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Elon Musk and Vivek Ramaswamy’s Department of Government Efficiency (DOGE) has gotten a lot of buzz in recent days. The idea behind DOGE is to look for wasteful federal spending and burdensome regulations. Although DOGE will work outside the federal government, there are efforts for at least some coordination between Musk and Ramaswamy and congressional committees.
Musk has said that he wants to cut $2 trillion of federal spending. Ramaswamy has said, “We expect certain agencies to be deleted outright” and opined about massive reductions in the federal workforce. The expectation is that DOGE will make recommendations and make them public and/or send them to the White House for consideration. What the White House does after it receives the recommendations is an open question. We’ll get into that later.
When Musk says he wants to cut $2 trillion of federal spending, does he mean in one fiscal year, over five years, or over ten years? Cutting $200 billion over ten years is a more realistic goal than cutting $2 trillion in a single year, but we don’t know exactly what the goal is yet. The plans haven’t been made clear.
Let’s Take a Quick Look at Federal Spending
The CBO projects that the federal government will spend $6.975 trillion in FY 2025. That’s a number that most of us can’t fathom. We can’t wrap our heads around it, especially considering that the world’s richest man, Elon Musk, is worth $333 billion. You’d need the wealth of 21 Elon Musks to fund the federal government. (To be clear, we’re not advocating for wealth confiscation, a wealth tax, or anything like that. We’re just trying to present this in a simpler way.) Let’s take it a step further. The combined net wealth of the top 100 wealthiest people in the United States is $4 trillion. That’s still not enough to fund the federal government for a full year. It covers about 145 days of the 250 business days in FY 2025.
But let’s look deeper at that $6.975 trillion the federal government will spend, shall we? There are three classifications of federal spending: mandatory, net interest on the public debt, and discretionary.
At $4.1 trillion, mandatory spending is the largest share of federal spending. This covers Social Security, Medicare, Medicaid, income security programs (food stamps, earned income tax credit, child tax credit, unemployment, etc.), federal civilian and military retirement, veterans’ programs, and more. Net interest on the public debt is the sum of the interest payments the federal government makes minus any interest income. Spending for mandatory outlays and net interest is baked into the cake. These budgetary items are programmatic–based entirely on the number of beneficiaries in a program or otherwise obligated. Congress doesn’t appropriate these outlays.
Discretionary spending is divided into two categories–defense and nondefense (or, depending on the source, “security” and “nonsecurity”). These outlays are subject to congressional appropriation. In FY 2025, discretionary spending is projected to be $1.832 trillion.
Really, we have to take the $1.016 trillion of net interest spending off the table. These are interest payments. The failure to pay those obligations would have catastrophic consequences and could spark a global recession. Less borrowing can reduce net interest, but that requires Congress to modernize the largest federal programs–Social Security, Medicare, and Medicaid. That’s not an easy task because of the political backlash that has always come with making changes to these programs. Modernization, however, can be accomplished to ensure individuals currently on these programs don’t see changes to their benefits.
Now, don’t let it be said that there isn’t waste and fraud in mandatory spending. There is. According to the Centers for Medicare and Medicaid Services, Medicare made $51.2 billion worth of improper payments in FY 2023 while Medicaid made $50.3 billion. Social Security has an uncollected overpayment balance of $23 billion. Improper payments aren’t always avoidable, though.
When spending cuts come up, they’re usually talked about in the context of discretionary spending, which, again, is projected at just over $1.8 trillion in FY 2025. Discretionary spending is split almost evenly between defense and nondefense. As mentioned already, there’s reason to believe there are places to reduce waste in the Pentagon. It’s easy to identify that waste, but it’s significantly harder to get rid of it because of the House and Senate Appropriations Committees and Armed Services committees. Even getting eliminating nondefense discretionary spending will be difficult.
Congress is currently debating the issue of discretionary spending right now. Leadership in both chambers is deciding whether they should package all the appropriations bills together and pass them or, instead, a continuing resolution for a few months.
These debates turn into gamesmanship over a government shutdown, which only makes Congress look like it can’t perform its most basic functions.
Impounding or Withholding Funding Appropriated By Congress Is Unconstitutional
Recently, it was suggested that the White House may try to “impound” funding. This references a key aspect of the Congressional Budget and Impoundment Control Act of 1974. The Impoundment Control Act (ICA) allows an administration to impound appropriated funds and submit a list of rescissions to Congress for consideration.
Congress has only 45 legislative or session days to consider proposed rescissions, after which the administration must release the funds for obligation. The Government Accountability Office, in a December 2018 legal opinion, noted, “The ICA represents an agreement between the legislative and executive branches, whereby the President may withhold budget authority for a limited period during which Congress may consider the corresponding proposal to rescind the amounts using expedited procedures.”
Although Congress did rescind funding in the Fiscal Responsibility Act, these rescissions weren’t accomplished under ICA, which provides a fast-track process that gives privilege to proposed rescissions in the Senate. This means that the normal three-fifths threshold (or 60 votes if all senators are present and voting) to advance legislation through a cloture motion doesn’t apply. Only a simple majority is required.
The last time Congress considered rescissions under (ICA) was in June 2018. The House passed the Spending Cuts to Expired and Unnecessary Programs Act, which would’ve reduced budget authority for targeted programs by $14.7 billion from FY 2018 through FY 2028. Ultimately, the motion to discharge the Spending Cuts to Expired and Unnecessary Programs Act was defeated in the Senate after then-Sen. Richard Burr (R-NC) voted against the legislation over a proposed rescission to the Land and Water Conservation Fund. Burr was the only Republican defection in the Senate. There were 19 Republican defections in the House.
