NEW YORK — President Donald Trump has floated a sweeping campaign promise: $5,000 for every American adult if Republicans win the U.S. midterm elections on Nov. 3. Analysts had expected Trump to reach for aggressive stimulus as the vote approached, but the cash handout he unveiled is more explicit than anticipated. The problem is the state of federal finances, with the national debt now above $40 trillion. Adding to the strain, the Middle East war has widened toward the Red Sea, pushing international crude prices back above $100 a barrel. With inflation concerns spreading rapidly across markets, U.S. Treasury yields are climbing without a ceiling. Should the administration add further cash-based stimulus on the judgment that it is losing ground in the midterms, upward pressure on prices is likely to intensify.
Trump: $5,000 for Every Adult if Republicans Win; Total Nears a Year of Defense Spending
Speaking at a Republican convention in Dallas, Texas, on the 9th, Trump said, "If Republicans win both the House and the Senate, we will pay a $5,000 dividend to every adult in America," naming the plan the "Trump dividend." He added that it was "very similar to the way a successful company pays cash dividends to its shareholders," and that "the money has to be spent inside America."
Trump raised the citizen dividend promise because the midterm outlook is difficult for Republicans. The party currently controls both chambers of Congress, but observers say it could cede majority status to the Democrats in the midterms.
In July, Trump launched what he called a "Trump account," a one-time $1,000 payment for children born during his term. In December of last year, he also paid U.S. service members a special dividend of $1,776 each. No particular formula produced the $1,776 figure. It simply matched 1776, the year the United States was founded.
At the convention, Trump promised not only the dividend but also to make his tax cuts permanent. On the war with Iran, he again hinted at the possibility of bombing what is presumed to be the site of an underground nuclear facility, a location referred to as "Pickaxe Mountain." Trump repeated his claim that "the United States controls the Strait of Hormuz," saying, "We are going to call it the Trump Strait." On the trade dispute with Canada, he said, "Canada wants a deal, so things could work out well," while stressing that Lake Ontario would come to be called "Lake America."
Trump's election-oriented populism continued on the 10th. He posted a roughly two-minute recorded address to the official White House account on X, formerly Twitter, saying that insurance premiums had been overcharged under the Affordable Care Act, known as Obamacare, during the previous Biden administration, and that 1 million people across 30 states would receive refunds of $500 each. Trump said the overcharged amount reached at least $500 million, and claimed that "the previous administration knew this and even investigated it, but just pocketed the money and told no one." The White House added that "checks will be sent starting next month to eligible Americans."
Health insurance premium subsidies under Obamacare expired at the end of last year. In response, the Trump administration has been proposing a "Great Healthcare Plan" that would lower costs by encouraging competition rather than paying subsidies directly to large insurers.
"Tariffs Will Cover It," but Nowhere Near Enough; Criticism Mounts Over Buying Votes With Tax Money
The central question surrounding Trump's cash payment policies is how they would be funded. Total federal debt passed $40 trillion for the first time last month, leaving effectively no fiscal room to hand out money. According to CNBC, paying $5,000 to roughly 240 million American adults would total $1.2 trillion. That is comparable to the $1.27 trillion in interest on the national debt and the $1.36 trillion in defense spending the U.S. government has paid out so far in fiscal 2026, which runs from Oct. 1 of last year through Sept. 30 of this year.
Vice President JD Vance said on Fox News on the 9th that the Trump dividend would be funded by tariffs. "Tariffs are a policy that imposes enormous fines on cutting workers' wages and moving jobs overseas," Vance said, arguing that "these fines have generated enormous revenue and helped pay down our debt." According to the Congressional Budget Office, the analytical arm of Congress, the federal government collected $195 billion in tariff revenue in fiscal 2025, which ran from Oct. 1, 2024, through Sept. 30, 2025. Even if revenue has risen further in fiscal 2026, the sum falls far short of covering the dividend.
