When a government advisory board created to slash wasteful spending finds itself at odds with policies that increase the deficit by nearly $4 trillion, something fundamental has gone wrong with fiscal policy. The tension between Elon Musk’s Department of Government Efficiency (DOGE) and President Donald Trump’s sweeping tax legislation reveals a deeper contradiction in how America approaches fiscal responsibility.
The Congressional Budget Office estimates that Trump’s ‘One Big Beautiful Bill’ will add $3.8 trillion to the federal deficit over the next decade. For context, that’s roughly equivalent to the entire federal budget for 2024. Meanwhile, DOGE has been systematically cutting federal programmes and laying off government workers in pursuit of $170 billion in savings—a drop in the bucket compared to the bill’s fiscal impact.
‘I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decrease it, and undermines the work that the DOGE team is doing,’ Musk said in a CBS interview. The world’s richest person, who has positioned himself as a champion of government efficiency, finds his efforts overshadowed by tax cuts that dwarf any savings his team might achieve.
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The Numbers Behind America’s Fiscal Challenge
The numbers tell a stark story about American fiscal priorities. The federal deficit for the first half of fiscal year 2025 has already reached $1.3 trillion—the second highest six-month deficit on record according to Treasury Department data. With the national debt now at $36.2 trillion, the country faces what economists describe as an unsustainable fiscal trajectory.
DOGE’s approach to cost-cutting has been swift and sometimes chaotic. By February and March 2025, DOGE-related moves resulted in approximately 275,000 government layoffs, according to consultancy firm Challenger, Gray & Christmas. These cuts have affected agencies from NASA to the Indian Health Service, with many decisions later reversed following congressional pressure or legal challenges .
Political Resistance to Spending Cuts
The resistance to DOGE’s cuts reveals the practical difficulties of reducing government spending. Republican lawmakers whose districts face job losses have joined Democrats in pushing back against mass layoffs. Federal judges have blocked some workforce reductions, ruling that agencies cannot conduct ‘large-scale reorganisations and reductions in force in blatant disregard of Congress’s mandates’.
Even successful DOGE initiatives pale in comparison to the fiscal impact of the tax legislation. The advisory board has cancelled 440 federal building leases, saving $171 million annually in rent costs. It has identified inefficiencies in federal HR systems and targeting grant programmes it considers wasteful. The United States Postal Service has agreed to work with DOGE to eliminate 10,000 positions.
Yet these efforts, while potentially valuable for government efficiency, represent a fraction of the deficit increase from tax cuts. Much like the challenges facing fiscal policy in the United Kingdom, the political dynamics make meaningful deficit reduction extremely difficult.
The Tax Cut Versus Efficiency Paradox
The tax legislation extends Trump’s 2017 Tax Cuts and Jobs Act while adding new reductions he campaigned on. To partially offset revenue losses, Republicans propose cutting federal safety net programmes and eliminating green energy tax breaks from the Biden administration’s Inflation Reduction Act.
The political dynamics around fiscal policy have created an environment where cutting government workers is politically feasible, but addressing the structural drivers of deficits remains challenging. Social Security, Medicare and interest on the national debt—which together comprise the majority of federal spending—remain largely untouchable. Discretionary spending, where most DOGE cuts occur, represents a smaller portion of the federal budget.
Trump defended his tax bill despite its deficit impact, telling reporters: ‘I’m not happy about certain aspects of it, but I’m thrilled by other aspects of it. That’s the way they go.’ This pragmatic acceptance of fiscal tradeoffs contrasts with DOGE’s mission to eliminate government waste and inefficiency.
Economic Consequences and Market Impact
The broader economic context makes these fiscal choices more consequential. Interest payments on federal debt now exceed defence spending, and the Congressional Budget Office projects deficits will continue growing as a share of GDP. Rising borrowing costs affect not just government finances but also private sector investment and household borrowing.
Musk has acknowledged the political challenges facing his efficiency efforts. ‘DOGE is just becoming the whipping boy for everything,’ he told The Washington Post. ‘Something bad would happen anywhere, and we would get blamed for it even if we had nothing to do with it.’ He has scaled back his involvement to focus on running his companies, including Tesla, SpaceX and X.
The efficiency versus growth debate reflects competing theories about government’s role in the economy. Supporters of the tax cuts argue they will generate sufficient economic growth to compensate for reduced revenues. Critics point to decades of evidence showing tax cuts rarely pay for themselves through increased economic activity.
Corporate and Consumer Reactions
The tension has practical consequences beyond budget numbers. Tesla has faced consumer backlash over Musk’s political involvement, with reports of customers burning cars in protest. Federal agencies struggle to maintain services with reduced workforces while adapting to new efficiency requirements.
What emerges from this fiscal tug-of-war is a portrait of a government struggling to reconcile competing priorities. DOGE’s targeted cuts address genuine inefficiencies but cannot meaningfully reduce deficits when dwarfed by tax policy choices. The result is a fiscal policy that satisfies neither efficiency advocates nor those concerned about long-term debt sustainability.
As the Senate considers Trump’s tax legislation, lawmakers face a choice between short-term political wins and long-term fiscal responsibility. The DOGE experience suggests that meaningful deficit reduction requires addressing the largest components of federal spending and revenue, not just eliminating government positions or programmes that poll badly. The challenges mirror what other governments face when balancing efficiency with fiscal responsibility.
The efficiency drive has achieved some measurable savings in government operations, but the broader lesson may be that fiscal responsibility cannot be achieved through advisory boards alone. It requires political leaders willing to make difficult choices about taxes, spending and the size of government—choices that go far beyond eliminating federal jobs or cancelling building leases.
