DOGE's Newly Listed 'Regulatory Savings' for Businesses Have Nothing to Do With Cutting Federal Spending

This month the Department of Government Efficiency (DOGE) published new estimates of “savings” from various regulatory changes, which it says total $29.4 billion so far. The New York Times suggests several reasons to question these numbers but overlooks the most fundamental problem: Although deregulation accounts for about 17 percent of the $175 billion in total “estimated savings” that DOGE claims, the numbers in this category generally have nothing to do with federal spending, the project’s ostensible target.

One possible exception: DOGE claims changes to the rules governing health insurance subsidies under the Patient Protection and Affordable Act will save $10 billion, and at least some of that may represent reduced federal spending. But according to an “unnamed senior administration official” quoted by the Times, DOGE’s estimates of the impact from regulatory changes “represent cost savings for regulated parties.”

DOGE plausibly claims deregulation will reduce costs for businesses, and it may also benefit consumers in various ways. But those benefits have no impact on the annual budget deficit or the accumulating national debt. It is therefore illogical to include such “regulatory savings” in a tally that is supposed to show how far DOGE has gone in tackling those problems.

Even if we ignore this conceptual confusion and accept DOGE’s numbers, its progress represents a drop in the bucket of the federal government’s fiscal incontinence, which is mainly due to spending over which DOGE has no control. DOGE’s avowed accomplishments also fall far short of the ambitious goals set by Elon Musk, the billionaire entrepreneur who unofficially ran the initiative until his recent pivot back to his businesses. Musk, who originally thought DOGE could reduce annual federal spending by “at least” $2 trillion, cut that target in half in February. But as recently as late March, he was still confident that DOGE could achieve $1 trillion in annual savings.

On its face, DOGE’s current estimate falls about 83 percent short of that goal. But because that estimate includes multi-year savings, such as projections of the total that would have been spent under canceled grants and contracts, it does not tell us how much DOGE claims to be saving in any given fiscal year.

In April, Musk projected that the savings in FY 2026, when DOGE is scheduled to sunset, would be about $150 billion. But that estimate, which refers to a specific year, should not be confused with DOGE’s periodically updated “estimated savings,” a number that includes spending reductions that span multiple years.

Keeping that distinction in mind, there are reasons to doubt whether even these modest savings will materialize. News organizations have identified many problems in DOGE’s “Wall of Receipts,” which lists canceled or modified contracts, grants, and leases. The errors include contracts that were not actually canceled, contracts that were terminated during the Biden administration, iffy estimates of savings on contracts that had not been awarded yet, contracts that were counted multiple times, conflation of contract caps with actual spending, the inclusion of past spending in estimates of future savings, and overvaluation of contracts and grants.

The Times, which publicized many of those mistakes, sees similar exaggeration in DOGE’s new list of “regulation repeals and modifications.” Reporters Coral Davenport and Stacy Cowley “examined 10 of the largest claims on the leaderboard” and concluded that “several did not show evidence of savings to households.”

Right away we see a problem. DOGE does not claim the “regulatory savings” accrue to “households,” although it does say its total “estimated savings,” which include the “regulatory savings,” amount to $1,086.96 “per taxpayer.” In any case, both ways of framing the numbers overlook the point that DOGE is supposed to be reducing federal spending. Its estimates of “regulatory savings” for businesses are irrelevant in that context.

Instead of delving into that puzzle, Davenport and Cowley question the wisdom of various regulatory changes. They note, for example, that DOGE “claims that the Energy Department’s proposals to reverse 16 efficiency standards on appliances like dishwashers and microwaves will save Americans a combined $4 billion.” Yet according to “government scientists’ own accounting,” they say, “appliance efficiency standards saved the average American household about $576 in 2024 on water and gas bills.”

