Business
DOGE Theory
One of the most intriguing developments following Donald Trump’s election victory has been the announcement of Elon Musk and Vivek Ramaswamy’s Department of Government Efficiency, or DOGE. The initiative, which hopes to cut up to $2 trillion from the federal budget, has generated notable excitement, momentum, and memes. The world’s richest man and a successful biotech entrepreneur, Ramaswamy, have revitalized what seemed to be a mostly dormant libertarianism, drawing on the inspiration of Milton Friedman and promising to slash the bureaucracy to the bone. But what are its prospects for real-world success?
Elon Musk is our era’s most gifted entrepreneur, having revolutionized several industries and run multiple major companies. But the private sector operates on radically different principles than the public sector, which has a way of stalling or disarming even the most determined efforts. I foresee three potential impediments to DOGE’s success.
First is the problem of authority. While President-elect Trump has dubbed the effort the “Department of Government Efficiency,” it is not a government department at all. Rather, Musk and Ramaswamy will remain in the private sector and preside over what is, in effect, a blue-ribbon committee providing recommendations to the president and to Congress about potential cuts. In practice, though, blue-ribbon committees are often where ideas go to die. Politicians who feel the need to “do something” about a given problem often establish such committees to create the perception of action, which masks their true desire or, at least, the eventual result: inaction.
DOGE’s challenge will be to translate its recommendations into policy. It is almost certain that an entrepreneur of Musk’s ambition will not be content with writing a report. His and Ramaswamy’s task, then, is to persuade the president and the director of the Office of Management and Budget to enact real (and politically risky) cuts, and, if possible, to persuade Congress to abolish entire departments, such as the Department of Education, in the face of left-wing backlash.
The second problem for Musk and Ramaswamy is public opinion. Libertarians and small-government conservatives have long promised to reduce the size of government; one reason that they have never done so is that federal programs and agencies are generally popular. All of the major federal departments, with the exception of the IRS, the Department of Education, and the Department of Justice, have net-positive favorability numbers. Congressional members, even conservative Republicans, fear that slashing these departments would expose them to savage criticism from the Left and backlash from voters. They know that Americans complain about the size of government in theory but oppose almost all spending cuts in practice—the key paradox that libertarians have been unable to resolve.
Musk and Ramaswamy have repeatedly appealed to the work of Argentinian president Javier Milei, who has dramatically reduced the number of departments and created flashy video clips of himself stripping down organizational charts and yelling, “Afuera!” But what is possible in Argentina, which has been mired in a decades-long economic crisis, may not be achievable in the United States, which is much more stable, and, consequently, may not have the appetite for such dramatic action.
Which brings us to the problem of politics. Sending a rocket into space requires mastery over physics, but cutting government departments requires mastery over a more formidable enemy: bureaucracy. As Musk and Ramaswamy will see, the relationship between would-be reformers and Congress is vastly different from that between a CEO and a board of directors. To succeed, Musk and Ramaswamy must persuade a group of politicians, each with their own interests, to assume a high level of risk.
DOGE’s first task—identifying the budget items to cut—is the easy part. The hard part will be actually cutting them. They will have to convince Congress, which, for nearly 100 years, has refused to reduce the size of government, even when that notion had bipartisan support, as it did during the presidency of Bill Clinton, who promised that “the era of big government is over.”
This does not mean that DOGE cannot succeed. Though there may not be an appetite for a $2 trillion reduction in government spending, there is a hunger for targeted cuts that would strip the federal government of hostile ideologies that have made our institutions dysfunctional and our national life worse. For example, slashing grant funding for critical race theory would likely win support from voters; cutting the budget for USDA meat inspectors would not, and, given opportunity costs, would probably prove unproductive as well.
Perhaps the name of this committee—the Department of Government Efficiency—is also slightly off the mark. The problem is not only about efficiency, which suggests quantity, but about orientation, which implies quality. The federal government has long been captured by ideologies that misdirect its efforts. Simply making the bureaucracy more efficient will not solve that problem. DOGE must first determine what federal spending is worthwhile; from there, it can focus on creating “efficiencies.”
I hope that Musk and Ramaswamy can dispel my pessimism. Political realities have stifled countless reform efforts before now, and DOGE is an enterprise that would be difficult, if not impossible, under normal circumstances. But these are two remarkably talented men; if anyone is capable of shattering the mold, they can.
Please share your ideas, dissents, and thoughts in the comments. In the next newsletter, we will feature the best material in a“comment of the week” section. In the meantime, have a wonderful Thanksgiving.
Business
Trump Tells Supreme Court He Wants To Resolve Tik-Tok Controversy
From the Daily Caller News Foundation
By Hailey Gomez
President-elect Donald Trump filed a brief Friday with the U.S. Supreme Court, asking the justices to block a law requiring that the social media platform TikTok either be sold or shut down by Jan. 19.