Supporters of the incoming administration are attempting to make a case that ICA is unconstitutional and will seek either legislation to amend the law or challenge it in federal courts. The case against ICA isn’t compelling. The argument is, in part, historical and rests on the notion that presidents impounded funds before ICA. Of course, this ignores three key facts.
- SCOTUS placed limitations on presidential impoundment: The Supreme Court issued an opinion in Train v. City of New York (1975) in which justices unanimously held that President Nixon couldn’t impound funding for a program controlled by the Environmental Protection Agency (EPA) under the Federal Water Pollution Control Act Amendments of 1972. The Court limited its ruling to the specific program, but the holding in Train came up in Clinton v. City of New York (1998). Justice Antonin Scalia mentioned the holding in Train in his dissent from the majority opinion.
Justice Scalia wrote, “President Nixon, the Mahatma Gandhi of all impounders, asserted at a press conference in 1973 that his ‘constitutional right’ to impound appropriated funds was ‘absolutely clear.’ The President's News Conference of Jan. 31, 1973. Our decision two years later in Train v. City of New York proved him wrong, but it implicitly confirmed that Congress may confer discretion upon the Executive to withhold appropriated funds, even funds appropriated for a specific purpose.” Although the holding in Train was narrow, Scalia’s dissent in Clinton–in which Line Item Veto Act was struck down–suggests that the Court views Train as far more reaching.
- ICA was passed in response to Nixon impounding funds: As noted, President Nixon was notorious when it came to impounding funds. Congress responded with the ICA to limit the Executive Branch’s ability to withhold funding obligated by Congress.
- ICA provides a process for rescinding funds: In a recent interview, Rep. Ralph Norman (R-SC) expressed support for DOGE and suggested that the president-elect should use impoundment because “it’s hard enough to cut anything” and that “[i]t’s constitutional to freeze the money and hold it up. … With Trump, we can do that.” As mentioned, ICA provides a fast-track process to rescind previously appropriated funding, and the law has been used successfully in the past to cancel appropriations.
The remainder of the case focuses on a broad interpretation of the Article II powers of the president. The problem with this argument is executive power isn’t absolute. There are already constitutional constraints on the Executive Branch and executive power. The president has no specific or implied power to impound funds. The argument is also unjustified based on the process that ICA has in place for a president to make recommendations for rescissions and Congress to act on those recommendations.
Another argument that the Impoundment Control Act “is unconstitutional” flies in the face of the Legislative Branch’s Article I “power of the purse,” existing caselaw and precedent limiting the scope of impoundment, and that prior history of impoundment simply doesn’t matter with the existence of ICA. The assertion that a president can simply ignore Congress has deep constitutional ramifications for the separation of powers, which delegates government funding and legislative functions to the Legislative Branch, and the system of checks and balances we have in place.
Conclusion
Musk, Ramaswamy, and DOGE have an opportunity to start the conversation we, as a nation, need to have about our future. The debt we’re accumulating isn’t sustainable. The effort can’t be performative.
Look, the federal government isn’t a model of efficiency. It constantly misallocates resources. Members of Congress routinely seek to find ways to fund programs and projects in their districts, particularly when it comes to defense production. The “military-industrial complex” is a real thing, folks. Back in 2016, the Washington Post reported that the Department of Defense spiked a report that could’ve saved taxpayers $125 billion over five years. More recently, the Pentagon failed its seventh audit in a row. The documented waste, inefficiency, and incompetence found in the audit are impressive, even for the Pentagon. Still, Congress budgeted $849 billion for defense in FY 2024, and the figure for FY 2025 is $905 billion.
There’s also waste and inefficiency in other areas of federal spending. Congress also fails to authorize what it spends. The Congressional Budget Office (CBO) noted in April 2023 that $510 billion in federal spending was unauthorized. That’s not to say many or most of these programs aren’t important. Some $122 billion of that is in the jurisdiction of the House and Senate Veterans’ Affairs committees. The authorizing committees aren’t doing their jobs to keep programs authorized, which is a problem in and of itself. Although Congress has addressed most of the recommendations the Government Accountability Office made over the past decade to reduce inefficiencies, more work needs to be done.
So, clearly, there is waste and inefficiency in the federal government. No one in their right mind would question that. Does this mean DOGE will be successful? Success needs to be clearly defined, and it hasn’t been. It’s easy to make bold declarations about cutting entire agencies, but it’s quite another to get into the weeds of the federal budget and see that half of federal spending in FY 2025 is projected to be spent on Medicare, Social Security, and net interest on the public debt. Social Security, Medicare, and net interest are the drivers of federal spending, and they will consume greater shares of outlays in the future.
When you look at what we spend, you see that the federal government is, more or less, a pass-through. Put more crudely, the federal government is essentially an insurance and benefits administrator with a nuclear arsenal.
We need to look at DOGE as the beginning of a conversation about deficits, debt, and the modernization of Medicare and Social Security. This is what many of us who work on the broader issue of federal spending hoped the bipartisan Fiscal Commission Act, H.R. 5779, would be. Unfortunately, the momentum for the Fiscal Commission Act stalled after conservative special interest groups came out against the bill because revenue increases could be part of the discussion.
Let’s hope DOGE has better luck than we did with the Fiscal Commission Act.
