Budget Battle Veterans Skeptical Of ‘DOGE’ Focus For Cuts

Tesla CEO Elon Musk posted a very simple question Dec. 7 on his X (formerly Twitter) social media account: “Why are we doing this when our own country is so deeply in debt?”

The object of Musk’s curiosity? International humanitarian aid, which, according to a United Nations estimate, the United States gave more of than nine other countries combined, totaling almost $9.5 billion in 2023.

As one of two co-chiefs of the still nebulous “Department of Government Efficiency” ― at this point, “DOGE” it is more of a social media account than an actual federal entity ― all eyes are on Musk and former Republican presidential candidate Vivek Ramaswamy and what they will focus on as potential areas where the government can save money. But, as the foreign aid example shows, so far Musk appears to be looking at small but headline-grabbing proposals with little potential to meaningfully reduce the federal budget deficit.

“They’re not serious about controlling the deficit or the debt. What they’re serious about is helping people that would help them. That’s it,” Rep. Jim McGovern (D-Mass.) told HuffPost.

There is little dispute the U.S. government debt load has entered nearly unprecedented levels, with fears it could lead to a sharp financial crisis or become an ever-larger drag on economic growth. The federal debt held by investors was 99% of the size of the U.S. economy in 2024, according to the nonpartisan Congressional Budget Office (CBO) in June, and projected to hit 122% by 2034. For comparison, the debt load of the U.S. after World War II was almost 109%.

And the problem gets worse each year. The annual deficit (the difference between how much the government brings in each year and how much it has spent), and thus how much debt gets added to the government’s ledger, was $1.83 trillion in 2024. That reflected spending of $6.75 trillion but revenue of only $4.92 trillion.

Though the years immediately following the pandemic financial crisis featured low interest rates and sputtering growth, making deficit spending wise and necessary, the high interest rates and steady growth of the years following the COVID-19 upheaval would seemingly be ideal for cutting spending.

That’s not what President-elect Donald Trump, who appointed Musk and Ramaswamy as co-chiefs of the advisory panel, has planned. He has focused on extending and expanding the massive tax cuts for the wealthy and corporations that were passed during his first term, which would explode the deficit even further and risk reigniting inflation.

In theory, those tax breaks could be offset by spending cuts proposed by Musk. But the items he has recently posted about would do very little to close the gap. For example, getting rid of the $9.5 billion in international humanitarian aid that Musk questioned would have reduced the 2024 deficit by only about 0.5%. (1% of $1.83 trillion is $18.3 billion.)

Likewise, even if all foreign aid and international relations spending were scrapped — an unlikely prospect given U.S. commitments to international organizations as well as allies such as Israel — that would have totaled close to $72 billion in 2024. Though that may sound impressive on paper, it would have reduced the deficit by only a little under 4%.

Similarly, on Dec. 5, the DOGE social media account targeted the National Institutes of Health for spending $759 million on workforce diversity and outreach in 2023. If that same amount had been eliminated in 2024, it would have cut the deficit by less than a quarter of a percentage point.

It would not be the first time seemingly simple and politically popular ideas have been proposed that would do little to change the fiscal trajectory. Lawmakers on Capitol Hill have long sought to highlight individual instances of potentially wasteful spending, dating back to Sen. William Proxmire (D-Wis.), who gave out annual “Golden Fleece” awards to what he saw as egregious examples of waste from 1975 to 1987.

The phenomenon is familiar to old-time deficit hawks.

“We’re probably going to spend so much of our time looking at the things that make headlines — million-dollar hammers, gerbil racing, all of those things ― and it will keep us away from where everyone who’s serious in this area knows the real savings are,” Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget (CRFB), told reporters in November.

Those areas are spending on entitlement programs, such as Social Security, Medicare and Medicaid, and spending through the tax code in the form of rates, credits and deductions.

“We will hear a lot of ways to try to avoid the real, hard choices that ultimately are going to have to be part of a budget deal, the same thing many of us have been saying for many years,” MacGuineas said.

Indeed, MacGuineas’ group put forward a list of what it called “$700 Billion of Easy Deficit Reduction” in November as a way to jumpstart the discussion. They included ideas like spending more money on the Internal Revenue Service’s tax enforcement (bringing in an extra $130 billion over 10 years), stop paying “excessive” tax credits for businesses still trying to claim money under the COVID-era employee retention program ($80 billion over 10 years), extending the Federal Communications Commission’s auctions of electromagnetic spectrum ($70 billion over 10 years) and extending an existing but small across-the-board cut in entitlement spending set to expire in a few years ($85 billion).

A more comprehensive list was dropped Dec. 12 by the CBO. Released once every two years after elections, it’s a list of options for lawmakers on entitlement spending, annual discretionary spending and taxes, describing what changes could be made and how much they would raise revenues or cut spending over 10 years.

Little-known outside of budget wonk circles, the report’s options, in keeping with CBO’s nonpartisan advisory to role to Congress, run the gamut, from imposing new taxes to big cuts in entitlement programs.

For example, its two biggest deficit-cutting ideas are on the tax side, eliminating all itemized deductions for income taxes (raising $3.42 trillion over 10 years) and imposing a European-style value-added tax (VAT) of 5% on goods and services (raising $3.38 trillion over 10 years).

On spending, the biggest option CBO outlined was recalculating what the government pays Medicare Advantage health insurance plans in relation to their participants’ health ($1.05 trillion over 10 years). Other big spending cut options in the report included trimming the annual defense budget by $959 billion over 10 years and capping how much the federal government spends on Medicaid for each person in the federal-state insurance program ($893 billion over 10 years).

Bill Hoagland, senior vice president of the Bipartisan Policy Center and a former Capitol Hill Republican budget staffer, said the options used to be looked at closely when they came out.

“But once again, there’s not always much new about them.”

The problem with the CRFB and CBO ideas is that they would be nonstarters politically. Republicans talked a big game about tax reform in 2017 but ended up keeping most itemized deductions. And neither party is up for imposing a VAT in place of the current income tax system.

Similarly, cutting Medicare would be difficult in the wake of Trump’s promises that it and Social Security would be off-limits in his second term. Cuts to Medicaid would draw opposition from states that share the costs of the program, doctors who see Medicaid patients and millions of people who rely on the program.

Those are just a few examples of the bigger problem, according to Hoagland.

“This isn’t the first rodeo for a lot of us,” Hoagland said. “We’ve been through this a lot, and where is the political will to follow through?”

MacGuineas had a similar concern. Though she said some technological changes, like the rise of artificial intelligence, could boost economic growth and make deficit reduction easier, she said those kinds of ideas should not distract from more credible, even if politically tougher, ones.

“We know all the policies that are going to fix these fiscal situations. It’s just getting the political will. It’s just ending the polarization and partisanship enough that we can work together on this,” MacGuineas said.

That may not be as impossible as it sounds. A few Democrats have joined the DOGE Caucus on Capitol Hill, though its membership is overwhelmingly Republican.

And though McGovern, the House Democrat, said he doesn’t see the effort as a serious one, he said he was willing to work with DOGE on areas where they might agree, such as defense spending after Musk criticized the cost of the F-35 fighter jet’s development.

“If they want to talk about looking at the Pentagon budget, find savings there, I would welcome that,” McGovern said.