Lawfare Daily: DOGE’s Attack on the Treasury Department

[Intro]

Jacob Leibenluft: If I were to identify three things that I think would look different in a good faith process, first, I think—and I think probably most importantly—you wouldn't see this effort to redefine as fraudulent anything that was against the administration's priorities.

Quinta Jurecic: It's the Lawfare Podcast. I'm Lawfare senior editor Quinta Jurecic with Wendy Edelberg, director of the Hamilton Project and senior fellow at the Brookings Institution, and Jacob Leibenluft, who recently served in the Treasury Department and the Office of Management and Budget.

Wendy Edelberg: Part of the point is actually to create a level of uncertainty and confusion and lack of trust in the federal government. Like in the whole like move fast and break things, I actually think the breaking things is part of the point.

Quinta Jurecic: Today we're talking about the implications of efforts by Elon Musk's DOGE team to access sensitive payment systems inside the Treasury Department.

[Main podcast]

We're here to talk about a—I was going to say a slow moving crisis, but really it's a, a very quickly moving crisis at the Treasury Department, and really across government as a whole with Elon Musk's DOGE team coming in and accessing various sensitive systems. I wanted to start by talking about DOGE's access to the Bureau of Fiscal Service, which has really been at the, the center of this storm.

Maybe just to begin, I think it would be helpful to kind of set the scene a little bit and remind listeners. Wendy, could you give us sort of a, an overview of what's been happening over the last month in this space?

Wendy Edelberg: So what we learned right after President Trump took office is that he was sending people in to Treasury to get into the inner workings of the nearly $6 trillion payment system that civil servants at Treasury had overseen for decades to make sure that the money that Congress had appropriated—you know, agencies that had been stood up by Congress, entitlements to the social security system—that all of that money got where it needed to go, and, you know, that then the deposits came in and got deposited from revenue payments, the like, you know.

That system that had been working quite well for decades with all of the appropriate congressional oversight—Trump sent people in to meddle in that system. And we have now been trying to figure out what people at DOGE have access to, what their goals are in the meddling and, what we should be worried about

Quinta Jurecic: Jacob, is there anything you want to add to that?

Jacob Leibenluft: Well, I would just say that, you know, I think you could describe the Bureau of the Fiscal Service as a core part of our financial and governmental infrastructure that you almost at least until earlier this year never had to think about. You know, I think as Wendy says, it's this core plumbing that allows the government to make payments and it's really serving traditionally a ministerial purpose.

It's not determining who is supposed to get paid or how much. It is processing files that agencies send over based on the amount that Congress has appropriated to those agencies and just ensuring that the funds actually get sent to where it needs to go. It's really the last mile of that process from Congress appropriating money to agencies carrying out those appropriations to Treasury ensuring that the money gets in people's bank accounts.

And so that's how we've thought about it traditionally. It's why, as Wendy says, it's always been run by career officials who are highly trained, who have been, you know, undergone a clearance process. And any effort to mess with that system, I think, you know, then creates a lot of concerns, either A) why do you want to mess with that system, and then secondly, what are some of the either intentional or unintentional consequences from, from, from doing that?

Quinta Jurecic: So the—as I said and as you were saying—the, the story really begins with these people who were hired by Elon Musk coming in and accessing the system.

Before we go further, I want to make clear to listeners that as of a, a temporary restraining order was issued in early February, I believe all those people are barred from accessing those systems and that TRO has been extended as the litigation continues. It may be lifted at some point. It's not really clear. So currently, I believe these folks should not be accessing these systems, but we're still very much in the process of figuring out what on earth happened here and what is happening in, in other corners of the government. And we'll get back to the litigation later in the, in the show.

I want to dig into this, this issue of civil servants being the people who administer these systems at, at BFS, because I think that the flip side of that is, you know, if it's good to have civil servants administering these payments, why is it so concerning for people who are coming in as part of a new administration, as part of a political team, to be suddenly mucking around in this?

Wendy Edelberg: So it's that word: political. That's the important word there. You know, so—as listeners of this podcast have probably heard this phrase a million times—Congress has the power of the purse. So Congress enacts the laws, and the president merely signs them, that determine where Treasury should be sending money.

So we don't want the executive branch to get in the middle of that. You don't want the president to be able to turn on and off that money that's been appropriated by Congress, that's been enacted into law. You don't want the president to be able to, you know, turn on and off that money at his own whim.

I mean, there's all sorts of worries about people being involved in this system who have not been appropriately vetted, don't know what they're doing, have potentially nefarious goals. Like all of that is problematic, but it would be problematic for both civil servants and politically appointed people. Even the most well-intentioned political appointee from the executive branch should not be trying to direct this system because it's not an appropriate role for the executive branch.

