As the so-called Department of Government Efficiency looks to cut federal spending, Elon Musk and President Donald Trump have floated the idea that some of any savings could come back to Americans in the form of $5,000 dividend checks.

But experts say it’s too soon to say whether such checks could materialize — and caution that if they did, there could be economic consequences for consumers.

Both Musk and Trump boosted a proposal that James Fishback, CEO of investment firm Azoria, posted Feb. 18 on social media platform X, that suggested sending millions of American households checks.

“Americans sent their hard-earned tax dollars to Washington, D.C.,” Fishback told CNBC.com. He said he believes some of “those tax dollars were wasted.”

“There needs to be restitution to correct that,” Fishback said.

The White House released in early February a list of what it called “waste and abuse” of funds at the U.S. Agency for International Development, including $1.5 million to promote diversity, equity and inclusion in Serbia’s workplaces and $70,000 for a DEI musical in Ireland.

Under Trump, DOGE, an advisory group, set an aim to cut $2 trillion in federal spending. However, Musk said in a recent interview that target may be the “best-case outcome” and there may be a “good shot” of cutting half that amount.

In his proposal, Fishback starts from the presumption that DOGE will achieve $2 trillion in cuts to the government. By taking 20% of that total savings — or around $400 billion — that may leave room for around 79 million tax-paying households to each receive a $5,000 tax refund, per Fishback’s plan.

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The idea of direct money may sound familiar to American households, millions of whom received Covid-era stimulus checks. But these payments would be different from the stimulus checks, which work to stimulate the economy at a time of weak gross domestic product growth, Fishback said. Unlike the stimulus checks, the DOGE dividend checks would be only for households that pay federal income taxes, Fishback said.

The idea calls for a dividend closer to something like the Alaska Permanent Fund, in that it would represent a share of collected savings, noted Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.

The rebate would be sent only to households that are “net payers of federal income tax,” per the plan — people who pay more in taxes than they get back. Under those terms, lower-income Americans would not qualify for the return. According to the Pew Research Center, most Americans who have an adjusted gross income of under $40,000 effectively pay no federal income tax.

Fishback, meanwhile, told CNBC.com there’s no minimum income requirement, but Americans would have to file a federal tax return to receive the money. The prospect of the payments may provide an incentive for non-working individuals to re-enter the labor force, according to the plan.

To be sure, the terms of the plan could change if lawmakers decide to consider it.

Trump has welcomed the idea. Musk, who Trump brought on board to implement DOGE, “very much agrees the incentives are in place” to get everyday Americans to report waste, fraud and abuse, Fishback said of a recent conversation he had with the billionaire.

Last week, House Speaker Mike Johnson, R-Louisiana, said that while it would be “great” politically, other priorities should come first. Experts say DOGE needs to figure out how much money has been saved before promising people checks in the mail.

“We have a $36 trillion federal debt. We have a giant deficit,” Johnson said. “I think we need to pay down the credit card.”

White House Deputy Chief of Staff Stephen Miller recently said the DOGE checks will be “worked on through the reconciliation process with Congress that’s going underway right now.”

Yet some experts have expressed doubts about the proposal.

“There’s no appropriation for this,” said Elaine Kamarck, a senior fellow at the Brookings Institution who ran the Clinton Administration’s National Performance Review, which implemented cuts in an effort to modernize and improve the federal government’s performance.

“You cannot spend money without Congress telling you that you can spend money,” Kamarck said. “That is illegal.”

It also remains to be seen whether the DOGE initiative can generate enough savings to justify $5,000 payments, Kamarck said. Even with the savings DOGE plans hope to generate, initiatives like curbing immigration will require new or increased spending in other areas.

Without yet having generated meaningful savings, it’s premature to talk about dividend checks, MacGuineas said.

“The bottom line is when you’re running $2 trillion deficits every year, you can’t give away more money in stimulus checks,” MacGuineas said.

“Basically, you’re borrowing more to give back to people, but the borrowing still falls on them,” MacGuineas said.

But if the DOGE were able to generate $1 trillion in savings per year, “absolutely additional savings being returned to taxpayers would make total sense and be desirable,” she said.

Inflation spiked in the aftermath of the Covid pandemic and is still higher than the Federal Reserve’s 2% target. Some experts worry that additional direct payments to Americans would contribute to more inflation.

“This is certainly the wrong time to have any sort of consumer stimulus,” said Judge Glock, director of research and senior fellow at the Manhattan Institute. “Inflation remains elevated; any sort of stimulus would exacerbate that inflation.”

However, the amount of money saved under DOGE may not provide payments big enough to fuel inflation, Kamarck said.

The prospect of direct payments comes as Congress may look at extending provisions in the Tax Cuts and Jobs Act later this year.

There are already a number of policies being added to that package that are raising deficit concerns, said Alex Muresianu, senior policy analyst at the Tax Foundation.

“This would be another very large thing to try and squeeze in as well,” he said.

Meanwhile, Fishback maintains the DOGE dividend checks would simply refund Americans money they already contributed through income taxes.

Moreover, the way Americans would likely use an unexpected $5,000 — by paying off debt, saving or investing toward long-term goals like retirement — would not be inflationary, Fishback said, citing a 2019 CNBC survey.

