Palantir Technologies Inc. PLTR co-founder Joe Lonsdale offered a sobering assessment of the Department of Government Efficiency initiative, suggesting that while $1 trillion in federal spending cuts might be achievable, further reductions would face significant hurdles.
What Happened: “The next trillion will be a lot harder,” Lonsdale said during a CNBC interview on Thursday, tempering expectations for the ambitious cost-cutting program championed by Tesla Inc. CEO Elon Musk. The initiative, which initially targeted $2 trillion in cuts, has recently scaled back its goals.
Lonsdale revealed that the effort has attracted significant talent, noting, “I know dozens of friends who are helping out in various ways—brilliant engineers and lawyers working day and night.” However, he emphasized that government resistance and bureaucratic obstacles would make deeper cuts challenging.
The discussion gains particular significance as President-elect Donald Trump‘s team plans to integrate DOGE into a second administration.
Why It Matters: Lonsdale, who previously attempted similar efficiency initiatives during the former President Barack Obama‘s administration, shared a cautionary tale: “Obama even verbally agreed to let us do it back in the day but then his people stopped it from going ahead; wasn’t politically useful to find all that for some reason.”
Analyzing potential savings areas, Lonsdale identified fraud reduction, entitlement reform, and elimination of unused government buildings as promising targets. However, he expressed skepticism about substantial defense spending cuts, citing strong bipartisan support in Congressional committees and national security considerations.
The initiative’s evolution reflects growing attention to government efficiency as Trump has appointed Musk to lead a commission auditing federal agencies. This alignment of technology leaders with government reform efforts marks a significant shift in approaches to federal spending reduction.
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