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Well they’ve made it pretty clear why they’re using this particular steel. The goal is to create a relatively cheap, reusable rocket. The strength of the steel helps make up for the increased density since you can use thinner panels. They also don’t have to paint them. This leads to a small difference in total weight.
The compromise they’re going for is giving up a slight amount of capacity to decrease cost of materials, increase production volume, and hopefully improve the reusability and lower the total maintenance.
They’re not trying to build the highest performance rockets, they want the lowest cost for the level of performance they’re targeting. That’s not to say it will necessarily work out, but they’ve obviously done the math on the compromise and think it’s beneficial in the long run.
Of the many issues Starship has had, it doesn’t seem like the steel skin is one of them. It’s just one of a million design choices you have to make for any rocket.
I think a big reason these companies are laying people off is because we actually did increase their taxes. The Tax Cuts and Jobs Act of 2017 (Trump’s only major legislation passed) changed the rules on R&D deductions after 2022 to balance the other cuts and allow Senate Republicans to pass the bill without a supermajority (through Reconciliation). This was meant to be a poison pill that everyone expected would get repealed before it went into effect, but efforts to repeal it fell apart.
https://pro.bloombergtax.com/brief/rd-tax-credit-and-deducting-rd-expenditures/
https://youtu.be/1ecu0YsCGxg?si=zh-39-HMHif-zvaU