Elon Musk—of Tesla, SpaceX, and X fame—will be tasked by incoming President-elect Donald Trump to review federal government efficiency with the intent to cut federal spending, reform existing programs, possible shutdown of federal agencies, etc. Elon should be encouraged to study a herculean report done in the first term of President Ronald Reagan called The President’s Private Sector Survey on Cost Control, also called the President’s Private Sector Survey (PPSS).
The effort was chaired by Mr. J. Peter Grace who was the chairman and chief executive officer of the diversified chemical company, W. R. Grace. The PPSS report, also known as The Grace Commission report, was delivered to President Reagan in January 1984. Reading its summary forty years later showed how prescient it was. It predicted that if nothing was done to reform many facets of federal operation, spending and waste would lead to much higher federal debt. The PPSS identified and suggested remedies would save $424 billion in three years (1984-1987) to $1.9 trillion per year by 2000.
The report’s projection of total federal debt in 1990, with no reforms applied, would be $3.2 trillion, skyrocketing to $13.0 trillion in 2000. Total debt projections in 1990—implementing suggested report reforms—would be $2.0 trillion, rising to $2.5 trillion in 2000. Annual interest on the debt, with no reforms, would be $252 billion in 1990, ballooning to $1.52 trillion in 2000. Annual interest on the debt—applying the reforms—would be $89.2 billion in 1990, decreasing to $75.1 billion in 2000.
A graph from page three of the PPSS final report submittal letter entitled Federal Revenues, Outlays and Deficits shows estimated projected future federal deficits if no suggested reforms were applied:
A graph from 1980 to 2024 showing total accumulated federal debt compared to US Treasury ten-year securities market yield, sourced from the St. Louis Federal Reserve website, shows total federal debt of $13 trillion was reached around 2010.
A graph from The Peter G. Peterson Foundation shows interest paid on the federal debt for federal fiscal years (FY) 2020-2024. Federal debt interest payments for FY 2024 were near $900 billion.
The PPSS report predictions of accumulated federal debt, deficits and debt interest payments with no reforms applied occurred after 2000.
Page three of the PPSS submittal letter states, “Equally important, the 2,478 cost-cutting, revenue-enhancing recommendations we have made can be achieved without raising taxes,...” This is key information for Elon’s team from what the PPSS showed forty years ago.
Page four of the PPSS report states, “One-third of all their taxes is consumed by waste and inefficiency in the Federal Government as we identified in our survey…. With two-thirds of everyone’s personal income taxes wasted or not collected,...” (underlining in original). When we look at federal government waste in 2024, this report from 1984 is virtually prophetic.
Elon’s team should be encouraged to read the January 1984 Grace Commission Report as a critical teaching moment. Past reports on federal government waste were done and very few of their suggested remedies were applied. Is the will to implement federal spending cuts present? Past history says no and the federal fiscal reality strongly says yes.
