By Fiona McLoughlin, Daily Caller News Foundation | March 02, 2025
Commerce Secretary Howard Lutnick addressed concerns Sunday that the cuts identified by the Department of Government Efficiency (DOGE) will harm economic indicators.
Lutnick appeared on Fox News’ “Sunday Morning Futures” to address concerns about the impact of DOGE’s shrinking the size and expenditures of the federal government on economic measures. He stated government spending will be separated from gross domestic product (GDP) reports in response.
“You know, that governments historically have messed with GDP,” Lutnick said. “They count government spending as part of GDP. So I’m going to separate those two and make it transparent.”
“If the government buys a tank, that’s GDP, but paying 1,000 people to think about buying a tank is not GDP,” Lutnick explained. “That is wasted inefficiency, wasted money. And cutting that, while it shows in GDP, we’re going to get rid of that.”
“Remember this, when we balance the budget of the United States of America, interest rates are gonna come smashing down. When [the United States] produces the energy that is necessary, energy prices are gonna come smashing down, inflation is gonna come smashing down and our economy is going to explode,” he continued. “This is going to be the best economy anybody’s ever seen and to bet against it is foolish.”
The separation of spending from GDP reports could possibly distort or complicate the measure of the U.S. economy’s health, according to The Associated Press (AP). Government spending is typically included in the GDP because of the impact spending, deficits and regulations by the government and changes in taxes has on the overall growth, according to the outlet.
GDP reports already include details on government spending, allowing for transparency for economists, the outlet noted.
Lutnick’s comments reflected arguments DOGE head Elon Musk made Friday on X.
“A more accurate measure of GDP would exclude government spending,” Musk wrote. “Otherwise, you can scale GDP artificially high by spending money on things that don’t make people’s lives better.”
The most recent GDP report was published Thursday by the Commerce Department’s Bureau of Economic Analysis. It showed the economy grew at an annual rate of 2.3% in the last three months of 2024, AP reported.
The report showed the gains at the end of 2024 were largely driven by greater consumer spending and an upward revision of federal government spending in terms of defense. Government spending also accounted for nearly one-fifth of people’s personal income, including benefits for military veterans, Social Security payments, Medicare and Medicaid and other programs.
Fiona McLoughlin is a contributor at the Daily Caller News Foundation
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