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Elon Musk, Trump, and the Treasury Takeover: A Fiscal Crisis in the Making [1]

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Date: 2025-02-13

Donald Trump is taking a wrecking ball to the federal government, in a process that one researcher describes as “ungoverning” : a deliberate attempt to weaken the federal government, as opposed to what conservatives have typically sought, which is to reduce the size of government. The risks are clear: the federal government may become so weak that it cannot fulfill its essential tasks. Key to this process is the work of Elon Musk and his Department of Government Efficiency. Musk acts as a kind of free player in a team whose coach is Trump and he is at the head of an unfolding constitutional crisis, as he attempts to seize control over the Treasury’s payment system. Nathan Tankus, the publisher of “Notes on the Crisis”, argues that this is the most significant constitutional crisis in U.S. fiscal policy history and warns that Elon Musk's involvement in the situation poses an unprecedented danger.

This unfolding crisis escalated when the Fiscal Assistant Secretary of the Treasury, David Lebryk, was placed on administrative leave after resisting requests from DOGE for access to the Treasury's payment system data. Afterward, he retired . It’s not quite clear why Musk and his allies want access to the payments system. There have been musings about wanting to detect fraud or payments to improper actors, but, traditionally, this is done through existing Know Your Customer (KYC) regulations by banks. Musk’s desire for read and write access to the source code is unprecedented and troubling, especially given the lack of safeguards against his misuse.

Some Background

As everyone well knows by now, Trump attempted to subvert the Impoundments Control Act, which essentially says that when Congress votes money for some use, the federal government’s job is to spend the money. Trump has sought a fight on this issue because he wants to claim for the Presidency the right to view budget allocations as a cap on spending: in other words, he doesn’t have to spend all or any money allocated, he spends what he wants up to a Congressional limit. This gives him a kind of oversight over Congress, and would give him the power to cut off funding to federal agencies such as USAID, the Department of Education, and programs he abhors, such as Diversity, Equity and Inclusion (DEI) programs. His attempted federal spending freeze through executive orders was in violation of a court injunction. The Office of Management and Budget (OMB), whose recently confirmed director, Russell Vought, is at the heart of this drive, issued a memo enforcing this freeze, disrupting federal payment portals. That memo was later rescinded, but the executive order remains in place, which has left federal spending uncertain. If Trump wins this, he will have established the Presidency as supreme over Congress, at least when it comes to federal spending, and it is hard to see how Congress can be seen as the President’s peer when the President has oversight over it.

The Takeover of the Treasury’s Payment System

Lebrysk’s removal is because he stood as a wall preventing Musk and his allies from accessing treasury payment system data, including source code information. One of the excuses Musk has given is that he is modernizing the system -which runs on COBOL and Assembly-, but even if this was 100% sincere, it creates enormous risks: shifting the Treasury’s payment system to a more “modern” code and protocols opens the door to system failures, which could be hard to unwind. Remember, this system controls payments for the entire U.S. government. Bond interest payments, Social Security payments, and basically every payment the federal government makes could be disrupted. Pushing this kind of change through without any research and analysis being done and without consulting the people who actually run the system, is just very high risk. You just have to look at how Musk’s changes to Twitter, now X, created disruptions to use and significant technical failures. Musk is just not an expert on mission-critical IT infrastructure. There could be catastrophic failures in federal payments because Trump is in awe of this guy who has struggled with X.

Nevertheless, Treasury Secretary Scott Bessent, a Trump appointee, overruled Lebryk and granted Musk’s team access. For now, the main rationale is that Musk and his allies want to stop "improper payments." Initially, reporting by the New York Times suggested that DOGE had been granted full access, but subsequent reporting said they did not have operational capabilities. Reporting by Politico and the Wall Street Journal suggested that DOGE’s access was limited to "read-only" mode and that their activity was monitored. However, even with just “read-only” access, DOGE can gain key insights to learn how to manipulate the system later.

MAGA-fying the Treasury Payments System

It's clear that “improper payments” are at least partly defined through Musk’s political lens and that by reshaping the system, it will be in greater alignment with Trump’s political agenda. In fact, Musk’s allies believe that the system should be under a political rather than career appointee, opening the door to programs being effectively defunding through the backdoor.

There are also privacy concerns: this is some of the most sensitive data in the U.S. Few have access. There is nothing preventing the data being used by Trump and the Republican Party even after he has left the White House, to target political opponents.

Musk and Trump must be prevented from gaining further influence over the Treasury’s operations. He is not an expert in anything to do with the Treasury and his influence could lead to a widespread failure in U.S. fiscal governance.

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