Can Doge Really Cut $2 Trillion From The Federal Budget? Likely Yes.

11/20/2024|3 minute read

Key Takeaways:

• The Department of Government Efficiency is tasked with cutting $2 trillion from the more than $6 trillion budget.
• DOGE will look at eliminating agencies, simplifying agency missions, streamlining permitting, and reducing inefficiencies in how agencies implement their programs.
• The work of the 1980's President's Private Sector Survey on Cost Control (the Grace Commission) suggests that simplifying agency missions and cutting inefficiency might alone achieve $1 trillion in savings.

To the American citizen, congressional budget accounting is inscrutable. But using some simplifying assumptions from budget documents, one sees that, from 15 executive departments and numerous commissions and bureaus, a $2 trillion cut is in reach.

Headed by Elon Musk and Vivek Ramaswamy, the Department of Government Efficiency, or DOGE, is a private commission tasked by President-elect Donald Trump to cut $2 trillion in expenses, or "outlays," from the annual budget. That would be one-third of President Joe Biden's currently proposed $6.1 trillion budget.

In the author's opinion, the DOGE project will advance at three levels of public visibility. At the high level, DOGE will look at terminating all or part of certain federal agencies, such as the Department of Education. Changes of this sort will nearly all require legislation. At the middle level, DOGE will look at permit streamlining, reductions in incentives to the private sector, and reductions in federal research and development. Many of these changes may require legislation, particularly if the changes are to be long-lasting. Most can be done, however, by agency rulemaking. At the low level, DOGE is likely to look at changes resulting from improvements in what we traditionally think of as "inefficiency," e.g., the inefficiency of having four bureaus within the Department of Agriculture and each having its own office in the same city.

Changes at the low level are today's focus. That brings us to the Grace Commission, as it was popularly called, though its work has been sidelined for so long that it has been forgotten. In 1982, President Ronald Reagan established the President's Private Sector Survey on Cost Control, which came to be known as the Grace Commission, named after its chairman, J. Peter Grace. The commission produced 47 reports containing 2,478 recommendations after examining federal practices against private-sector cost controls. The Grace Commission assessed its recommendations would save $424 billion in three years, rising to $1.9 trillion per year by 2000.[i] Unlike the high-visibility changes discussed above, the commission's proposals did not eliminate agencies; the commission just recommended improved management practices.[ii]

Could the Grace Commission's recommendations help? Waste is endemic in federal spending. Many Americans believe the more spending, the more waste, usually in direct proportion. For simplicity, we can use the commission's work to estimate a "government waste" percentage. The commission projected $424 billion in savings over three years, for an average of $142 billion per year. Reagan's budget estimated that outlays for 1984 would be $848 billion.[iii] The Grace Commission's proposed savings were 16.7 percent - one-sixth - of the 1984 projected outlays.

Biden's budget for fiscal year 2025 reports that actual outlays for 2023 were over $6.1 billion.[iv] Cutting 16.7 percent of those outlays yields savings of about $1.02 trillion.

As this article is published, DOGE has not indicated it will use the Grace Commission's proposals. It is true that time may have made some of the recommendations irrelevant. Others may not fit the new administration's priorities.

But two reasons make it hard to see that DOGE would ignore the commission. First is Musk's cast of mind. He reuses rockets. It would be out of character for him not to reuse so thorough a study to make government more efficient. Second, most of the commission's recommendations can be implemented, without legislation or even rulemaking, by the Office of Management and Budget and the new management of the federal agencies themselves. From a political perspective, these recommendations are the low-hanging fruit of the DOGE project.

Cutting $2 trillion is a mammoth task. But DOGE could be halfway there already.

[i] President's Private Sector Survey on Cost Control, at v (1984).

[ii] Office of Management and Budget, Budget of the United States Government Fiscal Year 1984, 98th Cong., 1st Sess., at 3 (House Doc. No. 98-3, 1983).

[iii] Id. at M11.

[iv] Office of Management and Budget, Analytical Perspectives: Budget of the U.S. Government Fiscal Year 2025, Table 24-3, at 281 (2024).

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