Elon Musk and the Useless Spending-Cut Theater of DOGE

Summary

Podcast Summary: "Elon Musk and the Useless Spending-Cut Theater of DOGE"

Podcast Information:

• Title: The Opinions
• Host/Author: The New York Times Opinion
• Description: You've heard the news, here's what to make of it.
• Episode: Elon Musk and the Useless Spending-Cut Theater of DOGE
• Release Date: March 5, 2025

---

Introduction

In this episode of The Opinions, David French, an opinion columnist at The New York Times, engages in a detailed discussion with Jessica Riedl, a fellow at the Manhattan Institute and a recognized expert on the federal budget and America’s fiscal realities. The conversation centers around Elon Musk's initiative, DOGE, and its implications for federal spending and fiscal conservatism.

---

DOGE Initiative: Expectations vs. Reality

[00:42] David French: Introduces himself as a fiscal conservative and expresses his initial disappointment with Elon Musk's DOGE initiative, despite its promise to improve federal bureaucracy efficiency.

[01:34] Jessica Riedl: Shares her initial hope that DOGE would spearhead a significant reduction in government waste, especially addressing the $1.8 trillion deficit and the $191 billion lost annually to payment errors. She anticipated that Musk’s technical expertise would target overpayments and inefficiencies effectively.

However, Riedl quickly dispels these hopes:

• [03:22] Jessica Riedl: Highlights the opacity of DOGE’s operations, noting the lack of transparency and reliance on tweets rather than official reports. She mentions that the claimed $55 billion in cuts largely consists of accounting errors, translating to a real reduction of approximately $2 billion—a mere fraction of the federal budget.

---

Understanding Fiscal Conservatism

[04:32] Jessica Riedl: Defines fiscal conservatism as advocating for a smaller government, reduced spending, and controlled taxes to prevent large budget deficits. Emphasizes the importance of maintaining essential government functions without overspending.

---

Trump Administration’s Fiscal Philosophy

[05:23] Jessica Riedl: Critiques former President Donald Trump’s approach, labeling it as “populism” rather than genuine fiscal conservatism. She explains that Trump’s administration embraces significant government spending on programs like Medicaid, SNAP, and defense, coupled with aggressive tax-cut rhetoric. This combination leads to unsustainable deficits, citing the Trump administration’s $8 trillion increase in borrowing over four years.

---

The Importance of Deficit Reduction

[06:38] Jessica Riedl: Explains the ramifications of soaring deficits, including:

• Short-term: Increased inflation and higher interest rates, referencing the impact of the 2021 American Rescue Plan.
• Long-term: Unprecedented debt levels could hinder Washington's ability to borrow, potentially forcing harmful measures like excessive money printing.

Quote:

“We want to stop the train before we get to that point.” — Jessica Riedl [06:38]

---

Assessing DOGE’s Financial Impact

[07:35] Jessica Riedl: Estimates that DOGE has achieved approximately $2 billion in savings, significantly less than the claimed $55 billion. She points out that DOGE lacks the authority to unilaterally reduce federal spending without congressional approval, rendering its impact minimal.

---

House Budget Resolution and Its Deficit Implications

[08:29] Jessica Riedl: Criticizes the recently passed House budget resolution, which proposes $4.5 trillion in tax cuts over ten years. She expresses skepticism about Congress’s ability to offset these cuts through proposed reductions in Medicaid, SNAP, and student loans, forecasting a potential $4.5 trillion deficit increase if unaltered.

[09:16] David French: Summarizes the disparity between DOGE’s minimal savings ($2 billion) and the massive potential deficit increase ($4.5 trillion).

---

Impact of Federal Employee Cuts on the Deficit

[09:58] Jessica Riedl: Discusses the limited effectiveness of cutting federal employees in addressing the deficit. She explains that even eliminating a quarter of the 2.3 million civilian employees would save approximately 1% of federal spending—a negligible impact relative to the overall deficit.

Quote:

“Any spending cuts legally have to be reprogrammed elsewhere, unless Congress goes in and reduces the spending levels.” — Jessica Riedl [07:50]

---

Critique of DOGE: A Distraction from Real Fiscal Challenges

[11:10] Jessica Riedl: Labels DOGE as “government spending cut theater,” targeting culturally resonant but financially insignificant areas like DEI contracts and Politico Pro subscriptions. She argues that DOGE distracts from substantial spending increases and tax cuts being enacted by Congress.

Quote:

“DOGE is really kind of a distraction from the spending increases and tax cuts Congress is really doing right now.” — Jessica Riedl [11:10]

---

Solutions for Meaningful Deficit Reduction

[12:00] Jessica Riedl: Outlines that 75% of federal spending is allocated to Social Security, Medicare, Medicaid, defense, veterans, and interest payments. She emphasizes that addressing these major expenditures is crucial for meaningful deficit reduction.

