Constitutional Limits Of $5,000 “Trump Dividend”

President Donald Trump's proposal to give every adult American citizen a $5,000 “dividend” if the Republicans, were to retain control of both houses of the United States Congress, in the Mid-term elections scheduled for later this year in November, has raised an immediate political question about whether the promise amounts to an attempt to influence voters. The more fundamental legal question, however, is different, which is that even if the proposal is politically permissible, does the President possess the constitutional authority to make such payments without congressional authorisation? The proposal reportedly involves payments that could cost more than $1 trillion and has been presented as a return to Americans of money generated through tariffs and other government revenues. The distinction between the campaign promise and the government's eventual ability to make the payment is critical, as the first concerns questions of the First Amendment and federal election law, while the second engages one of the central structural principles of the United States Constitution, namely, that the power of the purse belongs to Congress, and Presidential authority to administer federal law does not, by itself, include the power to create new federal expenditures.

The Constitutional starting point is Article I, Section 8, Clause 1, of the United States Constitution^[1], which gives Congress the power to tax and spend for the general welfare of the public, while, The Appropriations Clause, enshrined by virtue of Article I, Section 9, Clause 7 of the United States Constitution^[2], provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The Appropriations Clause is not a technical accounting provision, it simply reflects the Constitution's deliberate allocation of fiscal power to the legislative branch. Put simply, Congress determines whether federal money may be spent and for what purpose, the Executive administers spending that Congress has authorised. The Supreme Court of The United States, has repeatedly recognised the force of this principle, including in Office of Personnel Management v. Richmond[^3], where the Court held that the Appropriations Clause prevents executive officials from paying money from the Treasury where Congress has not authorised the expenditure. However, more recently, in Consumer Financial Protection Bureau v. Community Financial Services Association of America Ltd.^[4], the Supreme Court considered the constitutional requirements of an appropriation under Article I, Section 9, Clause 7, explaining that an appropriation is constitutionally sufficient where Congress has authorised the expenditure of public money for a designated purpose. The significance of that principle to the proposed dividend is straightforward. The mere existence of money in the Treasury does not itself constitute authority to spend it, there must be a law authorising the expenditure and identifying the purpose for which the funds may be used. The constitutional difficulty with the proposed dividend therefore begins not with whether the Treasury has received sufficient revenue, but with whether Congress has authorised that revenue to be spent for this particular purpose, unless Congress enacts an appropriation authorising the payments, the President cannot simply direct the Treasury to issue $5,000 payments.

The legality of the proposed payment must nevertheless be distinguished from the legality of making the promise. A presidential candidate is not constitutionally prohibited from promising voters that, if elected, his administration will pursue a particular economic policy. In Brown v. Hartlage^[5] the Supreme Court considered restrictions on political promises made during an election and recognised the constitutional protection attached to political advocacy concerning governmental policy. That principle is relevant here because Trump's announcement is, at present, a political commitment rather than an existing entitlement enforceable against the United States Treasury. The constitutional difficulty therefore arises when the promise is translated into governmental action, because implementation would require legal authority that a campaign statement cannot itself provide.

The Supreme Court's recent decision in Learning Resources, Inc. v. Trump^[6], is instructive in drawing the distinction between tariff authority and spending authority. The case concerned the scope of presidential authority to impose tariffs and, in doing so, reaffirmed that presidential power in the area of international economic policy remains subject to the constitutional allocation of legislative power to Congress. Even assuming that tariff revenues are lawfully collected pursuant to presidential authority, that does not answer the separate question of how those revenues may be spent. The authority to impose and collect tariffs is distinct from the authority to draw money from the Treasury for a particular purpose under the Appropriations Clause. The existence of one power does not, by itself, establish the other.

The fact that the federal government receives money through tariffs does not therefore mean that the President acquires independent authority to decide how that money will be distributed. The distinction becomes particularly important because the proposed payment is not simply an administrative refund of money already owed to taxpayers. A refund of a specific overpayment or a statutory tax credit operates pursuant to an existing legal entitlement created by Congress. A $5,000 payment to every eligible adult would instead constitute a new federal expenditure programme, which would require Congress to determine eligibility, appropriate the necessary funds and establish the legal mechanism through which the Treasury could make the payments. Congress could, for example, enact legislation creating a refundable tax credit or direct payment and appropriate the necessary funds. Once such legislation exists, the Executive could administer the programme within the boundaries established by Congress. Without congressional legislation creating the relevant entitlement and authorising the expenditure, the President's announcement would remain a political proposal rather than an enforceable federal benefit.

The issue is therefore also one of separation of powers. The President possesses substantial authority over the execution of federal law, but execution presupposes a law to execute. Article II of the United States Constitution^[7], does not contain a general power allowing the President to create federal spending programmes whenever the Executive considers them desirable. The constitutional structure instead divides the fiscal process between the political branches, Congress legislates and appropriates, while the Executive executes the resulting laws. The proposed dividend therefore illustrates a broader constitutional principle, presidential control over the Executive Branch is not presidential control over federal spending.

Eventually, Congressional approval would also have to address the size and structure of the proposed programme, with estimates placing the cost of paying $5,000 to approximately 240 million adults at roughly $1.2 trillion, although the precise cost would depend on eligibility, means testing and whether the payment applied to all adults or only particular categories. Vice President JD Vance has suggested that the payment could ultimately be limited according to income, which independently illustrates why congressional legislation would be indispensable, since questions concerning eligibility, funding, taxation, administration and enforcement cannot be resolved merely through a presidential announcement and are precisely the kinds of policy choices that the Constitution places within the legislative process.

The most legally defensible conclusion is therefore a qualified one. Trump's promise is not necessarily unlawful merely because it offers voters a substantial economic benefit, since American constitutional democracy leaves considerable room for candidates to make extraordinarily ambitious promises (First Amendment)^[8]. The difficulty, however, arises when such a promise moves beyond political rhetoric and into actual federal expenditure. The President cannot unilaterally create the promised federal payment; Congress would have to authorise the programme and provide the necessary appropriation before money could lawfully be drawn from the Treasury (Article I, Section 9, Clause 7)^9]. If Congress enacted such legislation, the resulting programme would then have to comply with other constitutional and statutory requirements. If Congress did not, the promise would remain what it currently is, a political commitment without an (absolute) existing legal entitlement behind it. The controversy therefore ultimately turns not on whether the President may make the promise, but on whether he can convert it into expenditure without legislative action, put simply, the President may promise the dividend, but it is Congress that must decide whether the Treasury will pay it.

References: