AI takes center stage in Musk’s federal restructuring
Elon Musk leads cost-cutting efforts using AI as Trump’s administration reshapes federal agencies.
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| Elon Musk, CEO of Tesla Inc., speaks during a fireside discussion on artificial intelligence risks in London, UK, on November 2, 2023. Photo by Tolga Akmen/EPA/Getty Images |
Elon Musk is driving a sweeping effort to reshape the federal government, with artificial intelligence playing a crucial role in identifying budget cuts and reducing expenditures. As head of the newly created Department of Government Efficiency (DOGE), Musk has been tasked by the Trump administration with slashing federal spending. In just two weeks, his team has upended multiple agencies, urging staff resignations and implementing radical cost-cutting measures.
Musk’s allies, now embedded within key government departments, are pushing AI as a primary tool for streamlining operations and detecting waste. According to sources familiar with internal discussions, who requested anonymity due to fears of retaliation, the plan involves deploying AI to analyze budgets, pinpoint inefficiencies, and identify potential fraud.
On Monday, Thomas Shedd, a former Tesla engineer now overseeing technology initiatives at the General Services Administration (GSA), told staffers that AI would be central to their cost-reduction strategies. He informed agency employees that they should prepare for a 50% budget cut, underscoring the administration’s aggressive approach to downsizing government operations.
Musk’s AI vision for federal agencies
The GSA, which manages office space, transportation, and technology across federal agencies, houses the Technology Transformation Services (TTS), a 700-member team of government technologists. DOGE has reportedly identified TTS as a critical resource for engineering expertise. Over the past two weeks, Shedd and his team have interviewed employees, reviewing their technical accomplishments and evaluating colleagues for “exceptional” talent.
During a meeting with TTS staff on Monday, Shedd outlined a plan to consolidate all government contracts into a central database and use AI to assess redundancies and inefficiencies. Sources indicated that Stephen Ehikian, a Trump-appointed acting GSA administrator and former Salesforce executive, is maintaining an AI strategy document to guide these efforts.
Shedd also suggested that AI could play a key role in identifying fraud and abuse, though specifics on its implementation remain unclear. Neither GSA nor Shedd responded to requests for comment.
The limits of AI in government cost-cutting
While both the Trump and Biden administrations have emphasized AI’s potential in government operations, experts question whether the technology can effectively identify and eliminate waste at the scale Musk envisions. Musk has repeatedly claimed, with little evidence, that billions of taxpayer dollars are lost to fraud each year and that AI can help recoup those funds.
President Trump has defended Musk’s aggressive restructuring, praising his ability to reduce government spending. “He’s got a team of very talented people, and we’re trying to shrink government. He can probably do it as well as anybody else, if not better,” Trump told reporters on Monday.
Musk’s enthusiasm for AI extends beyond government operations. His company xAI is developing advanced artificial intelligence models for his social media platform, X, and for Tesla’s autonomous driving systems. Despite this, he has also voiced concerns about AI’s risks, warning that unchecked AI development could threaten humanity.
His complex relationship with AI is further underscored by his legal battle with OpenAI, a company he co-founded but left in 2018 after disagreements with its leadership. Musk has sued OpenAI, claiming it abandoned its original mission of prioritizing public good over profit. Meanwhile, OpenAI has partnered with Microsoft, which is currently facing a lawsuit from The New York Times over alleged copyright infringement related to AI training data.
Silicon Valley’s influence in Trump’s administration
The nation’s largest AI firms—Google, Meta, OpenAI, and Amazon—have embraced Trump’s presidency, with executives donating to and attending his inauguration. As the administration takes shape, these tech giants are working to influence federal AI policies.
Trump recently appointed David Sacks, a venture capitalist and close Musk ally, as the “White House AI and Crypto Czar.” One of his first moves was to revoke Biden-era AI safeguards, signaling a shift toward deregulation. Additionally, Trump announced a $100 billion AI infrastructure initiative in partnership with OpenAI, Oracle, and SoftBank, aimed at bolstering U.S. leadership in artificial intelligence.
Musk’s cost-cutting claims under scrutiny
Musk’s government overhaul mirrors his cost-cutting tactics at Twitter, now X, where he eliminated thousands of jobs in an attempt to streamline operations. In a late-night audio livestream on Monday, he claimed that the U.S. government loses between $100 billion and $200 billion annually to fraud, including “fake people” collecting Social Security and Medicare payments and “foreign fraud rings” exploiting government programs.
“A trillion dollars can be saved just by addressing waste, fraud, and abuse,” Musk said, without providing details on how he arrived at that figure.
Despite Musk’s sweeping claims, experts remain skeptical. While AI has proven effective in fraud detection within financial institutions, its ability to overhaul government spending on such a massive scale remains untested. Critics argue that cutting federal programs too aggressively could disrupt essential services, potentially harming the very efficiency Musk aims to improve.
As Musk’s AI-driven cost-cutting experiment unfolds, its long-term impact on government efficiency and public services remains uncertain. For now, the federal workforce braces for more changes as Trump’s administration pushes forward with its radical restructuring plans.
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