$5,000 Dividends Would Cost $1.2 Trillion

Last night, President Trump promised to issue a $5,000 “dividend” to every adult citizen in the United States should his party retained unified control of Congress after the upcoming midterm elections. Issuing this dividend in 2027 would cost the federal government over $1.2 trillion, which is far more than all three COVID-era stimulus payments combined, the projected cost of the President’s signature One Big Beautiful Bill Act (OBBBA) next year, and is 50% larger than the entire primary deficit projected for 2027.

Indeed, a one-time $5,000 dividend would more than double next year’s projected $780 billion primary deficit to $2 trillion and increase total projected deficits to $3.1 trillion. As a share of the economy, deficits would rise from a projected 5.8% of GDP this year to 9.4% in 2027. Most experts agree that deficits should be reduced to 3% of GDP over time.

With the economy already operating near potential, this cash infusion would boost demand and likely generate additional inflation. The policy would also likely boost interest rates, as the Federal Reserve responded to higher inflation and the markets to higher debt. The result would be significantly more debt and a higher cost of living for ordinary households.

Rather than enact costly, unpaid-for giveaways, policymakers should begin the important work of finding the spending and revenue reforms required to set federal finances on a sustainable course.