Jacob Leibenluft: And I just add to that, you know, I think you've spoken on this podcast before about the issue of impoundment—this concept that essentially the executive branch cannot just unilaterally decide not to spend money that Congress has appropriated.

And I think of the arguments that the administration has been using, that DOGE has been using to get access to the BFS systems really suggests that they see this as one of the places where they can essentially engage in illegal impoundment. We typically thought about that happening often at the agency level. So you know, the secretary of HHS chooses not to make a payment or the president tells the secretary of HHS not to make a payment. But this is sort of taking that process downstream.

And I think it's important to realize this isn't just an idle or hypothetical concern. If we just look at what Elon Musk has tweeted, as soon as the story about BFS started becoming public, he talked about, you know, rapidly shutting down what he would describe as, quote unquote, illegal payments to, for example, any institution with Lutheran in its name, which sounds ridiculous, but this is what, you know, he was himself saying, and then, you know, I'm sure we'll talk more about this. We also have some pretty concrete evidence, including now from the administration in the administration's own words that they in fact did see this as a place to try to stop payments, for example, coming out of USAID.

So this is not what—the BFS's role again has never been to determine who gets paid or how much they get paid. That's supposed to happen at the agency level. Somehow this is sort of contemplating that no, in fact, as the last mile in the process we can use BFS as a place to impose policy priorities on what money goes out.

Wendy Edelberg: I just want to jump in to say that the idea that some of these payments could be made fraudulently, the idea that that the agencies could get something wrong—like that is not new to Congress. Like, these are, you know, hundreds of millions of payments getting made. The idea that this system needs a lot of oversight and the person who has their hands at the keyboards making sure that the payment actually gets made has some role in making sure that those payments are being done accurately and to the right person—like, that's not new.

And, and indeed Congress has passed laws trying to give the payment system more authority to, you know, make sure that the, that the payments are done appropriately.  It's not like the DOGE folks were like the first ones to came along on the scene and said whoa, maybe we need to like think hard about whether or not this system is being, is being operated appropriately.

Congress has been aware of it. Treasury's been aware of it. And Treasury does have certain prerogatives in this system to make sure that like hey, we've run this person's name through a database and it, and it turns out that we have evidence that, that this person's actually died. They should not get this payment. There is a system in place to, to stop that payment. And the agency, you know, would see that flag from Treasury and say, hey, yeah, you're right. Don't make that payment. There are checks and balances is what I'm trying to say.

Quinta Jurecic: So in other words, this what's happening now looks very different than what you would expect if this were actually a good faith effort to try to, you know, modernize, make more efficient, reduce improper payments, that kind of thing.

Wendy Edelberg: I mean, I don't know. Maybe it's a perfectly good faith effort, but it's not the—we actually have a process. Like, there is a process if, if, if Congress wanted to, you know, think harder about how to make this system safer. Like they have done this before. They have passed laws before to try to make this system safer. There's a process to do that. And it's not this.

Jacob Leibenluft: Right. And I think if I were to identify three things that I think would look different in a good faith process, first, I think, and I think probably most importantly, you wouldn't see this effort to redefine as fraudulent anything that was against the administration's priorities.

And so, I think it's really notable when, if you look closely at what, for example, Musk has said, he'll talk about stopping payments that are fraudulent or to people who are dead, or he'll add at the end of that list are, you know, do not match congressional appropriations. And when he says do not match congressional appropriations or congressional intent, what he's actually saying is, is not consistent with administration policy as laid out, for example, in executive orders.

And again, that's not the role that BFS has ever traditionally played, is legally allowed to play, has the expertise or the data or the information to play. It is simply actually sort of expanding the role of it as a choke point while they're simultaneously redefining any policy opposition as fraud. So I think that's the first thing you would see is, is no mention of sort of if you disagree with our policy priorities, it's fraud.

I think the second thing you would see is some actual attention to how the systems currently work and you'll see when you, when you look at Musk’s tweet about, for example, the do not pay system that Wendy alludes to, he has basic errors and how he describes and how it works. He does not seem to appreciate that these systems exist or how they try to work.

And the third thing I think is you would see some appreciation for any of the tradeoffs at play or the risks that they may be taking on. And so I think it's, you know, notable that you aren't seeing them talk about, you know, how they're protecting data or how they're ensuring that the system doesn't inadvertently pause payments to people who are eligible for payments.

