Trump wants to bring small government back: Will it be with a bang or whimper?

But could it be in for ‘huuuge’ action, to borrow a favourite word of Donald Trump, once US leadership goes Republican again in 2025? It was typical of Trump, who’s set to take charge as US president on 20 January, to give his downsizing agenda the sound and fury of an atomic explosion.

A proposed Department of Government Efficiency (DOGE), co-led by billionaire Elon Musk and biotech success Vivek Ramaswamy, is expected to help “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures and restructure federal agencies” in what Trump called the Manhattan Project of our time, citing Musk as saying it’ll send “shockwaves through the system.”

This comparison with America’s 1940s scramble for nukes may seem over-the-top, but where this scale-back of the state leads the US would be of interest to policymakers around the globe. Especially in India, where the ideal size of government remains an unsettled debate.

In Musk’s view, $2 trillion can be shaven off the US federal budget, estimated at $6.8 trillion for the year till 30 September. Can it? Even though DOGE wants to hire “super-high-IQ small-government revolutionaries,” it looks like a pie-in-the-sky ambition—a Mars-shot of sorts.

After all, America’s welfare outlay of nearly $3 trillion can hardly be squeezed without a social upheaval, $950 billion must go into debt pay-backs, and the rest—the discretionary part—includes $850 billion for Uncle Sam’s defence, which enjoys exalted status too.

Many expenses will prove hard to cut without leaving the US government wobbly. As for staff layoffs, a wage bill of $384 billion is not large enough to save much. Yet, government bloat is a universal problem and some expenses have outlived their utility.

If DOGE slashes even $1 trillion, Trump could plausibly ease taxes without worsening the US fiscal deficit. At 6.4% of GDP, this gap is too wide even for a country that can borrow cheaply from the rest of us. The more impactful part, though, might be DOGE’s drive to deregulate markets.

And here, Musk’s role will be watched for any whiff of oligarchy. It’s awkward enough to have business tycoons invested in sectors like AI, space tech, social media and biotech judging how much regulation is too much. All these are fields in obvious need of oversight.

Under-regulation has its risks. Should Musk’s shockwaves flatten even the minimal framework of rules needed, it could lay America low. But if the project lives up to its hype, which may take years to determine, we’d have seen a live example of how an economy can be boosted by giving market forces more space.

If the US emerges better served by shrinking the state, should India follow suit? Measured by the money it spends, our government is smaller. New Delhi spends just 14.6% of Indian GDP, while Washington’s budget is a bulky 23.6% of US output—which is 7.5 times larger in dollar terms.

While this may suggest India’s set-up hasn’t bloated the way America’s has, it’s hard to claim with a straight face that our sarkari use of public funds is low on waste and high on efficiency.

There’s clearly scope for a scale-back—just to stay fit. Success or failure would pivot on the fitness plan. Get it right, and the future brightens. Get too radically rightist, and big-bang reforms could end in a whimper.