In Pivot, President Rolls Out Proposals To Tackle Affordability

 

“President Trump surprised Sen. Elizabeth Warren of Massachusetts on Monday with a phone call after she criticized him during a speech on affordability. Only days earlier, he had pitched a cap on credit-card rates that sounded like a proposal from the Democratic senator's wish list.

 

"I told him that Congress can pass legislation to cap credit-card rates if he will actually fight for it," Warren said.

 

Until recently, Trump, a Republican has called Democrats' focus on affordability a hoax, but the issue has since taken on urgency in his administration. The president has announced many proposals aimed at gaining more leverage over the economy and the cost of living. He has done it by upsetting Wall Street supporters and pitching ideas more closely associated with liberal Democrats.

 

The president's proposals include banning large investors from buying single-family homes, and directing government-backed mortgage-finance companies Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds in an effort to lower rates for home buyers.

 

He has floated using tariff revenue to fund payments of at least $2,000 to most Americans. The president is also drawing up plans to dominate the Venezuelan oil industry, efforts he believes could lower oil prices, The Wall Street Journal reported. On Monday night, he posted on social media that he never wants "Americans to pay higher Electricity bills because of Data Centers" and that big tech companies building data centers "must 'pay their own way.'"

 

The president has touted the U.S. economy as strong, pointed to economic growth and a low unemployment rate and graded himself "A-plus-plus-plus-plus-plus" on the economy. But he has also expressed frustration at Americans' extended sour mood about the economy and fixation on high prices. A Fox News poll in mid-December showed the president with a 39% approval rating on the economy, in line with other surveys.

 

At times, he has blamed Federal Reserve Chair Jerome Powell for economic hurdles and has openly pressured Powell to enact steeper rate cuts. Federal prosecutors have launched a criminal investigation into Powell, a ploy, Powell said Sunday, to allow the president to gain control of the central bank and push through cuts.

 

Trump now appears focused on ideas to improve affordability. He said in a Detroit speech Tuesday that he would release details on an affordable-housing plan at the World Economic Forum in Davos, Switzerland, this month.

 

Trump also praised his handling of the economy during the speech. "We've only been there 11 months. Think of what we can do for the rest of it," he said.

 

The White House has pointed to average gasoline prices falling to about $2.80 a gallon, according to AAA, after remaining above $3 a gallon for much of the past four years. Mortgage rates have also eased in the past year.

 

Some of the measures Trump announced in recent weeks could modestly benefit consumers, if they go into effect. A 10% cap on credit-card rates could save U.S. households about $100 billion a year in interest payments, according to recent analysis from Vanderbilt University.

 

House Speaker Mike Johnson of Louisiana, a Republican, played down the prospects for legislation when he was asked about Congress passing a credit-card interest cap. "I wouldn't get too spun up about, you know, ideas that are out of the box that are proposed or suggested."

 

Trump "says often what he's thinking out loud," Johnson said.

 

Using tariff revenue to fund payments of at least $2,000 to most Americans could also boost the economy briefly, said Mark Zandi, chief economist at Moody's Analytics. And the Fannie and Freddie bond purchases could lower mortgage rates by 0.2 to 0.25 percentage point, said Robert Barbera, a Johns Hopkins University economist.

 

Translating Trump's economic proposals into meaningful, long-term policy will take time. Most legal experts said Congress would have to approve a credit-card rate cap, and Trump called on Congress to codify his ban on investors buying single-family homes.

 

Trump faces an uphill battle to give people a reprieve from prices ahead of the midterm elections in November. Economists said the new proposals are unlikely to have a big effect on prevailing economic conditions that have made consumers feel gloomy.

 

Inflation didn't surge because of Trump's tariffs the way some economists feared, but it has hovered above the Fed's 2% target, frustrating consumers looking for relief.

 

"Even though the rate of price increases has moderated, people are still very anxious about the higher cost of necessities," Zandi said.

 

That said, wages are still growing faster than prices, suggesting, on average, workers are staying ahead of the cost of living.

 

Prices are about 25% above where they were five years ago, and tariffs and other disruptions have caused certain items like coffee to rise markedly in the past year. Jobs have become harder to find in a sputtering labor market, buying a home is out of reach for many, and healthcare premiums are rising.

 

Taken together, Trump's proposals "don't add up to much, and the speed with which he can deliver makes it hard to imagine it could play a big role in the midterms," Barbera said.

 

White House officials see a fresh opportunity for Trump to show progress on the economy, even as he has directed much of his attention overseas.

 

"It's clear that his political team is telling him: 'You've got a problem with voters: the cost of coffee and beef and healthcare and housing, etc.' So this is affordability month," said Stephen Moore, who has advised Trump on economic policy in the past.

 

White House officials have noted that many of the tax benefits in Trump's tax-and-spending law will reach Americans' wallets this year, and they are touting what they expect to be record tax refunds for the filing season that starts this month.

 

"Will there be a household who finds that their paycheck goes further because of these things? The answer to that is yes," said Michael Strain, economist at the American Enterprise Institute. But, he cautioned, some policies might make it harder for working people. For instance, lower-income people could have to turn to payday lenders if the credit-card industry stops offering them cards because of a cap.

 

"On balance, these are not going to improve affordability but in some cases could actually reduce affordability," Strain said.” [1]

 

1. In Pivot, President Rolls Out Proposals To Tackle Affordability. Ensign, Rachel Louise; Thomas, Ken.  Wall Street Journal, Eastern edition; New York, N.Y.. 14 Jan 2026: A1.