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Trump's $5,000 dividend would reignite inflation and swell the U.S. deficit, economists say
CBS News • • general
Key Points:
- President Trump’s proposal to send $5,000 to every U.S. adult if Republicans retain Congress would require $1.25 trillion, far exceeding the $125 billion annual tariff revenue cited as funding, likely increasing the federal deficit from $1.8 trillion to $3 trillion.
- Economists warn the payments would stoke inflation by boosting consumer spending, similar to pandemic stimulus checks that contributed to a 40-year high in consumer prices in 2022, and could unsettle financial markets by increasing fiscal risks.
- The rising U.S. debt, now over $40 trillion, has already pushed up government interest costs beyond spending on defense or Medicare, and this proposal would exacerbate borrowing costs for consumers and the government.
- Fiscal experts describe the plan as fiscally irresponsible and detached from economic reality, while Wall Street largely dismisses it as unlikely to pass Congress; President Trump claims congressional approval may not be needed.
- The proposal comes amid ongoing inflation concerns, with August CPI expected to show 3.3% annual inflation, and while the payment might offer short-term relief, economists say it would ultimately worsen inflation and economic instability.
