WASHINGTON — A concept initially proposed on social media has risen to prominence at the White House, garnering President Donald Trump’s strong support: Utilizing a portion of the savings from Elon Musk’s initiative to reduce government expenditures and refund it to taxpayers.
“I love it,” Trump stated late Wednesday while aboard Air Force One, in response to questions about the proposal.
Supporters assert that if Musk’s goal of $2 trillion in budget reductions materializes by next year, around one-fifth of those funds could be shared with taxpaying households, translating to checks of approximately $5,000.
However, budget analysts caution that such substantial savings — nearly a third of the federal government’s annual expenditures — are improbable.
Economists further alert that distributing checks, akin to the stimulus payments given out during the pandemic by Trump and then-President Joe Biden, might trigger inflation. White House officials refute that concern.
With last year’s annual budget deficit at $1.8 trillion and Trump advocating for significant tax reductions, there exists notable pressure to allocate all savings toward diminishing this deficit instead of distributing a portion.
Here’s what you should know about the proposal:
What’s the source of the proposal for stimulus checks?
James Fishback, founder of Azoria Partners, an investment firm he established at Trump’s Mar-a-Lago estate, introduced the idea on X, previously Twitter, leading Musk to indicate he would “check with the president.” Fishback mentioned there have been “behind-the-scenes” discussions regarding this matter with White House officials.
Musk has claimed that the department he oversees — the Department of Government Efficiency — has already saved $55 billion, a minor fraction of the $6.8 trillion federal budget. The public declarations from DOGE do not confirm this figure.
Fishback advocates for the nonpartisan Congressional Budget Office to assess how much DOGE manages to save. He stated that if DOGE achieves savings of $500 billion by July 2026, the checks would amount to $1,250 instead of $5,000.
Will I receive my check? If yes, when?
Per the proposal, DOGE must complete its tasks by July 2026, which is over a year away. Once completed, one-fifth of any savings may be distributed in the following year to approximately 79 million taxpaying households. Roughly 40% of Americans do not pay income tax, so they would not receive a check.
How much can DOGE genuinely save?
Most economists and budget specialists are dubious about the government’s focus on “waste, fraud, and abuse” yielding significant reductions in spending. Budget-cutters from both political parties have attempted to eliminate “waste” for decades with minimal success in addressing the deficit.
So far, one of the largest actions by the Trump administration has been the dismissal of tens of thousands of government employees, but such measures are unlikely to generate substantial savings.
“A small portion of total spending is allocated to federal employees,” explained Douglas Elmendorf, former director of the Congressional Budget Office. “The majority of funds are designated for federal benefits and taxes, areas that are outside DOGE’s scope.”
In November, John DiIulio Jr., a political scientist from the University of Pennsylvania, noted in an essay for the Brookings Institution that “eliminating the entire federal civilian workforce would still leave about 95% of all federal spending intact and the $34 trillion national debt.” He pointed out that government contractors and nonprofits that receive federal funds currently employ three times the number of federal employees, estimated at 2.2 million.
It remains uncertain how much savings can be achieved without legislative action from Congress.
“Terminating an employee doesn’t equate to savings until Congress returns and reduces the funding for that individual’s agency,” Elmendorf stated. “If you dismiss someone but maintain the funding, then that money can simply be redirected elsewhere. Thus, DOGE cannot realize savings without legislative changes.”
Could another round of government checks lead to increased inflation?
Kevin Hassett, director of the White House’s National Economic Council, expressed on Thursday that since that money would have been spent by the government anyway, transferring that spending to consumers would result in a neutral effect.
Ernie Tedeschi, director of economics at the Yale Budget Lab, and previously an economist in the Biden administration, stated that the current low U.S. unemployment rate compared to 2021 means businesses may face challenges in hiring sufficient workers to meet the increased demand prompted by checks. Labor shortages could inflate prices.
Some Democrats concur with Hassett, albeit for different reasons.
“I find it hard to believe that they’d be inflationary, as I doubt they’d be substantial enough,” remarked Elaine Kamarck, a senior fellow in governance studies at the Brookings Institution.
Kamarck, who collaborated with Vice President Al Gore in the Clinton administration to address excessive government expenses, dismissed the DOGE dividend as “ridiculous.”
“There’s no substantial funding available, certainly not enough to make a significant contribution to taxpayers,” she expressed.
By CHRISTOPHER RUGABER and PAUL WISEMAN, The Associated Press
