Trump’s $2,000 Tariff Dividend Doesn’t Add Up — Here’s Why

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Speaker 7 Welcome to Professor Markets. I'm Ed Elson.
It is November 12th. Let's check in on yesterday's market vitals.

Speaker 7 The Dow closed at a record high on continued optimism for an end to the shutdown. The SP also rose.
However, the Nasdaq declined as NVIDIA dragged down the index. Nvidia shares fell 3%

Speaker 7 after SoftBank sold its entire stake in the company to fund their other AI efforts. Meanwhile, the dollar slid after new ADP data indicated a slowing labor market.

Speaker 7 And finally, AI infrastructure company Coreweave dropped 16% 16%

Speaker 7 after issuing weaker than expected guidance for the year

Speaker 7 okay what else is happening a new twist in the tariff story emerged this week and that is the tariff dividend over the weekend President Trump proposed a $2,000 tariff dividend for all Americans except for high income earners he says the dividend will be funded by the revenues that the tariffs bring in he also wrote on truth social quote people who are against tariffs are fools.

Speaker 7 We are now the richest, most respected country in the world. However, the White House has not released any plans on what this dividend will actually look like.

Speaker 7 So the tariff dividend, essentially the stimulus check of 2025. Perhaps it'll happen.
Perhaps it won't happen.

Speaker 7 It isn't clear how serious this proposal actually is, but if it does happen, well, it will have pretty significant impacts on our economy and also our nation.

Speaker 7 So to help us make sense of this proposal, we are speaking with Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan.

Speaker 7 Professor Wolfers, thank you very much for joining us again on Profit Markets.

Speaker 6 Wait, if you call me Professor Wolfers, do I have to call you Mr. Ed?

Speaker 7 You do, that's the rule.

Speaker 6 Okay, a horse.

Speaker 6 Of course, of course, no one can talk to a horse, of course. That is, of course, unless the horse is the famous Mr.

Speaker 8 Ed.

Speaker 6 Yep.

Speaker 7 Well, it's good to see you again. We want to get your reactions to this $2,000 tariff dividend.

Speaker 7 What do you make of this? What are your thoughts? Does this make sense?

Speaker 6 Is this a swearing show or no swearing show?

Speaker 7 This is a swearing show.

Speaker 6 Is swearing good for the soul or bad for the soul?

Speaker 6 So, I'm going to give you a hot take. I'm a styer I've heard.
In my head, there was an exploitative in between.

Speaker 6 Okay.

Speaker 6 Here's how this looks like on average. Take money from Americans through tariffs, pull it in through the IRS, send it over to the checkprinting department and send it out to Americans.

Speaker 6 In the best possible scenario, we come out even. The best thing we can do is not harm people.
Okay. In reality,

Speaker 6 is it a good idea for the government to take money with one hand and then just send it straight back out? Remember, on average, because there's going to be differences across people.

Speaker 6 No.

Speaker 6 I am so old, Ed, so very old. I remember when Republicans didn't like taxes.

Speaker 6 Their argument was if you tax my income,

Speaker 6 then I'll work less hard. Every extra hour means less take-home, pay, less stuff.

Speaker 6 The same thing, by the way, applies to a consumption tax. If I work a certain number of hours, get the same amount of money, but now I can't afford as much stuff.
That's less of an incentive to work.

Speaker 6 A tariff is a form of a consumption tax.

Speaker 6 And so exactly the same logic that Republicans use to say we shouldn't tax income also applies to taxing consumption and also applies to tariffs.

Speaker 6 And so then the idea of pulling money in,

Speaker 6 bearing all those economic costs that Republicans think we shouldn't bear unless absolutely necessary.

Speaker 6 And then the only necessary thing that happens is we send the money straight back out and on average people come out exactly the same

Speaker 6 is absurd on its face. Yeah.
So here's the thing.

Speaker 6 If you want to reduce how much tariffs are hurting Americans, I have this whole much simpler plan.

Speaker 6 Don't levy the tariffs.

Speaker 6 And then you haven't got this problem. You've taken money from people and you have to give it back.
Just don't take it. Leave them with it.

Speaker 7 So my response to that, and of course I agree,

Speaker 7 perhaps the argument and and perhaps the argument that people are kind of implicitly making in their heads, is: oh, no, these tariffs, we got the money from foreigners.

