Before President Donald Trump’s substantial re-election, Elon Musk had promised to head a “Department Of Government Efficiency” that might cut $2 trillion from the Federal budget, and even floated the idea of bringing in the great Dr. Ron Paul, who at 89 is an encouragement to us all. That seems an eminently attractive goal, entirely in line with traditional Republican policy, although traditional Republicans (at least since President Ford) always turned out weak and backsliding when it came to implementing spending cuts. In the hope that Musk means it (his success in cutting waste at X/Twitter is at least encouraging) I thought it worth presenting some ideas of activities that could be axed. I focus here on cash savings rather than quality improvements; even in agencies one might keep (such as the Federal Emergency Management Agency from recent news) there are clearly many “bad apples” and an appalling management ethic; these must also be remedied.

I begin with the most obvious example: the Department of Education, which was established by President Carter in 1980, and which countless Republican Presidential candidates have pledged to abolish but none of them ever do so while in office. This department does nothing but meddle in education, properly a state activity, adding endless bureaucratic requirements such as President George W. Bush’s “common core” standards that standardize education, dumb down its quality and, most pernicious, impose “woke” leftist requirements on its nature, blocking religious instruction, for example. The direct cost of this Department is only $82 billion per annum in the Biden 2025 Budget, but every little helps; more important, it is clear that the net economic value produced by the Department is substantially negative. Raze it to the ground!

While we are on the subject of education, Musk should shut down immediately the Federal Direct Student Loan Program. The accrued and hidden bad debt losses on this are already some $1 trillion and the amount is soaring every year (obviously, closing the program will not get that money back; the important thing is to staunch the bleeding). Having the state provide student loans has many ill-effects: it subsidizes economically useless courses and expensive colleges, while disadvantaging youths who choose community colleges or apprenticeships. If as under the Biden administration, loans are further subsidized or “written off” this makes ordinary people pay for the most privileged in our society, especially those with economically useless degrees.

Too many people go to college; the entire college expansion of the last 75 years has been a gigantic waste of resources, both of money and of the time of students who could be productively working. Cut the college student population down to 10% of each annual cohort, make it easier for mid-career people to get 1-year “top-ups” to change their career direction or modernize their skill base, and make colleges cut their costs by firing administrators or provide scholarships, and the difficulties in U.S. higher education would be hugely reduced. The cost savings here of eliminating state loans is around $200 billion a year in the long run, a substantial part of the budget cuts needed.

Turning now to an area beloved by traditional Republicans representing rural districts: the Agriculture Department costs only $29 billion annually, but most of that consists of agricultural subsidies that are a scam on taxpayers, since they have the same economic effect as tariffs, but cost money instead of yielding it. Rep. Thomas Massie (R.-Ky) is rumored to be in line for Agriculture Secretary; he needs to go full libertarian in the manner of Argentina’s Javier Milei and remove all such subsidies, replacing them with tariffs wherever necessary to protect U.S. producers, and removing also any prohibitions on imports, which are equivalent to infinite tariffs that produce no revenue. Lord Liverpool realized in 1815 that agriculture was best protected by some mechanism such as the Corn Laws; the same applies today. Agriculture subsidies are a disgraceful relic of the statist New Deal and must all go.

The big numbers in the Budget are of course Social Security, Medicare and food stamps, which together cost $4.4 trillion in the 2025 Budget, being $1.54 trillion for Social Security, $936 billion for Medicare, $589 billion for Medicaid and $1,303 billion for “other mandatory programs,” presumably mostly food stamps. These figures are offset by receipts from related taxes and premiums paid, so that the net cost of social security is only $259 billion, and of Medicare $394 billion.

Thus, the hysterical bombast from statist budget hawks that Social Security and Medicare are the main U.S. budgetary problem is nonsense; the “middle class” programs cost only $653 billion compared to the “welfare” programs’ cost of $1,892 billion, almost triple the amount. It is also well known that the fraud levels in Medicaid and food stamps have soared under the Biden administration and that many of those “welfare” benefits are given to illegal immigrants who should not be here. Hence, the biggest steps that can be taken are to eliminate fraud as far as possible and to cut off all benefits to illegals; as Milton Friedman said: “If you have a welfare state, then free immigration is impossible.” President Trump’s deportation program of illegal immigrants is a budget essential, as well as being desirable in other respects. In addition, the food stamps program should be converted to one of food handouts; this would greatly reduce the fraud, particularly in respect of ineligible people claiming the benefit.

