Musk Needs A Wake-Up Call About Reworking The US Economy, Says Senator Elizabeth Warren

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If there’s anyone who can offer a prescription to cure the US economy, it’s Senator Elizabeth Warren (D-MA). It was her idea to create the Consumer Financial Protection Bureau as a way to stop scams and hold financial firms accountable when they cheat people. Now billionaire Elon Musk has bought his way into the Trump administration and has landed a position with a presidential advisory commission that can “slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”

Warren has countered with 30 detailed proposals that would cut at least $2 trillion of government spending over the next decade.

Mr. Musk, are you listening?

Invigorating the US Economy: An Exercise to Support US Citizens?

The Economist concluded at the end of 2024 that the “enduring nature of America’s power was visible in the economy,” citing how it has grown at three times the rest of the G7.

Part of this success was due to investors’ prudent approach to their portfolios. You see, as enjoyment of new wealth declines, an aversion to risking large sums increases. Most investors who ascribe to such a utility function generally split their contributions between high-returning but risky assets — such as stocks — and safe ones such as bonds. This helps to maximize their happiness.

But technology savants like Musk seem not to be happy with their wealth and status. Instead, they are intent on influencing the US economy under the Trump administration for further personal fiscal growth. But is shrinking the state really an engineering problem? Or is it more of a political problem — which is historically very messy? The tech industry has very little experience wielding political influence.

In a letter to Musk in his role as the chair of the “Department of Government Efficiency” (DOGE), Warren is explicit: Musk’s original but now reduced goal to cut federal funding from $500 billion in annual spending to $2 trillion has numerous and costly miscalculations, conflicts of interest, and likely policies that would hurt ordinary Americans.

The Senator also acknowledges that the US federal government spends trillions of dollars on wasteful spending. She suggests to Musk that, “if you are serious about working together in good faith to cut government spending — in a way that does not harm the middle class — I have proposals for your consideration.”

Here are some of those proposals.

• Cut spending at the US Department of Defense, which has never passed an audit. Warren argues that the DOD should negotiate better contracts, recreate a renegotiation board to challenge excess profits, stop using the military to perform civilian jobs, end corporate welfare for Pentagon contractors and foreign governments, instruct the agency to stop gaming the budget process, boost energy efficiency and industry competition, tackle repair restrictions on military equipment, and “avert wasteful government spending on plutonium pit production at the Savannah River Site.”
• Cutting waste, fraud, and abuse in federal health care programs: Needed measures include curbing taxpayer abuse by Medicare Advantage insurers, engaging in more Medicare negotiations to lower prescription drug costs, supporting efforts to crack down on pharmacy benefit managers, quashing patent abuses by the pharmaceutical industry, exercising march-in rights to reduce medication prices, breaking up conglomerates, and keeping private equity out of the industry.
• Save on education programs: This would entail eliminating or reducing funding for the federal Charter Schools Program, as much of this funding has been mismanaged and wasted. Warren also suggests that, because for-profit colleges tend to emphasize their bottom lines, they should be ineligible for federal grant aid including Pell Grants, federal loans, and GI Bill benefits.
• Cut waste and abuse in the Federal Tax Code: Clawing back tax expenditures and close loopholes for the wealthy are imperative, says. The total value of these tax expenditures — and the money that is lost by the government by reducing taxpayers’ owed amounts — is huge, comparable in size to federal discretionary spending.

Affirming that she is willing to work in the interest of “taking aggressive, bipartisan action to ensure sustainable spending, protect taxpayer dollars, curb abusive practices by giant corporations, and improve middle-class Americans’ quality of life,” Warren also expressed dismay with the DOGE approach to federal fiscal reductions.

“DOGE’s agenda has focused on limiting the size of the federal government to increase efficiency and save taxpayer dollars. As the list above indicates, there are many opportunities for identifying savings that would not hurt the middle class, and that would eliminate wasteful special interest spending. But focusing solely on cutting federal budgets is myopic and counterproductive, and misses key ways in which the government can cut costs for ordinary Americans, saving them billions of dollars.”

Warren’s letter followed an MSNBC op-ed that Rep. Ro Khanna (D-CA) wrote in December, offering Musk some recommendations. A report by the watchdog Public Citizen released earlier this month identified “what an efficiency agenda based on evidence, not ideology, would include,” in the words of the group’s co-president, Robert Weissman, who has formally requested to join DOGE to serve as a voice “for the interests of consumers and the public.”

Elizabeth Warren: “If Trump Wants to Unrig the Economy, I’m In”

Warren has also been vocal about ways Democrats on the Senate Banking, Housing, and Urban Affairs Committee can assist in tempering federal funding. According to Warren, these Committee members want to deliver what Americans have asked for in election after election. In a Wall Street Journal editorial, she wrote that, “If Trump wants to unrig the economy, I’m in.” She promises to lead Democrats on the Banking Committee to lower costs, advance security, and cut red tape.

To do so, Warren says she’s ready to work with the new Trump administration “whenever they support policies that rebuild the middle class, advance our economic and national security, and fight the corruption of those who seek to use government to enrich themselves.”

Warren lists four specific tasks ahead.

1. Lower costs and improve access to financial services. That includes serious federal investment to create incentives for home construction; continuing the popular fight against junk fees, corporate consolidation, and price gouging; and reinforcing the Consumer Financial Protection Bureau’s work to lower costs.
2. Advance economic and national security. Draw upon export controls, sanctions, trade policy, corporate transparency, domestic supply chains and other levers to support our economic security at home and promote our values abroad. That includes helping American industry grow and preventing terrorists from exploiting our financial system, but not doing favors for corporate lobbyists or countries that don’t share our values.
3. Ensure that our financial system serves families and the real economy. Too-big-to-fail banks are quietly taking on riskier investments. The shadowy private credit market has loaded up on highly leveraged loans. And after waves of catastrophic losses, the insurance industry faces a reckoning that even climate-change deniers can’t ignore. Without significant changes, another financial crash is coming. The Recoup Act would reduce incentives for risk-taking, and simplifying financial regulations would alleviate regulatory complexity can drive up costs.
4. Be vigilant against so-called reforms that make it easier for Wall Street to rip off consumers or crash the financial system. Reforms can encourage regulators to ease up too much. Tariffs and sanctions are powerful tools that we can use to protect consumers and our security, but they can also be exploited to dole out corporate welfare to well-connected businessmen or protect monopolies.

The policy team of President Donald J. Trump has “disparate, sometimes contradictory goals,” with the tech contingent seeing “government as something to influence and disrupt,” according to The Economist. Disputes seem inevitable. Yes, the value of Elon Musk’s firms have risen and sparked interest since the election, yet “a combination of insights, botched implementation, and self-dealing could provoke a backlash that stymies Trump’s second term.”

How long will DOGE — under Musk’s leadership — be viable?