Elon Musk Leaves Republican Party Over U.S. Debt Concerns

Elon Musk, the CEO of Tesla and SpaceX, has expressed concerns about the U.S. debt, which has led to his departure from the Republican Party and the formation of the American Party. This move comes after a feud with President Donald Trump over a mega-bill expected to add trillions to the deficit. Musk has warned of "debt slavery" from the tax-and-spending bill and criticized its treatment of EV and solar energy tax credits versus oil and gas incentives.

Interestingly, Musk's concerns are shared by some prominent voices in the Democratic Party. Reid Hoffman, the cofounder of LinkedIn and a top Democratic donor, has expressed sympathy for Musk's core cause of reining in deficits. Hoffman noted that the cost of paying interest on U.S. debt is one of the biggest line items in the federal budget. However, he is skeptical about the prospects of the America Party, given the long history of unsuccessful attempts to sustain third parties.

Jared Bernstein, who previously served as the chair of President Joe Biden’s Council of Economic Advisers, has also acknowledged the dangers of the nation’s budget math. In a recent post, he admitted that he has joined the hawks on budget deficits, acknowledging that fiscal austerity often does more harm than good. Larry Summers, who served as Treasury Secretary in the Clinton administration and National Economic Council director in the Obama administration, has also sounded the alarm on U.S. debt. He warned that the current deficits and the prospect of debts are unprecedented in U.S. history, especially at a moment when the economy was strong and the country was at peace.

Despite the shared concerns about U.S. debt, Musk and some Democrats do not necessarily agree on the solutions. Musk's Department of Government Efficiency sought to slash federal spending by trillions of dollars to reduce the deficit. In contrast, Summers has advocated for significant tax increases to reach a more sustainable fiscal trajectory, while acknowledging that the federal government can be more efficient.

This dialogue highlights the seismic shifts in American politics, with a major debate over new governing principles for the economy in the wake of a shattered consensus. OpenAI CEO Sam Altman has also hinted at the churn in American politics, stating that Democrats had lost their way and that he is now "politically homeless." Altman advanced his own economic vision, advocating for techno-capitalism, which encourages wealth creation and distribution.