Budget battle veteran skeptical of ‘DOGE’ focus on cuts

Tesla CEO Elon Musk I posted a very simple question On his X (formerly Twitter) social media account on December 7: ““Our country has so much debt, why are we doing this?”

What is the object of Musk’s curiosity? international humanitarian assistance, According to UN estimatesThe United States contributed to more than nine other countries, totaling $9.5 billion in 2023.

One of two co-directors of the still-obscure “Department of Government Efficiency,” “DOGE” is more of a social media account than an actual federal agency. 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 considering small, headline-grabbing proposals that have little chance of meaningfully reducing the federal budget deficit.

“They are not serious about controlling the deficit or debt. What they are serious about is helping those who will help them. “That’s it.” Rep. Jim McGovern (Democrat Massachusetts) told HuffPost.

There is little disagreement that the U.S. government’s debt burden has reached almost unprecedented levels, and there are concerns that this could lead to a sharp financial crisis or further hinder economic growth. Federal debt held by investors will reach 99% of the size of the U.S. economy in 2024. According to the nonpartisan Congressional Budget Office (CBO) in June,It is expected to reach 122% by 2034. For comparison, America’s debt burden after World War II was nearly 109%.

And the problem is getting worse every year. The annual deficit (the difference between how much the government brings in and how much it spends each year) and the resulting amount of debt added to the government’s books is: $1.83 trillion in 2024. This amounted to $6.75 trillion in spending but only $4.92 trillion in revenue.

Even though several years have passed since the pandemic financial crisis, Low interest rates and rapid growth have made deficit spending wise and necessary, and the years of high interest rates and steady growth following the COVID-19 upheaval are likely to be ideal for reducing spending.

This is not what President-elect Donald Trump, who appointed Musk and Ramaswami as co-chairs of his advisory board, had planned. He has focused on extending and expanding the massive tax cuts for the wealthy and corporations passed during his first term. This risks further exploding deficits and reigniting inflation.

In theory, these tax cuts could be offset by Musk’s proposed spending cuts. But his latest posts do little to bridge the gap. For example, eliminating $9.5 billion in international humanitarian aid, which 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 America’s commitments to international organizations as well as allies such as Israel), that amount would be close to the total. $72 billion in 2024. That may sound impressive on paper, but it would have reduced the deficit to less than 4%.

Likewise, on December 5, DOGE social media accounts Targeted National Institute of Health to spend $759 million on workforce diversity. Support activities in 2023. Had the same amount been removed in 2024, it would have reduced the deficit to less than a quarter of a percent.

This is not the first time that seemingly simple, politically popular ideas have been proposed that do little to change the fiscal trajectory. Members of Congress have long sought to highlight individual instances of potentially wasteful spending, dating back to Sen. William Proxmire (D-Wis.). Annual “Golden Fleece” Award What he saw was a serious example of waste from 1975 to 1987.

This phenomenon is familiar to old-time deficit hawks.

“We probably spend too much time on things that grab the headlines, like multi-million dollar mallets and gerbil races. It’s real cost savings,” Maya McGinnis, chairwoman of the nonpartisan Federal Budget Committee (CRFB), told reporters in November.

These areas include spending on entitlement programs such as Social Security, Medicare, and Medicaid, as well as spending through tax laws in the form of rates, credits, and deductions.

“You’re going to hear a lot of ways to avoid the real, difficult choices that ultimately have to be part of budget negotiations,” MacGuineas said. “This is the same thing many of us have been saying for years.”

In fact, the MacGuineas group suggested: inventory It was called “$700 billion in easy deficit reduction” in November as a way to stimulate discussion. This includes spending more money on tax enforcement for the Internal Revenue Service (bringing in an additional $130 billion over 10 years) and an “excessive” tax credit ($80) for businesses still trying to claim money under COVID-era employee retention programs. Ideas included stopping paying . ($1 billion over 10 years), extends the Federal Communications Commission’s electromagnetic spectrum auctions ($70 billion over 10 years), and extends existing small cuts to entitlement spending that were set to expire in 2019. Several years ($85 billion).

no way A more comprehensive list was removed by CBO on December 12.. The list, released every two years after an election, is a list of options for lawmakers’ spending rights, annual discretionary spending and taxes – what changes could be made and how much they could raise revenues or cut spending over a 10-year period. Explain what to do.

The report’s options, little known outside the budget expert community, run the gamut from new taxes to deep cuts to entitlement programs in line with the CBO’s bipartisan recommendations for a role for Congress.

For example, the two biggest deficit-cutting ideas are on the tax side. That means eliminating all itemized deductions on income tax (an increase of $3.42 trillion over 10 years) and imposing a 5% European value-added tax (VAT) on goods. Services ($3.38 trillion raised over 10 years).

The biggest option outlined by CBO on spending was to recalculate how much the government pays Medicare Advantage health insurance plans related to the health of their participants ($1.05 trillion over 10 years). Other large spending cut options included in the report include cutting the annual defense budget by $959 billion over 10 years and limiting the amount the federal government spends on Medicaid for each individual in the federal state insurance program ($893 billion over 10 years). ) was included.

Bill Hoagland, senior vice president at the Bipartisan Policy Center and a former Republican budget staffer on Capitol Hill, said he used to scrutinize options as they came up.

“But then again, there’s not always a lot of new stuff.”

The problem with the CRFB and CBO ideas is that they do not start politically. Republicans talked about tax reform in 2017, but ultimately kept most itemized deductions in place. And neither side intends to impose a value-added tax to replace the current income tax system.

Likewise, cutting Medicare would also be difficult because of Trump’s promise that Medicare and Social Security would be limited in his second term. Medicaid cuts will spark opposition There are states that share the cost of the program, doctors who care for Medicaid patients, and millions of people who depend on the program.

According to Hoagland, these are just a few examples of a larger problem.

“This is not the first rodeo for many of us,” Hoagland said. “We’ve been through a lot of this, but where is the political will to overcome this?”

MacGuineas had similar concerns. She said some technological changes, such as the rise of artificial intelligence, could boost economic growth and make deficit reduction easier, but they should not stand in the way of more credible ideas, even if those ideas are politically stronger.

“We all know the policies that will address this financial situation. It’s just a matter of gaining political will. All we have to do is end polarization and partisanship enough for us to work together,” MacGuineas said.

It may not be as impossible as it sounds. Although a few Democrats have joined the Governors’ Caucus on Capitol Hill, its members are overwhelmingly Republican.

McGovern, a House Democrat, said he did not think the effort was serious, but said he was willing to work with DOGE on areas they could agree on, such as post-Musk defense spending. Criticized the cost of developing the F-35 fighter jet.

“If you want to talk about reviewing the Department of Defense budget and look for savings there, I would welcome that,” McGovern said.