Commentary
A goal of $2 trillion of budget savings is crucial to the very future of Constitutional democracy and capitalist prosperity in America. In fact, the soaring public debt is now so out of control that the Federal budget threatens to become a self-fueling financial doomsday machine. So more power to the DOGE of Musk and Ramaswamy. In spades!
For want of doubt, just recall this sequence. When Ronald Reagan was elected in 1980 on a call to bring the nation’s inflationary budget under control, the public debt was $1 trillion.
By the time Donald Trump was elected the first time it had erupted to $20 trillion, which has now become $36 trillion. And under current built-in spending and tax policies it will hit $60 trillion by the end of the current 10-year budget window.
Thereafter, however, soaring interest expense will ignite a veritable fiscal wildfire. On paper, the public debt would power upward unabated to $150 trillion by mid-century under the CBO’s latest projection. Yet even the latter is based on a Rosy Scenario budget model that assumes Congress never again adopts a single new tax cut or spending program and that the US economy steams along without a recession, inflation recurrence, interest flare-up, or other economic crisis during the entirety of the next quarter-century!
Of course, long before the public debt actually hits $150 trillion or 166 percent of GDP per the CBO’s current long-term projection, the whole system would implode. Every remnant of America as we now know it would go down the tubes.
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So we need to be clear that the team of Musk and Ramaswamy is talking about savings of $2 trillion per year and relatively soon, too. We make this clarification because we see the usual clueless commentators on Bubblevision saying, “Oh, they must be talking about $2 trillion over 10 years or at least a multi-year period of time.”
But we don’t think they meant that at all because Elon’s statement on the matter at the Madison Square Garden rally was very clear, and, quite frankly, if realized over 10 years or even 5 years it would be hardly worth the bother. That’s because the nation’s fiscal doomsday machine will be accumulating interest expense so fast as to make $2 trillion of savings spread over a decade little more than a rounding error. To wit, Federal interest expense has already passed the $1 trillion per year mark, which figure will hit $1.7 trillion by 2034 according to CBO and would top $7.5 trillion per year at minimum by our calculations by mid-century.
That is, if something drastic is not done now—like a $2 trillion annual budget savings soon—America will be paying more interest on the public debt within 25 years than the entirety of the Federal budget—Social Security, defense, Medicare, education, highways, interest, and the Washington Monument—today.
So, yes, Musk surely did mean $2 trillion per year in this interchange:
“‘How much do you think we can rip out of this wasted, $6.5 trillion (annual) Harris-Biden budget?’ Howard Lutnick, a Wall Street CEO and Trump’s transition team co-chair, asked Musk at the former president’s recent rally held at Madison Square Garden in New York City.
Obviously, the sprawling Federal government and its prodigious expanse of spending and debt literally defies easy comprehension and graspable solutions. After all, the current annual budget of $7 trillion amounts to Federal spending of nearly $20 billion per day and $830 million per hour. And when you talk about the 10-year budget outlook, comprehension literally fades away completely: The current CBO spending baseline for 2025–2034 amounts to $85 trillion or just shy of the annual GDP of the entire planet this year.
So based on experience we suggest building the $2 trillion case around a target year and several big buckets of savings by type. The latter can then be used to build a detailed but comprehensible plan for arraying and conveying the desperately needed house-cleaning of the Federal budget.
In that context, FY 2029 makes the most sense as a target year since it would represent the 4th and outgoing Trump budget; and also one which would give sufficient time for phasing in some of the sweeping cuts that will be needed, but not so far in the distant future as to be largely irrelevant to the here and now of fiscal governance during Donald Trump’s second term.
- Slash the Fat… by eliminating unnecessary and wasteful agencies and bureaucrats wholesale.
- Downsize the Muscle… by curtailing national security capacities and functions not needed for an America First policy.
- Cut the Bone… by reducing low-priority entitlements and subsidies that the nation cannot afford, and which a reasonable view of societal equity does not require.
Needless to say, when it comes to the vast wasteland of the Federal budget there are innumerable ways to skin the cat.
Based on our extensive experience of more than fifty years dealing with the Federal budget, we have determined that the following approach is the most reasonable and balanced way to achieve $2 trillion in annual savings by FY 2029.
This proposed mix of cuts is likely to cause controversy in Washington, but we believe it can be justified for various reasons, which we will explain in future installments. Here is our plan:
– Slash the Fat: $300 billion or 15%.
– Downsize the Muscle: $500 billion or 25%.
– Cut the Bone: $1.2 trillion or 60%.
Even the first category of cuts will face significant opposition, particularly the elimination of expenses related to Biden’s Green New Deal and corporate subsidies. In Part 2, we will delve into the details of how these savings can be achieved.
While it may be tempting to focus on eliminating specific instances of wasteful spending, such as questionable studies or foreign aid projects, these actions will only make a small dent in the overall savings goal. Instead, we need to look at larger structural changes, such as reducing the number of federal employees and eliminating entire agencies.
In Part 3, we will outline our plan to cut $500 billion from the national security budget and $1.2 trillion from entitlement and domestic welfare programs. It will not be an easy task, but it is necessary to address the fiscal challenges facing our country.
Please note that the views expressed in this article are solely the opinions of the author and do not necessarily reflect those of The Epoch Times. Please provide an alternative version.
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