The government is shutting down because Elon Musk has factories in China

In a way, Donald Trump is picking up where he left off. Most of us remember the last official act of his presidency as the Capitol Riot, but just before that, just before Christmas 2020, he belatedly inserted himself into a government funding fight in which he had previously been disinterested. Congress had agreed to a bipartisan year. -finalize the omnibus spending bill that included the first COVID relief measures in nine months. The bills had already passed until Trump decided some of the spending sounded funny and individuals should get $2,000 checks instead of the $600 offered. He refused to sign the omnibus without them.

Within hours, Democrats wrote an expanded check bill and sent it through the House, but Mitch McConnell refused to let it go forward, and Trump reluctantly signed the omnibus anyway, climbing all the way down. The $2,000 checks became an issue in two Georgia special elections that Republicans lost. The road to the Biden agenda was through Trump’s anger-fueled, failed bid to renegotiate a congressional deal after it was completed.

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Almost four years today we are back here again. But this time, Trump is a sidekick in the show. He and his transition team reportedly had no problems with the 2024 version of a spending bill until this week. Then Elon Musk started writing a rant about how a perfectly normal bipartisan deal represented a total betrayal, lying about the content in the process. Trump had to be encouraged to back his co-president by getting House Rep. Mike Johnson (R-LA) to engineer a partisan solution while imposing an eleventh-hour, two-year suspension of the debt limit to prevent the Republican trifecta of deal with that nuisance at the next congress.

The remaining gasps of the Tea Party right, who see the debt limit only as an opportunity to force down spending, refused to go along with that piece, with 38 of them oppose the Johnson bill on the floor yesterday. Democrats weren’t about to vote for a bill they had no say in (if the offer was to remove the debt limit forever, they should go for it, but it’s not), and it failed. House Republicans promise to try again today, but they’ll probably need a two-thirds vote on anything today (it’s procedurally complicated; suffice to say, they can’t wait for the Rules Committee reports a rule, forcing a poll under suspension of those rules). That means any bill will require Democratic votes, and there is no indication that any negotiations with Democrats are underway. So the government will shut down at midnight.

Which brings us back to the original cause of the explosion: Elon’s endless scroll. Which seems to be tied to none of the inaccurate reasons he offered on X, but an old standby for billionaires: personal financial and business incentives. The original bill would have made it more difficult for Musk to build Tesla factories in Shanghai.

The word for this is oligarchy, and oligarchs do not think first of the country.

This is the first scandal of the second Trump term, and take a good look, because it’s going to look like all the other scandals: a conflict of interest among his impossibly wealthy advisers and aides (or from Trump himself) spills over into politics.

The measure in question is known as the “outbound investment” provision. We have heard for years about the problem of manufacturing companies sending jobs overseas to China, with its low wages and low environmental standards. China typically forces companies that want to locate factories in its country to transfer their technology and intellectual property rights to Chinese firms, which can then use it to undercut competitors in state-backed global markets.

Congress has been working its way into a froth about China for years now, and they finally figured out a way to deal with this issue. Sens. John Cornyn (R-TX) and Bob Casey (D-PA) have the flagship bill, which would either prohibit American companies from investing in “sensitive technologies” in China, including semiconductors and artificial intelligence, or create a broad notification regime around it.

The bill would also add some reporting requirements and improved reviews; generally, it expands the restrictions that the Treasury Department has already presented in regulatory rules. Codifying these rules into statute means they cannot be changed by successive administrations.

Cornyn-Casey passed the Senate last yearand after about a year unlawfulnesscame a final outgoing investment package into the year’s expiry bill. “We are taking a necessary step to safeguard American innovation against bad actors and ensure our enduring dominance on the world stage,” Cornyn said in a declaration.

Fun story: Elon Musk’s car company has a significant amount of, well, exit investment. A Tesla Gigafactory in Shanghai opened in 2019; perhaps a quarter of the company’s revenue comes from China. Musk has backed the construction of a second Tesla factory in China, where his grip on the electric car market has been completely loosened by domestic competition. He is working with the Chinese government to bring “Full Self-Driving” technology to China, in other words importing a technology that can be seen as sensitive. Musk has battery and solar panel factories that are not yet in China, but he may want them there in the future.

One can argue about whether the US should limit investment in China. But it is indisputable that a billionaire who has a lot of investments in China and wants to do more suddenly disrupted a normal congressional process that was supposed to limit that investment with a bunch of lies from his media platform. And lo and behold, when the new funding bill appeared, the outgoing investment feature was the fall. In fact, all traces of provisions related to China were removed from the bill.

Donald Trump is coming across as someone who is determined to “get tough” on China. But he has empowered someone with serious business entanglements in China to seemingly serve as a barrier to any policy related to China over the next four years.

The current occupant of the White House (remember him) picked this up. In one declarationWhite House press secretary Karine Jean-Pierre noted that “Republicans are breaking their word to support a bipartisan deal that would lower prescription drug costs and make it harder to offshore jobs to China.” The prescription drug reference has to do with a major reform of the pharmacy benefit managers, which was also taken out of the new bill.

So Donald Trump, purported leader of the reshuffle of populist Republicans, rejected a spending bill primarily to protect the world’s richest man’s investments in China and the profits of UnitedHealth Group, owners of the second-largest pharmacy operator.

This will be a constant theme for the next four years. Personal business interests will constantly take precedence over governance in the Trump/Musk White House. The word for this is oligarchy, and oligarchs do not think first of the country. Millions of federal employees, including service members, won’t see paychecks over Christmas, national parks will be shut down, food inspections and countless other government functions will stop because an Elon Musk doesn’t want anyone poking around his business in China.

Happy New Year.