How to Fix Washington's Affordability Crisis

Welcome to the Kato podcast. I'm Ryan Bourne, Kato's R. Evan Schaaf chair for the public understanding of economics. 2026 has been dubbed the year of affordability, and it's not hard to see why. Consumer prices have jumped 28% in just the past six years. And last week, the Iran war-driven gas price spike gave us the highest monthly inflation reading since 2022. Grocery and electricity prices are up more than 30% since 2020, and borrowing costs on mortgages, car loans and credit cards have jumped as well. Now increasingly, the public sees the price level, that's everything costing more as a result of inflation, as synonymous with a bad economy. But one of the central arguments of our new Kato Handbook on Affordability, released today, is that Washington keeps treating this affordability discontent as one issue when really it isn't. What people call an affordability crisis is really a bundle of different frustrations. Stick a shock from higher prices after that inflation surge, expensive credit, ways that Donald Trump era policies like tariffs and the war are pushing up certain prices in particular, and structural price pain from long standing dysfunction in markets like housing, childcare, healthcare and energy. These distinctions matter because different problems require different answers. If the problem is economy wide inflation, that's money losing its purchasing power, that's a macroeconomic issue. If the problem is the price of essentials arising faster than everything else, then that's often a supply and competition problem, typically underpinned by some bad public policy. Yet instead of really addressing this rigorously, politicians here in Washington, and indeed at state and local levels, keep reaching for the usual bag of tricks, price controls, subsidies, mandates, crackdowns on investors and other policies that treat prices as the problem, rather than as important signals of real world scarcity. Now at best those ideas just reshuffle costs from some consumers to other consumers or taxpayers. They don't really make things cheaper to produce, and they often bring shortages, distortions and dysfunction along the way. So that's why we worked on this handbook. It argues for a very different approach to the affordability crunch, underpinned really by two principles. First sound monetary policy and tighter fiscal policy to reduce inflation and try to prevent another inflationary blowout. And second, more economic freedom to make it easier to build, produce, innovate and compete in those sectors that really dominate household budgets. So I edited the volume, but today I'm delighted to be joined by some of the key authors who actually wrote most of the recommendations. So first of all, Jay Keadia, a research fellow at the Center for Monetary and Financial Alternatives. Hi, Ryan. Thanks for having me. Colin Grabo is an associate director at the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies. Right. I look forward to the discussion. And Steve Slewinski is a senior fellow at the Cato Institute in the economics department. Happy to be here. So Jay, let's start with you. Let's start with the big picture macro stuff. The last couple of weeks we've had strong inflation figures last week with the CPI Consumer Price Index really grabbed headlines and pulled fuel onto the fire of these affordability concerns. For listeners who weren't following it that closely, what was the story of that release and how worried should Americans be about really high inflation reemerging? Yeah, of course, the primary cause of that was the Iran War and then the Middle East crisis spilling over into oil prices. That's usually how the supply shocks start. You'll have this ill-conceived government policy that leads to some sort of supply restriction. In this case, it was oil through the war. And the first thing you'll see is oil prices spike because oil prices are very receptive to economic conditions. They're also very easy to change very quickly. That's where they're the first thing to be affected. It's also actually kind of the reason why the Fed tends to ignore oil prices when it's setting monetary policy, focusing more on core inflation metrics that don't include food and energy. That's not much comfort to the consumer because they still have to pay higher prices at the pump. And kind of the way to think about that is it's not just energy prices full stop. That's the first domino to fall. So you have this massive inflation reading well over 3 percent. Of course, the Fed's target is 2 percent. That's not going to be the stopping point. There's no sign energy prices are going to come down anytime soon, but that's going to start trickling down into other goods and services that are provided and will eventually affect that core inflation metric that the Fed cares about and that affects people not just at the pump, but at the grocery store. Yeah. And apparently there's a lot of trade in things like fertilizer that goes through the straight of a moose as well. So it might not just be limited. Yeah. Just on that point of thought, right? If fertilizer prices are going to go up, I guess what's going to happen to the cost of everything that relies on fertilizers as an input, well, that's going to go up as well. Right. Next thing you know, that one oil price shock is spilled over into multiple things that people actually pay, you know, very close attention to the Fed. And of course, you as a consumer, be with your wallet. So