Musk and Trump: DOGE, Debt, and Default
The Department of Government Efficiency goes inefficiently bust.
The last 48 hours have been historic—and not in a good way.
Elon Musk has left the Trump administration with a black eye and a fresh dose of chaos. The official line is that he “tripped on something,” but given the behaviour, my guess is he tripped on a blotter of acid.
DOGE—the Department of Government Efficiency—will apparently limp on. But with most of its staff seconded from Musk’s companies, it’s hard to see how it can function for much longer.
In February, President Donald Trump appointed Musk to lead DOGE, a brand-new agency tasked with overhauling the U.S. government’s bloated spending. In 2024, federal spending hit $7.57 trillion across hundreds of departments and agencies. DOGE’s mission was to cut that.
Musk, never one for subtlety, posed with a chainsaw, vowing to slash the federal bureaucracy.
There’s something almost beautifully deranged about creating a new government agency just to cut other government agencies. But this fits neatly into Chadwick’s Laws of Public Finance:
Chadwick’s Laws of Public Finance and Administration:
- If an ambitious right-wing politician says they’ll reduce bureaucracy, expect more paperwork.
- If they claim they’ll cut government spending, it’ll end up costing more.
- The bigger the ambition—and the further right they lean—the bigger the failure and the higher the bill.
Musk’s original target was $2 trillion in savings. That figure was quickly revised to $1 trillion, then again to just $150 billion by the end of the 2026 financial year. Even these modest figures are hard to verify—and many of the “savings” appear to stem from reductions under the Biden administration, not Musk.
The verdict? Failure.
DOGE has axed billions in programmes, contracts, and grants. Over 60,000 federal employees have been laid off. Another 110,000 left through a deferred resignation scheme. Foreign aid has been slashed. But despite all this, federal spending is up.
So far during Trump’s presidency, spending is $190 billion higher than over the same period last year, and public finances are in a worse shape.
Why? Because when you cut vital departments, you lose revenue faster than you save money. Case in point: the IRS.
The largest exodus has come from the U.S. Treasury, which lost over 29,000 employees—most of them from the IRS. Scrapping 22,000 IRS positions might save $1.8 billion in wages by 2026, but it’s projected to cost $10.3 billion in lost tax revenue. Fewer staff = fewer taxes collected. No surprise there.
But Musk’s most dangerous cuts have been in public health.
The U.S. is now the only wealthy nation with endemic leprosy and human plague. Yes, actual plague. And it’s currently facing a major measles outbreak. The cost of treating preventable diseases vastly outweighs the meagre savings from gutting health programmes. And in America’s fragmented system, much of that cost falls on individuals. So while the federal government might save a few bucks, the country pays dearly.
But this isn’t just about Musk’s failure.
Trump plans to borrow $2.4 trillion to fund tax cuts. The plan to “pay” for them was through huge cuts to federal spending—cuts that Musk was supposed to deliver. Trump was using Musk’s reputation to borrow loads of money.
Now Musk’s public departure (and bitter criticisms) have exposed a brutal truth: Trump has no credible plan to pay for America’s spiralling debt. His only fallback? Tariffs. Which, let’s be honest, are just a tax on ordinary Americans. It would take 10 years of Tariffs to pay back the cost of Trump’s latest tax cuts, all the while the US would be paying interest on it.
And Musk isn’t the only one falling out with Trump. The President is at odds with the Federal Reserve chair, and rumours suggest Treasury Secretary Scott Bessent has his bags packed. He recently had to issue a direct assurance to financial markets that the U.S. wouldn’t default.
Bessent and Musk are even rumoured to have come to physical blows over Musk’s failure to deliver savings.
But the bigger picture is bleak: the U.S. is closer to default than ever.
Trump is ramping up debt while interest rates climb. That’s the real reason federal spending is rising: debt interest is ballooning faster than the economy is growing.
For now, this is sustainable only because the U.S. dollar is still the world’s reserve currency, and global banks keep buying U.S. Treasury bonds. But with Trump’s erratic behaviour and economic nationalism, even that advantage is wearing thin.
In the UK, our parliamentary system allowed us to turf out Liz Truss and try (just about) to steady the ship. We’re still paying the price—8% of government spending now goes on debt interest. In the U.S., it’s 16%—before Trump borrows another $2.4 trillion.
As Hemingway put it in The Sun Also Rises:
“How did you go bankrupt?”
“Two ways. Gradually, then suddenly.”
And all the while, JD Vance and the rest of the tech bro apostles are waiting in the wings, slouching towards Washington, their hour to be born.
Postscript: DOGE UK Edition
Just as DOGE crumbles in the U.S., Nigel Farage has popped up announcing a British version. Letters have gone out to Kent County Council from Reform UK’s “DOGE team” demanding access and information—letters with no legal standing, of course.
While writing this post, two senior members of the UK DOGE initiative resigned, including the Chairman of Reform.
Farage’s pantomime version of DOGE won’t save a penny. That’s not the point. It exists purely to deflect from Reform’s failure in local government.
When the policy fails, blame Council workers and foreigners, not the hapless politicians who prioritised posturing on social media over efficient administration.
