The Daily - Two Billionaires’ Big Plan to Shrink Government

Episode Date: December 4, 2024

Elon Musk and Vivek Ramaswamy have called the federal bureaucracy an “existential threat to our republic.” Now, President-elect Donald J. Trump is empowering them to drastically shrink it, by whatever means necessary.David A. Fahrenthold, an investigative reporter for The New York Times, discusses their plans — and what it would look like if they were actually carried out.Guest: David A. Fahrenthold, an investigative reporter for The New York Times.Background reading: The so-called Department of Government Efficiency has advantages that past budget cutters did not, but laws and court challenges could still make change slow and difficult.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.

From the New York Times, I'm Sabrina Tavernisi, and this is The Daily. Your money is being wasted, and the Department of Government Division is going to fix that. Elon Musk and Vivek Ramaswamy have called the federal bureaucracy a, quote, existential threat to our republic. We're going to get the government off your back and out of your pocketbook. Now, President-elect Trump is empowering them to drastically shrink it, by whatever means necessary.

America is going to reach heights that it has never seen before. The future is going gonna be amazing! Today, my colleague David Ferenfold examines their plans and what it would look like if they actually carried them out. It's Wednesday, December 4th. So David, you've been doing some reporting on plans by Elon Musk and Vivek Ramaswamy to cut government to the tune of $2 trillion. You're trying to understand exactly what this effort is and how it would work. Tell me what you're finding.

Well, we're talking about this thing called the Department of Government Efficiency. Those of you who are on the internet may know that that's a meme. It's named after a funny dog meme that Elon Musk likes. And a cryptocurrency apparently. And a cryptocurrency that's named after the funny dog meme. Now, there's no thing in the government called the Department of Government Efficiency, but it is something that President Trump has pledged to set up once he takes office. And what they're talking about is kind of a hybrid setup where there would be people outside the government, Vivek Ramaswamy and Elon Musk, these sort of advisors on the outside

taking no government salary, holding no government position. And then a bunch of folks on the inside, people who actually would work for the government, Musk has described them as sort of committed, smart government, you know, budget cutters. And together, their goal is pretty massive. They talked about, as you said, cutting about $2 trillion in the federal budget. You know, the numbers like that can get kind of abstract with that size, but what that really means

is about a third of the federal budget they wanna cut. And they also wanna make huge cuts to regulation, to the number of regulations, to the size of the regulatory state. Now, it's important to note that there is fat in the federal government, there is potentially room to cut it. But the thing they're taking on it's really not just in numbers, but in sort of effort is going to be a massive task. So basically very, very big promises. But you know, to be kind of real about this, I think anyone who stood

in line, the DMV could get behind the idea that a more efficient government, as they say that they want to make, makes sense. I mean, you know, efficiency is a hard concept to argue with, right? Right. It's hard to argue with the idea that those government processes could be made more efficient. And on paper, Elon Musk is a really good person to put in charge of efficiency. He has many areas of success, but the thing that he has done best over his career is process engineering. Taking a process like assembling a car, assembling a rocket, building a thing, and making that process run faster, smoother, cheaper. I mean, the way he changed the assembly

process for Teslas particularly, and for SpaceX, there's a reason why his companies build those things faster than others. So he is a great expert in efficiency, at least in that kind of efficiency, sort of manufacturing efficiency. In fact, this whole thing, the whole doge, I mean as you could probably tell from the name, this is Elon's idea. Donald, great to speak. There was actually a recording of it happening. Musk is interviewing Trump in August on X, Musk's social media platform. I think it would be great to just have a government efficiency commission that takes a look at

these things. And Musk says, hey, you know, I think we should have this commission. And I'd be happy to help out on such a commission. I'd love it. Well you you're the greatest cutter I mean I look at what you do you walk in you just say you want to quit Then Trump says oh, yeah sure we'll do that So this is Musk's idea and so he's the one who sort of planted this idea and he's really focused on it since Trump Was elected I appreciate it. I'll see you soon. All right. Sounds good. Thank you Thank you, Elon. Thank you very much. And then Vivek Ramaswamy this partner in this is somebody who briefly ran for president It seems like a million years ago

But a year ago was running for president and he talked a lot on this campaign trail about also cutting government how to make government smaller So they're really focused on this idea of efficiency. But listen, the question for all of us looking at this effort is what do they mean by efficiency? And that's an easy question to define when we're talking about making a car, but what exactly does it mean when you're talking about government?