before we get onto the policy recommendations, there was a new paper by the great Lutz Kilian, an oil energy economist expert who had a paper this week, academic paper, which suggested that, you know, if the straight of a moose is closed for say three months, we could be looking at headline inflation going up somewhere between four and a half and five percent. So very high. But to put that into context, at the inflation that we've just lived through, I think peaked for the personal consumption expenditures index. That's the one that the Fed targets at 7.2 percent. A lot of people still talk in Washington as if the last inflation was solely driven by various supply shocks, the pandemic, the Ukraine war that drove up the price of energy and foodstuffs. And that, you know, Washington was totally passive in everything that happened. Well, yeah, I mean, of course, here's the thing again, you take that Kilian paper into perspective, are the authors wrong? Of course not. But that's making a whole series of assumptions that we stop at four or five percent based on good government policy to follow. That, I mean, is hopeful at best. Our recent history is not very indicative that this is going to go in a good direction, tying back to the to the affordability handbook. All of this assumes that the Fed does a good job in responding to these shocks, that Washington doesn't keep printing money, putting that into into bank accounts for people to spend and driving up demand, all of which are very hopeful assumptions at best, right? Now, the Fed could respond to the situation correctly. And we have recommendations, of course, in the handbook that that offer suggestions as to how to do that. But people should definitely know that yes, war supply shocks are a problem. But our federal and monetary response to that is just as important to make sure that inflation doesn't go completely out of control. Yeah, if we react to those shocks by allowing more money creation, running bigger federal deficits to try to make everybody whole, we turn a supply shock in a specific sector into a more general inflationary problem. Not that we would ever do something like that. Imagine, imagine that we would do something like that. So one of the kind of starting points for us right in this handbook is really that we think that affordability angst among the general public is primarily being driven by the inflation that they've just lived through. I think there's good evidence of this, right? If you look at Donald Trump's net approval rating on inflation of cost of living, it was net approval plus 6% on inauguration, and it's steadily, steadily declined ever since. In fact, his net approval on his handling of inflation and prices is much worse than the net approval on his handling of the overall economy. And I think the way to understand that is that the public are still peeved about the legacy of the recent inflation and are simply disappointed that Trump hasn't got prices falling again. And ultimately, what determines the price level is macroeconomic policy, it's monetary and fiscal policy interacting with the growth potential of the economy, not all these various things that politicians talk about in regards to affordability. No, of course not. I mean, well, first right from the top, right? There's a there's a flawed campaign promise here, which is that Trump did not promise lowered inflation, he promised promised lowered prices, right? So the so going in when it comes to inflation and prices, so much is about expectations and the things that drive that you've now anchored in the minds of lots of voters that they're actually going to see not a lowered surge in prices, but literally cheaper bread, food, groceries, everything else. That just doesn't happen in our economy, right? Deflation is not I mean, inflation is a problem, but the central bank views deflation as a much bigger problem than that. So right of the bat, that was that was the first mistake is thinking that we could actually sort of use the government to engineer lowered prices altogether. Right? That's the first problem. Now, the second problem is that the policies that the administration is implementing, along with poor monetary policies actually making that worse. So not only have we not had lowered prices, we even haven't we haven't even had lowered growth in prices inflation is actually quite a bit above the Fed's 2% target and accelerates accelerating as we just as we just discussed. And that's again, if you want to point fingers at someone, the first place you should be pointing fingers at is right here in Washington, starting with our spending. And there's a great chapter in the affordability handbook on fiscal expenditures, where if you have a very reckless fiscal agent spending lots of money, well, you can't really expect that everything else will sort of smooth that away. Right? That acts essentially, as you know, as a as a gigantic demand shock that pushes prices up and reduces the value of dollars that people already hold in their wallets and their bank comes. Right? And then couple that with, and I know this is this is something specifically that you like to talk about as well, which is the main institution responsible for stable prices is the Fed. And they somehow skirt responsibility when it comes to this, right? And I don't know what's going to happen with the price shocks from Iran and things like that. But just take the post pandemic as an example. You had inflation surging pretty high, and then