Speaker 7 We got the money from China, India, and Brazil. So we're transferring money from these foreign nations and putting it in the pockets of Americans.

Speaker 7 I think you and I understand that's not what's happening because, as you say, tariffs are a tax on consumption. It's a tax on Americans.
It's a tax on the importers as well.

Speaker 7 But it sounds as if that's maybe the implicit argument that by saying, oh, we're going to give the money back to you, it implies that we got it from someone else.

Speaker 6 Or that why we have to give it back to us. So you do know we have a national debt of quite some substantial magnitude, one that the president promised would be over within eight years.
Right.

Speaker 6 So yes, even if that were true, which it's not, right?

Speaker 6 Not. Can we be clear? So let's end a crazy land where it's true that somehow China is sending us checks.

Speaker 6 Why is it that the next step is that we have to send those checks straight on to American households? I don't think there's any logic to that.

Speaker 6 So I have spent some amount of my day doing TV interviews on this. And people keep asking, you're a serious economist.
Let me ask you a serious set of questions.

Speaker 6 You just did it, Ed, because you're a wonderful guy, devastatingly handsome, and you want to get to the truth.

Speaker 6 But if you want to get to the truth, don't ask me what the economic logic of this is, because there isn't any.

Speaker 6 So here's where the Emperor is wearing no clothes, apart from everywhere. But the thing I want to focus on is there's a standard way you do economic policy.

Speaker 6 You come up with an idea in a room, maybe in the White House, and then you ask your nerds to go off and crunch some numbers.

Speaker 6 And then you think about the idea and you bring together people from the National Economic Council and the Council of Economic Advisors and the Treasury chimes in.

Speaker 6 And there's a policy process and you think about who wins and who loses. And you talk to the interest groups and the stakeholders and so on.

Speaker 6 And then you've refined this policy so it's so beautiful, it achieves exactly your goals, that you're so excited to unveil it to the American people that you don't just tweet about it at midnight.

Speaker 6 You then release a 30-page background paper that explains the case and makes the argument and shows the modeling. And you go out there and you try and win the war of ideas.

Speaker 6 You're excited because you've got something you really believe in. and you can't wait to show your work.
That's how it's worked every single day of my lifetime, except now.

Speaker 6 So the real thing is, should you ask an economist to take seriously a policy that the White House hasn't taken seriously? So here's the challenge. To you, to me, to anyone.

Speaker 6 I'm a pretty good economist. You're a pretty fantastic journalist.
You should be able to call the White House and say, can I see your work? Right.

Speaker 6 My son right now is 13 years old. He's upstairs right now.
He's preparing for a middle school math exam. He has to show his work.

Speaker 6 My son, the stakes of whether he gets question five on his middle school math test correct are far lower than the macroeconomics of a $2,000 rebate per person.

Speaker 6 My son is showing more of his work than the president.

Speaker 6 My son is more convinced that he has a useful answer to a question that's worth answering than the president.

Speaker 6 And so I think we should all give up the pretense. If they're not going to show their work, it's because they haven't done it.
And we should stop pretending that it's anything remotely serious.

Speaker 6 It's populist nonsense.

Speaker 6 This is no way to govern a country. Sorry, my god.

Speaker 6 You're fantastic. And what happened was I just got ahead of steam going because it drives me nuts.

Speaker 6 How are you feeling? Tell me about your feelings, Ed.

Speaker 7 Well, I wanted to get to

Speaker 7 why did he do this? And I think you kind of hinted at it there when you said populist nonsense.

Speaker 7 It sounds like this is, I mean, we look at the approval ratings of Trump and specifically his tariff policy, which are low and going even lower.

Speaker 7 People are putting, connecting the dots and realizing, okay, inflation's rising, my grocery bills are going up, and more people are realizing, okay, this is probably because we put a 20% tax on all the stuff that we bring in.

Speaker 7 So I wonder if maybe this is just his kind of lazy way of winning back political approval, getting people to like him, his free money. Is that what this is all about?

Speaker 6 One imagines. So I think really the framing is going to be, this is a tariff dividend.
My policy is doing so much that I can afford to send some of it back to you.

