King (or Queen) of Welfare

Years ago there used to be periodic news articles about various individuals labeled as the King or Queen of Welfare. Invariably the story was about some woman with a drug habit and a dozen kids fathered by a dozen different men who continued to have more babies to fuel the amount of payments she could extract from the various welfare programs. OR about some man who kept fathering children with a variety of different women in order to do the same thing although he had to extract the payments to the women by force, intimidation or withholding drugs – these men were often pimps who prostituted these women in addition to preying on their welfare payments.

But in today’s politically correct world we avoid such stories because they may be viewed as ridiculing or embarrassing. Since many of these stories, but hardly all of them, involved minorities, they were also seen by the oh-so-careful-crowd as racist, sexist, elitist or whatever “ists” are popular today. Since I don’t give a fig about political correctness, I have decided to write one of those stories and ask for anyone interested to nominate their own “king” or “queen” of welfare.

But before we begin, let’s make sure that we are all on the same page for a definition of “welfare” for purposes of this column. The Business Dictionary defines welfare as:

“Government support for the poor and otherwise disadvantaged members of the society, usually through provision of free and/or subsidized goods and services.”

Well, that is what it is supposed to mean but that is not how it is applied by state and federal governments. A better definition would be:

“Direct or indirect payments by the government to persons or groups for which no reciprocal goods or services are received.”

And that is the definition I have applied to this little exercise. Based on that my nominee for King of Welfare is Elon Musk – founder of Tesla, Space X, and Solar City. However, before we look as the financial aspects of Mr. Musk’s companies and the benefits he has received from welfare – using my definition – lets look at who Mr. Musk is.

By all accounts Mr. Musk is a brilliant futurist with an engineer’s penchant for moving from concept to reality. His current major thrusts are in solar power (Solar City), electric cars (Tesla) and space exploration (Space X). He has also dabbled in mass transit, (Hyperloop and The Boring Company) and neurotechnology including a brain/computer/artificial intelligence interface (Neuralink). If you have ever sat in or driven a Tesla electric car you would be overwhelmed by its beauty, functionality and sheer boldness of design. Mr. Musk changed electric car design by building a car from the ground up to be all electric as opposed to the American and Japanese traditionalist who kept trying to retrofit a standard gas powered existing production model (e.g. General Motor’s Volt which was simply a mediocre Chevrolet Cruz with an electric motor). He has become a superstar in the technology world, not for his business acumen but rather his views of technological solutions for modern problems. But just as former Sen. John McCain (R-AZ) could be a war-hero and a jerk at the same time, Mr. Musk can be a brilliant technologist and a welfare king at the same time.

According to an August 17, 2017 article in The Hill citing a study by the Los Angeles Times, Mr. Musk’s three companies had already tapped the federal government till for over $4.9 Billion. The Hill estimated that by the date of its publication that figure had grown to over $5 Billion. And by extrapolation I estimate that figure is now closer to $6 Billion. But that’s only the beginning of it. The $7500 federal tax credit you receive for purchasing a Tesla inures to the bottom line of Tesla’s) books. Additional state and local subsidies and tax credits are available to Tesla – for instance the state of California added a $2500 tax credit for the electric cars and Nevada gave what amounts to $1.3 Billion in tax credits for Tesla to build its ion battery factory. Oregon chimed in with $5.6 Million in tax credits for solar energy. In essence government money simply rained down on Mr. Musk and his companies.

Ah, but you say that those funds didn’t go directly to Mr. Musk but rather went to his various companies production efforts. That would be true but just as naïve as thinking that taxpayers don’t fund the public employee unions. Forbes Magazine pegs Mr. Musk’s net worth at nearly $20 Billion. He holds nineteen percent of Tesla which has a current market capitalization of approximately $38.5 Billion making Mr. Musk’s stake worth $7.3 Billion – nearly one-third of his wealth – and a figure that would be worth zero absent the magnitude of government subsidies. The current market capitalization of Space X is $33 Billion and a Musk Trust owns fifty-four percent of it or $17.8 Billion. Again, absent the massive subsidies Space X would be worth zero because it would have never gotten off the ground (no pun intended).

Other automobile companies have received sizeable federal assistance from time to time but in most instances that assistance has been repaid either in whole or in part. The difference here is that no one person connected with those transactions has benefited personally to the extent that Mr. Musk has.

But I did not nominate Mr. Musk as the King of Welfare on the assumption that he has benefited more than anyone else – there, in fact, may be other individuals that have benefited more. I nominated him not only for the largesse that has flowed to him but also because of the consistency of Mr. Musk to routinely garner taxpayer support and subsidy for his various ventures. He is wealthy and he is prolific and he is my nominee as King of Welfare.

If you don’t like my nominee, make your own. We as taxpayers are owed an accounting.

Oregon Catalyst