Other than that, the main reform, making Social Security and Medicare more fully viable in the long term, is to continue the program the U.S. has had in 2003-26, raising the age of full Social Security by one month each year; it should thus become 68 in 2038, 69 in 2050 and 70 in 2062. This preserves the benefits of existing retirees, matches the rise in lifespans to the Social Security age and, provided immigration is strictly controlled, with even legal immigration less than in recent years, should enable any subsidies required from the general budget to remain modest.

Another easy win is to abolish the Department of Housing and Urban Development and close the statist behemoths Fannie Mae and Freddie Mac, saving most or all of the department’s $73 billion budget. The American insistence on state guarantees of home loans is a disgraceful relic of the New Deal; it is not done in any other civilized country. (Germany and France have specialized mortgage banks, Britain has loans made by ordinary banks, though once specialist “building societies” did the job considerably better.) State home loan guarantees are a subsidy to house price inflation, that causes losses to taxpayers every time the housing market suffers a downturn. Real estate investment in an inflationary economy such as the U.S. is always excessive, because banks are eternally tempted by its apparent security; subsidizing it further is pure madness. House prices are too high at present; the only way to lower them is to reverse the excessive flow of legal and illegal immigration that has caused overcrowding, slums and hopelessness in all our major cities.

The State Department’s $64 billion, which includes international aid programs, is another place for drastic cuts. While I accept a State Department is necessary, there is no reason to have so many Ambassadors and Embassies. Sir Henry Wotton (1568-1639) in 1610 described Ambassadors as “honest men sent abroad to lie for their country.” Well today, with modern communications, diplomats can lie for their country perfectly well from their homes. Maybe in poor countries where the U.S. has unofficial suzerainty, the U.S. Embassy is a kind of High Commission, helping to maintain order, and so useful, but there can be no possible purpose in the U.S. having 27 Embassies in the 27 countries of the EU. Yes, these are used to reward political donors, but all you need for that is a proper honors system, ideally with hereditary peerages at the top. Those honors cost almost nothing, and the enormous costs of 27 Embassies and 27 large sets of bureaucracies can be saved.

As for international aid, it is essentially all wasted and to the extent it is fed to the international bureaucracies, highly damaging to U.S. interests. After all, if you want to stimulate private enterprise in poor countries, why on earth would you hire a U.S. public sector bureaucrat or an aid-funded consultant to do so? Their incentives are all wrong; they are paid to make the assigned task as difficult and long-drawn-out as possible.

Finally, I come to the Bush-era behemoth, nominally $62 billion in the 2025 Budget, that is the Department of Homeland Security and the security agencies generally (some of which, such as the CIA, are funded through State or Defense). Some of this, like airport security, should simply be privatized, as should the airports themselves – the airports will fetch very good money for the public Treasury, while privatizing security will make it more efficient and less unpleasant. As for the security agencies, I see no reason for the FBI’s existence. In the last 20 years it has shown itself a thorough menace to American freedoms, using the new surveillance technology to imprison hundreds of J6 political prisoners, for example. Given the existence of today’s surveillance technology, a central politicized agency cannot be trusted; it should be abolished and its functions devolved to local police departments, who can communicate with each other when necessary.

The CIA, NSA etc. form a more difficult problem. I reluctantly accept their necessity but believe many of their activities over recent decades have become thoroughly damaging to U.S. interests (for example, as in Macedonia supporting a neo-Communist coup against the successful center-right government of Nikola Gruevski), or even to humanity as a whole (for example running bioweapon labs in Ukraine). There must be much more discipline in their activities; to the greatest possible extent, their function should be reduced to information-gathering, focusing only on non-U.S. citizens. To ensure their future good behavior, I suggest that some trusted figure like Tulsi Gabbard, who understands their needs and pathologies, be appointed to overall control of all these agencies, cutting them back as far as possible.

I could carry on through the rest of government, suggesting economies at the Defense Department for example, but at the risk of descending into unreadability. If readers wished, I will be happy to devote further columns to this subject.

Trump may not think of himself as a traditional Republican, but he can be and would rank among the greatest of Presidents if he copied McKinley on tariffs (as he has said is his intention) and Coolidge on government economy, halving government spending in the next six years. I shall discuss next week whether he should make it a trifecta by adopting Ron Paul’s proposal of “Ending the Fed” and re-establishing the Gold Standard.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)