An Honest Look at D.O.G.E

We need to take an honest look at the Department of Government Efficiency (D.O.G.E), specifically:

1. The current state of the federal debt and deficit
2. The criticisms and successes of Elon Musk as the apparent force behind D.O.G.E.
3. Other options for fiscal responsibility.

A Debt Crisis

The U.S. Federal government has had many episodes of peaking debt in the last two centuries. Typically, these are due to war (the Civil War, WWI, WWII, the Cold War, the War on Terrorism) or major financial crises (the Great Depression, 2008 Credit Crunch, COVID). For each of these, there is a precipitous drop in debt due to spending cuts, raising taxes, and economic growth. Except for our current 25-year run-up in debt.

For example, America experienced a massive economic boom after WWII since our infrastructure was unscathed, allowing us to be competitive worldwide.  

After the end of the Cold War in the early 1990s, Bill Clinton, with bipartisan support from Congress, was able to balance the budget and start paying off the debt. They used tax increases and spending cuts. They also benefited from the tech boom of the late 1990s, which resulted in higher tax revenues. Unfortunately, they also used Social Security surpluses to offset deficits.

A good measure of debt is the ratio of debt to GDP, with debt typically rising 30% to 80% about pre-crisis levels.  The previous highest level was 119% at the height of WWII. The debt is now at about 122%. Twenty years of the war on terror, the financial crisis in 2008, COVID in 2020, all contributed to the debt, but the country also experienced steady growth during this time.

The Federal government spends $2 trillion more each year than it takes in. Half of that is used to pay the interest on our current $36 trillion debt. I recommend examining the US Debt Clock or reading my post If We Ran Our Households Like The Federal Government.

So why can't we just keep doing what we've been doing?

The risk is a "debt spiral". Printing money results in higher interest rates, which result in higher debt, requiring more money to be printed, etc. Additionally, higher debt-to-income ratios result in slower growth, which results in lower income. The classic example is Hyperinflation in the Weimar Republic. While the U.S. economy has proven more resilient than the Weimar Republic, the current trend is unsustainable. We may "grow our way" out of this, but it would be more responsible to use all means possible to return to sustainability.

Is Elon Musk the guy who can fix this?

Surprisingly, the debt wasn't even raised during the presidential debate between Donald Trump and Kamala Harris. Elon Musk is the first to make the debt part of the national debate. It's worth taking a detailed look at Elon Musk, including the good and the bad. I'll start this investigation with the claim that Elon is a disruptor. Disruption can be both bad and good. Some of  the ways Elon achieves disruption that I would like to focus on are:

• First Principles Thinking - Break down complex problems into fundamental truths, ignoring conventional wisdom. For example, how much should this car or rocket part cost? Start with the cost of raw materials and the labor to convert them into the needed part.
• Long-Term Vision.
• Leverage Technology and Automation.
• Fail Fast, Fix Fast - take action quickly, and when you fail, learn from it. 
• Running Lean Organizations - "Delete any part or process you can. If it turns out you need it, add it back later." 

As you can imagine, these approaches result in much criticism, often well deserved.

Let's examine a few of his ventures for pros and cons across various industries:

• Banking (PayPal)
• Aerospace (SpaceX)
• Energy (SolarCity and Gigafactories)
• Automotive (Tesla)
• Social Media (Twitter/X)

PayPal

Good: Have you ever used PayPal or Venmo? Elon realized there wasn't a lot of innovation in the financial services sector and that money was low bandwidth (you didn't need a lot of infrastructure like banks or ATMs) (video). Moving money from one person to another via email was much faster and became a popular feature of their financial offerings.

Bad: Elon is criticized for his authoritarian management style, and his vision for a broader financial platform was too ambitious, which led to his ouster as CEO.

“Going from PayPal, I thought well, what are some of the other problems that are likely to most affect the future of humanity?” 

SpaceX

U.S. space travel was in a state of stagnation, marked by high costs and limited ambition. From 2011 to 2020, NASA paid Russia $70-$90 million per seat to ferry astronauts to the ISS on Soyuz rockets - a humiliating dependency. 

Good:  SpaceX significantly cut the cost of launching payloads into space with streamlined operations and reusable rockets. The result was the commercialization of space exploration and inspiring space industry growth.

Bad: Elon over-promises and under-delivers, setting highly ambitious, often missed timelines. SpaceX is known for its intense work culture, with employees working long hours to meet deadlines. Some have criticized the environmental impact of an increased number of rocket launches. Privatization of Space has also drawn criticism as the folly of Billionaires playing "astronaut".

SolarCity and Gigafactories

Elon Musk challenged utilities by pushing for decentralized power. Solar panels could capture the sun's energy and store it in batteries for later use.

Good: Musk's vision for a sustainable future encouraged broader investments in green energy. His focus on scale and efficiency accelerated technological improvements at his companies, SolarCity and Tesla Energy, helping advance clean, renewable energy that reduces carbon emissions and our dependence on fossil fuels. Homeowners and businesses can have more control over their energy consumption. 

Bad: SolarCity and Tesla Energy products have benefitted from government subsidies and incentives. SolarCity's business model included leasing options, sometimes leading to financial difficulties. Battery production and lithium mining have been linked to environmental concerns, such as mining pollution and waste disposal.

Tesla

Good: Tesla is also part of Musk's vision for a sustainable future. His leadership and innovation have led to the adoption of EVs worldwide, with Tesla representing about 2/3rds of the EVs in the U.S. Telsa cars are stylish, high-performance, high-tech, competitive alternatives to other cars. Ford CEO Jim Farley said they struggle to compete with Tesla due to the integrated software development and ability to rapidly update vehicle features and pricing through over-the-air updates, which traditional car manufacturers struggle with due to their complex legacy system and dealer networks (video short). Additionally, the Tesla supercharger network is unparalleled (they realized the infrastructure was required for EV adoption, so they built it). 

 

Bad: 

Once again, Elon is criticized for over-promising and under-delivering. He also has the same intense management style, which is high-pressure and demands long hours.  Tesla has faced regulatory scrutiny and legal challenges due to its aggressive business practices, product claims, and workplace issues.

In August 2021, Joe Biden held an Electric Vehicle summit at the White House to promote the transition to cleaner transportation and address climate change.  The Detroit's big three automakers were invited with President Biden highlighting GM's CEO Mary Barra, stating "I think she's one of the reasons we're here today". No one from Tesla was invited, and no recognition was given for Tesla's contributions. 

Twitter/X

Before Musk bought Twitter in October of 2022, the platform had several issues: frustrated users, investors, and even some employees. Growth had plateaued, innovations were minimal, and the company rarely turned a profit. The Twitter workforce was bloated. Content moderation was a mess with rampant bots and spam. With the release of the Twitter files, evidence showed inappropriate government influence in censorship, shadowbanning, and election interference.

Good: Elon emphasized his commitment to free speech and said he would be more open to diverse opinions and less prone to content moderation and censorship. His vision was to allow people to engage in open dialogue, fostering a marketplace of ideas without heavy-handed moderation. He made efforts to combat bots and fake accounts. He streamlined operations and adopted cost-cutting measures to make the platform more profitable. For example, he found that many employees were idle, that company-provided gourmet lunches were thrown in the trash, etc. He has explored using artificial intelligence to improve user experience and content moderation.

Bad: The first problem is that Elon didn't practice due diligence in his purchase and significantly overpaid for Twitter. Some believe that hate speech, misinformation, and harassment have become more prevalent. The uncertainty during the transition resulted in revenue decreases and advertisers leaving the platform.

D.O.G.E

Good: Elon is a proven efficiency expert with an outsider perspective. He has tech-driven innovation and attempts to promote public accountability by posting about inefficiencies on the X platform. He is acting fast, as opposed to the usual stalemate of government action.

Bad: Musk has massive conflicts of interest with many government agencies providing oversight of his various companies. His "fail fast, fix fast" style could destabilize the government and paralyze critical services. Musk lacks public administration expertise, where public trust is paramount. After the Chornobyl disaster, Mikhail Gorbachev said:

Everything that a top leader says in such situations has to be carefluly weighed and has to be very fully informed. So you always have to bear in mind that in such situations there is always a danger of panic. 

For example, Elon posted on X a list of the number of people in various age ranges in the Social Security database, showing many people over 120 years of age. To follow Gorabachev's advice, this should have included more information, such as how many of those people were actively receiving benefits and details on some of the outliers over 200 years old. Instead, there was a lot of confusion.

Who should fix the U.S. debt Crisis?

Recently, I was referred to the "Tangle" podcast and have enjoyed their balanced reporting. I eagerly listened to "The legal fight over DOGE's budget cuts." They present the Left's take, the Right's take, and then "My take". "My take" was presented by Ari Weitzman. I agree with his criticisms of the cutting being done by DOGE. 

He asked, "Why not leverage an existing agency - the Government Accountability Office (GAO) or the Congressional Budget Office - to lead the charge?" I thought this was a good point, but then I thought, "Why aren't they already doing this? Why haven't they been sounding the alarms?"

In the Netflix documentary "Turning Point: The Bomb and the Cold War," there are several instances that the World has moments away from nuclear annihilation. Stanislav Petrov (at great risk) ignored a false alarm of U.S. incoming nuclear missiles, avoiding full-scale nuclear war. A Soviet overreaction to U.S. military games, Able Archer, in 1983, was de-escalated when Leonard Perroots recommended winding down the U.S. operations. Daniel Ellsberg said, 

"We see time and again that it's the individuals who have the courage to stand up and make a call, not the system that necessarily works." 

Remember that Daniel Ellsberg was the one who released the Pentagon Papers in 1971, revealing government deception regarding the Vietnam War.

Can we rely on our current system to resolve our budget crisis? Or do we need a brave individual? I don't know who should do it, but I'm glad it's part of the national conversation. Hopefully, we can be more honest about it.

Empathy and Compassion

People will be hurt no matter what is done or who does it. If the cost cutting results in loss of jobs, those jobs represent people with families, mortgages, and other living expenses. Cancelled projects may affect people in need with no other source of help. If taxes are raised, then that will be a burden on the taxpayers.

If nothing is done, our children and grandchildren will have to pay the bill in the future.

If nothing can be done (which is what I'm hearing a lot), then we are headed for economic collapse that will affect not only Americans but all of the world.

If Elon Musk and Pres. Trump are somehow able to restore financial solvency without creating hardship for anyone but criminals and fraudsters (a purely hypothetical result), then there will be people that have been personally hurt by either man who will most likely not see justice served.

If you find yourself in a position where you are safe from hardship, it's essential to recognize the hardship that others may face.