*

Trump administration tells agencies to prepare for

large-scale

layoffs

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Musk attends Trump's first cabinet meeting, says can

achieve $1

trillion in cuts

*

(New throughout, adds details on layoffs, cabinet meeting,

government cancelling property leases and executive order)

By Trevor Hunnicutt, Alexandra Alper and Andy Sullivan

WASHINGTON, Feb 26 (Reuters) - U.S. President Donald

Trump's administration on Wednesday ordered federal agencies to

undertake more large-scale layoffs of federal workers, as

downsizing czar Elon Musk vowed at Trump's first cabinet meeting

to pursue deeper spending cuts.

A new administration memo instructed agencies to submit

plans by March 13 for a "significant reduction" in staffing to a

federal workforce already reeling from Musk's waves of layoffs

and program cuts. It did not specify numbers of desired layoffs.

The memo, signed by White House budget director Russell

Vought and Office of Personnel Management acting head Charles

Ezell, represents a major escalation in Trump and Musk's

campaign to slash the size of the U.S. government.

Thus far, the layoffs have focused on probationary

workers, who have less tenure in their current roles and enjoy

fewer job protections. The next round would target the vastly

bigger pool of veteran civil servants.

At the cabinet meeting, Trump said Lee Zeldin, the

Environmental Protection Agency administrator, plans to

cut up to 65%

of his more than 15,000 employees.

On Tuesday, an Interior Department source told Reuters

bureaus such as the U.S. Fish and Wildlife Service and the

Bureau of Indian Affairs should prepare for workforce reductions

ranging from 10% to 40%.

Some 100,000 of the nation's 2.3 million civilian

federal workers have been fired or taken buyouts since Trump

took office.

Trump gave Musk an extraordinary sign of support for the

cost-cutting campaign by inviting the billionaire to the cabinet

meeting and asked him to speak about the work of his Department

of Government Efficiency, which is overseeing the overhaul.

As cabinet secretaries looked on, the Tesla and SpaceX

CEO - wearing a black "Make America Great Again" baseball cap

and a t-shirt that read "tech support" - expressed confidence

that he can cut the $6.7 trillion budget by $1 trillion this

year. That extremely ambitious target would likely entail

significant disruption of government programs.

Without such deep spending cuts, Musk said, "the country

will go de facto bankrupt."

Later on Wednesday, Trump signed an executive order

directing agencies to work with DOGE to review and terminate all

"unnecessary" contracts and instructing the General Services

Administration, which manages the government's real estate, to

create a plan for disposing of any unneeded property.

Thus far, Trump and Musk have failed to slow the rate of

spending. According to a Reuters analysis, the government spent

13% more during Trump's first month in office than during the

same time last year, largely due to higher interest payments on

the debt and rising health and retirement costs incurred by an

aging population.

Trump reiterated his promise to refrain from cutting popular

health and retirement benefits that account for nearly half of

the budget.

"We're not going to touch it," said Trump.

Trump is simultaneously pushing Congress to extend the 2017

tax cuts, the signature legislative accomplishment of his first

term, set to expire at year's end. The nonpartisan Committee for

a Responsible Federal Budget estimates the 2017 cuts added $2.5

trillion to the nation's debt -- now $36 trillion. It estimated

that extending the tax cuts could cost more than $5 trillion

over a decade.

Republicans are weighing cuts to healthcare and food aid

for the poor to help pay for the tax cuts, though specifics have

not yet emerged.

TRUMP SAYS SOME WORKERS 'ON THE BUBBLE'

Some of the cabinet secretaries were taken by surprise

over the weekend when federal workers received an email

requiring them to list their accomplishments for the week, a

demand that Musk said would result in termination if ignored.

Some agencies told employees to ignore the directive,

prompting days of confusion over whether Musk and Trump could

make good on the threat.

Musk, the world's richest person, told the cabinet meeting

his email was an attempt to find out whether government

paychecks were going to actual workers.

"We think there are a number of people on the government

payroll who are dead," he said, without providing evidence.

Trump suggested that the roughly 1 million workers who did

not respond to Musk's email might be at risk of losing their

jobs.

"They are on the bubble," he said, using a slang term to

refer to a situation that has uncertain outcome.

Trump and Musk's unprecedented government overhaul has also

frozen foreign aid and disrupted construction projects and

scientific research.

The GSA, informally known as the government's landlord,

plans to terminate 1,100 leases for office space by the end of

the year, according to a person briefed on the matter.

The terminations will target so-called soft-term leases,

which are no longer subject to cancellation penalties and can be

easily ended, the person said. The GSA manages roughly 2,800

soft-term leases in total, and thousands more "firm-term" leases

that cannot be ended without cause.

(Additional reporting by Nathan Layne, David Shepardson, James

Oliphant and Joseph Ax; Editing by Ross Colvin, Deepa Babington

and David Gregorio)