In his February 1982 speech, when announcing the establishment of the “Private Sector Survey on Cost Control” (PSSCC), better known as the Grace Commission, President Ronald Reagan commented:
“I expect them to roll up their sleeves and search out waste and inefficiency wherever it’s to be found in the Federal establishment… Special emphasis will be placed on eliminating overlap, red tape, and duplication; identifying nonessential administrative activities; and increasing management effectiveness.”
A little over a decade later, in March 1993, when announcing the establishment of the “National Partnership for Reinventing Government” (NPR), President Bill Clinton stated:
“Our goal is to make the entire federal government less expensive and more efficient, and to change the culture of our national bureaucracy away from complacency and entitlement toward initiative and empowerment.”
In February 2010, while announcing the creation of the “National Commission on Fiscal Responsibility and Reform,” more commonly referred to as the Simpson-Bowles Commission, President Barack Obama remarked:
“For far too long, Washington has avoided the tough choices necessary to solve our fiscal problems and they won’t be solved overnight…. I’m confident that the Commission I’m establishing today will build a bipartisan consensus to put America on the path toward fiscal reform and responsibility.”
And finally, in November 2024, while announcing the creation of the “Department of Government Efficiency” (DOGE), the re-elected President-elect Trump said:
“I am pleased to announce that the Great Elon Musk…will lead the Department of Government Efficiency (‘DOGE’). Together, …[Musk and others] will pave the way for my Administration to dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal agencies…”
While President Trump’s Department of Government Efficiency (DOGE) succeeded in eliminating thousands of government jobs (a task also accomplished by President Clinton’s NPR), and shutting down many activities, its overall impact on government efficiency and spending is turning out to be minimal at best and cost additive at worst. In fact, over the course of the time Musk spent in Washington expectations of reduced spending by the federal government went from approximately $2 trillion for 2025 immediately following the November elections, to $1 trillion immediately following the January inauguration, to roughly $150 billion during his last month at DOGE, with independent estimates ranging from $5 billion dollars to $35 billion. Of course, these figures represent the benefits side of the equation from an expense perspective, and do not take into account the cost side of the equation in terms of lost revenue collection and reduced and delayed services.
While all the above efforts can be viewed as admirable attempts to move the nation toward a more sustainable fiscal position, they share a common flaw: none has ever established a comprehensive, nonpartisan and broadly accepted definition of what constitutes waste, nor a consistent method for quantifying it. Without such clarity, each initiative ends up pursuing its own interpretation, producing uneven estimates, unrealistic expectations and ultimately disappointing outcomes. At a deeper level, federal reform efforts face the immovable reality that roughly three quarters of the federal budget is consumed by mandatory programs and interest payments, leaving only a relatively small portion of spending realistically subject to cuts. Achieving meaningful deficit reduction through efficiency alone is therefore structurally impossible, and raising taxes to close the gap remains deeply unpopular with the electorate, severely constraining the range of politically viable options.
In the meantime, and in line with the latest projections from the Congressional Budget Office, we expect federal spending as a share of GDP to continue rising and surpassing 24 percent by 2030, while revenues remain stable at roughly 18 percent. This leaves a persistent gap of about 6 percent of GDP that will need to be financed through the capital markets, with a significant share falling on domestic financial institutions, and indirectly through further expansion of the balance sheet of the Federal Reserve well past 2030.
The recent confirmation from Scott Kupor, Director of the Office of Personnel Management, that DOGE has effectively ceased to exist is simply the latest reminder that these initiatives, across administrations, parties and decades, consistently fall short not because of a lack of ambition, but because they target the margins rather than the core drivers of federal finances. President Reagan’s initiative was by no means the first attempt, and President Trump’s will almost certainly not be the last.
As always, stay tuned.
Ardavan Mobasheri
Chief Economist