After Trump won the usa election, Tesla CEO Elon Musk was appointed along with former presidential candidate Vivek Ramaswamy as the co-heads of the newly established Department of Government Efficiency (DOGE) and expressed his desire to cut 2 trillion dollars from the national budget.

The goal of DOGE is to reduce government waste and bureaucracy, and the two co-heads began their work: Musk wants to hire "small government revolutionaries" for the department, while Ramaswamy wants to completely "delete" entire government institutions.

However, according to one of the 2024 Nobel laureates in economics, Simon Johnson, Musk may need to double-check his math.

According to the usa Congressional Budget Office (CBO), federal spending is expected to reach 6.5 trillion dollars in 2024, which means Musk hopes to cut nearly one-third of the current federal budget.

Mandatory spending in the federal budget includes Social Security, Medicare, Medicaid, and other medical-related expenditures. By 2024, these expenditures are expected to reach about 3.9 trillion dollars.

"He proposed to cut 2 trillion dollars from the domestic budget. The total budget exceeds 6 trillion dollars, but most of it is Social Security and Medicare."

This leaves about 1.6 trillion dollars in the budget available for discretionary spending. Historically, half of this has been used for defense spending.

Johnson said about Musk, "I don't think he'll cut military spending because I don't think Republicans would want that. So he's going to try to cut 2 trillion dollars from 0.8 trillion dollars."

"Listen, I'm not against the government improving efficiency or cutting waste," Johnson continued. "But this has been tried many times before. Musk is obviously a very creative person. I don't think he's considered these numbers yet because the numbers he mentioned don't make sense," Johnson added.

Abolishing institutions and cutting unnecessary spending may sound simple, but the process is anything but. Congress, not DOGE, oversees these institutions' budgets, which means Musk is not directly responsible for implementing his cost-cutting ideas. Furthermore, proposals to cut social security programs are extremely unpopular and could face strong opposition.

Johnson said, "Mr. Trump can't cut medical insurance and social security payments to people because many who rely on those payments just voted for him."

When discussing the usa federal budget, it's impossible not to touch on the topics of national deficit. Some market analysts predict that Trump's policies could increase the national debt by 10 trillion dollars over the next decade, and the head of blackrock's global fixed income team predicts that by the end of 2025, the national debt could reach problematic levels.

Johnson did not take such an extreme position, but he is still concerned about the trajectory of national debt, especially since Trump will likely renew the Tax Cuts and Jobs Act once in office.

"The tax cuts will be huge, and that's not a good idea for the long-term future of the country," Johnson said.

A reduction in taxes means that the already underfunded social security and medical insurance will be further impacted. According to the Committee for a Responsible Federal Budget, Trump's proposed tax policies could lead to the social security fund "going bankrupt" in the next six years. Musk's proposal for significant budget cuts and Trump's advocacy for tax reductions seem to leave no way to address the underfunded government programs.

This does not mean that Johnson completely denies Musk's ambitious plans. Perhaps a technocrat outsider would have unusual ideas about improving government efficiency. For example, ai could be a useful tool for businesses and government institutions to simplify their operation.

Johnson said: "It will be very interesting to see what Mr. Musk can come up with. Is there a clever way to utilize ai to improve the delivery of government services?"