Investing.com -- The announcement of the Department of Government Efficiency (DOGE), spearheaded by Elon Musk and Vivek Ramaswamy, has drawn public attention and speculation about its potential to transform federal operations.
However, according to analysts at Barclays (LON:BARC), the scope of DOGE’s influence is likely far more limited than its proponents suggest.
Contrary to its title, DOGE is not a formal government department. Its function is advisory, with no legal or executive powers to enforce its recommendations.
Without congressional approval or direct legislative support, its capacity is constrained to making suggestions rather than implementing change.
DOGE’s potential actions include highlighting areas of federal inefficiency, such as waste, fraud, and abuse, and proposing improvements to government operations.
These recommendations could target reducing the federal workforce through measures like voluntary buyouts, early retirements, or temporary hiring freezes.
The group may also identify federal assets for sale or relocation as a means to cut costs.
However, its actual power to enforce these changes is negligible. For instance, proposals to cut government spending or restructure federal agencies require bipartisan congressional support—a tall order in the current polarized political climate.
Even identifying and addressing "waste" is no simple task; past efforts by similar commissions have yielded limited results due to legal, logistical, and political barriers.
Congress holds the "power of the purse," meaning that significant reductions in government spending require legislative approval.
Although discretionary spending, particularly in defense and non-defense budgets, could theoretically be trimmed, achieving this would demand a level of bipartisan cooperation that seems unlikely.
Mandatory spending, which constitutes the bulk of federal outlays, is even less susceptible to DOGE’s influence.
Programs like Social Security and Medicare are politically sensitive and legally protected from unilateral cuts.
Similarly, efforts to deregulate or amend government operations are subject to rigid processes established under the Administrative Procedure Act.
Regulatory rollbacks would need to navigate a lengthy and often contentious rulemaking or litigation process.
Despite claims from Ramaswamy that DOGE aims to slash the federal workforce by 75%, the feasibility of such a move remains doubtful.
Most federal employees are protected by civil service laws that prevent arbitrary dismissals.
Additionally, nearly 70% of the federal workforce operates in defense or national security roles, areas that are politically and practically challenging to downsize.
Past initiatives for large-scale reductions in the federal workforce have proven ineffective or counterproductive, often resulting in increased costs and reduced operational efficiency.
DOGE’s most tangible contributions might come from identifying opportunities for operational improvements.
Federal agencies spend significant sums on maintaining outdated IT systems, and upgrading these could generate long-term savings.
According to the Government Accountability Office, there is potential to save billions through enhanced efficiency measures, though such initiatives would likely require upfront investments and congressional approval.
Ultimately, the analysts at Barclays emphasize that DOGE’s influence is symbolic more than functional.
It may use its platform to draw attention to inefficiencies and advocate for reforms, but its recommendations will remain non-binding.
Achieving substantial change will require navigating a complex web of legal and political hurdles that go well beyond DOGE’s advisory remit.