The Federal Advisory Committee Act clearly states that advisory committees, such as Elon Musk’s Department of Government Efficiency, must ensure their recommendations are not biased by special interests. .
But as the richest man on the planet, Musk has the widest and deepest potential conflicts of interest with the federal government that he has probably ever seen.
Mr. Musk owns, oversees and invests in a wide range of industries, and is involved in dozens of federal departments, from Tesla’s Department of Transportation to SpaceX’s Department of Defense to Neuralink’s Department of Health and Human Services. . His company has been the subject of federal investigations and regulatory actions, including accusations of employment discrimination, environmental damage and safety deficiencies.
In a recent interview with Time magazine, Donald Trump dismissed concerns about Musk’s conflicts of interest, saying, “I think Elon is putting the country a lot more than his company.”
tesla
Musk’s CEO, the electric car company, is currently worth $1.25 trillion, more than all other publicly traded U.S. auto companies combined — ranking 10th in revenue and 9th in profit. Despite this. The stock’s valuation would ultimately drive other auto companies out of business, it would gain market share, it would avoid traditional automakers’ labor and pension costs, and it would avoid significant liability. It is a product of the expectation that one will be able to escape. About car production problems.
All of these assumptions are based on how companies are regulated and how car companies are taxed and subsidized.
The National Highway Traffic Safety Administration has been investigating Tesla’s self-driving system since August 2021. A report released in April said the design of self-driving cars “led to foreseeable misuse and avoidable crashes,” and attributed 13 deaths to Tesla’s self-driving features and their abuse. It is said that
NHTSA staff reductions could directly impact these investigations. More pointedly, threats of cuts to NHTSA could influence current investigations to gain favor.
Tesla also faces legal challenges over its labor policies. Tesla is the only U.S. automaker without union representation. Tesla prevents workers from distributing union fliers, bans workers at its California factory from wearing union T-shirts, and says workers will lose stock options if they join a union. The National Labor Relations Board took action against all of these actions.
Musk spoke about firing striking workers during his X meeting with Donald Trump. Trump told Musk: “You’re the greatest cutter.” “I look at what you’re doing. You come in and say, ‘Do you want to quit?’ I won’t say the name of the company, but when they go on strike, you say, ‘Do you want to quit?’ “That’s fine. You’re all gone. ”
“Yes,” Musk replied with a laugh.
Under federal law, workers cannot be fired for striking. Threatening someone to do so is illegal under the National Labor Relations Act. The exchange prompted the United Auto Workers union to file a complaint with the NLRB, asking that the exchange be reviewed as an illegal threat.
space x
The market value of SpaceX, which is privately owned by Mr. Musk, has doubled to $350 billion from last year, by some estimates. Observers attribute some of these gains to Mr. Musk’s close relationship with Mr. Trump.
Musk has further clashed with the NLRB through his rocket and satellite services company SpaceX. After Musk fired SpaceX employees who had publicly criticized him, the NLRB ruled the firings were illegal.
Musk responded in January by filing a federal lawsuit challenging the constitutionality of the NLRB itself. The lawsuit filed by SpaceX in Texas federal court circumvents the right to a jury trial by NLRB administrative law judges, and the president should be able to remove them under Article 2. However, the NLRB system does not currently allow this. .
Consider how the Department of Government Efficiency’s recommendation that the president reduce the NLRB’s staff by firing judges will affect Musk’s business operations and legal environment.
Unlike appointees to federal courts, administrative law judges do not require confirmation and do not enjoy the same protections from removal as federal judges.
Since Musk took office, SpaceX has received more than $15 billion in federal contracts. The company is seeking billions more from NASA for a mission to the moon, from the Department of Defense for satellite communications services, and from the Federal Communications Commission to provide rural broadband service through its Starlink subsidiary. . NASA recently turned to SpaceX to rescue two stranded astronauts on Boeing’s Starliner program after it was unable to send a ship to retrieve them from the International Space Station.
However, SpaceX is also subject to regulatory action by the Federal Aviation Administration (FAA) over environmental issues.
SpaceX’s response was to tell the FAA to focus on Boeing’s problems and leave SpaceX alone. How Musk’s influence over FAA and NASA budgets could affect future SpaceX regulations and funding, potentially putting Boeing and other aerospace companies at a competitive disadvantage. Let’s think about it.
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Musk’s acquisition of Twitter was likely a product of regulation. In 2022, Musk, who was Twitter’s largest shareholder at the time, posted that he was willing to take the company private. The comments sparked a shareholder lawsuit alleging stock price manipulation and prompted an investigation by the Securities and Exchange Commission.
