Business
How the Public Utilities Commission circumvents the California Public Records Act
The California Public Utilities Fee — which regulates day-to-day providers as various as electrical utilities and ride-hailing corporations — has lengthy vowed to turn out to be extra clear in response to criticism it operates far too secretively.
But regardless of these guarantees, the CPUC has erected a number of roadblocks to forestall the general public from studying about its dealing with of lethal disasters and company scandals, based on a San Francisco Public Press evaluate of courtroom information and interviews with 1st Modification attorneys.
Making use of century-old legal guidelines meant to struggle railroad corruption, the fee has successfully restricted courtroom enforcement of the state’s public information act. However a forthcoming ruling in a lawsuit difficult that long-standing follow might deliver extra transparency to the highly effective fee.
The lawsuit disputes the company’s refusal to launch information regarding its communications with Gov. Gavin Newsom’s workplace concerning the 2018 Camp hearth — the state’s deadliest wildfire — and the company’s determination to waive a $200-million penalty in opposition to PG&E.
The case was introduced by tv station ABC10 in Sacramento and its reporter Brandon Rittiman, whose protection of the fireplace has garnered nationwide consideration. It claims the company should adjust to the California Public Information Act, which says all businesses should launch public information “promptly.”
The fee contends the lawsuit needs to be dismissed as a result of Rittiman’s request — already greater than a yr outdated — didn’t adjust to a prolonged administrative course of supposed to restrict abusive litigation by railroad barons preventing regulatory choices.
However at a listening to earlier this month earlier than the first District Court docket of Enchantment in San Francisco, two of the three justices appeared skeptical concerning the fee’s declare that the outdated regulation applies to the more moderen information act.
“I discover it kind of putting, if not excessive,” Presiding Justice Jim Humes mentioned to the company’s lawyer, including later, “You just like the Legislature’s actions a century in the past, however you don’t actually just like the Legislature’s actions extra lately?”
David Snyder, government director of the First Modification Coalition, a nonpartisan group devoted to advancing authorities transparency, which is supporting the lawsuit, mentioned it’s “completely essential” that individuals have well timed courtroom evaluate of company denials of their requests for data.
“Administrative businesses shouldn’t and can’t have the ultimate say on whether or not the Public Information Act has been adopted,” mentioned Snyder, a lawyer and former journalist. “That’s the proverbial fox guarding the henhouse.”
Citing particular powers granted no different state company, the fee has denied requests for information on its dealing with of catastrophes corresponding to Pacific Gasoline & Electrical Co.’s Camp hearth, the failed San Onofre nuclear energy plant and hundreds of collisions and assaults on Uber and Lyft rides, a evaluate of courtroom circumstances and state paperwork discovered.
These powers have been supposed to struggle the corrupting affect of the railroads, however the fee has deployed them to undercut the information act, meant to advertise authorities transparency and accountability, courtroom information present.
The company has denied its procedures violate the act’s necessities that it launch information promptly. In adopting its present coverage in 2018, it referred to as such allegations “merely speculative” and cited “our longstanding practices supporting disclosure and our progressive growth of guidelines that can promote public entry to information in our possession.”
The Camp hearth courtroom case highlights hurdles dealing with anybody looking for information from the company, which regulates energy, water, phone, transportation and different utilities. It’s accountable for making certain utility providers are honest and protected.
In response to Steve Zansberg, the Denver-based legal professional for ABC10, the case poses a elementary query: Is the fee above the state regulation that requires all businesses to promptly launch information about how they conduct public enterprise?
“We’re attempting to carry the PUC accountable,” he mentioned in an interview. “You possibly can’t try this if you happen to don’t have entry to the information that present what’s happening behind the scenes.”
Christofer Nolan, a lawyer representing the company, didn’t reply to emails looking for remark. Terrie Prosper, the fee’s director of reports and outreach, additionally declined to remark.
“We’re attempting to carry the PUC accountable. You possibly can’t try this if you happen to don’t have entry to the information that present what’s happening behind the scenes.”
— Steve Zansberg, lawyer for ABC-10 in its lawsuit in opposition to the CPUC
In addition to the San Rafael-based First Modification Coalition, the lawsuit has gained assist from the Related Press and the Emeryville-based Middle for Investigative Reporting, the nation’s oldest nonprofit investigative newsroom.
