Milton Friedman's Warning to DOGE

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08-04-2025

"Wise words," wrote Elon Musk about this 1999 viral clip described as "Milton Friedman casually giving the blueprint for DOGE [the Department of Government Efficiency]" as he ticks off a list of federal government agencies he'd be comfortable eliminating.
Musk is right. Friedman, a Nobel Prize–winning libertarian economist, did offer a solid blueprint for creating a smaller, less intrusive government. At the peak of his fame, he seemed poised to influence an American president to finally slash the federal bureaucracy.
But those efforts ended in disappointment because they were blocked by what Friedman called the Iron Triangle of Politics.
Slashing government waste and making the federal bureaucracy more accountable are incredibly important. But President Donald Trump and Musk are hitting the same wall President Ronald Reagan did more than four decades ago.
Now more than ever, it's time to pay attention to Milton Friedman's advice for how to defeat the tyranny of the status quo.
In the 1980s, Friedman's influence reached deep into the halls of power.
"Government is not the solution to our problem. Government is the problem," said President Reagan during his first inaugural address in January 1981.
Like Trump, Reagan was preceded in the White House by a big government liberal, who expanded the size of government and whose presidency was plagued by inflation.
Reagan, who awarded Friedman the Presidential Medal of Freedom, promised to enact many of the libertarian policy ideas laid out in the 1980 bestseller co-authored with his wife Rose.
"I don't think it's an exaggeration to call Milton Friedman's Free to Choose a survival kit for you, for our nation, and for freedom," Reagan said in an introduction to the television adaptation of Friedman's book.
But for the most part, the Reagan Revolution failed to deliver on its libertarian promises.
"Reagan's free market principles…clashed with…political reality…everywhere," wrote his former budget director David Stockman in his 1986 book The Triumph of Politics: Why the Reagan Revolution Failed. "For the Reagan Revolution to add up," he wrote, all the people "lured" by politicians into milking social services "had to be cut off."
Reagan tried to keep his promises but, like most presidents, he was only partly successful.
Reagan lifted price controls on oil, cut taxes, and pushed for deregulation. But his commitment to these initiatives quickly fizzled. Federal spending exploded, and he even left trade quotas in place for the automotive industry.
The failure of the Reagan revolution inspired the Friedmans to write The Tyranny of the Status Quo, which examines the political obstacles that obstruct government cost cutting. Their insights are as relevant today as they were 41 years ago.
The book, which came out in 1984, pinpoints the Iron Triangle of Politics as the main obstacle to cutting government. The triangle's three points reinforce each other to uphold the status quo: the Beneficiaries, the Politicians, and the Bureaucrats.
The "beneficiaries" are interest groups and connected industries that profit off of government programs at the expense of taxpayers. Today's beneficiaries include farmers who receive federal dollars. The new budget bill backed by the Republican Party would extend the Farm Bill, which subsidizes crop purchases. As Friedman said, the people paying the bill are "dispersed." You might not have noticed your share of the $2.1 billion going to prop up corn, soybeans, wheat, and other prices when you paid your 2023 taxes, but the farmers who get that money certainly did.
The "politicians" depicted on the triangle are supposed to be responsive to their constituents but end up serving interest groups instead. But it's the bureaucrats who actually distribute the money.
They grow their power when politicians grow the size of their departments, which generates more spoils to distribute to the beneficiaries. It's a symbiotic relationship all at taxpayer expense.
Bureaucracy tends to "proceed by laws of its own," wrote Friedman, noting that in the half-century between Franklin Delano Roosevelt's New Deal and the Reagan Revolution, the U.S. population "didn't quite double but federal government employees multiplied almost fivefold."
Musk has also observed that a metastasizing bureaucracy "proceeds by laws of its own," stating in a press conference from the Oval Office that "if the people cannot vote and have their will be decided by their elected representatives…then we don't live in a democracy, we live in a bureaucracy."
And, like Friedman, he senses danger if the ballooning of the bureaucratic state isn't reversed. At another press conference, he told attendees that "the overall goal here with the DOGE team is to help address the enormous deficit….If this continues, the country will become de facto bankrupt."
DOGE's strategy is to try breaking through the Iron Triangle by the force of a thousand cuts, looking for little inefficiencies with the mindset of a software engineer. Musk has described his role as "tech support," which is fairly accurate given that the Executive Order that created DOGE actually just rebranded an Obama-era agency called the U.S. Digital Service.
It's a good start. The federal work force should be streamlined, and much of it even automated. But Musk might be repeating some mistakes of the Reagan years.
As Stockman observed, the Reagan Revolution floundered because his team only focused on "easy solutions" like ferreting out "obscure tidbits of spending that could be excised without arousing massive political resistance," which" yielded savings that amounted to rounding errors in a trillion-dollar budget."
To make real progress on cutting spending, the cost reduction must go deeper than tech support could manage on its own. Friedman knew that the path to shrinking the federal government began with abolishing federal agencies. In his viral clip, he lists the departments of Housing and Urban Development, Agriculture, Commerce, and Education as ones to put on the chopping block.
