Donald Trump is pledging to cut wasteful federal spending by tapping two billionaires – Tesla CEO Elon Musk and entrepreneur Vivek Ramaswamy – to lead the initiative, which the president-elect calls the Ministry of Government Effectivenessor DOGE.
The appointments, announced by Trump on Tuesday, raise a host of questions about the effort, including whether Musk and Ramaswamy will have the power to change federal spending as Congress authorizes the country’s spending, as well as the direction that could take businessmen. reduce expenses. Under the plan, however, DOGE is not an official government department, raising questions about its powers and operation.
The announcement comes a week after Trump won a second term as president, with voters expressing dissatisfaction with the economy under the Biden administration. As part of his election promises, Trump promised to cut government spending. Musk’s bio on X, the social media platform he purchased in 2022, now says: “The people voted for major government reform.”
“Frankly, it needs to be redone, so every few decades you really have to look at everything,” Elaine Kamarck, a senior fellow in governance studies at the Brookings Institution who led the national assessment of the Clinton administration’s performance, a effort to cut government spending in the 1990s, told CBS MoneyWatch.
But Kamarck also has reservations about Musk and Ramaswamy’s tenure, especially after the former recently suggested it could achieve more than $2 trillion in savings, or nearly a third of the $6.7 trillion of annual federal government spending. Two-thirds of this spending is mandatory through programs such as Social Security and Medicare, while discretionary spending is largely on defense.
“This is the first warning sign that this operation will fail,” Kamarck said. “It’s crazy.”
The Trump campaign did not immediately respond to a request for comment.
Here’s what you need to know about the Department of Government Effectiveness.
What is the Department of Government Effectiveness?
Trump announced DOGE in a statement on Tuesday, describing it as an effort to “reduce excessive regulations, cut wasteful spending, and restructure federal agencies.”
The name is a nod to Musk’s support for a cryptocurrency called dogecoin, created as a joke by two software engineers and using the image of a smiling Shiba Inu dog. (The price of Dogecoin has more than tripled in the past month and is now trading at 38 cents.)
Trump said Musk and Ramaswamy’s work “will be completed no later than July 4, 2026,” which is before the 250th anniversary of the Declaration of Independence.
Trump only described the outlines of the initiative and did not reveal how it would be staffed or funded. The Trump campaign did not respond to an inquiry about funding for DOGE or whether Musk or Ramaswamy would be paid for their work on the project.
Can DOGE Really Reduce Federal Spending?
At the moment, this seems unlikely given that DOGE is not a real government department, which would have to be created with Congressional approval. Federal spending is authorized by Congress, and senators and House representatives may be reluctant to support cuts in major programs like Social Security or Medicare, which are popular with millions of voters, or in the military of the country.
It is also unclear how the organization will operate. It could fall under the Federal Advisory Committee Act, which dictates how external groups that advise the government must operate and be accountable to the public.
Trump described Musk and Ramaswamy’s role as providing “advice and guidance from outside the government.”
That doesn’t amount to much, Kamarck said.
“They have no authority, none at all,” she added, while noting that the president’s support can help convince lawmakers to support efficiency efforts.
What did Musk and Ramaswamy say about federal spending?
Musk, the world’s richest person with a net worth of $319 billion, according to the Bloomberg Billionaires Index, called the U.S. government bloated and said its spending was unsustainable. The Tesla founder also said he wants to reduce the number of federal agencies to 99, from more than 400.
“There are so many [agencies] that people have never heard of and have overlapping areas of responsibility,” Musk said earlier this month.
While on the campaign trail with Trump, Musk also said he could cut “at least $2 trillion” from the annual budget. “Your money is being wasted and the Department of Government Efficiency is going to fix this,” Musk said.
Musk is known for cutting costs in his own companies, reducing most of the workforce of after purchasing the company two years ago and focusing on manufacturing costs at Tesla. Despite this, these efforts have had mixed results, with X’s valuation having fallen by around 80% since its purchase. Tesla’s stock price, meanwhile, has surged 48% over the past year, taking its value to more than $1 trillion.
Ramaswamy, who Forbes says has a net worth of about $1 billion, withdrew from the presidential race in January after operating on an “anti-wake-up” campaign. He also advocated for government budget cuts by eliminating the Department of Education, a goal shared by President-elect Trump.
Have administrations ever tried to reduce costs?
Yes, both Republican and Democratic presidents have made efforts to reduce government spending.
In 1982, President Ronald Reagan created the Grace Commission, headed by wealthy businessman J. Peter Grace, CEO of WR Grace & Company, a chemical company. About 150 businessmen volunteered to serve on the commission, which ultimately recommended 2,500 reforms, according to the Ronald Reagan Presidential Library.
“Most of the recommendations, including those requiring congressional legislation, were never implemented,” the library notes. “However, the Commission’s work provided a starting point for many conservative critiques of the federal government.”
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, Kamarck said. The group was made up of civil servants who understood bureaucracy and many of whom were frustrated by it, she added.
The group had some success streamlining operations and cutting costs, and ultimately cut more than 300,000 jobs, according to a Congressional Research Service study. Kamarck noted that the group also focused on integrating technology into departments at a time when the Internet was just emerging, leading to efficiencies such as online tax filing.
Where could the Trump administration cut spending?
Although experts are skeptical of Musk’s claim that he could cut spending by $2 trillion, they also point out that there are opportunities to examine efficiency gains.
Eliminating Medicare fraud is one area that could result in savings, according to Citizens Against Government Waste, a nonpartisan group that examines government spending. Its recommendations also include reducing the country’s contributions to the UN and ending subsidies for certain agricultural products, such as dairy and sugar. Its projected savings: $377 billion in the first year, or about 19% of the $2 trillion envisioned by Musk.
But efficiency goes beyond cost reduction, Kamarck emphasized. It’s also about understanding how bureaucracy works,
“Everything in the federal government is large and complex, and there are layers and layers of complexity,” she emphasized. “Al Gore and I relied on hundreds of experienced officials to tell us how this worked – and if you don’t do it, which I suspect they won’t, because Musk is an arrogant billionaire, you will fail. “
Does Musk have any conflicts of interest?
Yes, since Musk’s SpaceX works with the Department of Defense and NASA, with the federal government pledging $3 billion to his companies last year, according to the New York Times. Tesla, meanwhile, has been the subject of an investigation by the National Highway Traffic Safety Administration, as well as other agencies.
Federal employees are generally required to disclose their financial assets and ownership interests to avoid potential conflicts of interest and to divest significant ownership interests related to their work. Because Musk and Ramaswamy would not be formal federal workers, they would not face these ethical requirements or limitations.
contributed to this report.
