US president Donald Trump has offered to give a $5,000 “dividend” to every adult citizen only if Republicans win the US House and Senate in November’s midterm elections.

How much would the plan cost?

The proposal would likely cost more than $1 trillion, with about 270 million US adults involved. A $5,000 cheque would give each US adult more money than they received in direct government payments from Covid-19 relief measures during Trump’s first term.

How could he go about doing it?

It is not clear yet. Doing so would need the approval of Congress, which last year resisted his calls to send $2,000 rebate checks to families that would have been funded with money collected from his tariffs.

Is it legal?

It is not immediately clear. New Mexico-based lawyer John Day told AP that he believed Trump’s proposal would be legal because the payment would go to everyone regardless of how they voted, or whether they voted at all, said

“This is a campaign promise,” Day said. “It’s not a payment to individuals to try to get them to vote in a particular way.”

Trump pledges $5,000 for each US citizen if Republicans win midterms during rambling speech

Could the US afford it?

It could come at a steep cost beyond the $1 trillion cost.

The US president’s promise is injecting fresh uncertainties into the bond market and concerns about Washington’s fiscal discipline and erratic policymaking.

The bond market has come under pressure in recent weeks as fresh tensions in the Middle East pushed oil prices higher, fuelling bets that the US Federal Reserve may need to raise interest rates again. This, in turn, is raising the price of borrowing.

Also weighing on US bonds are unabated worries over the fiscal health of the world’s largest economy, now that total US public debt has surpassed $40 trillion for the first time.

How have markets reacted to Trump’s pledge?

The response has been measured so far. Bond yields only fluctuated in a narrow range, after Donald Trump made the pledge on Wednesday night.

“The general reaction from markets is very muted precisely as everyone sees almost zero chance of this happening,” said Mark Cudmore, Bloomberg’s Markets Live executive editor.

“The US economy is strong and already at risk of running too hot, so pumping in so much extra fiscal stimulus when under funding pressure will exacerbate all the dynamics we’re already focused on in markets: weaker treasuries, a depreciating dollar and a rush to commodities and real assets.”

Kiyoshi Ishigane, executive chief fund manager at Mitsubishi UFJ Asset Management Co in Tokyo, agreed that the planned move went against efforts by US treasury secretary Scott Bessent to calm the bond markets.

“When Bessent is trying so hard to keep yields down, saying something like this would be contradictory,” Ishigane told Bloomberg.

“I’m not saying this alone would trigger a massive sell-off in treasuries, but it does raise one question: what does the Trump administration as a whole actually want to achieve? … With messages like this, it’s hard to tell.” – Agencies