Elon Musk And Trump's Federal Efficiency Plans Slammed By Paul Krugman, Economist Warns About Risks To Medicare, Social Security: 'Government Is An Insurance Company With An Army'

Benzinga Neuro

September 05, 2024

Nobel laureate Paul Krugman has expressed concerns over Republican presidential candidate Donald Trump and Tesla Inc (NASDAQ:TSLA) CEO Elon Musk‘s proposed federal spending cuts. Krugman shared his thoughts on X on Thursday, ahead of the 2024 presidential election.

What Happened: Krugman stated, “The federal government is an insurance company with an army. You can't make major spending cuts without slashing Social Security, Medicare and Medicaid and/or weakening national defense.”

He referenced a post by Jeff Stein, a White House economics reporter for The Washington Post, who highlighted Trump’s claim that a Musk-led commission would find “trillions” in spending cuts. Stein expressed skepticism, noting that budget experts doubt such cuts can be made without harming millions of Americans.

Stein questioned why Trump hasn’t already identified these cuts, asking, “If Trump is so confident he can do this, why wouldn’t he do so now? Why not show the country what they actually are?”

Stein further challenged the feasibility of the proposed cuts, stating, “One way to convince the country that a Trump-Musk commission could identify trillions of federal programs to cut would be to publicly identify … any of them?”

Krugman’s and Stein’s comments come as Trump continues his campaign, promising significant reductions in government spending.

The federal government is an insurance company with an army. You can't make major spending cuts without slashing Social Security, Medicare and Medicaid and/or weakening national defense pic.twitter.com/lDySBm1AvU
— Paul Krugman (@paulkrugman) September 5, 2024

See Also: Kamala Harris To Unveil $50K Tax Deduction For Small Businesses To Counter Trump’s Economic Policies As She Looks To Win Over Middle-Class Voters

Why It Matters: The proposed spending cuts are part of Trump’s broader strategy to streamline government operations. Trump recently announced that he would establish a government efficiency commission led by Musk if elected, with Musk agreeing to serve without compensation.

In the past, Musk’s companies, including Tesla, have benefited from federal subsidies, which complicates the narrative of Musk leading efforts to reduce government spending.

A former Tesla executive recently argued that Trump’s policies had previously harmed the company, suggesting a complex relationship between Musk and federal economic policies.

The debate over federal spending is further intensified by competing tax proposals from other 2024 presidential candidates, including Vice President Kamala Harris, who has proposed a $50,000 tax deduction for small businesses to counter Trump’s economic policies.

Goldman Sachs has also warned that tax plans from both Trump and Harris could lead to significant fluctuations in S&P 500 earnings, highlighting the broader economic implications of the upcoming election.

Read Next:

Federal Reserve May Be Prompted To Pause Rate Cuts In Reponse To Supply Side ‘Shocks,’ Says Expert

Image VIa Shutterstock

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote

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