Why did Musk’s house collapse in the United States?

While Elon Musk’s Department of Government Effectiveness (DOGE) is slamming federal agencies with budget cuts and layoffs, Tesla and SpaceX, the cornerstones of Musk’s vast fortune, are enjoying the benefits of public funding that would likely not have been possible without it.

Original title: "Elon Musk: The billionaire vampire sucking on federal welfare"

The South African-born billionaire is pushing a massive and haphazard campaign to cut excessive government spending at the behest of Trump, but he is one of the biggest beneficiaries of federal support in history, on which his business empire was built.

In the past 15 years alone, Musk's $1.1 trillion Tesla and $350 billion SpaceX have sucked up as much as $30 billion in public money. At the same time, Musk's personal wealth has ballooned, from $2 billion in 2012 to more than $400 billion last December; now he's worth $393 billion. Thirteen years ago, the world's richest man wasn't even a billionaire.

In 2012, Republican presidential candidate Mitt Romney called Musk a "crony capitalist," but the financial favors his companies have received for so long are hard not to associate with another Republican term for people who live off public funds. In the years that followed, Musk's companies have developed a symbiotic relationship with federal programs that has made him look more like a "vampire." Here's what happened:

SpaceX has won $22 billion in contracts from the Department of Defense and NASA for rocket launches, satellite deliveries, missions to ferry astronauts and supplies to the International Space Station, and Starlink services, according to SpaceX President Gwynne Shotwell (though a review of public data puts the figure at $20 billion).

Tesla has sold $ 11.7 billion in regulatory credits since 2008, at least $4 billion of which came from automakers required to comply with U.S. Corporate Average Fuel Economy (CAFE) rules.

In 2009, the U.S. government provided Tesla with a $465 million federal loan guarantee, helping the then-struggling startup acquire its first factory (transferred from Toyota).

Tesla ’s charging network received at least $31 million in federal funding under a program that Trump recently canceled.

Tesla buyers have been the biggest beneficiaries of a $7,500 electric vehicle tax credit, receiving about $4 billion since the Obama era. That benefit, too, could be eliminated under Trump.

Tesla was once considered likely to win a $400 million contract to provide armored electric vehicles to the State Department, but the agency subsequently suspended its plans.

Musk has relied on government funds to develop and expand his company for many years, but DOGE, which he leads, has brought the "move fast and break things" approach to the government. These two things seem somewhat incompatible.

DOGE claimed to have cut federal spending by $55 billion (which it could not confirm) and laid off at least 200,000 government workers, including those at the Federal Aviation Administration (FAA) and experts in nuclear weapons safety or trying to prevent an avian flu pandemic, though many of them were quickly recalled. Norman Eisen, a senior fellow at the left-leaning Brookings Institution who is involved in a lawsuit filed on behalf of federal employees seeking to stop DOGE from carrying out what they see as unconstitutional actions, called the situation alarming.

"It is the height of hypocrisy that Musk is now undermining the federal government after his companies have received massive support from it for years," Eisen told Forbes. "Worse, in the long run, the ongoing relationship between his commercial enterprises and the U.S. government raises a host of serious conflict of interest issues never before seen."

Tesla and SpaceX CEO Elon Musk walks off the stage at the Conservative Political Action Conference in Oxon Hill, Maryland, wielding a chainsaw. Photo credit: Getty Images

Musk did not immediately respond to a request for comment. DOGE also does not have a designated public spokesperson.

"As for concerns about conflicts of interest between Elon Musk and DOGE, President Trump has stated that he will not allow conflicts of interest to arise, and Elon has committed to recuse himself when conflicts of interest may arise," White House press secretary Karoline Leavitt said in an emailed statement.

Musk has established an image as an entrepreneur who dares to take risks. It can be said that he is one of the most successful entrepreneurs in the 21st century so far.

Yet, despite his creativity and drive, his business empire would not have reached its current size without strong federal support.

Federal funding helped Tesla and SpaceX gain footing 15 years ago when they were fledgling, untested startups. In Tesla’s case, the company nearly filed for bankruptcy in late 2008, but an Advanced Technology Vehicle Manufacturing (ATVM) loan from the U.S. Department of Energy was its lifeline. The loan, which offered a lower interest rate, would have been impossible to build its first factory so cheaply and quickly if Tesla had relied solely on private funding. It also enabled Tesla to launch its groundbreaking Model S sedan on time in 2012, laying the foundation for its future success.

