Donald Trump’s promise of a $5,000 dividend for every American adult if Republicans retain control of Congress would cost more than $1.2 trillion and risk fuelling inflation, economists have warned.
The president made the pledge during the Republican National Committee’s midterm convention in Dallas, saying the payment would follow a Republican victory in November and be known as the “Trump Dividend”. He did not explain how the scheme would be authorised or distributed.
Vice-president JD Vance later suggested the money could be funded from tariff revenue and indicated that wealthy Americans might be excluded. However, the proposal’s estimated cost is many times greater than the revenue currently being generated by tariffs.
The US has collected less than $200 billion a year in new tariff revenue, according to the Committee for a Responsible Federal Budget. About 245 million adult citizens could be eligible for the payment, meaning the bill would exceed $1.2 trillion even before any income restrictions were applied.
Trump’s $5,000 dividend could drive inflation
Economists said a cash injection on that scale would increase consumer spending at a time when the US economy is already operating close to full capacity.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, described the proposal as “fiscally dangerous” and said borrowing another $1.2 trillion to send cash to households would worsen the country’s economic problems.
The organisation estimated that the payment could push next year’s total federal deficit to about $3.1 trillion, compared with a projected $780 billion primary deficit. It said deficits could rise to roughly 9.4 per cent of gross domestic product.
Marc Goldwein, the group’s senior policy director, said the idea of distributing a dividend was difficult to justify while the US was running annual deficits of around $2 trillion and carrying national debt of more than $40 trillion.
“We don’t have surpluses to give away,” he said.
Economists have previously linked the pandemic-era stimulus payments to the surge in consumer prices that followed. A fresh round of payments could produce similar pressure by encouraging households to spend more, potentially prompting higher interest rates and borrowing costs.
The consequences could extend beyond inflation, with investors likely to demand higher yields on US government debt to compensate for increased fiscal risk. That would raise the cost of mortgages, car finance and other loans for consumers.
Trump has said he does not believe Congress would necessarily need to approve the payments. Constitutional experts and budget analysts, however, said the president does not have the authority to spend money from the Treasury without an appropriation passed by Congress.
The White House has defended the president’s record against what it called criticism from “doomers and naysayers”. But Republican lawmakers have yet to rally behind the proposal, which would add substantially to the national debt.
Trump has previously floated other forms of direct payments, including dividends funded by tariffs and payments linked to savings from the Department of Government Efficiency. Neither plan has resulted in a nationwide cash payment to taxpayers.
With the midterm elections approaching, the president has made the cost of living a central theme of his appeal to voters. But economists warned that a one-off payment might offer short-term relief while ultimately intensifying the inflation and debt pressures it was intended to ease.