Right, like how do these two people take the private sector idea of efficiency of this process engineering and map it on to the federal government. There are, of course, risks to this, right? If you make a mistake at Twitter and it goes offline for a day, not really that big of a deal, but if you do it with air traffic controllers, planes could collide. What's the plan here?

It seems to me, honestly, like they are still figuring this out themselves, but to the degree that we know their plan, they spelled that out in an op-ed in the Wall Street Journal last month. And they laid out a few different ways that they say they would go about sort of beginning to identify and then make the right cuts. And the sort of theme underlying it all was that government is run by what they call unelected bureaucrats, meaning federal workers. They're going to find a way to take power back from those folks and return it to the people.

Which is kind of a little rich. I mean, power back to the people, it's basically to them, right? So power back to the business people. Right. We're in a situation where a couple of very rich people are sort of putting themselves in the place of identifying what the people want. Right. But they are working for a president who just won.

So maybe they have a little more claim to it now than they would have a few months ago. Right. OK. So what are they actually saying? What are they going to do? Well, there's a few different ways they're going about this, but the most important thing I think we need to start with is the idea that they want to cut regulations first, federal rules first, and that once you cut rules, then you can start to cut people and spending. And the way that they're going to start by cutting rules is using a Supreme Court decision called Loper-Brite. It basically strikes down something called Chevron deference.

We're deep in the legal weeds here, but this is important. So the reason it's called Chevron is it's named after a case in which Chevron was a party back in the 80s. And the idea that the Supreme Court laid out in the 80s was that if a federal agency makes a rule, it takes an idea that Congress laid out and then sort of makes it more specific, promulgates a rule for people to abide by. If somebody challenges that rule and says, hey, this rule is wrong or it doesn't comport with what Congress wanted, that the court should defer to the judgment of the agency. The idea being that the agency has experts that they may know better than the courts, that they should defer to the judgment of the agency. The idea being that the agency has experts that they may know better than the courts,

that they should defer to the judgment of the agency unless it's really egregious. So the power of the federal government is kind of present there because the court defers to what the federal agency says the rule is. But SCOTUS changed that in the past few terms. They did. So the Supreme Court got rid of that and what they said instead was, no, courts should just be able to use their own judgment. The agencies don't deserve any sort of special deference that if somebody challenges a rule in court, that the court should be able to use their own judgment about whether that rule was reasonable or not without going from a starting point that the agency might be right.

So the way that Musk and Rameswami want to use this is to say, okay, well, now we're going to go back into federal government and with the help of the folks who work inside government, we're going to identify a whole bunch of rules that we believe are wrong. Now that we think there's more freedom to challenge federal rules, we're going to find all kinds of federal rules we think are overreaching or don't follow the original intent of Congress or unconstitutional. And we're just going to start identifying those and tell President Trump, hey, stop enforcing these rules.

Don't enforce them. And we'll start the formal process to take them off the books. And that once you stop enforcing rules and start taking those rules off the books, their idea is, well, you won't need as many federal workers to enforce those rules because there's less rules to enforce. And you won't need as much spending because there'll be fewer workers to pay for. So basically their argument is that they have this magic wand that they can just wave and stop enforcing federal regulations. What else do they say they're going to do? That was sort of the main thrust, the idea that you know you

cut regulations first and other cuts are downstream of that. But they had a couple other ideas for cutting the federal workforce. And their plans here really kind of run the gamut. They refer to a plan where the president could just lay off huge numbers of federal employees across the board. There are civil service protections that prevent individual employees from being fired for their political beliefs or other reasons, but they believe the president could just simply shut down an agency. They also float some kind of more creative efforts that would make employees quit so they wouldn't have to be fired.

