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CNN
3 days ago
- Business
- CNN
Analysis: Scorecard: How Musk and DOGE could end up costing more than they save
Rather than set government straight, Elon Musk is leaving Washington with the federal budget all cattywampus. Deficit spending is increasing, not waning, and there is a growing school of thought that his 'efficiency' effort could end up costing the government as much as or more than it saved. The Tesla and SpaceX CEO came to Washington with a cut-till-it-hurts mindset and carte blanche from President Donald Trump. Musk quickly dialed back his campaign-trail bravado of cutting $2 trillion from the federal budget, but as recently as a Fox News interview in March, he said that by the time he left government, his Department of Government Efficiency 'will have accomplished most of the work required to reduce the deficit by a trillion dollars….' Instead, Musk will leave government work 'disappointed' that the Republicans he helped put in power are working to pass a bill that is estimated to add some $3.8 trillion in deficit spending and which Trump calls 'big' and 'beautiful.' There's no accounting trick to correct that imbalance. The budget is trillions out of whack, and the shock-and-awe campaign Musk and Trump imposed across the federal workforce has led to some serious PTSD for federal workers and contractors while claiming only to have saved $175 billion. That's not chump change, but it's not going to radically reform the US government. What's listed on the still-rudimentary DOGE website is also not an accurate reflection of what the group might actually have accomplished. DOGE will live on in the White House, 'like Buddhism' without Buddha, Musk has said, and CNN has reported that more cuts are planned after his departure. But the pace of DOGE activity has slowed, at least as reflected on its website. Musk's departure is an opportunity to consider whether the Department of Government Efficiency has lived up to its name. CNN's Casey Tolan is among the reporters who have been trying to match what DOGE claims to have saved or cut with what has actually been trimmed. Picking apart the 'estimated savings' of $175 billion on the DOGE website, Tolan told me that less than half that figure is backed up with even the most basic documentation. That means it's possible only even to start investigating about $32 billion of savings from terminated contracts, $40 billion of savings from terminated grants and $216 million of savings from terminated leases that DOGE claims. Plus, some of the specific terminations that are included in those numbers have no details at all. And Tolan has reported on the fact that DOGE's tally has 'been marred by various errors and dubious calculations throughout the entire time they've been releasing this info.' Probably not. The figure is based on '161 million individual federal taxpayers,' according to the DOGE website, which drastically undercounts taxpayers in the US. That 161 million figure is more likely a reflection of individual tax returns and would not reflect married people who file jointly, according to Betsey Stevenson, a former chief economist at the US Department of Labor during the Obama administration who is now a professor at the University of Michigan. 'This distinction is about trying to get that number as large as possible. If instead it was expressed as per American then it would be $514,' and only if you assume DOGE has saved $175 billion, which it probably has not, she told me in an email. Workers who generated revenue from the government have been fired, Stevenson points out. For example, staffing cuts at the IRS will mean the US brings in less revenue — but so will operating national parks short-staffed. Plus, a universe of litigation related to DOGE's efforts to cancel contracts and fire workers seemingly without cause is percolating through courts. 'In total, estimates suggest that what has been spent to generate these cuts may be as great as the cuts. In the long run, it's not clear that DOGE generated any savings,' she said. Max Stier, CEO of the Partnership for Public Service, has estimated in a back-of-the-envelope way that DOGE cuts could end up costing the US $135 billion simply because it will need to retrain and rehire elements of the work force that have been let go. The federal workforce is literally in trauma — something Trump's director of the Office of Management and Budget, Russ Vought, said was an aim of his. Stier estimates the federal workers will be much less productive after DOGE's efforts, for a variety of reasons. Workers are now worried about losing jobs; their morale is depleted; they are distracted from their work; and many top performers are being reassigned or are leaving entirely. In a previous interview, Stier described the DOGE effort to me as 'arson of a public asset.' We probably can't, according to Nat Malkus, a senior fellow at the American Enterprise Institute who has tried to keep track of DOGE's accounting for its cuts. While Musk has promised maximum transparency, it has been impossible to verify much of what DOGE has said it has done. 'We expect the government to show receipts,' Malkus told me in a phone interview. 'And the receipts that DOGE has shown that are posted publicly are nonetheless woefully inadequate to back their claims,' he said. Far from fundamentally changing government, the savings DOGE claims won't actually be realized unless and until Congress, which has the power of the purse in the Constitution, passes a rescission bill to claw back the funding. 'So far, we've just canceled contracts,' he said. 'The money is still spent because Congress spends the money.' The DOGE effort has certainly changed the tenor of the conversation around government spending. Its aggressiveness came as a shock to many Americans. 'They have shown that they're willing to inflict pain in the pursuit of reducing government expenditures,' Malkus said, adding that most Americans think the government spends too much money. 'That resolve is something rare and potentially valuable,' Malkus said. DOGE also brought in a tech mindset of cutting more than is necessary with the aim of building back, something that could be argued occurred with the rehiring of nuclear safety workers, for instance, or the reinstatement of certain contracts. Jessica Tillipman, an expert in government procurement law at George Washington University, is troubled by the idea that the government has gone from being the best business partner to one contractors approach with caution. 'The government's not acting like a good business partner right now,' Tillipman said. 