In a speech in early September, Trump raised eyebrows with a pitch that seems outright shameless:
And here is my promise: If the Republicans win the House of Representatives and the United States Senate, both of them … I will issue a dividend to every adult citizen in the United States of America for $5,000.
He has since continued to promise the dividend as recently as this week.
A few things must be stated out of the gate here. First, this isn’t happening. Not only would Trump not follow through with this promise, but the conditions it’s based on are nearly impossible. Election Betting Odds predict the GOP has about a 10 percent chance of winning the House as of this writing, and they also look unlikely to hold the Senate.
On this margin, Trump is just making a promise which he does not need to keep. “I would’ve given you $5,000 too, if it weren’t for those meddling Democrats.”
It would also be a bad thing if it did happen. Do we really want politicians promising direct cash transfers to taxpayers if they win? If it isn’t criminal bribery, it’s certainly textbook electoral inducement.
But actually, the obviousness is exactly the silver lining to Trump’s proposal.
Plundering the Future
Offering money for votes isn’t new, even if this level of blatancy is. Economists James Buchanan and Richard Wagner, in their book Democracy in Deficit lay out the classic view of deficit spending.
When politicians spend money which is paid by today’s taxes, it “places the burden of payment squarely upon those members of the political community during the period when the expenditure decision is made.” When spending is financed by debt, though, things work differently:
As new generations of voters-taxpayers appear, they would, under this scenario [debt finance], face fiscal burdens that owe their origins exclusively to the profligacy of their forebears … The effective time horizon, both for members of the voting public and for the elected politicians alike, seems likely to be short, an implicit presumption of the whole classical construction.
In other words, debt finance differs from tax finance because spending via debt imposes tax burdens on future generations.
This creates a fundamental problem with how our current democratic political system operates. If men were angels, perhaps voters and politicians would ensure that policies passed such that future generations’ interests were fairly treated. If we assume politicians and voters are self-interested, though, this will not be the case.
When politicians run for election, their primary job is to convince current voters to vote for them. In order to do this, they must convince them that the net benefits of voting for them are higher than the net benefits of voting for their opponents.
Ideally, these benefits would be provided by creating rules which improve society such that voters benefit, but it’s possible to provide benefits by taking resources from one group and giving them to another.
This is a popular strategy among politicians, but it does come with a drawback. When you rob Peter to pay Paul, you may secure Paul’s support, but you create an enemy in Peter.
Deficit spending provides a clever way around this. By promising “free” goods to current voters by taking on more debt, politicians rob a future Peter to pay a present Paul. Debt must ultimately be financed by future taxes (or money-printing). Increasing the debt increases the tax burden for future generations. Fortunately for politicians, our democratic system offers no means for future generations to argue against debt that they have to pay off 30 years down the line, because they cannot vote and many do not even exist yet.
This creates a public choice problem. The political process selects for political victors, and political victors can improve their chances by robbing future generations to bribe present ones.
Trump’s Bribe: Uglier, but Not New
Policies that offer benefits to current generations but create more debt are taxes on future generations. With that in mind, we can see that policies like student loan forgiveness mean higher future taxes (because it lowers government revenue, thereby increasing the debt). Promises of free healthcare deliver goods and services to generations living today, but the bill for those services won’t arrive until those present generations are gone (or have at least escaped most of the payment).
Similarly, the government’s choice to continue to fund Social Security, Medicare, and Medicaid, despite budget shortfalls, means future taxes will be higher as well. When you run a deficit, every dollar spent is a burden pushed to the future.
Trump’s proposal is no different. He’s essentially offering every American (Republican, Democrat, or otherwise) $5,000 to vote for his party. The prospect of a $5,000 payment (however unlikely) could influence some voters’ preferences. But future and non-voting generations (at least in part) would be responsible for paying the cost. His claim that tariff revenue will cover the $1.2 trillion price tag is laughable.
The silver lining of Trump’s policy is how obvious it is. Our politicians spend absurd amounts of time dressing up bribes to special interests and their favorite constituencies as something more. “Policy X will pay for itself!” “Policy Y promotes the common good!” “I care about students!” “I care about the elderly!” “I care about the sick!”
Some of these statements may even be true. Perhaps politicians have convinced themselves they’re doing something other than plundering future generations to bribe current voters. It actually doesn’t matter what the intention of the politician is, because the logic of our democratic system (as it stands today) means politicians who act like they’re bribing present generations will tend to win elections, and politics selects for winning. This makes our complete inability to manage our debt more explicable. Politicians advocating for future voters — for fiscal restraint — will lose, because future voters cannot vote.
As is often the case with Trump, his political instincts tear the polite mask off politics as usual. His offer exposes the public to what the political process frequently is — an attempt to plunder from future generations who cannot fight back. He wants to win, and in pursuing that victory, he exposes what a winning strategy in politics truly looks like — without the lipstick on the pig.
