MW Elon Musk's $2 trillion in miracle money forgotten as Trump administration rushes unfunded tax cuts

By Brett Arends

Republicans are moving forward with a plan to cut taxes that could prove costly for the federal government - without promised savings from DOGE

I guess we can say so long to Elon Musk, his magic chainsaw and his big talk of cutting $1 trillion, or even $2 trillion, in "waste, fraud and abuse" from the federal budget.

Treasury Secretary Scott Bessent and others in the Republican leadership aren't waiting around for Musk's miracle money before rushing ahead with President Donald Trump's real flagship policy: tax cuts costing $500 billion a year (or more).

That's the cost before we count all the extras, such as no taxes on tips.

Bessent says Congress should pass the massive tax cuts by July 4. That's just over two months from now.

Some people may ask: What's the hurry? Why don't we wait until Elon Musk and DOGE have produced their massive budget savings so we can see what kind of tax cuts the country can afford?

Otherwise these are just going to be unfunded tax cuts - the kind that the federal government absolutely cannot afford.

Cynics can only laugh.

In case you've been living under a rock for the past six months, you should know that Tesla $(TSLA)$ CEO and major Trump donor Musk has been promising gigantic, unprecedented budget savings by slashing waste, fraud and abuse from the federal budget. In October he said he would cut $2 trillion. We explained at the time why this number was completely absurd. But it helped Trump win the election. Musk later admitted we were right all along and slashed his forecast to $1 trillion.

Musk has been heroically sticking to this figure, which would account for one-seventh of all federal spending - even including Social Security and Medicare. In interviews, he's ramped up the promises, saying he's uncovered the biggest scam of all time: Social Security benefits going to millions of dead people. Gigantic, epic sums being effectively stolen by nongovernment organizations. The works.

Musk has been insisting that he has thrown himself into this work to prevent "America," by which he means the federal government, from "going bankrupt."

His $1 trillion in promised savings were supposed to pay for Trump's tax cuts. (They were also supposed, simultaneously, to pay for deficit reduction. Don't ask)

But apparently we are going to get the tax cuts now, and the spending cuts ... er, sometime.

(Separately, congressional Republicans have floated proposals to offset the cost of tax cuts by reducing spending in other ways, for example by cutting Medicaid. But these proposals are also ill-defined and politically challenging, and in any case the numbers involved are much smaller).

"The resolution before us will increase the debt by $5 trillion," said Rand Paul, a Republican senator from Kentucky and one of the few actual conservatives left in Washington. "So, which is it? Are we cutting spending or are we expanding the debt?"

Musk's DOGE website claims it has uncovered $160 billion in savings - not even one-fifth of the revised target.

Many analysts say this lowly figure is itself suspect and that actual cuts achieved are even less. An analysis by the BBC found only $62 billion of the alleged cuts were itemized, and only $33 billion worth have receipts attached.

And it's not clear how many of these "savings" are recurring and how many are one-offs. If you cut $10 million in operating costs from a program, you can legitimately claim those as recurring savings. But if you "save" $10 million by selling a building for that amount of money, that's just a one and done. You can't sell the same building again every year, not even if you are Donald Trump.

I asked White House spokesman Harrison Fields for an explanation. When the phone didn't ring, I knew it was him.

I've been skeptical of Musk's numbers all along, though not for the reasons typically offered by more liberal voices in the media.

First, I've seen this movie before: David Stockman made very similar big promises when he worked for Ronald Reagan in the 1980s, and although we got the tax cuts, we never got the savings. In his brilliant account of his time as Reagan's budget director, "The Triumph of Politics," Stockman explained why. In a nutshell, most federal spending doesn't go to "bureaucrats" or free solid-gold Cadillacs for illegal immigrants or foreign aid. Most of it goes to five things: Social Security, Medicare, Medicaid, defense and debt interest. The book should be required reading these days.

Second, Musk's numbers were implausible. Two trillion? One trillion? Out of a total budget of around $7 trillion? Additionally, Musk and his allies are misrepresenting the data they're citing on government fraud. For instance, the Government Accountability Office, the main federal government watchdog, did not say there was "half a trillion dollars" in government fraud. It guessed that fraud was in a range with that as the uppermost estimate - and that estimate was heavily influenced by the pandemic years of 2020 and 2021, which saw a bonanza of fraud. As the GAO director who oversaw this study told MarketWatch, the office estimated that "fraud" - defined broadly - accounted for somewhere around 5% of federal spending, or about the same level as you see in big private-sector companies.

Third, there's another reason to question these numbers: If the waste, fraud and abuse in federal spending is so massive and pervasive, why has no one else uncovered it? That includes the GAO and 17 separate offices of inspectors general. And it includes individual whistleblowers. Federal law authorizes huge payouts to individuals who blow the whistle on fraud in federal spending. This is real: Last year Uncle Sam paid out $400 million to individuals who helped expose $2.4 billion in fraud. That's about 17% of the savings. By this math, individuals exposing $1 trillion in annual fraud, as Musk alleges, could have pocketed some $170 billion - yes, really - in finder's fees.

It seems astonishing, doesn't it, that whistleblowers left all that money on the table?

Insofar as Musk and others in the Trump administration are genuinely seeking to root out actual waste, fraud and abuse in federal spending, they have my support. Even Bernie Sanders, the independent senator from Vermont, agrees that combating fraud in spending is a good thing to do.

And if Musk somehow found $1 trillion in annual fraud, he'd deserve enormous credit.

But if the GOP is going to use these claims of $1 trillion in found money to sell a $500 billion tax cut, then here's a simple reply in the name of fiscal sanity.

You produce the savings, and then we'll talk about the tax cut. Not the other way around. Not all of us were born yesterday.

-Brett Arends

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 30, 2025 11:50 ET (15:50 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.