One is to make federal workers come back into the office five days a week, ending what they call the sort of unnecessary post-COVID privileges. And the other was to relocate federal agencies out of Washington. I think about 85% of federal workers don't work in Washington, but there are a lot, obviously, who are here in Washington where I am. President Trump can use executive action to say, okay, the headquarters of this agency is no longer Washington, it's somewhere else, and trust that a lot of people won't want to relocate and so the federal workforce will decline in the process of moving them.

Got it. And then finally, they say they want to look around the federal government to cut wasteful spending. That means both cutting entire programs, spending programs that they don't agree with. It also means trying to make existing programs like Medicare or the Pentagon run more efficiently by finding and cutting waste or fraud. Okay. So it sounds like an op-ed, right? Here's how I'll cut the federal government in five easy steps. It'll be so quick, so easy. It's funny you say that. Actually, Fox News interviewed Elon Musk's mom, May Musk.

May, it's great to have you with us. It's great to be here because I watch your show. Who has been sitting in some of these meetings. His mom. Yeah, Elon Musk's mom is part of this, and she was saying... He wants to chop the bureaucracy. I take it he's excited about doing that, isn't he? Very excited because it's going to be very easy.

It's going to be so easy. It's going to be so easy to do. And I'm very proud of him. I can't imagine what it would be like to be his mother. There was actually another element of this. Vivek Ramaswamy posted a picture on Instagram over Thanksgiving with like one of his kids napping in his lap and he's reading a report on how to cut the federal budget. So you know, the vibe from them has been, this is going to be fun, this is going to be easy,

it's going to be bigger than you think, you know, just we can't wait to get started and we're going to make such huge progress. But we have seen lots of administrations try this. Honestly, the history of just this one idea about how to cut the budget, which is you get some very successful businessmen from outside the government, bring them in and help them, you know, with their fresh eyes, they'll see how to run government like a business. The first person to do that was Theodore Roosevelt. Ronald Reagan made a big effort led by this industrialist named Peter Grace.

He had this huge commission that produced like 2500 separate recommendations to cut the budget. More recently, we had Al Gore trying to reinvent government in the 90s. And then, you know, I was covering Congress in 2010, 11, 12, when the Tea Party wave of Republicans came in, they were all about cutting the budget, getting the government down to the right size. It's been tried again and again and again in the last hundred plus years. And often, it doesn't happen. Now, there are reasons to think this time might be different. There's never been anybody like Elon Musk at the head of one of these commissions.

Nobody is rich or powerful. Nobody is close to the president. So those are all reasons to think that Doge is going to have more luck than these other previous efforts. That said, it's pretty clear that Doge is about to run more luck than these other previous efforts. That said, it's pretty clear that Doge is about to run into some pretty big hurdles of its own. We'll be right back. So David, you said that many past presidential administrations have tried but failed to do what Doge is attempting. Tell me about the obstacles that these two are likely to run into. Well, I think the best way to start, Elon Musk, because he wants to cut $2 trillion

out of the 6 point something trillion federal budget, so about a third of the federal budget. If you zoom out, think about what are the biggest chunks of the federal budget? Where does that money go? And the first is about a third of the budget goes to two programs, Medicare and Social Security, two programs that provide income security and health care for older Americans. Now, those are things that Republicans have targeted a lot in the past. Remember the Paul Ryan years, a lot of people wanted to cut Medicare and Social Security. Trump's innovation, the thing that he did that no other Republican did was that he said, no, we'll never cut those things.

In fact, it says it in the Republican Party platform this year, Medicare and Social Security will not be touched. So you're putting those two giant programs off the table. They're not going to be touched. So, okay, a third of the federal budget already off limits. That's right. And beyond that, if we put Medicare and Social Security off to the side, we're not going to touch those.

Another big chunk, about 13% of the budget goes to national defense. And that's, you know, all the armed forces, all the contracts to people who supply things for the armed forces, you know, which by the way, includes Elon Musk's SpaceX, they have contracts to shoot satellites up in the air for the Air Force. Right. So it's really unlikely that Trump is going to make major cuts in that area. If you look at his governing record from his first administration, the military budget went way up and Trump tried to make it go higher than even than it did. So he's somebody who has said a lot, he wants the military to be strong, he wants to spend

a lot of the military. I don't sense a lot of appetite from him to shrink the military budget in any sort of significant way. Nor presumably would Musk want to cut contracts that he himself receives from the federal government. That is also part of this. So what else are we talking about here that's off-limits? Well, it's important to note that we are running huge budget deficits as a country and that a lot of the federal budget, about 10%, is just paying interest on money we already borrowed. So nobody's excited about this spending.

