In between the cabinet nominations that President-elect Donald Trump announced this week was an unusual appointment: Elon Musk and Vivek Ramaswamy will lead a newly created Department of Government Efficiency.
While Trump has not detailed how the entity will operate, he said in a statement that it would “slash excess regulations, cut wasteful expenditures and restructure federal agencies” and “provide advice and guidance from outside of government.”
Conventionally, what outsiders can do in the government has been pretty limited. But with Trump and Musk both known for pushing boundaries, it’s not clear what “DOGE” will look like.
The federal code’s primary conflict-of-interest law is a big deterrent to adopting government authority. It bans government employees from participating in government matters where they have a financial stake. But it doesn’t apply to outside contractors or advisers, which could be important to Musk, whose businesses interact with many federal agencies and who would most likely be required to make divestments if he became a federal employee.
Things get complicated if an outsider acts on behalf of the government. Just saying you’re not a government employee doesn’t mean the law will treat you that way, even if you’re not paid. Acting like a government employee — for example, by managing government employees — may open the door to being charged with a felony under the conflict-of-interest law.
“What he shouldn’t do is pretend he’s not a government employee and then come in there and start running around acting like a government employee — supervising government employees, giving orders, performing the functions of a government employee,” Richard Painter, who was the principal lawyer responsible for clearing financial conflicts of interest in the George W. Bush administration, said of Musk.
Trump could grant Musk a waiver for his conflicts of interest. Virtually all government employees either recuse themselves from matters that could affect their finances or divest from those assets. But there is a third option: The president can grant a waiver, though Painter said such waivers are extremely rare.
It wouldn’t be the first time Trump departed from precedent, and it could allow Musk to become a part of the government without making divestments.
DOGE doesn’t necessarily need to step over the line to be extremely influential. “The president is entitled to seek advice from people who he thinks give him good advice,” Richard Briffault, a Columbia University professor of law, told DealBook.
For Musk to steer clear of the conflict-of-interest law, his recommendations would need to be translated by Congress, which controls the federal budget; by the president; or by others with the authority to act on them. Ramaswamy has said he believes that the president has the power to fire 75 percent of government workers.
The setup isn’t new — in 1982, President Ronald Reagan appointed an outside commission to write a report on how the government could cut costs — but Musk’s level of influence might be. He has already become one of the most influential figures in Trump’s orbit, sitting in on job interviews and attending at least one national security meeting.
Official advisory committees are subject to specific rules. For example, they’re required to make hearings open to the public and abide by transparency rules. It’s not clear if DOGE will reach the level of formality that would make it subject to those rules.
Even if they don’t face a potential felony, outsiders face pressure to avoid conflicts of interest. Carl Icahn, who as a special adviser to the first Trump administration was not subject to the conflict-of-interest law, left his role after concerns arose that his strong views on environmental regulations could have benefited some of his investments. — Sarah Kessler
IN CASE YOU MISSED IT
Jay Powell signaled a shift in tone on rates. The Fed chair said the central bank was not “in a hurry” to cut interest rates. The comments, combined with investor worries about the impact of President-elect Donald Trump’s protectionist economic policies, sent markets tumbling, with tech and pharmaceutical stocks hit especially hard.
Trump began filling his cabinet. The president-elect nominated Senator Marco Rubio of Florida as secretary of state; the Fox News host and veteran Pete Hegseth as defense secretary; Gov. Kristi Noem of South Dakota as secretary of homeland security; and former Representative Matt Gaetz of Florida as attorney general.
Trump’s appointee for secretary of health and human services raised questions for the pharmaceutical and food industries. His pick, Robert F. Kennedy Jr., is a vaccine skeptic who has vowed to “make America healthy again” and upend the food system. Shares in vaccine makers, including Pfizer and Moderna, declined on the news.
John Malone reorganized his corporate empire. The cable and telecoms pioneer sold Liberty Broadband to Charter Communications. His conglomerate, Liberty Media, will remain the owner of the Formula 1 motorsports competition and spin off Liberty Live, which will own the parent group’s majority stake in Live Nation. Greg Maffei, Liberty Media’s longtime C.E.O., will step down by the end of the year.
Will the antitrust shift persist?
From its onset, the Biden administration set out to transform how the United States treats antitrust. With Lina Khan at the head of the Federal Trade Commission and Jonathan Kanter as the assistant attorney general for the Justice Department’s antitrust division, it has sought an unabashedly expansive view of the role of government in overseeing competition.
