DOGE

According to people ‘familiar with the matter’ Elon Musk’s X has quietly raided the back of the sofa and handed over about $10m to the ever up-for-it President, settling a lawsuit brought against the company and its former CEO, Jack Dorsey. For those whose lives have continued its course blissfully unaware of the spat,  DJT had his beautiful locks ruffled when the company de-platformed him for his role in the Capitol Hill brouhaha. To close the loop, for those now putting the Racing Post down, Musk re-platformed Trump in 2022. All water under the bridge. By all accounts, Trump’s legal team thought about letting the file gather dust given the somewhat awkward fact that Musk ran up a $250m tab to help to get their man elected, but what’s $10m amongst friends. That Musk now leads the new administration’s brand for small government and efficiency is another curious happening in the new age of America. That he parades in the Oval Office with his children, another. But back to DOGE. The US clearly has some fat to trim. According the World Bank’s chewy, but widely acclaimed, “government effectiveness” metric, the US lags other developed countries in a big way. The hope is that with some new AI bots here, fewer disengaged workers there, the end result will be more efficient government services. And less ‘borrow-and-spend’. Whilst the agenda is likely to be able to roll back many Biden-era regulations, the ambition to eliminate major agencies is likely too long a carry for the club in hand. The Republican’s margin in the House is too slim. Expect widespread layoffs and the ripping up of promises made to sectors like renewable energy. Expect too, cuts to Medicaid to come into focus. The problem for DOGE is that Congress, rather than their Cat in the Hat, controls the public purse. Another problem is that there is likely an army of lawyers lined up to challenge anything that can be challenged. And any spending cuts will realistically be delayed. The hope for risk assets is that the disrupters at DOGE HQ surprise to the upside, and Republicans vote en masse for significant spending cuts. That though, so say some experts, is a big ask. Time will tell.