Elon Musk has founded a string of successful companies, but his ambitions to create a new political party to take on Trump may be much harder to achieve.

Musk first launched a poll on social media site X in early June about the idea of ​​forming an “American party”, after a heated exchange with President Donald Trump over the “Big, Beautiful Act”, which was then just a bill.

The “Big, Beautiful Act” (OBBBA) would make permanent the tax cuts that Trump signed into law in his first term in 2017, as well as add new tax deductions, with an estimated total cost of up to $4.5 trillion.

Elon Musk at a conference in Paris, France, June 2023. Photo: Reuters

Elon Musk at a conference in Paris, France, June 2023. Photo: Reuters

The bill ends tax credits for new and used electric vehicles on September 30, instead of the end of 2030 under current law, which is seen as a blow to Musk’s electric car company Tesla. OBBBA also includes a provision to raise the US debt ceiling by $5 trillion.

The Congressional Budget Office (CBO) predicts that OBBBA could increase the US federal budget deficit over the next 10 years to nearly $3.3 trillion in the 2025-2034 period, countering the spending cuts Musk has pushed through his Office of Government Efficiency (DOGE).

These are considered the reasons why Musk reacted strongly to OBBBA. On July 3, just before President Trump signed it into law, Musk continued to raise the idea of ​​forming a third party to compete with the Republican and Democratic parties, openly confronting Mr. Trump.

“Independence Day is the perfect time to ask, do you want to get rid of the two-party system? Should we create an American party?” he wrote.

Musk criticized both the Democratic and Republican parties, citing the huge government deficits that have grown since they ran the country. He said he wanted to create a fiscally conservative party with tight control over spending, but gave few other details about the party’s platform.

Musk is constitutionally barred from running for president because he was born in South Africa, but pushing the idea of ​​a new party could alienate many Republicans.

However, campaign finance experts and political scientists say that for a number of reasons, no third party has yet emerged to challenge the two-party system in the United States. They say that creating a new party in the United States would face many financial, legal, and political difficulties.

Musk may be the richest person on the planet, but he could still face some financial hurdles with his plans to form a new party. Funding a new party comes with its own set of hurdles, as the McCain-Feingold Bipartisan Campaign Reform Act of 2022 places strict limits on contributions to political parties.

The current limit for an individual to contribute to a party is $450,000. Lee Goodman, a lawyer and former chairman of the Federal Election Commission (FEC), said Musk would need thousands of co-donors to help him raise money for the new party.

“A billionaire can’t fund a new party the way he could start a business, because there are federal contribution limits,” Goodman explained. “The prospect of a wealthy founder funding a party to run on the ballot across the country is not feasible under the current legal system.”

There are still ways to get around the current rules, according to Bradley Smith, a law professor at Capital University Law School.

“Some case law suggests that some new party organizing and initiation activities can be funded with larger contributions, until it actually qualifies as a party under the election commission’s rules,” he said, noting that this is complicated and extremely difficult to do.

“You can fund a super PAC as much as you want, but you can’t fund a political party. That’s the weird part of American law,” Smith said.

In addition to finances, the operations of political parties in the US are governed by laws and rules not only from the Federal Election Commission (FEC) but also from the states, including which party candidates can appear on the ballot.

States have different rules on this, such as requiring candidates to collect a certain number of signatures from voters to get on the ballot.

“The system is set up to make it almost impossible for third parties to succeed,” said Alan Abramowitz, a political science professor at Emory University in Atlanta, Georgia.

For Musk to form a third party, Goodman said, “it would take years and probably require changing laws across the country that favor the two major parties.”