In the United States, the $2 trillion budget savings goal is crucial for the future of constitutional democracy and capitalist prosperity. The soaring public debt has spiraled out of control, turning the federal budget into a self-accelerating financial doomsday machine. Therefore, it is extremely necessary to support the efficiency departments led by Musk and Ramaswamy.
Looking back at the history of public debt, in 1980, when Ronald Reagan was elected president promising to curb inflation, the public debt stood at $1 trillion. By the time Donald Trump was first elected president, the public debt had skyrocketed to $20 trillion, and now it has reached $36 trillion. Based on current spending and tax policies, it is projected to reach $60 trillion by the end of a 10-year budget cycle.
However, the ensuing skyrocketing interest expenses will trigger a true fiscal crisis. The Congressional Budget Office’s latest forecasts project that by the mid-century, the public debt will continue to grow, reaching $150 trillion. This projection assumes that no new tax cuts or spending plans will be introduced by Congress and that the U.S. economy will not experience a recession, inflation resurgence, interest rate spikes, or other economic crises over the next 25 years!
Certainly, according to the long-term projections of the Congressional Budget Office, the entire system will collapse long before the actual public debt reaches $150 trillion or 166% of GDP. Every remaining portion of what we currently know as the United States will head towards destruction.
We need to clarify that Musk and Ramaswamy’s team are discussing saving $2 trillion annually, and they are on track to achieve this goal soon. Some commentators on Bubblevision have made the mistake of saying, “They must be talking about saving $2 trillion over 10 years or at least several years.”
However, we believe Musk’s team is not referring to a long timeframe like that, as Musk’s statement at the Madison Square Garden rally was very clear. Frankly, if this goal were to be achieved in 10 or even 5 years, it wouldn’t be worth the trouble. This is because the U.S.’s financial doomsday machine will accumulate interest expenses at an extremely rapid pace, and saving $2 trillion over 10 years would only make a minimal difference. In fact, federal government interest expenses have already surpassed the threshold of $1 trillion annually, and according to our calculations, this figure will reach at least $7.5 trillion by the mid-century.
In other words, if drastic measures are not taken now, such as achieving the $2 trillion annual savings goal, the interest payments on the U.S. public debt over the next 25 years will exceed the total federal budget expenditure today, including social security, defense, Medicare, education, highways, interests, and the Washington Monument, and all of this is based on the current state of affairs.
Therefore, Musk’s intention is certainly to save $2 trillion annually.
“How much do you think we can save from Biden’s wasteful $6.5 trillion annual budget?” asked Howard Lutnick, CEO of Cantor Fitzgerald and co-chair of the Trump transition team, to Musk at the Madison Square Garden rally.
Musk responded without providing specific details that he believes “at least $2 trillion,” sparking widespread attention online and mixed reactions in the budget realm.
Clearly, the enormous federal government with its massive expenditures and debt is indeed difficult to grasp and challenging to address. After all, the current annual budget of $7 trillion equates to the federal government spending nearly $200 billion per day or $8.3 billion per hour. When considering the the budget projections for the next 10 years, it becomes completely unfathomable: the Congressional Budget Office’s spending baseline for 2025-2034 of $85 trillion is nearly equivalent to the annual GDP of all countries worldwide this year.
Therefore, based on experience, it is recommended to set a goal year and several major categories of savings measures to achieve the $2 trillion annual savings target. These measures can be used to formulate detailed but easily understandable plans for the much-needed cleanup of the federal budget.
In this context, fiscal year 2029 is the most reasonable target year, as it would represent the fourth and final budget of the Trump administration, providing ample time for the gradual implementation of necessary comprehensive reduction plans without being too distant from being relevant to Trump’s second term in fiscal governance.
We summarize the proposed three-pronged approach to savings as follows:
1. Cut excess spending… comprehensively cut unnecessary and wasteful institutions and bureaucratic systems.
2. Reduce defense spending… cut national security capabilities and functions unrelated to the “America First” policy.
3. Trim low-priority welfare spending… reduce unaffordable and unnecessary low-priority welfare benefits and subsidies based on reasonable social equity principles.
