President-elect Donald Trump has stated his desire to create a Department of Government Efficiency (DOGE), to be headed by two hugely successful entrepreneurs—Elon Musk and Vivek Ramaswamy. The nomenclature of the proposed department is problematic, since “government efficiency” is an oxymoron. The Commission to Shrink Government would have been more accurate. But DOGE it is, and slashing spending and bureaucracies is a goal much to be desired and urgently needed.
To put this in context, Uncle Sam’s largest source of revenue is the personal income tax, which brought in not quite $2.2 trillion last year. That means that almost half of our income tax payments now go to servicing the debt on past expenditures rather than funding current programs.
The Task Ahead: Big Cuts, Many Choices
How can Musk and Ramaswamy shrink the federal government? Surely they will go after the low-hanging fruit of outrageous expenditures, such as the $518,000 spent to study how cocaine affects the sex lives of Japanese quails.They could save more by putting an end to the billions of dollars spent funding bogus climate-change alarmism projects.
They could trim more fat by taking the federal office buildings that reputedly have 20 percent occupancy rates and forcing four or five such agencies to consolidate and sell off the unneeded buildings.
They certainly need to take a meat axe to the grants of federal agencies (looking at you, Environmental Protection Agency) that fund anti-growth activism.
But even then, such sensible cuts won’t achieve a significant decline in federal spending. The truly major changes, if there are to be any, will need to come from Congress.
Congress must support efforts to reduce government spending. It needs to repeal or drastically cut egregiously wasteful laws (e.g., the Inflation Reduction Act).
Congress must abolish or radically downsize rogue bureaucracies that, in defiance of Supreme Court decisions such as 1922’s West Virginia v. Environmental Protection Agency, continue to promulgate, in whack-a-mole fashion, stifling regulations that exceed the bureaucracies’ statutory authority.
Congress must put an end to the insane regulatory “finding” that carbon dioxide—the base of the food chain on Earth—is a pollutant.
Question: Can drastic cuts to government enhance prosperity, or would they tank the economy? It’s time for a quick history lesson: What 20th-century U.S. president had the most successful economic program? If your answer is “Ronald Reagan,” you’re close, but that guess is probably subject to recency bias. By far the most successful economic program of the previous century was that of Warren G. Harding. Having inherited a deep depression that saw GDP shrink by more than 23 percent and unemployment explode from less than 5 percent to more than 14 percent in 1921, the year he took office, Harding implemented policies that resulted in industrial production rising by 27 percent in 1923 while unemployment fell all the way to 2.4 percent.
Realistically, Harding-scale cuts to federal spending aren’t politically feasible today. Even after Harding’s bold cuts, the federal budget was still more than twice as large as it had been just five or six years previously, before the United States entered World War I. Americans hadn’t yet become addicted to big government.
By contrast, today there are several generations of Americans who have become habituated to Uncle Sam’s myriad spending programs. That inertia will be hard to break. But given the seriousness of annual trillion-plus-dollar interest payments on debt, we the people should cheer on Musk and Ramaswamy as they fight the good fight. As we wish them success, let us hope that Congress has the same zeal for downsizing federal spending. But don’t hold your breath.