Deceptive Political Appeal Of Affordability

After the highest inflation in 44-years under President Biden, specious Democrats are championing affordability. They are blasting President Trump for the lofty prices of housing, groceries, child care and insurance. Democrats are apoplectic that Trump hasn't lowered prices during his 11 months in office.

Democrats have a case of convenient amnesia.  During the period 2021-2024, prices ballooned a cumulative 19.5%, the worst runaway inflation since the 48.6% sticker shock during Jimmy Carter's term from 1977-1980. 

Democrats remained indifferent about mushrooming prices while they were in power.  Now the party has experienced an epiphany. Flip went flop and now they are concerned about the impact of galloping inflation on the financial health of Americans.

Cheeky Democrat political strategists thumped their chests and proclaimed elections in New Jersey, Virginia and New York City birthed a winning issue: "affordability," guaranteed to rouse voter anger and stoke turnout.  However, New Jersey and Virginia were centered on other issues.

Affordability was only front-and-center in New York, where the cost of living is more than double the national average.  Socialist Zohran Mamdani swept the Big Apple's mayoral race, promising to lower costs and make life easier for New Yorkers.That hardly suggests a Democrat midterm tsunami. 

However, there's no question Americans are weary of bearing the brunt of a never-ending march of higher prices.  You can't blame them. Inflation was 1.4% when Trump left office at the end of 2020.  In Biden's first year in 2021, prices rocketed 7% higher, the largest one-year inflation rate since 1981.

Here is a sample of the cumulative cost increases as measured by the Consumer Price Index (CPI) during the chaotic Biden years: 

• Transportation saw the largest increase, hiking 34.4%.  Gasoline prices were a key driver.
• Housing leapt by 23%.  Prices for rent soared 31%.
• Food and beverage prices rose 23.6%. Groceries skyrocketed 26%.
• Fuels and utilities catapulted 28.5%.  
• Since 2017, childcare costs have spiked 40% for a family with two children. 

While acknowledging COVID impacted inflation, the federal government spent a whopping $27.4 trillion in the fiscal years 2021 through 2024 as Democrats embarked on a spending spree unseen in modern times.The pump-priming flooded the economy with too much money chasing scare goods.   

The rampant spending included infrastructure projects and cash payments as part of the $1.9 trillion American Rescue Plan.  All that money sloshing around in the economy created jobs, but the numbers were inflated by the addition of 1.07 million government jobs in the Biden years.  

The reckless spending helped fuel a wage-price spiral that poured gasoline on services and goods igniting combustible inflation. 

The Federal Reserve was forced to act to hose down inflation, ratcheting up interest rates from near zero in 2020 to 5.5% in January, 2024.  Rising rates hit consumer's in digital wallets, as interest surged on credit cards, cars and housing mortgages. Americans hemorrhaged cash to make interest payments.

The interest rate bomb and exploding prices left about two-thirds of American households living paycheck-to-paycheck.  

The latest survey conducted by the University of Michigan underscores the economic migraine. The index plummeted to 50.3%, documenting flagging consumer sentiment.  A reading below 75 suggests consumer pessimism about the economy and personal finances.  Consumers are gasping for hope.  

All the hyper-political rhetoric will do nothing to return prices to 2019 levels. Prices will continue to rise, but are showing signs of increasing at a slower rate.  In the aftermath of the worst inflation under President Carter, prices stabilized but there was no retreat to pre-1977 levels.    

Some economic models show when inflation exceeds 8% it can take an average of 16 years to return to the Fed's official 2% target. Other economists hedge, saying it can take a few years or up to a decade. That explains why Democrats are pivoting to  "affordability" as the midterm slogan de jour.  

Consumers are unlikely to care about past economic policy, which is the reason Republicans need to be laser-focused on the economy.  Renewing current tax cuts approved during Trump's first term, while representing progress, doesn't put more money today in the pockets of consumers. 

Other Trump tax cuts--the no tax on tips and no taxes on overtime for some workers--will not be felt by consumers until 2026 when they file taxes for 2025. Americans will have more dollars to spend as a result of these policy changes.

However, most consumers gauge affordability by how much they shell out when they buy groceries, dine out, put gas in their vehicles, pay for rent, housing and utilities.  Since Trump assumed office, prices have declined for gasoline, fresh fruits, eggs and communications services.

Yet other prices--for example, those for electricity, health insurance, beef and rent--have marched higher than 2%. In recognition of consumers' economic pain, the Trump Administration announced this month it will eliminate tariffs on coffee, beef, bananas, other fruits and vegetables. 

While it's a positive development,  Republicans need to level with Americans about inflation. Prices aren't going to fall as fast as costs surged.  Trump should be laster focused on growing the economy and jobs, while reminding Americans that it was Democrats who drove the inflation bus off the cliff.  

Schumer Shutdown And Obamacare Subsidy Lies

Senator Chuck Schumer's government shutdown threatens to become the longest in American history, breaking the record 36-day stalemate in President Trump's first administration.  The NewYork lawmaker fears his party's leftist base will torpedo his reelection chances unless he remains recalcitrant. 

