(Bloomberg) -- Billionaire Elon Musk said he is considering sending his government efficiency team to the Federal Reserve, citing a costly renovation of the central bank’s Washington, DC, headquarters as an example of potential government waste.
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“Since at the end of the day, this is all taxpayer money, I think we certainly — we should definitely — look to see if indeed the Federal Reserve is spending two and a half billion dollars on their interior designer,” Musk told reporters Wednesday at the White House.
The Fed’s multiyear headquarters renovation has ballooned to a $2.5 billion price tag as of 2022, a figure that the central bank pinned to higher costs of building materials and labor since the project started in 2021, right as inflation began to soar.
“That’s an eyebrow raiser,” Musk said.
Musk spoke Wednesday in the White House’s Roosevelt Room, just hours before the Wall Street Journal reported that Tesla Inc.’s board had initiated talks with a search firm to find the EV maker’s next CEO. Tesla Chair Robyn Denholm later called the report “absolutely false” in a post on X.
The event, ostensibly to tout the successes of his Department of Government Efficiency effort, came just a week after Musk told investors he’d be pulling back from his time in Washington to devote more time to the carmaker amid declining sales and a falling stock price at Tesla.
The Fed doesn’t rely on congressional money to cover its operations — instead funding itself from income generated by securities held on its balance sheet. But the central bank has run a deficit in recent years as interest expenses have risen, drawing Musk’s scrutiny.
Musk’s suggestion that DOGE should examine the Fed is the latest example of how President Donald Trump is aiming to exert more political control over the independent central bank, a move that could rattle investors who count on the Fed to keep inflation in check.
Since Trump appointed his billionaire supporter to run the newly created DOGE in January, Musk’s teams have set up shop at agencies across the federal government. They’ve rummaged through sensitive government data, sought to find waste and fraud, downsized workforces and even shut down entire agencies.
The Fed’s Washington-based Board of Governors and its 12 regional banks house sensitive data, including proprietary information on the banks it regulates, and nonpublic records related to monetary policy deliberations.
DOGE has been criticized for haphazardly rifling through federal databases and using lax security protocols. At the Social Security Administration, online portals crashed after Musk’s team had access to its systems.
Musk’s remarks came after Trump has publicly mused about whether he would fire Fed Chair Jerome Powell. Trump in April said Powell’s termination “cannot come fast enough,” criticizing the central bank’s monetary policy that he said was “always too late and wrong.” But days later, he reversed himself, saying he has no intention of firing the central bank leader.
For years, the Fed’s income exceeded its operating expenses, and it turned over billions of dollars in profits to the US Treasury that helped narrow the government’s budget deficit. As interest rates have risen, however, the opposite has happened: The Fed recorded operating losses in 2023 and 2024, forcing it to forgo remittances to the Treasury. The shortfalls have drawn the attention of the man tasked with slashing federal costs.
The Fed has said renovations to its headquarters on Constitution Avenue, which will take several years to complete, will consolidate most of its board staff into one campus, reduce off-site leases and modernize its workspace.
Next Steps
In his rare off-camera interview Wednesday, Musk was accompanied by three of his top DOGE lieutenants — all of whom also have connections to his many business ventures: Steve Davis of the Boring Co.; Antonio Gracias, who is on the board of SpaceX; and Anthony Armstrong, the Morgan Stanley investment banker who helped provide the financing for Musk to take over Twitter.
But asked who would lead DOGE as he stepped back, Musk demurred.
“DOGE is a way of life, like Buddhism,” Musk said.
He was also noncommittal about how long DOGE would last. Trump’s initial executive order setting up the effort gave it a July 4, 2026, expiration date.
“If the president wants to stick to that date, we’ll stick to that date,” Musk said. “As long as the president wants to go on, basically.”
Musk objected to criticism that DOGE’s access to Americans’ most sensitive personal data — Social Security numbers, employment histories, disability records and tax returns — puts him at the center of a big data “surveillance state.”
DOGE needs that data, he said, to eliminate $162 billion a year in known improper payments. Fraudsters often exploit the lack of connectivity in government databases, he said, so that one government agency may not know that another agency has flagged a recipient for fraud.
“And so we take something like a Social Security database where there’s something like 20 million people marked as alive who are not — now, most of those people were not receiving Social Security. Some of them were, but most of them were not,” Musk said.
“What way is that a surveillance state? That’s literally just reconciling the data to see if somebody should receive unemployment insurance or not. Are they dead? Dead people should not be receiving unemployment insurance. They’re employed in the afterlife?” he added.
Musk’s remarks came as a federal appeals court on Wednesday kept in place a lower court order barring DOGE from accessing personally identifiable data at the Social Security Administration. The appeals court specifically cited Musk’s comments that Social Security was a “Ponzi scheme” as evidence that the old-age pension program was in the “crosshairs” of the Trump administration.
Federal Workers
One of Musk’s signature initiatives was a deferred resignation plan he called the “Fork in the Road.” It allowed eligible federal employees to be paid through the end of September if they quit by the end of February.
But only about three quarters of the initial 80,000 volunteers have left by the end of April, as agencies have moved departing employees onto administrative leave at different times to avoid disruptions.
“You didn’t wake up one day with 100,000 people leaving the workforce. They are rolling off in a steady manner. That was by design,” said Armstrong, a Musk deputy who’s a special adviser to the Office of Personnel Management.
The Trump administration has followed the initial buyout offer with what Armstrong calls “rolling forks,” with many agencies continuing to offer buyouts. And as employee skepticism of the offer has waned, the second wave of new volunteers is more than twice as large as the first round of resignations.
The final number, while likely classified because of employees in intelligence agencies, will be in the “hundreds of thousands,” Armstrong said. Together with other early retirement programs, about 80% of the reductions in the federal workforce will be voluntary, he said.
Only about 20,000 employees have been fired through reduction-in-force measures, while 26,000 employees in essential positions have been hired despite a general hiring freeze. “We’ve actually hired more people than have actually been fired at this moment,” he said.
--With assistance from Christopher Condon and Kate Davidson.
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