Elon Musk's Conflicts of Interest

Over the past few days, I have described how the U.S. Digital Service was renamed the U.S. DOGE Service and turned into a tool for Shadow President Elon Musk to take control of essential parts of the U.S. government. I described how, through DOGE, Musk attempted to gain direct control of the entire federal workforce and authority over the government's payment systems. Yesterday, I explained Musk's efforts to harness vast amounts of government data. While the White House insists that Musk has no decision-making authority and is not formally connected to DOGE, it is clear that he has established control of some of the most important operational components of the U.S. government: its employees, payments, and data. This has made Musk the most important individual within the government with the possible exception of cult leader, convicted felon, and failed President Donald Trump. Indeed, at a cabinet meeting held yesterday, Musk — who is not a member of the cabinet — spent more time talking than any other attendee other than Trump.

The pro-Musk or pro-DOGE justification for Musk's involvement with the U.S. government is that he is a genius who is bringing much-needed efficiency to a bureaucracy that is bloated and out of control. By downsizing the workforce and eliminating waste, fraud, and abuse, he will restore fiscal sanity to the government. There is plenty of evidence that Musk's approach, which has involved bringing a meat cleaver where a scalpel would be more appropriate, has caused more damage than benefit and that DOGE is not accomplishing its goals. Many DOGE claims about savings have been revealed to be exaggerated if not simply wrong. Still, the argument could be made that Musk and DOGE are well-meaning but incompetent. However, the evidence suggests that Musk is not leading an altruistic effort but rather using the tools of government at his disposal to benefit himself and his companies.

First, let's discuss X, Musk's social media network that was formerly named Twitter. Initially, DOGE only posted information about its activities to its X account. Even the DOGE website originally did little more than republish tweets. As a result, privately owned X became the exclusive vehicle for information about DOGE. More problematic, however, has been the apparent exploitation of Musk's government ties to threaten advertisers who have been boycotting X. The Wall Street Journal reported on attempts by a lawyer from X to bully a large advertising company:

A lawyer at advertising conglomerate Interpublic Group fielded a phone call in December from a lawyer at X. The message was clear, according to several people with knowledge of the conversation: Get your clients to spend more on Elon Musk’s social-media platform, or else.

Interpublic recently announced a merger with rival Omnicom Group, and Interpublic leaders interpreted the threat to suggest that the merger could be prevented or slowed down by the Trump Administration. Company officials fear that if they don't play ball, Musk will use his influence within the government to retaliate against them.

A controversy involving another Musk-owned company, Tesla, briefly erupted this month when a U.S. Department of State procurement document was discovered that specified spending $400 million on "armored Teslas". The State Department argued that this document was produced during the administration of former President Joe Biden and that the procurement would be cancelled. However, NPR discovered that the amount allocated during the Biden Administration was much lower, just $483,000 rather than $400 million. Moreover, that spending was allocated for "Armored Electric Vehicles" rather than the Teslas the revised document specifies. With Musk's control of government payments, he could still authorize this purchase despite claims that it has been cancelled.

The Washington Post reported on another DOGE effort that has benefited Tesla:

A small government team regulating the sort of autonomous cars that Elon Musk says represent the future of Tesla, his car company, is getting cut nearly in half by the Musk-led U.S. Doge Service, according to people briefed on the reductions.

Furthermore:

“If the question is, will this affect the federal government’s ability to understand the safety case behind Tesla’s vehicles, then yes, it will,” said one terminated engineer.

Tesla plans to launch an autonomous vehicle pilot project in Austin, Texas, this year. Musk has said that autonomous driving is crucial for the future of Tesla. Now that project will be able to proceed with reduced government scrutiny.

But where Musk most clearly seems to be using his new influence to benefit one of his companies involves the Federal Aviation Administration and the Musk-owned company SpaceX. In 2023, a $2.4 billion contract was awarded to Verizon to modernize the ground-based communication system used by air traffic controllers. Musk has been a critic of Verizon's project, recently saying on X that "The Verizon system is not working and so is putting air travelers at serious risk". However, Verizon has just started its work and, as such, it is too early to evaluate its results. According to the Associated Press, an effort is being made to either replace or supplant Verizon with Starlink terminals provided by SpaceX. According to the AP's reporting, SpaceX personnel have already begun working with the FAA, and Starlink terminals are currently being tested. The Washington Post reports that the FAA is close to cancelling the Verizon contract and awarding it to Starlink.

The government has strict procurement regulations, but Musk and SpaceX appear to be ignoring them. As the Washington Post reports:

Musk’s team determined the job should go to Starlink, the person said. But the process for unwinding a contract and awarding it to another company is lengthy and has not been followed in this case so far, the person said.

Because some FAA officials have refused to cooperate with the contract machinations, "Musk’s team is now seeking help from the acting administrator of the agency, Trump appointee Chris Rocheleau, and [Department of Transportation Secretary Sean] Duffy."

While Musk wages war against government spending, it is somewhat ironic that his own businesses have been major recipients of such funding. The Washington Post reported yesterday that Musk and his companies have received "at least $38 billion in government contracts, loans, subsidies, and tax credits". Much of this funding continues, and it will be interesting to see if it is protected from the DOGE cuts that are impacting vast amounts of other government spending. In one case, electric vehicle subsidies, Musk has supported eliminating the funding. While he acknowledges that ending the subsidies would harm Tesla, he says that it would be "devastating for our competitors". So even in this case, he is maneuvering to his advantage.

From the instant that Musk was named as a special advisor to the President, he has generally ignored laws, rules, and regulations. As a result, many of his actions are currently tied up in court. Musk and DOGE operate as if the rules don't apply to them. Among the strictest government regulations are those regarding conflicts of interest. While both Musk and Trump have claimed that conflicts of interest will be addressed, so far there is nothing more than their assurances to confirm that this is the case. To the contrary, the example of Starlink and the FAA suggests exactly the opposite. To make matters worse, whereas Musk constantly champions transparency in government, he is completely opaque when it comes to his and DOGE's activities. As such, how Musk handles his numerous conflicts of interest is probably not going to be easily determined.