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Elon Musk’s newest venture, co-piloted with Vivek Ramaswamy, is shaking the financial world to its core. Dubbed the Department of Government Efficiency (D.O.G.E), this initiative, launched under President-elect Donald Trump, is designed to slash federal spending by targeting $500 billion in what they call unauthorized or misused expenditures. But while Elon touts cost-cutting and deregulation as his ultimate goals, the potential fallout from D.O.G.E has Wall Street sweating. Federal contractors, pharmaceutical giants, and even defense behemoths like Boeing and Lockheed Martin are bracing for a storm. TD Cowen analysts are already raising red flags. Roman Schweizer, in a Friday note to clients, called D.O.G.E “a major risk factor” for companies tied to government contracts. “Cuts are possible, and there will be uncertainty for several months,” he said. For a market already jittery over sky-high valuations, D.O.G.E might just be the wrecking ball nobody asked for. D.O.G.E targets $500 billion in spending In their Wall Street Journal op-ed, the duo explained their approach: slashing regulatory bloat, trimming administrative costs, and saving taxpayers billions. They say this will rein in federal waste and, in Elon’s words, “put the government on a diet.” Part of the plan includes gutting discretionary spending, cutting funding to organizations like the Corporation for Public Broadcasting, and restructuring federal workforce policies. For example, Elon wants to reduce headcounts by encouraging voluntary resignations and mandating in-person work for federal employees. It’s Elon’s classic playbook: cut costs, cut deeper, and then cut some more. But here’s the thing, analysts are skeptical about just how much D.O.G.E can actually deliver. TD Cowen estimates the initiative might save $50 billion to $100 billion annually. That’s a lot of money, sure, but it’s peanuts compared to the federal deficit, which is projected to hit $1.7 trillion in 2024. Plus, Congress would have to…

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Filed under: News - @ November 24, 2024 7:27 pm