US President Donald Trump promised every adult US citizen a $5,000 “dividend” conditional upon Republicans retaining control of both chambers of Congress in the November midterm elections. The striking element however (apart from the size of the cheque) was the word dividend. A dividend is normally paid out of profits. It is what shareholders receive when a company has generated enough surplus to distribute some of it. By using this word, Trump invokes an interesting metaphor, that of an US citizen being recast as a shareholder, and the United States itself as a company whose economic success is supposedly producing cash that can be returned to its owners. But the United States government is not sitting on a pile of profits. It is, on the contrary, running a deficit. Trump declared this promise at the Republican Party’s convention in Dallas on September 9, saying that if Republicans win the House and Senate, he would issue a $5,000 payment to every adult US citizen. He offered almost no details beyond saying that the money would have to be spent inside the United States. Tax foundation estimates indicate that a payment to 250 million voting-age adults would cost $1.25 trillion. The Congressional Budget Office (CBO) projects that the federal government will absorb about $7.4 trillion in 2026 and raise only $5.6 trillion in revenues. Consequently, the federal deficit was approximately $1.8 trillion in fiscal year 2025, according to the Congressional Budget Office. Federal outlays were approximately 23.1% of GDP, while revenues were around 17.2% of GDP. respectively. In other words, Washington would have to come up with something close to the whole amount that has to be covered by the budget. The fiscal challenge that the United States is currently experiencing cannot be characterised as a welfare issue. The biggest portions of federal expenditures are Social Security, Medicare, and other mandatory programmes, as well as significant interest payments on the federal debt. In 2025, mandatory expenditures are estimated at $4.2 trillion, with more than half devoted to Social Security and Medicare. By comparison, discretionary outlays totalled approximately $1.9 trillion, including defence and a broad range of non-defence programs.The CBO projects that mandatory spending will grow to $4.5 trillion in 2026. Social Security and Medicare account for nearly half of the increase from the previous year. Between 2027 and 2036, mandatory outlays are projected to rise by approximately $2.2 trillion, with increased Social Security and Medicare payouts accounting for 81% of that increase. An aging population, rising healthcare costs, and growing numbers of beneficiaries contribute to the rise in spending. The problem posed by these expenditures is apparent, as the reduction in these areas is nearly impossible, while additional revenues to finance these expenditures will be extremely difficult to raise.Then there is the third expenditure that does not enjoy the same political popularity as it does not come as a cheque to a particular voter: interest. Net federal interest costs were about $970 billion in 2025. CBO expects them to exceed $1 trillion in 2026. Going forward, interest costs are expected to increase to roughly $2.1 trillion by 2036. At that point, interest alone would consume resources comparable to some of the government’s largest programmes. Federal debt held by the public is projected to rise from about 101% of GDP in 2026 to 120% by 2036. That changes the meaning of a $5,000 payment.The Trump administration has highlighted tariffs as a potential funding source. This is superficially plausible as tariffs have accounted for substantially higher revenues under Trump’s trade policies. However, the numbers are far from being able to be delivered. The Tax Foundation estimates that the new tariffs could raise approximately $125 billion in net revenue in 2027. Even if that estimate materialises, it would cover only about one-tenth of a $1.25 trillion dividend. Over a decade, the organisation estimates roughly $1.4 trillion in additional net tariff revenue, although that figure is spread across ten years and therefore cannot finance a one-time $1.2 trillion payment without incurring debt in the interim. There is some economic irony here. A tariff is in essence a tax on imports. Therefore, if the government uses tariffs to fund a payment to American households, it means that they tax goods entering the country in order to redistribute some of the revenues to its citizens. However, tariffs increase the price of imported products and imported inputs, which means that the same policy can drive up prices.Moreover, the value of the $5,000 dividend itself would be substantial. The United States has already engaged in a massive experiment in the area of direct household payments. The three rounds of direct economic stimulus checks which were made to families during the pandemic have so far totalled $931 billion. They have allowed to offset the loss of household income due to pandemic-related restrictions to a significant extent. However, they have also highlighted the limits of direct financial interventions in the economy. The surge in aggregate demand generated by such measures without a corresponding increase in supply leads to inflation, which several economists argue to be partly responsible for higher prices in the post-pandemic period.The current environment is drastically different to the pandemic as lockdowns and factory closures had thrown supply chains into disarray and resulted in mass unemployment. Instead, the US faces rising inflation, soaring oil prices and borrowing costs: on September 11, the ten-year Treasury yield neared 5% and Brent crude climbed above $100 a barrel on renewed Middle East tensions. Covering the cost of the dividend with new debt would push Treasury yields higher as investors factor in more inflation and borrowing, which would increase mortgage, corporate and consumer-credit costs and limit the Federal Reserve’s ability to loosen monetary policy. Americans would then enjoy a $5,000 windfall, but higher borrowing costs and bills would also come into play.The effects would not stop in US shores. With US dollars, the world’s main reserve currency and the benchmark for financial markets worldwide, any fiscal expansion in the US will have global ramifications. The initial boost to demand would increase imports from India, Mexico, South Korea, Japan and the European Union, but these would be partially cancelled out by Trump’s tax policies, which would stack up the cost of imports and disrupt supply chains. For India, higher US demand would benefit pharma, engineering goods, textiles and services, but tariffs, oil prices and borrowing costs would eat into those gains.The spillover would likely occur on financial markets rather than trade as higher borrowing costs could draw capital into dollar assets, depressing emerging-market currencies and hiking their dollar loan costs. India would then see higher export demand, but also higher capital costs and a larger energy bill. The same fiscal boost that stimulates demand worldwide would then tighten financial conditions elsewhere. This is a worry given that fiscal space is already limited around the world as the IMF projects global growth of about 3% in 2026 while global public debt is close to 100% of GDP, the highest since the Second World War.The real US welfare debate, therefore, is becoming a broader argument about what every citizen believes the state owes them and how much the state can promise before the bill arrives.Deepanshu Mohan is Dean and Professor of Economics, O.P. Jindal Global University and a Visiting Professor at LSE and a Visiting Research Fellow at Oxford Department of International Development, University of Oxford.