In a recent private meeting with House Republicans, Treasury Secretary Scott Bessent reportedly discussed the potential impact of the GOP’s tax and trade policies on the 2026 midterm elections.
House GOP Debates Economic Path
Bessent held a closed-door meeting with a group of House Republicans on Wednesday to discuss the GOP’s economic strategy under President Donald Trump, reported Politico.
The meeting, hosted by House Budget Chair Jodey Arrington, focused on measures to boost economic growth and reduce the federal government’s annual deficit, which currently stands at over $38 trillion.
The group also deliberated on the “acid test of the midterms,” which, according to Arrington, is whether voters are better off now than when the Republicans took over the leadership in Washington. Arrington expressed optimism about the GOP’s tax bill, signed into law by Trump in July, which is expected to result in substantial tax refunds for voters this spring.
GOP’s Lukewarm Reaction To Tariff Dividend
The discussion also touched on Trump’s proposal to issue $2,000 rebate checks to Americans using the revenue generated by his tariffs. The president announced that the checks will be issued by mid-2026 to moderate and middle-income people.
This proposal, however, was met with skepticism by Arrington and several other Republican lawmakers. Majority Leader John Thune (R-S.D.) told reporters on Tuesday that tariff revenues have grown "substantially" and, in his view, should be ideally directed toward helping pay down the national debt.
Meanwhile, earlier this month, Sen. Bernie Moreno (R-Ohio) said, “I think we should pay down the deficit.”
Bessent himself had previously said that Trump’s proposal requires congressional approval and that the tariff dividend could come in many forms, like eliminating taxes on tips, overtime, and Social Security, or allowing auto loan deductions under the president’s proposal.
Inflation Drop Could Shift 2026 Outlook
The meeting comes in the wake of the tariff dividend checks proposal, which has raised concerns about its potential impact on the federal deficit, with the Committee for a Responsible Federal Budget (CRFB) estimating a cost of around $600 billion annually, potentially doubling the amount generated by Trump’s new tariffs.
Meanwhile, one of the biggest threats to Trump’s 2026 midterm position is the brewing affordability crisis. Bank of America’s Michael Hartnett says a drop in inflation to 2% next year could deliver both political and market gains for Trump.
In his latest Flow Show report, he argues that lower inflation could push Trump's approval above 45%, giving Republicans a strong edge heading into the 2026 midterms, while also boosting a lesser-watched bond trade tied to the trend.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