Matthew Cate, the Washington, D.C., legal professional who filed a quick on behalf of the organizations, wrote that the fee has a historical past of “illegal delays” in responding to requests and that its practices might encourage different businesses to erect related obstacles to public data.
“The PUC has created a set of procedures utterly opposite to the letter and spirit of the CPRA and the constitutional proper of entry to public information,” Cate wrote, referring to the state public information act.
A evaluate of courtroom circumstances, fee filings, legislative historical past and interviews with attorneys, along with this reporter’s expertise as a requester, discovered a gantlet of obstacles:
- The company can take months or years to launch information. Between Jan. 1, 2017, and April 4, 2022, the company obtained 3,115 requests and took a median of 58 days to shut them, statistics it launched beneath the general public information act present. 5 requests submitted by the Public Press for information regarding hundreds of ride-hailing security incidents have taken between six and 27 months.
- The fee tends to interpret the scope of requested information narrowly, whereas making use of exemptions from disclosure broadly, successfully lowering public entry to data.
- With different state businesses, an individual might instantly search impartial courtroom evaluate of a denied request. However beneath fee guidelines, they need to first file an administrative enchantment after which apply for a rehearing, a much more cumbersome and prolonged course of.
- The fee requires requesters to enchantment inside 10 days or lose their proper to problem its denial, in contrast with 90 days allowed beneath the federal Freedom of Data Act.
- Company guidelines present no deadline for the fee to resolve appeals or rehearings, and the company asserts that requesters might not search courtroom evaluate till it has, successfully holding their requests in limbo. Federal regulation, against this, lets requesters sue as early as 20 working days after interesting.
- With all different California businesses, requesters might search evaluate in an area Superior Court docket. However for the fee they could search evaluate solely in state appeals courts or the California Supreme Court docket, boards which can be extra sophisticated and dear, successfully deterring impartial evaluate of denials.
The fee has mentioned it’s devoted to transparency however should stability that aim with its responsibility to keep up confidentiality of commerce secrets and techniques and private information in firm filings.
It has famous that no different company within the state is required to observe each the information act and the Public Utilities Code, which says any worker who releases confidential data submitted by a utility, until ordered to by the fee, is topic to a misdemeanor cost. This authorized requirement “is exclusive to the Fee and thus analogy to different state businesses or native governments’ processes,” it mentioned, are “inapplicable.”
The company says it adopted its system of administrative enchantment and rehearing to let requesters present data needs to be launched, and utilities present it’s actually confidential, earlier than the commissioners make a remaining determination.
However attorneys for requesters famous that workers of different businesses additionally face felony penalties for improperly releasing data, corresponding to rap sheets or medical information.
And no matter inner course of an company creates, they are saying, it could not violate the information act’s clear deadlines.
Enacted in 1968, the California Public Information Act is modeled on the federal Freedom of Data Act. The state regulation declares that “entry to data regarding the conduct of the individuals’s enterprise is a elementary and crucial proper.”
It says all state businesses “shall” decide whether or not the requested information are releasable inside 24 days, instantly notify the requester and “promptly” launch them. If an company withholds information, it says, requesters might search courtroom evaluate “on the earliest potential time.”
Voters bolstered the regulation in 2004 once they overwhelmingly handed Proposition 59, which embedded these phrases within the state Structure: “The individuals have the precise of entry to data regarding the conduct of the individuals’s enterprise, and, subsequently, the conferences of public our bodies and the writings of public officers and businesses shall be open to public scrutiny.”
Just like the information act, the fee has roots in a voter-backed constitutional modification. The company was created because the Railroad Fee in 1879 however was corrupted by the Southern Pacific Railroad, which dominated state politics, says a historical past written by fee workers.
In 1911, voters propelled by Gov. Hiram Johnson’s reform platform granted the company better autonomy with the intent of stopping corruption. Its authority was prolonged to different utilities and in 1946 it obtained its present title. It’s led by 5 commissioners appointed by the governor for six-year phrases. They oversee 1,402 workers and a $1.1-billion funds.
