Total cost of 'Trump dividend' would exceed US defense budget

Tariff revenue forecast at $125 billion — a tenth of what's needed

'It's debt or taxes,' say critics, including some Republicans

US President Donald Trump [AFP]
US President Donald Trump [AFP]

US President Donald Trump pledged Wednesday at a Republican midterm convention in Dallas to give every adult American citizen a $5,000 "dividend" payment if Republicans retain their House and Senate majorities in the November midterm elections. The cost of fulfilling that pledge, analysts note, would exceed the entire US national defense budget for fiscal year 2026.

With roughly 240 million adult Americans, a $5,000-per-person payout would add up to a total of $1.2 trillion — about 20 percent of the approximately $5.25 trillion in federal revenue collected last year, and well above the $1.01 trillion national defense budget for fiscal year 2026.

Trump has pointed to tariff revenue as the funding source, but analysts say that is effectively impossible. In a Fox News interview Thursday (local time), when asked how the $5,000 payment would be financed, Trump said, "We're taking in $21 trillion. No country has ever come close to that," adding it was all thanks to "that beautiful word — tariffs."

The $21 trillion figure Trump cited is not actual tariff revenue; it is understood to refer to the total foreign investment he expects to flow into the United States as a result of his tariff policies.

Covering the cost through tariff revenue alone is arithmetically impossible. Even if the Congressional Budget Office's original fiscal year 2026 tariff revenue projection of $418 billion were applied in full, it would cover only about a third of the needed funds — and that figure has since been revised downward after the Supreme Court struck down some of Trump's tariffs. The Tax Foundation projects that under current policy, tariff revenue next year will reach only about $125 billion. On top of that, roughly $166 billion in tariffs already collected under the International Emergency Economic Powers Act could be refunded.

Even Fox News — which conducted the interview and leans toward Trump — expressed skepticism, noting that annual US tariff revenue of around $200 billion "falls far short of the estimated cost" of the pledge.

Analysts say that without large-scale additional borrowing, tax increases or spending cuts, there is no realistic way to fund a $5,000 dividend. Douglas Holtz-Eakin, president of the center-right American Action Forum, called it "an enormous proposal," saying: "To write the checks, Congress would have to appropriate the money, and then you'd have to borrow $1.2 trillion, raise $1.2 trillion in taxes, or some combination of the two."

The US national debt, which surpassed $40 trillion last month, adds weight to those concerns. Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said Thursday (local time): "This would mean more borrowing, higher interest rates, undermined long-term growth, an exploding national debt, higher inflation and greater debt burdens on future generations."

Beyond the fiscal math, the president does not have the unilateral authority to implement such a policy. Congressional approval would be required, and a significant number of Republican lawmakers are already skeptical given fears of a surge in the national debt — making the bill's path to becoming law an uphill one.

Rep. Chip Roy, Republican of Texas, posted on X Wednesday night, arguing that setting aside the deficit, the money "could nearly eliminate taxes for a decade for married households with dependents earning under $200,000."

Rep. Thomas Massie, Republican of Kentucky, also posted on X, calling the very idea of buying his vote for $5,000 "insulting" and adding, "not to mention the inflation it would cause."

The United States has distributed cash to its citizens before, though on a far smaller scale and under very different economic conditions. Congress approved direct payments to Americans through a bipartisan bill in early 2020, when the COVID-19 pandemic had sharply curtailed economic activity, and passed a second round of $600 payments in December of that year. The Democratic Party also made cash payments a central campaign pledge in the Georgia runoff elections that gave it a Senate majority, and in March 2021 passed a stimulus bill on a party-line vote providing $1,400 per person.

Democrats have effectively condemned the pledge as blatant vote-buying. Rep. Lloyd Doggett, Democrat of Texas, said: "Five thousand dollars for free? Trump thinks Americans are naive enough that the bigger his lie, the more they'll believe it. The more people see through his deception, the more desperate he'll become."

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mokiya@heraldcorp.com