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The United States faces an enormous problem. It’s gone unresolved for decades, and it gets worse with every year that passes. And as 2025 begins, there’s no relief yet in sight.
It’s the national debt: the amount of money borrowed by the federal government to cover its expenses. It was less than 63% of GDP [ [link removed] ] at the end of 2007, but recently it surpassed 120% of GDP. Shortly after his reelection, President-elect Trump announced the creation of an informal Department of Government Efficiency (DOGE) to be headed by tech entrepreneurs Elon Musk and Vivek Ramaswamy. DOGE [ [link removed] ], Trump said, would pursue three goals: (1) streamline government operations, (2) reduce wasteful spending and (3) eliminate unnecessary regulations. Reducing spending is the most critical of the three. It’s also the hardest to accomplish.
Trump’s establishment of DOGE is encouraging, but what can the new president and his new department do to ensure successful reforms where previous administrations, both Democratic and Republican, have failed? What can we learn from past attempts to bring down government spending by reducing the size and scope of the government, both in the U.S. and elsewhere? What’s worked and what hasn’t? Reform is possible, but only with a strong commitment from the executive and a willingness to start, if necessary, with small and gradual changes.
Government Growth in the 20th Century
The federal government expanded dramatically during the 20th century. Government spending averaged just 2.1% [ [link removed] ] of GDP between 1900 and 1916, but World War I triggered a sustained expansion, and federal government spending has been steadily increasing ever since.
Franklin Delano Roosevelt’s New Deal, a massive intervention meant to bring immediate economic relief and to stabilize the economy after the worst of the Great Depression, significantly expanded the size and scope of the federal government. In response, Congress in 1947 established a bipartisan commission [ [link removed] ], chaired by former President Herbert Hoover, on how to make the government more “efficient and economical.” But the Hoover Commission focused only on operational improvements to existing government programs, rather than on whether those programs needed to exist. Ironically, by enabling the government to do the same work more efficiently, the 1947 Hoover Commission may have helped to expand [ [link removed] ] government, not shrink it.
Congress established a second Hoover Commission in 1953, and that commission did make some efforts to “attack big government at its roots [ [link removed] ].” The commission’s 1955 report proposed privatizing certain government functions. But little was achieved, in part because Democrats controlled both houses of Congress at the time of the report’s release.
The Reagan Spending Cuts
By the early 1980s, many Americans had become disillusioned with “big government.” Ronald Reagan campaigned on a promise to scale back the size and complexity of federal government [ [link removed] ], and it likely contributed to his landslide victory. Once in office, President Reagan froze federal hiring, which reduced employment in government agencies (except for the Department of Defense) by 7.2% [ [link removed] ], largely through attrition. Congress [ [link removed] ] implemented almost all the substantial reductions [ [link removed] ] in nondefense spending that Reagan proposed in his first budget.
But liberal Democrats pointed out that most of Reagan’s proposed spending cuts were aimed at programs that helped the poor, such as tax credits, food and nutrition assistance, and aid to state and local governments, while middle-class entitlements, such as Social Security and Medicare, were untouched. In subsequent budgets, Congress rejected or ignored many of the administration’s proposed reductions in government programs, and Reagan himself rejected many spending cuts recommended by his budget director, David Stockman. Federal spending thus increased, though nondefense discretionary spending (spending controlled by Congress through the appropriations process) still fell overall by 9.7% [ [link removed] ] during Reagan’s first term.
Beyond its efforts to reduce government spending in annual budget proposals, the Reagan administration explored options for reducing government waste by establishing the President’s Private Sector Survey on Cost Control, led by Peter Grace, a successful business executive. The Grace Commission, as it came to be known, was funded entirely by private contributions. Members of the commission met with heads of government agencies to pursue detailed investigations of agency operations. The Grace Commission made 2,478 recommendations for a reduction in spending that it estimated at $424.4 billion over three years.
The nonpartisan Congressional Budget Office (CBO), however, found these estimates overly optimistic. When the CBO analyzed the commission’s most impactful recommendations, which accounted for 89% [ [link removed] ] of the potential three-year savings, it found that the savings realized would only be about a third as large as the commission estimated. Moreover, the president could implement only a small number of the commission’s recommendations [ [link removed] ] on his own authority; most would require congressional approval. Because the House of Representatives was controlled by Democrats at the time, the biggest cost-cutting proposals never went through.
Although the White House included some of the Grace Commission’s recommendations in its 1983 budget, in the end the commission had little lasting impact on government spending or efficiency. One of the commission’s most notable accomplishments, however, was to make the initial recommendation for the Base Realignment and Closure [ [link removed] ] (BRAC) program, an effort to close unneeded military facilities. After four rounds of base closures, BRAC saved the government an estimated $7 billion [ [link removed] ] per year beginning in 2001.
Concerns about large deficits and excessive government spending continued after Reagan left office. President George H.W. Bush, after promising not to raise taxes, signed legislation that did just that, while accomplishing little in the way of restraining spending. Defense spending, however, declined gradually after the collapse of the Soviet Union.
The Clinton Era
In 1993, President Bill Clinton asked Vice President Al Gore to conduct a National Performance Review [ [link removed] ] (NPR). Its goal was to “reinvent government” to make it “work better, cost less, and get results Americans care about [ [link removed] ].” The NPR employed 250 career civil servants—a wise choice that helped ensure the NPR’s success, since civil servants are the ones who understand how government works. The NPR took six months to produce a report with 1,250 recommendations. Like the earlier Hoover Commission, however, the NPR’s focus was not on reorganizing or eliminating government agencies but on improving their performance and reducing costs. Implementation of the NPR’s recommendations reduced employment in nondefense agencies by 4.2% [ [link removed] ] between fiscal years 1992 and 1996.
