Can Elon Musk’s Efficiency Playbook Fix Washington?
Zero-Based Budgeting, First-Principles Thinking, and the Most Ambitious Government Reform in U.S. History
TLDR: Using Zero-Based Budgeting (ZBB) and First-Principles Thinking, DOGE, led by Elon Musk, is attempting to rebuild government spending from scratch—causing short-term pain for what they say will be long-term efficiency.
The $36.2 Trillion Problem That Won’t Fix Itself
The U.S. federal government is the largest and most complex organization in the world:
It employs over 2.8 million civilian workers across 400+ agencies
With an annual budget of ~$7 trillion, it manages more financial resources than the economies of most nations
Yet, despite its vast scale, government spending lacks the accountability and efficiency required to ensure tax dollars are optimized. Unlike private businesses that must stay profitable to survive, the government can borrow, print money, or raise taxes indefinitely—which has led to an unsustainable financial trajectory.
The Current Fiscal Reality
At its core, the U.S. federal budget is a $7 - $7.4 trillion problem in resource allocation—a staggering ~24.8% of GDP. The government’s annual revenue, estimated at ~$5.5 trillion, leaves an immediate ~$1.9 trillion shortfall that must be borrowed, adding to an already unsustainable national debt.
Where Does the Money Go?
Spending falls into three broad categories:
Mandatory Spending ($4.4T, 60% of the budget) – Automatic expenditures that require no annual approval, including:
Social Security ($1.3T)
Medicare & Medicaid ($1.8T)
Income Security, Veterans’ Benefits, Federal Pensions ($1.1T)
Discretionary Spending ($1.9T, 26% of the budget) – Programs debated and approved by Congress annually:
Defense ($900B)
Non-Defense Programs ($1.0T), including education, transportation, health services, and public infrastructure.
Net Interest on the Debt ($1.0T, 14% of the budget) – Interest payments alone exceed the entire discretionary non-defense budget, meaning we now pay more to service past spending than we do to invest in the country’s future.
In response to this unsustainable financial trajectory, Trump launched the Department of Government Efficiency (DOGE) in January 2025, appointing Elon Musk as its chief advisor.
DOGE’s mission is to save taxpayers' money and reduce US national debt, and so far, it appears it will try do so by:
Attempting to eliminate $2 trillion in wasteful spending by July 4, 2026
Implementing Zero-Based Budgeting (ZBB)—every agency must justify every dollar spent
Applying First-Principles Thinking—break down inefficient systems and rebuild them smarter
This initiative represents the most aggressive government reform effort since the New Deal, but before we get to DOGE, it’s important to understand how Elon operates.
Elon Musk’s Efficiency Playbook: First-Principles Thinking
Elon Musk has a proven track record of breaking down complex systems and rebuilding them for maximum efficiency. Whether it’s rockets, electric vehicles, or AI, his approach has consistently cut costs, eliminated waste, and accelerated innovation.
Elon Musk’s 5-Step Process for Maximum Efficiency
Before tackling government reform, Elon Musk has applied a rigorous five-step process to SpaceX, Tesla, and X (formerly Twitter)—cutting costs, improving efficiency, and eliminating waste:
Question Every Requirement – Just because a rule or process exists doesn’t mean it should. Every requirement must be challenged, no matter which department it came from.
Delete Unnecessary Parts – Most processes contain redundant steps. The best way to improve efficiency is often removing steps entirely.
Simplify and Optimize – Once unnecessary components are gone, simplify what remains and improve the design.
Accelerate Cycle Time – Speed matters. The faster a system moves, the more efficient it becomes.
Automate the Process – Only after optimizing should automation be introduced—otherwise, automation just speeds up inefficiency.
Musk has used this approach before, with staggering results:
Musk didn’t just optimize these industries—he fundamentally restructured them. For more his philosophy, watch him break it down:
💡 Leadership Takeaway: Interestingly, Musk shares that most leaders—himself included—often make the mistake of running this process in reverse. More in the video below.
Now, He’s Doing the Same with the U.S. Government
By applying this ruthless efficiency model to Washington, DOGE is questioning every federal budget line, eliminating inefficiencies, and redesigning agencies from scratch. Just as SpaceX made NASA look outdated, Musk’s efficiency tactics could expose decades of bloated government spending—but at a massive political and human cost in the short term.
If successful, it could permanently alter how the U.S. government operates.
If it fails, it will prove just how resistant Washington is to private-sector efficiency.
Why Previous Reform Attempts Failed
This isn’t the first attempt to fix government inefficiencies.
