Jefferson Smith, the clear-speaking everyman appointed to the Senate and sent to Washington as an unwitting political stooge in Frank Capra’s “Mr. Smith Goes To Washington,” didn’t expect to find corruption in the nation’s capital.
Smith, played by the Hollywood legend Jimmy Stewart, wanted to find what he deemed “plain, ordinary, everyday kindness … and a little looking out for the other fella, too.” Those traits, he said during his famous Senate filibuster in the 1939 classic, were the “blood, bone and sinew of this democracy.”
Elon Musk, the less-than-clear-speaking billionaire on his way to Washington as the co-head of President-elect Donald Trump’s newly created “Department of Government Efficiency,” is looking for something even larger.
— Elon Musk (@elonmusk) November 13, 2024
“I think we can do at least $2 trillion,” Musk told a crowd of Trump supporters during the former president’s late October election rally at Madison Square Garden. He’d been asked by a Trump loyalist, Cantor Fitzgerald CEO Howard Lutnick, what he could carve out of “the wasted $6.5 trillion Harris/Biden budget.”
“All government spending is taxation,” he claimed. “Your money is being wasted, and we’re going to get the government off your back and out of your pocketbook.”
‘All government spending is taxation,’ Elon Musk told a New York City rally last month. Last year, the government collected $4.92 trillion in taxes and spent $6.75 trillion on services.
Trump himself said the department, whose acronym DOGE matches a digital currency the Tesla (TSLA) CEO favors, will “drive large-scale structural reform and create an entrepreneurial approach” unprecedented in U.S. history.
Will Musk help ‘drain the swamp’?
It’s a familiar refrain and usually forms the bedrock of any presidential campaign (think “drain the swamp” or “Reaganomics”), but it hasn’t been entirely successful. Or indeed at all.
Trump’s own administration, in fact, oversaw a $7.8 trillion increase in the national debt from 2016 to 2020, despite his vow in an interview with Bob Woodward and Robert Costa of The Washington Post that he would eliminate debt through trade deals and growth “over a period of eight years.”
Government spending has been increasing virtually every year since the late 1990s, when it was tabbed at around $1.8 trillion, and is on pace to top $6.75 trillion in the government’s current financial year, which ends in September.
Related: Fed Chair Powell digs in for a fight as markets debate Trump economic plan
The bulk of that tally, however, is composed of the kinds of outlays that are exceedingly difficult to cut, given their political sensitivity and the fact that the lawmakers who agree to the reductions have to face the electorate soon after.
Social Security, Medicare, defense spending and veterans-benefits programs will gobble up more than $5.3 trillion of this year’s budget, and around $600 billion is allocated to paying the 19.6 million people the federal government employs to manage them.
In other words, Musk could fire 20 million federal government employees and still be $1.4 trillion short of his stated goal.
Finding $2 trillion from that simple equation is a riddle that has flummoxed generations of efforts in Washington, including a blue-ribband panel of lawmakers and company bosses created by former President Barack Obama in 2010.
Trump’s cost-cut plan: Simpson-Bowles 2.0?
Formally titled the National Commission on Fiscal Responsibility and Reform but better known as Simpson-Bowles, the 18-member group had proposed a series of cuts and changes to all the government’s sacred cows, Social Security included. The move would have trimmed public spending by $4 trillion over four years and slashed long-term government debt.
But the commission couldn’t get the supermajority of 14 votes needed to take the proposals to the president, who would then bring them to Congress, and the project faded into memory.
Musk, who famously slashed millions in costs from Twitter, the social media group he purchased for $44 billion and renamed X, vowed to be “very open and transparent and be very clear about this is what we’re doing” with the new cost-cutting department.
Related: Goldman Sachs analyst hints at big risk to post-Trump election rally
Setting aside the inefficiency of that statement alone, it’s worth noting that Musk’s spending cuts at X have created a platform that is significantly less-efficient than it was under its prior ownership. And it carries a market value less than half what Musk was forced to pay for it by a Delaware Chancery Court judge in 2022.
It’s also important to note that the Office of Management and Budget, the executive-branch division that is expected to work with Musk and the biotech investor Vivek Ramaswamy, lacks the force of law required to put any of his recommendations into practice.
Congress controls spending and the predicted narrow majority for Republicans in the House of Representatives will be reluctant to vote for big changes to favored-program spending when Musk’s report is delivered in July 2026. That’s because their reelection campaigns will begin only a few months later.
By that time, the Congressional Budget Office has projected, government spending will have topped $7 trillion and the broader government deficit will be knocking on the door of $2 trillion.
More Economic Analysis:
Jobs report shocker puts Fed interest-rate cut in playFed inflation report renews pressures, tests interest rate betsFed interest rate decision and election may roil stocks
And those figures don’t include the myriad tax cuts the president-elect has promised, nor the impact of tariffs and trade barriers on the nation’s overall receipts, which could tumble if Trump’s full economic agenda wins support in a Republican-controlled Congress.
Jefferson Smith, a Boy Scout leader of modest means framed falsely for corruption, fought for his political life, and public reputation, in a 25-hour filibuster that ultimately wins over his Senate accusers.
Lost causes, he declared, were the only ones worth fighting for.
Musk, the world’s richest man with leadership roles in some of the world’s most important companies, might not find similar motivation if his budget-slashing plans don’t find approval from the men and women who will be tasked with enforcing them.
Related: Veteran fund manager sees world of pain coming for stocks
