Rent-Seeking: Trump Sells Patriotic Fraud to Boost His Tariff Lies
I was going to write about how Trump’s promise, last night, to send a bunch of service members a $1,776 checks, was actually a confession that there will be no tariff rebates for civilians.
Two paragraphs after Trump introduced his false claims about tariffs — “my favorite word” — he said that because of tariffs, along with the Big Ugly, Trump was sending some number (he bolloxed the number repeatedly) service members would get a check.
This historic trend will continue. Already, I’ve secured a record-breaking $18 trillion of investment into the United States, which means jobs, wage increases, growth, factory openings and far greater national security. Much of this success has been accomplished by tariffs, my favorite word, tariffs, which for many decades have been used successfully by other countries against us, but not anymore. Companies know that if they build in America, there are no tariffs, and that’s why they’re coming home to the U.S.A. in record numbers. They’re building factories and plants at levels we haven’t seen. A.I., automobiles, we’re doing what nobody thought was even possible, not even remotely possible. There has never, frankly, been anything like it.
[snip]
Because of tariffs, along with the just passed One Big, Beautiful Bill, tonight I am also proud to announce that more than 1,000, 450,000, think of this, 1,450,000 military service members will receive a special, we call warrior dividend before Christmas, a warrior dividend. In honor of our nation’s founding in 1776, we are sending every soldier $1,776. Think of that. And the checks are already on the way. Nobody understood that one until about 30 minutes ago. We made a lot more money than anybody thought because of tariffs, and the bill helped us along. Nobody deserves it more than our military. And I say congratulations to everybody. And by the way, we now have record enlistment in our military, and last year we had among the worst recruitment numbers in our military’s history. What a difference a year makes.
He once was offering bigger refunds — $2,000 — for everyone but high income people. That was, as Dean Baker did the math at the time, totally unaffordable, even ignoring that Trump is likely to have to pay some portion of the tariffs back, only to importers, not the consumers who have paid increased prices for consumer goods.
Doing the simple arithmetic, the country has 340 million people. If 10 percent of these people fit Trump’s definition of high-income, and therefore don’t get the rebate, roughly 300 million people would get the checks.
At $2,000 a piece it would come to $600 billion, more than twice what Trump is collecting from us with his import taxes. Since he’s already $330 billion short, how can Trump think he has money to pay down the national debt? Also, he seems not to know that our deficit this year is projected to be $1.8 trillion, so he is actually adding considerably to the debt and would be adding even more with his $600 billion tariff “rebate.”
So, I figured, promising a smaller number (but hiding the smaller amount in patriotic shlock) to a far smaller number of people would serve the purpose of the rebates — to generate public support for keeping the tariff revenue rather than paying them back — in a way that would be hard to oppose.
Who would begrudge service members a check, after all.
But once you give that $2.5 billion away (assuming the larger number is the correct one), you’ve started eating into the $100 billion you might be able to use to give money away.
The service members were going to get the check instead of everyone.
But according to Defense One, even that is not what is going on. Trump is taking money Congress allocated to expand housing allowances and paying it as a direct check instead.
President Donald Trump’s $1,776 checks for more than a million troops, announced Wednesday, come from Congressionally-allocated reconciliation funds intended to subsidize housing allowances for service members, a senior administration official confirmed.
During a prime-time TV address, Trump said he was “proud to announce” that “1,450,000 military service members will receive a special, we call ‘warrior dividend,’ before Christmas.” He added that to honor the nation’s founding, “we are sending every soldier $1,776. Think of that. And the checks are already on the way.”
The senior administration official told Defense One in an emailed statement late Wednesday evening that Defense Secretary Pete Hegseth directed the Pentagon to “disburse $2.6 billion as a one-time basic allowance for housing supplement” to all eligible service members ranks 0-6 and below.
“Congress appropriated $2.9 billion to the Department of War to supplement the Basic Allowance for Housing entitlement within The One Big Beautiful Bill,” the senior official said. “Approximately 1.28 million active component military members and 174,000 Reserve component military members will receive this supplement.”
It has nothing to do with tariffs (though was provided, without enough guidance to prevent such a gimmick, in the Big Ugly bill). Trump just told that lie along with his $18 trillion lie in order to claim his tariffs have been less disastrous than they have been.
Who knows? Maybe Trump will bankrupt the country to send rebates to cover over how much consumers have paid for these tariffs.
For now, though, Trump is simply piling lie on top of lie about it all.
I’m certainly not a tax attorney, but I wonder if this will create a tax issue for those service members by switching an increase to basic housing allowance to a one-time increase in ordinary income. I believe that the Basic Allowance is not taxable, but income certainly is.
If I have a choice between a boost to non-taxable income or an equal boost to taxable income, I’ll take non-taxable every day of the week and twice on Sunday.
But Trump doesn’t get that, or think that folks will notice.
You can tell Trump has always had people do his taxes, probably with the guidance “make sure I pay less”, although he surely interjected schemes he was told about as ways to cut them.
Trump boasts that he doesn’t pay taxes. He juggles debt and losses in such a way as to negate income. Because he is such a lousy businessman, this worked for him for decades.
It changes the non-taxable allowance into a taxable bonus. I noted this in a comment on the previous thread just now but that is indeed the effect. For example, my nuclear power bonuses were taxable. My housing allowances were not. If we’re talking enlisted members, the bite would not be yuuge because of where their bracket would be, but for them every penny counts.
The basic housing allowance is exempt from federal (and most state) income taxation and is not subject to social security taxes. Assuming that Congress had raised the basic housing allowance by $1,776, Trump’s movement of this money from housing allowance to ordinary wages likely cost each service member more than $400 (assuming income tax of 15% and SS/Medicare of 7.65%).
