The Opinions - Elon Musk and the Useless Spending-Cut Theater of DOGE

Episode Date: March 5, 2025

As a fiscal conservative, the columnist David French would normally be excited about a Department of Government Efficiency and the opportunity to rein in spending. But Elon Musk’s approach to cost cutting has left much to be desired. In this conversation with the Manhattan Institute's Jessica Riedl, French reckons with what Musk and his department have wrought on the government, and argues that DOGE will do little to ameliorate the proposed tax cuts in the budget resolution recently passed by the House.This conversation was recorded on Friday, February 28.Thoughts? Email us at [e-mail] can find transcripts (posted midday) and more episodes of “The Opinions” at nytimes.com/column/the-opinions.This episode of “The Opinions” was produced by Jillian Weinberger. Edited by Kaari Pitkin and Alison Bruzek. Fact-checking by Mary Marge Locker and Kate Sinclair. Mixing by Carole Sabouraud. The show’s production team also includes Derek Arthur and Vishakha Darbha. Original music by Sonia Herrero, Pat McCusker and Carole Sabouraud. Audience strategy by Kristina Samulewski and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie-Rose Strasser.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

This is The Opinions, a show that brings you a mix of voices from New York Times opinion. You've heard the news. Here's what to make of it. I'm David French, an opinion columnist at the New York Times, and a fiscal conservative. At first glance, you'd think I would be excited for an initiative like Elon Musk's Doge. But I'm not. Even though I believe the federal bureaucracy could use some efficiency, I'm actually pretty appalled at what I'm seeing out of Musk and the Trump administration. So is my friend Jessica Riedel. Jessica is a fellow at the Manhattan Institute, and just like me, a fiscal conservative.

Jessica might be one of the nation's foremost experts about the federal budget and about America's fiscal realities. She has taught me an enormous amount about all of those issues. So I am delighted that Jessica is joining us for this conversation. Thank you. It's a pleasure. Thank you for having me. So let's just kind of level set here. You would think, as I just said, that if there was a Department of Government efficiency announced to get the budget under control, the growth of spending under control, that we would be really excited about this.

And so when you heard that Elon Musk was going to be forming and running Doe, You know, you have worked on Republican presidential campaigns in 2012 and 2016. You're at a conservative think tank. What was your first reaction? What were you hoping it would be? What were you fearing it would be? I was hoping that this would be the biggest war on government waste in decades. There's no shortage of spending to go after.

We have a $1.8 trillion deficit. Spending is growing. And you knew going in that don't. was not going to be able to negotiate the grand deal on Social Security and Medicare and taxes. That's going to be a bipartisan effort in Congress. But there is a lot of waste. You know, there's $191 billion a year lost to payment errors. The hope was that Elon Musk would use his technical expertise to open up the hood, dive into waste and overpayments, and finally focus us there.

That was the hope. So, well, let me ask you this, because few big-ticket initiatives have been more opaque than Doge. There is a lot of energy. There is a lot of activity. A lot is happening. It's been remarkable. We've had judges even ask government lawyers, who runs Doge, who is the administrator, how is this set up? And they don't have the answers. So what is Doge actually doing? You're right. It's a challenge. You know, for all. Doge's talk about transparency, they've taken offline parts of the federal budget. And a lot of what they're doing, we're learning by tweet rather than true government reports and tracking.

There is a website that supposedly shows $55 billion that have been cut so far. However, anyone who's looked into the wall of receipts has realized that most of what is claimed to be spending cuts are just accounting errors and that the real cuts are smaller. So we're trying to piece together what they're doing. We're all kind of guessing, but it's the most real for the people in Africa who aren't getting USAID aid, for the federal employees being laid off. It's very real for them. For the rest of us, it's piecing together from different sources. Well, let's take a minute and back up, because I had said at the beginning, I used a term fiscal conservative. That is not a term that is widely used much anymore.

