Feb. 10: DOGE Comes for the Treasury

Trump speaks on hostages; Lee Zeldin's Qatari payday; USAID is the tail, not the dog

Feb 10, 2025

The Big Story

On Saturday, federal judge Paul A. Engelmayer issued a sweeping, albeit temporary, restraining order barring employees of the Department of Government Efficiency (DOGE) from accessing payment systems at the U.S. Department of the Treasury. Here’s former federal prosecutor Andy McCarthy, writing at National Review:

Judge Paul Engelmayer has paused the access of the Department of Government Efficiency to what are described as “sensitive” (i.e., apparently not classified) Treasury records. DOGE, which is an overhaul of the U.S. Digital Service, is a temporary technology unit within the Executive Office of the President, established by a Trump executive order on January 20 and led by Elon Musk. Musk is a special government employee, as are members of the teams working under his direction. They are carrying out President Trump’s 18-month agenda (terminating July 4, 2026) to modernize federal technology and maximize government efficiency and productivity.
The stated concern of Judge Engelmayer, an Obama appointee, is that DOGE’s access to the sensitive records carries a high risk of improper disclosure or hacking. These concerns are echoed—coincidentally, I’m sure—in a New York Times op-ed today, jointly penned by five mostly Democratic former Treasury secretaries (Robert E. Rubin, Lawrence H. Summers, Timothy F. Geithner, Jacob J. Lew, and Janet Yellen). As they tell it, “The nation’s payment system has historically been operated by a very small group of nonpartisan career civil servants,” an administrative “norm” they fear “has been upended” by Trump, Musk, and the “so-called” DOGE—“political actors [who] have not been subject to the same rigorous ethics rules as civil servants.”

Indeed, Engelmayer’s order declares that only “civil servants” and not “political appointees” can access the payment systems. But the implication of that would be that President Trump has no authority to oversee the operations of the Treasury—which is, constitutionally, part of the executive branch and thus under the president’s authority. As McCarthy goes on to write, “So absurd is the notion that the chief executive is powerless to investigate how executive agencies execute their responsibilities that to state it is to refute it.” In other words, expect Engelmayer’s order to be overturned—eventually.

But what is the case really about? One hint comes from the origin of the lawsuit Engelmayer was responding to, which was brought by 19 Democratic state attorneys general and spearheaded by New York Attorney General Letitia James. The second comes from an announcement made by DOGE head Elon Musk on Monday (at 5:03 a.m., no less) that the DOGE team had “just discovered that FEMA [the Federal Emergency Management Agency] sent $59 million LAST WEEK to luxury hotels in New York City to house illegal migrants.”

In a long X post—which we’ve transcribed and lightly edited for readability—former federal prosecutor William Shipley explains how the two fit together:

The story today about the $59 million from FEMA to NYC hotels is EXACTLY what the New York lawsuit is intending to keep covered up for some time.
Like most federal government payments to third parties, these are payments built into the Treasury’s payment processing system every month. They are automatic until canceled.
The Treasury handles millions(?) of payments like this every month and there is no possible way for every one of them to be processed by a human before payment goes out. So they are programmed to happen automatically. If the Roosevelt Hotel wants $8 million, they make a payment request through an electronic invoice that has already been preapproved.
So much of what the government spends—if mistaken—is only captured by audits, meaning the discovery is incidental, not because anyone went looking for it. I saw this a few times—and had it explained to me in detail—with fraudulent Medicare and Medicaid billing. Those bills from doctors are paid automatically every month. Overbilling or upcoding is only caught by audit.
DOGE—even with “read-only” access to the processing system’s data, would be able to detail all these payments just like the payments from the U.S. Agency for International Development were detailed. That is what they were blocked from having on Friday night [i.e., early Saturday morning] by the Southern District of New York judge.
The recipients and the amounts being paid monthly are the next big scandal of the administrative state to be exposed.

