Business
California will test digital driver’s licenses. Should you worry about your personal info?
Are Californians prepared for yet one more new model of the driving force’s license?
The final one — known as “Actual ID” — went over about in addition to CNN+. As of April, lower than half of the state’s drivers had obtained one, though Californians will want a Actual ID or a passport to get on a airplane or enter a federal constructing in a 12 months. The tepid response might stem from the truth that these IDs supply no new advantages to drivers, simply one other time-consuming obligation.
Now the state’s Division of Motor Automobiles is planning to check a model known as a cellular driver’s license or digital ID — an identity-verifying credential saved in your smartphone. And in contrast to Actual ID, a cellular license may offer you extra management over your private info, though critics say a poorly designed system would threaten your privateness.
Louisiana, Colorado and Arizona have already got rolled out cellular licenses, and Utah is testing them. Different international locations, together with Germany and New Zealand, are additionally creating digital id programs. But the know-how continues to be in its early days, consultants say, with some key items unfinished.
Right here’s a rundown of how cellular licenses would work, the advantages they might present and the potential drawbacks.
What’s the purpose?
Eric Jorgensen, director of Arizona’s Motor Car Division, stated in a latest interview that the aim is to enhance safety, privateness and comfort. “It’s not about balancing one in opposition to the opposite,” he stated. “It’s an try and make all three of these higher.”
The best solution to perceive the push for change, although, is to think about the issues with typical driver’s licenses.
The 9/11 terrorists used fraudulently obtained state IDs to board the planes they hijacked, placing an exclamation level on the vulnerabilities of bodily ID playing cards. That day’s occasions prompted the federal authorities to go the Actual ID Act in 2005, which set larger requirements for the way licenses have been designed and issued. The aim was to discourage the playing cards from being counterfeited or obtained by individuals who weren’t authorized residents.
Actual ID was no panacea, nevertheless. Whereas the watermarks and different design options have been arduous to repeat, they have been additionally arduous for the untrained eye to acknowledge. You virtually must be a safety skilled to detect them, Jorgensen stated.
And like all bodily IDs, typical licenses aren’t a lot assist in terms of verifying your id on the web. They’re not ineffective — see, for instance, how ID.me makes use of licenses and smartphone cameras to confirm identities on-line. However you must soar by means of numerous hoops on the net to show that the ID card you’re utilizing really belongs to you, and the method continues to be weak to scamming.
One other drawback with bodily ID playing cards is that they’ll share an excessive amount of info. When that creepy bouncer on the nightclub door calls for proof that you simply’re sufficiently old to enter, you possibly can’t simply present him the birthdate in your license. It’s a must to present him the entire thing, revealing your title and tackle within the course of. Ugh. (And as Jorgensen factors out, nothing stops the bouncer from taking footage of each license proven on the door.)
As well as, the knowledge laminated into permanence on a bodily ID just isn’t, itself, completely correct. And nothing on the cardboard will sign that it has incorrect info; the one solution to confirm particulars like your present title and tackle is to entry the DMV’s database.
And eventually, even a counterfeit-proof, up to date ID card can’t affirm that the hand holding it belongs to the one that obtained it. There’s info on the cardboard {that a} cashier or clerk can verify in opposition to an individual’s bodily look, however that’s hardly a foolproof system of verification.
How would a cellular license be totally different?
The shortcomings of driver’s licenses are half of a bigger drawback with how individuals go about answering the query “Who’re you?” It’s a good larger problem on-line, the place id theft has risen sharply over the previous decade. The necessity for one thing safer than ID playing cards and the ever-present login-password combo has impressed quite a few firms and inter-industry teams, such because the Higher Id Coalition and the Quick Id On-line Alliance, to advertise extra dependable methods to confirm id.
In response, the tech world is steadily shifting towards options based mostly on “multi-factor authentication.” A password is one issue — one thing solely you understand. An ID card is a single issue too — one thing you’ve got. Multi-factor authentication is a few mixture of one thing you understand, one thing you’ve got and one thing you might be, resembling a fingerprint or facial scan.
That’s the strategy taken by a cellular driver’s license app. It makes use of the biometric capabilities of your smartphone (one thing you might be) to tie your cellular driver’s license or ID to your system (one thing you’ve got). For sure makes use of, you may even require a passcode (one thing you understand).
Proponents of cellular driver’s licenses say a system constructed across the technical commonplace printed final 12 months by the Worldwide Group for Standardization addresses all the shortcomings of a bodily license. One caveat is that the ISO commonplace simply covers in-person use in the meanwhile; the requirements for on-line use are nonetheless in growth.
Think about, only for instance, you’re making an attempt to enter that nightclub with the creepy bouncer:
- You possibly can determine whether or not to let him verify your cellular license — he can’t accomplish that with out your permission. And also you don’t have at hand the bouncer your telephone to show your ID; your license app will change info wirelessly along with his system.
- You management which items of data out of your license to share and which to maintain hid. Additionally, the license app is ready to reply some sure/no questions, so it will possibly reveal whether or not you might be sufficiently old to enter with out telling the bouncer your birthdate.
- The way in which the system is designed, not one of the info you disclose can be saved by the bouncer’s system.
- The cellular license is less complicated for the bouncer to verify too. As a substitute of him scrutinizing your bodily license for watermarks or different anti-counterfeiting options, his system will use cryptographic strategies to verify that your license is genuine.
- Depart your telephone on the bar after overindulging? The cellular license is extra theft-resistant than its bodily counterpart, because of the biometric controls in your telephone. Plus, in case your telephone is misplaced, you possibly can inform the DMV to revoke your cellular license, rendering it inoperable — in sharp distinction to a revoked bodily license, which seems to be no totally different than a sound one.
- However let’s say a thief by some means manages to unlock your telephone and your cellular license, then tries to hire a automotive with the license earlier than you revoke it. When the thief shares the cellular license knowledge with an agent on the counter, the image saved with it is going to be transmitted electronically to the agent’s system so she or he can examine it with the individual pretending to be you.
- One different profit: Whenever you change your tackle, you possibly can replace your info instantly. Equally, in case your driving privileges are suspended or revoked, the digital license would instantly mirror that, but it might proceed to operate as an ID.
The 2 states first out of the gate with cellular license apps — Louisiana and Colorado — acted earlier than the ISO commonplace was full, limiting their licenses’ interoperability. At this level, Colorado’s app is accepted by that state’s businesses and cops, and Louisiana’s works with authorities businesses, state liquor shops and different app customers.
To allow broader use of cellular licenses, the American Assn. of Motor Car Directors, a commerce group of DMV officers from throughout the nation, has issued pointers for cellular driver’s licenses constructed across the ISO commonplace. And in step with a 2020 regulation, the U.S. Division of Homeland Safety is engaged on methods to confirm IDs electronically, utilizing the identical commonplace.
The Transportation Safety Administration has began supporting standards-based cellular licenses in Apple’s pockets app. At chosen airports, Arizona residents with a cellular license from the state can go by means of a TSA screening with a single faucet of their system, Jorgensen stated.
State businesses in Arizona are additionally beginning to settle for its cellular driver’s license to confirm candidates for different state licenses and companies, Jorgensen stated, including that retailers and banks have additionally expressed curiosity in how they’ll implement the know-how. In this system’s first 12 months, he stated, about 320,000 Arizona residents had downloaded the cellular license app, and since March about 60,000 had put their cellular ID into an Apple pockets. (The state has greater than 5.3 million licensed drivers.)
Vittorio Bertocci of Okta, whose know-how helps companies confirm identities, stated that after twenty years engaged on id points, “in all probability for the primary time, I see that the requirements and the know-how are mature sufficient to present an excellent base, an excellent basis” for cellular ID. “And I see the need, the funding, from governments,” stated Bertocci, who’s a principal architect on the firm.
So what may go mistaken?
The reality that there’s a global commonplace doesn’t imply each nation is utilizing it. Though the U.S. is constructing round the usual, Bertocci stated that European international locations are taking a distinct strategy. Firms like Okta can present methods to bridge the variations so digital ID programs can interoperate, he stated, however that form of association is probably not universally accepted.
Nor does everybody have a smartphone or pill. That’s why each cellular license rolled out within the U.S. thus far has been a complement to a bodily ID, not a alternative for it.
Extra basically, the notion of shifting IDs from bodily to digital is troubling to some privateness advocates. Amongst different issues, they’re fearful that firms and governments will discover a means to make use of digital licenses to trace your actions and study one thing about your private life.
Granted, you allow a digital path whenever you use your bank card or smartphone to pay for issues away from house. However with a driver’s license on a card and a bunch of money in your pockets, you possibly can go about what you are promoting in relative anonymity.
Invoice Lamoreaux, a spokesman for Arizona’s Motor Car Division, stated these considerations are being addressed by the individuals creating and implementing cellular licenses.
“Cell ID, as carried out, is system to system,” Lamoreaux stated. In different phrases, the system checking your ID doesn’t hook up with the DMV, so it will possibly’t observe you. “Because the issuing authority, we have no idea when or the place these are used, as is the case with a bodily, plastic license or ID.”
Nonetheless, Alexis Hancock, director of engineering for the Digital Frontier Basis, stated the usual for digital licenses features a means for the app to remain in contact with the company that issued it, and “it doesn’t actually successfully tackle easy methods to restrict this.”
Jeremy Grant, coordinator of the Higher Id Coalition, stated some authorities officers, particularly these in regulation enforcement, would love to make use of digital licenses for monitoring. And the implications could possibly be extreme: Think about, Grant stated, if licenses may report when a lady went to an out-of-state abortion clinic.
However that sort of monitoring can’t occur in a correctly designed system, he stated. Every cellular license will include the state’s encrypted digital signature. Whenever you share info out of your license, the verifying system solely checks to see whether or not the digital signature is legitimate — in that case, your ID and the information on it are legitimate. “They’ll get a sure/no reply with out the state figuring out it was you,” Grant stated.
Past that, a standards-based cellular license doesn’t transmit a singular identifier when it shares its knowledge. So once more, there aren’t any digital footprints to attach the cellular ID used at nightclub X or brewery Y to the individual to whom it belonged.
Earlier than transferring ahead with cellular licenses, Hancock stated, governments must work by means of various points that could possibly be raised by placing IDs on smartphones stuffed with delicate private info. For instance, she stated, what occurs if a site visitors cop or TSA agent calls for that you simply hand over your unlocked telephone for an ID verify, though they’ll get the knowledge they want out of your cellular license with out you doing so? What safeguards are there in opposition to your telephone being unlawfully searched?
Some privateness advocates need to unfold out the storage of ID knowledge on-line, utilizing blockchain or different distributed ledger know-how, moderately than having it centralized in a single state database. Each bit of an individual’s id info — title, birthdate, tackle, image, and many others. — could be saved individually so it could possibly be checked independently of the others. That would cut back the chance of a large knowledge leak whereas additionally making certain that the federal government retains no file of the place and when the digital IDs are used.
The decentralized strategy, often known as verifiable credentials, is being explored by the Canadian province of British Columbia and a coalition of teams throughout Canada. A invoice by state Sen. Bob Hertzberg (D-Van Nuys), SB 1190, would require California by Jan. 1, 2024, to “present {industry} requirements and finest practices” relating to the issuance of verifiable credentials for people and companies.
Grant stated his group doesn’t have a place on the technical query of how ID credentials are saved, simply that the association must protect privateness and be safe. However his private view, he stated, is that the blockchain approaches “introduce some very sophisticated methods to handle id and privateness that can overwhelm the common shopper,” resembling requiring individuals to “handle a distinct non-public [cryptographic] key for each knowledge level about them.”
He added, “You possibly can protect privateness and keep away from monitoring with applied sciences that don’t require blockchain, and which might be simpler to implement, simpler for individuals to make use of, and that scale higher.”
