The Trump Administration’s “Department of Government Efficiency” (DOGE) is making headlines for the substantial federal government layoffs that have resulted from its cuts. The idea behind DOGE is not new. President Obama had the “National Commission on Fiscal Responsibility and Reform,” collegially known as the “Bowles-Simpson” commission after its committee chairs, former White House Chief of Staff Erskine Bowles and former Wyoming Senator Alan Simpson. In December 2010, Bowles-Simpson proposed a series of budget cuts, reforms to Social Security and Medicare, and tax reforms to reduce the federal budget deficit. None of the commission’s recommendations were enacted.
President Clinton had the “Commission to Reinvent Government.” The goal was to streamline the federal government and achieve cost savings through reductions in the federal workforce. The commission began in 1993, eliminated 350,000 jobs and saved taxpayers $136 billion.
Thus, many presidents have tried to reduce the size of the federal workforce to reduce the budget deficit. What is unique about DOGE is how swiftly the cuts have come. DOGE has already eliminated 30,000 federal employees and 200,000 probationary employees – those who had less than one year of experience working in the federal government and would have become regular employees after that year. DOGE claims to have saved $100 billion; other estimates place the savings closer to $10 billion. Regardless of the number, this is a substantial amount in less than a month.
Cutting jobs and contracts only saves money if those employees and projects were providing less value than their cost. If their work was worth more than $10 billion, these cuts may be a net loss. If it was worth less, then the cuts improved efficiency. This is how government spending should be evaluated – comparing the cost to the benefit. It is hard to imagine that National Park Service employees or employees of the National Oceanic Atmospheric Administration were on the wrong side of the cost-benefit calculation; but without more information, it is impossible to know.
It is important to keep the size of these cuts in perspective. When President Clinton announced the Commission to Reinvent Government, the budget deficit was $227 billion, so $136 billion in savings over the span of the administration was significant. In fact, the deficit began shrinking after 1993 and balanced in 1998. In 2010, the deficit had ballooned to $1.2 trillion and unfortunately, none of the Bowles-Simpson recommendations were adopted. Currently, the deficit is at $2 trillion and the federal payroll is approximately $320 billion. Even if every federal job was eliminated, the budget deficit would only fall by 16%.
The real federal spending is for defense ($850 billion), Social Security ($1.6 trillion), Medicare ($1 trillion) and interest on the national debt ($1 trillion). DOGE cutting jobs and canceling contracts grabs headlines, but defense and entitlements consume the largest portions of federal spending, yet remain politically untouchable. Without reforms in these areas, no amount of workforce cuts will meaningfully shrink the deficit.
