Elon Musk expresses intentions to reform the administration under Trump's leadership. However, his past actions suggest a contrasting narrative.
Musk and Trump have openingly chatted about a potential government role for Musk if Trump wins the presidency, with regard to Tesla and SpaceX CEO. Although Musk and Trump haven't disclosed specifics, Musk has humored the idea of being in charge of a Department of Government Efficiency, nicknamed DOGE, a term derived from his favorite meme and cryptocurrency. Meanwhile, Trump mentioned Musk as a potential "Secretary of Cost-Cutting" on Fox News last week, a title for a hypothetical government agency that currently does not exist.
On the campaign trail and in an August interview with Trump, Musk pledged to make deep reductions to cut unnecessary spending, potentially using AI to identify areas for reduction. He also suggested implementing a major rollback of government regulations, a cause he has long advocated for. Musk proposes generous severance packages for displaced government workers, while simultaneously threatening layoffs to wasteful employees through an assessment system.
These tactics reflect Musk's business practices. His track record, however, is mixed. Musk did not respond to a request for comment.
Severe reductions
Trump, during his interview with Musk in August and subsequent discussions about potential government roles for Musk, has praised Musk's aggressive approach to layoffs. Following this, the UAW autoworkers union filed labor charges against the two in August, with Trump labeling Musk a "cutter" and suggesting he would dismiss striking autoworkers. Trump, as he announced plans for a possible government role for Musk in September, emphasized Musk's ability to recommend "drastic reforms."
In a Pittsburgh town hall, Musk expressed the need for significant cuts to government spending: "Step No. 1 is to spend a lot less of it," Musk said. "Let's start from scratch."
However, in his businesses, cuts haven't always yielded the desired results.
At X, Musk implemented drastic layoffs, reducing roughly 80% of the company's workforce, which led to an unstable product, as evidenced by his failed technology demonstrations with Florida Gov. Ron DeSantis in 2023 and Trump a couple of months earlier. Musk also eliminated X's trust and safety teams, resulting in an escalation of hate speech and unchecked misinformation, leading to an exodus of advertisers from the platform.
As of October 2022, X is worth 80% less than what Musk paid for it.
Regulatory rollback
Regulations have been a thorn in Musk's side for years, and he has frequently criticized unnecessary bureaucracy and red tape.
Although regulatory rollback is not a new concept among business leaders, Musk's methods of circumventing or manipulating regulations have at times led to unfortunate consequences.
At Tesla, Musk advanced boldly in deploying "full self-driving" technology, sparking multiple accidents and government warnings and investigations. Adopting a "deploy-first-and-fix-later" strategy, Tesla has recalled the technology several times, claiming that autonomous driving software saves lives.
In a recent investigation by the top safety regulator, a fatal accident involving a pedestrian hit by a car utilizing Tesla's full self-driving features was announced. In 2021, the National Highway Traffic Safety Administration stated that the technology posed an "unreasonable risk" to motor vehicle safety due to "insufficient adherence to traffic safety laws." Furthermore, the technology is believed to violate traffic laws at certain intersections before drivers may intervene.
At SpaceX, evading California government regulators led to contentious relationships with residents and lawsuits in a Texas town, which housed the company's rocket launch and test site. Among the complaints were trespassing, damaged property, and sizable debris fields. Musk moved a significant portion of SpaceX's operations to Texas due to excessive regulation, and the company sued a California regulator last week.
Assisting dismissed workers
Musk suggested offering displaced government employees two-year severance packages, according to the Wall Street Journal, who attended several of Musk's rallies supporting Trump. Musk explained, "The point is not to be cruel or to have people unable to pay their mortgage."
However, at X, Musk was sued multiple times for failing to honor his commitment to payout severance packages to laid-off employees, including the former CEO and other top executives, who were denied billions of dollars in their exit packages.
Before Musk's acquisition of Twitter (now X) in 2022, the company's severance policy stipulated that employees remaining after the acquisition and subsequently terminated would be entitled to up to six months of pay and one week of pay for each year of service. However, the lawsuits against Musk and the company alleged that the company failed to honor this agreement.
Musk won one such lawsuit earlier this year, but several others remain active.
In the context of potential government roles, Trump praised Musk's business approach to layoffs, specifically mentioning severe reductions and cost-cutting measures. Musk, during his Pittsburgh town hall, emphasized the need for significant spending cuts in government.
Despite Musk's business practices involving layoffs and cost-cutting, his track record at X has been mixed. His drastic layoffs at X, resulting in a reduced workforce and unstable product, led to several failures and lawsuits. Despite promising generous severance packages for dismissed employees, Musk was later sued for failing to honor these commitments at X, including a lawsuit from the former CEO.
