Billionaire Elon Musk will oversee the effectiveness of the Trump administration - a classic case of conflict of interest, as his companies receive government subsidies and others have direct contracts with the government.
The friendship between Donald Trump and Elon Musk is flourishing, the media write. It seemed strange at first, but it turned into a professional opportunity for Musk. In the last week, the two attended a martial arts match and then ate McDonald's on Trump's private jet.
Before the election, Trump promised the South African Musk to head a special unit on government efficiency. The future president made it official last week - Musk and Vivek Ramaswamy will head a committee on government efficiency.
What exactly will Musk's new job be?
This agency is brand new, so no one knows for sure what will be included in its jurisdiction. It will likely be a small board that will operate outside of government and will not have any real regulatory powers. However, Musk will definitely have a voice and influence in the Trump administration.
The commission's idea is to cut government spending by $2 trillion -- through cutting red tape, new regulations and "shrinking” the government must be "put on the rails".
Musk is known for cutting costs for his companies, but the case with the government is quite different. "Musk has no real experience with the state other than suing it for spreading conspiracy theories about him," explains Donald Moynihan, a professor of public administration at the University of Michigan. "The American government needs to be modernized, but Musk only talks about limiting spending and punishing those he disagrees with," Moynihan said. "The simple mathematical equation does not come out”.
In 2023 the US government budget would have been $6.1 trillion. A third of that goes to Social Security and Medicare, programs that Trump has said he wants to leave untouched. According to the nonpartisan Congressional Budget Office, only $1.7 trillion in total is discretionary spending, ie. those that are not fixed by law or contract and can be rejected by the members of the parliament.
A conflict of interest for billions
Musk must already be quite busy running his six companies, including Tesla, SpaceX and X (formerly Twitter). His new position in the US government hides numerous conflicts of interest. In particular, due to the fact that some of his companies receive government subsidies and others have direct contracts with the government. This means that some of his companies are government contractors. Musk's companies also use innovations and technologies that break regulatory boundaries.
"I can think of no other instance where someone - with such clear and obvious conflicts of interest - would give advice on budget, management structure and layoffs when it directly affects their business" , Moynihan said.
Over the years, SpaceX has earned billions from contracts with NASA and the US Department of Defense. Over the past ten years, these SpaceX contracts have totaled more than $15 billion, as calculated by the "New York Times". Last year alone, Musk's company signed 100 different contracts with 17 US government agencies worth a total of $3 billion. dollars.
Musk has had a number of problems with US government agencies and other regulators. An investigation by the US Securities and Exchange Commission led to charges of securities fraud in 2018. Musk's resignation as chairman of Tesla's board was part of the settlement that followed. His electric car company does not have many contracts with the state. However, Musk could convince Trump to keep tax breaks for electric cars to boost sales. It could also raise tariffs on its competitors that make cars outside the US.
And that's not all: Musk could influence regulators who want to scrutinize Tesla's pursuit of self-driving cars. He could also try to preserve emissions regulations that allow Tesla to sell billions of dollars worth of environmental credits to other automakers that don't make enough electric vehicles.
Could this friendship end abruptly?
Trump is not the first president to try to cut government spending. However, it matters who the future president is and whether he will not seek opportunities for personal enrichment.
For now, Trump is careful, insisting that Musk will not be part of the government in an official capacity, but will "advise". This is extremely important because federal law prohibits people who have a financial interest in government business from participating in government affairs. But no matter exactly what Musk's official title will be, any potential spending cuts will have to be approved by Congress. The final decision will remain in the hands of the legislature.
Trump remains the most unpredictable. He is known for choosing favorites and then suddenly discarding them. And turning his back on the richest man in the world could boost Trump's self-esteem even more. Trump and Musk love the spotlight, Moynihan says, but Trump can't stand being overshadowed. "Musk's appointment may even be a demotion, considering that everything he does may not have any effect,”, the professor believes.