'They're squeezing contracts that have been fairly negotiated between the government and contractors.' It's always possible DOGE could end up reforming government in positive ways, but the evidence is not yet there, Tillipman said. 'What have we seen? You require everybody to come back to work and you don't have office space,' she said as one example. 'You have people doing work that they're not trained to do. You have talent drains,' Tillipman said, pointing out that most of the government firings so far were among recently hired workers often brought on with a particular expertise. 'Half the training programs for the government have been canceled, so these pipelines that the government spent decades working on to make sure that there's a steady supply and the government's an attractive place for high-quality talent have gone away.' The long-term effect of those changes will not be clear for some time. 'There's a long way to go before this is going to actually shift the way agencies work,' Malkus said. 'It just takes longer than four months.' Stevenson pointed out that despite everything DOGE claimed to do, government outlays are on track to rise by 9% in 2025 compared with 2024. That's because Americans are living longer and drawing more from programs like Medicare and Social Security. It's those programs that are driving the deficit and debt, not the discretionary spending Musk targeted. 'Chainsaws and bluster can't solve the yawning gap between revenue and spending that has led American debt to rise to unsustainable levels,' Stevenson said.
CNN
3 days ago
- Business
- CNN
Analysis: Scorecard: How Musk and DOGE could end up costing more than they save
Rather than set government straight, Elon Musk is leaving Washington with the federal budget all cattywampus. Deficit spending is increasing, not waning, and there is a growing school of thought that his 'efficiency' effort could end up costing the government as much as or more than it saved. The Tesla and SpaceX CEO came to Washington with a cut-till-it-hurts mindset and carte blanche from President Donald Trump. Musk quickly dialed back his campaign-trail bravado of cutting $2 trillion from the federal budget, but as recently as a Fox News interview in March, he said that by the time he left government, his Department of Government Efficiency 'will have accomplished most of the work required to reduce the deficit by a trillion dollars….' Instead, Musk will leave government work 'disappointed' that the Republicans he helped put in power are working to pass a bill that is estimated to add some $3.8 trillion in deficit spending and which Trump calls 'big' and 'beautiful.' There's no accounting trick to correct that imbalance. The budget is trillions out of whack, and the shock-and-awe campaign Musk and Trump imposed across the federal workforce has led to some serious PTSD for federal workers and contractors while claiming only to have saved $175 billion. That's not chump change, but it's not going to radically reform the US government. What's listed on the still-rudimentary DOGE website is also not an accurate reflection of what the group might actually have accomplished. DOGE will live on in the White House, 'like Buddhism' without Buddha, Musk has said, and CNN has reported that more cuts are planned after his departure. But the pace of DOGE activity has slowed, at least as reflected on its website. Musk's departure is an opportunity to consider whether the Department of Government Efficiency has lived up to its name. CNN's Casey Tolan is among the reporters who have been trying to match what DOGE claims to have saved or cut with what has actually been trimmed. Picking apart the 'estimated savings' of $175 billion on the DOGE website, Tolan told me that less than half that figure is backed up with even the most basic documentation. That means it's possible only even to start investigating about $32 billion of savings from terminated contracts, $40 billion of savings from terminated grants and $216 million of savings from terminated leases that DOGE claims. Plus, some of the specific terminations that are included in those numbers have no details at all. And Tolan has reported on the fact that DOGE's tally has 'been marred by various errors and dubious calculations throughout the entire time they've been releasing this info.' Probably not. The figure is based on '161 million individual federal taxpayers,' according to the DOGE website, which drastically undercounts taxpayers in the US. That 161 million figure is more likely a reflection of individual tax returns and would not reflect married people who file jointly, according to Betsey Stevenson, a former chief economist at the US Department of Labor during the Obama administration who is now a professor at the University of Michigan. 'This distinction is about trying to get that number as large as possible. If instead it was expressed as per American then it would be $514,' and only if you assume DOGE has saved $175 billion, which it probably has not, she told me in an email. Workers who generated revenue from the government have been fired, Stevenson points out. For example, staffing cuts at the IRS will mean the US brings in less revenue — but so will operating national parks short-staffed. Plus, a universe of litigation related to DOGE's efforts to cancel contracts and fire workers seemingly without cause is percolating through courts. 'In total, estimates suggest that what has been spent to generate these cuts may be as great as the cuts. In the long run, it's not clear that DOGE generated any savings,' she said. Max Stier, CEO of the Partnership for Public Service, has estimated in a back-of-the-envelope way that DOGE cuts could end up costing the US $135 billion simply because it will need to retrain and rehire elements of the work force that have been let go. The federal workforce is literally in trauma — something Trump's director of the Office of Management and Budget, Russ Vought, said was an aim of his. Stier estimates the federal workers will be much less productive after DOGE's efforts, for a variety of reasons. Workers are now worried about losing jobs; their morale is depleted; they are distracted from their work; and many top performers are being reassigned or are leaving entirely. In a previous interview, Stier described the DOGE effort to me as 'arson of a public asset.' We probably can't, according to Nat Malkus, a senior fellow at the American Enterprise Institute who has tried to keep track of DOGE's accounting for its cuts. While Musk has promised maximum transparency, it has been impossible to verify much of what DOGE has said it has done. 