Update 842: Government Run-a-Musk

February 13, 2025 | Banking, CFPB, DOGE, Jobs, OMB, Update | By

Update 842 — Constitution under Attack;
Administration’s Assault on Law Expands

This week saw new and continued attacks by the Trump administration on federal law and constitutional norms via dismantled programs, dismissed civil service workers, and personal data breaches, with more to come threatened. The emerging constitutional crises, accommodated by the GOP, are being challenged in federal courts and by Democrats in Congress.

We focus below on some of the worst of the above, including Trump’s carte blanche for Elon Musk to gain access to federal payment systems and eliminate programs, as well as procedurally permitted but unpopular efforts in Congress to curtail regulations to protect American consumers. All the while, more Trump nominees advance through Congress, with Russell Vought, Project 2025 architect, confirmed yesterday by the Senate to serve as OMB Director. Details below. 

In late-breaking news, Senate Budget Committee Chairman Lindsay Graham (R-SC) announced the Committee’s plan to move forward with a budget resolution to kick off the reconciliation process given House delays on its own measure. In contrast to the House plan, the Senate’s is designed to secure Trump early wins on priorities like immigration and defense, leaving a tax bill for a later date. Sen. Graham released his chairman’s mark this afternoon, scheduled for a committee markup as early as next Wednesday. We will cover this development and the reconciliation process, in Wednesday’s deep-dive. 

Good weekends all…

Best,

Dana

Headline

DOGE Flaunts the Law as Musk Grabs Power

Trump granted Elon Musk’s Department of Government Efficiency access to the Treasury’s payment system, alarming federal workers, consumer advocates and Democratic lawmakers alike. DOGE is not a federal department, and yet Trump’s first-day EO  gave it “full and prompt access to all unclassified agency records, software systems, and IT systems.” After forcing out the Treasury’s longtime Deputy Secretary, David Lebryk, over his refusal to allow Musk access to sensitive Treasury data, DOGE now has access to the Bureau of the Fiscal Service, which handles the disbursement of payments such as Social Security checks and federal salaries. While Treasury insists that DOGE has “read-only” access to the department’s data, meaning that it would not be able to make coding changes to it, even that much access gives DOGE access to sensitive financial data for millions of Americans, such as their Social Security numbers. The fact that Musk is reportedly using private email servers to handle this data, which is in and of itself illegal, means that that data could be at increased risk even if Musk does not use it maliciously. 

As of Wednesday, DOGE’s actions and access to sensitive government data spread to Medicare and Medicaid, the Department of Labor, and even the FAA. Trump stated “Elon can’t do and won’t do anything without our approval. And we’ll give him the approval where appropriate, where not appropriate we won’t.” Considering Trump’s disinterest in obeying laws or norms that restrict his power, this is hardly reassuring.

If DOGE’s access to the Treasury payment system goes beyond read-only, Musk would have vast control over federal spending in blatantly illegal ways. Musk could cut off benefits for millions of Americans via Social Security and other programs.  Democratic lawmakers have raised concerns that he could do it for politically motivated reasons, like unilaterally cutting off funding to programs he does not like. Musk has already bragged about DOGE’s role in gutting USAID and other targets of his ire. If Musk ends up using the Treasury payment system to block funds appropriated by Congress, it could set off a constitutional crisis. Musk has already claimed credit for halting payments to federal contractors, apparently with Trump’s approval. Such power runs counter to the insistence of Trump officials that DOGE’s access is “read-only.”

Musk’s moves through DOGE are already generating a political backlash. Several lawsuits have already been filed against DOGE concerning its access to sensitive government data. On Wednesday, one such lawsuit resulted in the DOJ agreeing with plaintiffs to limit DOGE’s access to sensitive Treasury data while litigation is ongoing. Additionally, 13 blue-state attorneys general sued to block DOGE’s access to that same data. 