And that's a really concerning thing, given, I think, how much we—and when I say we, I mean everybody from families who count on Social Security to, you know, participants in our financial markets—expect payments from Treasury to come out on time. BFS brags about having a hundred percent on time payment rate. That's really important for our economic and financial and social system. And there's no sense I've gotten from DOGE or its advocates that they appreciate those risks.

Wendy Edelberg: So I, I would love to expand on one of the recipients of this, of this Treasury money that, that Jacob mentioned, which is participants in, you know, financial markets who own Treasuries. So this is the system that gets interest and principal payments to Treasury holders. And that's a system that you don't want to make errors in. And, you know, so if the system were mucked with and they just by mistake didn't get payments to the right people at the right time, I think that that would make financial markets quite jittery.

What I'm actually even more worried about is that they are looking carefully at the code. And well, and, and, and let me step back and say, just because I'm about to say things that might scare you and sound nuts, Trump recently said, hey, it looks like some of the interest payments that we've Treasuries are actually fraudulent and we don't owe as much as the published numbers suggest we owe and we're looking, you know—now I'm, now I'm paraphrasing more—that they were looking into whether or not the interest payments that have been made were the right payments and suggesting, hey, maybe they're going to figure out that some of those payments should be, should be held back.

Okay. So what does that mean? Why is that so concerning? If by getting into the nuts and bolts of this payment system, DOGE and, you know, as representatives of President Trump are figuring out a method for withholding, let's say, principal and interest payments to certain holders of Treasuries, that is a threat that could really destabilize financial markets.

So in Trump's first administration, it was widely reported that the administration was very, you know, was annoyed by what they saw as China's role in the pandemic. And it was widely reported that they were trying to figure out if one of the ways to punish China would be to cancel some of its debt. So people who are just watching, you know, listening to this on, audio can't see that I'm making air quotes on the, on the cancel, because it's not totally clear what that means. But it was widely reported that they were trying to figure out if they could specifically identify the Treasuries that were held in, in public funds in China and not make payments on those.

One of the many reasons why this threat was just, you know, pretty roundly ignored and then, and then it was walked back that they were really considering this is that it was completely implausible that the payment system had the wherewithal to find the Treasuries that were only held in China and only hold back on, you know, deny interest payments just on those Treasuries. Like the system wasn't set up that way.

It seems totally plausible to me that they are working to get that ability to be able to threaten countries, you know, or threaten sovereign funds or individual investors who the heck knows and say, we're not going to make interest payments to you. And now we can actually make good on that threat because we've worked it out in the payment system.

Quinta Jurecic: And so the way that they would do that would be because they have access to the system itself to the code making those changes.

I mean, one, one thing that I've also seen speculation and concern about is the fact that, my understanding at least is that these systems run on COBOL, which is a very old programming language. It's clunky. It's not something that if you're, you know, a 25-year-old, you're necessarily particularly familiar with.

And so there's also a risk that if you have, you know, a relatively young programmer coming in and trying to make changes on the system that runs on COBOL that you could mess something up in some way that could, you know, change the system or prevent it from working, prevent those payments from coming out on time in all kinds of ways that we can't even imagine because it's never happened. Is that something that, that you both think is a concern?

Jacob Leibenluft: Yeah. I mean, I think absolutely when you talk about any system that is both this consequential and this complex, you know, I think a primary consideration has to be, are you operating with care and are you appropriately considering the ways in which, you know, even small and well-intentioned changes—and we've talked about a set of changes that I think are not necessarily well-intentioned—but even small well-intentioned changes can have a much broader negative impact.

And you know, I would be concerned with political interference in these systems, even if I were hearing public professions of an acknowledgement of those downside risks, but we're not even getting that. And so I think it's really notable to me that there's, you know, you hear the sort of idea of move fast and break stuff, which can be certainly appropriate in a startup environment. It is not necessarily appropriate in an environment when you're talking about $200 billion of daily cash flow. And when you're talking about a system that's really been built on trust that when a payment is supposed to be made by the federal government, it's going to be paid.

And again, I think to a point Wendy made earlier, none of this is to say that it's inappropriate or wrong to try to make attempts to stop fraud or improper payments. Certainly the Biden administration was doing so—you have efforts by previous administrations, but you need to engage in those efforts with an appreciation of where entering the system might cause damage. And I think we just haven't seen that.

Quinta Jurecic: So I want to go back to the points that you both made earlier about the potential sort of dominoes that could fall if we were to end up in a situation where payments don't go out on time either in a targeted way or just because someone's mucking around in the system and they don't know what they're doing and it messes with that 100%, right? Or in the more targeted scenario, Wendy, as you were mentioning, that the administration figures out some way to actually say, you know, we're not going to pay back these particular debts that we have to these particular holders.

