November 18, 2025 • 40 mins
On this episode of The Federalist Radio Hour, Phil Kerpen, president of American Commitment and principal of the Committee to Unleash Prosperity, joins Federalist Senior Elections Correspondent Matt Kittle to discuss the nation's affordability crisis, dissect the disastrous consequences of Obamacare, and analyze President Donald Trump's 50-year mortgage proposal.
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Episode Transcript
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Speaker 1 (00:16):
And we are back with another edition of the Federalist
Radio Hour. I'm Matt Kittle, senior Elections correspondent at the
Federalist and your experienced Shirpa on today's quest for Knowledge.
As always, you can email the show at radio at
the Federalist dot com, follow us on ex at FDR LST.
Make sure to subscribe wherever you download your podcast, and
(00:38):
of course to the premium version of our website as well.
Our guest today is Phil Kirpin, principle at Unleash Prosperity.
Phil joins us to discuss what arguably is the number
one economic issue in America today, the prohibitedly high cost
of owning a home for two many Americans. Phil, thank
(01:01):
you so much for joining us on this extremely timely
and urgent topic.
Speaker 2 (01:06):
Hey, my pleasure, Matt, Thanks for having me you bet.
Speaker 1 (01:08):
Phil, by the way, is also a nationally syndicated columnist.
You can read him in a lot of different places
these days. I believe you're still chairman of the Internet
to Freedom Coalition. Is that correct?
Speaker 2 (01:20):
Yeah? I mean we haven't done much with that particular
vehicle in a while, but I would say yes, I
think it still exists.
Speaker 1 (01:26):
Yes, and the author of the Grade twenty eleven book
Democracy Denied. In fact, if we get a chance to
on this edition to the Federalist Radio Hour, we'll talk
a little bit about that, what Phil was writing about
at the time, and what the leftists are saying today
about democracy being denied. I think it's an interesting perspective
(01:48):
these many years later. Let's begin here. Treasury Secretary Scott
Best argued the biggest hindrance for housing is mortgage rates.
If the FED brings down mortgage rates, then they can
end this housing recession. And what we have are some
(02:09):
really troubling numbers. Households in their thirties have an ownership
rate just forty two percent. That's more than twenty percent lower,
a twenty points lower than the national average. And now
the median age of all home buyers is a record
breaking fifty nine, and the age of a first time
buyer is forty, up from twenty nine in nineteen eighty one.
(02:32):
This has a lot of moving parts to it. But Phil,
do you agree with the Treasury Secretary?
Speaker 2 (02:40):
Well, I'm not sure you can lay the blame squarely
on the Fed. One of the things we've seen in
the last couple of years is that even when the
FED cuts the short term rates that they control the
overnight rate, the long term rates don't necessarily go down,
and in fact, they've gone up with most of the
FED cuts because the long term rates are really keyed
to inflation expectations. And one of the challenges that we've
(03:03):
got is, you know, there's no fiscal discipline at all.
And the reason we had, you know, the reason we
had the huge inflation episode that we did under Biden
in particular, is we spent an extra six trillion dollars
on COVID and we didn't really come back down from
that or not fully. And so you know, if you
(03:24):
juice the economy in the short term with lower interest rates,
but you don't have any fiscal discipline, and the longer
term inflation expectations might actually go up rather than down,
and long term rates might therefore go up rather than down.
So it's more complicated, in my opinion than just you
can blame the FED. I think the principal blame should
be placed on Congress for getting no control on spending.
(03:46):
And so I don't necessarily agree with that aspect of
what the Secretary said, but I do think he's right
that when you've got you've got a huge percentage of
people who are in homes with interest rates that are
much lower than the current prevailing rates. That makes people
very unlikely to sell, and that's why one of the
reasons you have so little inventory, because if you've got
(04:08):
to sell your house where you've got a two or
three percent interest rate and buy a house at six
percent plus, you can't afford to buy a house at
the same price that you're selling yours for, most likely
because the monthly payment's going to be so much higher.
And so they've talked about maybe doing some form of
portability or assumability, or doing something so that the rate
persists after you have a sale. It'll be interesting to
(04:31):
see if they can, you know, can figure out a
way to make that workable, because otherwise we're not really
going to see the market on freeze unless we see
rates come down a lot. But I don't think it's
as simple as the FED cuts and the mortgage rates
go down. I don't think we're likely to see rates
as low as what a lot of people have right
now anytime in the near future.
Speaker 1 (04:49):
Yeah, I agree with you one hundred percent. I think
this is a multi headed Gorgan, a monster of a
problem that has been building for for many, many years.
But just to remain on the FED chair Jerome Powell
right now, could he in your estimation, could he have
acted faster as the President has said throughout this year.
Speaker 2 (05:11):
Well, I think FED policy has been has been pretty
terrible under Jerome Powell. You know, even if you judge
him by his own measure of inflation within a symmetric
range around two percent on the PCE, he's actually accomplished
that one time out of his I think seventy nine
twelve month periods since he's been in. So if you start,
(05:32):
you know, after he'd been in for twelve months, you
don't have to blame him for what came before. He's
only hit his own target once and on a rolling
twelve month period. So he's batting I think zero thirty
something like that on his own metric, on his own standard,
he's failed completely. So I think they've done a pretty
poor job of sort of explaining and establishing the basis
(05:54):
on which they're making policy and then sticking to it.
Now I'm not sure that I'm not sure that monetary
policy could have achieved what his goal was in light
of what was happening on the fiscal side. But I
think you can really only judge someone by the standards
they established for themselves, and you know, by that standard,
he's really failed. Now, the question of what FED policy
(06:14):
should be, you know, that's tricky. I mean, I'm not
someone who thinks that the job of the Federal Reserve
is to you know, save us all from ourselves and
smooth out the business cycle and micro manage the economy
or any of that. I'm more sort of the Milton
Friedman school that they should just have a known predictable
rate of growth of money supply and otherwise leave everything alone.
(06:35):
And you know, I think Milton said you could replace
the FED with a computer. That sounds pretty good to me.
So I'm not you know, I'm not likely to ever
give any FED chair high grades just because you know,
the way they operate the thing is, there's so much
arbitrary iness in it compared to the way I think
it should be done.
Speaker 1 (06:53):
I'll be careful now. You know, there are some AI
folks out there who are really pinning all of their
hopes on that technology. They might just take you up
on that. In Milton Friedman's offer, to have.
Speaker 2 (07:03):
Yeah, he said that it should be replaced by a computer,
you know, fifty years ago when computer's continue.
Speaker 1 (07:08):
Yeah right now, yeah, on a Texas instrument computer back then,
of course, or certainly long before we had our smartphones.
Now you noted before. And I think this is a
huge point. Congress once again abdicating its responsibility. But then again, Phil,
what is new. I mean, if you want to look
at all kinds of problems in America, Congress has a
(07:30):
big share of the blame for that. It's because over
many years in the Leviathan that is this you know,
bureaucracy state, this administrative state, it has abdicated its responsibility
at every turn and allowed to Yeah.
Speaker 2 (07:49):
Here's the thing, here's the thing.
Speaker 1 (07:50):
Yeah, you can.
Speaker 2 (07:51):
You can pass the Fed to Reserve Act and say, oh,
now the Fed is in charge of, you know, maintaining
the value of the dollar or whatever. Okay, you can
do that. But if you spend so much money that
you run a two trillion dollar deficit every year and
there isn't enough real demand for that debt from the
rest of the world, and the FED ends up buying
it and monetizing it, and the price of everything goes
(08:13):
up as a consequence. I mean, yeah, you can say, oh,
it wasn't us, it was the FED, but you know,
you're still responsible in my judgment. And you know the
whole episode that we had under COVID, and it should
be such an object lesson for the American people because
we spent an extra six trillion dollars or so above
the already bloated federal budget and you know, pandemic response measures,
(08:35):
and about ninety percent of that was just printed money
from the Fed. It just went on the FED balance
sheet and they printed the money, and we all saw
the consequence. The price of everything up went up twenty
percent or more. And so you would hope that people
could connect those dots and say, wait a second, if
we want things to be more affordable, we need to
cut federal spending. We can't just have these massive deficits
(08:55):
that are financed essentially by money printing. And you would
hope they would blame Congress, that they wouldn't just blame
the FED, and we'd get some spending cuts. But it's
hard to be optimistic, Matt when you do you have
a spending fight like the one we're in right now,
where the Republicans say, oh, we want to extend current
spending levels that the you know that Biden said in
his budget, and the Democrats say, oh my god, that's horrible.
Everyone's going to starve and die. We need to shut
(09:17):
down the government unless we can get a one point
five trillion dollars spending increase on top of the Biden levels.
