Economists aren’t so enamored with the “DOGE dividends” rebate floated by Elon Musk and under consideration by Donald Trump.
The idea is relatively straightforward: Pay 20 percent of the $2 trillion Musk has promised will be saved by the Department of Government of Efficiency in the form of $5,000 tax refunds to millions of eligible Americans.
The proposal was first pitched on X to Musk, who promised to “check with the President.” On Wednesday, Trump told a crowd at an investors conference in Miami that it was “under consideration.”
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On Thursday, Musk reportedly said after House Speaker Mike Johnson’s pushback on the stimulus checks, “I told the president, he’s supportive of that. So it sounds like something we’re going to do.”
If it sounds too good to be true, it probably is.
In interviews with the Daily Beast, three professional economists suggested that the idea was not only wildly implausible—it also threatens the very benefits Musk has vowed DOGE’s cuts will provide.
The biggest problem, though, is that Musk—and even the president—can’t just make a tax rebate happen.
Jeffrey A. Frankel, an economics professor at Harvard, wasn’t even open to entertaining the possibility.
“The whole thing is beyond absurd,” he told the Daily Beast.
“It’s not gonna happen,“ he added. ”You might as well ask what is the effect if fairies come down and granted some wishes.”
For all his accusations of fraud, Musk has yet to demonstrate significant savings from his work at DOGE, as pointed out by James K. Galbraith, an economist at the University of Texas at Austin.
Galbraith was skeptical that the approach taken by DOGE in Trump’s first month would ever yield positive results.
“Wholesale dismissals, reductions-in-force, and probationary firings are a slash-and-burn approach,” he said. “They will make the federal government less efficient: queues will get longer, maintenance will be deferred, more mistakes will be made, it will be harder to hire new people if they don’t think the jobs are secure.”
“So in that sense there won’t be any ‘efficiency’ savings,” Galbraith added, acknowledging that Musk’s push to cut spending overseas could see modest returns.
And as for any savings DOGE does create, Trump would need to use them to make good on the tax breaks he campaigned on—not a rebate, Frankel said.
He wanted to remind Americans eager for “DOGE dividends” about “the tax cuts they’ve already promised, which are big in size and more than $5,000 a person, but they’re not gonna be able to deliver those either.”
Lawrence White, an economist at NYU Stern (where Trump’s son Barron attends college), explained that even if by some miracle Trump’s White House managed to pull the rebate off, it could still have negative effects on the economy.
“We have a general condition where the United States government is spending a whole lot more than it is taking in in tax revenues,” White said. “We already have a large national debt. Adding to it is not great at the moment.”
Doing so, by issuing a tax refund like the one Trump is considering, could drive up interest rates, White said.
The rebates bear a resemblance to the stimulus checks pushed for by both Trump and Biden during the pandemic. However, the economists said that that was a very different situation.
“This is not 2020,” White said. “We have a strong economy, we have relatively low unemployment. Anybody who claims the economy is terrible, they simply don’t know what they’re talking about.”
Frankel agreed, saying, “Some of the things Trump and Musk are doing may send us into recession and we may then need stimulus, but there’s no point predicting that before it happens.”
“I’m sure Mr. Trump and Mr. Musk would love to put their names on checks,” White added. “Sorry, that’s a political thing. That’s not a sensible policy thing.”
Galbraith summed it up: “I don’t really know what Musk is thinking, and there is the possibility that he’s not really thinking.”
