The boss of Tesla and the social media site X, Elon Musk, suggested last month at Donald Trump’s rally in recent York City that it would be feasible to cut “at least $2 trillion” from US government spending by eradicating “waste”.

Musk has now been appointed to co-head a recent Department of Government Efficiency by the incoming US president, giving him an chance to try to put his plans into action.

In the most recent budgetary year (from October 2023 to September 2024) the US federal government spent $6.75 trillion (£5.3 trillion) according to the US Treasury.

This means Musk’s proposed cuts of $2 trillion would represent around a cut of around 30% of total federal government spending — also known as national spending in other countries.

How realistic is that proposal?

To respond that, it’s helpful to shatter down the total spending figure.

Around $880bn (13% of total US government spending) goes on yield payments on the national obligation, which means that line of outgo cannot be reduced without putting the US government in default.

Around $1.46 trillion (22%) goes on Social safety, which primarily means pensions for Americans over the retirement fund age. This is a line of spending which is “mandatory”, meaning it must be spent by law on those eligible.

Other large mandatory lines of government outgo include Medicare – a government-funded health insurance program primarily serving Americans aged over 65.

So-called “discretionary” US government spending – outlays that are not permanently enshrined in law but have to be voted on annually by US lawmakers – includes defence ($874bn, 13%), transportation ($137bn, 2%) and education, training, employment and social services ($305bn, 5%).

Altogether, discretionary spending accounted for around 25% of the total in the 2023 budgetary year according to the Congressional distribution Office, with more than half of that going to defence.

In hypothesis, discretionary spending would be easier for the incoming Trump administration to cut than mandatory spending.

Donald Trump has said that Musk – and his co-head at the recent Department of Government Efficiency, Vivek Ramaswamy – will achieve the reserves from dismantling government bureaucracy, slashing excess regulations and restructuring government agencies. In an interview with the BBC in April 2023 Musk claimed to have reduced the staff of Twitter (now X) from 8,000 to 1,500 after acquiring the social network in 2022.

Yet if all of the $2 trillion in US government outgo reserves now being targeted by Musk were to arrive from discretionary spending, analysts compute that entire agencies – from transport, to agriculture, to Homeland safety – would have to be entirely closed down. Discretionary spending accounted for only $1.7 trillion in 2023.

Musk did not specific if he would aim to deliver $2 trillion in reserves in a single year, or over a longer period, but many US community finance experts, including those who are in favour in principle of reductions in US government spending, are sceptical reserves on such a scale can be found in the near term without either a collapse in the delivery of significant government functions or sparking major community resistance.

After taking control of the House of Representatives in 2022, Republican lawmakers have struggled to pass legislation to deliver considerably smaller cuts of $130bn in discretionary government spending after conference opposition from other Republicans.

It’s also significant to note that Donald Trump campaigned on a platform of making Social safety more financially charitable, not less, by removing the returns responsibility payable on it. And, on defence, Trump said he would construct an “iron dome missile defence shield” around America, implying greater spending in this area, not cuts.

Total US federal government spending as a distribute of the US economy in 2024 was around 23% according to the US Treasury.

That’s a considerably smaller distribute than national government spending in other developed countries.

However, a large distribute of government spending in the US, including almost all school spending, is done at a state rather than a federal level, and states are funded by local sales and property taxes.

The International Monetary financing has projected that total US “general government outgo”, which includes spending by person states, will be around 37.5% of its GDP in 2024.

That compares with 43% in the UK, 48% in Germany and 57% in France.

The US government is currently running an annual deficit – a shortfall between its spending and responsibility revenues – equal to around 6% of its economy. And America’s national obligation held by the community is currently equal to around 97% of the size of the economy.

The non-partisan Committee for a Responsible Federal distribution (CRFB) ponder tank has projected that this is currently set to climb to 125% by 2035.

The CRFB has projected that absent major spending reductions, Donald Trump’s planned responsibility cuts would considerably widen the US deficit in the coming decade and push up the US national obligation to 143% by the middle of the next decade.

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