Rohan Grey, Assistant Professor of Law at Willamette University, joins Money on the Left to discuss his urgent new paper, “Digitizing the Fisc.” During our conversation, we recount the events surrounding Elon Musk & the DOGE boys’ unconstitutional takeover of the Treasury’s Bureau of Fiscal Service, while explicating the right-wing theory of the “unitary executive” that underwrites such actions. Next, we analyze the structural deficiencies and choke points in the current Congressional appropriation process that have made DOGE’s illegal interventions possible. Turns out, the US fiscal process involves several readily exploitable weaknesses, making it somewhat akin to the almighty Death Star’s unprotected thermal exhaust port in Star Wars (1997). Finally, we consider Grey’s proposal for a more streamlined, distributed, and democratic digital architecture for coordinating federal expenditures. Building legal concepts and procedures into the very materiality of digital design, this alternative system not only secures Congress’s constitutional spending power against authoritarian interference and impoundment. It also unbundles fiscal policy from public debt management, making clear to the world that legislative action does not redistribute extant funds, but rather creates money afresh every time Congress votes to spend.
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Transcript
This transcript has been edited for readability.
Scott:
Rohan Grey, welcome back to Money on the Left.
Rohan Grey:
Thanks for having me. Nice to see you all.
Scott:
So, what’s been going on Rohan? What’s going on in the world?
Rohan Grey:
I’m not much a bit of a snooze week. You know, slow news year. I mean, it’s been pretty interesting to watch the end of the rule of law from within a law school. If you were wondering whether or not it keeps happening, it does. And we all just sit there, and it just slowly boils over. Yeah, it’s been a relatively existential time.
Scott:
We’re in a constitutional crisis.
Rohan Grey:
Yeah, there’s been an unprecedented synthesis of two long right-wing strategies, one of them certainly a lot bigger than the other. The first one is unitary executive theory. You know the Federalist Society. There’s a right-wing group of judges and lawyers and all these people that that formed during the Ronald Reagan era to essentially build an intellectual legal machine and pipeline for right-wing people to go into judgeships and senior policy positions and academia. Unitary executive theory was one of the big things they’ve been pushing since then. It started off mostly only about the ability to fire people.
Under the Constitution’s Article 2, it says the President shall “take care that all laws be faithfully executed.” They have interpreted that passage in a very ahistorical and extreme way to mean that anybody, any person who works for the Federal Government could be fired by the President and Commander-in-Chief. It’s like a CEO of a company should be able to fire everybody without any reason. They all belong to him. All under his power; he can move the road.
So, it originally started with firing people in the Reagan era. But by the time you get to the Bush era, it expanded to include foreign policy powers: the President can drone strike people, the President can torture, etc. This is a very expansive conception of the imperial President.
The other strategy is less known and even more extreme, I would say. It is the idea that the President has the unilateral right to “impound” funds, which just means to not spend. Congress tells you to spend, makes the money available, and then the executive branch just doesn’t spend it.
Scott:
Nixon tried this.
Rohan Grey:
Nixon did it. Different presidents did it in different ways going back to the 1800s, but only around the edges and a little bit. It pertained to very specific things that either had been authorized by Congress, like Congress put in a bill saying that you can give it up, or it was specifically functions that were always considered part of the executive, mostly understood as commander-in-chief.
One of the original examples is Thomas Jefferson. He was given money to build some boats and then the war was over and he was like, “Well, I don’t need to build the boats anymore.” So, he didn’t spend money that had been delegated to him.
Nixon took it much further and it started getting more use in the 20th century in general. But Nixon, classic Nixon, decided to push it to the limit and use it in an extremely crude political way to cut funding to community programs and things that were mostly going to Black communities as part of his general southern strategy. You know, “I’m racist. Vote for me, if you’re racist.”
After he did that, Congress in 1974 threw the book at him and they passed the Anti-Empowerment and Control Act that set extremely limited circumstances under which the President can impound funds. Presidents have to give notice in advance and it can only be for a certain amount of time.
