Republicans and Democrats alike are racing to develop policies to ease the “affordability crisis” ahead of the 2026 midterms. Inflation and cost-of-living concerns rank among the top concerns for American voters, and facing this huge discontent, policymakers at the federal and state levels are under immense pressure to deliver price relief.
Cato’s Handbook on Affordability is a practical guide for how they might do so in an economically sensible way. It presents over 100 policy ideas that could help reduce the risk of inflation, lower prices, or broaden options for cheaper basic core goods and services that people care about.
In my editor’s introduction, I’m direct about two things policymakers often get wrong where affordability is concerned.
First, today’s affordability frustration traces overwhelmingly to the post-pandemic inflation surge, itself driven by excessive macroeconomic stimulus. Congress flooded the economy with borrowed funds, and the Fed allowed vast money creation. The resulting explosion in spending far outpaced the economy’s productive capacity, and prices jumped permanently. The “greedflation” narrative was only ever finger-pointing at corporations and landlords; “supply shocks” can’t explain the breadth or permanence of the price surge. The real culprit was always Washington.
Second, most new proposals making the rounds—rent controls, interest rate caps, anti-gouging laws, government-run grocery stores, institutional investor home-buying bans, 50-year mortgages—don’t help improve affordability. Instead, they primarily shift the burden of paying for core life costs onto taxpayers or create new shortages and distortions. They treat high prices as political problems to be band-aided over instead of price signals to be reckoned with earnestly.
Our handbook offers a different path:
Inflation: To reduce inflation and keep it low, we propose a range of reforms to the operation of monetary policy and specific institutional and policy steps to reduce federal budget deficits.
Core living costs: To ease the burden of paying for life’s basics, we propose removing government barriers that constrain supplies in eleven sectors comprising 75 percent of consumer spending: housing, energy, healthcare, transportation, childcare, food, clothing, higher education, and financial services.
The through-line is simple: a better approach to affordability is delivering sound money to protect against inflation and more economic freedom to supply goods and services.
