XPost: alt.fan.rush-limbaugh, alt.politics
<https://www.economist.com/finance-and-economics/2025/02/12/elon-musk-
is-f
ailing-to-cut-american-spending>
Elon Musk is failing to cut American spending
DOGE has so far disrupted everything in government bar the deficit
A close up shot of Elon Musks faces whilst wearing a black cap detailed
with 'Make America Great Again'.
Photograph: Getty Images
Feb 12th 2025|Washington, DC
Listen to this story.
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 (see chart).
Chart: The Economist
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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