President Trump Unleashed Elon Musk to Cut $2 Trillion From the Federal Budget. Could Social Security and Medicare Cuts Be on the Way?

The latest cover of Time magazine shows Elon Musk sitting at the historic Resolute Desk in the Oval Office with the U.S. flag and the presidential flag behind him. This doctored image suggests not so subtly that Musk is the real power in the White House rather than President Trump.

Whether or not you believe this is true, Musk's influence in the second Trump administration is undeniable. Trump has placed Musk, the world's richest man, CEO of Tesla (NASDAQ: TSLA) and SpaceX, and primary owner of X (formerly Twitter), Neuralink, and The Boring Company, as the point person to make huge cuts to federal spending. Could Musk have his eyes set on Social Security and Medicare?

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Image source: Getty Images.

Musk's mission

Musk was a vocal supporter of Trump during the presidential campaign. He was also a large financial contributor, donating a whopping $281 million to political action committees and other organizations promoting Trump's bid to return to the White House.

In September, then-candidate Trump revealed in a speech to the Economic Club of New York that he planned to create a commission to conduct "a complete financial and performance audit of the entire federal government." Trump said that the commission would be charged with recommending "drastic reforms." He added that Musk had agreed to lead the effort.

At a Trump campaign rally several weeks later, Musk was asked how much he could cut out of the federal budget. His response: "At least $2 trillion."

After his inauguration, Trump moved quickly to fulfill his campaign promise, issuing an executive order to establish a temporary organization named the Department of Governmental Efficiency (DOGE). The acronym was a nod to Musk's fascination with the Dogecoin (CRYPTO: DOGE) cryptocurrency. Trump originally picked Musk and biotech entrepreneur Vivek Ramaswami to lead DOGE. However, Ramaswami opted out so he could focus on a run to become governor of Ohio.

The challenge with finding $2 trillion to cut

Musk and his DOGE team hit the ground running in their effort to find ways to cut federal spending. In a post on X, DOGE stated that it had canceled around $420 million of current and pending federal contracts in its first 80 hours. By Jan. 28, DOGE claimed to be saving roughly $1 billion per day for the U.S. government but that it wanted to boost the number to over $3 billion per day.

DOGE is saving the Federal Government approx. $1 billion/day, mostly from stopping the hiring of people into unnecessary positions, deletion of DEI and stopping improper payments to foreign organizations, all consistent with the President's Executive Orders.

A good start,...

-- Department of Government Efficiency (@DOGE) January 29, 2025

However, even Musk acknowledged in an interview earlier this year that cutting $2 trillion would be difficult. He told political strategist Mark Penn, "I think if we try for 2 trillion, we've got a good shot at getting 1." But even that goal could prove to be elusive.

Around 24% of the $6.9 trillion federal budget goes to health insurance programs, with Medicare making up roughly half of the total. Social Security comprises 21% of the budget. Defense makes up 13%, as does paying interest on the national debt. Another 8% is for paying benefits to veterans and federal retirees. That leaves only 21% for all other federal spending.

Could Social Security and Medicare cuts be on the way?

Social Security is the only budget item that accounts for more than $1 trillion in federal spending. Specifically, $1.5 trillion is spent on the program. Medicare is the next closest, with $912 billion.

The harsh reality is that Musk and his DOGE team would almost certainly have to reduce Social and Medicare benefits to have any chance of slashing $2 trillion -- or even $1 trillion -- from the federal budget. In a social media post on Feb. 5, DOGE said that it terminated a Social Security Administration contract that would save around $1 million. The organization has also gained access to Medicare and Medicaid records.

Could Social Security and Medicare benefit cuts be on the way? Probably not. Trump pledged during his presidential campaign that he "will not cut a single penny from Social Security or Medicare."

Despite the depiction on the recent Time magazine cover, it's Trump who sits behind the Resolute Desk rather than Musk. And while Trump must sign bills for them to become the law of the land, any legislation must first be passed in both chambers of Congress. Social Security and Medicare benefit cuts would require congressional support, which is highly unlikely to materialize.

The $22,924 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

View the "Social Security secrets" »

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.