Elon Musk's Pro-Austerity Party Might Still Change Politics

Forbes

7 days ago

WASHINGTON, DC - MAY 30: Tesla CEO Elon Musk listens as U.S. President Donald Trump speaks to ... More reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC. (Photo by)
To read this article with full citations, please visit taxnotes.com
Elon Musk wants a new political party, and he has plenty of company. According to a recent YouGov poll, 45 percent of Americans would welcome a third option in the voting booth.
If you're Musk, that might sound like good news for his new America Party, announced July 5 with all the usual social media fanfare. But a lot of voters have soured on Musk personally, and only 11 percent of respondents told YouGov they would consider supporting a party founded by the Tesla chief. According to political number cruncher G. Elliott Morris, even that paltry figure may be optimistic; he estimates Musk's likely constituency at around 2 percent.
Musk, of course, seems undaunted by those numbers. (Is he ever daunted? By anything?) In fact, he seems to believe that his new party will appeal to 'the 80 percent in the middle' of the American electorate.
Maybe he's right. But to evaluate that claim, we would need to know a bit more about the America Party's likely platform. Musk has made some gestures toward fiscal responsibility as a centerpiece (although he seems to define that concept solely in terms of spending austerity rather than revenue adequacy). But he hasn't said much about the rest of his program.
'If the name is unimaginative, so is the apparent pitch,' wrote Jon Allsop in The New Yorker. 'Beyond deficit hawkery and cutting supposed 'waste & graft,' it's not yet clear what the Party might stand for.'
But maybe Musk is onto something — maybe fiscal austerity could be enough. It seems vaguely plausible, given the grim, not-so-long-term outlook for the nation's finances. Americans claim to be alarmed by the prospect of big deficits and rising debt. In March 53 percent of respondents told Gallup that they worried 'a great deal' about federal spending and the budget deficit, while another 28 percent said they worry 'a fair amount.' That's 81 percent, apparently validating Musk's intuition about his constituency.
Still, there are good reasons to suspect that voters are lying — certainly to pollsters and probably to themselves. If Americans worry about federal debt, they don't seem to vote based on those worries. When asked about the biggest single problem facing the nation, roughly a third of Americans cite economic issues of one sort or another. But only 7 percent name deficits and debt as the single biggest problem; worries about the 'economy in general' and 'high cost of living/inflation' both rank higher in Gallup surveys.
Maybe lying is too strong a word. We should probably take voters at their word when they say they worry about deficits and debt. But they don't seem inclined to punish politicians who flout the rules of sound public finance. At the end of the day, voters care about other things more than they care about red ink.
A Brief History of Third Parties
If Musk thinks his austerity agenda could provide the foundation for a political transformation, he wouldn't be the first political entrepreneur to entertain such hopes. American history is replete with partisan start-ups, many of them rooted in popular unhappiness over public finance — including taxation.
Third parties have often been rooted in the failure of the nation's political duopoly to address widespread economic discontent. These parties have based their electoral appeal on a range of issues, including monetary policy and broader fiscal stewardship. And while none of these parties found a durable spot in the American political system, they have often sparked important policy changes, including the adoption of the federal income tax.
A quick survey of some 19th century history makes the pattern clear.
America's founders were notoriously suspicious of organized 'factions,' with President George Washington warning his fellow citizens in 1796 about 'the baneful effects of the spirit of party.'
Illustration of four of the United States Foundign Fathers, from left, John Adams (1735 - 1826), ... More Robert Morris (1734 - 1806), Alexander Hamilton (1757 - 1804), and Thomas Jefferson (1743 - 1826), 1774. (Photo by)
Almost as famously, Americans of the 1790s wasted no time sorting themselves into two distinct parties, loosely organized around the personalities of Alexander Hamilton and Thomas Jefferson. Hamilton's Federalists championed the need for a strong central government and a robust federal tax system (necessary for Hamilton's plan to restructure the national debt incurred during the Revolution and its aftermath). Jefferson's Democratic-Republicans, by contrast, advanced a more limited vision of federal governance, including a revenue system that relied heavily on tariffs and not at all on internal taxes (like the controversial excise on whiskey that sparked the eponymous rebellion).
