Is Trump the Real Socialist? Evaluating the $5,000 Promise

Saddled with a historically unpopular President and persistent inflation, Republican candidates have been desperate for an issue that might resonate with voters in the upcoming midterm elections. They seem to have hit upon one by pointing to the small number of progressive Democratic primary victors who are members of or aligned with the Democratic Socialists of America, identifying all Democratic candidates with those progressives, and then red-baiting incessantly. Last week, as he so often does, President Donald Trump threw a monkey wrench into that strategy, even as he himself continues to deploy it by calling all Democrats “communists.” At the unusual midterm convention in Dallas, Trump told his supporters and thousands of empty seats that if the Republican Party retains its majorities in the House and Senate, he will send every adult U.S. citizen $5,000. It was a striking reminder of just how far the Republican Party has moved since Trump arrived on the political scene. As recently as 2012, Republican Presidential nominee Mitt Romney derisively referred to policies favored by Democrats for helping Americans afford essentials like health care as “free stuff.” How is $5,000 for every American socialist? As University of Colorado law professor Sloan Speck explained in a recent essay, one can understand Trump’s proposal as reviving one made by Democratic Presidential candidate George McGovern in 1972. To pay for “demogrants,” McGovern would have paired them with a flat 33% income tax from the first dollar, which in combination would have effectively raised the tax burden on the wealthy. For people at the lower end of the income spectrum, the money from the government would exceed any tax liability. For those at the upper end, the additional taxes would more than eat up the demogrant. By thus taxing the rich to pay the poor, the proposal could fairly be described as progressive, redistributive, or even socialist. We can almost certainly acquit the President of the socialism charge, however, because he surely does not intend to impose progressive taxes to fund the $5,000 payments. Vice President J.D. Vance has stated that the payments would be funded from tariff revenue. That is impossible: the demogrants would cost over $1.2 trillion, roughly ten times annual tariff revenue. Commerce Secretary Howard Lutnick offered an even more ludicrous account of where the revenue would come from. He said the government could magically “earn” the money, so that it would come neither from taxpayers nor from additional government borrowing. The best account of Trump’s promise is that it is almost certainly vaporware of the sort he has frequently produced, a crass appeal to voters and a distraction from his domestic and foreign policy failures. Nonetheless, it is worth analyzing, if for no other reason than that doing so reveals the utter cravenness of Republicans like Vance, Lutnick, and House Speaker Mike Johnson who are saying with a straight face that Trump’s proposal has any merit at all. Is It Even Legal? Below I return to the economics of the promised $5,000 grants, but first, we should consider whether the President can legally make the promise Trump made. Numerous observers have wondered whether Trump’s promise is an illegal bribe. Federal law forbids vote buying and authorizes both fines and the possibility of imprisonment for up to a year—or up to two years if the violation is willful. Although Trump’s statement that he will pay Americans but only if Republicans win the midterms certainly violates the spirit of the law, it does not appear to violate the letter. Under the scheme, no one is paid more or less depending on how or if they vote. Moreover, politicians routinely make promises that will benefit voters but only if they win the election. To be sure, the contingent nature of those promises is typically implicit rather than explicit as in Trump’s case, but that difference is not enough to convert Trump’s extremely distasteful campaign promise into a vote-buying crime. The scheme might be criminal in another respect, however. The federal Antideficiency Act forbids making payments out of the Treasury without an appropriation by Congress. Knowing and willful violations of the Act are punishable by up to two years in prison and, fittingly in this instance, a fine of up to $5,000. Because of the Supreme Court’s extremely broad 2024 ruling in Trump v. United States, the President himself would likely have immunity from criminal prosecution but, absent a pardon, that would not be true of any federal officers who participated in sending out unauthorized payments. In any event, the public conversation since Trump’s promised largesse makes clear that he was proposing to seek congressional authorization for the $5,000 payments. If authorized by Congress, such payments would be lawful. What’s Wrong with Free Money? Lawful does not mean sensible, however. Notwithstanding the claims of Vice President Vance and Commerce Secretary Lutnick, any payments would almost certainly be financed by government borrowing. As Professor Neil Buchanan recently explained in a pair of columns on this site (here and here), government borrowing, even in large sums, is not necessarily bad. Much depends on the state of the economy and the purpose for which the money is spent. Although comparisons between government fiscal policy and household finances sometimes misfire, at the highest level of generality one works here: when interest rates are low, it might be sensible to borrow money to buy a home or pay for a college education; when interest rates are high or, honestly, whenever interest rates are not negative, it is a bad idea to borrow money to finance casino gambling. It is theoretically possible to imagine circumstances in which Congress could reasonably conclude that it makes sense to give every adult U.S. citizen $5,000 without raising taxes to pay for it. For example, if the government were running a surplus, the payments could be deemed a kind of rebate. Even in such circumstances, it would be better to concentrate the expenditure on people who need it, giving more to the poor and working class and less to the wealthy. Still, one could imagine that political considerations would make a truly progressive distribution impossible; if so, Congress might conclude that it is better to help the needy somewhat rather than not at all. However, the proposal to give every American $5,000 is a terrible idea now, when the combined effects of Trump’s tariffs and his destructive war of choice against Iran are driving inflation. Injecting over a trillion dollars into an economy in which there is already higher-than-optimal inflation would increase dollar demand without affecting supply. Anyone who has sat through the first week of an economics class knows that the effect would be inflationary. Because the Trump administration has effectively ruled out taxes to pay for the $5,000 payments, they would have to be financed by additional borrowing, which would itself feed inflation: other things being equal, government borrowing drives up interest rates for private borrowers too, and higher borrowing costs translate into higher prices. The net result is that the extra $5,000 would not buy an extra $5,000 worth of goods and services at today’s prices, because the price of everything would go up. What’s more, the inflationary effects of the quick injection of over a trillion dollars in spending power and additional government borrowing could persist for years, whereas Trump has envisioned the payments as a one-time affair. Who would be harmed the most? The answer is surely the poorest Americans, who spend all or nearly all of their income (including payments from the government) on goods and services and are thus hit hardest by high inflation. In the end, then, Trump’s plan is not progressive (much less “socialist”). It is not even a reverse-Robin Hood scheme (like the tax cuts for the rich and Medicaid cuts for the poor in his “One Big Beautiful Bill”). Trump’s $5,000 per person giveaway scheme would likely end up robbing everyone to benefit nobody, harming the poor most of all. * * * In light of the foregoing analysis, perhaps we can take comfort from the fact that Trump was probably no more serious about his proposed $5,000 payments than he was about his repeated promise to repeal and replace Obamacare with a better program. (Thus far, his replacement plan consists of a one-page fact sheet.) Indeed, Trump may have already pivoted to a new scheme to use the public fisc to evade the vote-buying prohibition. The day after he made his $5,000-per-person promise, the White House announced that as a result of supposed Obamacare overpayments collected by the Biden administration, “nearly 1 million Americans will receive a refund check of $500 per person. Checks will be sent to eligible Americans beginning in October 2026.” As of this writing, it is not clear whether the memo portion of each check will say “Vote Republican in the midterms.”