We may all get a “doge dividend” of $ 5,000 if the cost -saving committee of Elon Musk can deliver. But the national debt will probably be at least $ 4 trillion balloon, which would be an extra $ 12,000 in new debt for every American.
Welcome to the mysterious world of Trumpmath.
President Trump wants everyone to know that his so-called doge committee, led by Musk, is hard at work to engage the costs in the federal bureaucracy for the well-being of the American taxpayer. The goal is at least $ 500 billion in annual savings, which would be around 7% of all federal expenses.
Trump also wants to increase Gobs of new income through rates on import. He is so impressed by his own financial insight that he thinks a historic moment is approaching. “Now balance the budget ???” Trump posted on social media on 20 February. “Let’s try. A lot of money comes in from rates.”
Here is the scammer: Trump shines a spotlight on money that comes in while they do not pay attention to the hundreds that go out. On the positive side of the ledger there are doge and rates, which, in order to be honest, could generate some extra income and cost savings. But on the negative side, tax reductions that are probably multiples are larger. There is no chance that Trump will balance the federal budget, and it is almost certain that the national debt will only swell under Trump.
The efficiency effort of the Doge government can be a valuable exercise, but $ 500 billion in annual savings is an extremely ambitious goal. If you attach the entire federal workforce of 3 million people, you would only save around $ 270 billion while the United States would leave without a functional government. There are just not enough employees to dismiss, contracts to terminate or property to sell to get nearly $ 500 billion in savings. The real money is in advantages that go directly to voters, including social security, medicine, medicaid and veteran programs, plus defense, traditionally difficult to cut.
The Musk Commission claims that it has already found $ 55 billion in savings. That fails the snuff test, and budget experts say that the real amount of savings is probably a fraction of that. But the prospect of found money is already leading to fantasies about how to spend it.
Trump says he wants to return 20% of DOGE savings to taxpayers, a “doge dividend” that Americans compensates for what they have lost in government functionality. This is where the $ 5,000 figure comes from: Musk’s original doge -white was $ 2 trillion in annual savings, and 20% of that would be around $ 5,000 for each tax -paying household in America. It does not matter that Musk has reduced his saving goal from $ 2 trillion to a still incredible $ 500 billion. Twenty percent of $ 500 billion would only be $ 1,250, a strange Unround number that is not very compelling.
So $ 5,000. That’s the number.
What you do not hear from Trump’s advisers is the extra debt with which they will probably saddle taxpayers. Trump wants to expand all tax cuts that end at the end of 2025. That will add at least $ 4 trillion to the national debt in the next decade or $ 400 billion a year. Trump threw a whole series of other tax cuts, such as eliminating income tax on tip income, overtime and social security benefits – and republicans who control the congress are legislation to realize them. If the Congress spends all the proposed tax cuts of Trump, this can add more than $ 10 trillion to the national debt, or $ 1 trillion per year over the next 10 years.
It’s getting worse.
Trump is located in the middle of dismissing 6,000 employees on the Internal Revenue Service, or 6% of the total staff of the Tax Authorities. If Trump were serious about balancing the federal budget, the very first thing he would do is to drive the IRS. The task of the IRS is to collect the taxes that people owe legitimate. There is already a “tax gap” up to $ 688 billion. The tax gap is money that Americans owe legally to the government to taxes, but have not paid. Hardly that money is owed taxes by employees who earn most of their income from a salary; Most of the money is trying to hide the investor class through complex tax infections.
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The government will never collect every cent that owes tax cheats. But it could certainly collect more. In 2022, when Democrats dominated the congress, President Biden signed new financing for the IRS intended to update old computer systems, to hire more auditors and examiners and provide other means to avenge taxes supported by lawyers and accountants . Republicans have since tried to claw back that financing, as if there is something wrong with people who pay the taxes they owe. Because Republicans now check both houses of the congress, they can have the voices to defend the IRS again. Musk seems to get a lead by depopulating the desk.
Songs game: President Donald Trump and Elon Musk in the Oval Office. (Photo/Alex Brandon/Associated Press) ·Associated Press
Most Americans cannot keep up with all of this, which Trump probably counts on. So here is a cheat sheet in which it is all about where it all seems to go:
Doge: The goal is $ 500 billion in annual savings. It will probably be a miracle if it saves a fifth of that. An optimistic result would be $ 100 billion in annual savings.
Tariff income: The total federal income from rates for imports are around $ 80 billion a year. Trump could double that, but at some point the higher costs paid by American companies and consumers would affect the import, affect the tariff income and slow the entire economy. An optimistic figure for new income from the Trump rates can be an extra $ 100 billion.
Doge and new rates can therefore generate an extra $ 200 billion in annual federal income. But cuts in the IRS means fewer tax revenues that are collected due to weaker enforcement. It is conceivable that a destroyed IRS will abandon at least $ 200 billion, so that the profit of doge and rates will be neutralized.
Tax cuts: The congress can come up with a number of cuts that limit the damage to the national debt, but a minimal extra costs are probably $ 3 trillion for a decade, or $ 300 billion a year. The top range is at least $ 10 trillion of extra debts for a decade, or $ 1 trillion per year.
In the best possible scenario, the Trump tax reductions cost $ 300 billion per year, compensated with $ 200 billion in savings of doge and rates.
In a more likely scenario, tax reductions cost $ 500 billion a year and the Doge/Rate Savings only compensated two fifth of that.
It is also possible that many of the DOGE savings are rolled back by a lawsuit and the congress’s own efforts to block cuts in programs that they have made and approved. Rates can kick markets and cause Trump to withdraw. In the meantime, the congress could withstand a wider set of tax cuts, with $ 600 billion, $ 800 billion or even $ 1 trillion in the national debt every year.
So if your doge dividend arrives, perhaps save for the rainy day that will certainly come when someone has to take all those extra debts into account.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Extingy And X: @rickjnewman.
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