The two-party system of the 1790s and 1800s didn't last long. Indeed, the Federalists began a rapid decline after losing the 1800 presidential election and never really recovered. A series of three Democratic-Republican presidents led the nation through the first quarter of the 19th century. In 1825 the party split, and President John Quincy Adams emerged as a leader of the short-lived National Republicans. Other Democrats began to organize around the figure of Andrew Jackson, and by the 1830s, a new duopoly had emerged with Jackson and his Democrats squaring off against the new Whig Party (cobbled together from the remains of the National Republicans).
In the late 1820s, the nation's first third party appeared on the scene. True to its name, the Anti-Masonic Party was rooted in hostility to Freemasons, who dominated much of the American political establishment. Broadly speaking, the Anti-Masons were an anti-elite party — populists of a sort, although not in the way that term would be used at the end of the 19th century.
When it came to public finance, the Anti-Masons embraced rather conventional views, supporting robust tariffs and ample spending on national infrastructure projects (or internal improvements, as they were called at the time). The party did well initially, outperforming in the 1828 congressional elections. In 1832 the party nominated William Wirt as its presidential standard bearer, and he actually carried the state of Vermont and its seven electoral votes. Over the course of several years, the party also managed to elect two governors and numerous members of the House of Representatives.
But the Anti-Masons' political ascendancy was short-lived; the party collapsed in the 1830s and was largely absorbed by the Whigs, who shared the Anti-Masons' economic preferences, as well as their antipathy toward Jackson (himself a prominent Freemason).
During the late 1840s and early 1850s, the Free-Soil Party emerged from internal divisions plaguing both the Whigs and the Democrats. Both parties were riven by arguments over slavery, prompting some discontented members to establish an alternative. True to their name, the Free-Soilers opposed the expansion of slavery into new territories. They agreed to tolerate slavery in the existing slave states, solely as a practical matter. But they were determined to contain its spread.
The Free-Soilers framed their arguments against slavery in economic and political terms. The party's famous slogan — 'free soil, free speech, free labor, and free men' — underscored the importance of labor in its broader political appeal. Slavery reduced the number of jobs available to free workers, party activists contended. It also bolstered the political dominance of the slave states, threatening the long-term prospects for free workers.
The Free-Soilers enjoyed some modest political success with this economic argument, winning a dozen seats in the House and six in the Senate. During the 1848 presidential election, the party nominated former President Martin Van Buren, and while he carried no states, he managed to win 10 percent of the popular vote — more than any third-party candidate before him.
Election results, moreover, don't tell the whole story. The Free-Soil Party helped galvanize antislavery activists as a force in national politics. The party managed this feat by linking economic and moral arguments, establishing a broad coalition against slavery. In modern parlance, it was a big-tent platform — and one that paved the way for the emergence of the new Republican Party in the mid-1850s.
The Populist Party was the most significant third party in U.S. politics, winning important elections but also reshaping both major political parties. The Populists emerged from the widespread economic distress plaguing U.S. farmers in the latter half of the 19th century. The party was especially popular in the West and South, appealing to farmers by objecting to the concentration of wealth and economic power.
The economic agenda put forth by the Populists covered a wide range of issues, including silver coinage and the nationalization of railroads and telecommunication firms. But the party was especially focused on reforming public finance, calling for strict economy in expenditures and even tighter limits on taxation. 'We believe that the money of the country should be kept as much as possible in the hands of the people, and hence we demand that all state and national revenues shall be limited to the necessary expenses of the government, economically and honestly administered,' the party declared in its 1892 platform.
