Case Study: Three Scenarios for Musk’s $2 Trillion DOGE Gambit

If you follow the news, you’ve probably heard much about government spending lately: from France’s budget deficit topping 6% of GDP to Javier Milei cutting 30% of Argentina’s budget and reaching a surplus for the first time in years.

Yet, Elon Musk’s claim made during the U.S. election campaign of a $2 trillion government spending cut is the most impressive budget number circulating.

Now that Trump has been elected, he wasted no time appointing Elon Musk and Vivek Ramaswamy to co-lead the DOGE (Department of Government Efficiency ), which is mandated to reduce government spending dramatically. 

This initiative has been met with skepticism, given the enormity of the task, the entrenched nature of government bureaucracy, and the aggressive claims already made.

I’m no government expert and won’t get into an ideological or partisan battle here. Still, I know a few things about leading a business turnaround.

No matter how aggressive you want to be, nothing beats building “what if” scenarios to prepare best and anticipate any headwinds you might face as you turn things around.

These “what if” scenarios can help any business become more resilient, adaptable, and prepared for an uncertain future.

So, let’s put on our DOGE shoes, project ourselves into the not-so-distant future—say, the Summer of 2026—and see what scenarios we can consider. 

I’ve developed three of them. 

Of course, there are many other possible futures, but that’s my stake in the ground to assess better, reasonably likely outcomes, as well as their causes and consequences. Also, don’t get too hung up on the numbers. They’re just here to illustrate my points:

Scenario #1 – A resounding Success Reshaping Public Governance

Economists and policy analysts worldwide are puzzled by the DOGE’s unprecedented success in slashing $2 trillion from the original $6.8 trillion U.S. federal spending. The deficit was eliminated for the first time in decades, projections show a surplus by next year, and average processing times for federal services (e.g., passport applications and tax returns) decreased by 75%.

Despite initial concerns, GDP growth accelerated to 4.5% annually, driven by increased business confidence and reduced regulatory burden.

While 1.2 million federal jobs disappeared, the private sector added 3.5 million jobs, mainly in the technology and green energy sectors, boosted by the streamlined regulatory environment.

It wasn’t without challenges, as the DOGE faced significant opposition from Congress and various interest groups. However, a massive public communication campaign helped demonstrate the benefits of each reform to the American people.

The initial phases of the restructuring led to a brief economic downturn, which was mitigated by implementing a targeted retraining program for displaced federal workers. The DOGE also worked closely with a bipartisan congressional task force to draft and pass the necessary legislation.

Here are the top five strategies that led to success:

First Principles Approach

The DOGE began by reducing each government function to its most fundamental purpose, eliminating numerous redundant agencies and programs. For example, 18 different agencies dealing with food safety were consolidated into a single, streamlined entity.

Technology Integration

The DOGE implemented advanced AI systems to automate routine tasks across all federal agencies. It resulted in a 40% reduction in administrative staff and a 60% increase in processing speeds for various government services.

Zero-Based Budgeting

Every department was required to justify its budget from zero each fiscal year. This approach uncovered billions in unnecessary spending and forced agencies to prioritize essential services.

Public-Private Partnerships

Musk and Ramaswamy leveraged their private sector experience to create innovative partnerships. For instance, SpaceX took over certain NASA operations, reducing costs by 30% while increasing mission frequency.

Regulatory Overhaul

The DOGE led a massive deregulation effort, eliminating over 50,000 pages of federal regulations. This reduced government compliance costs and stimulated economic growth.

Scenario #2 – A Disastrous Government Restructuring Effort

Policy analysts and economists are examining the fallout from the DOGE’s failed attempt to slash $2 trillion from U.S. federal spending. Initially hailed as bold, Musk’s and Ramaswamy’s appointment soon led to missteps and unforeseen complications.

Instead of stimulating growth, the drastic cuts and disruptions led to a recession, with GDP contracting by 3% annually. The elimination of 2 million federal jobs was not offset by private sector growth, leading to a high unemployment rate.

Contrary to expectations, the federal deficit increased due to plummeting tax revenues and increased spending on unemployment benefits. Many essential government services became unreliable or non-functional, from air traffic control to food inspections.

The disarray in federal agencies also led to several security breaches and a decline in America’s global standing. As a result, a flood of lawsuits against the federal government overwhelmed the justice system.

Career civil servants and unions, whose cooperation was crucial for successful implementation, all felt alienated. Dismissing experienced government officials also led to a critical loss of institutional memory and expertise.

Musk’s and Ramaswamy’s private sector experience did not translate well to government operations’ intricate, legally bound world. Their libertarian and confrontational approach to Congress led to legislative gridlock, preventing necessary legal changes to support his proposed reforms.

Finally, the human cost of the reforms was severely underestimated, leading to widespread public backlash.

Here are the top five strategies that led to this disaster:

Radical Agency Consolidation

The DOGE attempted to merge multiple federal agencies based on Musk’s first-principles approach. This led to chaos as incompatible systems and cultures clashed, resulting in critical service disruptions in areas like food safety and environmental protection.

Aggressive AI Integration

The rapid implementation of AI systems across federal agencies, without adequate testing or safeguards, led to massive data breaches and system failures. Social Security payments were delayed for months, causing widespread hardship among retirees.

Zero-Based Budgeting

While intended to eliminate waste, this approach gutted essential but less visible government functions. Weather forecasting capabilities were severely compromised, leading to inadequate warnings for several natural disasters.

Sweeping Deregulation

Eliminating thousands of regulations without proper impact assessment led to environmental disasters, including a major oil spill and several industrial accidents.

Privatization Push

The attempt to privatize several government functions, including parts of Medicare, resulted in skyrocketing healthcare costs for seniors and reduced access to essential services.

Scenario #3 – A Mixed Bag

As we reach the summer of 2026, Elon Musk’s ambitious effort to cut $2 trillion from U.S. federal spending through the DOGE has yielded mixed results, illustrating both the potential and pitfalls of applying private sector strategies to public governance.

While the target was not met, significant cuts were made, reducing annual spending by approximately $1 trillion. The federal deficit was reduced but not eliminated, as revenue shortfalls persisted due to slower-than-expected economic recovery.

Tempered by initial disruptions in government services, the economy only experienced modest growth, with GDP increasing by 2% annually.

Public opinion was divided; while some praised the efficiency gains, others criticized the social impact of reduced government services. Yet, using social media for transparency helped maintain some public support by allowing citizens to voice concerns directly.

Here’s how the top strategies played out:

Agency Consolidation

The DOGE successfully reduced the number of federal agencies from over 400 to approximately 150, eliminating redundancies and streamlining operations. However, the rapid consolidation led to initial service disruptions as agencies struggled to integrate systems and personnel.

Technology Integration

Advanced AI and blockchain technologies were implemented to improve transparency and efficiency in government transactions, reduce fraud, and speed up processes. However, the implementation was not without issues; technical glitches caused temporary delays in some services, such as tax processing.

Zero-Based Budgeting

This approach uncovered billions in unnecessary spending, forcing departments to prioritize essential services. Yet, some critical but less visible functions were initially underfunded, which led to gaps in areas like environmental monitoring.

Public-Private Partnerships

Collaborations with private companies led to cost savings in space exploration and renewable energy. However, concerns about conflicts of interest quickly arose, particularly given Musk’s business ties with companies that benefitted from these partnerships.

Regulatory Overhaul

Deregulation efforts reduced compliance costs for businesses, contributing to economic growth. Still, some led to environmental concerns and public backlash, requiring careful reevaluation.