The Government Is Shutting Down Because Elon Musk Has Factories in ChinaTheres a mundane reason for the late-term chaos, and its called a conflict of interest.by David Dayen December 20, 202412:00 PMRSSPrintIn a sense, 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 inserted himself late into a government funding fight that he had been previously disinterested in. Congress had agreed to a bipartisan year-end omnibus spending bill that included the first COVID relief measures in nine months. The bills were already passed, until Trump decided that some of the spending sounded funny, and individuals should get $2,000 checks instead of the $600 on offer. He refused to sign the omnibus without them.Within hours, Democrats wrote an expanded checks bill and passed it through the House, but Mitch McConnell refused to let it advance, and Trump grudgingly signed the omnibus anyway, climbing all the way down. The $2,000 checks became an issue in two special elections in Georgia that Republicans lost. The road to the Biden agenda went through Trumps anger-fueled, failed gambit to renegotiate a congressional deal after it was complete.Almost four years to the day, were back here again. But this time, Trump is a side player in the show. He and his transition team reportedly had no problem with the 2024 version of a year-end spending bill until this week. Then Elon Musk starting posting into a frenzy about how a perfectly normal bipartisan agreement represented a total betrayal, lying about the contents in the process. Trump had to be roused to back up his co-president, getting House Speaker Mike Johnson (R-LA) to construct a partisan solution while inserting an eleventh-hour, two-year suspension of the debt limit to prevent the Republican trifecta from having to deal with that nuisance in the next Congress.The remaining gasps of the Tea Party right, who see the debt limit only as an opportunity to force spending cuts, refused to go along with that piece, with 38 of them opposing the Johnson bill on the floor yesterday. Democrats werent about to vote for a bill they had no say in (if the offer was to eliminate the debt limit for all time, they should go for it, but this is not that), and it failed. House Republicans are vowing to try again today, but they will likely need a two-thirds vote on anything today (its procedurally complicated; suffice to say that they cant wait for the Rules Committee to report out a rule, forcing a vote under suspension of those rules). That means any bill will need Democratic votes, and nothing suggests that there are any negotiations with Democrats afoot. So the government will shut down at midnight.That brings us back to the initial reason for the blowup: Elons endless scroll. Which appears 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 harder for Musk to build Tesla factories in Shanghai.The word for this is oligarchy, and oligarchs dont think about the country first.This is the first scandal of the second Trump term, and take a long look, because its going to look like all the other scandals: a conflict of interest among his impossibly wealthy advisers and aides (or from Trump himself) seeps over into policy.The measure at issue is known as the outbound investment provision. We have heard for years about the problem of manufacturing businesses shipping jobs overseas to China, with its low worker wages and low environmental standards. China typically forces businesses wanting to locate factories in its country to transfer their technology and intellectual property to Chinese firms, which can then use that to undercut competitors in global markets, with state support.Congress has been working itself into a lather about China for years now, and they finally came up with 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 U.S. companies from investing in sensitive technologies in China, including semiconductors and artificial intelligence, or set up a broad notification regime around it.The bill would add some reporting requirements and enhanced reviews as well; in general, it expands restrictions that the Treasury Department has already put forward in regulatory rules. Codifying those rules into statute means that they cannot be changed by successive administrations.Cornyn-Casey passed the Senate last year, and after about a year of legislative wrangling, a final outbound investment package made it into the year-end bill. Were taking a necessary step to safeguard American innovation against bad actors and ensure our lasting dominance on the world stage, Cornyn said in a statement.Funny story: Elon Musks car company has a significant amount of, well, outbound investment. A Tesla Gigafactory in Shanghai opened in 2019; maybe a quarter of the companys revenue comes from China. Musk has endorsed building a second Tesla factory in China, where his grip on the electric-vehicle market has completely loosened amid domestic competition. He is working with the Chinese government to bring Full Self-Driving technology to China, in other words, importing a technology that may 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.You can argue about whether the U.S. should be restricting investment in China. But its incontrovertible that a billionaire who has a bunch of investments in China and wants to make more all of a sudden disrupted a normal congressional process that was going to restrict that investment with a bunch of lies from his media platform. And lo and behold, when the new funding bill emerged, the outbound investment feature was dropped. In fact, all traces of provisions related to China were removed from the bill.Donald Trump preens as someone determined to get tough on China. But hes empowered someone with serious business entanglements in China to seemingly serve as a barrier to any policies related to China over the next four years.The current White House resident (remember him) picked up on this. In a statement, White House Press Secretary Karine Jean-Pierre noted that Republicans are breaking their word to support a bipartisan agreement 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 pharmacy benefit managers, which was also taken out of the new bill.So Donald Trump, alleged leader of the realignment of populist Republicans, scuttled a spending bill primarily to shield the richest man in the worlds investments in China and the profits of UnitedHealth Group, owners of the second-largest pharmacy benefit manager.This is going to be a constant theme of the next four years. Personal business interests are going to constantly take precedence over governance in the Trump/Musk White House. The word for this is oligarchy, and oligarchs dont think about the country first. Millions of federal employees, including service members, wont see paychecks over Christmas, national parks will be shut down, food inspections and countless other government functions will stop because a Elon Musk doesnt want anyone poking around his business in China.Happy New Year.Back to Search ResultsDavid DayenDavid Dayen is the Prospects executive editor. His work has appeared in The Intercept, The New Republic, HuffPost, The Washington Post, the Los Angeles Times, and more. His most recent book is Monopolized: Life in the Age of Corporate Power.Read more by David DayenDecember 20, 202412:00 PMUnlike many news organizations, the Prospect has remained staunchly committed to keeping our journalism free and accessible to all. We believe that independent journalism is crucial for a functioning democracybut quality reporting comes at a cost.This year, were aiming to raise $75,000 to continue delivering the hard-hitting investigative journalism youve come to expect from us. 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