FT's Big Read: Elon Musk’s DOGE - How the $1tn government shake-up unravelled

Key topicsMusk's Doge project fell short of promised $1tn+ federal budget cutsClaims of $170bn savings largely unverified and inflated by expired dealsFirings, data access, and chaos eroded support across Congress and public.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Joe Miller in Washington and Chris Cook in London.It was never meant to be $2tn. Elon Musk’s vow last year to cut almost a third of the annual federal budget, made in front of a frenzied Maga crowd during a Trump rally at New York’s Madison Square Garden, came as a surprise even to the event’s organisers.“The deal was he was going to [say he would] cut $1tn,” Howard Lutnick, the prominent Trump backer and now commerce secretary — who had invited Musk on stage — later admitted. “What was I supposed to say?”The impromptu pledge has increasingly become an albatross around Musk’s neck. Six months after Donald Trump officially announced the formation of Musk’s cost-cutting vehicle, the so-called Department of Government Efficiency (Doge), it has yet to find a fraction of that initial sum on a one-off basis, let alone make the sort of cuts that would reduce spending year after year.While Doge’s website claims $170bn in savings, an FT investigation shows that only a sliver of that figure can actually be verified. Instead, there is evidence of inflated valuations being used to boost the numbers, while contracts that were already lapsing have been claimed as new savings. At the same time, US Treasury data has so far shown no drop in government spending.As Doge has struggled to make headway, it has strained to paint a positive picture: to beef up its claims, its website mixes recurring cuts to federal spending through workforce reductions along with temporary or one-off influxes of cash from the sale of federal properties and contract cancellations.“In all likelihood, the amount of claimed savings from Doge is significantly less than what Elon Musk originally wanted,” says Dominik Lett, an analyst at the free-market Cato Institute. “Doge should not be seen as a very successful deficit reduction effort.”Musk and the White House did not respond to requests for comment.Musk is prematurely stepping back from his role atop Doge — which was supposed to last until next summer — amid a backlash from members of the Trump cabinet and persistent protests from Congress. He leaves Washington a poorer man, as his political exploits have wiped hundreds of billions of dollars off Tesla’s share price and have led to cancellations of contracts with his satellite internet provider Starlink.Doge, which Trump claimed had the potential to be as seismic as the Manhattan Project, has fallen short of Musk’s own lofty expectations. “In the grand scheme of things, I think we’ve been effective,” he told reporters last month, in a rare White House interview. “Not as effective as I’d like. I think we could be more effective. But we’ve made progress.” Despite setting himself what was widely considered an unattainable target, Musk’s quest to quash government waste initially won him unexpected support. Senator Bernie Sanders joined some prominent Democrats in suggesting he could back at least parts of the Doge agenda, particularly when it came to slashing America’s gargantuan defence budget.Voters were also overwhelmingly in favour of a Doge-like initiative. On the eve of Donald Trump’s inauguration in January, roughly two-thirds said they agreed that the federal government was rife with corruption and inefficiencies, according to AP-NORC research. A long running survey showed Americans believed the state wasted almost 60 cents of every dollar it spends.Even the early choice by Musk to feed the US agency for international development, USAID, “through the woodchipper”, laying off most of its workers and axing life-saving schemes around the world, enjoyed broad support. Voters were resentful of tax dollars being spent abroad, or believed the blizzard of inaccurate claims made by Musk on his social media site X, including that the US was spending money on sending condoms to Gaza. .Read more:.Elon Musk’s government overhaul goes up in smoke - Bloomberg Editorial Board .But the goodwill began to rapidly erode, as young coders recruited by Musk and Silicon Valley venture capitalists began appearing at numerous government departments, demanding access to sensitive data.The seemingly random suspension of tens of thousands of “probationary” government employees, a category that includes experienced civil servants who have recently been promoted into senior positions, caused chaos in constituencies far away from Washington DC.Park rangers were laid off in places like Wyoming and Iowa, while cancer researchers and those providing mental healthcare for veterans were fired nationwide — provoking local fury that forced even Republican lawmakers resolutely loyal to Trump to protest against the cuts.Even as many agencies were ordered by courts to reinstate suspended employees, the speed and haphazard nature of the firings upset US voters.