Government efficiency commission: the good, the bad, and the ugly

Donald Trump is proposing a new government efficiency commission and he wants Elon Musk to lead it. Like most campaign proposals, it does not yet have many specifics, and it may only be so much hot air. The ideas Trump and Musk have floated so far are a mixed bag:

Sovereign wealth fund. This is a terrible idea, because the federal government will politicize its investment decisions. For those not familiar, sovereign wealth funds are government-owned investment portfolios. If Trump wins, he’ll use it to reward friends and punish enemies. Democrats would use it to promote climate cronyism, ESG, DEI, and other ideological investment objectives.

Corporate tax rate cut. The ideal corporate tax rate is zero, because companies pass on their costs. Consumers pay most of the corporate tax through higher prices. Shareholders and employees bear the rest of the burden through a combination of lower returns, lower wages, and fewer job openings. The corporate tax might feel like we’re socking it to rich corporations, but we’re really socking it to ourselves.

Trump has proposed lowering the corporate tax rate from 21 percent to 15 percent—but only for companies that produce all of their goods in America. He says that “My message is simple. Make your product here in America and only in America.”

A corporate tax rate cut is a good idea. But it should be universal, rather than given only to companies that meet Trump’s special conditions. His rate cut would add complexity to a tax code that is already 75,000 pages long. Let’s simplify it instead. 

A government audit. This idea has some curb appeal, and the government does need better transparency. But an audit along the lines of what Trump and Musk want is likely not feasible.

One reason is size. The federal government is the largest organization in the world. It raises more than $4.4 trillion in revenue, and spends more than $6.1 trillion. It does this every year, and it is still growing. Good luck keeping track of all those line items, even if agencies cooperate with the auditors, which they won’t.

Spending commission. It’s too early to tell, but this could be similar to the regulatory reduction commission CEI has been promoting for years. That idea was inspired by the successful BRAC commissions from the 1990s that closed unneeded post-Cold War military bases.

The idea works like this: If Congress can’t agree on doing something that it really needs to do, then outsource it to a commission that assembles a package that Congress then gives a simple up-or-down vote. It’s a proven way to get Congress to swallow medicine that it doesn’t want to take. The BRAC model worked with military bases, and it could work with regulation. It’s worth a try for spending.

The status quo isn’t working, for regulation or for spending. For example, it took 54 years to end the government’s Tea Tasting Board through regular channels. Larger programs would face even more inertia — and even more special interest resistance.

That said, a spending commission will be useless if it doesn’t tackle entitlement reform, which Trump has already come out against.

It would be nice to get rid of more wasteful Tea Tasting Board-style line items, but those are decimal points compared to the $110 trillion in unfunded liabilities now facing Social Security and Medicare.

Those programs are unsustainable, and must transition to a private accounts model to remain solvent. Staying with the current defined-benefits model is not an option, and it is time for both parties to face that fact.

If the commission doesn’t move Congress towards substantive entitlement reform, it will be useless. I am not optimistic, since Trump opposes Social Security reform. But I would be delighted to be proven wrong.

Universal tariff. Most people know by now that this is a bad idea. A universal tariff, whether 10 or 20 percent, would raise consumer prices, spark retaliatory tariffs that would do further damage, and make US businesses less competitive.

For a more positive trade agenda, see Iain Murray’s and my “Traders of the Lost Ark” paper, and Kent Lassman’s half of the Project 2025 book’s trade chapter (scroll past Peter Navarro’s angry protectionist screed to page 796).

Regulatory reform. This has potential. Trump enacted a series of Executive Orders in his first year that enacted, among other things, a one-in, two-out rule for new regulations, and better transparency for guidance documents and other regulatory dark matter.

The trouble is that Trump never worked with Congress to codify those Executive Orders while he still had a majority in Congress. The result is that Joe Biden overturned those Executive Orders within days of taking office.

The other trouble is that Trump was not necessarily a net deregulator. He has no problem politicizing regulation to benefit friends and punish enemies. Trump started the antitrust revival, in part because he views tech companies as political opponents. He also threatened actions against media companies whose coverage he dislikes, and used tariff exemptions as a way to do favors for friendly companies.

If Trump works with Congress to make regulatory reforms permanent, and can refrain from seeing regulation as a political tool to reward and punish, then the government efficiency commission could do some real good. If not, then not — and that is a big if.

Musk and Trump should consult CEI’s regulatory reform chapter from our Agenda for Congress for some lasting regulatory reform ideas, as well as Wayne Crews’ Ten Thousand Commandments.

All this is not to pick on Republicans. Democrats’ ideas are no better. For analysis of Kamala Harris’s price control proposals, see my recent syndicated op-ed.