Elon Musk says Trump’s economic plans could cause ‘temporary hardship’

October 30, 2024

(WASHINGTON, D.C.) -- Elon Musk, the world’s richest person, has vaulted to the forefront of the presidential campaign as a top donor and impassioned speaker in support of former President Donald Trump.

Still, Musk has said in recent days that the candidate’s economic plans could cause financial pain, at least in the short term.

Among those proposals is the potential formation of a new “government efficiency commission” to be led by Musk. The group would scrutinize federal spending and slash programs deemed wasteful.

Speaking on a telephone town hall on Friday, Musk said spending cuts imposed by the commission would “necessarily involve some temporary hardship.” Ultimately, Musk added, the cost-cutting would “ensure long-term prosperity.”

“We have to reduce spending to live within our means,” Musk said.

Offering up another cautionary note, Musk voiced agreement with a post on X on Tuesday that warned of dire economic fallout if Trump wins the election and implements some of his key agenda items.

“If Trump succeeds in forcing through mass deportations, combined with Elon hacking away at the government, firing people and reducing the deficit - there will be an initial severe overreaction in the economy,” an anonymous user posted on X.

“Market will tumble. But when the storm passes and everyone realizes we are on sounder footing, there will be a rapid recovery to a healthier, sustainable economy,” the post added.

In reply, Musk said, “Sounds about right.”

ABC News contacted Musk-owned companies, Tesla and SpaceX, in an effort to reach Musk for comment. He did not immediately respond. America PAC did not immediately respond to a request for comment.

In response to ABC News' request for comment, the Trump campaign praised Musk, saying he is uniquely equipped to help improve government efficiency.

“As President Trump has said, Elon Musk is a genius, an innovator, and has literally made history by building creative, modern, and efficient systems. Elon Musk has dedicated himself to America’s future by offering to serve with President Trump to ensure our government works more efficiently and uses America’s taxpayer dollars effectively," Brian Hughes, a senior adviser to the Trump campaign, told ABC News.

"The commission will ultimately be staffed and dedicated to this mission, and President Trump is committed to having Mr. Musk lead this commission to analyze the functionality of our government," Hughes added.

On the campaign trail, Trump has vowed to slap tariffs of up to 20% on all imported goods and deport millions of undocumented immigrants. Economists widely view those proposals as likely to drive up consumer prices, since companies typically pass along the costs of taxes and wage increases to customers.

Trump has also floated the notion of eliminating the personal income tax for all Americans. The U.S. would pay for the lost tax revenue with far-reaching tariffs, Trump told Joe Rogan last week.

The individual income tax currently accounts for roughly half of the $5 trillion in revenue that the federal government brings in each year. It would be all but impossible to make up for the lost revenue with increased tariffs, experts previously told ABC News.

Last year, the U.S. imported about $3.8 trillion worth of goods, the U.S. Bureau of Economic Analysis found. To generate the same amount of revenue currently brought in by the individual income tax, a tariff would have needed to be set at about 70%, said Alan Auerbach, a law professor at the University of California, Berkeley.

However, a tariff of such magnitude would significantly reduce U.S. trade, slashing the total amount of imported goods and, in turn, reducing tax revenue.

Musk, who leads Tesla and SpaceX, has taken an active role as both a large donor and vocal proponent backing Trump.

Musk donated about $75 million to a pro-Trump Super PAC over a three-month period ending in September, according to disclosures filed to the Federal Election Commission. Musk, who owns X, frequently posts messages in support of Trump on the social media platform, where he boasts more than 202 million followers.

The U.S. national debt currently stands at about $35 trillion. President Joe Biden has added to the national debt over the course of his term in office, just as Trump did.

Vice President Kamala Harris’ economic plans would increase primary deficits by $1.2 trillion over the next 10 years, according to a budget model created by the University of Pennsylvania’s Wharton School of Business. The plans put forward by Trump, meanwhile, would increase primary deficits by $5.8 trillion over that period, the model found.

Speaking on a telephone town hall on Friday, Musk vowed to closely examine the federal budget if appointed head of a potential “government efficiency commission.”

The role means “looking at every line item, every expense, and saying is this necessary at all?” Musk said.