In 1972, on the way to an epic trouncing by Richard Nixon in that year’s Presidential race, nice, clueless, ultra-liberal Sen. George McGovern’s flower child-fueled campaign was roundly mocked for a proposal to give a thousand dollars to every man, woman and child. This was called the ultimate nanny state hand-out plan, among the more polite criticisms of it. Now President Donald Trump, hardly one for tie-dyed shirts, says he wants to give most Americans a $2,000 handout funded from tariffs.
“A dividend of at least $2000 a person (not including high income people!) will be paid to everyone,” the President wrote last week in a Truth Social post. U.S. Treasury Secretary Scott Bessent told Fox News that the rebates would likely be given to families making “less than, say, $100,000.” They might get a puppy and candy too.
I glean from this that the President was freaked out by the apparent success of the “affordability crisis” talking point that may have helped Democrats and Communists prevail in some key elections earlier this month. Thus he’s stooping to vote buying, straight up, which is usually a Democrat trick. Trump’s vulnerability on this issue is his own fault, and he repeatedly promised to reduce food prices “on Day One” during his campaign, a pledge that was ridiculous, but it did help with the idiot vote, which took away from Kamala Harris’s natural constituency.
Paying $2,000 to about 150 million adults earning $100,000 or less would require roughly $300 billion in revenue, according to Erica York, vice president of federal tax policy at the Tax Foundation, posting on X. “Only problem, new tariffs have raised $120 billion so far,” she said.
Sounds like a great plan! But wait! There’s more! For the fiscal year ended September. 30, the federal government raised $195 billion in customs duties, according to the U.S. Department of the Treasury. U.S. importers have paid nearly $89 billion in tariffs imposed under the IEEPA, according to U.S. Customs and Border Protection data. If the Supreme Court rules that the IEEPA tariffs are unlawful, those businesses affected could be entitled to refunds. And the betting is that SCOTUS will rule those tariffs illegal.
Then there is the inconvenient truth that a $2000 gift to most taxpayers would add to the national debt. York: “The math gets worse accounting for the full budgetary impact of tariffs: a dollar of tariff revenue offsets about 24 cents of income and payroll tax revenue,” she said. “Adjusting for that, tariffs have raised $90 billion of net revenues compared to Trump’s proposed $300 billion rebate.”
Now remember that those stimulus checks handed out during the pandemic to compensate in part for the stupid, disastrous lockdown inflamed inflation, which reached a 40-year high in 2022. So sending checks to almost every U.S. household seems like a counter-intuitive way for the President to deal with “affordability.” It would risk another bout of inflation by stimulating demand for goods and services without boosting their supply. This even I can understand, and I skipped Ec.1 in college because I was afraid I would flunk.
Trump said in another Truth Social post that “money left over” from the payments would be used to pay down the national debt. Right. And the money I have left over after Christmas will be used to buy a pony.
This is like flying through a storm in a passenger jet and the pilot comes on the loudspeaker singing “A Hundred Bottles of Beer on the Wall.”
Ethics Alarms 
Expecting sensible policies from Trump is like expecting whales to run the 400 yard dash. His policy shop in 2016 was a non-existent joke, and it’s gotten worse since then. He showed us in his first term he (for the first time in US history) liked to put his name on payments to voters. He has NEVER cared about deficits, never proposed a serious plan to rein in spending (DOGE was a typical shitshow–and may not have actually saved much money. Some cuts, like those at the IRS, were gigantic losses of revenue. Even his mass furloughs and firing don’t really save much money, as salaries make up such a small component of spending). OF COURSE he’s going to have a stupid policy. The tariffs themselves are fabulous dumb and regressive for the most part (the one on Chinese cars is probably defensible, but even that was done in almost the dumbest way possible).
But his excellent health care plan is only two weeks away…and always will be.
If DOGE accomplished nothing more than to make a large percentage of people reveal their true feelings about government spending (ie that they are against any spending cuts whatsoever) then it was worthwhile. At least it made it clear that probably half of the voting population will never truly want to cut spending.
