MAGA’s Affordability Crisis Will Soon Get Worse

And Trump’s numbers will continue to slide

Long ago, probably in a long-forgotten hotel room, I watched a 1974 movie called The Internecine Project — now available, as you’ll see if you follow the hyperlink, on YouTube. In truth, it’s a pretty bad movie. But what made it memorable was the unusual nature of the villain, played by James Coburn: An evil, murderous chair of the President’s Council of Economic Advisers. Yes, you read that correctly – an evil, murderous chair of the CEA.

In the opening scene, Coburn is on a talk show, being quizzed about the high rate of inflation. He responds that people shouldn’t be upset about rising prices, because their incomes are rising even faster. Presumably the scriptwriters intended this to show how smarmy and cynical he is.

And that’s why Donald Trump won the 2024 election. No, Democrats didn’t lose because they use big words, or advocate for open borders, or talk too much about trans rights. None of those things actually happened to any significant degree, regardless of what Trump or the self-defeating wing of the Democratic Party says. They lost because Americans were angry about higher prices and not mollified by the fact that most people’s wages had risen more than overall consumer prices. In this coming Sunday’s primer, I’ll talk more about the underlying economics of the affordability issue, and in the following primer I’ll talk about specific strategies for Democrats to adopt to address it.

But what I want to focus on today is the politics of affordability. As current polls show, swing voters are increasingly blaming Trump, rather than Biden, for the cost of living. And the public’s ire is likely to get worse for the Republicans as time goes on.

In the summer of 2024, as Trump was lagging in the polls behind Kamala Harris, he began to repeatedly and explicitly promise not simply to reduce inflation but to deliver large declines in consumer prices: “Starting the day I take the oath of office, I will rapidly drive prices down.” Although economists warned that there was no way he could deliver on those promises, enough voters believed him to swing the election.

Now that Trump has in fact utterly failed to deliver, those voters — especially those Black and Latino voters who believed him — have swung back to the Democrats with a vengeance:

Trump is handling this reversal with his usual style and grace: in the past few days he has repeatedly called affordability a “hoax” and a “con job.” According to Axios, he’s planning a nationwide retribution tour to convince voters that things are going great and that they’re wrong to be so down on the economy. Democratic strategists must be rubbing their hands with glee.

And if you are one of those Republicans reconsidering your future career options, know that things are going to get worse. A lot worse.

Lately I’ve been revisiting the work of the political scientist Suzanne Mettler. Mettler asked why so many people who are dependent on government social programs vote for conservatives who want to slash those programs. She focused in particular on Kentucky, where 28 percent of the population is covered by Medicaid, yet which gave Trump a more than 30 point margin last year.

My quick summary of Mettler’s analysis emphasizes two points. First, many people who benefit from government social programs don’t actually think of them as social programs. This is true not only for implicit aid like the tax exemptions for mortgage interest payments and employer-provided health insurance, but also for explicit aid programs like Medicare and Social Security. What Mettler documented is that many people who depend on government benefits don’t consider them “benefits” but rather something they’ve earned.

Second, Mettler documented that recipients of means-tested government benefits such as Medicaid and food stamps are relatively poor, less educated, and often fail to vote.

I will add a third point: Most Americans aren’t close followers of policy debates. Telling them how an election promise is likely to affect their future benefits simply doesn’t register for most people. Instead, there has be a clear demonstration of the policy change before it is made real to them. Take the example of Obamacare, which was famously unpopular before it went into effect. But once people experienced the benefits of Obamacare it went on to garner very strong public support. Furthermore, most people don’t mobilize in support of popular programs until it’s very obvious that they’re under imminent threat. Trump’s anti-Obamacare rhetoric during the 2016 campaign didn’t appear to hurt him, but his actual attempt to kill the program in 2017 helped Democrats win big in the 2018 midterms.

Which brings us to the health care earthquake that’s soon to hit — an earthquake that, based on my read of Mettler, is going to inflict significant political damage on the Republicans.

For those who haven’t been keeping up: The Affordable Care Act requires that health insurance companies offer the same policies to everyone, with no discrimination based on pre-existing conditions. It also provides significant subsidies to help people pay insurance premiums — specifically, limiting the amount families have to pay out of pocket as a percentage of their income — with the subsidies on a sliding scale based on income. These subsidies have an important secondary benefit: They encourage even healthy people to buy insurance, which improves the risk pool and therefore holds overall premiums down.

Mandatory disclaimer for liberals: Yes, it would be much simpler just to have single-payer healthcare, paid for with progressive taxes. But that wasn’t politically possible when Obamacare was created, and it still isn’t. Obamacare was more or less the best we could get.

As originally drafted, however, Obamacare was underpowered and underfinanced. Insurance was still hard for many Americans to afford, even with the subsidies. And there was an upper income limit for the subsidies: you still received substantial support as long as your income was less than four times the poverty line, but as soon as you crossed that line all support was cut off. This is the kind of “notch” everyone who studies tax and benefit policy is adamant that you want to avoid.

So in 2021 the Biden administration enhanced the subsidies. Out of pocket payments were reduced for everyone. And the “notch” was eliminated: maximum premium payments as a percentage of income were capped no matter how high one’s income was, although this limit wasn’t relevant for the truly affluent.

But the legislation providing these enhanced subsidies expires at the end of this month. And Republicans in Congress are adamantly opposed to maintaining them. Even Trump has pleaded with his party to agree to a temporary extension, but seems to be getting nowhere. Visceral GOP dislike for anything that helps ordinary Americans may be partly to blame. Moreover, bolstering the ACA would be an implicit admission by the Republicans that they have been wrong all along about health care.

So let’s think about the politics of what’s about to happen: Millions of Americans are about to see a sudden rise in health care costs — not a hypothetical future rise, but a sudden jump on January 1.

And who will be hit worst? Here are Charles Gaba’s estimates for Florida:

Almost all ACA enrollees will be paying more. However, the really huge premium increases will fall on older Floridians who are relatively well off — that is, those with incomes above the maximum allowable to receive subsidies. According to Gaba, these people are likely to see their insurance bills rising by more than $2500 a month — more than $30,000 a year! And these people, unlike many Medicaid or food stamp beneficiaries, have a high propensity to vote.

This ACA premium shock will hit as other forces are exacerbating the sense of crisis over affordability. Businesses are starting to fully pass onto consumers the cost of Trump’s tariffs. Electricity prices are soaring as data centers inflict the cost of their enormous power demands on consumers. In addition, Trump’s deportation policies are increasing the cost of food.

Trump may believe that affordability is a con job, but it isn’t. It’s going to hit him and his allies hard. And it couldn’t happen to a more deserving group of people.

MUSICAL CODA