You, Jacob, you just mentioned, you know, this, this system runs on trust. I think for, for listeners who are less familiar, it might be helpful to just walk through why is that so damaging? What's the, what's the follow on from that? What is, what are the sort of effects both domestically and for the global financial system if it turns out we actually can't trust that Treasury is going to make good on these payments?

Wendy Edelberg: So let me first level set where we currently are because we know that some agencies have not received the money that we would expect them to get if things were operating under normal conditions. For example, I think the canary in the coal mine here is USAID, which effectively appears to be shut down as an agency.

Now, my sense is that's not because of actions being taken in the payment system itself. My sense is that's because political appointees, you know, have been put in charge of USAID who are not requesting money to be sent to USAID. So I think that that's more just part of a political process now that's still very much contradicting like the laws that Congress has put in place and the money that's been appropriated. So it's still absolutely a problem, but it doesn't seem so far that this is happening because of DOGE getting access to the payment system, but certainly money has stopped flowing in alarming ways.

So let's come to what I was saying about if by getting access to the payment system, Trump then was able to make credible threats about not making interest payments to you know governments that he thinks are, are adversarial. And I worry that—the Treasury market is a $28 trillion market. It is easily the largest financial market in the world. It serves as the backbone of the global financial system. And of course, as part of that, it serves as the backbone of our domestic financial system. The interest rates that we pay on mortgages, the interest rates, you know, that, that businesses face when they want to borrow to, you know, start up a new investment—like all of that runs because of, because of Treasury markets working. That is the lifeblood of our economy and our financial system.

And I can imagine Trump saying something irresponsible about, you know, maybe we're not going to make this interest payment to these Treasury holders, and financial markets now realizing, oh, they can make—they mean it because they can make good on that threat, and financial markets start freaking out.

Now, even at that point, you're at a fork in the road. Are we in our Liz Truss moment where President Trump says, oh, oopsies, take back; I realize now that, you know, that's a really bad idea. And he, you know, reassures markets that no, no, no, he, he completely believes in the rule of law; he completely believes in, you know, the full faith and credit, you know, safety and soundness of the Treasury market.

And what that means is that in financial markets, we have a very, very bad week. Maybe a very bad month. So that's bad, but not nearly as bad as Trump digging in and saying, no, no, no, this is my system. This is my system to operate, and I get to choose. And then, I think you're talking about a full blown financial crisis, because I think no holder of Treasuries will feel, should feel confident anymore that they're going to get paid on time. And that's going to make those Treasuries worth a lot less. ‘

And all of those people who are on the, you know, who are holding Treasuries, which includes probably all three of us—even, you know, indirectly in some retirement account, if nothing else is going to lose a lot of money. I mean, a lot of money.

And that's the kind of thing that leads to a financial crisis at a very sharp rise in interest rates. I'm going to get myself all freaked out.

Quinta Jurecic: I don't feel reassured, I'll tell you that much. Jacob, what do you think?

Jacob Leibenluft: Well, and I just, I think Wendy laid out a, I think, particular and frightening macro risk. I also want to talk about a different kind of risk that gets created when these systems don't operate as they're supposed to in again, this primary purpose of getting payments out on time.

You know, I think those folks who are receiving payments from the federal government have essentially structured their entire lives around getting those payments on time. And you can see that whether you're talking about a Social Security recipient who actually relies on that payment coming in at a certain time every month so that they can make their rent payment, or if we talk about a state that is reliant on a Medicaid payment coming in that allows it to basically keep that state's health system operating, to a nonprofit that operates a Meals on Wheels program and may be forced to lay off people—and we're obviously seeing that in the USAID context right now—you know, those are all folks who rely on BFS operating not only in a way that makes payments on time, but also in a transparent way.

And so I think the other thing that I worry about here and actually gets back to a point that Wendy was making about, you know, what is happening at the moment—it's not, I think, always going to be the case that the use of BFS is to stop payments at BFS. Maybe it's a choke point where essentially they say to the agency—and this seems like it was what was happening with USAID—oh, you know, Are you really sure you want to make that payment? And so it essentially becomes a way to force agencies to do things around impoundment.

And again, I think the other way of thinking about this is whether it's intentional or unintentional, you know, we're in a situation where we're already seeing a number of institutions or in particular, I think, you know, nonprofits or others who are receiving grants who aren't really sure where their money is. And I think that's a really problematic place to be both from a, you know, again, how all these institutions operate on a daily basis, but also it's not quite clear, you know, if they ask, where's my money, who is supposed to answer that question?

