Weeks before Donald Trump was inaugurated, bringing Elon Musk and the Department of Government Efficiency to Washington with him, J.P. Morgan Asset Management’s Michael Cenbalest was skeptical of how much money the effort could save.
Instead of Musk’s claim of $1 trillion to $2 trillion in savings, Cembalest calculated that the total would come to about $150 million. He was close: Recently Musk suggested it would only amount to $160 million.
Now it looks like even that amount may be an overstatement, said Cembalest, JPMAM’s chairman of market and investment strategy.
In a new commentary, Cembalest compared Musk to Maximilien Robespierre, a leader of the French revolution known for embracing the the use of violence — the guillotine — against supporters of the monarchy in what is known as the Reign of Terror. Cembalest’s piece even features a photoshopped image of Musk in the powdered wig and 18th century bourgeois attire that Robespierre wore.
“Elon Musk (“Dogespierre”) and his DOGE team also brought down a proverbial guillotine with indiscriminate cuts to federal employment, contracts, leases and grants,” said Cembalest.
He noted that now, as Musk is reportedly leaving the government, “DOGE projects $160 billion in savings: far below the $2 trillion and $1 trillion figures Dogespierre originally stated.”
“While DOGE has drawn attention to some wasteful spending, it has overpromised and underdelivered on verifiable cuts; substantial deficit reduction by unilateral executive decree was never a realistic outcome since Congress controls spending,” Cembalest said. “Furthermore, given DOGE’s indiscriminate approach, it may take years to fully assess negative effects from broad cuts to departments focused on public health, aviation, energy, cybersecurity, taxation, and education.”
The strategist said even the new number is likely way too high.
“DOGE reports of spending cuts are reportedly inflated by large errors and by the inclusion of savings from assumed termination of contracts that have not been agreed to yet,” he explained.
He quoted a DOGE tracker run by researcher Judd Legum that found that of $61 billion of itemized savings, only $12 billion was verified as cancelled funding.
Cembalest went on to quote other “DOGE skeptics,” many of which come from conservative think tanks.
He said the Cato Institute, a libertarian think tank “which never met a spending cut it didn’t like,” has cited “overstated or fake savings” by DOGE. “What’s most frustrating is that we agree with their goals. But we’re watching them flail at achieving them,” Cato said.
The American Enterprise Institute also “questions the DOGE approach of assuming that uncertain events are certain and then claiming maximum possible savings,” according to Cembalest. He then cited a George Washington University professor who studies federal contracting and described the DOGE approach as “garbage.”
Also, the conservative Manhattan Institute analysts estimated that DOGE has only saved $5 billion to date, “and that it will end up costing more than it saves,” said Cembalest.
He added that the overstatement of DOGE-related savings could be as high as 80 percent, according to Harry Kraemer, an executive partner with Madison Dearborn Partners and a professor at Northwestern University’s Kellogg School.
Such estimates do not account for other negative effects. For example, “Yale’s Budget Lab estimates that a reduction of ~22k [22,000] employees would save $2 [billion] in salary costs each year but would result in $22 [billion] less in tax collections, for a net annual revenue loss of ~$20 [billion] ($200 [billion] over ten years).” Cembalest said.
And then there are the potential conflicts of interest regarding DOGE spending cuts. Cembalest said these include cuts “at the EPA, the Office of Vehicle Automation Safety (which has ordered dozens of Tesla recalls and delayed rollout of self-driving software) and other agencies that regulate Dogespierre’s businesses.”
For example, he said that “Starlink is competing to replace Verizon on a $2.4 billion contract with the FAA to upgrade its systems for managing U.S. airspace. DOGE staffers have directed FAA funds to a new initiative called “Project Lift,” whose employees have been made to sign non-disclosure agreements for reasons which remain unexplained.”
He listed other government agencies “actively investigating Dogespierre” according to the House Judiciary Committee, including the CFPB, DOL, USDA, FEC, DOI, DOD and SEC.
In early February, Cembalest noted, Trump fired the director of the Office of Government Ethics, the department that would oversee potential conflicts of interest.
“Robespierre’s legacy is complex,” said Cembalest, in explaining the analogy to Musk. “But his Reign of Terror also left France destabilized, trapped in an endless cycle of political violence and eventually led to the rise and fall of Napoleon, the Bourbon Restoration of French kings and another 40 years of monarchy until the Third Republic was established in 1870.”
