One of the campaign promises made by President-Elect Trump was a new Department of Government Efficiency or DOGE. Trump has tapped two successful businessmen in Elon Musk and Vivek Ramaswamy to head the effort. Trump has also said that the efforts of Elon and Vivek will allow his administration to dismantle the government bureaucracy and cut wasteful spending. How much waste there is in Washington is unknown, but many believe it is significant. While the two appointed leaders would dig into the details and come up with recommendations for Trump, it’s unlikely Musk and Ramaswamy would have the power to restrict spending since all federal spending is under the purview of Congress.
Where is the Waste, Fraud, and Abuse?
Why scrutinize federal spending now? Because the federal government is spending over $7 trillion and collecting $5 trillion. With a federal budget shortfall of over $2 trillion and a national debt over $36 trillion, why not now? If the status quo is permitted to continue, this heavy debt burden will pass to subsequent generations and will become unmanageable. To get an idea of the amount of waste, fraud, and abuse in Washington, let’s refer to the following chart. It shows the estimated waste, fraud, and abuse as a percentage of each department’s budget.
According to the G.A.O., the Department of Treasury has the greatest percentage of waste, fraud, and abuse at 23.87% of the department’s budget. This is followed by Labor at 11.68%, Veterans Affairs at 10.33%, Agriculture at 9.76%, and HHS at 8.87%. The numbers also reveal there is less waste as a percentage of the budget in Defense, Small Business Administration, HUD, Social Security Administration, and Transportation. When you add the amount of waste, fraud, and abuse in all 12 departments, the total is $209.6 billion.
Earlier this year Elon Musk said he believed he could find about $2 trillion in wasteful spending. The estimate of $209.6 billion from the G.A.O. is approximately 3.0% of current spending and just over 10% of Musk’s estimate. Therefore, Musk and Ramaswamy must find another $1.8 trillion in cuts to reach their goal of $2 trillion.
What could be on the chopping block? Some believe the federal government will put an end to remote work, although it’s hard to estimate the cost savings from such a move. Some federal employees moved out of D.C. during Covid, assuming they could continue to work remotely. If remote work ceases, they may decide to seek employment elsewhere or retire. While this may save some money, it’s unlikely it would amount to much. Expired government programs that are still receiving funding are another target. According to Ramaswamy, there are more than 1,200 programs that have expired but are still receiving federal funding. Cutting these programs could save an estimated $500 billion per year.
The idea of cutting a full $2 trillion from the federal budget is not without its skeptics. Critics suggest that the discretionary part of the budget is about $1.7 trillion and that the rest of the spending is required by law. Even if all discretionary spending was eliminated, reaching $2 trillion would require an additional $300 billion in cuts to programs that are required to be funded by law. It’s more likely that budget cuts would be spread across the board rather than concentrated in a few departments.
Technology will likely play a role. As the federal government incorporates more technology – including A.I., some of the approximately three million federal workers could lose their job. This has many wondering about their future. Cracking down on tax evasion using A.I. is another way to help close the budget gap by boosting federal revenue.
How did we get here? For decades, politicians were hesitant to address the issue of overspending since spending has been a key ingredient in election and reelection campaigns. This is one reason it’s been difficult to unseat an existing member of Congress at election time.
The Republican rout on November 5, 2024, is seen as an example of Americans standing up to the fiscal folly of the left. What will Trump do? The mood in the country seems right for this type of action and with the landslide election results, Republicans now have a mandate to get the nations fiscal house in order. If they fail, the financial burden thrusted upon our children and grandchildren will be enormous.
Stay tuned for more.