Don't Write Off DOGE

: Veronique De Rugy on Dec 12, 2024

Elon Musk and Vivek Ramaswamy want to cut $2 trillion and make the government more efficient. It's a high priority since the United States is barreling toward a fiscal crisis. Yet despite the mounting evidence of unsustainable spending and deficits, lots of people seem to believe that the goals of the Department of Government Efficiency, or DOGE, are dead on arrival. Why? Because these doubters believe that Social Security, Medicare and Medicaid are completely off-limits for cuts.

This is nonsense.

Spending on these three programs represents roughly half of 2025's $7 trillion budget, and more if you include Veterans Affairs spending. It's true that Musk and Ramaswamy will need Congress to help make major changes. It's also true that cutting as much as they intend to without touching Social Security, Medicare and Medicaid would spark serious political drama. And yes, cutting Medicare and Social Security benefits isn't popular -- so much so that politicians would rather ignore the problem.

Yet this does not take entitlements off the table for cuts and review. Mindlessly ignoring their unsustainability just because they are popular is shortsighted and actively irresponsible. It perpetuates a political culture in which difficult choices are avoided, fiscal irresponsibility accelerates, and long-term economic stability is sacrificed for short-term political expediency.

Besides, doing nothing will lead to Medicare benefits being cut by 11% and Social Security Benefits being cut by 23% in less than a decade, when their respective trust funds expire. Politicians can swear on the Bible that they won't touch these programs; it's only true if they let the scheduled cuts take place.

So let me tell you why Musk and Ramaswamy's plan isn't DOA and how entitlement spending could be on the table without too much pain.

First, bury the myth that the so-called entitlement programs -- Medicare and Social Security in particular -- are somehow sacrosanct or immune to legislative action. The executive branch has limited power to make changes, but Congress has all the powers needed to reform, adjust or even close these programs if it chooses. It's simply choosing not to tackle the moderate reforms we need.

That could change. The DOGE guys have the biggest microphone any fiscal reformer has ever had. They've managed to put fiscal issues, along with the insanity of government inefficiency, on display for every American to see. This should motivate Congress to get off the couch and start taking our problems seriously.

Then there is the fact that before Congress thinks about cutting entitlement benefits, there are plenty of other, low-hanging fruit steps to be taken that would save a lot of cash. For instance, as it is now, Medicare pays different rates for the same service based on where it is provided (hospital outpatient department, ambulatory surgical center or private physician office). Imposing site neutrality would save $100 billion over 10 years.

Medicaid and Medicare are the source of at least $100 billion a year in fraud and over $100 billion annually in improper payments. Obviously, ending fraud should be a priority. And according to the Government Accountability Office, 74% of improper payments are simple overpayments. However, the government is making little effort to recover the funds.

In fact, to the extent that any effort is expended, it's by health care providers (mostly hospitals who are large beneficiaries of Medicare's fee-for-service improper payments) and Congress, who try to slow down the rate of improper payment recovery by audit contractors. Why we should tolerate such a scandal, I don't know.

Congress has also capped the amount that taxpayers need to repay when receiving improper payments through the Obamacare premium tax credit. The result is a massive underreporting of income by taxpayers to get bigger credits, as well as other fraud schemes. Cato Institute scholars calculated that "removing repayment limits would save taxpayers between $44 billion and over $95 billion over ten years."

Social Security suffers from unrecovered improper payments too. According to the program, "at the end of FY 2023, SSA had an uncollected overpayment balance of $23 billion." That's not chump change.

There could be many more large, attainable savings from Social Security and Medicare that wouldn't affect benefits if, and only if, Congress decides to pay attention.

The bottom line is that there is no reason, political or otherwise, to assert that Musk and Ramaswamy's plan is impossible to achieve. If they fail, it will be because Congress refused to join the cause. And there is no reason whatsoever to excuse entitlement programs from their scrutiny.

Veronique de Rugy is the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University. To find out more about Veronique de Rugy and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

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