In April, President Joe Biden signed legislation allowing the ban of the Chinese-owned social media platform unless it is sold to a non-Chinese company within the year. Despite the company’s attempts to challenge the legislation as the shutdown date approaches, a panel of three judges on the U.S. Court of Appeals for the D.C. Circuit ruled unanimously on Dec. 6 that the ban would be upheld, citing TikTok as a potential national security risk due to the Chinese government’s involvement with the app.
In his new filing, Trump argued against the ban, seeking to resolve the issue “through political means once he takes office.”
“President Trump alone possesses the consummate deal-making expertise, the electoral mandate and the political will to negotiate a resolution to save the platform while addressing the national security concerns expressed by the government — concerns which President Trump himself has acknowledged,” the brief said.
The Supreme Court on Dec. 18 agreed to hear TikTok’s challenge against the ban, with oral arguments set to begin Jan. 10. In its emergency application to the high court, the social media platform argued that the Protecting Americans from Foreign Adversary Controlled Applications Act, which is the basis for the ban, will not only “shutter” the U.S.’s “most popular speech platform the day before a presidential inauguration,” but will also “silence the speech of Applicants and the many Americans who use the platform to communicate about politics, commerce, arts, and other matters of public concern.”
Despite attempts to ban the app through executive orders, Trump publicly opposed legislation targeting TikTok, stating that the move to ban the social media platform could potentially benefit Meta CEO Mark Zuckerberg’s Facebook.
“If you get rid of TikTok, Facebook and Zuckerschmuck will double their business. I don’t want Facebook, who cheated in the last Election, doing better. They are a true Enemy of the People!” Trump posted to Truth Social in March.
In addition to his request to handle the issue once in office on Jan. 20, the brief noted Trump’s large following on TikTok, arguing that it allows him to “actively” communicate with supporters.
“President Trump is one of the most powerful, prolific and influential users of social media in history,” the brief said. “Consistent with his commanding presence in this area, President Trump currently has 14.7 million followers on TikTok with whom he actively communicates, allowing him to evaluate TikTok’s importance as a unique medium for freedom of expression, including core political speech.”
TikTok additionally filed a brief Friday to the Supreme Court claiming the law being used to aid the ban was a violation of the First Amendment.
“The government has banned an extraordinary amount of speech; demands deference to unsubstantiated predictions a future risk will materialize; and gets facts wrong when it bothers to provide them,” the brief said.
“Congress’s unprecedented attempt to single out petitioners and bar them from operating one of the nation’s most significant speech venues is profoundly unconstitutional,” the brief continued.
Alberta
Alberta government must do more to avoid red ink
From the Fraser Institute
By Tegan Hill
As Albertans look toward a new year, it’s worth reviewing the state of provincial finances. When delivering news last month of a projected $4.6 billion budget surplus for fiscal year 2024/25, the Smith government simultaneously warned Albertans that a budget deficit could be looming. Confused? A $4.6 billion budget surplus sounds like good news—but not when its on the back of historically high (and incredibly volatile) resource revenue.
In just the last 10 years, resource revenue, which includes oil and gas royalties, has ranged from a low of $3.4 billion in 2015/16 (inflation-adjusted) to a high of $26.1 billion in 2022/23. Inflation-adjusted resource revenue is projected to be relatively high in historical terms this fiscal year at $19.8 billion.
Resource revenue volatility is not in and of itself a problem. The problem is that provincial governments tend to increase spending when resource revenue is high, but do not similarly reduce spending when resource revenue declines.
Overall, in Alberta, a $1 increase in inflation-adjusted per-person resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year, but a decline in resource revenue is not similarly associated with a reduction in program spending. Over time, this pattern has contributed to historically high levels of government spending that exceed ongoing stable levels of government revenue.
And while the Smith government has shown some restraint, spending levels remain significantly higher than reliable ongoing levels of government revenue. Put simply, unpredictable resource revenue continues to help fund Alberta’s spending—and when resource revenues inevitably fall, Alberta is at high risk of plummeting into a deficit.
Indeed, Finance Minister Nate Horner continues to emphasize that we are “living in extremely volatile times” and warning that if oil prices fall below $70.00 per barrel a budget deficit is “very likely.” According to recent forecasts, the price of oil may hit $66.00 per barrel in 2025.
To avoid this fate, the Alberta government must do more to rein in spending. Fortunately, there’s plenty of options.
For example, the government spends billions in subsidies (a.k.a. corporate welfare) to select industries and businesses every year. A significant body of research shows these subsidies fail to generate widespread economic benefits. Eliminating this corporate welfare, which would generate significant savings in the budget, is a good place to start.
If the Smith government fails to rein in spending, and Alberta incurs a budget deficit, it will only mean more government debt on the backs of Albertans. And with Albertans already paying approximately $650 each in provincial government debt interest each year, that’s something Albertans simply can’t afford.
With a new year set to begin, the Smith government continues to warn of a budget deficit. But rather than simply prepare Albertans for more debt accumulation—financed by their tax dollars—the government should do more to avoid red ink. That means cutting wasteful government spending.
Tegan Hill
Director, Alberta Policy, Fraser Institute
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