Musk plan for retooling government takes shape, but big questions loom
WASHINGTON — The initial plan for retooling the federal government under President Donald Trump started with three loyal billionaires: banker Howard Lutnick, tech leader Elon Musk and entrepreneur Vivek Ramaswamy.
Now, it’s down to one.
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Lutnick emerged as Trump’s pick to run the Commerce Department. Ramaswamy decided to step aside from the project just before Trump assumed office Monday.
As a result, Musk, the world’s richest man, now has full command of the federal cost-cutting effort, which Trump has hailed as “potentially, the Manhattan Project of our time.” How exactly Musk wields his consolidated power to set the tempo and targets of the so-called Department of Government Efficiency remains to be seen. But his first moves suggest he will oversee something closer to an information technology project than the sweeping operation to slash at least $2 trillion from the federal budget that Musk had once predicted.
The Musk-led project debuted this week with a bit of bureaucratic jujitsu: the takeover of an existing arm of the White House that, for the past decade, had focused on improving government technology. The office, the United States Digital Service, now renamed United States DOGE Service, was created in 2014 to fix failing computer systems that threatened the success of President Barack Obama’s health insurance overhaul.
Musk, who cut 80% of the jobs at Twitter after he bought the social platform two years ago, aims to conduct a review of at least some of the roughly 200 employees who work in the office before deciding whether to keep them in their jobs, according to two people familiar with his plan, who spoke on the condition of anonymity to describe internal plans.
From this new perch in the administration, Musk immediately gains a road map to the federal bureaucracy, which could allow him to swiftly assess the technological capacities of agencies and departments and identify potential changes. He is also expected to maintain an office in the West Wing, which will help him keep crucial access to Trump and key White House aides. Musk’s allies, meanwhile, have secured key posts in the administration. Amanda Scales, who until this month worked at Musk’s artificial intelligence company, xAI, is now chief of staff at the Office of Personnel Management, a powerful agency that oversees government hiring.
Musk posted a meme last week on his social platform, since renamed X, that hinted at grand ambitions for his new project, comparing his looming effect on government to his company’s innovation of rockets that fuel space travel.
“What matters going forward is to actually make significant changes, cement those changes and set the foundation for America to be strong for a century, for centuries, forever,” Musk said at a Trump rally in Washington on Sunday.
In a post on X on Friday, DOGE said that hundreds of millions of dollars’ worth of current or impending federal contracts had been canceled. “Initial focus is mainly on DEI contracts and unoccupied buildings,” the post said, referring to diversity, equity and inclusion-related efforts. A spokesperson for the office did not immediately respond to a request for comment on the particular programs that were affected.
But the decision to rebrand the former digital office into DOGE also signals the potential limits of the endeavor, budget experts said.
Trump initially said his government overhaul would “cut wasteful expenditures” and “slash excess regulations,” but those goals were not explicitly laid out in the order Monday that created the new group.
DOGE has been tasked with recommending cuts to the federal workforce in the next 90 days and playing a key role in overhauling hiring practices within four months.
But the office does not have the power to approve spending cuts — that authority remains with Congress.
Romina Boccia, the director of budget and entitlement policy at the libertarian Cato Institute, said focusing on modernizing government technology could help address issues like improper payments. But she said that would be likely to save only a couple hundred billion dollars at most, far less than Musk had promised.
“The cynic in me says that DOGE realized that they were perhaps too ambitious and it would be much more difficult to accomplish their initial goals of reducing spending by $2 trillion,” Boccia said. “They’re narrowing their scope to something more manageable.”
A White House spokesperson did not respond to a request for comment. A spokesperson for Musk declined to comment.
During last year’s presidential campaign, Musk said DOGE could cut the $6.75 trillion federal budget by at least $2 trillion, or about 30%. More recently, he has lowered his estimate to closer to $1 trillion. During the first Trump administration, spending jumped to nearly $8 trillion from about $5 trillion, an increase due in part to COVID-19 relief efforts. Heading into his second term, Trump has vowed to avoid cuts to Social Security and Medicare, which account for about a third of federal spending.
Still, some experts on the federal government said DOGE’s influence could be substantial because Musk and his allies will operate from within the federal government, rather than outside. Trump’s order called for “DOGE teams” to be embedded within federal agencies like the IRS, a change from Trump’s original plan to have the group based mostly outside the government to offer advice to White House budget officials. Most DOGE staff members will now be full-time government employees, according to a person familiar with the plans.
“It brings DOGE inside and connects it with every federal agency, in ways that could have sweeping impact,” said Donald F. Kettl, a former dean of the University of Maryland School of Public Policy.
Simplifying government systems could also be a tool that results in substantial benefits for taxpayers, said Mina Hsiang, the most recent administrator of the Digital Service, noting that better technology could help people to file taxes or gain access to veterans’ benefits.
“If they choose to work on the everyday problems that impact all Americans, they could accomplish a lot,” said Hsiang, who was appointed to the role during the Biden administration. “If they work on programs that put them in a deeply adversarial position with agencies, I think they will be less likely to get important things done.”
The full extent of how DOGE works and what it does may end up shielded from the public. Musk hopes to join the administration as a special government employee, according to a person familiar with his plan, a designation intended to avoid triggering a transparency law requiring government panels that include private citizens to conduct their meetings in public and make their documents available. It remains to be seen whether many other DOGE staffers will also have that designation.
An executive order Trump signed this week to institute a hiring freeze of federal civilian employees underscored how broad the group’s authority could be. DOGE will help work on a plan to reduce the size of the federal workforce “through efficiency improvements and attrition,” according to the order.
Musk’s team is tightly integrated with the Office of Personnel Management, with some of his DOGE aides working out of the OPM offices, according to a person with knowledge of the arrangement. Federal agencies have been asked to send Scales, the office’s new chief of staff, lists of all their workers who are on probationary status — and therefore easier to fire — by Friday.
Another Musk ally is also poised to join the administration: Michael Grimes of Morgan Stanley, a star Silicon Valley banker who helped Musk purchase Twitter, has told associates that he’s likely to come aboard in a temporary, fellowshiplike role before returning to the bank, according to people briefed on the conversations. His interest was first reported by The Wall Street Journal.
An early focus for DOGE appears to be the IRS, the sprawling agency with more than 80,000 employees that collected nearly $5 trillion in tax revenue last year.
People involved with DOGE, including tech investor Baris Akis, participated in the transition team’s agency review at the IRS, with a focus on updating the tax collector’s technology systems, according to three people familiar with the work. Musk has criticized the agency on X as having outdated information technology.
A goal of the new administration is to reduce the number of IRS employees by automating more work, the people said.
An executive order from Trump this week temporarily freezing hiring across the federal government also empowered DOGE to keep the freeze in place indefinitely at the IRS.
Musk’s focus on technology was at the heart of a philosophical divide with Ramaswamy, the Ohio biotech entrepreneur, that ultimately forced him to walk away from DOGE.
Ramaswamy, a Yale-trained lawyer, had publicly spoken about a more policy-driven approach that revolved around regulatory rescissions to “dismantle the administrative state,” something he frequently pushed from the campaign trail.
A spokesperson for Ramaswamy declined to comment.
The two men had publicly welcomed the chance to lead DOGE for Trump, and even floated the possibility of hosting a weekly podcast together. But their differences over how to set priorities quickly led to problems behind closed doors, according to transition aides.
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