Thursday, November 14, 2024

Trump’s DOGE gift to Elon Musk is basically just a consulting gig

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Tesla (TSLA-6.11%) and SpaceX CEO Elon Musk will be joined by Vivek Ramaswamy as “outside of government” consultants on federal spending for President-elect Donald Trump’s incoming administration. Exactly what that means is still unclear.

Trump on Tuesday evening announced that the wealthy duo will lead a so-called “Department of Government Efficiency.” It’s not actually a government department, but rather a task force Musk pitched months ago when he interviewed the Republican. Trump said the department — which, to be clear, is not actually part of the government, despite the name — will “pave the way” for his administration to tackle overregulation and restructure federal agencies.

“It will become, potentially, ‘The Manhattan Project’ of our time,” Trump said in a statement, referring to the program that developed the first nuclear weapons.

Details about DOGE, which appears to be an advisory board, are still sparse, including how many people will be employed, how large its budget will be, and how much taxpayer cash will go to support it. Trump said that Musk and Ramsawamy’s group will work with the White House and the Office of Management and Budget to find areas for reform. They aim to cut some $2 trillion from the budget, or about one-third of all federal spending, according to Musk.

More than half of that spending went to Social Security and Medicare — which Trump has said he will not “cut one penny from” — as well as interest on federal debt and defense. If they avoided recommending ways to slash benefit programs like Social Security and spending on the military, that could mean cuts of more than 80% across domestic programs, including food inspections and infrastructure repairs.

Cantor Fitzgerald CEO Howard Lutnick, who is helping lead Trump’s transition, has said he will work with Musk on DOGE. Other potential members are former Trump national security advisor Michael Flynn, whose son said he would likely join, and Pershing Square Holding’s Bill Ackman, who has repeatedly expressed interest in joining DOGE.

Setting DOGE up as a group outside of government was likely done to ensure that Musk would be able to dodge ethics concerns, considering that multiple federal agencies regulate his slew of companies.

SpaceX, Neuralink, X, and Tesla are collectively the subject of at least 20 recent investigations or reviews. And Tesla and SpaceX have collectively received more than $15 billion in government contracts and frequently come into conflict with regulators.

It’s “clear that Musk will have a massive role in the Trump White House with his increasing reach clearly across many federal agencies,” Tesla bull and Wedbush Securities analyst Dan Ives said Tuesday evening.

Ives added that his team expects Musk to have “a key role on many of the new AI initiatives within the government (AI Ambassador) as well as China tariff discussions.” Musk has publicly stated that he will use DOGE to make it easier for companies to streamline federal regulations for driverless vehicles, which Tesla is working on.

Even before this announcement, Musk had been flexing his influence over the president-elect, sitting in on meetings with multiple foreign leaders and advocating for Sen. Rick Scott of Florida to become the next Senate majority leader. On social media, he’s cheered calls to end the Federal Reserve and close the Department of Education.

According to The New York Times, Musk — often with his four-year-old son on his lap — has spent most of the last week with Trump at his Mar-a-Lago resort, joining almost every meeting the president-elect has had. He’s reportedly requested that SpaceX employees be hired as top government officials, including at the Department of Defense. On Wednesday, he’s expected to join Trump at the House Republican conference, CNN reports, as members participate in leadership elections.

Ramaswamy — nicknamed the “CEO of Anti-Woke Inc.” — has his own business interests, thanks to his drug-development company Roivant Sciences (ROIV-1.35%) and his broader portfolio, including Buzzfeed. Ramaswamy, in 2023, stepped down from Roivant’s board to focus on running for president, suspending his bid after the Iowa Republican primary in January.

The group will have until July 4, 2026, to complete their work. Trump said that would be the “perfect gift to America” on the 250th anniversary of the Conitennalt Congress adopting the Declaration of Independence.

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