How Musk turned on Trump's tax ‘abomination'

Yahoo

3 days ago

In the world of Elon Musk, five days is a very long time.
Last Friday, Donald Trump described Musk as a 'very special' friend as he stepped down from his role as cost-cutting tsar, bidding farewell by presenting the Tesla chief with a golden key to the White House.
After accepting the gift, Musk told reporters in the Oval Office that he would make good use of it.
'I'll continue to be visiting here and be a friend and adviser to the president,' he said.
Just a few days later, it appears the billionaire's punchy advice may already be pushing this friendship to breaking point.
Late on Tuesday, Musk escalated his criticism of Trump's 'one big, beautiful bill', attacking the US president's package of tax cuts over fears it could add trillions to the national deficit.
'I'm sorry, but I just can't stand it anymore,' he told his 220m followers on his social media site X.
'This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Congress is making America bankrupt.'
More ominously, he took aim at the 215 Republican members of the House of Representatives who voted for the Bill. 'Shame on those who voted for it: you know you did wrong,' he said.
He didn't stop there. Two hours later, he warned of reprisals at the crucial Congressional midterm elections in 2026. 'In November next year, we fire all politicians who betrayed the American people.'
These are words that could send a chill through Republican Party politicians, including the president himself.
Last year, Musk pumped almost $300m (£220m) into Trump's election campaign, providing the financial firepower required to restore him to the White House.
And while the Tesla chief has recently exited his role in the Trump administration and vowed to cut his political spending, Musk still looms large over US politics.
Unsurprisingly, the White House has so far played down Musk's criticism.
'Look, the president already knows where Elon Musk stood on this Bill,' White House spokesman Karoline Leavitt told reporters on Wednesday. 'It doesn't change the president's opinion. This is one big, beautiful bill, and he's sticking to it.'
The Bill's next stop is the Senate, where it's already facing a less unanimous welcome from Republicans.
John Thune, the Republican Senate majority leader, is sticking with his boss.
'My hope is that as [Musk] has an opportunity to further assess what this Bill actually does, that he comes to a different conclusion,' Thune told reporters.
But the Tesla billionaire has found a vocal ally in the fiscally hawkish Republican Senator Rand Paul, a longstanding Trump critic. The pair spent Tuesday sharing each other's posts on X.
'I've been pretty consistent in my time in the Senate: I oppose deficit spending no matter which party is in charge,' Paul said in one X post that Musk then promoted.
'If we don't get serious about reining in the debt, the next generation will pay the price. Fiscal responsibility isn't a campaign slogan. It's a duty which I take very seriously.'
For Musk, this isn't just a matter of policy. It's personal.
The Bill's fiscal profligacy flies directly in the face of the mission that brought him into politics as a chainsaw-wielding Maga maverick: cutting government spending.
His department of government efficiency, or Doge, has been on a move-fast-and-break-things campaign to reduce the size of the state.
At the White House ceremony to receive his golden key, he wore a T-shirt with the iconography of The Godfather film reworked as 'the Dogefather'. He compared Doge to Buddhism, describing it as 'like a way of life'.
He is yet to reach fiscal nirvana, though, having fallen well short of initial ambitions to cut at least $2 trillion from the federal budget during his allotted 130 days as a government agent.
By the start of June, his 'wall of receipts' was showing savings of $180bn, although several independent efforts to verify Doge's claims have struggled to make the sums add up.
'Maybe why Elon Musk is a bit worked up about this is that he thought he had a mandate to cut spending, and that didn't really happen very much with Doge,' says John Stopford, of fund manager Ninety One.
Musk has publicly vented frustration at what he sees as obstructionism from Trump lieutenants and Republican members of Congress keen to protect spending that benefits their districts.
Now Trump is in his sights, too. Musk told CBS over the weekend that the tax-cut Bill 'undermines the work that the Doge team is doing'.
Musk isn't alone in questioning whether Trump's signature legislation is as beautiful as it is big.
Yields on longer-dated US Treasury bonds, which finance the government's deficit, are at or near their highest in decades.
Investors are worried that the US fiscal trajectory is unsustainable, and are demanding a bigger reward for holding debt beyond the next few years.
Term premiums on 10-year US Treasuries – the extra compensation that investors demand compared with shorter-dated bonds, and which can be used as a proxy for investor caution on long-term debt – have hit their highest level in more than a decade.
The higher the term premium, the lower the demand.
'What we have been seeing is just a lot of worry about the sustainability of US finances. Worries that there just simply aren't enough investors, especially foreign investors, in the market,' says Gennadiy Goldberg, head of US rates strategy at TD Securities.
A dearth of buyers raises the risk of a crisis in which sellers could become unable to clear their sales, Goldberg warns. This would drive a sharp surge in rates and could force an emergency intervention from the Federal Reserve.
'If there was a big deleveraging that happened and there was a big source of selling, whether it's from foreign investors or hedge funds or levered investors or basis investors, it could potentially overwhelm the system,' he says.
Ninety One's Stopford agrees. 'There is a risk that you reach a tipping point at some point,' he says.
However, beyond the economy, it's possible that if anyone has reached a tipping point, it's Musk himself.
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