Elon Musk's D.O.G.E Could Collapse the US Economy

Elon Musk, billionaire, CEO of Tesla, is co-leading the newly formed Department of Government Efficiency (DOGE) with Vivek Ramaswamy under the upcoming administration of 'crypto czar' Donald Trump. The goal is to cut $2 trillion in federal spending. This figure is close to the expected deficit of the US government in 2024. But the problem here is that this project could not only fail but also potentially destroy the entire US economy. Dream of the Future DOGE is not even a real part of the government. It's an advisory group. It can't do anything without the approval of the Congress or Trump. But Elon's name carries weight. His involvement alone has turned this into more than just a theoretical exercise. These plans are very aggressive: mass layoffs, dissolution of agencies, and reduction of regulations. While Trump and his allies are cheering, skeptics are sounding the alarm about the potential consequences that may arise. Elon and Vivek are eyeing a potential 75% cut in government workforce. Three-quarters of federal employees could be laid off if DOGE's vision becomes a reality. But how realistic is this? Experts say it's not very realistic. Here's why: about 75% of the federal budget is mandatory spending. Programs like Social Security and Medicare are untouchable without causing a fierce political backlash. That only leaves discretionary spending—about $1.7 trillion—for the cuts. Half of that is reserved for defense, which Trump and his allies are unlikely to touch. What's left is just a drop in the bucket compared to the ambitious goal of $2 trillion. Even the savings from cutting inefficiency (around 150-200 billion dollars) are just a drop in the bucket compared to the deficit. This calculation is unreasonable. Government Shutdown Elon has demonstrated his political power, and that has really made Trump a little worried. Just a few weeks ago, this eccentric billionaire broke a bipartisan deal to avoid a government shutdown. His enthusiastic social media posts rallied Republican lawmakers to block the agreement. He calls the allocations excessive, labeling them as wasteful spending. This increases concerns about a government shutdown as the holiday season approaches. If federal activities stall, the economic impact will be dire. The closure in 2018-2019 caused $11 billion in economic damage. Experts warn that another closure could be even worse, especially with the prospect of inflation and interest rates in 2025 creating a fragile economic environment. And Elon's influence isn't even official yet. Imagine what would happen when Trump takes office, and DOGE starts pushing its proposals even more strongly. The risk of prolonged deadlock in Washington is increasing, and the economy will suffer heavily. A Debt Crisis is Emerging With all the talk about effectiveness, DOGE can actually make the national debt worse. The United States is already deeply in debt. The national debt has exceeded $36 trillion, and the Congressional Budget Office (CBO) predicts that the debt will reach 166% of GDP by 2054. DOGE's proposals, if they do not result in real savings, could accelerate this trend. This is how it could unfold. First, the goal of saving 2 trillion DOGE dollars seems unattainable. If they fail to meet the target, the government will have no choice but to continue borrowing. That means paying higher interest on the debt, which already consumes 880 billion dollars a year—13% of the budget. On Monday, Trump called on Congress to eliminate the debt ceiling. While this may avoid a short-term debt crisis, it could lead to uncontrolled borrowing in the long run. Then comes the card of removing tax. If Elon's idea includes tax reduction without corresponding spending cuts, the deficit could explode. Trump's first term added nearly 8 trillion dollars to the debt, partly due to tax cuts. If DOGE follows a similar strategy, the debt issue will spiral out of control. The Market Is on the Verge As we reported earlier, the financial market is not immune to DOGE's big plans. Investors are watching with concern, and for good reason. Analysts believe that Elon's cutbacks could create a "shock of deflation". Bond yields have risen, making borrowing more expensive for both businesses and governments. Interest rates have surged from 3.6% in September to 4.46% currently. This has created a liquidity crisis. Companies are struggling to access cheap capital, leading to a slowdown in economic growth. The stock market may be affected as investors shift towards bonds, considered safer during uncertain times. Of course, this will also affect the cryptocurrency market, especially Bitcoin, which still has a strong correlation with US stocks, and Dogecoin (DOGE) shares the same name with this department. In addition, there is also concern about the reduction of consumer spending. If DOGE cuts welfare programs such as Social Security, millions of Americans could lose disposable income. This will affect the economy, causing damage to everything from retail sales to the housing market. DYOR! #Write2Win #Write&Earn $DOGE {spot}(DOGEUSDT)