Why Elon Musk's attempt to cut expenses can't work - even if he saves billions of dollars - Trump still has to spend the same amount on the same programs - only Congress can reduce funding
- and many ways to reduce debt in 2030s not needed now
Musk's attempt to save hundreds of billions of dollars by budget cuts is impossible without help of Congress. Musk and Trump don’t seem to understand this yet.
There are three components, mandatory, discretionary and interest.
All the budget is set by Congress.
Mandatory - Congress set the amount to spend when the law was passed and can only be changed by changing the law, e.g. Social Security and Medicare
Discretionary - Congress allocates funding every year, e.g. USAID
Interest - most of this goes to Americans and is a source of wealth to them
So it has to be spent on something. The president can't redirect it - the only way a president could avoid spending it is by impoundment, just not spending the money on anything. That is illegal since Nixon misused it leading to Congress putting a law in place to stop impoundment. That's when Congress put the impoundment control act into place, overriding his veto with a unanimous vote in the Senate and near unanimous in the House.
Trump could try to defy that bill. If so it would go all the way to the Supreme Court and the current legally conservative court is not MAGA. It’s often ruled against Trump and seems inclined to reign in the power of the executive. Seems pretty certain he’d lose that case. More on that at the end of this blog post.
The president does have some flexibility for some of the mandatory funding by rule making. For instance he can change eligibility criteria for SNAP food stamps, student debt forgiveness, or emergency agricultural subsidies. Presidents often overspend on such things over the original intent of Congress, and the Committee for a Responsible Budget says that Congress could save $80 billion in 10 years or $8 billion a year by restricting the president's power to overspend.
The Constitution grants Congress the power of the purse, not the executive branch, yet the past two Presidents have increased spending on student loans, farm subsidies, and SNAP (“food stamps”) in ways that appear well in excess of legislative intent. Requiring that future actions in these areas be budget neutral would save $80 billion relative to the Congressional Budget Office (CBO) baseline and has the potential to save much more, depending on actual presidential actions.
So by cutting this overspending, Trump could save $8 billion a year or $22 million a day., if that's politically acceptable to him. But that's about it. the rest has to be spent.
Then, there are some things he can do with the help of Congress. He could save $700 billion in a decade, or $70 billion a year, a little under $200 million a day if he followed all the recommendations of the Committee for a Responsible Budget which they say has bipartisan support and could be passed in Congress. But this is nowhere near what Trump wants to achieve.
There's just no way he can find $2 billion a day from the budget.
This graphic may help
TEXT ON GRAPHIC:
Why Trump can make only minor reductions in expenses without Congress:
Trump has some ability to remove funding from programs he doesn't like and can of course eliminate fraud and wastage.
However all the money freed up in this way has to be spent on the same program he freed it from.
He can only reduce funding after doing this with support from Congress
Mandatory funding: Fixed amount set in law
- Can be reduced by simple majority in both chambers (reconciliation) but
- tend to be popular with significant Republican supportDiscretionary funding: Must be renewed every year
- Reductions can be stopped by Democrat filibuster in Senate
- Previous year's funding used if filibusteredNet interest: 2/3 of the interest is paid to Americans, e.g. pension funds
By impoundment control act,
- president has to spend all this money
- only $8 billion savings in easy control of the presidentMany other ways to balance budget in 2030s:
- raise retirement age
- increase immigration (including young entrepreneurs like Musk was)
- save on budget
- save on tax fraud
- VATIn 2020s priority is to boost economy which needs funding.
. File:2023-federal-budget-breakdown.png - Wikimedia Commons
This is a breakdown of the owners of the public debt. As you see, 2/3 of the interest goes straight into the US economy:
I go into that here:
BLOG: Elon Musk's Department of Government Efficiency is advisory only and ends July 4th
— Can't stop funding from Congress
— $2 trillion of saving is impossible
— and a president can't close departments
READ HERE: https://robertinventor.substack.com/p/elon-musks-department-of-government
Then, US does NOT need to control its debt in the 2020s, only by the 2030s. In the 2020s the priority is recovering from the recession and rebuilding a vigorous economy.
There are many ways to control debt in the 2030s. One of the simplest is to increase the retirement age by a few years. Another is to encourage immigration as immigrants tend to be young and need less care and produce more taxable income for the government and are often entrepreneurs like Musk indeed. Then increase taxes or a national sales tax (like VAT) and finally cutting expenditure which is what Trump is trying to do.
But right now that's not where we are at. It's good to continue to spend a lot on growing the US economy and recovering from the recession.
What many don't realize is that most of the debt is actually debt to US citizens and is a source of wealth for them, which makes it very different from household debt. So that also helps the economy.