That is not exactly an apples-to-apples comparison, and it takes for granted the paternalistic premise that consumers are not smart enough to assess their own interests. Left to their own devices, Davenport and Cowley assume, Americans would irrationally discount the long-term savings from reduced utility bills. They might prefer cheaper appliances that save them money up front or dishwashers that use more water per cycle but clean dishes better in less time. In any event, appliance manufacturers are free to tout the cost-cutting advantages of more “efficient” models, which may or may not persuade any particular consumer. As Davenport and Cowley see it, that would give Americans more freedom than the federal government should allow.

What does any of this have to do with the accuracy of DOGE’s numbers? According to “multiple experts in regulatory policy,” Davenport and Cowley say, “many of the numbers DOGE and the Trump administration cite show little to no evidence of the comprehensive cost-benefit analysis” that “has historically undergirded agency regulations,” which considers the impact on “individuals and households” as well as regulated businesses.

Davenport and Cowley see a similar problem with DOGE’s estimate that rescinding the Biden administration’s limits on credit card late fees “will save Americans $9.5 billion.” That can’t be right, they say, because “government analysts” in the prior administration “calculated that the rule would save millions of customers an average of $220 per year,” totaling “about $10 billion annually, mostly in avoided bank penalties.”

By ignoring those savings, Davenport and Cowley think, DOGE is presenting a misleading picture. Yet the estimate that they cite does not take into account the unintended results of capping late fees, which could hurt consumers.

“Individuals considered risky are still able to access credit because of contractual terms like late fees,” Reason Contributing Editor Veronique De Rugy noted in 2023. “Lighten the fees and delayed payments will increase, making lending money riskier for institutions. When that happens, the only tools left to manage risk will be higher interest rates—which means higher costs even for responsible borrowers—or outright denials of low-income credit card applicants.”

Whatever the merits of the policy that the Trump administration reversed, the savings DOGE is claiming based on that change do not imply any reduction in government spending. Nor do the savings it attributes to relaxed appliance efficiency standards, which may increase consumer freedom but have no impact on federal outlays.

“The cost savings from [those] unprecedented deregulatory actions represent projected savings to both consumers and manufacturers based on a variety of factors, including increased choice of lower cost appliances and lower compliance costs,” a Department of Energy spokeswoman told the Times. That is all well and good, but it does not explain why those savings should be counted in any calculation of the Trump administration’s success at curtailing runaway federal borrowing.

Given DOGE’s track record, there is ample reason to be wary of the dollar figures it attaches to particular regulatory changes. To begin with, DOGE does not specify what period of time is covered by each item. Are these total savings or annual savings?

Davenport and Cowley offer more grounds for skepticism. They note, for example, that DOGE says rolling back water efficiency standards for commercial washers “would save Americans $1.9 billion.” That seems implausible, they say, since “the entire market for commercial washers is about $6.5 billion.” They quote Steve Cicala, co-director of the National Bureau of Economic Research’s Project on the Economic Analysis of Regulation, who says “there’s just no way that number makes any sense.”

Susan Dudley, “an expert in regulatory policy at George Washington University” who “served as the senior regulatory official in the George W. Bush administration,” concurs. “I don’t understand how anyone thinking this through could account for that claim of savings,” she told the Times. “This was one of my concerns with DOGE from the beginning. They’re not doing their homework, and they’re not showing their work.”

That take jibes with the impressions of budget experts such as the Manhattan Institute’s Jessica Riedl, the American Enterprise Institute’s Nat Malkus, and the Cato Institute’s Romina Boccia. But in this case, the problem is not just that DOGE’s numbers are unreliable or that its results are unimpressive even when taken at face value. The problem is that DOGE implicitly portrays “regulatory savings” for businesses as a step, however tiny, toward federal fiscal sanity.

The post DOGE’s Newly Listed ‘Regulatory Savings’ for Businesses Have Nothing to Do With Cutting Federal Spending appeared first on Reason.com.

Source: https://reason.com/2025/05/30/doges-newly-listed-regulatory-savings-for-businesses-have-nothing-to-do-with-cutting-federal-spending/