Trump's Affordability Ideas Would Probably All Backfire

"Fulfilling a campaign promise. When the country reopened, that money flowed into an economy whose supply chains were still disrupted. With too much money chasing too few goods, inflation took off. The spending package wasn't the main cause of post-pandemic inflation-which, after all, occurred around the world-but economists broadly agree that it pushed inflation up by at least a few percentage points."

"In November, he promised to send out a "tariff dividend" of $2,000 to all but the highest-earning Americans sometime in 2026. This plan, which he has continued to promote, would almost certainly require an act of Congress, meaning that it's unlikely to happen. That's a good thing. Handing out free money would make voters happy in the short term but would ultimately backfire. This is because a massive one-time influx of cash is likely to create far more demand than the economy can possibly meet."

Donald Trump's affordability proposals include a proposed $2,000 "tariff dividend" for most Americans in 2026, which would likely need congressional approval and is therefore unlikely. Economists warn that a large one-time cash payout now would boost demand beyond supply, risking higher inflation given strong consumer spending and low unemployment. The 2021 stimulus checks exemplify the risk: large payments flowed into an economy with disrupted supply chains and helped push post-pandemic inflation up by several percentage points. Handing out broad cash payments in the current macroeconomic environment would likely worsen affordability by raising prices rather than improving purchasing power.

Read at The Atlantic