Three courtroom circumstances highlight how the company has sought to dam public entry.
The 2010 explosion of a PG&E gasoline pipeline in San Bruno killed eight residents and injured dozens extra. San Bruno officers suspected PG&E and company workers have been secretly negotiating an unfairly gentle penalty in opposition to the utility for inflicting the blast.
To search out out, the town requested copies of communications with PG&E executives, however the company largely failed to reply, San Bruno Metropolis Atty. Marc Zafferano recalled.
Town filed an administrative enchantment — solely to find fee guidelines specified no deadline for its determination. Finally, the town sued and reached a settlement through which the company launched information, spurring PG&E to launch many extra.
The information confirmed there have been improper non-public communications between the company and utility, for which PG&E agreed to pay $97.5 million in penalties. It additionally was fined $1.6 billion for violating security requirements.
Underneath the settlement, the fee reviewed its public information procedures. San Bruno urged it to undertake deadlines to finish the “probably countless appeals course of that it utterly controls.”
However in a 2018 order the company dismissed such considerations as speculative and adopted its present coverage, Common Order 66-D.
Michael Aguirre, a former federal prosecutor in San Diego, hit related boundaries when he sought information on the 2012 shutdown of the San Onofre nuclear energy plant, the place engineers had found a radioactive leak.
Aguirre represented utility prospects difficult the fee’s determination that they pay $3.3 billion of the $4.7-billion value of the failed reactor. In 2016, he requested copies of communications between the fee and Gov. Jerry Brown’s workplace about San Onofre. The company claimed they have been confidential.
Aguirre sued in state appeals courtroom, contending the governor’s workplace might need secretly influenced the company’s determination on prices, and the general public had a proper to know. The company, he mentioned, “engaged in excessive delay techniques.”
The fee denied Aguirre’s claims and requested the courtroom to dismiss his lawsuit as a result of he had not utilized for a rehearing on the company till after he sued. Since that software was pending, it mentioned, the courtroom had no jurisdiction.
The courtroom didn’t handle that problem however in June 2018 ordered the company to launch extra information.
In a separate federal lawsuit, Aguirre and his regulation companion, Maria Severson, gained fee approval later that yr of a revised determination saving ratepayers $775 million on the plant closure.
Lately, the fee has made extra data public. It not lets corporations merely stamp their filings “confidential,” requiring particular justifications for secrecy claims.
However as ABC10’s Rittiman discovered, the company nonetheless poses obstacles to information requests.
The Camp hearth in Butte County burned 153,336 acres, destroyed 18,000 buildings and killed not less than 85 individuals. PG&E pleaded responsible to 84 counts of involuntary manslaughter and considered one of inflicting the fireplace.
Rittiman wished to know why the company waived a $200-million effective in opposition to PG&E, and whether or not the governor’s workplace influenced that call.
On Nov. 19, 2020, he requested communications between then-commission President Marybel Batjer and Newsom’s workplace. The company mentioned the information have been confidential.
Rittiman filed an administrative enchantment, which the company denied a yr later. He utilized for a rehearing, which the company denied as improperly filed.
On June 14, 2021, Rittiman sued. The company tried repeatedly to get the case dismissed. However on Might 3 the appeals courtroom lastly heard arguments on whether or not the fee should meet the deadlines within the information act.
Nolan, the company’s lawyer, conceded Rittiman’s request was taking “longer than we want.” Nonetheless, Nolan mentioned that beneath the Public Utilities Fee’s century-old guidelines he couldn’t search courtroom evaluate.
However Affiliate Justice Kathleen M. Banke requested why the courtroom couldn’t conclude that, in later passing the information act, the Legislature “crafted a distinct sort of scheme, and it appears fairly clear that it applies on to the PUC.”
A call within the case is anticipated by Aug. 1.
Rosenfeld writes for the San Francisco Public Press, an impartial nonprofit newsroom that produces investigative and options journalism. For extra of its protection on this subject, see Trip Hailing’s Darkish Information.
This story was produced in partnership with the McGraw Middle for Enterprise Journalism on the Craig Newmark Graduate Faculty of Journalism on the Metropolis College of New York. Help additionally got here from the Fund for Investigative Journalism.
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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