the Fed saying, Hey, look, these are all supply shocks, we have nothing to do with this. And next thing you know, inflation becomes entrenched. Right? If they've been if they've been following sensible policy, this whole inflation is transitory, supply shocks don't affect the economy. None of that would have been a thing that consumers would have to worry about. And the broader problem, I think, I think for people to understand what the problem is with the fiscal government is easy, it's spending, the problem with the Fed is discretion. And what I mean by that is 12 people think that they have better information about the economy than all markets or demand and supply markets put together. These 12 people go into a room, look into a crystal ball apparently, and then come out and then say that this is what interest rates should be to fix all our economic problems. One, that's not how it works. And two, that's not how it should work. It's impossible to expect that 12 people sitting in a room have enough information by the way I'm talking about the 12 FOMC members were in charge of setting interest rates. It's impossible to think that they have enough information to deal with the problem as big as inflation. Right? So that discretionary authority of the Fed is really one of the key reasons why inflation got out of hand in 2022, and why it's already signaling danger science. So your part of the handbook offers some reforms that we can make to monetary policy to try to lower the risk of a similar inflation outbreak in the future. And if I were to summarize them, what most of your reforms say is that the Fed's action should be more strongly linked to a rule rather than that discretion you just talked about so that people kind of know what to expect and can factor that into the way that they organize their lives. But also that the Fed's remit should be much more strongly focused on its price stability mandate and perhaps it shouldn't be doing as much as it does. So why don't you just explain to us how those two things you think can actually help keep inflation at least lower than we've seen? Yeah, that's a perfect encapsulation of the sort of policies that I think would lead to better price outcomes for everybody. Let me start with the rules based framework first, right? For for about 20 years from 1985 to 2005, the period that most economists call the Great Moderation. This is this period in American economic history with stable prices, stable employment. The Fed actually takes credit for a lot of that. Now I don't I don't subscribe to that theory per se. But part of the reason why the Fed itself never became a source of disturbances the way it did in 2022. And part of the reason why it helped keep economic conditions fairly even keel was because academic research shows the Fed was following a rule. And what I mean by a rule is some sort of easily predictable, easily figured something that you can easily figure out how the Fed is setting the interest rate in comparison to things like inflation and employment that are part of its dual mandate, right? So some sort of easy arithmetic formula that really you and I or any person really could could not have to go to CNBC and spend four hours listening to a talking at figure out, you know, Fed speak, could easily just plug this into a computer or into a calculator and figure out exactly kind of where interest rates are and where they're going into the future. Benefits are obvious, clear, objective, you know, policymaking. But what actually academics have found out that economic outcomes are actually way better when you follow that rule as compared to just relying on Fed discretion. You know, take 2022 as an example. By the way, the Fed publishes all of these rules on the Atlanta Fed website. So you can go there and check, right, what these rules suggest rates should be now and what they were in the past. Virtually, all of the rules would have had the Fed raise the interest rate way sooner than they did, right? So we wouldn't have had to have this discussion of inflation being transitory or whether the Fed should raise rates or not. And then the rate at which the rates would increase would be way smoother than what it ended up being, which was this massive 0 to 5% interest rate spike in the matter of just a year. So those are some of the very obvious benefits. And then there are secondary benefits. We also live in the world, unfortunately, with a lot of political interference of the Fed. Rules are the best tool we have available to shield us from some of that, which is the Fed just has to say has to commit to a rules based approach, and then short term political pressures on the Fed don't really affect how those rates are set. So that's the rules based aspect. That's the best thing we can do under the current framework for good policy outcomes. And then everything else, unfortunately, that the Fed is engaged in is just a distraction from its price stability mandate. And our recommendations are don't do it. So just a quick example is regulation, right? Does the Fed need to be a regulator? We have two other national federal regulators that regulate banks, OCC, FDIC, tons of state regulators. None of them also have this price stability mandate for better or worse. The way we view the Fed today, its primary job is delivering stable prices. So we had a very bad reputation at doing that. But let's assume that's their primary goal. Well, if you have the Fed be a regulator, the way the Fed controls inflation is by