Macro Nugget: Good luck, Elon & Vivek
The DOGE bros think cutting government spending will be easy, but they might need to think again...
Even before officially stepping into their roles as DOGE-tsars, Elon Musk and Vivek Ramaswamy have made it clear that government spending will be cut, and they claim the process will be easy since there are so many low-hanging fruits. However, when examining the actual spending of the US government, cutting excess fat appears less straightforward. Non-defense spending is below 5% of nominal GDP, leaving entitlements and mandatory spending as the primary targets for bringing down deficits. The question then arises: will Trump allow his tech allies to reduce benefits for his own voters? If not, the Trump administration’s goal of achieving a 3% deficit as a percentage of nominal GDP will become even more difficult to attain.
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