DOGE’s mass federal workforce cuts may cost taxpayers $135 billion this fiscal year alone

• DOGE claims to have saved the government $150 million in waste, fraud, and abuse, but some federal workforce and policy experts believe Elon Musk’s cost-cutting efforts have proven expensive to taxpayers. The chaos of personnel changes have tanked productivity, one expert claims, costing the government billions in wasted payroll. Fired IRS employees are no longer able to carry out audits to bring in key revenue, another argued.

As Elon Musk prepares to step back from the Department of Government Efficiency (DOGE), his goal to rout out government waste, fraud, and abuse may have fallen short. Some experts warn his efforts may actually be costing the government billions in lost labor and revenue.

DOGE initially promised to identify and eliminate $2 trillion in the first months of President Donald Trump’s second term, though Musk drastically cut that figure down to $150 billion—just 7.5% of his original estimated savings. Those spending cuts have impacted 260,000 federal workers, who have been fired, taken buyouts, or retired early since Trump’s return to the White House, Reuters calculated. Between layoffs and resignations, the Internal Revenue Service may lose up to one-third of its 100,000-strong workforce, about 22,000 of which may take Trump’s most recent resignation offer, The New York Times reported earlier this month.

The mass exodus of federal workers may mean the government has fewer salaries to pay, but it also could critically reduce the amount of work it can conduct, including collecting revenue from tax audits.

“We do need to have our government work better, but the approaches that have been adopted so far are taking us in the exact wrong direction,” Max Stier, chief executive of government efficiency and workforce nonprofit Partnership for Public Service, told Fortune. 

“The end result will be that the American public will be holding the bag as Elon Musk goes back to his private enterprises.”

Quantifying the cost of DOGE

The Partnership of Public Service estimated DOGE could be costing taxpayers roughly $135 billion. With the 2.3 million people in the federal workforce receiving a total $270 billion in annual payroll, Stier believes the cost of firing, re-hiring, and putting workers on paid leave—as well as the losses in productivity as a result of the personnel changes—has cost the government about half of that total payroll.

A Yale University Budget Lab report from March found additional evidence that DOGE’s intended saving may be costing the government. While it’s unclear how much of the IRS’s workforce will be reduced, the Budget Lab calculated that should 22,000 employees leave the agency, it would lose $8.5 billion in net revenue in 2026, largely as a result of fewer personnel available to conduct audits. Over 10 years, this loss would amount to nearly $198 billion in revenue, according to the report.

These calculations notably do not engage with or take into account DOGE’s claimed $150 billion in savings. Some of DOGE’s claimed savings were found to be erroneous, including calculating savings from contracts that had been expired for years. Harry Kraemer, an executive partner with Madison Dearborn Partners and a clinical professor of Leadership at Northwestern University’s Kellogg School of Management, told Fortune last month DOGE-related savings could be overstated by up to 80%.

The White House and DOGE did not respond to Fortune’s requests for comment, but White House spokesperson Harrison Fields told the New York Times, “It’s important to realize that doing nothing has a cost, too, and these so-called experts and groups are conveniently absent when looking at the costs of doing nothing.”

Where are the losses coming from?

What DOGE missed in its savings calculations is the value of the labor the federal workforce was hired to complete, experts said.

“Saving on $1 of salary, it sort of diminishes the impact of what that salary is doing,” Richard Prisinzano, director of policy analysis at The Budget Lab, told Fortune.

The efficiency of the IRS depends on having personnel able to complete audits, Prisinzano argued. While counterintuitive, in order to increase the agency’s efficiency—quantified by the amount of revenue it can bring in through audits—it would be better off hiring more personnel. The Wall Street Journal calculated tens of billions of dollars in uncollected tax revenue as a result of recent job cuts.

“For every dollar spent, there's quite a bit of revenue that comes in,” Prisinzano said.

But with fewer hands to complete its work, the federal government may be also wasting money in the form of lost productivity, a result of “chaos” created by DOGE’s presence in agencies, as well as firings and rehirings, Stier posited. Fortune calculated that Musk’s weekly emails asking workers to list five weekly accomplishments would cost the employees 165,000 hours of their workday to complete.

DOGE would therefore be wasting dollars as a result of a workforce no longer able to carry out its work efficiently, something Stier argued the Trump administration was actively facilitating. Last year, Russell Vought, Trump’s director of the Office of Management and Budget, said in private speeches, “We want to put them in trauma,” referring to bureaucrats.

“What we are seeing is a workforce that is being traumatized, just as the administration has stated as their goal,” Stier said. “And when you traumatize the workforce, there’s nothing produced.”

This story was originally featured on Fortune.com