WSJ What’s News - Meet Elon Musk’s Right-Hand Man Cutting Costs at DOGE

Episode Date: February 10, 2025

P.M. Edition for Feb. 10. After Elon Musk took over Twitter, one of his deputies, Steve Davis, adopted a move-fast-and-break-things approach to make the company more efficient. WSJ White House economics reporter Brian Schwartz tells us how Davis, now working at Musk’s Department of Government Efficiency, could use the same playbook for the federal government. Plus, Musk is leading an effort to buy ChatGPT maker OpenAI. And President Trump’s promise of mass deportations is causing immigrants to spend less. We hear from the Journal’s senior special writer Ruth Simon about who is feeling the impact. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Rise to rewards with the BMO Eclipse Rise Visa Card. Terms and conditions apply. Rise to rewards with the BMO Eclipse Rise Visa Card. Terms and conditions apply. Elon Musk is leading an effort to take over OpenAI, the maker of ChatGPT. Plus, meet the man behind the curtain for Doge's cost-cutting efforts. It's an incredible amount of power for him.

He really is at the point of the triangle when it comes to leadership ranks at the Department of Government efficiency. And President Trump's promise of mass deportations is making immigrants spend less. It's Monday, February 10th. I'm Alex Osela for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

We're exclusively reporting that a consortium of investors led by Elon Musk is offering about $97 billion to buy the nonprofit that controls OpenAI. The unsolicited offer is being backed by Musk's own artificial intelligence company XAI, which could merge with OpenAI following a deal. Though Musk and Altman co-founded OpenAI as a charity in 2015, more recently the two have been battling over the direction of the company. While Altman plans to convert OpenAI into a for-profit company and spend up to $500 billion on AI infrastructure

through a joint venture called Stargate, Musk, in a statement provided by his lawyer, says he wants to return the company to the quote, open source, safety-focused force for good it once was. An OpenAI spokeswoman didn't immediately respond to a request for comment. INTRO The Department of Government Efficiency, or DOJ, has been in the news a lot during the first three weeks of Trump's second term.

The entity says it's identified and cut more than $1 billion in spending in these first few weeks, though that's just a fraction of the $2 trillion that Elon Musk, the public face of Doge, has set as the department's goal. The cost-cutting approach has a lot in common with how Musk transformed Twitter shortly after buying it in 2022, and there's a good reason for that. The same person is behind both efforts. That person is Steve Davis, a leader of one of Musk's other companies. I'm joined now by The Wall Street Journal's

White House economics reporter, Brian Schwartz. So, Brian, who is Steve Davis? Well, Steve Davis is one of Elon Musk's loyal deputies. He's been a longtime tech executive in Silicon Valley for years. Knows a lot of people that are close to Elon Musk, and he's been a leader of The Boring Company, one of Elon's companies dedicated to creating tunnel systems in various parts of the country. And really importantly here, he was one of the leaders that led a transition effort at Twitter after Elon Musk was responsible for buying the company. And to be very clear about this, how he's run the Boring company and as well when he had

an official leadership role at Twitter has been really focused in part on cost cutting. That's very important to what we're seeing now from Doge. That's been Steve Davis' model for running businesses to cut costs, really get in there with a hatchet knife and make cuts to things in order for the business to do better. So yeah, let's talk about Twitter for a second. So Musk buys it, installs Davis in a leadership role. What did Davis do then? How did he decide on what kinds of things to cut? Well basically one of the first things that Steve Davis wanted to target was the real

estate contracts where it was very clear that Twitter was renting office space. The only problem was that there is no real clear mechanism to just get out of an office lease. If you break a lease, there are, of course, added fees to that. And what Davis ran into was some form of resistance from Twitter employees, according to a lawsuit that we've reviewed. They weren't necessarily fired, but they left the jobs. They left their posts to then detail their experiences in a lawsuit that's ongoing against Twitter and X.

What is similar and different about how Davis is approaching his role at Doge? I don't know if he's specifically if he's taking that exact same model he had at Twitter and bringing it to Doge, but there are some unique similarities here between his approach to Twitter and what he's doing at doge federal government so big but the model is similar right they want to place people in certain places that can then do what they want and then hopefully they can find cuts and bring that good news back to president trump if you look at how companies are run has a comparison right there's always somebody at the top of the food chain

making these decisions. And when it comes to Steve Davis, he really is at the point of the triangle when it comes to leadership ranks at the Department of Government Efficiency. So it's an incredible amount of power for him. President Trump is authorizing Musk and his team for everything they've been doing.

