Trump is counting on tax refunds to win over Americans — but his allies have some concerns

The Treasury Department recently announced new tax credits under the "Working Families Tax Cuts" would increase the average payout by $1,000 for middle-class American households, and the Donald Trump administration is betting on the refunds to boost consumer sentiment. However, experts have warned that the short-term financial stimulus may wear off by the time the midterm elections approach in November. Even GOP strategists and some of the president's allies have warned that the "sugar high" of tax refunds may be temporary, Politico reported. 

Historically, midterm elections have not favored the president's party, and since the Second World War, the ruling party has lost 27 seats in the House and four seats in the Senate, on average, as per NPR. Furthermore, the result has been worse for presidents with an approval rating of 50%, with a median loss of 32 seats in the House. Trump's approval rating has been below 40% since November, as per multiple polls, with his policies on immigration, foreign trade, tariffs, and the economy all backfiring. Consumer confidence has also plummeted to an 11.5-year low, as per the Consumer Board's survey.

However, Trump and his top advisers have been banking on tax refunds to alleviate consumer sentiment amid a cost crisis. But skeptics cautioned that the extra money will quickly be consumed by high costs and will bear little to no influence in the November elections. “The sugar high will be short-lived if [the refunds], in fact, go toward paying and supporting prices of things like additional health care costs, additional insurance costs, additional electricity costs, additional heating costs,” Diane Swonk, chief economist at the accounting firm KPMG U.S., told Politico. “The real issue is we’ve gotten prices way out of line, and it takes a very long time to catch up," she added. 

Even GOP allies think the political payoff of the refunds may be fleeting, as in the rapid news cycle, they may be forgotten soon. “Any employer will tell you that when they give their employees a bonus, they get goodwill for a little bit, but six months later, the employees have forgotten about their bonus,” Alex Conant, a GOP strategist, told the publication. “[Voters] won’t remember it unless the president and candidates remind them," he added. While affordability was one of the key issues during Trump's presidential campaign, he has evidently struggled to keep the spotlight on affordability, shifting it in and out of focus amid his campaign to acquire Greenland. This may explain why the administration's top officials, including Treasury Secretary Scott Bessent, bring it up so often, the $100 to $150 billion tax refunds.

Unfortunately for the GOP, the previous larger stimulus checks sent out during COVID-19 delivered only a temporary boost in sentiment, with former president Joe Biden suffering typical losses during his midterm election. Another GOP strategist, Doug Heye, who witnessed the execution of similar schemes play out while serving in the George W. Bush administration, shared with Politico that Trump officials may be overstating how much the refunds will sway voters.

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