
Aaron Schwartz/Sipa USA via AP Images
Senate Minority Leader Chuck Schumer (D-NY) speaks at a press conference at the Capitol in Washington, January 28, 2025.
We now have two contradictory stories about the infiltration into the largest and most sensitive government payment systems maintained by the Treasury Department’s Bureau of the Fiscal Service. If you believe the Treasury secretary, Scott Bessent, who has only been there less than a week and who gave access to Elon Musk and his Department of Government Efficiency (DOGE) team in the first place, it’s limited, read-only, merely for purposes of review, to improve the prudent disbursement of taxpayer funds. If you believe the people who actually have run the system for years, some 25-year-old former SpaceX employee named Marko Elez has administrative, read/write access to the system, which is responsible for 88 percent of all payments made by the federal government.
I think I know who I believe.
According to Wired, Elez can navigate the file system, alter user permissions, write code, and modify files on the system. “You could do anything with these privileges,” said one source. Josh Marshall adds that “extensive” code changes have already been made, and that staffers who know the system are half-helping, basically because they know he could blow it up if he’s not careful. There’s a reason Nathan Tankus has been having the dry heaves for the past five days. (Nathan’s latest update is here.)
What’s more frightening at the moment is what will be done accidentally. One misstep with code could blow up the ordinary, smooth functioning of four million payments a day, with dire consequences almost across the board.
This testimony in a federal lawsuit gives you some sense of the stakes.
A nonprofit in West Virginia with five employees, which does nothing but serve individuals in the community with disabilities—getting them to health treatments or the grocery store, building ramps in their homes so they can get around, helping them live on their own—gets 70 percent of its budget through the Administration for Community Living at the Department of Health and Human Services. They have no cushion or advance payout from the government; they can only draw down to pay immediate bills, a total hand-to-mouth operation. When the Office of Management and Budget memo froze all grants, including their funds, within two days they had to lay off three of their five staffers, or 60 percent of payroll. State grants allowed them to rehire two of the staffers, but without the federal funds they are weeks away from collapse.
Multiply this by, I don’t know, hundreds of thousands, or tens of millions if you’re talking about benefit payments for things like Social Security. That’s what we’re talking about.
But it’s important to note that the previous example is from an organization that still lacks access to a federal grant, even though OMB rescinded the memo that started the broad pause on such grants, and even though there are now two temporary restraining orders on that conduct. Just yesterday, D.C. District Court Judge Loren AliKhan issued the second order, days after she issued an administrative stay in the case. In that order, AliKhan cites White House Press Secretary Karoline Leavitt’s comment that the funding freeze was not rescinded along with the memo, and highlights numerous entities that still cannot get funding that was clearly appropriated by Congress and approved by the particular agency. “The funding pause remains in effect—at least for some recipients—despite OMB’s rescission of [the memo],” AliKhan writes. “Destroying the paper trail of allegedly illegal activity means nothing if the activity persists.”
We can draw two conclusions from this. One, when you set something in motion in the federal government, it’s nearly impossible to roll it back quickly. And we know from this testimony that even a short-term hiccup in funding has real consequences: People will lose their jobs, and services will not be delivered, mostly to the poorest and most vulnerable members of society.
The second, inescapable conclusion is that an active impoundment of federal spending is happening, across several nodes of the government. In many cases, agencies are deriving separate authority than the OMB memo, from executive orders for example. This is no less unconstitutional: You can’t just stop payments approved by Congress because the president doesn’t like the recipient.
We know that the vast majority of federal aid has been halted, particularly that which comes from the U.S. Agency for International Development. This includes medical care and food for malnourished children, refugee hospitals, supplies for war-torn regions, and much more. Claims that humanitarian aid was exempted from the pause are simply not true. We know that clean-energy businesses aren’t receiving grants passed by Congress under the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. We know that Energy Department grants intended for historically disadvantaged cities or projects with community benefit plans (including the restarting of a nuclear facility in Michigan) have been stopped. We know that electric-vehicle charging station grants have been stopped.
This is all completely illegal. Elon has boasted of shutting down certain payments through his takeover of the payment system, though that’s probably just bloviating. (It’s also terrifying, as it carries the threat of mucking up the payment system in ways that could destroy the country.) But we’re not in a theoretical place when it comes to payments to disfavored causes and organizations. They are doing this now, in the open, in plain view of everyone, and in so doing usurping the power of a coequal branch of the government.
I recognize well the need to focus on immediate threats, but the payment system crisis has put the matter of active impoundment into the background. Trump and Musk are seeing what they can get away with, where they face opposition. Numerous conservative Supreme Court justices do not agree that the president can pick and choose which spending to honor. But what if they never get the opportunity to rule on it? The lawsuits to immediately enjoin improper access to the payment system are incredibly important. But we need the lawsuits on impoundment today as well, for the sake of every organization leader sitting around their office making decisions on who they can save and who they can’t.