With the presidential inauguration on Monday, the Trump administration is set to kick off a series of policy moves focused on, among many things, reducing government waste.
It’s not surprising to see a renewed focus on our government’s and politicians’ extravagant spending, especially when some families struggle to put food on the table because of persistent inflation (which is arguably also a result of government action). Aptly named “DOGE,” an acronym for the Department of Government Efficiency — and a subtle nod to a cryptocurrency by the same name — Trump has appointed well-known entrepreneur Elon Musk of Tesla fame, and lesser-known businessman and financier Vivek Ramaswamy, to lead the cost-cutting effort.
Endeavors akin to DOGE are not without historical precedent. Several presidential initiatives dating back to before World War II have held the same or a similar goal: Reduce wasteful government spending. Arguably, the most successful attempt was one of the earliest — President Harry Truman’s Hoover Commission, named for former President Herbert Hoover, who was appointed to run the commission.
This committee made more than 250 recommendations to Congress in a series of 19 reports. Almost 70% of those initiatives were implemented, at least partially, which streamlined several government agencies that had expanded unhindered during World War II.
While the first of these committees found success, later attempts faltered. Some chronologically gifted readers may remember President Ronald Reagan’s 1982 effort to “drain the swamp,” which may sound oddly familiar. Over 18 months, the so-called Grace Commission created 36 task forces chaired by 161 leaders in varied disciplines (mainly business) to scrutinize a huge swath of federal operations. Their report included almost 2,500 recommendations to theoretically reduce spending by about $424 billion over three years.
Several criticisms arose: Could the same rules that improved efficiency in the private sector work in the public sector? Is it a conflict of interest for private-sector executives to influence changes to the very organizations that, in part, regulate these leaders’ actions? Ultimately, only about 27% of the committee’s recommendations could be implemented by executive order; the remaining 73% required congressional approval, which proved elusive. Reagan’s efforts didn’t work. By the time he left office, the annual deficit and national debt had tripled according to History.com.
As the saying goes, history doesn’t often repeat, but it does rhyme. As I’ve written in previous articles, the rate at which our country continues to spend is ultimately unsustainable. So, an effort to reduce spending, especially in wasteful or unused areas, is commendable. As with our individual clients, while the reductions may not be as remarkable as we hope, any amount saved is a good thing. Furthermore, the committee’s appointees, Musk especially, are known for doing the undoable. And unlike his predecessors, Musk holds a tool that will significantly change the process and likely outcome: X (the social network formerly known as Twitter).
I believe the primary obstacles to budget reform are politicians and their constituents’ and donors’ competing interests. Would farm-state senators support eliminating farm subsidies? Would a state like Colorado support the elimination of green energy initiatives? Everyone likes cuts until it’s their interests on the chopping block. Finding efficiencies means convincing politicians from both parties that the outcomes are worth the sacrifices. In a vacuum, this is a near impossible task. But when wasteful spending is brought to the stage of public opinion, a decision becomes less the result of a singular politician’s opinion and more democratic.
Musk holds a public stage that his predecessors lacked, with one notable exception. The Hoover committee may have succeeded where others failed in part due to their ability to engage the public via local chambers of commerce. This grassroots outreach proved critical. Via X, Musk has a similar ability, albeit on a national level. Through shining light on issues through his platform, outcomes may be “forced” upon politicians.
However, this may be a double-edged sword. What happens when a vocal minority overwhelms the silent majority? Are government endeavors like clean water, a safe food system, and emergency services — let alone the financial requirements of each — well enough understood by most Americans that these foundational elements won’t face undue pressure? There is a reason we have elected officials, after all.
Whether DOGE can succeed where others have failed remains to be seen. However, I believe that any effort to understand our spending and reduce it, especially in areas of waste, is worthwhile. Just as we encourage clients to create and work within a personal budget that doesn’t exceed their means, we must hold our elected officials to a similar standard with our national budget.
Admittedly, this column deviates a bit from Improving Investor Behavior, our typical personal finance topic. That’s because I believe the greatest current threat to our country is not war, famine, or culture, but rather our government’s unrestricted and extravagant spending. If we don’t begin the necessary work of reducing our debt, we will leave behind undue risk for our children and grandchildren.
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income” He was named by Forbes as a 2024 Best-in-State Wealth Advisor, and a Barron’s 2024 Top Advisor by State.
