Tech billionaire will cut $1 trillion from the deficit as government efficiency (DOGE) searches federal computer systems to cut taxpayer-funded programs He says he’s working on it.
“Overall goal is to try to remove $1 trillion from the deficit. If the deficit is not controlled, the US will go bankrupt,” Musk said last week with Fox News’ President Shaun Hannity and President Donald Trump. He spoke in a joint interview with .
Thousands of federal employees were fired and several programs and departments were shut down as the Trump administration began plans to cut federal spending.
Musk says he was given a $2 trillion deficit when Trump took office for the second time, claiming government fraud and waste will account for the majority.
Officially, the deficit in 2024 was over $1.8 trillion.
Does Musk have a shot of cutting $1 trillion from that deficit? Mathematically, yes. As a practical matter, it would be difficult.
With Musk and his critics throwing statistics, here are some points to know about how the government spends taxpayer taxpayer money.
What is the government spending money on?
The biggest chunk of the federal budget is directed towards forced spending. These programs do not require annual spending approved by Congress. They are:
Social Security (approximately 20%).
Medicare (approximately 15%).
Interest on federal debt (approximately 12%).
Medicaid and other essential health programs (almost 11%).
Benefits for veterans, military and civilian retirees (less than 6%).
Food Stamps and Other Safety Net Programs (over 5%).
Another category of spending covers discretionary programs approved by Congress each year.
Discretionary spending falls into two categories: defense and non-defense. Defense involves the army. Non-defense includes all other federal agencies, including the Judicial and Transport and Environmental Protection Agency.
The scale of mandatory and discretionary spending budgets is not equal. Approximately three-quarters of federal spending comes from either forced expenditures on debt or interest.
How much is the required expenditure “required”?
The mandatory spending programme will run on Autopilot until Congress passes changes to the rules and the President signs the law. So they are a little more protected than discretionary spending. This must be fought in Congress every year. But aside from the interest payments that cannot be ignored unless it causes serious harm to the creditworthiness of countries around the world, being “essential” does not mean it is out of hand.
If Congress and the President want to cut down on Social Security benefits, Medicare benefits, or other essential programs, they can.
Trump has pledged to not cut social security or Medicare. Combined with interest, these federal spending categories collectively account for almost half of the total. If that promise holds, it narrows Doge’s options to cut $1 trillion in spending.
In an interview with Honity, Trump said Medicaid was “untouchable.” If that’s also off limits, the options will be even narrower.
How about reducing discretionary spending?
When it comes to discretionary spending, the options are even more tricky.
Discretionary spending accounted for around $1.8 trillion in 2024, accounting for about half of defense and half of non-defense.
Trump has pledged to sign “record-breaking” military funding in his campaign. This means an increase in the current level.
If Trump continues, that means that non-defensive discretionary spending will bear the brunt of the cuts. However, last year, non-defensive discretionary spending totaled around $9600 billion, which, even if it was cut by 100%, did not become a targeted $1 trillion musk.
What does it mean to reduce non-defensive discretionary spending?
If Musk relies on non-defensive discretionary spending to reach a trillion dollar cut, that means removing essentially everything the federal government does other than defense, essential programs and interests.
Besides the Pentagon, there is not a single department or agent accounting for more than 7.3% of discretionary spending. The biggest ones are veterans, followed by the Ministry of Health and Welfare at 7.2%. The sector with a 3% to 5% stake includes homeland security, education, housing and urban development, transportation and energy.
How about making money rather than cutting spending?
Instead of cutting spending, the deficit can also be reduced by increasing taxes (or a combination of tax increases and spending reductions). But Trump promised not to do so. He pledged to sign “large tax cuts for the middle class, upper class, lower class and business class.”
The practical effect of tax cuts is to increase the deficit if everything else remains the same. So, if there is a tax cut, mask recommended spending cuts must work even harder to reach his trillion dollar target.
Trump has another income lazer to work with: tariffs. However, when it comes to dealing with the deficit, tariffs face two challenges.
One problem is that independent estimates of future tariff revenues are modest. The Central Right Tax Foundation estimated that the first year of tariffs in China, Canada, Mexico and other countries would bring $140 billion.
Another problem is that the US economy could lose sufficient tax revenue from the effects of tariffs. The Tax Foundation predicts that Trump’s tariffs could reduce American income by nearly 1%, with the risk of lower income from taxes.
How much can Musk save by reducing the federal workforce?
So far, some of the most famous cuts under Trump have come in federal labor that have either been fired or shopped for tens of thousands of workers.
The federal workforce employs around 3 million, or about 2.4 million, without counting U.S. Postal Service workers. The 2.4 million figure does not include approximately 1.3 million active duty veterans.
The largest employer for civilians is the Department of Defense, followed by the Department of Veterans Affairs (approximately three-quarters of VA workers are employed directly at VA-Run hospitals and clinics). The Department of Homeland Security is a distant third, followed by the Department of Justice and Treasury.
Estimates consistently found that federal employees’ compensation could reach around 6% of total federal spending, or around $3500 billion in recent years.