The Risks of AI in Government Cost-Cutting: A Cautionary Tale

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Mar 7, 2025 By George Bailey

Elon Musk's Department of Government Efficiency (DOGE) has reportedly turned to artificial intelligence (AI) to guide its cost-cutting decisions, aiming to rapidly reduce the federal budget deficit by at least $1 trillion. While AI offers the promise of efficiency and data-driven insights, experts warn that this approach could lead to significant risks, including security breaches, biased firing choices, and the elimination of highly qualified government staff. As the government navigates this uncharted territory, the stakes are higher than ever, and the potential consequences could be far-reaching.

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The Promise and Peril of AI in Government


AI has long been hailed as a transformative technology, capable of processing vast amounts of data and making decisions at speeds humans cannot match. However, its application in sensitive areas like government cost-cutting raises serious concerns. David Evan Harris, an AI researcher who previously worked on Meta’s Responsible AI team, warns that relying on AI for such critical decisions is fraught with risks. "It’s just so complicated and difficult to rely on an AI system for something like this, and it runs a massive risk of violating people’s civil rights," Harris said. "With the current AI systems that we have, it is simply a bad idea to use AI to do something like this."


The Impact on Government Operations


Musk’s ambitious goal to cut the federal budget deficit has led to widespread uncertainty and frustration within government agencies. Entire departments have been dismantled, and federal employees have faced confusing demands. This chaos is reminiscent of Musk’s takeover of Twitter, where thousands of workers lost their jobs, and technical glitches and lawsuits ensued. However, the consequences of dismantling government agencies could be far more severe than those faced by a tech company. John Hatton, staff vice president of policy and programs at the National Active and Retired Federal Employees Association, emphasized the potential dangers: "You do that in the federal government, and people may die."


Specific Instances of AI Use by DOGE


Recent reports indicate that DOGE has already begun integrating AI into its operations. In February, DOGE fed sensitive Department of Education data into AI software accessed through Microsoft’s cloud service to analyze the agency’s programs and spending. Additionally, DOGE staffers have been developing a custom AI chatbot for the US General Services Administration called GSAi, which could help analyze large amounts of contract and procurement data.


Another concerning instance involved the Office of Personnel Management’s request for federal workers to send bullet points detailing their weekly accomplishments. DOGE considered using AI to analyze these responses to determine which positions were no longer needed. While Musk claimed that AI was not "needed" for this task, the very consideration highlights the potential for AI to influence critical personnel decisions.


The Resignation of USDS Employees


The use of AI in government operations has not gone unchallenged. In late February, 21 employees at the United States Digital Services (USDS) resigned in protest, stating they would not use their skills to compromise core government systems or jeopardize Americans’ sensitive data. Their resignation letter, addressed to White House Chief of Staff Susan Wiles, accused DOGE of mishandling sensitive data and breaking critical systems. White House Press Secretary Karoline Leavitt dismissed the resignations, claiming that protests and lawsuits would not deter President Trump.


The Challenges of Implementing AI in Government


The integration of AI into government operations faces several challenges. Amanda Renteria, chief executive of Code for America, a non-profit group that works with governments to build digital tools, warns that building an effective AI tool requires a deep understanding of the data being used to train it. "You can’t just train (an AI tool) in a system that you don’t know very well," Renteria said. Government systems are often older and more complex, making it difficult to deploy new technologies without risking errors or data breaches.


Moreover, AI tools can sometimes "hallucinate" or produce incorrect outputs, especially when the data they analyze lacks context. This risk is compounded when the AI system is used to make critical decisions, such as determining which government positions to eliminate. Harris warns that AI could inadvertently favor certain groups over others, leading to biased outcomes that could disproportionately affect women and people of color.


The Broader Implications of AI in Government


The use of AI in government cost-cutting is not an isolated issue. It reflects a broader trend of AI integration into various sectors, often with mixed results. AI hiring tools, for example, have been shown to favor White, male applicants, while AI-powered facial recognition technology has led to wrongful arrests. These biases highlight the need for careful implementation and oversight to prevent unintended consequences.


In the government context, the stakes are particularly high. The mishandling of sensitive data could lead to security breaches, while biased decisions could undermine public trust in government institutions. Harris is particularly concerned about the handling of personnel records, which he describes as "the most sensitive types of documents in any organization." The rapid deployment of AI without adequate training or oversight could lead to significant risks for both government employees and the public they serve.


The Need for Transparency and Accountability


One of the most pressing concerns surrounding DOGE’s reported use of AI is the lack of transparency. Questions remain about which AI tools are being used, how they were vetted, and whether humans are overseeing and auditing the results. Julia Stoyanovich, computer science associate professor and director of the Center for Responsible AI at New York University, emphasizes the need for clear goals and rigorous testing. "I’d be really, really curious to hear the DOGE team articulate how they are measuring performance, how they’re measuring correctness of their outcomes," she said.


A Call for Responsible AI Use


As the government explores the potential of AI to streamline operations and reduce costs, it must also confront the risks associated with this technology. The use of AI in government decisions must be approached with caution, ensuring that it does not compromise civil rights, data security, or the integrity of government services. The recent resignations of USDS employees and the concerns raised by AI experts highlight the need for transparency, accountability, and careful implementation.


The future of AI in government operations is not without promise, but it requires a balanced approach that prioritizes the well-being of both government employees and the public they serve. As Musk and his team navigate this complex landscape, the lessons learned from previous AI implementations should serve as a guide. The goal should not be to cut first and fix later, but to build a system that is both efficient and equitable, ensuring that the benefits of AI are realized without sacrificing the values that underpin democratic governance.



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