Without DOGE and the federal programs that Trump is now busy canceling, Musk most likely would not have been able to amass such a massive fortune.

SpaceX, after multiple failures, didn’t begin sending rockets into orbit until 2008. It also wouldn’t have become NASA’s premier provider of cargo and crew launch services if it hadn’t won a life-changing $1.6 billion contract that year. The futures of both companies were uncertain, but the government’s risky investments ultimately paid off.

Today, Tesla is the world’s most valuable automaker, worth $1.16 trillion. SpaceX is estimated to be worth $350 billion, making it the world’s most valuable private startup. So without DOGE and the federal programs Trump is now busy canceling, his massive $393 billion fortune (estimated by Forbes based on Musk’s holdings in these companies) would most likely not have been possible.

Controlling government spending and improving efficiency have been bipartisan concerns for decades. While there have been many initiatives to address these issues, they seem to be getting worse over time. One big difference during the Trump administration is that for the first time in U.S. history, the cost-saving effort was completely outsourced to a billionaire entrepreneur.

In addition to Trump’s attempt to cancel all future appropriations and funding for Biden’s Inflation Reduction Act and the Bipartisan Infrastructure Act (which could include $4 billion in federal funding for California’s high-speed rail project), Musk’s DOGE team is making sweeping cuts to federal agencies and funding. So far, there is no clear indication that they have been thoughtful in cutting staff and projects.

As it stands, DOGE has developed a “shoot first, ask questions later” style of doing things, much like Musk did when he drastically laid off 80% of Twitter’s employees after acquiring it in 2022. In addition to some embarrassing and ill-considered layoffs in DOGE’s first few weeks, it has been criticized for multiple moves, including suspending research grants from the National Institutes of Health (NIH) (which could slow medical breakthroughs), slashing much of the budget and staff at the U.S. Agency for International Development (USAID) (resulting in disruptions to food and medical supplies to developing countries), eliminating the Consumer Financial Protection Bureau, cutting IRS staff just in time for tax season, cutting seasonal staff at national parks, and potentially eliminating the Department of Education (including cutting vital funding that goes to America’s poorest school districts).

A protester during a demonstration in Washington against US President Donald Trump and Elon Musk's government efficiency policies. Photo credit: AFP via Getty Images

But even Trump supporters like Kash Patel, who has been confirmed by the Senate to serve as FBI director, point out that Musk has benefited greatly from federal contracts. In a December 2021 interview with Fox News, he said of SpaceX's Starlink service: "We are all paying for it. That's why he is so rich."

Although Musk has been the public face of DOGE and his efforts have been praised by Trump, a federal lawyer claimed last week that Musk was not strictly in charge of the cost-cutting project and that he "did not have actual power to make government decisions himself." His status is an unpaid special government employee. But because Musk has a contract with the government through SpaceX, DOGE has unrestricted access to databases of agencies including the Treasury Department, the Social Security Administration, the Internal Revenue Service and the Department of Defense, which is disturbing.

“How could they allow him access to where all the contracts are stored when he’s a government contractor? I think it’s definitely illegal,” retired U.S. Army Lieutenant General Russel Honoré told Forbes.

Trump's staff also said they relied on Musk to identify any potential conflicts of interest on his own. But that was not enough for Eisen, a former government ethics expert in the Obama administration and co-counsel to the House Judiciary Committee during Trump's first impeachment trial.

"Despite his claims of transparency, there are many questions we don't know the answers to, such as what precautions he took when handling a particular matter to ensure he had no personal financial interest in it," he said.

The impact of DOGE’s actions is far from clear, but many agencies have been forced to make painful cuts that could soon affect more Americans, especially low-income people, as well as cities, states and school programs that rely on federal funds to operate. So far, Congress, which once set up and approved the funding for these programs, has not intervened.

Eisen, who served as U.S. ambassador to the Czech Republic, said it was worrying that a billionaire like Musk, who had received huge amounts of money from government programs and donated at least $200 million to help Trump get elected in 2024, was now drastically cutting federal agencies with questionable legal authority.

“The same tycoons who once benefited from government largesse are now spending hundreds of millions of dollars to support a candidate who, once elected, is then involved in government decision-making, creating all kinds of conflict of interest issues,” he said. “We can describe this situation in one word: oligarchic. We are witnessing the formation of an oligarchy in the United States, and it should be a cause of deep concern to Americans.”