The following is a lightly edited transcript of the December 15 episode of the Daily Blast podcast. Listen to it here.
Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR Network. I’m your host, Greg Sargent.
President Donald Trump can’t seem to decide whether affordability is a hoax or not. He keeps saying concerns about prices are a con job by Democrats. But now he’s tweeting out video of himself talking about how important it is to do something about affordability, which seems to admit that costs are a problem, even on his watch. We think this neatly captures the dilemma that Trump and Republicans find themselves in. And it comes even as Republicans are starting to sound the alarm about the midterms a lot louder than before. In fact, the Republican National Committee chair is admitting that in the midterms, the party faces almost certain defeat. Economist Rob Shapiro has a great new piece at Washington Monthly spelling out the core of the problem, Trump’s policies. So we’re talking to him about all this. Rob, good to have you on, man.
Rob Shapiro: It’s great to be here, Greg.
Sargent: So again and again, Donald Trump has said in the past few months that affordability is a con by Democrats, a scam, a hoax, etc. etc. So it was a bit surprising to see Trump post video of himself on Truth Social at a rally at which he said this.
Donald Trump (voiceover): And I have no higher priority than making America affordable again. That’s what we’re going to do. And again, they caused the high prices and we’re bringing them down. It’s a simple message.
Sargent: So there you have Trump trying to say that the only reason affordability is an issue is because of Democrats, Joe Biden, etc. Now, in fact, Trump inherited an economy that The Economist called the envy of the world.
Rob, that aside, there’s no way to avoid the basic facts of the situation here, right? Which is that Trump now finds himself forced to admit that costs on his watch are a problem. Your thoughts?
Shapiro: Well, you know, there are two realities here. One is the economic reality that people feel they can’t afford the things that they used to be able to afford. And the second is the political reality, which is they blame Trump for it. And they blame Trump for it, I think, because he spent the first six months of his term saying, I’m going to totally redo economic policy, totally redo the economy around the tariffs. And so he seized responsibility for the economy. And of course, the tariffs only raised prices.
So they make the underlying issues worse. And people believed him. He was the master of the economy. Well, they don’t like the results. So he’s got a political reality, which is ultimately based on the underlying economic reality.
Sargent: Well, just in case people need a refresher, CNN put together a few clips of Trump on affordability. Listen to this.
Donald Trump (voiceover): The word affordability is a con job.
They use the word affordability, it’s a Democrat hoax.
Look, affordability’s a hoax.
Sargent: So what’s funny about this is that the political advisors are telling him, “Sir, you really have to stop downplaying costs. This is a meaningful issue for people.” So Trump goes out at a rally and mouths the words that he cares deeply about getting prices down.
But at bottom, he can’t bear to admit this, because it amounts to a confession of fallibility, which is impossible for him. He often says not only that affordability is a Democratic scam, but also that prices are way down compared to last year. Rob, what’s the reality? Can you just lay that out and make it simple for us?
Shapiro: Sure. The reality is that prices continue to rise, and they are continuing to rise at a rate which is a little faster than they were rising last year. Moreover, most economists expect inflation to accelerate because the impact of the tariffs is only now kicking in.
And the reason for that is that businesses knew the tariffs were coming, so they built up their inventories before the tariffs. Well, now they’ve spent down those inventories. So any new inventories they buy—either from abroad or made with inputs from abroad—are going to cost more, and they’ve got to pass it on.
Sargent: Right. So basically, these businesses just stockpiled a bunch of stuff as they were preparing for the tariffs to hit so that they wouldn’t have to pay the tariffs on those goods. Now they’ve kind of shipped all those goods out the door, and now they have to restock, and now they’re going to get hit by the tariffs and then pass the cost of that down to people. How do you simplify the data for us? Like, what’s the simplest way of understanding the numbers?
Because we’ve heard Karoline Leavitt, the White House press secretary, really cooking the numbers in crazy ways. In the simplest terms possible, what does the data say about what’s happened to prices in the last nine months in Trump’s presidency—second term?
Shapiro: In the last nine months—you know, in 2024, at the end of 2024—prices were rising at about 2.8 percent a year, and they had been falling steadily through 2023 and 2024. That is, the rate of increase in prices, the inflation rate, had been slowing steadily.
In 2025, the direction of inflation turned up again instead of easing off. And now prices are rising about 3 to 3.2 percent a year. The price of housing and the price of food and the price of electricity have been rising considerably faster than 3 percent this year. They are rising more like four to five percent. So even in the last year, living standards that people expect and are used to have become squeezed.
Sargent: And so it’s not surprising Republicans are clearly in a panic about all this. I’m going to read some quotes from Republican National Committee Chair Joe Gruters that were compiled by The Bulwark: “There’s no sugar-coating it. It’s a pending, looming disaster heading our way.” “We are facing almost certain defeat.” “The chances are Republicans will go down, and we’ll go down hard.”
Now, Rob that’s the usual effort to lower expectations and so forth. But the truth is that it’s a striking admission coming from the RNC chair. And Egger at The Bulwark talked to GOP operatives who roundly trashed Trump’s message about affordability. And they said it’s precisely because they need to stay loyal to Trump that they’re in such trouble. This is what they told The Bulwark. What do you make of that?
Shapiro: Well, I think that part of it was lowering expectations and part of it was ringing an alarm bell that if we don’t figure out how to address this in a credible way to the country, we’re going to get wiped out. And it means that they think that the wave of negative feeling across the country about the economy and Trump’s management of the economy cannot be turned around by spending more money on campaigns, which can make a difference if it’s close.
And if people say, Well, we don’t really know, you know... yeah, some things are good, some things are bad. That’s not the view of the country. The view of the country is: Almost everything is bad. And, you know, if you’re a president like Trump, who has to be the lead story every day, that’s a way of advertising, It’s all my fault.
