Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Lately, President Donald Trump has been talking about in unconventional
Speaker 2: economic policy idea, the tariffs.
Speaker 3: Allow us to give a dividend if we want to
Speaker 3: do that now.
Speaker 2: On November ninth, the President posted about the idea on
Speaker 2: Truth Social A dividend of at least two thousand dollars
Speaker 2: a person, not including high income people, will be paid
Speaker 2: to everyone, he wrote. He brought it up again a
Speaker 2: few days later, so we're.
Speaker 3: Going to be doing a dividend which people will enjoy
Speaker 3: and spend and do what they want.
Speaker 4: Essentially, he's talked about taking some of the tariff revenue
Speaker 4: that the US has collected and using that to issue
Speaker 4: two thousand dollars payments directly to US citizens.
Speaker 2: That's Dan Flatley, a US Treasury reporter for Bloomberg.
Speaker 4: The idea would be to take some of that revenue
Speaker 4: and redistribute it to families making under one hundred thousand
Speaker 4: dollars right or individuals making under a hundred thousand dollars.
Speaker 2: Since Trump began his trade war in April, the US
Speaker 2: has made money from tariffs. The Treasury Department says the
Speaker 2: US has collected one hundred and ninety five billion dollars
Speaker 2: in customs duties in the twenty twenty five fiscal year.
Speaker 2: But there's a small problem with the math. The Yell
Speaker 2: Budget Lab estimated that it would actually cost four hundred
Speaker 2: and fifty billion dollars to pay out dividends in the
Speaker 2: way Trump is proposing. The Committee for a Responsible Federal
Speaker 2: Budget estimated that these dividends could cost six hundred billion dollars.
Speaker 5: And so this would be sort of a money loser,
Speaker 5: regardless of whether the budget it's four fifty six hundred.
Speaker 2: That's Nancy Cook, a White House reporter for Bloomberg.
Speaker 5: It's going to cost more money than they're bringing in.
Speaker 2: And that's just one of the unanswered questions about how
Speaker 2: these two thousand dollars dividends would work. It's also not
Speaker 2: clear how the administration would act actually go about paying
Speaker 2: the money to Americans. In a recent interview with ABC News,
Speaker 2: Treasury Secretary Scott Bessont was asked by George Stephanopoulos about
Speaker 2: whether there's a plan for that.
Speaker 1: I haven't spoken to the President about this yet, but
Speaker 1: you know, it could. The two thousand dollars dividend could
Speaker 1: come in lots of forms in lots of ways, George,
Speaker 1: you know, it could be just the tax decreases that
Speaker 1: we are seeing.
Speaker 2: Trump meanwhile, insists the dividend would be paid out in checks.
Speaker 3: That's not made up. That's real money that comes from
Speaker 3: other countries.
Speaker 2: But there's another big hurdle, the politics.
Speaker 5: It's a tricky idea politically, forget like sort of the
Speaker 5: economics of it. It's not something that Trump can just do.
Speaker 4: You know.
Speaker 2: Latterally, I'm Sarah Holder and this is the big take
Speaker 2: from Bloomberg News today on the show, breaking down Trump's
Speaker 2: proposal to dole out tariff revenue to Americans, how it
Speaker 2: fits into the ability debate that will define the midterms,
Speaker 2: and the many obstacles to making it a reality.
Speaker 4: There's lots of economic implications for this. There's lots of
Speaker 4: practical implications for this. There's lots of things that we
Speaker 4: can sort of get into.
Speaker 2: Dan Flatley is a treasury reporter for Bloomberg. He's been
Speaker 2: chasing down the details of Trump's dividend check proposal, starting
Speaker 2: with how the administration would pay for it. Trump's idea
Speaker 2: is to use the money the US has collected in
Speaker 2: tariff revenue.
Speaker 4: There's no question that US has brought in a lot
Speaker 4: of money in this fashion. The last we looked was
Speaker 4: the end of the fiscal year, which ended September thirtieth.
Speaker 4: It's the fiscal year for twenty twenty five, one hundred
Speaker 4: and ninety five billion dollars worth of customs duties were collected.
