It is impossible to cut spending on that scale, it would strip away vital social protections, and even trying would crash the economy. The appointment of Elon Musk, the entrepreneur behind Tesla and SpaceX, to head up a new Department of Government Efficiency has provoked a predictably dismissive response from the mainstream political and economic experts.
It can’t be done, they loftily proclaim, and Musk is the wrong man to even try.
They should not be so certain. The US federal government is often hopelessly inefficient, and Musk has done this before. There is a very good chance that he will prove the Left-wing disaster economists humiliatingly wrong.
It may well be the most significant appointment of Trump’s second term. Musk has been drafted in alongside Vivek Ramaswamy to head up a new external agency tasked with re-engineering the government machine so that it can deliver more effectively at lower cost.
On the campaign trail, Musk argued for cutting spending by $2 trillion, out of a total federal budget of $6.7 trillion. To much of the political class, that is unimaginable. “Cuts” in state spending are usually only discussed in terms of “reducing its rate of growth”, not as, you know, actually spending a bit less. The idea that the budget could be reduced by a third is revolutionary.
True, it is a huge sum. Musk has offered very little in the way of specifics. And it is certainly fair to argue that he may well have conflicts of interest, given that Tesla and SpaceX, along with many other of his businesses, operate in highly regulated environments. Even so, Musk has three big things on his side.
First, the size of the state has expanded exponentially. The Code of Federal Regulations, published annually, has grown eight-fold since 1960, and now runs to more than 200 volumes, although it is hard to see how either the economy or society is eight times more complicated than it was then. Even over the last four years, President Biden has added another 120,000 people to the federal bureaucracy, taking it to the highest number ever recorded outside the pandemic. Federal agencies create rules and then need more bureaucrats to enforce them, creating a self-perpetuating increase in the size of the state machine.
Next, Musk will no doubt spend plenty of time checking the paper-clips budget, and that will be an important part of the process. But he is also planning something far more dramatic. He wants to completely re-engineer the way the state works, so that it does less, and costs less money. It is quite possible that swathes of the government actually make us less prosperous, less healthy, and less safe. We can get rid of them wholesale. That is what will make the real difference, because it is impossible to trim budgets by more than a few percentage points.
Finally, he has been here before. When Musk bought Twitter, now X, it in many ways resembled a mini-state; to take just one example, it effectively had a department of foreign affairs. Wandering around the lobby with a kitchen sink, Musk proceeded to fire 80 per cent of the staff.
Mr Musk entered Twitter’s HQ carrying a kitchen sink during his talks to buy the social media firm
There were predictions of catastrophe, and no one would deny that it has been a rocky ride, but the company has survived, and on some metrics is doing better than ever. True, X is relatively small compared to the US government. And yet, the first lesson every tech entrepreneur learns is this: if something works in a small way, you can scale it very quickly. It is possible we could get rid of 80 per cent of government employees as well, and after a few wobbles, the country would still function.
Sure, the whole $2 trillion may be ambitious. And yet, Musk may well be pulling a trick from the classic entrepreneur’s playbook. Set a huge target, and then settle on your team achieving just a fraction of it. In reality, if he could hit just a tenth of that total, it would be hugely significant – and prove his critics wrong.
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