Elon's Real Goal at DOGE & How to Fix the Debt

02/12/25 • 56 min

"Econ 102" with Noah Smith and Erik Torenberg

This week, Noah Smith and Erik Torenberg talk about DOGE, Elon Musk's initiative to reform government spending, and explore why it might be more about ideology than efficiency. Noah talks about how he would fix the US debt beyond simply cutting waste. They also cover the future of major programs like Medicaid ($804B/year), the trade-offs between inflation and austerity, and how conservatives might reshape federal institutions despite education polarization. Plus: why comparing government efficiency to Twitter's headcount reduction isn't as straightforward as it seems.

🙏 Help shape our show by taking our quick listener survey at https://bit.ly/TurpentinePulse.

Highlights from the Episode:

Noah argues that while Doge (Department of Government Efficiency) is publicly presented as a cost-cutting initiative, it's primarily an ideological project aimed at reducing "woke" initiatives in government.
As zero-interest debt gets rolled over at higher rates (around 4%), interest costs are reaching historic highs as a percentage of GDP.
Austerity measures will likely involve difficult choices for the middle class. Healthcare spending in the U.S. is disproportionately high compared to other wealthy nations.
Government efficiency is harder to measure than corporate efficiency due to its multiple, often conflicting objectives, the influence of democratic processes, and congressional oversight, which complicates decision-making about program value.

SPONSORS:

NetSuite

More than 41,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: https://netsuite.com/102

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102.

AdQuick

The easiest way to book out-of-home ads (like billboards, vehicle wraps, and airport displays) the same way you would order an Uber. Ready to get your brand the attention it deserves? Visit https://adquick.com/ today to start reaching your customers in the real world.

SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

FOLLOW ON X:

@noahpinion

@eriktorenberg

@turpentinemedia

RECOMMENDED IN THIS EPISODE:

Noahpinion: https://www.noahpinion.blog/p/what-i-think-doge-is-really-up-to

🙏 Help shape our show by taking our quick listener survey at https://bit.ly/TurpentinePulse.

Highlights from the Episode:

Noah argues that while Doge (Department of Government Efficiency) is publicly presented as a cost-cutting initiative, it's primarily an ideological project aimed at reducing "woke" initiatives in government.
As zero-interest debt gets rolled over at higher rates (around 4%), interest costs are reaching historic highs as a percentage of GDP.
Austerity measures will likely involve difficult choices for the middle class. Healthcare spending in the U.S. is disproportionately high compared to other wealthy nations.
Government efficiency is harder to measure than corporate efficiency due to its multiple, often conflicting objectives, the influence of democratic processes, and congressional oversight, which complicates decision-making about program value.

SPONSORS:

NetSuite

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102.

AdQuick

SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

FOLLOW ON X:

@noahpinion

@eriktorenberg

@turpentinemedia

RECOMMENDED IN THIS EPISODE:

Noahpinion: https://www.noahpinion.blog/p/what-i-think-doge-is-really-up-to

Previous Episode

Patrick Collison & Noah Smith: How Can the US Stay Ahead Technologically?

This week, Noah Smith and Stripe CEO Patrick Collison recorded a live conversation on Substack covering topics such as American technological leadership, global competition, industrial policy, foreign direct investment, post-financial crisis productivity trends, US financial system advantages, progressive policies, the middle class, tariffs, immigration, technological advancements like humanoid robots, Gen Z’s well-being, and key policy recommendations for economic and social progress. This conversation first aired in Noah's substack Noahpinion, so be sure to subscribe if you aren't already.

🙏 Help shape our show by taking our quick listener survey at https://bit.ly/TurpentinePulse.

Highlights from the Episode: (for more head to https://www.noahpinion.blog/p/patrick-collison-interview-at-least)

The U.S. has maintained its technological edge relative to most developed nations, particularly pulling ahead of Europe, Japan, and South Korea.
A key U.S. advantage is its diverse financing system - about 80% of U.S. commercial lending is non-bank lending, compared to only 20% in the UK.
The U.S. benefits from a large, unified domestic market, further strengthened by continued immigration, which attracts investment and fosters clustering effects, especially in sectors like software.
There are concerns about Gen Z's reported lower life satisfaction and mental health challenges.
Replacing NEPA with administrative review (similar to Japan's system).

SPONSORS:

NetSuite

Notion

📝Notion offers powerful workflow and automation templates, perfect for streamlining processes and laying the groundwork for AI-driven automation. With Notion AI, you can search across thousands of documents from various platforms, generating highly relevant analysis and content tailored just for you - try it for free at https://notion.com/upstreampod

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102.

AdQuick

SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

FOLLOW ON X:

@patrickc

@noahpinion

@eriktorenberg

@turpentinemedia

RECOMMENDED IN THIS EPISODE:

Noahpinion: https://www.noahpinion.blog/

Patrick Collison interview + at least five interesting things: https://www.noahpinion.blog/p/patrick-collison-interview-at-least

Stripe: https://stripe.com/

Next Episode

How the Macro, Tariffs and DOGE will Impact your Bank Account | Noah Smith on How To Money

This week, we’re bringing you an episode from the How to Money podcast, hosted by Joel Larsgaard and Matt Altmix, with special guest Noah Smith. Together, they dive into a range of topics, including the impact of tariffs, Substack’s revolutionary media model, and Noah’s unique economic philosophy. Tune in for insights on the escalating national debt, the baby bust, and the rising costs of U.S. healthcare. Noah also offers solutions, with a focus on boosting productivity and strategic immigration. Plus, don’t miss their take on Argentina’s dramatic economic decisions!

🙏 Help shape our show by taking our quick listener survey at https://bit.ly/TurpentinePulse.

RECOMMENDED PODCAST:

Check out How To Money Podcast on:

Apple: https://podcasts.apple.com/us/podcast/how-to-money/id1337718773

Spotify: https://open.spotify.com/show/6i5Cau3GShqOxHkSRT5TjL

iHeart: https://www.iheart.com/podcast/1119-how-to-money-30166328/

Highlights from the Episode: (for more head to https://www.howtomoney.com/tariffs-doge-and-your-money-w-noahpinion/)

Trump's approach to tariffs appears to be influenced by stock market reactions.
The main spending pressures come from healthcare programs (Medicare and Medicaid).
Declining birth rates (around 1.5-1.6 children per woman in developed countries) pose significant economic challenges.
Healthcare costs are primarily driven by providers such as hospitals, doctors, equipment, and pharma, while insurance companies, operating on low profit margins, mainly serve as cost pass-throughs, with recent slowdowns in cost growth potentially easing budget pressures.
Technological advances in AI, solar, and batteries could drive future growth.
President Milei's economic reforms, though initially painful, are showing positive results.

SPONSORS:

NetSuite

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102.

AdQuick

Incogni

Take your personal data back with Incogni! Use code ECON102 at the link below and get 60% off an

annual plan: http://incogni.com/econ102

SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

FOLLOW ON X:

@HowToMoneyPod

@HowToMoneyJoel

@HowToMoneyMatt

@noahpinion

@eriktorenberg

@turpentinemedia