Speaker 6 If that's the political signal, I want our audience to be very clear on what's happening here. So this is just arithmetic, right?

Speaker 6 At the moment, we're pulling in between 20 and 25 billion per month in tariff revenue. So this, this is, he's planning on sending out 600 billion in checks.

Speaker 6 So roughly speaking, we might pull in 250 or 300 billion in tariffs. Now comes the easy question.
What's bigger? $600 billion? I'm going to use hands to make this easy.

Speaker 6 I'm sorry for those who are on audio. Or $300 billion.

Speaker 7 I'm going to go with $600 billion on this one. Great.

Speaker 6 So the president has said, I'm going to do this. Look, and there might be other ways in which it's complicated.
He might decide to cut out the kids. So we're moving from 600 to 450 billion.

Speaker 6 He might cut out more rich people who the hell knows. But, you know, the point is,

Speaker 6 he's getting 250 to 300 billion in tariff revenue, and he wants to declare a dividend. The The dividend he's declared is more than all of it.

Speaker 6 And he said, not only is he going to declare a dividend, he's going to use the rest to pay down the national debt. Yeah.

Speaker 6 There's no rest. It's negative.
The national debt's going up.

Speaker 6 So he is not even showing us the respect of using numbers that are in the ballpark of truthful.

Speaker 6 Yeah. Hey.
Can I surprise you? Please. There's something I love about this policy.

Speaker 8 What's that?

Speaker 6 So one thing I don't like about tariffs is tariffs are aggressive because they're a tax on spending and poor people spend a larger share of their income than do rich people.

Speaker 6 So what's terrible is he's saying, well, let's pull in all this money that's in a regressive way. But guess what? He's talking about giving it out as a flat $2,000 per,

Speaker 6 which is incredibly positive in terms of redistributing towards working and middle class Americans.

Speaker 6 This is extremely progressive. So even though it's a regressive tax, if he sends it out as a flat amount,

Speaker 6 working class Americans would come out on top. I love that for him.

Speaker 6 And guess what? That's how I know it's not going to happen. Yes.
I am willing to bet you, Ed, whatever,

Speaker 6 I don't even know what my annual salary is, but whatever my salary is between November 11th and the end of the year, I will bet that against your salary between November 11th and the end of the year, that this will not happen.

Speaker 8 Yeah.

Speaker 7 Which brings us probably to Scott Besson's comments where he was asked about this. He seemed to be caught a little bit off guard.

Speaker 7 And then he said, oh, yeah, it might happen, but it might happen through tax cuts. And that really was the tell, I think, that this is not going to happen.
And he's kind of just shitposting.

Speaker 6 All the money that goes out of this administration is already gone. It went in the one big, beautiful bill, and it went to rich people and their tax cuts.
Exactly.

Speaker 6 I have a question for you. I know this is your show, Ed.
Can I ask you a question anyway? Please.

Speaker 6 How should we talk about nonsense?

Speaker 6 I'm not being funny. I mean, you're a totally serious economics commentator and I'm a semi-serious one.
This thing's on the front page of the newspaper.

Speaker 6 The president of the United States said it out loud, but he clearly hadn't even said anything to his Treasury Secretary. Yes.
What do we do? What is our role? What truths can we tell?

Speaker 6 How seriously should we take nonsense? I mean, it's the president, but it's nonsense, but sometimes he does nonsense.

Speaker 7 Well, this is part of the problem, isn't it?

Speaker 7 That's why I appreciate you making jokes about it because it deserves to be made fun of

Speaker 7 versus trying to come up with a very serious formal argument as to why it doesn't make sense. I mean, it's a joke of an argument to begin with.
So

Speaker 7 let's be comedic in our rebuttal.

Speaker 8 So I like how you're talking about it. I'll tell you that much.

Speaker 6 I don't find it funny every day, man.

Speaker 7 Yeah.

Speaker 6 And I don't want to bring the mood down because I love having fun with you. But.
And it is funny. Like, here's a weird thing that's happened to me.

Speaker 6 People have come up to me recently and say, hey, Justin, you're really funny. I'll tell you a funny thing about me.
I'm not funny.

Speaker 6 Stop laughing. I'm not funny.
I've never cracked a joke on national television. The only thing, including this, we can go back and look at the transcript.
I promise you I didn't tell a joke.

