Musk Faces Democratic Scrutiny After Spending $500 Million to Save Texas

Elon Musk lost a major political gamble in the 2026 U.S. midterm elections despite pouring nearly half a billion dollars into Republican campaigns. The billionaire spent the funds to keep Texas red, a state that hosts his companies Tesla and SpaceX. The investment failed as Democrats won both chambers of Congress and Gina Hinojosa defeated Greg Abbott in the Texas governor's race.

Musk backed the party of President Donald Trump, a close ally he helped elect. He urged his followers on X to vote Republican as recently as Tuesday. Now, he faces a resurgent Democratic Party that he has spent years antagonizing. The election results leave him exposed to new legislative and state-level challenges.

Democratic lawmakers are preparing to investigate Musk’s 2025 leadership of the Department of Government Efficiency, or DOGE. Trump tapped Musk for the role despite conflicts of interest and ongoing regulatory probes. The DOGE team dismantled foreign aid programs and allegedly breached privacy laws by accessing Americans' sensitive data. Robert Garcia, the incoming House oversight committee chair, told Republicans and their allies on Tuesday evening to lawyer up.

The U.S. Supreme Court has also agreed to hear arguments in a DOGE-related lawsuit. The Citizens for Responsibility and Ethics filed the suit seeking public records about DOGE activities. Musk threatened retaliation on social media last month after reports indicated Democrats would probe his companies if they won the midterms.

In Texas, Musk faces friction with the incoming state government. Hinojosa sued to obtain emails between Musk and Abbott. She accused Abbott of selling out the state by offering favorable deals to the billionaire. Hinojosa stated last month that Texas is not for sale. She has called for an immediate halt to new data center projects until lawmakers strengthen protections for local communities.

SpaceX plans to expand its AI business through data centers in Memphis, Tennessee, and Boca Chica, Texas. These facilities have helped SpaceX post its first profit as a public company. SemiAnalysis identified more than nine gigawatts of planned or developing capacity. Hinojosa has opposed the potential sale of a beachfront state park to SpaceX, a deal discussed by officials according to Texas Monthly.

Jake Dollarhide, CEO of Longbow Asset Management, said a Democratic sweep of Congress would put pressure on the tech sector. He noted that regulatory pressure could slow the rapid growth in AI. Musk’s cash infusion could not overcome higher utility bills, grocery prices, and gas costs for voters.