Needless to say, within the vast ruins of the federal budget, there are countless ways to address the issues. However, based on over half a century of participation and observation in the federal budget, we believe the following combination is the most feasible and balanced approach to achieve the $2 trillion annual savings by fiscal year 2029.
It is certain that even with this relatively cautious combination, it will inevitably unleash an unprecedented storm on both sides of the Potomac River, but we will provide strong grounds and defenses for it. We will elaborate on the reasons behind this in subsequent articles.
Trimming fat: $300 billion or 15%.
Elite forces: $500 billion or 25%.
Reduce governance: $1.2 trillion or 60%.
Undoubtedly, even the first item of reducing fat by $300 billion will make Washington’s swamp “cry and howl.” Nonetheless, saving this $300 billion can only be achieved by cutting the anticipated $50 billion annual cost of Biden’s misguided “green new deal” policies, including tax credits and subsidies for all electric vehicles, and other forms of corporate welfare and subsidies totaling $500 billion annually within the budget and tax code.
We will delve into the inherent waste and redundancy of this $300 billion in detail in the second part. However, it is certain that cancelling absurd studies aimed at creating sensational impacts, foolish foreign aid projects, and ceasing the distribution of funds to deceased individuals might only marginally achieve the savings target, and cutting these absurd expenses itself has valid reasons.
For example, canceling the fund saved from “Dr. Fauci’s monkey island project at the National Institutes of Health” would account for 0.002% of the $2 trillion goal, while canceling the “U.S. Agency for International Development’s promoting Egyptian tourism fund” would only save 0.0003% of the target amount.
Even more substantial ideas, such as promptly removing the deceased from the Social Security list, won’t save much money. This is because every month, 1.1 million social security benefit recipients transfer their benefits to others, who currently receive an average benefit of $1,907 per month. Therefore, deceased individuals on the social security list cost a hefty $2.1 billion each month.
However, in reality, this amount is not fully paid out. The list is cleaned up monthly based on newly submitted death certificates, including terminating payments to individuals who passed away in that month (including the last day). Thus, the average duration of a deceased person on the social security list is 15 days, costing $1.05 billion.
If Musk and Ramaswamy’s team can develop more efficient software to monitor, report, recalculate the previous month’s benefits, and cease payments to the deceased, the average duration of the deceased on the list could be reduced by two-thirds. This means that removing deceased individuals from the social security list 10 days earlier would save $700 million annually, accounting for 0.04% of the $2 trillion target. In essence, there is undoubtedly room for increased efficiency and elimination of blatant waste and folly in the federal budget, but unfortunately, even these savings add up to only minor amounts.
In other words, achieving the $2 trillion target is impossible without significant political upheaval. Cutting the federal budget without any anti-corruption measures will not work.
In this regard, only by cutting 47% off the average of 1.343 million non-defense federal employees can savings of $100 billion be realized by eliminating dozens or more institutions.
This figure is calculated based on the average annual salary cost of $100,000 per federal employee and an additional average benefit and fringe benefit of $44,000. By fiscal year 2029, the average salary cost per employee will rise to $160,000. In the second part, we will list the most reasonable and prudent reduction plans for the $200 billion in corporate welfare and green new deal waste as well as the $100 billion in excess non-defense salaries.
Then in part three, we will explain how to cut $500 billion annually from the national security budget, followed by reducing $1.2 trillion annually from welfare and domestic welfare programs.
About the Author:
David Stockman is a senior fellow at Brownstone Institute. He began his career in Washington in 1970 as Special Assistant to Illinois Congressman John Anderson. From 1972 to 1975, he served as the Executive Director of the House Republican Conference. In 1976, Stockman was elected to Congress from Michigan, resigning in January 1981. From 1981 to August 1985, he served as the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the government, Stockman joined Wall Street investment bank Salomon Brothers. Later, he became one of the founding partners of the New York private equity firm Blackstone Group. Stockman left Blackstone in 1999 and founded his own private equity fund in Greenwich, Connecticut. He has written several books on politics, finance, and economics and operates the subscription-based analytical website ContraCorner.
Original Title: How to Cut $2 Trillion of Fat From the Federal Budget
Published in English by Epoch Times.