We might all get a $5,000 "DOGE dividend" if Elon Musk's cost-cutting commission can deliver. But the national debt will probably balloon by at least $4 trillion anyway, which would be an extra $12,000 in new debt for every American.
Welcome to the mysterious world of Trumpmath.
President Trump wants everybody to know that his so-called DOGE commission, headed by Musk, is hard at work slashing costs in the federal bureaucracy for the good of the American taxpayer. The goal is at least $500 billion in annual savings, which would be about 7% of all federal spending.
Trump also wants to raise gobs of new revenue through tariffs on imports. He's so impressed with his own financial acumen that he thinks a historic moment is approaching. "Balance budget now???" Trump posted on social media on Feb. 20. "Let’s give it a shot. Lots of money coming in from tariffs.”
Here's the con: Trump is shining a spotlight on pennies coming in while drawing no attention at all to the hundreds going out. On the positive side of the ledger are DOGE and tariffs, which, to be fair, could generate some additional revenue and cost savings. But on the negative side are tax cuts likely to be multiples larger. There's no chance Trump will balance the federal budget, and it's virtually certain that the national debt will only swell under Trump.
The DOGE government efficiency effort might be a worthwhile exercise, but $500 billion in annual savings is an extremely ambitious goal. Axing the entire federal workforce of 3 million people would save only about $270 billion while leaving the United States without a functional government. There simply aren't enough employees to fire, contracts to terminate, or properties to sell to get anywhere close to $500 billion in savings. The real money is in benefits that go directly to voters, including Social Security, Medicare, Medicaid, and veterans programs, plus defense, traditionally hard to cut.
The Musk commission, at any rate, claims it has already found $55 billion in savings. That fails the sniff test, and budget experts say the real amount of savings is probably a fraction of that. But the prospect of found money is already prompting fantasies about how to spend it.
Trump says he wants to give back 20% of the DOGE savings to taxpayers, a "DOGE dividend" that compensates Americans for whatever they've lost in government functionality. Here's where the $5,000 figure comes from: Musk's original DOGE target was $2 trillion in annual savings, and 20% of that would amount to around $5,000 for every taxpaying household in America. Never mind that Musk has lowered his savings target from $2 trillion to a still implausible $500 billion. Twenty percent of $500 billion would be just $1,250 for every taxpaying household, a weird un-round number that isn't very compelling.
So $5,000. That's the number.
What you won't hear any of Trump's advisers discuss is the additional debt they're likely to saddle taxpayers with. Trump wants to extend all of the tax cuts that are due to expire at the end of 2025. That will add at least $4 trillion to the national debt during the next decade, or $400 billion per year. Trump pitched a slew of other tax cuts, such as eliminating income taxes on tip income, overtime pay, and Social Security benefits — and Republicans who control Congress are drafting legislation to make those a reality. If Congress passes all of Trump's proposed tax cuts, it could add more than $10 trillion to the national debt during the next 10 years, or $1 trillion per year.
It gets worse.
Trump is in the midst of firing 6,000 workers at the Internal Revenue Service, or 6% of the tax agency's total staff. If Trump were serious about balancing the federal budget, the very last thing he'd do is eviscerate the IRS. The IRS's job is to collect the taxes that people legitimately owe. There's already a "tax gap" as high as $688 billion. The tax gap is money Americans legally owe to the government in taxes but haven’t paid. Hardly any of that money is taxes owed by workers who earn most of their income from a paycheck; most of it is money the investor class is trying to hide via complex tax dodges.
The government will never collect every penny that tax cheats owe. But it could certainly collect more. In 2022, when Democrats controlled Congress, President Biden signed into law new funding for the IRS meant to update ancient computer systems, hire more auditors and examiners, and provide other resources to pry owed taxes from dodgers backed by armies of lawyers and accountants. Republicans have been trying ever since to claw back that funding, as if there’s something wrong with people paying the taxes they owe. Since Republicans control both houses of Congress now, they might have the votes to defund the IRS once again. Musk seems to be getting a head start by depopulating the agency.
Numbers game: President Donald Trump and Elon Musk in the Oval Office. (Photo/Alex Brandon/Associated Press) ·ASSOCIATED PRESS
Most Americans can't keep track of all this, which Trump is probably counting on. So here's a cheat sheet outlining where it all seems to be heading:
DOGE: Its target is $500 billion in annual savings. It will probably be a miracle if it saves one-fifth of that. An optimistic outcome would be $100 billion in annual savings.
Tariff revenue: Total federal revenue from tariffs on imports is around $80 billion per year. Trump could plausibly double that, but at some point the higher costs paid by American businesses and consumers would dent imports, impair tariff income, and slow the whole economy. An optimistic figure for new revenue from the Trump tariffs might be an additional $100 billion.
So, DOGE and new tariffs might generate an extra $200 billion in annual federal revenue. But cuts in the IRS will mean less tax revenue collected due to weaker enforcement. It's conceivable that a wrecked IRS will forego at least $200 billion, neutralizing the gains from DOGE and tariffs.
Tax cuts: Congress might come up with some spending cuts that limit the damage to the national debt, but a minimal additional cost is probably $3 trillion over a decade, or $300 billion per year. The upper range is at least $10 trillion in additional debt over a decade, or $1 trillion per year.
In the best possible scenario, the Trump tax cuts cost $300 billion per year, offset by $200 billion in savings from DOGE and tariffs.
In a more likely scenario, tax cuts cost $500 billion per year and the DOGE/tariff savings offset just two-fifths of that.
It's also possible many of the DOGE savings get rolled back by litigation and Congress' own efforts to block cuts in programs they created and approved in the first place. Tariffs could spook markets and cause Trump to pull back. Congress, meanwhile, could pass a broader set of tax cuts, adding $600 billion, $800 billion, or even $1 trillion to the national debt every year.
So, if your DOGE dividend does arrive, maybe save it for the rainy day that is surely coming, when somebody will have to reckon with all that additional debt.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
