This is the season of decisions. Personally, I have a set of resolutions for 2025. I plan on cooking all my own meals (no more ordering in). I’m going to stop drinking alcohol (so trendy right now). And I plan on going to the gym (at least) 5 days a week.
The Department of Government Efficiency, also known as DOGE, is a Trump-appointed task force led by Elon Musk and Vivek Ramaswamy that has several noble goals in its stated goal of cutting wasteful government spending. A resolution has been put forward.
The US budget is approximately $6.5 trillion annually. Musk announced $2 trillion in cuts during President-elect Donald Trump’s campaign rally. That’s right, one third of your budget. When Musk announced this, the crowd went wild. “Your money is wasted,” Musk said with a smile. “And the Department of Government Efficiency will solve that.”
The season of resolutions can bring out the arrogant optimist in us.
But after a few weeks, reality seemed to set in. Mr. Musk and Mr. Ramaswamy published an op-ed in the Wall Street Journal announcing plans to cut the U.S. budget by $500 billion.
To be clear, $500 billion is a huge amount and remains a very ambitious spending reduction goal. But it’s far from $2 trillion.
Honestly, I can relate. Going to the gym 5 days a week is a long time as the first week of January (from what I’ve Googled, this doesn’t really count towards your resolutions) moves into the second week. I started noticing this. I’m not trying to be a bodybuilder, I just want to be in better shape. Three days a week is enough to accomplish that.
But as we enter the third week of January and my neatly packed gym bag gathers dust in my coat closet, even my scaled-down goals are starting to seem like solutions deferred.
“My first thought was, ‘Good luck!'” said Douglas Holtz Eakin, an economist at the American Action Forum. He wasn’t actually talking about my fitness goals. He was talking about finding cuts to the US budget.
Holtz-Eakin served as an economic advisor to George H.W. Bush. He also headed the Congressional Budget Office in 2003 and said budget cuts can be a complicated thread for even the most determined people.
“These are successful, prominent people, and I understand all that,” Holtz-Eakin said. “But DOGE itself has no authority.”
After all, Congress passes spending bills, not DOGE. “They will be able to think seriously and make suggestions,” he said. “They are think tanks, and I run a think tank, so I know how inefficient think tanks can be.”
Holtz-Eakin’s think tank, the American Action Forum, has been scrutinizing the federal budget for years, and he worries that DOGE is seeking cuts in the wrong places.
Watch this clip of reporter John Stossel asking Vivek Ramaswamy about DOGE’s plans. So far, both Mr. Musk and Mr. Ramaswamy have talked extensively about laying off many federal employees, up to half.
That would be a significant layoff, 1.5 million to be exact. Would it be dramatic? yes. Will it be a statement? yes. Will it be different in terms of budget?
“It’s not like the money is there,” Holtz-Eakin said. “That money is not in federal jobs.”
In fact, compensation for all federal employees totals about $300 billion, less than 5% of the federal budget.
Another big announcement from DOGE concerns the elimination of the Department of Education. But Louise Scheiner, an economist who specializes in fiscal and monetary policy at the Brookings Institution, said the calculations may not make any sense there either.
“Abolishing the Department of Education would not significantly change the long-term fiscal agenda,” she said. In fact, the departments of Education, Agriculture, Transportation, and Law Enforcement combined account for less than 15% of the budget.
And these departments are doing a lot of good, Shiner noted. “It would be a big mistake to eliminate these programs because they create a lot of value.”
So where can DOGE make the cut? There are some obvious choices. Although defense spending makes up about 15% of the budget and another 10% goes to interest payments on the national debt, half of the U.S. budget is made up of just three programs: Social Security, Medicare, and Medicaid. . Together, they cost the United States about $3 trillion a year.
Shiner said it’s entirely possible to take control of the budget by tackling these programs and taking a variety of approaches, “combining tax increases and perhaps some modifications to Medicare, Medicaid and Social Security.” Change needs to happen quickly, Shiner said, but it doesn’t have to be so dramatic or painful.
So why doesn’t it happen? “Financials aren’t the issue,” she says. “The big obstacle is politics.”
After spending years reforming the U.S. budget, Douglas Holtz-Eakin said the question always comes down to: “If we really want to address the budget, we need to look at Social Security and Medicare.” But politicians don’t want to focus on Social Security and Medicare. Because these are deeply beloved programs, and the people who use them vote for them.
“If you went into a town hall today and said, ‘I want to reform Social Security,’ you might as well just walk out and start working at Dairy Queen,” Holtz-Eakin says.
After all, the people who make all the budget decisions were elected to that office, and they want to be elected to that office again.
Holtz-Eakin said it’s absolutely possible to modify or reduce spending on Medicare and Social Security, but that would require politicians to communicate with voters, adding that no matter what the cuts are, He said it was necessary to explain why the cuts had to be made, and to call on the people to unite and do their part. their belts for a better future. This will require Congress to work together across the aisle.
That’s what DOGE is really up against.
That’s why Holtz-Eakin is skeptical that Team DOGE will be able to match its terrifying bark for any kind of bite.
“I don’t think this Congress is going to be one where we’re holding hands and jumping up and down,” he said. “I don’t think this president will show leadership. So maybe I’m just a beaten-down Washington swamp guy, but I’ll believe it when I see it.”
The same could be said about my declining gym membership. But the obstacles are quite formidable! First, the outside temperature is 22 degrees. The other thing is, I’m recovering from a cold (and I don’t want anyone to get sick). I felt like an old running injury had flared up a bit, so I might as well take a break for now. I’ll feel better tomorrow though.
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