Republicans have ideas on affordability --- Just not conservative ones

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Congressional Republicans are ideating about domestic policy. That's a good thing. It's too bad that few of the ideas are actually conservative.

Earlier this month, the Republican Study Committee released its "Reconciliation 2.0" framework, called "Making the American Dream Affordable Again." The framework included ideas like: creating "The Don" Payment program, a zero-to-low down payment option for creditworthy borrowers; creating new tax-advantaged accounts for housing and healthcare; and establishing a parallel "MAHA" insurance marketplace.

The RSC is a caucus of conservatives, not a formal committee responsible for legislation. But some of these ideas may trickle into a reconciliation package this spring.

It's clear that Republicans have gotten the message that affordability cannot wither any further on their watch. They aren't going to wait around until tax returns show some gains this April or until new parents' Trump Accounts begin to fill.

It's also clear that there isn't some singular driving vision for how to address voters' concerns — adios to the limited government approach of the past. Thus the grab-bag approach of anything that might sniff of cost-reduction, including price controls and market meddling.

This isn't the type of GOP policy I remember crafting. I called up some friends who led economic policy in Republican White Houses and presidential campaigns for their take. Many applauded the focus. Others doubted that the ideas would make it to the president's desk. All questioned the impact on affordability.

Getting into the specifics, it's easy to see why. For example, encouraging savings has its merits. So too do tax-advantaged savings accounts, such as HSAs and 401(k)s. But there can be too much of a good thing. Tax-advantaged savings accounts are still a form of government spending, albeit a hidden one. The result is lost government revenue (instead of increased government spending) which increases the deficit.

Not to mention that savers are already drowning in various types of savings accounts, with the Trump Accounts being the latest addition on the block. The new GOP plan floats adding Home Savings Accounts, Jumpstart Accounts and Health Freedom Accounts to the mix. How is a normal person supposed to divvy up cash between all of these? And anyway, if Americans are in an affordability crunch, they are unlikely to have much extra cash to set aside to begin with.

The GOP housing proposals are a mess. "The answer to rising home prices is not to further goose demand without expanding housing supply," said Jessica Riedl, a senior economist in the Rubio ('16) and Romney ('12) presidential campaigns, and a long-time Republican Senate staffer. The single worst financial event the U.S. has experienced since the Great Depression was the Great Recession, the underpinnings of which were mortgages being extended where they never should have been. Removing down payments moves the country back in that direction.

Targeted financial assistance to low-income families has been shown to improve economic opportunity; but that's different than broad stimulus and demanding lower interest rates. The plan's proposal to tax foreign nationals who buy U.S. property as an investment is sound, but that's hardly cutting to the heart of housing affordability in flyover country. The bigger reason housing is expensive is because of local regulations governing land use.

I am perhaps most intrigued and confused by the health care section. Doug Holtz-Eakin, former Director of the Congressional Budget Office and head of George W. Bush's Council of Economic Advisers, described it to me as a "nothingburger." The main proposal is essentially shifting from Obamacare subsidies (which directly reduce insurance premiums) to credits deposited in separate savings accounts. Those credits could then be used to bring consumers' premium costs down. But the end-cost to consumers would be the same.

The ideas don't get better from here. The big revenue generators — like eliminating the death tax and selling federal land — have hung around town for a while. They are popular, but never seem to go anywhere.

The plan also spills a lot of ink about reducing services to immigrants in the U.S. illegally. That's red meat for the base and it must poll well, but the reality is that such immigrants are already excluded from most government programs. (And they really do contribute more to the government coffers than they take out of them.) Enough is enough.

There are some good ideas here. I like the plan's focus on expanding access to paid parental leave. That's long been a gaping hole in the U.S. federal safety net. It's also cost-effective and a good fit for a pro-family party. I also like much of the energy-boosting and regulation-reducing efforts, though it's hard to tell what's actually new.

Other proposals feel mobbish, such as establishing a "Safe Cities Fund" to provide grants to cities and municipalities working with the Trump Administration to reduce crime (and of course, to expedite deportations).

The bottom line is that Reconciliation 2.0 is only nipping at pieces of the affordability challenge. And there's not a driving conservative ideology behind it. Maybe voters will be glad for the GOP's attention to affordability, but it's my sense that what they really want is results.

We'd be better off if Republicans took their hands off the economy's wheel rather than trying to grip it tighter. Reduce policy uncertainty, back off the tariffs, stop changing the rules, address the supply side and pay more attention to why wages have stalled out.

(COMMENT, BELOW)

Abby McCloskey is a columnist, podcast host, and consultant. She directed domestic policy on two presidential campaigns and was director of economic policy at the American Enterprise Institute.

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