Why DOGE Will Fail

There is a long and inglorious history of failure

George Noga
Dec 15, 2024

I have posted frequently about cutting government spending.1 There is no way to make government more efficient; the most that can be accomplished is to reduce its size and scope. It still will be inefficient – just on a smaller scale. None other than Ludwig von Mises weighed in at length in his 1944 book, Bureaucracy. 2

“Citizens compare the operation of the government to business. They find bureaucracy is wasteful, inefficient, slow and cumbersome. They don’t understand how reasonable people allow such a system; why not adopt proven business methods? However, such criticisms are invalid and do not consider the differences between government and business. The bureaucracy cannot be improved by bringing in businessmen.”

There is a lengthy and inglorious history of the appointment of élite blue ribbon committees to cut government waste. The most recent are the 1982 Grace Commission and the 2010 Simpson-Bowles Commission.

Grace Commission

The Grace Commission was established by President Reagan in 1982 to identify government waste and inefficiency. It was chaired by noted businessman J. Peter Grace. The commission presented its report to Congress in January 1984. It concluded that one-third of all government revenue was consumed by waste and inefficiency. Its recommendations would have saved $140 billion per year. However, the GAO and the CBO estimated the savings at only $24 billion per year.

Although the commission highlighted areas for potential cost savings, only a very few of its recommendations were adopted. The actual impact of the Grace Commission was negligible and it proved to be a disappointment. There are compelling parallels between the Grace Commission and DOGE. Both were initiated by conservative presidents fresh off an election mandate and run by acclaimed businessmen.

Simpson-Bowles Commission

In 2010 President Obama established the Simpson-Bowles Commission to address the national debt and deficit. The commission proposed a comprehensive plan to reduce the deficit by $4 trillion over 10 years. The plan included both revenue increases and spending cuts. Despite the bipartisan makeup of the commission and the sterling political reputations of Simpson and Bowles, the plan never even came to a vote in Congress – it was dead on arrival.

Department of Government Efficiency (DOGE)

DOGE is the latest attempt to cut spending. It was created by a popular president, fresh off an electoral mandate, and is cochaired by the most successful businessman on the planet (Musk) along with another billionaire entrepreneur (Ramaswamy). It has generated much public interest and support. One would certainly think that if ever slashing government spending could be done, it would be by this president and these co-chairs. However, so it also was with Reagan and Grace.

Musk initially asserted he could cut $2 trillion annually. That is impossible without deep cuts to both Social Security and Medicare – which Trump ruled out. Even cutting $1 trillion is a pipe dream; it would require cutting the entire government except for entitlements, mandatory spending, defense and interest on the debt. Following is the actual spending for the fiscal year ended September 30, 2024 in billions. 3

Total revenue from taxes and all other ………. $4,920

Medicare, Medicaid, CHIP, Obamacare …….. 1,600

Social Security ……………………………………………..….. 1,461

Interest on the Debt ………………………………………… 882

National Defense …………………………………………….. 874

Income Security4 ……………………………………………. 671

Veterans’ Benefits …………………………………………… 325

Discretionary Spending ………………………………… 937

Total Spending ……………………………………………… $6,750

Deficit ……………………………………………………………… $1,830

What Will DOGE Actually Accomplish?

Social Security and Medicare are off the table. Income security (government pensions) and interest on the debt cannot be cut. Only minor cuts can be made to defense spending – which most agree should be increased. Big cuts to veterans’ benefits are impossible. That leaves only the cost of running the government ($937 billion). So, what will DOGE accomplish? Following is my fearless forecast.

The best outcome is for DOGE to cut $250 billion or 3.7% overall, but 26% of the $937 billion cost of running the government, i.e. discretionary spending.

A realistic expectation is for DOGE cuts of $100 billion to $200 billion.
The hype from Trump, Musk and Ramaswamy will be over the top. They will shamelessly trumpet and flog all their spending and personnel cuts. They will represent them to be more significant than they really are.
The hype from those opposed to the cuts will be outrageous. They will shamelessly trot out people allegedly harmed and assert DOGE is throwing granny over the cliff and starving children to death. Be prepared to see ads depicting alleged victims in the most dire circumstances imaginable.
Every government program has a constituency both inside and outside government. Expect them to fight fiercely to save even minor budget cuts.

DOGE has the most propitious opportunity in my lifetime to effect meaningful spending cuts. However, the math is heavily stacked against it. I look for a typical government ending to DOGE. In the final reckoning, DOGE will cut spending by up to $200 billion (including fiscal legerdemain) and will claim victory by asserting they cut $2 trillion over 10 years. Opponents also will claim victory by limiting spending cuts to a minimum and living to fight another day to restore the cuts.

It is impossible to take the politics out of politics. In the end, all sides will claim victory. The spending cuts will be less than meets the eye – they will be mostly hat and no cattle. Over time, the cuts will be restored and life in Washington will go on as before.

If DOGE cuts say $200 billion, that’s exactly 3% of all spending – weak tea indeed. All such a cut will do is to reduce the deficit by 11%. At most, it would delay the final reckoning by one year. It would not alter the death spiral trajectory of America’s spending, deficit and debt crisis.

Moreover, Trump’s campaign promises exert a strong bias for more spending and/or less revenue and will offset most of the DOGE spending reductions which, contrary to assertions, cannot be made up by tariffs and more energy production.

At day’s end, it is all about the numbers. There simply is no pathway for significant spending cuts without putting Social Security and health care (Medicare, Medicaid, CHIP and Obamacare) on the table. Stay tuned; it will be a wild ride!

