WASHINGTON (Reuters) -A day after Elon Musk escalated his feud with Donald Trump and announced the formation of a new U.S. political party, the Republican president's Treasury secretary said Musk should stick to running his companies. 

In addition, investment firm Azoria Partners, which had planned to launch a fund tied to Musk's electric automaker Tesla, said it was delaying the venture because the party's creation posed "a conflict with his full-time responsibilities as CEO." 

Musk announced on Saturday that he is establishing the "America Party" in response to Trump's tax-cut and spending bill, which Musk said would bankrupt the country.

Speaking on the CNN program "State of the Union" on Sunday, Treasury chief Scott Bessent said the boards of directors at Musk's companies - Tesla and rocket firm SpaceX - probably would prefer him to stay out of politics.

"I imagine that those boards of directors did not like this announcement yesterday (Saturday) and will be encouraging him to focus on his business activities, not his political activities," Bessent said.

Musk, who served as a top adviser to Trump on downsizing and reshaping the federal government during the first few months of his presidency, said his new party would in next year's midterm elections look to unseat Republican lawmakers in Congress who backed the sweeping measure known as the "big, beautiful bill."

The White House did not directly address the threat made by Musk but said the bill's passage showed that the Republican Party is in strong shape.

"As the leader of the Republican Party, President Trump has unified and grown the party in a way we've never seen," White House spokesperson Harrison Fields said.

Musk spent millions of dollars underwriting Trump's 2024 re-election effort and, for a time, regularly showed up at the president's side in the White House Oval Office and elsewhere. Their disagreement over the spending bill led to a falling out that Musk briefly tried unsuccessfully to repair. 

The bill, which cuts taxes and ramps up spending on defense and border security, passed last week on party-line votes in both chambers of Congress. Critics have said it will damage the U.S. economy by significantly adding to the federal budget deficit. 

Trump has said Musk is unhappy because the measure, which Trump signed into law on Friday, takes away green-energy credits for Tesla's electric vehicles. The president has threatened to pull billions of dollars Tesla and SpaceX receive in government contracts and subsidies in response to Musk's criticism.

Bessent suggested that Musk holds little sway with voters who, according to the treasury chief, liked the Department of Government Efficiency that Musk spearheaded more than they liked the world's wealthiest person himself. 

"The principles of DOGE were very popular," Bessent said. "I think if you looked at the polling, Elon was not."

INVESTOR REBUKE

Musk's announcement of a new party immediately brought a rebuke from Azoria Partners, which said on Saturday it will postpone the listing of its Azoria Tesla Convexity exchange-traded fund. Azoria was set to launch the Tesla ETF this week. 

Azoria CEO James Fishback posted on X several critical comments about the new party and reiterated his support for Trump. 

"I encourage the Board to meet immediately and ask Elon to clarify his political ambitions and evaluate whether they are compatible with his full-time obligations to Tesla as CEO," Fishback said.

On Sunday, Fishback added on X, "Elon left us with no other choice."

Stephen Miran, the chairman of Trump's Council of Economic Advisers, defended the tax-cut bill on ABC's "This Week" program.

"The one, big, beautiful bill is going to create growth on turbo charge," Miran said.

(Additional reporting by Gnaneshwar Rajan and Brendan O'Brien; Editing by Rami Ayyub and Dale Hudson)