Personal Discretion Over the Treasury's Payments System Means the End of Democracy

On Friday night, Elon Musk’s team gained access to the Department of Treasury’s payments system, which processes the federal spending that makes up more than a fifth of the U.S. economy. Social Security, Medicare, agricultural supports, the National Parks—a large majority of government spending flows through this spigot.

Musk’s team not only has the ability to see every government payment, but can make changes to the system—which could mean having the capacity to turn that spigot off. What Musk appears to be attempting is using the payments system to decide what congressionally approved spending will actually occur. If that happens, it will take our unfolding constitutional crisis to a whole new level.

Normally, the federal payments system is apolitical plumbing managed by nonpartisan bureaucrats. Those bureaucrats simply process funds; they don’t make decisions about whether spending is justified. But they have immense unused power, because controlling the federal spigot means they have the capacity to stop any government payment with the push of a button, even if they have never done so.

With Musk at the reins, that power shifts to an unelected billionaire who intends to use it. Don’t like “woke” research? Turn it off. Hate USAID? Cut off the money. Think payments to Lutheran Family Services are illegal? Shut them down. Giving a single individual, let alone one with no official position, such control over the federal government would be extraordinarily authoritarian.

The courts place limits on the use of such power, but they are only one check. Apolitical employees, whose only obligation is to the law, are another safeguard. We also rely on the technical infrastructure itself to ensure that payments happen without disruption. Mucking about with systems that are built on sixty-year-old code could be deeply disruptive to vital government functions, shutting down the Social Security payments many rely on or cutting off payments to small businesses that depend on government contracts for survival.

Trump has already demonstrated his intent to gut parts of government that threaten him or depart from his political allies’ interests or ideology. He has moved toward purging the FBI of independent voices, tried to prohibit funding for whole fields of study, and temporarily halted congressionally approved spending on clean energy.

The effort is unprecedented, but so far it has met with mixed success for two reasons. First, cutting off funds one agency at a time, in the face of reluctant bureaucrats, is a messy, slow and uneven process. Second, it is generally illegal, since the Impoundment Control Act of 1974 (ICA) requires presidents to spend congressionally authorized funds unless they receive specific congressional approval not to do so.

With Musk in control of the federal spigot, the “messy and slow” problem would be solved. In agencies like the National Science Foundation, the president does have considerable authority to direct spending, even if it has in the past been delegated to scientists and experts. If the president wants to create ideological litmus tests, he probably can. But even so, it takes time to make unenthusiastic employees review each grant for mentions of gender and equity. Centralizing this power would speed things up considerably.

In other spaces, however, statutes—and more generally, the Constitution’s delegation of spending power to Congress—leave little room for such presidential discretion. Here, control of the payment system would give Musk the technical capacity to hit pause, but would then face legal challenges from the states, businesses, and nonprofits who were intended to receive them. Though the initial lawsuits against Trump’s spending freeze were brought for violating the Administrative Procedures Act, not the ICA, they have already temporarily reversed it.

Eventually, however, such legal challenges would make their way to the Supreme Court, which—though experts disagree on how likely this is to happen—might potentially overturn the ICA as unconstitutional. Should that take place, Trump, and Musk, would have a much freer hand to pick and choose which congressionally authorized funds actually get spent.

At that point, having operational control of the spigot would have even broader implications for Trump’s ability to implement his sweeping, but currently stalled, agenda. For example, Trump wants to control how schools teach history, but without a funding lever, his main power is the ability to intimidate them into compliance. But if Trump had greater direct control over federal funding streams, the pressure to comply would increase, even though Congress has specified that the federal government cannot control local curricula.

One can imagine even more dire scenarios, depending on Supreme Court decisions and the administration’s willingness to ignore the law entirely. In an extreme, but far from unimaginable, example, Trump might retaliate against blue states who refuse to take directives from ICE by turning off Social Security payments to their residents until they comply. This is far beyond the bounds of law, but until now it has also been a practical impossibility. Operational control of the federal payments system would, for the first time, make it a technical possibility.

In addition to politicization and ideological control, having power over the spigot would also open up new avenues for corruption. Imagine Musk with the power to simply turn off funding to those who refuse to invest in his projects, or support his business partners. This, too, is illegal, but at least at present is hard to carry out. That practical barrier would disappear with control of the federal payments system, leaving us only with Musk’s questionable integrity to protect government from abuse.

There are very good reasons that the federal faucet has always been controlled by apolitical bureaucrats. Having a president—or, even more so, an unelected billionaire—hold direct, granular control of nearly seven trillion dollars is power beyond the Founders’ wildest dreams. And we have seen elsewhere, notably in Hungary, that finding ways to use government to defund the opposition has been an effective opening salvo in the expansion of authoritarian rule.

If the Supreme Court cooperates with Trump’s desire to expand his control of the purse, we may be headed in this direction regardless. But even so, there is a difference between an executive with diffuse bureaucratic control of spending, and one with the fully centralized ability to stop the functioning of any part of government. If the latter becomes a reality, we will have taken another big step toward losing our democracy entirely.

Featured image is Women inspecting printed currency at the Bureau of Engraving and Printing, by Waldon Fawcett