Last week, I unloaded a little bit on Elon Musk’s political ignorance, which has stood out as he has gotten into a big fight with Donald Trump and other Republicans over the budget bill. I thought I’d leave it at that, but I’ve now run across a quote from Elon Musk that made me go one more round.
No Subsidy Cuts for Oil & Gas?
Reportedly, Elon Musk complained that “there is no change to tax incentives for oil & gas, just EV/solar,” in the “big beautiful bill” Republicans are pushing through Congress. But, wait, what? You thought they were going to cut subsidies for oil and gas? Did Elon Musk really think that Republicans were going to cut subsidies for oil and gas in order to reduce the deficit? It’s mind blowing to me, but this seems to be something he thought could happen.
Now, a lot of people have concluded that he’s just upset about EV subsidies going away. But he addressed this multiple times on the campaign trail. He said repeatedly that he was fine with EV subsidies going away. He just thought all subsidies should be removed and there should be an even playing field. At the time, I couldn’t believe or understand the responses. Could he really think there was a chance the Republican Party would get rid of oil & gas subsidies? Surely he couldn’t be that politically naive.
But it appears that is something he has carried forward up till now — the idea that Trump and Republicans in Congress would cut EV subsidies but also cut oil & gas subsides.
On the campaign trail, Musk also argued that cutting EV subsidies would hurt Tesla’s competitors more than Tesla, so it might end up helping Tesla in the long run anyway. That seemed like even more of a Hail Mary, but the idea seemed to be that Tesla could sacrifice some of its margin and profits and still have unlimited demand (or something like that), while other EV producers couldn’t and they would thus not sell as many electric cars as their potential customers went to Tesla instead. Again, that was a total fantasyland idea if that’s what Elon thought, and maybe it’s finally hitting him as fewer and fewer people buy Teslas while more and more buy non-Tesla EVs.
Killing Fuel Economy Requirements
There’s another proposal picking up momentum in Congress that is a threat to Tesla. Senate Republicans want to eliminate fuel economy fines for automakers. They want to take away any penalty for not meeting fleet fuel economy requirements. That makes no sense, but it could certainly hurt the EV market.
Automakers are meeting fuel economy requirements by producing and selling EVs. Now, someone may be inclined to say that automakers shouldn’t be forced to sell EVs and consumers don’t want them, but consumers do buy them. If consumers didn’t want them, they wouldn’t buy them — there’s no consumer requirement to buy them. The fuel economy requirements get automakers to put EVs on the market, to actually try, but it’s not like they don’t have people wanting to buy them!
Carbon Tax Anyone?
I love the idea of a carbon tax. I love the concept. But it is straight poison politically in the US. First of all, you’re not going to get points with voters for passing a tax — you’re just going to get fired. Secondly, you can’t even get most of the Republican Party to accept that global heating and climate change are real, and a huge threat to humanity and the American economy. You’re not going to get people behind a carbon tax in the US.
In Trump’s first term, though, this was reportedly Elon Musk’s focus of conversation and policy with Donald Trump. He was trying to get Donald Trump to understand climate change, externalities, and how a carbon tax would be a free-market solution to the climate problem. Simple — just pass a carbon tax.
Like Elon’s idealistic idea that he could get Republicans onboard with cutting oil & gas subsidies, he previously had the idealistic idea that he could get them to support a carbon tax. He’s just completely naive politically — or a complete moron politically if you want to be even more frank about it.
US Deficit
I still think his biggest gripe with the “big beautiful bill” moving through Congress is that it will balloon the deficit. I don’t think his primary concern is the EV subsidies or oil & gas subsidies themselves. I think it’s that he again idealistically got wrapped up in this idea that he was going to get Republicans to cut the deficit. However, you have to be extremely politically ignorant to think that Republicans would ever cut the deficit and balance the budget. They just obsessively cut taxes on the rich, including large corporations, which balloons the deficit. The last president to balance the budget was a Democrat, of course — Bill Clinton. That should come as no surprise to anyone involved in US politics and policy, but I somehow would not be surprised if Musk didn’t know this. Clinton did so in 1998, 1999, 2000, and 2001 (fiscal years). Let’s see how close Trump gets to doing so.
Yeah, EV subsidies — even for Tesla — are probably going to go away. That won’t make any notable difference to the US budget and deficit. Elon Musk got punked, but more than anything, it seems he just punked himself.
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