‘No, we didn’t’: DOGE staffer admits Elon Musk’s cost-cutting agency failed to reduce the federal deficit

In its early days, the Elon Musk-led Department of Government Efficiency (DOGE) bragged it could cut up to $2 trillion from the U.S. federal budget. In December, Musk conceded the special advisory only saved $200 billion in “zombie payments” for cancelled contracts or fraudulent unemployment claims. 

But a recent estimation of DOGE’s overall impact indicated any savings it found did little, if anything, for the deficit.

In a deposition video from January, which recently went viral, DOGE employee Nate Cavanaugh said cost-cutting efforts fell far short of its original $2 trillion goal. The deposition was part of a larger lawsuit filed by the American Council of Learned Societies, a nonprofit consortium of scholarly institutions, alleging DOGE used OpenAI’s ChatGPT to identify and then cancel more than $100 million in diversity, equity, and inclusion grants.

“You don’t regret that people might have lost important income…to support their lives?” one attorney asked Cavanaugh regarding the grant cancellations.

“No. I think it was more important to reduce the federal deficit from $2 trillion to close to zero,” said Cavanaugh, who is also the founder of AI-powered accounting firm Flow Finance.

“Did you reduce the federal deficit?” the attorney asked.

“No, we didn’t,” Cavanaugh replied.

The White House did not immediately respond to Fortune’s request for comment.

Judge Colleen McMahon of the Federal District Court in Manhattan ordered videos of the deposition, which also included a deposition of DOGE staffer Justin Fox, to be removed online following social media backlash.

DOGE, formed the first day of President Donald Trump’s second term, was part of an effort to root out so-called “waste, fraud, and abuse” from the federal government. Over the course of the 10 months it was operating under centralized leadership, the group eliminated the roles of more than 300,000 federal employees and claimed to have canceled 13,440 contracts. 

The recent lawsuit is the latest instance of DOGE coming under scrutiny. Cybersecurity experts warned the group had access to U.S. payroll systems that presented “unprecedented power and control” over Americans’ information, while the mass layoffs could have created opportunities for countries like China and Russia to recruit informants who had access to classified data. Management experts claimed DOGE’s purported savings were completely overblown.

Signs of DOGE increasing U.S. government spending

From the beginning of Musk’s tenure as head of DOGE, which was not a real department but instead an advisory office, economists were skeptical about its ability to slash the federal deficit as the national debt soared beyond $38 trillion. The Brookings Institution Hamilton Project tool tracking federal spending found that as of Dec. 19, 2025, government spending increased nearly 6% to $7.558 trillion from $7.135 trillion a year earlier. 

A Cato Institute report from December 2025 argued DOGE’s failure to shrink overall spending, despite culling more than 9% of the federal workforce, was in part because most federal spending does not come from salaries. Additionally, the government hired contractors to replace employees. The libertarian think tank calculated that a 10% cut in the workforce would result in a savings of only about $40 billion.

Max Stier, chief executive of government efficiency and workforce nonprofit Partnership for Public Service, told Fortune in April 2025 that DOGE’s cuts could actually mount pressure on America’s coffers, estimating the cost to fire, rehire, and put workers on paid leave cost American taxpayers roughly $135 billion. 

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

A Yale University Budget Lab report from March 2025 similarly forecasted that if 22,000 Internal Revenue Service employees left their roles, the agency would lose $8.5 billion in revenue in 2026 as a result of fewer personnel available to conduct audits. Over a decade, that loss could snowball to nearly $198 billion in lost revenue. (The U.S. Government Accountability Office reported that more than 17,000 IRS employees left the agency last year.)

An IRS employee previously told Fortune the mass layoffs have decreased the efficiency of employees, increasing call times and slowing down the processing of paperwork.

“When we look back historically, we’re going to see that the gutting of the bureaucracy that keeps the government running, that keeps the country functional, will be the trigger that collapses America,” the employee said.

Scott Kupor, the head of the Office of Personnel Management, indicated the workforce reductions last year were overdone. He told The Washington Post earlier this month the administration is planning to rehire several positions in the 2 million-person federal workforce.

“We probably have some skills that we now need to hire back, quite frankly,” Kupor said. “There’s no question anytime you do restructurings … sometimes you over-restructure, sometimes you under-restructure.”

This story was originally featured on Fortune.com