How did you calculate that cost-benefit analysis? And for that matter, how did you conclude that people are against any spending cuts, just because they opposed the “torch first, ask questions later” approach of DOGE?
There was no cost/benefit analysis. It’s hyperbole.
I base my observations on how no matter what was being cut, it was followed by pearl-clutching “but what about the children?” complaints from people worried about the people affected by the cuts. Concerns about the method were present but secondary, in my experience.
Do you think that “torch first, ask questions later” is a fundamentally flawed approach to spending cuts?
Thanks for clarifying; I was not able to tell that it was hyperbole. I’m guessing that you felt like using hyperbole based on your strong feelings about other people’s foolish positions on government spending?
Do you think that maybe some of the pearl-clutching opposition to any spending cuts whatsoever might have been hyperbole from people who had strong feelings about what they considered foolish positions on government spending?
Furthermore, do you think maybe if they read what you wrote, they’d consider you to have revealed your “true feelings” on government spending, and that any concerns you might express about the method are secondary?
Yes, I do think that “torch first, ask questions later” is a flawed approach to spending cuts. For one thing, there’s Chesterton’s Fence to consider: Don’t get rid of something until you know why it’s there.
For another, the justification for immediate drastic action by DOGE to protect the economy from supposed imminent collapse by cutting federal spending without regard for how that affects people or cripples vital services exactly mirrors climate fanatics’ justification to take immediate drastic action to protect the environment from supposed imminent collapse by cutting emissions without regard for how that affects people or cripples vital services. In both cases, we can afford to be methodical and not cause harm in the process of overhauling the system. Haste makes waste.
I agree with the concern of preventing corrupt institutions from hiding or destroying evidence of their corruption; I’m unconvinced that shutting down institutions was necessary to prevent that. Once you’ve secured and copied the relevant records, you can let people get back to work while you sort out what work is actually worth doing.
You’re doing a whole lot of reading into my comment here and I’m not sure why.
I never said anyone was foolish. It quite makes sense to vote for things that benefit you personally, or may benefit you or your family personally one day, even if the result is a net loss to everyone else.
And my feelings on this are not strong. Government spending does not get me up in arms, but it is illuminating to see that there are so many people who claim to want cuts but really won’t ever be able to find something they’re okay with cutting.
I don’t really have concerns about the method used. Trump is the executive of the country–if anyone has carte blanche authority to fire federal workers, it’s him. There may have been areas in which he overstepped, but if there are I’m not aware of them.
Chesterton fences–that’s gonna be a hard analysis. Every single government dollar has a purpose, and a very strong proponent (the recipient of that dollar) who will work much harder to keep that policy than those who oppose it. And apparently, surprisingly, a large group of people who will support that proponent out of empathy or hatred of the other political party or something else.
You’re not going to get any traction from me by comparing this to climate change. First, cutting government results in better decisions, because it allows money to follow value and maximizes results. Yes, some of those results will be very painful for certain individuals, even things we will not stand for as a society and would seek to remedy. But at least it’s natural consequences, not the government picking winners and losers. Second, “drastic action” on the climate would only be accomplished through force, whereas cutting government results in less coersion.
For some reason I could no longer reply on that comment and had to publish it.
I have done some mental cost/benefit analyst to the “cut first, examine later” approach.
It’s not a human body, which will die if you unknowingly cut something vital. Outside of the legitimately necessary government services–monopolizing violence, providing or regulating public goods, enforcing contracts, handling relationships with other countries, etc., I can’t think of much that the feds provide that we couldn’t identify as a true need and reinstate.
Now, a wholesale (or even a large) dismantling of the feds would be extremely painful. A huge percentage of our GDP is represented there, and it would result in incredible amounts of economic turmoil as resources were shifted in response. It will never happen, for that reason alone.
But the cost of not doing anything (and you must admit, “we can afford to be methodical and not cause harm in the process of overhauling the system” is never going to happen in regard to government spending) is exponentially worse. The best we can do is kick that can down the road and hope we die before it explodes.
“I never said anyone was foolish. It quite makes sense to vote for things that benefit you personally, or may benefit you or your family personally one day, even if the result is a net loss to everyone else.”