And so I think to me, the lack of transparency that we've seen to date and the ways in which using BFS can exacerbate that lack of transparency is also very concerning and I think has a whole set of practical economic effects on a, on a day-to-day basis for, for millions of people.

Quinta Jurecic: And when you just to be clear when you say lack of transparency because of going through BFS, you mean because there's it's not just from the agency, it's potentially also through BFS that there's a confusion there?

Jacob Leibenluft: Partially that and partially, you know, I just think about this from the perspective of a payee of the federal government, who do you call and the person who you call, will they know the answer?

That's setting aside the issue that, of course, we're, you know, seeing substantial layoffs across the federal government that are actually reducing the number of people who can, civil servants in all of the agencies who can address problems as they arise.

But, but essentially, to me, you know, as soon as you start diffusing responsibility about how the system is supposed to work, you're creating a situation where, again, either intentional problems where the administration is deciding not to pay somebody or unintentional kludge in the process, it's not clear where folks go.  And, you know, to me, I get particularly concerned because it will be the least resourced, least connected folks in our society who are affected there.

For example, let's say you accidentally end up in limbo for your social security payment. You know, right now, I think people kind of expect—and again, Social Security administration has funding challenges that have made this made their capacity to, to address this less than I'd like it to be—but you basically know you can call your local Social Security office and they'll fix your problem.

And I worry about a situation where the administration is messing with these systems under, you know, I think the cover of fraud prevention, but actually with other goals in mind and in practice, you know, the recourse that people have to get money that they are legally owed just isn't there.

Wendy Edelberg: So to be concrete about just one example about what Jacob is talking about, let me step back and say that the Hamilton Project created a relatively, hopefully, easy to use, interactive–

Quinta Jurecic: It's wonderful. I definitely recommend that everyone check it out.

Wendy Edelberg: Oh spectacular. To actually be able to see on a day to day basis the nearly $6 trillion worth of payments that are being made through this system.

And the reason that the Hamilton Project was able to create this, I should say, is because these are reported in a daily Treasury statement that exists, and as long as it exists, and happily still exists, you know, fingers crossed, that it continues to and gives us a fair amount of transparency into what's happening on a day to day basis in this payment system.

And we were able to see and you, you know, you can see it if you, if you use our system online, money to USAID went to zero in a way that was, had, had never happened in all of the years the, the, the money to USAID had been broken out in the daily Treasury Statement. So something very obviously unusual was happening with USAID.

Okay, we've already talked about that. The National Science Foundation, NSF, you can also see for payments to NSF, payments for about five days went to zero. And if you're on the other side of an NSF grant, you know, that we know, at least through reporting, we're very much caught up in these executive orders and, you know, the executive branch saying, you know, money's going out that is not consistent with the executive orders and we're going to stop going out, etc, etc.

If you're on the other side of an NSF grant and you're not getting the money that you expect to be getting, It might be because this money is being held back in the payment system because it's not consistent with the executive order. However—and this is the part that when, when Jacob was saying, you don't even know who to call—there have been a couple of other times that I can see in the past few years where NSF money has gone to zero for a couple of days. So maybe that's actually just a normal part of the cadence of NSF money.

So if you're on the other side of an NSF grant, and you're like, what the heck? I'm really confused, I don't know what's happening. You don't know if it's because of something that's happening in the payment system, of something that's happening in like in a political appointee who's like stopping money at the NSF agency level, if, if it's something that's just, oh, this is just the normal course of things and like, if I kind of thought back to 2022, I guess this did happen that one time. Like, you now don't know.

And frankly, my guess, my intuition, is that's part of the point. Part of the point is actually to create a level of uncertainty and confusion and lack of trust in the federal government. Like, in the whole, like, move fast and break things, I actually think the breaking things is part of the point.

You know, we already went into this episode with, like, a depressing lack of trust in institutions, and this is only going to reduce trust.

Quinta Jurecic: And so if, if the, you know, moving fast and breaking things, if the breaking things is the point, what is the advantage of breaking things? Because everything that we've described here from, you know, depriving a lot of people potentially of their Social Security payments to causing a massive global financial crisis doesn't sound hugely advantageous to anyone.

Jacob Leibenluft: First of all, I think whether it's intentional or not, the consequences break things. So I think we can, we can talk about how much they are trying to do that or not. But I do think it gets back to trying to avoid, as Wendy said, sort of respond—there's also a sense of who is responsible. And it creates, I think, confusion over when things don't work—is that due to to The administration's actions, or is that due to a claim that these systems actually never worked in the first place? And I think there's a, I think there's an attempt to, you know, reduce that trust.

