John Paulson, a billionaire hedge fund manager and a major financial supporter of Donald Trump, recently stated in an interview that if Trump wins and appoints him as the new U.S. Treasury Secretary, he will work with tesla CEO Musk to implement significant measures to reduce federal spending.

This staunch supporter of Donald Trump stated that his top priority is to extend Trump's expiring 2017 tax cuts policy. His next goal is to 'work with Musk to reduce federal spending,' particularly by canceling subsidies for green energy within the Biden administration's 'Inflation Reduction Act'.

"All tax subsidies for inefficient and uneconomical energy sources such as solar and wind energy should be canceled, which will reduce (fiscal) expenditures," Paulson said.

During the interview, Paulson also mentioned that he believes his future responsibilities may include energy and trade. He pointed out that he will work with Trump to encourage energy production, make the USA a leading energy-producing country, and implement 'strategic tariffs'.

Trump has previously stated multiple times that if elected, he will impose tariffs of 10% to 20% on all imported goods. Trump has also threatened to escalate existing tariffs on Chinese goods by imposing a high 60% tariff on all Chinese imports after taking office. It is currently unclear whether Trump will fulfill the above tariff promises once he actually wins the election, or if he is using them as a negotiating tool for pressure.

Paulson stated in the interview that tariff threats are to some extent a strategy aimed at gaining concessions, such as convincing American companies like Dell to keep production in the USA.

Behind the substantial cuts in clean energy subsidies: Is Musk not afraid of being cut?

Trump had previously promised that if he won in November, he would appoint Musk as the head of a new 'Government Efficiency Committee.' The group led by Musk would propose cutting federal spending to Trump. In response, Paulson said he had not yet discussed specific cooperation with Musk.

Musk stated last weekend that if Trump wins this year's U.S. presidential election, he can help cut the federal budget by at least $2 trillion, fundamentally reshaping government expenditures. However, Musk did not elaborate on how he would achieve such a scale of spending cuts.

According to data from the U.S. Congressional Budget Office, the U.S. government's fiscal spending in the previous fiscal year was $6.75 trillion, with over half used for social security welfare, medical insurance (Trump promised not to touch these two expenditures), national defense, and debt interest payments.

While Paulson's latest statement seems to avoid subsidies in the electric vehicle sector, it is clear that such subsidies (tax exemptions) are also a key part of Biden's 2022 'Inflation Reduction Act' that became law. This also raises the question: if Paulson slashes subsidies in the green energy sector, will it eventually impact Tesla CEO Musk...

However, Musk seems to be prepared for the 'cut.' Although the electric vehicle tax exemption clause in the 'Inflation Reduction Act' is helpful for Tesla, Musk stated during the company's second quarter earnings call that cancelling these incentives would only cause 'slight' damage to the company, but would deal a 'devastating blow' to 'our competitors.' 'In the long run, this may actually benefit Tesla.'

Of course, even if Trump takes office and truly wants to completely eliminate green energy subsidy policies, it may not be an easy task. According to the Tax Foundation, repealing clean energy tax breaks can generate about $921 billion in revenue over a decade, but abolishing this law or any of its tax exemption clauses requires congressional approval.

Even if the Republicans ultimately control Congress, passing any reform is expected to face significant challenges - this is because many projects funded by the 'Inflation Reduction Act' stimulate employment and investment in rural areas dominated by Republicans, which are best suited for wind and solar energy or large manufacturing bases. If they really 'slash' everything, there may also be opposition within the Republican Party.

Is this like opening champagne ahead of time for the Treasury Secretary?

Regardless, Paulson is starting to enjoy his future 'financial ministerial career' ahead of time, seemingly with a hint of 'popping champagne' early.

It is extremely rare in American history for allies or supporters of presidential candidates to publicly discuss the roles they may play in the 'future government,' especially considering that the Secretary of the Treasury is one of the most important positions in the US government, requiring frequent interactions with Wall Street, business leaders, and foreign heads of state.

As early as March this year, Caijing mentioned that Trump had already discussed the possibility of appointing Paulson as Secretary of the Treasury if he won the November election. For those concerned about the US capital markets, Paulson's name is obviously well-known. The President of the hedge fund Paulson & Co., who profited from heavily shorting in the 2008 US subprime crisis, has been dubbed as 'Wall Street's shorting deity' and 'the top figure in hedge funds.'

Due to Paulson's close relationship with Trump and his involvement in Republican political activities for many years, his opinions currently carry significant weight. He has made donations to Republican political operative organizations like the Senate Leadership Fund. He is also a trustee of the Manhattan Institute, whose chairman is conservative think tank executive Paul Singer, another Wall Street executive.

Currently, in addition to Paulson, other speculated potential Trump Treasury Secretary candidates include Scott Bessent, founder of Key Square Group and another ally of Trump on Wall Street, Robert Lighthizer, former trade representative, and Jay Clayton, former chairman of the Securities and Exchange Commission.

However, it can be foreseen that even if selected by Trump, Paulson may face inquiries about his background during the Senate confirmation process for the Treasury Secretary nomination. Some Democrats like Massachusetts Senator Warren may strongly question Paulson's relationship with Wall Street and the money he made from the real estate crisis.

During Trump's first term, Treasury Secretary Mnuchin narrowly won Senate confirmation with a 53:47 vote ratio. Similar to Paulson, Mnuchin had extensive experience in the financial industry before becoming Secretary of the Treasury. In contrast, Biden's current right-hand person, current US Treasury Secretary Yellen, has accumulated richer experience in academia and senior positions at the Federal Reserve.