However, Trump is now saying that this Act is unconstitutional because it puts an unconstitutional restriction on impoundment and that impoundment is a Presidential power. So, even if there are any limits of these powers, they are not limits that come from Congress. In practice, what that’s meant is that Trump has gone into the government and he has just shut down whole agencies, what they call “zeroing out a budget.”
Any law you don’t like, you just turn the electricity on that law down to zero. It doesn’t exist anymore. Trump is ushering in an amazing confluence of taking over the entire executive branch and getting rid of the independent administrative state—so the CFPB, the Federal Reserve, all these entities that have their own statutory independence, even things like the Nuclear Regulatory Commission. All of that stuff is now under the President.
But Trump is not content with the first -in-a-generation consolidation of the executive. He’s also taken over the legislature. He’s also taken the power of the purse.
Scott:
A lot of the discourse in the last couple months has, and rightly so, been extremely presentist. It has been unfolding moment to moment. Our friend and colleague Nathan Tankus, for example, has been doing pioneering work on this, which is invaluable. Reporters at Wired have also been on this beat, and some other journalists elsewhere.
Rohan Grey:
Yeah, Nathan’s got an great ability to do urgent work in these crisis moments. He did it in response to the Greek payments crisis in 2015 with Syriza, as well as in response to COVID. He’s like an Olympic athlete. The speed of his reaction time is measured in microseconds, you know? Very impressive rising to the historical moment I would say.
Scott:
Right, and one of your contributions to this contemporary discourse is that you are slowing us down a bit, giving us a moment to catch our breath and put this into historical perspective. Which is not to say that Nathan isn’t in his own way. But he is really trying to report the moment-to-moment unfoldings, whereas you’re suggesting that this does not come out of nowhere. There are many precedents and lingering structural problems in the way that government and especially the fiscal apparatus is organized—both conceptually and bureaucratically but also technologically.
You’ve released a paper that you’ve titled, “Digitizing the Fisc.” In it, you give us a new historical framework through which to confront the present Constitutional crisis. To start us off, tell us a little bit about when you decided to do so.
Rohan Grey:
It was about four days ago—and now it’s 39,000 words and 400 footnotes. I actually wrote a version of this back in 2021. It was part of research for my doctoral program. At that point, what I was mostly focused on was the Central Bank Digital Currency (CBDC) debate. I was trying to make a larger case that we need to zoom out from one institutional model, a model that focuses on one issuer within one agency. We need to be thinking of digitizing the dollar as a thing that happens across all of the government because all different parts of the government have different payments technologies. So, if we really mean digitizing the government’s money, there’s more than just going to one narrow agency and one narrow kind of money and then making sure that’s very digital. It’s, to me, a much bigger process.
That’s what I was focusing on back then. But one of the risks I identified was the risk that the Treasury Department acts as a central bottleneck for the financing process of other government agencies. And this is a problem if you want the independence of agencies from the President.
You want a federal government, where each agency, each secretary, each director or head of a commission have their own statutory responsibilities to Congress. Then, they’re not all just yes men to one imperial President. When Congress passes a law saying the Federal Reserve will do XYZ, the Board of the Federal Reserve actually should be following that law, not what the President says. This is basic Schoolhouse Rock “where law comes from” kind of stuff.
But I was focusing back then on the fact that when agencies are required to issue debt, they usually don’t issue it out into the real world because that would be a thousand different government agency debts flowing around. There are a few exceptions, mostly around mortgage, issuing agencies or mortgage securitizing agencies like Fannie Mae. But generally speaking, most of the federal government, if it needs to issue debt, will sell it to the Treasury and then the Treasury will sell one into the world.
So, it’s almost like debt laundering, right? It’s almost like e pluribus unum, the treasury debt.
And my point back then was that Treasury secretary Mnuchin, under the first Trump administration, weaponized this system, had weaponized the Treasury’s control over this system to try to leverage power over other agencies, most notably in that case the Post Office as part of the Republicans’ longstanding war on the post office.
So, I say in this version of the paper that that was a sort of canary in the coal mine for this current strategy of taking over the government’s fiscal system through control of the IT technology and the administrative systems of the Treasury.
That was the original paper back in 2021 and then obviously when everything happened I repurposed it and added some other commentary around it.
