How Elon Musk and Vivek Ramaswamy teamed up to gut $2 trillion in government spending
A little over a year ago, Elon Musk and Vivek Ramaswamy didn’t know each other. Then the two hopped on X Spaces along with venture capitalist David Sacks. “I would like to know more about you,” Musk, the CEO of X, told Ramaswamy, who was running for the Republican presidential nomination at the time.
Now, Musk and Ramaswamy have teamed up to cut $2 trillion in annual government spending, or more than 30% of the federal budget, within two years.
They’ve been tasked by President-elect Donald Trump with running an entity focused on “government efficiency” that they’re calling DOGE. The advisory body, which will not be an official department of the federal government, aims to radically shake up the federal bureaucracy and massively cut federal spending in the process.
“They’ve been finding things you wouldn’t believe,” Trump said about DOGE at a Monday press conference.
“We’re looking to save maybe $2 trillion and it’ll have no impact. Actually it will make life better, but it will have no impact on people,” he added.
A raft of successful entrepreneurs have descended on Washington, D.C., from Silicon Valley to help with the incoming administration’s transition, and many of them have connections with billionaire venture capitalist Peter Thiel.
The tech industry was a liberal redoubt in 2017, with Thiel breaking the mold as one of the only Silicon Valley billionaires to openly back Trump. But in 2025, the tech-industry hub will act as a feeder program of sorts for an ambitious White House that is intent on radically downsizing the U.S. government and reforming the international trade system to America’s benefit.
There is no greater symbol of this sea change than Musk and Ramaswamy’s DOGE. The pair, both ardent supporters of Trump’s 2024 presidential election campaign, have promised to bring the fanatical cost-cutting strategy that Musk has deployed with success at high-tech manufacturing companies like Tesla
“The entrenched and ever-growing bureaucracy represents an existential threat to our republic, and politicians have abetted it for too long,” Musk and Ramaswamy wrote in a Wall Street Journal opinion article two weeks after Trump’s election victory. “We will serve as outside volunteers, not federal officials or employees. Unlike government commissions or advisory committees, we won’t just write reports or cut ribbons. We’ll cut costs.”
DOGE doubts
Some in Washington don’t believe Musk and Ramaswamy’s effort stands much of a chance, however.
“Absolutely no one who knows anything about the federal government can imagine cutting that amount of money in that amount of time,” said Elaine Kamarck, who ran President Bill Clinton’s National Partnership for Reinventing Government in the 1990s.
The Clinton effort to cut spending and modernize government services saved $112 billion over eight years and led to significant reductions in the federal workforce and real-estate footprint as well as in government regulations, according to an independent analysis at the time.
This is in stark contrast to the so-called Grace Commission under President Ronald Reagan, which, like DOGE, was led by business executives with little or no government experience. Over a two-year period, the committee of 161 business executives produced a report with thousands of recommendations that were largely ignored by Congress and never implemented.
One major difference between the two efforts was that the Clinton approach was not adversarial and relied on the advice of career civil servants as well as the perspective of outside consultants and business leaders.
“You need buy-in from the civil servants themselves,” Kamarck told MarketWatch. “They’re the ones who are going to know where the inefficiencies are.”
She added that Musk and Ramaswamy’s confrontational approach to the civil service could also be counterproductive in the long run and questioned whether career civil servants will want to educate DOGE on policy intricacies if its leaders have been calling them “lazy and good-for-nothing for two years.”
Ramaswamy, Musk and the Trump transition team didn’t respond to requests for comment from MarketWatch.
The tech entrepreneurs are indeed taking a confrontational approach to the civil service, and they’ve stated that one goal is to downsize the federal workforce by eliminating the ability of government employees to work from home.
“Requiring federal employees to come to the office five days a week would result in a wave of voluntary terminations that we welcome,” Musk and Ramaswamy wrote. “If federal employees don’t want to show up, American taxpayers shouldn’t pay them for the Covid-era privilege of staying home.”
Jacqueline Simon, policy director at the American Federation of Government Employees — which represents 800,000 workers — said that while some federal employees may leave if their remote-work privileges are revoked, it will likely be the most talented and in-demand employees who do so.
“If there’s another employer down the street paying the same salary that will let someone telework a couple of days a week, there will be people who say, ‘Forget about this, I can get a better hybrid deal elsewhere,’” she told MarketWatch.
The heads of DOGE may also be overestimating the extent of remote work taking place. The Office of Management and Budget reports that 54% of government employees aren’t eligible for remote work at all, among them civilian military workers, VA hospital nurses and border-patrol agents. Among federal employees who are not eligible for a fully remote work arrangement, 79.4% of regular working hours were spent in the office, the OMB added.
The contrarians
DOGE is also a symbol of the power and reach of Thiel and his brand of right-wing nationalism, which at one time marked him as an eccentric in tech circles but which is now becoming a dominant strand of thought in the industry.
“Thiel is sometimes portrayed as the tech industry’s token conservative, a view that wildly understates his influence,” biographer Max Chafkin wrote in “The Contrarian,” his 2021 book about Thiel. “More than any other Silicon Valley entrepreneur … he has been responsible for creating the ideology that has come to define Silicon Valley: that technological progress should be pursued relentlessly — with little, if any, regard for potential costs or dangers to society.”
Both Ramaswamy and Musk were connected to Thiel long before they were household names. Musk and Thiel became business associates when their payment companies merged in 2000 to create PayPal. Ramaswamy, meanwhile, was one in a long line of young, conservative businessmen who Thiel has backed. Thiel’s venture-capital firm invested early in Ramaswamy’s biotechnology company, Roivant Sciences Ltd.
When Musk and Ramaswamy first met virtually last year in the X Spaces discussion, Ramaswamy noted that “our mutual friend, Peter,” was also a seed investor in another Ramaswamy company, Strive Asset Management, a provider of exchange-traded funds. Sacks, the other participant in that discussion, has been a longtime associate of Thiel’s, co-writing a book with him in 1995 called “The Diversity Myth” and serving as chief operating officer of PayPal, the company cofounded by Thiel and Musk. Trump has named Sacks as his administration’s artificial-intelligence and crypto czar.
Thiel speaks in revolutionary terms, comparing the Democratic Party in a November interview to “the empire” in Star Wars, while saying he and his fellow Silicon Valley billionaires are a “ragtag rebel alliance” comprising a ”diverse and heterogenous group” that is fighting to overthrow a stifling orthodoxy.
Whether the American people voted in November for a revolution, or even an unprecedented downsizing of the federal government and the services it provides, is another question.
Kamarck argued that when Americans actually start to look at the services that would need to be cut to radically reduce the size of government, they may begin to balk at making those changes.
In 2024, Social Security, Medicare and Medicaid accounted for nearly 44% of all government spending, while interest payments accounted for about 13%, national defense 14% and veterans benefits 6%. This leaves precious little to cut, and the remainder includes Republican priorities like border patrol and transportation-infrastructure spending.
Trump well understands the sanctity of these programs for average Americans. DOGE “will never cut Social Security, things like that. It’s just waste, fraud and abuse,” he said Monday.
“Everybody hates government in general but likes it in the particular,” Kamarck said. “And if they go after Social Security and Medicare — which they would need to do to make the numbers they’re talking — all hell will break loose, and the first person to be mad at them will be the president himself.”