Speaker 6 The only thing that I've done is said out loud

Speaker 6 happening.

Speaker 6 And it turns out if you describe our reality, it's so absurd that

Speaker 6 people laugh. That's right.

Speaker 7 Stranger than fiction and funnier than fiction.

Speaker 6 That's right. What a world.
Well,

Speaker 7 Justin,

Speaker 7 we're due for a longer conversation very soon, but we're going to have to let you go. We appreciate you helping us make sense of this and how ridiculous this all is.

Speaker 7 We appreciate your time.

Speaker 1 Thank you.

Speaker 8 You too.

Speaker 7 After the break, a look at the rivalry between OpenAI and Anthropic. If you're enjoying the show, give Prof G Markets a follow.

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Speaker 7 We're back with Profit Markets. New documents from OpenAI and Anthropic reveal the vastly different business approaches of the two most valuable AI startups in the world.

Speaker 7 According to reports obtained by the Wall Street Journal, Sam Altman is pursuing an aggressive spending plan while Dario Amode is taking a far more cautious approach.

Speaker 7 Anthropic is on track to break even by 2028, while OpenAI projects $74 billion in operating losses that same year, about three-quarters of its revenue.

Speaker 7 The documents also show that OpenAI expects to burn through 14 times as much cash as Anthropic before making a profit in 2030.

Speaker 7 So for a deeper dive into this rivalry between OpenAI and Anthropic, we are speaking with Alex Heath, author of The Sources newsletter and co-host of the Access podcast.

Speaker 8 Alex, good to see you again. Good to see you, Ed.

Speaker 7 We want to get your reactions to this

Speaker 7 new data that we learned from the Wall Street Journal. They're really digging into how the Anthropic business really works.

Speaker 8 and what we're really learning is anthropic is reining in the spending or at least planning to they intend to break even by 2028 total opposite of what we're seeing over at open ai let's just start with your initial reactions i'm not surprised by this because they're very different businesses anthropic is majority b2b enterprise right it's 80-ish percent of their business OpenAI, on the other hand, is a massive consumer business where the vast majority of OpenEyes users, and I feel like every time I come on, Ed, we talk about ads and ChatGPT, but it really does come down to this.

Speaker 8 The vast majority of OpenAI's users are not making money for the company. They're actually a cost suck, right? Because most people are using ChatGPT for free.

Speaker 8 Whereas most of Anthropic's business is selling an API to companies that are buying its AI to power their products.

Speaker 8 And also Anthropic is not doing a lot of the things that OpenAI is. They're not doing consumer hardware with Johnny Ive.
They're doing nothing multimodal. They're doing nothing in audio, really.

Speaker 8 Video generation, image generation, they're staying out of it. When you talk to people in the industry, everyone understands that Anthropic is solely really focused on the coding market.

Speaker 8 It's the thing that they are winning at. OpenAI is certainly trying to nip at their heels, but there's just tremendous opportunity in coding by itself.

Speaker 8 I'm not trying to say that that's all Anthropic is doing, but certainly when you look at the growth profile of the company, it's coding. It's Cloud Code.

Speaker 8 It's the coding agents, and Open AI is just doing a lot more.

Speaker 8 And Altman, I think, wants to be seen as the next multi-trillion dollar, multi-platform tech conglomerate, whereas you've just got more focus with Anthropic and what they're doing.

Speaker 6 Yeah.

Speaker 7 Very interesting also, given what happened last week, where Sam Altman was asked by Brad Gusner. I don't know if you saw this about how he was going to pay for the $1.5 trillion in spending.

Speaker 8 And he had this very frantic response which went viral scott and i talked about it i i'd love to get your reactions to how that unfolded and and what did you think of his response to that question sam is good at the theatrics um i know for a fact that he was not surprised by that question that that was a question that uh he'd been asked privately um so i think there were some theatrics involved i don't really think he was being knee-jerk um defensive as you could read into it uh i think it was a little bit of a a kitschy thing.

Speaker 8 That said, it's certainly, you know, you could make the argument that it's not a good look for the CEO of the most important company, AI, maybe arguably the most important company in the world right now, to react that way to a very fair question from a large shareholder, which is how are you going to pay for all this?

