Donald Trump vows to cut wasteful federal spending by tapping two billionaires — Tesla CEO Elon Musk and entrepreneur Vivek Ramaswamy — to lead what the president-elect calls the initiative Ministry of Government Efficiencyor DOGE.
The appointments, announced by Trump on Tuesday, raise a host of questions about the effort, including whether Musk and Ramaswamy will have the authority to make changes to federal spending, given that Congress is suspending spending from the country favors, and also where business people might look. to cut expenses. Meanwhile, according to the plan, DOGE is not an official government department, which raises questions about how it has its powers and how it will function.
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 campaign promises, Trump promised to cut government spending. Musk’s bio on X, the social media platform he bought in 2022, now reads: “The people voted for major government reforms.”
“Frankly, it needs to be redone, so every couple of decades you really have to look at everything,” said Elaine Kamarck, a senior fellow in governance studies at the Brookings Institution who led the Clinton administration’s National Performance Review, an effort to to cut government spending in the 1990s, CBS told MoneyWatch.
But Kamarck also harbors reservations about Musk and Ramaswamy’s mandate, especially after the former recently suggested he could find more than $2 trillion in savings — nearly a third of the federal government’s annual spending of $6.7 trillion. Two-thirds of that spending is mandatory through programs such as 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,” Kamarck said. “That’s insane.”
The Trump campaign did not immediately respond to a request for comment.
Here’s what you need to know about the government’s Department of Efficiency.
What is the Ministry of Government Efficiency?
Trump announced the DOGE in a statement Tuesday, describing it as an effort to “eliminate 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 the image of a smiling Shiba Inu dog. (Dogecoin has more than tripled in price in the past month and is now trading at 38 cents.)
Trump said Musk and Ramaswamy’s work “will end no later than July 4, 2026,” or by the 250th anniversary of the Declaration of Independence.
Trump only outlined the outlines of the initiative and did not reveal how it will be staffed or financed. The Trump campaign did not respond to a request about DOGE funding or whether Musk or Ramaswamy will be paid for their work on the effort.
Can the DOGE actually cut federal spending?
At this point, that seems unlikely, as the DOGE is not an actual government department, which would have to be created with the approval of Congress. Federal spending is approved by Congress, and senators and House representatives may be reluctant to support cuts to major programs like Social Security or Medicare, which are popular with millions of voters, or to the nation’s military.
It is also not clear how the organization will operate. It could fall under the Federal Advisory Committee Act, which dictates how outside 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 mean much, Kamarck said.
“They have no authority whatsoever,” she added, noting that the president’s support could convince lawmakers to back efficiency efforts.
What have Musk and Ramaswamy said about federal spending?
Musk, the world’s richest person 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 more than 400 to 99.
“There are so many agencies that people have never heard of that have overlapping responsibilities,” Musk said earlier this month.
While campaigning alongside Trump, Musk also said he could cut “at least $2 trillion” from the annual budget. “Your money is being wasted, and the government’s Department of Efficiency will fix that,” Musk said.
Musk is known for cutting costs at his own companies most of X’s workforce after buying the company two years ago and focusing on production costs at Tesla. Yet these efforts have produced mixed results: X’s valuation has fallen by about 80% since his purchase. Tesla’s stock price has risen 48% in the past year, pushing its value above $1 trillion.
Ramaswamy, who Forbes says has a net worth of about $1 billion, dropped out of the presidential race in January after runs on an “anti-woke” campaign. He also advocated government cuts by eliminating the Department of Education, a goal shared by President-elect Trump.
Have governments tried to reduce costs before?
Yes, both Republican and Democratic presidents have made attempts to cut government spending.
In 1982, President Ronald Reagan created the Grace Commission, headed by wealthy businessman J. Peter Grace, the CEO of WR Grace & Company, a chemical company. About 150 businesspeople volunteered for the commission, which ultimately recommended 2,500 reforms, according to the Ronald Reagan Presidential Library.
“Most of the recommendations, especially those requiring legislation from Congress, have never been implemented,” the library notes. “However, the Commission’s work provided a starting point for much conservative criticism 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 included officials who understood the bureaucracy, many of whom had frustrations with it, she added.
The group had some successes in streamlining operations and cutting costs, ultimately cutting more than 300,000 jobs, according to a Congressional Research Service study. Kamarck noted that the group also focused on integrating technology across 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?
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 look at efficiency improvements.
Eliminating Medicare fraud is one area that could lead to savings, according to Citizens Against Government Waste, a nonpartisan group that looks at government spending. The recommendations also include reducing the country’s contributions to the UN and ending subsidies for some agricultural products, such as dairy and sugar. The expected savings: $377 billion in the first year, or about 19% of the $2 trillion Musk is targeting.
But efficiency goes beyond cost savings, Kamarck noted. It’s also about understanding how bureaucracy works,
“Everything in the federal government is big and complicated, and there are layers and layers of complexity,” she noted. “Al Gore and I relied on hundreds of experienced officials to tell us how this worked – and if you don’t do this, which I don’t think they will because Musk is an arrogant billionaire, you will fail.”
Does Musk have conflicts of interest?
Yes, as Musk’s SpaceX is working with the Defense Department and NASA, with the federal government pledging $3 billion to his companies last year, according to the New York Times. Tesla, meanwhile, has been investigated by the National Highway Traffic Safety Administration and other agencies.
Federal employees are generally required to disclose their financial assets and entanglements to ward off potential conflicts of interest, and to divest significant interests related to their work. Because Musk and Ramaswamy would not be formal federal employees, they would not face these requirements or ethical restrictions.
contributed to this report.
