Importance Score: 72 / 100 🔴
Experts are raising concerns that Elon Musk’s efforts to cut waste, fraud, and abuse at the Department of Government Efficiency (DOGE) may ultimately cost taxpayers billions of dollars. These potential financial repercussions come as Musk plans to transition to a part-time role at DOGE in May, following shareholder inquiries about his focus on Tesla.
Potential Financial Repercussions of DOGE Cuts
While Donald Trump has repeatedly praised Musk for spearheading the effort to reduce agency expenditures and eliminate federal jobs, some analysts fear that Musk’s actions may have negatively impacted taxpayers.
Conflicting Claims of Savings
Musk has claimed to have saved $150 billion by reducing the federal workforce by approximately 12 percent. However, a nonprofit organization, the Partnership for Public Service, estimates that these firings could cost over $135 billion when accounting for diminished productivity, paid leave, and the rehiring of some employees.
- Max Stier, the chief executive of the Partnership for Public Service, argues that Musk is significantly overstating the savings and disregarding the substantial waste he is creating.
- Stier asserts that these costs will burden American taxpayers for years to come.
Projected Costs at the IRS
The Budget Lab at Yale University forecasts that the dismissal of 32,000 workers at the IRS, with 22,000 based on DOGE’s recommendations, will cost $8.5 billion in 2026 alone.
Legal Challenges and Administration Response
The Trump administration faces potential financial burdens from at least 30 lawsuits filed against it, implicating DOGE’s actions.
Administration Justification
A spokesperson for the Trump administration acknowledged the potential costs but argued that the “monumental and historic” cuts were necessary to prevent even greater taxpayer waste. Harrison Fields told The New York Times that inaction also carries a cost.
Fields stated that every cut at the IRS was intended to enhance government efficiency without burdening Americans or reducing critical resources or programs.
Musk’s Transition and Trump’s Perspective
Musk’s decision to reduce his involvement with DOGE has surprised many, particularly given his close advisory role to President Trump.
Trump’s Support for Musk
Trump commended Musk, acknowledging his contributions to the campaign and his work at DOGE, after Musk announced his plan to dedicate only “a day or two” per week to government service following a decline in Tesla profits.
Trump expressed concerns that Musk was “treated unfairly” and praised his accomplishments.
Impact on Tesla and Public Perception
Trump suggested that public criticism related to DOGE firings negatively impacted Tesla, prompting him to purchase a Tesla as a show of support.
He reiterated his desire to retain Musk’s services as long as he is willing to serve.
Musk’s Future Role and Tesla’s Performance
Trump indicated that Musk’s eventual return to Tesla would benefit the electric car company.
Tesla’s first-quarter profits plummeted by 71 percent, with earnings of $409 million compared to $1.4 billion in the previous year.
The company’s stock value has decreased by approximately 40 percent since January, coinciding with Musk’s appointment as head of DOGE and his increased visibility alongside Donald Trump.
Investor Concerns and Musk’s Response
Tesla’s first-quarter earnings call highlighted investor concerns about Musk’s divided attention.
Investor Demands
One investor urged Musk to end his involvement with DOGE and politics, prioritizing his time and effort on engineering at Tesla. Musk responded by stating that his time allocation to DOGE would decrease significantly starting in May.
Continued Involvement
Despite reducing his commitment, Musk intends to dedicate one to two days per week to DOGE while allocating more time to Tesla.
Impact on Tesla’s Brand
Musk acknowledged that his forays into politics have likely damaged his company’s brand, attributing it to changing political sentiments and the global economy.
Shift in Public Perception and Consumer Response
Tesla’s brand has experienced a negative shift, particularly among liberal consumers.
Changing Political Landscape
Musk’s alignment with President Trump and support for right-leaning candidates has alienated some progressive and centrist buyers.
- Angry Consumers have staged protests at Tesla dealerships.
- Tesla’s sales have declined.
Tesla Takedown’s Claim
Tesla Takedown, an advocacy group for free speech rights at dealership protests, claimed victory for the revenue and sales declines, asserting their grassroots pressure impacted Tesla’s bottom line.
Tesla’s Market Position
Despite the challenges, Tesla remains the top-selling EV brand in the U.S. and the most valuable automaker globally by market capitalization.