An experiment that ended prematurely
The federal government successfully cut 271,000 jobs, a 9% reduction, marking the largest peacetime layoff record. However, at the same time, total federal spending increased, surging from $6.75-7.135 trillion in 2024 to $7.01-7.6 trillion, a net increase of $248-480 billion. This phenomenon of "slimming down but gaining weight" is precisely the core contradiction of the DOGE (Department for Government Efficiency) reforms.
Initially led by Elon Musk and Vivek Ramaswamy, this "outside advisory" organization promised to dismantle government bureaucracy, cut redundant regulations, and reduce wasteful spending through commercial means, ultimately saving $2 trillion to balance the federal budget. This ambitious plan was expected to last until July 2026, giving them 18 months to transform the government. However, reality proved far harsher than anticipated: Musk abruptly resigned in May, fulfilling only a 130-day term as a special government employee; and by November, DOGE quietly dissolved, with a full eight months remaining in its original term.
This wasn't an unfinished reform, but a complete abandonment. From its inception to its demise, DOGE's actual lifespan was only about 10 months. When cost-saving targets became clearly unattainable, legal challenges piled up, and the dispute with Trump became public, Musk chose to return to his business empire, leaving behind a crumbling organization and a host of unresolved issues. This rapid fall from ambition to disillusionment exposed not only flawed reform strategies but also the fundamental, insurmountable gap between corporate logic and government operations.
I. A complete divergence between grand goals and harsh reality
DOGE's vision for reform is imbued with Silicon Valley idealism. They plan to terminate billions of dollars in inefficient contracts, close redundant facilities, reduce the federal workforce from approximately 3.015 million to a leaner scale, and replace some bureaucratic functions with AI and automation tools through lean management principles. This methodology has proven successful in the business world; why can't it be used to transform government?
Chart: Number of federal employees since 1990
In January 2025, Musk joined the Department of Government and Employment (DOGE) as a special government employee, with a 130-day term. In Silicon Valley, 130 days is enough to launch a product prototype, secure a funding round, or even turn around a startup. In its initial months, the DOGE demonstrated dazzling efficiency. From January to November, federal employees decreased from 3.015 million to 2.744 million, a net reduction of 271,000 jobs. This was not only the largest peacetime federal layoff since World War II, but the speed of its execution was also astonishing. Specific actions included terminating a $290 million refugee facility contract with the Department of Health and Human Services, reducing the Treasury Department's IT redundancy spending by $190 million, and closing hundreds of inefficient agencies and projects, totaling over 29,000 reductions. The DOGE claimed to have saved approximately $21.4-25 billion through these measures, primarily in non-defense federal obligation spending, a 22.4% year-over-year decrease.
Chart: Cumulative Federal Government Spending
However, the spending data tells a completely different story. Overall federal spending rose from approximately $6.75-7.135 trillion in 2024 to approximately $7.01-7.6 trillion in 2025, an increase of 4%-6%. Spending in the first 11 months alone reached $7.6 trillion, an increase of $248 billion over the same period. Ironically, some independent analyses suggest that the savings figures claimed by the DOGE may be significantly exaggerated, with actual verifiable savings possibly only in the billions of dollars, or even as low as $3 billion. This could result in at least $350 billion in tax revenue losses over the next decade due to the weakening of the IRS's enforcement capabilities, making the so-called "savings" net effect close to zero or even negative.
The real obstacles soon became apparent. Federal spending continued to climb, and mandatory expenditures such as Social Security, Medicare, and Treasury bond interest payments were completely unaffected by the executive layoffs. By May, multiple pressures had converged. Musk's relationship with Trump began to deteriorate, with the two clashing publicly. Legal challenges followed, questioning the legality of DOGE's authority and procedures. Tesla's business was also calling for his return—stock price fluctuations, production issues, and market competition all required the CEO's attention. Most importantly, the $2 trillion savings target was clearly an impossible task, and remaining on a doomed project would do Musk no good for his personal brand. After his 130-day term, Musk announced his return to private enterprise. He did not apply for an extension, nor did he request more resources; instead, he chose a clean and decisive departure. This decision itself was the loudest admission: reforming government using business methods was far more difficult than he had imagined.
II. The Headless Horseman's Struggle: From May to November - The Decline
After Musk's departure, DOGE attempted to prove its continued existence. The White House signaled that the "DOGE spirit" would be integrated into the day-to-day operations of the government, becoming part of the "government way of life." Some former DOGE employees were embedded in various federal agencies, continuing to push for layoffs and cost-cutting. Ramaswamy still nominally leads the agency, attempting to maintain the momentum of reforms.
But without Musk, DOGE is like a rocket without an engine; its momentum can only be maintained for a short time. Without the aura of its star founder, the organization's visibility rapidly declined. Without Musk's direct communication channel with Trump, DOGE's influence within the government was significantly diminished. More importantly, the limitations of its reforms became increasingly apparent—DOGE simply couldn't reach those large-scale spending projects that truly required congressional legislation to change.
During this period, the DOGE's achievements became increasingly difficult to define. While some layoffs continued, spending figures remained high. Reports of service disruptions increased. Social Security applications were delayed, regulatory vacuums emerged, and some key positions remained unfilled due to excessive layoffs. Criticism grew louder: under the guise of improving efficiency, the DOGE was undermining the government's fundamental operational capabilities. Legal challenges also accumulated, questioning whether many of the DOGE's actions exceeded its administrative authority.
By November, several authoritative media outlets began reporting that DOGE had quietly dissolved. Reuters, TIME, CNN, Newsweek, and other media outlets used terms like "disbanded," "quietly shut down," and "no longer exists" to describe the organization's fate. Without a formal dissolution statement or a press conference, DOGE simply disappeared from public view. Its charter, which was originally scheduled to run until July 2026, was terminated early, and many functions were transferred to the Department of Personnel Management or other regular agencies.