Speaker 8 And saying, you know, basically, trust me, bro, does not endear confidence when

Speaker 8 we're seeing all these deals that are not based on current revenue, like you talk about on the show all the time.

Speaker 8 So,

Speaker 8 and hindsight, I'm sure he wishes he could have said it a different way. I mean, I think he even tweeted about that.

Speaker 8 That he, you know, you had, you had multiple follow-ups from him and Sarah Fryer in the last week or two, which I think just shows how on pins and needles everyone is about everything that comes out of OpenAI's leadership's mouse.

Speaker 8 Yeah.

Speaker 7 But then, right after we saw these comments from Sarah Fryer separately at this Wall Street Journal conference, where she brought out

Speaker 8 the word backstop, federal backstop,

Speaker 7 essentially saying, How do you pay for it? You get the government to pay for it. What did you make of that news?

Speaker 8 I saw the walk back of that, as I'm sure everyone else did.

Speaker 8 If you go back and listen to that part of the interview, it's not like a flub. It's not like something that could be interpreted as maybe she meant something else.

Speaker 8 There was actually a moment where the interview even like pushed to clarify, and she was like, Yeah, yeah, like a backstop.

Speaker 8 Like, I went back and watched it because I was like, Was this just something you could infer? I think it was a trial balloon.

Speaker 8 You know, I'm not saying this is like reporting I have to back this up right in right now, but

Speaker 8 it's a very, you know, this is a thing companies do all the time is they trial balloon ideas.

Speaker 8 And do I think OpenAI would love a government backstop if it could get one? Sure. Why wouldn't you?

Speaker 8 It would certainly help with the funding they need to do. I think the visceral reaction to that comment was maybe a sign to them that there's not appetite there for that.

Speaker 7 In related OpenAI News, SoftBank announced it is selling its remaining NVIDIA stake almost $6 billion.

Speaker 7 Supposedly, the money is going to be used to fund AI efforts, likely

Speaker 7 OpenAI, an investment in OpenAI or something of the sort.

Speaker 7 We also just wanted to get your reactions to that news, which is really moving markets. I mean, NVIDIA is down today, kind of bringing down the whole market with it.

Speaker 8 Again, it's crazy how twitchy everyone is, right? That comments like these, I mean, this is more than a comment, right? But that this stuff can move markets this way.

Speaker 8 I mean, very cynically, the take could be that SoftBank is selling its NVIDIA stake to fund companies whose main capex is buying NVIDIA chips.

Speaker 8 Also, like, you know, SoftBank is going to have its most profitable year, I think, since like 2020.

Speaker 8 And a lot of that has contributed from its OpenAI investment, which it is. writing the valuation for, helping to set by leading this massive round.

Speaker 8 You've been talking about round tripping a lot on the show. I'm I'm not trying to suggest this is exactly round tripping, but there is a very circular nature to all of this.

Speaker 8 I wouldn't necessarily look at this. And I'm pretty sure the soft bank executives were clear on their earnings call, like that this is anything specific about NVIDIA.

Speaker 8 SoftBank is super levered everywhere. It's like a octopus of leverage.
It's hard to keep track of everything they're doing and how they're trying to finance everything.

Speaker 8 And they're putting tens of billions in Open AI this year. So they needed liquidity and they were pretty confident about that.

Speaker 8 I mean, Masa famously i don't know if you remember this he uh got out of nvidia right before the chat gpt boom right uh and had he held uh that stake alone would be worth uh like over 200 billion dollars so the timing of softbanks buying and selling i don't think should necessarily set the broader market they also did we work

Speaker 7 i mean there's there's you could point to a lot of great moves and a lot of bad moves i wouldn't say it's uh consistent one way or the other it's it's very erratic yeah well it is funny he used the money that he he got from the NVIDIA sale to buy shares in WeWork.

Speaker 7 And now he's using the money from this

Speaker 7 NVIDIA sale to buy shares, perhaps, and OpenAI.

Speaker 7 And look, other people have been making that comparison.

Speaker 7 It's not me, but

Speaker 7 I'm not saying that is the right comparison to make.

Speaker 7 It is striking. And my final question to you, Alex.
I saw you last week at your launch party for sources. I had to leave on the earlier end.
How did it go?