tightening credit conditions. Well, guess what that does? That makes financial situations worse for the banks that the Fed is supposed to ensure are stable and sound. So now you've introduced this conflict of interest between the Fed as a regulator and the Fed as a price stabilizer. And that's the case for a lot of other things that the Fed is engaged in. Our recommendations are don't do those things. Yeah. And don't do many of the other things that people increasingly want the Fed to do like solve inequality or solve climate change or other things like that. Well, you know, despite our belief that most of this affordability anxiety has been driven by that inflation itself, a product of excessive macroeconomic stimulus in large part, I think it's fair to say that high inflation itself brings a lot of attention to certain specific prices that people really struggle with day to day. And of course, the primary cost for most people is housing. So Steve, you wrote the housing chapter of this handbook. The Trump administration seems acutely aware of there being a at least housing affordability discontent. They had a whole chapter on it in the most recent economic report of the president. When you were flicking through that work, did you get the sense that they had the right ideas about how we could improve affordability in an economically sensible way? I think they finally settled on the right answer. And so I'll kind of sort of start with the punch line, which is they eventually figured out and stated so in the economic report of the president that supply problems are really the core of the affordability issue, meaning in the United States today, there's so many restrictions at the federal, state and local level on where you can build, how you can build it, what you're allowed to build, and how fast it will take to be able to build that, right? All of those kinds of restrictions on speed, on cost, on minimum lot sizes, for instance, things like that are going to always have upward pressure on housing prices. I think where the administration airs, though, and this is very evident in the economic report of the president, it's also been rather evident by the somewhat schizophrenic nature of these two competing executive orders that the president has signed over the past six months or so. On the one hand, they make this very compelling and I think accurate case of why these federal and state and local restrictions decrease, constrict housing supply and as a result drive up prices. But then on the other hand, they'll have this other set of reasoning about how these deep pocket investors are coming in and buying up all the houses. They also admit, by the way, that it only takes two or three percent of the overall market are these so-called deep pocketed investors. But never mind that, don't mind the man behind the curtain. Really, what's happening here is that these sort of bogeyman logic is presiding in that set of rationales. Plus, they also say that immigration is driving up, illegal immigration in particular is driving up housing prices because, again, immigrants are coming in and buying the houses. These two assertions though have virtually no actual evidence behind them. And so it's really odd that so many of them are, they're spending so much time on both of these when the truth is there's only one that has any real explanatory power and that is the supply restrictions. Well, it doesn't seem crazy to me that if you have an increase in population or as people get wealthier or if you're subsidizing stuff from the federal government that you're going to put upward demand pressure, the important thing to remember though is that prices are set by the interaction of supply and demand. And so if at the same time, you've got a lot of local regulations that make it difficult to build and demand is going up, of course, more of that demand is going to feed through into higher prices rather than more houses. Now, housing is an area where kind of misguided policy responses to affordability concerns can be really destructive. You know, you have things like rent controls, affordable or inclusive housing mandates. And in your chapter, you do acknowledge that there's some of these demand side subsidies that also drive up housing costs. But ultimately, you know, you conclude that too many areas of the country, the supply of housing is being artificially constrained. So if you were just to kind of identify the one or two, what you consider the kind of key levers that could lead to improved affordability relatively quickly, because politicians want stuff to happen relatively quickly, what recommendations would you point to? Well, I definitely think you have to sort of sequence them in terms of what's the low hanging fruit, as they say, on the actual potential reforms at the state and local level. There's a few that you can do sort of right off the bat. One of them, in fact, I think one of the more more the compelling ones is in the area of how fast you can actually get shovels in the ground to build more housing, because we do have a real problem. And I think the fundamental problem out of all of these is the zoning issue, just the fact that local governments will tell you where and where you cannot build. But those zoning laws take a very long time to uproot and to reform. And I think it's been very limited success in places where it's been tried because of the dynamics of a lot of local politics. But one thing you can do is within the construct, within the