A DOGE Dividend Is a Bad Idea. Trump May Cut Checks Anyway…..see more

Congressional Republicans who are watching anxiously as Elon Musk’s DOGE usurps their control over federal programs have had the consolation of assuming that whatever savings he might generate by beating up on federal employees and killing programs and services that sound vaguely “woke” would at least lighten their own budgetary burdens.

Spending reduced by executive fiat is spending Congress won’t have to cut legislatively in order to reduce debts and deficits (which at least some of them care about) or pay for tax cuts (which all of them care about).

Unfortunately for deficit hawks and tax cutters, Musk seems to be taken with a very different idea: giving savings directly back to taxpayers as a “DOGE Dividend,” as Fortune reports:
Elon Musk’s Department of Government Efficiency task force claims to be slashing the federal budget, which would ease the federal deficit.

But now Musk is exploring the idea of using some of that money to send rebate checks to citizens.

In a post on Twitter/X Tuesday afternoon, Musk said he would escalate the idea of a “DOGE Dividend,” saying “will check with the President.”

The post came in a reply to a suggestion by James Fishback, the CEO and co-founder of right-leaning investment firm Azoria.

(The company last year launched an anti-woke ETF that excluded companies that prioritize DEI hiring.)

By Fishback’s calculations, if DOGE reaches its target of $2 trillion in savings (a number that includes most of the government’s discretionary spending and which Musk himself has backtracked from in the past month), a 20 percent cut of that distributed to Americans would work out to $5,000 per household.

The checks, he proposes, would be sent after DOGE expires next July.

Musk reacted to this idea by saying, “Will check with the president.”

That’s an ominous thought, since there’s probably not anything Donald Trump likes better than mailing checks to people with his name on the signature line, as he displayed with his avid support for COVID stimulus checks during the pandemic.

The intended recipients of DOGE Dividends would really like the idea too; even people who despise and mistrust government know that its checks will clear. So it’s a politically seductive idea in the current environment.

Unfortunately, it’s a really bad and unworkable idea, too, and that’s true even if you (a) believe DOGE’s estimates of its savings (often way off the mark), and (b) believe Musk (or even Trump) has the power without explicit congressional authorization to shift money from government programs to rebate checks for individuals, which is hard to imagine.

The closest thing we’ve seen in this country to the DOGE Dividend idea is Colorado’s so-called Taxpayer Bill of Rights (a.k.a. TABOR), adopted by voters in a 1992 constitutional-amendment ballot initiative.

TABOR strictly limits state spending to revenue growth with an inflation adjustment, then requires that “excess” revenues be rebated directly to taxpayers by periodic checks.

TABOR exemptions typically have to be created by voter referenda (which have typically passed), and state lawmakers do have leeway in how refunds are structured.

Precisely because the system has been Swiss cheese’d over the years, it’s not clear TABOR has served any purpose other than making Colorado’s state-budgetary process a living hell and giving the impression that whoever is in charge of the state (currently Democrats) is a beneficent Santa Claus.

While conservative groups (notably the American Legislative Exchange Council) have promoted the TABOR model for years, state legislatures and governors have generally said no thanks to the idea of tying their own hands in this manner and creating a mechanical system of rebates that taxpayers regard as an entitlement.

Elevating this bad idea to the federal level would really create chaos and vast inequities.

For one thing, Fishback’s scheme would apparently distribute DOGE Dividends only to households with net federal income tax liability.

Thanks to low incomes and refundable tax credits, nearly half of U.S. households (or close to Mitt Romney’s famous “47 percent” of Americans with no skin in the game) would not qualify.

If DOGE was generating “savings” in part by hammering programs benefiting low-income Americans, then rebating them to more fortunate folks would represent an upward income redistribution.

But the bigger and more basic problem with DOGE Dividends (other than their dubious legality) is that unlike Colorado under TABOR, the U.S. government is not operating on a balanced budget.

Furthermore, the spending and revenue plans of the Trump administration will make the deficit problem much, much worse.

Anything DOGE can claw back from federal employees and programs is already more than completely spoken for.

If the idea keeps percolating, though, an itchy-fingered president avid to send out checks and a public eager to get and spend them may force Republicans finally to face up to basic fiscal arithmetic.

Don’t make any plans for spending your DOGE Dividend any time soon.