Can Trump and the tech bros cut spending like they claim? The math doesn't add up

You may have heard that Trump's tech bro donors/insiders are going to put together a "council of superiors" to right-size the federal government. No matter how much that right-sizing connects to reality.

Friendly reminder: The USG spends $290 billion on personnel. If you fired EVERYONE who worked for the federal government, you’d save 5% of the budget. You know where most of it goes? Defense and back to us in Social Security and Medicare.

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— Garrett M. Graff (@vermontgmg.bsky.social) November 20, 2024 at 9:08 PM

So let's look at the actual numbers involves. To start, the Center on Budget and Policy Priorities recently updated its rundown of the Federal budget process, and where the dollars go to. This is an excellent resource for understanding the numbers in our $6.9 trillion federal budget, and to understand beyond the numbers on the page.

From there, let's see former White House economic advisor and Harvard Professor Jeffrey Frankel break down how much in budget cuts we are actually talking about, and what would have to be cut to get there.

So how much does the Trump Administration propose to cut now? Republicans often say they want to slash federal spending, but without cutting the mandatory programs, so-called entitlement spending — Social Security, Medicare, and other health-care. This exclusion forecloses any serious effort to balance the budget. Major entitlement programs accounted for half of all federal spending in 2023, or 61 % of spending if farm-price support and other income-support programs are included. This mandatory spending will only continue to rise in the future, as retired people make up an increasing share of the population.

Moreover, interest payments, which are running at 13 % of total spending, are not optional. Cutting those would mean defaulting on the national debt. Republicans don’t want to do that. (At least, most of them don’t want to do that. Trump has reveled in his ability to default on debts, having declared business bankruptcy six times.) Indeed, the interest bill is likely to continue rising, as debt is rolled over at interest rates well above the rock-bottom rates of 5 or 10 years ago.

What is left is discretionary spending. It is about 25% of total spending. But most Republicans don’t want to cut defense, which is roughly half of discretionary spending and so 12 % of total spending.

So let's bounce to the remainder of discretionary spending to see what could be taken out. Frankel says that if you ban all funding the US Department of Education, foreign aid, and transportation oversight, you get to somewhere around $500 billion a year. This would screw up a lot of state and local services, and likely lead to recession by itself.

But Frankel notes that it also means that more has to be cut to get to the goal of $2 trillion in federal spending cuts that Elon Musk claims he can find.

...[L]et's also zero out the National Parks and everything else that the Interior Department does, the National Weather Service and everything else the Commerce Department does, and so on. In fact, let’s imagine that we somehow eliminate all of the 14 % of spending that is non-defense discretionary. That would still not be enough to achieve the mirage of $ 2 trillion in savings that Musk claims he could achieve, equaling 31 % of total spending or 7 % of GDP, let alone to pay for Trump’s tax cuts and balance the budget. No matter how broadly one defines waste, fraud and abuse, there is simply not enough money to be saved.

Instead, what will happen under Trump’s tax cuts is a day of reckoning, not too many years into the future, when financial markets come to appreciate the unsustainability of the debt. At that time, Social Security and other entitlement spending will be cut sharply, more sharply than if it were done today or if taxes were not cut further today.

I can't see that working out well for the overwhelming majority of Americans. But then again, Elon Musk and Vivek Ramaswamy and the rest of these right-wing "business leaders" haven't had to care about people with real jobs, or that they had real consequences for failure in years.

So I have a better idea. Why not just tax the rich and corporate like it's the 1990s, or the 1970s? We could have all the supports we want and need, and have an economy that has a much better chance of sustainability and long-term opportunity, which to me is real freedom.

And we'd better see DC Dems hammer that point constantly. Republicans want to force unneeded injury and distress onto large numbers of Americans, instead of asking our already absurdly-rich and powerful oligarchs to pay a few more dollars of the funds that they have already taken from a lot of everyday Americans. This is class war, and we cannot accept what the rich, connected and corporate claim is best for the rest of us.