Elon Musk's generous compensation package from Tesla has prompted some senators to warn of a new golden age in the United States. Others have accepted the will of shareholders as capitalism working as intended. However, this raised eyebrows among the entire US Senate.
On Thursday, Musk received a $1 trillion payout package from Tesla shareholders. This is a staggering amount that will make him the world's first trillionaire once he hits several corporate milestones in the next 10 years.
A historical moment came in the midst of another. The compensation package was introduced during the longest government shutdown in U.S. history, leaving some families worried about getting their next paycheck and others nervous about losing access to food stamps.
Among many Democratic senators, it has fueled anger over a division that risks deepening in American life. For the super-rich, winner-take-all capitalism has been a huge success, creating new fortunes, especially in the technology sector. Much of this money is also tax-free, as these executives generate their wealth through stocks and dividends that are taxed at lower rates.
“People compare today to the excesses of the Roaring '20s, and Elon proves that's a gross understatement,” Massachusetts Sen. Elizabeth Warren told Quartz. “It's time to talk about Marie Antoinette. All the wealth flows upward, and the peasants are left with crumbs. This is the world Elon Musk inhabits.”
Tesla did not immediately respond to a request for comment.
That sentiment was echoed by Sen. Ron Wyden of Oregon, who once chaired the Senate Finance Committee when Democrats controlled the chamber under the Biden administration. He said it demonstrated the “extraordinary, astounding sums” that the upper echelons of American society are minting while others struggle to afford basic necessities.
“Forty-two million people are hungry, and we have a president who is practically fighting with them over getting enough meat, bread and basic necessities to survive,” Wyden said. “We better make some changes.”
Wyden said 23 Democratic senators had signed onto his bill for the so-called billionaire income tax, and it had the most support among rank-and-file Democrats. The legislation would impose a tax on significant gains from traded assets, such as stocks, after they are sold by very wealthy Americans. But Democrats failed to rally enough support for the idea when they controlled Congress and the White House in the first two years of Biden's presidency.
Sen. Mark Warner of Virginia, a centrist Democrat, leaned more toward the middle. “It’s stunning and feels like the Gilded Age,” Warner told Quartz. “I don’t think it sends the right message at the moment. But at the end of the day, shareholders have the right to do so.”
Sen. Tim Kaine of Virginia simply called it “rude.”
Musk said he refused regular cash salary at Tesla. However, his salary far exceeds that of other business executives and tech giants. The AFL-CIO's database of CEO salaries showed that Starbucks CEO Brian Niccol earned $96 million last year. Microsoft CEO Satya Nadella earned $79 million.
Republican senators tended to argue that the free market works. Republican Sen. James Lankford of Oklahoma joked that Musk could afford to “buy the country” for a trillion dollars.
However, he argues that Tesla shareholders have the right to evaluate Musk's performance for the company. Notably, Musk broke away from the company to begin the federal government's cost-cutting efforts under the auspices of the Department of Government Effectiveness (DOGE).
“I think it depends on the board of directors he serves on. It's not up to anyone in the US government to decide this,” Lankford said. “I hope every American has the opportunity to make as much money as they want.”
Republicans were generally comfortable with the amount because they believed it would bring broader benefits to the U.S. economy. For Sen. Mike Rounds of South Dakota, it was a simple calculation: “If they grow our economy by trillions of dollars, that's a good thing.”
One prominent Democratic economist also supported Rounds' argument. “Musk’s compensation package should be—and has been—determined between his shareholder and him,” Jason Furman, a Harvard professor who once served as chief economist under President Barack Obama, told Quartz. “If he hits all the targets to reach $1 trillion, he will not only make a lot of money for shareholders, but will also likely help improve productivity and the standard of living in America.”
Fuhrman did have one criticism. “My complaint is not about his salary, but that, as with other high-income people, it will not be taxed to the extent that I would like,” he added.
