Home sale signs are posted along Topanga Canyon road in Los Angeles, on Thursday, Oct. 19, 2023. Sales of previously occupied U.S. homes in September fell for the fourth month in a row, grinding to their slowest pace in more than a decade as prospective homebuyers grapple with surging mortgage rates and a near historic-low level of properties on the market. (AP Photo/Richard Vogel) Richard Vogel/AP

Bidenomics has destroyed the American dream

Washington Examiner December 15, 12:10 AM December 15, 12:10 AM Video Embed

The economy is growing. Unemployment is falling. Wages are finally beginning to rise faster than inflation. Yet most voters say they are unhappy with how President Joe Biden is handling the economy. More voters now believe they would be better off financially under former President Donald Trump.

This is driving Democrats crazy. Why isn’t Biden getting credit for an improved economy? Why isn’t Bidenomics the winning campaign theme Democrats thought it would be?

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The biggest of several reasons is inflation. Even though wages grew faster than inflation in the past year, comparing real wages now with what they were before Biden took office shows that Bidenomics has made most people poorer.

Relatedly, Federal Reserve efforts to contain Bidenflation by jacking up interest rates have put the American dream of home ownership out of touch for many people, especially young voters who would otherwise be more likely to support Biden and the Democrats.

Despite efforts to convince people otherwise, most still want to own their home. Inflation and rising mortgage rates mean the housing market, which was already difficult, became impossible for many, especially for first-time buyers.

According to Redfin, a typical home buyers’ monthly mortgage payment has almost doubled from what it was in 2020 to about $2,900. Before Bidenflation, a $2,000 monthly mortgage payment could finance a $400,000 home. Today, the same buyer could only finance $295,000.

This would be fine if house prices were falling, but they’re not. They’re rising sharply. The number of home sales has been falling, but not prices. And rents are rising, too.

How is this possible? In a market-based economy, rising prices should produce greater supply, pushing prices down.

But we don’t have a free market in housing and have not done so for generations. Localities put limits on what property owners may build on their land. Restrictions have become increasingly onerous, especially after Congress passed the National Environmental Policy Act in 1970, and most states followed with their own versions, such as the California Environmental Quality Act.

These green regulations and other mandates, such as minimum lot size and floor-to-area ratios, have driven housing costs higher across the country. A recent study by the Joint Economic Committee found that without zoning and environmental laws that impose a “regulatory tax” on home building, 20 million more homes would exist in the United States today. House prices would be far lower, and more people would be realizing the American dream.

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While it would be inadvisable for Congress, or the Housing Department, to dictate land use regulations nationwide, the federal government does have tools to push localities in the right direction. Instead of the hundreds of existing formulas and grant systems used to spread housing dollars across the country, Congress could take all existing spending and turn it into a simple block grant program.

The only qualification would be how much housing a state built the year before. If California builds none, it would get no money. If Texas built a quarter of all new units, it would get a quarter of the money. Such an incentive structure would change local zoning laws quickly, more housing would be built, and far more people could afford their own place.

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