President Donald Trump with advisers as Operation Epic Fury begins on February 28, 2026
Tuesday’s vote made things pretty clear: we don’t want Donald Trump’s f**king war. No one wants their family members and friends going to the other side of the world, risking injury and death, to kill people we have no real grievance with. That view is largely a bipartisan consensus, at least among voters, if not among their representatives in Congress.
As is also pretty clear, the war is very much front and center in the affordability issue. Gas prices jumped as much as $1.50 a gallon in the months following the start of the war and are still more than $1.00 a gallon above the pre-war level. Diesel prices rose almost $3.00 a gallon at their peak and are currently more than $2.50 a gallon above their pre-war level. This is a cost borne directly by truckers but will be largely passed on in higher prices for food and just about everything else.
We are also likely to see a hit to food prices next year due to fertilizer shortages. Much of the world’s fertilizer comes from the Persian Gulf region. The blockades and damage to factories have meant that considerably less fertilizer than normal has been exported to the rest of the world.
Ending the war won’t immediately reverse all the economic damage it has caused, but it would be a great start. Also, because the war has jump-started the green transition across the globe (China’s exports of electric vehicles and solar panels are soaring), we should expect to see worldwide demand for oil falling sharply in the not-distant future. Two-thirds of the cars sold in China, by far the world’s largest car market, are now EVs. This means that oil prices will quite likely fall well below their pre-war level in the next few years.
The war is not the only policy Trump has pursued that raised inflation. Everyone but him now knows that we paid his tariffs. This raised inflation by roughly 0.8 percentage points in 2025. Ending the tariffs should lower prices of the affected products, although here too the benefits may not be felt immediately. Businesses have been happy to take advantage of market power to boost profit margins on the way up. Without some aggressive oversight, they are likely to be slow to pass on the savings from lower tariffs to consumers.
Higher inflation has also led the Fed to raise interest rates this year, reversing the downward course rates had been on prior to the election. If Trump ended his war and was forced to reverse his tariffs, the Fed would likely turn around and again lower rates. This would mean lower interest rates on mortgages, car loans, and credit cards. Of course, when the AI bubble bursts, that will also lower interest rates, but that is not as directly under the government’s control.
Near-Term Actions Beyond Just Reversing Trumpian Damage
Lower gas and fuel prices, along with the lower prices from eliminating tariffs, and lower interest rates, would be a great start on making people’s lives more affordable. But Congress can look to go further.
The cost of home insurance has hugely outpaced the overall rate of inflation, largely because of the impact of global warming. While it is a major expense for homeowners, averaging more than $2,500 a year, it is not included in the Consumer Price Index (CPI) because it is viewed as an investment item, not a consumption good.
Congress can’t look to do much to stem global warming as long as we have a big global warming proponent in the White House, but it can try to reduce insurance costs. Florida, a state run by that well-known communist, Ron DeSantis, has several programs that assist homeowners in implementing measures to improve resiliency. Average savings run close to $1,000 a year. That would be a great model for the rest of the country, and we’re talking chicken feed in terms of the federal budget.
On the topic of insurance, Congress should try to restore the enhanced subsidies in the Affordable Care Act that the Republicans stripped out with their Big Bill in 2025. This could help to reverse the loss of health insurance coverage in the last two years. The higher cost of health insurance also doesn’t show up in the CPI, but it is very real to the people paying it, or not paying it, in the event they can no longer afford insurance.
Lower Drug Prices and Universal Medicare
In a post-Trump world, we should be looking to a universal Medicare system, and a big part of making that affordable will be radically reducing the prices we pay for drugs and medical equipment. This can ultimately be done by eliminating patent-supported drug research and relying instead on direct public funding. In that case, all drugs could be sold as cheap generics from the day they are approved by the FDA. This could easily save $500 billion a year on prescription drugs (almost $4,000 per household) and other pharmaceutical products, and maybe a couple hundred billion more on medical equipment.
Since it won’t be possible to go directly to a system of publicly financed research, the government can gradually increase public funding as it radically lowers the price that we pay for drugs. The industry’s usual argument against lower prices, that it will reduce research, becomes irrelevant in this context. We don’t want them to do research supported by patent monopolies; we want them to rely on direct upfront funding of research.
Every card-carrying economist should support a switch like this. Patent-monopoly prices for drugs and medical equipment are a recipe for corruption, which we see in these industries all the time. When companies can sell drugs for 1000 percent more than their costs of production, they have an enormous incentive to lie about their safety and effectiveness, which is almost a standard practice in these industries, as was the case with the opioid crisis.
This also creates the horrible situation where people have to beg their insurers to pay tens of thousands of dollars for a cancer drug needed to stay alive, or alternatively, to start a GoFundMe. This is incredibly absurd when we realize the drug would almost certainly sell for just a few hundred dollars in a free market. It’s rare that a drug is actually expensive to manufacture and distribute.
Anyhow, the switch to universal Medicare will almost certainly have to wait for a new president, but since Trump likes to boast about his 600 percent reduction in drug prices, a Democratic Congress may be able to put a bit of truth into his absurd boast. Lowering drug prices in a big way is a great policy, whose benefits will be seen immediately. And if we want to have a universal Medicare program that is affordable to the country, it should be a big part of the story.
Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack, from which this is reprinted with permission.
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