Trump's $5,000 payment would reignite inflation, economists say

Economists warn that President Trump's proposal to send $5,000 to every U.S. adult if his party retains control of Congress in the midterm elections would exacerbate inflation, strain the federal deficit, and alarm investors. The idea, raised during the Republican National Committee's midterm convention, would require funding through Trump administration tariffs, which generate about $125 billion annually.

However, this would only cover one-tenth of the $1.25 trillion needed for $5,000 payments to the nation's 245 million adults. To bridge the gap, the U.S. would likely issue $3 trillion in government debt, raising the deficit from $1.8 trillion to $3 trillion. This one-time payment, similar to pandemic stimulus checks, could fuel consumer spending and contribute to inflation reaching a 40-year high in June 2022.

The proposal would also likely rattle financial markets, as the already high national debt nears $40 trillion, prompting Treasury bond buyers to demand higher yields for increased fiscal risks. Economists and policymakers, including the Committee for a Responsible Federal Budget, deem the proposal "fiscally dangerous" and question its feasibility given the current fiscal and economic situation.

The White House maintains that Trump has "consistently proven his doubters wrong," dismissing concerns about the plan's fiscal impact. Nonetheless, economists warn that such a payment would be detrimental to the economy and exacerbate inflation, potentially backfiring on the very consumers it aims to assist.