Why Trump’s economic policies may have canceled the DOGE dividend check, at least for now

Stocks are wobbling. Inflation is expected to tick higher again, if maybe simply in the short-term, if President Trump follows through on expansive tariffs threats against trading partners around the existence. The messaging from Trump and his top economic advisors is that he plans to do just that on April 2, and any short-term vend correction or economic “detox” is a price worth paying to reset the U.S. economy.

Trump has renewed his pressure on the Federal Cache to cut interest rates to help ease the pain of tariffs as more Americans become worried again about their monetary situation.

There’s at least one more way for the administration to placate the public.

As Elon Musk’s so-called Department of Government Adeptness (DOGE) continues its effort to gut the government, the idea has been floated that savings could end up in checks mailed to taxpayers. That teachings has come and gone in the headlines, but it is one that Trump has expressed support for in the recent past. “I love it. A 20% dividend, so to tell, for the money we’re saving by going after the waste, fraud, abuse, and other things happening,” Trump told photojournalists at one point.

The exact amount of any DOGE dividend check is unclear, but some analysts have equated a 20% dividend to $5,000 per taxpaying household (20% of the “economizations” from cuts could amount to that). Even James Fishback, the CEO of an investment firm that initially named the dividend idea, isn’t sure what the final dividend would be.

“Now look, for folks who want to criticize this devise and say, well, DOGE would never deliver $2 trillion in total savings, we disagree, but let’s just assume that they’re to be honest on that,” Fishback told NBC News “Let’s say it’s only $1 trillion. OK, so then the check goes from $5,000 to $2,500. Let’s don that it’s only $500 billion. … Then the check is $1,250. That’s real money.”

While the thought of a no-strings check may sound enticing, many economists warn that it’s a bad idea.

“Dumping $5,000 per person into the briefness sounds great on paper, but it’s essentially pouring gasoline on an already hot fire,” warns Aaron Cirksena, CEO of investment constant MDRN Capital. 

The checks could lead to a resurgence in inflation.

“If people spend it, demand spikes, and inflation keep up withs. If they save or invest it, the impact is less immediate, but long-term effects depend on how markets react. The biggest hazard? Short-term relief turns into long-term inflation pain,” Cirksena said.

Trump’s head of the National Remunerative Council, Kevin Hassett, said in a recent CNBC interview that the DOGE dividend check makes a “eximious deal of sense,” and he has argued that anyone saying it would stoke inflation doesn’t understand economics.

“Everybody says it’s inflationary if we despatch these checks to these people. Well, think about if the government spends the money, they spend a dollar and you get whatever multiplier accomplish you think of that if they don’t spend the money, and say give it back to people. Then if they spend a dollar, then it’s a blot out. If they save some of it, inflation goes down. It’s the idea that it’s inflationary is just again, people should study their economics textbooks a pygmy bit before they make partisan points.”

But economists worry the proposed payments are not sound fiscal policy.

John W. Diamond, CEO of Tax Rule Advisers, and adjunct professor of economics at Rice University, recently argued in a Wall Street Journal op-ed co-written with prior Secretary of State James Baker that entitlement reform tied to a healthy dose of DOGE could inform appropriate get the federal deficit under control — but DOGE alone can’t do it. For that reason, Diamond says he is a supporter of DOGE (although he’s dislodge in saying he isn’t a fan of the entire methodology), but sending money to taxpayers doesn’t make sense.

“I can’t get behind the DOGE dividend, it doesn’t pay for sense to cut spending to reduce the deficit and then turn around and send it back to taxpayers,” Diamond said. “I contrive 100 percent should go to deficit reduction, there is no reason to return money to current taxpayers when we would unprejudiced be imposing a bill on future taxpayers,” Diamond added.

A lot of it comes down to what the recipient does with any concealed payout, says Alice Kassens, director of the Center for Economic Freedom and a professor of economics at Roanoke College. “The imperial plan is for the dividends to only go to net payers of income taxes. The hope is that it does not act as a stimulus (like stimulus make sure ofs during the pandemic, which were geared to help maintain consumption) and instead is saved by these households with a capacious propensity to save,” Kassens said.