framework of existing zoning laws, you can speed up the process to build the things that you've already been approved to build. And so most construction projects, residential and commercial, will often take weeks, months, maybe even years to get approvals, permits, just to start construction. Now, this is of course a real problem, especially in the sense that if you take a long time to start building a project, the cost of the inputs to those construction projects, they're going to go up, especially when you have tariffs that are also going up during this period of time by an indeterminate amount. It's very hard to play in long term when you've got this sort of whiplash effect with all of tariffs going on. But putting that aside, just the reality is, if you're allowed to build a house on a specific parcel, but you can't get a permit for months or maybe even a year, the reality of the dynamic of the market is going to change. And so you want to be able to commit early. And so I like the idea of having permitting reform as being a very first, frankly, a necessary first step. But I think one of the easiest to achieve in the short term, and you can effectively have a law that says state government, I rather sorry, local government, it could be a state law, but it's a local government has to within X number of days, approve a permit, as long as it fits all of the criteria that is already laid out in the zoning code. Furthermore, if it's not done within that period of time, say 10, 20, or maybe at most 30 days, it is what they call by right, automatically approved. And so it's sort of if they don't get to it enough time, if there's a huge bureaucratic process that is going to be hindering that, why put the burden of proof on the builder to explain to a bureaucrat why it needs to be approved if it's already been approved in the zoning code. And in fact, you can go one step further, you have the shot clock in place. And if the bureaucracy can't meet that shot clock, maybe the government has to refund all of the permitting fees that were paid up front during that application process, that actually creates a very strong incentive to either get a very non complicated already approved concept for a building out the door quickly. But then on top of that, it would effectively create more building on the parcels that we've already approved through zoning code that we could build more housing on, especially if it's something that allows them to subdivide parcels to build more than one house at a time, maybe a condo, a multifamily unit, things of that sort. So just the idea of getting government out of the way of requiring permission for things a builder should already be allowed to do that I think would really take a lot of the burden away from this housing construction. Nothing like the potential loss of revenue to focus the minds of government. When you're talking about the fees there. And this really, I think an important point for the general listener who perhaps is intrigued by the handbook, maybe considering reading it. It's not that we're saying that these supply restrictions have driven the acute affordability angst that we've seen of the past few years. That was clearly the inflation we've lived through. But we're saying that there's many laws on the books that inflate the costs of the basics higher than they need to be the structural regulations, provisions that have been in there. And Colin, your chapter really on food is a great example of this, because 83% of Americans surveyed said groceries were either very expensive or somewhat expensive. And groceries have gone up slightly faster than overall inflation. But mainly this has been a consequence of the high inflation that we've lived through. But when people go into the grocery store, and they pick up something, they're still shocked by the high prices, their pain. Now, there's not much governments can do about inflation. Once it's out of the bag in terms of lowering the price of particular goods, and many of the things being proposed like price controls on food, the surest way to get shortages. But you argue that there are existing laws, regulations, programs at the federal level that actually makes vast numbers of foodstuffs higher in terms of their price than they need to be. That's right, Ryan. The government imposes all sorts of measures that increase the cost of food. I think a good starting point are tariffs. This is a tax on imported goods, including food. A very straightforward effect of these tariffs is to increase the cost of that food that comes in from abroad. So straight away, if you want to make food more affordable, stop putting tariffs on it. That's pretty straightforward. But there's also a lot of measures that impose, have indirect effects that increase the cost of food. For example, beyond tariffs, another signature policy of the Trump administration has been cracking down on immigration. Well, immigrants are a key source of labor for our agricultural sector, and making more difficult to find the labor to harvest crops, for example, is going to show up in higher food prices. So loosening immigration restrictions and reforming our immigration laws would be a very another sensible way of increasing food affordability. Beyond that, other direct or indirect measures. I mentioned the tariffs on imported food, but also tariffs on other goods such as steel or farm equipment, say fencing. All sorts of these are all inputs used by the agricultural sector. You drive up their costs again. This