'Super Big Deal': Elon Musk's DOGE Will Reduce US Fed Deficit From $2 Trillion To $1 Trillion. Here's How

One of DOGE’s immediate priorities is eliminating wasteful contracts, particularly those related to Diversity, Equity, Inclusion, and Accessibility (DEIA) initiatives.

According to Musk, taxpayers have already saved $1 billion as a result of certain terminations.

Source : YouTube/NBC Chicago

Elon Musk has announced a bold strategy through the Department of Government Efficiency (DOGE) to reduce the US federal deficit by half, from $2 trillion to $1 trillion by 2026. 

The initiative, which was unveiled on January 31, outlines a daily spending cut of approximately $4 billion to achieve the ambitious target. Musk explained on social media, “Reducing the federal deficit from $2T to $1T in FY2026 requires cutting an average of ~$4B/day in projected 2026 spending from now to Sept 30.”

He added that achieving this goal could help balance economic growth and prevent inflation by 2026.

Reducing the federal deficit from $2T to $1T in FY2026 requires cutting an average of ~$4B/day in projected 2026 spending from now to Sept 30.

That would still result in a ~$1T deficit, but economic growth should be able to match that number, which would mean no inflation in…

— Elon Musk (@elonmusk) January 31, 2025

Cost-Cutting Measures in Focus

One of DOGE’s immediate priorities is eliminating wasteful contracts, particularly those related to Diversity, Equity, Inclusion, and Accessibility (DEIA) initiatives. Musk claimed that DOGE had already terminated 85 DEIA-related contracts valued at nearly $1 billion. These contracts spanned federal agencies such as the Department of Education, the Environmental Protection Agency (EPA), the Department of Labor, and the Treasury.

According to Musk, taxpayers have already saved $1 billion as a result of these terminations. The move, while expected to be controversial, underscores DOGE’s aggressive approach to trimming government spending.

DOGE has now saved taxpayers over $1 billion in crazy DEI contracts https://t.co/P81LgRKeOV

— Elon Musk (@elonmusk) January 31, 2025

Operational Structure Of DOGE

DOGE is essentially a restructured version of the US Digital Service, a unit within the Executive Office of the President that provides IT consultation to federal agencies. Its mission has now been narrowed to harnessing modern computing solutions to drive efficiencies in federal operations. Reporting directly to White House Chief of Staff Susie Wiles, DOGE will operate independently without encroaching on the executive powers of existing government departments.

The initiative will begin as an 18-month pilot under the US Doge Temporary Service Organisation, tasked with helping federal departments develop and implement productivity improvement strategies.

Challenges & Skepticism

Despite the lofty goals, doubts persist. UK-based wealth management firm Charles Stanley noted that Musk’s numerous business commitments and his preference for unconventional methods could hinder his involvement. Moreover, concerns about potential conflicts of interest and his aversion to bureaucratic norms remain points of contention.

Nevertheless, the DOGE initiative, with its ambitious vision and Musk’s reputation for disruption, signals a potentially transformative chapter in efforts to streamline federal spending and optimize government efficiency.