Checking the Math on Trump’s $2,000 Checks

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. Lately, President Donald Trump has been talking about an unconventional economic policy idea. The tariffs allow us to give a dividend if we want to do that. On November 9th, the president posted about the idea on Truth Social. A dividend of at least$2 ,000 a person, not including high-income people, will be paid to everyone, he wrote. He brought it up again a few days later. So we're going to be doing a dividend, which people will enjoy and spend and do what they want. Essentially, he's talked about taking some of the tariff revenue that the U.S.

1:44has collected and using that to issue$2 ,000 payments directly to U.S. citizens. That's Dan Flatley, a U.S. Treasury reporter for Bloomberg. The idea would be to take some of that revenue and redistribute it to families making under$100 ,000, right? or individuals making under$100 ,000. Since Trump began his trade war in April, the U.S. has made money from tariffs. The Treasury Department says the U.S. has collected$195 billion in customs duties in the 2025 fiscal year. But there's a small problem with the math. The Yale Budget Lab estimated that it would actually cost$450 billion to pay out dividends in the way Trump is proposing.

2:29The Committee for a Responsible Federal Budget estimated that these dividends could cost$600 billion. And so this would be sort of a money loser, regardless of whether the budget is$450,$600. That's Nancy Cook, a White House reporter for Bloomberg. It's going to cost more money than they're bringing in. And that's just one of the unanswered questions about how these$2 ,000 dividends would work. It's also not clear how the administration would actually go about paying the money to Americans. In a recent interview with ABC News, Treasury Secretary Scott Besant was asked by George Stephanopoulos about whether there's a plan for that.

3:11I haven't spoken to the president about this yet, but the$2 ,000 dividend could come in lots of forms, in lots of ways, George. It could be just the tax decreases that we are seeing. Trump, meanwhile, insists the dividend would be paid out in checks. That's not made up. That's real money. That comes from other countries. But there's another big hurdle. The politics. It's a tricky idea politically. Forget, like, sort of the economics of it. It's not something that Trump can just do unilaterally.

3:49I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, breaking down Trump's proposal to dole out tariff revenue to Americans, how it fits into the affordability debate that will define the midterms, and the many obstacles to making it a reality.

4:10There's lots of economic implications for this. There's lots of practical implications for this. There's lots of things that we can sort of get into. Dan Flatley is a Treasury reporter for Bloomberg. He's been chasing down the details of Trump's dividend check proposal, starting with how the administration would pay for it. Trump's idea is to use the money the U.S. has collected in tariff revenue. There's no question that the U.S. has brought in a lot of money in this fashion. The last we looked was the end of the fiscal year, which ended September 30th. It's the fiscal year for 2025. $195 billion worth of customs duties were collected.

4:47Not small change, but it's a fraction really of the overall federal budget, which is, you know, trillions of dollars. But there are lots of competing priorities for that money. This money has been earmarked for lots of different things. People have talked about using it primarily to pay down the deficit, reduce the federal debt. Scott Besson, the Treasury Secretary, has talked about bringing down the deficit to GDP ratio, which is a key metric for judging a country's economic health. Basically, everybody kind of wants to get their hands on this money. And it makes it a little bit complicated to then start to say, oh, we're going to start cutting checks using this revenue stream because there's only so much that the government is going to be bringing in over the next few years.

5:30Estimates are around about$300 billion a year. Trump has claimed that he doesn't have to choose between bringing down the deficit and issuing dividend checks. That he can do both. Now we're going to do a dividend and we're also going to be reducing debt. We have, because of Biden and others, we have$37 trillion in debt. Since Trump announced sweeping global tariffs on April 2nd, the national debt has risen by 5.5 percent. The U.S. hit$38 trillion in debt in October. But for everyday voters, bringing down the deficit sounds a lot more abstract than receiving a check in the mail. And Nancy Cook, who's covered Trump since his first term, says that's a political calculus this administration is well aware of.

6:17They did cut stimulus checks when Trump was president at the beginning of COVID. Biden did the same thing. The stimulus checks were really born out of the fact that the economy was in the tank and unemployment was high. And so those stimulus checks were really given to people as a way to kind of patch over what was just a really unusual time. I think Trump always likes the idea, though, of kind of a simple branding. I mean, it's like you send people$2 ,000 checks. The average American is not going to know that it came from tariff revenue. You know, they're not going to care. They're just going to see that, like, Trump sent them a check.

