The DOGE dodge

For the cause of fixing the finances of the federal government, DOGE is a destructive and distracting sideshow.

Fixing the finances of the federal government is an increasingly urgent endeavor. The Congressional Budget Office projects that federal spending this year will exceed $7 trillion. It projects the deficit at $1.9 trillion.

That’s over 6% of GDP. Now that the return of persistent inflation has interred Modern Monetary Theory, virtually no economist thinks this is sustainable. And there is no end in sight. The CBO’s 10-year prognosis doesn’t show the deficit ever dipping below 5% of GDP. And that assumes a massive increase in income taxes that probably won’t happen.

Meanwhile, the Social Security trust fund is estimated to be unable to cover obligations by 2033 and the Medicare hospitalization trust fund by 2036. Those are big fiscal issues just a decade or so away.

I won’t speculate about the motivation of Donald Trump and Elon Musk in setting up the Department of Government Efficiency. Substantively, however, the effect is to create a political illusion of doing something about government spending without actually doing much that is meaningful in fixing the finances of the federal government. In fact, for the cause of fixing the finances of the federal government, DOGE is a destructive and distracting sideshow.

DOGE appears to be engaged in three principal activities: reducing the federal workforce, suspending or canceling government contracts, and evaluating technological processes.

The federal government employs a lot of people, but isn’t a labor-intensive enterprise. Of the $7 trillion in spending, the federal payroll for non-military employees is just in the neighborhood of $300 billion. If the federal workforce was cut by a third, which is orders of magnitude greater than anything DOGE has indicated it is seeking, that would only reduce the deficit from $1.9 trillion to $1.8 trillion. A reduction in force isn’t a meaningful step toward fixing the finances of the federal government.

Theoretically, a reduction in force could make the federal government more efficient, doing the same or more with fewer workers. This would be beneficial even if it didn’t meaningfully move the needle on reducing the deficit.

However, that would require a considered evaluation of the tasks at hand and how many bodies optimally would be employed in doing them. Given the minimal contribution of a reduction in force to lowering the deficit, there’s no reason to rush it rather than engaging in this considered evaluation.

DOGE, however, is pursuing a rushed reduction in force indiscriminately and without any evaluation of whether that will make accomplishing the governmental tasks more or less efficient. DOGE is offering buyouts to everyone and firing whomever has less civil service protections, such as probationary employees. The effect on the efficiency of the delivery of governmental goods and services is entirely random.

For the most part, the federal government is a financial exchange. It directly delivers very little in the way of goods and services. It collects money from taxes and borrowing, and then cuts checks to a wide range of entities: seniors, health care providers, state and local governments. It contracts out much of what it is primarily responsible for providing.

DOGE’s suspension and cancellation of contracts is also rushed and random. DOGE and its political supporters claim it is ferreting out waste and fraud, but there’s not much in the way of true examples of that so far. Instead, DOGE is primarily suspending or cancelling contracts that were entered into to effectuate what Congress has directed and enacted.

Giving Musk and his squadron of over-caffeinated graduate students the power to override congressional enactments is not only constitutionally suspect. It’s about to become a big political problem.

Spending authorization runs out as of March 14. Support from Democrats will inevitably be required to avoid a government shutdown. But if the Trump administration asserts the ability to ignore congressional appropriations and continues to give Musk and his squadron the authority to override congressional enactments, what can Republicans possibly offer Democrats to induce them to provide the votes to keep the government open?

The fate of USAID is illustrative. The agency was set up as a result of a congressional enactment. Congress appropriated funds to it to carry out its statutory functions. Yet Musk and his squadron have effectively shuttered the agency. In this world, what meaning or effect does a congressional appropriation have?

If Democrats were politically smart, they would waive the filibuster in the Senate, meaning that Democratic votes weren’t necessary to pass a funding bill. Meaning Democrats couldn’t be blamed for any government shutdown. And then let Republicans stew in their own juices in attempting to pass one.

While DOGE is a political illusion, the real Republican agenda is contained in the budget reconciliation bill that recently passed the House with Trump’s endorsement. It calls for spending cuts of $1.5 trillion over the 10-year planning horizon. That’s just $150 billion a year. That’s nothing to sneeze at. But it’s not enough, or even close, to meaningfully putting federal finances on a sustainable footing.

For me, fixing the finances of the federal government would be easy, since I have what is now a radical view of federalism, or the respective roles of the national government vis-a-vis state and local governments.

Today, there is no state so poor that it cannot provide whatever government assistance is to be offered to low-income residents. Nor any state that doesn’t have the resources to finance their own infrastructure improvements and maintenance. If the federal government returned these functions entirely to the states, existing taxes could sustainably support the remaining federal programs and functions.

Ronald Reagan attempted such a sorting out, and that’s the last time it was on the political agenda. It’s unlikely to find its way back on.

Fixing the finances of the federal government requires broad policy changes that only Congress can enact, such as greater means-testing for Social Security and Medicare. Or, at the least, adjusting the balance between the federal government and states in funding Medicaid.

Tax rates shouldn’t go up. In fact, the lower tax rates enacted in 2017 should be made permanent, as Senate Republicans are saying. Stability in government policy regarding investment and work is an important factor in facilitating economic growth. Maintaining existing tax rates scheduled to expire isn’t really adding to the deficit. It’s just not pocketing a scheduled decrease. Economic considerations make that the more prudent move.

However, broadening tax bases should be part of the discussion. According to the CBO, there are $2.3 trillion in tax credits and deductions. Given the aging of the population, additional revenue is likely a politically necessary part of any serious effort to fix the finances of the federal government. Both politically and substantively, broadening tax bases is preferable to increasing rates.

Of course, there is not a serious discussion occurring regarding truly fixing the finances of the federal government, outside a handful of think tanks and a few cranky columnists.

MAGAism is rich with ironies. One of them is that, while there is some political clamor within MAGAland for at least the illusion of doing something about deficits and debt, Paul Ryan, the last prominent Republican to actually want to do something about them, is still demonized.

The ranks of Republicans actually wanting to do something about fixing the finances of the federal government doesn’t include Donald Trump, irrespective how much mayhem he empowers Elon Musk to foment.

Reach Robb at robtrobb@gmail.com.