But yes, I would say not just putting it into a bigger historical picture but putting it into a bigger architectural picture. It’s like we started the movie just as the Death Star is blowing up and everyone’s like “Wow, that was such a big explosion. Were they working on that for months?” And you’re like, “No, actually, they just shot one missile down one vent.” You’re like, “Wow, that’s an impressive weakness to catch.” And that’s where we are at at the moment.
That Trump has found this one air vent all the way down to the center of the Death Star, and he has sent his little Peter Pan and the Lost Boys—Elon Musk and the Doge Boys, he’s sent them in.
Billy:
I think it’s pretty clear to see in the current version that the first third of the paper is new, right? This is where you are contextualizing the history of the present moment and I love that. I also want to meditate about one of the metaphors you end up using in the paper– the metaphor of “hacking” the public purse.
I’m interested in you saying a bit more about what you mean by that. But also, given the fact that that air vent was there the whole time, does it make sense to consider what is happening now as a hack or is it more of an exploit? Is that the same thing?
The means and the mechanisms for this, what is currently happening, have been there for a long time in disuse or dormant. I think, you know, my editorial aside here, part of what’s so frustrating about this moment is seeing just how powerful, just how much ability and capacity the executive has had for progressive good things and how it’s just not used it and now it’s being fully weaponized. So, yeah, say a bit about the hacking metaphor if we could sort of chew on that for a minute.
Rohan Grey:
Yeah, sure. It’s not just being weaponized, but also even if they lose in the courts, just showing that occupying, being in control physically to begin with, puts you in such a negotiating advantage, especially if you’re cynical about the courts, if you’re ignoring them, if you’re maliciously complying, or if you’re really dragging your feet, having control over every step of the process is just such a good way to do that.
I can’t think of a good example. Maybe somebody trying to leave an abusive spouse, but the spouse has got all of the stuff in the House and you have to go back every time and every interaction with them is on their terms and their territory? It’s that.
This is showing not only that there were so many buttons we could have pressed, but also if you just press a thousand buttons, even if the courts shut off 800, you still get 200 through. And not only that. In the meantime, that takes about three years and you’ve only got four. So, get it done. Keep the courts kind of moving if you’re really trying to break stuff in a transformative way.
To your question about hacking, first of all I’m trying to use a lot of digital metaphors and language throughout the piece. But I talk about it as “hacking the administrative state” through the technology layer. I wouldn’t call this a hack in the sense that they had to break into the mainframe. You know, I’m in, no? But it is a hack in the sense that these parts of the system were essentially designed to be invisible in the legal design of the system.
You’re writing in Congress in 1787—whatever it is, in the Constitutional Convention—and you’re not thinking about ink, feather pens, and vellum. That’s not the layer of law that you’re thinking about, right? But it does become very importantly the layer later when when you start digitizing law and questions arise like, “Can we embed software into law?” “Can we have a law that’s self-executing?” “Can we have a law that’s self-expiring?” Those kinds of questions don’t come up in a world of vellum and ink.
So the very material of the law—the very material of the money—changes fundamentally the dynamic you’re in.
Bringing in this tech language is a way to shift us into the right place of being. But I think going through this previously apolitical tech layer, it’s almost like we were looking at a picture and then we put on a certain set of glasses and now we can see a skeletal map behind the picture. “Oh my god, that was there the whole time?” Yeah, you just didn’t see it without the right glasses.
And it’s going to require a different theory of administrative law that a lot of admin law people haven’t thought about. Because up until now, the assumption is if you want to tell an underling in the U.S. Agency for International Development (USAID) to stop a specific program, what would you have to do as President? You’d probably call the Office of Business and Management (OMB), and then the OMB would probably call USAID, and then USAID’s director would be told that’s what the president wants, and then they would tell their underlings.
Trump doesn’t have to do any of that stuff anymore. He doesn’t even have to leave his bedroom. He can do it on his keyboard, almost. He has the power now to just go into a central mainframe and just shut down the money for any agency. He can just shut it down and not even tell them. They call him and ask, “What’s going on?” He’s completely switched the locus of the power. Rather than him going to them, everybody comes to him now.
