Elon Musk has a new job doing something he knows a lot about: firing people. a lot of people Now, he’s off to test his axing skills in the most challenging cutback in American history.
President-elect Donald Trump is co-head of the Department of Government Efficiency (DOGE) to reduce government regulation, lay off unnecessary workers and save money. Musk’s running mate is Vivek Ramaswamy, a former biotech entrepreneur and 2024 Republican presidential candidate. Their ambition is incredible. In the end The Wall Street Journal comments, they write that they anticipate “headcount reduction in the federal bureaucracy” to be a major cost-cutting tool. Ramaswamy has proposed to lay off 75% of federal employees.
Musk seems like the perfect man for the job. It has laid off a significant number of workers at SpaceX and Tesla – he is the CEO of both – but because of the excellent finish, nothing can match his performance. Twitter. When he bought the company in 2022, he began mass layoffs within a week, laying off thousands of the company’s 8,000 employees overnight. Some received the news by email. Others concluded that they had been rejected when they were unable to access the internal computer system the next morning. A few were also dropped by accident and brought back. In the following months he cashed in more. Six months after taking over, Musk told the BBC he had cut staff by more than 80%.
It’s hard to know exactly how X (as Musk has dubbed Twitter) has fared since the company isn’t publicly traded, but the signs aren’t promising. Fidelity owns a minority stake in X and provides its estimated value. Based on Fidelity’s October estimate, X has lost 79% of its value since Musk took over.
Will Musk bring the Twitter book to America’s largest employer, the federal government? It’s easy to picture Washington shuddering at the thought. But as other captains of industry have discovered, government is different from the private sector in some unique ways. Here it is against Musk.
· DOGE cannot make it happen. Musk could fire employees of his companies in the blink of an eye because he was the CEO (and also the majority owner of Twitter). But DOGE “has no power,” says Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of the center-right American Action Forum. “They are a group of external consultants who will generate ideas. They are basically a high-level think tank.’
· Releases are subject to regulatory delays. DOGE’s stated procedure is to identify federal regulations that appear to be invalid under the two Supreme Court decisions, 2022 and 2024. President Trump will invalidate “thousands of such regulations,” Musk and Ramaswamy say in their op-ed. Fewer regulations mean a lighter workload and fewer employees. But while Trump could “immediately suspend enforcement of these regulations,” they noted, he must then “begin the process of review and repeal,” which could take a year or more and may not happen at all. Many regulations have constituencies around what happens. As a result, some regulations are not easily mastered.
· Layoffs, even if successful, won’t save much money. Musk and Ramaswamy emphasize that cost savings are central to their mission, but labor costs are a small fraction of federal spending. Most of what the government spends goes out the door on benefits—Social Security, veterans benefits, food stamps, and more. All these benefits have powerful ranges and are very difficult to reduce. Payrolls aren’t where the money is. Brian Riedl, a Washington-based economist who has been a Senate staffer and worked for Republican officials, says, “If you cut 25 percent of all federal jobs, you’d save about 1 percent of federal spending.” That he does not believe that a 25% reduction in employment will occur. “I don’t think it’s remotely feasible to cut the federal workforce by 20%, let alone the 75% that Vivek Ramaswamy is promising,” he says.
· Federal workers will push back. About a million federal workers are unionized, the Bureau of Labor Statistics says, and they are already preparing to take on the Trump administration. Trump has said he will impose a category of workers called Schedule F, reclassifying career civil servants as political workers, who have no civil service protections and can be quickly fired. Several government unions are trying to protect their members from being classified as Schedule F by appealing to the federal Office of Personnel Management and the Merit Systems Protection Board. Even if the unions lose, it may throw sand in the gears.
Musk and Ramaswamy say “DOGE’s main goal is to eliminate the need for its existence by July 4, 2026 – the expiration date we have set for our project.” Ostensibly this is to celebrate DOGE’s work as America celebrates 250 yearsth anniversary In practice, it means leaving six months with Republican control of Congress if DOGE’s work requires legislation. Musk is used to large-scale firings these days, but he’ll probably need every moment he has to pull off the release of a lifetime.
