Bloomberg: The Super Player Behind the U.S. Election, "Oligarch" Musk Has a New Venture

24-11-13 17:08
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Original Title: Elon Musk Has a New Project to Run: Trump's Government
Original Authors: Max Chafkin, Dana Hull, Bloomberg
Original Translation: Luffy, Foresight News


On Election Day afternoon, Elon Musk was at a polling station in South Texas. He then boarded a private plane headed to Donald Trump's vote-counting party at the Mar-a-Lago Club in Florida. Along the way, Musk held an impromptu political rally. He broadcast a live link on his social network, X. "Just a few hours left," Musk said, as the plane's engines hummed, with approximately 100,000 people tuning in to his live stream. "So be sure to make sure everyone is urging their friends and family to vote, vote, vote."


Up until this year, Musk was running six companies: Tesla (electric cars), SpaceX (rockets), Neuralink (brain implants), Boring Co. (tunnels), xAI (AI chatbots), and X (Twitter). But in May of this year, he added a seventh company: the America PAC. This is a political action committee that, from its inception to the election period, has spent over $170 million.


What's more surprising is that Musk himself has been personally involved in this work. He temporarily moved to Pennsylvania, where he toured the entire state, held marathon Q&A sessions in suburban halls, and turned his personal X account into a hub for right-wing rapid response actions. Many of the jokes he spreads are related to gender or race discrimination, or both. In the final days of the campaign, many of his posts expressed anger over a porn star's pet squirrel being euthanized.


Expenditure Categories of Musk's PAC, Data Source: Federal Election Commission


Musk's iconic blend of rebellious humor and "shamelessness" has been successful, perhaps because Trump is a perfect match for these qualities. On Election Day, the former president, who has been impeached twice and convicted 34 times, not only mobilized the usual elderly white voters but also gained a younger, more diverse, predominantly male new group. In other words, those who like Elon Musk. "He has lowered the threshold to become a Trump supporter," said Josiah Gate, Vice President of Political Marketing Agency Harris Media.


Candidate supported by Musk's PAC, Source: Federal Election Commission


"The Democratic Party has almost ensnared all celebrities," Musk said in the livestream, "They have a huge bias towards the traditional mainstream media." He told the audience that Democratic Party politicians intentionally introduced "illegal immigrants" to "flood the swing states' votes, so there is really no genuine election." Like many of Musk's past statements over the past two years, these are at best misleading. The immigrants he disparages in his conspiracy theory are not "illegal immigrants," but rather asylum seekers living legally in the U.S., paying taxes, but without the right to vote.


Musk is clearly not a weakling. His alliance with Trump is a typical strongman tale. One protagonist is a provocative, domineering billionaire, and the other is an equally domineering billionaire, coincidentally the world's richest person. This is also a story about money. We don't know the full extent of Musk's financial contributions to Trump's election, but it is at least over $132 million, totaling up to possibly $200 million. How much return will these contributions bring in the next four years? In the first three days after the election, Tesla's market value rose by 25%, increasing Musk's personal net worth by $50 billion, to over $300 billion.


Musk presenting a $1 million check to Kristine Fishell at Pittsburgh City Hall. Image Source: Getty Images


Trump promised some returns: providing a rocket contract for the new Mars mission, establishing rules to support Musk's upcoming self-driving taxi launch, and deciding in his administration which government projects are cut and which are retained. Trump and Musk refer to this hypothetical policy combination as the "Government Efficiency Department," a name derived from Musk's fondness for the abbreviation of DOGE, the symbol of his favorite cryptocurrency Dogecoin. In his victory speech, Trump referred to Musk saying, "He's a special person, he's a super genius. We have to protect our super geniuses."


Soon, Musk may be bestowed with a more accurate title: an oligarch. This term not only applies to him but also to Jeff Bezos, Sam Altman, Sundar Pichai, Satya Nadella, and other business tycoons who, after the election, strike various poses, from fake smile flatteries to outright groveling, hoping to get what they want from Trump. Their top concerns seem to include receiving more favorable treatment for mergers (Nadella, Pichai), relaxed regulations on AI (Altman), and avoiding retaliation for the news published in their own publications (Bezos).


