Elon Musk's Department of Government Efficiency (DOGE) under President Trump is considering paying American taxpayers 20% of the savings generated from the historic federal downsizing that is currently underway.
These proposed payments, called DOGE dividends, have a good chance of becoming a reality if Musk is able to trim federal spending by £1.57 trillion ($2 trillion). If Musk accomplishes his federal cost-cutting goals and DOGE dividends are approved by Congress, tax-paying households will receive £3,949 ($5,000) cheques directly in their bank accounts.
Trump supported the stimulus plan during his speech on Wednesday at the FII Priority Summit in Miami.
'[We are considering] a new concept where we give 20% of the DOGE savings to American citizens, and 20% goes to paying down debt because the numbers are incredible. So many billions, hundreds of billions are being saved...so we're thinking of giving 20% back to the American people,' he told global financiers and tech execs at the investment conference.
Do You Qualify For DOGE Dividend Cheques?
It is estimated that over 78 million tax-paying US households could receive DOGE cheques. However, there could be a catch on who qualifies for these stimulus payments.
Azoria CEO James Fishback, who originally pitched the idea of DOGE refunds to Musk on X.com, said in a follow-up post that dividend cheques will be sent only to tax-paying households who have demonstrated a "propensity to save (not spend) the incremental dollar received."
Given that Musk has probably gained access to sensitive Social Security records and will likely be successful in his ongoing efforts to peek into taxpayer data on IRS databases, DOGE could analyse individuals' financial behaviour to determine whether they are suitable to receive stimulus cheques. In short, having a clean tax record might not be the only criteria DOGE reviews when sending dividend cheques.
How Does DOGE Cheques Compare With Tax Refunds?
The IRS reported that the average tax refund through direct deposits was £1,710 ($2,165) as of 7th February, which is less than half of the proposed DOGE cheque amounts.
Many Americans rely on tax refunds to make ends meet, clear debt, or grow emergency funds. Receiving DOGE cheques could provide a considerable financial boost to many taxpayers.
Can DOGE Cheques Lead To Higher Inflation?
US headline CPI increased 3% year-over-year in January as the US Federal Reserve continues to battle the prolonged post-pandemic-induced sticky inflation. The Fed increased interest rates to historic levels in the past years to bring inflation down to its 2% target.
DOGE cheques aren't the first stimulus payments Americans will receive directly from the federal government. More than 476 million payments totalling £642.53 billion ($814 billion) were made to US households during the pandemic. During Trump's first term, eligible Americans received £947 ($1,200) payments in March 2020, followed by another £1,105 ($1,400) cheques in March 2021 under President Joe Biden.
Note that only one year after the final stimulus payments, US consumer prices soared to a 41-year high, which could be attributed to supply chain disruptions, Russia's invasion of Ukraine, and substantial government spending. St. Louis Fed estimated that government stimulus contributed 2.6 percentage points to the 7.9% annual inflation rate in February 2022.
However, Fishback highlighted a CNBC survey showing that over 70% of Americans who unexpectedly receive a $5,000 bonus would either pay off debt, contribute to their emergency funds, or invest for long-term goals like retirement. He argued that these activities are not inflationary; in fact, debt paydowns are actually deflationary.
Meanwhile, some economists believe that reducing the national debt can help defeat inflation. In addition to issuing dividend cheques, DOGE plans to lower the national debt using the savings generated from the ongoing federal restructuring.