And so like, you know, people are celebrating the oh
the Democrats cave. Then we got a c R and
it's like, okay, but that was at a very high
spending level. And the fact that the day was between
continuing where we were and raising it as opposed to
cutting it is not a very good sign. Yeah.
Speaker 1 (09:37):
I was going to say, what did do we learn
as Americans? Because ultimately, you know, we can blame Congress too,
but we're the people who keep putting these people in
power like that, I say, we you know, I've tried
to elect viscal conservatives. I lived in Wisconsin for a
very long time. I tried to elect conservatives in Madison, Wisconsin,
(10:02):
which was a quixotic, fools error. It was never going
to happen, you know, and the United States as some
of that as well. But you're right, we just went
through this battle where the argument what the Democrats the
hill they were dying on was we need to extend
indefinitely the hundreds and hundreds of billions of dollars for
(10:24):
subsidies for people who are earning middle to high middle
class wages so that they can get Obama Care subsidies
and a healthcare system that has failed miserably. So when
are people going to wake up to this? Eventually? When
(10:44):
we have to put a foreclosed sign on the country.
Speaker 2 (10:48):
Yeah, that's a pretty interesting one. They actually started asking
for a lot more than that, you know, when I
say one point five trillion. They also wanted to repeal
a bunch of things to the one big beautiful bill
and get rid of income eligibility checks and medicaids they
can put it eagles back on the rolls, and they
had a whole sort of waundry list. But yeah, by
the end of it, they were really obsessed with this
idea of making the COVID credits, the timber enhanced subsidies
(11:10):
in Obamacare either permanent or I think by the end
Schumer would have taken a one year extension or something
like that, and they ended up not even getting that.
But it wasn't interesting. It wasn't interesting thing for them
to really focus and key in on, right, because they
created this Obamacare program, and they of course said that
it would be wonderful affordable care for everyone. The Patient
Protection and Affordable Care Act one of the most hilariously
(11:33):
misnamed pieces of legislation in American history, and it was
failing pretty spectacularly. And the reasons it was failing had
nothing to do with COVID, But they use the excuse
of COVID to say, well, we need to throw more
subsidies on top. The original subsidy structure went up to
four hundred percent of the federal poverty level at the top,
(11:53):
and then it had a cap and at the bottom,
people who were very poor one hundred and fifty percent
of federal poverty or below, they only had to pay
two percent of their income towards premiums, and then taxpayers
picked up the rest. What they did during COVID is
they said, you know what, we're going to get rid
of this income limit at the top. We're going to
go unlimited. So no matter how much money you make,
you only pay eight and a half percent maximum of
your income towards premiums. Then taxpayers will pick up the rest.
(12:17):
And so they extended subsidies all the way up to
people making you know, two hundred thousand dollars or so,
maybe a little more in some very high cost areas,
and at the bottom they got rid of the two percent.
They say, we're going to make it zero. Well, you know,
when you make it zero, you get millions of people
signed up who don't value it, who don't want it,
who might not even exist if it's just unscrupulous brokers
signing them up to get commissions. And so we've seen
(12:39):
millions and millions of people put on these roles who
file no claims, and you know, some of them maybe
they just didn't get any healthcare that year. But you know,
this is not traditional insurance where if you don't get sick,
you're not going to use it. This is you know,
annual physicals. There's a whole list of things that they
kick in before deductible. So it's very unusual for there
to be no claims. And yet we've got millions of
(12:59):
people with no claim So the fraud R eight went
off the chart essentially, which you would expect with zero
premium payments at the low end and so Republicans have
basically said, you know, we want this to expire or
at least to be reformed. We don't think there should
be zero income cap at the top, we don't think
there should be zero premium payments at the bottom. And
Democrats acted like this was you know, that everyone was
(13:23):
going to die, essentially, which is their favorite go to move.
They went crazy, the media went crazy, and I actually
think they miscalculated. I think they misplayed their hand because
this is the kind of thing that Republicans in Congress
typically just cave on at the end of the year
and they as an annual ritual, and now they focus
so much attention on it. I think we've actually been
able to educate a lot of the Republican members to
(13:44):
the point where they won't just say yes, and they
either won't extend it or it'll be substantially reformed if
it does get extended. So I'm actually much more optimistic
now on the Obamacare issue than I was before the shutdown.
Speaker 3 (13:59):
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(14:20):
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Speaker 1 (14:23):
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Speaker 1 (14:31):
Yeah, I have to tell you, I was pleasantly surprised
that the Republicans all rode this out, and we saw
a little movement towards some defection early on, but that
went away pretty quickly. And even as this became the
longest shutdown in America and history, they stood by that
they're going to need that strength moving forward, because you know,
(14:54):
the Democrats are going to stop on this and to
put a finer point on this aspect of the conversation
about costs that is impacting everything, including this housing crisis
that we're living under, and that is Obama Care as
it has now now it's been known for some time,
was wasn't it meant to be a disaster? Didn't Obama
(15:19):
himself even get caught saying that so that they could
just go to full on socialized medicine.
Speaker 2 (15:26):
Yeah, I mean, I think there was a lot of that,
that sort of let's, you know, we'll give the private
system one last chance, and you know, we'll regulate it
so that it can't succeed, and it's one last chance.
I think there's an element of that. I think there
was certainly some ideologues who wanted that, but I also think,
you know, there's never one consistent rationale behind a public policy.
And I also think there was just a huge amount
(15:48):
of rent seeking from the insurance industry, and the insurance
companies have you know, they've had an unbelievable boom. I
think United Health went from something like, you know, less
than twenty percent of their revenue being from government program
over eighty percent. So they sort of flipped eighty twenty
one way to eighty twenty the other way. And that's
pretty typical I think for these big insurance companies, and
their stocks have gone to the moon, and so I
(16:09):
think there's a lot of corporate rent seeking. But there
also are the ideologues that sort of I think anticipated
that it would fail and we're okay with that. So
I think he had a mixture, He had a mixture
of motivations. But you know, the thing that's the thing
that's really interesting to me is we're actually seeing more
interest now from Republicans and actually doing something positive on
(16:31):
healthcare than we've seen in a long time. And I'm actually,
I don't want to say optimistic, because I'd stayed pretty
cynical about these things, but I think there's a there's
there's a reasonable chance that we see some positive structural
reforms in healthcare in a market oriented direction and approach choice,
pro competition kind of direction, in a way that we
might not have seen if the Democrats hadn't elevated the
(16:54):
issue with you know, sort of their own bad ideas
as the only solution being throwing more money at it.
And the President and now a number of key senators
have said, wait a second, let's take a bunch of
the subsidy money that right now is going directly to
insurance companies. Let's instead put it into people's hsas that
they can own and control and use not just to
buy insurance products, but to buy health care care itself,
(17:15):
To go to a primary care doctor, to buy products
at the pharmacy that are qualified and so on and
so forth. And I think if we go in that direction,
we're finally going to get some real downward cost movement
because we're going to have people having an interest in
spending less because they'll get to keep the rest of
the money they don't spend. And if we compare that
with some insurance reforms to bring back you know, real
(17:35):
traditional insurance products, real traditional major medical type indemnity plans
where you know you're not going to use it for
your day to day expenses. You've got the account to
pay for that directly, but you know if you do have,
God forbid, a hospitalization or surgery or an emergency room
type situation, you would have coverage for that. And I think,
you know that kind of approach, if we make it
legal again, and if we subsidize it for the lower
(17:56):
income people who need it, I think it would be
very very popular and it would put down were'd pressure
on price in a way that we haven't seen with
these With the consolidation trend in healthcare, I mean, to me,
the worst thing that's happened in healthcare since Obamacare is
not even just the cost issue. Although it's related to it.
It's the disappearance of real choice and competition. Everyone getting
gobbled up, all the physicians practices getting gobbled up by
(18:19):
hospital systems and insurance companies and other corporate entities has
just made it much. You know, you don't have the
relationship you did with your doctor anymore in a lot
of cases. I mean, we went in twenty twelve. I
just looked this up the other day. I don't have
the exact numbers at the top of my head, but
in twenty twelve, before Obamacare, I think it was it
was fifteen or sixteen percent of physicians practices that were
(18:41):
corporate owned, and now it's sixty percent, and it's rising very,
very quickly because we've destroyed the business model of being
private practice physicians in this country. I think if Republicans
came out and explained, this is how we're going to
reverse that trend. This is how we're going to fix
the payment policies that pay more if a hospital buys
your physicians practice. This is going to fist fix the
regulatory policies that have driven this consolidation. I mean, that
(19:04):
would be just they would be I think they would
be rewarded politically. And I also think we'd get better
quality care at lower cost if we did that.
Speaker 1 (19:11):
Well, that's what people voted for in twenty twenty four,
solutions and particularly solutions to this economic malaise under Biden inflation.
