(The Hill) — Senate Republicans are wrestling over what to do about President Donald Trump’s proposal to give $2,000 tariff dividend checks to most Americans amid widespread Republican concern over the soaring national debt.
While GOP lawmakers generally favor sending money back to American taxpayers, there is a strong push among Senate Republicans to use hundreds of billions of dollars the government is collecting from higher tariffs to pay down the huge national debt.
Trump wants to hand out big checks to millions of American families to help offset the higher costs of goods due in part to steeper tariffs on imports from around the world.
Such checks could come in handy for lawmakers running in next year’s congressional elections, but Republican senators are also worried about the potential impact on the deficit — and inflation, which is becoming a major political vulnerability for their party.
Senate Majority Leader John Thune (R-S.D.) said he would like to see the revenues collected from higher tariffs be used to pay down the national debt, which has ballooned to $38 trillion.
“I’ve seen reporting on it and the suggestion about it,” Thune said of Trump’s proposal to use tariff revenue to fund rebates for lower- and middle-income Americans.
“I’ve also heard suggestions that they would apply any tariff revenue to debt repayment, which I think is a really good idea. So, we’ll look forward and await any suggestions they might have,” he said.
Thune argued that reducing the debt would be a useful purpose for the tariff revenue, given a new projection from JPMorgan Chase that the United States government will have to increase inflation to help ease the burden of paying interest on the giant debt.
“The amount of revenue coming in from the tariffs is considered to be substantial at this point, and hopefully can be put to a useful purpose, in my view, one of which would be repaying the debt,” he told reporters.
Senate Republican Policy Committee Chair Shelley Moore Capito (W.Va.) said she wants to review Trump’s proposal more closely, but she shares Thune’s view that the revenues should be used to help reduce the deficit, which is estimated to reach $1.8 trillion on an annual basis in 2025.
“I think we need to have a more fleshed-out plan. Does it go to everybody?” she said. “I think my preferred route, quite honestly, would be to pay down the debt, but I want to hear out his program.
Sen. James Lankford (R-Okla.), the vice chair of the Senate Republican Conference, said money coming in from tariffs needs to go toward slowing the growth of the debt.
“Any income that’s coming in from anywhere is reducing the deficit at this point,” he said, noting the national debt is now nearly $40 trillion. “Whatever dividend that would be paid … would still add to our debt.”
Sen. Markwayne Mullin (Okla.), a member of the Senate Republican whip team, said he wouldn’t push the tariff rebate plan of his own accord but said he would follow Trump’s lead on the matter.
“I haven’t dug in on that one yet. I have no issues with it if the White House supports it, but I wouldn’t do it if the White House didn’t,” he said.
Other Republican lawmakers, however, argue that the tariff revenues should be sent directly to American families to help them afford the higher costs of goods due to Trump’s trade war.
Sen. Josh Hawley (R-Mo.) has introduced the American Worker Rebate Act, which would provide rebate checks to workers and families through a system of direct payments similar to what Congress enacted in 2020 during the height of the COVID-19 pandemic.
Hawley’s proposal would provide rebates of at least $600 per adult and dependent child, or $2,400 for a family of four. It would allow for a larger credit per person if tariff revenues exceed what is projected for this year.
The Treasury Department collected $136 billion in revenues from higher tariff rates through the end of July, according to the Congressional Budget Office (CBO). The department collected $28 billion from higher tariffs in July alone.
The Treasury Department in July projected the federal government could collect $300 billion this year, and the CBO projected it could collect about $2.8 trillion over 10 years.
Trump on Monday said that rebates funded by tariff revenue could go to “individuals of moderate income” likely “in the middle of next year.”
Treasury Secretary Scott Bessent said Sunday the administration would favor placing an income cap on those who are eligible to receive rebate checks from the tariff revenue. He said Congress needs to pass legislation to authorize the payments.
Bessent said in July that the $2.8 trillion in new tariff revenues CBO projected the government would haul in over the next decade is “probably low.”
“Americans deserve a tax rebate after four years of Biden policies that have devastated families’ savings and livelihoods,” Hawley said when he introduced his bill. “My legislation would allow hard-working Americans to benefit from the wealth that Trump’s tariffs are returning to this country.”
Trump’s proposal to pay out $2,000-a-person tariff dividends could cost the U.S. Treasury $600 billion a year, even if it excludes “high-income people,” according to the Committee for a Responsible Federal Budget, a nonpartisan group that studies fiscal issues.
The group estimates that paying out $2,000 tariff dividends would increase the deficit by $6 trillion over 10 years, assuming the dividends are paid annually. That’s about twice as much money as Trump’s tariffs are projected to raise over a decade, the group noted in an analysis.
Polls have shown many Americans dislike Trump’s trade policies. Giving Americans back some of the tariff revenue could be a way to start to turn those numbers around.
A White House official said in a statement last week that the administration “is committed to putting this money to good use for the American people.”
“President Trump’s tariffs are resetting global commerce, securing manufacturing investments, and safeguarding our national and economic security — and they’re also raising billions in revenue for the federal government,” the official said.