Now, it’s likely that Musk’s $59-million-for-luxury-hotels claim is an exaggeration. New York City received around $59 million from FEMA for migrants in the entirety of last year, according to The New York Post, but only a portion of that was for hotels, with the majority going to reimburse the city for other services, like food, health care, and education. City officials told the Post that of the $237 million in federal money awarded to the city by the Biden administration to deal with the migrant crisis (not all of it from FEMA), only $19 million has gone to hotels, and that most of the hotels were not “luxury.” At the same time, as we’ve seen with the USAID scandal, once these figures start circulating, voters will be angry enough that $237 million in taxpayer funds have going to subsidize illegal aliens in the nation’s largest sanctuary city, and they will not much care if the initial number about luxury hotels was inaccurate. James and the other blue-state AGs are, presumably, attempting to delay for as long as possible the sort of reckoning we’ve just witnessed with USAID, except on a much larger scale and with more disastrous implications for blue state-and-city finances.

In a related development, Musk announced over the weekend that DOGE and the Treasury had reached an agreement to add categorization codes and rationales to all outgoing government payments, to enable audits, and to improve compliance with “do not pay” lists that identify recipients known to be fraudulent, fronts for terrorist groups, or otherwise ineligible for federal payments. In a Saturday post on X, Musk wrote that these “super obvious and necessary changes” are “being implemented by existing, long-term career government employees.” He added, citing conversations with employees at Treasury, that more than $100 billion per year of entitlement payments had been made to individuals with no Social Security number or temporary ID number, about half of which were estimated to be fraud.

Again, we’d urge caution with any statistics that Musk posts on X. But a report published last week by the Economic Policy Innovation Center estimated that in 2024, the federal government spent at least $162 billion on “improper payments,” defined as payments to the wrong people for the wrong amounts. A previous estimate from the Government Accountability Office put the improper payments figure at $236 billion for fiscal year 2023. So maybe he’s exaggerating, but not by much.

In any event, we expect the administration to find a lot of bugs living under this particular rock, just as soon as the courts permit them to turn it over.

The Rest

→Video of the Day:

That’s Donald Trump speaking to a reporter aboard Air Force One on Sunday, discussing the latest release of three Israeli hostages on Saturday. All three, according to The Times of Israel, endured “physical and psychological abuse” during their 491 days in captivity and returned to Israel “suffering from severe physical and mental deterioration, including malnutrition, decreased muscle mass, heart disorders, and prolonged infection.” Hostages and their family members have testified to the Israeli press that the hostages were tortured during their captivity, including by being starved, bound by their feet, and burned with a “white hot” object during interrogation. “When I watch people that were healthy people a reasonably short number of years ago and you look at them today, they look like they’ve aged 25 years, they literally look like the old pictures of Holocaust survivors,” the president said, “I don’t know how long we’re going to take that.”

On Monday, Hamas announced that it was indefinitely postponing the release of the next round of Israeli hostages, citing unspecified Israeli violations of the cease-fire.

→In a Sunday interview with Fox’s Bret Baier, Trump again repeated that Palestinians would not have the right to return to Gaza under his plan for the United States to “take over” the territory. Here are the full comments:

TRUMP: We’ll build beautiful communities for the 1.9 million people. We’ll build beautiful communities, safe communities, could be five, six, two, but we’ll build safe communities a little bit away from where they are, where all of this danger is. In the meantime, I would own this. Think of it as a real-estate development for the future. It would be a beautiful piece of land …
BAIER: Would the Palestinians have the right to return?
TRUMP: No, they wouldn’t, because they’re going to have much better housing, much better—in other words, I’m talking about building a permanent place for them. Because if they have to return now, it’ll be years before they could ever—it’s not habitable. It would be years before it could happen. I’m talking about starting to build. And I think I could make a deal with Jordan, I think I could make a deal with Egypt. You know, we give them billions and billions of dollars a year.

On the other hand, Israeli Prime Minister Benjamin Netanyahu said over the weekend that Palestinians who left Gaza under the Trump plan would eventually be allowed back if they “disavow terrorism.”

