President Donald Trump has introduced several economic proposals aimed at addressing consumer affordability, following recent public opinion indicating pessimism regarding his economic management and the Republican Party's performance in recent off-year elections. Trump had previously characterized affordability concerns as a "new word" and a "con job" by Democrats earlier in his term.
Tariff Revenue Rebate Proposal
Trump is again proposing a "subsidy" for most Americans, valued at $2,000 (£1,500). This payment is designed to function as a rebate for federal revenue generated by tariffs on foreign imports. The remaining tariff revenue, he has stated, would be allocated to reducing the federal budget deficit.
Economists have commented on the financial feasibility and potential economic impact of this proposal. Erica York, vice-president of tax policy at the non-partisan Tax Foundation, indicated that if a $100,000 annual income cut-off were applied, the minimum cost would be approximately $300 billion. This cost, according to York, would exceed existing tariff revenue and necessitate deficit financing. Furthermore, York suggested that such tariff refunds could potentially increase prices by injecting more money into the American economy, drawing parallels to the dynamics observed with Covid-era stimulus payments. She stated, "It would give large sums of money to households who are more likely to consume that than save it. So we would have more dollars chasing goods in the economy."
On a recent Sunday, Treasury Secretary Scott Bessent addressed the possibility of these payments, stating that revenue gains from tariffs would be reflected in lower tax rates for Americans next year under the provisions of Trump's 2025 "Big, Beautiful Bill" spending package, which Congress passed in July.
Mortgage and Healthcare Proposals
Another proposal from President Trump involves promoting 50-year mortgages as an alternative to the standard 30-year mortgages for home purchases. This extended payment schedule is presented as a measure to facilitate home ownership. However, some members of his own party have expressed reservations. Republican Congresswoman Marjorie Taylor Greene of Georgia stated on X, "I don't like 50-year mortgages as the solution to the housing affordability crisis. It will ultimately reward banks, mortgage lenders and home builders while people pay far more in interest over time and die before they ever pay off their home." This mortgage idea was reportedly introduced without prior consultation with senior White House advisers.
Trump has also suggested converting government health insurance subsidies, scheduled to expire at the end of the year, into direct cash payments for consumers. During a Fox News interview, the president indicated this would enable American consumers to act as "entrepreneurs" and "negotiate their own insurance." These proposals would likely require congressional implementation.
Additional Economic Actions and Public Perception
Other, more limited proposals from Trump include ordering a federal investigation into beef prices and seeking an agreement with pharmaceutical manufacturers to reduce the price of obesity drugs for uninsured buyers. Ms. York described the current approach as "throwing all sorts of ideas out there to test them to see if they sound good."
Exit polls from last week's elections showed that the economy was a primary concern for American voters. Opinion surveys have also indicated public dissatisfaction with Trump's handling of the economy and perceptions regarding his ability to fulfill campaign pledges concerning consumer costs.
President Trump has consistently stated that prices are decreasing, citing examples such as eggs and dairy products. However, costs for other goods, including beef, coffee, and electricity, have reportedly risen. He has noted that the price of a Thanksgiving meal at Walmart was less than the previous year. The retail chain's dinner package for the current season contained fewer items and a smaller turkey. Concurrently, his administration has pursued legal action to end food aid during a government shutdown and has highlighted multi-billion-dollar renovations to the White House.
During the initial years of the Biden administration, the White House maintained that the economy was strong despite rising post-Covid consumer costs. The administration frequently referred to economic indicators and data, while public sentiment regarding the economy remained negative. Inflation under Trump reached 3%, which is lower than the 9.1% peak observed under the Biden administration. Trump previously emphasized this difference in public sentiment versus official economic data during his 2024 presidential campaign. Republicans are currently navigating similar circumstances as they prepare for upcoming elections.