WASHINGTON (AP) — An idea that originated on social media has now gained traction at the White House, attracting President Donald Trump’s enthusiastic support: utilize some of the savings from billionaire Elon Musk’s efforts to reduce government spending and return it to taxpayers.
“I love it,” Trump stated late Wednesday while aboard Air Force One when questioned about the proposal.
If Musk’s goal of achieving $2 trillion in spending cuts by next year is realized, proponents believe that approximately one-fifth of those funds could be disseminated to taxpaying households via checks of around $5,000.
However, before you start anticipating a financial boost, budget analysts caution that such substantial savings — nearly one-third of the federal government’s annual budget — are exceedingly improbable. Additionally, distributing checks akin to the stimulus payments issued by Trump and later by President Joe Biden during the pandemic could exacerbate inflation, according to economists, although officials at the White House downplay this concern.
Given that the annual budget deficit reached $1.8 trillion last year and Trump is advocating for substantial tax reductions, there will likely be considerable pressure to allocate all the savings toward deficit reduction, rather than distributing part of it to taxpayers.
Here’s what you need to know about the proposal:
Where is this coming from?
James Fishback, the founder of investment firm Azoria Partners, which he established at Trump’s Mar-a-Lago estate in Florida, brought up the idea on X, formerly Twitter, prompting Musk to say he would “check with the president.” Fishback also mentioned that there have been “behind the scenes” discussions about the matter with White House officials.
Musk has suggested that his Department of Government Efficiency has already cut $55 billion, a small fraction of the $6.8 trillion federal budget. Nevertheless, the public declarations from DOGE have not corroborated the assumed savings, and their assertions regarding tens of millions of deceased individuals fraudulently receiving Social Security have been debunked.
Fishback advocates for the nonpartisan Congressional Budget Office to ascertain the actual savings by DOGE. He indicated that if DOGE manages to cut $500 billion by July 2026, the checks would amount to $1,250 instead of $5,000.
“We have uncovered significant waste, fraud, and abuse,” Fishback told The Associated Press in an interview. “We will rectify this and provide restitution, and then reestablish the social contract between taxpayers and the federal government.”
Fishback supports issuing checks instead of utilizing all the savings for deficit reduction, as he believes this would motivate Americans to identify wasteful government expenditures “in their communities and report it to DOGE.”
When can I expect my check?
Let’s take a step back. According to the proposal, DOGE must first complete its operations, targeted to finish by July 2026. Once this is done, one-fifth of any savings could be distributed later that year to the estimated 79 million households that pay income taxes. About 40% of Americans do not pay such taxes, and therefore wouldn’t be eligible for a check.
How much can DOGE really save?
Many economists and budgeting authorities remain skeptical that DOGE’s emphasis on “waste, fraud, and abuse” can genuinely lead to significant reductions in government expenditure. Budget-cutters from both political parties have aimed to eradicate “waste” — which lacks a strong political support base — for decades, but with minimal success in decreasing the deficit.
One of the most significant actions taken by the Trump administration to date has been the dismissal of tens of thousands of government employees, but such strategies are unlikely to yield considerable savings.
“Only a small portion of total spending goes to federal employees,” remarked Douglas Elmendorf, a former director of the Congressional Budget Office. “The bulk of expenditures is directed toward federal benefits and taxes, which aren’t under DOGE’s jurisdiction.”
In a November essay for the Brookings Institution, political scientist John DiIulio Jr. noted that “eliminating the entire federal civilian workforce would leave approximately 95% of all federal spending and the $34 trillion national debt intact.” He observed that government contractors and nonprofits funded by the government now employ three times as many individuals as the federal government’s 2.2 million employees.
It remains uncertain how much in savings could be attained without Congressional approval.
“Terminating an employee does not result in savings until Congress returns and reduces the budget for that employee’s agency,” Elmendorf explained. “If you dismiss someone but maintain the budget, that money can be reallocated elsewhere. Thus, DOGE cannot genuinely realize savings until there is legislative change as well.”
Wouldn’t another round of government checks spur inflation?
Trump and his advisors attribute the recent surge in inflation, the most substantial in four decades, to Biden’s $1,400 stimulus checks distributed in the spring of 2021. They, however, argue that checks issued from reduced government spending wouldn’t aggravate inflation.
Kevin Hassett, director of the White House’s National Economic Council, stated Thursday that since the funds would have been utilized by the government regardless, transferring that expenditure to consumers would lead to a balance. The stimulus checks under Biden and Trump during the pandemic were financed by deficit spending, which can be more inflationary.
However, Ernie Tedeschi, director of economics at the Yale Budget Lab and a former economist in the Biden administration, argued that additional government checks are “the last thing we need economically at this moment.”
With the current U.S. unemployment rate considerably lower than in 2021, Tedeschi warned that businesses may struggle to find adequate workers to meet the increased demand generated by another round of checks. Labor shortages could lead to higher prices.
Yet, some Democrats resonate with Hassett’s views but for different reasons.
“I can’t envision them being inflationary because I can’t foresee them being substantial enough,” said Elaine Kamarck, a senior fellow in governance studies at the Brookings Institution.
Kamarck, who collaborated with Vice President Al Gore to eliminate government waste during the Clinton administration, dismissed the DOGE dividend as “absurd.”
“There is no money available, and certainly not enough to make a significant impact for taxpayers,” she stated. “The man just makes statements,” she added, alluding to Musk.
