DOGE

Answer: DOGE is an acronym for Department of Government Efficiency and a tip of the hat to one of Elon Musk’s favorite cryptocurrencies, Dogecoin. DOGE isn’t an official government department but rather an advisory committee to be run by two of past and future President Donald J. Trump’s close allies. These gentlemen are financière and former Presidential candidate Vivek Ramaswamy and businessman Elon Musk, known for Tesla, SpaceX, and X Corp (formerly Twitter). The two will co-head the Department of Government Efficiency (DOGE).

Musk has announced plans to cut $2 trillion from the $6.75 trillion federal budget. DOGE members believe that excessive spending and inflated government employee headcounts are the primary causes of government bloat and inefficiency. Naysayers are leery of the $2 trillion number, but Musk does have a strong track record of improving efficiencies; just look at his companies and the acquisition of Twitter, now known as X, for proof.

Addressing the fiscal deficit is a complex task. One place to start is by reducing government expenditures. Unfortunately, most estimates suggest that in 2024 and 2025 the deficit will approach $2 trillion. This would be the highest it has ever been, even if the $3+ trillion deficit of 2020 in response to the COVID-19 pandemic is excluded.

In a Wall Street Journal submission, Musk and Ramaswamy outlined examples of “federal overspending” starting with $1.5 billion in annual grants to overseas groups, and billions of dollars spent annually on maintaining unused government buildings. The current Federal government payroll is about 23.4 million which includes federal, state, and local government employees. Of this, roughly 10% are in administrative roles most susceptible to replacement by Artificial Intelligence (AI). 

Governments pass regulations to correct particular issues. These regulations sometimes outgrow their useful life or were implemented to fix something that is no longer a problem. Often, those regulations remain on the books indefinitely, keeping government employees on the payrolls to enforce them. These issues happen more times than we’re willing to acknowledge. A large part of government excess is attributed to these outdated regulations.

Our political system appears to have serious problems making the necessary changes to the regulatory environment as the economy changes. DOGE will make recommendations on how to increase efficiency and reduce expenditures.

As outside advisors, Musk and Ramaswamy will work with Trump to provide a list of outdated regulations and recommend guidance on spending cuts. Trump can then decide whether to continue enforcing those regulations or begin the process to review and rescind.

The goal of DOGE is clear: to cut costs and reduce waste. During a closed-door meeting with incoming Senate Majority leader, South Dakota Republican John Thune, Musk said, “I think we should be spending the public’s money wisely.” Recalling that Ramaswamy’s Presidential campaign pledged to reduce excess in the Education Department, the FBI, and the IRS, Musk and Ramaswamy will be focused on reducing bureaucracy. Ramaswamy explained that Elon “doesn’t bring a chisel, he brings a chainsaw,” and “we won’t just write reports or cut ribbons. We’ll cut costs.” 

Built in Obsolescence

DOGE has an expiration date of July 4, 2026. Trump said, “A smaller government, more efficiency, and less bureaucracy will be the perfect gift to America on the 250th Anniversary of the Declaration of Independence.” 

DOGE advisors won’t receive compensation, and according to Musk, they’ll be  “devoted to unglamorous cost cutting and not take salaries; this will be tedious work, make lots of enemies, and compensation is zero.” The motivation is to get the job done and move on rather than stay in place to collect a salary. 

The idea of federal bureaucracy and spending controls isn’t new. President Ronald Reagan established the Grace Commission in 1982, a private-sector organization tasked with recommending cost-saving proposals. The Clinton Administration had the National Performance Review effort in the 1990s which saved over a billion dollars and cut 250,000 people from federal payrolls. 

Musk intends to recommend cutting one-third of government spending. Roughly two-thirds of the total budget is mandatory compiled of programs such as Social Security and Medicare. Shockingly, Independent Senator Bernie Sanders of Vermont said, “Musk is right, reducing ineffective government spending should not be a partisan issue. The Pentagon, with a budget of $886 billion, just failed its seventh audit in a row. It’s lost track of billions.”

DOGE offers hope for improved efficiency by suggesting remedies intended to correct wasteful spending, streamline government operations, and eliminate unnecessary regulations. This sounds like a reasonable request. Stay focused and plan accordingly. 

Source: FactSet, data as of 12/5/2024