On Wednesday, President Trump indicated that he is contemplating allocating 20% of the savings generated by Elon Musk’s cost-reduction initiative, the Department of Government Efficiency, or DOGE, to issue direct payments to taxpayers. However, economists and policy experts from various political affiliations voiced doubts regarding the practicality of introducing a “DOGE dividend.”
“Our plan is to return 20% to American citizens and 20% to help pay down the debt,” Mr. Trump stated during the FII Priority summit, a Miami investment conference backed by Saudi government entities. No further details were provided by Mr. Trump.
The concept of the DOGE dividend gained traction on social media this week when an X user, James Fishback, published a four-page proposal. Musk, the owner of X, expressed interest and stated on Tuesday that he would present the idea to Mr. Trump.
Fishback estimates that 20% of a projected $2 trillion in DOGE savings could be distributed to eligible taxpayers in the form of a direct tax rebate, potentially amounting to $5,000 per household. It is important to note that only households with tax liabilities would qualify for the payment, thereby excluding lower-income households that typically do not pay income taxes.
Nevertheless, many economists and policy experts contend that the plan is unlikely to come to fruition, highlighting the implausibility of identifying $2 trillion in federal spending cuts, as well as the legislative challenges associated with approving such direct tax payments.
“The idea of DOGE saving $2 trillion is utterly unrealistic,” Jessica Reidl, an economist and senior fellow at the Manhattan Institute, a conservative think tank, told CBS MoneyWatch. “Approximately two-thirds of the $7 trillion federal budget is allocated to Social Security, Medicare, defense, veterans, and debt interest—none of which are on the chopping block according to President Trump.”
She further clarified, “Achieving $2 trillion in savings would necessitate the elimination of nearly all remaining federal programs. DOGE lacks the legal authority to enact such cuts; it would require Congressional approval, which is highly improbable.”
Mandatory commitments account for two-thirds of the nation’s $6.7 trillion in annual expenditures, primarily for programs like Social Security and Medicare, while discretionary spending is largely directed towards defense. Mr. Trump reiterated in a February 18 interview on Fox News’ “The Sean Hannity Show” that cuts to Social Security and Medicare are off limits.
“Social Security will remain untouched, aside from addressing fraud,” Mr. Trump asserted during the interview. “We believe it will be strengthened, but no cuts will occur. Medicare, Medicaid, and similar programs are also safe from cuts.”
On February 19, Mr. Trump endorsed the House Republicans’ budget proposal, which, if implemented, would initiate significant cuts to Medicaid, the nearly $900 billion per year government health insurance program benefitting around 79 million mostly low-income or disabled Americans.
The White House has not promptly responded to a request for comments.
DOGE Cuts
As of Wednesday, DOGE claims to have achieved savings totaling approximately $8.4 billion, according to their internal documentation.
While DOGE has only been operational since Mr. Trump’s inauguration on January 20, experts point out that its savings are far from the ambitious target of reducing $500 billion in annual government spending, let alone reaching the $2 trillion mark.
The proposal has been labeled as “highly unrealistic” by Alex Nowrasteh, vice president for economic and social policy studies at the Cato Institute, who identifies as a libertarian. “While I would love to see this happen, it seems improbable, especially in the initial year, without Congressional involvement,” he shared with CBS MoneyWatch.
Any potential tax refund would require Congressional approval, which holds authority over government finances and tax legislation. Meanwhile, House Republicans are currently negotiating a budget proposal that involves trillions in spending cuts to finance an extension of Mr. Trump’s 2017 tax cuts, along with other tax commitments made during his campaign.
Implementing a DOGE dividend “would complicate budget reconciliation,” noted Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, a left-leaning economic think tank based in Washington, D.C. “It’s challenging to envision how the math could be balanced.”
While the notion of a DOGE dividend could potentially emerge, it would likely be a significantly smaller sum than anticipated due to the practical difficulties in securing $2 trillion in federal cuts.
Experts pointed out that rebate checks are usually issued in response to economic challenges, such as during the pandemic when Congress authorized multiple rounds of stimulus checks. However, they note that the current state of the U.S. economy is considered robust, with a growing GDP and low unemployment rates.
Additionally, the federal government is increasingly spending $2 trillion more than its revenue each year, exacerbating budget deficits and pushing the national debt to a record $36.2 trillion.
Reidl remarked, “Washington is confronted with annual budget deficits that will likely exceed $3 trillion in the coming years. Sending dividend checks to taxpayers would be utterly irresponsible.”
DOGE Facing Legal Challenges
Experts have also raised concerns regarding the potential legal implications of DOGE’s proposed cuts, particularly given the multiple lawsuits challenging its access to sensitive information across various government agencies and questioning its legitimacy.
“I’m encouraged to see DOGE identifying areas to cut, but I have reservations regarding its legality,” said Nowrasteh of the Cato Institute. “Congress is responsible for appropriating funds, and the quasi-commission established by the president cutting expenditures may violate numerous laws.”
Reidl echoed this sentiment, stating that DOGE’s savings could be “overturned in court due to its circumvention of Congress.”
Given the complexity of identifying anywhere near $2 trillion in savings and the legislative barriers to enacting a tax rebate, experts caution taxpayers against expecting a DOGE dividend in the near future.
“I wouldn’t budget for a $5,000 payout anytime soon,” Jacquez advised.
