DOGE vs USAID and government spending

From: allin

The early days of the Trump 2.0 presidency have seen a significant focus on the Department of Government Efficiency (DOGE), specifically targeting the United States Agency for International Development (USAID) amidst broader concerns about government spending and budget issues and waste [03:00:00]. This initiative aims to address the substantial US national debt and improve governmental accountability [08:29:20].

What is USAID?

USAID, or the United States Agency for International Development, was established in 1961 by President John F. Kennedy via executive order [03:43:00]. Its stated purpose is to “make friends and influence countries in the American interest” and to assist countries recovering from disaster [03:51:00].

Under the Biden administration, USAID’s budget doubled from $26 bi ll i o n t o a pp ro x ima t e l y$ 45 billion annually, equating to about $150 p er A m er i c an p erye a r < a c l a ss = " y t - t im es t am p " d a t a - t = "04 : 05 : 00" > [04 : 05 : 00] < / a > . I t ha d a tl e a s t 10, 000 e m pl oyees an d p ro g r am s in 130 co u n t r i es a so f 2023 < a c l a ss = " y t - t im es t am p " d a t a - t = "04 : 11 : 00" > [04 : 11 : 00] < / a > . I n co n t r a s t, d u r in g T r u m p^{'} s f i rs tt er m, t h e b u d g e t r an g e d b e tw ee n$ 15 billion and $20 billion [04:27:00].

Controversial Spending Examples

DOGE investigations into USAID spending have revealed several controversial allocations [04:38:00]:

$2.5 million for EV charging stations in Vietnam [04:41:00]
$2 million for sex changes and LGBTQ+ activism in Guatemala [04:47:00]
$1.5 million to a Serbian LGBTQ+ group [04:53:00]
$70,000 for a DEI (Diversity, Equity, and Inclusion) musical in Ireland [04:57:00]
$47,000 for a transgender opera in Colombia [04:59:00]

Antonio Gracias suggested these expenditures could be indicative of a “kleptocracy,” where public funds are diverted for political contributions or personal enrichment [09:21:00]. For instance, Politico itself was allegedly funded by USAID [09:38:00].

The Rise of DOGE

The Department of Government Efficiency (DOGE) is a new initiative under the Trump 2.0 presidency, modeled on efficiency practices seen during Elon Musk’s takeover of Twitter [03:17:00]. Antonio Gracias, who assisted in the Twitter turnaround, notes that Twitter was near bankruptcy and had significant interest costs, leading to drastic cuts, including an 80% reduction in staff [06:08:00]. This turnaround, described as “the biggest turnaround of all time,” involved eliminating wasteful spending like excessive food services and unused office space [07:26:00].

The goal of DOGE is to apply similar “zero-based budgeting” principles to the federal government [17:55:00]. This involves taking all expenses “down to zero” and rebuilding the budget based on first principles and essential government functions [18:09:00]. The Trump administration aims to address the $2 t r i ll i o nann u a l d e f i c i t, re d u ce in t eres t cos t s, an d co mba t an es t ima t e d$ 650 billion to $1 trillion in fraud, waste, and abuse within the federal budget [08:24:00].

The initial focus on USAID came after the agency reportedly attempted to circumvent a Trump executive order pausing foreign aid [25:53:00]. Security officials at USAID allegedly tried to prevent DOGE access to their building and systems [26:37:00].

Historical Context of Government Efficiency Initiatives

While DOGE is presented as novel, similar initiatives have occurred in US history [10:21:00]:

Truman Committee (1941): Formed due to concerns about defense spending, this committee, operating with a small budget, saved an estimated $10-15 billion (equivalent to a quarter-trillion in 2023 dollars) by uncovering waste, fraud, and abuse. Its unanimous, bipartisan findings set guardrails for future efforts [10:33:00].
National Partnership for Reinventing Government (Clinton Administration): Another initiative aimed at government efficiency, led by Democrats [11:44:00].

A key difference with DOGE is its approach as “read-only auditors of the truth,” publishing findings in real-time. This bypasses slow congressional committees and inspector generals, which often delay information release [12:56:00].

Concerns about USAID and Media Funding

Critics argue that USAID’s extensive funding of media outlets creates conflicts of interest and biases reporting [13:35:00]. This is compared to “payola,” where undisclosed payments influence content [14:19:00].