Fair point. I was trying to find an adjective that would describe a position worthy of criticism, and I apparently chose one that didn’t fit very well. I retract my use of “foolish”. Maybe “destructive” would be more appropriate?
In your case, “concerns about the method” would be concerns about not moving with enough haste. I’ve heard enough ordinary people on the Left say “the cruelty is the point” to understand that whatever legitimate reasons you might have to support Trump’s approach, the Left doesn’t believe in your sincerity. They base their observations on how no matter what was being cut, many people on the Right thought (or assumed) that the cut was a good idea.
Sure, every government dollar has a purpose, but some of those purposes will cost more money if they’re abandoned. As far as the special interests, we might want to set them up with some sort of exit strategy for their career, if only so their support evaporates as people see they reject reasonable solutions.
“…it allows money to follow value and maximizes results.”
Not that I trust government to spend money to effectively solve problems, but in some cases it’s better than trusting people or corporations to spend it effectively. Government can solve coordination problems that capitalism hasn’t shown itself to solve. Of course, both these systems are handicapped by the foolishness of the people maintaining them.
“Drastic action” on climate wouldn’t need to require force. It would just require people to obey laws passed by duly elected legislators. Whether those laws count as “coercion” might depend on whether you think they’re a good idea. If all laws are coercion, then obviously we want people to be coerced not to kill or steal from each other, right?
No, I don’t have to admit that being methodical about cutting government spending will never happen. Are you saying it has never happened before? (I am open to the argument that human governments are rarely ever methodical.)
No. It includes unconstitutional methods, like the President trying to make laws. I don’t believe he did anything like that re: DOGE but I’m open to it. And no on the haste, too. It’s not (just) a matter of speed but direction. We’re heading toward a fiscal cliff, gaining speed exponentially every year.
Yeah, well that’s probably a gap that we’ll never bridge. Just as the Left sees every existing government program (outside of farm subsidies, I guess?) as necessary, the Right sees almost every existing government program as mostly unnecessary. Speaking in broad generalities, of course. Defense spending is an obvious exception.
I’d venture to guess that the percentage of government dollars that falls into this category is less than 0.1%, but then I’m biased.
And we get back to the can-kicking problem. An exit strategy that can handle the trillions of artificial (i.e. financed by debt rather than taxes) value being created by the government? Almost $1 trillion per year in defense spending, which bleeds heavily into the private sector, the 3 million federal employees, the hundreds of thousands of people who rely on federal grants for their businesses/research to survive? This goes a bit past “learn to code” and into “let’s reorganize 1/5th of our economy without destroying it” territory. I do not see it as being successful even if there existed the political will for it, and the debt crisis, in whatever form it arrives, will almost certainly arrive before this could be successfully executed.
Yes, and yes. Coercion is the worst way to motivate people (“good” people obey the laws because they don’t want to cause harm to others, not because of the threat of punishment, but the law still exists because not everyone is “good”). It is a slippery slope and the climate crisis is a perfect example of that slope.
Not in any material way, no. Certain special one-time programs have ended, but government has always been ratcheted. https://www.macrotrends.net/3978/federal-government-spending
That was an unusually knee-jerk response from you, EC.
I was a big fan of Gingrich’s Freedom to Farm act of 1995–which was going to zero out farm subsidies over five years. I still oppose almost all farm subsidies. They distort the food market, and the ag market, in bad ways that penalize small farmers, make Americans more obese, and cost us all money. I think most crazy liberals want to cut SOME government. Indeed, many would be happy to see the military go back to what it was 1789-1939–a small, professional military that swelled rapidly in wartimes and shrunk even faster when the war was over. As Alexander Hamilton warned us in Federalist 8 (I think)….the permanent military will start as our protector, and eventually evolve into our better, and republican government may perish. If we could get the Founders reanimated, they would, once they got over their technological and social shocks (gay people? Airplanes? Black de jure equality with White??) they’d be most shocked to see how large our military has become, in absolute and relative terms.
