Chief Economic Advisor clarifies Trump's warning on U.S. debt: DOGE questions Treasury payments, unrelated to debt repayment

Trump's chief economic advisor and director of the White House National Economic Council (NEC), Kevin Hassett, clarified Trump's warnings about U.S. debt over the weekend, rebutting recent criticisms from five former Treasury Secretaries regarding the efficiency of the Trump administration and the government led by Musk's Department of Government Efficiency (DOGE).

On Monday, February 10, Eastern Time, Hassett told CNBC that Trump's comments about irregularities in Treasury payments referred to Musk's claims of improper transfers from the U.S. government to contractors and funding recipients, rather than concerns about payments to bondholders. Hassett stated that newly appointed Treasury Secretary Janet Yellen "found that the previous (Biden) administration's control over spending was unacceptable, as they disbursed funds without knowing where the money was going."

Hassett expressed concern that Musk's DOGE team discovered a lack of safeguards at the Treasury to verify whether payments were going to the correct recipients. "They (the Treasury) didn't even take controls to ensure that the funds were being used properly." He also mentioned that a lot of work needs to be done to clarify the issues.

Wall Street Journal mentioned on Monday that after a U.S. federal judge temporarily prohibited DOGE from accessing the government payment system, Musk posted on social media X, claiming that DOGE had already identified significant vulnerabilities in the Treasury's payment system and that there was large-scale fraud at the Treasury. Trump stated to the media that the U.S. government is reviewing the payment situation of U.S. debt to identify potential wasteful spending and "fraudulent" debt, suggesting that the U.S. may not have a debt burden as high as $36 trillion.

Before Hassett's remarks, five former Treasury Secretaries from the Democratic administration, including Larry Summers and the recently departed Yellen, jointly published an op-ed in The New York Times warning that the recent actions taken by Trump administration officials and the DOGE team at the Treasury have raised "significant concerns." They believe these actions could "illegally" undermine the U.S. fiscal commitments, posing economic and financial risks to the nation.

In their article, the five former Treasury Secretaries wrote that during their leadership at the Treasury, they faced moments of crisis regarding debt default, stating, "Any suggestion of selectively suspending Congress-authorized payments would be a betrayal of trust and ultimately constitute some form of default. Once our credibility is lost, it will be difficult to restore. No Treasury Secretary should be placed in a position in the first few weeks of their tenure where they must assure the nation and the world of the integrity of our payment system or the commitment to fulfill financial obligations."

In addition to explaining the issues with ensuring payment flows at the Treasury, Hassett also rebutted claims that Musk is acting as a puppet master at the Treasury, calling such descriptions "nonsense," and stated, "Elon Musk is in the office next to mine; he does not control everything."