For many Americans, the American Dream feels harder to reach than it did decades ago.
Housing costs continue to climb. Energy bills remain unpredictable. Even routine trips to the grocery store leave many anxious at the checkout.
Many factors contribute to higher prices. But one often overlooked driver is government regulation.
Three examples stand out:
- Zoning and permitting rules that limit housing construction
- Energy red tape that slows new production
- Transportation restrictions that increase the cost of moving goods
Each of these categories illustrates a basic principle: When supply is artificially restricted, consumers usually pay the price.
Let’s take a closer look.
How government regulation makes housing more expensive
California offers one of the clearest examples of how regulations can affect housing costs.
Many communities limit new housing through restrictive zoning rules that make it difficult to build apartments, duplexes, and smaller starter homes that many young families need. At the same time, builders often face lengthy permitting and environmental review processes before construction can even begin.
These rules can make housing projects more expensive, more time-consuming, and less likely to move forward.
The result is predictable.
Fewer homes are built. People are forced to compete for a limited number of homes. Prices rise.
According to government sources, California is short roughly 2.5 to 4 million homes, and the median home price is over 2 times the national average.
There are many culprits behind rising housing costs, but a key factor is the restrictive and outdated regulations found in many states.
When communities make it easier to build, supply grows, relieving pressure on prices and making it easier for families to find an affordable place to live.
Energy red tape raises costs across the economy
Energy affects almost everything families buy.
It powers homes, keeps food refrigerated, runs factories, and moves products from one place to another.
That is why energy policy affects more than just utility bills.
One reason energy costs remain higher than they need to be is the difficulty of building new energy infrastructure.
One major obstacle is the federal permitting process under the National Environmental Policy Act, often called NEPA. The law was created with an important goal: understanding the environmental impact of major projects.
Environmental review can be important.
The problem is when reviews become repetitive, unpredictable, and stretch on for years. Energy projects can spend more time navigating paperwork and lawsuits than being built.
In fact, the average NEPA review lasts 4.5 years.
These delays increase costs, discourage investment, and slow the development of new energy supplies. When supply struggles to keep up with demand, prices rise.
Because energy powers so much of the economy, those costs show up in utility bills, transportation costs, manufacturing expenses, and, ultimately, the prices families pay every day.
The Jones Act: A costly, antiquated regulation
Every item in a grocery cart travels through a long supply chain before it reaches the checkout line.
That’s where shipping regulations come in.
One example is the Jones Act, which limits competition by requiring goods moved between two U.S. ports to travel on ships that are:
- Built in America
- Owned by American companies
- Crewed by Americans
The costs of this outdated regulation are substantial.
The Jones Act costs the U.S. economy between $1.2 billion and $5.2 billion each year, as U.S.-built cargo ships can cost 4 to 8 times more than comparable foreign-built vessels, reducing competition and increasing shipping costs.
The burden falls especially hard on places that rely heavily on ocean transportation, like Puerto Rico, Alaska, and Hawaii.
The regulation is so expensive that the federal government is currently pausing Jones Act enforcement to help bring costs down.
So why do government regulations lead to higher prices for consumers?
Because costs added at one stage of the supply chain rarely stay there. They move from shippers to wholesalers to retailers until they eventually reach families in the checkout line.
Affordability starts with abundance
We’ve laid out a consistent pattern: When rules make it harder to build, produce, or transport the things Americans need, prices rise.
The Working Families Tax Cuts took an important step by reducing some costly barriers and protecting families from higher taxes. But decades of restrictions cannot be undone overnight.
The path forward is an affordability agenda built around abundance, all-of-the-above energy, competition, and opportunity. More homes, energy projects, and transportation options can drive affordability in America.
Take a few minutes and dive deeper. You can learn more about policies that can help lower costs and expand opportunity by exploring our Affordability Agenda. You’ll see how removing unnecessary barriers can make the American Dream more attainable for everyone.