Nobody gets any benefit out of this spending. But we already agreed to pay these debts. And if you stopped paying interest now, you'd save a lot of money for about five minutes and then the country would default and the interest rates would go up and the economy would be shattered. It would not help any of Trump's political goals to stop paying interest on the debt. Okay. So more than half of the budget is essentially off limits right off the bat. What does that leave for this Department of Government Efficiency to actually cut?

Well, in theory, it gives them a still pretty broad range of things to cut within the federal government. The part that remains outside those programs we talked about earlier is everything from Medicaid and veterans benefits to the State Department to the Education Department. You know, there's a lot of different federal agencies and federal programs that in theory could be out there to be cut. But the problem they're going to run into is Congress. That's the problem these efforts always run into.

The reason the government spends money on these things in the first place is because Congress told them to. And so now to cut them, you need Congress to undo that effort. And sometimes that happens, but what has been proven again and again is that even small, seemingly small programs have a constituency in Congress. And you're going to need those folks to sign off to get rid of them. And often it doesn't happen. You know, I covered the Tea Party Congress in 2010, 2011, 2012, when there was a huge amount of effort. There'd been this big wave in Congress, all these people elected to cut the budget. They were explicitly running on

the idea that budget was too big, we had to cut things back. And one of the things I did at that time was write about these tiny little programs that seemed like the easiest possible things to cut. What's an example? Well, so my favorite one was the National Sheep Industry Improvement Center. Sheep, as in sheep the animal? Sheep, to improve the sheep. It paid for sort of contests that rewarded people who were good at shearing sheep, for trips for people in the sheep industry to take, you know, trips around the country.

Definitely seems non-essential. Yeah, it's like a million dollars. So it was sort of like, you know, in theory, the easiest thing to cut. And so at the time I was writing about this congressman from Florida, the Republican from Florida, it was sort of like a Mr. Smith goes to Washington thing, except, you know, the stakes were much, much smaller. Yeah. He just wanted to get rid of the National Sheep Industry Improvement Center.

Okay. But they were people who really like the Sheep Improvement Center, the places that have a lot of sheep, Texas, Montana, they like the money. And why wouldn't, you know, if they're going to be giving out money to everything else, why wouldn't they fight for some of that money to come to this industry they care about in their state? And so it didn't work. He failed. So even the like lowest hanging fruit, the thing you think nobody would miss, somebody

would miss it. And it didn't go away. So if you can't cut the sheep improvement center from the federal budget, you're probably not going to be able to cut a big hunk out of, say, Veterans Affairs. No, even the education department. That's been something that's been identified as like, well, obviously we've got to cut the education department. But a lot of what it does is provide grants to schools, school districts and schools all over the country. And so there's a lot of people on both sides of the aisle that like it, because the people in their district

benefit from it and don't want to lose that aid. Right. So I'm not saying this to tell you that it's impossible to cut the budget or the budget shouldn't be cut. I'm just saying that it's not one fight. It's a million little fights. And if you're going to cut the budget or the budget shouldn't be cut. I'm just saying that it's not one fight. It's a million little fights. And if you're going to cut the budget on a broad scale, you have to not only find these programs but also find and convince or bully the people in your way, the people that are defending these programs into letting them go. So even the stuff that seems quote unquote easy is a lot of work. And it's presumably much harder if you're an outsider and not an insider who knows how Congress works.

Absolutely right. And that has been the downfall of these outsider efforts in the past, is that they don't really understand how Congress works and that they want congressmen to act against their own interests. And it's even more difficult now in a Congress that is so narrowly divided where only a few votes going the other way could doom any idea. So, it's very hard to cut government programs. You have shown that amply. But beyond the programs, what about cutting the federal workforce itself?

