Treasury Secretary Scott Bessent recently sat down with a group of House Republicans for what sounds like a frank conversation about whether the GOP's economic policies will actually win them votes in 2026. The answer, apparently, depends on whether Americans feel richer when they head to the polls.

The Midterm Math

Bessent's closed-door meeting on Wednesday, hosted by House Budget Chair Jodey Arrington, focused on the party's economic game plan under President Donald Trump. The conversation centered on boosting growth while tackling the federal government's annual deficit, which now exceeds $38 trillion.

Arrington framed the challenge as the "acid test of the midterms": Are voters better off now than when Republicans took control in Washington? He's betting yes, pointing to the GOP's tax bill that Trump signed in July. The law is expected to deliver substantial tax refunds to voters this spring, which is convenient timing if you're thinking about election cycles.

The Tariff Rebate Idea Gets a Cold Reception

Here's where things get interesting. Trump has proposed sending $2,000 rebate checks to moderate and middle-income Americans, funded by revenue from his tariffs. The checks would go out by mid-2026, right before voters head to the polls.

But Arrington and several other Republican lawmakers aren't buying it. Majority Leader John Thune told reporters Tuesday that tariff revenues have grown "substantially" and should instead be used to pay down the national debt. Sen. Bernie Moreno of Ohio echoed that sentiment earlier this month, saying bluntly, "I think we should pay down the deficit."

Even Bessent has acknowledged the complications. He's previously noted that Trump's proposal requires congressional approval and suggested the "tariff dividend" could take different forms—like eliminating taxes on tips, overtime, and Social Security benefits, or allowing auto loan deductions.

The Deficit Question

The skepticism makes sense when you look at the numbers. The Committee for a Responsible Federal Budget estimates those rebate checks would cost around $600 billion annually. That's potentially double the amount generated by Trump's new tariffs, which creates an awkward math problem for anyone worried about the deficit.

Inflation Could Change Everything

The wildcard in all of this? Inflation. Bank of America's Michael Hartnett argues that if inflation drops to 2% next year, it could transform Trump's political prospects. In his latest Flow Show report, Hartnett suggests lower inflation could push Trump's approval rating above 45%, giving Republicans a significant edge heading into the 2026 midterms while also benefiting a bond trade tied to the trend.

Right now, the affordability crisis poses one of the biggest threats to Trump's midterm positioning. If voters still feel squeezed at the grocery store and gas pump in 2026, no amount of rebate checks may save the GOP's majority.