The United States is still reeling from the results of the 2024 election, and while it was originally predicted to be a close-run race between Donald Trump and Kamala Harris, it ended up being a landslide in favor of the Republican Party. Donald Trump is destined to become the 47th President of the United States, and as his plans for the next four years are slowly unveiled, he's wasting no time in revealing how he'll pull down much of the work the Biden administration did.
There are already some early winners, and alongside artificial intelligence companies rubbing their hands at Trump's promises of an AI future, Bitcoin has hit an all-time high, and some have already landed a new job.
2024 was a good time for Elon Musk to get in good with Trump, and alongside conservative activist Vivek Ramaswamy, he's the co-head for the newly formed Department of Government Efficiency (DOGE).
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Musk and Ramaswamy have vowed to shave $2 trillion from government spending, and with that being more than just a bit of pocket change, many are asking how the pair will do it.
The US Treasury revealed that the recent fiscal year from October 2023 to September 2024 saw the the US federal government spend $6.75 trillion. If successful, Musk's cuts would lead to massive drop of 30% in total federal government spending.
Speaking at a recent rally in Madison Square Garden, Musk told the crowd: "You think we can rip off this wasted $6.5 trillion Biden budget? Well, I think we can do at least $2 trillion. Yeah, yes, two trillion. At the end of the day, you’re being taxed; you’re being taxed—all government spending is taxation." But can it be done?
Breaking down the numbers, around $1.46 trillion goes on Social Security, with the next biggest expenditure being the $912 billion spent on healthcare. 13% of total US government spending ($880 billion) goes on interest payments on the national debt, while both Medicare and Defense got $874 billion each in the last fiscal year.
The area where cuts will be made is most likely going to be on the 'discretionary' categories that are voted on annually by US lawmakers. This includes defense, transportation, education, training, employment, and social services. 25% of the total government spend went on discretionary, with over half of that going on defense.
Critics have noted that the entire discretionary spend was only $1.7 trillion in 2023, meaning if Musk were to achieve this figure only from discretionary categories, whole departments like Homeland Security would have to be closed down - something that would never happen.
If anything, it seems like defense spending could actually go up under Trump, with the incoming President saying he wants to build an 'iron dome missile defense shield.' It should also be noted that Republican lawmakers struggled to deliver much smaller cuts of $130 billion when taking control of the House of Representatives in 2022.
It's unclear whether Musk plans to make cuts in one go or over a longer period of time, but according to the Committee for a Responsible Federal Budget (CRFB), Trump's plans could push the national debt from its current level at around 97% the size of the economy up to 143% by 2035.
Even though Musk seems confident he can trim the fat, it remains to be seen whether DOGE can deliver.