Key reasons previous reforms failed:
Political resistance – Bureaucracies and federal unions opposed cuts
Lack of accountability – No enforcement mechanisms to implement reforms
Special interest influence – Lobbyists pushed to preserve spending
Why DOGE Might Succeed Where Others Failed:
First time private-sector leaders are leading reform, not just politicians
Stronger executive authority and technology-driven oversight
Public transparency via the DOGE dashboard, detailed below
Zero-Based Budgeting & First-Principles Thinking
At its core, Elon’s approach follows two well-known efficiency frameworks: Zero-Based Budgeting (ZBB) and First-Principles Thinking. ZBB will require agencies to justify every dollar spent from scratch, rather than assuming past budgets should continue. First-Principles Thinking goes deeper, breaking problems down to their fundamentals and rebuilding them for maximum efficiency.
Instead of making small cuts, this approach questions everything, ensuring that only the most effective, necessary programs remain. Whether government can adapt to this level of scrutiny remains to be seen.
ZBB Case Studies from the Private Sector
The principles behind DOGE aren’t new—they’ve been used in the private sector for years to eliminate waste and improve efficiency at scale. Companies like 3G Capital, General Electric, and United Airlines have applied Zero-Based Budgeting (ZBB) to cut unnecessary costs, streamline operations, and increase profitability.
Agencies Under Scrutiny & Cost-Saving Targets
DOGE’s reform efforts are targeting several key federal agencies with a focus on reducing inefficiencies, eliminating redundancy, and restructuring spending. While no department is off-limits, the first wave of cuts is aimed at agencies where waste has been historically documented.
Agencies Currently Under Review
These agencies are the first wave of cost-cutting efforts, but they are unlikely to be the last.
Potential Future Targets for Cuts & Restructuring
While the details are still unfolding, sources indicate that additional departments may be affected in later phases.
While DOGE’s stated goal is to cut unnecessary spending, political backlash and public reaction will likely determine how deep these cuts actually go.
Short-Term Disruptions Will Be The Hardest Part
Government reform is never painless. Many federal employees, contractors, and businesses that rely on government spending will face immediate uncertainty. Budget cuts mean job losses, agency restructuring, and operational slowdowns—all of which will disrupt lives and communities in the near term.
One of the biggest areas of concern is Medicare and Medicaid, which together account for nearly 25% of total federal spending—roughly $1.8 trillion per year. If DOGE’s cuts extend into these programs, millions of Americans could be affected, including:
Seniors & Low-Income Americans – Reduced funding could lead to fewer covered services, higher out-of-pocket costs, or stricter eligibility requirements.
Healthcare Providers & Hospitals – Many hospitals, particularly rural and safety-net hospitals, rely on Medicaid reimbursements to stay open. Budget cuts could lead to staff reductions, closures, or reduced patient care.
Pharmaceutical & Insurance Industries – If reimbursement rates are cut, drug companies, insurers, and healthcare suppliers could face financial losses or be forced to raise prices elsewhere.
State Governments – Medicaid is jointly funded by federal and state governments. If federal funding is reduced, states may need to raise taxes or cut other programs to make up the shortfall.
While DOGE’s stated goal is to reduce inefficiencies rather than eliminate critical services, major cuts to Medicare and Medicaid could spark intense political battles and public backlash, making them among the most sensitive areas of reform.
The table below outlines who else is at risk and how they could be affected.
A Painful, But Potentially Necessary Transition
Elon Musk himself acknowledged the short-term pain of reform, stating:
"All large institutions resist change, but in the long run, the people who benefit from efficiency far outweigh those temporarily disrupted by it."
While the short-term outlook is difficult, the long-term goal is to increase government efficiency, eliminate unnecessary waste, and ensure tax dollars are spent more effectively.
What Happens Next?
The impact of budget cuts will depend on how deep the reductions go and how efficiently they are executed. While smaller cuts may stabilize government spending without major disruptions, aggressive cuts could significantly alter the economy, affecting inflation, interest rates, and overall financial stability.
If cuts are too aggressive, the rapid withdrawal of government spending could trigger job losses and economic instability. On the other hand, if executed carefully, reducing the deficit could help stabilize inflation and lower borrowing costs over time.
Tracking Progress
DOGE’s website doge.gov provides real-time updates on:
Budget cuts & efficiency gains
Audits of federal agencies
Public input mechanisms
There’s also a website tracking the progress:
So, Can Government Run Like a Business?
The next few years will be volatile, and many people will feel the effects of these reforms in the near term. There will be political battles, legal fights, and real economic pain as the system shifts toward efficiency.
But in the long run, DOGE’s reforms could result in a government that is leaner, more effective, and better equipped to serve the American people.
The question remains: can Washington finally be reformed, or will politics and bureaucracy kill efficiency once again?
See you Monday.