Elon Musk, DOGE, and the Coming Fiscal Reckoning

This is a 5-minute read.

I spent most of my career in management roles. It ran the gamut from owning and operating two companies early in my career to operating several businesses within Citigroup and Fidelity Investments. Throughout, I gained respect for the challenge of controlling expenses. Adding expenses is always easier than subtracting them, so adding is what humans do.

‍The private sector approach to this challenge is to periodically implement across-the-board cost cuts, reductions in force, and early retirement programs. The effort always includes a target - usually a round number like ten percent. Everyone knows it is crude but blunt force gets things done. Attempting to negotiate different targets division by division is a recipe for stalemate.

‍‍‍‍This was my experience in well-managed companies with deep subject matter expertise, strict budgeting processes, and a competitive market constantly challenging you to produce more for less.

‍Now consider the government, where departments the size of Fortune 500 companies are run by political appointees with no relevant experience and who turn over every couple of years. McDonald’s wouldn’t let you run a single outlet without several years of fast-food experience, and yet we let people run several billion-dollar departments with absolutely zero relevant experience. There is no competitor, no market price, and no signal that costs are too high. Civil service protections make staffing decisions nearly irreversible. Failure carries no personal consequence. Spending is on autopilot, written into permanent law and growing without challenge.

So should anyone be surprised that we are rapidly approaching a fiscal reckoning?

The national debt will soon pass $40 trillion. Off-balance-sheet obligations add trillions more. Interest is now the second largest line in the budget, at roughly $1.0 trillion this year and doubling by 2036.

Treasury's FY 2025 Financial Report puts the 75-year shortfall in Social Security and Medicare cash flow at $88.4 trillion. The 2026 Trustees Report projects the Social Security retirement trust fund will be depleted in late 2032. Medicare's hospital fund follows in 2033. Meanwhile the President has requested $1.5 trillion for defense in FY 2027, a 44 percent increase, and Democrats running for office are proposing an array of new programs.

I do not know when this bubble will burst, but I know it will. I have argued before that the solution must come in three phases: cut costs first, reform entitlements second, and only then raise revenue. This piece is about the first.

Crazy spending examples are not hard to find

‍In 2019 NASA hired Bechtel to build a mobile launch tower. The original estimate was $383 million with a delivery in 2023. By the time NASA issued a stop-work order this year, the cost had reached $1.6 billion, with delivery projected no earlier than 2029.

The Air Force's Sentinel missile program was priced at $77.7 billion in 2020. A mandatory Pentagon review put it at $141 billion, an 81 percent increase.

The F-35 program is projected to exceed $2 trillion in lifecycle costs, inside a department that has failed seven consecutive audits.

A 2024 Defense Department inspector general audit found Boeing had marked up lavatory soap dispensers for C-17 cargo planes by 7,943 percent.

The VA’s effort to digitize health records was funded at $16.1 billion, is now estimated to reach $49.8 billion and is still in only 6 percent of VA medical centers.

The GAO estimates that unemployment fraud during the pandemic exceeded $100 billion, roughly 12% of all benefits paid.

Then there is money that simply goes to the wrong place. The GAO reported that 64 agencies made $186 billion in improper payments in fiscal 2025, up $24 billion in a single year, and roughly $3 trillion since 2003. That estimate excludes programs that agencies concede are vulnerable but do not measure.

Which brings me to DOGE and Elon Musk

‍DOGE was the most serious attempt in decades to attack this directly. It was directionally correct and horribly executed. The outcome is still being debated, but there is little argument that after all the angst and drama, the results were disappointing.

Since there will inevitably be a DOGE Part Two, I think it makes sense to derive the correct lessons from DOGE Part One.

‍First, we need to elect a President with actual executive experience. Most governors and large city mayors have learned something about management. Ideally, we find someone with both public and private experience. Mayor Mike Bloomberg of NYC was that kind of person.

Second, we need Cabinet Secretaries who are experienced in the domain of their department and who will appoint and give some latitude to private sector talent. Frank Bisignano at the Social Security Administration is an example of that kind of talent.

Third, cost cutting needs to run through the cabinet.DOGE was built outside the departments, presumably because the President did not believe his own secretaries could get it done. No chief executive creates a parallel organization to cut costs. He gives each division head a target and holds them accountable.

‍‍Fourth, it needs to involve Congress.Most of the spending that needs to be cut is authorized by law and must be undone by legislation.

Finally, we should treat our geniuses better

‍Elon Musk has been much maligned. He is an easy target. But I’m reminded of something Dale Carnegie famously wrote, “Any fool can criticize, condemn, and complain, and most fools do.”

‍It is hard to be exceptional in this era. We expect our leaders, past and present, to be flawless, and we cannot hold two ideas at once: that a person did something extraordinary, and that the same person was in other respects difficult, or wrong. We struggle to reconcile the fact that our founders were also slave owners, that Christopher Columbus was hostile to Native Americans, and that President Truman allowed the firebombing of Japanese communities.

‍Like him or not, Elon Musk is one of the great geniuses of our time. He has revolutionized electric transportation, space, and global communication. He has built companies that broke the government’s cost-plus model and delivered capabilities at a fraction of traditional providers. He has upset the status quo in manufacturing by relentlessly asking “why” and “who made that rule?” Tolerating what offends us is a worthwhile price to pay to have him in our corner. Would you rather he had stayed in South Africa?

‍When the time comes for DOGE Part Two, we may not need Musk himself, but we will need what he and other talents from the private sector bring. Private-sector talent doesn’t come to Washington with all the refined delicacy and obfuscation of career bureaucrats. And that is precisely why we need them. Rather than subjecting them to the ritual abuse of Washington, perhaps we should be focused on helping them be successful in an alien world.

‍We do not have to like Elon Musk. But rather than excoriate him, we should be asking how to engage his talent in the public’s interest. Rather than make him a villain for his contributions to Republican causes, we should ask what it would take to enlist him in the non-partisan causes that we value. Bill Gates provides an excellent model of this kind of service. Our interest should be in getting more people of exceptional talent to follow his example.

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