We Live in Interesting Times

Musk and Trump Take Aim at Big Government

When Tesla CEO Elon Musk joined Donald Trump in the final stretch of his presidential campaign, the MAGA movement's mission expanded beyond targeting the "deep state" to dismantling big government. Musk called for $2 trillion in annual spending cuts, warning that achieving fiscal discipline would require shared sacrifice.

This austerity push seems at odds with Trump’s track record. During his first term, tax cuts and a hands-off approach to Social Security and Medicare swelled the U.S. deficit. His 2024 agenda could add $7.75 trillion to the national debt, according to the Committee for a Responsible Federal Budget.

Yet Musk’s fiscal efficiency rhetoric is fueling optimism, contributing to a post-election rally in the S&P 500. With U.S. debt set to surpass 100% of GDP, rising Treasury yields signal mounting pressure. Musk’s reputation for cost-cutting success at Tesla and SpaceX underpins faith in his ability to tackle inefficiency.

Still, government spending isn’t easily trimmed. Federal costs largely stem from entitlement programs, not bureaucracy. Even drastic job cuts wouldn't yield significant savings.

Musk’s advisory group, the Department of Government Efficiency (DOGE), faces a daunting challenge. Its mandate is limited to recommendations and executive orders, with a July 2026 sunset. Without meaningful legislative action, markets may grow uneasy, pressuring Republicans to deliver on promises.