All that suffering to reveal what pollsters and pundits and political scientists have known FOREVER? Americans vote for tax cuts and for expensive services. They want unicorns that shit ice cream when it comes to policies. The truly gifted politicians (the Reagans, the Clintons) can lead them to see that some sacrifices are necessary (Reagan’s great speech about tax reform that really moved the needle, Clinton’s gradual endorsement of a balanced budget, Reagan’s dramatic increase in the social security tax with the Greenspan commission, etc). But most politicians are afraid to tell fiscal truths.
Have you ever worked in private industry?
Okay, kazoo. Now do Biden, or whoever was running the country for those four years.
Burl Ives starred in a short-lived sitcom about a billionaire, called “O.K. Crackerby.” I like “OK kazoo” better.
Well, as someone who studies White House administration, I can say that Biden’s WH was incredibly well run. Take the 50year mortgage bullshit from Trump–that would NEVER happen in Biden’s WH. They vetted ideas carefully and quietly, they had liaisons to Capital Hill. Biden had a team that was also incredibly loyal, and lacked the infighting that bedevils most White Houses. True, Trump has gotten better on that measure–his first term was riven with discord, Team of Vipers, as one autobiography of that WH put it. Second term, there’s more unity (he has a much better chief of staff, the best he’s EVER had). But Biden had a great Chief of Staff, plus an experienced team player at almost every post. The young guy at NSA was the youth wing and he was quite good. The great failing of the Biden team was Groupthink. They just couldn’t see clearly how badly Biden was failing. Once the old man made the terrible decision to run again, it was like LBJ and Vietnam. If you questioned that decision…they’d freeze you out (we don’t know that, because I’ve seen no one who DID question it openly in the WH, but that was how it felt). But Biden, even in decline, had good instincts for governance. He was, for a 1 term president, quite consequential. His stimulus was far too big, and I think he conceded too much to Bernie in his Green Energy bill…and I think he should have stood up to Bibi the way Trump ultimately did…but as for his policy shop–9/10, few notes.
Well, there’s this: Blame Biden for the affordability crisis | The New Criterion
I’m not talking about whether the people running the Biden administration kept their shirts tucked in. I’m talking about what they wrought compared to the awful Trump first term.
Blame Biden for the affordability crisis | The New Criterion
Regarding the pilot singing in a storm, it’s been reported by people on the other end of his radio that Mario Andretti regularly sang Italian opera arias while going down the back stretch at Indy at over two hundred miles per hour. I’ve always thought high performance athletes only relax once the world starts going fast enough for them to start paying attention. I’ve thought so of Ted Williams who, besides hitting major league pitching better than anyone in history, flew fighter jets in the Korean War.
“I’ve always thought high performance athletes only relax once the world starts going fast enough for them to start paying attention.“
Like Joe Montana in the huddle before THE DRIVE in Super Bowl XXIII telling his teammates that John Candy was on the Jumbotron?
PWS
Exactly.
Joe Cool, the Comeback Kid. Got to watch him from the graduate student section/endzone at Notre Dame Stadium his last year, the fall of 1978, our first year in South Bend. And then watched him on TV win “The Chicken Soup Game” in the Cotton Bowl.
I thought the affordability theme was catchy and was wondering how, with its resonance amongst the voters, Trump would hijack or derail. $2000 and then using affordability as if it were his own idea is both hilarious and ominous.
While Trump seems to need a fight, I wonder if he would have gone so hard in all directions at once if he and his prior administration and those associated had not been hoaxed and lawfared or otherwise assassinated.
Assuming the SCOtUS rules the tariffs were unconstitutional and must be refunded how will the refunds be returned to the consumers who according to all the naysayers is passed directly on to consumers in the form of higher prices. If the producers get the tariffs refunded to them it should be seen as unjust enrichment.
Anyone who believed Trump could lower prices on day one is an idiot who has no understanding of Economics. It was John Maynard Keynes, the darling of government spenders, who said prices are flexible upward but sticky downward. More to the point, if the general price level fell by say 5% the labor market would disappear leaving many unemployed because the profit potential would decline signaling impending inventory surpluses. That would create a self fulfilling prophecy. Inflation drives growth because higher prices impact profits positively before costs catch up.
I hope Scott Bessent discourages this idea quickly.
