Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR Network. I’m your host, Greg Sargent.
Rob Shapiro: It’s great to be here, Greg.
Donald Trump (voiceover): And I have no higher priority than making America affordable again. That’s what we’re going to do. And again, they caused the high prices and we’re bringing them down. It’s a simple message.
Rob, that aside, there’s no way to avoid the basic facts of the situation here, right? Which is that Trump now finds himself forced to admit that costs on his watch are a problem. Your thoughts?
So they make the underlying issues worse. And people believed him. He was the master of the economy. Well, they don’t like the results. So he’s got a political reality, which is ultimately based on the underlying economic reality.
Donald Trump (voiceover): The word affordability is a con job.
Look, affordability’s a hoax.
But at bottom, he can’t bear to admit this, because it amounts to a confession of fallibility, which is impossible for him. He often says not only that affordability is a Democratic scam, but also that prices are way down compared to last year. Rob, what’s the reality? Can you just lay that out and make it simple for us?
And the reason for that is that businesses knew the tariffs were coming, so they built up their inventories before the tariffs. Well, now they’ve spent down those inventories. So any new inventories they buy—either from abroad or made with inputs from abroad—are going to cost more, and they’ve got to pass it on.
Because we’ve heard Karoline Leavitt, the White House press secretary, really cooking the numbers in crazy ways. In the simplest terms possible, what does the data say about what’s happened to prices in the last nine months in Trump’s presidency—second term?
In 2025, the direction of inflation turned up again instead of easing off. And now prices are rising about 3 to 3.2 percent a year. The price of housing and the price of food and the price of electricity have been rising considerably faster than 3 percent this year. They are rising more like four to five percent. So even in the last year, living standards that people expect and are used to have become squeezed.
Now, Rob that’s the usual effort to lower expectations and so forth. But the truth is that it’s a striking admission coming from the RNC chair. And Egger at The Bulwark talked to GOP operatives who roundly trashed Trump’s message about affordability. And they said it’s precisely because they need to stay loyal to Trump that they’re in such trouble. This is what they told The Bulwark. What do you make of that?
And if people say, Well, we don’t really know, you know... yeah, some things are good, some things are bad. That’s not the view of the country. The view of the country is: Almost everything is bad. And, you know, if you’re a president like Trump, who has to be the lead story every day, that’s a way of advertising, It’s all my fault.
Shapiro: Sure. There are really two dimensions of it. One is the government addresses affordability all the time by subsidizing certain goods. So we subsidize health care, not only through the kind of tax treatment, but through ACA subsidies and Medicaid. Well, he’s cutting the ACA subsidies and he’s cutting Medicaid. So that means as a direct policy goal, he is making those health care less affordable for probably about 100 million people. We subsidize food and we subsidize it through the SNAP program for 42 million people.
Sargent: And Rob, I think one of the pleasant surprises of the moment is that people really grasped the tariffs in a way that I didn’t expect. What I expected to happen was something like: Trump comes in, he sort of coasts on the decent economy he inherited from Biden. He talks about tariffs and says, I’m going to protect the country. I’m going to protect workers. And it all codes as good populist policy for people in the sense that he’s using power to protect working people. He’s willing to do that. He’s willing to intervene in the economy to protect them.
Shapiro: Yes. The truth is that all the polls for the last decade have found that large percentages of the country—like 70 percent—like trade. They think it’s a good thing for the country because they know how many foreign goods they buy.
I just find it heartening that Trump is tanking so badly on the right-wing populist policies on the main pillars of the right-wing populist agenda. That just strikes me as a heartening development. What do you think Rob?
Sargent: Worker productivity.
So the question is: What happened to all the benefits from that productivity? Well, there are two kinds of income. There’s earnings, which you get by working; and then there’s capital income, and that’s interest, dividends, and capital gains. And after inflation, capital income has grown 30 percent. That’s where all the productivity gains went.
Sargent: And Rob, I would just throw in here that that makes it a big double whammy for them politically because not only are people getting clobbered by the price hikes that are Trump’s fault, people also hate tax cuts for the rich. They understand taxation as well. They understand the Republican Party’s devotion to transferring wealth upward. So how do you see this playing out? Just to sum this up quickly, how do you see it playing out into the midterms? Do you think the crisis continues all the way through and does it cause a Republican loss?
Sargent: I will tell you what, Rob, the worse it gets for people, the louder Trump is going to start calling it a hoax and it’s just going to continue spiraling downward. Rob Shapiro, thanks so much for coming on with us, man. Really appreciate it.
Shapiro: Anytime, Greg. Anytime.
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