DOGE’s Pentagon Budget Cuts Don’t Touch Elon Musk’s SpaceX
Defense Secretary Pete Hegseth says the bloated Pentagon budget is a thing of the past. He has welcomed the cost-cutting efforts of Elon Musk and his so-called Department of Government Efficiency on social media, while making a major show of canceling $580 million in Defense Department contracts and grants.
The total cuts" to the Pentagon amount to 800 million in wasteful spending," Hegseth said. But these savings, which some experts doubt will even materialize, are trivial when it comes to the Defense Department's immense $850 billion budget. And there's one obvious contractor that hasn't faced a single cut so far: Musk's space technology firm SpaceX.
A day after his announcement, Hegseth hosted a private meeting in the secretary's office" with Musk, who donated almost $300 million to Donald Trump's 2024 presidential campaign - after which the new president tapped Musk to spearhead the administration's budget-cutting efforts. While Musk has seen his electric car company Tesla face immense consumer backlash and financial headwinds, SpaceX - now the top Pentagon contractor by market valuation - is poised to reap increased rewards from Hegseth's department.
The Musk meeting with Hegseth is just the latest example of the inherent conflict of interest in letting a major Pentagon contractor review the department's budget and suggest major changes," William Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraft, told The Intercept. Musk is no neutral arbiter, and it is quite likely that his recommendations will shift funding toward the emerging military tech sector of which his company is a part."
Musk and his businesses have received at least $38 billion in government contracts, loans, subsidies and tax credits, according to a recent Washington Postinvestigation, and most of that government money has gone to SpaceX. Those companies have 52 ongoing deals with seven government agencies, including the Defense Department. Nearly two-thirds of that $38 billion in government assistance has come about in the last five years.
Related Trump's Election Is Also a Win for Tech's Right-Wing Warrior Class" After the recent dip in the stock price of Tesla,the bulk of his fortune rests on his rocket company ownership. SpaceX is private, making his exact stake and the company's market price difficult to pin down, but a recent financial transaction set a valuation of at least $350 billion, and Forbes has estimated that Musk owns 42 percent of its stock. In the past year, the company has seen a massive jump in federal contracts, mostly with the Pentagon and NASA. In 2024, deals between federal and local governments with Musk's businesses reached at least $6.3 billion, the highest total to date.
The Pentagon's blue-skies research arm, the Defense Advanced Research Projects Agency, began doing business with SpaceX in the early 2000s.DARPA provided Musk's SpaceX with an entree to the lucrative world of DoD funding, according to a recent presentation produced by the agency's contracts management office. A February 2025 DARPA slide highlighting a past $22 million contract to develop a means to rocket military materiel anywhere on the planet in less than two hours reads: Unsuccessful tests but helped launch SpaceX into future government-funded projects."
The company made hundreds of millions of dollars on contracts with NASA over the following decade - but it took a lawsuit against the government for SpaceX to break into the big Pentagon contracts that now make up a significant chunk of its revenue.
In 2014, Musk's company sued the Air Force after it awarded a sole-source contract for rocket launches to a Boeing-Lockheed Martin joint venture called United Launch Alliance, arguing that opening the contract up to competition could save the government hundreds of millions of dollars per launch.
The Air Force eventually settled, and SpaceX's cheaper rockets have taken over. Major contracts with the Air Force and the Pentagon's spy satellite agency, the National Reconnaissance Office, or NRO, followed, and in 2020, SpaceX signed a five-year $316 million deal with Space Force to carry out space launch services. SpaceX now has, according to many observers, a near-monopoly on the U.S. satellite launch market. SpaceX's chief operating officer Gwynne Shotwell said the company has about $22 billion in government contracts, mostly from NASA. But SpaceX's deals with the Pentagon have grown exponentially - totaling almost $8 billion - as it has provided an increasing number of services to the DoD.
Musk and DOGE are ignoring the one place where you would actually find savings within the government."
SpaceX is now the most valued Pentagon contractor in terms of market cap[italization], and I think a lot of the reason for that investor confidence is that people know that Musk spent hundreds of millions of dollars getting Trump elected and that there's going to be a payoff of some sort to his private businesses," Stephen Semler, a senior fellow at the Center for International Policy, told The Intercept. Musk and DOGE are ignoring the one place where you would actually find savings within the government. Musk realizes, that although he is already getting tons of money from NASA contracts, the untapped potential for his businesses from the Pentagon budget is truly massive."
When the NRO put a shadowy national security payload" into orbit last week, via a SpaceX Falcon 9 rocket, it highlighted the company's role in building a network of hundreds of spy satellites, including work performed under a classified 2021 contract reportedly worth $1.8 billion.
Over the past two years, NRO has launched more than 150 satellites, including five to date in 2025. Little is public about the missions, but the NRO has at least seven more launches scheduled in 2025.
Musk and SpaceX are also poised to profit from billions in new contracts over the next several years. SpaceX has pendingrequestswith the Defense Department and the Federal Aviation Administration to build new rocket launchpads and a rocket-booster landing zone, and to launchmorefrequentlyfromthe government's spaceports in California and Florida. Under one of these agreements, the number of SpaceX Falcon 9 rocket launches allowed at Cape Canaveral Space Force Station in Florida could jump by 140 percent. SpaceX could also benefit from Trump's Golden Dome" missile defense project, which is projected to cost up to $2.5 trillion, according toone estimate.The company also regularly discusses the possibility of launching manned missions to Earth's moon and building a moon base on the lunar surface.
