Today's Policies Driving the Affordability Crisis | TWE 163
What the latest data reveals about rising prices — and what Americans are doing about it.
Hello Friends,
Everyone knows the economy is a top issue for voters. Housing affordability, gas prices, inflation, and rising everyday costs are shaping how Americans make decisions at the polls. Our leaders should be focused on policies that lower costs, expand opportunity, and make it easier for families and businesses to get ahead. But recent policies are unfortunately ignoring the root causes, instead adding complexity, raising costs, and weakening the incentives that drive growth.
In this episode of This Week’s Economy, we break down the latest data — from economic reports and migration trends to the Federal Reserve and energy prices— to show what’s really happening beneath the surface, and what it will take to build a more affordable and prosperous economy.
Watch the full episode on YouTube, Apple Podcast, or Spotify, and visit my website for more information about my work at Ginn Economic Consulting.
ECONOMIC HEALTH CHECK: GDP Report and Gas Prices
In the News:
The latest GDP report shows U.S. economic growth picked up in the first quarter, driven largely by business investment in artificial intelligence. But overall growth came in weaker than expected, weighed down by softer consumer spending. And research from the Federal Reserve Bank of New York points to a “K-shaped” economy — a pattern that isn’t new but remains concerning. Growth is increasingly concentrated in a narrow group, leaving the broader economy more vulnerable if conditions shift.
Meanwhile, fuel prices are rising again, with gas recently topping $4.50. This is the highest price since July 2022. Sources: BEA GDP Report, Axios, and CBS News
What That Means For You:
A K-Shaped Economy:
The K-shaped economy is real. Large firms are gaining market share, maintaining pricing power, and managing higher costs. Smaller businesses, by contrast, face tighter margins, higher financing costs, and greater hiring challenges.
At the same time, inflation continues to squeeze lower-income households. Policies that add uncertainty — especially tariffs — raise costs and complicate planning, hitting smaller firms hardest. Years of easy money fueled inflation and distorted incentives, while the sharp tightening that followed raised borrowing costs. Large firms adapted. Smaller firms absorbed the shock.
Fuel Prices Keep Rising:
Energy price spikes aren’t just acts of fate—they reflect geopolitical risks compounded by policy choices. War may trigger disruptions, but policy determines how painful they become.
When supply chokepoints affecting roughly 20% of global oil consumption are disrupted, prices rise everywhere. U.S. production helps, but it can’t fully shield us. The global market is still the global market, and right now it’s under strain.
Improving our Economy:
If we want an economy that works for more people, we need to take these signals seriously—and return to basic economics. Free-market capitalism remains the best path to broad-based prosperity, not protectionism, deficit spending, or monetary excess.
Fuel prices reflect global oil markets, refining capacity, distribution constraints, taxes, and inflation. The solution is abundance: more energy production, less government overspending, lower taxes, and fewer barriers to investment and growth.
Related Viewing: I discuss gas prices and recent economic policy on the Joe Pags Show.
FEDERAL POLICY: Our National Debt is Bigger Than the GDP???
In the News:
For the first time since World War II, America’s national debt has surpassed the size of its economy. Federal debt held by the public reached $31.27 trillion at the end of April, exceeding the U.S. GDP of $31.22 trillion over the past year. This marks a significant escalation in the nation’s fiscal burden. Source: CBS News
What That Means For You:
Debt is Not Free:
Politicians in both parties often act as if debt is “free money.” It isn’t. It’s deferred taxation, hidden inflation, and future instability wrapped in political convenience.
When government spending grows faster than the economy can support, it leads to higher taxes, rising debt, and persistent inflation. The result is fewer opportunities and less financial security for American families — many of whom are already feeling the strain of higher prices.
How Spending Fuels Inflation:
When the Federal Reserve buys Treasury debt and other assets, it expands its balance sheet, thereby increasing the money supply. Too much money chasing too few goods erodes purchasing power and pushes prices higher across the economy. While not the only driver of inflation, excessive government spending — combined with accommodative monetary policy — has played a key role in the pressures Americans face today.
The Path Forward:
The goal should be clear: a government that lives within its means and an economy that allows people to drive prosperity.
The national debt reflects broken incentives and a lack of fiscal discipline. Reversing course will require serious reform. That means adopting a sustainable spending rule — limiting growth to no more than population plus inflation. It means ending the use of deficits as political tools, reforming major entitlement programs, eliminating corporate welfare, and restoring a more rules-based approach to monetary policy.
Related Reading: Download my new guide on sustainable budgeting.
STATE POLICY: Americans Vote with Their Feet
In the News:
New data from IRS migration reports, the latest Tax Foundation analysis, the Fraser Institute’s economic freedom rankings, and the ALEC-Laffer State Economic Competitiveness Index all point to the same conclusion: people — and their income — are moving toward states with lower taxes, greater economic freedom, and more competitive policy environments. States like Texas, Florida, North Carolina, South Carolina, and Tennessee continue to gain residents and income, while states like California and New York remain among the largest losers. Sources: IRS, Tax Foundation, Fraser Institute, and ALEC
What That Means For You:
Migration Reflects Incentives:
This pattern is not random — it reflects incentives. And it has major implications for tax reform, spending restraint, and long-run state competitiveness.
