Investing.com – The announcement of the Department of Government Efficiency (DOGE), led by Elon Musk and Vivek Ramaswamy, has sparked public attention and speculation about its potential to transform federal operations.
However, according to analysts at Barclays (LON:), DOGE's scope of influence is likely much more limited than its proponents suggest.
Contrary to its title, DOGE is not an official government department. Its function is advisory, and it has no legal or executive powers to implement its recommendations.
Without congressional approval or direct legislative support, they are limited in their ability to advance proposals rather than implement change.
Potential DOGE actions include highlighting areas of federal inefficiency, such as waste, fraud, and abuse, and proposing improvements to government operations.
These recommendations could target federal workforce reductions through measures such as voluntary buyouts, early retirement, or temporary hiring freezes.
The group may also identify federal assets for sale or transfer as a way to reduce costs.
However, its actual power to enforce these changes is negligible. For example, proposals to cut government spending or restructure federal agencies require bipartisan support in Congress, which is difficult in the current polarized political climate.
Even identifying and addressing “waste” is not an easy task; Previous efforts by similar committees have yielded limited results due to legal, logistical, and political obstacles.
Congress has the “power of the purse,” meaning that significant cuts in government spending require approval by the legislature.
Although discretionary spending, especially in defense and nondefense budgets, could theoretically be reduced, achieving this would require a level of bipartisan cooperation that seems unlikely.
Mandatory spending, which makes up the bulk of federal expenditures, is less susceptible to the effect of DOGE.
Programs like Social Security and Medicare are politically sensitive and legally protected from unilateral cuts.
Likewise, efforts to liberalize or modify government operations are subject to strict processes provided by the Administrative Procedure Act.
Regulatory rollbacks will need to go through a lengthy and often controversial rulemaking or litigation process.
Despite Ramaswamy's claims that DOGE aims to cut the federal workforce by 75%, the feasibility of such a move remains questionable.
Most federal employees are protected by civil service laws that prevent unfair dismissal.
Additionally, nearly 70% of the federal workforce works in defense or national security roles, areas that are politically and operationally difficult to downsize.
Previous initiatives for broad reductions in the federal workforce have proven ineffective or counterproductive, often resulting in increased costs and decreased operational efficiency.
DOGE's most tangible contributions may come from identifying opportunities for operational improvements.
Federal agencies spend significant amounts of money on maintaining legacy IT systems, and modernizing them may result in long-term savings.
According to the Government Accountability Office, there is the potential to save billions through enhanced efficiency measures, although such initiatives would likely require upfront investments and congressional approval.
Ultimately, analysts at Barclays stress that DOGE's impact is more symbolic than functional.
It may use its platform to draw attention to shortcomings and call for reforms, but its recommendations will remain non-binding.
Achieving substantive change will require navigating a complex web of legal and political hurdles that extend beyond the scope of DOGE's advisory jurisdiction.
