While the Treasury Department pulls out all the stops to try to calm the bond market, the White House has apparently taken the opposite approach.
During his headline speech at the GOP’s midterm convention in Dallas, President Donald Trump pledged to issue “a dividend to every adult citizen in the United States of America for $5,000” — but only if the party retains the House and Senate majorities in November.
When questioned about the president’s proposal, Vice President JD Vance argued that roughly $1.3 trillion in stimulus checks would not constitute a transparent attempt to buy votes.
“Then the president of the United States says if you want to undercut the wages of American workers, you want to ship American jobs overseas, you will pay a big fat penalty when you try to bring that stuff back to the United States of America,” the vice president said. “Those penalties have generated revenue, they’ve helped us pay down debt.
“What the president’s just saying is, if you keep it going to the American people, if you keep us in power and allow us to continue to do these things, then you’re going to share in some of the benefit of this incredible wealth that we’re creating in the United States of America. I don’t think it’s a controversial idea. It’s actually the president of the United States saying we’re all working together, we’re all on the same team, and if we continue to create wealth, that wealth is going to go back to the American people.”
The fiscal math is considerably less favorable than Vance suggests. Trump’s tariffs generated roughly $300 billion in total customs revenue before the Supreme Court struck down the emergency tariffs that accounted for about half of those collections. Since then, the Treasury has been forced to refund roughly $100 billion to importers.
Because that tariff revenue was not sitting in a separate account waiting to be spent — the federal government is already running a deficit approaching $2 trillion this year — those refunds ultimately add to the government’s borrowing needs.
Rather than creating a pot of wealth, or even tax revenue responsibly saved for a rainy day, the tariffs produced revenue that temporarily reduced federal borrowing before a substantial portion had to be returned.
Voters may embrace Trump’s proposed payments, and principled conservative opposition to large government transfers may fall flat in a political culture increasingly comfortable with handouts. But the final constraint on this spending proposal is the bond market, and it is already signaling concern.
After the Trump-Vance proposal and Thursday’s inflation report, the benchmark 10-year Treasury yield soared about 13 basis points to nearly 5%, its highest level in nearly three years.
The 30-year Treasury yield rose to about 5.37%, its highest level in 19 years. In a $22 billion auction of 30-year bonds, the Treasury borrowed at a high yield of 5.308%, the highest auction yield in more than a quarter-century.
The Treasury futures market has also priced in roughly a 73% chance that the Federal Reserve will raise the federal funds rate at its meeting next week.
In other words, bond investors who finance the federal government are demanding substantially higher yields amid renewed concerns about inflation and Washington’s fiscal trajectory.
And why shouldn’t they be concerned? With wholesale inflation rising to 5.4%, nearly three times the Fed’s 2% inflation target, Trump and Vance are proposing another roughly $1.2 trillion in federal spending without identifying revenue remotely sufficient to pay for it.
Consider the fact that, in the first 11 months of fiscal 2026, Uncle Sam has already spent $6.8 trillion, 4% more than during the same period last fiscal year.
That spending increase reflects, among other factors, higher Social Security, Medicare, Medicaid, and interest costs. The federal government has already spent more than $1 trillion this fiscal year servicing the national debt, making interest one of the largest items in the federal budget.
TRUMP PROMISES $5,000 DIVIDEND FOR EVERY AMERICAN ADULT
Affordability remains a top concern for voters. Reducing cost-of-living pressures requires bringing inflation back toward the Federal Reserve’s 2% target while encouraging stronger economic growth.
Sending $5,000 checks to virtually every adult American would instead inject more than $1 trillion of additional purchasing power into an economy already experiencing renewed inflation pressures. Financing those payments through additional borrowing would also put more pressure on a Treasury market that is already demanding substantially higher interest rates.