To Succeed at Cutting Government, Musk and Ramaswamy Must Take on Entitlements

Possibly the biggest pile of waste in the federal government is the amount of “improper payments” made every year by the Medicare and Medicaid programs. In 2023, for example, those mistakes cost taxpayers more than $100 billion.

This is worth noting for two reasons in the wake of the news that President-elect Donald Trump has asked Elon Musk and Vivek Ramaswamy to head up a new Department of Government Efficiency (DOGE). Despite the name, the DOGE looks to be more of an unofficial advisory board that will work with the White House’s Office of Budget and Management (OMB), and Trump says it will help “drive out the massive waste and fraud which exists throughout” the government’s $6 trillion budget.

First, it’s not as if there is some secret knowledge to be uncovered by the DOGE when it comes to fixing the rampant inefficiencies of the federal government. Those Medicare and Medicaid overpayments are documented annually, for example. The Government Accountability Office and various inspectors general file regular reports. The Congressional Budget Office maintains a list of things that could be cut to reduce the deficit. Various members of Congress—most prominently, Sen. Rand Paul (R–Ky.)—periodically publish lists of silly, wasteful, or dubious government spending.

What’s lacking, in short, is not ideas but the political will to act on them.

The amount of political will is going to matter, because that is very relevant to the second point: Unless Trump is willing to set aside his promise not to touch America’s entitlement programs, the DOGE will be unable to follow through on its mandate.

Again, look at those improper payments made by Medicare and Medicaid. The $101.4 billion of improper payments the two entitlements made in 2023 accounted for 40 percent of all improper payments across the entire government that year, according to the GAO. That same GAO report suggested a simple change in how Medicaid bills some of its services that, if implemented, could save $141 billion over 10 years.

That should be the lowest of low-hanging fruit for any serious government-wide antiwaste effort—but it is off-limits as long as Trump refuses to consider any changes to entitlement programs.

The same problem pops up when you start looking at other big swings that the DOGE could take. Seven of the top nine suggestions made by the Congressional Budget Office’s annual report on “options for reducing the deficit” involve changing elements of America’s three federal entitlement programs. Capping Medicaid spending, increasing premiums for Medicare Part B, or reconfiguring how Social Security benefits are paid to wealthier Americans each could save hundreds of billions of dollars over the next decade. None will be possible as long as entitlement reform is off the table.

All of this is a function of the federal government’s fiscal reality: Entitlements are the biggest and fastest-growing segment of the budget. This year, so-called “mandatory spending”—primarily Social Security, Medicare, and Medicaid, along with a few other government-funded health care programs—will cost nearly $4 trillion, while all discretionary spending will total less than $1.8 trillion.

Musk has promised $2 trillion in spending cuts, but he could propose eliminating all discretionary spending—good luck zeroing out the Pentagon—and would still fall short of that goal. It is impossible to be serious about fiscal reform while promising not to touch the entitlement programs.

That’s why the question of political will matters. If the DOGE is going to be something more than a meme-ified version of Tom Coburn’s Congressional Pig Book, it will have to break through the political opposition that has stymied countless other efforts at cutting government spending. Pointing out the waste, fraud, and abuse is relatively easy. Getting Congress to cut programs that feed public cash to constituents and contractors is harder. Entitlement reform is orders of magnitude harder still.

Of course, libertarians should welcome any discussion about cutting government, and personally I wish Musk and Ramaswamy the best of luck in this endeavor. If nothing else, the project is sure to be “extremely tragic and extremely entertaining,” as Musk has promised.

Still, it seems prudent to withhold praise until the DOGE has put forth some ideas and indicated how it believes the White House and Congress will accomplish those things. As long as Trump remains adamant about maintaining the status quo for America’s entitlement programs, the DOGE’s bark is likely to be more fearful than its fiscal bite.

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Source: https://reason.com/2024/11/13/to-succeed-at-cutting-government-musk-and-ramaswamy-must-take-on-entitlements/