Ben Chu
The boss of Tesla and the social media site X, Elon Musk, suggested last month at Donald Trump’s rally in New York City that it would be possible to cut “at least $2 trillion” from US government spending by eradicating “waste”.
Musk has now been appointed to co-head a new Department of Government Efficiency by the incoming US president, giving him an opportunity to try to put his plans into action.
In the most recent fiscal year (from October 2023 to September 2024) the US federal government spent $6.75 trillion (£5.3 trillion) according to the US Treasury.
This means Musk’s proposed cuts of $2 trillion would represent around a cut of around 30% of total federal government spending — also known as national spending in other countries.
How realistic is that proposal?
To answer that, it’s helpful to break down the total spending figure.
Around $880bn (13% of total US government spending) goes on interest payments on the national debt, which means that line of expenditure cannot be reduced without putting the US government in default.
Around $1.46 trillion (22%) goes on Social Security, which primarily means pensions for Americans over the retirement age. This is a line of spending which is “mandatory”, meaning it must be spent by law on those eligible.
Other large mandatory lines of government expenditure include Medicare - a government-funded health insurance program primarily serving Americans aged over 65.
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