Affordability: Democrats' Best Chance and Biggest Blind Spot

Democrats believe that President Trump’s low approval ratings, combined with the issue of affordability, will be their ticket to a midterm victory. The problem is that being anti-Trump is not a governing strategy, and their framing of affordability is wrong. If they do not get that right, they will fail to deliver just as Trump has — and a 2026 victory is unlikely to survive the general election in 2028. 

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Their first mistake is failing to understand the cause and role of the unanticipated inflation of recent years. When the Federal Reserve grows the money supply faster than the economy produces goods and services — as they did between 2020 and 2022 — inflation is the result. Kevin Warsh made this point plainly in his recent congressional testimony. When inflation is unexpected, as this was to everyone but the monetarists among us, prices always rise faster than wages. That gap is what accounts for the spike in affordability pressure on American households. Democrats should understand this and shift responsibility for solving it to the Federal Reserve, where it belongs.

With respect to the longer-term, structural causes of affordability, they are also missing the mark. Their current policy response is more of the same: reduced tax rates and higher tax credits for lower-income earners, expanded healthcare subsidies, broader SNAP benefits and the like. None of this addresses the underlying constraints. Without doing so, any benefit from redistribution will be transitory at best.

So what is the solution? 

For most American families, three categories of spending dominate the household budget: housing, healthcare, and food. In all three, affordability is a serious and growing problem — but not for the same reasons, and the distinctions matter.

Housing and healthcare are structural supply failures. We have spent decades making it harder to build homes and train doctors. Costs in both sectors have risen persistently and well above the general rate of inflation because the supply of homes and medical care has not kept pace with demand. These are not cyclical problems. They are the product of accumulated regulatory choices, and they will not fix themselves.

Food is a different story, and a more complicated one. Over the long run, American agriculture has been a remarkable success — food has become progressively cheaper relative to wages for more than a century. The 2020 to 2023 price spike was real and painful, but it was driven primarily by excess money creation by the Federal Reserve, not by structural supply failure. Although the resultant inflation raised prices across the economy, food — a daily necessity — was among the first places households felt it. That is a monetary policy problem, addressed in our piece on restoring price stability.

There is a supply-side case for food reform but it is narrower: it is about building resilience against future shocks, closing labor market gaps, and reducing unnecessary regulatory friction. Not correcting a crisis that does not exist.

In all three sectors, however, the instinct of politicians has been to misread cost pressures and reach for the wrong solutions, most often creating more subsidies, more spending, and more redistribution. None of that adds a single home, trains a single additional doctor, or plants a single additional acre. The debate needs to shift — from who to blame to what is actually constraining supply, and what it would take to remove those constraints.

Housing: A System Built to Exclude

Before we talk about what to do, it helps to understand a principle element of how we got here: it is called zoning. The story of American zoning is not a neutral history of planning and order. It is a history of exclusion — and the mechanisms invented to achieve it are still very much with us.

It starts in Modesto, California, in 1885. City leaders enacted what historians widely regard as America’s first true zoning ordinance — an ordinance restricting where laundries could operate. The law did not mention race. It did not have to. Chinese immigrants had built laundry businesses serving Gold Rush-era prospectors and, as they moved from the outskirts into white neighborhoods, local officials reached for a new legal tool. By confining laundries to an area already known as Chinatown, Modesto established a template that would prove remarkably durable: mask the language of exclusion in the arid prose of land-use law.

As Yoni Applebaum documents in Stuck: How the Privileged and the Propertied Broke the Engine of American Opportunity (2025), cities quickly grasped the power of this approach. Courts that refused to uphold outright racial bans were entirely willing to accept neutral-sounding rules about what kinds of buildings could go where. You could ban entire categories of business — laundries, dance halls, boarding houses — without saying “Chinese” or “Black.”

In New York, Progressive Era reformers took a different path but produced a similar result. The Tenement House Acts of 1867, 1879, and 1901 were sincerely aimed at improving the nightmarish conditions in immigrant neighborhoods — dark, airless buildings crowded with families who had no other options. The 1901 law banned further construction of cramped “dumbbell” tenements and mandated courtyards, indoor plumbing, and outward-facing windows. The intentions were humane. The effect was also to make dense, affordable housing progressively more expensive and legally complex to build — raising standards in ways that reduced supply for those who could least afford a reduction.

