WASHINGTON, July 5 (Reuters) - The dispute between Republican President Donald Trump and his main campaign financier Elon Musk took another fractious turn on Saturday when the space and automotive billionaire announced the formation of a new political party, saying Trump's "big, beautiful" tax bill would bankrupt America.
A day after asking his followers on his X platform whether a new U.S. political party should be created, Musk declared in a post on Saturday that "Today, the America Party is formed to give you back your freedom."
New details continue to trickle in about the origins of the feud, almost all of which support what we already suspected. Most notably, sources within the White House have confirmed that “we dropped the dime” on Musk’s drug use. There was already overwhelming circumstantial evidence that the story had to come from within the administration—the NYT’s claim to have extensive photographic and video documentation pretty much narrowed it down—but this removes what little doubt there was. We’ll probably never know for certain if Trump himself played a role here—I’m inclined to suspect he didn’t—but we’ve passed the point where that matters.
After the initial rage faded, Musk did make an attempt to mend fences, taking down his original tweets and making various conciliatory and submissive comments, but the damage was done. Now, with the stress amping up around Tesla’s increasingly controversial robotaxi launch and dismal numbers coming out, Elon is back on the offensive—now promising to start the America Party (the American Party name was already taken by George Wallace).
As far as I can tell, no one—including Elon Musk himself—is pitching this as a truly competitive third party. His idea seems to be to get enough support to be a kingmaker, perhaps even grabbing a few seats in the House or possibly the Senate, allowing him to have the deciding vote on legislation. He could certainly play the spoiler—albeit asymmetrically.
Having lost his WH connection, Musk's political power comes from:
1. Money
2. Fan base
3. Control of Twitter
He's toxic with Dems and independents. 2. and 3. are mainly made up of Trump supporters. I'm sure he'd like to poach supporters from the left, but I don't see that as likely.
Something else you need to keep in mind is that, as we've often mentioned, among the super-rich, Elon Musk’s fortune is uniquely precarious. It depends on Tesla continuing to trade at 20 or 30 times the valuation the fundamentals suggest. We know that Musk has used some of his stock in the company to secure loans, which means a big drop would trigger margin calls—leading to all sorts of trouble for the world's (currently) richest man.
Trump is in a position to destroy his opponent’s fortune simply by aggressively enforcing laws that Tesla has been given a pass on for the past few years. To further complicate matters, there's this:
Elon Musk doesn't feel like doing just one job, he wants to do all these different jobs! Tesla shares are tanking in premarket trading in response to the new one he just gave himself as founder of "The America Party." Arjun Kharpal reports @cnbc.com - www.cnbc.com/2025/07/07/t...
— Lora Kolodny (@lorak.bsky.social) July 7, 2025 at 2:41 AM
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wsj: Tesla is running out of road in China… (Musk’s clashing with Trump isn’t helping) www.wsj.com/business/aut...
— Lora Kolodny (@lorak.bsky.social) July 7, 2025 at 12:20 AM
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From an election forecasting standpoint, we continue to sail into that part of the map marked only by the warning: Here there be monsters. Anything like observed data has long since disappeared over the horizon.
Here are some of the unknowns foolhardy modelers will have to contend with:
As far as I can tell, there is no precedent for a Donald Trump in American politics. We've had far-right demagogues before, but we've never had one reach this high an office or hold this kind of absolute power over his own party.
There is no precedent for Elon Musk—neither in terms of wealth nor political extremism. (Yes, I know about Ford, the Wall Street Putsch, and all the rest, but no politically driven plutocrat has ever reached the level we see here.)
Third parties inevitably introduce a huge degree of uncertainty into the mix.
Both Trump and Musk alternate between being motivated by anger and catharsis one day and by naked self-interest the next. In neither case does principle come into play. It’s entirely possible that both men will realize the damage they're doing to themselves and call a real truce—or they could just continue to escalate.
Was asked could this America Party change SV / tech money going to GOP? I don't know. I think tech money will flow to whoever is in power. Will friends of Musk maybe chip in to candidates he wants? Sure. But assume this party he says he formed will mostly change where his own money goes.
— Lora Kolodny (@lorak.bsky.social) July 7, 2025 at 2:45 AM
Musk, in particular, has a long history of quietly backing away from big promises. It’s entirely possible that will happen here. We also have to contend with the possibility that Musk will not have hundreds of millions of dollars in 18 months—or at least not hundreds of millions that he feels free to blow on a quixotic cause.
All of this is on top of the chaos and unpredictability that has increasingly defined 2025.
As the old (and probably apocryphal) curse goes: May you live in interesting times.
Not a fan of Musk, but when it comes to bankrupting our country with waste and graft, it would be nice to have multiple options.
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