Speaker 4: Not small change, but it's a fraction really of the
Speaker 4: overall federal budget, which is, you know, trillions of dollars.
Speaker 2: But there are lots of competing priorities for that money.
Speaker 4: This money has been earmarked or lots of different things.
Speaker 4: People have talked about using it primarily to pay down
Speaker 4: the deficit, reduce the federal debt. Scott Besstt, the Treasury Secretary,
Speaker 4: has talked about bringing down the deficit to GDP ratio,
Speaker 4: which is a key metric for judging a country's economic health. Basically,
Speaker 4: everybody kind of wants to get their hands on this money,
Speaker 4: and it makes it a little bit complicated to then
Speaker 4: start to say, oh, we're going to start cutting checks
Speaker 4: using this revenue stream, because there's only so much that
Speaker 4: the government is going to be bringing in over the
Speaker 4: next few years. Estimates are around about three hundred billion
Speaker 4: a year.
Speaker 2: Trump has claimed that he doesn't have to choose between
Speaker 2: bringing down the deficit and issuing dividend checks that he
Speaker 2: can do both.
Speaker 3: Now we're going to do a dividend, and we're also
Speaker 3: going to be reducing debt we have because of fighting
Speaker 3: and others. We have a thirty seven trigger in the debt.
Speaker 2: Since Trump announced sweeping global tariffs on April second, the
Speaker 2: national debt has risen by five point five percent. The
Speaker 2: US hit thirty eight it's billion dollars in debt in October.
Speaker 2: But for everyday voters, bringing down the deficit sounds a
Speaker 2: lot more abstract than receiving a check in the mail,
Speaker 2: And Nancy Cook, who's covered Trump since his first term, says,
Speaker 2: that's a political calculus this administration is well aware of.
Speaker 5: They did cut stimulus checks when Trump was president. At
Speaker 5: the beginning of COVID, Biden did the same thing. The
Speaker 5: stimulus checks were really born out of the fact that
Speaker 5: the economy was in the tank and unemployment was high,
Speaker 5: and so those stimulus checks were really given to people
Speaker 5: as a way to kind of patch over what was
Speaker 5: just a really unusual time. I think Trump always likes
Speaker 5: the idea though, of kind of a simple branding I mean,
Speaker 5: it's like you send people two thousand dollars checks. The
Speaker 5: average American is not going to know that it came
Speaker 5: from tariff revenue. You know, they're not going to care.
Speaker 5: They're just going to see that like Trump sent them
Speaker 5: a check, and then the hope for the Republicans would
Speaker 5: be they would vote accordingly in the midterms. And so
Speaker 5: I think politically that's how the White House is thinking
Speaker 5: about this.
Speaker 2: So what is Trump's play here as he doubles down
Speaker 2: on this idea. What do you think he's trying to accomplish.
Speaker 2: Is the main priority getting his name on a check again?
Speaker 5: Yes, I mean just the short answers, Yes, he wants
Speaker 5: his name on a check. Trump is just really on
Speaker 5: the defensive right now. He has not had a good
Speaker 5: few weeks between the Epstein files and Republicans sort of
Speaker 5: not going along on the hill with his idea of
Speaker 5: the filibuster. Democrats swept a bunch of elections in early November,
Speaker 5: and so he is just looking for ways to juice
Speaker 5: the economy ahead of the midterms. And we've seen him
Speaker 5: do that with the check's idea. We've seen them have
Speaker 5: to roll back some tariffs on some key agricultural products, coffee, bananas, beef,
Speaker 5: you know, just to try to give people a little
Speaker 5: bit more relief at the grocery store.
Speaker 3: I know.
Speaker 2: He was even, you know, floating the idea of a
Speaker 2: fifty year mortgage, which people also have questions about the
Speaker 2: feasibility and the viability of. But it seems to be
Speaker 2: part of this broader desperation to address affordability right now.
