In early 2025, we lined Elon Musk’s unusual detour into the Division of Authorities Effectivity (DOGE).
On the time, it was clear that Musk needed a direct hand in how the federal authorities spends cash, and he needed to replace how the equipment behind that spending truly works.
However issues didn’t go easily.
By late Might, Musk had formally stepped away from the function, following weeks of political blowback and public outrage.
Most individuals at the moment view Musk’s DOGE tenure as one thing between an ungainly experiment and political overreach.
However I imagine it was simply one other transfer in a for much longer sport.
If you wish to perceive Musk’s actual relationship with the U.S. authorities, you shouldn’t begin with DOGE.
You’ve acquired to return quite a bit additional.
From Subsidies to Infrastructure
Lengthy earlier than DOGE, Musk’s corporations had been already being woven into the federal system.
Over the previous 20 years, Tesla has benefited from billions of {dollars} in federal loans, together with state incentives, regulatory credit and tax applications that helped it survive its most fragile years and scale its manufacturing footprint.
This features a $465 million low-interest Vitality Division mortgage that helped Tesla ramp manufacturing throughout the Mannequin S period, in addition to large state-level incentive packages tied to gigafactories.
On prime of that, Tesla has generated greater than $11 billion in regulatory credit score income. These are credit created by authorities emissions guidelines and bought to legacy automakers that did not sustain, as a part of a deliberate coverage designed to reshape the auto and power markets.
Tesla simply occurred to be the corporate able to executing quick sufficient to benefit from them.
However Tesla isn’t the one one among Musk’s corporations that’s benefitted from public cash and public coverage.
Picture: The Washington Put up
And in a minimum of one case, that relationship has gone quite a bit additional.
I’m speaking about how SpaceX is relied on by the Pentagon at the moment.
Final April, the U.S. Area Pressure handed SpaceX the lion’s share of its most delicate launch program. This contract covers high-priority navy and intelligence launches by 2029, with an anticipated worth of roughly $5.9 billion.
To be clear, there was nothing ideological concerning the resolution to make use of SpaceX. The Pentagon wants launches that occur on time, each time. And proper now, SpaceX is the one supplier that constantly meets that bar.
Which additionally explains NASA’s dependence on Musk’s firm.
In 2021, the company awarded SpaceX a $2.9 billion contract for the Artemis Human Touchdown System. With added choices, the contract now exceeds $4 billion.
However NASA seems at it as cash properly spent. It’s shopping for a reusable heavy-lift system, orbital refueling functionality and a logistics structure that the U.S. will depend on for years,
For Musk, it successfully ties NASA’s plans to return to the moon to SpaceX.
By 2024, SpaceX disclosed it was sitting on roughly $22 billion in authorities contracts. At that scale, SpaceX seems much less like a contractor and extra like a part of our authorities’s working infrastructure.
And Starlink deepens this dependency even additional.
What began as a industrial satellite tv for pc community has now turn out to be a real-world communications layer for navy and authorities operations.
In 2023, the Pentagon contracted with SpaceX to supply Starlink providers supporting operations in Ukraine, together with a roughly $23 million settlement that ran by mid-2024.
Since then, the corporate has remained embedded in allied assist efforts. In different phrases, it has turn out to be a part of our battlefield infrastructure.
Starlink has additionally moved into categorised nationwide safety work.
Starshield is the government-only model of SpaceX’s satellite tv for pc community, constructed particularly for safe navy and intelligence use. One reported Starshield contract alone is valued at roughly $1.8 billion.
All of this implies SpaceX isn’t simply launching issues for the federal government anymore. It’s changing into important infrastructure.
And now Musk’s AI firm is coming into the identical orbit.
In September 2025, xAI reached a take care of the Normal Companies Administration (GSA) to make Grok accessible to federal companies below its OneGov technique.
The GSA revealed its personal announcement framing this as a authorities vast deployment path for “Grok for Authorities.”
That transfer places Grok contained in the federal shopping for system. The following step for Musk was to make sure utilization.
And that’s precisely what simply occurred.
For years, most authorities AI efforts normally stalled on the pilot stage. However final month, the Division of Struggle (previously the Division of Protection) introduced an AI initiative referred to as GenAI.mil.
GenAI.mil is a safe, government-wide platform designed to host accredited AI fashions to be used throughout federal companies.
This system initially named Google Cloud’s Gemini for Authorities as its first hosted mannequin.
However not too long ago, xAI’s Grok was additionally added. This follows a well-recognized sample for Musk…
Get contained in the system early. Then turn out to be a part of the way it operates.
Right here’s My Take
DOGE was a really seen function for Musk. In hindsight, that visibility won’t have been well worth the headache.
In spite of everything, Musk has had much more success working behind the scenes.
At this very second, he’s constructing a vertically built-in “authorities stack” throughout area logistics, communications and AI workflows.
And this offers him three sorts of energy.
First, he’s gained operational leverage. Because the launch supplier, the comms layer and the mannequin vendor his corporations have turn out to be a part of the federal government’s working system.
Second, it’s given him entry to compounding contracts. A launch contract isn’t a one-off deal, and neither is a satellite tv for pc community. An enterprise AI platform isn’t a one-time factor both.
As soon as these methods are in place, they generate repeat enterprise.
Third, there’s a suggestions loop that reinforces his benefit. Area and protection generate monumental quantities of real-world knowledge. Now that Musk’s corporations are inside these methods, they need to enhance quicker and turn out to be more durable to switch.
That’s why Musk leaving DOGE didn’t cut back his authorities affect.
If something, it may need helped him focus it into the locations that matter most.
However the information that trickled out final week about what his X app is constructing has me satisfied that he has even larger plans.
In our subsequent concern, I’ll reveal them to you.
Regards,
Ian King
Chief Strategist, Banyan Hill Publishing
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