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US President Donald Trump promised every adult US citizen a $5,000 “dividend” conditional upon Republicans retaining  control of both chambers of Congress in the November midterm elections. The striking element however (apart from the size of the cheque) was the word dividend.

A dividend is normally paid out of profits. It is what shareholders receive when a company has generated enough surplus to distribute some of it. By using this word, Trump invokes an interesting metaphor, that of an US citizen being recast as a shareholder, and the United States itself as a company whose economic success is supposedly producing cash that can be returned to its owners. But the United States government is not sitting on a pile of profits. It is, on the contrary, running a deficit.  

Trump declared this promise at the Republican Party’s convention in Dallas on September 9, saying that if Republicans win the House and Senate, he would issue a $5,000 payment to every adult US citizen. He offered almost no details beyond saying that the money would have to be spent inside the United States. Tax foundation estimates indicate that a payment to 250 million voting-age adults would cost $1.25 trillion.

The Congressional Budget Office (CBO) projects that the federal government will absorb about $7.4 trillion in 2026 and raise only $5.6 trillion in revenues. Consequently, the federal deficit was approximately $1.8 trillion in fiscal year 2025, according to the Congressional Budget Office. Federal outlays were approximately 23.1% of GDP, while revenues were around 17.2% of GDP.  respectively. In other words, Washington would have to come up with something close to the whole amount that has to be covered by the budget.

The fiscal challenge that the United States is currently experiencing cannot be characterised as a welfare issue. The biggest portions of federal expenditures are Social Security, Medicare, and other mandatory........

© The Wire