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Elon Musk is failing to cut American spending

Reproduced from The Economist
12 February 2025

It all seems to add up to something big. On a daily, sometimes hourly, basis, Elon Musk claims that his team of fiscal commandos has found yet more government fraud, terminated another wasteful contract or even scrapped an entire agency. Mr Musk’s supporters believe that, through tech wizardry and sheer willpower, he is slashing the federal deficit in a way that has eluded politicians for years. But this narrative has a glaring flaw: our review of official data shows that Mr Musk’s efforts have scarcely made a dent in spending.

Every working day the Treasury publishes a statement detailing withdrawals of cash from its primary deposit account, providing the best high-frequency indicator of government spending. Since Donald Trump took office a little more than three weeks ago, outlays have averaged $30bn a day. Compare that with the same period last year under Joe Biden: federal spending back then came to about $26bn a day. Outflows from the Treasury have actually risen since January 28th, when Mr Musk first claimed his “Department of Government Efficiency”, or DOGE, was saving the federal government $1bn a day. Looking at the bigger picture, the government’s spending trajectory in the current fiscal year, which began in October, basically resembles that of the past two years.

Such comparisons are far from perfect. Flows in and out of government coffers are volatile. In nominal terms spending naturally rises over time, pushed up by inflation. Perhaps outflows would have been even larger in the absence of DOGE. And the agency is still in its infancy. Nevertheless, the gap between Mr Musk’s declarations and his apparent failure to cut spending shows the difficulties facing his project. Mr Musk has promised over $2trn in annual savings for the federal government. He will struggle to get close to that.

In large part this is because of the way America’s budget is structured. The government is on track to spend $7trn this year. Nearly two-thirds of this consists of mandatory expenditures on Social Security and health insurance. Interest payments account for over 10%. That leaves a quarter of the budget for discretionary spending, a category which in theory is somewhat easier to trim—except that half of it goes on defence and Republicans would like to increase such spending. In other words, no matter how aggressive DOGE is, its actions are focused on barely more than a tenth of the overall federal budget.

Mr Musk says he will produce vast savings by rooting out fraud and waste. Undoubtedly an organisation as large as the American government has fat on its bones, and would benefit from an exercise regime. But it is more accurate to view it as flabby rather than morbidly obese. The government accountability office, a watchdog, estimates that losses from fraud have in recent years run between $233bn and $521bn a year. Were it possible to identify and zap all of that fraud in real time—an extremely tall order—it would still not get Mr Musk close to his ultra-abstemious targets.

In any case, DOGE’s efforts appear to be pretty scattershot. Many of its spending reductions have targeted specific things that Mr Trump deems wasteful such as “diversity, equity, inclusion and accessibility” programmes. Yet these amount to a tiny sliver of the federal budget. The full value of the savings announced by DOGE (on its account on X, Mr Musk’s social network) adds up to about $7bn so far. Moreover, some of the reductions came from scrapping multi-year contracts, meaning that the annual savings amount to less than the headline figure. If the controversial closing down of USAID, America’s main international-development agency, counts as a cost-cutting success for DOGE, its total savings would reach about $45bn per year, or just 0.6% of federal spending.

None of this is to minimise DOGE’s impact. It has already put thousands of government employees on leave. Armed with a new executive order from Mr Trump, it is now preparing to make mass lay-offs, though it may lack the legal authority to do so. Civil servants are disoriented and anxious about their future—an outcome that will surely please Mr Musk, who relishes his role in the war on bureaucracy.

But the core mission of DOGE is to save money. “It’s not optional to reduce federal expenses. It’s essential,” Mr Musk said on February 11th. And on that count, he looks likely to come up woefully short.
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Heartlander · 80-89, M
Before Biden left the White House he and his Democrat friends spiked the spending ball. They set in motion plans to increase federal spending, thus making it more difficult for the Trump admin to get spending under control. I believe they even had a phrase for it: Throwing gold bars from the Titanic.

Us Americans see this a bit different from how Democrats try to explain it. It’s less about wasteful spending and likely more about politicians camouflaging fraud and self enriching opportunities.

What a big surprise when the the American people discovered that entertainment celebrities who were supporting Harris with endorsements and their craft were being paid for their vocal support. Reflecting on Elon Musk bringing to the people’s attention about the hundreds of $millions of taxpayer monies being paid for “subscriptions” to news agencies and publications, it’s not too much of a stretch to question if news agencies are also being paid with taxpayer monies to slant the news in favor of Democrats and against anyone in their way.
MethDozer · M
@Heartlander no true scotsman
@Heartlander That's a good point. News subscriptions are not only wasteful, but treasonous if they're subscriptions to enemies of Trump.

The last thing this administration needs is informed workers or those who recognize a duty of loyalty to the Constitution or the office beyond its present occupant.