Among the most libertarian advocates of the verified credentials strategy need to take away the federal government fully from the id enterprise. They’d have individuals certify themselves, albeit in some verifiable means. The steep problem for this group, Grant stated, is persuading banks, authorities businesses and others to just accept “self-sovereign” claims, moderately than these backed by a DMV or different authorities company.
What’s California doing?
State lawmakers approved the DMV final 12 months to do a trial run with cellular driver’s licenses and ID playing cards, giving the division a 12 months to provide you with a timeline and value estimate for the pilot undertaking. At this level, the division continues to be speaking to a number of distributors about doable approaches, with no date set for the launch of any pilots, the division stated in an electronic mail.
The division declined to say how it might reply to the considerations expressed by privateness advocates. However the authorizing laws, which lawmakers tucked right into a 2021-22 funds trailer invoice, laid out various necessary protections for individuals collaborating within the trial, together with:
- No compelled participation. Solely volunteers can be included within the trial, which is proscribed to 0.5% of the state’s licensed drivers, or about 135,000 individuals.
- No monitoring or knowledge mining by your app. Your digital license or ID card and the corresponding cellular app are barred from accumulating or holding any info past what’s wanted to carry out their acknowledged features, “together with, however not restricted to, any info associated to motion or location.”
- No sneaky license checks. Earlier than your cellular ID app responds to any request for info, you would need to approve the discharge of any quantity of data.
- No warrantless searches. You can’t be compelled at hand over your system so as to confirm your ID, nor do you consent to having your system searched when you use it to confirm your ID.
- No further knowledge supplied. The data that may be launched by the app is proscribed to what’s in your bodily driver’s license or ID card.
In the end, the success of a cellular license will rely upon how extensively it’s adopted — not simply by drivers, however by anybody who asks in your ID. There’s a little bit of a chicken-and-egg drawback, Jorgensen stated, as a result of there’s not a lot incentive for firms to construct apps that assist cellular IDs if few individuals are utilizing them, and states and their residents received’t have a lot incentive to undertake cellular IDs if there aren’t many locations that settle for them.
But there are many different elements driving curiosity in digital IDs amongst state governments and companies, significantly nationwide ones. And tens of millions of Individuals have already gotten a style of how their smartphones can be utilized to confirm private particulars — they’ve been utilizing them over the previous 12 months to show their vaccination standing.
There’s a great distance nonetheless to go on cellular driver’s licenses, although, with primary questions nonetheless to be answered about the place id credentials can be saved and the way id can be verified on-line. On the present tempo, Grant stated, it would take 10 to fifteen years for cellular IDs to get to essential mass.
Californians is prone to have entry to at least one effectively earlier than that. However the DMV is the company in control of this effort, so an extended wait time could be on model.
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Business
How Poshmark Is Trying to Make Resale Work Again
Lauren Eager got into thrifting in high school. It was a way to find cheap, interesting clothes while not contributing to the wastefulness of fast fashion.
In 2015, in her first year of college, she downloaded the app for Poshmark, a kind of Instagram-meets-eBay resale platform. Soon, she was selling as well as buying clothes.
This was the golden age of online reselling. In addition to Poshmark, companies like ThredUp and Depop had sprung up, giving a second life to old clothes. In 2016, Facebook debuted Marketplace. Even Goodwill got into the action, starting a snazzy website.
The platforms tapped into two consumer trends: buying stuff online and the never-gets-old delight of snagging a gently used item for a fraction of the original cost. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for reselling intensified. It was so strong that Poshmark decided to go public. On the day of its initial public offering in January 2021, the company’s market value peaked at $7.4 billion, roughly the same as PVH’s, the company that owns Calvin Klein and Tommy Hilfiger, at the time.
Then, the business of old clothes started to fray.
Using the Poshmark app, Ms. Eager and others said, started to feel like trying to find something in a messy closet. The app was cluttered with features that did not work or that she did not use, and it felt “spammy,” she said, sending too many push notifications.
