Legal experts say it is obvious that Elon Musk's DOGE falls under a federal transparency law.
The Federal Advisory Committee Act was created to bring order to outside forces weighing in on policy.
The law would require DOGE to hold public meetings and balance its membership.
Disrupting the federal government might be harder than Elon Musk thought.
President-elect Donald Trump appointed Musk and former 2024 challenger Vivek Ramaswamy to lead the sweeping "Department of Government Efficiency," which aims to cut $2 trillion out of the federal budget.
According to legal experts, Musk and Ramaswamy's work may be complicated by a decades-old government transparency law — the exact type of bureaucracy the world's richest man has chafed against when his companies have tangled with the Securities and Exchange Commission or the FAA.
Congress wrote the Federal Advisory Committee Act in 1972 to rein in the larger number of outside advisors who weighed in on policy matters either at the president's or a specific Cabinet agency's behest. It is designed for panels like DOGE, which are led by people outside the federal government. Musk and Ramaswamy wrote in a Wall Street Journal op-ed that they would not officially join the Trump administration.
"Though not much information has come out yet about DOGE, it certainly looks like it is not going to be a department or government agency, it will be an advisory commission, and for that reason, it will fall under FACA's purview," Jason Arnold, an associate professor of political science at Virginia Commonwealth University, told Business Insider.
Musk wrote on X last month that DOGE would post its "all actions" publicly online, but it's unclear if that means the billionaires will fully comply with the law.
The law says Musk and Ramaswamy need to appoint a Democrat.
The advisory act would affect DOGE's operations almost immediately. The law requires that panels that fall under its definition be comprised of a balanced membership in terms of "the points of view represented."
If Trump formally authorizes DOGE after he is sworn in next month, his initial order would need to take this into account. For example, when President Obama created the Bowles-Simpson commission in 2010, his executive order required the 18-member panel to include Republicans and Democrats. The commission, tasked with getting the nation's finances in order, was also co-chaired by a Democrat, former White House chief of staff Erskine Bowles, and a Republican, former Sen. Alan Simpson of Wyoming.
So far, Trump has named William Joseph McGinley, a long-time attorney for Republican causes, to be DOGE's general counsel. Musk has already said that DOGE is looking for staffers willing to work 80-plus hours a week for no money.
"Indeed, this will be tedious work, make lots of enemies & compensation is zero. What a great deal!" Musk wrote on X.
DOGE just got a new hire
Elon Musk says DOGE can 'gut the federal government' with a recent Supreme Court ruling. Some lawyers disagree.
Posting DOGE's activities online might not be enough.
If DOGE complies with the act, it would also have to try to hold public meetings.
Obama's National Commission on Fiscal Responsibility and Reform, Bowles-Simpson's actual name, held six public hearings and culminated its work with a final report that caused a political uproar over its recommendations to raise the Social Security retirement age, increase the federal gas tax, and cut Pentagon spending. The act requires at least 15 days of formal notice before a meeting and for explanations to be provided if the panel moves to conduct a private session.
It's not hard to see how the public disclosure requirements could become a political headache for Trump's White House, especially if DOGE considers changes to Social Security and Medicare. Unlike most traditional Republicans, Trump has shied away from embracing major reforms to the popular programs. Ramaswamy told Axios that DOGE would look elsewhere for cuts.
Trump and his two advisors have already sparked the ire of some Republicans on Capitol Hill by promising they may try to unilaterally cancel spending, a process known as impoundment that Congress made mostly illegal in 1974.
Advertisement
Musk and Trump could still try to ignore the law.
Just because DOGE looks to fit the definition of the advisory act, doesn't mean the law's application is a simple business. In describing the law, the Congressional Research Service, lawmakers' nonpartisan research arm, concluded that it may ultimately fall to the courts to determine if FACA applies.
Arnold said if Trump and Musk go this route, it may take years to resolve the dispute. This, along with some of the act's vagueness in areas like what constitutes balanced membership, leaves some loopholes.
"There are a lot of flaws with the law, one of them is that there are no penalties for violations," said Arnold, who researched FACA for his book "Secrecy in the Sunshine Era." "It's almost up to the goodwill or the legal concerns of the administration to follow through."
The Trump transition team and McGinley did not respond to Business Insider's requests for comment. Tricia McLaughlin, a spokesperson for Ramaswamy, told USA Today everyone around DOGE "is committed to making sure all DOGE activities are conducted properly and in full compliance with ethical and legal requirements."
Past White Houses have tried to argue they could do business behind closed doors. President Clinton fought off attempts to argue that then-first lady Hillary Clinton's participation in closed-door discussions over the administration's healthcare plan ran afoul of the act. President George W. Bush's White House engaged in a years-long legal fight over whether it needed to disclose details from his energy task force which Vice President Dick Cheney chaired. It was later revealed that then-Enron CEO Ken Lay was among a host of fossil fuel executives who met with the secretive panel.
When Obama formed the Bowles-Simpson commission, then-House Minority Leader John Boehner called on the White House to make sure the panel didn't try to do its work behind closed doors.
"If it is your intent to have all proceedings of the Commission adhere to FACA, will the Commission notice all meetings in the Federal Register 15 days in advance, open all meetings to the public, and make all meeting minutes available for public inspection?" Boehner wrote to Simpson and Bowles in 2010.
Musk is already getting to work on DOGE. Rep. Marjorie Taylor Greene of Georgia and Sen. Joni Ernst of Iowa are expected to lead their respective chambers' work with the panel. Musk was on Capitol Hill this week to discuss what his department will do — those talks were behind closed doors.