[13:17] Jessica Riedl: Highlights ongoing bipartisan efforts to address Social Security, though she expresses concern over the lack of transparency and public acknowledgment of these discussions.

---

Positive Remarks and Areas for Improvement

[12:42] Jessica Riedl: Acknowledges some positive aspects of the Trump administration, such as efforts to reduce regulatory red tape. She praises the initial rule of repealing two regulations for every new one added, viewing it as a beneficial guideline for reducing government burden.

---

Economic Outlook and Future Implications

[14:46] Jessica Riedl: Provides a cautious outlook on the American economy, noting current headwinds such as declining consumer confidence, reduced spending, rising interest rates, and slowing housing starts. She anticipates a potential economic decline within the year, attributing it to spooked investment and consumer confidence, exacerbated by Republican budget expectations that may be overly optimistic.

Quote:

“There are headwinds right now. Consumer confidence is falling. Consumer spending is falling in preparation and in some senses, reaction to the tariffs.” — Jessica Riedl [14:57]

---

Conclusion

David French and Jessica Riedl delve deep into the shortcomings of Elon Musk’s DOGE initiative, framing it as an ineffective and distracting effort in the broader context of federal spending and deficit reduction. Riedl emphasizes the need for substantive changes targeting the largest budgetary components and expresses concern over the current administration's fiscal policies, which prioritize populist spending over sustainable fiscal management. The conversation underscores the urgency of addressing America's long-term fiscal challenges through bipartisan cooperation and informed policymaking.

---

Notable Quotes:

• Jessica Riedl [06:38]: “We want to stop the train before we get to that point.”
• Jessica Riedl [07:50]: “Any spending cuts legally have to be reprogrammed elsewhere, unless Congress goes in and reduces the spending levels.”
• Jessica Riedl [11:10]: “DOGE is really kind of a distraction from the spending increases and tax cuts Congress is really doing right now.”
• Jessica Riedl [14:57]: “There are headwinds right now. Consumer confidence is falling. Consumer spending is falling in preparation and in some senses, reaction to the tariffs.”

---

This comprehensive summary captures the essence of the podcast episode, highlighting key discussions on fiscal conservatism, the inefficacy of the DOGE initiative, the Trump administration's fiscal policies, and the broader implications for the American economy. Ideal for listeners seeking an in-depth understanding without tuning into the full episode.

Transcript

[Katie Milkman]

This episode is supported by Choiceology, an original podcast from Charles Schwab. Hosted by Katie Milkman, an award winning behavioral scientist and author of the best selling book how to Change. Choiceology is a show about the psychology and economics behind our decisions. Hear true stories from Nobel laureates, historians, authors, athletes and everyday people about why we do the things we do. Listen to [e-mail] podcast or wherever you listen. This is the Opinions, a show that brings you a mix of voices from New York Times opinion. You've heard the news, here's what to make of it.

[David French]

I'm David French, an opinion columnist at the New York Times and a fiscal conservative. At first glance, you'd think I would be excited for an initiative like Elon Musk's doge, but I'm not. Even though I believe the federal bureaucracy could use some efficiency, I'm actually pretty appalled at what I'm seeing out of Musk and the Trump administration. So is my friend Jessica Riedl. Jessica is a fellow at the Manhattan Institute and just like me, a fiscal conservative. Jessica might be one of the nation's foremost experts about the federal budget and about America's fiscal realities. She has taught me an enormous amount about all of those issues. So I am delighted that Jessica is joining us for this conversation. Thank you.

[Jessica Riedl]

It's a pleasure. Thank you for having me.

[David French]

So let's just kind of level set here. You would think, as I just said, that if there was a Department of Government Efficiency announced to get the budget under control, the growth of spending under control, that we would be really excited about this. And so when you heard that Elon Musk was going to be forming and running doge, you know, you, you have worked on Republican presidential campaigns in 2012 and 2016. You're at a conservative think tank. What was your first reaction? What were you hoping it would be? What were you fearing it would be?

[Jessica Riedl]

I was hoping that this would be the biggest war on government waste in decades. There's no shortage of spending to go after. We have a $1.8 trillion deficit. Spending is growing, and you knew going in that Doge was not going to be able to negotiate the grand deal on Social Security and Medicare and taxes. That's going to be a bipartisan effort in Congress. But there is a lot of waste. You know, there's $191 billion a year lost to payment errors. The hope was that Elon Musk would use his technical expertise to open up the hood, dive into waste and overpayments, and finally focus us there. That was the hope.

[David French]

So. Well, let me ask you this, because few big ticket initiatives have been more opaque than Doge. There is a lot of energy. There is a lot of activity. A lot is happening. It's been remarkable. We've had judges even ask government lawyers, who runs Doge, who is the administrator, how is this set up? And they don't have the answers. So what is Doge actually doing?

