Bloomberg Audio Studios, podcasts, radio News. Musk, for all the kind of excitement he's caused among Republicans, could actually be setting them up for a real problem that's going to hit when funding runs out on March fourteenth.
I'm Stephanie Flanders, head of Government and Economics at Bloomberg, and this is Trumpnomics, the podcast that looks at the economic world of Donald Trump, how he's already shaped the global economy, and what on earth is going to happen next This week, our question is will Elon musk campaign to make the US government more efficient actually lead to
its shutting down altogether in a few weeks time. On March fourteenth, the Continuing Resolution that funds the US federal government will run out and its work will shut down unless the Republican Congress and Donald Trump reach an agreement. Now, that was always going to be tough, but Elon Musk scorched earth overhaul of the US government via the so called Department of Government Efficiency DOGE appears to have made
it a whole lot harder. So that's left me wanting to know what exactly are the chances the federal government shuts down in a few weeks. And if it does, will DOGE shut down as well? Or will that be an opportunity for Elon Musk and his team to really go to town. Now, of course, nobody knows the answer to those questions, but I have two people here who can speculate much more wisely than most. Josh Green, National correspondent at Bloomberg BusinessWeek, author of the New York Times
bestseller Devil's Bargain, Steve Bannon, Donald Trump, and the National Uprising. Josh, great to have you back.
Could to be with you and Laura.
Davison, our White House editor specializing in DOGE taxes and fiscal policy. I think of you as the DOGE czar, but it just doesn't sound like a very nice name, Laura, so I won't call you that, but very good to have you.
Thanks for having me.
So.
I think in a more normal year, we'd have talked about the prospect of a government shut down long before now, since we're so close to that formal deadline. But frankly, there's just been too much going on.
Josh.
I mean, you did draw attention to this a few days ago in your excellent Business Week newsletter, but you describe their Elon Musk rampaging across Washington like Godzilla leveling Tokyo, packing away at federal agencies and firing workers on mass through Doge, I think, very good visual image. You had fun there. Doge appears to be having quite a lot of blowback out in people's constituencies. Is certainly causing a
lot of headlines, a lot of stories. But there's a very specific problem for the Republican leadership in Congress when it comes to these upcoming votes to keep the government running. So can you just take us through what they needed to happen and how Musk has made it harder.
The vibe in Washington right now among republic pilkins is very positive and very excited, and a lot of Trump fans have really enjoyed watching Musk shutter agencies, fireworkers, create all this chaos that has Democrats so upset, and of
course that's where all the news focus has been. But if you look right now, the conference is divided between a small group of hardline deficit hawks and the broader group, which includes moderate Republicans from districts that Joe Biden won who are concerned about deep spending cuts and so Republicans haven't been able to agree on a spending bill. This is not something that's new. In the past, Republicans have run into the same problem In twenty twenty three, Kevin McCarthy,
the House Speaker, had to rely on Democratic votes. Last December, Mike Johnson, his successor, again had to rely on Democratic votes to averta shutdown. So before Elon Musk, there had always been this kind of off ramp when I think of as an off ramp, where a Republican House Speaker who was in trouble could at the last minute cobble together some kind of a deal with Democrats to keep
the government funded. This time, however, the Democrats I've spoken to have been very angry about what Elon Musk is doing and what Donald Trump is doing. And a couple of them it said to me in the last couple of weeks, why would we help out Speaker Johnson and Republicans and agree to any kind of a deal. How could we possibly trust it if Elon Musk and Trump could just go ahead and summarily tear apart anything that
we'd agreed to. And to me, that raises an interesting tension that a lot of people aren't focused on yet. That Musk, for all the kind of excitement he's caused among Republicans, could actually be setting them up for a real problem that's going to hit when funding runs out on March fourteenth.
You mentioned that they've needed Democratic votes in the past. Just to be specific about it, there are quite a few Republican congressmen who and people who have never voted for one of these continuing resolutions, even with larger majorities than they have now, they've always had to go to Democrats.
Given that direct linkage that you're making with Elon Musk's unpopularity with Democrats and the need to get some Democrat votes, do you get the sense that they're going to link the two in any way, that they're trying to put some restraint on Doze or on President Trump more generally in return for that support, or would that be too explicit for them.
No, that's exactly the question that I've been asking, and the feedback I've gotten has been twofold. On the one hand, there's the obvious worry, which you've mentioned, that how can we have assurance that any deal we strike won't immediately be torn apart or ignored by Musk? The question I've been asking is would you actually write legislative language into an agreement saying Elon Musk cannot cut this agency? Or perhaps Trump could do what's called a presidential signing statement.
