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By Tom Norton
Fact Check Reporter
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Elon Musk shared an Oval Office press conference with President Donald Trump on Tuesday, during which he said the U.S. had a $2 trillion deficit as an attempt to justify huge cuts to federal spending that the SpaceX CEO will oversee.
Trump and Musk, who took questions from journalists, are looking to make widespread cuts to federal agencies in what they say is an effort to save taxpayers money and end bureaucracy.
Justifying the cuts, Musk said: "We've got a $2 trillion deficit and if this, if we don't do something about this deficit, the country is going bankrupt."
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The Department of Government Efficiency, a new department formed by Trump and overseen by Musk, has focused on several departments, including the Department of Education and the U.S. Agency for International Development.
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The U.S. government has not run a surplus between what it spends and collects in revenue since 2001. However, balancing the books is a priority of the new Trump administration as it tries to institute what it may consider responsible government accountancy.
The deficit's history and Trump's record managing it during his first term were not mentioned amid Musk's belt-tightening plea.
Newsweek has contacted a White House media representative via email for comment.
What and How Much Is U.S. Deficit?
The U.S. deficit results from the federal government's spending exceeding the amount it collects in revenue, mostly from taxes. The opposite is a surplus, something the government has had only four times in the last 50 years, consecutively between 1998 and 2001.
In fiscal year 2024, the government spent $1.83 trillion more than it collected, a $138 billion increase from 2023. Reporting on the deficit in the past two years, journalists and public figures reported on it nearing the $2 trillion mark.
U.S. Treasury figures show that in the fiscal year to date, which began on October 1, 2024, the deficit is $711 billion, from $1.79 trillion in spending and $1.08 trillion in revenue. A continuing deficit impacts the national debt: $36.22 trillion as of December 2024. Interest payments on that debt have, as Musk correctly pointed out, recently exceeded Defense Department outlays, as reported by the Council on Foreign Relations, a political think tank.
The Congressional Budget Office, in its Budget and Economic Outlook for 2025 to 2035, projected that the deficit will rise to $1.9 trillion this year.
One sign Musk's plans could struggle is the deficit growth under Trump's first presidency. It reached an historic $3.1 trillion in FY 2020 as the pandemic took hold, recovering the next year to $1.3 trillion, still below Trump's pre-pandemic revenue gap.
While President Joe Biden took credit for reducing the national debt inherited from Trump, he neglected to mention how high it was compared to its pre-pandemic figures. Trump's impact on the debt and the deficit was nonetheless significant. The deficit had reached near-historic levels before the pandemic, at almost $1 trillion in 2019, and was $743 billion in the six months before the pandemic.
Some of the plans that boosted the deficit, such as sweeping tax cuts, are priorities of the current Trump administration.
How Will Musk and Trump Reduce the Deficit?
The Bipartisan Policy Center said that interest payments on the national debt significantly impact an ongoing, wide deficit. The increase has resulted from the size of the debt and the Federal Reserve increasing interest rates to reduce inflation.
Musk wants to narrow the deficit by slashing federal spending, to help the government service its debt. Musk initially said and later walked back that he could cut $2 trillion from the federal budget. The plan was dismissed by some economists, with the 2024 federal budget reaching $6.75 billion. Mandatory spending, which must be spent by law, was 60 percent of that.
Although Musk has since called his $2 trillion aim a "best-case outcome" and trimmed expectations to $1 trillion in cuts, experts have doubts.
Philip Wallach, a senior fellow at the American Enterprise Institute, previously told Newsweek: "There's a lot of us out here who are skeptical that they're really going to be able to come in out of nowhere and figure out all these savings that nobody else has been able to figure out all these years."
Narrowing the deficit may be made harder with Trump's pledge to lower taxes, including extending his 2017 Tax Cuts and Jobs Act. The nonpartisan Committee for a Responsible Federal Budget estimated that added $2.5 trillion to the national debt during Trump's first term.
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