Slashing the Federal Workforce Won’t Solve the Budget Deficit

The recommendation scores political points and resonates with those who believe government is inherently inefficient. But would it work?

Dec 16, 2024

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AI-generated image advertising the Department of Government Efficiency, posted by prospective department head Elon Musk [Source: @Elon Musk on X]

Politicians have promised to “shrink the size of government” for decades, but President-elect Trump’s Department of Government Efficiency (DOGE) takes that ambition to another level. Elon Musk and Vivek Ramaswamy are calling for slashing federal employment, consolidating agencies, and eliminating federal subsidies. Musk has even claimed their plans could save $2 trillion in federal spending. But here’s the catch: that’s more than the federal government’s entire discretionary budget for 2023! The math just doesn’t add up.

There has been one aspect of the plan—slashing federal employment—that has garnered a lot of attention. Perhaps it’s because Musk recently applied a similar strategy at Twitter, firing thousands of employees in a bid to streamline the company. Or maybe it’s because the idea of cutting government jobs resonates with voters frustrated by what they see as bloated bureaucracy. It sounds like an easy way to rein in spending and chip away at the national deficit.

But if you think firing federal workers will solve the government’s budget problems, think again. The structure and sheer scale of federal spending make many of DOGE’s proposals look like symbolic gestures. To understand why, let’s look at what the federal government actually spends money on and how deficits work. Spoiler: it’s not federal salaries driving the government’s fiscal concerns.

Mandatory vs. Discretionary Spending

When most of us think about cutting expenses, it seems simple: eat out less, cancel a subscription, or maybe skip the fancy coffee. But the federal budget doesn’t work that way. It’s not a flexible pot of money where lawmakers can cut back on a few things to balance the books. Instead, it’s divided into two very different categories: mandatory spending and discretionary spending.

Mandatory spending is the big one. It currently accounts for around 60% of the federal budget and covers programs like Social Security, Medicare, and Medicaid. These programs aren’t just things lawmakers want to spend money on—they’re written into law. The government is required to pay them and most of this spending happens automatically. The only way to significantly cut mandatory spending is to change the underlying laws—a politically contentious process that no group in Congress really seems eager to take on.

The rest—about 40% of the budget—is discretionary spending and interest payments on our debt. Discretionary spending is the money Congress actively decides how to spend every year. It covers programs related to national defense, education, transportation, and yes, the salaries and benefits of federal employees.

Discretionary spending is the easier part of the budget to adjust, but it’s also much smaller than the amount we spend on mandatory categories. Even if you eliminated every single federal employee tomorrow—a scenario as drastic as it is improbable—you’d barely make a dent in the overall budget.

The Numbers Don’t Add Up

Let’s look at federal employment a little more. At first, the numbers sound big—roughly 2.3 million civilians work for the federal government, costing taxpayers around $300 billion annually in salaries and benefits. That sounds like an awful lot of money when you think about it on its own. But context matters here: the U.S. federal budget isn’t measured in billions. It’s measured in trillions.

In 2023, total federal spending topped $6 trillion. This means that the cost of paying federal workers made up only ~5% of the budget. If Musk and Ramaswamy were able to cut 25% of all federal employees, it would save the U.S. about $75 billion each year. While that sounds like a lot of money, it’s just a drop in the bucket compared to the $1.7 trillion federal deficit for 2023. In other words, those savings would cover less than 5% of the annual shortfall.

Now zoom out some and look at the bigger picture. The deficit is the annual gap between what the federal government spends and what it collects in revenue, while the debt is the total of all deficits (minus surplus) the government has ever run. The national debt currently exceeds $36 trillion! The idea that cutting federal jobs could meaningfully reduce the deficit—or even make a dent in the debt—is wishful thinking. Again, the numbers just don’t add up.

@econchrisclarke Will DOGE Department of Government Efficiency solve the nation's deficit? No. While I'm hopeful for improvements, most gov spending goes to entitlements, not the salary's of bureaucrats. Only 2 choices return taxes to 90's level or cut spending on the elderly and poor. #govern #government #economy #economics #policy #taxes #money #finance #business #regulation #chart #efficiency #doge #musk #trump #greenscreenvideo #greenscreen

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Why Targeting Federal Workers Feels Easier

If cutting federal employees would have such a small impact on the deficit, why does it seem like such a popular idea? The answer lies in politics, perception, and a misunderstanding of what federal employees actually do. The federal government is an easy target for many Americans as many see it as a bloated, inefficient bureaucracy bogged down by red tape. Cutting jobs feels like a tangible way to “rein in” the government and reduce waste. Few people are going to rally to defend bureaucrats.

But the reality is that federal employees play important roles in protecting Americans and ensuring the country functions smoothly. They inspect the food we eat, manage the highways we drive on, and enforce the laws that safeguard our businesses and homes. From responding to natural disasters to ensuring the integrity of financial markets, their work often goes unnoticed but is crucial to daily life.

Efforts like Michael Lewis’s book The Fifth Risk and Adam Conover’s Netflix series The G Word have tried to change this narrative by highlighting the behind-the-scenes contributions of federal workers. But the idea of cutting government jobs remains appealing, in part because it sidesteps more difficult conversations.

Programs like Social Security and Medicare are a significant share of the federal budget, but they’re also deeply popular. Reforming these programs would require raising taxes or cutting benefits, neither of which is a politically easy sell. Cutting federal jobs offers a symbolic gesture that feels substantial without requiring lawmakers to consider the tougher issues. Cutting federal employees would likely lead to reduced oversight, slower processes, and fewer safeguards for the public. The political appeal may be strong, but the practical and economic benefits are weak.

Final Thoughts

If the country is serious about reducing deficits and addressing the national debt, it’s time to focus on the real culprits: mandatory spending and revenue shortfalls. Programs like Social Security and Medicare are growing rapidly as the population ages, but reforming these programs is politically risky. At the same time, federal revenue isn’t keeping pace with spending.

The debate over federal employment distracts from these deeper, more difficult issues. Real progress requires uncomfortable trade-offs: reforming entitlement programs, rethinking defense spending, raising revenue, or some combination of all three. Until policymakers are willing to tackle these realities, fiscal theater like DOGE will remain a distraction, not a solution.