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DOGE’s Cutback On U.S Spending To Slow The United State's Rising Debt To GDP Ratio

 

By MarkeCom RC Feb 01, 2025

 

 

The debt-to-GDP ratio of the United States has risen by approximately 23% since 2013, when it first surpassed 100% during the administration of Barack Obama, the 44th President of the United States. 

 

Analysts interpret this considerable increase as a reflection of the United States' overleveraged status, which may undermine global confidence in its economic stability. With total debt currently at $36.22 trillion, the United States holds the position of the most indebted nation, raising concerns about a potentially inevitable economic crisis within the next two decades. 

 

The Department of Government Efficiency (DOGE) has implemented measures to curtail U.S. federal spending, which may contribute to a deceleration in the nation's debt-to-GDP ratio. This initiative stands to alleviate some of the economic pressure associated with interest payments and the expanding budget deficit.

 

Established under the leadership of President Donald Trump, DOGE is a federal initiative with the primary objective of mitigating government waste and improving operational efficiency. Elon Musk, CEO of Tesla and SpaceX, oversees the department.

 

DOGE has set a target to reduce federal expenditures by as much as $2 trillion, emphasizing the elimination of unnecessary expenditures, the dissolution of redundant agencies, and the reduction of the federal workforce. 

 

A key objective is to make government operations more responsive to executive directives, thereby improving overall efficiency as pointed out by Vice President JD Vance in an interview with Fox News, Wednesday, Jan. 30. 

 

DOGE Saves 5.8% of government spending in first week of operation

 

The Department of Government Efficiency, DOGE, has reportedly already saved the United States government approximately 5.8% of its annual spending cost. 

 

In an X post, from the agency's official account, DOGE highlighted several DEIA related contracts that have been terminated, saving the United States $1 billion per day in spending. 

 

The agency has also noted that it plans to increase this number to $3 billion, pledging consistency of its operation with the President’s executive order.

 

On January 20, 2025, President Donald Trump signed an executive order to establish the Department of Government Efficiency (DOGE), with the objective of improving productivity and efficiency within the federal government. This initiative encompasses the rebranding of the United States Digital Service (USDS) to the U.S. DOGE Service, the formation of specialized DOGE teams across federal agencies, and the initiation of a Software Modernization Initiative aimed at upgrading governmental technology systems.

 

The directive emphasizes the enhancement of interoperability among inter-agency systems, the assurance of data integrity, and the provision of access to unclassified records and IT systems for the U.S. Digital Service (USDS) to support these objectives. It further mandates cooperation with agency leadership and outlines a target completion date for the program by July 2026.

 

Solving U.S Deficit Problem; Enabling Economic Growth

 

By eliminating wasteful programs and reducing spending, the Department of Government Efficiency —DOGE — could lower the federal budget deficit, slowing the growth of the national debt.

 

With interest payments on the United State's $36.22 trillion debt estimated to be over $1 trillion and annual spending over $6.3 trillion, DOGE’s reported $1 billion savings of government spending per day reduces the U.S interest payments burden by approximately 36.5%.

 

That said, with DOGE's focus on increasing its cost saving by x3, reaching $3 billion per day, the United States is on a trajectory to be completely self-sufficient in handling domestic funding and fulfilling interest payments without acquiring additional debt through the issuance of additional government bonds. 

 

This cutback gives the United States economy room to grow without a continual increase in government debt, restoring the United States Dollar’s strength as a global reserve currency.