Trump and Musk trying to take America private

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Over the past six weeks, federal workers have seen in horror as software engineers, many without experience in the government, have been collected in their offices with a mission to sniff corruption and reduce costs.

The strategy, although still opaque, is hardly surprising from two business people who are used to the world of private business, where CEOs tend to rule as kings and face a little out of control.

President Donald Trump and Elon Musk believe they have a mandate to run the country as a business. But so far, they seem to take advantage of muscle memory, run a company’s playbook that maximizes returns for investors while burying companies in debt and cutting their costs down to the bone.

It is well -known territory for both men.

Of the five companies Musk Own or Manage, Tesla must only comply with the strict rules that ensure that public companies are transparent with investors. Musk owes the majority of his wealth to Tesla’s shareholders, but he still seems annoyed at the catch of public CEO’s life after regularly beating heads with regulators and shareholders.

Musk, who spoke at a technical conference on Wednesday, went so far as to say that “we had to privatize everything that can reasonably be privatized,” with reference to the US postal service and Amtrak as examples.

Trump’s short meetings with public markets have been the abolition of almost everyone involved but himself. He listed Trump Hotels and Casino resorts as a listed company in 1995, but the operation never made a profit and ended in bankruptcy in 2004 and wiped out shareholders. His Trump Media & Technology Group, published last year, softens cash and acts like a Memestock – which means it is a very risky roller coaster on an asset.

While neither Trump nor Musk comes from the world of private equity, both have used tactics closely linked to the industry.

Private Equity PlayBook tends to go like this:

The last part is where the promise of private equity often falls apart.

When Musk bought X, then known as Twitter, in 2022, he did so using a geared buyout – standard operating procedure for private equity investors – leaving the company on the hook to repay about a third of the acquisition of $ 44 billion.

Since then, X has flounded. The company lost almost 80% of its value in less than two years, according to Fidelity estimates. Users And advertisers have fled the social media platform, partly in response to Musk’s promotion of conspiracy theories and neo -Nazi accounts.

One year after taking his hotel and casino company publicly used Trump this company to buy one of his other casinos, the debt-made Taj Mahal in Atlantic City, New Jersey, according to Forbes senior editor Dan Alexander, author of the book “White House, Inc.: How Donald Trump made the presidency a business.”

The deal was a big fall in the fall for Trump, but it loaded the public company – what else? – A mountain of debt.

“Atlantic City got a lot of growth for me,” Trump told New York Times In 2016. “The money I took out there was incredible.”

When private equity takes over a company, it is slash and incineration time.

Disclaimers are often the first step. Then comes -one Tactics known as asset stripping-in the essential forcing the company to sell assets while the private equity people pockets the proceeds.

For example in 2014, When Golden Gate Capital bought Red LobsterInvestors sold $ 1.5 billion worth of the restaurant’s real estate assets. The chain then had to pay rent at the stores the previously owned. It is a common private equity tactic called a sales leaseback and it became an important reason why Red Lobster filed for bankruptcy last year.

Right now, across the federal government, tens of thousands of workers have either been dismissed or facing impending staff reductions under the Musk’s Department of Government Efficiency. On Wednesday, my colleague Natasha Bertrand reported that the Trump administration is planning to cut more than 70,000 jobs at the Department of Veterans Affairs – approx. 15% of the department.

Meanwhile, valuable state -owned property assets may soon be for sale. The Trump administration said Tuesday that it is considering selling the 440 “non-core” properties and claiming it could save “more than $ 430 million in annual operating costs.” (The administration of General Services later withdrew the list of properties for sale after what a source called a “misconduct” of sending the list.)

In other words, the asset strip may soon be in progress.

Where will the cost savings and revenue go? It’s less clear.

Trump said last month that some of the money would go to pay national debt and that some could be appointed in control of citizens. The White House did not respond to a request for comment.

But if the private equity playbook is any guide, it is more likely that the swap will end up in the pockets of the already wealthy.

CNN’s Rene Marsh contributed to this report.