Why Republicans Lose When They Talk About Affordability
And Why Trump Must Shift the Frame to Cost of Living Growth Rates
by Ed Butowsky
Republicans often discuss affordability, a term that rarely resonates with the public, as most do not feel that life is becoming more affordable. Instead, focusing on the rate at which living costs increase could be more effective, especially when considering the impact of policies under the Trump administration that have successfully slowed these trends.
1. How the Boskin Commission Altered CPI
In 1996, the Boskin Commission aimed to modernize the methodology of calculating the Consumer Price Index (CPI), leading to significant changes:
- Substitution: The assumption that consumers will switch to cheaper alternatives when prices rise, which reduces perceived inflation but degrades lifestyle quality.
- Hedonic Adjustments: Adjustments for quality improvements that do not necessarily correlate with the ability to afford basic needs.
- Geometric Weighting: The underweighting of price increases in volatile items, pushing CPI below real family experiences.
2. The Result
The reconfigured CPI became more of a political tool than an actual measure of cost of living, affecting federal spending on Social Security and other areas. This has led to three key outcomes:
- Real prices rise faster than those reported by CPI.
- Wage growth appears more favorable when compared to the CPI.
- Politicians can claim victory over inflation, despite ongoing struggles for many families.
3. CPI is Not the Cost of Living
CPI, cost of living, and affordability are distinct concepts that have been improperly conflated. Promising reduced prices while costs for housing, healthcare, and other essentials continue to rise creates a credibility gap. The more effective message acknowledges that while costs will always rise, the rate of increase can be managed effectively through strong policy.
4. The Strategic Frame Trump Should Use
Trump’s administration saw a slowdown in the growth rates of living costs due to changes in energy pricing, regulatory fees, tax rates, and supply chain operations. Moving forward, Trump should focus on controlling these growth rates, rather than promising outright price reductions. This approach is honest, economically sound, and aligns with the actual experiences of families, making it a stronger and more relatable message.
Conclusion
Instead of focusing on CPI, which has been distorted by past adjustments, Republicans should highlight their success in managing the rate at which living costs increase. This shift in messaging can better align with the lived experiences of American households, offering a more tangible and realistic perspective on economic management.