Speaker 5: Absolutely, I think part of the problem is that there's
Speaker 5: both the policy considerations, like how do we bring down prices,
Speaker 5: but how do we also make people feel like we're
Speaker 5: taking it seriously. Trump this week at an investment forum
Speaker 5: with the Saudi's who were in town. You know, he
Speaker 5: had this amazing line where he said, sort of dismissively,
Speaker 5: like Democrats came up with this idea of affordability, but they.
Speaker 6: Came up with the new word affordability. They look at
Speaker 6: the we were all about affordability, and everyone assumes that
Speaker 6: that meant said, no, their prices were high.
Speaker 5: In that same forum, he said, the stock market is
Speaker 5: doing great.
Speaker 4: Since the election.
Speaker 6: The stock market has set and this is a little
Speaker 6: more than nine months forty six all time record has
Speaker 6: and the growth is now amazing and it's lifting up.
Speaker 5: But that stuff doesn't always trickle down to people when
Speaker 5: they're trying to buy a home or go to the
Speaker 5: grocery store and their groceries are fifty dollars more expensive
Speaker 5: than they were three years ago. He is having a
Speaker 5: hard time, I think, wrapping his mind around the idea
Speaker 5: that that Americans don't view the economy as a golden
Speaker 5: age like he does.
Speaker 2: Issuing two thousand dollars checks could offer immediate relief to
Speaker 2: Americans struggling to afford basics right now, just like the
Speaker 2: COVID stimulus checks were a boost during a previous period
Speaker 2: of economic turmoil. But there was also a downside to
Speaker 2: all that Pandemic era stimulus.
Speaker 5: Mainstream economists agree that that really contributed to the historically
Speaker 5: high inflation that we saw. Just that amount of money
Speaker 5: pumped into the economy.
Speaker 2: All that extra money circulating around the economy in twenty
Speaker 2: twenty one and twenty twenty two set off a flurry
Speaker 2: of consumer spending. While pandemic disruptions constrain supply, economists say
Speaker 2: the sudden demand contributed to driving prices up, fueling inflation
Speaker 2: that's still here today, and some economists feared these dividends
Speaker 2: could do a similar thing.
Speaker 5: There would be a concern if they spent four hundred
Speaker 5: and fifty billion two six hundred billion dollars on these
Speaker 5: stimulus checks at a point when prices haven't still totally
Speaker 5: come down, that that would cause more inflation again. And
Speaker 5: so it's interesting that, you know, one of Trump's sort
Speaker 5: of go to policy moves to deal with higher prices
Speaker 5: and people's, you know, people being mad about the state
Speaker 5: of the economy is to cut checks, which could actually
Speaker 5: just add to more inflation.
Speaker 2: After the break, we talk about the other hurdles facing
Speaker 2: this idea and how Trump might navigate them.
Speaker 3: When I spend when I pay people two thousand dollars
Speaker 3: each for low and moderate incumbentment income people, everybody but
Speaker 3: the rich, we'll get this.
Speaker 2: President Donald Trump's proposal to send millions of Americans dividend
Speaker 2: checks is part of the administration's effort to get people
Speaker 2: feeling good about the economy again. But last time stimulus
Speaker 2: checks w to millions of Americans, economists say they played
Speaker 2: a role in creating the inflation we're dealing with today.
Speaker 5: And that's something that federal government has been wrestling with.
Speaker 5: The federal Reserve has been wrestling with and it's not
Speaker 5: something that they've really been able to solve, and Americans
Speaker 5: have been facing higher prices for the last several years
Speaker 5: at this point.
Speaker 2: That's White House reporter Nancy Cook again. The fear that
Speaker 2: a new wave of two thousand dollars checks could send
Speaker 2: prices even higher is just one of the reasons that
Speaker 2: lots of people, from prominent economists to members of the
Speaker 2: Trump administration and the Republican Party have been lukewarm on
Speaker 2: the proposal.
Speaker 4: People are very skeptical of this idea.
Speaker 2: Treasury reporter Dan Flatley, and I.
