Meet Elon Musk’s Right-Hand Man Cutting Costs at DOGE

Summary

WSJ What’s News: Meet Elon Musk’s Right-Hand Man Cutting Costs at DOGE

Released on February 10, 2025

The latest episode of WSJ What’s News, hosted by Alex Osola from The Wall Street Journal, delves into the intricate dynamics of Elon Musk’s ambitious endeavors, focusing on his attempt to acquire OpenAI and the pivotal role of Steve Davis in leading cost-cutting measures at the Department of Government Efficiency (Doge). Additionally, the podcast explores the broader economic impacts of President Trump's deportation policies on immigrant communities and small businesses. Below is a comprehensive summary of the episode's key discussions, insights, and conclusions.

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1. Elon Musk’s $97 Billion Bid to Acquire OpenAI

Elon Musk has initiated a bold move to acquire OpenAI, the nonprofit organization behind ChatGPT, by offering approximately $97 billion. This unsolicited offer is spearheaded by a consortium of investors led by Musk and is backed by his own artificial intelligence company, X AI. The proposed acquisition suggests a potential merger between X AI and OpenAI, signaling a significant shift in the AI industry landscape.

• Historical Context: OpenAI was co-founded by Musk and Sam Altman in 2015 as a charitable entity aimed at advancing artificial intelligence responsibly. However, recent developments have seen Musk and Altman at odds over the organization's future direction.

• Diverging Visions: While Sam Altman intends to transform OpenAI into a for-profit enterprise with plans to invest up to $500 billion in AI infrastructure through a joint venture named Stargate, Musk's vision diverges. According to a statement from Musk's lawyer, Musk aims to "return the company to the, quote, open source safety focused force for good it once was."

• Response from OpenAI: An OpenAI spokeswoman did not immediately respond to requests for comment, leaving the future of the organization uncertain.

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2. Steve Davis: Elon Musk’s Cost-Cutting Strategist at Doge

Central to Musk's latest initiatives is Steve Davis, a seasoned tech executive deeply entrenched in Musk’s circle. Davis’s role at Doge, the Department of Government Efficiency, mirrors his previous endeavors in cost reduction and operational streamlining.

• Background and Influence:

  • Brian Schwartz, the Wall Street Journal's White House economics reporter, describes Davis as "one of Elon Musk's loyal deputies" with extensive experience in Silicon Valley. Davis has played critical roles in both the Boring Company and Twitter, particularly during the latter's transition post-Musk's acquisition in 2022.
  • At Twitter, Davis focused on breaking costly leases and reducing operational expenses, often facing resistance from employees. This strategic approach is being replicated at Doge, where Davis aims to identify and eliminate inefficiencies within the federal government.

• Approach at Doge:

  • Doge has successfully cut over $1 billion in spending within the first three weeks of Trump's second term, though the overarching goal set by Musk is a $2 trillion reduction.
  • Davis's methodology involves meticulous analysis and decisive action, often employing a "hatchet knife" approach to streamline operations without compromising essential services.

• Quote Highlight:

  "Steve Davis is at the point of the triangle when it comes to leadership ranks at the Department of Government Efficiency. It's an incredible amount of power for him." — Brian Schwartz [02:39]

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3. The Department of Government Efficiency (Doge) Under Musk's Leadership

Under the stewardship of Steve Davis and with Elon Musk's overarching influence, Doge has embarked on an aggressive campaign to enhance government efficiency through significant cost reductions.

• Achievements and Strategies:

  • Within just a few weeks, Doge has identified and eliminated over $1 billion in federal spending.
  • The department employs strategies similar to those used by Davis at Twitter, focusing on renegotiating contracts, reducing overheads, and optimizing resource allocation.

• Presidential Endorsement:

  • President Trump's administration has fully authorized Musk and his team’s methodologies, including targeting agencies like USAID and gaining access to Treasury payment systems to implement cost-saving measures seamlessly.

• Quote Highlight:

  "President Trump is authorizing Musk and his team for everything they've been doing. The targets that have been made to USAID... have gone over." — Brian Schwartz [05:26]

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4. Economic Impacts of Trump’s Deportation Policies on Immigrant Communities

The episode shifts focus to the socio-economic repercussions of President Trump's stringent deportation orders, highlighting the chilling effect these policies have on immigrant communities and local businesses.

