DOGE faces dilemma as it seeks large spending cuts
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DOGE FACES DILEMMA AS IT SEEKS LARGE SPENDING CUTS
The newly created Department of Government Efficiency (DOGE) that is headed by Elon Musk and Vivek Ramaswamy under the Donald Trump administration is likely to face challenges in achieving large cuts to government spending, according to Morgan Stanley Wealth Management.
DOGE plans on targeting wasteful spending to make savings for U.S. taxpayers.
However, Lisa Shalett, chief investment officer and head of the Global Investment Office at Morgan Stanley Wealth Management notes in a report that mandatory spending that is covered by acts of Congress and the interest rate costs of U.S. debt will limit what DOGE can target.
More than 50% of U.S. government spending goes to Social Security, Medicare, Medicaid and other mandatory programs, Shalett noted. The Congressional Budget Office also anticipates net interest costs of around $1 trillion in 2025. That leaves around $2 trillion, or less than $1 trillion if defense spending is preserved.
"We're not saying there isn't waste, but the devil is in the details, and the reality of achieving real impact on debt and deficits likely requires potentially profound choices," Shalett said.
Musk, meanwhile, does not appear to be persuaded by arguments that there can be no cuts made to entitlements spending. "You don't yet appreciate how much waste and fraud there is in entitlements. It is beyond what you could possibly imagine," Musk wrote on X on Nov. 19.
(Karen Brettell)
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