Elon Musk, after several months of relentless trimming of government contracts, workers, leases, and grants, seems to be wrapping his head around a fact that budget gurus have always been privy to: His frequently touted purpose of slashing $1 trillion from the federal budget solely through executive policies is an incredibly challenging task. During a cabinet gathering this week, he seemed to table a toned-down objective, revealing his anticipation to secure savings around the $150 billion mark.
The original lofty goal of $1 trillion always seemed implausible for a cogent reason: The fraction of the budget Musk aimed at for cost-savings was projected to be only about $950 billion the following year. Extracting $1 trillion from this segment of the budget would bring spending in this category to an utter standstill. This includes near-total elimination of nondefense governmental employees, a large portion of veterans’ healthcare infrastructure, and all expenditures on medical R&D conducted via the National Institutes of Health. The deficit would still persist.
According to Zack Moller, the chief of the economic program at Third Way, a moderately progressive research institution, ‘To cut trillion in expenditures is not just about detecting and eliminating wastefulness, deceit, and abuse. It implies a profound reimagination of the government’s role in the United States.’
Under Musk’s decree, his Department of Government Efficiency (DOGE) can only slice out of this sub-portion of the budget, barring cases involving immigration enforcement and public safety. The Federal budget, obviously, exceeds the $1 trillion mark. However, a mix of political preferences and legal snags has kept Musk and his team from encroaching significantly into larger categories of government expenditure.
The Armed forces could perhaps be an easy target for finding cost reductions. Being a massive chunk of the budget, with its leaders acknowledging room to economize and its primary saving strategies — annulment of contracts, termination of grants, and reduction of government employees, mirroring the methods employed by Musk’s team. However visibly, President Trump doesn’t appear inclined towards shrinking this area of spending. His executive decree segregating Musk’s officials from this area corroborates this.
While Defense Secretary Pete Hegseth has lauded Musk for detecting some profligacy in the budget, he announced his intent to reallocate any saved funds. The Trump administration has even rubber-stamped a recent budget outline advocating an enlarged defense budget.
However, some of the budget’s heftiest fragments have been explicitly safeguarded. President Trump has on multiple occasions assured he will not alter Social Security or Medicare, two of the largest federal spending categories. Although Musk has initiated modifications to the staff distribution of these programs and aspires to purge fraudulent activities therein, he has refrained from amending the baseline benefit architecture, where the lion’s share of expenditure occurs.
Douglas Holtz-Eakin, a previous director of the Congressional Budget Office and current president of center-right economic advisory group the American Action Forum, remarked, ‘The proposition of Musk locating a trillion dollars for cutbacks within the programs he’s mandated to prune is inherently unfeasible. That’s outright far-fetched, given he cannot meddle with mandatory spending, which is the real money sink.’
Holtz-Eakin went on to add that even if the administration aggressively sought an equitable reduction of all budgetary sections, a one-year precipitous curtailment of one trillion dollars would wreak serious havoc and upheaval on the budget.
Musk’s financial maneuverability is further limited by another significant area of expenditure, — the interest payments on the federal debt are forecasted to exceed a trillion dollars next year, which outweighs the government’s allocation for Medicare or the military. Even monumental reductions in spending could not realistically offset these pre-existing interest commitments within just a year.
Also contributing to the challenge are burgeoning bond yields, which remain largely outside Musk’s jurisdiction. These could further skew the financial dynamics.
Musk’s recently rendered projection of saving $150 billion by next year is identical to DOGE’s calculation of the savings already achieved. However, there seems to be dubious accuracy in this figure.
There’s no exhaustive detailing of these savings provided by Musk’s team, and the segments on its website that do disclose specific cutbacks have been rife with discrepancies, redundancies, and substantial inaccuracies. Thus, the validity of the claimed savings remains questionable.