Donald Trump is vowing to reduce wasteful federal spending by tapping two billionaires — Tesla CEO Elon Musk and entrepreneur Vivek Ramaswamy — to spearhead the initiative, which the president-elect is calling the Department of Government Efficiency, or 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 in federal outlays, given that Congress authorizes the nation’s spending, as well as where the businessmen might look to cut spending. Under the plan, meanwhile, DOGE is not an official government department, raising questions about how its powers and how it will operate.
The announcement comes a week after Trump won a second term as president, with voters expressing their dissatisfaction with the economy under the Biden administration. As part of his campaign vows, Trump promised to slash government spending. Musk’s bio on X, the social media platform he bought in 2022, now reads, “The people voted for major government reform.”
“Frankly, it does need to be done again, so every few decades you really need to look at everything,” Elaine Kamarck, a senior fellow in governance studies at the Brookings Institution who managed the Clinton Administration’s National Performance Review, an effort to cut government spending in the 1990s, told CBS 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 — almost one-third of the federal government’s $6.7 trillion in annual spending. Two-thirds of that spending is mandatory through programs including 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 didn’t immediately respond to a request for comment.
Here’s what 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 “slash excess regulations, cut wasteful expenditures, 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 during the last month, and now trades at 38 cents.)
Trump said Musk and Ramaswamy’s work “will conclude no later than July 4, 2026,” or by the 250th anniversary of the Declaration of Independence.
Trump only outlined the initiative’s contours and didn’t disclose how it will be staffed or funded. The Trump campaign didn’t respond to a request about the DOGE’s funding or whether Musk or Ramaswamy will be paid for their work on the effort.
Can the DOGE actually cut federal spending?
At the moment, that appears unlikely given that the DOGE isn’t a real government department, which would need to be created by congressional approval. Federal spending is authorized by Congress, and senators and House representatives may hesitate 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’s also not clear how the organization will operate. It could come under the Federal Advisory Committee Act, which dictates how external 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 of government.”
That doesn’t amount to much, Kamarck said.
“They have no authority — none whatsoever,” she added, while noting that the backing of the president can help convince lawmakers to throw their support behind 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 U.S. government as bloated and said it its spending is unsustainable. The Tesla founder also said he wants to reduce the number of federal agencies to 99, down from more than 400.
“There are so many [agencies] that people have never heard of, and that have overlapping areas of 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 being wasted, and the Department of Government Efficiency will fix that,” Musk said.
Musk is known for cost-cutting at his own companies, slashing most of X’s workforce after he bought the business two years ago as well as focusing on manufacturing costs at Tesla. Even so, those efforts have had mixed results, with X’s valuation falling by about 80% since his purchase. Tesla’s stock price, meanwhile, has surged 48% in the past year, bumping its value above $1 trillion.
Ramaswamy, whom Forbes says has a net worth of about $1 billion, dropped out of the presidential race in January after running on an “anti-woke” campaign. He also advocated for government cuts by eliminating the Department of Education, a goal shared by President-elect Trump.
Have administrations previously tried to cut costs?
Yes, both Republican and Democratic presidents have created efforts to cut government spending.
In 1982, President Ronald Reagan created the Grace Commission, led by wealthy businessman J. Peter Grace, the CEO of W. R. Grace & Company, a chemicals business. About 150 business people 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, were never implemented,” the library notes. “However, the Commission’s work provided a starting point for many conservative critiques of the federal government.”
In the 1990s, President Bill Clinton created the National Performance Review with the goal to create a government that would work better and cost less, Kamarck said. The group was staffed with civil servants who understood the bureaucracy, and many of whom had frustrations with it, she added.
The group had some successes in streamlining operations and paring costs, eventually cutting more than 300,000 jobs, according to a study from the Congressional Research Service. Kamarck noted that the group also focused on integrating technology into 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 he can cut $2 trillion in spending, they also point out there are opportunities to look at efficiencies.
Eliminating Medicare fraud is one area that could result in savings, according to the Citizens Against Government Waste, a nonpartisan group that looks at government spending. Its recommendations also include reducing the nation’s contributions to the U.N. and ending subsidies for some agricultural products, like dairy and sugar. Its projected savings: $377 billion in the first year, or about 19% of the $2 trillion that Musk is eyeballing.
But efficiency goes beyond cost-cutting, Kamarck noted. It’s also about understanding how the bureaucracy works,
“Every single thing 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 civil servants to tell us how this worked — and if you don’t do this, which I suspect they won’t because Musk is an arrogant billionaire, you will fail.”
Does Musk have conflicts of interest?
Yes, as Musk’s SpaceX works with the Department of Defense 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, as well as by other agencies.
Federal employees are generally required to disclose their financial assets and entanglements to ward off any potential conflicts of interest, and to divest significant holdings relating to their work. Because Musk and Ramaswamy would not be formal federal workers, they would not face those requirements or ethical limitations.