The Pentagon did not respond to questions from The Intercept about whether Musk and Hegseth spoke about any of Musk's companies.
SpaceX did not reply to questions about whether Musk discussed the company during his meeting with Hegseth.
Experts don't believe that $800 million in DOGE-identified cuts" of Pentagon grants and contracts announced by Hegseth will save taxpayers money.Even if they are real, such reductions are minuscule for the Department of Defense, which is the largest government agency, has a budget heading toward $1 trillion, and hasfailedsevenstraight annual audits.
Related After Afghanistan Disaster, the Pentagon Is on Track to Get Even More Money Proposed cuts to the Pentagon are extremely modest compared to other agencies, including the Agency for International Development, which has been slashedfrom 10,000 employees to less than 300, and the Department of Education, which is slated for elimination," observed Hartung. And unlike these other agencies, savings found in one part of the Pentagon will simply be invested in other Pentagon programs, with no net reduction in the department's bottom line."
On DOGE's Agency Efficiency Leaderboard," which shows the largest savings" it has achieved, the Pentagon is currently wallowing in 14th place out of a total of 22 spots.
If you're looking to cut government waste, obviously the first place you'd look is the Pentagon because it has never passed an audit," Semler, who is also the co-founder of the Security Policy Reform Institute, told The Intercept. But if DOGE got rid of excessbureaucracy within the Pentagon, you'd still only come up with a few billion dollars in savings. What would really have to happen to get movement on reducing Pentagon waste is you would have to go after contractors. More than half the Pentagon budget goes to contractors."
Semler pointed out that the Pentagon spent $454 billion on contracts in 2024, about 60 percent of the total share of all federal contracts. If DOGE cut Defense Department contracts in proportion to what it claims to have done at other agencies, the savings would already top $10 billion instead of totaling less than $1 billion.
This is just a PR stunt and Hegseth is selling cuts in the name of the culture war."
Most of the terminated contracts and grants highlighted by Hegseth are programs that run afoul of Trumpian sensibilities like decarbonizing emissions from Navy ships; expanding access for underrepresented minority students to naval career pathways, particularly in the fields of science and technology; and a grant supporting university research into equitable" artificial intelligenceand machine learning. I need lethal machine learning models, not equitable machine learning models," said Hegseth, who has repeatedly preached that lethality should be his department's overriding priority.
DOGE doesn't know what the hell it's doing and really isn't interested in cuts at the Pentagon. This is just a PR stunt and Hegseth is selling cuts in the name of the culture war," said Semler, noting that some of Hegseth's previously reported cuts" were actually reallocations of funds from out-of-favor programs to those preferred by the Trump administration. Even if that $800 million total cut was real, taken as a percentage of the fiscal year 2025 budget, you're talking about a reduction of less than 1 percent. So, you're talking about an incredibly, incredibly small cut."
Related Pentagon Keeps Pouring Cash Into Golf Courses - Even As Trump Slashes Government Spending Last month, The Intercept called out Hegseth for the hypocrisy of pledging to end Pentagon efforts that do not promote lethality" while his DoD looks to pump money into some of its almost 150 golf courses.After publication, the Pentagon replied to The Intercept's questions, not with answers but with a raft of boilerplate excuses for being in the golf resort business, including the promotion of physical fitness and social interaction among troops. Additionally, the positive impact on mental and physical health contributes to the readiness of the force, ensuring that Service Members are prepared to meet the demands of their duties," an unnamed defense official" responded by email. Mention of lethality was conspicuously missing.
Golf is only one of the Pentagon's many frivolous fixations. Right now, the Navy is planning to renovate a 12-lane bowling alley - including new lanes, gutters, ball return machines, glow lanes, glow pins, and new electronic equipment - at its base in Rota, Spain. A similar makeover is on the docket for a 14-lane bowling alley at the Naval Submarine Base Kings Bay in Georgia. The Air Force is also looking to buy a new bowling lane machine for Dover Air Force Base in Delaware.
The Pentagon did not respond to a request for comment on how spending money on bowling alleys promotes or enhances military lethality.
DOGE is not about efficiency - it is about an ideological campaign."
Beyond highlighting wasteful expenditures on projects that don't align with Hegseth's lethality fixation, The Intercept previously offered DOGE and Hegseth a road map to more than $75 billionin annual savings and as much as $2 trillion over the next decade. Still, dysfunctional, expensive, and dangerous weapon systems like the defect-laden F-35 combat aircraft; vulnerable Navy ships with limited utility; and intercontinental ballistic missilesthat increase the danger of an accidental nuclear war have avoided DOGE's and Hegseth's cost-cutting efforts.
DOGE is not about efficiency - it is about an ideological campaign to shrink or eliminate agencies that extreme anti-government advocates do not like, whether or not those agencies provide essential services to some Americans," said Hartung.
DOGE did not respond to a request for comment from The Intercept about whether it has investigated federal contracts with Musk's companies - SpaceX in particular - for waste, fraud, or abuse.
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