I also, you know, I don't want to spec– I think there's enough dangerous things going on that I hesitate to speculate about motivation. But I do think I worry about folks who come from the private sector, who in many cases are still private sector employees, right, are coming in as special governmental employees, continuing their role as CEOs of major companies, you know, including not just Elon Musk, but Thomas Krause, who's been placed in charge of designated as fiscal assistant secretary to oversee BFS.

When you talk about a system that has 100 percent payment rate, that's an example of public infrastructure that, while there's always ways to improve, actually is doing its core job. If you don't believe that public infrastructure works or should exist, and in fact should be supplanted by, you know, private systems, I think, you know, you might find yourself saying that when things break, even if it's your own fault that it broke that, in fact, this is why we should be, you know, outsourcing this essentially to the to the private sector.

And I think that's to me again—I don't want to overly speculate on motivation, but I do—it concerns me to have folks who are behaving so casually with public infrastructure, and I mean both the BFS systems, but actually more broadly when we think about the civil service and the basic structures of our federal government. You know, it concerns me that people who are behaving so casually and don't necessarily seem invested in the idea of actually strengthening those, but maybe instead invest in the idea that that could work better through some private system that may lack democratic control or checks and balances, to use a term that Wendy made earlier.

I want to just also raise one area that I think has been appropriately a focus both in the press and from some of the—although I think we'd all love to see more congressional pushback on this issue–which is, you know, the data in this system is also incredibly sensitive. So we've been talking about both ways in which this administration officials could intentionally try to use this for problematic purposes. We've also talked about some of the ways in which they could break the system.

But the other thing that I think is of a major concern is, you know, in order to pay you, and this is going to be true for, I think, virtually every American, the government needs your bank account information. So there's all sorts of personal information that is in the BFS system that behaving in a way where you're not excessively careful about access puts that at risk.

And I think that's true, and to really emphasize how concerning this is, we also know that hostile foreign actors have been interested in the past and have, you know, made attempts, sometimes even successful, to try to get into Treasury systems. And this comes out in some of the filings that the administration has made in recent litigation. Their–the speed and carelessness at which some of this has moved, I think, should really concern people about whether there's appropriate caution and how that, you know, personally identifiable information could be made public in a really damaging way.

Wendy Edelberg: One thing that I have found most remarkable in this whole episode is that DOGE, you know, acting on behalf of President Trump has figured out how to politicize of all things the BFS. And I find it breathtaking that, like, they are, they are that deep into the machinery of the, you know, the basic operating of the federal government.

And like, you know, as they, as, as, as we see that they're going through Social, that now, you know, the Social Security Administration, the you know, Internal Revenue Service, like, I have every reason to believe that they are deep into the machinery of every other part of the federal government as well.

And that fact, and then what it leads me to imagine as I think going agency by agency, takes my breath away.

Quinta Jurecic: So as I mentioned at the top, we now have this injunction that bars anyone who is not a civil servant who needs access to the BFS systems to carry out their duties, and as well, the Treasury Secretary, Scott Bessent, that everyone else is barred from accessing these systems under this temporary restraining order. It also requires any copies that were made of the information to be destroyed.

Of course, all this litigation is very much ongoing. There are multiple court cases in multiple different stages, but I did want to ask you both, to what extent does that make you feel better about the situation we're in?

Wendy, I was listening to an interview you gave on Marketplace Morning at the beginning of February where you said you were concerned 10 out of 10. That was before the TRO. Are you still 10 out of 10? Are we 9 out of 10? Where are we?

Wendy Edelberg: I think what we have clear evidence of is their aspirations. And so it kind of goes back to what I said a second ago about how, you know, expansive this effort clearly is to get into the inner workings. Which as much as I say, it's, it's, it's breathtaking, it's not like I'm, you know, bowled-over with surprised, like this is what they promised—but it's still, I find it, it's just, it still takes my breath away.

I am not reassured because I suspect they are, to the degree that they are truly being stopped, my guess is that they just turn the page and go to, you know, the next play.

Jacob Leibenluft: I, I agree with Wendy that I mean, certainly I think the TRO is an important step and, and it pushes pause on one particular specific technical element of the risk. I don't think it changes my overall assessment of what both they're trying to do and the fact that they seem to be willing—and again, I think you see this in the way that the administration both, you know, Elon Musk and the president over the last few days have talked about Social Security, for example—using, I think, clearly misleading numbers to try to portray a picture of fraud that just, you know, has been looked into by inspectors general and and, you know, does not exist at all in the way they're describing it exists.

So I think both the intent and the I would say again, sort of casual lack of care being used here, I think remains, seems to remain the MO and, and I, and I am concerned that there are other means to get at some of the problematic outcomes that we've discussed.