Speaker 4: Haven't spoken to him about it, but I even detect
Speaker 4: a little bit of hesitancy in Secretary Besson's comments on
Speaker 4: this issue. He sort of floated the idea of Americans
Speaker 4: saving these checks if they are issued.
Speaker 2: What Treasury Secretary Scott Besson was implying is that if
Speaker 2: people put that money into savings, they're spending might not
Speaker 2: drive inflation. Bessen has also suggested using the tariff revenue
Speaker 2: to offset tax cuts instead of paying it out to
Speaker 2: people directly. Meanwhile, lawmakers haven't jumped at the chance to
Speaker 2: back this plan either.
Speaker 4: My colleagues who cover Capitol Hill. Have spoken to a
Speaker 4: lot of lawmakers who are very skeptical about this, and
Speaker 4: you really would need, according to the letter of the law,
Speaker 4: the consent of Congress or legislation passed by Congress in
Speaker 4: order to do this. If you're going to have this
Speaker 4: tariff revenue coming in, most lawmakers would prefer to see
Speaker 4: that go directly toward bringing down the deficit, paying down
Speaker 4: the debt, and rebalancing the US's books over time, rather
Speaker 4: than injecting this money into the economy in a way
Speaker 4: that could spark additional inflation and have very unpredictable effects
Speaker 4: in terms of how this would all play out.
Speaker 2: And just to be clear, Nancy, does Trump need Congress's
Speaker 2: approval to follow through with this proposal.
Speaker 5: Yes, he would need congressional approval. One of his aids
Speaker 5: this week at an event the Bloomberg government did said
Speaker 5: that they were looking at into ways that he could
Speaker 5: do to unilaterally, but realistically, at this point he needs
Speaker 5: congressional approval. And Dan is right. Senate Republicans people on
Speaker 5: the Hill are very cool to this idea. This is
Speaker 5: not something that they're interested in doing.
Speaker 2: Well. I want to talk about another potential hurdle to
Speaker 2: getting these checks out, which is the Supreme Court case
Speaker 2: evaluating whether a large swath of Trump's tariffs are even legal.
Speaker 2: Dan if tariffs are rolled back ruled illegal, does all
Speaker 2: that money get clawed back too, And what would that
Speaker 2: mean for a dividend like this.
Speaker 4: Yeah, we don't exactly know what the process will look
Speaker 4: like if the Supreme Court rules against Trump's tariffs. So,
Speaker 4: in other words, if the Supreme Court decides that Trump
Speaker 4: misused his emergency authorities in order to put these tariffs
Speaker 4: into place, there is a school of thought that says
Speaker 4: the government would have to refund this money to the
Speaker 4: importers who have paid these tariffs up to this point.
Speaker 4: There's also another school of thought that says the court
Speaker 4: could make it prospective words, the government could keep the
Speaker 4: money as collected so far, but going forward would no
Speaker 4: longer be able to collect the revenue from tariffs cet
Speaker 4: or implemented using these authorities. So either way, there's going
Speaker 4: to be a drop in the amount of revenue that
Speaker 4: the government is going to be collecting. If the government
Speaker 4: has to pay back a substantial portion of that money,
Speaker 4: it could make things very tricky.
Speaker 5: The political people that I speak to in the Trump
Speaker 5: Orbit largely believe that this is one case in which
Speaker 5: the Supreme Court will not side with Trump, and.
Speaker 2: Even in opening arguments, they seem quite skeptical, exactly.
Speaker 5: You can hear that in the Justice's own questions about
Speaker 5: the case, and so they're sort of working from the
Speaker 5: idea that it will get struck down. These tariffs are
Speaker 5: such a big part of what he firmly believes will
Speaker 5: make the economy better, and he's always viewed tariff revenue
Speaker 5: as a way like if he has this extra money,
Speaker 5: then he could do different things on tax policy, and
Speaker 5: so it will just be another big blow to his
Speaker 5: economic agenda ahead of the twenty twenty six men terms.
Speaker 2: Is there any sort of three D chests happening here
Speaker 2: where if two thousand dollars checks using this tariff revenue
Speaker 2: get sent out, it would be harder to claw back
Speaker 2: tariff revenue in the case that the Supreme Court does
Speaker 2: not rule his way.