will inform the cost of food by driving it up. And then we have other, beyond taxes, these tariffs, we have just restrictions on the ability to produce food or import food, such as the most notorious example is probably the US sugar program. So for those not familiar, the United States has a set policy where it restricts the amount of sugar that can come into the United States. It lets a certain amount come in at relatively low tariffs and beyond that amount, very, very high tariffs. And it also, unbelievably, actually restricts the amount of sugar that is produced. So the whole goal here is to raise the price of sugar. That is the policy objective is all about restraining supply. And if demand is steady, the end result is going to be higher prices. Unsurprisingly, the cost of sugar in the United States is typically anywhere from twice to three times as much here than is in other countries. And this, of course, is ultimately going to show up at the grocery store or when you go to the bakery to buy something. So this is another way that the government increases the cost of food. So yes, and that's just on the thorough level, we could even get into the state level, lots of stuff going on there. So the bad news is, there's lots of things the government is actively doing that increases the cost of food. The good news is, there's all sorts of things they could also do to improve the affordability of food by getting rid of some of these misguided policies. Yeah, that's definitely right. And I mean, one thing that the Trump administration's EPA did relatively recently was actually tighten the renewable fuel obligations, the most commonly known as the ethanol mandate. Now, that might not have as big an impact right now, because the oil price is so high, perhaps renewable fuels would be more economic to invest in anyway. But it does, you know, that's something that again, increases compliance burdens on refiners and blenders, which itself then feeds into other costs through the economy. So, you know, the administration may hope that improves domestic energy security, but yeah, that's something again, where there's a trade off potential trade off over time of higher prices as well. That's right. And the ethanol, of course, is made from corn. So this is it's hard not to read this as a payoff to corn farmers, which you could also see is, you know, they've been caught in the trade war crossfire. So we raise tariffs on Americans, that leads to, you know, negative consequences for our farmers. Well, then we pay off the farmers by, as you mentioned, tightening the renewable fuel standard, which increases the cost of corn, which is bad for consumers. And then of course, you know, increasing the cost of fuels and wise either. So a lot of bad policy all the way around. So it's not just food. You have a really good chapter on transport as well. And then of course, there's the transport of food. So I guess these things are linked. So you're an expert on the Jones Act, shipping rules, shipping rules and that form of protectionism can feel quite remote to many people, I suspect, because it's very indirect, its impact on their household bills. But you argue that this does feed into their household costs. So, you know, talk to us at the moment, I know that the Trump administration has talked about relaxing some of the Jones Act rules. I'm not sure what the status of that is given the high oil price allow more ships to from overseas to transport oil into the US. But what other measures could they take on things like shipping or other ways of internal transportation? Yes. So you mentioned the Jones Act and there's a neat intersection here between the Jones Act and food. So for those unfamiliar, the Jones Act is a federal law that restricts domestic water transportation to vessels that are owned and flagged and built and crewed by Americans. These vessels are much, much, much more expensive than internationally flagged ships. And so shortly after the Iran War began, the Trump administration, in a bid to restrain the cost of energy, suspended the Jones Act for the transportation of energy products, but they also exempted the transportation of fertilizer, which, you know, because farmers have been concerned, I think you mentioned earlier about fertilizer coming out straight of Hormuz. Well, you know, one issue with fertilizers, we produce a decent amount of it in Florida. But there was a US International Trade Commission investigation a few years ago in which Mosaic, which is a fertilizer producer in Florida, to give you a hint of just how much the Jones Act increased costs, they said it costs just as much to send fertilizer from Tampa to New Orleans, which is less than 500 nautical miles, as to send it to Brazil, which is over 5,000 miles away. So, you know, this increases the cost of fertilizer, which, you know, has spillover effects into the cost of food. So we're talking about transportation, but transportation touches everything, including food, but also including energy, which is why the Trump administration suspended it. Well, it's all well and good that they did so. But this is, you know, this is a recognition that this increases costs. So why do we have this around at all? This is, you know, a tacit recognition. This is a tax, a de facto tax that we're all paying all the time. So instead of, you know, 60 days of relief, we should be pushing for repealing this law in its entirety. But, you know, beyond shipping policy, there's other things that the government