I think the other thing I would mention about the, the ongoing litigation and whether you want to describe this as a cause for optimism or pessimism, I'm not quite sure. But I think it is just striking to me in how it's the only way in which we've been able to get at least some information from the administration about what was happening here.

I mean, I think it is really, I think it's been in some ways underappreciated, you know, on, on this whole—if we step back a moment, you know, this whole conversation about BFS began, I believe it was Jan. 31, when the then career fiscal assistant secretary resigned, and it was widely reported that was in protest. So this has all happened quite quickly.

On Feb. 4, the Treasury Department sent a letter to Senator Wyden, you know, ranking member of the Senate Finance Committee, who had expressed concerns and basically tried to portray this as nothing to see here. Essentially was describing the process here as, you know, a relatively standard review of systems, you know, I think their words were to maximize payment integrity.

And then what comes out just a week later in signed affidavits in this litigation but clear indication in the administration's own words that no, in fact, they were using this to stop payments to USAID for policy reasons and acknowledgement, even from the administration, that there were risks entailed in the access that they had been giving to the 25 year old DOGE staffer who again, in those previous communications hadn't really fully been acknowledged by the administration.

And then a admission that they had even accidentally given that staffer write access to the files. They claimed he never used it and so forth and so on. But again, even in the most generous reading of what they said, it was a very different picture of the situation than what the administration, the Treasury Department was telling the public was telling Congress.

And so on the one hand, you know, I think we can be encouraged that the litigation process has brought some of that out into the open. But I think it both unfortunately, I think, validates many of the risks that folks like Wendy and me were talking about before that information came out and I think again, just reveals a quite concerning lack of transparency about both their intentions and how they're going about these efforts.

And so I were that, that, that really makes me concerned about where this is going, given, I think the willingness to hide the ball to, to, to say it charitably about what was going on here.

Wendy Edelberg: I want to respond to one thing that, that Jacob said in a slightly glib way, but you said a lack of transparency. In another way of reading what's happening is they are being completely transparent. So, Elon Musk has said, I'm going to figure out how to cut, what, a trillion, two trillion dollars? Like, they're being completely transparent. Like, we just haven't, we just haven't believed them.

Jacob Leibenluft: Yeah, no, I think that's, that's a really good point.

And I should say, you know, in terms of the intentions again, you know, the evidence was out there all along as when we said in Elon Musk's tweets—both about the overarching goal, but also, you know, when I mentioned the specific tweet about stopping Lutheran payments or claiming that, you know, Treasury officials were illegally, you know, allowing payments to go out the door—tose intentions were all clear from the, from the tweets.

It just, to me, there seemed to be a period of time when the administration might have been saying, well, despite what Elon Musk is saying in those tweets, we're going about this in a totally normal way with nothing to be concerned. And in fact, again, these affidavits show quite clearly in my mind that you would have a stronger and clearer view about what was happening if you just deduced it from those Tweets than you would have if you listened to at least some of the assurances they were occasionally trying to give Congress and the public.

Quinta Jurecic: There's this bizarre mix of sort of extreme transparency and a total lack of transparency.

Jacob Leibenluft: Would I be happier or more assured if they were actually announcing clearly every day, you know, we've picked these 10 people not to pay? No, that would be its own problem because it would be illegally impounding or breaking contracts.  But we're in a place where some of that seems to be happening at least.

And we don't even know, you know, I think to Wendy's point on the NSF earlier, like, you know, sometimes systems are down for maintenance, and it's actually a big deal to know whether a system is down for maintenance because they're, you know, doing a scheduled update versus a system's not making payments because it was ordered by the president of the United States.

Wendy Edelberg: But, but like when Musk says, I was trying to look while I was sitting here and I can't remember the exact number. Like, what did he say? He said that some wildly high fraction of social security payments, he said were fraudulent, like 80 percent or something like he's using number. Anyway, he's just. This is the number that I was looking for when he somehow effectuates, like, you know, an 80 percent reduction in social security benefit payments, like, we'll come back and we'll have this conversation, and I will say, well, in some sense, he was being totally transparent.

Quinta Jurecic: So that I want to close by asking why you think we haven't seen more pushback.  So, we, we started by, by raising this issue of to what extent this is, we can understand this as part of a effort by the executive to essentially seize control over the congressional power of the purse, obviously. Republicans in Congress who have majorities in both chambers have been pretty willing to take this lying down, as far as I can tell.

