Memo to Musk: You can’t rely on your dodgy Doge accounting to fix troubled Tesla

Littered with errors and inaccuracies, Doge’s savings are vastly overstated, writes James Moore. Elon Musk must hope he is better at finding efficiencies at Tesla than he has been for the United States

The US Department of Government Efficiency (Doge) isn’t quite losing its king, but Elon Musk has promised that his time commitment will drop “significantly” from next month.

It can hardly be a coincidence that Tesla, his flagship electric carmaker, reported a 70 per cent fall in profits for the first quarter of its financial year. Deliveries declined by 13 per cent, revenues by 9 per cent. Those numbers were well short of Wall Street’s forecasts.

Musk’s high-profile work at Doge is at least partly to blame. Tesla’s brand has taken a battering as a result of his antics there. Being President Trump’s BFF also goes down like a broken battery with much of the world and at least half of the US.

But has it been worth it to the American taxpayer? Has Musk managed to reduce the nation’s debt mountain? During the US election campaign, the Tesla boss boldly promised to cut at least $2 trillion (£1.5 trillion) from the federal budget. That figure has come down rapidly since Trump took office. Last month, Musk told Special Report with Bret Baier on Fox News that he was confident Doge could unearth $1 trillion in savings. As things stand, it isn’t even halfway there.

The much-ballyhooed “Wall of Receipts” quotes estimated savings of $160bn, made up of a “combination of asset sales, contract/lease cancellations and renegotiations, fraud and improper payment deletion, grant cancellations, interest savings, programmatic changes, regulatory savings, and workforce reductions”. However, doubts have repeatedly been cast over the veracity of that number.

Let’s look at government contracts. I’m going to quote the American Enterprise Institute (AEI), a free-market think tank. It is not a place full of woolly woke liberal Trump haters. Nat Malkus, a senior fellow, recently conducted an analysis of savings from contracts cancelled by Doge, dating from when the Wall’s running total was at $140bn.

Malkus used a $3.3bn US government contract with Family Endeavours Inc for the resettlement of 3,000 unaccompanied refugee children to illustrate why its numbers don’t add up. The value of the potential contract was listed at $3.3bn by Doge, with its savings coming in at $2.9bn. That is only a tiny fraction of the US’s $36.2 trillion national debt, but it is still a big saving.

A justified one? Many people would support the resettlement of unaccompanied refugee kids, but is there any reason for it to cost $1.3m per child? Whisper it, but could Musk be onto something? Wait one moment. Malkus pointed out that the $3.3bn only represents how much could be spent over a number of years. These contracts have flexibility built in to cope with how much might be needed over time. However, that does not represent actual spending.

The amount of money obligated to the contract came to a much smaller, and more realistic, $428m. The amount actually spent came to $283m. Those refugee kids are costing a lot less than the Doge figures imply: subtract the obligated amount from the outlay and the savings come to just over $140m.

Malkus went on to look at the total potential value of $45.6bn of Doge’s axed contracts. He found that their obligated value was $23.8bn while the outlay to date amounted to $14bn. The savings thus came to $10bn, compared to the $18.9bn claimed by Doge.

Now consider the errors. The New York Times said Doge’s public ledger was “riddled with mistakes”, a point picked up by Malkus, who found a $3.8m contract listed at $38m, presumably as a result of a “fat finger” when the data was input.

He also pointed out that if you wanted to restart the work paid for by these contracts, you would need to re-tender. The simpler and cheaper way of realising savings would be to tell federal agencies to cease further spending on these contracts.

There’s more. Some 46 per cent of the cancelled contracts yielded savings of zero, while the majority of the money realised came from the gutting of USAid: 40 per cent of contracts by number, 58 per cent by value and 73 per cent of savings.

It is also worth considering the difference between “gross” and “net”, because some of Doge’s “savings” look set to cut off Uncle Sam’s nose to spite his face. The Washington Post reported that last month the US Treasury Department and officials from the Internal Revenue Service (IRS) were anticipating a tax revenue decrease of around 10 per cent when compared with the previous year, in part because the latter’s budget had been slashed. In dollar figures, that amounts to about $500bn, more than three times Doge’s already dubious figure.

Even if you choose to discount the work of Malkus and others in picking apart Doge’s claims, the (reduced) target of $1 trillion is still only a drop in the ocean when set against the vast size of the US national debt.

The most recent figures show American taxpayers shelled out $1.17 trillion in interest rate payments based on an average interest rate of 3.32 per cent. The US budget deficit in 2024 came to $1.8 trillion. So even if Doge hits its target – doubtful – it will only halve that. Perhaps that’s because it isn’t actually looking at areas where real savings could be made. Oft-quoted examples include social security and entitlements.

The UK’s left-of-centre chancellor Rachel Reeves, who has controversially attacked those, is proving to be far more of a fiscal hawk than anyone in the US’s conservative government. Perhaps Doge should hire her?

Tesla cannot, of course, indulge in the sort of double-counting, over-counting, fat-finger errors and misstatements found in Doge’s figures. The US Securities & Exchange Commission (SEC) would come down on the company like a ton of bricks if it found so much as a whiff of evidence of that.

One would hope Musk proves rather better at finding savings and efficiencies at his carmaker than he has been at Doge. Right now, it needs all the help it can get.