Musk himself is not popular, and Democrats have zeroed in on him as their new target as they look for a winning message to combat the Trump administration. House Democrats have already attempted to subpoena him during a House Oversight Committee hearing on Wednesday focused on “rightsizing” the federal government. Representative Mark Pocan (D-WI) also introduced the ELON MUSK Act to strip him of his federal contracts. Democrats are also consequently revisiting their strategy to cooperate on some of Trump’s nominations and are now taking action to stall the confirmation proceedings for Russ Vought and Kash Patel. How all of this will pan out is uncertain, but the damage that an unelected billionaire could do to the federal government should concern everyone.  

Other Developments

Trump Fires CFPB’s Chopra, Designates Bessent Acting Director

On Saturday, President Donald Trump caved to the demands of the financial industry and fired Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra. Trump has since designated Treasury Secretary Scott Bessent as Acting Director of the Bureau whose work Bessent has largely halted. 

Chopra led the CFPB – the federal consumer watchdog formed in the wake of the 2008 financial crisis – since 2021 and consistently worked to protect the most financially vulnerable from corporate abuse and make the financial system fairer. Under his leadership, the Bureau elevated the total relief to consumers to over $21 billion, brought nearly 100 enforcement actions against bad actors, and finalized rules to cap excessive credit card late fees, limit excessive overdraft fees, and remove medical debt from credit reports. 

Chopra’s firing is a loss for consumers and honest businesses. The Trump administration’s decision to replace Chopra on a temporary basis with Bessent, a billionaire hedge fund founder, signals a stark shift for the agency which has worked to make the financial system fairer for the most vulnerable people over the past four years. Under Bessent, the Bureau’s work has already been largely halted and the agency itself is likely to face existential attacks. 

Upon taking charge of the agency, Bessent immediately instructed staff to:

  • suspend the effective dates for the bureau’s final rules that have yet to take effect,
  • not to approve or issue any proposed or final rules or guidance, and
  • pause public communications.

The freeze applies to a broad swath of work by the agency — not authorized by Bessent or required by law — and will persist pending review to “promote consistency with the goals of the Administration.” Trump plans to nominate a CFPB Director to replace Chopra following Senate confirmation. 

Allies of the Trump administration have made their goals clear. Republicans have sought to dismantle the CFPB and attacked its work since the agency’s inception. Project 2025 explicitly advocated for the abolition of the CFPB and as recently as November, Elon Musk called to “Delete CFPB.” 

As Musk and his unelected representatives of the so-called Department of Government Efficiency (DOGE) continue their illegal disruptions and attacks on federal government agencies, it is crucial that Democrats vigorously defend the CFPB and its work. Hours ago, three representatives of the “DOGE” arrived at the CFPB’s office in Washington D.C. and were set to gain access to the agency’s data. As the CFPB’s union has highlighted, this development is deeply concerning, given Musk’s recently-announced plans for a new payments platform run jointly by Visa and his social media platform X, subject to the CFPB’s rules — a firm which could eventually be held accountable for any consumer abuse by CFPB enforcement actions.

January Job Gains Slow, Unemployment Ticks Down

Total nonfarm payroll employment rose by a lower-than-expected 143,000 jobs and the nation’s unemployment rate ticked down to 4.0 percent in January. Job gains in January slowed compared to the prior month when 307,000 jobs were added to the American economy. The new data was included in the January jobs report released by the Bureau of Labor Statistics this morning and shows that the labor market remains strong despite the extended high interest rate environment.

Source: New York Times

Net job growth in December was revised up by 51,000 jobs, from the initial estimate of +256,000 to +307,000 jobs, while the November figure was revised up by 49,000 jobs, from +212,000 to +261,000 jobs. With these revisions, employment in November and December combined is 100,000 higher than previously reported.

Last month, the largest gains came in:

  • Health care (+44,000 jobs)
  • Retail (+34,000 jobs)
  • Social assistance (+22,000 jobs)

Employment declined in the mining, quarrying, and oil and gas extraction industries.

