Musk and Trump in the debt dispute: Is the next crisis looming?

Musk and Trump in the debt dispute: Is the next crisis looming?

In a heated argument over the US national debt, Elon Musk and former President Donald Trump have aired their differences on social media. The reason for the dispute is a controversial bill in the Senate that provides for comprehensive tax and spending reforms. Under the bill, the national debt could rise by $2.3 trillion, which has already sparked concern among independent budget watchers. Musk called the bill a "lobbyist gift" and a "disgusting abomination" and warned of imminent U.S. bankruptcy if it passes. This reports fr.de.

Trump responded to Musk's statements and insinuated that the Teslaizer was against the bill because it would eliminate tax credits for electric vehicles. In the past, the relationship between Musk and Trump has been marked by contradictions, particularly over Trump's economic policies and his stance on immigration. Musk has also questioned Trump's ties to Jeffrey Epstein, further increasing tensions between the two.

Economic forecasts and impacts

Musk predicts that the US will face a severe recession in the second half of 2025. This comes in the context of an OECD forecast that reduces economic growth to just 1.6 percent for 2025, compared to 2.2 percent previously. In addition, the number of initial applications for unemployment assistance has reached 247,000, the highest level since October 2024. In recent years, the US economy grew by 8.4 percent from 2021 to 2024, which is the highest growth rate among the G7 countries. However, inflation rose to 9.1 percent under President Biden before falling to 2.7 percent by November 2024. n-tv.de adds that Musk said on his Platform

The discussion about debt levels is particularly explosive because the US national debt is already at $36.2 trillion and accounts for over 120 percent of gross domestic product (GDP). Experts warn that Trump's planned economic policies, which are highly supply-side and protectionist, with strict tax rebates and tariffs, could potentially further fuel inflation next year. The Federal Reserve faces a dilemma in this situation, while the OECD predicts a possible inflation rate of up to four percent by the end of 2025.

The controversial topic also points to the different views on fiscal responsibility in the USA. Musk compares national debt to personal debt and emphasizes that these problems urgently need to be solved. However, there are opinions that criticize Musk's comparison as inappropriate and emphasize the importance of the growth rate for the US's debt sustainability.