Many platforms found selling used items hard to scale. Now, online resellers are trying to recalibrate. Last year, ThredUp decided to exit Europe and focus on selling in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their goods, purchased a competitor, Recurate. The RealReal, a luxury consignor, appointed a new chief executive as the company tried to improve profitability.
Poshmark is undergoing perhaps the biggest reinvention. In 2023, Naver, South Korea’s biggest search engine as well as an online marketplace, bought the company in a deal valued at $1.6 billion, less than half its IPO price.
Something of a mash-up of Google and Amazon, Naver is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that made Naver dominant in its own country.
It may also help breathe new life into the resale market. Analysts think the resale fashion market still has room to grow in the United States, with revenue expected to increase 26 percent to $36.3 billion by 2028, according to the retail consultancy firm Coresight Research.
New legislation in California could help. The law, passed last year, requires brands and retailers that operate in the state and generate at least $1 million to set up a “producer responsibility organization” to collect and then reuse, repair or recycle its products. Resale platforms like ThredUp and Poshmark could be in a position to help brands carry out that mandate.
At the moment, though, Naver’s focus for Poshmark is more basic: Make it a better place to sell and shop. The company has the “operating know-how” to do that, said Philip Lee, a founder of the media outlet The Pickool, which covers both South Korean and U.S. tech companies.
“They’re trying to renovate Poshmark and then expand the market share,” he said.
A Marriage of Search and Commerce
Poshmark, which is based in Redwood City, Calif., was founded in 2011 by Manish Chandra, an entrepreneur and former tech executive, and three others. In trying to expand, Poshmark faced a problem common to resellers: Capturing the excitement of the secondhand-shopping treasure hunt while not frustrating buyers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reasons to come beyond paying $19 for a J. Crew sweater.
For its part, Naver was looking for ways to push beyond South Korea, where its commerce and search businesses were already mature. The growing online resale market in the United States presented an opportunity, and also gave the company access to the largest consumer market in the world.
“Commerce is a big growth engine for us,” Namsun Kim, Naver’s chief financial officer, said. And the peer-to-peer sector, where users sell to one another, was still in its infancy, with room to expand. But, Mr. Kim added, “it’s a more challenging segment, and that’s why it’s harder for a lot of the larger players to enter.”
There are two common business models for resale: peer-to-peer and consignment. With consignment, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on scores of people — many of them novices — haggling over prices and then mailing items to one another. This decentralization can be a headache for brands, which like to maintain a certain level of control of their products. And platforms like Poshmark must make buyers comfortable with trusting the sellers on their site.
Before the Naver purchase, it was difficult to push through needed technological changes, said Vanessa Wong, the vice president of product at Poshmark.
“I would always talk to my engineers and ask, ‘What if we do this or do that?’ They’re like, ‘That’s hard. The effort’s really high,’” Ms. Wong said.
Naver’s purchase offered both the investment and the expertise to pull off the changes. Founded in 1999, the company is everywhere in South Korea.
“We are not just a simple search technology or A.I. service,” said Soo-yeon Choi, the chief executive of Naver, whose headquarters are near Seoul. The company, she said, “alleviates the frustrations of people, which is what is needed to help growth.”
Search built Naver “into the massive power that they are in Korea,” said Mr. Chandra, who stayed on as chief executive after Naver’s purchase. It was the top priority when the company bought Poshmark.
Several new elements for users and sellers have been introduced. With a tool called Posh Lens, users can take a photo of an item and, using Naver’s machine-learning technology, the site populates listings that are the same or similar to the shoe or tank top that they’re searching for. A paid ad feature for sellers called “Promoted Closet,” pushes listings higher on customer feeds.
Poshmark also introduced live shows, some of which are themed, to draw in the TikTok generation and increase engagement. One party auctioned off clothing previously worn by South Korean celebrities, a connection that was made with the help of Naver.
