Today, Explained: Can DOGE Cut $2 Trillion?
Vox Podcast Network | December 4, 2024

Introduction

In the December 4, 2024 episode of Today, Explained, hosts Sean Rameswaram and Noel King delve into a bold and unconventional proposal spearheaded by Elon Musk and Vivek Ramaswamy: the potential elimination of $2 trillion from the United States federal budget. This detailed exploration examines the feasibility, targets, and political ramifications of such significant budget cuts, all under the whimsical banner of "Doge," inspired by Musk's favorite cryptocurrency, Dogecoin.

Elon Musk and the Dogecoin Phenomenon

The episode opens with Sean Rameswaram highlighting Elon Musk's affinity for Dogecoin, a cryptocurrency with origins in a popular internet meme featuring a Shiba Inu dog. Musk's influence on Dogecoin's popularity is undeniable, as evidenced by his promotional appearances and public endorsements:

Sean Rameswaram [00:00]: "Elon Musk is a funny guy. You can tell because his favorite cryptocurrency is based on a cute dog... it's Elon's fave."

Musk's advocacy led to significant price surges for Dogecoin and temporarily saw Tesla accepting the cryptocurrency as payment. However, his relentless promotion also attracted legal challenges:

Sean Rameswaram [00:26]: "He also said he would fund a moon mission entirely with Dogecoin and incessantly tweeted about the crypto."

Despite investor backlash and lawsuits accusing Musk of price manipulation, the courts sided in his favor, reinforcing his influential role in the crypto space.

The Birth of the Department of Government Efficiency (Doge)

Amidst this backdrop, the episode introduces the newly established Department of Government Efficiency, whimsically named "Doge," a nod to Dogecoin. This agency, appointed by then-President Trump, is led by Elon Musk and Vivek Ramaswamy, aiming to streamline and reduce federal expenditures.

Chris Edwards [02:17]: "The first thing you need to know about the Department of Government Efficiency is that Trump's put two people in charge of it. So it's off to a great start. Elon is one of them. The other is Vivek Ramaswamy."

Understanding the Federal Budget: Current Expenditures

To contextualize the proposed $2 trillion in budget cuts, the podcast provides an overview of the U.S. federal budget, highlighting the largest expenditure categories:

• Social Security: $1.3 trillion (04:45)

  Chris Edwards [04:45]: "So biggest single share is Social Security... that's the biggest single program, and it's one that Trump has promised not to cut."

• Medicare: $839 billion (06:27)

  Chris Edwards [06:27]: "In 2023, we spent 839 billion. So less than Social Security, but a lot."

• Defense Spending: $805 billion (07:18)

  Chris Edwards [07:18]: "Defense spending is huge. That was 805 billion in 2023."

• Medicaid: $616 billion (08:00)

  Chris Edwards [08:00]: "Most important here is Medicaid... next biggest chunk after Social Security, Medicare, defense."

• Income Security Programs: $450 billion (08:00)

  Chris Edwards [08:00]: "Income Security Programs... like food stamps, tax credits... a lot of programs that support low income people's incomes."

Proposed Budget Cuts: Feasibility and Targets

The central discussion revolves around the ambitious goal of cutting $2 trillion from the federal budget. Experts weigh in on the likelihood and strategies to achieve such reductions:

Sean Rameswaram [03:28]: "Rip out of this wasted $6.5 trillion Harris Biden budget?"

Dylan Matthews [03:25]: "Any sufficiently large organization is going to have inefficiencies... But almost everything that the federal government spends money on is pretty non-controversial."

Chris Edwards expresses skepticism about the feasibility of achieving $2 trillion in cuts:

Chris Edwards [12:10]: "They are not going to cut $2 trillion. I will bet any amount of money... I think the quantity of cuts we're going to be looking at is in the tens of billions rather than hundreds or trillions."

Conversely, Vivek Ramaswamy outlines potential areas for significant reductions:

Vivek Ramaswamy [18:54]: "The next biggest pot of money in the federal budget is aid from the federal government to state and local governments. That's $1.1 trillion of spending every year... I think state governments can pick up the slack."

Political Implications and Power Dynamics

A crucial aspect of the discussion centers on the constitutional balance of power between the executive and legislative branches. Typically, Congress holds the "power of the purse," making unilateral budget cuts by the president highly contentious and legally challenging:

Chris Edwards [10:32]: "I do not think that the White House on its own has the power to cut federal spending. Congress has the power of the purse... Russ Fought... thinks the President has what's called an impoundment power."

The possibility of the executive branch asserting greater control over federal spending without congressional approval introduces significant legal and political uncertainty.

Impacts on Public Programs and Services

The proposed budget cuts target a variety of public services, each with distinct implications:

• Medicaid and Income Security Programs: Expected to face substantial reductions, potentially affecting millions of low-income and disabled individuals.

Chris Edwards [08:00]: "Medicaid... highly likely to be a major target again this time around."

• Aid to State Governments: Aiming to reduce federal subsidies, thereby shifting financial responsibility to state governments, which may struggle to compensate equally across diverse states.

Vivek Ramaswamy [20:38]: "Think of diversity. I think when the federal government cuts a welfare program like public housing, New York might decide to fund its own public housing, but say Texas might decide... to privatize our public housing."

These cuts could lead to increased disparities in public services across states, depending on local government responses and fiscal health.

Conclusion: Uncertainty and Future Prospects

While the ambition to slash $2 trillion from the federal budget garners attention, experts like Chris Edwards caution against the likelihood of such extensive cuts, predicting more modest reductions focused on eliminating waste rather than dismantling major programs.

Chris Edwards [12:10]: "They are not going to cut $2 trillion... likely to be top targets."

Vivek Ramaswamy remains optimistic, arguing that economic pressures like inflation and mounting deficits create a political opportunity for meaningful spending reforms:

Vivek Ramaswamy [24:20]: "Republicans will be scared that if the deficits are too big and the spending is too large, they risk a bout of inflation... Presidents have their most legislative leverage in their first year."

Ultimately, the episode underscores the complexities and challenges inherent in overhauling the federal budget, highlighting the interplay between economic imperatives, political will, and institutional constraints.

Notable Quotes with Timestamps

• Sean Rameswaram [00:00]: "Elon Musk is a funny guy. You can tell because his favorite cryptocurrency is based on a cute dog..."

• Chris Edwards [04:45]: "So biggest single share is Social Security... that's the biggest single program, and it's one that Trump has promised not to cut."

• Vivek Ramaswamy [18:54]: "The next biggest pot of money in the federal budget is aid from the federal government to state and local governments. That's $1.1 trillion of spending every year..."

• Chris Edwards [12:10]: "They are not going to cut $2 trillion. I will bet any amount of money... likely to be top targets."

• Vivek Ramaswamy [24:20]: "Republicans will be scared that if the deficits are too big and the spending is too large, they risk a bout of inflation..."

This comprehensive summary encapsulates the critical discussions and insights from the episode, providing listeners with a clear understanding of the proposed Department of Government Efficiency's objectives, the challenges of implementing such substantial budget cuts, and the broader implications for U.S. federal spending and governance.