Musk Says US Must 'Live Within Our Means' With Proposed $2 Trillion Spending Cut

Elon Musk has emerged as one of Donald Trump's biggest supporters throughout the 2024 presidential campaign cycle. But, Musk recently told supporters that Trump's economic plan may bring hardship in the short term, as Musk and other prominent Trump supporters plan to help slash government spending.

Trump has built his proposed economic agenda around tariffs: a 20% duty on all imported goods and a very significant 60% tariff on goods imported from China. While Trump and proponents of the plan say the tariffs will encourage companies to produce domestically, economists warn that the tariffs could cause price increases to be passed onto consumers, thus increasing inflation.

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During a town hall last Friday run by America PAC, Musk's political action committee supporting Trump's election bid, the Tesla CEO warned followers that short-term sacrifices would need to be made.

"But most importantly, we have to reduce spending to live within our means. And that necessarily involves some temporary hardship, but it will ensure long-term prosperity," Musk said, according to the New York Times.

Musk, who has floated the idea of heading a ‘Government Efficiency' role in Trump's administration, also wants to cut back federal spending. John Paulson, a billionaire investor and close ally of Trump, has pledged to help Musk do so through measures like paring back clean energy incentives passed in the Inflation Reduction Act. 

Musk has pledged to cut annual government spending by $2 trillion but did not say how or which programs would be cut, according to The Wall Street Journal. This would be a reduction of about 30%, as the federal government spent over $6 trillion last year, according to the Congressional Budget Office.

Trump has pledged not to cut spending of Social Security and Medicare benefits, which accounted for more than half of last year’s government spending.

If a Trump administration were to cut $2 trillion in annual government spending, it would likely impact defense spending or social programs that are widely popular– like Medicaid, according to The Washington Post. But because these social programs are popular among voters on both sides of the aisle, Musk and Trump’s planned budget cuts could prove difficult to pass through Congress, which has the final say over government spending.

Even if all the $1.6 trillion the U.S. spent on discretionary spending were cut, including federal law enforcement funds, the administration would still need to cut $400 billion more in spending to meet Musk’s goal of $2 trillion.

Because of these hurdles, it’s unlikely that the proposed reduction of $2 trillion in government spending will ever happen. The deficit continued to grow every year under the previous Trump administration, despite his vows to cut spending.

Trump's proposed tariff plan, coupled with a reduction in government spending to support American businesses, could send shockwaves throughout the economy, experts warn.

Musk responded to an X user who suggested that "markets will tumble" if Trump's plan is implemented, but after stability is restored, a quick recovery toward a more resilient economy could follow. Musk replied, "sounds about right."

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Elon Musk and Donald Trump Photos by Frederic Legrand – COMEO on Shutterstock.