Still, the resale market is going through growing pains and has not quite found its footing since the height of the pandemic. It’s not clear whether the changes taking place at Poshmark will be enough. In May, Mr. Kim, Naver’s finance chief, said in an earnings call that Poshmark’s profitability was improving, but by November, the company was cautioning that growth had slowed because of weakness in the peer-to-peer resale market in North America.
Missteps and Reinvention
The company has already done some backpedaling on unpopular decisions.
In October, Poshmark introduced a new fee structure, which increased costs for buyers. Sellers, fearing that higher costs would make consumers bolt, revolted. Within weeks, the company scrapped the new fee structure.
And there are still user headaches: tags and keywords that help users find what they’re looking for can be miscategorized. Sellers sometimes tag their products incorrectly to get more eyeballs on their less popular products. (Hard-to-offload Amazon leggings, for example, may be listed as Free People apparel.)
The company is beta testing changes with its frequent sellers — people like Alex Mahl, who sells thousands of dollars in apparel on the site each year. And within dedicated Facebook groups related to Poshmark, there’s a lot of chatter about the changes that sellers and buyers would still like to see.
“The only way for it to do well is there’s going to be constant changes,” Ms. Mahl said about the tweaks on Poshmark. “If you were just on an app that never changed — one, it would be boring, and two, the opportunity to just do better wouldn’t be there.”
One recent morning, Ms. Eager, the seller who joined Poshmark back in college, was pleasantly surprised to find that the app had some new features she actually liked. She snapped a photo of her Aerie gray tank top with Posh Lens. Within seconds, the app populated listings of similar products. It was so much better than conjuring up the adjectives needed to describe it.
“Love it,” Ms. Eager exclaimed.
Business
When receipts of home renovations are lost, is the tax break gone too?
Dear Liz: I have sold my family home recently after almost 50 years. I had done lots of improvements throughout those years. Due to a fire 15 years ago, all the documentation for these improvements has been destroyed. How do I document the improvements for the capital gains tax calculation?
Answer: As you probably know, you can exclude $250,000 of capital gains from the sale of a principal residence as long as you own and live in the home at least two of the previous five years. The exclusion is $500,000 for a couple.
Once upon a time, that meant few homeowners had to worry about capital gains taxes on the sale of their home. But the exclusion amounts haven’t changed since they were created in 1997, even as home values have soared. Qualifying home improvements can be used to increase your tax basis in the home and thus decrease your tax bill, but the IRS probably will demand proof of those changes should you be audited.
You could ask any contractors you used who are still in business if they will provide written verification of the work they performed, suggests Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. You also could check your home’s history with your property tax assessor to see if its assessment was adjusted to reflect any of the improvements.
At a minimum, prepare a list from memory of the improvements you made, including the year and the approximate cost. If you don’t have pictures of the house reflecting the changes, perhaps friends and relatives might. This won’t be the best evidence, Luscombe concedes, but it might get the IRS to accept at least some increase in your tax basis.
If you’re a widow or widower, there’s another tax break you should know about. At least part of your home would have gotten a step-up in tax basis if you were married and your co-owner spouse died. In most states, the half owned by the deceased spouse would get a new tax basis reflecting the home’s current market value. In community property states such as California, both halves of the house get this step-up. A tax pro can provide more details.
Other homeowners should take note of the importance of keeping good digital records. While documents may not be lost in a fire, they may be misplaced, accidentally discarded or (in the case of receipts) so faded they’re illegible. To make sure documents are available when you need them, consider scanning or taking photographs of your records and keeping multiple copies, such as one set in your computer and another in a secure cloud account.
When an employee is misclassified as contractor
Dear Liz: A parent recently wrote to you about a son who was being paid as a contractor. I know someone else who got a job that did not “take out taxes from his paycheck.” Such workers believe they are pocketing more money, but unfortunately, too many do not know about the nature of withholding. They only learn if they choose to file for their expected refund, but instead discover an exorbitant tax liability that a paycheck-to-paycheck worker cannot pay.
The sad fact is that many of these employers improperly classify their workers, who are truly employees, as independent contractors! And they do this to avoid paying their own portion of Social Security and unemployment taxes and also workers compensation insurance.