Speaker 4: I think that there is a little bit of strategizing
Speaker 4: happening on the part of the White House when it
Speaker 4: comes to this case. You brought up one potential justification,
Speaker 4: but one that we hear a lot from administration officials
Speaker 4: is that the president needs to retain these authorities and
Speaker 4: the ability to impose tariffs for national security reasons. He
Speaker 4: needs to be able to use it as leverage when
Speaker 4: it comes to bargaining over different things with other countries.
Speaker 4: So whether the two thousand dollars checks play into this
Speaker 4: court case directly is sort of an open question. But
Speaker 4: there's certainly a number of justifications that the administration has
Speaker 4: made for why it's important for the president to have
Speaker 4: this ability and to have flexibility and how he uses
Speaker 4: it that others have argued that the law does not
Speaker 4: give him.
Speaker 2: Well, how is the Federal Reserve thinking about this? Has
Speaker 2: Jron Powell commented on this idea, It impact how the
Speaker 2: Fed thinks about the urgency of addressing inflation. Again, if
Speaker 2: this were to happen or seem more possible to have.
Speaker 4: In what the Fed is looking at at the moment
Speaker 4: is a very mixed picture, right. So you have inflation
Speaker 4: that has come down obviously from the high rates that
Speaker 4: we saw a couple of years ago, but is still
Speaker 4: stubbornly around that three percent range. You have a job
Speaker 4: market which is slowing a little bit at a time,
Speaker 4: and you have Federal Reserve officials who are trying to
Speaker 4: decide whether or not they want to do another twenty
Speaker 4: five basis point cut in December, notwithstanding the pressure that
Speaker 4: Pow is getting from President Trump to lower interest rates
Speaker 4: and lower them quickly, but also to try to figure
Speaker 4: out how to navigate this sort of set of mixed signals,
Speaker 4: also at a time, by the way, where data is
Speaker 4: a little bit behind because of the government shutdown and
Speaker 4: other things are happening in the economy. So it doesn't
Speaker 4: make Pal's job any easier, and it also makes Secretary
Speaker 4: Beston's job a little bit more difficult as he tries
Speaker 4: to interview successors to Pal and present those to Trump.
Speaker 2: Trump has said he wants these checks to go out
Speaker 2: sometime next year, and there's a lot in flux that
Speaker 2: Powell's termus FED chair is said to end in May
Speaker 2: of twenty twenty six, and there's this process underway to
Speaker 2: name his successor. As you mentioned, Dan, Secretary Bessant is
Speaker 2: deeply involved in both these efforts. So what will you
Speaker 2: be looking out for in the economy and from the
Speaker 2: White House and from the Treasury as we try to
Speaker 2: understand whether and when these checks will actually.
Speaker 4: Go out voters? As Nancy has talked about were unhappy
Speaker 4: with the state of the economy. Poles heading into the
Speaker 4: last presidential election showed that they trusted Trump to a
Speaker 4: certain extent, more than Vice President Harris. I think that
Speaker 4: Trump launched on a very ambitious economic agenda, overturning years
Speaker 4: of received wisdom about how the economy works, basically on
Speaker 4: his own gut instincts. So what we're seeing now is
Speaker 4: some feedback from that experiment, and how that plays into
Speaker 4: the midterm elections is going to be very interesting. I
Speaker 4: was at an event with jd Vance where he was
Speaker 4: talking about needing more patients from voters as the Trump
Speaker 4: administration tries to implement this wholesale economic reimagining. The problem
Speaker 4: is is that people are already hurting, right, and so
Speaker 4: I think that it's a question of how much patients
Speaker 4: voters are really going to have with this really ambitious
Speaker 4: remaking of the US economy. And I think there's going
Speaker 4: to be a lot of messaging around that, and who
Speaker 4: does that more effectively will be something that will be
Speaker 4: determinative of the midterm elections.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
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Speaker 5: You slay mind.