Trump has already shut down the Department of Education…kind of. His executive order directs the Education secretary to draw up plans to eliminate or shift some spending to other departments. It keeps major spending like federal student loans intact, and a total dismantling will require Congress to act.
The Trump administration has made severe cuts to the U.S. Agency for International Development (USAID), and it defunded the Consumer Financial Protection Bureau, the brainchild of Elizabeth Warren, which made access to credit and banking more difficult for low-income customers. DOGE also enticed 75,000 federal workers to resign. But many of these cost-cutting initiatives have been challenged in court. Truly eliminating federal agencies requires congressional action.
Because Trump holds only slim congressional majorities and didn't win on a platform to slash government, he won't be able to eliminate entire federal departments like Commerce or Agriculture.
But what would happen if the Trump administration had really followed the Friedman blueprint, learned from the shortcomings of the Reagan Revolution, and created a political movement capable of pressuring Congress to finally start permanently eliminating entire agencies?
Friedman says it would actually make the federal government function better by narrowly focusing on providing what state governments and the private sector can't.
"One function of government is to protect the country against foreign enemies—national defense," says Friedman. "A second function of government, and one which it performs very, very badly, is to protect the individual citizen against abuse and coercion by other citizens….I believe that the government performs that function very ineffectively because it's doing so many things that it has no business doing."
Earlier this year, Musk wielded a chainsaw gifted to him by Argentina's libertarian president, Javier Milei, who more closely followed the Friedman blueprint by targeting the beneficiaries and the bureaucracy, which he calls "La Casta."
In Argentina, it took massive poverty and triple-digit inflation to spark a real libertarian movement that now has a chance of overthrowing the tyranny of the status quo.
We don't want to wait for things to get that bad.
Musk praised Milei's approach at an event in Buenos Aires co-hosted by the libertarian Cato Institute.
"I think governments around the world should be actively deleting regulations, questioning whether departments should exist," said Musk. "Obviously President Milei seems to be doing a fantastic job on this front."
Fantastic indeed. But how can the Iron Triangle be overcome in the American system?
DOGE itself can't legally delete entire departments. DOGE's website claimed $140 billion in cuts out of its $2 trillion goal as of early April 2025.
But it hasn't provided full documentation, and various media and open source analyses have ball-parked DOGE's total savings as more in the $2 billion to $7 billion range.
Either way, DOGE isn't anywhere close to reaching its goal of cutting $2 trillion in government spending, or almost 30 percent of the $7 trillion annual budget. The Congressional Budget Office found the deficit grew 5 percent in February compared to the previous year despite DOGE's early cuts. Meanwhile, the Republican majority passed a budget projected that would add $3.4 trillion to our $28.8 trillion debt.
And we haven't even talked about Social Security and Medicare, which are the major drivers of debt, and which Trump has promised not to touch.
As Stockman came to realize, this is a bipartisan problem.
"There isn't a difference [between the parties] when it comes to the debt," he said on an episode of Reason's Just Asking Questions. "How in the world can we keep adding $1 trillion to our public debt every three months? How are we going to get away with basically enslaving the next generation of Americans with debt?"
The only way to break the Iron Triangle, Friedman suggested, is to push through deep structural reforms that are hard to overturn: a balanced budget amendment that forces Congress to spend responsibly, a line item veto allowing a president to eliminate special interest handouts without scrapping an otherwise popular law, a flat tax to eliminate special interest carve-outs, and a hard limit on how much money the government can print each year.
Sounds easy, right? Of course, it isn't.
Friedman believes that to defeat the Iron Triangle, a popular politician must break free of the grip of the triangle's other two points.
A new president, with a broad popular mandate and bully pulpit, is in a unique position to push the kind of radical but necessary reforms needed to cut government. And it all must happen, says Friedman, within the first six-month "honeymoon" period.
Trump entered his second term with a bold and disruptive plan, but he's spending his political capital unwinding America's global trade and defense partnerships, not on slashing spending.
To really cut the government, Friedman says you must capture the White House with a plan to cut spending and then make it harder to spend more. Trump isn't fighting that battle. He went to war with Rep. Thomas Massie (R–Ky.) for opposing the GOP's bloated budget.
And with Trump's tariffs throwing the market into turmoil, legal challenges to his executive action piling up, and his popularity already waning, the "honeymoon" is already over.
The gargantuan task of breaking the Iron Triangle will probably be left to whoever comes next. But the Iron Triangle will remain unbroken, and the looming threat of an increasingly centralized and bloated government will persist, until a movement emerges that is dedicated to achieving enduring structural reforms.
As Friedman wisely observed, it's not only short-term results that matter but the methods and their long-term consequences.
When asked what he'd do if made dictator for a day, Friedman replied, "I don't want to be made dictator. I don't believe in dictators. I believe we want to bring about change by agreement of the citizens. If we can't persuade the public that it's desirable to do these things, we have no right to impose it on them even if we had the power to do it."
DOGE's mission to rein in our catastrophic debt and unrestrained federal government is one of the most important political battles of our time. But it's a mission that will need more than a single executive agency to ultimately succeed: It needs a mass political movement.
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Producer: John Osterhoudt
Graphics: Lex Villena
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