Economists and other political observers are voicing concerns about the potential effects on inflation and the national balance sheet.
Trump previously pledged to use savings from the Department of Government Efficiency and revenue from tariffs on foreign imports to distribute payments of $2,000 or more, but none of that came to pass.
His latest idea comes as the U.S. economy is reckoning with persistent inflation and rising interest rates, two forces that have politically undermined Republicans after previously helping them reclaim power from Democrats. Trump claimed the payments would be possible because of the economy’s strength, yet consumer sentiment is weak as gasoline prices are increasing because of the war with Iran and wages are struggling to keep pace with inflation.
A few of Trump's allies embraced the idea, including Ohio Sen. Bernie Moreno, who said he would prepare legislation for the payments. But critics accused him of trying to buy votes at a time when Republicans are trying to maintain slim majorities in Congress.
Many Republicans, including from Trump's inner circle, are in a difficult spot after they’ve spent years blasting Biden and other Democrats for their spending.
As recently as last week, Vice President JD Vance and Treasury Secretary Scott Bessent blamed Trump's predecessor when asked about current price levels and consumer concern.
In the White House briefing room, Vance said at once that he was not interested in assigning blame while in the same answer noting “how endemic inflation became during the Biden administration.”
Bessent told CNBC that Biden and his allies “torched the American people” with their approach. “Almost 50 percent of the great inflation came from the out-of-control spending that went on then,” he argued.
Arkansas Gov. Sarah Huckabee Sanders, one of Trump's press secretaries during his first presidency, ran into the same conundrum Thursday — after the president's speech — when she shared on social media her appearance on Fox Business Channel.
“You do not build a strong economy by giving things away,” Sanders said.
“At the end of the day, though, somebody has to pick up the check,” she continued, “and it’s the taxpayers that will ultimately pay the price.”
Economists raised concerns about inflationary effects from such a large infusion of cash into the economy.
Michael Strain, director of economic policy studies at the American Enterprise Institute, a center-right think tank, said Trump would be repeating the same policy mistake as his predecessor, Democrat Joe Biden.
As part of his 2021 pandemic relief package, Biden provided $1,400 payments to most Americans, which Strain had warned at the time would spark inflation.
“But Mr. Trump’s proposal would be worse than the Biden stimulus in the sense that in 2026 the economy already has an inflation problem,” Strain said, while Biden's policy was intended to shore up an economy disrupted by COVID-19.
“Trump would be pouring gasoline on lit inflationary embers and hoping it wouldn’t ignite,” Strain said.