So when I say fiscal conservatism, how do you define that? Yeah, I have long defined fiscal conservatism as wanting a smaller government that spends less money, focuses on the primary objective of government, and tries to keep taxes down, but still enough to fund the government and not push up deficits. So small limited government, less spending, but still no large budget deficits. That's exactly how I would see it myself. But I've never seen someone convincingly describe Donald Trump as a fiscal conservative. He's purely a populist. He's going to do the things that he believes that will be popular. How would you describe the fiscal approach of the Trump administration. What is their overall sort of fiscal philosophy? Yeah, I agree with you. The word I use

is populism. I think Donald Trump is a big government populist who reflects where the Republican Party is today. Today's Republican Party is older, lower income, more dependent on not just Social Security and Medicare, but programs like Medicaid and SNAP. But it also includes a lot of veterans who want veteran spending and a lot of people concerned about defense. So overall, you have a big government populist party. But what's interesting in this populism is, while they're definitely more comfortable with government spending than past Republicans, at the same time, they're accelerating the tax cut rhetoric. And as an economist, I look at it and say, something's got to give. If you're going to make the Republican Party a populist, big spending party,

you can't also be the party of bold tax cuts, or you get what happened in Trump's first term, which is $8 trillion in new borrowing just from the legislation he signed in four years. Something's got to give. Why do these deficits matter? Why do they matter to an average everyday American? In the short term, soaring borrowing will push up inflation and interest rates. And I shouldn't have to explain that too much because we saw. in 2021 how the American Rescue Plan that Biden enacted pushed up an inflation rate that was already going to be a little high coming out of the pandemic and added about three more points to it. This also is pushing up interest rates.

And in the long term, it's worse because ultimately, with the debt going to levels that have never been seen in the developed world before, you get to the point where Washington can't even borrow enough money to pay for its spending, which will then force the government to go to the printing press. And then you have all sorts of problems. We want to stop the train before we get to that point. So what is your best estimate about the Doge savings right now? Perhaps $2 billion, which they claim $55 billion. And even ultimately, that $2 billion may not happen because technically speaking, Doge cannot impound and unilaterally reduce federal spending. Right.

Any spending cuts legally have to be reprogrammed elsewhere unless Congress goes in and reduces the spending levels. So I would say right now, $2 billion, which to put in context is 1 35th of 1% of the federal budget, otherwise known as budget dust. Wow. So we just had the House very narrowly passed a version of a budget resolution. A couple of things. First, how much will this increase the deficit? And then second, what is in it?

Why will it increase the deficit? The budget resolution mostly consists of $4.5 trillion in tax cuts over 10 years. They're also promising to offset with cuts to Medicaid, snap, and other nutrition spending, and likely student loans. I'm skeptical that Congress can actually pass this. If they don't, you're up to a $4.5 trillion 10-year cost. Now, the budget also promises discretionary savings far into the future, but there's nothing enforcing that, and there's no reason to take it seriously. And the budget also assumes a huge growth in tax revenues from economic growth. That's also more of a gimmick.

That's not going to happen. It's been a while since I've had a math class, but it sounds like what you're saying is they're cutting $2 billion for savings, but they're adding $4,500 billion. in deficit. So it's $2,500 billion versus $4,500 billion. Those are very, very different numbers. All right. So let me try to put the deficit challenge in perspective. We've also had a large number of cuts that Trump is trying to achieve of maybe even several hundred thousand federal employees, which is a large number. What's the impact on the federal deficit of, say, cutting 300,000, 400,000, employees. Well, here's one way to look at it. There's 2.3 million civilian employees. If we eliminated a quarter of them, which would be remarkable, that would be laying off nearly 600,000 workers and not

replacing them, you would save 1% of federal spending. The savings aren't large. You're not going to fix the deficit, even if you eliminate a quarter of federal employees. Now, I want to be careful. Yes, we should reduce federal employment if we have extraneous employees, if they're not doing a good job, if the agency should be shut down, even $1 in waste and unnecessary spending is too much. But if the goal is to reduce spending, you're not going to get there by firing federal employees because most government spending goes to benefits to us, not the administrative costs. So not to put words in your mouth, but the implication of what you're saying is that Doge is causing an awful lot of disruption to federal operations without doing anything material at all to address the long-term fiscal challenge America is facing. I would call Doge a government spending cut theater. The targets they're going after, DEI contracts, political pro-subscripts, descriptions, federal employees, foreign aid, are not where the money is. Some of it is essentially a rounding error, but there are targets that fit a lot of cultural touchstones for a lot of conservatives. Doge is really kind of a distraction from these spending increases and tax cuts Congress is really doing right now.

