Donald Trump has pledged to cut wasteful federal spending by tapping two billionaires — Tesla CEO Elon Musk and businessman Vivek Ramaswamy — to lead the initiative, which the president-elect has called for. Department of Government Efficiencyor DOGE.
The appointment, which was announced by Trump on Tuesday, raised many questions about the effort, including whether Musk and Ramaswamy will have the authority to make changes in federal spending, as Congress authorizes state spending, as well as where the entrepreneurs can see to reduce spending. Under the plan, the DOGE is not an official government department, raising questions about its powers and how it works.
The announcement came a week after Trump won the second season as president, with voters expressing 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 bought in 2022, now reads, “People are voting for major government reform.”
“Honestly, it has to be done again, so every few decades you have to look at everything,” said Elaine Kamarck, a senior fellow in governance studies at the Brookings Institution who managed the Clinton Administration’s National Performance Review, an effort to reduce it. government spending in the 1990s, told CBS MoneyWatch.
But Kamarck also has reservations about Musk and Ramaswamy’s mandate, especially after the former recently suggested they could find more than $2 trillion in savings — nearly one-third of the federal government’s $6.7 trillion in annual spending. Two-thirds of that spending is mandated through programs including Social Security and Medicare, while discretionary spending is mostly used for defense.
“That was the first warning sign that this was going to be a failed operation,” Kamarck said. “That’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 Efficiency.
What is the Department of Government Efficiency?
Trump announced the DOGE in a statement on Tuesday, describing it as an effort to “reduce excessive regulation, reduce wasteful spending, and restructure Federal Agencies.”
The name is a nod to Musk’s support for a cryptocurrency called dogecoin, which was created as a joke by two software engineers and uses an image of a smiling Shiba Inu dog. (Dogecoin has more than tripled in value over the past month, and is currently trading at 38 cents.)
Trump said Musk and Ramaswamy’s work “will be completed no later than July 4, 2026,” or the 250th anniversary of the Declaration of Independence.
Trump outlined only the contours of the initiative and did not reveal how it would be staffed or funded. The Trump campaign did not respond to requests about DOGE’s funding or whether Musk or Ramaswamy would be paid for the effort.
Can DOGE cut federal spending?
Currently, that seems impossible because the DOGE is not a real government department, which must be created by congressional approval. Federal spending is authorized by Congress, and senators and representatives of the House of Representatives can hesitate to support cuts to major programs like Social Security or Medicare, which are popular with millions of voters, or the state military.
It is also not clear how the organization will operate. It could be in the Federal Advisory Committee Act, which defines how external groups that advise the government should act and be accountable to the public.
Trump described Musk and Ramaswamy’s role as providing “advice and guidance from outside of government.”
That’s not a lot, Kamarck said.
“They have no authority – nothing,” he added, while noting that the president’s support could help convince lawmakers to support efficiency efforts.
What do Musk and Ramaswamy have to say about federal spending?
Musk, the world’s richest man with a net worth of $319 billion, according to the Bloomberg Billionaires Index, described the US government as bloated and said the spending was unsustainable. The Tesla founder also said he wants to reduce the number of federal agencies to 99, down from more than 400.
“There are a lot of (agencies) that people have never been aware of, and they have overlapping responsibilities,” 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 wasted, and the Department of Government Efficiency will fix it,” Musk said.
Musk is known for cutting costs in his own company, slashing most of X’s workforce after he bought the business two years ago he also focused on manufacturing costs at Tesla. Even so, these efforts have had mixed results, with X’s value dropping by around 80% since the purchase. Tesla’s stock price, currently, has risen 48% in the past year, increasing its value to more than $1 trillion.
Ramaswamy, who Forbes says is worth about $1 billion, withdrew from the presidential race the following January running on “anti-woke” campaign. He also advocated for government cuts by eliminating the Department of Education, a goal shared by President-elect Trump.
Did the previous administration try to cut 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 business. About 150 business people volunteered for the commission, which eventually recommended 2,500 reforms, according to the Ronald Reagan Presidential Library.
“Most recommendations, especially those requiring legislation from Congress, were never implemented,” the library notes. “However, the Commission’s work provided a starting point for many conservative criticisms of the federal government.”
In the 1990s, President Bill Clinton created the National Performance Review with the goal of creating a government that would be better and cheaper, Kamarck said. The group is made up of civil servants who are familiar with bureaucracy, and many of them are frustrated, he added.
The group had some success streamlining operations and cutting costs, ultimately cutting more than 300,000 jobs, according to a study by the Congressional Research Service. Kamarck noted that the group also focused on integrating technology into the department at a time when the internet was just emerging, leading to efficiencies such as online tax filing.
Where can the Trump administration cut spending?
While experts are skeptical of Musk’s claim that he can cut $2 trillion in spending, he also points out that there is an opportunity to see efficiencies.
Eliminating Medicare fraud is one area that could yield savings, according to Citizens Against Government Waste, a nonpartisan group that looks at government spending. The recommendations also include reducing the country’s contribution to the UN and ending subsidies for some agricultural products, such as milk and sugar. Projected savings: $377 billion in the first year, or about 19% of the $2 trillion Musk envisions.
But efficiency outweighs cost, Kamarck noted. It’s also about understanding how bureaucracy works,
“Every chapter in the federal government is big and complicated, and there are layers and layers of complexity,” he said. “Al Gore and I rely on hundreds of experienced civil servants to tell us how things work – and if you don’t do this, which I suspect you won’t do because Musk is an arrogant billionaire, you will fail.”
Does Musk have a conflict of interest?
Well, because Musk’s SpaceX is working with the Department of Defense and NASA, with the federal government pledging $3 billion to his company last year, according to the New York Times. Tesla, meanwhile, has been investigated by the National Highway Traffic Safety Administration, as well as by other agencies.
Federal employees are generally required to disclose their financial assets and involvements to avoid potential conflicts of interest, and to divest themselves of important holdings related to their work. Because Musk and Ramaswamy will not be official federal workers, they will not face these requirements or ethical restrictions.
contributed to this report.