• Policy Overview:

  • The Trump administration has intensified immigration enforcement, leading to widespread fear among both undocumented immigrants and U.S. citizens in mixed-status families.
  • A recent court ruling mandated the restoration of federal funding previously frozen by the administration, complicating efforts to adjust immigration policies.

• Economic Fallout:

  • The fear of deportation has led to reduced consumer spending, especially within Latino neighborhoods where Hispanic and Latino consumers accounted for approximately 13% of consumer spending in 2023.
  • Small businesses, particularly those owned by immigrants or serving immigrant communities, are experiencing decreased patronage. Examples include street vendors, local restaurants, and home loan providers witnessing cancellations of transactions tied to consumers fearing legal repercussions.

• Insights from Ruth Simon:

  • Ruth Simon, a senior special writer at WSJ, underscores the pervasive anxiety affecting both undocumented immigrants and U.S. citizens:

    "Many people are worried about this... Some people are afraid of going out. And in communities that are largely Latino, you see less traffic on the street and less traffic in stores." [09:06]

  • Businesses across various sectors report significant impacts, from reduced sales to staffing cuts, pointing to a potential broader economic downturn if fears persist.

• Quote Highlight:

  "It could have a meaningful impact both on individual communities and it could potentially have an impact on the economy as a whole..." — Ruth Simon [11:06]

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5. Additional News Highlights

Beyond the primary discussions, the episode touches upon several other pertinent news stories:

• Stock Market Performance:

  • U.S. stocks saw gains as markets dismissed concerns over potential trade wars stemming from President Trump's proposed steel and aluminum tariffs.
    • Dow Jones Industrial Average: Up ~0.4%
    • S&P 500: Increased by ~0.7%
    • Nasdaq Composite: Rose nearly 1%

• Tax Season Updates:

  • The IRS reported that taxpayers spent an average of 13 hours and $290 preparing and paying taxes, with the WSJ’s "Your Money Briefing" podcast offering advice on saving money during tax season.

• Middle East Hostage Situation:

  • Hamas announced the postponement of releasing three additional hostages as part of a ceasefire agreement with Israel, citing disputes over access to essential shelters.
  • President Trump's proposal to assume long-term control of Gaza has further complicated peace efforts, leading to increased tensions and opposition from major Middle Eastern powers.

• Homeland Security Initiatives:

  • The Department of Homeland Security has requested Treasury Secretary Scott Besant to deputize IRS criminal investigators and other law enforcement personnel to bolster immigration enforcement efforts. This move aims to enhance investigations into financial flows linked to human trafficking and businesses employing illegal immigrants.

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Conclusion

The episode of WSJ What’s News provides an in-depth look into Elon Musk's strategic maneuvers within the tech and governmental sectors, highlighting his substantial influence through figures like Steve Davis. Concurrently, the podcast sheds light on the profound economic and social impacts of stringent immigration policies under President Trump's administration, emphasizing the interconnectedness of political decisions and market behaviors. By weaving together these complex narratives, the episode offers listeners a multifaceted understanding of the forces shaping today's business and political landscapes.

Transcript

[Alex Osola]

This episode is brought to you by bank of America. What if your business could see beyond what is and into what can be? And what if you had a partner as visionary as you are? Bank of America gives customers access to trusted experts, real time insights and digital tools to make every move matter.

[Brian Schwartz]

What would you like the power to do?

[Alex Osola]

Visit bankofamerica.com bankingforbusiness bank of America is proud to be the official bank sponsor of FIFA World Cup 2026. Elon Musk is leading an effort to take over OpenAI, the maker of ChatGPT plus meet the man behind the curtain for Doge's cost cutting efforts.

[Brian Schwartz]

It's an incredible amount of power for him. He really is at the at the point of the triangle when it comes to leadership ranks at the Department of.