Please see my most recent post “Government Failure Explained” dated October 20, 2024. It is available on my website www.mllg.us and in the Substack archives.
The following quote has been updated for modern usage, but the meaning is unchanged.
These data were for FY 23-24. This FY interest on the debt will increase another $100+ billion and Social Security and Medicare will increase significantly due to unfavorable demographics.
This includes unemployment, SSI, federal pensions and SNAP among others.

© 2024 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

Today’s College Degrees are Worth Much Less Than Before

By: George Noga – March 10, 2012

If you want an example that encapsulates the pervasive extortion by public sector unions, look no further than paying $4 million per year for a meter reader. That is just so much bushwa, you may be thinking; surely that could never happen in America. Think again. I take you step-by-step to demonstrate how it costs local governments $4 million for only one active meter reader position.

“You don’t believe a $4 million per year meter reader is possible in your city; think again!”

A ubiquitous feature of public pension plans is for employees to receive 3% of their final year’s pay for each year worked. In this case I assumed the final year salary was $78,000 – not an unreasonable assumption for a public sector union employee after 30 years of government work including merit raises, promotions and cost-of-living adjustments. Of course, overtime is included in computing the pension. If our unionized meter reader begins work immediately after high school and works for 30 years, he receives 90% (30 years at 3%) of his pay for his life and also, in many cases, for the life of his spouse.

Moreover, his pension is indexed for inflation and often includes retiree medical benefits. Thus, our meter reader retires at age 48 and collects his public pension until age 91 inasmuch as the joint life expectancy of him and his spouse at age 48 is 43 more years. And then there is the disability. The system is rigged to permit a large number (in some cases, 90%) of workers to qualify for disability, which adds 30% to the cost of the pension.

Okay – our enterprising meter reader graduated high school at age 18, got married and had a child at 20, retired at 48 and (jointly) lived to 91. His patriarchal family was traditional and they knew a good thing when they saw it. Therefore, the meter reader’s son, grandson, and great-grandson followed in his footsteps – doing everything he did at exactly the same ages.

Each, in turn, maximized overtime during his final year on the job, a practice with which everyone was complicit; it even has a name – spiking. I assumed they spiked only 60% of their base salary although frequently spiking can be well over 100% with even 300% being possible. They also qualified for disability; like spiking, this is a fraud in which all are complicit. I assumed inflation was 3.75%, a reasonable long-term average. All the numbers used herein are on an Excel worksheet and I will email it upon request. The numbers are breathtaking.

“For each active employee, government must pay four people – three retirees and one on-the-job worker.”

There comes a time when the original meter reader and his son and grandson all are retired and collecting pensions; the great-grandson is still active reading meters. Therefore, for one active employee who is performing one job, the city must pay four people – three retirees and one worker. The total cost using the assumptions disclosed herein is $3 million. The number approaches $4 million if retiree (and, of course, spousal) medical benefits are included and/or the employees spike at a rate significantly higher than 60%.

This bears repeating. The government’s cost for one active meter reader position is $3-$4 million per year depending on the level of spiking and whether or not there are medical benefits. In our story, four generation of the same family can make $4 million a year for doing one job. Now you know how corrupt unions (oxymoron) game the system at our expense.

“Instead of $4 million annually in the out years for unionized public sector employees, the comparable amount for a private sector company would under $300,000 – this is 93% less!”

Let’s compare the $4 million government union price tag to comparable non-union private sector employees. There are humongous (highly technical economic term) differences.

Private sector employees have defined contribution pension plans (which they mostly pay for) like 401(k)s rather than costly defined benefit plans.
Once private sector employees retire, the employer has no ongoing pension obligation.
Private sector employees retire at age 65 not 48.
It is rare for private sector employees to qualify for disability.
Defined contribution plans are not indexed for inflation nor based on joint lives.
Seldom do private companies provide retiree health benefits.

Instead of $4 million for someone employed in a unionized government job, the comparable cost for a private sector job is less than $300,000, or a staggering 93% less.

College Degrees Have Become Vastly Overvalued

A basic college degree no longer conveys intellect or knowledge now that government has decreed everyone should have one. Since successful folks tend to have college degrees, the way to raise people up is for them to have a degree; right? But college degrees aren’t causes of success; they’re simply markers or societal totems for possessing the traits and skills needed for success, i.e. mental acuity, discipline and deferred gratification. Having the traits always must precede obtaining the markers. Getting the markers doesn’t produce the traits any more than a designer suit makes a gentleman of a Neanderthal.

“Having the traits must precede obtaining the markers.”

Note: Another common marker for middle class success is home ownership. Government therefore assumes that if people who can’t afford homes are given homes through government programs (Freddie, Fannie, etc.) they will rise into a higher economic class. Just as with college degrees, government confuses markers with traits and causes. Giving a home to someone who can’t save for a down payment, make the monthly payment, pay taxes, insurance and utilities or even maintain the home will not improve their economic position. Habitat for Humanity learned this lesson long ago. Despite Habitat’s generous terms, rigorous screening and education of putative homeowners and insistence on investment of considerable sweat equity, they still have failures. Again, the traits needed for home ownership must precede the marker.

“Getting markers doesn’t produce the traits any more than a designer suit makes a gentleman of a Neanderthal. . . . Most motivation comes from Bluto rather than Plato.”

Moreover, college frequently is a bad deal. Forty percent don’t graduate. Many that do, obtain degrees that are of no market value. Graduates are saddled with debt that lasts decades. Much of college is pursuit of a totem and results in no increase in human capital. Nor are graduates well-rounded. Instead of being inspired by Plato, most motivation comes from Bluto. College actually discourages freedom of thought; instead, it initiates young people for life into an emotional, unthinking tribe of liberal orthodoxy from which precious few ever escape.

Tag: Government Waste