President Donald Trump has said some strikingly out-of-touch things about affordability: that it’s a “hoax,” he’s “solved it” and he’s “won affordability.” In his State of the Union address, he even said “prices are plummeting downward.” U.S. families know this is nonsense. But to see how much Trump’s policies will erode affordability in the coming years, you must understand that affordability isn’t just about prices.
Affordability is the outcome of a race between incomes and prices. And for typical families, the Trump agenda is near-guaranteed to harm their incomes far more than it can possibly reduce their prices.
For typical families, the Trump agenda is near-guaranteed to harm their incomes far more than it can possibly reduce their prices.
Even judged by the movement of prices alone, Trump’s record on affordability is poor. Inflation fell from 8.0% to 3.0% in the final two years of the Biden administration. This rapid downward movement slowed to a crawl in the first year of Trump’s second term, with inflation falling from 3.0% to just over 2.6%.
There are clear policy reasons why progress in reducing inflation has slowed. Electricity prices have surged as the Trump administration has ended subsidies for renewable generation passed during the Biden administration. The Trump tax cuts passed in the president’s first term were part of a law that gouged loopholes in the tax code, including inviting pharmaceutical companies to offshore their production and import back into the United States. Last year the Trump administration put tariffs on these offshored pharmaceuticals, pushing up their costs. When the administration failed to extend Obamacare subsidies for people buying health insurance through the exchanges, healthier enrollees who could afford to began opting out, driving up prices for everybody left in the Affordable Care Act marketplace.
And these are not the only ways that Trump administration policies have intensified affordability issues for ordinary Americans.
That failure to extend Obamacare subsidies did more than lead to higher market prices for exchange insurance plans. It also siphoned income away from families that could have been used to defray the cost of buying health insurance. Instead, out-of-pocket burdens spiked. Even bigger harm looms for more vulnerable families as the Republican tax and spending megabill, known as Trump’s One Big Beautiful Bill Act, is poised to cut Medicaid and food stamps by more than $1 trillion over the next decade. These cuts effectively remove income from the pockets of the most vulnerable. This explains why the bill reduced affordability for the bottom 40% of families in this country.
It is hard to make a bunch of changes to the nation’s tax and spending laws that add $4 trillion to the nation’s debt and still somehow manage to make 40% of the population worse off. If you’re borrowing it all anyhow, why not at least give something to the worst-off among us?
Finally, even as inflation fell slightly in 2025, wage growth adjusted for inflation (or real wages) also slowed. For the lowest-wage workers, these real wages actually declined. The reason is simple: The labor market cooled in 2025. This was no accident. The administration’s federal workforce cuts, deportation agenda and the chaos of the Trump tariff policy and approach to the Federal Reserve all contributed to labor market sluggishness. And workers in the bottom half of the wage distribution need sustained and very low unemployment rates to gain any leverage with employers when they ask for higher wages. They had this leverage early in the post-pandemic recovery, but it’s been lost. The labor market would have cooled even faster in 2025 had there not been a ramp-up in spending associated with the frenzied buildout of artificial intelligence firms and the related stock market boom (which could still prove to be a bubble).
With all that in mind about the scale of Trump policies’ negative impact on affordability, now let’s consider what genuine wins in affordability would look like. A chief place to start: attacks on the influence that has most harmed U.S. families’ affordability in recent decades — the rise in inequality that has funneled income away from the bottom and middle toward the top. This expansion in inequality was policy-generated, so it can be reversed by different policy choices. Yet the Trump administration has doubled down on strategies that have increased inequality by hamstringing workers’ rights to organize unions and bargain collectively and rolling back important labor standards, such as minimum wages. (If you want more examples, my Economic Policy Institute colleagues and I identified 47 ways Trump has made life less affordable for Americans over the past year.) The first step in a good-faith affordability agenda would be restoring the Medicaid and SNAP funds cut in the One Big Beautiful Bill Act. The first step in a good-faith affordability agenda would be restoring the Medicaid and Supplemental Nutrition Assistance Program funds cut in the One Big Beautiful Bill Act. The obvious way to pay for this restoration? By sharply raising taxes on the ultra-rich. Besides being a key source of revenue to pay for affordability-enhancing measures such as Medicaid and food stamps, raising taxes on the ultra-rich would lower pre-tax inequality. Essentially, these higher taxes would blunt the incentive for the ultra-rich to rig the rules of the economy in order to claim as much income as they can at the expense of typical families. This strategy works — across time and across countries there is ample evidence that higher taxes on the rich keep pre-tax inequality in check. The economic struggles of typical U.S. families deserve serious solutions, not political buzzwords. Unfortunately, the policies the Trump administration has undertaken are making Americans’ economic struggles harder, not easier.
Josh Bivens
Josh Bivens is the chief economist at the Economic Policy Institute. 