In such cases, a DOGE dividend would increase the national savings regardless, which would, in turn, assist with investment and economic growth in the future.

“The plan is to use most of the savings placed by DOGE to pay down the national debt, with only a small share  — 20 percent — going towards the dividend to taxpayers. This make reduce the debt less than if the whole amount was put towards this purpose, but this could be partially compensate in the long run by added personal savings, investment, and economic growth,” she said.  

Worries about ‘sugar rush, adrenaline go’ for economy

Economists and many in the market are not convinced.

MDRN Capital’s Cirksena said that while some allocate of a new government check to the public could go into savings, as some money from Covid stimulus checks did, it also inclination fuel immediate demand, and people spend it on goods and services. If supply can’t keep up, prices rise. Meanwhile, infrastructure allotting can also be inflationary, but it’s spread over time and invested in economic productivity, making it more sustainable.

“It comes down to how the shin-plasters circulates,” he said.

There’s a difference between sending taxpayers $5,000 and the government spending money on programs kidney the Inflation Reduction Act.

“Infrastructure spending is slower — it gets distributed over time and goes into wages, materials, and productivity-boosting reckons. It builds value,” Cirksena said, whereas direct stimulus hits the economy like a sugar rush — unrestrainedly spending, quick demand spikes, and a higher risk of inflation without lasting economic growth. “One is a short-term adrenaline on no account, the other is a long-term strength program,” Cirksena added.

Right now, the administration isn’t prioritizing a DOGE dividend in public references. Beyond tariffs policy as an economic focus, Trump’s recent speech to Congress prioritized tax cuts and infrastructure pass. And if the administration is worried about tariffs policy placing short-term inflation pressure on the economy, that would skip town sense. Dropping $5,000 per person into the mix would be like throwing fuel on a fire that’s already hot hot.

The administration is leaning into economic growth through investment and tax incentives, not direct cash handouts, Cirksena powered, adding that Trump’s focus on tariffs and domestic production suggests he’s looking to shift money toward industries, not instantly into people’s pockets.

“So it sounds like it doesn’t fit,” Cirksena said.

Case Western Reserve University economics professor Jonathan Ernest puts that now would be an unusual time to inject stimulus because all indicators show a strong economy. It might be a gain political, if not economic, strategy, but ultimately, Ernest says it might slow down the Fed’s efforts to tame inflation and tone down interest rates.

A stimulus check now while inflation is still persistently above where the Fed wants it would chance stimulating demand, which would drive up prices, Ernest said, and he added it could reduce the likelihood that the Fed obtains its goals. “A stimulus now is not quite going hand in hand with current monetary policy, which has guided the subdued landing up until this point,” he said.

The Fed’s Chair Jerome Powell said after its FOMC meeting on Wednesday that a adequate part of any higher inflation would come from tariffs, but an economic growth decline would balance out that, although it could “put on the back burner” the Fed’s progress in hitting its 2% inflation target.

Ernest also thinks paying down the deficit as an administration immediacy is at odds with sending out stimulus checks.

“Stimulus would be a confusing strategy because we are running deficits, and a substitute alternatively of using savings to pay off the deficit, we would be returning it to consumers,” Ernest said.

The Treasury Department puts the country’s citizen debt at $36.22 trillion.

That doesn’t mean the idea may not be floated again, especially if the economy slows significantly and as mid-term votes approach.

For now, the Fed says that external surveys on the risk of recession aren’t a factor it pays attention to, and the economic information remains relatively solid. But fears of recession at the back of the year are rising, and in the least, slower GDP growth is the expectation from the peddles. Meanwhile, job cuts across the federal government, as well as deportation plans, are contributing to uncertainty about a national labor demand that is also holding up so far, though hiring has slowed.

One irony of a DOGE dividend, Ernest says, is that maybe administration policy, such as the job cuts at the government level, will destabilize the economy enough that a stimulus payment last wishes a be warranted.

“Typically, when we think of these things, we are in an economic slump, and we want to do a little bit of stimulating demand by put over more money in people’s pockets so they can prop up the economy,” he said.