Why Your Energy and Housing Costs Keep Rising | TWE 166
Families are paying more because policy makes abundance harder to achieve.
Hello Friends,
Affordability continues to dominate the concerns of American families, and for good reason. As prices remain elevated, energy costs are squeezing household budgets, housing has become increasingly out of reach, and the value of every dollar continues to erode. But these problems didn’t appear out of nowhere; much of today’s affordability crisis is the result of years of bad policy.
In this episode of This Week’s Economy, we’ll examine why inflation remains a persistent burden, how housing shortages and overregulation continue driving up living costs, why tax and spending reforms matter for long-run affordability, and what the future of the Federal Reserve under Kevin Warsh could mean for restoring sound money and economic discipline.
Watch the full episode on YouTube, Apple Podcasts, or Spotify, and visit my website for more information about my work at Ginn Economic Consulting.
ECONOMIC HEALTH CHECK: A Man-Made Affordability Crisis
In the News:
A new Gallup poll shows that the high cost of living continues to top Americans’ list of the most important financial problems facing their families. Americans have good reason for concern. The latest report on consumer prices showed inflation rising at a faster-than-expected pace in April. Energy costs remain a major pressure point, with the national average price for gasoline reaching $4.515 per gallon on May 18. Sources: Gallup, BLS CPI Report, CNBC, AAA
What That Means For You:
Rising Prices Are Squeezing Families:
The latest Consumer Price Index report shows family budgets breaking under the weight of bad policy. Prices rose 3.8 percent over the last year in April, while monthly CPI increased 0.6 percent after rising 0.9 percent in March. Energy rose 3.8 percent in April and accounted for more than 40 percent of the monthly increase. Gasoline rose 5.4 percent in April and was up 28.4 percent over the year.
For many families, wages are not keeping up with the rising cost of necessities, leaving less room in household budgets for savings, investment, or financial security.
Understanding Why Fuel Prices Rise:
Some price spikes are caused by shocks. The latest energy surge clearly involves global factors. But persistent inflation is not an act of God; it is the result of too much money chasing too few goods and services, combined with years of loose monetary policy, excessive government spending, and supply-side policies.
If policymakers learn one lesson from today’s energy prices, it should be this: supply matters. When governments restrict production while subsidizing demand, prices rise. When policymakers regulate, delay, mandate, litigate, and discourage the ability to build, drill, refine, transport, insure, and compete, energy becomes more expensive.
Policy Solutions to Affordability Crisis:
Government spending remains the primary driver of higher debt, inflationary pressures, future tax increases, and growing fiscal instability. If lawmakers refuse to control spending growth, families will continue paying the price through higher living costs and weaker purchasing power. Families need lower burdens, honest prices, and more economic freedom.
The good news is that supply-side reforms can improve affordability over time. More energy production, more housing supply, greater healthcare competition, and stronger entrepreneurship will do far more to lower costs and improve living standards than price controls, tariffs, subsidies, or more government intervention.
Related Reading: I examine how bad policies contributed to today’s affordability crisis and what policymakers can do to reverse course.
FEDERAL POLICY: A Change in AI Executive Order
In the News:
President Trump recently decided to withdraw an executive order on AI testing requirements amid concerns that the policy could weaken America’s ability to compete with China in the global AI race. Some reports suggest the move followed discussions with leading AI industry executives. The decision leaves room for a broader debate about the future direction of U.S. AI policy. Sources: Politico and The Hill
What That Means For You:
Let American Innovation Flourish:
Some in Washington still understand that America succeeds by building, competing, innovating, and allowing entrepreneurs to move quickly. Others are drifting toward the same failed approach: fear first, bureaucracy second, progress last. Overly restrictive regulation risks slowing one of the most important technological advances of our time, while competitors like China continue to accelerate development.
AI is Already Helping US, Don’t Regulate These Benefits:
AI is already improving people’s lives in meaningful ways by helping doctors detect diseases earlier, helping researchers process information faster, helping workers become more productive, helping students learn, and expanding opportunities across industries. As NetChoice and others have highlighted, AI tools in healthcare could help detect cancer sooner, identify sepsis faster, and improve treatment outcomes. Delayed deployment can mean fewer breakthroughs, slower productivity growth, higher costs, and missed opportunities to improve or even save lives.
What Smart Policy Looks Like:
President Trump is right to recognize that bad AI policy could weaken America’s competitive position against China. The goal should not be to centrally manage innovation. It should be to preserve an environment where innovation can flourish while addressing legitimate harms. America became a global technology leader because it allowed builders, entrepreneurs, investors, and innovators to experiment and compete. That advantage should not be surrendered through fear-driven regulation.
Good AI policy should remain narrow, targeted, and harm-based. Policymakers should focus on addressing fraud, theft, cybercrime, national security threats, and clear abuses without creating sweeping bureaucratic barriers that choke off innovation before it develops.
Related Reading: Read my recent guide on AI and technology policy.
STATE POLICY: Tax Reform
In the News:
The latest income tax data shows more states are moving away from progressive income taxes and toward flatter, lower, and eventually zero income taxes. This shift matters because income taxes punish work, saving, investment, entrepreneurship, and success while giving politicians permanent access to your paycheck. At the same time, states including Florida, Iowa, Kansas, Montana, Nebraska, North Dakota, Pennsylvania, South Carolina, Texas, and Wyoming are actively debating ways to reduce or eliminate property taxes. New research also provides a framework that states can adapt to their own tax systems, constitutional structures, economic conditions, and political environments. Sources: Americans for Tax Reform and Ginn Economic Consulting
What That Means For You:
Spending Restraint Is the Foundation of Tax Reform:
Every serious tax reform conversation must begin with the part too many politicians ignore: spending restraint. If government spending grows faster than population growth plus inflation, the government is expanding faster than taxpayers can reasonably afford to support. Tax cuts or tax elimination without spending discipline simply lead to tax shifting. Politicians may cut one tax today, continue overspending, and then come back later with higher sales taxes, higher property taxes, new business taxes, or more debt to fill the gap. Sustainable tax relief requires sustainable spending.
The Race Toward Zero Income Taxes:
Income taxes are among the most economically harmful taxes because they directly reduce the rewards for productive activity. They discourage work, saving, investment, entrepreneurship, and upward mobility. This is why the long-run goal should be no income tax.
Flat taxes are better than progressive tax systems because they are simpler, more transparent, and less punitive at the margin. States that move toward lower, flatter taxes are often the same states that attract more people, businesses, investment, and economic opportunity. Lower rates are better than higher rates because they reduce the penalty on earning and investing.
Property Tax Reform Movement:
Property taxes are different from most other taxes because they tax ownership itself. Even after families fully pay off their homes, they must continue paying annual taxes simply to remain on their property. Failure to pay can ultimately lead to government seizure of that property.
As housing affordability worsens across the country, states are debating major reforms or even the full elimination of property taxes. States that successfully combine fiscal discipline with structural reform can improve affordability, strengthen economic competitiveness, and restore greater financial security for homeowners, renters, workers, and businesses alike.
Related Reading: My analysis of the Americans for Tax Reform data and a recent property tax reform case study report below.
BANKING: The Fed Under Warsh
In the News:
Kevin Warsh was recently sworn in as Chair of the Federal Reserve. This comes as the Fed’s balance sheet remains at a historically elevated level and markets continue to watch whether Washington will keep using monetary policy to paper over fiscal excess or finally restore discipline. Warsh has argued that the Fed drifted far beyond its core mandate of price stability, warned about the long-term consequences of quantitative easing, and criticized the central bank’s growing entanglement with fiscal policy. That is the correct diagnosis. Sources: Reuters and Hoover Institution
What That Means For You
Will Warsh Actually Reform the Fed?
The real test begins now. Will the Warsh Fed simply manage the same broken framework somewhat better? Or will it begin the difficult work of shrinking the Fed’s footprint, restoring sound money, and ending the central bank’s role as Washington’s fiscal shock absorber? For too long, the Federal Reserve has attempted to stabilize an unstable fiscal system by suppressing interest rates, expanding its balance sheet, and intervening heavily in financial markets. Those policies may temporarily ease pain in Washington, but they often create long-term distortions for families, businesses, savers, and investors.
Start with Reducing the Balance Sheet:
The Fed’s balance sheet is where meaningful reform must begin. The Fed held roughly $6.7 trillion in total assets as of May 20, 2026 — approximately 21 percent of GDP. A balance sheet this large distorts capital allocation by steering investment toward government debt, weakening price discovery, rewarding excessive leverage, punishing savers, and insulating Congress from the consequences of chronic overspending.
A healthier long-run framework would dramatically reduce the Fed’s footprint in financial markets. The benchmark would be limiting the Fed’s balance sheet to roughly 6 percent of GDP or less. At today’s GDP levels, that would imply a balance sheet closer to $1.9 trillion — requiring a reduction of nearly $4.8 trillion from current levels.
Restoring Price Stability:
Restoring sound money also requires rethinking inflation policy itself. The Fed’s 2 percent inflation target still guarantees a gradual erosion of purchasing power over time. A truly stable dollar should mean long-run price stability, not permanent monetary depreciation at a slower pace. Congress must also do its part. Inflation cannot be separated from runaway fiscal policy. Federal spending should grow no faster than population growth plus inflation to reduce pressure on both taxpayers and monetary policy.
Interest rates should reflect real market conditions, not continual central-bank intervention. Over time, the Fed should return to a far narrower lender-of-last-resort role, focused primarily on preserving monetary stability rather than constantly managing the broader economy.
Related Reading: See my recent post on what Warsh’s leadership could mean for the future of the Federal Reserve.
HOUSING: Build More Homes
In the News:
The U.S. House of Representatives and Senate are negotiating a new housing bill. The House recently stripped the Senate language targeting institutional investors in single-family homes from the 21st Century ROAD to Housing Act. The bill has now been sent back to the Senate, where its future remains unclear. Sources: The Hill and Congress.gov
What That Means For You:
Understanding the Housing Affordability Problem:
Housing affordability is hammering families across the country. First-time buyers face high mortgage rates, elevated home prices, and too little inventory. Renters are paying more each month while struggling to save for a down payment. Employers also face challenges hiring workers when people cannot afford to live near available jobs.
Changes to the House version of the 21st Century Road to Housing Act that remove the time limit on people with more housing to hold those houses are a good step forward over the Senate’s version. But the question remains, why is this a role for the government? It is not. Let the market work!
Blaming the Wrong Target:
Institutional investors are an easy political target. But many investors have scaled back their activity as higher interest rates, taxes, and insurance costs have made single-family rentals less financially attractive. The reality is, they are not the primary reason housing has become so unaffordable; the core problem is a shortage of supply.
For years, policymakers at every level of government have made housing harder and more expensive to build through restrictive zoning rules, density limits, slow permitting, costly fees, environmental review delays, inflationary policies that raise labor and material costs, higher interest rates that increase financing costs, and rising property taxes and insurance premiums that push up monthly payments. When supply is constrained for years while demand continues growing and prices rise, exactly what families are experiencing today.
What a Strong Housing Bill Needs:
The path to affordability is building more homes; thus, the housing bill should focus directly on expanding supply. This legislation includes some constructive ideas on financing, housing programs, and local flexibility that should be strengthened and advanced. But federal ownership restrictions would move policy in the wrong direction by discouraging investment instead of increasing supply.
A stronger housing bill would speed up permitting, reduce zoning barriers, lower regulatory uncertainty, and stop policies that artificially restrict development. Policymakers should focus on creating conditions that encourage more homebuilding, more private investment, and more housing choices for families.
Related Reading: I explain how policymakers can strengthen housing affordability through supply-side reforms here:
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God bless you, and let people prosper!
