Elon Musk and Vivek Ramaswamy will lead the new “Department of Government Efficiency” in the Trump administration

CNN
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President-elect Donald Trump announced Tuesday that Elon Musk and Vivek Ramaswamy will lead a new “Department of Government Efficiency” in his second term.

“Together, these two wonderful Americans will pave the way for my administration to cut government bureaucracy, eliminate excessive regulations, cut wasteful spending and restructure federal agencies,” Trump said in a statement.

The announcement by Ramaswamy, and especially Musk, who runs companies with existing, lucrative government contracts, immediately raises questions about possible conflicts of interest. It's not immediately clear how the department – which Trump said would “provide advice and guidance from outside the government” – would function and whether a Congress, even one entirely controlled by Republicans, would have the will to to authorize such a massive overhaul of government spending operations.

Trump proposed the creation of a government efficiency commission as part of a series of new economic plans he unveiled in early September. At the time, he said Musk had agreed to take the lead if he wanted to secure a return to the White House.

In Trump's statement Tuesday night, Musk was quoted as saying, “This will send shockwaves through the system and everyone involved in government waste, which is a lot of people.”

Ramaswamy responded separately

During the campaign, Trump pointed to his proposed Government Efficiency Commission as a way to reduce government spending. “As a first task, this commission will develop an action plan to completely eliminate fraud and improper payments within six months,” he said in September. “This will save trillions of dollars.”

Ramaswamy, who previously challenged Trump in the Republican presidential primary before endorsing him in January, made reducing waste in government spending a key policy platform for his campaign.

Last year, Ramaswamy — who campaigned on promises to eliminate the FBI, the Department of Education and the Nuclear Regulatory Commission, which would lay off thousands of federal workers in the process — released a white paper outlining what he said would be a legal framework the president to eliminate federal agencies of his choice.

Musk, for his part, said while supporting Trump on the campaign trail that he would propose a massive rollback of government regulations that he has long complained about. The CEO of Tesla and SpaceX has also introduced a rating system that threatens wasteful employees with layoffs and proposed offering generous severance packages to laid-off government workers.

Musk initially hit out at Trump in a conversation between the two that took place in August

A few days later, Musk posted a picture on “I am ready to serve,” he wrote.

On Tuesday he promised

The department's work will end no later than July 4, 2026, Trump said in his statement. “A smaller government with more efficiency and less bureaucracy would be the perfect gift to America on the 250th anniversary of the Declaration of Independence.” I am confident that they will succeed!” he said.

Musk, who after buying Twitter – today

Asked by Trump-Vance transition team co-chair Howard Lutnick at a rally last month how much he could cut from the $6.5 trillion federal budget, Musk replied: “Well, I think we could at least Save $2 trillion.”

“Your money is being wasted, and the Department of Government Efficiency is going to fix it,” Musk said at the rally at Madison Square Garden in New York City. “We’re going to get the government off your back and out of your wallet.”

(According to the Treasury Department, the federal government spent $6.8 trillion in fiscal year 2024.)

But experts have expressed doubts that Musk will be able to cut costs by nearly $2 trillion.

In a speech at the Economic Club of New York on Tuesday, former Treasury Secretary Larry Summers said Musk would be lucky to achieve $200 billion in federal budget cuts because there is limited scope to curb waste.

Glenn Hubbard, an economist and former dean of Columbia University's business school, said it would be very difficult to cut so much spending if interest spending, entitlement programs and defense were off limits.

“It's just mathematically impossible to find $2 trillion,” Hubbard, a former chairman of the U.S. Council of Economic Advisers in the George W. Bush administration, said at the Economic Club.

Trump and congressional Republicans have long argued that fighting waste, fraud and abuse is a way to save the federal government money. But that refrain is “often an excuse to do nothing,” Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, told CNN as Trump first discussed creating a government efficiency commission.

The commission would need to be given a broad mandate to review the largest federal spending programs — Social Security, Medicare and defense — to be most effective, Goldwein said.

A major federal workers union, already bracing for the likelihood of a purge during the second Trump administration, also criticized the idea of ​​a government efficiency commission.

“Elon Musk and Donald Trump care about one thing: lining their own pockets. “This is not about government efficiency and certainly not about making things better for everyday Americans,” American Federation of Government Employees national president Everett Kelley said in a statement in early September.

This story has been updated with additional details.

CNN's David Goldman contributed to this report.