Washington
CNN
—
A few weeks before Donald Trump was sworn in as president, members of his transition team went to the Treasury Department to talk about the handover of power.
But what is normally a routine discussion turned into an alarming series of interactions for a handful of top career Treasury officials.
Trump’s team, which included members of Elon Musk’s Department of Government Efficiency peppered Treasury officials about one of the department’s most sensitive and critical functions: processing trillions of dollars in government payments a year.
Through a series of specific requests, Trump’s landing team attempted to lift the hood on the department’s Bureau of the Fiscal Service, an arcane branch that distributes nearly 90 percent of all federal payments, including Social Security benefits, tax refunds and payments to federal workers and contractors. That adds up to a billion annual transactions totaling more than $5 trillion.
A month later, this obscure Treasury office is now a key battlefront in a wider war being waged by Trump and his allies over federal spending. Signs of the fight have emerged this week.
The top civil servant at the Treasury Department, David Lebryk, is leaving unexpectedly after Trump-affiliated officials expressed interest in stopping certain payments made by the federal government, according to three people familiar with the situation.
According to one person familiar with the department, Trump-affiliated employees had asked about Treasury’s ability to stop payments. But Lebryk’s pushback was, “We don’t do that,” the person said.
“They seem to want Treasury to be the chokepoint on payments, and that’s unprecedented,” the person added, emphasizing that it is not the bureau’s role to decide which payments to make — it is “just to make the f-ing payments.”
Before Trump’s inauguration, members of his transition landing team wanted to know granular details about the bureau’s proprietary computer systems, including “each step in the disbursement process.” They also wanted to visit field offices where government workers, in Philadelphia or Kansas, work on computers that disburse payments.
The requests puzzled many career officials initially. The transition operation hadn’t requested substantive briefings on any of Treasury’s other critical areas of operation, multiple people familiar with the matter said. Veterans of past transition efforts, representing presidents of both parties, couldn’t recall precedent for the Trump team’s entreaty.
With Trump set to take office in a matter of days, officials found little reason to open the doors to the nation’s payment nerve center. But the persistence of the transition operation’s focus on the payments infrastructure rattled some Treasury officials.
The arcane process of cutting the government’s checks is normally overlooked by political leadership, though the incoming administration exhibited an odd interest in its inner workings, sources said — raising suspicions among career officials about the intent to tinker with a crucial financial pipeline that keeps the nation’s economy running.
Tension between Lebryk and Trump political appointees, including those affiliated with DOGE, had been mounting, with sources telling CNN that things escalated this week after the Office of Management and Budget on Monday ordered a sweeping freeze on trillions of dollars in federal spending.
At the time, Lebryk was the acting Treasury Secretary. Trump’s pick to lead Treasury, Scott Bessent, was sworn in Tuesday. OMB rescinded that order a few days later after an uproar that’s still being litigated in court.
Lebryk’s departure, which he announced by email to his team on Friday morning, has shaken up career Treasury officials, several sources have told CNN this week.
Lebryk’s exit was first reported by the Washington Post, but the full scale of the tension inside the Treasury Department has not been previously reported. Lebryk didn’t respond to an inquiry from CNN on Friday morning.
Sen. Elizabeth Warren, the ranking member of the Senate Banking Committee, called for an investigation on Friday following news of Lebryk’s departure.
“It’s alarming that Elon Musk is attempting to gain access to the Federal Government’s critical payment system, which is responsible for delivering Social Security checks, tax refunds, and Medicare benefits to Americans across the country,” Warren said in a statement provided to CNN. “It is equally alarming that Musk and the Trump Administration drove out the most senior career official at Treasury as the agency is already taking extraordinary measures to avoid a US default.”
Multiple Trump administration officials, including people at Treasury, didn’t respond to several requests for comment this week.
Musk himself acknowledged his interest in the Treasury Department’s payment processing in a middle-of-the-night post on his social media platform Saturday.
