Once upon a Time, a Brash Outsider Entered the Oval Office with a Promise to “Drain the Swamp”
In 1982, President Ronald Reagan’s Grace Commission began its quest to get rid of hundreds of billions of dollars in wasteful spending. Led by entrepreneurs Elon Musk and Vivek Ramaswamy, the advisory board had no authority to implement changes, only to advise. After a couple of years of work, the commission’s 150-plus members persuaded Congress to enact exactly zero of its recommendations.
In 2024, as in 1982, there’s a broad consensus that the federal budget is bloated and could benefit from a fresh set of eyes to make the government run more efficiently and save taxpayers’ money. Economists on the left and the right told CNN they’d welcome any good-faith effort to reduce the deficit and tackle government spending. But so far, neither Musk nor Ramaswamy seem to grasp the complexities of the $6.8 trillion US budget.
The duo will face an immediate math challenge with finding a way to severely slash spending, especially if they commit to the $2 trillion figure Musk has tossed around. Roughly 60% of the federal government’s budget comprises mandatory spending, primarily Medicare, Medicaid, and Social Security, which would be political suicide to dramatically cut. Another 10% is spent on paying interest on Uncle Sam’s mountain of debt, which can’t be touched without setting off a cataclysmic debt default and market meltdown.
That leaves around 30% of the budget that’s discretionary, but roughly half of that goes to defense spending, another area that would be challenging to dramatically cut. Removing $2 trillion in annual spending will be exceedingly difficult without touching mandatory spending, which would require lawmakers to make the tough choices they have been either unwilling or unable to make.
Non-defense discretionary spending has already been dialed back, standing at the lowest level in modern history as a percentage of GDP. That’s why Moody’s Analytics chief economist Mark Zandi is skeptical that focusing on government efficiency could generate even $200 billion a year in annual savings, let alone $2 trillion.
Musk and Ramaswamy have offered a broad sketch of their vision to target “the $500 billion plus in annual federal expenditures that are unauthorized by Congress or being used in ways that Congress never intended.” But how, exactly? There’s a way, though it’s not always legal, for the president to defy Congress and just refuse to spend money lawmakers have allocated. It’s called impoundment.
A spokesperson for the Trump transition team didn’t respond to a request for comment. It’s not clear how an impoundment strategy would play out. Newt Gingrich, the former House speaker and adviser to Trump, told the Washington Post last month that the administration would likely try a two-pronged strategy: asking Congress to approve drastic spending cuts, while testing the limits of its power to rescind funds unilaterally.