If workers believe that they have been misclassified (the IRS website provides all criteria), they can file IRS Form SS-8 and Form 8919, which will allow them to pay only their allocated half of their Social Security taxes. Hopefully the IRS will then contact these employers to correct their wrong classifications. And finally, it should be a law that, when hired, all true independent contractors should be given a clear form (not fine print on their employment agreements) that informs them of their status and the need to make estimated tax payments.
Answer: A big factor in determining whether a worker is an employee or contractor is control. Who controls what the worker does and how the worker does the job? The more control that’s in the employer’s hands, the more likely the worker is an employee.
However, the IRS notes that there are no hard and fast rules and that “factors which are relevant in one situation may not be relevant in another.”
The form you mentioned, IRS Form SS-8, also can be filed by any employer unsure if a worker is properly classified.
Liz Weston, Certified Financial Planner®, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
Business
Inside Elon Musk’s Plan for DOGE to Slash Government Costs
An unpaid group of billionaires, tech executives and some disciples of Peter Thiel, a powerful Republican donor, are preparing to take up unofficial positions in the U.S. government in the name of cost-cutting.
As President-elect Donald J. Trump’s so-called Department of Government Efficiency girds for battle against “wasteful” spending, it is preparing to dispatch individuals with ties to its co-leaders, Elon Musk and Vivek Ramaswamy, to agencies across the federal government.
After Inauguration Day, the group of Silicon Valley-inflected, wide-eyed recruits will be deployed to Washington’s alphabet soup of agencies. The goal is for most major agencies to eventually have two DOGE representatives as they seek to cut costs like Mr. Musk did at X, his social media platform.
This story is based on interviews with roughly a dozen people who have insight into DOGE’s operations. They spoke to The Times on the condition of anonymity because they were not authorized to speak publicly.
On the eve of Mr. Trump’s presidency, the structure of DOGE is still amorphous and closely held. People involved in the operation say that secrecy and avoiding leaks is paramount, and much of its communication is conducted on Signal, the encrypted messaging app.
Mr. Trump has said the effort would drive “drastic change,” and that the entity would provide outside advice on how to cut wasteful spending. DOGE itself will have no power to cut spending — that authority rests with Congress. Instead, it is expected to provide recommendations for programs and other areas to cut.
But parts of the operation are becoming clear: Many of the executives involved are expecting to do six-month voluntary stints inside the federal government before returning to their high-paying jobs. Mr. Musk has said they will not be paid — a nonstarter for some originally interested tech executives — and have been asked by him to work 80-hour weeks. Some, including possibly Mr. Musk, will be so-called special government employees, a specific category of temporary workers who can only work for the federal government for 130 days or less in a 365-day period.
The representatives will largely be stationed inside federal agencies. After some consideration by top officials, DOGE itself is now unlikely to incorporate as an organized outside entity or nonprofit. Instead, it is likely to exist as more of a brand for an interlinked group of aspirational leaders who are on joint group chats and share a loyalty to Mr. Musk or Mr. Ramaswamy.
“The cynics among us will say, ‘Oh, it’s naïve billionaires stepping into the fray.’ But the other side will say this is a service to the nation that we saw more typically around the founding of the nation,” said Trevor Traina, an entrepreneur who worked in the first Trump administration with associates who have considered joining DOGE.
“The friends I know have huge lives,” Mr. Traina said, “and they’re agreeing to work for free for six months, and leave their families and roll up their sleeves in an attempt to really turn things around. You can view it either way.”
DOGE leaders have told others that the minority of people not detailed to agencies would be housed within the Executive Office of the President at the U.S. Digital Service, which was created in 2014 by former President Barack Obama to “change our government’s approach to technology.”
DOGE is also expected to have an office in the Office of Management and Budget, and officials have also considered forming a think tank outside the government in the future.