And then the other aspect in terms of pushback that I wanted to, to ask about is actually the markets. It doesn't seem to me like the markets are reacting to all of this with the degree of alarm that I'm hearing in this conversation. If I'm wrong, if I'm wrong about that, please let me know. But I'm, I'm curious for your thoughts on, on why that might be.

Wendy Edelberg: So I'll talk a little bit about the, the markets and venture a little outside my lane on the, on the political stuff, though it's not my area of expertise.

So, so on the, on the markets, it's hard to figure out, if you were, let's say a holder of Treasuries, how do you price in a little bit of default risk or a little bit of incompetence? Like it's kind of, it's kind of binary. Like you either trust Treasuries or you don't. And so I suspect that finance, that participants in financial markets—and you know, whether or not that's people in this, you know, who are mostly in the stock market or people mostly like in the bond market—I think that they're paying close attention.

I mean, there's a lot of other things that Trump is doing that are incredibly beneficial to profits and, you know, the value of stocks and, and such. So it's not all downside for them. I suspect they're paying very close attention, but when it gets priced in, it's going to be abrupt or maybe I should say, if it ever gets priced in, it will be abrupt. I shouldn't say when.

As to why people are taking it lying down—I mean, this is outside my lane, but, but my intuition is that people elected Donald Trump to like knock heads together, to shake things up, to, to be muscular in tearing the system inside out. And so I think for a lot of people watching this from the outside, like so far, so good.

Jacob Leibenluft: Look, from one perspective, the awareness among probably even members of Congress, let alone the general public, about the Bureau of the Fiscal Service before three weeks ago was probably quite low. So did, do they—

Quinta Jurecic: I will confess that I had never heard of it.

Jacob Leibenluft: And again, to sort of go back to where we started, you know, in some ways, the best sign of a smoothly and effectively operating BFS is one that you are never hearing about.

And so, from a general public perspective, I, I do think—while certainly not at the level that I think has caused the administration to be particularly chastened—I, I do think it's good that you see some concern, whether it's about, you know, the disclosure of private information like your bank account number or the broader risks to specific payments or the economy. I mean, I think it's, you know, there is greater awareness than there was three, three weeks ago, and greater concern.

Having said that, I think if you had asked even those of us who have worked at Treasury or, you know, had BFS system before, whether this was even going to be on the table before three weeks ago, I think we would not have thought so either. And so it's quite troubling that we're here and you would have thought that would have caused all the alarm bells to go off.

I think, unfortunately, this is one of those situations where as much as we can raise the and talk about the risks and as much as I think events to date have shown many of those concerns to be validated, I worry that for example legislators may not be pushed to take real action until you see negative consequences.  And, and, you know, the question will be, of course, at that point, do they then own those consequences for not heeding these risks?

But, you know, I think the challenge is taking something that on the one hand can feel pretty abstract and technical and make clear that this could have major impacts on, on American lives. I think that's what many of us have been trying to do. Whether that will, particularly in an environment where so much is happening, fully break through to cause a response, you know, I think that's that has to be the area of concern, but I think why it's important for people to continue to talk about some of these risks.

The last thing I would say is I think that we're at an unfortunate point where—I think the New York Times in one story, if I remember correctly, described Elon Musk as quote unquote fixated on the BFS system. And I think we're at an unfortunate point where the level of focus and attention DOGE has and the importance they place on having access and control to these systems is actually very high. And you sort of have this situation where, where they care a lot and legislators in particular, Republican legislators, even if they have concerns, those concerns are much lower.

And so, in a way, I think that should frighten us. The fact that they find these systems to be so important, I think shows that they're going to, you know, they're quite willing to take some drastic and problematic steps, but that asymmetry, I think, is, is, is part of the challenge.

The one last thing I would say is you know, I think both in the case of BFS, but also with respect to, you know, some of the frozen payments across the board, I think what you're seeing both among recipients who have had payments frozen and among legislators is real genuine fear about the consequences of speaking up.

And so I think to the extent that you are seeing real world manifestations of these actions today, as opposed to some of the broader system wide concerns we're raising—you know, I think you see everyone from, you know, Republican senators to the actual grantees say, you know, if I speak up about this publicly, I may get punished and I'm better off either expressing my concerns privately or just waiting it out and hoping that my money gets unlocked.

And that I think may be a rational reaction, but it, you know, I think could exacerbate the situation where the broader both systemic and constitutional concerns stay very live because you're not getting coordinated, consistent, and broad resistance to, to the action.

Quinta Jurecic: All right, we're gonna leave it there on that cheerful note. Wendy, Jacob, thank you for joining us.

Wendy Edelberg: Thanks for having us.

Jacob Leibenluft: Thank you.

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