There is no public policy idea so dumb to preclude some member of Congress from whole-heartedly supporting it. And the latest example is a proposal to hand out billions of taxpayer dollars to taxpayers to offset taxpayers paying billions of dollars in taxes — that is, tariffs.
Sen. Josh Hawley (R-Mo.) has just introduced the American Worker Rebate Act. Consider it a plan to rob Peter in order to pay … Peter.
President Trump’s tariffs are forcing American businesses and consumers to pay billions of dollars in tariffs, which are taxes. So far this year, the U.S. government has collected about $150 billion in tariffs. Normally, the federal government collects between $75 billion and $80 billion for the whole year.
The White House is ecstatic about all this increased revenue. White House press secretary Karoline Leavitt said, “In reality, tariffs are a source of massive revenue.” But that “massive revenue” is a result of new taxes coming from Americans. In years past, Republicans went to great lengths to avoid passing anything that could be construed as a tax increase.
And, in fairness, no Republican currently in Congress voted for these tariffs. They exist because one Republican, Trump, has unilaterally imposed, then unimposed, then reimposed, then delayed, then reimposed the tariffs. And while many Republicans quietly grumble about Trump’s tariffs, they hedge their public remarks so as not to “poke the bear.”
Now that Trump’s tariffs are extracting billions of taxpayer dollars from Americans, Hawley proposes to have the government hand out checks to most Americans. Let’s call them Hawley Bucks.
According to The Hill, Hawley’s proposal would offer $600 “tariff rebates.” Children are included, meaning that it “would give a family of four $2,400.” The senator says, “Like President Trump proposed, my legislation would allow hard-working Americans to benefit from the wealth that Trump’s tariffs are returning to this country.”
What a stupid statement. That “wealth” Hawley’s referring to belonged to Americans, and the money isn’t “returning” to America because it was already here. Trump’s tariffs took that wealth away from Americans by forcing them to pay the tariffs. Why does the government need to return the money? The Hill reporter nails it: “The payments are designed to offset higher prices resulting from tariffs.”
Just consider some of the many problems with this proposal.
First, the renewed inflationary pressure leading to higher prices is self-imposed by Trump’s tariffs. Bizarrely, Hawley is modeling his rebates on the COVID-19 stimulus checks, which helped ignite a years-long inflation battle that consumers are still feeling and the Federal Reserve Bank is still fighting.
Second, tariffs, like sales taxes, are regressive. They tend to hit lower-income families harder than higher-income families. So, Hawley plans to means-test the rebates. “The payments would be reduced for households that earn $150,000 or more, a head of household who earns more than $112,500 and individuals who earn more than $75,000.”
That’s a form of income redistribution. Everyone pays the tariffs, but higher-income families won’t get the rebates. There was a time when Republicans strongly opposed income redistribution, while progressives like Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) strongly supported it. Now a Republican, with Trump’s backing, is proposing income redistribution.
Third, some tariff supporters claim the increased revenue will help reduce the current federal budget deficit, which the Congressional Budget Office projects will be $1.9 trillion for 2025. But the tariffs won’t reduce the budget deficit if the government is rebating the tariff revenue to Americans.
Fourth, the tariff revenue will vary, in part because Trump keeps shifting the tariff rates on various countries. But Hawley’s rebates aren’t variable. So, if tariff revenue comes in low and the rebates remain the same, the rebates could add to the federal deficit.
Finally, progressives have long supported a universal basic income (UBI), in which the government hands out checks to everyone — a guaranteed income for every American. Republicans have opposed proposals that would create a new entitlement program. But Hawley’s tariff rebate takes us very close to a UBI.
Of course, a new president entering office in 2029 may repeal the tariffs. Or the U.S. Supreme Court may decide that Congress never gave the president the power to impose sweeping new tariffs on any and all countries for whatever reason or for no reason. In that case, tariff revenue would decline sharply. Yet the public would be very reluctant to see their Hawley Bucks eliminated.
Although Hawley’s proposal is terrible policy, you can appreciate its politics. He is trying to limit the negative consequences of another terrible policy. But rather than create a new entitlement program, Republicans should take steps to eliminate the cause of the problem: Trump’s tariffs.
Merrill Matthews is a co-author of “On the Edge: America Faces the Entitlements Cliff.”
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