"There won't be a lot of detail for the press today, and that's by design," House Speaker Mike Johnson told reporters. "This is a brainstorming session."
Trump’s Department of Government Efficiency (DOGE) is a classic Orwellian institution. It isn’t a governmental department, nor is it designed to promote efficiency. A genuine executive department would require an act of Congress, including the ability to overcome the Senate filibuster. Its leadership would also require senatorial approval, and—as in some cases—assurances that it can operate in a bipartisan manner. These are all things that Trump obviously does not want. Instead, the DOGE is nothing but a glorify advisory committee. Considering its leadership, none of its recommendations are likely to promote governmental efficiency. What is expected to come out of the DOGE is a plan to weaken the federal government’s regulatory capacities, especially as it relates to the financial sector.
It is important to note that there is already a government agency—a real one!—that audits the federal government and recommends ways to cut waste: the Government Accountability Office (GAO). Originally titled the Government Accounting Office, the GAO was founded in 1921 as part of the Budget and Accounting Act, which also created the critically important Office of Management and Budget. For the last century these agencies have coordinated the process of budget management and evaluated the efficaciousness of government programs and agencies. Recently, several of the GAO’s reports have concluded that many governmental agencies are not meeting their mission, but the main culprit behind these substandard results is not excessive regulations, but inadequate funding.
As an example, on February 12, 2024, the GAO released its report on the Internal Revenue Source’s (IRS) audit rates. It found that between 2012 and 2022, the agency closed 16,812 audits of taxpayers who made between $500,000 and $1 million, but only closed 2,933 audits of taxpayers who made over $10 million. Essentially, the wealthier a taxpayer was, the less likely that person would be audited. The main reason for this discrepancy was that the IRS lacked the resources to challenge the potentially fraudulent tax filings of multimillionaires and above. Biden attempted to address this issue by including new IRS funding in the bipartisan Inflation Reduction Act. Meanwhile, Trump has promised to repeal the law.
Such fair analysis is not part of the purview of the DOGE. Rather, it is there to create an ideological patina for eliminating agencies that have been a target of conservatives, especially those agencies that could a hinder the ability of DOGE’s leadership to make money.
Recently, Elon Musk, one of two chairs of the DOGE, has called for the elimination of the Consumer Financial Protection Bureau (CFPB). The CFPB was formed in the aftermath of the Great Recession to ensure that banks could no longer engage in the type of widespread fraud—including flagrantly misleading consumers as to the terms of their mortgages—that led to the housing market crashing.
Musk’s animosity toward the CFPB is shared by his co-chair, Vivek Ramaswamy. Ramaswamy, who describes himself on X as a “Small-government crusader,” retweeted an article on Musk’s statement, writing “CFPB started under Elizabeth Warren less than 20 years ago, and consumers are no better off for its existence. Quite the contrary, actually.” Two days prior to his retweet,
Ramaswamy posted a clip from billionaire and venture capitalist Marc Andreeesen, claiming that the CFPB was under the “personal control” of Senator Elizabeth Warren (D-MA), that it got “to do whatever it wants,” and that it was responsible for major financial institutions “debanking” Trump supporters. None of which is true.
In reality, the CFPB has been a critical agency defending everyday consumers against the abuses of the financial industry. Since its creation, the CFPB has saved Americans $17.5 billion, and imposed another $4 billion in civil penalties. The money from the civil penalties goes into a Victims Relief Fund, which provides compensation for consumers who were scammed by financial companies. This past year, the CFPB finalized rules that forced credit card companies to reduce their late fees from an average of $32 to $8. The new regulations are expected to save Americans billions.
Most recently, the CFPB released a new rule that would regulate data brokers. Under the new regulations, data brokers would be classified as “consumer reporting agencies.” This means that they would be obligated to ensure the accuracy of their data, had to guarantee that users had access to their own data, and were prevented from selling personal data to unsavory clients. The move is likely to have immense downstream impacts in protecting average Americans. Indeed, organized criminals regularly buy or steal personal information from data brokers to target victims. In one example, hackers were able to steal 3 billion records—including social security numbers—from an insecure data broker. In another, a federal judge’s son was murdered by a man who tracked down his victim after freely purchasing his private information from a data broker.
Noteworthy, Musk’s statement against the agency comes less than a week after the CFPB finalized its regulatory rules regarding digital wallet apps. The new rules grant the CFPB regulatory oversight over these apps in the areas of privacy, surveillance, errors, fraud, and termination of services. Musk has been vocal about the fact that part of the reason he purchased X was to transform the social media platform into an “everything app,” which would allow digital wallet services.
Furthermore, only a month after Musk purchased X (when it was still Twitter), the social media platform had to pay a $150 million fine to the Federal Trade Commission for asking users for personal information with the stated purpose of securing their accounts, only to then use that information for targeted ads. What X did was illegal, but perhaps the more damaging aspect is the relationship that the platform has with its “service providers.” It is likely that few X users realize that by signing onto the platform, they forfeit their information to several data brokers, who—until recently, when the CFPB decided to regulate them—paid X for that information with very little oversight.
Trump might adopt populist rhetoric, and holler against the “deep state,” but his policy objectives are clearly directed at benefiting America’s most wealthy. The DOGE, headed by fellow billionaires Musk and Ramaswamy, isn’t designed to make the federal government work better for average Americans, who are right to expect that their hard-earned tax dollars are being used wisely. It’s the opposite. It is designed to delegitimize any federal regulatory agency that interferes with the ability of companies to scam, swindle, and scrounge Americans out of their money.
No comments:
Post a Comment