Will their efforts pay off? Trump's track record does little to inspire confidence. Following Bezos' decision to withdraw his support for Kamala Harris, The Washington Post saw a wave of subscription cancellations, losing 10% of its subscriber base within days. This suggests that executives and Tesla stock-boosting investors have not yet fully grasped the potential negative repercussions.


In the days following the election, Trump and Musk had closer interactions. Musk was actually holed up at the Mar-a-Lago estate with Trump's inner circle, appearing in family photos and joining Trump's calls with world leaders. So far, the incoming president has viewed Musk both as a trophy and a confidant, not shying away from potential national security issues, such as having Musk speak with Ukrainian President Zelensky or threatening to withdraw from NATO in retaliation for European attempts to regulate Musk's companies.


Musk with members of the Trump family at the Mar-a-Lago estate. Image Source: Kai Trump's Twitter


Meanwhile, Musk continues to vocally support Trump on Twitter, hinting at plans to fire 80% of government employees, abolish the Department of Education, and escalate propaganda against the Federal Reserve.


This fervor is unlikely to last. Moreover, if Trump wants to govern effectively, it simply cannot.


Musk is outspoken and quick to react. At 53, he understands the instincts of young men and perhaps behaves like a teenager in many ways. This might lead to disconnects with analysts and investors who don't see fart jokes, 420, and 69 as comedy gold and fail to grasp that for Musk and his fans, dullness is the enemy.


Outsiders might find it hard to realize that while X may be a commercial failure, it is a massive political success. Musk has turned a low-popularity social media platform into a right-wing media, fan, and in some cases, genuine white supremacist distribution platform. X has shed numerous users and advertisers, leading to an almost 80% plunge in the company's value since its acquisition in 2022. Yet, it still boasts a vast young audience interested in Trump, sports, video games, and cryptocurrency. A YouGov Blue survey conducted in November found that social media is the primary news source for 18-29-year-old males, with X being the most popular, surpassing YouTube and TikTok.


When Musk began funding a Political Action Committee, he targeted this group. The organization had three basic goals to help Trump: register new voters, encourage supporters to vote early, and get those who might not vote to the polls. It arranged for paid canvassers instead of volunteers and poured significant funding into social media ads that catered to Trump's audience of "edgelords." A 15-second ad began with a young bearded man lazily lying on a couch, with a gruff voice saying, "If you do not participate in this election, Kamala and the crazies will win," then describing Trump as an "American baddie." Another ad warned that Harris would ban pick-up trucks, red meat, and Zyn nicotine pouches. A third ad called Harris "a big C word" ("C" standing for "Communist").


Musk PAC's Video Ad. Source: YouTube


The PAC was in chaos early on. Staff complained of unpaid bills, unstable decision-making, and violations of standard labor practices, mirroring long-standing grievances from Tesla and SpaceX employees. However, Musk's efficiency was astounding: political movements typically take years to build, but Musk and his deputies recruited a 2,000-strong army in just a few months. Andrew Romeo, a former adviser to Florida Governor Ron DeSantis, was in charge of North Carolina. David Rexrode, who worked for former Virginia Governor Glenn Youngkin, was in charge of Pennsylvania and Michigan. Chris Carr, Trump's 2020 political director, was in charge of Arizona and Nevada. Most canvassing efforts tried to save money by sending canvassers to more densely populated areas, where they could visit as many households as possible. But a source familiar with the PAC's operations said Musk's funding allowed governors to send canvassers to more rural areas, where Trump could increase his vote count. The anonymous source said Musk's PAC visited approximately 11 million households.


Musk was also generous in other ways. When the campaign team rented contact lists to send emails and texts to potential voters, each lead typically cost no more than $10. Musk built his list from scratch. He offered $47 to anyone recommending a registered voter in a swing state to the Political Action Committee, asking for their email address and phone number. Musk later increased the offer for Pennsylvania registered voters to $100. He then announced a daily $1 million giveaway to a lucky signer of the petition. This proposal could be seen as illegal, prompting a lawsuit from the Philadelphia district attorney trying to stop the giveaway, but it also attracted media attention. Musk's petition ultimately gathered over a million names. "It's a nice number," said Gait, of Harris Media.


