In early 2025, we covered Elon Musk’s strange detour into the Department of Government Efficiency (DOGE).
At the time, it was clear that Musk wanted a direct hand in how the federal government spends money, and he wanted to update how the machinery behind that spending actually works.
But things didn’t go smoothly.
By late May, Musk had formally stepped away from the role, following weeks of political blowback and public outrage.
Most people today view Musk’s DOGE tenure as something between an awkward experiment and political overreach.
But I believe it was just another move in a much longer game.
If you want to understand Musk’s real relationship with the U.S. government, you shouldn’t start with DOGE.
You’ve got to go back a lot further.
From Subsidies to Infrastructure
Long before DOGE, Musk’s companies were already being woven into the federal system.
Over the past two decades, Tesla has benefited from billions of dollars in federal loans, along with state incentives, regulatory credits and tax programs that helped it survive its most fragile years and scale its manufacturing footprint.
This includes a $465 million low-interest Energy Department loan that helped Tesla ramp production during the Model S era, as well as massive state-level incentive packages tied to gigafactories.
On top of that, Tesla has generated more than $11 billion in regulatory credit revenue. These are credits created by government emissions rules and sold to legacy automakers that failed to keep up, as part of a deliberate policy designed to reshape the auto and energy markets.
Tesla just happened to be the company capable of executing fast enough to take advantage of them.
But Tesla isn’t the only one of Musk’s companies that’s benefitted from public money and public policy.
Image: The Washington Post
And in at least one case, that relationship has gone a lot further.
I’m talking about how SpaceX is relied on by the Pentagon today.
Last April, the U.S. Space Force handed SpaceX the lion’s share of its most sensitive launch program. This contract covers high-priority military and intelligence launches through 2029, with an expected value of roughly $5.9 billion.
To be clear, there was nothing ideological about the decision to use SpaceX. The Pentagon needs launches that happen on time, every time. And right now, SpaceX is the only provider that consistently meets that bar.
Which also explains NASA’s dependence on Musk’s company.
In 2021, the agency awarded SpaceX a $2.9 billion contract for the Artemis Human Landing System. With added options, the contract now exceeds $4 billion.
But NASA looks at it as money well spent. It’s buying a reusable heavy-lift system, orbital refueling capability and a logistics architecture that the U.S. will rely on for years,
For Musk, it effectively ties NASA’s plans to return to the moon to SpaceX.
By 2024, SpaceX disclosed it was sitting on roughly $22 billion in government contracts. At that scale, SpaceX looks less like a contractor and more like part of our government’s operating infrastructure.
And Starlink deepens this dependency even further.
What started as a commercial satellite network has now become a real-world communications layer for military and government operations.
In 2023, the Pentagon contracted with SpaceX to provide Starlink services supporting operations in Ukraine, including a roughly $23 million agreement that ran through mid-2024.
Since then, the company has remained embedded in allied support efforts. In other words, it has become part of our battlefield infrastructure.
Starlink has also moved into classified national security work.
Starshield is the government-only version of SpaceX’s satellite network, built specifically for secure military and intelligence use. One reported Starshield contract alone is valued at roughly $1.8 billion.
All of this means SpaceX isn’t just launching things for the government anymore. It’s becoming vital infrastructure.
And now Musk’s AI company is entering the same orbit.
In September 2025, xAI reached a deal with the General Services Administration (GSA) to make Grok available to federal agencies under its OneGov strategy.
The GSA published its own announcement framing this as a government wide deployment path for “Grok for Government.”
That move puts Grok inside the federal buying system. The next step for Musk was to ensure usage.
And that’s exactly what just happened.
For years, most government AI efforts usually stalled at the pilot stage. But last month, the Department of War (formerly the Department of Defense) announced an AI initiative called GenAI.mil.
GenAI.mil is a secure, government-wide platform designed to host approved AI models for use across federal agencies.
The program initially named Google Cloud’s Gemini for Government as its first hosted model.
But recently, xAI’s Grok was also added. This follows a familiar pattern for Musk…
Get inside the system early. Then become part of how it operates.
Here’s My Take
DOGE was a very visible role for Musk. In hindsight, that visibility might not have been worth the headache.
After all, Musk has had far more success working behind the scenes.
At this very moment, he’s building a vertically integrated “government stack” across space logistics, communications and AI workflows.
And this gives him three kinds of power.
First, he’s gained operational leverage. As the launch provider, the comms layer and the model vendor his companies have become part of the government’s operating system.
Second, it’s given him access to compounding contracts. A launch contract isn’t a one-off deal, and neither is a satellite network. An enterprise AI platform isn’t a one-time thing either.
Once these systems are in place, they generate repeat business.
Third, there’s a feedback loop that reinforces his advantage. Space and defense generate enormous amounts of real-world data. Now that Musk’s companies are inside those systems, they should improve faster and become harder to replace.
That’s why Musk leaving DOGE didn’t reduce his government influence.
If anything, it might have helped him concentrate it into the places that matter most.
But the news that trickled out last week about what his X app is building has me convinced that he has even bigger plans.
In our next issue, I’ll reveal them to you.
Regards,
Ian King
Chief Strategist, Banyan Hill Publishing
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