He wrote his team “discovered, among other things, that payment approval officers at Treasury were instructed always to approve payments, even to known fraudulent or terrorist groups.They literally never denied a payment in their entire career. Not even once.”
The post appeared to ignore the mechanisms already in place for Treasury to simply fulfill lawful payment decisions made by other agencies, and that the system’s value to the federal bureaucracy and the nation’s economy lies in its reliability.
Jack Lew, who ran the Treasury Department during President Barack Obama’s second term, said any attempt to disrupt payments made by the BFS would be dangerous to the world’s markets.
“The American people should not have to worry about political interference when it comes to receiving Social Security and other payments the fiscal service makes,” Lew told CNN. “And as the world’s reserve currency, it is crucial to maintain confidence around the globe that the US Government will make timely payments on its obligations.”
Some of the members of Trump’s landing team present for the initial transition meetings are now working at the Treasury Department.
Among them is Baris Akis, a Musk ally who is the co-founder of a venture capital firm, Human Capital. Akis’ presence raised alarms among some of the Treasury officials present for those early meetings, since he was not an official member of the incoming Trump administration and didn’t have a security clearance at the time, the sources told CNN.
Akis, along with a few others affiliated with Musk’s DOGE, has been in the Treasury building in recent days. Sources familiar with the department tell CNN they “rove around as a pack” — emphasizing how the group is working in the building in a way that is separate from the rest of the department’s staff.
Akis did not respond to a request for comment from CNN.
Meanwhile, several blocks away in downtown Washington, Musk has asserted significant influence at the Office of Personnel Management, with at least one other employee formerly with Human Capital. The agency, which serves as the overarching human resources headquarters for the federal government, has historically been an operation driven by career officials who have worked across administrations of both parties.
Political appointees have long played a role, but according to one long-time official, the current iteration “is like a different world.”
That world is now populated with a number of Musk acolytes.
Amanda Scales, who previously worked for Musk’s artificial intelligence company xAI after working for Human Capital, arrived at OPM as the agency chief of staff on Inauguration Day and has been the central figure identified with the agency’s sweeping efforts to restructure the federal workforce, multiple agency officials said. She previously worked at Akis’ company.
Brian Bjelde, the human resources chief for SpaceX, and Anthony Armstrong, a Morgan Stanley banker who worked on Musk’s purchase of Twitter, have also taken on substantial roles. Musk worked out of the OPM headquarters – with his surrogates by his side – last week, the officials said.
Trump’s nominee to run OPM, Scott Kupor, is awaiting confirmation but also holds deep ties to the Silicon Valley universe integral to Musk’s DOGE operations.
Nonprofits and Democrat-led states are already suing to try to block the Trump administration’s attempts to freeze federal spending. Despite the rescission of the memo directing the pause, they say the lawsuits need to continue, because of evidence the funding is being withheld.
On Friday, a federal judge in Rhode Island told the Trump administration it couldn’t block payments to states, nor could it try to revive stopping payments in any agency under Trump. More hearings are to come, including on Monday morning in a separate federal court, in DC.
The court fights show how any action by the administration that tampers with congressionally mandated funding could attract aggressive litigation.
The lawsuits haven’t yet touched upon the Bureau of the Fiscal Service’s work inside the Treasury Department.
This story has been updated with new reporting.
CNN’s Alayna Treene contributed to this report.
At the heart of the conflict is President Biden’s ambitious domestic agenda, which includes massive investments in infrastructure, education, healthcare, and other social programs. Republicans, on the other hand, are pushing for more limited government spending and are wary of the potential impact of Biden’s proposals on the federal deficit.
With the OMB playing a crucial role in crafting and implementing the federal budget, the office has become a focal point for both sides as they seek to influence the allocation of government funds. The stakes are high, with the outcome of this budget battle likely to shape the future of federal spending for years to come.
As the Biden administration and congressional Republicans continue to clash over budget priorities, all eyes are on the OMB to see how this arcane Treasury Department office will ultimately shape the course of federal spending in the coming years.
Tags:
