When Trump was running for a second term, he pilloried the Democrats for not bringing down costs and helping working families. Now Trump is the incumbent. Try as he will, he can’t easily disassociate himself, or his party, from a costly K-shaped economy. Even after his reversal on beef and other foodstuff tariffs, most of his levies remain in place, and millions of Americans are facing a year-end leap in the cost of health insurance. None of the schemes he has recently floated are adequate to address the affordability challenge, and his health-care proposal could well make things a lot worse.
Trump got his fifty-year-mortgage idea from the MAGA loyalist Bill Pulte, the director of the Federal Housing Finance Agency, who reportedly pitched it as a way to offer home buyers lower monthly payments. But Pulte seems to have neglected to tell the President a couple of pertinent facts. Since mortgage holders pay off most of the interest on a loan before they start eating into the principal in a meaningful way, it could take someone who took out a fifty-year mortgage decades to build up much equity. And, because of the longer duration of the loan, they would carry higher interest rates than shorter-term loans. Analysts at UBS Securities calculated that, under Trump’s scheme, a typical borrower with a mortgage of four hundred and twenty thousand dollars would save a hundred and nineteen dollars a month, but they would make payments for an extra twenty years and end up paying twice as much interest.
After widespread blowback to the idea, Trump’s enthusiasm for it appeared to wane, and Politico reported that White House officials were furious with Pulte for selling the President “a bill of goods.” Pulte, too, seemed to pull back. He said the Administration was considering another option, “portable mortgages” that would allow homeowners to transfer their loan for one property to another. The idea here would be to break the current logjam in which many people are reluctant to move because they’d have to take out a new mortgage at a higher rate. But Pulte provided no details about how the loan transfers would work, or whether banks would even agree to them.
Sending direct payments to households is something Trump did twice in his first term, during the COVID-19 pandemic. But reviving this idea in the form of tariff dividends is another problematic idea. For one thing, the tariffs don’t generate nearly enough revenue to send two-thousand-dollar checks. The Committee for a Responsible Federal Budget reckons the proposal would cost six hundred billion dollars. So far, Trump’s levies have brought in only about a hundred billion dollars. Given this shortfall, the payments would have to be financed by additional borrowing, which perhaps explains why the Treasury Secretary, Scott Bessent, who has claimed that Trump’s policies will eventually reduce the gaping budget deficit, doesn’t sound very keen. (Last week, he said, “There are a lot of options here.”)
Rising health-care costs are a headache for every President, but Trump made the problem a lot worse by signing the One Big Beautiful Bill Act, which allowed the expanded Obamacare subsidies that the Biden Administration had introduced during the pandemic to phase out at the end of this year. Nine out of ten people who get insurance through the exchanges benefitted from the enhanced subsidies, and many of them are now facing the prospect of steep hikes in their premiums. During the government shutdown, Democrats demanded that Republicans restore the subsidies. In an apparent bid to deflect blame, Trump endorsed an alternative approach, advanced by the Republican senator Bill Cassidy: depositing money directly into personal health savings accounts, which people could then use to purchase insurance.
Experts on health insurance have slammed this proposal as misguided and dangerous. If the health-savings-account payments allowed individuals to buy any insurance plan they liked, rather than plans offered through the Obamacare exchanges, many younger and healthy people would likely choose cheaper “junk” plans that don’t cover preëxisting conditions and have limits on how much they pay out in cases of major illness. That would hurt the junk-policy owners who got seriously sick, and also everybody who still relied on Obamacare policies, because, in proportionate terms, that population would be older and sicker than it is now. With this deterioration in the insurers’ “risk pool,” premiums would rise even further. Some observers say it could even lead to the collapse of the system and a surge in uninsurance rates.
