U.S. President Donald Trump and tech titan Elon Musk are feuding again, as Trump’s megabill — a budget reconciliation bill projected to add trillions to the country’s federal deficit — passes a vote in the Senate.
Trump’s controversial spending bill has been the source of Musk’s ire since the beginning of the summer, leading to the soap opera-like collapse of their close working relationship that began during Trump’s election campaign last year.
Musk, who was brought into the Trump administration in January to lead the then-newly formed Department of Government Efficiency — a cost-cutting project that led to massive job cuts across the public service — said the legislation would lead to “the biggest debt increase in history.”
The Congressional Budget Office, a non-partisan government agency, estimated that in all, the bill including the Senate’s additions would add $3.3 trillion US over nine years. The CBO has projected the U.S. deficit will be $1.9 trillion US this year.
The bill, which promises measures like expanded tax cuts, mass deportations and cuts to Medicaid, is projected to reduce federal revenues by a larger margin than it will reduce federal spending, widening the deficit. Musk sees this as undoing the cost-saving work he performed with DOGE.
Trump, meanwhile, has suggested that he’d target Musk’s companies by eliminating their government contracts and subsidies, which a Washington Post analysis found amounted to at least $38 billion US over the years — providing the foundation for Musk’s immense personal wealth.
“DOGE is the monster that might have to go back and eat Elon,” he told reporters on Tuesday morning.
After a very public war of words, it appears the honeymoon is over for Elon Musk and Donald Trump. CBC’s Eli Glasner breaks down the unexpected bromance between two of the world’s most powerful figures and how the ‘Big, Beautiful Bill’ eventually tore it apart.
How does Musk benefit?
Musk currently runs or owns six companies, and his private space flight venture SpaceX holds about $22 billion US in government contracts, according to SpaceX CEO Gwynne Shotwell — the majority from NASA and the Department of Defence.
SpaceX technology is so ingrained in some of the Pentagon’s operations — like its Starlink satellite service, which provides internet connectivity in rural areas, and which was used during military operations in Ukraine last year — that some have questioned how the agency, and the U.S.’s space program, would fare without it.
Conversely, some of Musk’s companies are also vulnerable to regulatory oversight, including brain chip company Neuralink — its technology and clinical trials are overseen by the U.S. Food and Drug Administration — and Tesla, which has been scrutinized over its self-driving software. That company’s expansion into robo-taxis also depends on regulatory approval.
Tesla also gets regulatory credits for selling EVs. And it has benefited from EV subsidies — but Senate Republicans recently added a proposal to the budget bill that would quickly kill a $7,500 US consumer tax credit for electric vehicles, a direct hit to the company.
“The last thing Tesla investors want to see is Trump go from [a best friend] to an enemy, or at least someone who can be a detractor for Musk. It’s all politics, and that’s the frustration,” said Daniel Ives, global head of tech research at Wedbush Securities in New York.
There was never much doubt that the Trump administration would do away with the so-called EV mandate, according to Ives. The U.S. president, writing on Truth Social, said electric cars are “fine, but not everyone should be forced to own one.”
“The bigger worry is what this means for autonomous and the regulatory framework for Musk and Tesla,” said Ives. “In terms of SpaceX and some of the concerns there, I think the bark is worse than the bite.”
Musk, distraught by the spending bill, has been threatening for the last few weeks to form a new U.S. political party, pitching it as an alternative to what he referred to as the Democratic and Republican “uniparty.” Writing on X, the social media platform that he owns, Musk said that he would form the America Party within a day if the spending bill is passed, which it has.
“Investors want to see him out of politics, but he keeps diving into it. And that’s part of the frustration,” said Ives.
How did two of the most powerful men on the planet — Donald Trump and Elon Musk — go from friends to foes? Andrew Chang explains why it may be in their best interests to reconcile. Then, is Trump really coming after Canada for its critical minerals?
A hit to Musk’s businesses
Musk’s anger over the bill is being perceived within the White House as concern over his own companies, because the bill “would hurt Musk’s businesses in a number of different ways,” Dasha Burns, the White House chief correspondent for Politico, told CBC’s Front Burner last month.
Front Burner28:34Trump and Elon’s messy breakup
“Musk is a smart guy,” she added. “The way that he is messaging the bill and his problems with it do hit on the same issues that some fiscal conservatives have with the bill, as well.”
In a threat to Musk on Truth Social on Tuesday, Trump said the U.S. would save a “fortune” if it ended subsidies for SpaceX’s rocket launches and satellites, and Tesla’s electric vehicle production.
Responding on X, the social media platform that he owns, Musk said, “I am literally saying CUT IT ALL. Now.”
Tesla’s stock plummeted on Tuesday, with some shareholders unnerved by Musk’s spat with Trump. The company’s second-quarter earnings are out this week.
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