In 1916, Berkeley became the first city in America to enact single-family-only zoning. Developer Duncan McDuffie championed the ordinance as protection against the “invasion of their district by flats, apartment houses and stores.” Subsequent zoning petitions in Berkeley targeted Chinese and Japanese laundries and explicitly blocked a Black-owned dance hall from locating on a prominent corner. California Real Estate magazine celebrated the ordinance as a tool that would keep neighborhoods free of “Negroes and Asiatics.” The boosters were not subtle about it.

After the Supreme Court struck down explicit racial zoning in 1917, single-family zoning spread rapidly as the preferred substitute. The Supreme Court upheld its constitutionality in 1926, and by mid-century it had become the default residential land-use rule across the country. The language had cleaned up. The outcome had not: neighborhoods reserved for those who could afford a detached single-family home, with everyone else locked out.

This history matters because the mechanisms are still operating. Today, roughly 75 percent of residential land in major U.S. cities is zoned exclusively for single-family detached homes. Duplexes, townhomes, and small apartment buildings are illegal by default across much of metropolitan America. The tool invented to exclude minorities now excludes the middle class.

Zoning, of course, is not the only thing that has contributed to the reduction of housing supply over the last several decades. On top of this foundation, we have accumulated an overwhelming number of regulations and requirements that cumulatively make building more expensive, push builders toward larger homes to generate a reasonable return, or make building simply not worth doing. These include minimum lot sizes, setbacks, parking minimums, idiosyncratic requirements of local municipalities, increasingly complicated building codes, prevailing wage requirements, and prohibitions on manufactured housing.

Add to that the damage done by policies that distort the existing supply. Rent control reduces the incentive to maintain and invest in rental housing, shrinking effective supply over time. Restrictive covenants — private agreements embedded in deeds — have for decades prevented higher-density development even where zoning would otherwise permit it. Together, these layers of restriction have made American housing progressively harder and more expensive to build, maintain, and expand.

The numbers tell the story. In the mid-1970s, the U.S. built roughly nine housing units per 1,000 residents each year. By the 2010s, that number had fallen below four — the lowest on record. Freddie Mac estimates a national shortfall of approximately 3.7 million homes. Home prices have risen roughly twice as fast as median incomes over the past decade.

The shortage of smaller, affordable homes is especially stark. A Congressional Research Service analysis found that construction of single-family homes under 1,400 square feet fell from more than 400,000 units — over 35 percent of new construction — in 1976 to roughly 65,000, or about seven percent, in 2020. That is not a shift in consumer preference. It is what happens when rules and fixed costs push builders toward larger, higher-margin projects. At the same time, the number of residential builders fell by significantly between 2007 and 2012 and has never fully recovered.

What needs to change is clear, and several states are already demonstrating it.

In 2020, Minneapolis became the first large American city to eliminate single-family zoning through its 2040 Plan, allowing triplexes on any residential lot. A peer-reviewed study published in 2025 found that home prices grew 16 to 34 percent more slowly, and rents 17 to 34 percent more slowly, than a comparable city that did not reform. That is real money in real households.

California went further. In 2021, Governor Newsom signed Senate Bill 9, effectively ending single-family-only zoning across the state’s largest state. The law allows property owners to split lots and build duplexes by right — without discretionary review or hearings. UC Berkeley’s Terner Center estimated it could enable approximately 700,000 additional units.

Massachusetts has taken a different but equally direct approach. The MBTA Communities law requires municipalities served by public transit to zone at least one district for multifamily housing as of right. It sets a floor under local obstruction — the same obstruction that has driven Massachusetts home prices to among the highest in the nation. Similarly, Executive Order 623 requires the identification of vacant or underutilized state land that would be suitable for multi-unit residential housing. Related legislation limits the ability of local communities to prevent their conversion. 

My own liberal town of Wellesley is currently pushing back on a proposed multiunit development resulting from Order 623. Although we have all kinds of reasons from the environmental impact to traffic congestion, at the end of the day it is NIMBYism at its finest. 