I remember one of my articles from my old law professor, Eben Moglen, talks about how like the most of academic history, we had to move scholars to archives, move around on the board. The idea that you can sit where you are and the archive comes to you is an incredibly new concept in the academy. Same logic, I think.
Billy:
Well, I think to a certain extent it’s fair for those machinery and mechanisms to have remained invisible because they are machinery and mechanisms fundamentally of self-harm and self-destruction.
Rohan Grey:
Yeah, well, their machinery and mechanisms that when they’re working best are invisible. Right, so when they’re working best, you just turn on the computer. You don’t call the IT guy every week and say thanks for keeping it running. Call him when there’s a problem. So yeah, I don’t think that they’re just purely weapons of destruction. They are useful coordinating mechanisms for making systems more efficient or whatever else. But they are not always more efficient, but certainly more formally structured.
Billy:
Yeah, well, and the presumed use case is to keep things functioning as designed with the intention of good actors, right?
Rohan Grey:
Yes, exactly. With the assumption that people aren’t going to work in the government as fifth column saboteurs. And also, it partially grows out of just realizing a function needs to be done, building the technology for that function, realizing that that function is one that only needs to be done once across the government or is best when done once across the government and then putting it into a centralized agency.
It’s this going, “Yeah, this would be good to have a standardized process to now we’ve built an agency and now that agency has sort of become a centralized choke point in the moment.” So, even though the technology is invisible, you see its product in the administrative state, is what I mean.
Billy:
Yeah. At the same time as that machinery’s remained invisible, the Unitary Executive Theory has very much not, and you cite a pretty vast literature raising a red flag.
Rohan Grey:
Yeah, so they’re talking a lot about that, as I said, Presidential hiring and firing and things. I said the combination of the Unitary Executive Theory, this idea that the president is the only chief executive, with impoundment, I call it the “Unitary Executive Fisc.” The idea is that all of the powers of the fisc go into this one seat with one computer with one big red button that you can press and shut down any electricity any way you want. And that’s relatively unprecedented as a vision of the federal government—in part because it just wasn’t logistically possible in the same way really.
Billy:
Do you think it wasn’t as logistically possible in the context of Bush’s War on Terror?
Rohan Grey:
Yeah, I was thinking that in the 1780s it’s not logistically possible back then because you’ve got customs offices. You know, back when we had tariffs and the Postal Service and they’re all over the country and half the time they’re collecting revenue at this point and holding it locally and then re-spending it. So, you don’t even have an entity called “the Treasury.” But the Treasury is sort of distributed around the country geographically
Billy:
I’m thinking about the role of the AG and the office of legal counsel, authoring the torture memos, and the whole infrastructure of extraordinary rendition and all that stuff that I don’t know if we need to talk about it. They’d be interesting to consider. How much of that stuff was funded or supported by proto versions of this hacking of the purse? Or, is that a totally separate? In any case, the unitary executive has been on legal scholars radars for a while and it’s retrospectively shocking that were, that you, are the first to put your finger on what’s happening here
Rohan Grey:
I mean, a lot of people have talked about the Unitary Executive, as I said, in the legal administrative sense; but to link it to the fiscal, it’s almost a reverse parliamentary system. It’s almost like not just anti-American constitutionalism; it’s anti-Parliamentary revolution in the English sense.
It’s like going back to King James, where we’re going back because he is synthesizing the executive and legislative branches and specifically doing so by reclaiming the power of the purse, which was the whole basis of parliamentary democracy and its revolutionary form. But he’s doing so under the king.
Now to your other point, I think the torture memos and all those kinds of things, a lot of the money that was funding that came from either black budget stuff that was already there or military stuff that was already there, or repurposing of other funds, emergency funds and things like that.
Now, whether we like that or not, and obviously I’ve got thoughts about that, it’s a creative repurposing of existing authority. It’s not looking at Congress and saying, “No, I don’t have to do what you want.” Fiscal authority, I mean.
