GOP senators reject Trump’s $5,000 dividend proposal

Republican senators are rejecting President Donald Trump’s proposal to send $5,000 dividend payments to all American adults if the GOP wins the midterm election. Fiscal hawks in the party warn the plan would add more than $1 trillion to the national debt and could worsen inflation, with several saying they were caught off guard by the announcement.

Trump unveiled the proposal during his primetime address at the GOP midterm convention in Dallas last Thursday.

“We’re trying to figure out what that proposal is. He called it a ‘dividend,’ but I don’t know what that proposal is and I’ve seen no legislation,” said Sen. James Lankford (R-Okla.), who warned that pumping more than a trillion dollars into the economy could make inflation worse. “I don’t know whether it should go out at all.”

Lankford pointed to the Inflation Reduction Act as a cautionary example. “We watched the Inflation Reduction Act and the money that was actually shipped out the door and what that did to inflation across the country,” he said. “That had a detrimental effect when you throw money out.”

Other Republicans raised concern about the nation’s debt, which now costs more than a trillion dollars in annual interest payments.

“I haven’t seen the mechanism and mechanics around how we could get it done,” Sen. Steve Daines (R-Mont.) said. “I do worry about the $40 trillion in debt that we have, and something like that would add to the national debt.”

Daines acknowledged that it was “the first time I heard it” when Trump announced the plan.

Senate Majority Leader John Thune (R-S.D.) on Monday declined to endorse the proposal, noting the president hasn’t put out a specific plan.

“There’s no specific proposal out there, and obviously how that were to come together, Congress would have a big role in determining,” Thune said. “There will be discussions around that subject.”

Asked if he received any notice before Trump unveiled the proposal, Thune said: “I did not.”

Asked if Senate Republicans would pass the dividend, Thune replied: “Well, that’s a good question. We’ll cross that bridge when we come to it.”

On whether the payout should go to people who don’t pay taxes, Thune said: “All those questions are unanswered at this point.”

Sen. Rand Paul (R-Ky.) said paying a dividend to Americans would make sense only if the federal government were running a surplus instead of a $2 trillion annual deficit.

“Most of the time when you give out dividends, you’re running a profit. I’m thinking maybe they just forgot the negative sign. If you lose $2 trillion a year, I guess it would be a negative $5,000 dividend,” Paul said. “I don’t think it would be a good idea to basically borrow money to send to the public. I don’t think it will come to fruition.”

Sen. Bill Cassidy (R-La.) said he would support putting $5,000 into Americans’ retirement or investment accounts provided the money “is there.”

“If you’re telling me we’ve got to borrow the money, then obviously that’s going to negatively impact people’s personal finances in the near, intermediate and long term by raising interest rates,” Cassidy said.

Senate Commerce Committee Chair Ted Cruz (R-Texas) said the proposal should be “structured as a tax refund.”

“I think we should be incentivizing work. I don’t think we should be paying people that are not working,” Cruz said in an interview with Fox News.

Senate Appropriations Committee Chair Susan Collins (R-Maine) called the idea “extraordinarily costly.”

Sen. Chuck Grassley (R-Iowa) said high diesel prices are a bigger issue in the Iowa gubernatorial and Senate races than the proposed dividend.

“We need to concentrate on affordability for this election. With diesel at $6 [a gallon], the best thing Trump could do is follow what a Republican president did in the ’70s and a Democrat president did in the ’70s when they were worried about the price of food: They put an embargo on soybeans and wheat,” Grassley said.

Grassley called on Trump to stop diesel exports to reserve fuel for domestic consumption. “He should put an embargo on diesel leaving the country because $6 diesel is a bigger issue in Iowa than $5,000,” he said.

Paul on Monday called on Congress to cut spending instead of sending out the checks, proposing what he calls a “Six Penny Plan” to cut 6 cents from every dollar in federal spending.

“If Washington really wanted to tackle affordability, it would rein in the reckless spending that drives inflation,” Paul wrote on the social platform X.

Some Republicans expressed support for the dividend. Sen. Darline Graham (S.C.), who recently won a Republican primary runoff with Trump’s support, said: “I think it’s a good idea.”

Senate Republican Policy Committee Chair Shelley Moore Capito (W.Va.) said the proposal came as a surprise.

“It kind of came as a surprise to everybody, the president’s proposal,” Capito said. “When it’s time, we’ll take a look at it. I don’t think it will come in the immediate.”

The yield on 10-year Treasurys crossed to more than 5 percent on Monday before closing for the day slightly below that mark. Treasury Secretary Scott Bessent has repeatedly sought to calm the bond markets, but to little avail so far.