6:52And then the hope for the Republicans would be they would vote accordingly in the midterms. And so I think politically, that's how the White House is thinking about this. So what is Trump's play here as he doubles down on this idea? What do you think he's trying to accomplish? Is the main priority getting his name on a check again? Yes. I mean, just the short answer is yes. He wants his name on a check. Trump is just really on the defensive right now. He has not had a good few weeks between the Epstein files and Republicans sort of not going along on the hill with his idea of the filibuster. Democrats swept a bunch of elections in early November.

7:30And so he is just looking for ways to juice the economy ahead of the midterms. And we've seen him do that with the checks idea. We've seen them have to roll back some tariffs on some key agricultural products, coffee, bananas, beef, you know, just to try to give people a little bit more relief at the grocery store. I know he was even, you know, floating the idea of a 50-year mortgage, which people also have questions about the feasibility and the viability of. But it seems to be part of this broader desperation to address affordability right now. Absolutely. And I think part of the problem is that there's both the policy considerations, like how do we bring down prices, but how do we also make people feel like we're taking it seriously?

8:08Trump this week at an investment forum with the Saudis who were in town, you know, he had this amazing line where he said sort of dismissively, like Democrats came up with this idea of affordability. But they came up with the new word, affordability. They look at the, we are all about affordability. And everyone assumes that that meant that, no, their prices were high. In that same forum, he said, the stock market is doing great. Since the election, the stock market has set, and this is a little more than nine months, 46 all-time record highs. And the growth is now amazing. But that stuff doesn't always trickle down to people when they're trying to buy a home or go to the grocery store and their groceries are$50 more expensive than they were three years ago.

8:56He is having a hard time, I think, wrapping his mind around the idea that Americans don't view the economy as the golden age like he does. Issuing$2 ,000 checks could offer immediate relief to Americans struggling to afford basics right now. Just like the COVID stimulus checks were a boost during a previous period of economic turmoil. But there was also a downside to all that pandemic-era stimulus. Mainstream economists agree that that really contributed to the historically high inflation that we saw. Just that amount of money pumped into the economy. All that extra money circulating around the economy in 2021 and 2022 set off a flurry of consumer spending, while pandemic disruptions constrained supply.

9:40Economists say the sudden demand contributed to driving prices up, fueling inflation that's still here today. And some economists fear these dividends could do a similar thing. There would be a concern if they spent$450 billion to$600 billion on these stimulus checks at a point when prices haven't still totally come down, that that would cause more inflation again. And so it's interesting that, you know, one of Trump's sort of go-to policy moves to deal with higher prices and people being mad about the state of the economy is to cut checks, which could actually just add to more inflation. After the break, we talk about the other hurdles facing this idea and how Trump might navigate them.

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11:56When I pay people$2 ,000 each for low and moderate income and middle income people, everybody but the rich will get this. President Donald Trump's proposal to send millions of Americans dividend checks is part of the administration's effort to get people feeling good about the economy again. But last time stimulus checks went out to millions of Americans, economists say they played a role in creating the inflation we're dealing with today. And that's something that federal government has been wrestling with, the Federal Reserve has been wrestling with, and it's not something that they've really been able to solve.

12:33And Americans have been facing higher prices for the last several years at this point. That's White House reporter Nancy Cook again. The fear that a new wave of$2 ,000 checks could send prices even higher is just one of the reasons that lots of people, from prominent economists to members of the Trump administration and the Republican Party, have been lukewarm on the proposal. People are very skeptical of this idea. Treasury reporter Dan Flatley. And I haven't spoken to him about it, but I even detect a little bit of hesitancy in Secretary Besson's comments on this issue. He sort of floated the idea of Americans saving these checks if they were issued.

13:12What Treasury Secretary Scott Besson was implying is that if people put that money into savings, their spending might not drive inflation. Besson has also suggested using the tariff revenue to offset tax cuts instead of paying it out to people directly. Meanwhile, lawmakers haven't jumped at the chance to back this plan either. My colleagues who cover Capitol Hill have spoken to a lot of lawmakers who are very skeptical about this. And you really would need, according to the letter of the law, the consent of Congress or legislation passed by Congress in order to do this. If you're going to have this tariff revenue coming in, most lawmakers would prefer to see that go directly toward bringing down the deficit, paying down the debt and rebalancing the U.S.'s books over time rather than injecting this money into the economy in a way that could spark additional inflation and have very unpredictable effects in terms of how this would all play out.

