Even Musk Couldn’t Discipline Trump’s Spending – Twin Cities

Donald Trump is advocating massive tax cuts while vowing to protect Social Security and Medicare benefits and promising drastic cuts in immigration, which will make it harder to sustain retirement programs. It doesn’t work, mathematically, especially in an economy already struggling with inflationary and interest-rate pressures.

Enter Elon Musk. Trump’s latest economic argument is that he will find the money he needs in a government efficiency commission led by Musk that will wring waste out of the system and drive the country into fiscal nirvana.

It’s a smart gambit, politically. But I have news for Trump and Musk: The federal government is already quite efficient at its primary job, which is sending money to the elderly.

Love Musk or hate him, he’s clearly a hard worker whose obsessive focus on product has brought success to both Tesla and Space X. His takeover of Twitter was far less successful from a business perspective, but he managed to execute massive layoffs in a way that drew a lot of complaints from the left (which Trump undoubtedly sees as a bonus) but ultimately worked out well (which he probably cares less about). You could argue that Musk could accomplish the same thing with the federal government—run through the books, fire a few bureaucrats, and insult the right people. The idea of balancing the budget by cracking down on waste was a staple of ’90s pop culture, in movies like Dave and books like Executive Orders.

It’s enough to make you wonder why real presidents George H. W. Bush and Bill Clinton signed deficit-reduction bills consisting of unpopular tax increases and spending cuts. Did they simply not know the right accountants?

It is more likely that the idea is being brought back not because it is feasible, but because it is politically expedient.

The No. 1 item in the government budget is, after all, Social Security, which is being run with breathtaking efficiency. The next big items are interest on existing debt—not a great use of funds, but not an efficiency issue either—and the military, which Trump wants to spend more on, not less.

The other two big national components are Medicare and Medicaid. Can they be made more efficient? Of course, to some extent, it depends on what you mean. But the administrative costs of these programs are very low compared to private insurance, which is kind of a double-edged sword. Medicare also uses its large size to insist on paying doctors and hospitals less than they get from the private sector, which is a pretty efficient strategy. Medicaid pays even lower rates—as a result, many providers refuse to accept it.

As a result, there is almost no feathery filler in these programs. One big opportunity to reduce costs without cutting services is one that President Joe Biden has already partially seized: using Medicare’s purchasing power to force manufacturers of 10 popular prescription drugs to offer lower prices. This initiative could be expanded in a way that would save even more money without significantly reducing patient access to the drugs. But conservatives oppose the idea, arguing that windfall profits from highly successful drugs are essential to preserving incentives to invest in research and development.

Without entering into that debate, I would just like to point out that “government waste” often depends on your perspective.

A private company like Tesla or X has a profit and loss statement; a given item either contributes to revenue or it doesn’t. It can be difficult to predict whether a given expense is or isn’t a good idea, all things considered, but the terms of the argument are mostly straightforward. That’s not the case with, say, Medicare, which is much less likely to deny a claim than private insurance. That’s what so many older people like about Medicare. There are various proposals to apply a more rigorous cost-benefit analysis to Medicare coverage, but that would create more red tape, not less. That’s also what sparked the controversy over Obama’s “death panels.”

If Musk were to examine the federal budget in detail, he would find that this is by far the most common situation: There is plenty of opportunity for people to disagree about whether the government should do this or that, but relatively little pure “waste” in the sense of a Twitter employee who does not contribute to the core functioning of the service.

Trump has repeatedly promised to eliminate the Department of Education, for example, criticizing federal meddlers who poke their noses into matters best left to states and school districts. There’s certainly some meddling going on at the department. But mostly, he’s been handing out money, either in the form of student loans or grants to districts. Simply firing all the meddlers won’t cut spending much. And it doesn’t make much sense to hand out so much money without any oversight—i.e., meddling.

Now, completely removing the federal government from funding education could really save some money. But people will notice if, say, states have to lay off 5% of their teachers because their federal Title I grants disappear.

If you look at the public sector with an appropriate skepticism, almost everything—student loans, Head Start, care for the elderly and disabled, the National Park Service—can seem wasteful. But there is a fundamental difference between making government more efficient at what it does and deciding that it should do fewer things.

The vast majority of federal spending now goes to just a few functions: national defense, which Trump wants to increase spending on, and care for the elderly and sick. The latter is expensive, and Republicans have traditionally wanted the government to do less of it. Trump’s political successes, such as they are, have largely been based on avoiding that trade-off—by cutting taxes but not Social Security or Medicare, securing the support of both the business community and older, working-class cultural conservatives. No amount of auditing can plug the hole that this leaves in the federal budget.

Matthew Yglesias is a Bloomberg Opinion columnist. A co-founder and former columnist for Vox, he writes the Slow Boring blog and newsletter. He is the author of One Billion Americans.