Top economists and various financial experts have raised concerns that Donald Trump’s proposed policies for a potential second presidential term could significantly increase the federal deficit by trillions of dollars, exacerbate inflation, and potentially drive the U.S. economy into a recession or even a depression. Surprisingly, Elon Musk, a key figure in Trump’s campaign, appears to concur with the belief that such policies could harm the economy.
Within a week, Musk has twice seemed to suggest that Trump’s economic policies might lead to hardship in the United States. The initial suggestion occurred during a “Telephone Town Hall” conducted on Musk’s platform X, where he cryptically mentioned the necessity to reduce spending to ensure long-term prosperity, even if it results in some temporary hardship. Musk did not elaborate further on these comments, which were made in the context of discussing the national debt.
Adding to the speculation, Musk again hinted at potential adversity by responding to a right-wing account on X that predicted an initial economic upheaval following mass deportations and a reduction in governmental size. The account claimed these actions would lead to a short-term market tumble but eventually result in a more sustainable economy. Musk responded to these comments by stating, “sounds about right.”
Numerous economists have expressed similar concerns regarding Trump’s plans, which include mass deportations, substantial tax cuts for the wealthy, weakening the U.S. dollar, and imposing global tariffs. These strategies are expected to increase the federal deficit, drive inflation, and create economic uncertainty. Some Trump advisors have also proposed significant reductions in federal spending and cuts to government employment, which could further destabilize the economy. It is notable that despite being a key Trump ally, Musk seems to acknowledge these potential negative outcomes during an intensely competitive presidential race.
Musk’s admiration for Argentine President Javier Milei, known for drastically reducing government spending, could offer some insight into his perspective. Milei’s policies, which focus on cutting government expenditure on social welfare, devaluing the national currency, and reducing government jobs, have led to substantial socioeconomic challenges like heightened poverty and inflation in Argentina. Despite these issues, Musk, similar to Milei, views short-term hardships as necessary for future prosperity.
In the United States, despite some voters perceiving Trump as a successful businessman with fond memories of his first term, much of the economic data indicates that the Trump administration inherited a robust economy from the Obama era. Trump’s policies, however, are often criticized for undermining that recovery.
Some of Trump’s proposals, such as eliminating taxes on Social Security, could ironically harm his voter base by effectively threatening the program’s sustainability, potentially pushing millions into poverty. Conversely, Vice President Kamala Harris has suggested reforms that include raising taxes on the wealthiest Americans to ensure Social Security’s future.
While any aggressive economic proposals from Trump, if reelected, would require Congressional approval, making their implementation uncertain, the very notion of such policies is enough to cause concern among experts and analysts.