'We expect the government to show receipts,' Malkus told me in a phone interview. 'And the receipts that DOGE has shown that are posted publicly are nonetheless woefully inadequate to back their claims,' he said. Far from fundamentally changing government, the savings DOGE claims won't actually be realized unless and until Congress, which has the power of the purse in the Constitution, passes a rescission bill to claw back the funding. 'So far, we've just canceled contracts,' he said. 'The money is still spent because Congress spends the money.' The DOGE effort has certainly changed the tenor of the conversation around government spending. Its aggressiveness came as a shock to many Americans. 'They have shown that they're willing to inflict pain in the pursuit of reducing government expenditures,' Malkus said, adding that most Americans think the government spends too much money. 'That resolve is something rare and potentially valuable,' Malkus said. DOGE also brought in a tech mindset of cutting more than is necessary with the aim of building back, something that could be argued occurred with the rehiring of nuclear safety workers, for instance, or the reinstatement of certain contracts. Jessica Tillipman, an expert in government procurement law at George Washington University, is troubled by the idea that the government has gone from being the best business partner to one contractors approach with caution. 'The government's not acting like a good business partner right now,' Tillipman said. 'They're squeezing contracts that have been fairly negotiated between the government and contractors.' It's always possible DOGE could end up reforming government in positive ways, but the evidence is not yet there, Tillipman said. 'What have we seen? You require everybody to come back to work and you don't have office space,' she said as one example. 'You have people doing work that they're not trained to do. You have talent drains,' Tillipman said, pointing out that most of the government firings so far were among recently hired workers often brought on with a particular expertise. 'Half the training programs for the government have been canceled, so these pipelines that the government spent decades working on to make sure that there's a steady supply and the government's an attractive place for high-quality talent have gone away.' The long-term effect of those changes will not be clear for some time. 'There's a long way to go before this is going to actually shift the way agencies work,' Malkus said. 'It just takes longer than four months.' Stevenson pointed out that despite everything DOGE claimed to do, government outlays are on track to rise by 9% in 2025 compared with 2024. That's because Americans are living longer and drawing more from programs like Medicare and Social Security. It's those programs that are driving the deficit and debt, not the discretionary spending Musk targeted. 'Chainsaws and bluster can't solve the yawning gap between revenue and spending that has led American debt to rise to unsustainable levels,' Stevenson said.
CBS News
21-05-2025
- Business
- CBS News
Stock market falls sharply after Target reports sales drop
Understanding the cycle of U.S. deficit spending and rising debt amid Trump budget push Stocks are slumping amid signs of slowing consumer spending and investor concerns about the U.S. fiscal outlook. Target, one of the nation's largest retailers, on Wednesday reported weaker sales for the first quarter and warned of a potential downdraft over the rest of the year as Americans react to U.S. tariffs by pulling back on consumption. The company's sales fell 2.8% to $23.8 billion in the January-March period, down from $24.5 billion from the year-ago quarter, while Target said it expects a low-single digit decline in sales for 2025. Target "faced several additional headwinds this quarter, including five consecutive months of declining consumer confidence [and] uncertainty regarding the impact of potential tariffs," CEO Brian Cornell said in a call with Wall Street analysts. Shortly before the close of trade, the S&P 500 fell 106 points, or 1.8%, to 5,835. The Dow Jones Industrial Complex dropped 865 points, or 1.5%, while the Nasdaq Composite dropped 1.3%. Target shares fell 5.7% to $92.50 in afternoon trade. Such weakness comes as more companies say that rising economic uncertainty is clouding their financial prospects. Other large retailers, including Walmart, have said they plan to hike prices to offset tariffs imposed by the Trump administration on China and other countries. Shrinking corporate sales and profits could eventually shackle job growth, which has remained resilient in recent months, experts note. "Businesses expect growth in consumer demand to slow and view the outlook as unusually uncertain, so they are pausing hiring," analysts with Pantheon Macroeconomics said in a research note. Some retailers are benefiting from the current environment as some consumers tighten their belts. Discount giant TJX Companies, whose brands include HomeGoods, Marshall's and TJ Maxx, on Wednesday reported a 5% rise in net sales for its fiscal 2026 first quarter from a year ago. Tax bill overhang Investors are also assessing how a Republican-backed tax and spending bill now being negotiated in the House could impact the nation's finances. Moody's on Friday highlighted the government's growing debt pile in its decision to downgrade the U.S. credit rating. A weaker credit rating raises borrowing costs for the U.S. "We do not think that the downgrade matters by itself," Bank of America strategists wrote in a report, "but it has served as a wake up call for those investors who had been ignoring the ongoing fiscal discussion." Stocks were also feeling pressure from higher Treasury yields in the bond market, which can weigh on other types of investments. Bond prices have dipped because of concerns that a move in Congress to extend tax cuts could add trillions to the federal debt. "The bulk of the bill simply extends existing [tax] rates rather than lowering them incrementally," equity analyst Adam Crisafulli, head of Vital Knowledge, said in a note to investors. "In addition, there are some offsets that could financially harm lower-income Americans. Most important, the legislation is massively expensive and will add further to the debt/deficit at a time when both are already extremely unbalanced." Alain Sherter Alain Sherter is a senior managing editor with CBS News. He covers business, economics, money and workplace issues for CBS MoneyWatch. contributed to this report.
