A pair of fiscal conservatives expressed disillusionment with Elon Musk's efforts to cut federal spending through his Donald Trump-authorized Department of Government Efficiency.
The tech mogul promised to slash the federal budget by eliminating entire agencies and dramatically culling the government workforce, but New York Times columnist David French and the Manhattan Institute’s Jessica Riedl don't think his savings will come close to offsetting Republicans' proposed tax cuts.
"In the short term, soaring borrowing will push up inflation and interest rates," Riedl said. "In 2021 we all saw how the American Rescue Plan that Joe Biden enacted pushed up inflation that was already on track to be a little high coming out of the pandemic. That plan added about three more points to the overall inflation number. That also pushes up interest rates."
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"In the long term, it’s even worse," she added. "With our debt reaching levels higher than we’ve ever seen in the developed world, you will eventually get to the point where Washington can’t even borrow enough money to pay for its spending. That will then force the government to go to the printing press, and then you have all sorts of problems. We want to stop the train before we get to that point."
DOGE has claimed to have saved $55 billion, but Riedl said the real number is closer to $2 billion – at best.
"Even that $2 billion may not ultimately happen because technically speaking, DOGE cannot impound and unilaterally reduce federal spending," Riedl said. "Any spending cuts legally have to be reprogrammed elsewhere unless Congress goes in and reduces the spending levels. So right now I would say DOGE has saved $2 billion, which, to put it in context, is one-thirty-fifth of 1 percent of the federal budget, otherwise known as budget dust."
The GOP-led House last week narrowly passed a version of a budget resolution that consists of $4.5 trillion in tax cuts over 10 years, which they intend to offset with massive cuts to entitlements.
"They’re also indicating they’ll offset this with cuts to Medicaid, SNAP and other nutrition spending, and likely student loans," Riedl said. "I’m skeptical that Congress can actually pass this. If they don’t, it will be a $4.5 trillion cost over 10 years. The budget also promises discretionary savings far into the future, but there’s nothing enforcing that and there’s no reason to take it seriously. The budget also assumes a huge growth in tax revenues from economic growth. That is more of a gimmick. It’s not going to happen."
French was dumbfounded.
"It’s been a while since I’ve had a math class, but it sounds like what you’re saying is they’re cutting $2 billion for savings but they’re adding $4,500 billion in deficit. It’s $2 billion versus $4,500 billion. Those are very, very different numbers," he said.
Riedl said the savings that would come from dismantling much of the government workforce, as Musk says he intends to do, would be negligible.
"There are 2.3 million civilian employees," she said. "If we eliminated one quarter of them — which would be remarkable, that would be laying off nearly 600,000 workers and not replacing them — you would save 1 percent of federal spending. The savings aren’t large. You’re not going to fix the deficit, even if you eliminate a quarter of federal employees. And I want to be careful because yes, we should reduce federal employment if we have extraneous employees or if they’re not doing a good job or if the agency should be shut down. Even one dollar in waste and unnecessary spending is too much."
"But if the goal is to reduce spending, you’re not going to get there by firing federal employees," Riedl added. "Most government spending goes to benefits to us, not to administrative costs."
DOGE cuts have disrupted federal operations throughout the government, but Riedl said they're not doing much to address the nation's long-term fiscal challenges.
"I would call what DOGE is doing 'government spending-cut theater,'" she said. "The targets they’re going after are not where the money is. D.E.I. contracts, Politico Pro subscriptions, federal employees, foreign aid. Some of it is essentially a rounding error, but they are targets that hit a lot of cultural touchstones for a lot of conservatives. DOGE is really a distraction from the spending increases and tax cuts Congress is really doing right now."