Musk Rallies for Trump at Madison Square Garden. Source: Getty Images


But Musk's most significant move was to inject his personal brand into the PAC's work. On October 5th, he appeared on stage at a Trump rally in Butler, Pennsylvania, at the very site where Trump had narrowly escaped an assassination attempt. He didn't just speak; he leaped into the air, donned a black MAGA hat, and proclaimed himself "dark MAGA" (the campaign team immediately embraced the term, meaning "so in love with Trump, it's scary"). Musk held a series of events across Pennsylvania that attracted a young audience who liked him but might not necessarily know Trump. Then, on October 27th, he showed up at Trump's demonstration rally at Madison Square Garden in New York, where he received treatment even more lavish than Trump's campaign partners and his children.


On the day before the election, America's most popular podcaster Joe Rogan interviewed Musk, much like he had interviewed Trump a week earlier. "It's a message to the men," Musk said, as Rogan nodded in agreement. "You gotta vote like your life depends on it." Rogan, who supported Bernie Sanders in 2020, said he now backed Trump and made it clear it was Musk's doing. "The great and powerful Elon Musk," Rogan later wrote on X. "I think he made the most compelling argument for Trump, and I wholeheartedly agree with him."


In the days following Trump's victory, Musk was not the only billionaire whose net worth soared. The biggest winners included investors in private prison companies, cryptocurrency firms, and nuclear energy producers. The idea behind these so-called Trump trades was: If Trump deported millions of immigrants, private prisons would benefit; if Trump established the strategic bitcoin reserve he promised, cryptocurrency values would rise; and nuclear energy companies would profit from Trump's pledge to build new reactors.


Musk's own Trump trade followed a similar logic. During the campaign, Trump indicated his government would fund Musk's manned Mars mission plan by 2028. This could bring SpaceX tens of billions, if not hundreds of billions, of dollars in value as the company has already launched rockets for NASA and the Department of Defense.


A more direct potential payoff involves SpaceX's satellite internet service Starlink. Musk has long complained about being left out of a $42.5 billion subsidy plan passed during Biden's presidency to fund fiber-optic broadband in rural areas. Telecom research firm New Street Research's Blair Levin suggested the government could redirect some of the funding to Musk instead of laying fiber.


Many of Musk and Trump's other dealings have been speculative and almost fanciful. The surge in Tesla's stock price seemed to be driven by the idea of Trump unilaterally legalizing the company's planned self-driving taxi. Musk floated this notion in Tesla's earnings call in the weeks leading up to the election. "If there was an efficiency department in government, I would do my best to help it happen," Musk said, adding that these regulations would apply to all car companies, not just Tesla. The issue is that Tesla has not actually developed a functional self-driving taxi yet.


Furthermore, while many Tesla investors fit the image of Trump supporters or Musk fans, the actual people buying Musk's electric cars tend to be climate-concerned, middle-class moderates. During the previous Trump administration, Tesla customers responded to his Muslim immigration ban policy by canceling orders, despite Musk's only indirect ties to the administration at the time.


Then there's the personal dynamic between Musk and Trump. Nearly every influential business leader close to Trump has eventually been forced out of his circle. Trump's sphere of influence has a very short half-life, so much so that there is a jokingly named phenomenon, the "Scaramucci effect," referring to investor and former Trump confidant Anthony Scaramucci's 10-day stint as White House Communications Director before being fired in 2017. "Elon Musk and others are now having a good time with Donald Trump," Scaramucci said in a radio interview in early November. "But there will be a moment when they will go to hell with him, it's just a matter of time."


Even if Musk could withstand the Scaramucci era and even if his businesses could weather customer boycotts, neither Musk nor Trump is very popular. (An NBC News poll in late September showed Musk with a 34% approval rating; as of November 11th, FiveThirtyEight's polling average showed Trump with a 44% approval rating.) If Trump were to make good on his promise to have Musk cut $2 trillion from the federal budget, it would almost certainly involve cutting Social Security and some of the most popular government programs. This would face fierce opposition not only from the Democrats but also from Republicans. Even if the GOP were to win back the House, their control over Congress would be very tenuous.


"Musk may act like an elected autocrat, but the US is not an autocracy, at least not yet," Bill Allison said.


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