As Republicans head toward what looks like a perilous midterm election, affordability is on everyone’s lips. The Biden administration never convinced voters that it had brought food and housing costs under control. Some Republicans have tried to pretend the problem does not exist; others have acknowledged it without making meaningful progress.
Both Joe Biden and Donald Trump made choices that worsened the pressure, from expanding federal spending to deepening costly foreign commitments. Neither party has a durable solution. The Congressional Budget Office projects a $1.9 trillion deficit for fiscal year 2026, and debt held by the public now tops 101% of GDP. Spending and inflation are not accidents at the edge of mass democracy. They follow from its incentives, and nothing will change until the incentives do.
The affordability crisis has several causes, but much of the immediate pain comes from the cumulative rise in prices. Wages may rise and bank balances may grow, yet each dollar buys less. Inflation is a pernicious tax precisely because it is hidden. Normal taxes must be enacted and collected openly. No one votes directly for inflation, which instead erodes the value of money people have already earned and saved. It punishes careful savers while rewarding borrowers and speculators.
Deficit spending can fuel inflation when government expands demand faster than the economy can supply goods and services. Creating money makes it easier to distribute benefits today, but it can reduce the currency’s purchasing power tomorrow. Inflation also lightens the real burden of government debt by reducing the value of what was borrowed. The average person, however, rarely has early access to new money or the sophisticated financial instruments wealthy investors use to hedge against rising prices. He feels the loss at the grocery store.
The oldest move in politics is to offer people a material reward for their support. Every system does it, but democracy makes the exchange especially powerful because elections confer legitimacy. A politician rarely calls the arrangement a “bribe.” He routes the benefit through a program aimed at groups likely to reward him at the polls. The legal form gives the transaction respectability, but voters still understand the bargain.
Donald Trump recently dispensed with even that pretense. At the Republican midterm convention last week, he promised $5,000 to every adult citizen if Republicans retain the House and Senate. An independent estimate put the cost at more than $1.2 trillion, and Congress would have to approve it. Whether the payments ever materialize is not the point. The offer mocks the fiscal restraint conservatives claim to espouse. Conservative commentators objected, but Trump brushed them aside. He understands the incentives. He promised not to cut Social Security and Medicare because benefits win votes. In a democracy, giving voters something is the winning strategy, and Trump likes winning.
Warnings about democracy long predate modern America. Plato and Aristotle distrusted rule by the demos, and the American founders built a constitutional republic with layers of insulation against popular majorities. Their fear was simple: Once voters discover they can use the state to transfer other people’s money to themselves, restraint collapses. A republic may survive only if institutions impose limits that elections alone will not.
Is the $5,000 check good fiscal policy? Of course not. It’s a disaster. A transfer approaching $1.2 trillion would widen the deficit and almost certainly worsen inflation, especially in an economy already near capacity. Pandemic-era fiscal stimulus did not single-handedly cause the 2021-2022 inflation surge; supply shocks and monetary policy mattered too. But New York Federal Reserve research found that fiscal support contributed materially.
Is the check good politics? Yes. In a democracy, vote-buying is an optimal strategy, and anyone who refuses it risks losing to someone who will. Democrats have principles that let them hand out money and receive praise — and votes. Republicans profess principles that should forbid it. Sound economics grants no electoral advantage.
To be fair, giving 5000 dollars directly to people would probably benefit the public more than incremental funding of most public services. It is particularly brazen, though.
He also wants a $1.5 trillion defense budget so we can fight more wars for Israel