[Alex Osola]

Government Efficiency and President Trump's promise of mass deportations is making immigrants spend less ALEX It's Monday, February 10th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world. Today, we're exclusively reporting that a consortium of investors led by Elon Musk is offering about $97 billion to buy the nonprofit that controls OpenAI. The unsolicited offer is being backed by Musk's own artificial intelligence company, X AI, which which could merge with OpenAI following a deal. Though Musk and Altman Co founded OpenAI as a charity in 2015, more recently the two have been battling over the direction of the company. While Altman plans to convert OpenAI into a for profit company and spend up to $500 billion on AI infrastructure through a joint venture called Stargate. Musk, in a statement provided by his lawyer, says he wants to return the company to the, quote, open source safety focused force for good it once was. An OpenAI spokeswoman didn't immediately respond to a request for comment. The Department of Government Efficiency, or Doge, has been in the news a lot during the first three weeks of Trump's second term. The entity says it's identified and cut more than $1 billion in spending in these first few weeks, though that's just a fraction of the $2 trillion that Elon Musk, the public face of Doge, has set as the department's goal. The cost cutting approach has a lot in common with how Musk transformed Twitter shortly after buying it in 2022, and there's a good reason for that. The same person is behind both efforts. That person is Steve Davis, a leader of one of Musk's other companies. I'm joined now by the Wall Street Journal's White House economics reporter, Brian Schwartz. So, Brian, who is Steve Davis?

[Brian Schwartz]

Well, Steve Davis is one of Elon Musk's loyal deputies. He's been a longtime tech executive in Silicon Valley for years, knows a lot of people that are close to Elon Musk. And he' a leader of the Boring Company, one of Elon's companies dedicated to creating tunnel systems in various parts of the country. And really importantly here, he was one of the leaders that led a transition effort at Twitter after Elon Musk was responsible for buying the company. And to be very clear about this, how he's run the Boring Company and as well, when he had an official leadership role at Twitter, has been really focused in part on cost cutting. And that's very important to what we're seeing now from Doge. That's been Steve Davis's model for running businesses to cut costs, really get in there with a hatchet knife and make cuts to things in order for the business to do better.

[Alex Osola]

So, yeah, let's, let's talk about Twitter for a second. So Musk buys it, installs Davis in a leadership role. What did Davis do then? How did he decide on what kinds of things to cut?

[Brian Schwartz]

Well, basically, one of the first things that Steve Davis wanted to target was the real estate contracts where it was very clear that Twitter was renting office space. The only problem was that there is no real clear mechanism to just get out of an office lease. If you break a lease, there are, of course, added fees to that. And what Davis ran into is some form of resistance from Twitter employees. According to a lawsuit that we've reviewed, they weren't necessarily fired, but they left the jobs. They left their posts to then detail their experiences in a lawsuit that's ongoing against Twitter and X.

[Alex Osola]

What is similar and different about how Davis is approaching his role at Doge?

[Brian Schwartz]

I don't know if he's specifically if he's taking that exact same model he had at Twitter and bringing it to Doge, but there are some unique similarities here between his approach to Twitter and what he's doing at Doge. The federal government's so big, but the model is similar. Right. They want to place people in certain places that can then do what they want, and then hopefully they can find cuts and bring that good news back to President Trump. If you look at how companies are run as a comparison, right, there's always somebody at the top of the food chain making these decisions. And when it comes to Steve Davis, he really is at the, at the point of the triangle when it comes to the leadership ranks at the Department of Government Efficiency. So it's, it's an incredible amount of power for him. President Trump is authorizing Musk and his team for everything they've been doing. The targets that have been made to usaid, for instance, the access they've been given to the treasury payment systems, all of that has been authorized by President Trump. It's gone over. The Department of Government Efficiency and Davis, Musk and whoever else is running this have gone all in with those asks.

[Alex Osola]

That was WSJ White House economics reporter Brian Schwartz. Thank you, Brian.

[Brian Schwartz]

Thank you.

[Alex Osola]

U.S. stocks were up today as investors shrugged off the risk that President Trump's planned steel and aluminum tariffs could ignite a trade war. The dow rose about 0.4%. The S&P 500 ticked up roughly 0.7%. And the Nasdaq climbed nearly 1%. Coming up, President Trump's deportation orders are already having an economic impact. That's after the break. It's tax season. So what's new this year that could save you money?

[Ruth Simon]

The IRS says that taxpayers spend 13 hours and $290 preparing and paying just.

[Brian Schwartz]

For the tax prep. So worth looking into different options.

