US Moving in Right Direction on Affordability Amid Trump’s Plans: Panel

Affordability. It's the big buzzword right now. Is the country moving in the right direction on it? President Trump is making a big push for it. Our panel is going to help us navigate this complex and vital topic. Please welcome Paul Mueller, a senior research fellow at the American Institute for Economic Research, and Michael Bustler, an economist and public policy analyst, also a professor of finance at Stockton University. Thank you both for being here. Paul, let's start with you. Trump signed an order today to drop reciprocal tariffs on beef, coffee, tropical fruits, and other agricultural products across the board. The order said this is in part because of the quote current domestic demand for certain products and current domestic capacity to produce certain products. Your thoughts on this pivot and the impact tariffs have had on the economy so far? >> Well, I think uh President Trump is recognizing that the tariffs have indeed raised costs for a lot of people, for a lot of products they consume every day. And what we see going on in the economy is we're seeing a divide where the economy is growing like crazy gang busters when it comes to energy and AI and big companies. The stock market is on a tear. But for most people who are going to Starbucks or going to the grocery store, they have not seen as much of the price declines that President Trump had promised because these tariffs have have raised costs. It's a big tax increase. And I think President Trump is recognizing that he needs to to pivot here to lower the grocery store costs for ordinary Americans. That's where a lot of I think the unrest in the economy and concern and pessimism is coming from. >> Thanks Paul and Michael please feel free to respond and share your thoughts on this as well. >> So the overall effect of tariffs on the consumer price index has been virtually negligible. The inflation rate today is about the same as it was when President Trump uh came into office. Now, it is true some products have seen some increases in price and some of those food products and Trump is working uh to get those uh costs down. Overall, the inflation rate is likely to fall. We didn't get a um CPI number for October because the government was uh shut down. Um but the November num number is likely to show that the consumer price index is falling mostly because energy which accounts for about 7% of the CPI directly and almost 30% indirectly. Uh energy prices are are falling. I don't know if you bought gasoline uh lately. When I was d uh driving home today, I saw gasoline for $2.85 a gallon. Oil is down to about $60 a a barrel. And President Trump says um based on his drill baby drill policy and a commitment from OPEC to increase output, he expects uh oil prices to be down under $55 a barrel by the end of the year and perhaps as low as $50. That'll translate into gasoline under$ 250 a gallon. And while there may be some inflationary pressures from some products because of the uh tariffs, it will be more than offset the Trump pres Trump administration feels by declining energy prices. Trump feels that he's going to get the CPI down close to 2% um by the uh end of this uh year. So the things that are uh a problem he's going to try to work on specifically, but overall the trend for the consumer price index is down. Professor Bustler, that's exactly right and very interesting. And I had a chance to look under the hood at that that headline inflation number and you you surprisingly you don't really see those price increases where you would expect them. Imported goods and toys and clothes and stuff like that. A lot to talk about here. Paul, what's the big picture here? Has Trump made things more affordable within the nine months he's been in office? >> I think it's trending in the right direction. So, I don't disagree with the point that was just made. So, CPI is back under control. We're not seeing high levels of inflation that we saw under the Biden administration. Uh, however, the the real question, you know, that an economist would ask is, well, what's the the alternative case, right? What would inflation have done uh without the tariffs? And again, I think even though there's this general trajectory that is going well and many of Trump's policies are progrowth, tariffs have always been the odd man out in terms of slowing growth. And I think, you know, energy prices going down benefit different people and different sectors of the economy differently. So again, as I mentioned, u the AI sector is going gang busters and that's good and we should be pro that. Um, but they're one of the biggest consumers of energy. Now, energy prices do go to consumers more broadly, but I think again that President Trump is recognizing that there are a few particular pain points that people are feeling. Again, coffee, it's not necessarily a big part of the ordinary person's budget, but it's something that a lot of people purchase on a pretty regular basis. And so, they feel the, you know, 20, 30, 50% increase in prices there. So again, I think what President Trump is navigating is the progrowth policies that I think are keeping the economy in a generally healthy place, but also recognizing that there are some very specific uh pain points for certain groups of people or very obvious products that they use frequently where the the price increases have been more apparent. >> Such a good point, Paul. And Americans need relief now. And maybe some of President Trump's policies and the Republicans have had an impact. Maybe it takes a little time for those things to really set in. Now, Michael, has President Trump's signature big beautiful bill helped to ease the economic burden on