Elon Musk, known for his extensive experience in firing employees, is about to face one of his biggest challenges yet: downsizing the federal government. Recently appointed as co-head of the Department of Government Efficiency (DOGE) by President-elect Donald Trump, Musk is set to apply his private sector strategies to reduce government regulations, dismiss unnecessary workers, and ultimately save money. Musk will be sharing this ambitious endeavor with Vivek Ramaswamy, a former biotech entrepreneur and candidate for the 2024 Republican presidential nomination.
In a Wall Street Journal op-ed, the two announced their intent to carry out “mass head-count reductions across the federal bureaucracy,” with Ramaswamy suggesting that as much as 75% of federal employees could be let go. Musk’s recent history indicates he is well-suited to the task. His management of workforce reductions at Twitter, Tesla, and other ventures has demonstrated his willingness to implement large-scale layoffs swiftly.
When Musk acquired Twitter in 2022, he initiated mass layoffs within a week, reducing the company’s workforce by more than 80% within six months. However, this approach also led to a significant drop in the company’s value, raising questions about the long-term efficacy of such drastic measures. The success of Musk’s strategies at DOGE remains uncertain, particularly given the unique challenges of government operations.
Unlike the private sector, government regulations and employment practices are subject to numerous checks and balances. Douglas Holtz-Eakin, former director of the Congressional Budget Office, noted that DOGE lacks the direct authority to make changes, operating more as a high-profile think tank generating ideas rather than enforcing actions.
musk-driven government downsizing efforts
The implementation of regulatory rollbacks is also complicated. DOGE plans to identify and nullify regulations deemed invalid under recent Supreme Court decisions. However, the process of reviewing and rescinding these regulations can take a year or more and may encounter significant resistance from vested interests.
Moreover, labor costs constitute a relatively small portion of federal spending. The bulk of government expenditures are directed towards benefits such as Social Security, veterans’ benefits, and food stamps, which have strong political support and are difficult to cut. Brian Riedl, a Washington-based economist, estimates that even a 25% reduction in federal jobs would result in only about a 1% decrease in federal spending.
Federal employees, many of whom are unionized, are also gearing up to resist these changes. Trump has proposed a new employee category called Schedule F, which would reclassify career civil service employees as political appointees who can be fired more easily. Government unions are actively seeking to protect their members from this reclassification.
Musk and Ramaswamy have set an ambitious deadline for their project, aiming to eliminate the need for DOGE by July 4, 2026. While Musk is known for executing large-scale decisions rapidly, the complexities of the federal government mean that he will need every moment to achieve this monumental task. In the coming months, Musk’s ability to translate his private sector success to the public sector will be rigorously tested as he embarks on what could be one of the most substantial government overhauls in American history.