Politico: Received an average of $1.3 mi ll i o nann u a ll y f ro m f e d er a l a g e n c i es d u r in g T r u m p^{'} s f i rs tt er m, w hi c h " ba ll oo n e d " t o$ 8 million per year under Biden [15:26:00]. This amount represents approximately 4% of Politico’s 2021 revenue [16:15:00].
BBC: Received $2.7 million from USAID in 2023, accounting for 8% of its annual income [16:21:00].
Thompson Reuters (consulting arm): Received $120 million from the federal government since 2011, with half of that coming during the Biden administration [16:32:00].
New York Times: Received $370, 000 f ro m t h e f e d er a l g o v er nm e n t in t h e l a s t ye a r u n d er B i d e n, u p f ro m$ 100,000 annually [16:45:00].

These payments raise questions about the independence and objectivity of reporting from these outlets [13:41:00]. Beyond media, USAID has been accused of funding political opposition groups in other countries, such as Hungary and Poland [32:58:00].

Political Reactions and Implications

The Republicans and the Doge agenda and the initiative have been met with opposition from Democrats, who argue that DOGE’s actions, such as accessing payment data, violate privacy [48:51:00]. However, proponents argue that Americans prioritize stopping waste over privacy concerns in this context [49:16:00]. The perception is that opposition to curbing waste, fraud, and abuse is politically damaging [48:51:00].

Former Democratic Chief of Staff Rahm Emanuel has criticized Democrats for losing focus on “kitchen table issues” like inflation, which disproportionately harms wage earners and those on fixed incomes [50:31:00]. The argument is that the Democratic party has shifted from being “pro-labor” to “pro-capital,” benefiting asset owners through policies that lead to inflation and deficits, despite portraying themselves otherwise [47:50:00].

A federal judge issued a temporary restraining order on DOGE, barring Elon Musk and his team from accessing US Treasury payments data, and limiting read access to only two individuals [01:03:08]. This is viewed by some as an administrative block to slow down the process [01:08:58].

Broader Government Spending and Debt Issues

The US government faces a $2 t r i ll i o nann u a l d e f i c i t an d ana t i o na l d e b t a pp ro a c hin g$ 40 trillion [32:28:00]. The interest cost on this debt is currently $1 trillion per year [08:31:00]. The bond market and government spending was showing concern over the uncontrolled spending, leading to higher rates, which proponents believe are now trending down due to DOGE efforts [08:32:00].

A fundamental problem highlighted is the lack of proper financial controls and reconciliation processes within the government [21:48:00]. Money often flows out without a clear audit trail, and departments receive budgets that are not rigorously audited [21:50:00]. This contrasts sharply with private businesses that have strict procurement and payment verification systems [21:35:00].

Proposed US Sovereign Wealth Fund

President Trump signed an executive order to establish the first US Sovereign Wealth Fund proposal [52:34:00]. Traditionally, sovereign wealth funds are based on natural resources (like Norway’s oil fund or Saudi Arabia’s PIF) [52:48:00]. This proposed fund could be anchored by a potential 50% share of TikTok’s US operations [53:15:00], along with revenue from federal land sales and increased oil production [54:56:00].

The fund’s purpose is debated:

Chamath Palihapitiya suggests it should be managed by sophisticated financial experts (e.g., David Tepper, Stan Druckenmiller) to invest capital on behalf of America into American companies [54:19:00].
Antonio Gracias views it as a “stealthy way to create industrial policy” in America, akin to China’s long-term strategic investments in key industries like chip manufacturing [55:22:00]. He advocates for market-driven investment decisions focused on areas beneficial to the country [56:37:00].
David Sacks supports it as a “strategic vehicle for monetization of high value government assets,” like the sale of seized Bitcoin, rather than a vehicle for generating new capital [59:39:00]. He also sees an opportunity to manage Social Security funds more effectively, investing them in equities instead of low-yield bonds [01:00:51].

Concerns include the government’s ability to effectively manage capital, the potential for political pet projects, and the high cost of government capital (5% interest on debt) [58:51:00].

AI and Economic Impact

Beyond direct government spending, the discussion touched on the broader economic impact of AI development, particularly concerning job displacement and productivity.

Google’s plan to invest $75 billion in capital expenditure for AI infrastructure (data centers, servers) in 2025 signals confidence in the technology’s long-term profitability [01:09:56]. This investment is expected to lead to higher returns on invested capital and increased productivity [01:13:08].
Historically, Google has been a “frugal, thoughtful, and well-managed Computing infrastructure investor,” optimizing for cost, energy efficiency, and extended hardware lifespan [01:14:14].
The discussion acknowledges the potential for job displacement due to AI, particularly in sectors like driving and research [01:17:50]. However, there’s optimism that increased productivity will lead to new industries, services, and job creation, akin to historical shifts during the Agrarian and Industrial Revolutions [01:18:38]. The agility and creativity of Americans, if unburdened by excessive regulation, are seen as key to navigating this transition [01:19:37].

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