Another dividend check? Not so fast: CEI analysis

During yesterday’s RNC Midterm Convention, President Trump announced his intent to give every American adult a $5,000 dividend check should Republicans win in November. CEI experts explain the economic infeasibility of Trump’s latest dividend proposal.

CEI Senior Economist Ryan Young:

“President Trump’s $5,000 check proposal is not going to happen, even if Republicans win the midterms. Americans are already worried about the $40 trillion national debt. These checks would add more than $1 trillion to that debt in one fell swoop.

“The checks conflict with Trump’s desire for lower interest rates. The extra cash in circulation would raise inflation, which the Fed would likely have to counter with higher interest rates.

“Over and above anything the Fed does, a trillion dollars in new spending would raise interest rates on government debt by making the government’s financial situation even worse. Reluctant bond-buyers would demand higher interest rates for taking on more risk.”

CEI Fred L. Smith Fellow in Regulatory Studies Wayne Crews:

“Trump’s proposed $5,000 ‘dividend’ is the latest and most expansive step in an alarming policy trajectory increasing in prevalence since Covid’s stimulus checks issued to households regardless of hardship.

“We’ve been here before; we’ve seen Trump’s DOGE dividend teaser and his proposed $2,000 tariff dividend. Trump has also expressed support for sharing the gains from AI with Americans, raising the prospect that AI-driven productivity could become another rationale for expanding direct federal transfers. (Here’re Trump’s own words: ‘[T]here’s so much money and it’s so big that there are concepts where pieces could be given to the American public where the American public essentially becomes a partner with … the companies.’).

“This is now a dangerous pattern with Trump. Each unfortunate iteration moves the political discussion another step toward the idea that government should routinely distribute cash to citizens, just as progressives have always wanted, and will welcome and retain when he leaves office.

“The question policymakers should be asking is not ‘How do we fund the next dividend?’ but ‘Why are we building the machinery for one?’”