George W. Bush used to do these a lot, that would specify his intentions for what a bill means and how it should be interpreted. To guard it against Elon Musk, There's got to be some kind of an assurance from Democrats that the deal they agree to is going to withstand Doge's attacks. But then the other factor in all of this is that the Democratic Party is very unpopular.
It's favorability rating is something like in the mid thirties, and so there's a lot of pressure on Democratic lawmakers from Democratic voters not to simply roll over and enable Trump and Republicans to continue what they view as an assault on government. So there are a lot of forces, I think, behind the scenes that are pushing the two sides toward what looks to me to be a pretty high chance of a government shutdown.
I guess, just to be clear, everyone in Congress is pretty unpopular, right. The Republicans in Congress are not super popular, or you would say, you think specifically as the Democrats.
I think the Democrats right now are more unpopular. I saw Paul the other day that had Democrats running about twenty points behind, I think, in popularity behind Republicans. When Donald Trump even got a bit of a honeymoon, he had higher favorability ratings and unfavorability he rings for the
first month or so of his presidency. But it's the view of Democrats among their own voters that is so worrisome to Democratic elected officials because they need this support in order to stay in their jobs, and they're very alert and attuned to the dissatisfaction in the Democratic base. And that too is a factor that's going to play into what Democrats are and aren't willing to agree on when it comes to cutting it spending deal with the Republicans.
Okay, Joss, I might make you do a lot of work. I have one more question. Go on to something else, but I am interested. Do you think that doge has changed the politics of a shutdown because we don't normally talk about federal workers very much except if there's a shutdown, But I feel like we spent the last two or three weeks reading loads of stories about federal workers debating whether they're all useless, or whether any of them are
really important. Do you think that maybe President Trump will be less frightened of a shutdown in this context? Will it just sort of muddy the waters around Doge.
They're eager to test the proposition that the government really doesn't need all these employees to function on it, so I think there would be some appetite for a shutdown. The danger with that is that in the past, Republicans have gone into shutdowns saying, Oh, this isn't going to be a big deal, it will be fine, the government
can cont you to run. In my view, we had a test to that back during the first Trump administration in twenty eighteen and twenty nineteen, when Republicans allowed a shutdown to occur because Trump wanted to secure immediate funding for a border wall, and the shutdown lasted thirty five days. Eventually, there was a lot of blowback from ordinary Americans, and Trump ended up agreeing to reopen the government without having
secured that funding. Republicans and Trump lost that shutdown because the political pressure became too much for them to bear. I think the longer a shutdown goes on, regardless of how excited Republicans might be in the front end of that. The political pressure on them to get the government running again is only going to increase. Elon Musk may not care, a lot of Republicans eager to fire government workers may
not care. But at the end of the day, Republican elected officials want to keep their jobs and Trump wants to maintain his popularity, and it's very hard for me to see how they would be able to do that over an extended government shutdown.
I can be come back to a bit later, because I do want to think about the implications for doge
itself and their activities if the government shuts down. But first, I mean, we've had a lot of politics, which is only occasionally allowed on Trumponomics, But I wanted to also think about some of the numbers involved here, and specifically have a quick think about whether all these firings and scary emails and all the fire smoke coming out of federal government thanks to DOGE, has actually produced a lot of savings for the US taxpayer. So Laura, you and
your team keep a close eye on all this. And I see that DOGE itself has claimed recently that it's already found fifty five billion dollars worth of savings. Now, our chief economy is pointed out, and a woe pointed out on this show not long ago that you'd need around eight times that you'd need more like four hundred billion to really make a dent on the US borrowing trajectory. But still in just a few weeks, fifty five billion would be pretty impressive. Is it true so far?
No, And they actually recently updated that number just sixty five billion, But we still have seen their accounting of how they got there.
So in the last few days it's gone up from fifty five to sixty five.
Yes, but the underlying sort of accounting doesn't bear that out. Doge has really made this claim that they are the most transparent agency out there, that they are doing this all in public view. For the first couple weeks, what this really was was just an x account just posting, hey, we canceled this contract. We canceled that contract. In the past week or so, they have put this all on a Doze website and basically listed here are all the
contracts that we have canceled. If you go through there's an At this point, I had a couple thousand there when we did the math last week on this There were about sixteen billion dollars worth of contracts listed there. However, there was one that doesn't add up to the fifty five billion that they were claiming at the top line.
And then once you dug down into these contracts, we found one pretty major error that showed an eight billion dollar contract that was actually an eight million dollar contract.
That's the kind of a state you make when you're the richest man in the world and you're just constantly getting your millions and billions mixed up.
But truly, as you mentioned, that doesn't really move the dial, but it showed and caused a lot of called into a question Doge and how transparent they are being. Actually, they've accounted for about eight billion dollars worth of savings. That's not that much here at Bloomberg when we're talking about tax policies, we sometimes don't even really start talking about them ntill they're about one hundred billion dollars.
