Elon Musk can’t steadiness the price range

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Elon Musk can’t steadiness the price range


That’s how a lot Elon Musk, co-chair of President-elect Donald Trump’s new “Division of Authorities Effectivity,” or DOGE, has stated he can reduce out of the annual federal price range. Musk and his associate Vivek Ramaswamy have prompt that they will obtain this via “mass head-count reductions throughout the federal paperwork,” by cracking down on spending “unauthorized” by Congress, and “large-scale audits” of federal contracts. Their goal wouldn’t be entitlement packages “like Medicare and Medicaid,” they are saying, however “waste, fraud, and abuse that almost all taxpayers want to finish.”

In case you might truly reduce this a lot, it might wipe out the US’s $1.9 trillion deficit and put the nation into surplus for the first time for the reason that 2001 fiscal 12 months. However let’s be clear: There is no such thing as a means in hell Musk and Ramaswamy are going to have the ability to determine $2 trillion in annual spending to chop, and so they definitely is not going to get wherever close to that quantity with out congressional motion.

To see why, seek the advice of this straightforward chart of projected federal spending in fiscal 12 months 2025, which started on October 1:

I’m utilizing the present fiscal 12 months, however you’ll see one thing comparable in any given 12 months. The most important single program is Social Safety (which I’ve grouped right here with its companion program, Supplemental Safety Earnings). Trump has promised he is not going to reduce 1 cent from Social Safety, in order that’s roughly $1.6 trillion out of the $7 trillion price range off the desk.

The subsequent-largest is curiosity funds on federal debt, collected from prior deficits. Musk’s America PAC has bafflingly listed this as a type of authorities waste, however failing to pay curiosity on previous debt would represent a US default and sure result in a nationwide, and doubtless international, monetary disaster and recession. Whereas we will scale back future deficits and pay much less curiosity sooner or later, we’re obligated to pay curiosity on debt we’ve already collected.

So there’s nothing to avoid wasting right here both. Already we’ve dominated out over a 3rd of complete spending.

Subsequent up is protection spending. Musk and Ramaswamy highlighted wasteful Pentagon spending of their Wall Avenue Journal op-ed, so this cash might face some cuts. However Trump massively elevated protection spending in his first years in workplace, and his congressional allies, like incoming Senate Armed Companies chair Roger Wicker (R-MS), have proposed trillions in extra spending to counter China. Trump’s angle towards the protection price range, as together with his angle on so many issues, vacillated wildly throughout his first time period, so maybe he’ll aspect with Musk and Ramaswamy and search to decrease protection spending. However that’s removed from assured.

If protection spending is off the desk, we’ve dominated out greater than half the price range.

So what would they seemingly reduce? They may look first to Medicare and Medicaid, that are chargeable for over $1.5 trillion. Musk and Ramaswamy insisted that these will not be their targets, however it’s laborious to see how they’d keep away from that. For one factor, there are locations the place Medicare particularly overspends the place policymakers in each events need to crack down; its follow of paying extra for care in hospitals than at smaller amenities is a main instance. For an additional, Trump proposed huge cuts to Medicaid final time period.

Then there’s non-defense discretionary spending, a grab-bag class that features all spending licensed via annual appropriations payments relatively than mandated by different laws. The most important class is transportation, which pays for issues like air site visitors management and nationwide highways. Subsequent up is veterans’ care and advantages. Help for science, public well being/analysis, legislation enforcement, and training (together with federal help for Okay–12 colleges) every obtain round or slightly over $100 billion yearly. This class has been reduce to the bone for the reason that 2010s as it’s, and it’s laborious to think about Musk and Ramaswamy going up towards veterans or cops.

Lastly, there’s different obligatory spending, not damaged out within the above chart however together with a wide selection of security web packages:

Large chunks of this really feel politically and virtually off-limits. Navy retirement and veterans’ advantages (which fall below each the non-defense discretionary and obligatory elements of the price range) appear politically inconceivable to chop, and even civilian worker retirements can be troublesome to chop again provided that staff have paid into these accounts themselves for years.

The Kids’s Well being Insurance coverage Program and foster care have lengthy loved bipartisan help. Trump and JD Vance have proposed increasing the kid tax credit score, making financial savings there unlikely.

That leaves packages like meals stamps, the Inexpensive Care Act medical insurance credit, and unemployment insurance coverage.

Let’s suppose that Musk and Ramaswamy determine to essentially go for it. They’re going to chop non-defense discretionary spending in half, possibly by shutting down all scientific and well being analysis and Okay–12 faculty help. They’re slashing Medicare and Medicaid by 1 / 4, and so they’re eliminating meals stamps, ACA credit, and unemployment insurance coverage solely. These, to be clear, are all cuts that might require congressional approval and that Musk, Ramaswamy, and Trump couldn’t obtain via govt motion alone. Moreover, they’re cuts that appear politically inconceivable to push via. For the sake of argument, let’s suppose that is the package deal.

Doing the mathematics, even this unbelievably bold package deal would quantity to slightly over $1.1 trillion yearly. It’s barely midway to Musk’s acknowledged aim.

The notion that the federal authorities is hopelessly bloated as a result of waste that each cheap individual desires to remove is an interesting delusion, however it’s a delusion. Authorities spending overwhelmingly goes to wildly well-liked packages like Social Safety, Medicare, Medicaid, veterans’ advantages, and the protection price range. You possibly can’t make a lot of a dent in it with out touching these areas, and when you contact them, you’re going to get immense backlash.

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