→In our Thread of the Day, friend of The Scroll Kyle Shideler explains how to understand the relationship between USAID, the U.S. government, and the “NGO archipelago”:

→Lee Zeldin, Trump’s newly confirmed head of the Environmental Protection Agency, reported in his financial disclosures “compensation exceeding $5,000” in 2023 from a venture capital firm headed by a member of the Qatari royal family, Jewish Insider reports. Zeldin, who is not only Jewish but was also a vocal critic of Qatar while in Congress between 2015 and 2023, received an unspecified amount of money from Heritage Advisors, the London-based investment firm of Sheikh Sultan bin Jassim al Thani. Sultan is a former Qatari government official and was the royal responsible for investing $50 million in the pro-Trump news network Newsmax, as the International Consortium of Investigative Journalists reported last July. Sheikh Sultan also met in 2021 with disgraced former U.S. Senator Robert Menendez, who was convicted last year of accepting cash and gold bars in exchange for using his position on the Senate Foreign Relations Committee to benefit Qatar. The meeting was brokered by former Joe Biden aide Mark Doyle.

→Reports on Monday, including from Axios’ Barak Ravid, indicated that Palestinian Authority President Mahmoud Abbas had issued a decree canceling the PA’s so-called martyrdom payments to the families of dead Palestinian terrorists, known in the West and Israel as the “pay-for-slay” program. The news, however, is less than it appears, as Jewish Insider’s Lahav Harkov notes on X:

→On Friday, the Trump administration also announced money-saving measures at the National Institutes of Health, prompting a wave of excited headlines, compiled by Byron York of the Washington Examiner:

Washington Post: “NIH cuts billions of dollars in biomedical funding, effective immediately”
New York Times: “Trump Administration Cuts Put Medical Progress at Risk, Researchers Say”
CNN: “Researchers decry ‘disastrously bad’ idea as NIH slashes payments for research infrastructure”
Huffington Post: “TRUMP SLEDGEHAMMERS NIH FUNDING; ‘CATASTROPHIC’ HIT TO SCIENCE”

Sounds bad, right? In reality, as York explains, what happened is that the NIH announced a new 15% cap on “indirect costs”—essentially management costs and other bureaucratic overhead. In a statement announcing the new policy, NIH said that its average indirect cost rate over time was between 27% and 28%, and that for some grants, the rate was as high as 50% or 60%. Overall, the agency said that of its $35 billion in research grants in fiscal year 2023, $26 billion went to research and $9 billion to indirect costs. The new cap, as York explains, merely brings the NIH’s practice in line with that of large private grant-making institutions, such as the Gates Foundation and the Chan Zuckerberg Initiative, which also cap indirect costs at 15% of the funding total.

Read the full article here: https://www.washingtonexaminer.com/opinion/columnists/3315099/after-nih-move-doge-hysteria-spreads/

→Chart of the Day:

That chart, which shows that antisemitic attitudes are far more prevalent among younger Americans than older Americans, comes from a late 2024 survey of nearly 130,000 registered voters conducted by the Democratic polling firm Blue Rose Research. It was shared on X over the weekend by Blue Rose’s head of data science, David Shor, who noted that 18-year-olds are about five times more likely to have “explicit antisemitic attitudes” than 65-year-olds. While the graph shows that young Trump supporters were, on average, a few points more antisemitic than young Kamala Harris voters, Shor pointed out in a follow-up tweet that according to data from the 2024 American National Election Studies survey, self-described “moderate” voters of all ages were more likely to report “cold” feelings toward Jews than either liberals or conservatives.

→Quote of the Day:

Many people also called Noah crazy, and then the rains came, and all the fact-checkers died. You have to persevere.

That was Sen. John Kennedy (R-LA) speaking last month during the confirmation hearing for Trump’s director of the Office of Management and Budget, Russell Vought, who was confirmed by the Senate last week. Kennedy was quoted in a Sunday profile on Vought in the Financial Times, which identified the new OMB head, a self-identified “Christian nationalist” and one of the co-authors of “Project 2025,” as “the man on a ‘divine mission’ to traumatise U.S. bureaucrats.”

SCROLL TIP LINE: Have a lead on a story or something going on in your workplace, school, congregation, or social scene that you want to tell us about? Send your tips, comments, questions, and suggestions to scroll@tabletmag.com.