Musk's "DOGE Plan": A Double-Edged Sword for the US Economy
Elon Musk's "DOGE Plan" is impacting the US economic landscape with thunder. The plan aims to drastically cut federal spending, with the goal of saving $1 billion a day from now to $4 billion a day in 2026, in order to curb the crazy growth of US debt.
Since 2020, US debt has surged by $12 trillion like a runaway rocket. Musk tried to solve this problem through a series of radical measures, and the establishment of DOGE (Department of Government Efficiency) was a key step. Just two weeks after its establishment, DOGE claimed that it could cut 20% of the annual $1.8 trillion deficit. Its measures include closing two-thirds of idle federal office space, which costs up to $76 billion a year to maintain; using blockchain technology to track government spending and reduce fraud by about $521 billion. Musk estimates that about 50% of federal spending is fraudulent spending, amounting to $50 billion a year.
But this plan is a double-edged sword. On the positive side, if the plan is successfully implemented, the trend of surging US debt will be effectively controlled, and the deficit is expected to be significantly reduced from $1.87 trillion to $410 billion. However, the negative impact cannot be ignored either. Large-scale spending cuts may cause the US GDP to shrink by 9.4%, far exceeding the 4% decline during the 2008 recession. Once $2 billion is cut every day, the inflation rate may decline, but the GDP will face a crisis of collapse, millions of jobs will disappear, and industries that rely on federal contracts will be paralyzed. The worst result is that the United States may usher in the worst economic recession since the 1930s.
The growth rate of US debt is staggering. The debt that has increased in just five years took 221 years to accumulate. Although Musk's "DOGE Plan" has the ambition to turn the tide, it is too radical and may lead to catastrophic consequences. The US economy is now at a crossroads, and it is really worrying where the "DOGE Plan" will lead it.