Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X, formerly known as Twitter. — Reuters
Elon Musk predicted he could cut at least US$2 trillion from the US federal budget, a lofty goal that would require a level of austerity unprecedented since the winding down of World War II.
His target, mentioned at Donald Trump’s rally in Madison Square Garden, last Sunday, exceeds the amount Congress spends annually on government agency operations, including defence.
It would likely require making significant cuts to popular entitlement programmes such as Social Security, Medicare, Medicaid and veterans’ benefits.
In short, it’s easier said than done – even for the world’s richest man, who Trump has said he’d appoint to lead an efficiency commission should he win a second term in the White House.
Last year, the government spent more than US$6.75 trillion, with more than US$5.3 trillion of that coming from Social Security, healthcare, defence and veterans’ benefits – all of which are politically fraught and notoriously difficult to convince Congress to cut – as well as interest on the debt.
Musk’s own companies – including Tesla Inc and SpaceX – have billions in federal contracts and have benefited from government spending, including electric-vehicle tax credits and infrastructure investments, further underscoring the difficulty of implementing a US$2 trillion cut.
Trump’s first term showed just how elusive spending cuts can be.
His efforts to slash spending on Affordable Care Act insurance subsidies failed in the Senate, and Congress rejected many of his other proposed spending cuts to domestic agencies.
Trump eventually agreed to major increases in discretionary spending followed by trillions in pandemic relief in a series of deals that ballooned the deficit.
Trump has since said, however, he would seek to shrink spending by impounding funding approved by Congress, challenging a 1974 law limiting the president’s authority to withhold appropriated funds.
The closest to Musk’s austerity push would be a budget proposed by Republican Senator Rand Paul, which would cut spending by 6% a year every year for five years, until the US budget is balanced.
That blueprint, which doesn’t specify which programmes would be cut, was blocked on a 56 to 39 procedural vote in the Senate last month, opposed by Republican defence hawks like Roger Wicker, the top Republican on the Armed Services Committee, and Susan Collins, the top Republican on the Appropriations Committee.
If Trump’s impoundment gambit failed, he’d need Congress to back his cuts, and lawmakers are generally loathe to pass on pain to programmes sending billions to their states and to voters. — Bloomberg
Steven T. Dennis is a writer for Bloomberg. The views expressed here are the writer’s own.