Let's suppose you wanted to actually be serious about cutting the deficit. where does federal money go? And as a corollary to that, then what has to be cut or what kind of revenue has to be raised to meet these obligations? When I explain where the money goes, it'll be clear why we're not cutting it. Seventy-five percent of all federal spending goes to six items. Social Security, Medicare, and Medicaid, defense, veterans, and interest. That is 75 cents of every dollar. Everything government does besides that, education, health research, housing, justice, homeland security, that's all the other 25%. But Social Security, Medicare, and Medicaid are the big drivers. That's really the ballgame. So let me ask you this. Is there anything you like about Trump's policies so far? Is there anything that you're pleased by?

I will say that some of the talk Trump offers on reducing red tape is welcome. I think in the first Trump administration, there was a rule that for every regulation we add, we're going to repeal two regulations. I think that was a good guideline. So is there anybody that you're looking at in the political world right now that you look to and say, this is a serious person talking about these issues? an elected official Republican or Democrat. Is there anyone out there that you're saying he or she gets it? They get what's happening. Not many come to mind, to be honest.

I work with a lot of lawmakers. I mean, it's funny because there are certain members that I work with on these issues, but I'm actually not supposed to mention them because they're working quietly on them behind the scenes and they don't want me outing them as actually trying to solve problems. I have been invited to bipartisan social security working group dinners, where you have Republican lawmakers and Democratic lawmakers getting together in the back room of a restaurant, inviting some experts and talking about bipartisan ways to address social security. And one of the rules of attending this is that this dinner never happened. None of us were here.

Everything is off the record. Do not tell anyone that these meetings took place. And on the one hand, you're heartened that these conversations are happening behind the scenes in a bipartisan fashion. But what does it say for the state of our democracy that they don't want anyone to know they're trying to solve a really important challenge in a bipartisan way? It's backwards. All right. So let me wind down the conversation by asking you maybe the hardest question because I'm going to ask you to put on your prophecy hat for a minute. where do you think the American economy is headed over the short to medium term? And how much do you think Trump's current policies are going to impact it positively or negatively? It's early and economic predictions have a history of making fools of people. So take this with the greenhouse.

I won't hold you to it. This is informed speculation. There are headwinds right now. Consumer confidence is falling. Consumer spending is falling in. preparation and in some instances reaction to the tariffs, interest rates have been inching up, housing starts are starting to slow down. I would think that right now, it's more likely we see the economy declining over the course of the year than growing. I hope I'm wrong. As critical as I am of Trump's policies, I'm never going to stop rooting for the economy or rooting for America. I hope I'm wrong, but it really looks like investment spending is getting spooked, consumers are getting spooked. And this is pretty scary because Republicans keep budgeting on the hope that economic growth is going to skyrocket immediately. And I think we might be heading a little further downward instead.

Jessica, thank you so much for joining me. Thank you. It's been a pleasure. If you like this show, follow it on Spotify, Apple, or wherever you get your podcasts. This show is produced by Derek Arthur, Sophia Alvarez Boyd, Bishaka, Fisca Durba, Phoebe, Fibylette, Christina Samuoski, and Jillian Weinberger. It's edited by Kari Pitkin, Alison Bruzek, and Annie Rose Strasser. Engineering, mixing, and original music by Isaac Jones, Sonia Herrero, Pat McCusker, Carol Saburo, and Afim Shapiro.

Additional music by Amin Sahota. The fact check team is Kate Sinclair, Mary Marge Locker, and Michelle Harris. Audience Strategy by Shannon Bustra. Christina Samuiluski and Adrian Rivera. The executive producer of Times Opinion Audio is Annie Rose Dresser.