SACHA PFEIFFER, HOST:
Affordability is at the top of many people's minds as they vote in this year's midterms. Last year, Republicans were betting that economic issues would be on their side after massive tax cuts. Instead, so far, the cost of living seems to be driving a surge of voting in favor of Democrats - that's based on early voting reports from some states. Here to tell us about how voters are being influenced by the pressure they're feeling on their wallets is NPR's personal finance reporter Stephan Bisaha. And Stephan, we know from that famous James Carville quote, "it's the economy, stupid," that the economy often plays a big role in how people vote. But this year feels different or more intense. Tell us why.
STEPHAN BISAHA, BYLINE: Yeah. Well, what is different in this year is just how straight a line voters are able to draw between the economic pain they feel and the party in charge. It is true that people often vote based on how their wallet is doing, which can often be a little unfair to incumbents. Elected officials usually only have so much control over how the economy is actually doing. But this year, the price voters are seeing at the checkout aisle and at the pump can be directly tied to President Trump and the U.S. war against Iran, which has driven up energy prices. Take Owen Smith (ph). He's a registered Republican in Des Moines, Iowa. He split his ticket on the local level, but nationally, he voted for Democrats because of the war.
OWEN SMITH: It cost me like 80 bucks to fill up my tank, and that's just not sustainable. And it seems like it was a completely avoidable conflict that has just rocketed up our prices and mine personally. And so I don't support the candidates who are supportive of the president's policy in that area.
BISAHA: Yeah. He was fired up enough about this that two weeks ago, he got in line the first day of early voting and waited a half hour to cast that ballot.
PFEIFFER: Stephan, what about the tax cuts from last year I mentioned earlier that Republicans hoped would help taxpayers and would also help their party's prospects?
BISAHA: Yeah. That was the One Big Beautiful Bill Act, and it did help. It did tax reforms, like no tax on tips. People also generally got bigger tax refunds than past filing seasons. The average refund was about $340 more this year than last year. Republicans had initially predicted much bigger refunds, but it is still a 12% increase from last year - so a good-sized jump. But an NPR/PBS and Marist (ph) poll from September found significantly more registered voters believe Democrats would do a better job handling the economy than Republicans. So those tax refunds just don't seem to be helping Republicans at the ballot box.
PFEIFFER: And is that because taxes are one category of cost, but what people pay for day-to-day is a different one?
BISAHA: Yeah. Well, I mean, a lot of this tax windfall is being used to cover those higher costs, those higher prices. Consumer prices in September were up 3.7% from a year earlier, according to the Labor Department. The tax refunds and lower taxes Americans are paying has helped them cover some of those rising costs. And it's likely a big part of the reason consumer spending has continued to grow, and that's good for the overall economy. But Americans are not feeling good about those prices and don't like having to watch their budget so closely.
There also seems to be a lot of disappointment because President Trump got elected on the promise of lowering prices. So lower taxes in your paycheck - they're just also not as noticeable as prices on the store shelf. It's also easy to forget about the tax refund you got in the spring when you're voting in the fall. That's what Owen Smith says. He's the voter we heard from earlier.
SMITH: I do my taxes, like everyone else, one time a year. So any impact that that may have had on my thoughts at the time of voting is way in the rear view compared to the gas prices that I'm seeing every single day.
PFEIFFER: What about the real estate market? Interest rates high, house prices high, and yet, last year Republicans and Democrats came together, passed a big housing bill meant to help with that. How much, if at all, has that made a dent in housing affordability?
BISAHA: Yeah. Unfortunately not. That bipartisan bill became law in July and was really meant to show voters that their elected leaders care about housing and want to fix it. The bill was basically classic supply and demand. They wanted to encourage more home building - that boosts supply, meets demand, lowers prices. But the problem is there's so many different ideas packed into that law that it takes a long time to go into effect, so it might be years before you even feel this, like, affecting home prices.
This also gets back to what I said earlier. Washington can only do so much to affect the economy, including housing prices. The exception, of course, again, is President Trump and the war he started against Iran. That drove up inflation, which drove up the cost of borrowing, and that is making it more expensive to get a mortgage.
PFEIFFER: That is NPR's personal finance reporter, Stephan Bisaha. Thank you.
BISAHA: Thanks, Sacha. Transcript provided by NPR, Copyright NPR.
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