Trump’s $5,000 ‘dividend’ would add heavily to the deficit — unless Congress couples it with spending reductions that survive long after the checks are cashed.
President Trump’s call for a $5,000 “dividend” payment to all adult U.S. citizens is being widely criticized as fiscally unsound, grossly irresponsible, a cynical vote-buying scheme, and another political promise that will never come to fruition.
Trump’s plan, as he presented it in just a couple of throwaway sentences at the Republican Midterm National Convention in Dallas last week, is indeed all those things. It amounts to a Keynesian-style attempt to stimulate the economy temporarily by making people feel richer than they are, to be followed by the usual consequences of such fiscal monkeyshines: violent inflation and a subsequent grinding recession.
Trump, however, is a habitual dealmaker. What if congressional leaders were to respond to the president’s idea as a starting point for negotiations?
My suggestion: Agree with the president to pass a one-time tax cut of $5,000 for the 2027 fiscal year, paired with a permanent spending cap set at the 2019, pre-COVID-19 level and mandatory 2% additional reductions in the spending cap each year through 2040.
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S. T. Karnick is a senior fellow and director of publications for The Heartland Institute.