And you're absolutely right. Maybe the two most silly names
for legislation would be the Affordable Care Act and then
(19:31):
the Inflation Reduction Act.
Speaker 2 (19:35):
Of course had the two year extension of the COVID
enhanced Obamacare subsidies.
Speaker 1 (19:38):
Of course it is only with three.
Speaker 2 (19:40):
And then we got loaded in there Inflation Reduction Act
with all the green energy giveaways and everything else. And
by the way, do you know the only reason they
named it that is Joe Manchin, who had previously opposed
the bill when it was called Build Back Better. He said,
you know what, I'll vote for it. My main ask
is that you changed the name so I can say
I did something about it. It's like unbelievable.
Speaker 1 (20:00):
Well, that says a lot about why Joe Mansion is
no longer a Senator of West Virginia. Right now, our
guest today is Phil Kirpin, principle at Unleash Prosperity, Phil,
joining us to discuss what arguably is the number one
economic issue in American America today. You know, the health
(20:20):
insurance affordability issue certainly is in there, but it's all
tied together with the prohibitively high cost of owning a
home for way too many Americans. An interesting column that appeared,
I think, first in the New York Post and then
maybe the maybe Fox News picked it up. But the
(20:42):
headline is this, we need a Marshall Plan for housing,
a collection of broad initiatives to make homes more affordable
and put the American dream back on track. The gentleman
who wrote that is escaping me right now. I want
(21:04):
to make sure I give credit where credit is due.
I don't have that at my fingertips. But what do
you think of this idea of all hands on deck basically,
which was what the Marshall Plan was a very you know,
manifold many parts to rebuilding Europe after World War Two.
(21:25):
The same kind of thing of rebuilding, if you will,
or starting from scratch from a broken system in the
housing marketplace.
Speaker 2 (21:34):
Yeah, I mean, look, the only thing that makes me
a little bit nervous about that is that there's awful
lot of government spending in the Marshall plan, and I
don't think what we need is more subsidies. I think,
you know the healthcare lessons that when you throw massive
subsidies at something, and the education lesson for that matter,
when you throw massive subsidies at something, you tend to
make it more expensive, not less. And so you know,
the challenge I think we have is that most of
(21:57):
the bad housing policies are local. The single most significant
factor in whether a housing market is overpriced. And Wendel Cox,
who's the demographer that we work with it Unleash Prosperity,
has written a lot on this. But the biggest factor
is whether a city has an urban growth boundary. Because
cities that have urban growth boundaries, you know, like all
(22:18):
the major cities in California and Portland, Oregon, and you
know a lot of other places. When you have an
urban growth boundary, you create massive artificial scarcity because you
can't build new housing supply past the boundary. And they say, oh,
you know, the urbanists love these, by the way, because
they say, oh, we're fighting sprawl and we want to
have more high rise residential, more housing projects, and we
(22:40):
don't want more places for single family homes. But what
happens is when you put these boundaries on, the price
of housing goes crazy, especially for single family homes, which
is still what most people want. It goes haywire, it
goes through the roof. You look at markets that don't
have urban growth boundaries, that don't have restrictive zoning, that
don't have permitting challenges, and the homes and those markets
(23:03):
are still relatively affordable. And that's a lot of a
lot of markets in the South are like that, and
so it's not really a uniform national problem, and that
makes it a little bit difficult to come up with
uniform national solutions. Obviously, the interest rate factors are national,
and some of the other things are national, but the
restrictions that make it difficult to build supply to build
new houses, those are very different in different places. And
(23:26):
one of the things we're seeing is that the places
where it's really bad, people are leaving. They're giving up,
they're giving up on a lot of these blue jurisdictions
and just voting with their feed and moving other places.
And so, you know, that is that's been a major
trend that accelerated during COVID. But I really think that
you know, there's some cry there's some cracks now on
(23:46):
the left wing with sort of the nimbi's being challenged
by people who do want, you know, to allow more building.
And we may see some changes, we may see some
changes at the local level, but until we see changes
to these major sort of urban planning policies, I'm not
sure we're going to see a big difference. And I
would hate to have federal taxpayer subsidies come in in
(24:09):
an indiscriminate way and essentially subsidize the places that have
the worst local policies, because that would just be an
unfair subsidy from the places that have more rational policies
to the places that are kind of hamstringing their ability
to create housing supply.
Speaker 1 (24:22):
Yeah, it'd be a continuation of the leftist policies that
you mentioned before in blue cities like Portland and San Francisco,
Los Angeles, places certainly in Colorado, and there's a long
list of them. Howard Husick, by the way, from the
American Enterprise Institute wrote the piece on his assertion as
(24:42):
we need a Marshall plan for housing, including broad initiatives,
some of the things I agree with. One of the
things that he mentions is he's not a big fan
of the presidents. I think maybe an idea that was
thrown out there at least to get people talking a
(25:04):
fifty year mortgage. I think that would be absolutely disastrous.
But Husick says, well, at least he's getting the conversation rolling.
What do you think of those kinds of things? A
fifty year mortgage plan? To me, that is well, it's
(25:24):
just more indentured servitude in America today.
Speaker 2 (25:28):
Well, it's pretty it's pretty similar in practice to an
interest only mortgage. You pay almost no principle for the
first couple of decades under a fifty year schedule. And
you know, there are pluses and minuses to that kind
of arrangement if you have, you know, if you're trying
to stretch a little bit to get into a home,
or if you've got your prospects of your income increasing
in the future. But it's a little low right now,
(25:49):
it might make sense to use that kind of a product.
But I mean, you're really not going to build much
equity unless you make extra payments. And you know, I
don't know so how many people are in a situation
where it actually makes sense. I'm generally not against having
you know, more of a variety of products available for
people to choose from. But you know, one of the
challenges with any kind of demand side approach to the
(26:13):
housing situation is that, you know, let's say you bring
in new new financial type products so that more people
can afford to pay more for homes. Well, what you're
going to do is you're going to you're going to
create more upward pressure on price, and people who don't
qualify or don't want to use those new products for
whatever reason, they're not going to have more more difficulty
getting into the housing market, especially if they're not in it.
(26:35):
And so I'm not sure that that's the best solution,
but I'm not necessarily opposed to having more, more different
options available as long as people understand, you know, the
plus and minuses when they're choosing them.
Speaker 1 (26:46):
And it's a political reality to all of this, and
the political reality is is staring conservatives in the face
and the usual election cycle twenty twenty six midterms are
coming up. As we were talking about before, people are disappointed,
certainly with Congress for not achieving what they voted for,
(27:08):
what a majority of people voted for. There have been
some definitely some victories I think the big beautiful bill
could be put in there. But you know, the housing
crisis remains a huge issue. And when you're talking about
people who are forty before they can afford a house,
there is a restlessness clearly that's going on. I'm not
(27:33):
saying that this is a restlessness that will create a
national mom Dannie, but it certainly is a problem for
free market conservative principles. Do you believe the housing crisis
we're experiencing will contribute to a difficult time for Republicans
(27:57):
in Congress in twenty twenty six if they don't immediately
try to solve this thing or get on the road
to solving this thing.
Speaker 2 (28:09):
Yeah, I mean, look, I mean I think it's certainly
a negative. It's always hard to sort of way how
you know, everything kind of balances out, and at the
end of the day, it's a binary choice. And if
you give people, you know, if your best reason for
people to vote for you is better than your opponent's reason,
then you can have a lot of strikes against you
and still win sometime. So yeah, I'm not sure how
it all shakes out, but it certainly will be a
strike against this president and Republicans if they don't accomplish
(28:32):
some significant things on affordability in general and on housing
in particular. And there are some places where we might
see federal policies that really could make a big difference
for supply. And so for instance, you know, around there
are really two cities where there's significant federal land availed
them around them that could be made available for housing.
Those are Phoenix and Las Vegas. And the President has
(28:53):
talked about doing that, making you know, essentially opening up
federal lands to private development. So the more how and
can be built there, that could be very helpful in
those places. But you know, there are not a lot
of silver boats when they talk about how nationally we're
going to open up all of this land for housing. Well,
I mean, other than those cities, there's not really cities
that have a lot of federal land nearby. And so
(29:13):
there are some places where there are some obvious things
you can do, but in most places, as I said,
the challenge is bad local policies and that's kind of
difficult to get at as a national matter. It's going
to be largely on, you know, on the politicians in
those areas to have those those kind of local fights,
and you know, I think in terms of messaging for reelection,
(29:34):
I think these guys have got to make sure they've
got you know, they've got messaging and talking points that
are appropriate to the market and the challenges in their
particular areas. And you know, in some places, you've got
some Republican members of Congress from places where housing is
still very affordable, so they might not be too worried
about it. But obviously if you've got them in areas
(29:54):
where this is a big problem, they've got to figure
out some suite of at least talking points to blame
you know, local policies, if not actual solutions, which would
be even better if they could get some of these
things done.
