There is an ongoing idea that a portion of the US government’s savings made by Elon Musk’s Department of Government Efficiency (DOGE) can be distributed to taxpaying households, which amounts to $5,000 per household.
This originally started off as a proposal on social media, but has now reached the White House with US President Donald Trump also seeming to approve of it.
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However, this can be a tough call since saving the targeted $2 trillion which is as much as a third of the government’s spending is unlikely to happen and even if it does, distributing it to citizens could fuel inflation, according to a report by news agency AP which cited economists.
There is also the annual budget deficit which was $1.8 trillion last year that needs to be plugged with the savings.
The idea initially became popularised with James Fishback, founder of investment firm Azoria Partners touting it on social media platform X.
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As of now, Musk has estimated that DOGE has cut $55 billion so far, which is a tiny fraction of the $6.8 trillion federal budget.
Fishback supports sending out checks, instead of using the money to reduce the deficit, since it would encourage Americans to seek out wasteful government spending “in their communities, and report it to DOGE,” according to the report.
To increase savings, one of the biggest moves so far has been to fire tens of thousands of government workers. However, “only a small share of total spending goes to federal employees,” the report quoted Douglas Elmendorf, former director of the Congressional Budget Office as saying. “The big money is in federal benefits and in federal taxes and those are not in DOGE’s purview.”
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When it comes to inflation, Trump and his economists blamed Biden’s $1,400 stimulus checks, distributed in the spring of 2021, for fueling the worst spike in inflation in four decades.
However, sending checks from DOGE’s savings won’t cause inflation since Biden’s checks were deficit-financed, while their checks are from savings which the government would have spent anyway, according to the report which quoted Kevin Hassett, director of the White House’s National Economic Council, as saying.
