Yes, the federal workforce really did shrink by about 9% this year. No, federal spending didn’t drop—and you can’t even tell when the cuts began by looking at the spending charts. That tension is the real story behind Elon Musk’s “matrix was reprogrammed” victory lap.
The most important correction first: a historic headcount cut didn’t translate into lower federal outlays. The Cato Institute, whose chart Musk amplified, says you can’t “see” the start of the government-cutting drive (DOGE) in the spending data at all. Treasury’s monthly numbers back that up.
Headline The 9% Cut Is Real. The Savings? Not So Much. Inside Musk’s ‘Matrix’ Moment, the BLS Drop, and Cato’s Inconvenient Chart
What actually happened
- The cut: Federal employment fell from 3.015 million in January to 2.744 million in November 2025—a drop of 271,000, or nearly 9%. That’s the sharpest peacetime decline on record, comparable only to post‑war demobilizations, according to Cato’s analysis. Sources: BLS/FRED headcount data; Cato analysis
- The driver: BLS attributed the single biggest monthly plunge (October) largely to “deferred resignation” buyouts—152,000+ employees accepted buyouts and left in a wave. Sources: BLS release; Reuters tally
- The chart Musk boosted: Musk posted “The matrix was reprogrammed” alongside Cato’s headcount graph. Source: Starlink Telegram mirror of his post
The twist: Spending didn’t fall
- Cato’s conclusion: Even with the headcount plunge, federal outlays kept rising. You can’t identify the start of DOGE in the spending charts. Source: Cato
- The numbers, explained:
- Cato’s figure—about $7.6 trillion through November—uses 2021 dollars and focuses on executive‑branch outlays.
- The Treasury’s Monthly Treasury Statement, in nominal dollars and for total outlays, sums to about $6.41 trillion for Jan–Nov 2025 versus ~$6.38 trillion for Jan–Nov 2024. That’s a much smaller difference than the original article suggested. Source: YCharts summary of MTS outlays
Why didn’t the cuts move the spending needle?
- Most federal dollars aren’t salaries. Entitlement programs (Social Security, Medicare, Medicaid) and interest dominate outlays and are largely on autopilot unless Congress changes the law. Cato’s authors say this is why the start of DOGE doesn’t show up in outlay charts. Source: Cato
- Interest costs are high. But the article’s “17% of spending is interest” claim overstates 2025: net interest is closer to
13% this year ($970B of ~$7.3T). Source: American Action Forum
What changed inside government
- USAID: Reports describe a wholesale dismantling of USAID as an independent agency, with functions slated to move to State. That is substantively an “elimination,” but the legal status is contested and implementation is uneven due to litigation. Sources: Washington Post, Guardian, Reuters
- July rescission bill: Trump signed a law canceling roughly $9 billion—mostly foreign aid and funding tied to public broadcasting (CPB/NPR/PBS). Source: PBS NewsHour/AP
Musk’s role—what the records show
- The original article called Musk the “former Department of Government Efficiency chief.” That overstates his official status. He was the public face and a senior adviser, but an acting administrator said in a court declaration that Musk did not run USDS/DOGE. News coverage indicates he stepped down from the government role in late May. Source: Fox News report; administrator’s declaration cited in coverage
Rates, the Fed, and the “save a fortune” claim
- Trump has pushed for lower interest rates and is considering a new Fed chair as Jerome Powell’s term ends in May 2026. Lower rates would reduce interest costs, but the “17%” interest share cited in the article is too high for 2025. Sources: Reuters on Fed chair search; AAF on interest share
Context: How unusual is today’s headcount?
- November 2025’s federal headcount (2.744 million) is similar to late‑2014 and to levels from 2003–2007. The last time the civilian workforce dipped below 2.7 million was 1966—when the U.S. population was far smaller. Source: FRED
Key findings and corrections
- Verified
- Federal workforce fell ~9% in 2025 (down 271,000 since January). Sources: BLS/FRED
- October’s huge drop was driven by buyouts/deferred resignations. Source: BLS
- Cato is right: This is the largest peacetime cut on record—and spending didn’t fall in tandem. Source: Cato
- $9B rescission bill in July mainly hit foreign aid and CPB/NPR/PBS funding. Source: PBS/AP
- Needs correction or nuance
- Musk wasn’t the formal “chief” of DOGE; he was a high‑profile adviser and left the government role in late May. Source: Fox News; administrator declaration cited
- Spending totals in the original article mix apples and oranges: Cato’s $7.6T is inflation‑adjusted executive outlays; Treasury nominal totals for Jan–Nov are about $6.41T in 2025 vs $6.38T in 2024. Sources: Cato; MTS/YCharts
- “17% of spending is interest” is high for 2025; the best estimate is ~13%. Source: AAF
- “USAID eliminated” is functionally true in terms of dismantling, but the legal/administrative status remains contested, with litigation and partial reversals. Sources: WaPo; Guardian; Reuters
How we checked
- Pulled federal employment data from BLS’s establishment survey (via FRED) and cross‑checked the BLS Employment Situation note about “deferred resignations” in October.
- Read Cato’s post to understand their claim and their spending method (2021 dollars; executive outlays).
- Summed Treasury’s Monthly Treasury Statement (via YCharts) to compare nominal outlays 2025 vs 2024.
- Reviewed coverage on USAID’s dismantling and the July rescission.
- Verified interest‑cost shares using independent budget analysis.
What we still don’t know
- The precise, durable headcount level once buyouts, recalls, and litigation‑driven reinstatements settle.
- The long‑term budget effect of reorganizations (e.g., shifting USAID functions to State) vs outright eliminations.
- Whether a new Fed chair and lower rates will materially change the interest share in the next two years.
The bottom line
- The cut is historic—a genuine 9% drop in federal headcount, heavily driven by buyouts.
- The savings aren’t—total federal outlays kept rising. Without changes to entitlement laws, shrinking payrolls doesn’t move the spending mountain.
- Some headline claims overshot the facts—about Musk’s title, total spending levels, interest’s share, and the legal status of USAID.
If you want a side‑by‑side of Cato’s inflation‑adjusted series and the Treasury’s nominal totals, I can lay them out month by month so you can see exactly where the $7.6T vs ~$6.41T gap comes from.
Links
- BLS Employment Situation (Nov. 2025): https://www.bls.gov/news.release/archives/empsit_12162025.htm
- FRED federal employment series (CES9091000001): https://fred.stlouisfed.org/series/CES9091000001
- Cato analysis: https://www.cato.org/blog/doge-produced-largest-peacetime-workforce-cut-record-spending-kept-rising-0
- MTS outlays (summary): https://ycharts.com/indicators/us_monthly_treasury_outlays
- PBS/AP on rescission: https://www.pbs.org/newshour/politics/trump-signs-bill-canceling-9-billion-in-foreign-aid-and-public-broadcasting-funding
- AAF on interest costs: https://www.americanactionforum.org/insight/sizing-up-interest-payments-on-the-national-debt/
- Musk post (Telegram mirror): https://t.me/s/Starlink
- USAID coverage: WaPo https://www.washingtonpost.com/national-security/2025/02/06/usaid-trump-cuts/ ; Guardian https://www.theguardian.com/us-news/2025/feb/07/trump-usaid-staff-cuts
- Fed chair timing and Trump’s rate push: https://www.reuters.com/world/us/trump-praises-fed-governor-waller-great-after-interview-fed-chair-2025-12-18/