Hey everybody. Welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads that shape SpaceX, Tesla X, The Boring Company, and Neurolink. I'm your host, Will Walden. So how does Elon Musk plan to cut $2 trillion from the federal budget? Is it realistic or will it lead to a collapse of our vital services in the United States of America? And can his involvement with the Trump administration really make it happen, or will conflicts of
interest get in the way? Now Elon Musk has flow to the idea of trimming $2 trillion from the US federal government spending during a speech at a Trump rally in New York City last month. Now he has been appointed to Co lead the newly established Department of Government Efficiency, or DOGE, by president-elect Donald Trump.
This appointment gives Musk an opportunity to test his ambitious claims, but it's unclear how feasible his proposals are or what impact they might have on the functioning of the US government now. In the fiscal year of 2023, the US federal government spent approximately $6.25 trillion, according to the US Treasury. In Musk's goal of slashing, $2 trillion would amount to a reduction of nearly 30% in federal spending now.
For context, mandatory expenditures such as Social Security, Medicare and interest payments on national debt constitute a significant portion of that budget, making them difficult to cut without legal changes or risking severe political backlash. Now, interest payments alone accounted for about $880 billion at 13% of the total, while Social Security made-up 1.46 trillion, or 22% of that.
Now, discretionary spending, which is subject to annual congressional approval, comprised roughly 25% of the budget in 2023. This category includes defense 874 billion, transportation, 137 billion and education 305 billion. More than half of discretionary spending is allocated to defense and area. Trump has pledged to expand, not cut through, initiatives like a
new missile defense system. Now, given the makeup of the budget, targeting only spending for Musk's proposed cuts would require dismantling entire agencies or eliminating major programs, a strategy unlikely to gain widespread political support. Now, Trump announced that Musk would be working alongside entrepreneur Vivek Ramaswamy as
Co leaders of DOGE. Their primary objective is to identify and eliminate waste in federal spending by reducing bureaucratic inefficiencies, cutting reduction regulations and streamlining government operations. However, experts warned that the new departments advisory role without direct executive power could limit its effectiveness. They said there's the executive branch that might be in the way, the Congress might be in the way.
The Constitution is a bit of an obstacle coming at Douglas Holtz Eakin, president of the American Action Forum. Now, Musk's track record is reducing operational cost, of course. It's notable, particularly an X, where he slashed the workforce from 8000 people to 1500 people
after acquiring the company. However, applying similar methods to government agencies could prove more challenging, given the complexities of federal regulations and legal constraints of the US. Federal government operates under a labyrinth of rules, and sweeping reforms would require approval from Congress, where previous attempts at smaller budget cuts have faced significant hurdles.
In 2022, Republican lawmaker struggled to pass legislation cutting just $130 billion from discretionary spending. Even with the GOP controlled Congress, any substantial reductions to the budget would face resistance, especially from lawmakers concerned about the potential impacts on essential
services. Additionally, Donald Trump campaigned on promises to enhance Social Security benefits by removing income tax on them, which would likely increase, not decrease federal expenditures in that area. Now the DOGE department, the new department will reportedly partner with the Office of Management and budget, the OMB
to pursue structural reform. But the goal of completing their work by July 4th of 2026. Now Trump described the initiative as potentially the Manhattan Project of our time, signaling its ambitious scope. The department's official account on X has already begun messaging its goals to the public, stating working overtime to ensure your tax dollars will be spent wisely. Now, despite this enthusiasm,
many analysts remain skeptical. Sounds to me like an outside Commission that will give OMB recommendations on what they should do to improve government efficiency, and as such its powers are entirely advisory now without formal authority, the commission's recommendations may be easy for other parts of the government to just ignore. Musk's close relationship with the Trump could provide the Commission some influences.
The billionaire spent election night at Trump's Mar A Lago estate and has been involved in several meetings with the president-elect and Republican lawmakers. However, this connection also raises concerns about potential
conflicts of interest. Tesla, SpaceX and other Musk owned companies hold substantial contracts with federal agencies including NASA, the Department of Defense, and critics argue that Musk's dual roles as a tech CEO and government advisor could lead to bias recommendations that favor his own business
interests. Ethics experts have pointed out that for Musk to comply with federal conflict of interest laws, he would need to either divest from his companies or recuse himself from discussions involving agencies where his businesses have dealings. However, since DOGE is technically just an Advisory Board created by the president rather than Congress, it might skirt standard ethics rules, leaving questions about oversight and accountability.
If it's Commission, it's outside the government, then the president takes the advice or he doesn't. Now, Tesla's frequent disputes with regulatory agencies like the National Hwy. Safety Patrol exemplify the potential conflicts. The NHTSA has mandated recalls and open investigations into Tesla vehicles or safety concerns, actions that Musk has publicly criticized as
overreach. Now, a Government Efficiency Commission Co led by Musk could propose cuts to regulatory bodies like NHTSA, potentially limiting their ability to enforce safety standards and directly benefit Tesla. Now SpaceX, Muska's rocket company, also faces regulatory scrutiny, particularly from the FAA. Delays to Spacex's Starship program have been attributed to FAA reviews, which Musk has argued are excessive. And Spacex's contracts with NASA and the Department of Defense
total billions of dollars. And any budgetary or regulatory changes recommended by DOGE could impact these projects. No X has faces own challenges, including ongoing investigations by the Federal Trade Commission of the FTC and the Securities and Exchange Commission of the SEC. Since taking control of the platform, Musk has overhauled its operations and content policies, drawing criticism for potentially prioritizing his political views over consumer
protection and transparency. His public endorsements of Trump and active promotion of pro Trump content on X have fueled concerns about the platform's neutrality during the election season. And while Musk has described his involvement with DOGE as an effort to delete the mountain of choking regulations, legal experts warn that if he directly participates in decisions affecting his own businesses, he could violate federal ethics laws unless he receives a waiver
from the president. Now, such waivers have been very rare and controversial in the past. Now, environmental issues may also pose a challenge to Musk's plans. His AI venture XAI is building a supercomputer facility in Memphis, TN, which has drawn criticism from environmental groups due to its reliance on gas turbines and its location near predominantly Black
neighborhoods. The Environmental Protection Even Agency, or the EPA, has been urged to investigate the potential health impacts of this project, which could complicate any attempts by DOGE to propose cuts to environmental regulations. Now, despite these concerns, Musk and Ramaswami seem determined to push forward with their vision for reducing government waste.
Musk's social media presence suggests he plans to keep the public engaged, even promising a leaderboard for the most insanely dumb spending of your tax dollars. Whether his approach will resonate with viewers and voters or translate into meaningful policy changes remains to be seen. And while the DOGE initiative has garnered significant attention, its ultimate success will hinge on the willingness of Congress and the White House to
adopt its recommendations. Without a clear legal mandate or bipartisan support, the department may struggle to implement its goals. For now, the debate over Musk's appointment in the feasibility of its proposed cuts is likely to dominate discussions in Washington, highlighting the challenges of balancing efficiency, transparency and ethical governance. Hey, thank you so much for listening today. I really do appreciate your
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