Dan Proft reacted to President Trump’s keynote address on the first night of the GOP’s midterm convention in Dallas, in which Trump proposed what he called a “Trump dividend,” a $5,000 payment to Americans contingent on Republicans retaining control of both the House and Senate in November. Trump framed the payment as funded by tariff revenue and argued Democrats could never offer something similar because, in his telling, they do not generate comparable income for the government. Proft noted that providing $5,000 to every American adult would cost roughly $1.2 trillion, a figure that does not include related proposals such as an expanded child tax credit or child care subsidies favored by Vice President JD Vance.
For analysis of the economics behind these proposals, Proft spoke with Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University. De Rugy said she doubts the Trump dividend will ever materialize, noting the president lacks unilateral authority to authorize such a payment, though she acknowledged Ohio Senator Bernie Moreno has said he is willing to sponsor legislation to do so. She said what concerns her more broadly is the shrinking distinction between the two parties on questions of government spending, arguing that neither side meaningfully challenges the premise of transferring money from one group of Americans to another, differing mainly in which constituencies benefit.
The conversation turned to a draft rule reportedly circulating at the Department of Health and Human Services that would create a federal child care subsidy of about $9,000 per child for married couples in which one spouse works at least 35 hours a week and the other stays home to raise children. De Rugy rejected the argument, made by some self-described conservatives, that since existing child care subsidies for working parents are not going away, a comparable subsidy for stay-at-home parents would simply correct an imbalance. She said government has no proper role in steering family structure through the tax code regardless of which arrangement it favors, and compared the proposal to federal electric vehicle subsidies that primarily reward people who would have made the same purchasing decision anyway. She also argued the subsidy would do little to change behavior among the population it is nominally aimed at, since most recipients of existing child care subsidies are single mothers for whom $9,000 per child would not be enough to leave the workforce, meaning the new subsidy would more likely benefit households that could already afford for one parent to stay home.
De Rugy pushed back on the claim that tariff revenue could cover the cost of these proposals, arguing that tariffs function as a tax borne primarily by American businesses and consumers rather than as a new source of government wealth, and that channeling money collected largely from manufacturers, given how many U.S. imports are components used in domestic production, back out as a new entitlement program represents an economically destructive way to run fiscal policy. She said the math behind funding a program of this scale through tariff revenue simply does not work.