Musk first floated the idea of cutting costs while hosting Trump at X this summer. The official name is a reference to a Shiba Inu dog memewhich then gave its name to the Dogecoin cryptocurrency, Musk’s favorite, which skyrocketed in value after the election.
Professor Phelps says the name is “a nod to the fact that crypto deregulation is part of what they’re going to do.”
But it’s unclear how much of Musk’s downsizing talk could become reality.
For one thing, the new department will not have an official role, but will provide “advice and guidance from outside government,” according to the announcement.
Experts also warn that cuts of this magnitude could be extremely disruptive — and face pushback in Congress — depending on how quickly they are implemented.
Musk himself acknowledged the risk, saying Americans should be willing to endure temporary hardship for long-term gain.
The way he has run his firms may hint at what Americans can expect.
After him Delivery in October 2022 social media platform Twitter, which he called X, Musk introduced radical changes, including reducing X’s workforce from about 8,000 to 1,500 in a matter of weeks.
“His idea of efficiency was to let a lot of people go,” says Alex Woddon, professor of US politics at the University of Leicester.
Musk also loosened content moderation, stopped verifying accounts, and welcomed back users to the platform who had been banned for violating anti-hate speech and misinformation rules.
Among the users he reinstated was Trump, who was banned following the January 2021 Capitol riots after he continued to claim the 2020 election was rigged against him.
Critics say his changes have led to hate speech and misinformation – although Musk maintains the site is politically neutral.
The overhaul also caused an exodus of advertisers, the site’s main way of making money. Although Musk has introduced new ways to increase revenue, such as paid subscriptions, the company is worth far less today than the $44 billion Musk paid for it just two years ago.
Musk’s track record in his other major companies — Tesla and SpaceX — is stronger.
Among car companies, Tesla stands out because it produces electric cars with high profits, partly thanks to streamlined operations. His rocket firm, SpaceX, is credited with making it possible to launch rockets at much lower costs.
“As a serial entrepreneur, Musk has relentlessly sought to improve the institutional effectiveness of his businesses,” says Professor Gift.
He adds that while Musk’s primary role will be to “cut through the red tape of the US federal government,” his position will also give him influence in the new administration.
“Even though his role at the Department of Government Efficiency will be more informal, there’s no question that Trump has listened to him — at least for now.”
