Preparedness for an unwanted revelation awaits the DOGE supporters
It was 1982, and President Reagan's Grace Commission embarked on a mission to eliminate hundreds of billions of dollars worth of unnecessary expenditures.
Similar to Donald Trump's proposed "Department of Government Efficiency," led by entrepreneurs Elon Musk and Vivek Ramaswamy, the Grace Commission lacked the power to implement changes, only to suggest them.
Following several years of labor, the Grace Commission's 150+ members managed to convince Congress to pass zero of their proposed changes.
As Douglas Holtz-Eakin, President of the center-right think tank the American Action Forum, stated to CNN, "There's no evidence that the growth of the government was impacted in the slightest by the Grace Commission." While the group did achieve minor successes, Holtz-Eakin questioned, "What sets Elon and Vivek apart from the Grace Commission, and what makes them any different than other unsuccessful ventures?"
Throughout 2024, as in 1982, there's an overwhelming consensus that the federal budget is excessively large and in need of a fresh perspective to improve efficiency and save taxpayers' money. Economists across the political spectrum expressed support for any sincere effort to reduce the deficit and address excessive spending. However, Musk and Ramaswamy appear to be struggling with the complexities of the $6.8 trillion US budget.
"We keep trying to view the federal budget as if we were managing a household budget at home," Holtz-Eakin, a former advisor to John McCain's 2008 campaign and budget chief under George W. Bush, stated. "But that's a fallacy... It's a significant slice of our economy, and it's incredibly difficult to manage and restructuring it."
The mathematical challenge
Musk and Ramaswamy will face an immediate challenge in finding a way to significantly reduce spending, especially if they commit to the $2 trillion reduction figure Musk has mentioned.
Approximately 60% of the federal government's budget is dedicated to what's known as mandatory spending - primarily healthcare programs like Medicare, Medicaid, and Social Security. It's politically impractical to drastically cut funding for these safety-net programs, making Congress uninterested in pursuing such changes. Trump has even pledged to protect Social Security.
An additional 10% of the budget goes towards paying off the country's debt. Modifying this allocation is also inadvisable without risking debt default and a subsequent market collapse.
This leaves around 30% of the budget that is discretionary; however, half of that is allocated to defense spending, another area difficult to substantially reduce.
"Reducing $2T in annual spending will be a formidable task without a reduction in mandatory spending, which would necessitate difficult choices from Congress that they have either been unwilling or unable to make," Isaac Boltansky, Director of Policy Research at BTIG, concluded in a recent report to clients.
Non-defense discretionary spending is already at record lows as a percentage of GDP, according to Moody's Analytics Chief Economist Mark Zandi. As a result, Zandi was skeptical that focusing on government efficiency could generate even $200 billion in annual savings, let alone $2 trillion. (Musk mentioned he could achieve at least $2 trillion, but he failed to specify if he meant annually or over a longer period.)
"I'm all for efforts to improve government efficiency," Zandi claimed. "But there's no game-changing 60-yard touchdown here. It will be many short gains instead."
A two-pronged approach
In a Wall Street Journal op-ed last month, Musk and Ramaswamy presented a broad strategy to tackle the $500 billion+ in unauthorized or misused annual government expenditures.
However, the question remains: How can they achieve this goal?
There is a procedural method, although it may not be legal, for the President to disregard Congress' allocation of funds. This practice is known as impoundment.
"My confidence that Musk and Ramaswamy's proposals will make it through Congress is relatively low," Bobby Kogan, Senior Director for Federal Budget Policy at the Center for American Progress, commented. "However, my confidence in their intention to act illegally, unilaterally, is extremely high."
Trump has openly expressed his intention to challenge the Nixon-era legislation restricting the President's ability to block funding for approved Congressional projects. Musk and Ramaswamy also share this view, stating in their op-ed that the Supreme Court would likely rule in Trump's favor.
A spokesperson for the Trump transition team failed to respond to a request for comment.
Impoundment's exact implementation remains uncertain. Gingrich, the former House speaker and an advisor to Trump, suggested a two-pronged strategy. They would first ask Congress to approve substantial spending cuts, while simultaneously testing the limits of their power to rescind funds unilaterally.
For example, if the administration targeted federal funding to schools with vaccination requirements, as Trump has suggested, the move would likely be challenged in court by the involved school or local government. It would ultimately depend on the courts to uphold or overturn the decision, potentially leading to delays in the disbursement of vital funds for an extended period.
"I believe they'll probably lose some court cases, but this is a real path to chaos," Kogan concluded.
Despite Musk and Ramaswamy's plans to reduce unnecessary government expenditures, similar to the Grace Commission's efforts, they may face challenges in implementing changes due to the complexities of the federal budget.
The Grace Commission, which suggested hundreds of billions of dollars worth of savings, failed to convince Congress to pass any of their proposed changes.
(Or, The proposed changes by Musk and Ramaswamy, like those of the Grace Commission, could face resistance in Congress due to the intricacies of the budget.)
