United States | News & Politics

Every working day the Treasury publishes a statement detailing withdrawals of cash from its primary deposit account, providing the best high-frequency indicator of government spending. Since Donald Trump took office a little more than three weeks ago, outlays have averaged $30bn a day. Compare that with the same period last year under Joe Biden: federal spending back then came to about $26bn a day. Outflows from the Treasury have actually risen since January 28th, when Mr Musk first claimed his “Department of Government Efficiency”, or doge, was saving the federal government $1bn a day. Looking at the bigger picture, the government’s spending trajectory in the current fiscal year, which began in October, basically resembles that of the past two years (see chart).

chart: the economist

Such comparisons are far from perfect. Flows in and out of government coffers are volatile. In nominal terms spending naturally rises over time, pushed up by inflation. Perhaps outflows would have been even larger in the absence of doge. And the agency is still in its infancy. Nevertheless, the gap between Mr Musk’s declarations and his apparent failure to cut spending shows the difficulties facing his project. Mr Musk has promised over $2trn in annual savings for the federal government. He will struggle to get close to that.

In large part this is because of the way America’s budget is structured. The government is on track to spend $7trn this year. Nearly two-thirds of this consists of mandatory expenditures on Social Security and health insurance. Interest payments account for over 10%. That leaves a quarter of the budget for discretionary spending, a category which in theory is somewhat easier to trim—except that half of it goes on defence and Republicans would like to increase such spending. In other words, no matter how aggressive doge is, its actions are focused on barely more than a tenth of the overall federal budget.

Mr Musk says he will produce vast savings by rooting out fraud and waste. Undoubtedly an organisation as large as the American government has fat on its bones, and would benefit from an exercise regime. But it is more accurate to view it as flabby rather than morbidly obese. The government accountability office, a watchdog, estimates that losses from fraud have in recent years run between $233bn and $521bn a year. Were it possible to identify and zap all of that fraud in real time—an extremely tall order—it would still not get Mr Musk close to his ultra-abstemious targets.

In any case, doge’s efforts appear to be pretty scattershot. Many of its spending reductions have targeted specific things that Mr Trump deems wasteful such as “diversity, equity, inclusion and accessibility” programmes. Yet these amount to a tiny sliver of the federal budget. The full value of the savings announced by doge (on its account on X, Mr Musk’s social network) adds up to about $7bn so far. Moreover, some of the reductions came from scrapping multi-year contracts, meaning that the annual savings amount to less than the headline figure. If the controversial closing down of usaid, America’s main international-development agency, counts as a cost-cutting success for doge, its total savings would reach about $45bn per year, or just 0.6% of federal spending.

None of this is to minimise doge’s impact. It has already put thousands of government employees on leave. Armed with a new executive order from Mr Trump, it is now preparing to make mass lay-offs, though it may lack the legal authority to do so. Civil servants are disoriented and anxious about their future—an outcome that will surely please Mr Musk, who relishes his role in the war on bureaucracy.

But the core mission of doge is to save money. “It’s not optional to reduce federal expenses. It’s essential,” Mr Musk said on February 11th. And on that count, he looks likely to come up woefully short. ■