See my:
BLOG: US doesn't have to control its debt in the 2020s
— it's a source of wealth to Americans and speeds recovery from recession
— and many ways to do it in the 2030s
So in more detail, first there is no way that Elon Musk can help Trump save a billion dollars a day. The reason is Congress has allocated it to be spent so the government has to spend it. Trump can redirect some of it to other things. But he can only reduce the funding through Congress.
That's why you can be sure that DOGE is on a pointless mission.
There is SOME waste it can get rid of and the agencies can make more efficient use of their money in some areas.
But it has to spend certain amounts every year on both mandatory and discretionary funding. So if he finds ways to spend less he has to replace it with more funding on something else.
For instance if he removes some programs from USAID the money still has to be spent by adding new projects to spend it on.
USAID was funded by H.R.2882 - Further Consolidated Appropriations Act, 2024. It's summarized here
This allocates:
$1.7 billion for USAID Operating Expenses,
$85.5 million for the Inspector General of USAID, to support oversight of U.S. foreign assistance in countries and regions with higher risk.
$29.3 billion for global health, economic and development assistance, and humanitarian programs administered by the Department of State, USAID, and the Department of the Treasury,
That's divided up as
$10 billion for Global Health Programs
$3.93 billion for Development Assistance
$3.89 billion for the Economic Support Fund
$8.7 billion for humanitarian assistance
$430.5 million for the Peace Corps.
$930 million for the Millennium Challenge Corporation.
$79 million for Treasury Department international program
$8.9 billion for Department of State security assistance programs.
That's divided up as
$1.4 million for International Narcotics Control and Law Enforcement
$870 million for Nonproliferation, Anti-terrorism, Demining, and Related Programs
$6.1 billion for the Foreign Military Financing Program, including: - $3.3 billion for assistance to Israel. - $1.3 billion for assistance to Egypt. - $300 million for assistance to Taiwan. - $425 million for assistance to Jordan.
$2.7 billion for Multilateral Assistance,
$757 million for Export and Investment Assistance,
If Trump finds a way to eliminate waste and fraud he still has to spend all that money somehow on something for all those programs.
Then as it's discretionary funding, Congress can reduce the funds but every discretionary bill can be filibustered in the Senate. The democrats have 47 votes so can easily meet the 41 seat level to filibuster even if a few agree with Republicans on some bill.
When it's filibustered, the previous bill gets repeated while Congress works through its disagreements.
This is why Trump and Musk together cna't do anything to reduce the funding for USAID even by a million dollars. They can make it more efficient, but for every million dollars saved they have to find something else to fund with it.
The only way the US can reduce government expenses is through bills in Congress but Trump is never going to be able to get those bills passed to reduce funding with a slender majority and many Republican legislators whose constituencies want the funding to continue for various reasons.
It's also just not true that there are large amounts of hidden fraud.
What Trump has done is to classify things as fraud that were just agencies doing what they were tasked to do by Congress and the president. Nothing hidden or secret. It's not fraud to help promote DEI and LGBT equality in Serbia. It's just that the current administration flies in the face of medical science and claims certain things are false which the medical experts extablished to be true long ago. Same also with action on climate change.
There ws nothing fraudulent in any of the things listed for USAID which were also not secret but public projects you can find with a google search.
BLOG: Tiny fraction of USAID funding for transinclusive DEIA
— not fraud
— Trump can't close down USAID
— Schatz slows down Senate appointments in protest
— employee reduction paused
— legal cases underway
READ HERE: https://robertinventor.substack.com/p/only-a-minute-part-of-usaid-funding
Even after cutting everything from USAID that looks like funding for DEIA or abortion or LGBT rights - that's a tiny part of the Federal budget - and they still have to spend the money on something so it's not going to be a saving.
It's the same also if they do actually find real fraud - so far not found anything - or they'd have made a big thing of it. But if they do it's still no saving as they still have to spend the mandatory and discretionary budgets approved by Congress.
So the whole thing is rather quixotic. It suggests an administration that simply doesn't understand the most basic things about how the US government works that they would try to reduce expenses by cutting projects funded by discretionary or mandatory funding by Congress.
The only way he can do it without he support of Congreses is through impoundment and that is illegal and is pretty sure to fail in the Supreme Court, probably 9 : 0.
I have a section on impoundment here:
BLOG: Elon Musk's Department of Government Efficiency is advisory only and ends July 4th
— Can't stop funding from Congress
— $2 trillion of saving is impossible
— and a president can't close departments
READ HERE: https://robertinventor.substack.com/p/elon-musks-department-of-government
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What about just not spending the money - impoundment - requires Congress to remove the 1974 impoundment control bill - not credible - or Trump to defy Congress - Supreme Court expected to rule against him
Short summary:
impoundment was made illegal in 1974, no way Congress would change that because it would surrender their own right to decide budgets, moderate Republicans couldn’t vote for that.