The lesson from all three of these efforts: reform is not theoretical. It is happening, and it is working. The question is whether the political will exists to do it faster and at greater scale.

Healthcare: Scarcity by Design

The U.S. has 2.7 practicing physicians per 1,000 people against an OECD average of 3.7. We have 2.8 hospital beds per 1,000 versus 4.3 across peer nations. Japan has 12.6 beds per 1,000. France has 5.7. When a system runs this close to the margin, bottlenecks become permanent — and costs follow.

The physician shortage is not caused by a lack of qualified applicants. U.S. medical school enrollment now exceeds 100,000 students annually. The constraint is residency positions — capped by Medicare hospital limits set in the Balanced Budget Act of 1997 and tied to 1996 training levels. Congress has added slots at the margin, but workforce projections still show a national physician shortfall of between 13,500 and 86,000 within the next decade.

Supply and demand operate in medicine as surely as anywhere else. Rural areas and underserved communities with fewer physicians pay substantially more in signing bonuses, base salaries, and loan repayment incentives to attract doctors. Metro areas with high physician concentrations — Boston, Washington, D.C., Baltimore — show lower adjusted compensation precisely because competition among physicians is greater. Doctors in the U.S. are not the wealthiest people in every neighborhood. They are expensive in part because there are not enough of them.

The fix is direct: lift or eliminate the Medicare Graduate Medical Education cap, fund a multi-year expansion of residency positions with emphasis on primary care, psychiatry, and rural medicine, and streamline licensing for internationally trained physicians who meet U.S. standards.

Scope-of-practice rules create a separate bottleneck. Research links restrictive requirements — such as mandatory physician oversight for nurse practitioners — to slower workforce growth and reduced patient access. The principle should be simple: allow clinicians to practice at the top of their license where the evidence supports it.

Telehealth is a genuine supply expander, but we have not finished the job. 42 states, the District of Columbia, and Guam have now joined the Interstate Medical Licensure Compact, which expedites the process of obtaining multiple state licenses. But it remains an expedited application process, not a single national license. A physician licensed in Massachusetts still cannot simply treat a patient in Florida by video without holding a separate Florida license. Full federal portability — a single national license enabling telehealth across all state lines — would expand access immediately, with no new training, no new buildings, and no new spending required.

We also underinvest in keeping people out of the system in the first place. The U.S. has allowed preventive care spending to fall from 3.7 percent to 2.9 percent of total health spending since 2000, while peer nations have held steady. A study in The Lancet Public Health estimated that more than 27 percent of all U.S. healthcare spending — roughly $730 billion in 2016 — was attributable to preventable conditions. Prevention is not a cure-all: some screening programs cost more than they save. But treating a chronic condition in an emergency room is the most expensive care we provide. The selective expansion of evidence-based prevention programs — smoking cessation, hypertension screening, diabetes management — reduces that cost without expanding capacity.

On drug approvals, the FDA already operates four expedited pathways for serious conditions, and 66 percent of new therapies approved in 2024 used at least one of them. The challenge is less speed of initial approval than accountability for follow-up. A USC Schaeffer Center white paper published in September 2025 recommends using artificial intelligence to accelerate drug reviews and incorporating real-world evidence into confirmatory trials — both of which could shorten the path from approval to confident clinical use.

Then there is the complexity tax. A 2014 Health Affairs study found that hospital administration alone consumes 25.3 percent of total U.S. hospital expenditures — more than twice the rate of Canada or Scotland. A broader 2020 analysis published in Annals of Internal Medicine found that administrative costs across all insurers and providers amounted to 34.2 percent of total national health expenditures — versus 17 percent in Canada. We run 900 private payers and thousands of health plans, each with its own billing rules, documentation requirements, and payment rates. Standardizing transactions across payers would reduce administrative labor that adds cost without improving care.

Food: Two Things at Once

Food is the most complicated of the three sectors. 

