A prescription for economic steroids before the midterms

I learned in Congress that a high-flying economy is no match for a sagging housing market. Since the pandemic, we’ve seen the largest increases in rents since we’ve been keeping records. Mortgage rates have leveled off but are still locking millions out of the American dream of homeownership. Skyrocketing inflation across insurance, labor, and supply costs are putting intense pressure on homeowners, landlords, and working American families in nearly every state.

When we say we have an inflation problem, what we really mean is that we have a housing cost problem. The relative importance of housing costs within the Consumer Price Index (CPI), which measures the change in prices for consumer goods and services, represents a 35% share of all items. The cost of shelter, including rent and mortgage payments, has increased for 57 consecutive months. To put it another way, if shelter were excluded from the CPI, overall inflation would have been at or below the Fed’s 2% target level in 16 of the last 20 months.

Here, again, changes to tax policy can power a transformation in housing costs, lowering bills for millions of families. Since 1986, the Low-Income Housing Tax Credit (LIHTC) has been a trusted mechanism for stimulating economic growth while building and preserving attainable, affordable homes. The LIHTC works by subsidizing development costs of low-income housing by allowing those that invest in qualified projects to take up to a 9% tax credit against the cost of construction. It gives decision-making to the states, incentivizes private capital and management, and does not rely on big bureaucracy. The enormity of this incentive has resulted in 4 million affordable homes for 9,280,000 families over the last 30 years.

Republicans and Democrats have put forward legislation to expand and strengthen the tax credit, which would boost housing supply at a critical moment. Again, this is overwhelmingly supported by both parties. A 12.5% increase to the allocation to each state’s Housing Credit ceiling, alongside a bevy of other enhancements, was also included in the aforementioned H.R. 7024. If Trump champions this change, it would result in approximately 200,000 additional affordable homes over the next decade than what would have otherwise been possible.

Realizing Trump’s economic promise

Looking ahead, the administration’s success will be measured by its ability to translate policy into pocketbook results for everyday Americans. The window of opportunity is clear but finite; while the proposed employment initiatives and tax reforms provide a framework, their success depends entirely on execution that impacts kitchen-table economics.

With a clear mandate for change and a comprehensive economic playbook, the Trump administration now faces its defining challenge: creating an economy that delivers tangible benefits across all segments of American society. Championing these two provisions would tell the American people that Congress and President Trump care about the real economy and the Americans who make it hum.