families? >> Well, it does take a little bit of time. Um uh and of course taxes uh tax rates remain low and that uh helps um everyone. A couple of things that we we we really have to look at. Health care costs are ridiculously uh high and something has to be done about that. uh the the government was shut down because um one side wanted the uh healthc care subsidies which were passed in 2021 for four years and it's set to expire at the end of this year. One of those uh extended and that turns out to be hundreds of billions a year. I think was 1.5 trillion over a 10-year uh period. Um while um everybody or the Democrats at least are saying that look we we have to stop this um if we don't subsidize this health care costs are going to go up for uh tens of millions of people and that's true. On the other hand, what about the hundred millions of people who pay taxes and have to cover this? They're already covering roughly 80% of the Obamacare premiums and uh now they're looking to cover more which is a result of what was passed in 2021. We need to fix the whole health care system. Obamacare promised us lower premiums did not deliver. Increases in the quality doesn't appear to deliver there and you'll be able to maintain your doctor patient relationship that has deteriorated. So, we need to look not just at a short uh stop gap here to worry about um premiums going up this year. We need to take a look at the whole system and try to get this health care system down. Insurance companies have made exorbitant profits as a result of this Obamacare. President Trump wants to try to change that and get consumers to have more control over their their money. And when people have control over their money, they watch it a little more closely. If you have insurance and uh the doctor prescribes a medication, you figure, I don't care what it costs, the insurance company's going to pay for it. But if there's more direct involvement from consumers, they're going to question whether do I really need all these medications? Are there other uh substitutes that uh could be just as um beneficial and perhaps at a lower price? So healthcare need to look at. And the other thing that we need to look at is h housing costs and they're starting to take a look at that too. >> I follow exactly what you're saying Michael and when you we've had a data lapse of course due to the shutdown but prior to that you actually see that services were bumping up that headline inflation number whereas the goods not quite as much and we know energy and food are volatile. So there's all these variables but Paul to you. Will Trump's proposed alternative to Obamacare dubbed Trump Care be less expensive? It'd be hard not to be less expensive. As we was just pointing out, the what the Democrats don't want to talk about is, you know, they talk about premiums rising for people and they just ignore why is it so expensive, right? When and it's because it's a system that's been heavily subsidized for over a decade now. And you see this in other industries like higher education where you have significant government subsidies that boost demand and it really just drives up prices at the end. And so health care is a system that has seen just dramatic growth in spending at the federal level, at the state level. Uh there's a lack of incentives. There's a lack of transparency. The whole system is a mess. It's not easy to fix. Uh but I'm guessing we can do better than we're doing now. We kind of need to do better than we're doing now because our current system is unsustainable. It's wasteful and it just piles on to the significant national debt problems that uh we're still dealing with. And Michael, it seems like you would like to respond to Paul. And also, President Trump says that using Trump Care, people can go out and negotiate their own insurance. I mean, how does that work? And will it bring down health care costs for the average American? >> So, we haven't seen the specifics of Trump Care, so it's a little difficult to to tell. Recall during Trump's first term, he actually had this problem fixed. He came up with a a new system that would have reduced uh cost. The House of Representatives passed it. The Senate was very evenly split. John McCain was in the hospital. They brought him out of the hospital to vote on this. That would have been the 51st, the 50th vote, rather, to take it over the top. And then he voted no. So, we went right back to the drawing board and stayed with Obamacare. And since then costs have continued to go up significantly and people now are not um able to afford uh the care that they really need. Look, the overall goal of the system is to get the highest quality health care at the most reasonable price and try to cover as much of the population as possible. Prior to Obamacare, about 90% of the population had health insurance. They were generally happy with it. They didn't like the cost of it, but they were generally happy with it. After Obamacare, only 91% of the population is covered by uh health insurance. So, it didn't help that many people and it ended up hurting a lot. We need to fix the whole system. >> Fascinating conversation on this topic that literally affects everyone. Looks like we um we might just have a quick comment from you, Paul, and then we'll wrap. >> I would just add briefly that that to control costs, we really to focus and decentralize cost savings. We don't need the government to be setting premiums or prices. If they can restructure the system so that consumers can see the prices and make their decisions, that will discipline costs. That is how we're going to fix the system in in the end. >> Noted. Paul Mueller and Michael Bustler, thank you both so much for joining us. >> Thank you. >> Pleasure.