On Sunday, President Trump posted the following to his Truth Social account:
ELON IS DOING A GREAT JOB, BUT I WOULD LIKE TO SEE HIM GET MORE AGGRESSIVE. REMEMBER, WE HAVE A COUNTRY TO SAVE, BUT ULTIMATELY, TO MAKE GREATER THAN EVER BEFORE. MAGA!
For any supporters concerned Trump’s resolve to cut federal spending might moderate that would seem to allay those concerns for the moment. And despite all the wailing coming from beneficiaries of federal largesse, the cuts made so far don’t even amount to a haircut for the federal leviathan.
To put them in perspective, the cuts proposed so far by the administration, based upon recommendations by Elon Musk’s Department of Government Efficiency (DOGE), are all within a the category of the federal budget called “Discretionary Spending.” Discretionary spending for fiscal year 2025 is projected to be $1.848 trillion. Overall spending is projected to be $7.028 trillion.
So, DOGE is only looking to make cuts to about one quarter of total spending. About half of that one quarter is Defense spending at $859 billion. Trump has said he wants to cut military spending, but that appears to be contingent upon China and Russia agreeing to cut theirs in a future, theoretical deal.
Meanwhile, the Senate just passed a spending bill that increases defense spending by $150 billion.
That leaves about one eighth of the budget affected by DOGE cuts. And DOGE certainly isn’t even trying to cut all of that one eighth.
Still, what cuts are made have the potential to punch far above their weight. Closing down USAID, for example, even if a lot of its funds are eventually spent, constitutes a major policy change given the revelations about what the agency was doing with those funds. Opponents of everything from covert regime change operations to censoring domestic political speech may be quite pleased with the difference firing just a handful of federal employees might make.
There is also the potential for outsized economic pain from cutting a relatively small percentage of the federal budget. Given the Federal Reserve’s $5 trillion tsunami of new money created since 2020, the U.S. economy is in an “everything bubble” and even marginal cuts to federal spending might be the pin that pops it.
Bubbles represent capital deployed for nonproductive ends and need to be popped. But no one is happy when it happens. Typically, bubbles blow up under one president and pop under the next. Guess who gets the blame?
Read the rest on Tom’s Substack…
Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?
