This video from Graham discusses a new proposal to distribute a portion of government savings back to American taxpayers as a dividend, spurred by the efforts of the Department of Government Efficiency (Doge) and supported by Donald Trump. The concept revolves around cutting wasteful government spending and then returning a percentage of those savings directly to taxpayers.
The video begins by highlighting the idea that instead of citizens paying the government, the government would pay them. This is prompted by the growing savings from Doge, currently standing at $55 billion. Graham emphasizes the importance of understanding the specifics, which are quite different from the stimulus checks of 2020, with the potential for both positive and negative impacts depending on income levels.
Doge, acting as an advisory body to the government, has been identifying inefficiencies and wasteful spending, resulting in significant cuts from various departments, including USAID, the Department of Education, and the Social Security Administration. Additionally, the department aims to terminate non-critical IRS workers, encourage government employees to return to the office, and offer federal buyouts for voluntary resignations.
The proposal to return funds to taxpayers originated from a user on X, with Elon Musk and Donald Trump lending their support. Graham stresses the importance of accurate calculations when estimating how much each taxpayer could receive. He argues against simply dividing the total savings by the entire U.S. population, since that includes non-taxpayers, children, and non-citizens. Instead, he uses Tax Foundation data showing that approximately 85 million people pay some amount of income tax, estimating that they would be the ones who would benefit.
Using Trump's suggestion of returning 20% of the savings, Graham calculates that if Doge cuts $55 billion in spending, 20% ($11 billion) divided among 85 million people would result in a refund of approximately $129 per person. However, if the savings continue at the same rate over a year, the refund could potentially increase to $1,550. He references initial estimates of Doge cutting $2 trillion in unnecessary expenditures, which could lead to a $5,000 refund per person, but acknowledges that Elon Musk has since backtracked on these specific figures. Musk stated that he never mentioned a specific dollar figure, and the ultimate tax reduction will be proportional to the actual savings achieved by Doge.
The video explains that, unlike COVID-era stimulus checks, this proposed refund may be structured in such a way that individuals who pay more in taxes will receive a larger refund. This is based on the logic that those who contribute more should be entitled to a greater percentage of the refund.
Graham pivots to discuss the broader economic implications, particularly the impact on inflation. He references the Federal Reserve's stance that current policy is already less restrictive and that rate cuts are unlikely in the near future. He mentions that firms may pass on higher input costs arising from potential tariffs to consumers, likely keeping prices high and delaying rate cuts.
The potential inflationary effects of another government payout are explored. While previous research suggested that stimulus checks contributed significantly to COVID-era inflation, it is argued that the current proposal may have a milder impact, as recipients are more likely to save or invest their refunds instead of spending them immediately. Also, the refund would be funded by existing tax revenue, not printed money. However, Graham believes that most people would likely spend any unexpected windfall, leading to a small uptick in inflation, though smaller than what was seen in 2022.
Finally, Graham expresses his support for reducing government spending and addressing waste and unnecessary expenditures, noting the lack of accountability and incentive for the government to spend less. He raises concerns about cutting services and departments too quickly without fully evaluating the potential consequences, while acknowledging that a slower approach could take years. He then suggests a simpler alternative of allowing agencies to roll over unused funds into the next fiscal year. He concludes that while the likelihood of a refund is fairly good over the next year or two, it is unlikely to happen soon. Graham believes a federal tax credit towards future taxes is more probable than a check or gift card.