In the year 2025, a work titled “How to Cut $2 Trillion: A Blueprint From Ronald Reagan’s Budget Cutter to Musk, Ramaswamy and the DOGE Team” has just been published, authored by David Stockman and translated by Xin Yu. This article extracts the first chapter from the book to share with readers.
During Donald Trump’s second term as President, the establishment of the Department of Government Efficiency (DOGE) led by the world’s richest man, Elon Musk, and the renowned entrepreneur Vivek Ramaswamy has garnered notable attention. The goal of the Department of Government Efficiency to save $2 trillion in the budget is crucial for the future of American constitutional democracy and capitalist prosperity. The escalating public debt is now spiraling out of control, and the federal budget could become a self-igniting financial doomsday machine.
Looking back on history may offer many insights. When Ronald Reagan was elected as President of the United States in 1980, he called for controlling the national budget to combat inflation, with the public debt at $930 billion, approximately 30% of the GDP at that time.
By the time Donald Trump was first elected as President, this number had already reached $20 trillion, and currently stands at $36 trillion, accounting for 125% of the GDP. Without significant budget cuts following the target levels set by the Department of Government Efficiency, the federal fiscal equation could plummet into a supercritical crisis by the end of this decade. According to data released by the Congressional Budget Office (CBO), the annual baseline deficit is projected to reach $2.9 trillion by the fiscal year 2034, constituting 7% of the GDP.
Even these staggering figures are built upon the foundation of an “optimistic outlook.” It assumes that Congress will not pass any measures to increase spending or cut taxes, including the expiring $5 trillion tax cut plan from Trump’s 2017, which is expected to be extended. This is based on the convenient assumption that in the remaining time of this decade and beyond, there will be no economic recession, no resurgence of inflation, sudden rise in interest rates, or any other economic crisis.
Furthermore, it also assumes that these surging total deficits and soaring debt service costs will pose no issues in the bond market. In other words, the Congressional Budget Office perplexingly predicts that by 2034, deficits worth 7% of GDP and annual interest expenses of $1.7 trillion or 4.1% of GDP, along with a weighted average yield on nearly $60 trillion of public debt at 3.4%, can all coexist.
Yes, if even dogs could whistle, the world would become a wonderful chorus. However, if the average yield were to increase by 250 basis points, by 2034, annual debt service would reach $3.1 trillion, and the annual deficit would soar to $4 trillion. In short, an apocalyptic cycle is forming within the federal fiscal equation, and unless the goal of saving $2 trillion annually as proposed by the Department of Government Efficiency is achieved before the decade ends, the explosive growth trend in the coming years cannot be reversed.
In fact, if comprehensive budget tightening is not promptly implemented, the ever-increasing interest payments will ignite a true fiscal wildfire. According to the current optimistic projections by the Congressional Budget Office, by the mid-21st century in 2054, public debt will only rise to $150 trillion, representing 166% of GDP. However, well before the debt reaches this staggering figure, the entire system will implode. Everything we know about America’s assets will vanish into thin air.
It is clear that the team led by Musk at the Department of Government Efficiency must focus on saving $2 trillion annually from a relatively short period. This is because the nation’s fiscal doomsday machine will accumulate interest expenses at such a rapid rate that saving $2 trillion annually over a longer period (like a decade) would only be a rounding error. In other words, federal interest expenses have already surpassed the $1 trillion mark annually, and by the early 2030s, they will exceed $2 trillion annually. According to our calculations, federal interest expenses could reach at least $7.5 trillion annually by the mid-21st century.
Therefore, it is imperative to realize that merely cutting the federal budget will not make the problem vanish. If drastic measures are not taken politically, it will be impossible to achieve the goal of saving $2 trillion annually.
For instance, even with a forceful reduction of the current 1.343 million non-defense federal employees by 50%, a saving of $1 trillion annually by the year 2029 remains achievable. This comprehensive figure is based on the current average annual salary cost per federal employee of $100,000, plus an average benefit and allowance of $44,000; by the fiscal year 2029, the annual salary cost per employee will rise to $160,000 due to inflation.
To meet the goal of saving $2 trillion annually, a thorough examination and substantial efforts are required across three areas: cutting the “fat,” tightening the “muscles,” and streamlining the “bones.” In the following five chapters of this book, we will expound on the most sensible and wise approaches to achieving the $400 billion goal in reducing the “fat,” and then detail the implementation of cutting $500 billion in non-essential expenses from the national security budget annually based on the “America First” principle in Chapter 7 to tighten the “muscles.” Subsequently, Chapter 8 will delve into streamlining the “bones,” addressing the challenge of cutting $1.1 trillion annually from national welfare, which is the highlight of hitting the $2 trillion saving target set by the Department of Government Efficiency.
In conclusion, it should be clear that achieving the grand objective of cutting $2 trillion annually from the federal budget requires a shift in factual analysis and a shift in paradigm of thought; these are crucial elements of success.