Speaker 1 (30:06):
Final question for you on the housing crisis side of things.
You talked about regulations before. I think, you know, so
many things fall into that. But how much has the
extreme environmental policy that we see in California in particular
(30:28):
many other Blue states, how much of that has had
to deal with the limitations on housing stock in America today?
Speaker 2 (30:37):
Well, I think a lot. You know, New York banned
natural gas hook ups for new construction, and now I
think they're maybe going to delay their ban because of
the cost associated with putting an all electric everything is
not cost competitive. We've got you know, we've got regular
Even on the federal level, we had Biden's appliance regulations.
You know, they drove up the cost of basically every
appliance in your house by several hundred to one thousand
(30:59):
dollars each. And if you've got that on your washing
machine and you're dryer, and you're you know, and your
stove and your refrigerator, it adds up. It adds up
to enough to actually be material on the price of
a home. When you talk about all of these regulations
cumulative and so you know, those are all being dialed
back now by the Department of Energy and by the EPA,
and so the federal rules and regulations are being eased,
(31:22):
but in a lot of places, the rules and regulations
can be very expensive at the stay and local level.
And it's not just the environmental rules in terms of
applient standards and things like that, it's also permitting rules
and regulations. I mean, there's an amazing rant. Bill Maher
was on Chris Pratt's podcast, and he has this whole
(31:42):
rant about how he was trying to put a new
roof on his house in California, and they made him
have like five inspections and he had to wait forever,
and it cost them an additional you know whatever. It
was on top of the normal cost of a roof.
And he was just like, I'm not going to put
a bad roof on because I don't want it to
fall in on me. Like, we let me put the
roof I want on my house. And I think you've
got a lot of regulations and permitting restrictions of that
(32:04):
sort where you know, each one might only be a
couple hundred dollars or whatever it is, but the time
that's associated with it, and the cumulative effect is that
you make homes much more expensive than they would otherwise be.
And of course, you know, we also have one significant
Trump policy that's adding to construction costs, and that is
his tariff policy, and particularly on lumber, that flows through
(32:25):
into construction costs. And so you know, it would be
good to get a suspension on some of the tariffs
that are relevant to home building as well as part
of this affordability push.
Speaker 1 (32:35):
Well, and messaging is very important here. Republicans have had
a difficult time doing that with a lot of different
areas how much will messaging as we move into twenty
twenty six. And what I mean by that is point
to Gavin Newsome in California, point to Kathy Hokel in
(32:55):
New York. These are the people who have made your
life miserable. If you doubt that, ask the people in
California and New York. But they always see there always
seems to be a tepid response to those at tepid
messaging to that, do you have hope that the Republicans
will get their messaging straightened out as they head into
(33:17):
twenty six?
Speaker 2 (33:19):
I mean probably not know they're not you know, the
Democrats have some very bad policies, but they're very good
at politics nonetheless. And you know, one of the challenges
we have is that a price control message is an
easy message. And you can ask someone like mom Donemi
who Mom Donnie who just says, you know, I'm going
to lower rents by decree and people, okay, that sounds good.
It's a much more difficult, complicated message to say, you know,
(33:42):
we're going to pull back on some of the regulatory
and permitting requirements and land use restrictions and allow more
supply to be built. And you know, even you know,
let's say low income housing set asides, which have been
a disastrous failed policy in all these blue areas. When
you tell developers you can't build anything unless you set
aside some percentage of it for below market rate rent,
(34:05):
you actually get a lot less housing built overall as
a consequence of that, because now you make it harder,
you reduce the return on capital, so less capital goes
into housing, you get fewer projects. The ones that do
get built have these set asides, but you get less
additions to your housing stock overall. Now, if we go
and we say, actually, we want to let them build
ultra high luxury as many as they want, that's better
(34:25):
because people move up and they vacate where they were,
and then those people move up, and then the oldest
part of the housing stock becomes the cheapest and available
at the lowest rate for people. And this is how
it's always worked historically. People say, you know, that is
much harder to explain than just we're going to order
lower rents. We're going to order developers to build low
income units. And so the democratic message that doesn't work
(34:48):
is actually simpler and easier to explain than the market
driven message. The conservatives. Conservatives have even though our message
actually works better in practice, and so we've always had
this communication challenge.
Speaker 1 (35:00):
Just a few minutes left, and I did want to
reserve some time. It's hard to believe, but we almost
fifteen years on the release of your book, Democracy Denied.
Speaker 2 (35:10):
Yes, you've very antiquated at this point, but you know,
occasionally they sell it for twenty cents at Amazon or something,
so when they have it on some when they're just
trying to dump it, I would still recommend that people
get it because even though a lot of it was
very time bound to what was going on by then,
there are a couple of chapters in there that are
still extremely relevant. In particular, I've been trying to get
(35:30):
this bill called the Rains Act passed since since then,
and you did get it done in Wisconsin, were six
other states have done it on the state level. But
this is the you know, such a simple idea, any
major regulation, one that has a major effect on the economy,
instead of agencies being able to impose it directly, they
should have to send it to the people's elected representatives
in Congress or in the state level at the legislature
(35:52):
and have an affirmative vote of approval. Not because Congress
is incapable of doing stupid things. We know better than
to think that. But at least then the inertia and
inability to get things done in Congress works in our favor,
and it stops bad ideas and bad regulations instead of
them just sitting on their hands while these things pile up.
And you know, at least you'd be able to look
up who voted for them and hold them accountable if
(36:12):
we had a system like that. And so that's there's
a whole chapter on that in there, which you know
we're still you know, we almost got it in the
big beautiful bill this year, and Jim Jordan got it
in the House version coming out of committee, and then
they took it out on the House floor because they
were worried about Senate rules. And then Mike Lee tried
three or four different versions and the Parliamentarian wouldn't let
him do it because the reconciliation process is so convoluted.
(36:35):
And so we were close, we were as close as
we that we've ever been, but we weren't quite able
to get it over the finish line. So we'll keep
we'll work another fifteen years on that maybe someday we'll
get it done. But it's super important because you know,
we saw Trump reversed so many Obama regulations, then Biden
came in, snapped his fingers, put them all back in
and then some. And so Trump's accomplishing a lot on deregulation,
(36:56):
but it's not going to be very permanent unless we
get the Rains Act or something like it done. The
next Democrat will just bring it all back again and
then some. So that's I think very relevant from the book.
And you know, the point, and that's kind of where
the title of the book comes from, right is I
was saying, it's an affront to democracy that all the
power is held by these bureaucrats and regulators instead of
our elected officials in Congress. And you know, I had
(37:16):
no idea that the Democrats would refine, redefine democracy to
mean just whatever they're in favor of, basically regress to
process and so forth. And it's kind of interesting because
now you know, now they're against whatever the president wants
to do, they call it an affront to democracy. He
was elected in an election, and so that word's been scrambled,
(37:37):
But that was what I was referring to in that
title was this problem of an unelected kind of permanent
bureaucratic state making the decisions instead of our elected representatives.
Speaker 1 (37:45):
No, I think it's a fantastic title for an era
where democracy was definitely denied. And you know, it's all
just a little bit of history repeating because as you mentioned,
you have democrats going around crying and screaming in the
nashing of teeth about how Trump is, you know, assaulting
democracy as the same people shouting that are going around,
(38:09):
you know, trying to put their political opponents in jail,
remove them from the ballot, and and you know, indict
them on bocus charges and all of this sort of stuff.
At the same time, you had an Biden administration that
was you know, cutting off communications from one half of
(38:29):
the country, the Conservatives out there, and then you had
a president through this auto pen scandal, who wasn't there,
as you know, a lot of us knew anyway, we
didn't need, you know, the the op ed from a
Hollywood star to tell us that before the election. But
it is interesting that there have been times where democracy
(38:52):
has indeed been denied. But I think it's fascinating that
democrats are saying that that is the era under Trump
when they have done so much to deny democracy over
the years.
Speaker 2 (39:06):
Right, you know, it's interesting to them. To them, the
affront of democracy is when the elected president fires people
in the bureaucracy, whereas to me it was kind of
the opposite. So what are you going to do?
Speaker 1 (39:18):
Yeah? Absolutely, thanks to my guest today, Phil Kirpin, principal
at Unleash Prosperity. Phil has joined us to talk about,
you know, all of the things going on in the
housing side of things and the absolute urgency of getting
down to business and working to solve these problems. You've
(39:41):
been listening to another edition of The Federalist Radio Hour.
I'm Matt Kittle, Senior elections correspondent at the Federalist. We'll
be back soon with more. Until then, stay lovers of freedom.
I'm anxious for the fray
And we are back with another edition of the Federalist
Radio Hour. I'm Matt Kittle, senior Elections correspondent at the
Federalist and your experienced Shirpa on today's quest for Knowledge.