Sargent: You wrote in your piece that Trump is uniquely vulnerable here for other reasons as well. First, he campaigned as a populist. And second, his right-wing populist policies are what are playing the big role. in making the crisis worse for working people. Can you explain that argument?
Shapiro: Sure. There are really two dimensions of it. One is the government addresses affordability all the time by subsidizing certain goods. So we subsidize health care, not only through the kind of tax treatment, but through ACA subsidies and Medicaid. Well, he’s cutting the ACA subsidies and he’s cutting Medicaid. So that means as a direct policy goal, he is making those health care less affordable for probably about 100 million people. We subsidize food and we subsidize it through the SNAP program for 42 million people.
We also have, in a way, subsidized it through very, very low tariffs on food imported from abroad. Well, the tariffs reversed that. So we are, as a policy matter, making food less affordable, just like we’re making healthcare less affordable. And the third area is energy, where again, he is [slashing] subsidies for wind and solar and other sustainable energies, which those subsidies brought down people’s electricity bills or held them down. Well, he’s ended those. That’s one of the reasons everybody’s electricity bills have gone up. So he has taken positive, deliberate steps to make healthcare, food, and electricity less affordable, not more affordable.
Sargent: And Rob, I think one of the pleasant surprises of the moment is that people really grasped the tariffs in a way that I didn’t expect. What I expected to happen was something like: Trump comes in, he sort of coasts on the decent economy he inherited from Biden. He talks about tariffs and says, I’m going to protect the country. I’m going to protect workers. And it all codes as good populist policy for people in the sense that he’s using power to protect working people. He’s willing to do that. He’s willing to intervene in the economy to protect them.
I figured that would all code just as good pro-worker policy, no matter what anyone tried to explain. But to my very pleasant surprise, the press has done a remarkably good job at explaining how tariffs actually work. And I think all the data suggests very strongly that people understand what’s happening.
Shapiro: Yes. The truth is that all the polls for the last decade have found that large percentages of the country—like 70 percent—like trade. They think it’s a good thing for the country because they know how many foreign goods they buy.
Sargent: You know, that’s really good to hear because there’s always a presumption on the part of the punditry to sort of say Trump just sort of has a lock on our arguments. He can’t lose our arguments. Right-wing populist rhetoric is just very pro-worker in a way that is impenetrable for Democrats and liberals to gain traction against. And it turns out that right-wing populist policies are actually unpopular on immigration, on trade, and even I think on wokeness, on cultural issues as well.
I just find it heartening that Trump is tanking so badly on the right-wing populist policies on the main pillars of the right-wing populist agenda. That just strikes me as a heartening development. What do you think Rob?
Shapiro: Well, I think it’s very heartening. I think the country was educated by Bill Clinton and Barack Obama about the fact that we live in a global economy and that that’s a good thing and you can’t go back. So I think it’s very heartening. But, you know, there’s one other dimension of this, and it’s Trump’s underlying anti-populism. And that is what’s happened to people’s earnings is very interesting, because over the last several years, productivity increased 10.2 percent—rose at a very healthy rate.
Sargent: Worker productivity.
Shapiro: Absolutely for productivity, because productivity traditionally translates into higher wages. Well, earnings, wages, and salaries have not gone up. It’s not that they didn’t go up 10.4 percent with productivity. It’s that over the last several years, they went up less than 1 percent. And that’s at every level of education. That’s for people with college degrees; people with some college but no degree; high school graduates; people with no high school diploma; and professionals—the people at the top of the education pyramid with graduate degrees or law degrees or medical degrees—their earnings have actually, after inflation, fallen a little.
So the question is: What happened to all the benefits from that productivity? Well, there are two kinds of income. There’s earnings, which you get by working; and then there’s capital income, and that’s interest, dividends, and capital gains. And after inflation, capital income has grown 30 percent. That’s where all the productivity gains went.
And Trump’s policies of making healthcare and food and electricity... all those cuts, making those things less affordable... were all done in order to deliver a trillion dollars in tax cuts to the people who own capital. And 88 percent of all capital income goes to the top 10 percent. And 52 percent of all capital income goes to the top 1 percent. So he has made life less affordable in order to make the rich even richer.
Sargent: And Rob, I would just throw in here that that makes it a big double whammy for them politically because not only are people getting clobbered by the price hikes that are Trump’s fault, people also hate tax cuts for the rich. They understand taxation as well. They understand the Republican Party’s devotion to transferring wealth upward. So how do you see this playing out? Just to sum this up quickly, how do you see it playing out into the midterms? Do you think the crisis continues all the way through and does it cause a Republican loss?
Shapiro: I think that the crisis will get worse in 2026. I think inflation is going to accelerate a bit, and I think unemployment is headed up. You know, the economy is weakening badly, and there is nothing they can do to turn that around between now and next November—in the next 11 months. You know, you can’t turn around an economy that fast. I think prices will rise at three and a half percent or so. I think that growth will slow. I think the unemployment rate will increase to 4.6, 4.7, 4.8 percent. And people’s feelings about the economy and their own economic position will worsen. I think that, you know, Trump... you know, he’s getting 31 percent support or 32 or 33 percent support on the economy, on overall approval. He is down to the Republican base. After all, he won 50 percent of the vote, and he’s lost between 15 and 20 percentage points.
Sargent: I will tell you what, Rob, the worse it gets for people, the louder Trump is going to start calling it a hoax and it’s just going to continue spiraling downward. Rob Shapiro, thanks so much for coming on with us, man. Really appreciate it.
Shapiro: Anytime, Greg. Anytime.