“The diagnosis of Doge was correct,” says Seb Wride, head of opinion research at Public First US, which has polled attitudes to the initiative over the past few months. “People still do believe that there is waste in government spending, but the approach Doge has taken felt reckless.”Doge’s emissaries appeared to have little appreciation of what branches of government they were targeting actually did, alarming some inside the White House, according to people familiar with the matter.The Trump administration had to halt the firing of employees at the National Nuclear Security Administration, which guards the nation’s nuclear stockpile. Musk’s allies in the media were reduced to begging for reversals of rash decisions. Fox host Jesse Watters in February made an on-air plea to Doge to rehire a veteran who “put his life on the line” for the US, but who was summarily fired as part of the cuts to the Department of Defense.Travellers were spooked by reported cuts to the Federal Aviation Administration, especially after a deadly plane crash near Washington’s Reagan airport.“Doge could have done good things,” says Valerie Ramey, an economist at the Hoover Institution, who generally argues for reducing US government spending. “But they sort of needed to take a year figuring out how the government operates before they start[ed] tearing it apart.”Some cabinet members — notably Treasury secretary Scott Bessent and secretary of state Marco Rubio — openly clashed with Musk over Doge’s attempts to infiltrate their departments. Eventually, Trump stepped in, reinforcing in a heated cabinet meeting in March that secretaries of state had final say over decisions affecting their departments, and publicly urging Musk to use a “scalpel rather than the hatchet” when downsizing government. In recent weeks, Musk, who gave disgruntled senators his personal phone number in an attempt to calm their fears, has referred to Doge as essentially “tech support” for government agencies, helping them identify “waste and fraud”. Hopes of reaching even $1tn in savings began to fade, as Doge’s accounting was found to be riddled with duplicates and inflated estimates.Of the $170bn that it currently claims to have saved, the best documented portion is the $31.8bn of savings from 10,248 itemised contract cancellations and amendments. Even this number, however, is both opaque and overstated. The FT has been able to match the claimed saving to an underlying contract modification in only around 6,700 cases.Almost all of the missing contracts involve the US Agency for International Development where no contract is listed. For these 3,373 cases, which account for $12.8bn of Doge’s claimed savings, the platform simply lists the details as “unavailable for legal reasons”.Even among the fully itemised items, which claim to be worth $18.2bn, the numbers are overstated.Around $840mn came from 253 contracts where Doge itself lists the contract as “expired”. Doge also claimed a further $289mn of savings stemming from 322 contracts whose period of operation had been scheduled to end prior to Doge’s involvement.Even where the claims can be matched to contracts, the maths for savings are contestable.Around $4bn of the claimed savings come from 155 “indefinite delivery vehicles” (IDVs)— flexible framework contracts that allow agencies to order a good or service as they need it. In these cases, where there is no firm contract to cost, Doge’s savings estimates have come from citing the legal limits of what could hypothetically be spent on a particular item..Read more:.FT: Elon Musk’s self-destruction.Contracts closed out by Doge that were actually matched to contracts with clear terms saved just $12.4bn. But even here, there are problems with the claims.One of the larger claims — a $1.4bn saving on an IT contract for the Department of Defense — was singled out by the defence secretary, Pete Hegseth.But a decision to foreshorten the contract from its original 2029 end point had already been taken in September 2024, under the Biden administration, when the term was cut to June 2025. With a single month left to run, this contract has so far only cost $73mn.“While Doge has drawn attention to some wasteful spending, it has overpromised and underdelivered on verifiable cuts,” Morgan Stanley’s Michael Cembalest said this month. “Given Doge’s indiscriminate approach, it may take years to fully assess negative effects from broad cuts to departments focused on public health, aviation, energy, cyber security, taxation and education,” Cembalest added. Calculating Doge’s impact, analysts say, is complicated by its deliberate opacity.Musk repeatedly claimed that Doge is operating with “extreme transparency”. Yet even as it faces dozens of lawsuits, the initiative has refused to provide the most basic information about its inner workings, including the number of staff it has hired, the number of agencies targeted, and the amount of criminal referrals it has made for “tremendous fraud”.When a handful of Doge’s now notorious young coder recruits finally appeared in the media last month, sat around a table for a Fox News interview, their full names were withheld.Trump has repeatedly referred to Musk as the head of Doge, though Amy Gleason, a longtime civil servant, is technically the agency’s acting administrator, according to court filings.“We still do not have answers to fundamental questions like: What is the scope of Doge’s work? How many people work at Doge? And who are they?” Democratic Rhode Island senator Jack Reed said.