Get out of bed for less than a few billions.
Other other colleagues have noted for various tax savings that in this bill that Republicans are looking to pass later this year. Elon Musk personally could benefit by hundreds of billions of dollars. So the fact that his group is only saving eight billion dollars really just goes to show just how they're barely denting the surface.
And it's weird. I mean that particular example, the million billion one. I mean, we joke around it, but actually it's also one of those ones where it's just on its face it's mad. You sort of wonder, how if you just tell us a bit more about the detail of what the claim is in terms of how this contract would be bigger than anything that this company has had anything to do with ever.
Yes, so this was a contractor that's out in a Washington suburb. Their average contract going back was about a million dollars, so this having an eight billion dollar contract would just be wildly out of proportion.
And it is a DEI contract, right of course you want to claim that you were wasting lots and lots of money on DEI.
Yes, And even for the agency this contract was going through, their entire budget was only about nine billion dollars. So the fact that they would have one single contract being eight billion on DEI just doesn't stand up.
And it was eight million.
It was for eight million. The other thing that was really called into question even of Okay, say you make that accounting change, you have eight billion dollars in which in what they say they've saved, all of these contracts that are listed basically have a maximum value, and that doesn't mean that top line number is actually what's spent, So that eight billion dollars is probably actually much less after you go through a discount all of these contracts
across the board. Doe just quick to point out that, look, this doesn't account for all of the the leases that we've canceled, all the personnel that we have pulled from the federal government roles. But even still, even if you give a very generous estimate to all of those, were still just talking a couple more billion dollars here and there. This claim that Musk started with a two trillion dollar goal of cutting two trillion dollars from the federal deficit.
He's now decreased that to one trillion. So the goalposts really keep moving here, just week by week.
I guess you could say he's providing the open goal by making all this transparent on the website, Given that a lot of people seem to be quite happy to take at face value that claims he's been making on x. I guess they deserve some credit for the transparency of the website, especially if it means we find all these errors and we can constantly criticize them.
The other criticism, though, is that there's really not a lot of transparency requirements for DOGE. It is not a department as all the other Department of Homeland Security. It's really just an office within the White House. Musk himself doesn't have to disclose his finances publicly. They also don't have the same sort of scrutiny from a watchdog or an inspector general that would have the same sort of oversight.
They don't have to report who the people are. There's questions of are these doze kids, as they've been called, going to these different agencies, a lot of them very young. Have they completed their ethics training, the t training. There's been some cases we've reported on lapses there that have cropped up. So they really aren't subject to the same hiring practices and scrutiny as any other of the federal workers that they're going in and auditing.
And to your point about the website, they don't seem to have done a lot of basic arithmesy. This actually takes us that the status of DOGE and the fact that it's not subject to a lot of these things, actually raises this much intriguing question of what happens to DOGE efforts themselves in the case of a government shutdown, And mean, I go back to you, Josh, what's your sense would we consider the DOGE effort to now be enough part of the federal government that all of its
people have to go home? Or would it the counter's essential workers it's essential to be cutting the government even as you shut it down.
Yeah, it's a great question. That's one that Democrats and Republicans have started to ask themselves. I spent yesterday talking to a couple of House and Senate staffers just asking the basic question, would DOGE be allowed to continue operating in a government shutdown? There isn't a clear answer, but the general sense that I got was that staffers both in the House and Senate think that it probably would be because the president does have a lot of leeway
to declare certain workers essential to the government. And so, as one Democratic House staffer put it to me, I don't think DOGE would even pause, I did get an interesting illustration of the way that presidents used this power to manipulate public opinion. And I think it might come into play with Trump and Doze if there is a
government shutdown. Back in twenty thirteen, when Barack Obama was president, there was a shutdown and Obama shut the National Parks down, and Republicans got very angry about that because they said, Obama has the power to keep this open. He's doing this for political purposes to get people mad at Republicans.
And he was compliance right, yeah, yeah, exactly.
But then during the twenty eighteen government shutdown when Trump was president, Trump made a point of keeping a bunch of stuff open, including the National Parks, in order to underscore the argument that shutdowns aren't that bad and it wasn't his fault when things got messed up during a shutdown. Think if you flip that around and put it in a Doze context, Trump, I don't see why Trump couldn't
argue that Doze are essential workers. They're actually helping to balance the budget by continuing to kind of fire people and do these things at Trump and Musk think is so important. And I don't know what power Democrats would have to stop them. So while we don't have a clear and definitive answer yet, the assumption among people I talked to on the Hill is that DOGE probably would be able to continue operating in a shutdown.