As always, you can email the show at radio at
the Federalist dot com, follow us on ex at FDR LST.
Make sure to subscribe wherever you download your podcast, and
(00:38):
of course to the premium version of our website as well.
Our guest today is Phil Kirpin, principle at Unleash Prosperity.
Phil joins us to discuss what arguably is the number
one economic issue in America today, the prohibitedly high cost
of owning a home for two many Americans. Phil, thank
(01:01):
you so much for joining us on this extremely timely
and urgent topic.
Speaker 2 (01:06):
Hey, my pleasure, Matt, Thanks for having me you bet.
Speaker 1 (01:08):
Phil, by the way, is also a nationally syndicated columnist.
You can read him in a lot of different places
these days. I believe you're still chairman of the Internet
to Freedom Coalition. Is that correct?
Speaker 2 (01:20):
Yeah? I mean we haven't done much with that particular
vehicle in a while, but I would say yes, I
think it still exists.
Speaker 1 (01:26):
Yes, and the author of the Grade twenty eleven book
Democracy Denied. In fact, if we get a chance to
on this edition to the Federalist Radio Hour, we'll talk
a little bit about that, what Phil was writing about
at the time, and what the leftists are saying today
about democracy being denied. I think it's an interesting perspective
(01:48):
these many years later. Let's begin here. Treasury Secretary Scott
Best argued the biggest hindrance for housing is mortgage rates.
If the FED brings down mortgage rates, then they can
end this housing recession. And what we have are some
(02:09):
really troubling numbers. Households in their thirties have an ownership
rate just forty two percent. That's more than twenty percent lower,
a twenty points lower than the national average. And now
the median age of all home buyers is a record
breaking fifty nine, and the age of a first time
buyer is forty, up from twenty nine in nineteen eighty one.
(02:32):
This has a lot of moving parts to it. But Phil,
do you agree with the Treasury Secretary?
Speaker 2 (02:40):
Well, I'm not sure you can lay the blame squarely
on the Fed. One of the things we've seen in
the last couple of years is that even when the
FED cuts the short term rates that they control the
overnight rate, the long term rates don't necessarily go down,
and in fact, they've gone up with most of the
FED cuts because the long term rates are really keyed
to inflation expectations. And one of the challenges that we've
(03:03):
got is, you know, there's no fiscal discipline at all.
And the reason we had, you know, the reason we
had the huge inflation episode that we did under Biden
in particular, is we spent an extra six trillion dollars
on COVID and we didn't really come back down from
that or not fully. And so you know, if you
(03:24):
juice the economy in the short term with lower interest rates,
but you don't have any fiscal discipline, and the longer
term inflation expectations might actually go up rather than down,
and long term rates might therefore go up rather than down.
So it's more complicated, in my opinion than just you
can blame the FED. I think the principal blame should
be placed on Congress for getting no control on spending.
(03:46):
And so I don't necessarily agree with that aspect of
what the Secretary said, but I do think he's right
that when you've got you've got a huge percentage of
people who are in homes with interest rates that are
much lower than the current prevailing rates. That makes people
very unlikely to sell, and that's why one of the
reasons you have so little inventory, because if you've got
(04:08):
to sell your house where you've got a two or
three percent interest rate and buy a house at six
percent plus, you can't afford to buy a house at
the same price that you're selling yours for, most likely
because the monthly payment's going to be so much higher.
And so they've talked about maybe doing some form of
portability or assumability, or doing something so that the rate
persists after you have a sale. It'll be interesting to
(04:31):
see if they can, you know, can figure out a
way to make that workable, because otherwise we're not really
going to see the market on freeze unless we see
rates come down a lot. But I don't think it's
as simple as the FED cuts and the mortgage rates
go down. I don't think we're likely to see rates
as low as what a lot of people have right
now anytime in the near future.
Speaker 1 (04:49):
Yeah, I agree with you one hundred percent. I think
this is a multi headed Gorgan, a monster of a
problem that has been building for for many, many years.
But just to remain on the FED chair Jerome Powell
right now, could he in your estimation, could he have
acted faster as the President has said throughout this year.
Speaker 2 (05:11):
Well, I think FED policy has been has been pretty
terrible under Jerome Powell. You know, even if you judge
him by his own measure of inflation within a symmetric
range around two percent on the PCE, he's actually accomplished
that one time out of his I think seventy nine
twelve month periods since he's been in. So if you start,
(05:32):
you know, after he'd been in for twelve months, you
don't have to blame him for what came before. He's
only hit his own target once and on a rolling
twelve month period. So he's batting I think zero thirty
something like that on his own metric, on his own standard,
he's failed completely. So I think they've done a pretty
poor job of sort of explaining and establishing the basis
(05:54):
on which they're making policy and then sticking to it.
Now I'm not sure that I'm not sure that monetary
policy could have achieved what his goal was in light
of what was happening on the fiscal side. But I
think you can really only judge someone by the standards
they established for themselves, and you know, by that standard,
he's really failed. Now, the question of what FED policy
(06:14):
should be, you know, that's tricky. I mean, I'm not
someone who thinks that the job of the Federal Reserve
is to you know, save us all from ourselves and
smooth out the business cycle and micro manage the economy
or any of that. I'm more sort of the Milton
Friedman school that they should just have a known predictable
rate of growth of money supply and otherwise leave everything alone.
(06:35):
And you know, I think Milton said you could replace
the FED with a computer. That sounds pretty good to me.
So I'm not you know, I'm not likely to ever
give any FED chair high grades just because you know,
the way they operate the thing is, there's so much
arbitrary iness in it compared to the way I think
it should be done.
Speaker 1 (06:53):
I'll be careful now. You know, there are some AI
folks out there who are really pinning all of their
hopes on that technology. They might just take you up
on that. In Milton Friedman's offer, to have.
Speaker 2 (07:03):
Yeah, he said that it should be replaced by a computer,
you know, fifty years ago when computer's continue.
Speaker 1 (07:08):
Yeah right now, yeah, on a Texas instrument computer back then,
of course, or certainly long before we had our smartphones.
Now you noted before. And I think this is a
huge point. Congress once again abdicating its responsibility. But then again, Phil,
what is new. I mean, if you want to look
at all kinds of problems in America, Congress has a
(07:30):
big share of the blame for that. It's because over
many years in the Leviathan that is this you know,
bureaucracy state, this administrative state, it has abdicated its responsibility
at every turn and allowed to Yeah.
Speaker 2 (07:49):
Here's the thing, here's the thing.
Speaker 1 (07:50):
Yeah, you can.
Speaker 2 (07:51):
You can pass the Fed to Reserve Act and say, oh,
now the Fed is in charge of, you know, maintaining
the value of the dollar or whatever. Okay, you can
do that. But if you spend so much money that
you run a two trillion dollar deficit every year and
there isn't enough real demand for that debt from the
rest of the world, and the FED ends up buying
it and monetizing it, and the price of everything goes
(08:13):
up as a consequence. I mean, yeah, you can say, oh,
it wasn't us, it was the FED, but you know,
you're still responsible in my judgment. And you know the
whole episode that we had under COVID, and it should
be such an object lesson for the American people because
we spent an extra six trillion dollars or so above
the already bloated federal budget and you know, pandemic response measures,
(08:35):
and about ninety percent of that was just printed money
from the Fed. It just went on the FED balance
sheet and they printed the money, and we all saw
the consequence. The price of everything up went up twenty
percent or more. And so you would hope that people
could connect those dots and say, wait a second, if
we want things to be more affordable, we need to
cut federal spending. We can't just have these massive deficits
(08:55):
that are financed essentially by money printing. And you would
hope they would blame Congress, that they wouldn't just blame
the FED, and we'd get some spending cuts. But it's
hard to be optimistic, Matt when you do you have
a spending fight like the one we're in right now,
where the Republicans say, oh, we want to extend current
spending levels that the you know that Biden said in
his budget, and the Democrats say, oh my god, that's horrible.
Everyone's going to starve and die. We need to shut
(09:17):
down the government unless we can get a one point
five trillion dollars spending increase on top of the Biden levels.
And so like, you know, people are celebrating the oh
the Democrats cave. Then we got a c R and
it's like, okay, but that was at a very high
spending level. And the fact that the day was between
continuing where we were and raising it as opposed to
cutting it is not a very good sign. Yeah.