Sarcasm, aside, I do think it's important to recognize that Musk isn't "doing nothing" when his stated goals aren't met.
Heartlander · 80-89, M
@MistyCee Those goals probably have to be routed through congress. Executive orders not run through congress or have clear constitutional grounds get intercepted in the courts, where non elected judges take turns supporting and opposing those executive orders. Or at least they should be routed through congress so they reflect the will of the people and give the people a way to decide on whether to keep or pitch their elected representatives. Add a bit of complication when congress empowers the head of a government agency with discretion.

This is really an extension of prosecutorial discretion that’s been in discussion for years. Does the district attorney get to decide which laws to enforce and which they can ignore? If the legislators are Republicans and the DA is a Democrat, most Democrat insist that laws are just options for the DA to pick from. Put the shoes on the other foot and Democrat legislators insist that the president has no discretion over laws passed by the legislature. It’s the same with appropriations.
@Heartlander Impoundment is back with a vengeance, and I expect there will be no actual prosecutorial discretion happening for the next 4 years.

It's easy to overstate Trump's seriousness about pursuing and his capabilities to eliminate all checks and balances and govern as an absolute authoritarian, but I don't see how his contempt for institutions and others who don't bow the knee to him can be discounted.

The sanest rationale I've heard articulated for electing Trump is that he'll break all the stuff we don't like, and the other stuff is either less important or can be replaced.

I still think that's pretty crazy, though.
SunshineGirl · 36-40, F
@Heartlander Well that potentially accounts for $4bn. But the main point of the article is the huge gap between what Musk claims to have saved and what can be independently verified. And his very limited options for making further "savings".

Waste and fraud are two very different things. Public spending is not fraudulent just because one group of people happens to disagree with what the money was spent on.
nudistsueaz · 61-69, F
@SunshineGirl Really, what does it mean, when 75 percent of the tax payers don't agree with how their money is spent?
SunshineGirl · 36-40, F
@nudistsueaz No one likes paying taxes, but people generally like driving on well m aintained roads, not having planes falling out of the sky, not having elderly relatives starve to death . . all stuff that costs money.

If money is allocated by Congress for a specific purpose and spent on that purpose, how can this be fraud?
Heartlander · 80-89, M
@SunshineGirl The proof is in the pudding :) our infrastructure is crumbling, planes are falling out the sky all while our tax dollars fly off to foreign shores, pay for unearned benefits for illegal immigrants and go unaccounted for. We pay more for healthcare than any other nation on earth, pay more for education yet when compared to other countries we are not getting our money’s worth. Far from it.

All the money that gets appropriated by congress is administered by a department of the executive branch. For the president and his/her staff to not see what congress allocates is accounted for and not be well spent would be dereliction of duty. It’s no different than when the DOJ enforces laws passed by congress, or the IRS collects taxes as determined by congress or other executive branches administers programs created by congress.

To correct the notion that congress alone appropriates, Democrats are ignoring the fact that what congress passes almost also has to be approved by the president. Most laws are collaborations between the executive branch and congress.
nudistsueaz · 61-69, F
@SunshineGirl Because it isn't being spent on those things. It's being given away to other countries.
SunshineGirl · 36-40, F
@Heartlander So why is Musk attacking spending that is accounted for and quite clearly has nothing to do with foreign aid or migration? Why has he sacked auditors who held departments democratically accountable for the public funds they received? The information is all out there, but if it conflicts with Musk's narrative it gets suppressed.
nudistsueaz · 61-69, F
@SunshineGirl Musk is doing a fantastic job.
Heartlander · 80-89, M
@SunshineGirl

So why is Musk attacking spending that is accounted for and quite clearly has nothing to do with foreign aid or migration?

Probably because the government has made even those accounted for expenditures too expensive to sustain. Like a HUD funded apartment construction project cost twice as much as a private developer project would cost. The cost difference is in the uncertainty for a HUD project from concept to completion with government involvement.

Have you noticed how peacetime military personnel are usually moved around? The Air Force usually uses commercial or chartered flights, even though they have thousands of transport aircraft parked and crews available. Why? because a chartered United flight can do it cheaper than a military C17.
SunshineGirl · 36-40, F
@Heartlander That is understandable, but what has been approved by Congress must be revoked by Congress. It cannot be left in the hands of two individuals who take the peculiar view that government spending is the same as household budgeting or a corporate profit and loss sheet.
Heartlander · 80-89, M
@SunshineGirl But isn’t that exactly what congress does? Puts $$ in the hands of bureaucrats to spend at will? At the discretion of the Administrator? And since the Administrator works for the president ….
MasterLee · 56-60, M
@Heartlander she doesn't have a clue being a foreigner