Mr. Musk’s friends have been intimately involved in choosing people who are set to be deployed to various agencies. Those who have conducted interviews for DOGE include the Silicon Valley investors Marc Andreessen, Shaun Maguire, Baris Akis and others who have a personal connection to Mr. Musk. Some who have received the Thiel Fellowship, a prestigious grant funded by Mr. Thiel given to those who promise to skip or drop out of college to become entrepreneurs, are involved with programming and operations for DOGE. Brokering an introduction to Mr. Musk or Mr. Ramaswamy, or their inner circles, has been a key way for leaders to be picked for deployment.
That is how the co-founder of Loom, Vinay Hiremath, said he became involved in DOGE in a rare public statement from someone who worked with the entity. In a post this month on his personal blog, Mr. Hiremath described the work that DOGE employees have been doing before he decided against moving to Washington to join the entity.
“After 8 calls with people who all talked fast and sounded very smart, I was added to a number of Signal groups and immediately put to work,” he wrote. “The next 4 weeks of my life consisted of 100s of calls recruiting the smartest people I’ve ever talked to, working on various projects I’m definitely not able to talk about, and learning how completely dysfunctional the government was. It was a blast.”
These recruits are assigned to specific agencies where they are thought to have expertise. Some other DOGE enrollees have come to the attention of Mr. Musk and Mr. Ramaswamy through X. In recent weeks, DOGE’s account on X has posted requests to recruit a “very small number” of full-time salaried positions for engineers and back-office functions like human resources.
The DOGE team, including those paid engineers, is largely working out of a glass building in SpaceX’s downtown office located a few blocks from the White House. Some people close to Mr. Ramaswamy and Mr. Musk hope that these DOGE engineers can use artificial intelligence to find cost-cutting opportunities.
The broader effort is being run by two people with starkly different backgrounds: One is Brad Smith, a health care entrepreneur and former top health official in Mr. Trump’s first White House who is close with Jared Kushner, Mr. Trump’s son-in-law. Mr. Smith has effectively been running DOGE during the transition period, with a particular focus on recruiting, especially for the workers who will be embedded at the agencies.
Mr. Smith has been working closely with Steve Davis, a collaborator of Mr. Musk’s for two decades who is widely seen as working as Mr. Musk’s proxy on all things. Mr. Davis has joined Mr. Musk as he calls experts with questions about the federal budget, for instance.
Other people involved include Matt Luby, Mr. Ramaswamy’s chief of staff and childhood friend; Joanna Wischer, a Trump campaign official; and Rachel Riley, a McKinsey partner who works closely with Mr. Smith.
Mr. Musk’s personal counsel — Chris Gober — and Mr. Ramaswamy’s personal lawyer — Steve Roberts — have been exploring various legal issues regarding the structure of DOGE. James Burnham, a former Justice Department official, is also helping DOGE with legal matters. Bill McGinley, Mr. Trump’s initial pick for White House counsel who was instead named as legal counsel for DOGE, has played a more minimal role.
“DOGE will be a cornerstone of the new administration, helping President Trump deliver his vision of a new golden era,” said James Fishback, the founder of Azoria, an investment firm, and confidant of Mr. Ramaswamy who will be providing outside advice for DOGE.
Despite all this firepower, many budget experts have been deeply skeptical about the effort and its cost-cutting ambitions. Mr. Musk initially said the effort could result in “at least $2 trillion” in cuts from the $6.75 trillion federal budget. But budget experts say that goal would be difficult to achieve without slashing popular programs like Social Security and Medicare, which Mr. Trump has promised not to cut.
Both Mr. Musk and Mr. Ramaswamy have also recast what success might mean. Mr. Ramaswamy emphasized DOGE-led deregulation on X last month, saying that removing regulations could stimulate the economy and that “the success of DOGE can’t be measured through deficit reduction alone.”
And in an interview last week with Mark Penn, the chairman and chief executive of Stagwell, a marketing company, Mr. Musk downplayed the total potential savings.
“We’ll try for $2 trillion — I think that’s like the best-case outcome,” Mr. Musk said. “You kind of have to have some overage. I think if we try for two trillion, we’ve got a good shot at getting one.”
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