If you want to bring down health insurance prices eliminate the mandate and subsidies first. Allow people to buy or not buy whatever coverage they feel appropriate. Like the idea that refunding tariffs to the duty payers and not the consumers you cannot argue that subsidies are needed if insurers are making record profits.
I am getting tired of people who lack patience and want lower prices immediately. I don’t see any of these people standing up and asking for a reduction in wages which comprise about 2/3 of all costs of production.
Americans are well on their way to becoming servants to Chinese masters because they have become too dependent on government to save them from themselves coupled with an unwillingness to do without because they have no desire to forego immediate satisfaction.
Well, if the tariffs have to be refunded, who else would they go to than the companies that paid them? I.e. the companies importing those goods.
Now they may plan to or have already passed along those extra costs to the people who buy those goods, and they maybe ought to do something about that.
I mean, yes the people ultimately paying the tariffs are the end consumers, but the folks who initially write the checksare the companies importing the goods.
DG. My point was that those complaining about inflationary tariffs cannot argue that the taxes that are paid by suppliers ( legal incidence) get the refund if the economic incidence of the tax fall on the consumer.
If they are ruled unconstitutional then the equitable result would be to only stop the practice. Otherwise importers get paid twice to recover the tariff cost.
But it gets even more complex when different goods have different price elasticities. With highly inelastic goods ( demand being relatively unresponsive to price changes) the consumer shoulders the economic incidence of the tax and highly elastic demand results in the suppliers incurring a majority of the economic Incidence of the tax. Trying to get to a truly equitable outcome is a fools errand if tariffs are to be refunded to anyone. The legal incidence of all excise taxes are incurred by the supplier. Would it make sense to give all the taxes on gasoline back to the distributors if those taxes were deemed unconstitutional? I don’t think anyone would think that would be equitable.
I have a memory from a few months ago when Trump was in one of his rambling loose cannon mouthed talks, he talked about all the money that the USA was making off the tariffs and he floated that maybe giving some of that money back to the people of the USA was a good idea. I don’t remember his exact words, maybe someone could do a deep dive into videos of Trump to find it.
P.S. I generally don’t have memories like this that aren’t true. I’ll try to do some digging in the very, very limited time I have available.
He did and it was a trial balloon. The problem is that Trump is no longer concerned with his political well being but he is concerned about who will follow him. He understands that people are self interested and will not be concerned with the overall impact of handing out checks if they get one. He also knows that the American people do not understand that it takes years before the hundreds of billions in repatriated capital investments being made in the biotech, manufacturing and Fab plants will yield a payday for the populace. My issue is that he is not explaining this to the people. Those tariffs played a role in such repatriation.
The vast majority of the electorate who live paycheck to paycheck do not concern themselves with the longer term effects of their perceived need to spend money on the larger economy. Investment they say is a luxury as they buy the latest animatronic skeleton or Santa, big screen TV or load their grocery carts with prepackaged convenience meals and 5-8 dollar six packs of flavored waters. What people want is government to pay for the things they need so they have money to buy the things they want
Demand side policies (read spending money domestically to prop up an economy) are inflationary as a rule. This idea of giving out money will exacerbate the affordability issue because consumers will squander it away to buy more goods produced overseas or services that provide limited temporal value and not invest it.
Until the American people stop complaining about what they don’t have because they spent all their incomes on frivolities and experiences I have a hard time being sympathetic.
This is a great comment. And it underscores my argument that most Americans are not poor. They are broke. People who buy $50-60 giant inflatable Minions for their front yards should not, at the same time, be demanding free food from charities and government agencies.
[ From your host: yes, this is another redacted comment the most defiant and obnoxious banned EA commenter ever. I didn’t spam it because jd posted a reply before I could take the thing down, since when a comment goes, so do any replies. jd is recent enough not to be aware of AF’s status here. Sure, he’s capable of excellent observations. But he breached the rules here, and eschewed offers to be reinstated provided that he agreed to behave, He chose instead to routinely violate the rules by commenting while banned. That just disrupts the blog and is unfair to other commenters]
This is a very well said, factual post.