Will Musk's DOGE Save America? [Tech Talk]

Musk's U.S. Government Efficiency Department, DOGE
Can It Cut Federal Budget by 30%?
The Fatal Flaw: An Advisory Body Without Real Authority

The U.S. economy is on the verge of a serious crisis. You might wonder why, given the high economic growth rate and record-high stock prices. The answer lies in the 'government deficit.'

Since the Joe Biden administration, the enormous U.S. government deficit has sparked heated controversy. According to U.S. Treasury financial data, in this fiscal year (FY), the federal government spent $6.75 trillion (approximately 9,450 trillion won), collected $4.92 trillion (about 6,890 trillion won) in revenue, resulting in a deficit of $1.83 trillion (around 2,562 trillion won). This amounts to about 6.3% of the Gross Domestic Product (GDP), a figure typically seen only during times of war or national disasters.

A fictional seal of the U.S. Government Efficiency Department created by an overseas netizen. Captured from an online community.

An uncontrollable government deficit carries the risk of escalating into a national fiscal crisis. Not only does the national debt continue to grow, but the government must issue more bonds to secure resources to operate government agencies. Subsequently, the interest on the national debt, i.e., bond yields, will soar, triggering a chain reaction affecting mortgages, small and medium-sized banks, and consumer sentiment. Therefore, the Donald Trump administration must reduce the deficit as soon as it takes office in January next year to stabilize the U.S. fiscal system.

In this presidential election, Elon Musk, a tech entrepreneur and a strong ally of former President Trump, proposed 'improving government efficiency' as a solution. He claims that by eliminating all waste in federal government departments, the budget could be reduced by up to $2 trillion (approximately 3,400 trillion won). If his plan succeeds, the U.S. would achieve a government surplus for the first time.

Can the government conduct mass layoffs like Big Tech?

Elon Musk, CEO of Tesla. Reuters Yonhap News

The department tasked with realizing Musk's vision is the Department Of Government Efficiency (DOGE), abbreviated as Doji. According to a notice posted on former President Trump's social networking service (SNS) platform, Truth Social, Doji is a presidential advisory body that provides various 'recommendations' to increase government agency efficiency and reduce operating costs.

It is not yet known what specific strategies Musk will introduce to improve government efficiency. However, Musk wrote on X that it involves "abolishing government bureaucracy, eliminating excessive regulations, reducing wasteful spending, and restructuring federal agencies." In other words, it is likely to adopt an approach similar to tech companies' cost-cutting through layoffs.

U.S. tech companies are adept at hiring numerous engineers during boom times and conducting large-scale layoffs during downturns. Musk is a seasoned executive in such restructuring strategies. Tesla survived numerous restructurings in its early days when it lacked proper factory facilities. After acquiring Twitter (X's former name), Musk focused on efficiency by laying off over 1,000 employees.

If such tech company management strategies are introduced to the government, it would likely involve consolidating departments deemed 'useless' and conducting massive layoffs of idle personnel. Currently, the federal government employs about 19.5 million civil servants, and since Musk aims to cut total costs by 30%, approximately 5.85 million employees would need to be laid off.

Doji outside the government lacks real power

The federal executive departments of the United States receive annual budget allocations from the Treasury Department and are organizations headed by ministers appointed by the President. Truman Library capture

However, a problem arises here. While it is Musk's prerogative to devise and propose 'efficiency strategies,' the actual execution decisions rest with Congress. Just as the establishment of U.S. government departments requires Senate approval, so does their closure. Even if the Republican Party holds the majority in both the House and Senate, it is highly unlikely that lawmakers will act as a 'rubber stamp' for Doji's recommendations.

Notably, a significant portion of federal government spending is related to defense or healthcare. Among these, Medicare, the U.S. public health system, accounts for about 16% of GDP and creates numerous public jobs in many states. This means it is deeply connected to the 'votes' of local district representatives.

Above all, although the Republican and Democratic parties are deeply divided, they have always cooperated bipartisanship in negotiations to raise the federal debt ceiling. If the country stopped borrowing to sustain public welfare and jobs, their own positions would be at immediate risk. The strong opposition from U.S. public employee unions goes without saying.

Screenshot of the U.S. White House website

Another issue is Doji's 'real power.' Although Doji uses the term Department, a designation for federal government agencies, a closer look reveals it is not a typical department. It is described as "advising from outside the government." In the federal government, a Department is an agency that receives and executes an annual budget allocated by the Treasury, led by a Secretary appointed by the President and confirmed by Congress. Doji has neither a budget nor a Secretary.

In other words, Doji is not actually a government department. It is merely an 'advisor' outside the government. This position is useful in that former President Trump can appoint personnel without separate congressional approval, but it has the fatal drawback that its actual administrative power approaches zero. Whatever recommendations Doji makes, the White House can simply 'ignore' them.

The difference between the private sector and government

Of course, since Doji's true nature has not yet been revealed, it is best not to prematurely predict the likelihood of achieving 'government efficiency.' However, it is important to note the differences between tech companies and government agencies.

Tech companies can pursue extreme efficiency through drastic layoffs because owners with firm responsibility and control have the actual power to make decisions.

But the government is different from a company. It is an institution that uses taxpayers' money, not investors', to guarantee public welfare and national security. It employs far more personnel than a single company, and the power relations among decision-makers are far more complex than those at a board of directors level. Perhaps this difference is the real barrier to achieving government efficiency.