Key Takeaways
- Elon Musk and Donald Trump have proposed sending checks to citizens based on federal spending cuts initiated by the ‘Department of Government Efficiency’ task force.
- Economists and other experts identified several major obstacles to checks going out, starting with whether DOGE will actually be allowed to implement cuts to federal spending.
- The spending cuts claimed by DOGE so far are disputed, and would yield small checks with “zero effect” on the overall economy, according to one economist.
President Donald Trump and his billionaire advisor Elon Musk have proposed sending taxpayers checks totaling as much as $5,000 based on federal spending cuts, but the feasibility and potential impact of that policy are far from certain.
Talk of checks began swirling this week when a social media user proposed the government send checks to taxpayers equal to 20% of the value of federal spending cuts identified by Musk’s Department of Government Efficiency team. DOGE has been laying off employees and canceling grants and contracts at multiple federal agencies under the president’s orders to cut federal spending.
The social post that sparked the discussion estimated checks at $5,000 per person if the task force reached its goal of $2 trillion in spending cuts. Musk and Trump both subsequently made comments supporting the idea.
At a speech in Miami Wednesday, Trump said he was considering dividing up the DOGE savings: “20% goes to American citizens, and 20% goes to paying down debt,” he said.
Will DOGE Be Able to Cut Enough?
Still, it’s far from clear whether stimulus checks will be sent out, how much they might be worth or how soon they could be coming.
Economists and other experts identified several major obstacles to checks going out, starting with whether DOGE will actually be allowed to implement cuts to federal spending.
The Constitution gives Congress, not the White House, the power to tax and spend, a point raised in numerous lawsuits challenging the legality of DOGE’s actions, which included attempting to close down the U.S. Agency for International Development, the organization that distributes foreign aid.
Another potential sticking point is the amount of money DOGE will actually be able to save in its efforts to reduce federal outlays by targeting “wasteful spending across federal agencies,” as its mission statement states.
Early DOGE efforts have focused on contracts and federal employees, which make up a tiny fraction of the overall federal budget. According to its website, the agency has saved $55 billion so far, but an independent analysis by NPR only confirmed $2 billion.
Should 20% of that amount be sent to every U.S. adult, the checks would be for about $41 if DOGE’s tally is accurate or $1.50 if the unaccounted-for savings do not materialize.
What Effect Would the Checks Have on Economy?
Setting aside the impact of the spending cuts, DOGE stimulus checks could affect the economy.
If the agency reduced spending by $2 trillion and sent out $400 billion in checks to citizens, economists at Oxford Economics estimate it would boost economic growth and inflation, likely taking effect in the first quarter of 2026.
The GDP would grow at an annual rate of 2.9% that quarter after stimulus checks compared to a baseline forecast of 2.5%. Meanwhile, core inflation would be 0.2 percentage points higher than it otherwise would, Bernard Yaros, lead U.S. economist at Oxford, wrote in an email to Investopedia.
The White House, however, disagrees that the checks will be inflationary. In a press conference with reporters today, Director of National Economic Council Kevin Hassett responded to a question about the check’s effect on the economy.
“If we don’t spend government money and we give it back to the people, if they spend it all, then you’re even,” he said. “But they’re probably going to save a lot of it, in which case you’re reducing inflation.”