In the home stretch of the 2024 election, voters who’ve been weighing both campaigns’ proposals to tackle living costs are now hearing a new pitch from the Republican side: accept some short-term economic pain to rein in government spending.
That message has emerged from former President Donald Trump’s wealthiest backer, Elon Musk, who says that the GOP nominee’s plans to put the U.S. on firmer fiscal footing would likely entail “temporary hardship” for ordinary Americans.
At a virtual town hall event on October 25 held on Musk’s social media platform, X, the multibillionaire Tesla and SpaceX executive said he was “praying for a victory” for Trump, so he could begin working in a high-level cabinet role to axe federal spending.
“We have to reduce spending to live within our means,” Musk said. “And, you know, that necessarily involves some temporary hardship, but it will ensure long-term prosperity,” he said.
Many economists agree that Trump’s economic and fiscal proposals could spark an economic calamity, though it is not clear whether they have considered, or given credence, to Musk’s calls for austerity.
In a joint letter released last week, 23 Nobel Prize-winning economists warned Trump’s plans for tariffs, tax cuts and an immigration crackdown — including detaining and deporting millions of people — would “lead to higher prices, larger deficits, and greater inequality.” More than anything, they wrote, Trump would undermine the rule of law and political certainty, “the most important determinants of economic success.”
The call for voters to endure some hardships comes as the U.S. economy heads toward Election Day on firm footing, with consumer confidence rising, employers still adding hundreds of thousands of jobs, wages handily outpacing inflation and overall economic output chugging along. But many Americans are still struggling with big-ticket expenses like child and elder care costs, a forbidding housing market, steep insurance and debt payments and more.
While elected officials in both parties have for decades campaigned on addressing America’s debt load — now at 120% of GDP, an all-time high — and spending obligations, neither party has made much of a dent. That includes Trump. During his first term in office, debt grew at a pace similar to that of his predecessors.
One reason for that lack of progress has been grappling with how to persuade long-time recipients of government spending, from Social Security and Medicare beneficiaries to defense contractors, to accept changes.
This time, Trump has promised to appoint Musk as chief government efficiency officer.
That gives Musk’s frankness about reductions — and his track record of making large, painful cuts at his own companies — added weight.
“There is so much government waste that it’s kind of like being in a room full of targets, like you can’t miss — you fire in any direction you’re going to hit a target,” Musk said. He added, “as a country, obviously, we need to live within our means,” and said he envisioned going through all government expenditures “one item at a time, no exceptions, no special cases.”
He said he expected an “antibody response” from “a lot of sides.”
“Everyone’s going to have to take a haircut…we can’t be a wastrel …we need to live honestly,” Musk said.
Speaking at Trump’s Madison Square Garden rally last Sunday, Musk said he wants to cut $2 trillion from the federal budget, though he didn’t specify where.
And on Tuesday, Musk reiterated the anticipated economic pain from the plan. In response to an X user who wrote that spending cuts would cause “a severe overreaction in the economy” and that “markets will tumble,” before the U.S. emerges on “sounder footing,” Musk responded, “sounds about right.”
Musk representatives didn’t immediately respond to requests for comment. The Trump campaign didn’t immediately comment but has previously said that the GOP agenda wouldn’t cause short-term economic hardship. “The only pain facing Americans would be four more years of Kamala’s failed economic policies,” a spokesperson told CNBC this week.
Musk himself would likely face a set of conflicts were he to oversee federal cost-cutting. According to research on federal spending and prime contracts by FedScout, Musk’s aerospace venture, SpaceX, has received billions from the federal government in recent years and is poised to take in another $7.9 billion in revenue from the government over the next three years.
That number doesn’t include block grant spending by states for items like SpaceX’s Starlink terminals and satellite internet service often purchased for use after natural disasters or other emergencies, FedScout CEO Geoff Orazem said.
Looking at existing and pending contracts, SpaceX is also likely to score another $20 billion in federal business reaching out into the 2028 time frame (or at least another $5 billion to $6 billion annually).
There’s some skepticism on Wall Street that a new Trump administration could implement spending cuts on the scale Musk has proposed.
Bob Elliott, chief investment officer at Unlimited Funds investment group, said the idea of cutting $2 trillion from the budget in any immediate time frame was “totally implausible,” pointing out that it would equate to almost all discretionary funding — currently at $1.7 billion — which includes transportation, education, housing and environmental programs.
Instead, he said, investors are scrutinizing both campaigns’ economic proposals broadly. With Trump’s, he said, they fear his plans could prompt a resurgence in inflation.
“They’re both indicating they intend to maintain substantial deficits and elevated government spending, certainly compared with the strength of the economy,” Elliott said.
Steve Sosnick, chief strategist at Interactive Brokers financial group, said in an email that while neither candidate was preaching fiscal restraint, Trump’s policies “would be highly detrimental to the budget deficit and debt.”