14:06And just to be clear, Nancy, does Trump need Congress's approval to follow through with this proposal? Yes, he would need congressional approval. One of his aides this week at an event the Bloomberg government did said that they were looking into ways that he could do it unilaterally. But realistically, at this point, he needs congressional approval. And Dan is right. Senate Republicans, people on the Hill are very cool to this idea. This is not something that they're interested in doing. Well, I want to talk about another potential hurdle to getting these checks out, which is the Supreme Court case evaluating whether a large swath of Trump's tariffs are even legal.

14:40Dan, if tariffs are rolled back, ruled illegal, does all that money get clawed back, too? And what would that mean for a dividend like this? Yeah, we don't exactly know what the process will look like if the Supreme Court rules against Trump's tariffs. So in other words, if the Supreme Court decides that Trump misused his emergency authorities in order to put these tariffs into place, there is a school of thought that says the government would have to refund this money to the importers who have paid these tariffs up to this point. There's also another school of thought that says the court could make it prospective.

15:19In other words, the government could keep the money that's collected so far, but going forward would no longer be able to collect the revenue from tariffs that are implemented using these authorities. So either way, there's going to be a drop in the amount of revenue that the government is going to be collecting. If the government has to pay back a substantial portion of that money, it could make things very tricky. The political people that I speak to in the Trump orbit largely believe that this is one case in which the Supreme Court will not side with Trump. And even in opening arguments, they seem quite skeptical.

15:50Exactly. You can hear that in the justices' own questions about the case. And so they're sort of working from the idea that it will get struck down. These tariffs are such a big part of what he firmly believes will make the economy better. And he's always viewed tariff revenue as a way like if he has this extra money, then he could do different things on tax policy. And so it will just be another big blow to his economic agenda ahead of the 2026 midterms. Is there any sort of 3D chess happening here where if$2 ,000 checks using this tariff revenue get sent out, it would be harder to claw back tariff revenue in the case that the Supreme Court does not rule his way?

16:29I think that there is a little bit of strategizing happening on the part of the White House when it comes to this case. You brought up one potential justification, but one that we hear a lot from administration officials is that the president needs to retain these authorities and the ability to impose tariffs for national security reasons. He needs to be able to use it as leverage when it comes to bargaining over different things with other countries. So whether the$2 ,000 checks play into this court case directly is sort of an open question. But there are certainly a number of justifications that the administration has made for why it's important for the president to have this ability and to have flexibility in how he uses it that others have argued that the law does not give him.

17:13Well, how is the Federal Reserve thinking about this? Has Jerome Powell commented on this idea? Might it impact how the Fed thinks about the urgency of addressing inflation? Again, if this were to happen or seem more possible to happen. What the Fed is looking at at the moment is a very mixed picture, right? So you have inflation that has come down, obviously, from the high rates that we saw a couple of years ago, but it's still stubbornly around that 3 % range. You have a job market, which is slowing a little bit at a time, and you have Federal Reserve officials who are trying to decide whether or not they want to do another 25 basis point cut in December.

17:55Notwithstanding the pressure that Powell is getting from President Trump to lower interest rates and lower them quickly, but also to try to figure out how to navigate this sort of set of mixed signals, also at a time, by the way, where data is a little bit behind because of the government shutdown and other things are happening in the economy. So it doesn't make Powell's job any easier. And it also makes Secretary Besson's job a little bit more difficult as he tries to interview successors to Powell and present those to Trump. Trump has said he wants these checks to go out sometime next year, and there's a lot in flux.

18:30We know that Powell's term as Fed chair is set to end in May of 2026, and there's this process underway to name his successor. As you mentioned, Dan, Secretary Besant is, you know, deeply involved in both these efforts. So what will you be looking out for in the economy and from the White House and from the Treasury as we try to understand whether and when these checks will actually go out? Voters, as Nancy has talked about, were unhappy with the state of the economy. Polls heading into the last presidential election showed that they trusted Trump to a certain extent more than Vice President Harris.

19:06I think that Trump launched on a very ambitious economic agenda, overturning years of received wisdom about how the economy works, basically on his own gut instincts. So what we're seeing now is some feedback from that experiment. And how that plays into the midterm elections is going to be very interesting. I was at an event with J.D. Vance where he was talking about needing more patience from voters as the Trump administration tries to implement this wholesale economic reimagining. The problem is, is that people are already hurting, right? And so I think that it's a question of how much patience voters are really going to have with this really ambitious remaking of the U.S.

19:49economy. And I think there's going to be a lot of messaging around that. And who does that more effectively will be something that will be determinative of the midterm elections.

20:02This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. Thanks for listening. We'll be back tomorrow.

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