“Do they also hold jobs outside the federal government? What are their financial holdings and potential conflicts of interest?”Senator Richard Blumenthal, a member of the permanent subcommittee on investigations, last month alleged that Musk and his companies faced at least $2.37bn in potential fines from federal investigations and regulatory actions being carried out by the very agencies being gutted by Doge.There have been some wins. A document listing Doge’s achievements, circulated within the White House, touted the “first ever all-digital, no paperwork federal retirement”. Joe Gebbia, a co-founder of Airbnb who is on Tesla’s board, spearheaded an attempted modernisation of a disused mine in Pennsylvania that houses the documents required to close a civil servant’s career, which currently need to be retrieved and filled out by hand.More than 75,000 government workers have also taken buyouts offered by Doge. And a series of contracts with consulting groups have been cancelled or curtailed by the government’s central procurement office.But for those who have long campaigned for drastic cuts to US government spending, Doge’s failure has rather been its lack of ambition. Despite claiming that welfare payments are riddled with fraud, the initiative has not substantially gone after social security, Medicare or Medicaid programmes, which account for more than half of annual spending. Far from reducing defence spending — another large chunk of the annual budget, which Musk has repeatedly criticised on X — the Trump administration has vowed to fill the Pentagon’s purse with $1tn in the next funding cycle, an increase of more than 10 per cent.Nor has Doge succeeded in slashing red tape, despite Musk promising in November to effect a “drastic reduction in federal regulations” as its first order of business.Doge “got off in the wrong direction because it attacked exactly the wrong thing,” says Matt Calkins, chief executive of software company Appian, which powers much of government procurement and has worked with the initiative on some cost-cutting measures.“Of all the things you could do to affect the government, it would have been better to go after regulation. It would have been better to go after entitlements. Just blowing up jobs was a good way to make enemies, a good way to cause more disruption than progress.”With Musk’s exit, the task of making substantial savings passes in part to Capitol Hill, where lawmakers are locked in negotiations over a funding bill that has exposed sharp divisions within the Republican party, and which looks unlikely to meaningfully reduce the annual deficit.“I think that some people, particularly on the right, felt that maybe Doge would be just kind of a catch-all solution,” says Cato’s Dominik Lett.But he adds that “if you want to reassure bond markets, if you want to put the budget on a sustainable path, you need to make spending reductions to Medicare, Medicaid and social security. And for the administration, Doge was never really intended to make significant benefit reductions to those programmes.”Last month, Musk contended that Doge’s modified goal of $1tn in savings could still be reached if there was “sufficient political will” among Republican lawmakers. “It’s a long road to go . . . It’s sort of, ‘How much pain is the cabinet and Congress willing to take?’ Because it could be done, but it requires dealing with a lot of complaints.” Some of Doge’s actions could prove counter-productive.The non-profit Partnership for Public Service has estimated that Doge’s firing and rehiring of workers will cost the US $135bn this year in lost productivity.As of March, more than 11,000 IRS employees, whose responsibilities include the collection of tax receipts, have left the agency or are expected to do so, according to a watchdog report, with further lay-offs planned. Yale’s Budget Lab estimated that a reduction of just 7,000 IRS staff would save $6.9bn in salary costs over the next decade, but result in $64bn less in tax collections, as the agency’s ability to go after tax cheats is curtailed.Whatever the eventual effects, Musk is not likely to be around to see them. Having been forced to pay more attention to his companies, his desk in the Eisenhower building adjacent to the White House has been mostly cleared, and his oversight of Doge has recently consisted of a series of phone calls, according to Trump’s chief of staff, Susie Wiles.But Doge’s cheerleaders still see it as the start of a much-needed shift in mindset within a bloated bureaucracy.For Safra Catz, the chief executive of software group Oracle — whose founder Larry Ellison has been a Trump ally — Doge was simply the long overdue introduction of a business mindset to government.“Don’t use things from years ago just because you have always been using them,” she says of the initiative’s approach.Whatever cost-cutting measures Congress ultimately passes, Doge seems set to live on, at least as a concept.“When you have a Doge effort going on in Washington, and an administration that really wants to see the waste disappear, it allows for those people who are really forward thinking . . . to come forward and say ‘Hey, we are going to do this ourselves’,” says Katherine Boyle, a partner at venture capital firm a16z, whose members have filled Doge’s ranks. For his part, Musk last month seemed unsure of how consequential Doge would be without him at the helm. Questioned by reporters about whether the initiative would remain effective without its spiritual leader, Musk mused: “Is Buddha needed for Buddhism?” Additional reporting by Alex Rogers in Washington and Derek Brower in New York.© 2025 The Financial Times Ltd.

FT's Big Read: Elon Musk’s DOGE - How the $1tn government shake-up unravelled

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