Elon Musk, the head of President-elect Donald Trump’s government-shrinking initiative, DOGE, said he would cut “at least $2 trillion” from the federal budget during the initiative’s 18-month lifespan. On Wednesday, one libertarian think tank explained how it could be done.
In its Report to the Department of Government Efficiency, or DOGE, the Washington, D.C.,-based Cato Institute recommended dozens of large scale reforms to eliminate federal subsidies, deregulate key industries and reduce welfare spending.
One author of the 35-page white paper said despite its limited policymaking authority, DOGE might still prove to be the most successful promoter of small-government ideas in decades, following an election cycle where Trump and Vice President Kamala Harris mostly focused on big-government promises.
“Until a few months ago, nobody was talking about cutting the size of government or large scale deregulation,” said Alex Nowrasteh, the vice president for economic and social policy studies at Cato.
With the country exceeding $36 trillion in debt, regularly racking up $2 trillion deficits, and spending nearly $900 billion on interest payments in 2024, Nowrasteh told the Deseret News that DOGE represents “a welcome opportunity to, at a very minimum, spotlight some areas where the federal government should be cut and where the interference of the federal government in our lives can be stepped back.”
But in addition to “marketing” the benefits free-market approaches, Nowrasteh believes DOGE can apply political pressures to make $2 trillion in taxpayer cost savings a reality, particularly through discussions of how to renew Trump’s Tax Cuts and Jobs Act in 2025.
Musk and Ramaswamy, who have vowed to make a “naughty list and a nice list” to track how representatives vote on spending proposals, could have significant influence to push Congress toward fiscal responsibility, according to Nowrasteh.
“We do have, I think, more of a political opportunity than we’ve had in years, and decades, perhaps, to get some cuts in federal spending, or, at a very minimum, just flat line it for a while,” Nowrasteh said.
To cut one-third of the federal budget will require the Republican White House, House of Representatives, and Senate to go far beyond incremental decreases and token budget fights. Everything will have to be on the table.
Some scholars, even at right-leaning institutions, have described the task as impossible. Others, at the left-leaning Brookings Institution, have expressed skepticism toward DOGE’s ability, as a non-congressionally approved advisory body, to navigate the complex web of government contracting or to get lawmakers to move on the mandatory spending programs that make up 66% of the budget, especially when past recommendations have failed to make their way through Congress.
The easy part will be reversing policies previously passed using presidential authority, according to Nowrasteh; what was made by executive order can be destroyed by executive order. This could include ending affirmative action in hiring for federal employers and federal contractors, removing the regulatory framework on artificial intelligence introduced by President Joe Biden, and ending declarations of national emergency used to justify spending.
The vast majority of cuts — to regulations, waste and welfare — must come from Congress. Maybe the most likely of these to pass under the Republican trifecta in coming months will be the end of allowing government benefits to be given to noncitizens, the reduction of federal funds to universities and the repeal of green-energy subsidies as part of Biden’s Inflation Reduction Act, Nowrasteh said.
Each of these cuts would likely save taxpayers hundreds of billions of dollars. But $2 trillion in savings will require Congress to increase revenue by freeing up American innovation and greatly decrease the size and scope of government.
The Cato report claims government overreach causes a “catastrophic cost to the life, liberty, private property, and prosperity of Americans” by stifling lifesaving technologies, incentivizing reliance on “rickety” retirement programs and creating the conditions for debt-induced stagflation. Cato’s prescription pulls no punches.
The report calls for deregulating financial markets and abolishing aid to states. This would mean repealing the Dodd-Frank regulations implemented after the 2008 financial crisis and ending federal subsidies for K-12 education, housing, transit and community development.
It doesn’t end there. To achieve DOGE’s vision, Nowrasteh and his co-author argue the federal government should privatize the U.S. Postal Service, transfer Bureau of Land Management lands to the states, and send Medicaid funds directly to the states, instead of administering the funds itself. Cato would also have the United States withdraw troops from Germany and shrink the number of active duty members of the Army by 25%.
To tackle the largest driver of debt, federal retirement and health care programs, Cato recommends raising the age of Social Security eligibility by three years, decreasing the size of Social Security inflation adjustments, slashing Medicare spending by one-third and allowing enrollees to spend Medicare funds themselves. The Cato report cites research showing that one-third of Medicare spending is “pure waste.”
Those who express worry about the negative impacts of reversing regulations and removing federal subsidies, ignore the benefits of innovative technologies and the danger of depending on poorly managed government systems for retirement and health care that often work “at cross purposes with other portions” of the government, Nowrasteh said.
“You get this confusing muddle where most people are generally worse off than they would be if the federal government just left people alone,” he said.
