Democrats Move in on DOGE in Wake of Controversial Job Cuts

Though for Thursday

“Unlimited power in the hands of limited people always leads to cruelty.”

― Aleksandr Solzhenitsyn, The Gulag Archipelago 1918–1956

Democrats Move in on DOGE in Wake of Controversial Job Cuts

?A Federal judge in the US has ordered the department of government efficiency – the agency seemingly headed up by Elon Musk – to issue documents relating to their recent cost-cutting operations.??

This forms part of a lawsuit submitted by the attorney generals of 14 democratic states who have argued that Musk’s operations have violated the constitution. The suit also aims to identity the breadth and depth of their operations, as concerns mount over the extent to which DOGE have been able to deliver job cuts.

Questions are also being raised about Musk’s personal position and whether he is acting outside of his remit. The Trump Administration for example have said that Musk is a senior adviser to the president, meaning that the billionaire would have no formal authority to make government decisions. However, it’s clear that his influence on DOGE means that many consider that he is in contravention of this notion.

According to the Constitution, only “principle officers” have power vested in them of heads of department and these principle officers have to be nominated by the President and confirmed by the Senate. Hence, since Musk has had no such confirmation, he may be making decisions which far outreaching his jurisdiction.?

As we looked at last week, the department has been the driving force behind huge and highly controversial job cuts, and while it’s difficult to gather exact figures, estimates indicated that tens of thousands of jobs have been cut at the federal government level over the last six weeks.

Doge have already made announcements which seek to implement far reaching spending cuts across the Department of Education , the Agency for International Development, the Department of Defense, and the Department of Homeland Security.

US Redundancy firm Challenger, Gray & Christmas for instance estimate that as many as 60,000 job cuts were announced by the federal government over February.

Hence as Politico notes “DOGE’s actions have faced ferocious resistance in court and criticism from Democratic lawmakers and some Republicans.” It also indicated that Trump may even be looking to reel in Musk, as concerns grow over the billionaire’s unilateral moves.

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US Inflation

?Yesterday afternoon, the latest inflation print from the US indicated that the consumer price index (annualised) eased 20bps from January’s figure of 3%. This came in softer than expected, given that the general market consensus was pointing to a 2.9% print.

This marks the lowest print since November, but is still 40bps higher than September’s figure of 2.4% where inflation eased to its lowest level since early 2021.

Behind the headline figure, energy costs fell 0.2%, with petrol prices falling 3.1% on a year-on-year basis. However natural gas prices were still in inflationary territory, rising 6% on the year.

When excluding the volatile components of energy and food prices, core inflation hit 3.1% on an annual basis, against expectations of 3.2%. This marked the lowest figure since April 2021 and was a 20bps slowdown from last month’s print.

Yesterday’s data release comes against a backdrop of market participants readjusting their inflation and interest rate forecasts in the wake of considerable developments to the US fiscal environment, not least given the implementation of tariffs, federal job cuts (discussed above) and concerns over a possible slowdown across the US economy.?