10th September 2026
Donald Trump has come up with an extraordinary election promise.
If Republicans retain control of Congress in November, he says every American adult will receive a $5,000 “Trump dividend”.
It sounds wonderful.
Who would not like an unexpected cheque for $5,000?
But there is a rather large question sitting behind the promise.
Where is the money going to come from?
The United States already has one of the world's largest government debts and is running a federal budget deficit approaching $2 trillion a year.
A $5,000 payment to roughly 270 million American adults could cost about $1.35 trillion.
That is not a rounding error in the American budget. It is an enormous amount of money. Reuters puts the potential cost at around $1.35 trillion, while other estimates have also put the cost above $1 trillion depending on who ultimately qualifies.
And that immediately raises another question.
Is this really a dividend, or is it an election promise financed by future taxpayers?
The timing is difficult to ignore
Trump made the announcement at the Republican Party's midterm convention, with the November elections only weeks away.
The payment would apparently depend on Republicans retaining control of Congress.
That makes the political calculation fairly obvious.
It is not the same thing legally as offering someone money in return for their individual vote. The proposal is not saying that an individual voter has to vote Republican to receive the money.
Nevertheless, it creates an extraordinary political situation in which the President is telling millions of voters that a Republican victory could put $5,000 in their pockets.
Calling it a “dividend” makes it sound like a payment from a profitable company to its shareholders.
But America is not a company sitting on a giant pile of spare cash.
It is a government with a huge deficit.
America is already borrowing at an extraordinary rate
The Congressional Budget Office expects the federal deficit to reach $1.9 trillion in 2026, equivalent to about 5.8 per cent of GDP.
It projects that deficits will remain very large for years, reaching $3.1 trillion by 2036.
Meanwhile, debt held by the public is projected to rise dramatically, reaching around 120 per cent of GDP in 2036.
This matters because borrowing money is not free.
The US Treasury has to pay interest on its debt, and those interest payments are becoming one of the biggest pressures on the federal budget.
The Committee for a Responsible Federal Budget estimates that interest payments on the US national debt are already on course to exceed $1 trillion a year, with the figure expected to rise substantially over the next decade.
So adding another trillion dollars or more of borrowing would not simply disappear into the accounts.
It would become part of the debt mountain.
But Trump says tariffs will pay for it
This is where the proposal becomes particularly interesting.
Trump has previously promoted the idea of giving Americans “dividend” payments financed from tariff revenues.
There is a certain political attractiveness to that argument.
Instead of saying “we are borrowing another trillion dollars and giving it to you”, the Government can say “America is collecting money from foreign countries and giving it back to Americans.”
The problem is that tariffs do not actually work that way.
The foreign exporter does not simply send the American government a cheque.
The tariff is collected when goods enter the United States, generally from the American importer. The cost can then be passed through the supply chain, meaning American businesses and consumers can ultimately bear at least part of the cost.
And there is another problem.
There may simply not be enough tariff revenue.
Recent US budget figures have already shown how volatile tariff receipts can be. In July, customs receipts were actually negative after tariff refunds, while the fiscal-year deficit had already reached $1.799 trillion with two months still remaining.
Even if tariff revenue becomes very large, the sums involved have to be put into perspective.
If the Government collected, for example, $300 billion in additional tariff revenue, that would still leave a gap of roughly $1 trillion against a $1.3 trillion payment programme.
Somebody would have to finance the difference.
And then comes the trillion-dollar question
Suppose Congress approved the scheme.
There are only a few broad possibilities.
The Government could borrow the money or it could raise taxes elsewhere.
It could cut other spending or it could combine several of these approaches.
If it borrowed the entire amount, America's national debt would increase by another trillion dollars or more.
That would not necessarily cause an immediate economic disaster. The United States has enormous borrowing capacity because the dollar remains the world's dominant reserve currency and US Treasury securities remain central to global financial markets.
But that does not mean borrowing is costless.