We first need to know sort of the size of the federal workforce. It's about 2.3 million civilian employees. That sounds like a lot, but it hasn't actually changed that much in decades. What has changed is the number of outside contractors that do work for the federal government. If you come here to DC, that's what's transformed the DC area, brought all this wealth to the DC area, is there's huge numbers of federal contractors doing all kinds of federal jobs, sometimes jobs that seem like they should be done, you know, sort of clerical office work jobs that should be done by the agencies themselves. So that makes it a hard problem. It's not just that you can shut down this department

as hard as that would be. If you're gonna really shrink the amount of money you spend on federal workers, you're gonna have to go through the hard work of auditing contracts, figuring out which ones are duplicative, which ones you actually need. Now this is an area where I think Musk and Rameswamy

have not really answered a basic question, which is why are you cutting the federal workforce? Are you doing it because you want to save money? Is that the goal? Are you doing it because you want to reduce sort of the deep state, the like liberal influence over Washington? Are you doing it because you think the government does things that it shouldn't do? This is how far apart those two are. Musk has been calling out on his Twitter account, individual government employees who he thinks their jobs are too woke. You know, look at this person, you know, who works for this department on this woke thing. They shouldn't work for the government anymore. But firing that person is not

going to change the federal budget in any meaningful way. Right. So you're maybe following your political agenda, but you're not really doing the main work, which is making government more efficient. Yeah, you're not going to cut two2 trillion firing one person at a time. Ramaswamy, on the other hand, has been sort of like the machete approach to government. He's talked about we should fire everybody who works for the government whose social security number ends in an odd number. So just like one of those dramas where everybody just vanishes one day, like, you know, like

this like a rapture, we're going to rapture the government employees and one day only half of them will be there. So there's no sense that we're going to continue delivering the same services. It's just, let's cut for cutting's sake. So until the two of them can get on the same page about what they're cutting and why they're cutting, that does leave some questions about their ability to deliver any sort of significant reduction to the federal workforce. Okay, so bottom line, very difficult to make cuts anywhere near the scale that Musk is talking about. Cutting the budget and even the size of the federal workforce will be

very hard. But what about this idea of reducing government regulation? This is clearly what animates Musk. That's what got Musk into this. He runs a lot of businesses that are regulated by the federal government. He runs a lot of businesses that are regulated by the federal government. And he regards a lot of those regulations as standing in his way, standing in the way of progress. He often says standing in the way of getting humanity to Mars. And when he talks about, you know, what will this DOGE committee do, he often talks about things that affect him personally. You know, I'd like to get rid of this regulation that slows down my rocket launches or that

inhibits this tunnel I'm digging somewhere. So, you know, I'm not saying that he gets into this only to sort of clear the way for his businesses, but when he talks about what makes him mad about government and why he's so animated about this, it's clearly the regulations that impact him. So that makes sense for him to say regulations is the place we're going to start. So remember that so much of their plan revolves around using this court case that ended what we called Chevron deference. And so their argument here is that now there's all this new power in the executive branch

to basically stop enforcing rules you don't agree with. But the problem with that argument is that according to the legal experts we've talked to is it is 100% wrong. Okay, how? Well, remember that the essence of that decision was it took power that had been given to the executive branch, the federal agencies, and gave it to the courts. The courts now have the power to strike down these regulations if they feel like they have overstepped the bounds.

Right, and they don't have to defer to the federal government. Exactly. It doesn't do anything to say that the federal executive branch can decide to do that. In fact, it takes power away from them. So basically, they're claiming a right and a power not to enforce regulations that is nowhere in that court decision. And in fact, they probably have less power to ignore rules or reinterpret rules than they did before because that power is now in the courts.

Right. I do think that that court case will lead to a lot more deregulation, but it's going to happen slowly, one court case at a time as courts sort of roll back those rules. It's not going to happen all at once because the president decides he doesn't want to start enforcing rules he doesn't like.

So their central argument of how they're going to pull off this efficiency thing kind of doesn't hold water. That's right. They have lofty ambitions. They have a lot of confidence, and they have some very high-level ideas about what they want to cut. But this is not something that can be done with high-level ideas. This is going to take a lot of detailed, focused effort, a lot of political effort, and we haven't seen yet that those elements are present.

