Elon Musk's budget deficit gamble: A troubling path forward

In a piece from The Atlantic, the ambitious claims surrounding Elon Musk’s promise to drastically reduce the U.S. budget deficit come under scrutiny. Musk’s dogged pursuit of eliminating a $2 trillion deficit in a year was touted as a bold step towards fiscal responsibility. However, the article argues that Musk's approach—characterized by sweeping cuts and controversial decisions—could not only fall short of his lofty goal but likely exacerbate the deficit.

Musk’s plans began with high expectations, including predictions that he could reach halfway towards eliminating the deficit by the end of May 2024. Critics, however, have pointed out that his strategy lacks coherent execution and is based on flawed assumptions. The budget savings he claims to have achieved are either inflated or nonexistent. For instance, reports show savings of just $2 billion, a mere fraction of Musk's target, with prediction markets dropping their forecasts for DOGE’s first-year savings to a meager $1 billion.

While Musk and his team argue that they've made cuts in government inefficiencies, closer examination reveals that these actions may ultimately cost the government more. For example, firing a technician responsible for maintaining HVAC systems in Veterans Affairs offices may save money in the short term but could lead to much higher long-term costs when the systems inevitably break down. Similarly, the cuts made within the IRS—targeting nearly 20,000 employees—may jeopardize the government's ability to collect taxes effectively. Preliminary surveys indicate a potential shortfall of $500 billion in tax revenue, far outweighing any savings from DOGE’s budget reductions.

Perhaps more troubling is the underlying ideological drive behind Musk’s fiscal strategy. The article highlights Musk’s past claims about government inefficiencies and fraud, particularly within the context of left-wing politics. His assertions about fraudulently attracting undocumented immigrants through entitlements appear to be rooted in baseless conspiracy theories rather than sound fiscal analysis. These unfounded beliefs have likely led to misguided efforts that focus on unnecessary cuts rather than genuine fiscal reform.

The piece also critiques Musk’s focus on a small segment of the budget—non-social insurance programs—while ignoring the larger expenditures on social security, Medicare, and defense. Musk’s proposed cuts are spread thin across various departments that, while large in scope, account for only a fraction of the budget. As a result, the fiscal impact is minimal, and government functions in critical areas such as tax collection and defense are hampered.

By Vugar Khalilov