The unemployment rate ticked down to 4.0 percent in January from 4.1 percent in December and 4.2 percent in November. The unemployment rate remains remarkably low and has remained fairly consistent between 4.0 and 4.2 percent for the past eight months.

Today’s report shows that the labor market remains strong but continues to show signs of cooling after weakening slightly over the past year. With job gains strong and the unemployment rate low as the Federal Reserve has begun lowering interest rates from their elevated level, the U.S. economy remains in good shape. The Fed’s interest-rate-setting committee has noted that it no longer views the labor market as a source of inflation but today’s strong data suggests that the committee may move slowly in cutting rates further over its next several meetings. The Federal Open Market Committee meets next to determine the fate of interest rates on March 18 and 19.

Confirmation Votes/Hearings

Russell Vought, Director of OMB

Yesterday, the Senate confirmed Russell Vought as Director of the Office of Management and Budget (OMB) in a party-line vote. Vought – a co-author of Project 2025 and a persistent advocate for impoundment – has faced major pushback from Democrats and some Republicans following the federal funding freeze that sent the country into chaos last week. 

Senate Budget Committee Democrats protested the vote that moved Vought’s confirmation out of committee last week, and Democratic Senators continued their protest efforts by holding the floor all of Wednesday night ahead of Thursday’s confirmation vote in a fiery show of discontent. Over 20 Democrats took to the Senate floor to share their concerns about the Administration’s efforts – under the direction and design of Vought – to go around Congress in pursuit of cutting the federal government. 

Vought’s confirmation signals that the Trump administration’s attempts to circumvent congressional power of the purse will continue. Many of the administration’s past actions that unilaterally pause or cut funding have been put on hold by the courts, but Vought is not short of ideas for undermining our government’s crucial checks and balances as can be directly seen through his contributions to Project 2025. 

Howard Lutnick, Secretary of Commerce

Trump’s nominee for Secretary of Commerce Howard Lutnick is poised for confirmation after advancing out of the Commerce, Science and Technology Committee on Wednesday. Senator John Fetterman of Pennsylvania was the only Democrat to join Republicans to push Lutnick’s nomination to the Senate floor with a 16-12 vote. Throughout his nomination hearing, Lutnick expressed his support for across-the-board tariffs and agreed with the President’s intentions to target allies and adversaries with tariffs for both short-term domestic policy objectives – as seen this week with the tariff drama with Canada and Mexico – and big picture grievances with the international trade system. The Senate is expected to vote to confirm Lutnick’s nomination for Secretary of Commerce in the coming days. 

Kelly Loeffler, SBA Administrator 

On Wednesday, the Senate Small Business and Entrepreneurship Committee voted to advance the nomination of Kelly Loeffler as head of the Small Business Administration to the Senate floor, with her passing by a vote of 12-7. The business executive and former Georgia senator will likely be confirmed for the role, as there is little reason to believe that Senate Republicans have any opposition to their former colleague joining the administration. The most notable aspect of her confirmation hearing had less to do with her and more to do with Trump’s recent freeze on federal spending. The Committee’s Democrats, led by Ranking Member Ed Markey (Mass.), questioned Loeffler on the legality of Trump’s decision, with her standing by the president. This is particularly important in light of Trump’s calls for withholding disaster aid to Los Angeles, whereas the SBA is in charge of providing disaster loans to businesses. While Democrats may vote against her in protest, her support from the GOP means that her confirmation is not in doubt.

Jamieson Greer, U.S. Trade Representative

On Thursday, Jamieson Greer, former deputy to Trump’s previous United States Trade Representative (USTR) Robert Lighthizer, sat before the Senate Finance Committee for his nomination as USTR. The USTR is the United States’ chief trade negotiator – a flashy job title given the President’s spotlight on trade and tariff policy in his first 100 days in office. Unique to this position, the USTR is expected to report to both the President and Congress given its role in trade agreements and negotiations with other countries.

