DOGE’s goal of eliminating $1 trillion from the government budget is not limited to federal employees. Consultants must also prove their value. What would be their response? “Our only job is to help clients save money in the long run.” Good enough? Well, Musk will have to decide.
Reports say that the General Services Administration (GSA) asked all federal agencies to list and justify consulting contracts from 10 companies by the end of this week.
There is a long history of consulting companies making a lot of money off of the government’s inefficiency. In the US, they are hired to help the government with a wide range of tasks, such as making the Department of Homeland Security’s websites safer and more user-friendly for people who are borrowing money to pay for school.
This looks very vague. Some sort of USAID for the US? However, not every government deal is at risk in the same way. It is said that the GSA wants to get rid of so-called “Oasis” contracts that cover professional services like accounting, engineering, logistics, and banking services.
This means that businesses that offer services based on technology, like cyber security or AI, should be less affected. I mean even Musk is a tech person and believes in technology. Palantir Technologies, the AI-powered data analytics company co-founded and run by Peter Thiel, who has worked with Musk for a long time, could be an example.
Defense is what Palantir does best, and the US government gave it 42% of its income last year. Even though the price dropped recently, the stock has doubled since November. There is still a downside. Musk’s knowledge of tech will give him the space to ask the right questions to the consultants involved. Maybe the risk is even higher.
Consultant companies that are at risk of Musk’s axe
According to GSA, the10 consulting firms are set to receive over $65 billion in fees in the coming years. The companies are Deloitte Consulting LLP, Accenture Federal Services LLC, General Dynamics IT, Booz Allen Hamilton, Leidos, Guidehouse, Hill Mission Technologies Corp., Science Applications International Corp., CGI Federal, and IBM.
Cutting some of these contracts, means a milestone for Musk and DOGE.
Stephen Ehikian, acting GSA administrator, wrote, “Consistent with the goals and directives of the Trump administration to eliminate waste, reduce spending, and increase efficiency, the U.S. General Services Administration has taken the first steps in a Government-wide initiative to eliminate non-essential consulting contracts.” This shows support for DOGE.
Lets see the companies that have been enjoying the most benefits. Booz Allen Hamilton is the biggest beneficiary and also the most open of the big consultants. The business split off from its consulting arm for the private sector in 2008.
Now, almost all of its income comes from the public sector. The last fiscal year saw this amount rise to $11 billion. This is more than double what it was ten years ago. This is massive.
Booz Allen CEO Horacio Rozanski says the company is well-aligned with the Trump administration’s priorities and is already talking to officials about how to deploy its technology in areas such as space defenses and fraud reduction. However, since Donald Trump was elected in November, its shares have gone down 43%.
Next is Leidos Holdings. It is hired to do work in hacking, cryptographic key management, and other areas. Over the last year, Leidos received $9 billion, the most recent amount being $37 million from the Department of Defense.
This translates to about 87% of the company’s total income. Meanwhile, shares in Leidos Holdings have dropped more than a third. I guess the investors are afraid of Trump’s government, and they probably saw this coming.
Accenture also gets about 8% of its income from the US government. However, the company has lost about 14% of its market value in the last month.
The Americans’ stance on DOGE cuts
This is a major hit for Americans. Federal workers losing their jobs, companies losing government funding, and, of course, more people will lose their jobs. In fact, according to economists, the number of layoffs at Elon Musk’s DOGE could be much higher than most people think.
The 1 million job cuts related to DOGE could be much higher than the often-mentioned 300,000 cuts. The 300,000 cuts don’t take into account the effects on the 5.2 million federal contractors who work for the government, as both Musk and Trump target government contracts and grants at the same time.
Higher unemployment due to DOGE layoffs and possibly slower GDP growth due to less government stimulus are not good for the financial markets. However, according to Michael Wilson, chief U.S. equity strategist at Morgan Stanley, these problems may only last for a short time before assets get a long-term boost from a more stable fiscal outlook.
Taken on February 28, 2025. Source: Flickr
According to Americans who may not understand much, the least they expect is lower standards of living and maybe lesser taxes. If that doesn’t happen, then the government has questions to answer.
Something else that is exciting to Americans is that, when all is said and done, they will get some money that DOGE would have collected. There is a Trump proposal that would give 20% of the savings from DOGE’s cost-cutting measures to American citizens. In addition, an equal amount would be used to pay down the federal debt.
Should it be implemented, cheques of up to $5,000 could be sent per household after the Musk-led DOGE wraps up its work in July 2026. Not bad. However this is a year away. It is still not something that is a guarantee.
Americans are still lukewarm about DOGE because they’re torn about its mission. Sure, they have a low opinion of the federal government, but they might be ready to put up with its deep flaws so long as it delivers their goodies.