Speaker 8 Oh, man.

Speaker 8 Poker was very fun, but

Speaker 8 we brought the poker tables out. Yeah, we brought poker, but I shouldn't comment on

Speaker 8 how I ended.

Speaker 8 It could have been a lot worse, but you know, whatever. It's a party.

Speaker 8 Yeah, that was my favorite part.

Speaker 7 I walk in and there is a room that is

Speaker 6 dedicated to poker.

Speaker 6 But yeah,

Speaker 7 I support it.

Speaker 8 We'll have you at the next game. Absolutely.
Love it.

Speaker 6 Okay.

Speaker 7 Alex Heath, author of the Sources Newsletter, co-host of the Access Podcast. Alex, always appreciate your time.

Speaker 8 Thanks so much, Ed.

Speaker 7 Well, we all know Anthropic.

Speaker 7 We all know Claude, their chat bot, but this is very interesting reporting from the Wall Street Journal because it is giving us one of the first very clear side-by-side views of Anthropic's business and OpenAI's business.

Speaker 7 We now know the differences, not just in terms of what they're building in AI, but how they are building in AI, their R ⁇ D plans, their business strategy, their spending plans.

Speaker 7 And it really is a tale of two companies. On the one hand, you have a company that doesn't seem to care at all about spending, that is OpenAI.

Speaker 7 And on the other hand, a company that seems to care quite a lot. a company that is on track to be profitable in just a couple of years.

Speaker 7 And that is significant because up until this point, the assumption in AI has been you have to spend obscene amounts of money. That is a given at this point.

Speaker 7 But here we are, here we have an AI juggernaut that is massively successful, that has proven its commercial value, that is growing very quickly, and that seems to have a far more measured approach to spending.

Speaker 7 Yes, they're still spending a lot, but anthropic spending doesn't come even close to open AI. They're two very, very different approaches.
Now, up until this point, OpenAI has been the winner.

Speaker 7 $500 billion valuation, not only getting a lot of usage, but also telling a very exciting story. Open AI is the undisputed heavyweight champion of AI.

Speaker 7 But as we discussed on Monday, that narrative might be running out of steam. The spending is getting out of control.

Speaker 7 Sam Altman's having these public meltdowns on these podcasts and investors are beginning to show some signs of anxiety.

Speaker 7 And it's all coming to fruition this week, where we saw a big spike in big tech bond yields. We're seeing the highest spread on these bonds since Liberation Day.
Why?

Speaker 7 Because investors are getting increasingly concerned about all of the spending on AI. We're also seeing some wariness in the AI stocks.
NVIDIA fell as much as 9% this week.

Speaker 7 CoreWeave fell more than 20%.

Speaker 7 We're seeing increased short interest in AI stocks, including, of course, course, Michael Burry's now infamous short position on NVIDIA and Palantir.

Speaker 7 And even outside of the stock market, people are getting anxious. Look at Google search volume, for example, for AI bubble.
That is up 10x from six months ago.

Speaker 7 Jeff Bezos, David Solomon, Bill Gates, many other leaders are publicly acknowledging that we are probably in a bubble. Put another way,

Speaker 7 The narrative on AI is beginning to waver. And a trillion-dollar AI spending plan, it just isn't quite what it used to be.
It doesn't sound as sexy as it did, say, 12 months ago.

Speaker 7 And that may well mean pain for OpenAI,

Speaker 7 which has, of course, been leading this charge.

Speaker 7 But more importantly, it might mean new opportunities, opportunities for other companies that are taking a different approach, companies that are reining in their spending, companies that are getting their costs under control.

Speaker 7 It might mean the beginning of the rise of a new heavyweight champion, a new AI winner.

Speaker 7 And when you look at these documents that the Wall Street Journal has just released, it does look like that winner could well be anthropic.

Speaker 7 Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson, and engineered by Benjamin Spencer.
Our associate producer is Alison Weiss.

Speaker 7 Our research team is Dan Shallan, Isabella Kinsel, Kristen O'Donoghue and Mia Silverio, and our technical director is Drew Burroughs. Thank you for listening to Profit Markets from Profit Media.

Speaker 7 If you liked what you heard, give us a follow. I'm Ed Elson.
I will see you tomorrow.

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