Amidst great fanfare, President Donald Trump recently appointed Elon Musk and Vivek Ramaswamy to lead a newly formed Department of Government Efficiency to reduce government waste. Musk and Ramaswamy described their mission as acting to “cut the federal government down to size.”  For years, politicians from both sides of the aisle have claimed to be concerned about the levels of government spending. Despite that, spending has not only increased, but in recent years the increases have occurred at a clearly unsustainable accelerated rate.   DOGE is an unofficial governmental agency that is expected to be staffed by volunteers using artificial intelligence. The premise behind creating DOGE is that wasteful spending results largely from bloated governmental agencies that have too many employees. Musk and Ramaswamy stated that they will work closely with the White House Office of Management and Budget. Although DOGE expects the president to implement the spending cuts, the pursestrings belong to Congress.  DOGE’s tactics will apparently rely heavily upon contorting two recent Supreme Court decisions that presently set forth rules restricting the executive branch’s regulatory authority.   If the president tries to implement spending cuts through executive order, that process would be governed by the Administrative Procedure Act. Before cuts can be made, the affected agencies must undergo an elaborate process, which is subject to litigation by those affected. That process undoubtedly would be a long, drawn-out endeavor.  When DOGE was first announced, the anticipated savings were $2 trillion — the amount by which government spending currently exceeds collected revenues. More recently, that savings estimate has dwindled to $500 billion, which still leaves a $1.5 trillion deficit. But one has to wonder whether even these amounts are realistic.   The Center on Budget and Policy Priorities, a nonpartisan research and policy institute, has extensively analyzed federal spending and revenues. Its analysis provides considerable food for thought.  The U.S. Gross Domestic Product (the value of all goods and services produced in the U.S.) for fiscal 2024 is expected to be about $29 trillion. Government spending during that period is estimated to be $6.9 trillion, of which only 26%, or about $1.8 trillion, is discretionary spending.   Defense spending constitutes about 46% of discretionary spending. Given the considerable amount of geopolitical unrest and the Republicans’ propensity to spend money on defense, how likely are defense spending cuts?   Approximately 75% of nondiscretionary spending is spent on Social Security, Medicare, Medicaid and veterans benefits. DOGE seeks to reduce the administrative costs of running these programs. But the administrative costs for most of these programs are small in relation to the total program costs.   If Musk and Ramaswamy are serious about ensuring that DOGE is successful, why are they focusing principally on administrative costs? There are other potential cost savings that provide more “bang for the buck.” For example, perhaps a more meaningful way to control Medicaid costs is to address prescription drug costs. But doing so pokes a stick into the beehive of special interests who spend a fortune lobbying Congress and the executive branch to retain the current lucrative pricing structure.   Musk and Ramaswamy claim the DOGE project of identifying costs will be completed by July 4, 2026. Even if that goal is met, until those costs are actually eliminated, they will continue to be financed through the issuance of additional governmental debt.   Assuming the project is successful and $500 billion of wasteful spending is eliminated, that merely reduces the annual federal spending deficit from $2 trillion to $1.5 trillion. How does Congress plan to address the remaining deficit? Additional cost cutting is not likely. Congress wants to cut taxes, further widening the deficit.  The federal government is reaching the end of the line with respect to funding deficits through borrowing. The bond markets are signaling that they are no longer willing to finance additional federal debt without higher interest rates. Because so much privately issued debt is tied to the 10-year Treasury debt yield, borrowing costs for home mortgages and other privately issued debt will increase.  Unfortunately, the most plausible long-term way of funding the deficit is likely to include increasing taxes. Project 2025 envisions supplementing, perhaps even replacing, the income tax with a consumption tax such as the value added tax already employed by many countries. Consumption taxes are regressive because they increase taxes disproportionately for low- and middle-income households who spend most of their income on purchasing goods and services.  While we all want to see government waste eliminated, I fear that those expecting DOGE to be a silver bullet restoring fiscal responsibility will ultimately be disappointed.  Jim de Bree, a semi-retired CPA, is a Valencia resident. The post Jim de Bree | How Realistic Is Musk’s DOGE Plan? appeared first on Santa Clarita Valley Signal.