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Spat Between Elon Musk And Democrats Expands To Biden’s Build Back Better Bill

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A spat between Elon Musk and leaders of the Democratic party escalated in recent days, as the founder of Tesla TSLA and SpaceX took dead aim at Joe Biden’s $1.9 trillion “Build Back Better” (BBB) bill that congressional Democrats are struggling to get across the finish line before Christmas. For whatever reason, Democrats’ long-time admiration society with Mr. Musk has soured over the course of this year, exemplified by President Joe Biden’s November 18th lauding of General Motors CEO Mary Barra for “leading the world” in the electric vehicles (EV) space, adding that she, not Musk, has “changed the world” where EVs are concerned.

That all certainly must have come as news to Mr. Musk, whose own company has been leading the way on EVs in the United States for almost 20 years now.

Speaking at an event sponsored by the Wall Street Journal last Thursday, Musk, who literally kept his Tesla venture afloat in its early years by taking advantage of billions in federal subsidy dollars, panned the BBB bill despite the fact that it contains hundreds of billions in new, expanded EV and renewable energy subsidies. “Honestly, I would just can this whole bill,” said Musk, “Don't pass it. That's my recommendation.”

“Rules and regulations are immortal,” Musk continued. “They don't die. The vast majority of rules and regulations live forever ... there's not really an effective garbage collection system for removing rules and regulations, so this hardens the arteries of civilization where you are able to do less and less over time.”

He’s right about all of that, of course. Democratic Senators Joe Manchin (WV) and Kyrsten Sinema (AZ) really should take Musk’s advice to heart and kill this bill outright instead of continuing to try to negotiate it down to a number they believe is low enough to preserve their senate seats next time they’re up for re-election.

America is already suffering with its worst inflation issue in 40 years, a problem that Federal Reserve Chairman Jerome Powell recently admitted can no longer be described as “transitory.” The passage by Congress of another $1.9 trillion in federal spending risks inflaming the problem even further. This bill, which Democrats originally referred to as a “budget reconciliation bill,” has now morphed into little more than a vast expansion of the social welfare state for individuals and for rent-seekers in the renewable energy space. BBB is in fact a Green New Deal cornucopia.

Musk talked about that reality, saying that his company has not received federal tax subsidies for the purchase of Tesla vehicles for the past two years. The federal tax subsidy of $7,500 per vehicle is limited to 200,000 cars per U.S. automaker, and Tesla did reach that limitation in 2018. Musk’s company does, however, continue to benefit from the generous EV subsidy programs in states like California, New York and Louisiana.

It also should be noted that congressional Democrats have chosen to pick a fight with Musk and Tesla, inserting a new, $4,500 per EV federal subsidy into the BBB bill that would only apply to automakers who use unionized labor. Tesla’s workforce is not unionized, though its workers enjoy similar, in many cases even better, compensation than their unionized peers. This is a pretty transparent example of the Democrats trying to reward one of their most loyal traditional constituencies by discriminating against Tesla in favor of unionized companies like Ford and GM GM .

While this is a classic example of the retail politics Democrats love to play, the clear discrimination against Musk and Tesla cannot be denied, and it removes any incentive Musk, currently ranked as the world’s 2nd-richest man, might have to be supportive of the whole BBB effort. And it is interesting to note that an initial version of EV subsidy reform circulated by Democrats in early 2021 would have renewed Tesla’s ability to take advantage of the federal credit again.

Whatever Musk’s motivation, his criticisms of this bill are certainly valid, and he applies them even to the provisions that relate directly to his industry and would in practice serve to benefit Tesla. When the moderator at the WSJ event pointed out that the bill contains billions in subsidies for the installation of new EV charging infrastructure, Musk responded by saying “Unnecessary. Do we need support for gas stations? We don't. I'm literally saying get rid of all subsidies.”

Well, alright then.

To be sure, that’s a lot easier for Elon Musk to say now that his company has met its limit for per-vehicle federal subsidies. You won’t see other U.S. automakers who are late to the EV game - like Ford and GM - echoing Musk’s advice on the bill, and you have to wonder what Musk himself would be saying if congressional Democrats hadn’t decided to pick this particular fight with him.

But it is a fight they chose to pick, and now the guy who has recently alternated between #1 and #2 on the Forbes 400 list of the world’s wealthiest individuals is advocating for the killing of their bill.

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