Two. trillion. dollar
So says Elon Musk, co-chair of President-elect Donald Trump’s new “Department of Government Efficiency,” or DOGE. He can cut out of the annual federal budget. Kasturi and his partner Vivek Ramaswamy suggested That they could achieve this by cracking down on “mass reductions across the federal bureaucracy,” “unauthorized” spending by Congress, and “large-scale audits” of federal contracts. Their goal would not be entitlement programs “like Medicare and Medicaid,” but “the waste, fraud and abuse that almost all taxpayers want to end.”
If you can actually cut that much, it will be erased US $1.9 trillion deficit And put in surplus for the country For the first time since the 2001 fiscal year. But let’s be clear: There’s no way in hell Musk and Ramaswamy will be able to identify $2 trillion in annual spending cuts, and they certainly won’t get anywhere near that number without action from Congress.
To see why, check out this simple chart of projected federal spending in fiscal year 2025, which began on Oct. 1:
I’m using the current fiscal year, but you’ll see something similar any year. The largest single program is Social Security (which I group here with its companion program, Supplemental Security Income). Trump promised 1 cent won’t cut it From Social Security, so that’s about $1.6 trillion of the $7 trillion budget off the table.
The next-largest is interest payments on the federal debt, collected from previous deficits. of musk America PAC misleadingly lists it as government wasteBut failure to pay interest on past debts would trigger a US default and likely lead to a national, and possibly global, financial crisis and recession. Although we can reduce future deficits and pay less interest in the future, we are obligated to pay interest on the debt we have already accumulated.
So there is nothing to save here either. Already we have eliminated more than a third of the total cost.
Next is defense spending. Kasturi and Ramaswami The Pentagon’s wasteful spending has been highlighted Their Wall Street Journal op-ed, so this money may face some cuts. But Trump is massive Increase in defense spending During his first years in office, and his congressional allies, such as incoming Senate Armed Services Chair Roger Wicker (R-MS), proposed trillion in additional spending To counter China. Trump’s attitude toward the defense budget, like his attitude toward many other issues, vacillated wildly In his first term, he is therefore likely to side with Musk and Ramaswamy and try to reduce defense spending. But it is far from certain.
With defense spending off the table, we’ve eliminated more than half of the budget.
So what are they likely to cut? They can look first at Medicare and Medicaid, which account for $1.5 trillion. Kasturi and Ramaswamy insist that’s not their goal, but it’s hard to see how they can avoid it. For one thing, there are areas where Medicare is particularly overspending that policymakers on both sides of the aisle want to crack down on; its practice Paying more for hospital care A prime example compared to small facilities. For another, Trump proposed massive cuts to Medicaid last term.
Then there is Non-Defense Discretionary ExpenditureA grab-bag category that includes all expenditures authorized through annual appropriations bills not mandated by other legislation. The largest category is transportation, which pays for things like air traffic control and national highways. Next up are veterans care and benefits. Science, public health/research, law enforcement, and support for education (including federal aid for K–12 schools) each receive close to or slightly more than $100 billion annually. The division has been cut to the bone since the 2010s and it is hard to imagine Kasturi and Ramaswamy going up against Praveen or the cops.
Finally, there are other mandatory costs, not broken out in the chart above but including a wide array of safety net programs:
Large parts of it feel politically and practically out of bounds. Military retirement and veterans benefits (which fall under both the non-defense discretionary and mandatory parts of the budget) seem politically impossible to cut, and even civilian employee retirement would be difficult to cut because the employees themselves paid into those accounts. year
Children’s health insurance programs and foster care have long enjoyed bipartisan support. Trump and JD Vance proposed Extending the Child Tax CreditThere is no possibility to save.
It leaves programs like food stamps, the Affordable Care Act health insurance credit, and unemployment insurance.
Let’s say Kasturi and Ramaswamy really decide to go for it. They are going to cut non-defense discretionary spending in half, maybe end all scientific and health research and K–12 school aid. They are cutting Medicare and Medicaid by a quarter, and they are eliminating food stamps, ACA credits, and unemployment insurance entirely. These, to be clear, are all cuts that would require congressional approval and that Musk, Ramaswamy, and Trump cannot achieve through executive action alone. Moreover, these are cuts that seem politically impossible. For the sake of argument, let’s assume this package.
Doing the math, even this incredibly ambitious package would amount to $1.1 trillion annually. That’s half way to Musk’s stated goal.
The idea that the federal government is hopelessly bloated with waste that every reasonable person would like to eliminate is an attractive myth, but it is a myth. Government spending goes disproportionately on popular programs like Social Security, Medicare, Medicaid, veterans’ benefits, and the defense budget. You can’t make too many holes in it without touching those areas, and once you touch them, you’re going to get a lot of feedback.