Speaker 1 (09:37):
I was going to say, what did do we learn
as Americans? Because ultimately, you know, we can blame Congress too,
but we're the people who keep putting these people in
power like that, I say, we you know, I've tried
to elect viscal conservatives. I lived in Wisconsin for a
very long time. I tried to elect conservatives in Madison, Wisconsin,
(10:02):
which was a quixotic, fools error. It was never going
to happen, you know, and the United States as some
of that as well. But you're right, we just went
through this battle where the argument what the Democrats the
hill they were dying on was we need to extend
indefinitely the hundreds and hundreds of billions of dollars for
(10:24):
subsidies for people who are earning middle to high middle
class wages so that they can get Obama Care subsidies
and a healthcare system that has failed miserably. So when
are people going to wake up to this? Eventually? When
(10:44):
we have to put a foreclosed sign on the country.
Speaker 2 (10:48):
Yeah, that's a pretty interesting one. They actually started asking
for a lot more than that, you know, when I
say one point five trillion. They also wanted to repeal
a bunch of things to the one big beautiful bill
and get rid of income eligibility checks and medicaids they
can put it eagles back on the rolls, and they
had a whole sort of waundry list. But yeah, by
the end of it, they were really obsessed with this
idea of making the COVID credits, the timber enhanced subsidies
(11:10):
in Obamacare either permanent or I think by the end
Schumer would have taken a one year extension or something
like that, and they ended up not even getting that.
But it wasn't interesting. It wasn't interesting thing for them
to really focus and key in on, right, because they
created this Obamacare program, and they of course said that
it would be wonderful affordable care for everyone. The Patient
Protection and Affordable Care Act one of the most hilariously
(11:33):
misnamed pieces of legislation in American history, and it was
failing pretty spectacularly. And the reasons it was failing had
nothing to do with COVID, But they use the excuse
of COVID to say, well, we need to throw more
subsidies on top. The original subsidy structure went up to
four hundred percent of the federal poverty level at the top,
(11:53):
and then it had a cap and at the bottom,
people who were very poor one hundred and fifty percent
of federal poverty or below, they only had to pay
two percent of their income towards premiums, and then taxpayers
picked up the rest. What they did during COVID is
they said, you know what, we're going to get rid
of this income limit at the top. We're going to
go unlimited. So no matter how much money you make,
you only pay eight and a half percent maximum of
your income towards premiums. Then taxpayers will pick up the rest.
(12:17):
And so they extended subsidies all the way up to
people making you know, two hundred thousand dollars or so,
maybe a little more in some very high cost areas,
and at the bottom they got rid of the two percent.
They say, we're going to make it zero. Well, you know,
when you make it zero, you get millions of people
signed up who don't value it, who don't want it,
who might not even exist if it's just unscrupulous brokers
signing them up to get commissions. And so we've seen
(12:39):
millions and millions of people put on these roles who
file no claims, and you know, some of them maybe
they just didn't get any healthcare that year. But you know,
this is not traditional insurance where if you don't get sick,
you're not going to use it. This is you know,
annual physicals. There's a whole list of things that they
kick in before deductible. So it's very unusual for there
to be no claims. And yet we've got millions of
(12:59):
people with no claim So the fraud R eight went
off the chart essentially, which you would expect with zero
premium payments at the low end and so Republicans have
basically said, you know, we want this to expire or
at least to be reformed. We don't think there should
be zero income cap at the top, we don't think
there should be zero premium payments at the bottom. And
Democrats acted like this was you know, that everyone was
(13:23):
going to die, essentially, which is their favorite go to move.
They went crazy, the media went crazy, and I actually
think they miscalculated. I think they misplayed their hand because
this is the kind of thing that Republicans in Congress
typically just cave on at the end of the year
and they as an annual ritual, and now they focus
so much attention on it. I think we've actually been
able to educate a lot of the Republican members to
(13:44):
the point where they won't just say yes, and they
either won't extend it or it'll be substantially reformed if
it does get extended. So I'm actually much more optimistic
now on the Obamacare issue than I was before the shutdown.
Speaker 3 (13:59):
New York's Knew Day or zor on Mom Donnie claims
the taxation isn't theft, what capitalism is The Watch Dout
on Wall Street podcast with Chris Markowski every day, Chris
helps unpack the connection between politics and the economy and
how it affects your wallet. Does Mom Donnie think every
business owner is stealing from their workers and he's supposed
to lead the business capital of the world. Whether it's
(14:20):
happening in DC or down on Wall Street, it's affecting
you financially.
Speaker 1 (14:23):
Be informed.
Speaker 3 (14:23):
Check out the Watch Dot on Wall Street podcast with
Chris Markowski on Apple, Spotify, or wherever you get your podcasts.
Speaker 1 (14:31):
Yeah, I have to tell you, I was pleasantly surprised
that the Republicans all rode this out, and we saw
a little movement towards some defection early on, but that
went away pretty quickly. And even as this became the
longest shutdown in America and history, they stood by that
they're going to need that strength moving forward, because you know,
(14:54):
the Democrats are going to stop on this and to
put a finer point on this aspect of the conversation
about costs that is impacting everything, including this housing crisis
that we're living under, and that is Obama Care as
it has now now it's been known for some time,
was wasn't it meant to be a disaster? Didn't Obama
(15:19):
himself even get caught saying that so that they could
just go to full on socialized medicine.
Speaker 2 (15:26):
Yeah, I mean, I think there was a lot of that,
that sort of let's, you know, we'll give the private
system one last chance, and you know, we'll regulate it
so that it can't succeed, and it's one last chance.
I think there's an element of that. I think there
was certainly some ideologues who wanted that, but I also think,
you know, there's never one consistent rationale behind a public policy.
And I also think there was just a huge amount
(15:48):
of rent seeking from the insurance industry, and the insurance
companies have you know, they've had an unbelievable boom. I
think United Health went from something like, you know, less
than twenty percent of their revenue being from government program
over eighty percent. So they sort of flipped eighty twenty
one way to eighty twenty the other way. And that's
pretty typical I think for these big insurance companies, and
their stocks have gone to the moon, and so I
(16:09):
think there's a lot of corporate rent seeking. But there
also are the ideologues that sort of I think anticipated
that it would fail and we're okay with that. So
I think he had a mixture, He had a mixture
of motivations. But you know, the thing that's the thing
that's really interesting to me is we're actually seeing more
interest now from Republicans and actually doing something positive on
(16:31):
healthcare than we've seen in a long time. And I'm actually,
I don't want to say optimistic, because I'd stayed pretty
cynical about these things, but I think there's a there's
there's a reasonable chance that we see some positive structural
reforms in healthcare in a market oriented direction and approach choice,
pro competition kind of direction, in a way that we
might not have seen if the Democrats hadn't elevated the
(16:54):
issue with you know, sort of their own bad ideas
as the only solution being throwing more money at it.
And the President and now a number of key senators
have said, wait a second, let's take a bunch of
the subsidy money that right now is going directly to
insurance companies. Let's instead put it into people's hsas that
they can own and control and use not just to
buy insurance products, but to buy health care care itself,
(17:15):
To go to a primary care doctor, to buy products
at the pharmacy that are qualified and so on and
so forth. And I think if we go in that direction,
we're finally going to get some real downward cost movement
because we're going to have people having an interest in
spending less because they'll get to keep the rest of
the money they don't spend. And if we compare that
with some insurance reforms to bring back you know, real
(17:35):
traditional insurance products, real traditional major medical type indemnity plans
where you know you're not going to use it for
your day to day expenses. You've got the account to
pay for that directly, but you know if you do have,
God forbid, a hospitalization or surgery or an emergency room
type situation, you would have coverage for that. And I think,
you know that kind of approach, if we make it
legal again, and if we subsidize it for the lower
(17:56):
income people who need it, I think it would be
very very popular and it would put down were'd pressure
on price in a way that we haven't seen with
these With the consolidation trend in healthcare, I mean, to me,
the worst thing that's happened in healthcare since Obamacare is
not even just the cost issue. Although it's related to it.
It's the disappearance of real choice and competition. Everyone getting
gobbled up, all the physicians practices getting gobbled up by
(18:19):
hospital systems and insurance companies and other corporate entities has
just made it much. You know, you don't have the
relationship you did with your doctor anymore in a lot
of cases. I mean, we went in twenty twelve. I
just looked this up the other day. I don't have
the exact numbers at the top of my head, but
in twenty twelve, before Obamacare, I think it was it
was fifteen or sixteen percent of physicians practices that were
(18:41):
corporate owned, and now it's sixty percent, and it's rising very,
very quickly because we've destroyed the business model of being
private practice physicians in this country. I think if Republicans
came out and explained, this is how we're going to
reverse that trend. This is how we're going to fix
the payment policies that pay more if a hospital buys
your physicians practice. This is going to fist fix the
regulatory policies that have driven this consolidation. I mean, that
(19:04):
would be just they would be I think they would
be rewarded politically. And I also think we'd get better
quality care at lower cost if we did that.
Speaker 1 (19:11):
Well, that's what people voted for in twenty twenty four,
solutions and particularly solutions to this economic malaise under Biden inflation.