In addition, the Populists demanded a revival of the federal income tax. First imposed in 1862 but allowed to lapse a decade later in the face of elite opposition, the income tax had served as a progressive counterweight to an array of regressive consumption taxes, including high tariffs and a wide array of excises. (Initially, the income tax was also designed to balance the federal property tax enacted in 1861, which fell heavily on farmers.)
Both before and after the Civil War, farmers had resisted high tariffs. Some Democrats and almost all Republicans supported a protective tariff regime, arguing that it protected jobs and provided necessary revenue. But the Populists were determined to ease tariff burdens by restoring a progressive income tax. Such a levy — already proven to work during the war — would ease the burden on consumers and reallocate the tax burden to those most able to pay.
Like most third parties, the Populists had limited success when it came to winning elections. By the late 1890s, the party was spent as an electoral force. But the Populists managed to reframe political debates and transform both major political parties. Reform of the federal revenue system emerged as a pivotal issue in the late 19th century, thanks chiefly to Populist agitation. By the early 1900s, the Democrats had co-opted much of the Populist agenda, and even some Republicans came to embrace the Populist call for income taxes. Indeed, the most durable legacy of the Populist Party came in 1913 with the ratification of the 16th Amendment.
The Third-Party Dynamic
The story of the Populists illustrates why third parties matter — they can sometimes win even when they're losing. 'In terms of the parties that really had a big impact, they didn't win seats,' explained political scientist Bernard Tamas in comments to The Guardian. 'The job of third parties is disruption. It's to sting like a bee. It's to cause pain.'
Tamas's comment alludes to a famous observation by historian Richard Hofstadter, a giant of mid-20th-century political historiography. Third parties, Hofstadter observed, are almost never long-lived. 'Once they have stung, they die,' he wrote in The Age of Reform.
Democrats vs republicans are in a ideological duel on the american flag. In American politics US ... More parties are represented by either the democrat donkey or republican elephant. animal shadows on flag
But third parties die because of their success, not despite it. They die when they force meaningful change on otherwise reluctant mainstream parties. 'Change occurs because the successful third party presents the major parties with an opportunity to appeal to the third party's constituency in subsequent elections,' wrote Walter J. Stone and Ronald B. Rapoport in Three's a Crowd: The Dynamic of Third Parties, Ross Perot, and Republican Resurgence:
'One or both major parties changes its positions to bid for the third party's constituency, and former third party supporters migrate into the party that makes the successful appeal. The third party then dies because its constituency has been co-opted by a major party and because it can no longer attract significant support.'
Stone and Rapoport call this 'the dynamic of third parties,' and it captures an important truth about the sort of venture that Musk seems to have in mind. Third parties trying to compete on the national level face enormous institutional and political barriers, not least the challenge of securing ballot access in 50 states and the District of Columbia.
Musk Might Be Different
Thanks to his enormous wealth, Musk might be able to defy these odds. Politics is expensive, but it still looks relatively cheap when measured against a personal fortune of roughly $400 billion. That sort of money might help Musk succeed where others have failed — if he's willing to spend enough.
'Even if third parties are generally a losing proposition, Musk's sheer financial firepower could give him a better chance than most of making it work — especially if one takes a modest view of his likely objectives,' Allsop wrote in his New Yorker article. History can't provide much guidance on Musk's political prospects when a Musk-size bankroll is in play.
Ultimately, however, Musk's biggest problem may be rather mundane: Americans don't seem to care that much about fiscal austerity — even if they say they do. If we judge the electorate based on how they vote on Election Day — rather than what they say when a pollster calls their cellphone — then we arrive at a rather obvious conclusion. Contemporary voters like the idea of fiscal austerity — just like the Populists did. But when the rubber hits the road, modern voters just don't care that much about annual deficits and accumulated debt. Other things seem to matter more.
In an article last year, Kevin R. Kosar of the American Enterprise Institute posed a crucial question: 'Are American voters simply all talk when it comes to responsible budgeting?' Kosar doesn't hazard an answer, but the truth seems undeniable: Yes, they are.