And of course, do they even agree among themselves on all of this stuff? I mean, as you described here, it doesn't sound like they're all going to be rowing in the same direction. Look, I think the most important thing to remember about all this is the finite quality of all this is going to be attention and energy, both Musk's energy, Ramaswamy's energy, probably most importantly, Donald Trump's energy. Remember when Trump takes office, he's promised to do all kinds of things that are going to be disruptive in Washington. They're going to produce controversy, and they're going to take energy, time, and effort

to make work. He's talked about mass deportations, a deportation like we haven't seen in decades. He's talked about tariffs, huge tariffs on a lot of different countries and possibly trade deals. There's a lot of disruption he's promised. And in among all this, Elon Musk and Vivek Ramaswamy are gonna try to make a very disruptive change in the size of the federal government. The question for me is when the rubber hits the road on these cuts, when they recommend big cuts to different agencies or to things that congressmen

wanna fight for, is Trump gonna have the energy and the inclination to join that fight, to lend him some of his presidential energy and power? Or is he going to be focused on other things? But as you said, we do have a budget deficit crisis. The country could benefit from addressing it. This is a hugely important conversation. Just in the last few years, we've added 12 trillion dollars to the national debt. We spend, as I said, more than 10% of the federal budget every year just paying off the debt for money we already borrowed. Whatever you

think the size of the federal budget ought to be, I think the country would benefit from a real serious significant conversation about what it spends money on and an effort to try to make that more efficient, to try to spend the least you can to get the services you want. So given all of that, David, what's the best case scenario here? I mean, in terms of what Doge might actually get done? I think the best case scenario is that Elon Musk really dives into one of these like really thorny, ugly, complicated federal government, you know, bureaucracies and finds a way to

make it more efficient. Think about finding waste in Medicare where there's billions of dollars lost to waste. Think about auditing the Pentagon, although the Pentagon is one of its customers. But if there was a way to sort of shrink the wasted money and duplication at the Pentagon, you could really make a huge difference, not just in the budget, but at the functioning of the federal government. I think that's the best case scenario is that someone really digs into one of these supposedly unsolvable problems that make the government so big and inefficient.

But the worst case scenario here is that Trump or Musk get distracted, they get bogged down, they don't change very much. But the small things they do change, they make a huge deal out of. And people see that, see, you know, a cut of a few million dollars here, even a few billion dollars here, things that sound big, but are actually pretty small in the context of the federal government, that they see those kinds of changes. And they think, oh, the problem was fixed. Donald Trump fixed this problem.

When in reality, the problem wasn't fixed. It was just sort of kicked down the road for somebody else to deal with. In other words, this just becomes another chapter in the government's struggle to contain the problem. That's right. David, thank you. Thanks for having me on. We'll be right back. Here's what you should know today.

South Korea, one of America's closest allies in Asia, descended into political chaos on Tuesday after its president, Yoon Suk-yool, imposed martial law, and then, just hours later, the country's National Assembly, in a swift rebuke to the president, voted to lift it. Yoon, a deeply unpopular and divisive leader, accused the opposition of, quote, trying to overthrow democracy. It was the first time a South Korean president had declared martial law since the military dictatorship ended in the country in the late 1980s.

The move drew peaceful protests in Seoul, the capital, and over the course of a tense night eventually backfired. Before the sun rose on Wednesday morning, the president had backed down and rescinded his martial law declaration. And, Donald Trump's transition team announced that it had belatedly signed an agreement with the Department of Justice that will allow the FBI to conduct background checks on people Trump intends to appoint as senior officials in his new administration. FBI background checks have long been a routine part of transitions. But Trump, who is hostile to the FBI because of its role in various criminal and counterintelligence

investigations into him, had let weeks pass without signing the agreement. Today's episode was produced by Eric Krupke, Rob Zipko, and Astha Chaturvedi. It was edited by MJ Davis Lynn and Michael Benoit with help from Paige Cowitt, contains original music by Marian Lozano and Rowan Niemesto, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsherk of Wonderly. That's it for the Daily. I'm Sabrina Tavernisi. See you tomorrow.