Speaker 2: positive speaking to a lot of different groups of New Yorkers,
29:03
Speaker 2: real focus on affordability, real tangible policy proposals that were
29:08
Speaker 2: easy to understand, fast free buses, universal childcare, municipal grocery stores. Right,
29:15
Speaker 2: these are things that New Yorkers could get right, and
29:20
Speaker 2: we can see four years from now, did he accomplish
29:22
Speaker 2: these things or did he not? And so I think
29:26
Speaker 2: when you go back and you look at the Biden
29:28
Speaker 2: reelection campaign, it was really hard to say exactly what.
29:31
Speaker 4: They were running on.
29:32
Speaker 2: They had like a million policy proposals, a lot of
29:36
Speaker 2: which were really technical. They were running on these big
29:39
Speaker 2: bills that even now, if you asked me what was
29:43
Speaker 2: in the IRA, right, like, I would probably take twenty
29:46
Speaker 2: minutes to.
29:47
Speaker 4: Answer that question.
29:49
Speaker 2: And so I think that there is this importance of gestural,
29:53
Speaker 2: simple bumper stickery policy making. And I think that jd.
29:57
Speaker 2: Vance is going to face this problem, right, what does
29:59
Speaker 2: he run on?
30:00
Speaker 4: Trump notably.
30:01
Speaker 2: You know, he wasn't sort of policy forward as a
30:05
Speaker 2: candidate either time, So there's exceptions. Trump has a very
30:09
Speaker 2: different type of political genius, right, Yeah.
30:12
Speaker 4: I think that for politicians.
30:14
Speaker 2: On both sides, making it so that you're not responsible
30:17
Speaker 2: for the entirety of the affordability crisis, but instead you're
30:20
Speaker 2: promising things that you can actually deliver. I think that
30:24
Speaker 2: that that's going to be really important.
30:27
Speaker 1: Just to jump in here for one second. One of
30:29
Speaker 1: the advantages that Democrats do have, which we saw with
30:32
Speaker 1: the elections last week, is that a very diverse roster
30:36
Speaker 1: of candidates. One so mont Damia, New York, you know,
30:39
Speaker 1: is a Democratic socialist, but then thedidate. The gubernatorial candidates
30:44
Speaker 1: in Virginia and New Jersey are real moderate female candidates,
30:49
Speaker 1: experienced politicians who come out of national security backgrounds with
30:53
Speaker 1: very centrist messages. So the Democratic Party at least at
30:56
Speaker 1: this point, is very willing to kind of have a
30:59
Speaker 1: lot of different types of candidates, and that is helpful
31:02
Speaker 1: I think for solving affordability or unique problems at the
31:06
Speaker 1: local level. The Republican Party is completely run by Trump
31:10
Speaker 1: at this point, and if you defy him, even at
31:13
Speaker 1: a local level, there is sort of retribution, there are
31:17
Speaker 1: threats that they're going to get primary like everyone in
31:20
Speaker 1: the entire party, including governors, need to be on the
31:23
Speaker 1: Trump agenda, and so I think Democrats have an opportunity
31:27
Speaker 1: in that because you know, what Gavin Newsom is doing
31:30
Speaker 1: in California, you know, can be completely different than what
31:33
Speaker 1: Abigail's Banberger is going to do in Virginia, and the
31:35
Speaker 1: party is okay with that.
31:38
Speaker 3: That is a very wise point to end on. Thank you, Nancy.
31:42
Speaker 3: It's a sort of unapologetically US focused episode, even by
31:45
Speaker 3: the standards of Trumponomics, but I think it's all right
31:47
Speaker 3: for once. Thank you very much, Annie Lowry and.
31:51
Speaker 1: Lacy Coote, thanks for having me.
31:52
Speaker 3: Thank you, thanks for listening to trump Ponomics from Bloomberg.
32:01
Speaker 3: It was hosted by me Stephanie Flanders, and I was
32:03
Speaker 3: joined by Annie Lowry, star writer at The Atlantic, and
32:06
Speaker 3: Bloomberg's senior national political correspondent, Nancy Cook. Trumponomics was produced
32:16
Speaker 3: by Summer Sadi and Moses and with help from Amy
32:19
Speaker 3: Keen and special thanks this week to Rachel Lewis Chris Key.
32:23
Speaker 3: Sound design is by Blake Maples and Nick Johnson and
32:26
Speaker 3: Sage Bowman is Bloomberg's head of podcasts. To help others
32:30
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32:34
Speaker 3: you listen.