Finding Trillions in Federal Cuts Is Easy. But Will Trump and Musk Follow Through?

During President Donald Trump's first term in office, the national debt increased by $8 trillion—due, in large part, to huge spending hikes that Congress passed and Trump signed.

Can SpaceX CEO Elon Musk help Trump avoid a repeat performance? While campaigning alongside Trump in the final days of the presidential race, Musk pledged not merely to limit future spending increases but to cut the cost of government in a big way. When asked at Trump's Madison Square Garden rally in October how much waste "we can rip out" of the $6.75 trillion annual federal budget, Musk estimated "at least $2 trillion."

That sentiment reflects the relentless pursuit of efficiency that has become a hallmark of Musk's companies, including Tesla and X, where Musk purged more than 6,000 jobs after buying the social media site (then known as Twitter) in 2022. It might also demonstrate his naiveté about government, where the incentives are stacked heavily against cost cutting.

Musk and fellow tech entrepreneur Vivek Ramaswamy have been tapped to co-chair Trump's Department of Government Efficiency (DOGE), a non-Cabinet entity that will "pursue three major kinds of reform: regulatory rescissions, administrative reductions and cost savings," the pair wrote in a Wall Street Journal op-ed in November. Armed with a couple of recent Supreme Court rulings that have weakened the power of the administrative state, Musk and Ramaswamy certainly have the right objectives in mind. "Unlike government commissions or advisory committees, we won't just write reports or cut ribbons," they promised. "We'll cut costs."

Good. Still, the biggest challenge facing the DOGE project will not be finding wasteful government spending to cut. There is so much of that, and there are whole agencies—the Government Accountability Office (GAO), most prominently—already tasked with calling lawmakers' and executive branch officials' attention to it.

No, the hardest part will be following through with the cuts themselves, and doing so when whole bureaucracies and media narratives are objecting to the effort.

The most obvious question about Musk's promise to rip $2 trillion out of the federal budget is also one of the easiest to answer: Can it be done?

Yes, absolutely. In 2019, the last full budget year before the COVID-19 pandemic unleashed even higher outlays, the feds spent about $4.4 trillion. Simply cutting the government back to the size it was five years ago accomplishes this seemingly impossible promise.

A more realistic approach might start with the prepandemic spending baseline. In January 2020, the Congressional Budget Office projected that government spending in FY 2025 would total $5.8 trillion—about $1 trillion less than what the government actually spent in 2024.

So the first thing a Musk-guided second Trump administration could do is to set an overall spending target. Rolling the government back to a prepandemic budget baseline of $5.8 trillion would accomplish half of the $2 trillion promise, and it would do so without having to target any particular program. Hold firm to that final figure and make Congress sort out the details. That, at a minimum, should be the goal for the first year.

Trump can lend Congress a big hand by simply repealing a series of Biden-era executive orders that expanded eligibility for food stamps, hiked federal spending on Medicaid payments to managed care providers, and granted debt forgiveness to some college graduates (even after the Supreme Court struck down a broader student loan forgiveness scheme). The Committee for a Responsible Federal Budget, a nonprofit that advocates for reducing deficits, estimates that those changes could trim more than $800 billion over 10 years.

Then you've got to cut more deeply. That means not just targeting wasteful spending but rethinking how the federal government operates.

One of the first things that should go is federal subsidies to state governments. According to the National Association of State Budget Officers, federal taxpayers supplied more than 35 cents of every dollar spent by the states during FY 2023. That's largely due to subsidies for public schools and Medicaid. The first flow of money ought to be ended outright, while the latter could be reformed in ways that give states more flexibility and ask less of federal taxpayers.

To cut $2 trillion from the federal budget, the Trump administration won't necessarily have to kill any of Republicans' sacred cows—but they will have to be put on a diet.

That means getting serious about the military budget. The Pentagon has never passed an audit yet it continues to receive annual spending increases, an arrangement many Republicans would rightly squawk about if the same were true of a welfare program.

As part of its most recent report titled "Options for Reducing the Deficit," the Congressional Budget Office had outlined a series of spending changes that could reduce the Pentagon's budget by nearly $1 trillion over 10 years. Those savings would be achieved primarily by reducing the military's active-duty manpower and shifting toward less costly alternatives.

Implementing those recommendations would require a complete overhaul of how America conducts itself abroad. Rather than flexing its military muscles, it would require "inducing favorable behavior in other nations, deterring military aggression, and shaping an international community based on rules that support the interests of the United States and its allies." In short, more diplomacy and fewer deployments. That can't be implemented quickly, but it is long overdue.

Finally, Trump would have to drop his promise not to touch America's two major entitlement programs: Medicare and Social Security. Cutting spending in a major way is simply not possible without putting so-called "mandatory spending" for entitlements on the block, as those line items already cost more than $4 trillion and are growing faster than anything else.

There are huge savings to be realized here. The $101.4 billion of improper payments made by Medicare and Medicaid in 2023 accounted for 40 percent of all improper payments across the entire government that year, according to the GAO. That same GAO report suggested a simple change in how Medicaid bills some of its services that, if implemented, could save $141 billion over 10 years.

Meanwhile, seven of the top nine suggestions made by the Congressional Budget Office in that annual report on reducing the deficit would change elements of America's entitlement programs. That includes capping Medicaid spending (more than $501 billion in 10-year savings), increasing premiums for Medicare Part B (more than $57 billion), and reconfiguring how Social Security benefits are paid to wealthier Americans (more than $40 billion).

None of those changes will be easy to pass—but, again, finding stuff to cut is not the difficult part. There are many options available to the incoming administration, but most of them will require Trump (perhaps with Musk's help) to embrace the "Afuera!" mentality of Argentine President Javier Milei. The cuts must be deep, and they must be lasting.

When the heads of congressional committees and various government bureaucracies start crying about having nothing left to cut, the Trump administration simply has to point to the work already done by the GAO, various inspectors general, and such nonprofits as Citizens Against Government Waste. As of this writing, the GAO has more than 5,300 open recommendations for improving the government. Not all of those changes will net billions of dollars in savings, but there's no shortage of targets.

Those ideas are already in writing and waiting to be adopted. There is no need for study committees, lengthy hearings, or other stall tactics. "Get to work" should be the message from the administration, which should also remind critics (over and over, if necessary) that the sky didn't fall when government spending was running at the pace it was in 2019.

By March, when Trump is due to deliver the first budget proposal of his second term, we'll have some idea whether DOGE is a serious effort and whether Musk's pledge to cut spending was more than campaign-trail blather.