There's a lot of thought also with the DOGE that a shutdown would actually be very beneficial because they wouldn't be encumbered by all of the career staff that would be in the office. They've run into lots of issues where they want to access a data set, they want access to certain files, and the staff that's there says no. Suddenly, if you remove all those people from the building for an extended period of time, DOGE has a lot more leeway to just run roughshot and grab what they want.
So you've raised the other sort of big question out of all this. I started off asking where Republicans now be less scared of a shutdown? Well, Democrats actually wonder about really concerned about the federal government. Should they be pretty concerned about shutdown?
If you guys are right, it's a good question. I think everybody's trying to figure this out. The impression I have in talking to Democrats is that they're just very frustrated with the way all this is going, and so I don't imagine that a lot of them are going to be eager to just keep things rolling along. There's certainly an appetite among at least some Democratic staffers that I've talked to, that Trump just needs to get a taste of his own medicine, and he wants to shut
the government down. Let's go ahead and do it, and let him deal with all the political blowback that happens as a result of that. But one other thing I think is worth mentioning is, and this is a concern among Democrats I spoke to, is that there is a lot of fear of what could doje in musk do during a shutdown if they were allowed to continue operating. And one particular area of concern is the treasury payment system.
There's been talk in the past among Republicans that a shutdown wouldn't be so bad because they could sort of decide which bills to pay and which bills not to pay and keep things rolling for a long time. So you't government wouldn't default on treasury bonds, but it might shut down other payments. That is something that a lot of people view is very dangerous. To the market, to global markets if there were a shutdown. We now know that the dose folks do have access to a lot
of these payment systems. Nobody really knows what could happen, what kind of mishift they could get up to, if this kind of scenario were to unfold.
I guess we should say at this point it's got best. We've interviewed a couple of times in Bloomberg in the last couple of weeks. He comes from Wall Street. He's been very clear that this is we're all getting ahead of ourselves in worrying about specifically those functions and the running of the treasury market. He thinks all of that is hysterical. I think what you stated in terms of the possible leavers they would have and the lack of clarity we would have in the vent of a shutdown,
I think is all true. But we should say there is supposedly someone who cares about these things sitting inside fifteen hundred Pennsylvania Avenue that the Treasury Department. I guess one last question is just goes back to this broader environment,
the rather febrile environment we have. If we have a shutdown, rightly or wrongly, is it seem to be the sort of defining battle between Congress and the executive This sort of ongoing tussle we've had with President Trump over who actually controls the power of the purse, who can control whether to actually spend money or not. You were hinting at it just now, Josh. Is this how it's going to come to a head, perhaps even more than all the court orders and all the cases that have gone out.
I really don't know. I mean, right now, there's not a lot of contention between Trump Doge and House Republicans, Trump's own cabinet secretaries. Republicans in Congress have basically been willing to let Trump and Musk operate as they wish. At some point, maybe that battle comes to a head and it becomes more visible, more publicly contentious. I just don't know the answer of the question yet.
I'd say we've just seen a glimmer of the sort of fissures starting to form between Trump allies and Musk. This really came to a head in this email that went out over the weekend where Musk said, every federal worker, send in five bullet points of what you've been doing over the past week. This caused a lot of alarm, ruined a lot of Cabinet secretary's weekends as they were trying to figure out how to respond to this, and a lot of agencies said ignore it, do not reply,
will handle this. Musk late last night got upset over this and said, Okay, if you didn't reply this time, fine, but we're going to send another email, and this time you have to reply or else you'll be fired. This runs in contrast of all of the guidance that both agency heads have given, and these are Trump hand picked people to run these places, as well as OPM with the Office of Personnel Management or the HR for the federal government. So we're starting to see this power struggle forming.
We'll see where we are. The shutdown is, if it happens, is about fifteen days away. A lot can happen between now and then.
Yeah, we talk about the battle between different arms of government, Congress and the White House, but if it's between Elon Musk and everyone else, that's what seems to be coming down to Laura occurs to me, you're not even I think when you're on shutdown, you're not even allowed to check your emails. So I guess he is if he does get if we do get shut down, Elon Musk is not going to be able to send a lot more emails to federal workers that they're supposed to reply to within a day or whatever.
That would be a key point that would harm his strategy here of they would say, look, couldn't respond because you didn't let me.
All right, well, Josh Green and Laura Davison, thank you very much. That was a great Thank you, Thanks so much, thanks for listening to this episode of trump Andomics from Bloomberg. It was hosted by me Stephanie Flanders, and I was joined by Laura Davison and Josh Green. Trump Andomics is produced by Samasadi and Moses and Dam with sound design by Blake Maples. Brendan Francis Newnan is our executive producer and please do rate and review us wherever you listen
to podcasts, so a lot more people can listening. Turning