Elon Musk aims to cut $2 trillion in US spending, but is it feasible?
Elon Musk, the CEO of Tesla and owner of X (formerly Twitter), recently raised eyebrows when he suggested at a rally that he could cut at least $2 trillion from US government spending by eliminating “waste.” This dramatic figure has caught the attention of both supporters and skeptics alike. Now, with Musk appointed co-head of a new Department of Government Efficiency under the incoming US president, he has a unique opportunity to put his plans into action.
The US federal government spent $6.75 trillion in the most recent fiscal year (October 2023 to September 2024), according to the US Treasury. Musk’s proposed cuts would represent a massive 30% reduction in this total, or about $2 trillion. To understand whether this is possible, we need to break down where the money is currently going.
Where Does the Money Go?
About 13% of US government spending goes toward interest payments on the national debt, totaling around $880 billion. Unfortunately, this isn’t a flexible area for cuts. The government can’t reduce these payments without risking a default, which would have catastrophic economic consequences.
A larger chunk—around 22%, or $1.46 trillion—is spent on Social Security, primarily pensions for retirees. This is a “mandatory” spending item, meaning it’s required by law, and cutting it isn’t an option without significant political and social fallout.
Other mandatory programs, like Medicare (the government-funded health insurance program for seniors), further restrict the ability to reduce spending in a meaningful way.
This leaves us with “discretionary” spending—outlays that aren’t mandated by law and must be voted on by lawmakers every year. Discretionary spending includes defense ($874 billion, or 13% of total spending), education ($305 billion, 5%), and transportation ($137 billion, 2%). In total, discretionary spending makes up about 25% of the federal budget.
While theoretically easier to cut than mandatory spending, the scale of reductions Musk is proposing raises serious questions about the feasibility of such massive cuts.
How Realistic Are Musk’s Plans?
Musk’s solution to slashing government spending revolves around cutting bureaucracy, reducing regulations, and restructuring government agencies. Drawing on his experience at X, where he drastically reduced staff from 8,000 to 1,500, Musk believes similar efficiency gains can be made across the government.
However, even if all of the $2 trillion in savings came from discretionary spending (which, as mentioned, only accounted for $1.7 trillion in 2023), it would require the closure of virtually every federal agency—from the Department of Homeland Security to the Department of Agriculture. To say this would be disruptive is an understatement.
Moreover, the idea of finding such massive savings in the near term faces strong opposition from experts and lawmakers. Even relatively modest cuts have proven difficult to pass. For example, after taking control of the House of Representatives in 2022, Republicans struggled to reduce discretionary spending by just $130 billion due to pushback from both sides of the aisle.
The Political Landscape and Challenges Ahead
The political landscape also complicates Musk’s goal. While Musk and his co-head of the Department of Government Efficiency, Vivek Ramaswamy, plan to streamline government functions, President Donald Trump has previously campaigned on making certain programs like Social Security more generous, not less. Trump has also proposed expanding defense spending, not cutting it. These positions clash with the idea of slashing spending across the board.
Additionally, the US government is running an annual deficit—spending more than it brings in through taxes—and the national debt is already reaching nearly 100% of the GDP. Without major changes, projections show the debt could grow to 143% of GDP by the middle of the next decade, exacerbating the fiscal challenges facing the country.
Is $2 Trillion Really Possible?
Ultimately, the prospect of cutting $2 trillion from the US budget is far from simple. While discretionary spending offers a potential target for cuts, the idea of slashing such a vast amount in a short period is fraught with challenges, not least the massive disruption it would cause to government services and the economy.
Musk’s vision might be bold, but whether it can be realized on such a scale remains highly uncertain. Critics argue that without sacrificing crucial government functions, Musk’s ambitious goal could turn out to be an exercise in futility. While the idea of cutting waste is appealing, the practicalities of reducing government expenditure by $2 trillion might be too daunting to pull off, at least in the near future.
