During their campaign tours in November, Elon Musk and Donald Trump introduced the concept of the Department of Government Efficiency as a potential remedy for excessive government spending and bureaucracy. The appeal of this idea to many Americans is understandable, considering the staggering U.S. debt, which results in government interest payments of nearly $1 trillion annually.

In theory, minimizing the national debt seems like an easy win that should have bipartisan support. However, the practicalities of deciding where to reduce costs or raise taxes always lead to political backlash to some extent.

The burning question after a month is this: Has DOGE genuinely implemented spending reductions, and how do these measures compare to the looming debt crisis in America? (Hint: The figures do not align.)

Presently, the U.S. debt has surpassed $36 trillion. Rather than being awestruck by what could be purchased with that amount (equivalent to buying all the gold ever mined on Earth four times over), we must focus on debt reduction. To make progress, we must first comprehend the origins of this debt.

Over the past decade, the U.S. government spent a total of $61 trillion, while only generating $45 trillion in revenue. This implies an average yearly expense of $6.1 trillion, with $1.6 trillion of that designated for deficit spending.

Common belief suggests that government spending patterns differ significantly between Democratic and Republican administrations, but empirical data challenges this assumption. In reality, the deficits under Trump exceed the averages recorded during the presidencies of Joe Biden and Barack Obama.

Irrespective of the ruling party, federal expenditure primarily falls within four key categories, dubbed “The Big Four.”

-Medicare and Medicaid: Approximately 23% of annual spending, around $1.4 trillion.
-Social Security: Roughly 21% of yearly expenditure, totaling $1.3 trillion.
-Defense: Represents about 12% of annual spending, equivalent to around $750 billion.
-Interest Payments: Account for approximately 11% of yearly expenditure, totaling around $700 billion (though the current figure is $1 trillion).

Collectively, these four sectors consume 67% of annual spending, equaling $4.1 trillion out of the total yearly average of $6.1 trillion.

Given total expenses of $6.1 trillion, $4.1 trillion expended on “The Big Four,” and an average deficit of $1.6 trillion, any viable deficit reduction plan by DOGE must focus on drastically cutting spending in Medicare, Medicaid, Social Security, or Defense, raising government revenues substantially, or eliminating various government programs to save about 80% of current expenses.

To date, DOGE has failed to achieve these targets.

Verification of the DOGE-identified cuts or the methodology guiding these decisions remains inaccessible to the public until 2034, which leaves us reliant on DOGE’s self-reported activities.

The announced budget cuts by DOGE are as follows:

-Federal employee buyout program: Claimed savings of $37.5 billion in employment-related costs, but actual savings may be overstated.
-Unspecified National Institute of Health Overhead Reduction: $4 billion.
-Removal of DEI-related initiatives and contracts: $2.6 billion (impacting entities like the Office of Personnel Management, USAID, and the Department of Education).
-Reported misplacement of HUD funds totaling $1.9 billion.
-Cancellation of certain Department of Education contracts: $900 million.

Additionally, the remaining DOGE-recommended cuts amount to around $2 billion.

Considering these figures, the total for DOGE’s cuts is $49 billion. However, when factoring in potential overstatements in federal employee buyouts, the actual impact may fall between $21.5 billion and $49 billion. This translates to DOGE cuts addressing merely 1.25% to 3% of the budget deficit so far.

With less than a year remaining until DOGE’s planned termination in line with America’s 250th anniversary, the current pace of spending reductions is insufficient to balance the federal budget and may even lag further behind due to various factors.

The lack of legal backing for several cuts means that Congress or courts could overturn them, potentially causing a net detrimental effect on the budget. Additionally, the heavy focus on personnel reductions in DOGE’s current cuts could damage public trust in the government and financial markets, leading to reduced tax revenue.

Even if DOGE intensifies efforts to address the deficit through substantial cuts in the “Big Four,” it remains unrealistic considering that Medicare, Medicaid, Social Security, and other mandatory spending sectors necessitate congressional action to implement any significant reductions. Thus, DOGE cannot access a trillion dollars in the budget due to mandatory spending obligations and a further trillion allocated solely for interest payments.

This leaves Defense expenditure as the lone major sector that DOGE could potentially target. Nonetheless, even if DOGE manages to slash 8% from Defense spending, it would fall significantly short of its ultimate goal by over $1 trillion.

In light of this, DOGE’s current cuts, unless coupled with substantial reforms in Social Security, healthcare, Defense, or tax legislation, will remain superficial. The only real solution to addressing the deficit requires legislative action, an aspect that both political parties have struggled to agree on for an extended period.

Ryan Chapman’s expertise lies in applied microeconomics research.