What is DOGE? Elon Musk will join the Trump Administration as head of the Department of Government Efficiency and a close advisor to the President. But despite its name, DOGE is not an actual government department. It's an advisory body that can suggest budget cuts and deregulation, but Congress retains the power to actually make any changes.

Potential impact on the fiscal deficit. One of DOGE’s aims is to reduce government spending. The US fiscal deficit is unusually large, at nearly 7% of GDP. Musk’s proposed spending cuts could bring this down significantly, but previous attempts at large-scale government cuts such as Reagan's Dream Commission fell short due to political fights and vested interests. Meanwhile, potential tax cuts and tariff increases could complicate the fiscal picture.

Regulatory targets. Musk aims to cut regulations, particularly targeting the Department for Education, Environmental Protection Agency and other regulatory bodies. The recent Supreme Court ruling overturning so-called ‘Chevron deference’ could aid DOGE's deregulatory agenda because it limits regulatory agencies' power to interpret federal laws.

Efficiency or political agenda? The word ‘efficiency’ is normatively loaded. Musk's proposed cuts aim to reshape the very size and role of the US government, not just eliminate waste.

Musk's broader influence. Beyond DOGE, Musk wields significant geopolitical influence through his companies like X (formerly Twitter) and Starlink, a satellite network. His recent endorsements in European politics and interventions in UK legal cases highlight his growing political involvement.

Potential moderation? Musk's support for high-skilled immigration and free trade may moderate some of the Trump administration's policies. However, it's uncertain how much influence he will ultimately have, and an eventual falling out between Trump and Musk is entirely possible.