Trump’s State of the Union: A closer look at the claims

Last night, President Trump delivered a State of the Union address filled with optimism, applause lines, and bold claims about the country’s direction. There were many points worth applauding: economic growth, deregulation, energy production, and American competitiveness are areas that are particularly commendable from a free-market perspective.

However, a State of the Union address is more than political theatre. It is an overview of how the administration views the country and its policy priorities. When claims are overstated, statistics lack context, or complex issues are reduced to soundbites, the result is often confusion rather than clarity.

Superior policymaking depends on accurate facts. In that spirit, what follows is a look at some claims the president made last night that deserve a second look — not to score political points, but to ensure policy debates are grounded in facts and reality.

Inflation is not plummeting

When the president declared that inflation is “plummeting,” he overstated his case. Bureau of Labor Statistics data shows that inflation has moderated since the 2022–2023 surge, but it remains above the Federal Reserve’s 2 percent target. Slowing inflation is not the same thing as falling prices. It means that groceries, rent, and utilities are still getting more expensive, just not as fast as before. And that’s on top of the Biden-era inflation. For many Americans, the distinction feels academic when their monthly bills remain far higher than they were a few years ago. American families are still living with the cumulative impact of several years of elevated price increases, and that reality cannot be overlooked.

Tariffs are mostly paid by the American people

Trump stated that tariffs are paid by foreigners. This may sound appealing but it is not reflective of economic reality. Tariffs are collected by the US government from American importers at the port of entry, not from foreign governments. The Congressional Budget Office recently estimated that 95 percent of tariff costs are borne domestically, and that those costs are ultimately passed to consumers in the form of higher prices. Research shows that the American people bore the brunt of the tariff costs during Trump’s first term through higher prices and reduced purchasing power. If we are serious about economic prosperity for American families, we should call tariffs what they are: a tax that lands on Americans, not foreigners.

Medicaid fraud is real, but it persists because government programs are massive and complex

Trump’s call to fight Medicaid fraud is a welcome acknowledgment that taxpayer dollars are sometimes misused in sprawling government programs. Trump is right to tout efforts to cut red tape, which can reduce bureaucratic inefficiencies and make programs harder to exploit. These deregulatory steps have real benefits and are a credit to his administration.

However, he also reiterated his commitment to protecting Social Security, Medicare, and Medicaid, which are the three largest drivers of the federal budget and are thus most vulnerable to mismanagement due to their immense size and complexity. Focusing enforcement on a few high‑profile cases does not resolve the underlying incentives that make government largesse prone to corruption and improper payments.

When trillions of dollars cycle through opaque bureaucracies, opportunism and misallocation are inevitable. As I wrote in a blog post, the best anti‑corruption tool is not more auditors or more red tape; it is a smaller, simpler government with fewer opportunities for corruption to take place. Tackling symptoms rather than the disease leaves taxpayers footing the bill for corruption, year after year.

Institutional investors are not ruining the housing market

Trump touted his executive order restricting institutional investment in single-family homes as a solution to rising housing costs. In reality, institutional investors own only about 1 percent of single-family rental homes, and an even smaller fraction of the overall housing stock, which means that a ban would have little effect on market prices.

Evidence shows that these investors can help reduce vacancy rates and were especially important in stabilizing the market during the Great Recession. Analysis from CEI Senior Fellow and Director of Finance Policy John Berlau details how banning institutional investors could actually harm housing affordability.

In reality, the bigger factors driving housing costs are local land-use policies, zoning restrictions, and slow permitting processes. Structural barriers like these — not institutional investors — are the primary drivers of housing affordability.

Most-Favored-Nation pricing will not necessarily lower drug prices

Trump claims that his trade deals and Most-Favored-Nation (MFN) pricing will make prescription drugs “lower than ever,” but the evidence tells a more complicated story. The lowest foreign prices are typically government-mandated and can lead to rationing and delayed access, not true market savings. Analysis from my colleague, Jeremy Nighohossian, illustrates how adopting these prices in the US would undercut incentives for innovation that drive new lifesaving treatments.

Similarly, a CEI coalition letter opposing MFN highlights that these proposals do little to address the true drivers of high drug costs. These critiques line up with evidence from the European experience with international reference pricing showing that prices did not substantially decrease and that access to pharmaceutical drugs became more restricted. MFN may sound like a win for consumers, but the hidden costs fall on patients and the future of medical innovation.

Credit where it is due, scrutiny where it matters

Presidents of both parties deserve credit when they get it right and constructive pushback when they get it wrong. On issues ranging from tariffs and housing to corruption and inflation, the details matter far more than the applause lines. If we want durable, pro-growth policy, the conversation has to be anchored not in rhetoric, but in evidence. That is a standard worth applying irrespective of who occupies the White House.