President Trump slammed Elon Musk’s subsidies, and Republican senators struck down a plan to shield artificial intelligence from state regulations. These two middle-of-the-night developments on Tuesday reinforced a growing schism between Trump and Silicon Valley supporters over his “big, beautiful bill.”
The first development came at 12:44 a.m. ET, when Trump responded to Tesla (TSLA) CEO Musk’s ongoing critiques of the package, focusing on the government grants that Musk’s companies receive.
“Without subsidies, Elon would probably have to close up shop and head back home to South Africa,” wrote the president in a Truth Social post, adding, “perhaps we should have DOGE take a good, hard, look at this?” The president was referring to the government efficiency group that Musk ran until recently.
The president’s missive came after Trump’s signature legislation underwent key changes in recent days that set off many in the tech industry, Musk most of all, with new measures to tax green energy companies and further support for fossil fuels, as well as a growing price tag.
Elon Musk and President Trump appeared together during a news conference in the Oval Office on Musk’s last day as a ‘special government employee’ on May 30. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
The divide between many in Silicon Valley and the “big, beautiful bill” has been evident for over a month. It appeared set to deepen further when, a few hours later, a closely watched artificial intelligence provision was stripped from the bill itself.
This plan, which had many Silicon Valley supporters, was meant to shield the quickly growing AI industry from state and local regulations.
But the idea now appears to be dead after Sen. Marsha Blackburn of Tennessee turned against a compromise plan Monday evening and stripped it from the bill.
It wasn’t close in the end, with the Senate voting 99-1 to adopt Blackburn’s subsequent amendment in a count that wrapped up a little after 4:00 a.m. ET.
Trump’s overall package also appears to be teetering Tuesday morning after a series of overnight developments saw two key Republican senators — Lisa Murkowski of Alaska and Susan Collins of Maine — uncommitted to vote yes.
Those two senators could join two Republicans already committed to voting no, which would be enough to sink the package.
The drama between the president and the world’s richest man has been up and down for weeks, but it escalated Monday afternoon when Musk offered new electoral threats against Republicans.
Musk had already amplified Democrats’ critiques and talked about the need for a new political party. He offered a striking promise Monday afternoon that lawmakers who vote for the bill “will lose their primary next year if it is the last thing I do on this Earth.”
Story Continues
Musk, of course, was the biggest donor during the 2024 campaign, spending at least $288 million, most of which was offered in support of Trump.
Trump reiterated his critiques of Musk Tuesday morning, speaking to reporters and saying of Musk’s objection to losing EV subsidies, “Elon can lose a lot more than that.” The president also called the Department of Government Efficiency (DOGE) a “monster that might have to go back and eat Elon.” And when asked by a reporter if he would consider deporting Musk, he demurred: “We’ll have to take a look.”
What is unclear for the days ahead is how much the Trump-Musk fight will impact the actual chances of the bill’s passage, with Senate amendment votes ongoing. Musk is clearly focused on a debate likely coming later this week, when the House is set to take up the amended measure if it passes.
The House is where a vocal bloc of fiscal conservatives — who often vote as part of the “Freedom Caucus” — warily supported a previous version of the bill, saying a previous smaller price tag was too big.
Musk even tagged some of these House Republican lawmakers in some of his latest posts, which continued throughout the night with dozens of messages.
Musk also responded to Trump’s comments about his subsidies by saying his companies like Tesla and SpaceX (SPAX.PVT) would be fine and that oil and gas subsidies should be removed as well.
Elon Musk met with Senate Republicans at the US Capitol in March. (Graeme Sloan for the Washington Post via Getty Images) ·The Washington Post via Getty Images
The back-and-forth over AI also came to a head overnight after the House passed a plan in May that included a complete ban on state regulations of AI for a decade.
The little-noticed measure gained wider attention in the weeks that followed, with many of Trump’s most loyal supporters opposing it.
Rep. Marjorie Taylor Greene even admitted that she hadn’t been aware of the provision when she voted yes.
The Georgia lawmaker then announced her opposition and plans to vote no if this “violation of state rights” stayed in the bill.
Trump himself doesn’t appear to have taken a position on the measure, but it had the backing of his Silicon Valley-aligned aides, most notably the vocal support of AI and crypto czar (and longtime venture capitalist) David Sacks.
But Republican opposition grew, and Sen. Blackburn of Tennessee became a leading voice of opposition in the Senate.
She entered into negotiations over the issue and appeared to have found a compromise in recent days around the idea that instead of a decade-long ban, the provision would be amended to be a “temporary pause” of five years.
States would be strongly discouraged from regulating AI, as lawmakers linked it to access to millions of dollars in AI infrastructure and deployment funding.
But even that wasn’t enough. Blackburn renounced the compromise, said a moratorium “could allow Big Tech to continue to exploit kids, creators, and conservatives,” and teamed with a top Democrat to strike the provision entirely.
Arkansas Gov. Sarah Huckabee Sanders (a former Trump press secretary) congratulated Blackburn on the move in a post the senator quickly reposted.
“This is how you take on big tech!” Sanders wrote.
This story has been updated with additional developments.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
Click here for political news related to business and money policies that will shape tomorrow’s stock prices
Read the latest financial and business news from Yahoo Finance
