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 Post investigation, 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.

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 entrée 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........

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