The administration was willing to take on more cases than past administrations, test novel theories and brave losses in court. And it hoped to make that change last.
But its antitrust enforcers faced big setbacks in court, like failed attempts to overturn Microsoft’s acquisition of the video game maker Activision Blizzard. Dealmakers have complained that merger enforcement has been so unpredictable that it has become unmanageable. And the administration’s perhaps biggest attempt to permanently change enforcement, through new merger guidelines, will almost certainly be thrown out by the next administration.
Bankers are already girding for a flurry of dealmaking under a Donald Trump presidency.
“To the extent you thought this is a moment for revolution, well, that revolution has not happened,” Daniel Crane, a professor of law at the University of Michigan, told DealBook.
So was the new paradigm of antitrust enforcement under the Biden administration an aberration? Or has it made a lasting impact?
The administration’s track record on changing the law is debatable. Khan and Kanter brought to trial four times as many billion-dollar merger challenges as enforcers under Trump or President Barack Obama, according to a report compiled by the American Economic Liberties Project. They notched headline and historic wins: The Justice Department blocked an airline deal for the first ever and prevailed over Google in a monopolization case.
But there have been plenty of losses, too. And critics say many of their wins are on traditional case law, not the kind of groundbreaking legal theory that the administration set to push forward.
“They’ve won when they had sort of fairly conventional theories and good facts, but have they really changed the law in any significant way?” Crane asked. “I don’t think so.”
Supporter of the agencies point to the Justice Department’s suit blocking Penguin’s acquisition of Random House as a victory for incorporating labor into antitrust. They say that even though the F.T.C. lost its attempt to stop Meta’s acquisition of Within, a virtual reality start-up, the court endorsed the agency’s way of analyzing future competition in an undeveloped market.
Their detractors say this legal theory was always there, just more dormant.
One of its most important achievements may be seeping antitrust into the cultural zeitgeist. The Biden administration’s triumvirate of antitrust leaders, “Wu Khan and Kanter,” became a slogan on coffee mugs. (Tim Wu served as a special assistant to the president for technology and competition policy.) Khan was the first F.T.C. chair to be interviewed by Jon Stewart on the “Daily Show.” Public comments on F.T.C. actions jumped more than 800 percent, from 13,000 to 121,000, and a new language emerged to capture wonky antitrust theory, like “tyranny of the intermediary” and “platformization.”
“It has created a new large cohort of young law students, young practitioners to pick up the course and pursue it,” Bill Kovacic, a former F.T.C. chair, said. “They make their way into judicial clerkships where they advise judges about the resolution of antitrust cases. They build a larger literature that supports pro-enforcement approaches.”
That may be crucial for the ideas to stick around, even if the Trump administration enters with a very different outlook on mergers.
But President Biden’s antitrust legacy may ultimately depend on the next four years. The outcomes of some of his administration’s biggest cases, like its lawsuits against Amazon and Meta, are still pending.
For Khan and Kanter, there is reason to be hopeful that the administration will continue those cases. The case against Google started under Trump’s first administration. Matt Gaetz, his pick for head of the Justice Department, has been a proponent of breaking up big technology companies.
“I’ve been so grateful and appreciative of the bipartisan support from the network, including Vice President-elect Vance and formerly Congressman Gaetz, who I understand was just announced as future attorney general,” Khan said at a public panel this week. “It will be terrific for the bipartisanship around this work to continue.”
But most expect that both Khan and Kanter will be replaced. And the future of the administrative state itself is in question. With Musk’s claim that he could slash $2 trillion from the budget, the commission he’s leading with Ramaswamy could threaten the already underfunded F.T.C. and Justice Department. This week, he boosted calls to defang the F.T.C. and the Securities and Exchange Commission.
“We’re in an era when the Supreme Court and some of our other federal courts are very suspicious about broad applications of regulatory power,” Kovacic said.
In other antitrust news: Makan Delrahim, the assistant attorney general for the Justice Department’s antitrust division during the first Trump administration, told DealBook that he had no plans to return to a role in competition enforcement, despite recent speculation. He said:
“I am the biggest advocate for the success of President Trump and his administration. While it was an honor to serve, I am not a candidate nor have I sought to return as assistant attorney general of the antitrust division or as F.T.C. chair. There are many excellent candidates who can continue President Trump’s pro-growth competition law enforcement policies.”
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