March 1, 2025
What DOGE can learn from the states
The Department of Government efficiency (DOGE) faces many challenges in downsizing the federal government. The cuts in federal government programs proposed by DOGE have made headlines, but this approach to fiscal responsibility suffers from some blind spots. The federal government could learn much from the states in restoring sustainable fiscal policies.
One flaw is that DOGE will not address reforms in Social Security, Medicare, and other health care programs. These entitlement programs account for almost half of the federal budget and are growing at an unsustainable rate. Over the next decade, the trust funds for Social Security and Medicare will be exhausted. The most important lesson from the states is that budget constraints must apply to all programs, including entitlements. In recent decades, state expenditures for public employee pensions and health care programs were growing at an unsustainable rate. Most states responded to this challenge by reforming these programs to ensure their sustainability in the long term.
There is some ambiguity regarding the savings generated from DOGE reforms. Perhaps the worst idea is to simply return these savings to the budget in the following year; the states that have done this have had little success in constraining spending. Some have suggested that the savings generated by DOGE be offset by tax rebates, and some states have done this. However, the federal government now faces a debt crisis. The federal debt is now at $36 trillion and is projected to grow to more than double our national income by mid-century. There is almost universal agreement among economists that this growth in federal debt is not sustainable. The highest priority should be in stabilizing and reducing federal debt in coming decades, which means that any savings generated by DOGE, or from other reforms, should be earmarked for debt reduction.
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