Donald Trump’s Proposal Is Unconstitutional And Unwise

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I know that for a Republican to criticize Donald Trump these days is a little like touching the third rail of the subway: exciting, dangerous, and generally discouraged if you value your eyebrows. But occasionally a Republican has to take a deep breath and ask a rather old-fashioned question: Does this actually make fiscal sense? President Trump has proposed a $5,000 “dividend” for every adult American if Republicans retain both the House and Senate. As a professional money manager and treasurer of the Montana Republican Party, I find myself reaching for the antacid.

First, there is that pesky little document called the Constitution. The President does not possess a magical Washington checkbook from which he can simply reach in and distribute money. Article I gives Congress the power of taxation, borrowing and spending, and Congress must authorize expenditures. Speaker Mike Johnson has already acknowledged that congressional approval would be required. So even if the President proposes the checks, Congress has to decide whether Uncle Sam actually writes them.

Then comes the wonderfully arbitrary question: Why $5,000? Why not $10,000? Why not $50,000? Heck, if Washington has finally discovered the governmental equivalent of a money tree, why stop there? Make everybody a millionaire! Unfortunately, economics has an annoying habit of ruining perfectly good political fantasies. With roughly 240 million adult U.S. citizens, $5,000 each would cost approximately $1.2 trillion. That is not couch-cushion money.

And here is where my professional money-manager brain starts making unpleasant noises. The national debt is already approaching $40 trillion, while Social Security and Medicare face substantial long-term financing problems. Yet somehow Washington is contemplating another trillion-dollar-plus distribution? The obvious question is: Where does the money come from? The administration has pointed toward tariff revenues and other sources, but no detailed funding mechanism has been established that demonstrates how the entire program would be financed without adding to deficits or debt.

Then there is the little fellow named inflation, who has a remarkable talent for following politicians around. Put another $1.2 trillion of purchasing power into the economy and you have to ask what happens next. Economists have warned that such a massive injection could increase demand and inflationary pressure. Washington could hand you $5,000 with one hand while inflation quietly retrieves part of it with the other. You get your check, then discover that the grocery store, insurance company, contractor, landlord and automobile dealer apparently received copies of it.

Finally, there is an interesting political footnote. Current prediction-market pricing has put the chance of a Republican sweep of both chambers at roughly 15%, meaning the market is pricing the alternative at roughly 85%. Of course, prediction markets are not crystal balls, and prices can change. But if the proposal is explicitly conditioned on Republicans controlling both chambers, the market currently strongly suggests that the $5,000 checks are not likely.

Regardless, Republicans should be willing to ask the uncomfortable questions: Where does the money come from? Who has constitutional authority to spend it? What happens to the debt? And what happens to the dollar’s purchasing power? Government does not create wealth by discovering a money tree. Wealth is created by Americans producing, investing, saving and building things. Conservatives should remember that principle—even when the check being offered has five thousand dollars printed on it.