Republicans will regret Elon Musk’s efficiency project
11/15/2024 23:38
The federal bureaucracy is sprawling because Congress wants it that way. Elon Musk won't change that.
An enduring myth of Washington, DC is that Republicans want to slash government spending. In reality, they’re happy to trim here and there, but this is mostly a smoke screen to justify keeping taxes as low as possible. They also back huge amounts of defense outlays and want to keep all the pork flowing to hundreds of congressional districts and the patrons who fund their campaigns.
Elon Musk is about to call their bluff.
President-elect Donald Trump’s new ally is set to run an outside commission on government efficiency to identify ways to slash government bloat, axe hundreds of thousands of bureaucratic jobs and cut trillions in spending. Then he will present his findings to Congress, which will find all the usual reasons to do nothing and look the other way.
Musk, of course, performed the same type of bariatric surgery at Twitter, the social-media network he bought in 2022 for $44 billion. He executed mass firings, changed the name to X, alienated users and advertisers and hacked nearly 80% off the company’s value. That’s not a great model for a business turnaround. But the government isn’t a business, and it doesn’t need to turn a profit. So Musk seems like the perfect guy.
Joining him will be Vivek Ramaswamy, the biotech entrepreneur who’s adept at lecturing libs and normies about everything they don’t know. Their project will be called the Dept. of Government Efficiency, which is supposed to be funny because the acronym is DOGE, which is also the ticker symbol for Elon Musk’s favorite memecoin.
Two software engineers created dogecoin in 2013 as a kind of spoof of crypto products drawing buyers and investors despite having no inherent purpose or value. Dogecoin should be worth nothing, but it’s actually worth some $50 billion, in large part because of Musk’s promotion. The joke seems to be that Musk’s fix-government project evokes one of the most hyper-inflated assets in financial history, akin to the government, hahaha.
But it could end up being that Musk’s DOGE, the Dept. of Government Efficiency, will have no inherent value, either.
Musk and Ramaswamy seem to think they’re the first people to try to streamline the US government. They’re not even close. The Congressional Budget Office has a longstanding list of “options for reducing the deficit” that Congress routinely ignores. Dozens of think tanks have blueprints for streamlining government, including one from Manhattan Institute budget expert Brian Riedl that we discussed in detail recently on the Yahoo Finance Capital Gains podcast.
President Barack Obama appointed a bunch of experts to produce the 2010 “Bowles-Simpson report,” one of the most earnestly overlooked documents in American history. President Bill Clinton launched the “reinventing government” initiative, doomed to obscurity once ardent budget geeks tried branding it as ReGo. The 1986 Packard Commission actually led to some changes in defense procurement, but critics argued that it created more problems than it solved.
Musk, Ramawsamy and their patron Trump think they’ll apply entrepreneurial moxie to succeed where so many others have failed. No doubt they’ll highlight massive inefficiencies and probably hundreds of billions of dollars in federal expenditures that could be better spent on something else or simply returned to taxpayers.
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If the US government were a private-sector company, McKinsey or some other slasher consultancy could probably downsize it by 50% with no impact on output. Duplicate agencies could be consolidated or killed, bureaucrats replaced with automation, outdated processes whiz-banged up to speed with artificial intelligence.
What Batman and Robin are bound to discover, however, is that the US government is nothing like the for-profit enterprises they’re used to manhandling. Uncle Sam has a board of directors with 535 members, each member of Congress having claim to some piece of turf in the executive branch, and the funding that comes with it.
They’ll also discover that voters didn’t really ask for more government efficiency. It’s wildly inefficient to have a post office in every town, live humans to answer inane questions at the Social Security office—and federal land agents riding around on horses. But taxpayers want these services. A cardinal rule of politics is that you’ll pay a heavy price if you take something from your constituents that they’re accustomed to having.
Musk and Ramaswamy aren’t elected politicians and they won’t pay any price if Congress enacts their plan. But members of Congress will, and from their perspective, the government is actually very efficient. That's because it provides every member with a little fiefdom, and sometime a big one, which they oversee and fund. Oversight and funding are the source of power in the US political system, and Congress built the massive executive branch in a way that optimizes the power of each member.
In a corporation, the CEO can exercise unbridled power to shape the organization as he or she wishes, as long as shareholders are on board. In the US government, Congress is the source of all funding, and the power of the purse is broadly dispersed. So when Team Musk presents its plan to X-ify the federal bureaucracy, it will basically be telling many members of Congress they need to cede power. Good luck guys!
The DOGE master plan is due by July 4, 2026. Trump says it will be “the perfect gift to America on the 250th anniversary of the Declaration of Independence.” That will also be three months before the midterm elections, so Trump’s fellow Republicans will be able to tell voters how they plan to follow Musk’s lead and cut dozens, maybe hundreds, of federal agencies. Then they’ll have to do it.
Don't Overly Get Excited.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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