Donald Trump is vowing to reduce wasteful spending by calling on two billionaires – Tesla CEO Elon Musk and entrepreneur Vivek Ramaswamy – to lead the initiative the president-elect is calling for. Department of Government EfficiencyOr DOGE.
The appointments, announced by Trump on Tuesday, raise several questions about the effort, including whether Musk and Ramaswamy will have the authority to make changes to federal outlays, given that Congress authorizes the country's spending. as well as where businessmen can look to cut expenses, Meanwhile, under the plan, DOGE is not an official government department, raising questions over its powers and how it will operate.
This announcement comes a week after Trump won second term As president, voters expressed their dissatisfaction with the economy under the Biden administration. As part of his campaign pledge, Trump promised to cut government spending. Musk's bio on X, the social media platform he purchased in 2022, now reads, “The people voted for major government reform.”
“Frankly, it needs to be done again, so every few decades you really need to look at everything,” said Ellen Kamarck, a senior fellow in governance studies at the Brookings Institution who led the national performance review of the Clinton administration. Managed an effort to cut government spending in the 1990s, CBS MoneyWatch was told.
But Kamarck also has reservations about Musk and Ramaswamy's mandate, especially since Musk recently suggested he could find more than $2 trillion in savings — roughly half of the federal government's $6.7 trillion annual spending. One third. two-thirds of that expenditure is Mandatory through programs including Social Security and Medicare, while discretionary spending is largely spent on defense.
“This is the first warning sign that this is going to be a failed operation,” Kamark said. “That's madness.”
The Trump campaign did not immediately respond to a request for comment.
Here's what you need to know about the Department of Government Efficiency.
What is the Department of Government Efficiency?
Trump announced DOGE in a statement on Tuesday, calling it an effort to “reduce excess regulations, cut wasteful spending, and restructure federal agencies.”
The name is a sign of Musk's support for a cryptocurrency called Dogecoin, which was made as a joke An image of two software engineers and a smiling Shiba Inu dog is used. (The price of Dogecoin has more than tripled over the past month, and now trades at 38 cents.)
Trump said Musk and Ramaswamy's work “will be finished no later than July 4, 2026, or the 250th anniversary of the Declaration of Independence.”
Trump only outlined the initiative and did not disclose how it would be staffed or funded. The Trump campaign did not respond to a request for comment about DOGE's funding or whether Musk or Ramaswamy will be paid for their effort.
Can DOGE Really Cut Federal Spending?
At the moment, this appears unlikely, as DOGE is not an actual government department, which would require Created with congressional approvalFederal spending is authorized by Congress, and senators and House representatives may hesitate to support cuts to major programs like Social Security or Medicare, which are popular among millions of voters, or the nation's military.
It is also not clear how the organization will work. This could fall under the Federal Advisory Committee Act, which dictates how outside groups that advise the government should operate and be accountable to the public.
Trump described Musk and Ramaswamy's role as providing “advice and guidance from outside the government.”
It's not much, Kamark said.
“They have no authority — nothing,” he said, while adding that the president's support could help convince lawmakers to throw their support behind efficiency efforts.
What have Musk and Ramaswamy said about federal spending?
Musk, the world's richest man with a net worth of $319 billion, according to the Bloomberg Billionaires Index, has described the US government as bloated and said its spending is unsustainable. The Tesla founder also said he wants to reduce the number of federal agencies from 400 to 99.
“There are so many [agencies] Which people have never heard of, and which has overlapping areas of responsibilities,” Musk Said earlier this month.
Musk also accompanied Trump during the campaign Said He could cut “at least $2 trillion” from the annual budget. “Your money is being wasted and the Department of Government Efficiency will fix it,” Musk said.
Musk is known for cutting costs at his companies, Most of X's workforce Two years ago he bought the business as well to focus on manufacturing costs at Tesla. Yet, as with the evaluation of X, those efforts have had mixed results. almost 80% decline Since its purchase. Meanwhile, Tesla's share price has increased 48% in the past year, making it worth more than $1 trillion.
Ramaswamy, who Forbes says has a net worth of about $1 billion, dropped out of the presidential race in January Running on “anti-woke” Campaign. He also advocated government cuts abolish the education departmentA goal shared by President-elect Trump.
Has the administration tried to cut costs before?
Yes, both Republican and Democratic presidents have made efforts to cut government spending.
In 1982, President Ronald Reagan created the Grace Commission, led by wealthy businessman J. peter graceWR is the CEO of Grace & Company, a chemicals business. About 150 business people volunteered for the commission, which ultimately recommended 2,500 reforms, According For the Ronald Reagan Presidential Library.
The Library notes, “Most of the recommendations, particularly those requiring legislation from Congress, were never implemented.” “However, the commission's work provided a starting point for many conservative criticisms of the federal government.”
Kamark said that in the 1990s, President Bill Clinton created the National Performance Review with the goal of creating a government that would work better and cost less. He said there were civil servants in the group who understood bureaucracy and many of them were frustrated by it.
The group had some successes in streamlining operations and reducing costs, ultimately cutting over 300,000 jobs, According For a study by the Congressional Research Service. Kamark said the group also focused on integrating technology into departments at a time when the Internet was emerging, leading to efficiencies such as online tax filing.
Where might the Trump administration cut spending?
While experts are skeptical of Musk's claim that he can cut $2 trillion in spending, they also point out that there are opportunities to see efficiencies.
Eliminating Medicare fraud is one area that could result in savings, According For Citizens Against Government Waste, a non-partisan group that looks at government spending. Its recommendations also include reducing the country's contributions to the United Nations and ending subsidies for some agricultural products such as dairy and sugar. Its estimated savings: $377 billion in the first year, or about 19% of the $2 trillion Musk is eyeing.
But Kamark said the efficiency goes beyond cost-cutting. It's also about understanding how bureaucracy works,
“Everything in the federal government is big and complex, and there are layers and layers of complexity,” he said. “Al Gore and I relied on hundreds of experienced civil servants to tell us how it works — and if you don't do that, which I suspect they won't do because Musk is an egotistical billionaire, you Will fail.”
Does Musk have a conflict of interest?
Yes, since Musk's SpaceX works with the Defense Department and NASA, the federal government pledged $3 billion to his companies last year. According For the New York Times. Meanwhile, Tesla has been investigated by the National Highway Traffic Safety Administration as well as other agencies.
Federal employees are generally required to disclose their financial assets and entanglements to remove any potential conflicts of interest and to sell significant holdings related to their work. Because Musk and Ramaswamy will not be formal federal employees, they will not face those requirements or ethical limitations.
Contributed to this report.