3 Reasons Elon Musk’s DOGE Could Be Good for Middle-Class Americans’ Wallets
Written by
Heather Altamirano
Edited by
Molly Sullivan
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It’s only been a few weeks since President Donald Trump returned to the Oval Office for his second term and he’s not wasting any time making changes. From day one, Trump started enacting new policies and slashing government spending at a head-spinning rate. To help eliminate waste and fraud, Trump created the Department of Government Efficiency, appointing Elon Musk as the head of the agency.
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In less than two months, Musk has fired thousands of federal employees to reduce government costs and is making good on his promise to scale back. From the Social Security Administration to Veteran Affairs, the Federal Aviation Administration, the Centers for Disease Control and Prevention and more, Musk has gutted several agencies and more mass firings are expected, the Associated Press reported.
So far, Musk has saved $105 billion, according to DOGE’s website, and more savings are on the way. At a Trump rally back in October, Musk said he wants to cut $2 trillion. “Your money is being wasted and the Department of Government Efficiency is going to fix that,” he told the crowd.
The White House states these actions are turning things around, but with significant job loss, the market tanking and fears of a recession looming, what does this mean for the middle class? Peter C. Earle, senior economist, American Institute for Economic Research, explained how this could actually be good for the economy in the long run.
Elimination of Financial Distortions
Many Americans are concerned about Musk having access to the Treasury Department and Federal Payment System, but Earle explained how his role does not hurt the middle class financially. Instead, Musk and his DOGE team will flush out financial imbalances.
“For years, runaway federal spending and the Federal Reserve’s inflationary bias have caused higher prices and propped up inefficient industries, creating an artificial economy on top of the actual, productive economy that benefits those closest to government power while burdening middle-class workers and businesses,” Earle noted.
“The transition away from those government-induced financial distortions may cause short-term market disruptions, but are a necessary correction on the road back to economic health. Markets must be allowed to reprice risk, capital must be allocated efficiently, and industries must thrive based on innovation and consumer demand rather — not government largesse.”
Exposure of Inefficient Government Programs
The U.S. is in debt by nearly $840 billion, per FiscalData, and one of the goals of DOGE is to cut the national deficit and provide relief for taxpayers. While Americans haven’t seen taxes decrease or economic benefits, Earle stated DOGE’s exposure of inefficient government programs could help.
“Any tax burden on Americans comes from excessive deficit spending and monetary expansion. Musk/DOGE’s influence over public funds reflects a larger issue: decades of reckless government spending,” he explained. “That spending has driven taxes and other government fees up, effectively suppressing real wages, making the middle class poorer.”
Although Americans feel their wallets squeezed more, Earle explained the temporary situation will have great benefits.
“If the short-term turmoil accelerates the return to a more sustainable economic structure — where industries must succeed based on market fundamentals rather than political connections, and where the government is small and engages only in the small handful of tasks that the Constitution expressly permits — then the long-run benefits will vastly outweigh the costs.”
Earle added, “By exposing inefficiencies in bloated government programs and artificial economic scaffolding, Musk/DOGE’s disruption may inadvertently force a much-needed fiscal correction, but one that will benefit taxpayers in the long run.”
Long-Term Market Stability
The market is plummeting and the S&P 500 almost hit its worst day since 2022 when it dropped 3.6% at one point, per AP, while the Dow Jones Industrial Average dropped 890 points around the same time. The market instability is partly due to Trump’s on and off again tariff proposals, but Earle explained it’s also for other reasons that will be beneficial down the road.
“Musk/DOGE’s impact on financial markets reflects the unwinding of distortions caused by years of government intervention, easy money policies, and bloat in both foreign and domestic expenses. The Federal Reserve’s low-interest-rate, high-liquidity policies created an environment where financial markets thrive not on productivity and efficiency, but on monetary expansion and cheap credit.”
According to Earle, market instability is a given and it will hurt, but it’s not forever.
“Now, as capital starts reallocating based on real economic value rather than government subsidies and Fed liquidity injections, market volatility is inevitable.”
He added, “A market-driven economy is always volatile in the short run but ultimately delivers greater prosperity than a centrally planned one.”
With so much job loss, stark changes and uncertainty, it’s difficult for many Americans to see the advantages of DOGE, but Earle believes the outcome will have a positive impact on the country and that while the transition will be painful, there will be financial compensation when things settle.
“It’s the only path toward a healthier economy that rewards actual innovation, efficient capital allocation and free-market competition rather than politically connected interests.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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