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Donald Trump has appeared to embrace a proposal to share a portion of the cuts in US government spending made by Elon Musk’s “department of government efficiency” (Doge) with all US households in the form of checks, intensifying concerns about inflation potentially rising again.
Trump addressed the idea in a speech at an investment conference in Miami on Wednesday, telling attendees: “There’s even under consideration a new concept, where we give 20% of the Doge savings to American citizens, and 20% goes to paying down debt.”
Trump suggested the policy would incentivize Americans to “participate in the process of saving us money” by reporting suspected government waste to boost their own share of the funding cuts.
When a reporter later asked Trump about the proposal as the president flew back to Washington on Air Force One, he said: “I love it.”
James Fishback, CEO of the investment firm Azoria, first raised the idea of a so-called “Doge dividend” in a memo he shared on social media. The memo suggested households could receive checks of $5,000 if Doge successfully cuts $2tn in government funding, as Musk has promised.
Musk appeared to react favorably to the proposal, replying to Fishback’s post: “Will check with the President.”
There is some reason for skepticism that such a plan could be implemented. Although Musk has set a lofty goal of cutting $2tn, he has acknowledged that his team may fall well short of that target. Last month he described $2tn as the “best-case outcome”, adding: “I think if we try for 2tn, we’ve got a good shot at getting 1.”
A Reuters analysis of partial data published by Doge also found that Musk’s team has only cut government contracts worth $8.5bn so far, representing a small fraction of the total spending directed toward contractors.
Musk’s team became the subject of mockery this week after the New York Times reported that Doge claimed it had cut an $8bn contract that was actually only worth $8m.
Even if Musk could reach his $2tn target, questions remain over the implications of sending checks to every US household.
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Both Trump and Joe Biden sent stimulus checks to help families cope with the financial instability caused by the coronavirus pandemic, and economists have suggested they contributed to an elevated inflation rate.
According to research conducted by the Federal Reserve Bank of St Louis, the pandemic-related stimulus “contributed to an increase in inflation of about 2.6 percentage points in the US”. Annual US inflation hit a 40-year high of 9.1% in June 2022 before starting to drop, but it has still not reached the 2% target set by the Federal Reserve.
The 12-month consumer price index rose by 3% last month, a slight uptick from 2.9% in December. During his presidential campaign Trump promised to “rapidly drive prices down” but he acknowledged in December that it is “hard to bring things down once they’re up”, and continued to blame Biden for the price increases under Trump’s own tenure.
“Inflation is back. No, think of it: inflation’s back,” Trump told Fox News’s Sean Hannity in an interview that aired on Tuesday. “And they said, ‘Oh, Trump,’ and I had nothing to do with that.”
