Explainer: How Musk's US government efficiency panel might work

Roivant Sciences

13/11/2024 19:27

(Adds detail from Ramaswamy and expert comment)
       WASHINGTON, Nov 13 (Reuters) - 
    President-elect Donald Trump has tasked billionaire Tesla
CEO Elon Musk with setting up a panel to streamline the U.S.
government. Although Trump has said little about how this group
would operate, Musk previously set an ambitious goal of cutting
$2 trillion of federal spending.
    Musk, the world's richest person, will head the new panel
along with former Republican Presidential candidate Vivek
Ramaswamy. Here is how it might work.
    
    WHAT DOES MUSK WANT TO CUT?
    Musk said at a Trump rally at Madison Square Garden in
October that the federal budget could be reduced by "at least"
$2 trillion. That ambitious goal exceeds total discretionary
spending, including defense spending, which is estimated to
total $1.9 trillion out of $6.75 trillion in total federal
outlays for fiscal 2024, according to the Congressional Budget
Office.
    Musk, whose companies include the electric vehicle maker
Tesla and commercial space company SpaceX, has extensive federal
contracts for rockets and other space operations with the
National Aeronautics and Space Administration and the Pentagon.
    Musk has also tussled with various federal regulators. The
Federal Aviation Administration has a say in SpaceX rocket
launches and the Environmental Protection Agency has fined the
company over pollution near a launch site in Texas. The National
Highway Traffic Safety Administration is investigating
autonomous driving functions in Tesla's cars. The Securities and
Exchange Commission disciplined Musk for a 2018 tweet about
taking Tesla private.
    Ramaswamy, who founded pharmaceutical company Roivant
Sciences, has worked with the Food and Drug Administration, an
agency he has called "corrupt". On social media site X in 2023
he wrote: "Countless FDA regulations and actions are
hypocritical, harmful & unconstitutional."       
    
    WHAT HAVE MUSK AND TRUMP SAID ABOUT THE PANEL?
    Trump in a statement on Tuesday said the panel would
"provide advice and guidance from outside of government," on
slimming down the government, cutting regulations, reducing
spending and restructuring federal agencies.
    Trump wants to abolish the Department of Education, giving
states greater control of schooling. He also wants to sharply
cut the "deep state" – career federal employees he says are
clandestinely pursuing their own agendas.
    Trump and Musk have suggested the panel will make dramatic
cuts. However the U.S. Constitution gives Congress the power
over the federal budget. Congress can take or disregard advice
from outside panels like the proposed efficiency group.  
    In an effort to be transparent, Musk said the panel will
post its "actions" for public comment. 
    "Anytime the public thinks we are cutting something
important or not cutting something wasteful, just let us know!"
he said on X. 
    He also mentioned creating a list of "dumb" spending, which
he noted would be "extremely entertaining".
    On Tuesday, Ramaswamy said the panel would "soon begin
crowdsourcing" examples of government waste and alleged fraud. 
    
    WHAT IS THE PRECEDENT FOR THE EFFICIENCY PANEL?
    In February 1982, former President Ronald Reagan announced
he would form a group of private sector experts to recommend
ways to eliminate inefficiency and waste. That June, his
executive order formed a panel that became known as the Grace
Commission for its chairman J. Peter Grace, former CEO of W.R.
Grace and Co.
    Grace raised money to fund the effort through a foundation. 
                   About 150 business leaders volunteered time
on an executive committee that oversaw 36 Grace Commission task
forces, which reviewed agencies or functions.  
    The Commission issued a report in January 1984 with 2,500
recommendations. The task forces came out with reports as well. 
               
    “Most of the recommendations, especially those requiring
legislation from Congress, were never implemented,” the Reagan
Library said.
    In March 2017, Trump signed an executive order aiming to
improve efficiency, effectiveness, and accountability and
"eliminate or reorganize unnecessary federal agencies." It
directed each agency to submit a plan to reorganize. He signed a
separate executive order to place "regulatory reform" task
forces and officers within agencies.
    Trump unsuccessfully tried to kill at least 19 agencies
during his first term. He called for eliminating the Overseas
Private Investment Corporation that helps spur private
investment in foreign development projects and the Corporation
for Public Broadcasting. He also tried to cut funding for
Amtrak, subsidies for rural airline service and the Special
Olympics. 
    
    WHAT EXPERIENCE DOES MUSK HAVE WITH COST CUTTING?
    After Musk bought the social media app Twitter, he laid off
roughly 3,700 employees, half its workforce. Revenue shrank as
advertisers pulled spending and hundreds more employees
subsequently resigned. He later renamed the social media site
"X", but its valuation has slumped under his ownership.
        Musk has had much greater success with SpaceX. Its
Falcon 9 rocket slashed launch costs with its reusability. This
sprouted new satellite markets, giving rise to the company's
fast-growing Starlink constellation, which has disrupted the
established satellite communications industry and helped shape
modern military strategies. SpaceX is now a major defense
contractor. 
        "I would hope that he will look for places to do what he
did at SpaceX," said Steve Grundman, a deputy under secretary at
the Pentagon under President Bill Clinton.
  
        "The way to save big money is to delete stuff, close
things," Grundman said, adding the task is complicated because,
"you're never going to find you're never going to find a thing
that is pure dead weight."
  
        
  
    WHAT ARE THE RULES FOR A PANEL LIKE THIS?
    The committee would likely operate under the Federal
Advisory Committee Act, a 1972 law ensuring panels provide
advice that is prompt, objective and open to the public. It
mandates cost controls and record keeping requirements that
apply to the roughly 1,000 committees with some 60,000 members
advising the President and the executive branch at any given
time.
    Ramaswamy said on Wednesday, again on X, that the panel will
have a legal mandate given recent decisions by the Supreme Court
the curtailed the power of regulators.

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 (Reporting by Chris Sanders, Karen Freifeld, David Shepardson
and Alexandra Alper; Editing by Anna Driver and David Gregorio)
 ((Chris.Sanders@thomsonreuters.com; +1 202-558-8254; Reuters
Messaging: chris.sanders.reuters.com@reuters.net))