More government borrowing can increase demand for available capital and put upward pressure on interest rates, particularly if investors begin demanding higher returns to hold government debt.
Higher government borrowing can therefore have consequences far beyond the $5,000 cheque.
Mortgage rates could be affected, business borrowing could become more expensive, investment could be squeezed and the Government itself would have to devote more money to servicing the debt.
That creates what economists sometimes call crowding out.
What could be squeezed out?
This is perhaps the question Americans should ask before getting excited about the cheque.
If the Government has another $1.3 trillion to find, what happens to everything else?
Defence? Infrastructure? Healthcare? Education? Research? Social programmes? Tax reductions?
Or perhaps none of them immediately. The Government could simply borrow the money.
But then future governments inherit the bill.
This is one of the great problems with deficit spending. The person receiving the money today is not necessarily the person who ultimately pays for it. A 25-year-old American receiving $5,000 might quite reasonably spend it on a car, rent, household bills or a holiday.
But the US Treasury could still be paying interest on the borrowing decades later.
Could it actually stimulate the economy?
There is another side to the argument. Giving $5,000 to millions of people would put a huge amount of money into the economy.
People would spend some of it. Businesses would receive more orders. Retailers could see a temporary boost. Some households could pay down debts. Others might invest the money.
So there could be a short-term economic stimulus.
But there is an awkward possibility.
If the economy is already operating close to capacity, putting another trillion dollars of purchasing power into it could increase demand faster than businesses can increase supply.
That can push prices higher. In other words, some Americans could receive a $5,000 cheque only to discover that part of its value disappears through higher prices.
The benefit would then be rather less than the headline figure suggests.
Is it ethical?
This is where the debate becomes political rather than purely economic.
Governments regularly introduce policies before elections that benefit voters. Pension increases, tax cuts, infrastructure programmes and subsidies can all have political consequences.
So there is nothing automatically unethical about announcing a financial benefit before an election.
The unusual feature here is the directness and scale of the promise. A $5,000 payment is a very large amount of money for an ordinary household.
And it is being explicitly linked to the outcome of the November elections. That makes it reasonable for voters to ask whether this is economic policy or electioneering.
The legal question is different from the ethical question. Legally, the proposal does not appear to amount to paying individual voters for their votes because the payment would not depend on an individual voting Republican.
Ethically, however, people can reasonably question whether promising millions of voters a substantial cash payment immediately before an election crosses a line that politicians should be reluctant to approach.
The United States cannot keep doing this forever
There is an even bigger issue.
America has been able to borrow on a scale that would be impossible for many smaller countries because of the extraordinary position of the US economy and the dollar.
But even America's financial resources are not unlimited.
The CBO's long-term projections already show debt rising substantially faster than the economy, while interest costs consume an increasing share of federal resources.
Eventually governments have to make choices.
You cannot simultaneously promise permanently lower taxes, higher defence spending, more social spending, large investment programmes and enormous cash payments while also pretending that the national debt does not matter.
At some point the arithmetic wins. $5,000 today, or a healthier America tomorrow?
That may ultimately be the real choice facing American voters. A $5,000 cheque would be very attractive. For a family with two adults it could mean $10,000.
That could pay off a credit card, repair a car, reduce a mortgage or simply make life considerably easier for a while.
But it is not free money. If the payment is financed by tariffs, American consumers may already be paying part of the cost through higher prices.
If it is financed by borrowing, future taxpayers will pay through higher debt and interest costs.
If it is financed by spending cuts, Americans will lose something elsewhere a nd if it is financed by higher taxes, the money is simply being taken from one pocket and put into another.
There is therefore a much more important question than “Would you like $5,000?”
Almost everybody would. The question is “What would you be willing to give up to pay for it?”
That is the question American voters should be asking before they decide whether the proposed Trump dividend is a genuine share of America's prosperity or simply another enormous bill being handed to the next generation.