In his opening statement, Greer outlined his sense of urgency for what could be his new role: “I am convinced that we have a relatively short window of time to restructure the international trading system to better serve U.S. interests.” Greer said that the United States should be a country of producers and look to discover new markets for American farmers. While he defended the President’s plans for tariffs, it is unclear which cabinet member – if any – will actually have Trump’s ear on trade. Howard Lutnick – awaiting final confirmation from the Senate – is set to play a major role in trade policy. Greer deflected speculative questions on what to expect in terms of tariff rates, sectoral impacts and the status of trade deals by reminding the committee of Trump’s executive memo “America First Trade Policy.” The memo directs relevant agencies – including the USTR – to review various parts of what could be central tenants to Trump’s trade policy including tariffs, the USMCA and the feasibility of an External Revenue Service. 

Hearings

HFSC GOP Seeks to Undermine Key CFPB Rules

On Wednesday, the House Financial Services Committee convened for a hearing in which they considered a series of bills and resolutions to attack protections against discrimination for small businesses in credit provisions and block a recently finalized rule to limit overdraft fees. 

The Committee considered a draft resolution released by Republicans that seeks to block a rule to protect consumers from overdraft fee abuses by America’s largest financial institutions. The rule was finalized by the Consumer Financial Protection Bureau (CFPB) in December and is set to go into effect on October 1. It would reduce overdraft fees charged by insured depository institutions and credit unions with more than $10 billion in assets from the average $35 charged today to $5. The CFPB estimates that this will save consumers up to $5 billion in annual overdraft fees, or $225 per household that pays overdraft fees. 20/20 Vision, along with a broad coalition of consumer organizations, strongly rejects Republicans’ attempts to undermine the rule. 

During the hearing, Committee members also considered three bills seeking to repeal or undermine Section 1071 of the Dodd-Frank Act which builds on the Equal Credit Opportunity Act (ECOA) and requires that financial institutions gather and report data on race, ethnicity, and sex in the small business lending space. This data would help us better understand the financing needs of small businesses owned by women and minorities and identify possible discrimination in an effort to facilitate the enforcement of fair lending laws.

One draft bill led by Representative Roger Williams (R-TX) would entirely repeal Section 1071. The Small Lenders Exempt from New Data Excessive Reporting (LENDER) Act led by Chair French Hill (R-AK) and the Bank Loan Privacy Act led by Representative John Rose (R-TN) would significantly delay the implementation of the CFPB’s 2023 rule implementing Section 1071. Ahead of the hearing, 20/20 Vision joined the Leadership Conference on Civil and Human Rights and a broad group of national organizations to oppose the three pieces of legislation. 

SBC Banking Committee Discusses Debanking 

On Wednesday, the Senate Banking Committee held a hearing on “Investigating the Real Impacts of Debanking in America.” “Debanking” refers to the practice of indiscriminately denying financial services to broad categories of customers rather than analyzing and managing the risk of those customers. It has gained traction in recent political discourse as Trump and others have accused institutions such as the Bank of America of denying their services to conservatives. In the hearing, both Democrats and Republicans stated their concern that banks were improperly denying access to a range of businesses and individuals, though they did not agree on the root cause and focused on different alleged victims. Republicans, such as Senator Mike Rounds (R-SD), focused on a regulatory environment that they claimed forced banks to deny service to certain industries. In contrast, Democrats, such as Ranking Member Elizabeth Warren (D-MA), blamed the processes adopted by banks themselves, such as biases in the algorithms they use, to decide whether to provide people and businesses with their services. 

Another noteworthy aspect of the hearing: its focus on the crypto industry. Nathan McCauley, the CEO of crypto-bank Anchorage Digital, alleged that his firm’s bank account was abruptly closed on the grounds that the bank “was not comfortable with our crypto clients’ transactions” without explaining further and that they could not find another bank even after asking dozens of institutions. 

Look Ahead

Tuesday, February 11

Wednesday, February 12

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