does to raise our costs. Something, you know, like 70% of Americans drive themselves to work, you know, autos are very fundamental to getting around in the United States. We live in a fairly auto dependent country. And there are lots of government policies to increase the cost of auto purchasing and auto and maintaining and owning that car. We can start with, you know, as with food tariffs. We have perhaps most notoriously here the chicken tax, which is a 25% tariff on imported light trucks. This was imposed back in the 60s, I believe in retaliation for the French and Germans putting tariffs on American chickens. Well, those tariffs are removed, but the chicken tax remains. But even on, you know, passenger cars, we have a 2.5% most favorite nation tariff. Then, of course, we have the steel tariffs and tariffs on aluminum. Well, that's a major input for steel makers. So this all drives up the cost of tariffs. You know, I mentioned immigration restrictions in the context of food. This also applies to say find a mechanic to maintain your car. And then, as mentioned, the Jones Act drives up the cost of gasoline, which makes car ownership more expensive. So lots of things the government is doing to drive up the cost of transport. Yeah, I think that a key point that you made there that's worth digging into a bit more is that there's been a lot of focus over the last year on the new tariffs that have been implemented. But we shouldn't pretend that the US was a bastion of free trade in lots of areas even prior to that. And there are a lot of existing tariffs and protections on the books that actually inflate living costs of some of life's basics. So Steve, you know, you also had another chapter that was kind of more miscellaneous chapter that brought together everything else that kind of wasn't covered in some of the other chapters. But one example of that is clothing tariffs, tariffs on various types of apparel. And, you know, the tariff lines that the US has on clothing are regressive, not just because poorer households tend to spend more on clothing proportionately, but actually the line items of the types of clothing that they tend to be able to afford to buy face higher tariffs than the tariffs for many of the more luxury clothing products, which is just unbelievable. That is true. In fact, there in some respects, almost more aggressively taxed in the UF tariffs schedule. So I mean, 10 to 20%, sometimes exceeding 30% on certain items. And just these are inputs, certainly things like cotton or wool, you know, they face higher tariffs, but things like, you know, sneakers, shoes, the sorts of things that I mean, you think about back to school season, I'm a parent myself. And you don't see these types of price increases, or I should say, you don't see them called out on a receipt the same way you do a sales tax, for instance, right? So these are in a sense, hidden taxes as well. And they do fall on groups of people, what we call as economists regressive taxes, as you pointed out, those broad categories of goods that are larger share of the income of poor families are buying, right? Because I mean, it's, you know, perhaps you could say, I wouldn't sort of a class war for argument, I guess, but the argument is that, well, the rich people can afford it because, you know, such a small portion of their other income is devoted to these types of things. So it is regressive in that sense. And so it's going to hit those people the hardest. Yep, that's absolutely true. And you see this manifesting itself for a whole bunch of different items across the handbook. Now the handbook has a lot more in there. There's a lot more chapters. So as well as monetary policy on the macro side, we focus on fiscal policy. And then as well as housing, food, transport, we also address those thorny topics like energy, healthcare, childcare, higher education and consumer financial services. And I want to really like kind of wrap all this up really, because I think if you were to summarize the approach of the handbook to this challenge, it's too prompt. The first part of the book is about a sounder macroeconomic foundation, rule bound monetary policy, and more responsible fiscal policy, both to diffuse inflation now and reduce the risk of its reemergence to high levels in future. But then the second part of the book is really an acknowledgement that even beyond inflation, we're in an election year, politicians are going to propose a lot of ways to try to tangibly reduce prices of products and goods and services that people care about. So we're offering them a menu here of supply side reforms that would have the happy consequence of the double dividend of not just perhaps lowering prices or at least broadening options for consumers, but actually making the economy that bit more efficient as well, and perhaps even boosting the growth prospects of the economy. So that's been the introduction to the handbook. You can find the handbook on the Kato Institute website. There's a nice web version, lots of dropdowns where you can read the individual chapters or you can read covers to cover if you like through the PDF. We're going to be doing a lot more work on this topic over the coming months. And I very much think it's going to be one of the dominant narratives in the build up to November's election. So thank you for listening. That's all we've got time for today. Thank you, Jay, Steve and Colin for your contributions. We'll be back with the next episode of Kato podcast next Tuesday.