Elon Musk has a new job that he’s good at: firing people. Many people. Now he’s about to test his ax skills in the biggest downsizing challenge in American history.
He is co-head of the Department of Government Efficiency (DOGE), recently created by President-elect Donald Trump to cut government regulations, lay off unnecessary workers, and save money. Musk’s partner is Vivek Ramaswamy, a former biotech entrepreneur and candidate for the 2024 Republican presidential nomination. Her ambition is breathtaking. In a current one Wall Street Journal In their editorial, they write that they expect “massive staff reductions across the federal bureaucracy,” which will be their main cost-cutting tool. Ramaswamy has proposed laying off 75% of federal employees.
Musk seems to be the ideal man for this job. He laid off a significant number of workers SpaceX and Tesla – he’s the CEO of both – but unless you’re exuberant, 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 via email. Others only concluded they were fired when they couldn’t log into the internal computer system the next morning. Some were even accidentally fired and returned. In the following months he collected more. Six months after the takeover, Musk told the BBC that he had reduced staff by more than 80%.
It’s hard to say exactly how X (as Musk renamed Twitter) has fared since the company is no longer publicly traded, but the signs aren’t promising. Fidelity owns a minority interest 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 take the Twitter playbook to America’s largest employer, the federal government? It’s easy to imagine Washington trembling at the thought. But as other captains of industry have discovered, government differs from the private sector in some particular ways. Here’s what Musk is struggling with.
· DOGE cannot do it. Musk could fire employees at his companies in an instant because he was the CEO (and 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 an external advisory group that will generate ideas. They’re essentially a high-level think tank.”
· Layoffs depend on regulatory rollbacks. DOGE’s stated process is to identify federal regulations that appear to be invalid according to two Supreme Court decisions in 2022 and 2024. President Trump will then cancel “thousands of such regulations,” Musk and Ramaswamy say in their commentary. Fewer regulations mean a lower workload and fewer employees. But while Trump “can immediately suspend enforcement of these regulations,” they note, he must then “initiate the process of review and repeal,” which could take a year or more and may not happen at all. In many regulations, voters have a voice in what happens. The bottom line is that some regulations will not succumb so quickly.
· Layoffs, even if successful, won’t save much money. Musk and Ramaswamy emphasize that cost savings are central to their mission, but labor costs represent only a small portion of federal spending. The vast majority of government spending is spent in the form of welfare benefits – Social Security, veterans benefits, food stamps, and more. All of these benefits have a strong constituency and are extremely difficult to reduce. The money is not in the payroll. Brian Riedl, a Washington-based economist who has been a Senate staffer and worked for Republican appointees, says: “If you cut 25% of all federal jobs, you would save about 1% of federal spending.” He doesn’t think it will there will be a job cut of 25%. “I don’t think it’s remotely feasible to reduce the federal workforce by 20%, let alone the 75% that Vivek Ramaswamy is promising,” he says.
· Federal employees will fight back. About a million federal workers belong to unions, the Bureau of Labor Statistics says, and they are already preparing to take on the Trump administration. Trump has announced that he will create an employee category called “Schedule F” in which career public servants will be reclassified as political appointees, who lack public service protections and can be quickly fired. Several government unions are attempting to protect their members from Schedule F designations by contacting the Federal Office of Personnel Management and the Merit Systems Protection Board. Even if the unions lose, they might be able to throw sand in the works.
Musk and Ramaswamy say their “ultimate goal for DOGE is to eliminate the need for its existence by July 4, 2026 – the expiration date we have set for our project.” This is ostensibly intended to celebrate DOGE’s work during America celebrates its 250th birthdayTh Anniversary. In practical terms, it means giving Republicans control of Congress for six months if DOGE’s work requires legislation. Musk is used to making large-scale layoffs in a matter of days, but he will likely need every minute to pull off the layoff of a lifetime.