[Jessica Riedl]

You're right. It's a challenge. You know, for all Doge's talk about transparency, they've taken offline parts of the federal budget. And a lot of what they're doing we're learning by tweet rather than true government reports and tracking. There is a website that supposedly shows $55 billion that have been cut so far. However, anyone who's looked into the wall of receipts has realized that most of what is claimed to be spending cuts are just accounting errors and that the real cuts are smaller. So we're trying to piece together what they're doing. We're all kind of guessing, but it's the most real for the people in Africa who aren't getting USAID aid, for the federal employees being laid off, it's very real for them. For the rest of us, it's piecing together from different sources.

[David French]

Well, let's take a minute and back up, because I had said at the beginning I use the term fiscal conservative. That is not a term that is widely used much anymore. So when I say fiscal conservatism, how do you define that?

[Jessica Riedl]

Yeah, I have long defined fiscal conservatism as wanting a smaller government that spends less money, focuses on the primary objective of government, and tries to keep taxes down, but still enough to fund the government and not push up deficits. So small, limited government, less spending, but still no large budget deficits.

[David French]

That's exactly how. How I would see it myself. But I've never seen someone convincingly describe Donald Trump as a fiscal conservative. He's purely a populist. He's going to do the things that he believes that will be popular. How would you describe the fiscal approach of the Trump administration? What is their overall sort of fiscal philosophy?

[Jessica Riedl]

Yeah, I agree with you. The word I use is populism. I think Donald Trump is a big government populist who reflects where the Republican Party is today. Today's Republican Party is older, lower income, more dependent on not just Social Security and Medicare, but programs like Medicaid and snap. But it also includes a lot of veterans who want veteran spending and a lot of people concerned about defense so overall, you have a big government populist party. But what's interesting in this populism is while they're definitely more comfortable with government spending than past Republicans, at the same time they're accelerating the tax cut rhetoric. And as an economist, I look at it and say something's got to give. If you're going to make the Republican Party a populous, big sport spending party, you can't also be the party of bold tax cuts. Or you get what happened in Trump's first term, which is $8 trillion in new borrowing just from the legislation he signed in four years. Something's got to give.

[David French]

Why do these deficits matter? Why do they matter to an average everyday American?

[Jessica Riedl]

In the short term, soaring borrowing will push up inflation and interest rates. And I shouldn't have to explain that too much, because we saw in 2021 how the American rescue plan that Biden enacted pushed up an inflation rate that was already going to be a little high coming out of the pandemic and added about three more points to it. This also is pushing up interest rates. And in the long term, it's worse because ultimately, with the debt going to levels that have never been seen in the developed world before, you get to the point where Washington can't even borrow enough money to pay for its spending, which will then force the government to go to the printing press, and then you have all sorts of problems. We want to stop the train before we get to that point.

[David French]

So what is your best estimate about the Doge savings right now?

[Jessica Riedl]

Perhaps $2 billion, which they claim 55 billion. And even ultimately that 2 billion may not happen because technically SPE Doge cannot impound and unilaterally reduce federal spending.

[David French]

Right.

[Jessica Riedl]

Any spending cuts legally have to be reprogrammed elsewhere, unless Congress goes in and reduces the spending levels. So I would say right now, $2 billion, which, to put in context, is 1 35th of 1% of the federal budget, otherwise known as budget dust. Wow.

[David French]

So we just had the House very narrowly passed a version of a budget resolution. Couple of things. First, how much will this increase the deficit? And then second, what is in it? Why will it increase the deficit?

[Jessica Riedl]

The budget resolution mostly consists of $4.5 trillion in tax cuts over 10 years. They're also promising to offset with cuts to Medicaid, SNAP and other nutrition spending, and likely student loans. I'm skeptical that Congress can actually pass this. If they don't, you're up to a $4.5 trillion, 10 year cost. Now, the budget also promises discretionary savings far into the future. But there's nothing enforcing that and there is no reason to take it seriously. And the budget also assumes a huge growth in tax revenues from economic growth. That's also more of a gimmick. That's not going to happen.

[David French]

It's been a while since I've had a math class. But it sounds like what you're saying is they're cutting 2 billion for savings, but they're adding 4,500 billion in deficit. So it's 2 billion versus 4,500 billion. Those are very, very different numbers. All right, so let me try to put the deficit challenge in perspective. We've had a large number of cuts that Trump is trying to achieve of maybe even several hundred thousand federal employees, which is a large number. What's the impact on the federal deficit of say, cutting 300,000, 400,000 employees?