…or, as seems most likely, this is true and Trump is simply lying, again:
So, $2,600,000,000 divided by $1,776 would allow approximately 1,463,964 individual payments to be classified as tax-free “basic allowance for housing” or BAH, which seems to be where Trump’s lying “1,450,000 military service members will receive a special, we call ‘warrior dividend,’ before Christmas” comes from.
Many years ago when active-duty Younger Purple Son was stationed on the East Coast, he bought a nice little house in a depressed market and his BAH more than covered it (the VA no-down mortgage was cheaper than rent). A couple years later he got married and a year after that, with reassignment coming up, they sold the house for a $60k profit and moved into on-base housing for a few months, before moving to base housing in a very expensive West Coast location.
So, not currently receiving BAH, he is among the large number of Warriors (including single, barracks-housed servicemembers) not receiving Trump’s $1,776 “Warrior Bonus” check. He’s bummed that many of his youngest sailors are not either, but fine with that for himself.
(btw, his current ‘base housing’ is actually in an off-base military housing area. All military base housing whether within or outside of the base proper, is now managed/mismanaged to varying degrees by private contractors.)
As I mentioned a couple week age, they’re reporting to their new assignment, East Coast again, in a couple months. It’s also in a very high-housing-cost location so they’ll be renting a small apartment while waiting for base housing (six-month+ waiting list), probably breaking even on the recently increased BAH. Since this could be their last Navy posting and they’re not planning on retiring there, not attempting to buy a house seems a prudent risk/reward decision. We’re hoping they might eventually end up in the PNW where he was born, wow, nearly 40 years ago.
So, with the $1,776 “Warrior Bonus” check, they’re taxing service members instead??
Completely spot-on analysis as always, but in the unfortunate times we live in, we also can’t shake other possibilities. To the extent that one accepts selectorate theory, it is helpful to dictators to maximize one’s support among enough of the military that you can deploy them as needed . This rent seeking jingoistic worded behavior is also sending an implication of continued rewards to troops for supporting Trump personally. That he’s doing it with differently allocated funds is a feature not a bug. “Congress doesn’t provide support, I provide support”.
Jake of the Blues Brothers summarizes Trump’s speech in 7 seconds:
https://www.youtube.com/watch?v=dqTVe-NIq94
MAGA’s a hoax.
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“…how can Trump think he has money to pay down the national debt?”
He doesn’t, because the Republican’t Party doesn’t really give a crap about the “national debt”. Its only utility for them is to blame the Democratic Party for the “national debt”, even though time and time again it’s the Republican’t Party that has saddled the country with “national debt”.
Sending checks to the troops (rather than a housing allowance) may be an effort to duplicate the success of Covid stimulus payments to taxpayers in 2020. There were a number of low information voters in 2024 who voted for Trump largely because they fondly recalled the $2,000 pandemic relief checks with DJT’s signature on them and thought that a new Trump administration might send additional stimulus checks.
Trump’s $1,776 checks are a blatant attempt to buy service members’ and their families’ votes in the midterms.
At the risk of stating what is probably obvious to those here, djt is doing the same thing w/the farmers’ $12B bailout-with $ fm the tariffs that were largely responsible for their current predicament..!
It’s all performative. Numbers thrown out into the ether purely for the purposes of keeping the MAGA who don’t math on the MAGA path.
The speech Trump gave was not the speech he intended to give. Marco Rubio convinced Trump to opt out of the big announcement he was going to make, probably war on Venezuela, so he substituted his regular campaign falsities. And the $1776 nonsense.
The poor guy should be in a hospital. Never seen anything like the ghouls around him. Do they think he can last another three years?
I wonder if somebody finally alerted Trump to the fact that Hegseth has dismissed so many competent people from the services that we aren’t prepared to make war on anybody.
If Susie Wiles is to be believed, it is impossible for anyone to “alert” Trump to anything. “Nothing. Zero. Nothing.” (To quote her out of context.)
You know, that’s right. There I go ‘health-washing’ the man myself! It’s just not possible such a degraded person could be the chief executive.
We are making war on ourselves.
I saw this quote from Haley Barbour which seems apropos. “You can step on your own dick, you just can’t jump up and down on it”.
On November 19, Trump claimed tariff revenues of 21 trillion. Now he’s at 18. I do enjoy how the number moves in both directions, but someone should ask him what he’s done with the missing 3 trillion.
Well, one big money liar has already quit the administration — Elon Musk, who has long advertised Tesla cars as having self-driving and autopilot capabilities. No more. The California DMV has said Tesla violated state law when it marketed its vehicles in that way, calling the phrases misleading because their technology doesn’t actually enable autonomous driving, and ordering Tesla to change its marketing or lose the right to sell vehicles in the state.
Couldn’t happen to a nicer guy. Too bad there’s no recompense for all the damage done by his DOGE work. Maybe Trump could send some checks to those poor folks also?
$1789 would be a good number for those other poor folks. That would commemorate the Tariff Act of 1789, the MOAT (Mother Of All Taxes).
Also there is 1789 Capital. This investment company was funded/founded by Rebekah Mercer. Don Jr. as well as Peter Theil associates are involved.
Also the date of the French Revolution… let them eat cake, eh?
story: https://www.sfgate.com/tech/article/dmv-block-tesla-sales-autopilot-21246814.php
There are 70 known dealerships in CA.
I suspect that the tariff revenue number is like the number of communists in the state department in Senator Iselin’s speeches in the (original) Manchurian Candidate — constantly changing, and totally contextual (57 because of the ketchup bottle?)
They don’t even ask him about the health plan he’s been promising for ten years, so…
It’d be nice if all these businesses did more businesses in the US, but all their taxable incomes end up in some off-shore tax haven.
So in other words, US and probably states and localities provide incentives to these businesses to build in their locale and most of the profits are probably minimally federally taxed in the US.