Tesla and SpaceX CEO Elon Musk’s concern over the U.S. debt, which sparked his breakup with Republicans, is shared by some top voices in the Democratic Party.
Last weekend, he announced he’s forming a new political party after feuding with President Donald Trump over the mega-bill that’s expected to add trillions to the deficit.
“When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy,” Musk posted on X. “Today, the America Party is formed to give you back your freedom.”
He also warned earlier 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.
On Wednesday, LinkedIn cofounder and top Democratic donor Reid Hoffman told CNBC that he’s “very sympathetic” to Musk’s core cause of reining in deficits, noting that the cost of paying interest on U.S. debt is one of the biggest line items in the federal budget.
But he was doubtful about the prospects of the America Party, given the long history of unsuccessful attempts to sustain third parties.
“So it doesn’t strike me as necessarily the best strategy for that, but I think it’s important to try to focus on the debt,” Hoffman added.
Also this past week, Jared Bernstein, who previously served as the chair of President Joe Biden’s Council of Economic Advisers, said he has had a change of heart when it comes to U.S. debt.
In a New York Times op-ed on Wednesday, he acknowledged that he was once a longtime dove on budget deficits and previously argued that fiscal austerity often does more harm than good.
“No longer. I, like many other longtime doves, am joining the hawks, because our nation’s budget math just got a lot more dangerous,” Bernstein wrote.
Larry Summers, who served as Treasury Secretary in the Clinton administration and National Economic Council director in the Obama administration, sounded the alarm on U.S. debt after the megabill was signed.
In an interview with ABC News last Sunday, he said shrinking the deficit during the Clinton presidency set off a virtuous cycle of increased investment, more economic growth, lower interest rates and even narrower deficits.
He acknowledged that for a decade after 2010, which included the Obama administration, he had preached that deficit reduction didn’t have to be a top priority. But he, too, thinks this time is different.
“Anybody who looks at the numbers sees that we’ve never had deficits remotely like this or the prospect of debts remotely like this—at a moment when the economy was strong and we were at peace—anytime in our history,” Summers warned.
But just because Musk, who had emerged as a top bogeyman for the left, and some Democrats share debt concerns, it doesn’t mean they have similar ideas on what to do about the problem.
Before leaving the Trump administration, Musk’s Department of Government Efficiency sought to slash federal spending by trillions of dollars to reduce the deficit.
By contrast, Summers has said that while the federal government can be more efficient, the U.S. can’t reach a more sustainable fiscal trajectory without significant tax increases.
Still, the dialogue is another sign of the seismic shifts going on in American politics amid a major debate over the new governing principles for the economy in the wake of a shattered consensus.
OpenAI CEO Sam Altman hinted at the churn in a July 4 post on X, where he said Democrats had lost their way and that he is now “politically homeless.” At the same time, he advanced his own economic vision.
“I believe in techno-capitalism,” he wrote. “We should encourage people to make tons of money and then also find ways to widely distribute wealth and share the compounding magic of capitalism. One doesn’t work without the other; you cannot raise the floor and not also raise the ceiling for very long.”
