Friday, November 22, 2024

Elon Musk’s ‘crazy’ plan to rip $2 trillion out of America

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And there are other signs he has the former president’s ear.

In the past, Trump attacked the electric vehicle industries and green subsidies. Yet since Musk’s endorsement, he has softened his stance. In August, Trump said: “I’m for electric cars. I have to be, because Elon endorsed me very strongly. So I have no choice.”

If Trump returns to the White House, the Tesla chief is likely to carry significant influence. Having given more than $130m to Trump’s election bid, some Democrats have even labelled Musk – who, by virtue of his South African birth, cannot run for office – a potential “shadow president”.

But what would Muskonomics mean for America?

‘Crazy, nuts proposals’

Perhaps most crucial for his business empire, Musk is looking for a bonfire of red tape and a gutting of US government agencies he has accused of holding back SpaceX and Tesla, delaying his overriding ambitions of reaching Mars and deploying Tesla robotaxis and artificial intelligence (AI) robots all over the US.

High on the agenda for Musk are massive spending cuts, he told attendees at a rally last week. “We have to reduce spending to live within our means,” he said. “And you know, that necessarily involves some temporary hardship, but it will ensure long-term prosperity.”

Such pronouncements reflect Musk’s own business philosophy. He has sacked thousands of X and Tesla employees during downturns or tough moments for the company. Yet economists have doubts about whether this approach can realistically be applied to government.

Paul Mortimer-Lee, an independent economist and research fellow at NIESR, says Musk’s plans for $2 trillion in cuts were “crazy, nuts proposals”. It would wipe out the equivalent of the budget for transport, education, housing, social services, science and the environment – as well as decimating other benefits like Medicare.

“The proposed cuts are $2 trillion, or 8pc of GDP,” says Mortimer-Lee. “Cutting that amount from spending would send the economy into a tailspin and send unemployment soaring.”

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