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Donald Trump has pledged a $5,000 payout to all US adults if the Republicans win the midterm elections, framing it as an 'electoral dividend' for the nation's prosperity. While legally permissible as a campaign promise, the plan's feasibility relies on Congress allocating the necessary funds, which has been a contentious issue in the past. The proposal injects fresh uncertainty into the bond market, raising questions about fiscal discipline and the potential long-term economic implications of such a large-scale payout.
US president’s promise of ‘dividend’ raises legal, political and economic questions, with the plan likely to cost more than $1 trillionUS president has asked voters to pretend he is on the ballot and promised all US citizens a $5,000 payout if the Republicans win the midterm elections.adults involved.
A $5,000 cheque would give each US adult more money than they received in direct government payments fromIt is not clear yet. Doing so would need the approval of Congress, which last year resisted his calls to send $2,000 rebate checks to families that would have been funded with money collected from his tariffs. It is not immediately clear.
New Mexico-based lawyer John Day told AP that he believed Trump’s proposal would be legal because the payment would go to everyone regardless of how they voted, or whether they voted at all, saidFirst group of migrants deported from US arrive in Costa Rica“This is a campaign promise,” Day said.
“It’s not a payment to individuals to try to get them to vote in a particular way. ”The US president’s promise is injecting fresh uncertainties into the bond market and concerns about Washington’s fiscal discipline and erratic policymaking. The bond market has come under pressure in recent weeks as fresh tensions in the Middle East pushed oil prices higher, fuelling bets that the US Federal Reserve may need to raise interest rates again.
This, in turn, is raising the price of borrowing. Also weighing on US bonds are unabated worries over the fiscal health of the world’s largest economy, now that total US public debt has surpassed $40 trillion for the first time. The response has been measured so far. Bond yields only fluctuated in a narrow range, after Donald Trump made the pledge on Wednesday night.
“The general reaction from markets is very muted precisely as everyone sees almost zero chance of this happening,” said Mark Cudmore, Bloomberg’s Markets Live executive editor. “The US economy is strong and already at risk of running too hot, so pumping in so much extra fiscal stimulus when under funding pressure will exacerbate all the dynamics we’re already focused on in markets: weaker treasuries, a depreciating dollar and a rush to commodities and real assets.
” Kiyoshi Ishigane, executive chief fund manager at Mitsubishi UFJ Asset Management Co in Tokyo, agreed that the planned move went against efforts by US treasury secretary Scott Bessent to calm the bond markets.
“When Bessent is trying so hard to keep yields down, saying something like this would be contradictory,” Ishigane told Bloomberg. “I’m not saying this alone would trigger a massive sell-off in treasuries, but it does raise one question: what does the Trump administration as a whole actually want to achieve? ... With messages like this, it’s hard to tell.
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Donald Trump Electoral Dividend Midterm Elections US Economy Bond Market