Congressional efforts to reduce the deficit also played an important role in slowing the growth of government spending during the Clinton presidency. In 1990, Congress enacted the Budget Enforcement Act [ [link removed] ], which limited annual appropriations and required that any legislation that would increase the deficit or reduce any budget surplus be offset by spending cuts. Although Congress and the president found ways to evade its requirements, the act was quite effective in limiting spending, and it contributed significantly to several years of budget surpluses beginning in 1998.
Welfare reform was perhaps the most significant change in the role of the federal government during the Clinton administration. Although Clinton campaigned on ending “welfare as we know it,” he was helped by Republicans who came into office under the leadership of Newt Gingrich and under the banner of Gingrich’s Contract with America [ [link removed] ]. The Gingrich Congress also made substantial progress in cutting farm programs, which had been largely untouchable prior to 1996. (Congress, however, reversed course [ [link removed] ] in the late 1990s by enacting a series of supplemental farm subsidy bills to offset low farm prices.)
From the year 2000 until today, no presidential administration has successfully pursued significant reductions in government spending, while the national debt has just kept growing. In this century’s first decade, the war on terror took precedence over concerns about budget deficits. George W. Bush increased both defense spending and nondefense discretionary spending substantially during his presidency. During Barack Obama’s first term in office, recovery from the Great Recession took priority. Record low interest rates following the recession reduced the cost of servicing the debt and the urgency of limiting its growth.
Large deficits during Obama’s second term and Donald Trump’s first can be blamed mostly on the growth of entitlement spending, which neither president was willing to tackle. More recently, the COVID-19 pandemic and the economic upheaval that followed provided federal policymakers with a reason (or an excuse) for enacting huge stimulus spending packages costing trillions of dollars. All told, the past quarter-century of avoiding spending cuts has produced projected deficits and interest costs that future generations are likely to find unsustainable.
Spending Cuts Aren’t Easy
Limiting government spending is very difficult, for several reasons. The system of checks and balances established by the Constitution means it is generally easier to enact legislation than to repeal it, especially if the legislation provides benefits to special interest groups. When it comes time to reduce spending, or repeal a program entirely, those special interests will pressure their senators and representatives to keep the program, and their benefits, intact.
Considering the power of interest groups and the results of past reform efforts, it is hard to be optimistic about the prospects for significant reduction in government spending in response to DOGE or other initiatives the Trump administration might pursue. Nevertheless, some lessons can be learned from past government efforts to cut spending.
What most determines whether government reforms succeed or fail is the level of commitment of the effort’s leader—in this country, usually the president. Although Congress can override presidential decisions to reduce spending or reform policy, recent presidents have been able to accomplish some of their objectives and overcome congressional opposition. Because our presidents have been elected to represent the public at large [ [link removed] ] rather than a particular constituency, they are able to advocate for deals that might benefit the majority at the expense of a privileged minority.
By providing strong leadership, especially in the first few months after taking office, a president whose party has a majority in both houses of Congress can often get legislation enacted that includes provisions opposed by powerful interest groups. But gaining congressional support is critical because the changes that will save the most money are the ones that require congressional approval.
During the 1980s, President Reagan and Prime Ministers Margaret Thatcher in England and Brian Mulroney in Canada each aspired to reduce the size and power of the bureaucracy. Thatcher had the most success of the three [ [link removed] ] because she persisted in her efforts to reduce spending throughout her tenure. During his first year in office, Reagan was successful in getting $39 billion in budget cuts, but he paid less attention to the budget later. Mulroney gave lip service to the idea of reducing bureaucracy but did little in the way of concrete action; as a result, he did not accomplish much.
The federal government has made some major changes that have lasted, among them transportation deregulation in the 1970s, tax reform in the 1980s and a balanced budget in the late 1990s. The latter was once considered a particularly insurmountable goal. But it happened through a combination of gradual changes, including tax reform, tax increases (reluctantly agreed to by Reagan and George H.W. Bush) and reductions in spending (part of Clinton’s 1993 budget agreement with Congress). Big changes combined with smaller, incremental changes can produce important long-term benefits while helping to prevent worst-case scenarios.
Lessons for DOGE
We cannot expect DOGE by itself to solve the U.S. government’s fiscal problems. Cutting discretionary spending, which constitutes only about 26% of the federal budget, is at best only part of the solution. Trump promised in his campaign platform [ [link removed] ] not to make any cuts to Social Security and Medicare, but major reductions in deficits cannot be achieved without reforms to those programs. And those reforms must apply to everyone, including (or perhaps especially) beneficiaries in the middle- and upper-income brackets.
Nevertheless, it might be possible to reduce the budget by hundreds of billions of dollars by targeting discretionary spending alone. Every $100 billion helps! And reducing regulation can contribute to faster income growth, which increases tax revenue, which helps reduce deficits. To be successful, such efforts will require strong presidential leadership, the involvement and cooperation of career civil servants, and support from both houses of Congress.
Conservatives have been trying to rein in the government for well over a century. Cutting spending is not a new idea. DOGE would do well to pay attention to past efforts at reforms, capitalizing on what went right and avoiding what went wrong.

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