Too many lawmakers in high-tax states dismiss out-migration as a weather story, a retirement trend, or a temporary post-pandemic shift. That’s wishful thinking. If policy didn’t matter, states wouldn’t be racing to cut rates, flatten tax codes, and compete more aggressively for people and capital. The results wouldn’t be this consistent—or this predictable.
People Respond to Policy:
Taxes aren’t the only factor driving migration. Housing costs, job opportunities, crime, school quality, and regulation all matter. But tax policy still matters, and ignoring it comes at a cost. The Tax Foundation finds a clear negative relationship between top marginal state income tax rates and net migration. That doesn’t explain every move, but it confirms that tax competitiveness remains a key part of the story.
Competitiveness Is a Policy Choice:
The lesson for policymakers is clear: build a more competitive institutional framework. That means lower, flatter taxes—and the spending restraint needed to sustain them. It means broader, simpler tax bases rather than carve-outs and complexity. It means reducing unnecessary regulation, making housing more attainable, and protecting work and entrepreneurship.
Related Reading: My analysis of the latest migration data showing Americans moving toward lower taxes and greater economic freedom.
BANKING: The Future of the Federal Reserve
In the News:
Federal Reserve Chair Jerome Powell said he plans to remain on the Federal Reserve’s Board of Governors after his term as chair ends in May, citing concerns about legal challenges to the Fed’s independence.
At the same time, Kevin Warsh recently appeared before the Senate Banking Committee as a nominee to return as a Member—and potentially serve as Chairman—of the Federal Reserve Board of Governors. Sources: Reuters, Wall Street Journal, Senate Banking Committee
What That Means For You
Powell’s Continued Role at the Fed
Jerome Powell remaining on the Board follows the law. While his influence would likely diminish after stepping down as chair, his continued presence could provide some institutional continuity during a leadership transition.
That said, his record is mixed. I’ve been critical of the Fed’s expansionary balance sheet under his leadership—just as I was during Ben Bernanke’s tenure following the Great Financial Crisis. These policies have long-term consequences for inflation, financial stability, and fiscal discipline.
Will Warsh Shrink the Fed?
Kevin Warsh’s potential return signals a different conversation about the Fed’s role. He has emphasized Fed independence, inflation responsibility, and the need for a smaller Fed footprint. That’s a healthier conversation than the usual fixation on whether the Fed will adjust interest rates by 25 basis points at the next meeting. The real issue is not short-term rate moves—it’s the institution's long-term structure and scope.
My Own North Star
I don’t believe America needs a central bank. A free society doesn’t require a committee of experts managing money, suppressing price signals, and backstopping fiscal excess.
But as long as the Fed exists, it should operate under strict rules—not broad discretion. That means a clear commitment to long-run price stability, ideally targeting 0 percent inflation over time, and a significantly smaller balance sheet—closer to its pre-2008 level of roughly 6 percent of GDP. Anything beyond that risks distorting credit markets, misallocating capital, and enabling Washington’s unsustainable fiscal path. The goal should be simple: restore sound money, reduce intervention, and let markets do the work.
Related Reading: See my recent post on Warsh’s Senate hearing and my recommendations for the Fed.
HEALTH: How to Empower Patients
In the News:
Earlier this year, Dustin Burrows called for the creation of the Texas House Select Committee on Health Care Affordability to examine the drivers of rising healthcare costs. The committee recently held a two-day public hearing, and other states are pursuing similar efforts through hearings and legislation. Sources: Houston Public Media and My Testimony
What That Means For You:
Empowering Patients — Not Bureaucracies:
The issue is straightforward: affordable care will not come from empowering more bureaucracies. It will come from empowering patients. We have more “coverage” than ever, but less affordability, less transparency, and less trust.
Texans don’t need another study to know the system is broken. They experience it every month — through rising premiums, higher deductibles, surprise bills, delayed care, shrinking physician independence, and wages squeezed by employer-sponsored coverage.
Coverage Is Not the Same as Care:
One of the biggest mistakes in health policy is treating coverage and care as if they are interchangeable. They’re not. A bigger insurance card doesn’t guarantee better access, lower prices, or stronger outcomes. In many cases, it does the opposite. When patients are disconnected from real prices, doctors are buried in compliance, and payment flows through layers of insurers and government programs, the system becomes more expensive — and less personal — at the same time.
One of the most overlooked drivers of this structure is the federal tax exclusion for employer-sponsored insurance. It pushed coverage into the workplace, hides the true cost of compensation, rewards more expensive plans, and weakens the direct relationship between patients and providers.
Fix the Structure — Not the Symptoms:
If Texas wants to lead, it should stop patching a broken system and start rebuilding it around patients. That means expanding direct primary care and doctor-patient contracting, reducing mandates that drive up premiums, pairing catastrophic coverage with patient-controlled health accounts, and removing barriers to entry so more providers can compete.
Transparency matters, but it’s not the cure. Real reform means restoring incentives that put patients at the center of care.
Related Reading: I share my proposal for the Empower Patients Initiative in a new piece.
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God bless you, and let people prosper!
