DOGE Should Target Social Policy Programs

Rarely has a federal initiative generated as much controversy, so quickly, as Elon Musk’s Department of Government Efficiency. His exposure of major gaps in federal auditing, the widespread fraud enabled by Washington’s lax approach to spending, and the sometimes absurd programs funded by taxpayer dollars has sparked public outrage.

According to a study last spring by the nonpartisan Government Accountability Office, the federal government loses up to $521 billion annually to fraud. In that context, DOGE’s intense early scrutiny of federal accounts during the second Trump administration marks a crucial first step toward restoring fiscal sanity in Washington.

But fraud does not wholly explain the Washington accountability gap. The federal government is also rife with programs that run for decades, despite little or no success. For years, taxpayers have paid for antipoverty initiatives that don’t reduce poverty, social-welfare plans that don’t improve community flourishing, and job-training initiatives that don’t find people work. In too many cases, Congress finances programs without even asking for measurable results. We already know that some of these efforts have not worked before, yet the government plunges ahead with new spending anyway.

Facing this woeful record, the Trump administration’s long-term task for Musk should be to create within DOGE some version of what former Manhattan Institute scholar Jim Manzi called a Federal Experimental Agency, a body that undertakes to rate the effectiveness of government social policy programs in the same way the Congressional Budget Office assesses the budgetary impact of spending on those programs. At the core of this project would be a requirement that any initiative aimed at achieving a social policy goal—whether through legislation or executive order—include clear metrics for its success or failure, along with mechanisms to reduce or eliminate funding for programs that fail to deliver results.

It’s not a new idea. During George W. Bush’s first term, the Office of Management and Budget, under then-director Mitch Daniels, proposed restructuring federal antipoverty grant programs to focus on actually reducing poverty—and directing funds to programs that demonstrated results. Among OMB’s proposals was a requirement that antipoverty funds go only to genuinely distressed neighborhoods—many affluent communities were getting these grants as well—and that recipients be evaluated based on outcomes like reductions in poverty and crime, and increases in local employment.

And concerns about accountability go back even further: a transition team for President-elect Bill Clinton had already criticized the “systematic plunder of many millions of taxpayer dollars” in these same programs.

The response to the Bush proposals from official Washington and from those who received this money was indignation. New York senator Charles Schumer hyperbolically called these grants “the single most important tool that cities like New York have to grow,” while Baltimore’s then-mayor Martin O’Malley compared any attempt to shrink the programs with a terrorist attack on American cities. Studies on how the money was spent in places like New York and Baltimore showed the hollowness of these protests. A Buffalo News investigation published around the same time as Schumer’s comments determined that Buffalo had received more antipoverty funds per capita than any urban area over the last 30 years, though with “scant evidence” of any impact; instead, local politicians had “frittered away much of the money.” Similarly, a report by an economic development consultant on Park Heights and Upton, two Baltimore neighborhoods that had garnered $100 million over 20 years in antipoverty funds, concluded that the communities were “much worse off today” than before the money had come in—another testimony to the relentless decline of that city.

Unfortunately, Bush’s antipoverty-program reform efforts bore little fruit. Resistance in federal Washington was intense, and Bush wasn’t the disrupter that President Trump seems determined to be.

One outcome of a failure to measure the results of such programs is that funding goes on endlessly because it creates its own political constituencies. Antipoverty funds, for instance, have engendered entire political careers in places like New York City, where local activists use the money to build formidable political machines. An exasperated Mayor Ed Koch once summed up the process of turning antipoverty programs into political power when he branded a community activist-turned-legislator as a “poverty pimp.” During Jimmy Carter’s presidency, advocates for antipoverty block-grant funding managed to stave off efforts to kill the controversial federal program by expanding it, so that the money went to projects in more congressional districts—thus garnering more lawmaker support.

With so many Washington patrons, these programs persist despite little evidence that they work. A vivid example from the Biden administration was a $10 billion refunding of the 2009 State Small Business Credit Initiative—a kind of government-backed venture-capital scheme, aimed at firms in “disadvantaged communities” and very small businesses. Congress and the Obama administration launched the program in the same year that they gave us the Dodd-Frank Wall Street Reform and Consumer Protection Act, which imposed major new regulations on banks. Dodd-Frank, ironically, raised lending costs for banks and throttled small-business loans, according to a National Bureau of Economic Research paper. In other words, government launched a program to boost financing for businesses stifled by government regulation.

Biden revived the State Small Business Credit Initiative on the questionable premise that banks avoid lending in disadvantaged areas due to bias against local business owners—even after his administration, along with Trump’s, had already delivered hundreds of billions in Covid aid to small firms. But the deeper problem is often not lender bias but borrower risk. Many small businesses in low-income areas face steep credit challenges—one reason even government-backed lending programs frequently suffer heavy losses. After the Los Angeles riots of 1992, for instance, the federal government allocated $430 million in emergency block-grant funding for small businesses in the affected areas to create economic opportunity and stability. Within just two years, over a third of the funded businesses had failed—triple the projected default rate. A scathing HUD audit found that the plan had created few jobs, and the federal government quietly shut it down.

In today’s Washington, President Trump and Musk’s DOGE face resistance simply for attempting to build better safeguards against fraud—a revealing commentary on the federal government’s tolerance for waste. That so much money can be recovered through basic oversight points to a deeper problem: a spendthrift culture that treats taxpayer dollars as limitless. Beyond fraud lies a more insidious challenge: rooting out the so-called zombie programs that continue to receive funding long after their usefulness has faded. These initiatives persist by inertia, not merit. A broader reform effort would also require setting clear performance standards for social policy initiatives—and ending funding for those that fail to meet them. This subtler, institutionalized form of waste is no less costly to the American taxpayer.

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