In the fight between President Trump and Elon Musk, I would say that Elon Musk is right. The One Big, Beautiful Bill is fiscally irresponsible because, for the benefit of special interests, it fails to make the most pro-growth provisions permanent. It is also because of its lack of spending cuts or the closing of tax loopholes. (Jack Salmon and I have a list of all the tax expenditures that should be eliminated from the tax code here.)
Mr. Trump claims that “Elon’s upset because we took the EV mandate . . . which was a lot of money for electric vehicles and, you know, they’re having a hard time, and they want us to pay billions of dollars in subsidies.” The president also noted that these subsidies are silly and shouldn’t exist. He is correct. He added that “Elon knew this from the beginning; he knew it from a long time ago.” But his accusation doesn’t align with Musk’s public statements.
Sure, Musk’s companies have been the beneficiaries of loads of subsidies, which I have criticized him for many times. Still, his recent statements have been in favor of cutting them. More importantly, what seems to upset Musk is the fact that the Republican bill would cut EV subsidies but keep those for oil and gas. He said, for instance, “Keep the EV/solar incentive cuts in the bill, even though no oil & gas subsidies are touched (very unfair!!), but ditch the MOUNTAIN of DISGUSTING PORK.” This statement reinforces a stance he has maintained since at least 2021, when he testified, “We don’t need the $7,500 EV tax credit. Honestly, I would just cancel this whole infrastructure bill. Delete. I’m literally saying get rid of all subsidies. But also for oil and gas.”
He is right. The argument is straightforward: Subsidies distort markets, breed inefficiencies, and encourage cronyism. Green subsidies — particularly those for EVs and solar — often channel funds toward politically favored companies rather than toward market-driven innovation. Meanwhile, fossil-fuel subsidies remain deeply embedded in our tax code, quietly favoring oil and gas companies. Both should be eliminated, but there isn’t much appetite for that among Republicans.
It’s not as if there is much appetite among Democrats, either. Perhaps no example better illustrates progressives’ support for oil and gas subsidies than their support for the Export-Import Bank, whose primary beneficiaries are corporate giants like Boeing and major players in the oil and gas industry. Those who champion green policies conveniently overlook that Ex-Im subsidies funnel billions into the fossil-fuel sector (it was traditionally around 25 percent of its entire portfolio).
If policymakers genuinely care about a cleaner environment and more efficient markets, their solution should be simple and nonpartisan: eliminate subsidies entirely. But as we say in France, “with ifs, you could put Paris in a bottle.”
Musk’s clarity on this issue should embarrass politicians who continue to posture about fairness and fiscal discipline while fueling corporate welfare and deficits.