Trump promises $5,000 for every American adult: How will it affect US economy

US president Donald Trump on Wednesday promised a $5,000 payment to every American adult if Republicans retain control of both the House and Senate in the November midterm elections, in a striking bid to bolster his party’s weakening electoral position.“If the Republicans win, you win with us and you get $5,000,” Trump said during the GOP’s midterm convention in Dallas. “It will be called the Trump Dividend.”“We don’t want you going to Canada to spend the money, we don’t want you going to China, to Germany. You gotta spend the money in the United States of America," Trump added.Within an hour of Trump’s announcement, Vice President JD Vance appeared to partially walk back the proposal, suggesting that the $5,000 dividend would not be paid to wealthy Americans.Vance also suggested that the payments could be funded through US tariff revenues, although the proposed dividend far exceeds the amount the US has collected so far through the tariffs, as cited by news agency AP.How would the "Trump Dividend" be funded?Trump did not provide details on how the proposed payments would be financed. Unless the government raises taxes, cuts spending elsewhere or generates sufficient additional revenue to cover the cost, the initiative would likely have to be funded through additional borrowing, as reported by Bloomberg.Last year, Trump had proposed $2,000 “dividend” payments for low- and middle-income Americans, to be financed through revenue from his sweeping tariffs on US goods imports. However, the proposal did not materialise.How will it affect the US economy?The proposal could add to concerns over the US national debt, which surpassed $40 trillion for the first time in recent weeks and has been putting upward pressure on borrowing costs.Economists and policymakers have also raised concerns that placing $5,000 in the hands of every US adult could fuel consumer spending and add to inflationary pressures. Prices have already risen amid Trump’s policies on Iran and tariffs, with gasoline and diesel costs particularly straining household budgets, as cited by Bloomberg.The proposed “Trump Dividend” comes as Trump faces a challenging political landscape ahead of the midterm elections. Polls show his popularity at record lows, while Americans across the political spectrum have expressed concerns over his handling of the war in Iran and the economy.Catch the latest World News and Live updates. Download the TOI app.