Elon Musk gave Tesla stockholders a broad sense of relief on Tuesday when he announced that he would relinquish his daily role as head of the Department of Government Efficiency, or “DOGE,” the budget-cutting organization he assisted in founding under President Donald Trump.
The “major work” of creating the department was finished, Musk said investors during yesterday’s Tesla (TSLA) earnings call. “Starting probably next month, May, my time allocation to ‘DOGE’ will drop significantly,” Musk said.
Although Tesla’s revenue and earnings-per-share numbers on Tuesday fell short of Wall Street’s expectations, the news of Musk’s return to the firm was welcomed by shareholders. Since Musk began spending a significant amount of his time at the self-styled department, Tesla’s stock has generally suffered.
However, the White House has since informed MarketWatch that it still anticipates Musk would devote a substantial amount of time to advancing Trump’s policies.
“Elon didn’t say he was stepping away from ‘DOGE’ completely,” a White House insider told MarketWatch on Wednesday. “He will continue to work here and devote a significant portion of his time to making sure the president succeeds. Elon and ‘DOGE’ are therefore not going anywhere.”
The announcement comes after “DOGE” failed to live up to its high expectations. At first, Musk pledged that the group would reduce the government budget by $1 trillion a year. However, he drastically reduced that estimate to $150 billion for fiscal 2026, which starts in October, earlier this month during a White House cabinet meeting.
How Musk and the company are doing in terms of saving money is still out in the air. According to reporters and watchdogs, “DOGE” has made it very difficult to verify its self-reported “wall of receipts,” which lists all of its savings claims.
Because the company eliminated government identifying numbers from the website’s source code that would have allowed other parties to identify the grant and contract cancellations in question, it is challenging to validate the assertions made on the website.
The website also contains statements that some people believe to be untrue. A $1.9 trillion IT modernization contract was canceled, making it one of the biggest cuts claimed by the so-called department. However, the contractor informed the New York Times in February that President Joe Biden had really canceled the deal in November.
Although the IRS authorized spending $1.9 billion over seven years, the Federal Procurement Data System, a database of federal procurement initiatives, shows that no funds were actually spent on this program.
The White House official told MarketWatch that the Trump administration’s decision to cancel the contract completely saved taxpayers $1.9 billion, and that the Biden administration only delayed it because of a disagreement amongst possible recipients.
Proponents of the efficiency initiative claim that “DOGE” has exposed unnecessary government spending, which will require time and effort to stop, and that the savings will mount up over time.
BourseWatch spoke with Tom Schatz, head of the watchdog group Citizens Against Government Waste, who said that Elon “set the process in motion and moved the agencies to act on a lot of ideas that have been around for many years, like consolidating agencies to create more efficiencies.”
He cited the restructure of the State Department announced by Secretary of State Marco Rubio on Tuesday, according to which the department is “bloated, bureaucratic and unable to perform its essential diplomatic mission in this new era of great power competition.”
The plan calls for 700 job layoffs, a 15% staffing decrease over several years, and an 18% drop in the department’s overall number of bureaus and offices.
Proponents also point to the Musk-led organization’s push to terminate federal funding and low-value contracts, which they say has saved tens of billions of dollars. “DOGE” claims to have terminated over 10,000 grants and 8,000 contracts, many of which were connected to foreign aid or diversity, equity, and inclusion initiatives.
Through a package known as a rescissions package, the administration will seek to codify some of these cuts into law, aiming to reduce spending on public media, foreign aid, and other programs by $9.3 billion.
The 1974 Impoundment Control Act established the rescissions process, which allows a president to suggest budget cuts. They must then be approved by Congress within 45 days in a filibuster-proof procedure that now requires only Republican votes. Punchbowl News says that a vote on the package is anticipated to take place early in May.
According to Damien Brady, vice president of research at the National Taxpayers Union, Musk’s primary contribution to the initiative may be the press he can generate around a subject that few Americans find very exciting: the federal budget.
They’ve done a great job of drawing the public’s attention to some persistent concerns, such as redundant offices across agencies and antiquated IT systems at important agencies like the Treasury Department, even though “some of their claims have been a little bit exaggerated.”
According to Brady, he is worried that mass layoffs of government employees at the IRS and inspector-general’s offices may end up costing taxpayers more than they save if vital oversight and revenue-collecting duties are compromised.
“There’s plenty to be concerned about when it comes to federal spending,” he stated, “but the government has to be able to recruit and retain talented employees.”