[Alex Osola]

On the your Money Briefing podcast from the Wall Street Journal, we're breaking down the latest tax rules, how to keep your tax data safe, and ways to file for free. Catch our Series tax season 2025 what's new February 2nd and 9th on year money briefing in the Middle East, Hamas was due to release three more hostages this Saturday as part of the ceasefire agreement with Israel. Now Hamas has said that it will postpone those releases over a long running dispute with Israel over access to tents and mobile homes needed for shelter. It's the most serious challenge yet to the fragile ceasefire. Mediators say that the atmosphere has worsened in part because of Trump's proposal to evacuate Gaza and take long term control of the Strip. The president built on those comments in an interview with Fox News Brett Baier conducted yesterday.

[Brian Schwartz]

It would be a beautiful piece of land. Would the Palestinians. No big money spent. No, they wouldn't because they're going to have much better housing. Much better. In other words, I'm talking about building a permanent place for them because if they have to return now, it'll be years before you could ever. It's not habitable.

[Alex Osola]

Trump's proposal to take over Gaza had already caused discord within the Republican Party and had been rejected by major Middle east powers. A judge ordered the Trump administration to restore federal funding it had tried to freeze. In a written order, U.S. district Judge John McConnell in Rhode island said the White House wasn't fully complying with a restraining order he issued on January 31 and directed the administration to, quote, immediately take every step necessary to follow it. In another exclusive, the Department of Homeland Security has asked Treasury Secretary Scott Besant to deputize IRS criminal investigators as well as other law enforcement workers to assist in immigration enforcement. That's according to documents viewed by the Wall Street Journal. In a memo dated February 7, Homeland Security Secretary Kristi Noem requested that Besant provide agents who would help investigate financial flows involving human trafficking networks and businesses that employ illegal immigrants. The agents could help arrest, detain and transport people. Noem's request follows a broader effort by the Trump administration to deputize law enforcement officials at various agencies to help carry out deportations. As we've talked about before on the show, the Trump administration's promise of mass deportations and immigration raids is having wide ranging effects on immigrants and their communities. One effect that's become clear more recently is that fear of deportation is having a chilling effect on spending by immigrants, something that small businesses in Latino neighborhoods are feeling acutely. WSJ senior special writer Ruth Simon is here now to tell us more. Ruth, who is worried about this?

[Ruth Simon]

Many people are worried about this. You have undocumented immigrants. You have people who are in mixed status families, which means one person or more than one person in the family is a US Citizen and other people are not. And I even spoke to people who are U.S. citizens who spoke to me about their fears of being swept up in a raid even though they're here legally. I talked to one business owner who's taken to carrying her passport with her, or I talked to someone else who runs a trade group who sat down with his family, both he and his wife and his kids. They're all U.S. citizens. But they had a discussion about what happens if someone gets picked up in an ICE raid. So the fears are widespread and the fears are impacting how people behave. Some people are afraid of going out. And in communities that are largely Latino, you see less traffic on the street and less traffic in stores.

[Alex Osola]

So what are the kinds of businesses that are being affected by this? I know I mentioned small businesses, but that means a lot of different things.

[Ruth Simon]

A wide range of businesses. My colleague Paul Kiernan went out to Los Angeles and he talked to somebody who sells tamales on the street. He talked to someone who sells giant teddy bears. I talked to a business owner who has a restaurant in a Chicago neighborhood who has cut her staff hours. And then I also talked to someone who makes home loans who said he was seeing home purchases being canceled because some of them were being made by people who do not have legal status, and others were being made by people who are allowed to work legally in the US now, but are worried that the Trump administration may revoke their authority. So it's really a wide range.

[Alex Osola]

Yeah. Do we have a sense of what the economic impact could be on this?

[Ruth Simon]

We don't know what the actual economic impact will be, but what we do know is that Hispanics and other Latinos accounted for roughly 13% of consumer spending in 2023. Last year, I did a story about new business formation, and the biggest driver were Latinos. And some of those were immigrants, some of those were people who had been around for a while. But I think it could have a meaningful impact both on individual communities and it could potentially have an impact on the economy as a whole, depending on what happens.

[Alex Osola]

That was WSJ senior special writer Ruth Simon. Thank you, Ruth.

[Ruth Simon]

Thank you. It was a pleasure to talk to you.

[Alex Osola]

And that's what's news for this Monday afternoon. Today's show was produced by Pierre Biennime with supervising producer Matthew Walls and deputy editor Chris Insinsley. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.