DOGE Drops Federal Deficit

March’s federal budget report offered a rare dose of fiscal optimism. The monthly deficit dropped to $161 billion—the lowest since before the COVID crisis and a sharp improvement from February’s $307 billion shortfall. At the center of the turnaround: Elon Musk’s Department of Government Efficiency (DOGE). In its first full month of operation, DOGE helped slash “Income Security” outlays by $45 billion, uncovering massive waste allegedly funneled through fraudulent benefit schemes masked as social safety net programs. Tax receipts also rose nearly 11%, giving Treasury officials temporary breathing room.

Contract and employee terminations, while often seen as harsh, are also contributing to spending decreases. According to the New York Times, the following number of employee have been terminated thus far this year from the federal workforce.

The DOGE "Savings Wall" shows the agency has saved $150 billion so far and a list of the contracts it has cut - many of which are completely outside the scope of government work. There are some that question the accuracy of that number, as it appears to take future recurring contracts that will no longer renew into account.

Yet the picture is far from fixed. While DOGE delivered a significant reduction in one spending category, broader budget trends remain troubling. Entitlements, defense, and especially interest payments continue to surge. Annualized interest costs are now over $1.1 trillion—more than double 2021 levels—fueling concerns about long-term solvency. The March drop in the deficit may mark the beginning of a more aggressive push to root out inefficiencies, but it’s a small dent in a structurally unsustainable path. If Washington hopes to tame deficits without market panic, Musk’s crackdown may need to go much deeper—and do so while bond markets grow increasingly sensitive.

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