Trump's $5,000 Payout Plan Sparks Economic Concerns
US President Trump has made headlines with his proposal to give each adult in the US a $5,000 payment if the Republican Party retains control of Congress in the November midterm elections. The plan, dubbed 'Trump Dividend,' is estimated to cost over $1 trillion and would account for 18% of the US federal government's 2025 budget.
The funds for this commitment are unclear, with Trump himself not specifying how they would be raised. US Vice President Pence suggested that tariff revenue could cover some of the costs, but economists point out that current tariff collections are far below the needed amount.
Economists are warning that such a large cash handout would worsen inflation and fiscal budget problems in the US. According to Erica York, an economist at the Tax Foundation, 'This will be one of the worst ways to spend money. We are on an extremely unsustainable path, and the fiscal deficit is only expected to keep expanding.'
The Federal Reserve may ultimately bear the costs of Trump's plan, with market analysts predicting a likely rate hike in September due to sticky inflation and core inflation indicators.