And you're absolutely right. Maybe the two most silly names
for legislation would be the Affordable Care Act and then
(19:31):
the Inflation Reduction Act.
Speaker 2 (19:35):
Of course had the two year extension of the COVID
enhanced Obamacare subsidies.
Speaker 1 (19:38):
Of course it is only with three.
Speaker 2 (19:40):
And then we got loaded in there Inflation Reduction Act
with all the green energy giveaways and everything else. And
by the way, do you know the only reason they
named it that is Joe Manchin, who had previously opposed
the bill when it was called Build Back Better. He said,
you know what, I'll vote for it. My main ask
is that you changed the name so I can say
I did something about it. It's like unbelievable.
Speaker 1 (20:00):
Well, that says a lot about why Joe Mansion is
no longer a Senator of West Virginia. Right now, our
guest today is Phil Kirpin, principle at Unleash Prosperity, Phil,
joining us to discuss what arguably is the number one
economic issue in American America today. You know, the health
(20:20):
insurance affordability issue certainly is in there, but it's all
tied together with the prohibitively high cost of owning a
home for way too many Americans. An interesting column that appeared,
I think, first in the New York Post and then
maybe the maybe Fox News picked it up. But the
(20:42):
headline is this, we need a Marshall Plan for housing,
a collection of broad initiatives to make homes more affordable
and put the American dream back on track. The gentleman
who wrote that is escaping me right now. I want
(21:04):
to make sure I give credit where credit is due.
I don't have that at my fingertips. But what do
you think of this idea of all hands on deck basically,
which was what the Marshall Plan was a very you know,
manifold many parts to rebuilding Europe after World War Two.
(21:25):
The same kind of thing of rebuilding, if you will,
or starting from scratch from a broken system in the
housing marketplace.
Speaker 2 (21:34):
Yeah, I mean, look, the only thing that makes me
a little bit nervous about that is that there's awful
lot of government spending in the Marshall plan, and I
don't think what we need is more subsidies. I think,
you know the healthcare lessons that when you throw massive
subsidies at something, and the education lesson for that matter,
when you throw massive subsidies at something, you tend to
make it more expensive, not less. And so you know,
the challenge I think we have is that most of
(21:57):
the bad housing policies are local. The single most significant
factor in whether a housing market is overpriced. And Wendel Cox,
who's the demographer that we work with it Unleash Prosperity,
has written a lot on this. But the biggest factor
is whether a city has an urban growth boundary. Because
cities that have urban growth boundaries, you know, like all
(22:18):
the major cities in California and Portland, Oregon, and you
know a lot of other places. When you have an
urban growth boundary, you create massive artificial scarcity because you
can't build new housing supply past the boundary. And they say, oh,
you know, the urbanists love these, by the way, because
they say, oh, we're fighting sprawl and we want to
have more high rise residential, more housing projects, and we
(22:40):
don't want more places for single family homes. But what
happens is when you put these boundaries on, the price
of housing goes crazy, especially for single family homes, which
is still what most people want. It goes haywire, it
goes through the roof. You look at markets that don't
have urban growth boundaries, that don't have restrictive zoning, that
don't have permitting challenges, and the homes and those markets
(23:03):
are still relatively affordable. And that's a lot of a
lot of markets in the South are like that, and
so it's not really a uniform national problem, and that
makes it a little bit difficult to come up with
uniform national solutions. Obviously, the interest rate factors are national,
and some of the other things are national, but the
restrictions that make it difficult to build supply to build
new houses, those are very different in different places. And
(23:26):
one of the things we're seeing is that the places
where it's really bad, people are leaving. They're giving up,
they're giving up on a lot of these blue jurisdictions
and just voting with their feed and moving other places.
And so, you know, that is that's been a major
trend that accelerated during COVID. But I really think that
you know, there's some cry there's some cracks now on
(23:46):
the left wing with sort of the nimbi's being challenged
by people who do want, you know, to allow more building.
And we may see some changes, we may see some
changes at the local level, but until we see changes
to these major sort of urban planning policies, I'm not
sure we're going to see a big difference. And I
would hate to have federal taxpayer subsidies come in in
(24:09):
an indiscriminate way and essentially subsidize the places that have
the worst local policies, because that would just be an
unfair subsidy from the places that have more rational policies
to the places that are kind of hamstringing their ability
to create housing supply.
Speaker 1 (24:22):
Yeah, it'd be a continuation of the leftist policies that
you mentioned before in blue cities like Portland and San Francisco,
Los Angeles, places certainly in Colorado, and there's a long
list of them. Howard Husick, by the way, from the
American Enterprise Institute wrote the piece on his assertion as
(24:42):
we need a Marshall plan for housing, including broad initiatives,
some of the things I agree with. One of the
things that he mentions is he's not a big fan
of the presidents. I think maybe an idea that was
thrown out there at least to get people talking a
(25:04):
fifty year mortgage. I think that would be absolutely disastrous.
But Husick says, well, at least he's getting the conversation rolling.
What do you think of those kinds of things? A
fifty year mortgage plan? To me, that is well, it's
(25:24):
just more indentured servitude in America today.
Speaker 2 (25:28):
Well, it's pretty it's pretty similar in practice to an
interest only mortgage. You pay almost no principle for the
first couple of decades under a fifty year schedule. And
you know, there are pluses and minuses to that kind
of arrangement if you have, you know, if you're trying
to stretch a little bit to get into a home,
or if you've got your prospects of your income increasing
in the future. But it's a little low right now,
(25:49):
it might make sense to use that kind of a product.
But I mean, you're really not going to build much
equity unless you make extra payments. And you know, I
don't know so how many people are in a situation
where it actually makes sense. I'm generally not against having
you know, more of a variety of products available for
people to choose from. But you know, one of the
challenges with any kind of demand side approach to the
(26:13):
housing situation is that, you know, let's say you bring
in new new financial type products so that more people
can afford to pay more for homes. Well, what you're
going to do is you're going to you're going to
create more upward pressure on price, and people who don't
qualify or don't want to use those new products for
whatever reason, they're not going to have more more difficulty
getting into the housing market, especially if they're not in it.
(26:35):
And so I'm not sure that that's the best solution,
but I'm not necessarily opposed to having more, more different
options available as long as people understand, you know, the
plus and minuses when they're choosing them.
Speaker 1 (26:46):
And it's a political reality to all of this, and
the political reality is is staring conservatives in the face
and the usual election cycle twenty twenty six midterms are
coming up. As we were talking about before, people are disappointed,
certainly with Congress for not achieving what they voted for,
(27:08):
what a majority of people voted for. There have been
some definitely some victories I think the big beautiful bill
could be put in there. But you know, the housing
crisis remains a huge issue. And when you're talking about
people who are forty before they can afford a house,
there is a restlessness clearly that's going on. I'm not
(27:33):
saying that this is a restlessness that will create a
national mom Dannie, but it certainly is a problem for
free market conservative principles. Do you believe the housing crisis
we're experiencing will contribute to a difficult time for Republicans
(27:57):
in Congress in twenty twenty six if they don't immediately
try to solve this thing or get on the road
to solving this thing.
Speaker 2 (28:09):
Yeah, I mean, look, I mean I think it's certainly
a negative. It's always hard to sort of way how
you know, everything kind of balances out, and at the
end of the day, it's a binary choice. And if
you give people, you know, if your best reason for
people to vote for you is better than your opponent's reason,
then you can have a lot of strikes against you
and still win sometime. So yeah, I'm not sure how
it all shakes out, but it certainly will be a
strike against this president and Republicans if they don't accomplish
(28:32):
some significant things on affordability in general and on housing
in particular. And there are some places where we might
see federal policies that really could make a big difference
for supply. And so for instance, you know, around there
are really two cities where there's significant federal land availed
them around them that could be made available for housing.
Those are Phoenix and Las Vegas. And the President has
(28:53):
talked about doing that, making you know, essentially opening up
federal lands to private development. So the more how and
can be built there, that could be very helpful in
those places. But you know, there are not a lot
of silver boats when they talk about how nationally we're
going to open up all of this land for housing. Well,
I mean, other than those cities, there's not really cities
that have a lot of federal land nearby. And so
(29:13):
there are some places where there are some obvious things
you can do, but in most places, as I said,
the challenge is bad local policies and that's kind of
difficult to get at as a national matter. It's going
to be largely on, you know, on the politicians in
those areas to have those those kind of local fights,
and you know, I think in terms of messaging for reelection,
(29:34):
I think these guys have got to make sure they've
got you know, they've got messaging and talking points that
are appropriate to the market and the challenges in their
particular areas. And you know, in some places, you've got
some Republican members of Congress from places where housing is
still very affordable, so they might not be too worried
about it. But obviously if you've got them in areas
(29:54):
where this is a big problem, they've got to figure
out some suite of at least talking points to blame
you know, local policies, if not actual solutions, which would
be even better if they could get some of these
things done.
