That’s how a lot Elon Musk, co-chair of President-elect Donald Trump’s new “Division of Authorities Effectivity,” or DOGE, has mentioned he can reduce out of the annual federal finances. Musk and his accomplice Vivek Ramaswamy have steered that they’ll obtain this by way of “mass head-count reductions throughout the federal paperwork,” by cracking down on spending “unauthorized” by Congress, and “large-scale audits” of federal contracts. Their goal wouldn’t be entitlement applications “like Medicare and Medicaid,” they are saying, however “waste, fraud, and abuse that just about all taxpayers want to finish.”
When you might really reduce this a lot, it might wipe out the US’s $1.9 trillion deficit and put the nation into surplus for the first time for the reason that 2001 fiscal yr. However let’s be clear: There isn’t any method in hell Musk and Ramaswamy are going to have the ability to establish $2 trillion in annual spending to chop, they usually actually won’t get wherever close to that quantity with out congressional motion.
To see why, seek the advice of this straightforward chart of projected federal spending in fiscal yr 2025, which started on October 1:
I’m utilizing the present fiscal yr, however you’ll see one thing related in any given yr. The most important single program is Social Safety (which I’ve grouped right here with its companion program, Supplemental Safety Earnings). Trump has promised he won’t reduce 1 cent from Social Safety, in order that’s roughly $1.6 trillion out of the $7 trillion finances off the desk.
The subsequent-largest is curiosity funds on federal debt, gathered from prior deficits. Musk’s America PAC has bafflingly listed this as a type of authorities waste, however failing to pay curiosity on previous debt would represent a US default and certain result in a nationwide, and doubtless world, monetary disaster and recession. Whereas we are able to cut back future deficits and pay much less curiosity sooner or later, we’re obligated to pay curiosity on debt we’ve already gathered.
So there’s nothing to save lots of right here both. Already we’ve dominated out over a 3rd of whole spending.
Subsequent up is protection spending. Musk and Ramaswamy highlighted wasteful Pentagon spending of their Wall Avenue Journal op-ed, so this cash might face some cuts. However Trump massively elevated protection spending in his first years in workplace, and his congressional allies, like incoming Senate Armed Companies chair Roger Wicker (R-MS), have proposed trillions in extra spending to counter China. Trump’s angle towards the protection finances, as along with his angle on so many issues, vacillated wildly throughout his first time period, so maybe he’ll aspect with Musk and Ramaswamy and search to decrease protection spending. However that’s removed from assured.
If protection spending is off the desk, we’ve dominated out greater than half the finances.
So what would they doubtless reduce? They may look first to Medicare and Medicaid, that are chargeable for over $1.5 trillion. Musk and Ramaswamy insisted that these will not be their targets, however it’s arduous to see how they’d keep away from that. For one factor, there are locations the place Medicare specifically overspends the place policymakers in each events wish to crack down; its apply of paying extra for care in hospitals than at smaller services is a primary instance. For one more, Trump proposed huge cuts to Medicaid final time period.
Then there’s non-defense discretionary spending, a grab-bag class that features all spending approved by way of annual appropriations payments relatively than mandated by different laws. The most important class is transportation, which pays for issues like air visitors management and nationwide highways. Subsequent up is veterans’ care and advantages. Assist for science, public well being/analysis, legislation enforcement, and training (together with federal assist for Okay–12 colleges) every obtain round or a bit over $100 billion yearly. This class has been reduce to the bone for the reason that 2010s as it’s, and it’s arduous to think about Musk and Ramaswamy going up in opposition to veterans or cops.
Lastly, there’s different necessary spending, not damaged out within the above chart however together with a big selection of security web applications:
Enormous chunks of this really feel politically and virtually off-limits. Army retirement and veterans’ advantages (which fall below each the non-defense discretionary and necessary elements of the finances) appear politically unattainable to chop, and even civilian worker retirements can be tough to chop again provided that workers have paid into these accounts themselves for years.
The Kids’s Well being Insurance coverage Program and foster care have lengthy loved bipartisan assist. Trump and JD Vance have proposed increasing the kid tax credit score, making financial savings there unlikely.
That leaves applications like meals stamps, the Inexpensive Care Act medical insurance credit, and unemployment insurance coverage.
Let’s suppose that Musk and Ramaswamy determine to essentially go for it. They’re going to chop non-defense discretionary spending in half, possibly by shutting down all scientific and well being analysis and Okay–12 faculty help. They’re slashing Medicare and Medicaid by 1 / 4, they usually’re eliminating meals stamps, ACA credit, and unemployment insurance coverage totally. These, to be clear, are all cuts that might require congressional approval and that Musk, Ramaswamy, and Trump couldn’t obtain by way of govt motion alone. Moreover, they’re cuts that appear politically unattainable to push by way of. For the sake of argument, let’s suppose that is the bundle.
Doing the maths, even this unbelievably bold bundle would quantity to a bit over $1.1 trillion yearly. It’s barely midway to Musk’s said aim.
The notion that the federal authorities is hopelessly bloated on account of waste that each affordable individual needs to get rid of is an interesting delusion, however it’s a delusion. Authorities spending overwhelmingly goes to wildly well-liked applications like Social Safety, Medicare, Medicaid, veterans’ advantages, and the protection finances. You may’t make a lot of a dent in it with out touching these areas, and when you contact them, you’re going to get immense backlash.
