Investing.com — The announcement of the Department of Government Efficiency (DOGE), led by Elon Musk and Vivek Ramaswamy, has drawn public attention and speculation about its potential to transform federal operations.

However, according to analysts of Barclays (LON:), the extent of DOGE’s influence is probably more limited than its proponents suggest.

Contrary to its title, DOGE is not a formal government department. Its purpose is advisory, with no legal or executive power to implement its recommendations.

Without congressional approval or direct legislative support, its capacity is limited to making proposals rather than implementing change.

DOGE’s potential actions include highlighting areas of federal inefficiency, such as waste, fraud, and abuse, and proposing improvements in government operations.

These recommendations could target the reduction of the federal workforce through measures such as voluntary buyouts, early retirement, or temporary hiring freezes.

The group may also identify federal assets for sale or transfer as a way to reduce costs.

However, its actual power to implement these changes is limited. For example, proposals to cut government spending or reform federal agencies require bipartisan congressional support—a tall order in today’s polarized political climate.

Even identifying and dealing with “waste” is no simple task; Previous efforts by similar commissions have yielded limited results due to legal, logistical, and political obstacles.

Congress holds “power of the purse,” meaning that significant cuts in government spending require legislative approval.

Although discretionary spending, particularly in the defense and non-defense budgets, could theoretically be cut, achieving this would require a level of bipartisan cooperation that seems unlikely.

Mandatory spending, which makes up the bulk of federal spending, is less susceptible to DOGE influence.

Programs like Social Security and Medicare are politically sensitive and legally protected from unilateral cuts.

Similarly, efforts to deregulate or amend government operations are subject to strict processes established under the Administrative Procedure Act.

Regulatory rollbacks must navigate a lengthy and often contentious rulemaking or litigation process.

Despite claims from Ramaswamy that the DOGE intends to cut the federal workforce by 75%, the possibility of such a move remains doubtful.

Most federal employees are protected by civil service laws that prevent arbitrary dismissals.

Additionally, nearly 70% of the federal workforce operates in defense or national security roles, areas that are politically challenging and difficult to downsize.

Past initiatives for large-scale reductions in the federal workforce have proven ineffective or counterproductive, often resulting in increased costs and reduced operational efficiency.

DOGE’s most tangible contribution may come from identifying opportunities for operational improvement.

Federal agencies spend large sums of money maintaining outdated IT systems, and upgrading them can generate long-term savings.

According to the Government Accountability Office, there is the potential to save billions through improved efficiency measures, although such initiatives will likely require upfront investments and congressional approval.

Ultimately, Barclays analysts emphasized that DOGE’s influence was more symbolic than practical.

It can use its platform to draw attention to inefficiencies and advocate for reforms, but its recommendations will remain unreliable.

Achieving major change will require navigating a complex web of legal and political obstacles that are beyond the DOGE’s advisory remit.