On Wednesday, President Trump indicated that he is contemplating allocating 20% of the savings from Elon Musk’s cost-cutting initiative, the Department of Government Efficiency, or DOGE, for direct payments to taxpayers. However, economists and policy analysts from across the political spectrum have voiced doubts regarding the practicality of implementing such a “DOGE dividend.”
“We are considering giving 20% back to the American public and using another 20% for debt reduction,” Mr. Trump stated during the FII Priority summit, an investment conference held in Miami that was sponsored by Saudi government entities. Further details were not provided by Mr. Trump.
The concept of the proposed DOGE dividend gained traction on social media this week following the posting of a four-page proposal by an X user named James Fishback. The proposal drew the attention of Musk, the owner of X and leader of DOGE, who mentioned on Tuesday that he would present the idea to Mr. Trump.
Per Fishback’s calculations, 20% of the anticipated $2 trillion in DOGE savings would be allocated to certain taxpayers as a direct tax rebate, which he projected could amount to $5,000 per household. However, only households with a tax liability would qualify for the payment, excluding lower-income families typically exempt from income tax obligations.
Despite this, experts have raised concerns that the plan is unlikely to succeed due to the improbability of identifying $2 trillion in federal cuts and the significant legislative barriers in authorizing such direct payments.
“It’s utterly unrealistic for DOGE to save $2 trillion,” Jessica Reidl, an economist and senior fellow at the Manhattan Institute, a conservative think tank, expressed to CBS MoneyWatch. “Two-thirds of the $7 trillion federal budget is allocated to Social Security, Medicare, defense, veterans’ benefits, and interest on the debt — all of which President Trump has excluded from consideration.”
She added, “Achieving a $2 trillion saving would necessitate the elimination of nearly all remaining federal programs. DOGE lacks the legal or constitutional authority to make such cuts; Congress must enact legislation, which is unlikely to occur.”
With two-thirds of the nation’s $6.7 trillion in annual spending being mandatory obligations through programs like Social Security and Medicare, discretionary spending mostly funds defense. In a February 18 interview on Fox News’ “The Sean Hannity Show,” Mr. Trump reaffirmed his previous commitment that cuts to Social Security and Medicare are off the table.
“Social Security won’t be touched, aside from instances of fraud or similar concerns,” Mr. Trump remarked during the interview. “We will find a means to strengthen it, but it won’t be altered. Medicare, Medicaid, and similar programs will remain untouched.”
On February 19, Mr. Trump endorsed the House Republicans’ budget proposal, which, if passed, would entail significant cuts to Medicaid, the nearly $900 billion-a-year federal health insurance program assisting about 79 million mostly low-income or disabled individuals.
The White House has yet to respond to a request for comment.
DOGE Cuts
As of Wednesday, DOGE claims to have implemented cuts totaling approximately $8.4 billion, according to documentation from the task force itself.
Although DOGE has only been operational since Mr. Trump’s inauguration on January 20, the cuts made fall significantly short of Musk’s ambition to reduce $500 billion in annual government spending, let alone approaching the $2 trillion mark, experts observed.
The proposal “is highly unrealistic,” stated Alex Nowrasteh, vice president for economic and social policy studies at the Cato Institute, who describes himself as a libertarian, to CBS MoneyWatch. “While I would love to see it happen, it seems impractical, especially in the initial year, and certainly without Congressional involvement.”
Any new tax refund would necessitate Congressional approval, which is responsible for determining government expenditure and formulating tax laws. Currently, House Republicans are discussing a budget proposal that would implement trillions in spending cuts to finance an extension of Mr. Trump’s 2017 tax reductions and fulfill several campaign promises.
A DOGE dividend “will complicate their budget reconciliation efforts,” remarked Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, a left-leaning economic think tank based in Washington, D.C. “It’s challenging to envision how to balance the budget with this in play.”
While a DOGE dividend scheme could materialize, it would likely be at a significantly lower amount than expected, considering the challenges in sourcing $2 trillion in federal cuts. Experts noted that rebate checks are typically issued during economic hardships, such as the pandemic, when Congress authorized multiple rounds of stimulus payments. Today, however, the U.S. economy is perceived as robust, featuring rising GDP and low unemployment, they pointed out.
Moreover, the federal government’s annual expenditures are exceeding revenue by around $2 trillion, resulting in budget deficits that are contributing to the national debt reaching a historic $36.2 trillion.
Reidl commented, “Washington is facing annual budget deficits that are likely to exceed $3 trillion in the next few years. Issuing dividend checks to taxpayers would be entirely irresponsible.”
DOGE Facing Legal Challenges
Experts have also raised concerns regarding the possibility of DOGE’s cuts facing legal challenges, given that the group is currently embroiled in multiple lawsuits regarding its access to sensitive data from various agencies, as well as the legality of its establishment.
“I’m pleased to see [DOGE] identifying funding cuts, but I am apprehensive about the legality of such actions,” noted Nowrasteh from the Cato Institute. “Congress allocates funds, and having a quasi-presidential commission enact cuts could infringe upon numerous legal frameworks.”
DOGE’s current savings could potentially “be undone by judicial decisions due to its circumvention of Congress,” Reidl highlighted.
Considering the difficulties associated with discovering anything close to $2 trillion in savings, alongside the legislative challenges of enacting a tax rebate, experts advise taxpayers not to rely on receiving a DOGE dividend anytime soon.
“I wouldn’t plan for a $5,000 windfall in the near future,” Jacquez cautioned.
