President Donald Trump made another of his bold and extravagant promises at the Republicans’ midterm convention last Wednesday, proposing to give “every adult citizen in the United States of America” a “dividend” of $5,000 if Republicans win House and Senate majorities this November.
That would cost approximately $1.2 trillion, according to media estimates.
Democrats immediately derided the plan, as is their reflexive response to anything Trump does or says. Some Republicans quickly joined the chorus of woe, as is likewise their habit.
The complaints have substance: The plan is unworkable in the form in which Trump presented it. It would increase the already terrifying national debt and probably spark much higher inflation, to be followed by a harsh recession, depression, or hyperinflation.
Trump argues that recent economic growth justifies a return of resources from the grossly overfed government to the private sector. That is a fair point. In fact, it identifies what the nation most needs today: liberation from the damage the federal government has been doing for decades in constructing and feeding a massive, costly, unwieldy, and enterprise-destroying welfare state and a similarly expensive national-security apparatus.
Trump, however, does not put it quite that way. The White House press release for his plan says, “Like a successful company returning cash to its shareholders, the Trump Dividend is possible only because of President Trump. In his second term, he has unleashed trillions in new private investment, launched an unprecedented crackdown on government waste, and rebuilt American strength at home. That success belongs to the American people—and the Trump Dividend returns it to them.”
It is only fair to note, however, that the American people have already received a “Trump Dividend.” It has arrived in the form of the economic growth he and his team cite, which has improved wages, spurred increases in the value of investments, reduced federal taxes (thus increasing after-tax income), and transferred jobs from criminal illegal immigrants to American citizens and legal resident aliens.
Of course, the government is taking a large chunk of those wages and profits, so there is a strong case to be made for redress to people paying federal taxes.
The qualifier at the end of that sentence is important. To reduce the effect on debt and inflation, it would make sense to send the payments only to those who have actually paid federal taxes, and cap each check at the amount of taxes the person has paid since January 20, 2025.
Those who are paying taxes are the ones doing the productive work and investment that is creating the economic growth Trump says he wants to reward. They should be the ones to receive any cash dividend on that success.
With around 40 percent of U.S. households paying no income tax in the most recent year, the payout would be much less than $1.2 trillion.
Of course, this approach would not attract many votes from those who pay no taxes. Republicans, however, have long been strong proponents of “refundable tax credits,” in which the federal government sends tax “refunds” to people who paid no income tax. Hence, conservative critics of Trump’s plan have long supported it in principle. Just not this time.
They are right to complain that the increase in the national debt would cause economic havoc. Averting that outcome would require big spending cuts. That is exactly what the nation needs at this time anyway. Offsetting the payments with spending cuts should answer conservatives’ economic concerns, while raising political ones.
The political calculation is simple. Would more voters appreciate the prospect of a $5,000 check or bemoan a reduction of government spending?
In economic and ethical terms, the choice is simple. The amount the government takes from American workers and investors today is punitive, economically destructive, and immoral. It punishes enterprise and reduces incentives to work and invest. Reducing that damage by restoring some of the taxes paid is a very good thing to do, and it is honorable, whereas the current tax levels are not.
Such a historically large tax and spending cut would shrink the bloated government, stimulate the economy, and reduce inflation dramatically by spurring economic growth.
If political considerations require that the payments to achieve all that are also extended to “free riders” who didn’t pay taxes, the positive results may be well worth it.
Americans need and deserve tax cuts, not “conservative” suspicion of plans to return money to the private sector. Preserving the current high taxes, smothering regulation, and massive overspending will not conserve the American economy and way of life.
The conservatives’ complaints and inaction play into the hands of the Democratic Socialists of America, whose political support is based entirely on blaming businesses for the damage big government has caused.
Instead of dismissing Trump’s idea out of hand, the president’s conservative and libertarian critics can and should offer a better plan to accomplish the goal he says he’s aiming for.
Here’s my proposed alternative. Cut taxes by $1.2 trillion for one year by sending out the Trump Dividend checks, while cutting spending to match. That is where spending would be if we simply returned to the pre-COVID-19 trendline, which was too much government spending by far, anyway.
Then, sit back and enjoy watching the greatest economic revival of all time, anywhere, an economy that would be truly worthy of the president’s hyperbolic praise.
S. T. Karnick is a senior fellow at The Heartland Institute and author of the Life, Liberty, Property weekly e-newsletter.