Legacy-Conscious Obama Sure to Act on Deficit: Silicon Valley’s Musk

Photograph by Chris Thompson/SpaceX via Bloomberg

Space Exploration Technologies Corp.'s (SpaceX) Falcon 9 rocket takes off in Cape Canaveral, Florida.

Elon Musk, the Silicon Valley entrepreneur who splits his time between running the electric car-making Tesla Motors Inc. and rocket-making Space Exploration Technologies Corp., sees “good economic times ahead” for the U.S.

His Tesla, which received $465 million in federal loans in 2009 from the Obama administration to develop and build electric Model S sedans, had been cited as a “loser” company by Republican Mitt Romney in an Oct. 3 presidential debate — the same day Musk said the car-maker was making an “advance payment” for the federal loans.

SpaceX has a $1.6 billion contract with NASA for at least a dozen resupply flights to the International Space Station.

Post-election, Musk has shared his views about the economy going forward. He had declined to discuss Romney’s comments, didn’t publicly support either him or President Barack Obama and says he doesn’t expect “any significant impact” on either Tesla or SpaceX with the president’s re-election.

“The economy is improving quickly. This would happen no matter who is president,” Musk said. “I don’t think people appreciate that the president is like the captain of a huge boat with a tiny rudder.”

The slowly improving real estate market bodes well for continued economic recovery, he said.

“Now we’ve used up the housing stock and the housing industry is ramping up to normal employment levels. Housing, fully considered, is the biggest sector of the economy, so this will of course have a big positive effect on the economy,” he said. “Good times ahead!”

Balancing the budget must become Obama’s top priority, he said: “By this, I mean at least get the deficit under half a trillion. This needs to happen mostly through spending reductions, but will require some increase in taxes.”

It’s “obvious to everyone” that drastic cuts in government spending are necessary, he said, suggsting it wouldn’t be so bad if the automatic spending cuts that are part of the year end fiscal cliff took effect — given a choice between that and no cuts, he’d take the sequestration.

“The toughest challenge for the president will be cutting government spending,” Musk said. “Every special interest will lobby extremely hard to keep their funding, so fighting them will take incredible resolve.”

“This is the best thing about second-term presidents — they can afford to upset the system and not worry about re-election. President Obama cares about his legacy. He doesn’t want to leave office with the biggest deficit in history.”

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