The targets that have been made to USAID, for instance, the access they've been given to the treasury payment systems. All of that has been authorized by President Trump. It's gone over the Department of Government Efficiency, and Davis, Musk, and whoever else is running this have gone all in with those asks. That was WSJ White House economics reporter Brian Schwartz.

Thank you, Brian. Thank you. U.S. stocks were up today as investors shrugged off the risk that President Trump's planned steel and aluminum tariffs could ignite a trade war. The Dow rose about 0.4 percent, the S&P 500 ticked up roughly 0.7 percent, and the NASDAQ climbed nearly 1%. Coming up, President Trump's deportation orders are already having an economic impact. That's after the break.

In the Middle East, Hamas was due to release three more hostages this Saturday as part of the ceasefire agreement with Israel. Now, Hamas has said that it will postpone those releases over a long-running dispute with Israel over access to tents and mobile homes needed for shelter. It's the most serious challenge yet to the fragile ceasefire. Mediators say that the atmosphere has worsened in part because of Trump's proposal to evacuate Gaza and take long-term control of the Strip. The president built on those comments in an interview with Fox News' Brett Baier conducted

yesterday. It would be a beautiful piece of land. Would the Palestinians have the right to return? No, they wouldn't because they're going to have much better housing, much better. In other words, I'm talking about building a permanent place for them, because if they have to return now, it'll be years before you could ever. It's not habitable. Trump's proposal to take over Gaza had already caused discord within the Republican Party

and had been rejected by major Middle East powers. A judge ordered the Trump administration to restore federal funding it had tried to freeze. In a written order, U.S. District Judge John McConnell in Rhode Island said the White House wasn't fully complying with a restraining order he issued on January 31st and directed the administration to, quote, immediately take every step necessary to follow it. In another exclusive, the Department of Homeland Security has asked Treasury Secretary Scott Besant to deputize IRS criminal investigators, as well as other law enforcement workers, to assist in immigration enforcement. That's according to documents viewed by the Wall Street Journal.

In a memo dated February 7th, Homeland Security Secretary Kristi Noem requested that Besant provide agents who would help investigate financial flows involving human trafficking networks and businesses that employ illegal immigrants. The agents could help arrest, detain, and transport people. Gnome's request follows a broader effort by the Trump administration to deputize law enforcement officials at various agencies to help carry out deportations. As we've talked about before on the show, the Trump administration's promise of mass deportations and immigration raids is having wide-ranging effects on immigrants and their

communities. One effect that's become clear more recently is that fear of deportation is having a chilling effect on spending by immigrants, something that small businesses in Latino neighborhoods are feeling acutely. WSJ senior special writer Ruth Simon is here now to tell us more. Ruth, who is worried about this? Many people are worried about this. You have undocumented immigrants. You have people who are in mixed status families, which means one person or more than one

person in the family is a US citizen and other people are not. And I even spoke to people who are US citizens who spoke to me about their fears of being swept up in a raid, even though they're here legally. I talked to one business owner who's taken to carrying her passport with her. I talked to someone else who runs a trade group who sat down with his family,

both he and his wife and his kids, they're all US citizens, but they had a discussion about what happens if someone gets picked up in an ICE raid. So the fears are widespread and the fears are impacting how people behave. Some people are afraid of going out and in communities that are largely Latino, you see less traffic on the street and less traffic in stores. So what are the kinds of businesses that are being affected by this? I know I mentioned small businesses, but that means a lot of different things.

A wide range of businesses. My colleague Paul Kiernan went out to Los Angeles and he talked to somebody who sells tamales on the street, he talked to someone who sells giant teddy bears. I talked to a business owner who has a restaurant in a Chicago neighborhood who has cut her staff hours. And then I also talked to someone who makes home loans who said he was seeing home purchases being canceled because some of them were being made by people who do not have legal status, and others were being made by people

who are allowed to work legally in the U.S. now, but are worried that the Trump administration may revoke their authority. So it's really a wide range. Yeah. Do we have a sense of what the economic impact could be on this? We don't know what the actual economic impact will be, but what we do know is that Hispanics and other Latinos

accounted for roughly 13% of consumer spending in 2023. Last year, I did a story about new business formation and the biggest driver were Latinos. And some of those were immigrants, some of those were people who had been around for a while, but I think it could have a meaningful impact both on individual communities and it could potentially have an impact on the economy as a whole,

depending on what happens. That was WSJ senior special writer Ruth Simon. Thank you, Ruth. Thank you. It was a pleasure to talk to you. And that's what's news for this Monday afternoon. Today's show was produced by Pierre Bienamé with supervising producer Matthew Walls and deputy editor Chris Inslee.

I'm Alex Osala for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.