President-elect Donald Trump‘s appointed DOGE or the Department of Government Efficiency could potentially save $50–100 billion annually, according to Congressional Budget Office (CBO) analyses, said Mario Georgiou, CFA and executive director, head of investments at InCred Global Wealth U.K.
What Happened: Georgiou said that DOGE “tasked with cutting wasteful spending, could play a role in improving fiscal discipline, but the scale of potential savings is expected to be modest.”
The U.S. federal budget deficit could reach $1.7 trillion in 2024, entailing mandatory spending on Social Security and Medicare, which accounts for over 60% of expenditures, Georgiou said. “Even if the DOGE achieves its objectives, potential savings are estimated at $50–100 billion annually, according to Congressional Budget Office analyses, which would have only a marginal impact compared to total federal outlays of approximately $6.7 trillion in 2024,” he added.
However, Tesla Inc. and SpaceX CEO Elon Musk who will co-lead DOGE with Republican politician Vivek Ramaswamy had called for “at least $2 trillion” in budget cuts last month while speaking at a rally in New York.
On Wednesday, Musk and Ramaswamy outlined their vision for DOGE, “The two of us will advise DOGE at every step to pursue three major kinds of reform: regulatory rescissions, administrative reductions, and cost savings,” the duo wrote in a WSJ opinion piece on Nov. 20.
Why It Matters: In their opinion piece, the duo said “DOGE will help end federal overspending by aiming $500 billion-plus in annual federal expenditures that are unauthorized by Congress or being used in ways that Congress never intended.”
Musk and Ramaswamy aimed a few expenditure programs along with $300 million provided to the other “progressive groups.” They mentioned $535 million allotted to the Corporation for Public Broadcasting and $1.5 billion in grants to Planned Parenthood annually.
Discretionary spending—where most inefficiencies and “waste” are typically identified, “constitutes a smaller portion of the budget and offers limited opportunities for impactful cuts,” Georgiou added.
Musk and Ramaswamy highlighted that several federal contracts have gone unexamined for years. They suggested that a temporary suspension of payments would facilitate comprehensive audits, resulting in substantial cost savings.
“The Pentagon recently failed its seventh consecutive audit, suggesting that the agency's leadership has little idea how its annual budget of more than $800 billion is spent.”
“We are focused on delivering cost savings for taxpayers,” the duo said in their piece.
Musk and Ramaswamy swiftly defended their stance on cutting the budgets of a few entitlement programs. “Critics claim that we can't meaningfully close the federal deficit without aiming for entitlement programs like Medicare and Medicaid, which require Congress to shrink. But this deflects attention from the sheer magnitude of waste, fraud, and abuse that nearly all taxpayers wish to end,” they added.
Image via Wikimedia Commons
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