Trump could illegally impound funds and hope the Supreme Court would rule that the law is unconstitutional
but if anything they moved in the opposite direction with the Chevron case ruling in favour of LESS independence of the president from Congress
[the Supreme Court is NOT MAGA and has often ruled against Trump]
Vought thinks Trump could defund agencies by holding back money he is legally required to spend by Congress.
That is called illegal impoundment. He did it with Vought in his first term when he held back money owing to Ukraine temporarily. What he did was illegal and he was forced to send the money to Ukraine.
Allegedly he combined that with a threat to Zelensky which is one of the things lead to his first impeachment.
So, impoundment is when the president refuses to use the money that has been allocated to spend on various things and just holds it back unspent.
The impoundment bill limits what a president can do in that way. He has to ask Congress for permission to hold back funding and Congress has 45 days to reply and if it ignores the request then he can't impound the funds.
This bill was passed in 1974 after then president Nixon refused to spend lots of funding that was allocated by Congress.
. Impoundment of appropriated funds - Wikipedia
So then illegal impoundment is when the president refuses to spend the money even though Congress has also refused his request to impound it or he never asked Congress for permission.
With the Ukraine funding he just tried to block the funds.
This time around he wants to go further and take back the power of unlimited impeachment as it was under Nixon before the impoundement bill. There are two ways to do it.
He could ask Congress to reverse the 1974 bill, remove it.
- but he only has a majority 220 : 215 in the House and 53 : 47 in the Senate.
- at least some moderate Republicans will not want to give the president unlimited power to hold back funds that they have allocated for various things.
- Democrats can stop it in the Senate with a 41 seat fillibuster
It’s likely to fail in both House and Senate because legislators would see it as weakening Congress too much.
Legislators unlike Trump have a longer term view. It would mean ANY president could refuse to spend money that Congress allocates for projects the legislators may be very keen on.
Legislators may be in Congress for the rest of their professional lives.
He could just defy Congress and ignore the bill - and then it would go through the courts up to the Supreme Court.
Trump might mistakenly think the Supreme Court would want to give the president more power simply because he appointed several of them. But it doesn't work like that. The current legally conservative Supreme Court is if anything more concerned about reigning in the executive as we saw with their Chevron decision.
The Supreme Court shifted the other way, in the direction of giving the president less power, with its Chevron decision - saying that they did not think that the Executive should have the power to interpret things as they please when a bill is ambiguous.
In that decision, Supreme Court said interpretation was a role for Congress or the Judiciary - the president can suggest interpretations but not decide them. They said past decisions won't be affected for the most part - but in the future if the president has some novel interpretation of the law that this is up to the justices not the president to decide.
QUOTE STARTS
There will be obstacles. It does not take a leap of faith to guess that even many Republican lawmakers may not want to cede the power of the purse back to the White House.
Trump might think he’ll fare well challenging impoundment at the Supreme Court, which now leans to the right and is skeptical of the federal bureaucracy. The court recently curtailed the power of agencies to interpret statutes passed by Congress. That could also be read as a warning against executive overreach.
All that makes it unlikely that they give the president the right to defy Congress on impoundment.
Trump has lost more than half the cases against him at the Supreme Court, the worst rate of any president since 1937. His win rate was 43.5%, compared to 52.4% for Obama who had the next worst record after Trump. Biden’s win rate in his 2021 term was 56.5%. Trump did even worse with high profile cases, losing 65% or nearly 2/3 of them. See: Trump administration had worst Supreme Court record since at least FDR years, study says
So Trump has to work with Congress but he is going to find it exceedingly hard to get anything passed there to cut funding.
For more on this see my:
Elon Musk's Department of Government Efficiency is advisory only and ends July 4th - Can't stop funding from Congress - $2 trillion of saving is impossible - and a president can't close departments
Elon Musk’s Department of Government Efficiency can’t be a body with real teeth without Congress’s support which Trump is highly unlikely to ever get. Also, it can’t be a body with real teeth because if it was Elon Musk couldn’t lead it.
This page started off as a short debunk here:
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They can’t do fact checking, don’t expect that of them. But they can do a huge amount to help with the panic, anxiety, maladaptive responses to fear and so on.
Also do remember that therapy is not like physical medicine. The only way a therapist can diagnose or indeed treat you is by talking to you and listening to you. If this dialogue isn’t working for whatever reason do remember you can always ask to change to another therapist and it doesn’t reflect badly on your current therapist to do this.
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BLOG: Breathe in and out slowly and deeply and other ways to calm a panic attack
BLOG: Tips from CBT
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Ok, but what happens if they decide to simply ignore the SC as well? After all, the courts have no enforcement mechanism. And JD Vance said just the other day that courts have "no right" to limit the Executive's power.