President Donald Trump has proposed a $2,000 tariff “dividend” to every American. Reminiscent of the stimulus checks provided during COVID-19, the payment comes at a time of low public confidence in government and government policy.
Tariffs generated $151 billion between April and October, according to the Committee for a Responsible Federal Budget. Treasury Secretary Scott Bessent believes duty collections will reach half a trillion per year.
This does not simply mean that the US federal government has a few extra billion lying around to disperse to the public. America has over $37 trillion in debt that is expanding by the second. Tariffs are an indirect tax paid by consumers through higher prices, not a penalty absorbed solely by foreign producers. A “dividend” payment to Americans would offset that indirect tax. This is not inflationary in itself, rather, it is merely shifting money from importers and consumers back to individuals. It’s a redistribution, not a monetary expansion.
“The $2,000 divided could come in lots of forms,” Treasury Secretary Scott Bessent said. “It could be just the tax decreases that we are seeing.” Also reminiscent of the COVID stimulus checks, these payments likely would not go to Americans earning over a certain threshold. The US does not need to stimulate spending at this time. Consumer spending remains high amid inflation. Consumer sentiment is low, but that does not correlate with spending; however, it does correlate with confidence.
The nation recently witnessed the celebration of a socialist politician, Zohran Mamdani, who became the mayor of NYC through free offerings. The public has its hand out and is waiting for the government to fix the cost-of-living crisis. The premise is more of a political stimulus rather than a monetary one.
The public always demands government do something, and politicians respond with short-term gimmicks to preserve power. But the underlying problem is systemic. We’re witnessing the end of Keynesian economics. The idea that government can endlessly manage the economy through fiscal manipulation is dying.