Elon Musk Throws in the Towel
Author: Greg Valliere
January 10, 2025
PROMISES MADE during the election campaign seemed unattainable — and sure enough, it’s becoming clear that many cannot be met. The first casualty is Elon Musk’s pledge to cut government spending by $2 trillion in the next ten years. It can’t be done.
MUSK RAISED EYEBROWS YESTERDAY WHEN HE CONCEDED that cutting the deficit by half of his initial goal would be an “epic outcome” to attain.
WE GIVE MUSK CREDIT for trying to reform visa policy and tighten fiscal policy, but it’s extremely unlikely that the rise of red ink can be slowed. It may grow less rapidly than in recent years, but even that would require an epic Congressional brawl. Musk knows this.
IT’S NOT OUT OF THE QUESTION THAT AN UPCOMING FIGHT over spending will require an extension of the debt ceiling on March 14. We’re hearing that the House will not pass anything that doesn’t — at the least — contain an across-the-board spending cut. But a 2% cap on spending is unlikely — and a freeze would be a miracle.
MUSK ALSO MUST REALIZE THAT the only way spending can be curbed is to slow the growth of Social Security and Medicare outlays. Democrats are salivating. Although they have no plan.
SEVERAL OTHER CAMPAIGN PROMISES are already looking shaky —
TRUMP WILL NOT SOLVE the Ukraine war in one day, as he promised, he cannot close the border immediately. He will immediately begin a phase-out of electric vehicle mandates.
TRUMP CAN MOVE immediately to begin deporting immigrants who have criminal records. And he can move to increase drilling and fracking, and will seek to cut funding for schools that don’t crack down against vaccine mandates.
AND HE WILL SEEK to reform regulation of health care, energy policy and environmental regulations. But the big focus will be on tax and spending issues, which will have reduced flexibility because of a need to spend at least $20 billion on California.
ON THIS FISCAL FRONT, WE REITERATE: There won’t be dramatic tax cuts — the government can’t afford it — and the spending cuts will just nibble around the edges. Don’t believe us? Ask Musk, who sees the handwriting on the wall.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
Headquartered in Toronto, Canada, AGF has investment operations and client servicing teams on the ground in North America and Europe. AGF serves more than 800,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
For further information, please visit AGF.com.
©2025 AGF Management Limited. All rights reserved.