Schumer has frogmarched his Democratic Party minions into the Death Zone of politics.  Republicans are refusing to take his bait of extending Obamacare subsidies in exchange for unlocking the doors of government. Now Schumer faces the real threat of a pyrrhic victory, caving without a political victory.  

Pressure is ratcheting as airline executives, air traffic control union bosses, federal government worker union officials, small business associations and other groups are calling on Democrats to vote with Republicans to approve a continuing appropriation that Schumer voted for in March.

For those who insist both parties are at fault, this is the Big Lie. Republicans have voted more than 13 times for the so-called continuing resolution to fund the government at fiscal 2024 Biden-era levels.  A few Democrats have broken ranks, but Schumer has corralled the votes to enforce gridlock.  

Under Schumer's iron fist, Democrats have publicly made the shutdown about extending COVID-era Obamacare subsidies.  This may be the most bone-headed issue to pick for a shutdown showdown.  The media reporting reads like dispatches from Russian-controlled Pravda. 

The shutdown is not about all Obamacare premium subsidies.  It involves only the enhanced subsidies Democrats passed as part of American Rescue Plan (2021) and the Inflation Reduction Act (2022). Democrats voted to sunset the subsidies at the end of 2025. It was not a GOP idea.

These so-called enhanced subsidies, allegedly to help Americans during COVID, were nothing more than a scheme to put more individuals on Obamacare.  Under the plan, some Americans were able to get plans with no premiums or very low premiums.  These were pedaled as temporary measures. 

Democrats figured once millions of Americans were hooked up to the government teat they would cry foul if they were weaned from taxpayer subsidies.  This was a deliberate attempt to bloat the rolls with individuals willing to vote with Democrats to permanently latch on to the extraneous benefits.

To no one's surprise, the subsidies invited massive fraud.  Estimates by the non-partisan Congressional Budget Office (CBO) put the numbers of improperly enrolled individuals at between 2.3 million and 6.4 million. An independent estimate fixed the number at 5 million, costing taxpayers an extra $20 billion.  

The government uncovered insurance fraud as agents and brokers enrolled individuals without  their consent in order to collect commissions. An independent study by Paragon Health Institute found 11.7 million enrollees--more than one-third of the entire Obamacare marketplace--made no claims.

Where did the billions of dollars in subsidies go?  Into the pockets of unscrupulous insurance brokers and to insurance companies.  

That wasn't the only political hustle.  Obamacare subsidies were extended to households making 400 percent of the federal poverty cap. That allowed some Americans with incomes of $600,000 to qualify for government benefits.  About one-third of the enhanced subsidies went to these wealthy individuals.

How come the media has not highlighted these benefits for the often maligned bogeyman: the fat cats?  

This is what Democrats want their left wing base to believe is worth fighting for.  More fraud and taxpayer waste to keep the government in limbo.  There is no longer a COVID emergency and therefore there is no justification for making these costly subsidies permanent entitlements.  

Permanently extending the enhanced Obamacare subsidies would cost $488 billion, increasing the deficit by $350 billion over ten years, while adding another $60 billion in additional interest cost to finance the spending.

Even without the extended subsidies, the CBO projects the cost of Obamacare--the ill-named Affordable Care Act--to top $1.32 trillion during the ten-year period from 2025 through 2034.  

The approximately 24 million Americans currently enrolled in Obamacare health insurance plans face higher premiums next year, Democrats complain.  They quote the progressive  Kaiser Family Foundation forecasts that premiums through health exchanges will leap 26% on average next year, reflecting the rising cost of care. 

However, the foundation estimates are based on those who enroll in the Silver or second tier plan--not the lowest.  KFF also uses current enhanced subsidies in its calculation, which is skewed because it includes those Americans whose incomes are above the 400% of the poverty line.

A more accurate estimate is a study by the Centers for Medicare and Medicaid Services (CMS). It found the average Obamacare marketplace premium after tax credits is projected to cost $50 per month for the lowest cost plan next year.  Nearly 60% of enrollees will have access to those plans $50 and below.

Those estimates are based on the expiration of the enhanced subsidies. This destroys the Democrats' talking point that failure to extend the supercharged subsidies will significantly increase premiums for the poorest Americans.  

In fact, the cost for Obamacare coverage is significantly less than what most Americans pay for insurance through their employer.  And they don't get the advantage of taxpayer handouts. Taxpayers are forecast to cover 91% of the lowest cost plan premiums for Obamacare, CMS reports.    

Obamacare has left a shameful trail of broken promises.  You could keep your doctor.  If you liked your coverage, you could keep it.  Premiums would go down $2,500 on average. Reality was far different than what President Obama and Speaker of the House Nancy Pelosi sold to the American people. 

Millions found out their Obamacare plans did not include their doctor. In the first year alone, 9.3 million Americans lost coverage when their businesses stopped insuring them. Premiums ballooned 60% in just the first four years of Obamacare.

It is a failed experiment in government run health insurance. But like all government entitlements, politicians keep throwing your money at bad ideas. At least, Democrats and Republicans should agree that the COVID-era enhanced benefits can be accorded a Congressional burial.