[Jessica Riedl]

Well, here's one way to look at it. There's 2.3 million civilian employees. If we eliminated a quarter of them, which would be remarkable, that would be laying off nearly 600,000 workers and not replacing them, you would save 1% of federal spending. The savings aren't large. You're not going to fix the deficit even if you eliminate a quarter of federal employees. Now, I want to be careful. Yes, we should reduce federal employment if we have extraneous employees, if they're not doing a good job, if the agency should be shut down, even $1 in waste and unnecessary spending is too much. But if the goal is to reduce spending, you're not going to get there by firing federal employees because most government spending goes to benefits to us, not the administrative costs.

[David French]

So, not to put words in your mouth, but the implication of what you're saying is that DOGE is causing an awful lot of disruption to federal operations without doing anything material at all to address the long term fiscal challenge America is facing.

[Jessica Riedl]

I would call DOGE a government spending cut theater. The targets they're going after, DEI contracts, Politico Pro subscriptions, federal employees, foreign aid are not where the money is. Some of it is essentially a rounding error. But they're targets that fit a lot of cultural touchstones. For a lot of conservatives. DOGE is really kind of a distraction from the spending increases and tax cuts Congress is really doing right now.

[David French]

Let's suppose you wanted to actually be serious about cutting the deficit. Where does federal money go? And as a corollary to that, then what has to be cut? Or what kind of revenue has to be raised to meet these obligations?

[Jessica Riedl]

When I explain where the money goes, It'll be clear why we're not cutting it. 75% of all federal spending goes to six items. Social Security, Medicare, and Medicaid. Defense, veterans, and interest. That is 75 cents of every dollar. Everything government does besides that, education, health, research, housing, justice, homeland Security. That's all the other 25%. But Social Security, Medicare, and Medicaid are the big drivers. That's really the ball game.

[David French]

So let me ask you this. Is there anything you like about Trump's policies so far? Is there anything that you're pleased by?

[Jessica Riedl]

I will say that some of the talk Trump offers on reducing red tape is welcome. I think in the first Trump administration, there was a rule that for every regulation we add, we're going to repeal two regulations. I think that that was a good guideline.

[David French]

So is there anybody that you're looking at in the political world right now that you look to and say, this is a serious person talking about these issues? An elected official, Republican or Democrat. Is there anyone out there that you're saying he or she gets it, they get what's happening?

[Jessica Riedl]

Not many come to mind, to be honest. I work with a lot of lawmakers. I mean, it's funny because there are certain members that I work with on these issues, but I'm actually not supposed to mention them because they're working quietly on them behind the scenes, and they, they don't want me outing them as actually trying to solve problems. I have been invited to bipartisan Social Security working group dinners where you have Republican lawmakers and Democratic lawmakers getting together in the back room of a restaurant, inviting some experts and talking about bipartisan ways to address Social Security. And one of the rules of attending this is that this dinner never happened. None of us were here. Everything is off the record. Do not tell anyone that these meetings took place. And on the one hand, you're heartened that these conversations are, are happening behind the scenes in a bipartisan fashion. But what does it say for the state of our democracy that they don't want anyone to know? They're trying to solve a really important challenge in a bipartisan way. It's backwards.

[David French]

All right, so let me wind down the conversation by asking you maybe the hardest question, because I'm going to ask you to put on your prophecy hat for a minute. Where do you think the American economy is headed over the short to medium term, and how much do you think Trump's current policies are going to impact it positively or negatively?

[Jessica Riedl]

It's early and economic predictions have a, have a history of, of making fools of people. So take this with I won't hold you to it.

[David French]

This is, this is informed speculation.

[Jessica Riedl]

There are headwinds right now. Consumer confidence is falling. Consumer spending is falling in preparation and in some senses, reaction to the tariffs. Interest rates have been inching up. Housing starts are starting to slow down. I would think that right now it's more likely we see the economy declining over the course of the year than growing. I hope I'm wrong. As critical as I am of Trump's policies, I'm never going to stop rooting for the economy. You're rooting for America. I hope I'm wrong. But it really looks like investment spending is getting spooked. Consumers are getting spooked. And this is pretty scary because Republicans keep budgeting on the hope that that economic growth is going to skyrocket immediately. And I think we might be heading a little further downward instead.

[David French]

Jessica, thank you so much for joining me.

[Jessica Riedl]

Thank you. It's been a pleasure.

[Katie Milkman]

If you like this show, follow it on Spotify, Apple or wherever you get your podcasts. This show is produced by Derek Arthur, Sofia Alvarez Boyd, Vishaka Durba, Phoebe Lett, Christina Samulewski and Gillian Weinberger. It's edited by Kari Pitkin, Alison Bruzek and Annie Rose Strasser. Engineering, mixing and original music by Isaac Jones, sonia Herrero, Pat McCusker, Carol Saburo and Afim Shapiro. Additional music by Amin Sohota. The Fact Check team is Kate Sinclair, Mary Marge Locker and Michelle Harris. Audience strategy by Shannon Busta, Christina Samulewski and Adrian Rivera. The executive producer of Times Opinion Audio is Annie Rose Dresser.