President Donald Trump announced a plan to give $5,000 to every adult American if Republicans maintain control of Congress after the November midterms. The proposal was made at the Republican National Committee’s convention in Dallas on Thursday.
Bond yields rose slightly after the announcement, moving 3 basis points higher than their opening level, according to The Hill. The 10-year Treasury note closed at its highest point since April 2007, before the 2008 financial crisis.
The idea of a dividend was not new to Trump’s campaign, as he had previously promised payments of $2,000 or more in past election-year promises that never materialized, according to a report from NBC New York. The plan would require funding from military housing subsidies under the GOP-backed One Big Beautiful Bill Act, which were tax-free.
According to the Census Bureau, there are about 270 million adults in the United States eligible for the dividend. The total cost of the plan would be around $3 trillion, which is greater than the amount paid in interest on the national debt so far this fiscal year.
Economists and political observers have voiced concerns about the impact on inflation and the national balance sheet. Michael Strain, a director at the American Enterprise Institute, said Trump’s plan would worsen inflation problems already present in the economy. He compared it to former President Joe Biden’s pandemic relief payments, which he said had already caused inflationary pressure.
Strain warned that Trump’s idea would be worse because the economy is already struggling with inflation. Marc Goldwein from the Committee for a Responsible Federal Budget also criticized the plan, saying it was based on a false assumption of fiscal success.
He noted that the national debt has already surpassed $40 trillion this year. Several Republican lawmakers expressed skepticism about the plan’s feasibility and legality.
Former Representative Matt Gaetz said that Trump does not have constitutional authority to issue dividend payments without Congress. Vice President JD Vance claimed the administration will fund the dividend through tariff revenue.
However, many Republicans were not supportive of the idea, including some who have previously criticized Biden’s spending policies. Some lawmakers said they were insulted by the notion that their votes could be bought with such a payment.
Democratic lawmakers dismissed Trump’s promise as unrealistic and politically motivated. Rep. Robert Garcia of California said no one believes the dividend will actually happen.
The financial markets reacted negatively to Trump’s announcement, with bond yields rising and mortgage costs likely increasing. Top Republican leaders were reportedly unaware of the dividend plan before it was announced at the convention, Politico reported.
Some GOP lawmakers had previously pushed back on similar Trump spending proposals, according to people familiar with closed-door meetings. House Majority Whip Tom Emmer said he was surprised by the announcement and did not know of the plan beforehand.
He added that while he supported the idea in principle, it would be difficult to pass in the current Congress. Several Republican lawmakers questioned whether Trump had the legal right to commit funds without congressional approval.
Democratic leaders said the dividend was a distraction from other issues like the war in the Middle East and trade policies. Some Republicans, including Senator Bernie Moreno of Ohio, supported the idea and said they would introduce legislation for it.
But others, like Representative Thomas Massie, criticized the plan as an attempt to buy votes. Senator Ted Cruz said the dividend could serve as an incentive for work, even though it would be given regardless of employment status.
Fiscal conservatives within the party have expressed concern about how such a large payment would be funded. Representative Marc Veon asked for details on how Trump’s team would pay for the dividend, estimating it would cost over $1 trillion.
Trump has previously suggested funding the payments from tariff revenue and savings from the Department of Government Efficiency. The idea of giving direct payments to Americans has drawn criticism from both parties, with Democrats calling it a political stunt.
Critics argue that the plan lacks any real basis in current economic conditions or fiscal responsibility. The announcement came as the country continues to face inflation and rising interest rates.
Despite Trump’s claims of economic strength, consumer sentiment remains low due to high gas prices and stagnant wages. The plan has not been officially endorsed by the White House or Republican campaign arms.
Some Republicans have publicly supported the idea, while others remain skeptical about its execution and legality. The proposal has sparked debate over whether it is a legitimate policy idea or just another political promise for election-year appeal.
IMAGE: Trump promised to bring sweeping political change, to create wealth, and to make America safe again in a speech that excited delegates on the fourth and final day of the convention. (A. Shaker/VOA). Photo: Ali Shaker/VOA / Wikimedia, taken 2016-07-21, Public domain