Donald Trump’s ‘One Big Budget Bet’ & the DOGE Initiative

Context

DOGE = Department of Government Efficiency, launched in Trump’s second term.
Objective: Reduce federal spending, deficit, debt, and interest burden; streamline government operations; improve efficiency.
High-profile involvement: Elon Musk appointed adviser.
Ambition: Reduce number of U.S. federal agencies from 400+ to 99.
Extension: One Big Beautiful Bill (OBBB) — embeds DOGE reforms into a single federal law.

Background: U.S. Fiscal Position

Government Size (public expenditure % of GDP, avg. 2001–2024):
- U.S.: 36.49% — smallest among 7 major advanced economies (MAE).
- France highest: 56.53%.
Fiscal Balance & Debt (TE 2024):
- U.S.: Deficit –6.0% of GDP, Debt 119.5% of GDP.
- MAE average: Deficit –4.1%, Debt 108.6%.
Reason: Low revenues, not high spending.
- U.S. govt. revenue (% GDP, avg. 2001–2022): 30.55% (lowest among MAE).
- Tax–GDP ratio: U.S. 19.27% vs OECD avg. 32.74%.

DOGE – Key Measures

Cost Savings
- Terminated unused office leases, wasteful contracts.
- Cancelled/renegotiated grants.
- Detected and recovered misallocated funds.
- Sold surplus assets.
Workforce Optimisation
- Hiring restrictions, voluntary buyouts, early retirement.
- Workforce Reshaping Tool (AutoRIF upgrade) — layoff criteria: seniority & performance.
- 260,000 employees laid off/retired/bought out.
Regulatory Reforms
- Deregulation to reduce compliance cost — $30.1 billion savings.
- Deleted 1.8 million words from federal rules.
- Unconstitutionality Index (UI): In 2024, 19 bureaucratic rules per law passed.
Technology Use
- AI-based employee productivity monitoring.
- Transparency portals for workforce size and federal grants.
Reported Savings
- $190 billion total; ~$1,180 per taxpayer.

OBBB (One Big Beautiful Bill)

Legislative vehicle to integrate DOGE reforms with fiscal priorities.
Includes:
- Large tax cuts.
- Spending reductions in line with DOGE principles.
Conflict: Musk opposed removal of electric vehicle tax credits — contradicted DOGE advisory role.
Fiscal Challenge:
- Tax cuts > Spending cuts.
- Estimated to add $3.2 trillion to national debt over next decade.

Challenges

Revenue Gap:
- Low corporate tax rates, below OECD average.
- Lower effective tax rates on wealthy.
- Secrecy laws enabling tax evasion.
Sustainability Issue:
- Without boosting revenues, expenditure cuts alone unlikely to solve deficit/debt crisis.

Conclusion

The DOGE initiative represents one of the most ambitious government downsizing efforts in recent U.S. history, leveraging technology, transparency, and structural reforms. While initial savings are notable, the broader fiscal bet through the OBBB risks failure if revenue reforms are ignored. For long-term deficit and debt reduction, the U.S. will require not just leaner spending but also a broader and more progressive tax base, effective anti-evasion measures, and political consensus on sustainable fiscal reform.