WASHINGTON — An idea that originated on social media has made its way to the White House and garnered enthusiastic support from President Donald Trump: using some of the savings generated from billionaire Elon Musk’s efforts to cut government spending to provide refunds to taxpayers.
“I love it,” Trump expressed late Wednesday aboard Air Force One when questioned about the proposal.
If Musk’s goal of $2 trillion in spending cuts is realized by next year, proponents of the initiative argue that approximately one-fifth of those savings could be returned to taxpayers in checks amounting to around $5,000.
However, before you start anticipating a financial boon, budget analysts caution that such immense savings — nearly one-third of the federal government’s annual budget — is highly improbable. Moreover, sending out checks — reminiscent of the stimulus payments provided by Trump and President Joe Biden during the pandemic — could provoke inflation, economists warn, a concern that White House officials dismiss.
With last year’s annual budget deficit reaching $1.8 trillion and Trump proposing extensive tax reductions, there exists substantial pressure to utilize all savings to address that deficit rather than share a portion with taxpayers.
Here’s a summary of the proposal:
James Fishback, founder of Azoria Partners, an investment firm established at Trump’s Mar-a-Lago estate in Florida, advocated for the idea on X, formerly Twitter, prompting Musk to mention he would “check with the president.” Fishback indicated that there have also been “behind the scenes” discussions with White House officials regarding this matter.
Musk has estimated that his Department of Government Efficiency has already achieved $55 billion in cuts— a mere fraction of the $6.8 trillion federal budget. However, the claims from DOGE to date have yet to substantiate the anticipated savings, and assertions regarding millions of deceased individuals fraudulently receiving Social Security benefits have been debunked.
Fishback advocates having the nonpartisan Congressional Budget Office assess the savings generated by DOGE. He stated that if DOGE manages to cut $500 billion by July 2026, then the checks would total $1,250, rather than the initially proposed $5,000.
“We’ve uncovered significant waste, fraud, and abuse,” Fishback remarked during an interview with The Associated Press. “And we intend to make amends and pay restitution while redefining the social contract between taxpayers and the federal government.”
Fishback favors distributing checks instead of solely applying the savings toward reducing the deficit, believing it would encourage Americans to identify wasteful government spending “in their communities and report it to DOGE.”
However, let’s take a step back. According to the proposal, DOGE must first complete its tasks, which are projected to finish by July 2026. Once accomplished, one-fifth of any generated savings could be allocated later that year to the estimated 79 million tax-paying households. Approximately 40% of Americans do not pay income taxes, meaning they would be ineligible to receive a check.
Many economists and budget experts express skepticism regarding whether focusing on “waste, fraud, and abuse” can significantly reduce government expenditure. For decades, budget-cutters from both political parties have attempted to eradicate “waste” — a target with scant political backing — with minimal success in decreasing the deficit.
One of the most notable actions taken by the Trump administration has been the dismissal of thousands of government employees, but such measures are unlikely to yield substantial savings.
“Only a small portion of total spending is allocated to federal employees,” explained Douglas Elmendorf, former director of the Congressional Budget Office. “The significant expenditure lies in federal benefits and taxation, which are outside DOGE’s scope.”
In November, John DiIulio Jr., a political scientist at the University of Pennsylvania, noted in a Brookings Institution essay that “eliminating the entire federal civilian workforce would leave intact about 95% of all federal expenditure and the $34 trillion national debt.” DiIulio pointed out that government contractors and nonprofits receiving government funding currently employ three times as many individuals as the 2.2 million federal employees.
Trump and his economic advisors attribute the alarming inflation surge over the last 40 years to Biden’s $1,200 stimulus payments issued in the spring of 2021. Despite this, they argue that checks arising from decreased government spending would not trigger inflation.
Kevin Hassett, head of the White House’s National Economic Council, stated Thursday that since the funds would have been utilized by the government regardless, consumer expenditure of that money would neutralize the impact. Unlike Biden and Trump’s pandemic-era stimulus checks, which were financed through the deficit, these funds would not have the same inflationary effects.
However, Ernie Tedeschi, director of economics at the Yale Budget Lab and a former economist in the Biden administration, remarked that additional government checks are “the last thing we need economically at this moment.”
Tedeschi noted that the current U.S. unemployment rate is significantly lower than it was in 2021, suggesting that businesses might face difficulties in hiring sufficient workers to meet heightened demand created by new checks. Labor shortages can drive up prices.
Yet, some Democrats share Hassett’s sentiment for different reasons.
“I don’t see how they could be inflationary, primarily because I can’t envision them being substantial enough,’’ remarked 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 “ludicrous.”
“There’s no money available, let alone sufficient funds to significantly benefit taxpayers,” she said. “He just makes statements,” she added, making reference to Musk.