This quiet end speaks volumes more than any failure. There wasn't even a decent farewell, because admitting defeat is embarrassing in itself. DOGE went from a revolutionary institution promising to change government to a brief episode everyone hoped to forget.
III. The Underlying Logic of "Reducing Staff Doesn't Save Money"
1. An impenetrable wall of legally mandated expenditures
The most fundamental difference between the government fiscal system and that of businesses is that over 70% of federal spending is mandatory. These expenditures are legally mandated to grow automatically, influenced by demographics, economic cycles, and interest rate fluctuations, and are completely unaffected by administrative layoffs. Data from 2025 clearly demonstrates this rigidity: welfare spending, including Social Security and Medicare, increased by approximately $168 billion, primarily driven by population aging and inflation adjustments; national debt interest costs surged by $71 billion, and the debt has expanded to $36-38.3 trillion, with interest payments even exceeding the defense budget, becoming the largest single federal expenditure.
These rigid expenditures directly offset all of the DOGE's cost-saving efforts. Even with significant layoffs, Social Security payments must still be executed according to the legal formula, Medicare subsidies must still be distributed based on the number of insured individuals, and national debt interest must be paid on time to maintain the nation's credit. As an executive agency, the DOGE cannot unilaterally modify welfare programs authorized by Congress, meaning that reforms are confined to the "periphery" from the outset, unable to reach the "core" of spending.
At a deeper level, this rigidity stems from the constitutional and legislative framework. The government is not a profit-driven enterprise, but a public institution responsible for providing a social safety net. When a 65-year-old applies for social security, the government cannot refuse to pay under the guise of "cost optimization." This is the fundamental difference between the government and a business, and the root cause of why commercial thinking encounters obstacles here.
2. The "washout" of inter-departmental spending.
DOGE did achieve some success in discretionary spending. They terminated 5,200 projects and hundreds of billions of dollars in contracts in departments such as Health and Human Services, Education, and USAID, saving approximately $37 billion. However, these savings were quickly swallowed up by growth in other sectors. Defense spending increased due to geopolitical tensions, infrastructure investment ballooned due to the Trump administration's priorities, and the spillover effects of mandatory spending further inflated the overall budget.
The result is "localized downsizing, overall expansion." This is similar to the "cost-shifting" phenomenon common in corporate mergers and acquisitions—costs cut in one department often appear in other departments in another form. However, governments lack the flexible adjustment mechanisms of businesses and cannot reallocate resources as quickly as companies. The spending growth in 2025 also includes emergency response (increased natural disaster funds) and inflation adjustment (CPI rising by approximately 3%-4%), these external factors further amplify the "give and take" effect.
Specific data shows that DOGE's savings account for only 0.3%-0.5% of total spending, far from enough to reverse the overall trend. By 2025, mandatory spending will increase by $221 billion, discretionary spending by $80 billion, and net interest costs by $71 billion. When you save billions in one pocket but take tens of billions from each of the other three, the so-called "efficiency improvement" becomes a numbers game.
3. The inertia of institutional operation costs and frictions during transformation
Layoffs are never a cost-free operation, especially in the government system. The implementation of DOGE reforms itself generated enormous expenses: severance pay, paid leave, and rehiring costs following wrongful dismissals, totaling an estimated $135 billion. This figure far exceeds many of the "savings" claimed by DOGE. More hidden costs stem from lost productivity and service disruptions.
Government agencies rely heavily on institutional memory and human networks. When a large number of experienced employees leave, social security applications begin to be delayed, regulatory vacuums emerge, and policy implementation efficiency declines. While AI and automation are highly anticipated, these tools are far from mature enough to completely replace human judgment. Algorithmic governance may be efficient, but it also brings new problems such as data privacy breaches and algorithmic bias. In the process of shifting from a "public service device" to a "data-driven terminal," governments are losing something difficult to quantify but crucial—legitimacy, social cohesion, and public trust.
A more pressing issue is that the overtime pay for remaining employees after layoffs increases, and outsourcing costs rise. Governments often pay higher prices to outsource tasks originally intended for internal use to private contractors. In the long run, large-scale brain drain could create a "knowledge gap," impacting policy continuity and the accumulation of professional skills.
Conclusion: Who lost? Reflecting on the costs and boundaries of reform.
In this clash between ideals and reality, who will ultimately lose? Perhaps first and foremost, it will be the idealistic reformers who underestimated the complexity of government operations and mistakenly believed that business logic could be directly transplanted to the public sector. Taxpayers may benefit from short-term savings, but face the long-term risks of service cuts and declining quality. Beneficiaries of public services, especially those reliant on social security and health insurance, may suffer from service disruptions and reduced efficiency.
A deeper loser may be the sustainability and democratic legitimacy of the entire system. When government is treated like a business to be "optimized," values that cannot be measured in numbers—fairness, stability, and social cohesion—are quietly eroding. Public opinion polls show that DOGE's approval rating hovers around 40%, reflecting a coexistence of public approval of efficiency improvements and concerns about service disruptions.
But this clash was not without significance. If the DOGE can push Congress to take action that truly addresses core issues such as welfare reform and debt control, it could still be a turning point in history. The key is recognizing that government is not a business, and efficiency must be balanced with fairness, sustainability, and democratic principles. Businesses can sacrifice everything for profits, but governments must retain a final line of defense for society's most vulnerable members. This is the most important lesson business thinking needs to learn, and the most profound revelation this intense clash has left us with.
The data in this report was compiled and edited by WolfDAO. Please contact us if you have any questions for updates.
Written by: Nikka / WolfDAO ( X : @10xWolfdao )