Trump's plan to release money for electoral purposes amid fiscal strain and inflation has drawn strong pushback. On the 10th, the U.S. political outlet Politico reported that the amount "would far exceed what was distributed during the COVID-19 pandemic" and was "likely to sharply widen the fiscal deficit." Politico said that "if the president carries out the plan, it would likely further fuel prices already soaring because of the war with Iran, and worsen inflation by stimulating consumer spending," adding that "long-term borrowing costs for the U.S. government would rise further on concerns that federal debt will grow to unsustainable levels unless the dividend is tied to higher tax revenue."
The New York Times noted that the plan "would be hard to afford in a country already carrying $40 trillion in national debt," while CNBC pointed out that federal law bars paying money to induce support for or opposition to a particular candidate. California Gov. Gavin Newsom, a leading Democratic presidential contender, wrote on X that "Trump wants to buy votes with blood money raised from taxpayers," calling him "the most corrupt person ever to occupy the White House."
Oil Prices, PPI and Treasury Yields All Surge; Populism Adds Weight to Rate Hike Case
While Trump was campaigning on the dividend, actual inflation worsened further because of the surge in international oil prices. On the 10th, the Bureau of Labor Statistics said the producer price index rose 0.4% in August from July and 5.4% from a year earlier. Both readings accelerated from July, when the index rose 0.1% from the prior month and 4.8% from a year earlier. The year-on-year figure also exceeded the 5.3% expected by analysts. Excluding volatile food, energy and trade services, the PPI rose 0.3% from the previous month and 4.7% from a year earlier. Core PPI excluding food and energy climbed 0.2% on the month and 4.6% on the year in August. The PPI, a gauge of wholesale prices, is regarded as a leading indicator for the consumer price index. The August CPI is due on the 11th.
The higher-than-expected PPI reflected the widening Middle East war. On the 10th, West Texas Intermediate crude futures for October delivery settled at $102.48 a barrel on the New York Mercantile Exchange, up 6.69% from the previous session. WTI has risen for eight straight sessions since the 31st of last month, crossing the $100 line for the first time in four months, since May 19. On the ICE Futures Exchange in London, Brent crude for November also rose for a fifth consecutive session, closing 6.34% higher at $107.63.
Oil prices were pushed further by news that Yemen's pro-Iranian Houthi rebels had seized key waters in the southern Red Sea while the United States and Iran faced off in the Strait of Hormuz. Since the Strait of Hormuz was closed, Saudi Arabia has been exporting a substantial volume of crude via the Red Sea route through the Bab el-Mandeb Strait. The Wall Street Journal reported that Trump's closest advisers have been discussing privately the possibility that the war with Iran continues through the end of the current administration.
With inflation concerns mounting, U.S. Treasury yields surged again. The 10-year yield, the bond market's benchmark, topped 4.95% during the session to reach its highest level since October 2023. Some in the market predict the 10-year yield could break past the psychological resistance level of 4.5% and reach an unprecedented 5%. The 30-year yield, which serves as a reference for U.S. mortgage rates, closed at 5.360%, the highest since June 29, 2004. The two-year yield rose 0.122 percentage points to 4.548%, its largest gain since March. As market volatility widened, all three major New York indexes fell, with the Dow Jones Industrial Average down 0.60%, the Standard & Poor's 500 down 0.58% and the Nasdaq Composite down 0.65%.
With Trump seeking to pour fuel on prices through populist policies, market attention has turned to whether the Federal Reserve will raise its benchmark rate at the Federal Open Market Committee meeting on the 15th and 16th. According to CME FedWatch data on the 10th, the federal funds futures market raised the probability of a 0.25 percentage point increase this month to 71.3% from 61.2% a day earlier. The probability of a hold fell to 28.8% from 38.8%. Separately, the European Central Bank raised its three policy rates by 0.25 percentage points each the same day, citing the need to respond to rising prices. Markets are also treating as a near certainty a scenario in which the Bank of Japan raises its policy rate once more from the current level of about 1.0% at its policy meeting on the 17th and 18th. Trump, who wants lower rates, is paradoxically raising the odds of tightening through his election campaign.
Trump Stocker is a column delivering on-the-ground reporting and analysis of U.S. markets, companies, policy, politics and diplomacy that may be useful to investors during the Trump presidency. Subscribe to receive news from the United States.