This wasn’t the first time Musk and the SEC have clashed. Musk tweeted his intention to take Tesla public in 2018, briefly sending the stock price higher before ultimately having to pay a $20 million fine. The agency said the tweet violated securities laws, calling it “materially false and misleading.” As part of the lawsuit settlement, Musk agreed to have his social media posts reviewed by SEC “watchdogs” to ensure they did not violate securities laws, but Musk said he would not be able to remove the terms. An appeal to the U.S. Supreme Court was unsuccessful.
The SEC sought sanctions in its continuing investigation into Musk’s Twitter takeover after Musk canceled his hearing earlier this year. Although unlikely, Musk could face criminal charges of stock price manipulation because of the way he publicly communicated about the company before the deal.
Consider how a reduction request to the SEC could keep Mr. Musk out of prison.
Musk joked to Tucker Carlson before the election that he might go to jail if Trump loses. “If he loses, I’m screwed,” he said. “How long do you think my prison sentence will be? Will I be able to see my children? I don’t know.”
According to industry estimates, X lost billions of dollars in market value as advertisers and users fled the platform’s unmoderated forums. One path to profitability is by leveraging user data. Immediately after the election, the terms of service changed, informing users that their data would be sold to third parties for the purpose of training artificial intelligence models.
These types of sales are a focus of the Consumer Financial Protection Bureau, a government watchdog agency. The CFPB last week proposed rules to discourage the intermediation of sensitive user data as a way to curb financial fraud. The rule treats data brokers the same as credit reporting and background check companies, and requires those selling data on income, financial status, credit information and debt repayments to comply with the Fair Credit Reporting Act.
It is not immediately obvious whether X falls under this rule. But Musk’s recent posts calling on President Trump to “remove the CFPB” as a waste of government spending suggest he believes he might do so.
xAI
For now, user data on X is a training tool for Musk’s artificial intelligence startup, xAI. The private company is valued at about $50 billion and competes with Microsoft, Google and OpenAI, a nonprofit backed financially by Mr. Musk, among others.
Currently, AI faces few substantive regulatory considerations in the United States, aside from data privacy. But policymakers are considering potential rules for technologies that could harm people if they diverge from the public interest. In September 2022, the White House Office of Science and Technology Policy released a draft blueprint for an AI Bill of Rights, calling for legislation to ensure that AI does not impact civil rights or personal privacy.
Musk announced that xAI plans to build the world’s largest supercomputer in Memphis, Tennessee, and has already installed 14 large gas generators to power the data center. The South Memphis facility is located within a majority black community. Activists with the Southern Environmental Law Center said xAI was operating generators without permission, called for regulatory action, and described the pollution as “environmental racism.”
Mr. Musk’s companies have been at odds with the Environmental Protection Agency on a variety of issues, from emissions at Tesla factories to pollutant emissions at SpaceX launch facilities.
Consider the impact of a recommendation from a “Governor’s” committee to strip the EPA of its staff or eliminate pollution standards.
Neuralink
Musk’s most controversial investment was the creation of Neuralink, a biotech startup aimed at developing human brain implants that would enable wireless mental control of electronic devices.
The Food and Drug Administration initially denied permission for Neuralink to conduct human trials, but granted permission earlier this year. The company has faced criticism for how animals are killed in its research and development process, and is also under investigation by the FDA and the Department of Agriculture.
cryptocurrency
Musk famously named his new “Department of Government Efficiency” or Doge, after the cryptocurrency Dogecoin, which was first created as an internet meme joke. The currency’s value rose on Mr. Musk’s propaganda and soared after the election.
But Musk, who made his first billions from his work in financial services as one of the founders of PayPal, has long been a cryptocurrency enthusiast. He disclosed his personal investments in Bitcoin, Ethereum, and Dogecoin. His company has intermittently accepted cryptocurrencies as payment for services and has kept them in its treasury.
Cryptocurrencies face regulation. The demand for electricity for Bitcoin mining has led nomadic miners to seek cheaper electricity and looser energy regulations around the world. This industry is rife with fraud.
The SEC has pursued lawsuits against new coin offerings, exchanges, and crypto projects that are considered unregistered securities. The Commodity Futures Trading Commission regulates virtual currencies as a commodity. This is very different from regulations like stocks and bonds, which affect how crypto companies communicate. The Financial Crimes Enforcement Network is investigating how virtual currencies are used as tools for money laundering, sanctions evasion, and terrorist financing. And the IRS expects people who own virtual currencies to report gains and losses on their taxes.
Cuts to any of these agencies could have a direct and disproportionate impact on Mr. Musk’s personal finances.