The long-term trend is a genuine American success story. In 1901, the average household spent 42.5 percent of its budget on food. By 1960 that had fallen to about 17 percent of disposable income. By 2000, to roughly 10 percent. In 2024, Americans spent approximately 10.4 percent of disposable income on food — among the lowest shares in U.S. history, and among the lowest of any nation on earth. Agricultural technology, supply chain efficiency, and global trade have made food progressively cheaper relative to wages for more than a century. That is a fact worth stating.

Now for the second thing.

Between 2020 and 2023, food prices rose sharply. Food-at-home prices jumped 11.4 percent in 2022 alone — the highest rate since 1979. That spike did not reverse the long-term trend, but it was real and it was painful — particularly for lower-income households, who have the least cushion when prices move suddenly. The USDA Economic Research Service found that households in the lowest income quintile were spending 32.6 percent of after-tax income on food in 2023, at the height of the spike.

What caused it? The answer matters. As discussed in our piece on Federal Reserve oversight, inflation is not caused by corporate greed, supply chain disruptions, or the pricing decisions of individual companies. It is caused by excess money creation. Between 2020 and 2022, the Federal Reserve expanded the M2 money supply by approximately 40 percent while real GDP grew by only five percent. Prices rose because too much money was chasing too few goods — and food, as a daily necessity, was among the first places households felt it.

Politicians, as they reliably do, looked for someone to blame. Kamala Harris blamed “price gougers.” Donald Trump blamed Biden administration spending. Neither explanation was accurate, and neither pointed toward a solution. The misdiagnosis of inflation as a corporate behavior problem — rather than a monetary one — leads directly to the wrong remedies: price controls, windfall taxes, regulatory investigations. None of that adds a single unit of supply. It is precisely the kind of misdirected debate our piece on Federal Reserve reform is designed to correct.

The supply-side case for food reform is real, but it is better framed as resilience than crisis. The system showed that it is fragile under stress. A disease outbreak, an energy shock, a labor disruption, or another bout of monetary excess can translate quickly into price spikes that hit lower-income families hardest. The goal of supply-side reform is to make the system more resistant to those shocks — not to correct a decades-long failure, because no such failure exists.

The most direct vulnerability is agricultural labor. Roughly 70 percent of hired farm laborers are foreign-born, with approximately 40 percent lacking work authorization — a share that has remained stubbornly high for decades because the legal pathway is too narrow. The H-2A temporary agricultural worker program covers seasonal work but excludes year-round operations entirely: dairy farms, livestock operations, and greenhouse agriculture have no legal avenue to bring in foreign workers, even when domestic labor is unavailable.

The consequences are already visible. Between March and July 2025, the agricultural labor pool lost an estimated 155,000 workers due to immigration enforcement. The Farm Workforce Modernization Act — passed by the House twice in various forms with bipartisan support — would extend H-2A eligibility to year-round operations and streamline the application process. The Senate has not acted. That inaction is a risk to supply resilience, and to food prices the next time the system is stressed.

Beyond labor, the supply chain carries unnecessary friction: slow permitting for processing facilities and cold storage, tariffs and quotas that raise input costs, and transportation bottlenecks between farm and table. Reducing regulatory barriers to agricultural innovation — precision fermentation, vertical farming, improved biosecurity — builds the margin of safety that makes temporary shocks less painful for the families who can least afford them.

The Common Thread

Housing and healthcare are structural supply failures, decades in the making. These problems will not resolve on their own. They require deliberate reform: removing the many impediments to growth.

Food is different. It is a long-term American success story that hit a sharp, painful speed bump. The supply-side case for food reform is about resilience and building the margin of safety that keeps a temporary shock from becoming a lasting burden.

What unites all three is the political failure to diagnose the problem correctly. Politicians reach for scapegoats — price gougers, greedy corporations, the other party — because scapegoats are easier than solutions. Scapegoats do not require anyone to confront the zoning board, lift the residency cap, or extend a visa program that farmers have needed for decades. Solutions do.

The goal here is not subsidies or more spending. It is to make it easier and faster to build homes, train doctors, and grow food — so that output rises, prices face real competitive pressure, and American households keep more of what they earn. That is a pro-growth agenda. And unlike the scapegoating it replaces, it might actually work.