The concept of public policy can seem dubious, especially when it leads some lawmakers to hesitate in their support. A recent illustration of this is a proposal that suggests distributing billions in taxpayer money back to the people to offset tariffs.
Senator Josh Hawley (R-Mo.) has just introduced a rebate initiative aimed at American workers. Essentially, it’s like taking money from Peter to pay Peter. Confusing, right?
Thanks to President Trump’s tariffs, both businesses and consumers in the U.S. have to deal with billions in costs. So far, the government has collected around $150 billion in tariffs this year, a significant jump from the typical $75 to $80 billion that is usually collected annually.
The administration is keen on the rising revenue. White House Press Secretary Karoline Leavitt stated, “In reality, tariffs are a source of large income.” However, this “large income” is merely a new expense for Americans. Republicans have largely avoided labeling this as a tax increase in recent years.
To be fair, the current Republican Congress didn’t vote on these tariffs; they were imposed unilaterally by Trump. Many Republicans have expressed dissatisfaction over the tariffs but are careful to tread lightly publicly, perhaps afraid of backlash.
With billions being extracted from taxpayers due to these tariffs, Hawley proposes the government simply sends checks to most Americans, coining them “Holy Bucks.”
The proposal suggests a $600 “customer rebate,” which includes children, meaning a $4 family could receive $2,400. The senator remarked, “As President Trump proposed, my law would allow hardworking Americans to benefit from the wealth that Trump’s tariffs have brought back to this country.”
That’s quite the assertion. The so-called “wealth” was already in the hands of Americans before being taken away, so it’s not really “returning.” The logic here is puzzling, especially when the payments are framed as a way to mitigate the increased costs of tariffs.
There are several flaws in this proposal worth considering.
Firstly, the inflation trends fueling price increases can be directly traced back to Trump’s tariffs. Ironically, Hawley’s model appears to mimic the stimulus checks provided during the COVID-19 pandemic, which contributed to ongoing inflationary pressures that consumers are still feeling and that the Federal Reserve is working to combat.
Secondly, tariffs act like sales taxes and disproportionately affect low-income families. Hawley plans to adjust rebate amounts based on income levels, proposing that those earning over $150,000—or heads of households making over $112,500—would see reduced rebates. This effectively redistributes income. It’s interesting to note that Republicans historically opposed income redistribution; now they’re adopting such a stance for a Trump-backed initiative.
Thirdly, some tariff proponents argue that enhanced revenues could help with the federal budget deficit, projected to be $1.9 trillion by 2025. However, if the revenue from tariffs is being given back to Americans, this doesn’t actually contribute to reducing the deficit at all.
Fourth, as Trump frequently alters tariff rates, the revenue can fluctuate. This creates a risk where steady rebates could inflate the federal deficit if the tariff income decreases.
Lastly, advocates for Universal Basic Income (UBI) have pushed for similar government checks for all citizens. While Republicans have resisted UBI initiatives, Hawley’s rebates bring us closer to that idea than we might think.
Of course, the new president in 2029 could decide to eliminate tariffs altogether, or perhaps the Supreme Court could determine that Congress never granted the power to impose such tariffs. In either case, the potential loss of these “Holy Bucks” could be met with public resistance.
Overall, while Hawley’s proposal may seem misguided policy-wise, one can appreciate the political strategy behind it. Instead of creating a new program to address the fallout from tariffs, Republicans should focus on eliminating the tariffs themselves as the root cause of the problem.
