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Once upon a time, a ruthless outsider entered the Oval Office with the promise of “draining water.” He introduced the opportunity for businessmen, led by the head of industry, to work as “indefatigable people of blood” to eliminate inefficiency in the main office of Washington.
It was 1982, and President Ronald Reagan’s Grace Commission set out to eliminate hundreds of billions of dollars in illegal spending.
Much like President-elect Donald Trump’s “Department of State Development,” an advisory board chaired by businessmen Elon Musk and Vivek Ramaswamy, the Grace Commission had no power to make changes, only to advise.
And after several years of work, the approximately 150 members of the Grace Commission have persuaded Congress to implement exactly zero of its proposals.
“You can’t find evidence that they changed the size of the government one iota,” Douglas Holtz-Eakin, president of the center-right think tank the American Action Forum, told CNN. “There are very few examples of success” with the group, he said. “But I think you have to ask Elon and Vivek what makes them different from the Grace Commission. How are they different from other things that didn’t work?”
In 2024, as in 1982, there is a broad consensus that the federal budget is bloated and could benefit from a fresh set of eyes to make government run more efficiently and save taxpayers’ money. Economists on the left and right told CNN that they would welcome any positive effort to reduce the deficit and improve government spending. But so far, neither Musk nor Ramaswamy seem to grasp the complexity of the US’s $6.8 trillion budget.
“We continue to pretend that the federal budget is like sitting at the kitchen table, raising money for the family,” said Holtz-Eakin, a former 2008 campaign adviser and chief budget officer for John McCain under President George W. Bush. “These are lies… The fifth sector of the economy, and it is very difficult to manage and reform. And they are aware of it.”
A math problem
Musk and Ramaswamy will face a math problem very quickly and find a way to reduce costs significantly – especially if they commit to the $2 trillion Musk has made.
About 60 percent of the federal government’s budget consists of what is known as mandatory spending — primarily Medicare, Medicaid and Social Security. It would be politically suicidal to drastically cut funding for those safety-net programs, which is why there is no desire in Congress to do so. Trump has promised to protect Social Security.
Another 10% of the budget is used to pay interest on Uncle Sam’s debt. It can’t be handled either, at least not without stopping bad credit defaults and market crashes.
That leaves around 30% of the budget discretionary – but almost half of that goes to defense spending, another area that could be difficult to cut significantly.
“Removing $2T in annual spending will be extremely difficult without holding down mandatory spending, which will require lawmakers to make tough decisions they may be unwilling or unable to make,” Isaac Boltansky, director of policy research at BTIG, wrote recently. report to customers.
Non-defense discretionary spending has already been pulled back, standing at the lowest level in modern history as a share of GDP, according to Moody’s Analytics chief economist Mark Zandi.
That is why Mr. Zandi said he doubts that monitoring government operations can save 200 billion dollars a year, let alone 2 trillion dollars. (Musk said in October that he could cut at least $ 2 trillion, but he did not specify whether he meant annually or over time).
“I am trying to improve the functioning of the government,” Zandi said. “But there’s no game-changing 60-yard touchdown pass here. It’s going to be more of a one- or two-yard run.”
A two-way street
In a Wall Street Journal op-ed last month, Musk and Ramaswamy offered their visionary directive to target “$500 billion in annual federal spending that has not been authorized by Congress or spent in ways Congress never intended.”
But why, exactly?
There is a way, although it is not always legal, for the president to defy Congress and simply refuse to spend money that has been awarded by the judges. It is called impoundment.
“My threat to DOGE’s recommendations to do this through Congress is low,” said Bobby Kogan, senior director of federal budget policy at the Center for American Progress, a left-leaning policy research group. “My role in threatening them to do more illegal things, unilaterally, is very high.”
Trump has repeatedly said he will oppose Nixon-era legislation that limited the president’s ability to block funding for projects approved by Congress. The DOGE bros are on board, writing in their op-ed that they believe the Supreme Court will likely side with Trump.
A spokesman for Trump’s transition team did not respond to a request for comment.
It’s not clear how the shutdown strategy would work. Newt Gingrich, a former House speaker and adviser to Mr. Trump, told the Washington Post last month that the administration would likely try a two-pronged approach: asking Congress to approve massive spending cuts, while testing the limits of its unilateral spending power.
For example, if the White House wanted to stop federal funding for schools with a mandate to protect, as the president said, this decision would be challenged in court by the school or local government. It may be up to the courts to uphold or overturn that decision, causing him to keep valuable funds for months or even years.
“I think they will probably lose (some cases) in court, but that’s a real form of violence,” Kogan said.
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