Tesla CEO and X owner Elon Musk appears on a screen as he virtually attends the Future Investment Initiative (FII) in Riyadh, Saudi Arabia October 29, 2024. REUTERS/Hamad I Mohammed
On Tuesday night, Elon Musk and Donald Trump watched SpaceX’s launching of a rocket that could someday take people to Mars. It could also make Musk even richer if Trump awards him government contracts to try.
Musk’s increasingly powerful role in the Trumposphere has led some progressives to suggest we temper our criticisms of him.
On Saturday, Ritchie Torres, a Democratic congressman representing the South Bronx and a self-described “pragmatic progressive,” asked online why Elon Musk “came to be the favored punching bag of the far left,” as Torres put it (on the Musk-owned X).
Torres continued:
“Whether you approve of him or not, whether you agree with him or not, the man is leading two of the most innovative companies on earth. But for SpaceX, the US would be losing the space race against China. But for Tesla, the EV industry in the US would be a shell of itself. The country thrives on intrepid innovators like Elon Musk. Why antagonize him so intensely that you drive him into Trump’s corner and make a permanent enemy out of him? Politics should be a game of addition, not subtraction.”
With due respect to Congressman Torres, Musk is no “intrepid innovator.” He’s an intrepid government contractor. And he’s caused extraordinary harm to America — from the dangerous lies he’s spewing on X, to his war on workers, to the $120 million he spent to get Trump elected.
Musk’s so-called “innovations” have depended on government money. Tesla and SpaceX got started with assistance from state and federal policies, government contracts, and loans.
By January 2010, Musk had sold fewer than 2,000 Teslas. He then received a $465 million low-interest loan from the Department of Energy, months before Tesla’s initial public offering. With that loan, Tesla developed its Model S car, its first major success, and repaid the loan through proceeds from an additional sale of stock in 2013.
Every Tesla purchaser also received a $7,500 tax credit for electric vehicles, a subsidy that totaled an estimated $3.4 billion for Tesla. Even if the subsidy let Musk raise prices by half that amount, that would be another $1.7 billion in federal help.
In addition, state and federal tax credits aimed at reducing greenhouse gases generated another $2 billion for the company between 2008 and 2019, accounting for nearly 25 percent of its revenue in 2008 and 10 percent of its revenue over the next five years. Overall, sales of regulatory credits have brought in nearly $11 billion to Tesla.
Not until 2021 was Tesla able to post a profit without the help of credit sales. Without regulatory credits, Musk wouldn’t be the richest person in the world.
Musk is also dependent on government funding for his SpaceX. In 2021 and 2022, SpaceX got NASA contracts worth a total of $4 billion to take humans to the moon.
In June, NASA announced that SpaceX received an additional $843 million contract to “de-orbit” the space station when it is ready for retirement in a few years. SpaceX also has contracts to launch military and spy satellites.
All told, according to USASpending.gov (the government database that tracks federal spending), SpaceX has signed contracts worth nearly $20 billion. If the Trump administration increases funding for NASA’s efforts to return to the moon and travel to Mars, SpaceX’s value could easily increase to $500 billion or more.
Since Trump’s election, Musk’s net worth has increased $64 billion, or nearly 25 percent, according to Bloomberg’s estimate, based in part on investors’ assumptions that Musk will get contracts from the Trump administration for more rocket launches, satellites, artificial intelligence, and self-driving vehicles, and avoid the regulatory constraints and legal troubles he’s faced before.
His companies, including Tesla and SpaceX, are now the subjects of over 20 investigations or regulatory reviews, according to an examination by TheNew York Times. Musk has given his middle finger to laws designed to protect the health and safety of workers, laws enacted to protect workers’ right to organize a union, and laws to protect consumers and small investors.
Tesla’s push for autonomous driving is a particular focus for regulators. Just last week, the National Highway Traffic Safety Administration said it was investigating several self-driving crashes involving fog and dust.
Musk has also regularly tussled with the Securities and Exchange Commission. The commission has investigated Musk’s 2022 purchase of X, then called Twitter. Musk did not show up for a deposition in September, leading to an SEC request that sanctions be imposed on him.
**
There is an abiding assumption in America that the rich must be smart and that the free market doesn’t play favorites. In fact, the rich have often gained their wealth due to their skill at getting government subsidies, grants, bailouts, and contracts; their cleverness at skirting government regulations; and their hubris in ignoring conflicts of interest. Wherever great wealth connects with significant power, democracy suffers.
Donald Trump is Exhibit A. Elon Musk is Exhibit B.
That Trump has taskedMusk to find some $2 trillion of cuts in the federal budget through more “efficiency” is as bonkers as putting the Justice Department in the hands of an alleged sex trafficker, or assigning an anti-vaxxing conspiracy theorist to run public health, or choosing a possible Russian mole to direct U.S. intelligence.
Robert Reich is a professor of public policy at Berkeley and former secretary of labor. His writings can be found at https://robertreich.substack.com/.
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