Speaker 1 (30:06):
Final question for you on the housing crisis side of things.
You talked about regulations before. I think, you know, so
many things fall into that. But how much has the
extreme environmental policy that we see in California in particular
(30:28):
many other Blue states, how much of that has had
to deal with the limitations on housing stock in America today?
Speaker 2 (30:37):
Well, I think a lot. You know, New York banned
natural gas hook ups for new construction, and now I
think they're maybe going to delay their ban because of
the cost associated with putting an all electric everything is
not cost competitive. We've got you know, we've got regular
Even on the federal level, we had Biden's appliance regulations.
You know, they drove up the cost of basically every
appliance in your house by several hundred to one thousand
(30:59):
dollars each. And if you've got that on your washing
machine and you're dryer, and you're you know, and your
stove and your refrigerator, it adds up. It adds up
to enough to actually be material on the price of
a home. When you talk about all of these regulations
cumulative and so you know, those are all being dialed
back now by the Department of Energy and by the EPA,
and so the federal rules and regulations are being eased,
(31:22):
but in a lot of places, the rules and regulations
can be very expensive at the stay and local level.
And it's not just the environmental rules in terms of
applient standards and things like that, it's also permitting rules
and regulations. I mean, there's an amazing rant. Bill Maher
was on Chris Pratt's podcast, and he has this whole
(31:42):
rant about how he was trying to put a new
roof on his house in California, and they made him
have like five inspections and he had to wait forever,
and it cost them an additional you know whatever. It
was on top of the normal cost of a roof.
And he was just like, I'm not going to put
a bad roof on because I don't want it to
fall in on me. Like, we let me put the
roof I want on my house. And I think you've
got a lot of regulations and permitting restrictions of that
(32:04):
sort where you know, each one might only be a
couple hundred dollars or whatever it is, but the time
that's associated with it, and the cumulative effect is that
you make homes much more expensive than they would otherwise be.
And of course, you know, we also have one significant
Trump policy that's adding to construction costs, and that is
his tariff policy, and particularly on lumber, that flows through
(32:25):
into construction costs. And so you know, it would be
good to get a suspension on some of the tariffs
that are relevant to home building as well as part
of this affordability push.
Speaker 1 (32:35):
Well, and messaging is very important here. Republicans have had
a difficult time doing that with a lot of different
areas how much will messaging as we move into twenty
twenty six. And what I mean by that is point
to Gavin Newsome in California, point to Kathy Hokel in
(32:55):
New York. These are the people who have made your
life miserable. If you doubt that, ask the people in
California and New York. But they always see there always
seems to be a tepid response to those at tepid
messaging to that, do you have hope that the Republicans
will get their messaging straightened out as they head into
(33:17):
twenty six?
Speaker 2 (33:19):
I mean probably not know they're not you know, the
Democrats have some very bad policies, but they're very good
at politics nonetheless. And you know, one of the challenges
we have is that a price control message is an
easy message. And you can ask someone like mom Donemi
who Mom Donnie who just says, you know, I'm going
to lower rents by decree and people, okay, that sounds good.
It's a much more difficult, complicated message to say, you know,
(33:42):
we're going to pull back on some of the regulatory
and permitting requirements and land use restrictions and allow more
supply to be built. And you know, even you know,
let's say low income housing set asides, which have been
a disastrous failed policy in all these blue areas. When
you tell developers you can't build anything unless you set
aside some percentage of it for below market rate rent,
(34:05):
you actually get a lot less housing built overall as
a consequence of that, because now you make it harder,
you reduce the return on capital, so less capital goes
into housing, you get fewer projects. The ones that do
get built have these set asides, but you get less
additions to your housing stock overall. Now, if we go
and we say, actually, we want to let them build
ultra high luxury as many as they want, that's better
(34:25):
because people move up and they vacate where they were,
and then those people move up, and then the oldest
part of the housing stock becomes the cheapest and available
at the lowest rate for people. And this is how
it's always worked historically. People say, you know, that is
much harder to explain than just we're going to order
lower rents. We're going to order developers to build low
income units. And so the democratic message that doesn't work
(34:48):
is actually simpler and easier to explain than the market
driven message. The conservatives. Conservatives have even though our message
actually works better in practice, and so we've always had
this communication challenge.
Speaker 1 (35:00):
Just a few minutes left, and I did want to
reserve some time. It's hard to believe, but we almost
fifteen years on the release of your book, Democracy Denied.
Speaker 2 (35:10):
Yes, you've very antiquated at this point, but you know,
occasionally they sell it for twenty cents at Amazon or something,
so when they have it on some when they're just
trying to dump it, I would still recommend that people
get it because even though a lot of it was
very time bound to what was going on by then,
there are a couple of chapters in there that are
still extremely relevant. In particular, I've been trying to get
(35:30):
this bill called the Rains Act passed since since then,
and you did get it done in Wisconsin, were six
other states have done it on the state level. But
this is the you know, such a simple idea, any
major regulation, one that has a major effect on the economy,
instead of agencies being able to impose it directly, they
should have to send it to the people's elected representatives
in Congress or in the state level at the legislature
(35:52):
and have an affirmative vote of approval. Not because Congress
is incapable of doing stupid things. We know better than
to think that. But at least then the inertia and
inability to get things done in Congress works in our favor,
and it stops bad ideas and bad regulations instead of
them just sitting on their hands while these things pile up.
And you know, at least you'd be able to look
up who voted for them and hold them accountable if
(36:12):
we had a system like that. And so that's there's
a whole chapter on that in there, which you know
we're still you know, we almost got it in the
big beautiful bill this year, and Jim Jordan got it
in the House version coming out of committee, and then
they took it out on the House floor because they
were worried about Senate rules. And then Mike Lee tried
three or four different versions and the Parliamentarian wouldn't let
him do it because the reconciliation process is so convoluted.
(36:35):
And so we were close, we were as close as
we that we've ever been, but we weren't quite able
to get it over the finish line. So we'll keep
we'll work another fifteen years on that maybe someday we'll
get it done. But it's super important because you know,
we saw Trump reversed so many Obama regulations, then Biden
came in, snapped his fingers, put them all back in
and then some. And so Trump's accomplishing a lot on deregulation,
(36:56):
but it's not going to be very permanent unless we
get the Rains Act or something like it done. The
next Democrat will just bring it all back again and
then some. So that's I think very relevant from the book.
And you know, the point, and that's kind of where
the title of the book comes from, right is I
was saying, it's an affront to democracy that all the
power is held by these bureaucrats and regulators instead of
our elected officials in Congress. And you know, I had
(37:16):
no idea that the Democrats would refine, redefine democracy to
mean just whatever they're in favor of, basically regress to
process and so forth. And it's kind of interesting because
now you know, now they're against whatever the president wants
to do, they call it an affront to democracy. He
was elected in an election, and so that word's been scrambled,
(37:37):
But that was what I was referring to in that
title was this problem of an unelected kind of permanent
bureaucratic state making the decisions instead of our elected representatives.
Speaker 1 (37:45):
No, I think it's a fantastic title for an era
where democracy was definitely denied. And you know, it's all
just a little bit of history repeating because as you mentioned,
you have democrats going around crying and screaming in the
nashing of teeth about how Trump is, you know, assaulting
democracy as the same people shouting that are going around,
(38:09):
you know, trying to put their political opponents in jail,
remove them from the ballot, and and you know, indict
them on bocus charges and all of this sort of stuff.
At the same time, you had an Biden administration that
was you know, cutting off communications from one half of
(38:29):
the country, the Conservatives out there, and then you had
a president through this auto pen scandal, who wasn't there,
as you know, a lot of us knew anyway, we
didn't need, you know, the the op ed from a
Hollywood star to tell us that before the election. But
it is interesting that there have been times where democracy
(38:52):
has indeed been denied. But I think it's fascinating that
democrats are saying that that is the era under Trump
when they have done so much to deny democracy over
the years.
Speaker 2 (39:06):
Right, you know, it's interesting to them. To them, the
affront of democracy is when the elected president fires people
in the bureaucracy, whereas to me it was kind of
the opposite. So what are you going to do?
Speaker 1 (39:18):
Yeah? Absolutely, thanks to my guest today, Phil Kirpin, principal
at Unleash Prosperity. Phil has joined us to talk about,
you know, all of the things going on in the
housing side of things and the absolute urgency of getting
down to business and working to solve these problems. You've
(39:41):
been listening to another edition of The Federalist Radio Hour.
I'm Matt Kittle, Senior elections correspondent at the Federalist. We'll
be back soon with more. Until then, stay lovers of freedom.
I'm anxious for the fray
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