By Victor Reklaitis
A conservative analyst cautions that issuing these checks might lead to a resurgence of inflation.
President Donald Trump and his senior advisor Elon Musk have expressed interest in a suggested payment to taxpayers, which would be financed through savings from their controversial initiative called the Department of Government Efficiency.
Musk, the billionaire CEO of Tesla (TSLA), mentioned on Tuesday that he would discuss the “DOGE dividend” with Trump. In a speech on Wednesday, Trump acknowledged that his administration is exploring this idea and highlighted the substantial savings that could be realized.
“We’re even considering a new proposal where we allocate 20% of the DOGE savings to American citizens, while another 20% would go toward reducing debt, because the figures are astounding, Elon—billions and billions,” Trump stated at an event in Miami with Musk and other business leaders present. “We’re contemplating giving 20% back to American citizens and applying 20% towards debt repayment.”
According to James Fishback, CEO of hedge fund Azoria and a former Greenlight Capital employee, the DOGE dividend could be approximately $5,000 per taxpaying household.
Fishback has suggested the payout through social media and has garnered a response from Musk, who remarked: “Will check with the President.”
Advocates for DOGE target a goal of saving $2 trillion over a decade, although Musk has scaled back that ambition. Fishback has proposed that 20% of those savings—amounting to $400 billion—be issued as tax refunds to the nearly 79 million U.S. households projected to pay federal income taxes this year.
Nonetheless, several obstacles stand in the way of actualizing the payout.
Firstly, the U.S. House of Representatives and Senate, both narrowly dominated by Republicans, are engaged in a lengthy and challenging process to fulfill the GOP’s commitment to extending their party’s tax cuts initiated in 2017 before they elapse at the end of this year.
There is optimism that Congress will find a way to extend the tax cuts before January, but this endeavor will be complicated by fiscal conservatives in the House and by Trump’s campaign pledges for new tax reductions. These include eliminating taxes on tipped wages, Social Security benefits, or overtime pay, along with introducing new deductions for families with newborns, home generators, and interest on car loans.
From MarketWatch’s archives (October 2024): A comparative glance at all tax breaks proposed by Donald Trump and Kamala Harris—illustrated.
One watchdog group, the Committee for a Responsible Federal Budget, estimates that Trump’s tax proposals could cost between $5 trillion and $11 trillion over the next decade, coinciding with a national debt that has surpassed $36 trillion according to the Peter G. Peterson Foundation.
In light of the U.S. government’s fiscal state, experts are expressing skepticism about the viability of the DOGE dividend, which echoes the COVID-19 stimulus checks distributed during both Trump’s and Biden’s administrations.
“I appreciate the intentions behind DOGE, but this is ill-advised,” noted Preston Brashers, a tax policy research fellow at the Heritage Foundation, a conservative think tank, in a social media post. “There is no necessity for ‘dividend checks.’ The benefit of cutting expenditures is that it helps manage inflation. However, if government disburses stimulus checks, inflation will resurge aggressively.”
Similarly, Matt Glassman, a senior fellow at Georgetown University’s Government Affairs Institute, remarked: “If the plan involves distributing checks based on hypothetical savings over a decade upfront, that sounds both inflationary and likely fiscally irresponsible.”
Fishback has countered the inflation concerns associated with his proposal.
“Households that pay taxes are historically more inclined to save transfer payments like the DOGE Dividend instead of spending them, as consumption tends to make up a smaller portion of their income,” Fishback stated, noting his prior tensions with Greenlight Capital regarding his role’s title.
Investigate further: Inside the battle to prevent Elon Musk and ‘DOGE’ from accessing your financial details.
Learn: Five insights from last week about inflation—and the challenges of eradicating it.
-Victor Reklaitis
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02-20-25 1032ET
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