Photograph Source: Myotus – CC BY-SA 4.0
Back when Elon Musk was just getting his “Department of Government Efficiency” (DOGE) off the ground, he was boasting that he would eliminate $2 trillion in annual spending that was waste. That’s almost one-third of the federal budget. Needless to say, this was not a serious target, but Elon Musk is also someone who claimed that 20 million people over the age of 115 are getting Social Security benefits. Numbers are not Elon’s strong suit.
Anyhow, he quickly backed away from his $2 trillion, saying this figure might have been too high, but he would save us $1 trillion a year. More recently, Musk lowered his DOGE savings to $150 billion a year. That would be a bit more than 2.0 percent of annual spending, but still a considerably chunk of change.
However, even this $150 billion figure looks to be a huge overstatement, as a New York Times article documents. When it came to actually documented his savings, $92 billion — more than 60 percent of the claimed savings — are not even itemized. That gets us down to $58 billion, about 0.7 percent of the federal budget (and 2.9 percent of his original target) that Musk can actually identify.
But even here there are all sorts of exaggerations and errors. The largest single item was a $2.9 billion contract for housing migrant children. But this was not a firm commitment, and the money would likely have never been spent even without DOGE. The second largest item on the DOGE list is a $1.9 billion contract with the I.R.S. that was actually cancelled under Biden. The third largest item was a $1.75 billion grant to a vaccine non-profit. This grant was already paid in full, so Musk didn’t save us a penny.
As the Times piece shows, Musk’s “Wall of Receipts” is shot full of these sorts of ridiculous errors, claiming savings on money that was already paid, and hugely exaggerating the expected cost of cancelled commitments. This sort of error-ridden accounting may past muster at Tesla, but it’s not good enough for government work.
Musk has made a big show of laying off government workers on short notice and threatening them with dismissal over trivial affronts. That has terrorized and demoralized the federal workforce. That might be good fun for the world’s richest person, but it doesn’t do much by way of saving taxpayers’ money.
Many of the people he is laying off are still on the payroll, but let’s say he has gotten rid of 20,000 federal employees with his chainsaw. If we assume average compensation of $100,000 a year, that will save us $2 billion a year, or roughly 0.03 percent of the federal budget and 0.1 percent of Musk’s original $2 trillion claim.
As a practical matter, Musk actually doesn’t have the power to save us anything. Congress appropriates money which the president is obligated to spend. Trump could put in requests for recissions to Congress so that he doesn’t have to spend money previously approved, but he has not yet done so.
Many of the organizations who have been victims of Elon’s chainsaw are suing to get money that was already committed by the government. Contracts may not mean anything to Donald Trump, but they do still matter to the courts.
Similarly, many of the workers who Elon has tried to fire are suing. They have both civil service and union protections.
We don’t know how the courts will rule on these issues, but we may see rulings that negate the bulk of Musk’s claimed savings. In this case, Musk will have very little to show in the savings department, even though he may have run up substantial bills for unnecessary court cases.
We also will face a situation where we end up paying for work that doesn’t get done. This is likely to be a major issue at many agencies, most visibly the Social Security Administration (SSA). The agency, which serves more than 70 million beneficiaries, was already severely understaffed before Musk went after it seeking blood. Now wait times have increased enormously as people often have to wait hours to get errors fixed or address changes recorded.
Musk may not care about the quality of service SSA provides, but the vast majority of us non-billionaires do. We can always save money by effectively shutting down important programs like SSA, but no elected representative from either party would suggest something so absurd.
If we expect SSA to actually function as it should, we may end spending more because of Musk and DOGE boys. We may have to hire back far more staff and offer higher salaries since they now have to worry about some idiot coming after them with a chainsaw.
SSA is not the only major agency where we are likely to see a major hit to the quality of service as a result of Elon’s antics. He also crippled the I.R.S. This will mean longer wait times for those of us asking questions about our returns and probably slower processing of our refunds. More importantly, he gutted the staff of auditors, the folks that check over returns from billionaires like Elon to make sure they are paying what they owe. If we make taxes voluntary for the rich and very rich, we will see tax revenue plummet.
Musk also went after regulatory agencies that he felt were hurting his businesses. This meant cutting staff and firing the leadership and the National Transportation Safety Board, which was investigating Tesla car crashes, and tearing apart the files of the National Labor Relations Board, which would supervise union elections at his plants. This chainsaw whacks may not save taxpayers any money, but could help to boost profits at Musk’s companies.
But Musk’s DOGE boys went further. He, along with Trump, decided to eliminate the I.R.S.’s Direct File program. This was a simplified return that allowed most taxpayers to file quickly and save hundreds of dollars that might otherwise be paid to tax preparation companies. Musk’s move here will cost taxpayers tens of billions in fees, as well as millions of hours of anguish, but it will mean higher profits for his friends at TurboTax and H&R Block.
Musk’s favors for the financial industry go further. He is nixing the Consumer Financial Protection Bureau (CFPB), which has returned tens of billions of dollars to the public in its decade of existence. Perhaps more important than the money that it got back is the money that it saved consumers by preventing them from being ripped off in the first place.
The CFPB is just about a textbook case of efficiency for both the government and the economy. There are plenty of very smart lawyers and accountants who can think of clever ways to rip people off, if they devote their skills to that task. The point of the CFPB was to make these rip-offs unprofitable, so banks won’t try to develop exotic schemes to charge depositors fees and credit card companies won’t develop bizarre penalties to nab unsuspecting users.
If the paths for profit from ripping people off are blocked, then these clever lawyers and accountants might instead turn their skills to something productive. Apparently, Elon didn’t want this, since he made “deleting” the CFPB a top priority. It seems he is looking to get his social media site involved in finance in a big way and he doesn’t want a government agency looking over his shoulder and keeping him honest. We don’t how much Elon will cost us with this deletion, but it’s likely in the tens of billions annually.
At this point we aren’t in a position to determine the ultimate savings and costs from DOGE. Much will depend on what the courts decide and what Congress eventually ratifies. But it seems likely that the costs from DOGE’s destruction will far outweigh any savings. The $2 trillion in savings is obviously an illusion, but that is about par for most of the promises of the Trump presidency.
This first appeared on Dean Baker’s Beat the Press blog.