“Every American has the mechanism with DOGE and the incentive with the DOGE dividend to report this waste, fraud and abuse,” Fishback said. “We’ll save even more of our hard-earned tax dollars when we give every American skin in the game.”

With sweeping U.S. tariffs going into effect, more Americans are concerned about the cost of goods and the possibility that prices will rise further in the months ahead.

Those fears are causing some consumers to spend even more than they would otherwise.

To that point , 19% of adults indicate they are “doom spending,” or making impulsive purchases driven by fear and anxiety about the future, according to a recent report by CreditCards.com

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President Donald Trump said earlier Thursday that his proposed 25% tariffs on products from Canada and Mexico will start March 4.

“It’s too soon to say precisely how the new tariffs imposed by President Trump are affecting consumer spending,” says John Egan, a personal finance expert contributor at CreditCards.com. “However, they very well could cause some consumers to rethink their buying habits, especially when it comes to major purchases.”

To that end, 28% of Americans have already made a large purchase, such as a home appliance or home improvement supplies. Another 22% have also started stockpiling certain items, including non-perishable food, toilet paper and over-the-counter medications, according to CreditCards.com.

But these habits are also pushing 34% of credit card borrowers to take on more debt this year, the report also found. CreditCards.com polled 2,000 adults in February.

As credit card debt tops $1.21 trillion, it’s more important to focus on paying down card debt rather than spending even more, experts say.

“Anyone who tells you they know what the next few months hold for the economy is just speculating,” said Matt Schulz, chief credit analyst at LendingTree and the author of “Ask Questions, Save Money, Make More.”

“It’s easy to feel powerless with so much uncertainty out there, but there are plenty of things you can do to take more control of your financial situation,” Schulz said.

“Two of the best things you can do are knocking down your high-interest debt and building your emergency fund, to the degree that you can,” he said. “Both are easier said than done, for sure, but both will put you in a better position to handle whatever situations come your way.”

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Some states have stopped disbursing funds to consumers via Biden-era rebate programs tied to home energy efficiency, due to a Trump administration freeze on federal funding enacted in January.

The Inflation Reduction Act, passed in 2022, had earmarked $8.8 billion of federal funds for consumers through two home energy rebate programs, to be administered by states, territories and the District of Columbia.

Arizona, Colorado, Georgia and Rhode Island — which are in various phases of rollout — have paused or delayed their fledgling programs, citing Trump administration policy.

The White House on Jan. 27 put a freeze on the disbursement of federal funds that conflict with President Trump’s agenda — including initiatives related to green energy and climate change — as a reason for halting the disbursement of rebate funds to consumers.

That fate of that freeze is still up in the air. A federal judge issued an order Tuesday that continued to block the policy, for example. However, it appears agencies had been withholding funding in some cases in defiance of earlier court rulings, according to ProPublica reporting.

In any event, the freeze — or the threat of it — appears to be impacting state rebate programs.

“Coloradans who would receive the Home Energy Rebate savings are still locked out by the Trump administration in the dead of winter,” Ari Rosenblum, a spokesperson for the Colorado Energy Office, said in an e-mailed statement.

The U.S. Department of Energy and the White House didn’t return a request for comment from CNBC on the funding freeze.

California, the District of Columbia, Maine, Michigan, New Mexico, New York, North Carolina and Wisconsin had also launched phases of their rebate programs in recent months, according to data on an archived federal website.

All states and territories (except for South Dakota) had applied for the federal rebate funding and the U.S. Department of Energy had approved funding for each of them.

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The Arizona Governor’s Office of Resiliency said its Home Energy Rebates programs would be paused until federal funds are freed up.

“Due to the current federal Executive Orders, memorandums from the White House Office of Management and Budget, and communications from the U.S. Department of Energy, funding for all Efficiency Arizona programs is currently unavailable,” it said in an announcement Friday.

Rhode Island paused new applications as of Jan. 27 due to “current uncertainty” with Inflation Reduction Act funding and executive orders, according to its Office of Energy Resources.

The Georgia Environmental Finance Authority launched a pilot program for the rebates in fall 2024. That program is ongoing, a spokesperson confirmed Monday.

However, the timeline for a full program launch initially planned for 2025 “is delayed until we receive more information from the U.S. Department of Energy,” the Georgia spokesperson explained in an e-mail.

However, not all states have pressed the pause button: It appears Maine is still moving forward, for example.

“The program remains open to those who are eligible,” Afton Vigue, a spokesperson for the Maine Governor’s Energy Office, said in an e-mail.

The status of rebates in the eight other states and districts to have launched their programs is unclear. Their respective energy departments or governor’s offices didn’t return requests for comment.

While the Trump administration on Jan. 29 rescinded its memo ordering a freeze on federal grants and loans — two days after its initial release — the White House said the freeze nonetheless remained in full force.

Democratic attorneys general in 22 states and the District of Columbia filed a lawsuit against the Trump administration, claiming the freeze is unlawful. The White House has claimed it is necessary to ensure spending aligns with Trump’s presidential agenda.

David Terry, president of the National Association of State Energy Officials, said he is optimistic the rebate funding will be released to states soon.

“For these two particular programs, I do not think [the freeze] will stymie the programs,” Terry said. “I see signs of an interest in moving them forward and working with the states to implement them.”