Can Elon Musk Fix America's Spending Problem?

Government spending is exploding, raising worries of a fiscal crisis. Can Elon Musk right the ship with the Department of Government Efficiency (DOGE)?

Here’ a stat that highlights how insane health care costs in the U.S. really are:

Dialysis patients— there are about half a million of them. We actually spend 1% of the federal budget on the dialysis program. Not 1% of Medicare— 1% of the federal budget is the dialysis program.

That’s a quote from Jetson Leder-Luis speaking on Bloomberg’s Odd Lots podcast about how one out of every hundred dollars that the federal government spends each year— or almost $70 billion— goes to 500,000 dialysis patients.

Now, this is not to say that those patients shouldn’t get the care that they need— I think that they should.

But the fact that the government spends something like $140,000 per year on dialysis for each of those patients goes to show how expensive health care in this country is and makes you wonder whether the money is being used wisely or not.

Actually, this is the type of question that the new Department of Government Efficiency (DOGE) headed by Elon Musk and Vivek Ramaswamy was created to address.

I’ll admit, when I first heard about DOGE, I was skeptical— and don’t get me wrong, I still am to some extent.

But as I’ve learned more about how much money the government spends and what it spends its money on, it’s become clear that there could be real benefits to shining a light on government spending.

Let me give you another snippet from the podcast with Jetson. Here, Jetson explains the massive amount of fraud that is associated with the dialysis program:

We do not, in general, pay for ambulance rides or taxi rides for these people to go to and from the visits. They are responsible for getting themselves to the clinic— three times a week for a few hours. And that’s in perpetuity; it’s very challenging to get a kidney and therefore get off of dialysis.

We had this system— and this is sort of the canonical Medicare fraud— we build in a little thing for the few people who need it and that turns into a loophole through which bad actors drive a truck.

So, we built in this provision, which is, if the only safe way that you can get to the dialysis clinic is in an ambulance, Medicare will pay for an ambulance. And they pay for it at a competitive rate for the ambulance companies at, say, $250 for a one-way ride. Now, that’s not a lot of money for an ambulance, but it’s a heck of a lot money for a taxi.

And what happened is, thousands of firms around the country opened with the express intention not of giving people serious medical care, but of becoming an expensive ambulance taxi.

[They] billed the government— we have 100% data from the dialysis system; we can see all of these payments— more than $7 billion for nonemergency ambulance transportation over the following ten years. $7.7 billion [to be exact], and a lot of it was fraud.

The government cracked down; the government really tried to crack down. And in particular, they used a number of tools. The first one is they started throwing people in prisons.

But it’s so easy to start an ambulance company, that we see these stories where someone gets busted and their family member goes and opens a company next door the next day. And this persisted for years, with thousands of companies and billion of dollars of spending just down the drain.

Wow! That’s some pretty eye-opening stuff. And this is just one example of fraudsters taking advantage of the government to the tune of billions of dollars.

Jetson says that there are many other examples of widespread fraud in the health care industry, and that by reducing this fraud, the government can save as much as $100 billion.

Not only that, he says that if this same scrutiny is applied to other categories of government expenditures, like defense spending, there could be additional savings of tens or hundreds of billions of dollars.

Jetson isn’t the only one saying this.

The U.S. Government Accountability Office— which is the federal agency responsible for auditing government spending— estimates that the federal government could be losing as much as $521 billion per year due to fraud, and over $200 billion per year due to improper payments (where the government accidentally sends too much money to someone or sends money to someone they’re not supposed to send money to).

If Jetson and the Accountability Office are right, then that’s a big opportunity for Elon and Vivek’s Department of Government Efficiency.

In a recent op-ed on the Wall Street Journal, the duo wrote that they would find a way for President Trump to cut government spending dramatically by rooting out waste, fraud and abuse in the federal government.

So, the fraud that Jetson and the Government Accountability Office identified is exactly the type of thing that DOGE is seeking to eliminate.

That said, Elon and Vivek are targeting much more than just fraud.

They’ve said that they also want to dramatically reduce the federal government workforce and cut expenditures that aren’t explicitly authorized by Congress— like grants to international organizations and to Planned Parenthood.

Those are obviously more controversial things that you may or may not agree with.

But regardless, there does seem to be the potential to reduce government spending significantly in ways that almost everyone agrees on— like rooting out fraud and cutting out waste.

And that’s interesting to me because my initial assumption was that it’d be impossible to move the needle on government spending without drastic reductions in entitlement programs.

If you look at what the federal government spends money on today, of the $6.75 trillion of total spending, over 60% of it is mandatory— that is, it’s required to be spent based on existing laws. This is spending on things like Social Security and Medicare.

Another 13% is spent on interest on the federal debt— which also must be paid.

That leaves another bucket called discretionary spending, and that includes expenditures on national defense, education, transportation, and other programs that Congress approves through annual appropriations bills.

Of this discretionary spending bucket, defense makes up around half of it— and as you probably know, most people don’t want to touch defense spending; it’s widely seen as politically off-limits.

So, my thought was that unless the government made tough choices by cutting Social Security or Medicare benefits, you couldn’t reduce government expenditures significantly; there just wasn’t enough meat in that non-defense discretionary spending bucket to make a difference.

But it turns out that the government can potentially save a bunch of money even without cutting entitlement programs— and that’s a good thing.

Of course, just tackling fraud and waste might not be enough if you’re worried about runaway government deficits.

Cutting a few hundred billion dollars in government spending is great, but the U.S. federal government now spends nearly $1 trillion per year just on interest on the national debt.

And if the current trajectory persists, that amount is only going to get bigger, which could lead to a fiscal crisis down the line if nothing is done about it.

So, if we want to address that, maybe more drastic actions must be taken— like reforming entitlement programs or even raising taxes.

That’s a related but different topic. The point of this post is that there is an opportunity to save a lot of money by making the government more efficient, and that’s a worthy goal that could have a positive impact on the U.S. economy broadly.

After all, federal government spending represents around a quarter of GDP. Making the government more efficient makes our entire economy more efficient.

This is particularly true when it comes to the health care industry, where the government plays a major role through programs like Medicare and Medicaid.

The U.S. spends around $4.5 trillion, or $13,500 per person, on health care per year. The federal government accounts for a third of spending; so, to the extent those dollars can be used more efficiently, the better off the economy will be.

Granted, there’s probably a limit to how efficient you can make the government; incentives in the public sector are different than they are in the private sector. The government is never going to operate like a private company— nor should it.

Not to mention, identifying and rooting out fraud and waste is easier said than done— but it doesn’t mean we shouldn’t try.

The Government Accountability Office and the more than 70 Inspectors General that work in federal agencies have thousands of open recommendations for how to improve the government’s performance.

They say that those recommendations could quickly be implemented, saving the government hundreds of billions of dollars.

Given Elon and Vivek have close ties with Trump, they could help push these recommendations through, as well as come up with their own solutions to reform government spending.

On the other hand, Elon and Vivek aren’t necessarily neutral parties in all of this. They have a political point of view that you might not agree with, so you might take issue with their approach.

Maybe they want to cut government spending much more than you’re comfortable with. Or they want to cut things you don’t want to be cut.

And that’s completely fair.

But regardless of whether you support the exact methods that they propose, it’s still encouraging to see the topic of government efficiency gaining such prominence.

Cutting things like waste and fraud in government is a bipartisan issue and now that it’s out in the open, both partes can address it in the way they see fit.

So, we’ll see what happens. Elon and Vivek have said that they intend to complete their work and shut down DOGE by July 4, 2026— about a year in a half from now.

It’ll be interesting to see how much they can accomplish in that relatively short period of time.