The U.S. economy is in a tough spot. A yawning trade deficit—with gross domestic product growth at 1.4 percent for the fourth quarter of 2025, lagging behind 2.7 percent inflation—makes President Donald J. Trump’s recent assertion that the United States is in a “golden age” difficult to fathom. Incidentally, gold—a refuge in times of economic turmoil and uncertainty—traded at $5,269 per ounce on Feb. 23, 2026, three times higher than $1,750 per ounce in December 2021. This surge in price suggests that our golden age is either tarnished or illusory; in fact, 90 percent of respondents to a 2023 survey by the Certified Financial Planner Board of Standards reported affordability concerns.

In a December 2025 survey by The Associated Press-NORC Center for Public Affairs Research, 68 percent of respondents expressed disapproval with Trump’s handling of the economy. (His overall approval rating is down to a record-low 31 percent.) Costs for all manner of goods continue to rise, mainly affecting those in the lower and middle classes. While the administration publicly denies an affordability crisis, it is privately struggling to find ways to bring down the cost of living. Latest shots across the bow include attempted lowering of pharmaceutical prices, mass issuance of $2,000 stimulus checks, persisting in a misguided tariff policy, and capping credit card interest rates. Some states have imposed a ceiling on insurance company profitability margins.

One characteristic these proposals share is that they don’t work.  

Tariffs

Currently, much of our country’s economic pain is the direct result of tariffs. Economists at the Federal Reserve Bank of New York produced a report demonstrating that 90 to 95 percent of tariff-related inflation is borne by consumers. The nonpartisan Congressional Budget Office has found similar results. So how has the administration responded to these findings? For his part, White House Economic Adviser Kevin Hassett remarked that the authors of the New York Fed report should be punished.

Don’t like the truth? Blame the messenger.

Stimulus Checks

The administration has attempted to paper over the reality of more expensive goods and services with bold populist measures. For example, one proposal aimed to dull the pain of tariffs by sending $2,000 stimulus checks to all Americans earning less than $100,000 per year. This plan could cost north of $300 billion—twice the amount collected in tariffs. Following through on this proposal would effectively extinguish the tariffs’ impact.

Cheap Drugs

The president launched his new pharmaceutical dispensary, TrumpRx, on Feb. 5, 2026. He declared in a December 2025 speech that TrumpRx would defy the laws of mathematics, reducing drug prices by as much as 1,500 percent: “It’ll be numbers that nobody can even imagine. We’re going to get the drug prices down not 30 or 40 percent, which would be great. Not 50 or 60, no. We’re going to get them down 1,000 percent, 600 percent, 500 percent, 1,500 percent—numbers that are not even thought to be achievable.”

That much is true—nobody can imagine such numbers. (Additionally, early reports indicate that the only products offered cheaper through TrumpRx are weight loss and fertility drugs.)

Credit Card Interest Rate Caps and 50-Year Home Loans

While R Street has decried the foibles of a proposed 10 percent cap on credit card interest rates, the administration’s proposed 50-year home loan is an even more desperate measure.

In November 2025, Federal Housing Finance Agency Director Bill Pulte revealed a plan to reduce monthly house payments by offering a new 50-year fixed-rate mortgage. The problem with this proposal is that the average first-time homebuyer is now 40 years old. This means the average buyer taking out a 50-year mortgage won’t own their home until 90—that is, if they live that long.

Insurance Company Profit Margin Caps

Another idea for bringing down costs is to reduce personal insurance premiums. Because insurance is regulated at the state level, the federal government has limited levers it can pull to reduce premium for automobile, homeowners and renters insurance. However, several states have stepped into the breach with legislation to cap insurance company profit margins and return any excess profits to policyholders.

Florida’s statutory insurance laws for automobile insurance define “excess profit” as an underwriting gain in the three most recent years that exceed anticipated underwriting profit plus 5 percent of earned premiums in those years. Last month, Progressive announced plans to return up to $950 million in credits to personal automobile policyholders in Florida. Factors responsible for favorable results in 2023, 2024, and 2025 include mild hurricane seasons and the impact of tort reforms passed in 2023.

Florida has a similar (though more stringent) excess profit law for homeowners’ insurance, defined as a net underwriting gain of over 10 percent of earned premiums and a surplus higher than the 1 in 250 probable maximum loss.  

Georgia seeks to follow Florida’s example with HB 1274, an excess insurance profits bill entered into committee on Feb. 19, 2026 that compares an insurer’s underwriting profit to anticipated underwriting profit plus a 5 percent margin. Here, excess profit is defined as any profit greater than 5 percent of premium. The state’s insurance commissioner can order an insurer to return excess profits to policyholders, either by direct payment or credit toward future policies.

New Jersey’s excess insurance profit law for automobile insurance is even more demanding than Florida’s, with its three-year lookback period for calculating insurer profitability extended to seven years in 2003. State law defines excess profits as actuarial gain and excess investment income exceeding 2.5 percent of earned premiums. This statute gives the insurance commissioner discretion to calculate “excess investment income.”

Other states have their own excess profit laws, and several are currently exploring how to apply the Florida model in their states. One problem with these laws is that insurers can move loss reserves for prior years to their more recent accident years in order to deny an excess profit. Another is that excess profit laws are inherently unfair. If an insurer earns a profit margin higher than 5 percent, then it must give back the excess; however, there is no provision for insurers with poor results to assess the industry. This means insurer profits are capped at the high end but unlimited on the down side.

Conclusion

Our review of efforts to constrain the rising cost of living in the United States proves there are no easy answers. With so many ill-advised initiatives advancing at the state and federal levels, what can we do to address the affordability crisis effectively? Abandoning untenable populist measures and cutting tariffs would be a great start.