Artificial Intelligence’s Verdict
“I think we can [cut] at least $2 trillion” from federal spending, said Elon Musk at a political rally this past October. He now has that task, as head of the newly created Department of Government Efficiency, better known as DOGE.
Rekenthaler – “Dear ChatGPT, is it fair to say that there is no way that DOGE can save anything close to $2 trillion by firing federal employees?”
ChatGPT – ‘Yes, it’s fair to say that.”
At this point, I could conclude. However, as I did the research before asking that question, I will show my work, thereby pleasing math teachers everywhere. Also, I will explain at the end how this deception serves the purpose of a second, greater deception.
The Federal Budget
Let’s begin at the top, by reviewing the 2024 federal budget. The federal government spent $6.75 trillion in fiscal-year 2024. (Federal revenues were far less, at $4.92 trillion. The public quite reliably elects politicians who dispense free candy.)
Seven sources consumed $5.3 trillion of those expenditures: 1) Social Security, 2) debt payments, 3) Medicare, 4) the Department of Defense, 5) Medicaid, 6) the Department of Veteran Affairs, and 7) the Department of Education. The rest consist of miscellaneous payments, many of which are federal-to-state transfers.
(Note: Social Security costs are $1.448 trillion, rather than the $1 trillion figure that appears on the chart. The discrepancy owes to a glitch in the graphics software, which will soon to be fixed.)
The Executive Branch’s Portion
Hold on a moment, you might say. (I hope that you do.) This is all fine and dandy, but doesn’t the Constitution specify that Congress, rather than the executive branch, “provide[s] for the Defense and general Welfare of the United States”? Surely Congress is responsible for those costs, not the Presidency.
You are correct. The Constitution does give Congress fiscal authority, and consequently it holds most of the purse strings. For example, Social Security payments lie outside the Presidency’s grasp, as do Medicare/Medicaid coverage, and weapons purchases.
Musk, therefore, controls only the administrators – the civilian employees who oversee the expenditures that have been authorized by Congress. Although sprinkled among all departments, most work in what broadly may be termed areas of national security: Veterans Affairs, Homeland Security, the Army, Navy, Air Force, and Defense.
(The United States Postal Service is larger yet, but it occupies a different category, since by legislation signed by President Nixon the agency operates independently of the executive branch. That law hasn’t prevented President Trump from threatening to privatize the Postal Service, but since the USPS collects almost as much revenue as its spends, such an action would have little fiscal effect.)
In total, there are 2.4 million such employees, who earn an average of $150,000 in total annual compensation. (Most of the positions are white collar.) That makes for $360 billion of the $6.75 trillion.
Obviously, Elon Musk will not fire them all. Current estimates are that he has terminated 30,000 workers, another 75,000 have accepted buyouts, and perhaps 200,000 more are on the cutting block. If so, that combined loss of 300,000 jobs would remove $45 billion from the federal payrolls. Whoop-de-do.
Of course, nobody (including Musk himself) knows what the final layoff figure will be. As ChatGPT writes, though, the potential savings from the cutbacks cannot and will not be remotely close to $2 trillion.
Leaner Each Year
Underlying Musk’s promise is the assumption that the federal government is hugely overstaffed. Hmmm. Broadly speaking, federal civilian employment – that is, the workers controlled by the executive branch – has remained constant over the past half century. Specifically, it was flat until Bill Clinton took office, declined during his administration, and has since risen modestly.
The chart below shows the evidence: The number of federal workers since 1975, not counting the United States Postal Service. (Adding the Postal Service to the analysis wouldn’t change the picture, as today’s USPS employs slightly fewer people than it did 50 years ago.)
This picture, however, is incomplete, as the US population has grown markedly over that time. A better way to measure the relative size of the federal-civilian workforce is as a percentage of total employment. The next exhibit does just that, by dividing the previous chart’s figures by the total number of US workers each year (technically, the total number of Nonfarm Workers, per the Bureau of Labor Statistics).
This illustration somewhat modifies the earlier conclusion. While Bill Clinton was the only President before now to cut federal headcount in absolute terms, his predecessors did so in relative terms. The pattern therefore becomes 25 years of gradual relative decline, followed by 25 years of flat-lining.
The Underlying Issue
DOGE is old wine in a new bottle. During the entire era covered by the article, Republicans have lobbied for cuts in taxes and federal-government spending, suggesting that the latter will compensate in savings what the former costs in revenue.
That promise has never been fulfilled, for two reasons. The main one has been addressed by this article: Federal government expenditures are a relatively small target. The amount of savings that are required to pay for major tax cuts can only come from slashing Congressional funding for Social Security, Medicare, defense, and the like. That has always been true, and is even more true today, because in percentage terms, executive-branch spending is at a 50-year low.
The secondary reason has also been mentioned: although Republicans have attacked the size of the federal government’s payroll, until now Bill Clinton’s Democratic administration been the only one to pare its headcount. (In several ways, including passing NAFTA, reducing federal employment, signing an anti-crime bill, and running a budget surplus, Bill Clinton was a distinctly Republican President.)
By now, you should know where this is heading. Both Donald Trump and the Republican-led Congress are determined to extend 2017’s Tax Cuts & Jobs Act, which would forego more than $4 trillion in revenues over the ensuing decade. The DOGE initiative was thus a feint to convince voters that those monies could be painlessly recaptured, rather than coming from programs that the public cherishes.
The truth will be otherwise. As the tax cuts will almost certainly be extended, because both President Trump and the Republican-led Congress advocate for their continuation, either 1) the federal deficit will grow, 2) social-welfare programs will shrink, or 3) a combination of both.
The third option appears most likely, as the House narrowly passed a budget resolution that would offset the tax cuts with $2 trillion (there’s that number again) of Congressional savings, measured over that same 10-year period. (For technical reasons, that $2 trillion would need to come mostly from Medicaid coverage.)
In summary, Elon Musk deceived the public by overwhelmingly misstating the amount of money that could be saved by cutting federal headcount, and he made that statement in service of a second deception, which is that extending the 2017 tax cuts could be done easily by reducing government “waste.”
That’s a hoax, twice over.
Around the World
Here’s a trivia question for you. I recently took a round-trip flight that never went west. The first leg went east, and then when I returned to New York I also flew east. What was my destination?