Elon Musk Wants to Streamline the Bloated Federal Government

There sure was a lot of excitement regarding the release of the employment numbers last Friday. The September employment report indicated that employers added 254,000 jobs, which was significantly higher than the forecast of 140,000. The headlines boasted growth in sectors such as food services, health care, government, social assistance and construction. The unemployment rate also ticked down to 4.1% from 4.2%. The stock market glommed on to the news and stocks rallied big time.

Six weeks ago, the U.S. Labor department revised down job growth by the most since the Great Recession in 2009. The U.S. economy added 818,000 fewer jobs than initially reported from April 2023 through March 2024. In 2009, the Bureau of Labor Statistics revised employment growth lower by 824,000. That means the U.S. economy added 2.1 million jobs during this time frame instead of the 2.9 million jobs initially reported. The monthly gains were actually closer to 178,000 instead of 246,000. (source: ING Economics)

In the September jobs data from last Friday, it was also reported that the Labor Department released updates on previous reports showing upward revisions. Non-farm payroll employment for July was revised up by 55,000, from 89,999 to 144,000, and the change for August was revised up by 17,000 from 142,000 to 159,000. Many skeptics argue that these numbers are being manipulated, heavily influenced by political agendas, and cannot be trusted.

One area that comes under heavy scrutiny is the growth of federal government jobs. Big government costs big money. From 2010 to 2020, the average annual growth rate was about 1.5%. However, recent years have seen a higher growth rate, with a notable increase of 4% in 2023 alone. Between 2019 and 2023, more than 140,000 employees joined the civil service, an increase of about 7%, according to data that the non-partisan, non-profit Partnership for Public Service compiled and released this week.

The latest increase brings the grand total of full-time federal employees to just over 2 million. In total, agencies hired more than 200,000 employees last fiscal year — an increase of more than 45,000 hires over the previous year, the Partnership said. That does not account for attrition due to retirements and others leaving the government. Encompassing all the changes brings the net gain to about 80,000 employees.

Back when Ronald Reagan was President, he rolled out the New Federalism program, which aimed to shift more responsibilities from the federal government to state and local governments. Reagan found the public to be receptive to his ideas, the notion being that states and localities know best what the needs are of their citizens more than those in Washington D.C. Reagan used Congress and executive orders to implement many of his federalism reforms, but many more of his proposals failed after confronting specific programs and active special interest groups.

Reagan’s ideas were not new. At the time, his ideas both captured and stimulated growing public opposition to big government, big business and big labor, and prescribed a solution that appeared consistent with the ideas of the United States’ Founding Fathers. Returning responsibility for domestic policies to state governments, he suggested, would give the states greater discretion in crafting and implementing the policies, require less federal monetary assistance and reduce the need for federal regulations and oversight.

Today, non-defense spending by the federal government topped $3.8 trillion for 2023, which primarily funds Social Security, Medicare, Medicaid, federal pensions, federal health care, federal education, federal welfare and other non-defense discretionary spending. In fiscal 2024, total federal government spending is budgeted to be $6.94 trillion.

Source: usgovernmentspending.com

The federal government is facing three ticking timebombs that require the full attention of Congress to avoid major financial calamities down the road. Growth in medical spending is projected to grow dramatically. The number of persons enrolled in Medicare is expected to increase from 47 million in 2010 to 80 million by 2030. While the same demographic trends that affect Social Security also affect Medicare, rapidly rising medical prices appear to be a more important cause of projected spending increases.

And by the way, we already have a model for nationalizing health care. It is called the Verterans Administration, where heavy criticism lies for several reasons. There are numerous reports of inadequate health care services, including long wait times, insufficient mental care, excessive spending, contradictory policies, a massive backlog of benefits claims, lack of protection for its own staff and significant issues related to veterans’ access to private health care services. Universal health care run by the federal government will look like Canada’s failed system on steroids.

The CBO has indicated that: “Future growth in spending per beneficiary for Medicare and Medicaid — the federal government’s major health care programs — will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs — which will be difficult, in part because of the complexity of health policy choices — is ultimately the nation’s central long-term challenge in setting federal fiscal policy.” For 2024, federal healthcare accounts for approximately 6.3% of GDP, and is forecast to soar to 19.7% by 2030.

Social Security spending will increase sharply over the next few decades, largely due to the retirement of the baby boom generation. The number of program recipients is expected to increase from 44 million in 2010 to 73 million in 2030. Program spending is projected to rise from 4.8% of GDP in 2010 to 5.9% of GDP by 2030. The solution to fixing a Social Security system where the Trust Fund goes bankrupt around 2035 is likely to be an increase in payroll taxes and a reduction in the cost-of-living increases. This is a sacred cow issue that is considered untouchable, but like health care, it has the look and feel of rearranging the deck chairs on the Titanic if hard policy decisions aren’t made.

In 2024, interest on the federal debt is projected to be $892 billion, almost a third higher than what was spent in 2023, and account for 3.1% of GDP. For 2024, the federal debt to GDP ratio is 121%, meaning total public debt is more than double the size of the U.S. economy. By 2050, the CBO states that number will rise to at least 166% of GDP. The glaring problem is the federal debt is increasing much faster than originally forecast, so like the jobs data, it is safe to say these predictions are blurry at best.

So, what to do about the bloated federal government and its layers of incompetence among so many agencies? Like him or not, a government efficiency czar like Elon Musk has proposed top-down reforms in the form of audit and accountability to identify areas of waste and inefficiency, deregulate areas that hinder government operations and economic growth, slash unnecessary spending to get the most out of taxpayer dollars and apply principles from the private sector, such as streamlining processes by implementing the most advanced technologies available. The goal would be to make the government more responsive, cost-effective, transparent, leaner and doing a lot more good for citizens with far fewer federal workers because of extreme productivity gains through the implementation of technology and innovation — the stuff America’s private sector is the best at in the world.

It is high time to end the bureaucratic labyrinth of endless paperwork, red tape, one-hour hold times, massive waste and fraud, and start to drive the cost of running the federal government lower and get back to balancing the budget, and God forbid, running a surplus again to secure our future, our kids future, our grandkids future and generations thereafter. On this issue during this election season, I believe there is widespread consensus from the vast majority of Americans that something should be done to overhaul the federal government, and it should be done soon.

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