Associated Press
13-05-2025
- Business
- Associated Press
Fiscaldata.Treasury.gov informs North Carolina voters about the National Debt.
Both major parties have contributed to the unprecedented level of federal debt. 'Top 10 spending by category: 22% Social Security, 14% Net Interest, 13% Health, ...'— RALEIGH, NC, UNITED STATES, May 13, 2025 / / -- North Carolinians know the stress of being stuck in debt, with certain types of household debt running above the national averages, according to the Urban Institute ( ). Despite high levels of household debt, each household's share of the national debt is even more -- according to data from the department of Treasury website: Again, from the Urban Institute: 'Credit can be a lifeline during emergencies and a bridge to education and homeownership. But debt, which can stem from credit or unpaid bills, often burdens families' and communities' financial well-being.' These same words could apply to federal debt, though the amount of federal debt is an order of magnitude greater than the amount of household debt, excluding mortgage debt. The most obvious harm caused by the large federal debt is from the interest payments, which according to are now 14% of federal spending. Only Social Security spending is higher. High interest payments displace spending on social welfare, national defense, and other urgent priorities of government. Another harm of persistent deficit spending is born by future generations who are obligated to pay it back despite much of the benefit going to recipients today. Just as interest payments displace beneficial spending today, the repayment obligations of debt can displace future spending on essential programs. These harms are why people, when given the choice of taking on debt individually, take on far less debt than the government imposes on them. According to the New York Federal Reserve and other sources, the average household debt in the U.S. is about $32,000, excluding mortgages. This number, $32,000, represents the collective wisdom of over 170 million American households as to the amount of non-mortgage debt they are each willing to assume. In his 2004 book 'The Wisdom of Crowds,' author James Surowiecki showed how collective knowledge can be superior to biased or conflicted experts. The case of the federal debt may be a case where the wise crowd gives a better answer. The so-called experts in this case include biased Keynesian economists and conflicted politicians who increase spending while paying with debt rather than increasing taxes. Just how much has the federal debt diverged from the wisdom of the crowd? So much that in 2025 the expected U.S. federal debt per household is $216,000. That is seven times more than the $32,000 household average of non-mortgage debt. Who in North Carolina ran up the debt? All incumbent members of the U.S. Congress have responsibility for incurring federal debt. Special blame goes to the U.S. House Representatives, which is the only part of government that can introduce bills to raise revenue. The two longest serving members of North Carolina's House delegation are representatives Alma Adams (NC 12) and David Rouzer (NC 7). They have both served over 10 years and voted for over $18 trillion in debt between them. That is over $10,000 in debt per year, every year, for each household in North Carolina. During the tenures of both Adams and Rouzer, the national debt has more than doubled. The example of these two representatives shows that both Democrats and Republicans are responsible for causing unprecedented federal debt. One party has historically been about helping the poor and building the middle class. The other has a brand built on fiscal responsibility and low taxes. Yet the climbing federal debt displaces spending for the poor, pressures the middle class, is fiscally irresponsible, and increases future taxes. The Department of the Treasury has laid out the discomforting facts on its fiscal data website: Discomforting, but nowhere on the website does it say, 'debt crisis.' These words are used by many others, including the centrist think tank the Brookings Institution. In a recent article by Wendy Edelberg, Ben Harris, and Louise Sheiner they state: "... Analysts warn, however, that our nation's growing debt will inevitably lead to a crisis.' Rob Yates Libertarian Party of North Carolina ( +1 803-250-1075 [email protected] Visit us on social media: Facebook Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
