President Trump's plan to cap credit card interest rates at 10% sounded populist enough on paper, but it's running into a wall of skepticism from an unlikely coalition: leading economists and his own party's leadership.

Republican Leaders Sound the Alarm

House Speaker Mike Johnson didn't exactly roll out the welcome mat for Trump's proposal. During a Thursday press conference, Johnson said the House "ought to think about and investigate" the idea, but stressed the need to be "careful" with such policies. His concern? That the "zeal to bring down costs" could lead to "negative secondary effects."

Johnson went further, suggesting that Trump and other supporters of the cap "probably had not thought through" what happens when credit card companies simply stop lending to riskier customers.

Rep. Rich McCormick of Georgia shares those worries. He noted that government intervention through "price controls investments in businesses" typically results in "unintended consequences," according to a report by The Hill.

Even the far-right House Freedom Caucus is pumping the brakes. Rep. Eric Burlison of Missouri argued that competition naturally keeps interest rates as low as possible to attract customers. "As long as people are competing, they have a natural instinct to keep their interest rates as low as possible in order to get the creditors," Burlison said.

His prescription? The government should focus on maintaining a "healthy, robust" and "free market" rather than imposing rate caps.

Economists Call It a Wealth Transfer in Disguise

Economist Justin Wolfers didn't mince words during his CNN appearance on Thursday. He slammed the proposal as "a form of populism which actually does harm to working Americans," adding that the "president is a master of misdirection."

Here's the problem, according to Wolfers: the cap would disproportionately hurt lower- and middle-income Americans. "If you have a poor credit score, banks won't be able to charge you more than 10%, so they just won't lend to you," he explained.

The real kicker? Wolfers argues the cap essentially functions as a "subsidy" for the rich and those with good credit scores, paid for by the poor. That's because "poor credit card holders have been subsidized throughout history by rich credit card holders through this form of redistribution."

Economist Peter Schiff piled on earlier this week, calling Trump's proposal "unconstitutional" and the same kind of "socialist price control" that Trump had attacked former Vice President Kamala Harris for promoting during the 2024 campaign.

Schiff warned the cap will "force lenders to cut credit limits and close accounts for higher-risk borrowers," effectively cutting them off from mainstream credit.

The Competitive Enterprise Institute, a libertarian think tank, painted an even darker picture: as banks pull back from high-risk borrowers, those who still need credit will turn to "payday lenders or black markets."

So much for helping the little guy.