AP Photo/Stephanie Scarbrough
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Elon Musk, Donald Trump, and JD Vance at last week's Army-Navy football game.
Elon Musk blew up a near-complete bipartisan budget deal with an avalanche of tweets contending that it was too costly, luring Donald Trump into demanding that Republicans kill it. But Musk’s real reason—a story that David Dayen broke in the Prospect—was that the agreement included painstakingly negotiated limits on American tech investment in China. Had that provision passed, it would have been costly to Musk’s extensive Chinese Tesla operations and future AI plans.
Between Tuesday and Thursday, the budget deal collapsed. Trump, following Musk’s lead, threw in a new demand that the deal tackle the debt ceiling, always a politically tricky vote. But neither Democrats nor Republican fiscal hawks would give Trump that.
In the end, legislators of both parties wanted to get home for Christmas, and both houses overwhelmingly passed a simple “continuing resolution” keeping the government funded at roughly present levels through March, plus disaster relief and farm aid. Musk succeeded in stripping out the China provision.
Collateral damage included the loss of a bipartisan measure constraining abuses by pharmacy benefit managers, another limiting hotel and ticketing junk fees, and about 100 other bipartisan agreements. (Late night, the Senate did manage to pass two bills that were jettisoned from the deal but had already passed the House: one of several provisions funding pediatric cancer research, and another transferring ownership of the derelict RFK Stadium to Washington, D.C.)
The mainstream media focused on the tick-tock of whether the government would shut down, on Musk’s surprising influence, and the issue of the debt ceiling—but totally missed the China investment provision that was the real driver of the dispute. Even the exemplary Heather Cox Richardson missed it.
Did Trump miss it? Let’s recall that Trump is a ferocious China hawk. Stopping U.S. investment in sensitive technologies that could help China has been a key element of the agenda for serious China experts in both parties. On that issue, Musk won and Trump was rolled.
Trump’s own goal in the budget deal, as noted, was the debt ceiling. The failure to get that will come back to haunt him when the nation’s borrowing limit expires next summer. House Republicans privately discussed a deal in a future reconciliation bill to exchange a $1.5 trillion debt ceiling increase for $2.5 trillion in mandatory spending cuts—think Medicare, Medicaid, food stamps, and veterans benefits. (By law, Social Security cannot be altered in reconciliation.) That will prove politically toxic, even to Republicans.
So Democrats will probably have some future leverage on the debt ceiling. House leader Hakeem Jeffries is already talking about forcing it to be permanently abolished, a good idea that would end future MAGA hostage-taking.
In contrast to Trump, Musk played his hand in a way that made sure that he won his objective, and didn’t mind sacrificing Trump’s. In blessing the revised deal, which passed the House late Friday, 366-34, and the Senate, 85-11, Musk disingenuously praised Congress for drastically shrinking the total spending. This was total bullshit, since the budget numbers of the original deal and final one were almost identical. But shrinking spending wasn’t the goal: keeping the government out of his China business was.
In short, Musk outplayed Trump. Musk is not the sort of guy you can take to the woodshed. And the Inaugural is still a month away.
There will be more conflicts between the goals of President Musk and those of President Trump. Some of the slash-and-burn budget cutting that Musk is proposing—Social Security, Medicare, economic development and small business aid—will enrage Republican legislators and governors, and threaten base Republican constituents, not to mention the deep differences over unfolding China policy.
Who will outplay whom then?