The legal stuff was extremely imperial and expansionary, but the monetary strategy was not. Now, hacking the fisc is saying, “What if we took this very, very not-thought-about layer and then creatively repurposed it, which is what I consider hacking to be, the creative repurposing of a system for a previously unthought of function. Going, “Oh, what if this system’s actually the leverage point?” “What if this system’s actually the managerial software for the rest of the government as well as the budgetary software?” And I would say that’s a pretty big shift in the unitary executive, to the point that a lot of the people in the previous generations are kind of mad.
If we could say that it was Reagan 1.0, Bush 2.0, it’s Trump 3.0 in the unitary executive theory waves. It was step one, hiring and firing, let’s get rid of independent agencies like the CFPBs, head that can’t be removed for cause, etc. And, by the way, the irony there is they’re really worried about the Fed because they love Fed independence as an anti-democratic tool.
So, Trump did this extraordinary executive order the other day where he said, “All government agencies and public officials have to adopt my interpretation of the law and can’t put forth their own in any agency. I am the Senate, I am the law, everyone has to obey my version of the law.”
They said that they can hire and fire all agents and every government official works for the President, but they excluded explicitly the monetary policy functions of the Fed—not the rest of the Fed, not its financial regulatory stuff, because what’s the point of being President Trump if you can’t reduce financial regulation? But he didn’t want to pick a fight about monetary policy. It’s the last, it’s the literally, literally the last part of the independent administrative state that he won’t touch.
Anyway, so going from that version of hiring and firing, where it’s “I get to run the whole government minus the seven people on the Federal Open Market Committee.” And then from that to the imperial Presidency as Foreign Policy Commander-in-Chief,
“We love money, don’t we folks? Yes, I’ve got all the money.”
Scott:
I want to give some structure to our conversation going forward by having it tack pretty closely to the structure of your article. The first part of the article is really diagnosing what’s happened in the present moment up until the time of writing in a very presentist way. In the second part, you’re giving us a critical historical analysis of why the federal payment system is so problematic and how it works around not just one choke point but several choke points. That then makes all kinds of trouble and makes itself vulnerable to be hacked. And then most importantly, the last part of your article, you are offering the beginning or the basis for an alternative arrangement. I don’t hang out with lawyers other than you and Raúl Carrillo, but you know, in my world, we’re really good at pointing fingers and talking about how things are problematic and why everyone’s getting screwed, but we’re not so good at offering genuine, robust alternatives. This is why I think Modern Monetary Theory and Constitutional Theories of money are so important: because they license and liberate that kind of productive speculative imagination.
So, I just want to make sure that we’re we spend some time with each one of those tasks that you take on in that article. I don’t know if you want to start with a little bit more analysis of how the system is structured in little more detail and why it is so vulnerable to hacking?
Rohan Grey:
Yeah, sure. So building on what we were just talking about the implications of controlling the infrastructure, controlling the underlying resource by default that you’re arguing over.
You know, if you want to go dispute with a landlord about whether or not, you should get your deposit back, you would probably prefer to have that money in your account while you’re disputing that resolution rather than in theirs—just as a very simple example of why control and ownership can matter even as you’re resolving the underlying legal claim.
So, the first section is tracing out the current litigation, its limits. I’m questioning whether or not Trump is really likely to listen to the courts in the long run, just being a little skeptical about the traditional legal idea that the “law will save us if we just bring the right lawsuit.” That’s not likely to be the way that it’s going to happen. But then, as you said, in the second part of zooming out, I do try to weave in history. I will say I wouldn’t call this a history framing. To me, it’s a presentist structural analysis. It’s sort of an architectural analysis, it’s trying to show that Death Star blueprint and have that part that goes, “Oh, there it is, there’s that one shoot that blows everything up.”
But I identify three shoots, really. I identify three layers. The simplest layer is the Fed. This is the sort of bare metal accounts. They are the ones that process the final payments. They settle the final payments, but they do so very mechanically, at least up until now. If Trump or someone took over the Fed, maybe we’d be in a different world. Could happen faster than we think. But that layer is the accounting layer.
Then above the accounting layer, we have the payments instructions layer. And that’s the Treasury. The Treasury has an account at the Fed, one of these big accounts, and it manages payments for about 88% of the federal government. So, when you are an agency and you want to spend some money, you ask the Treasury, this very boring bureaucratic department that’s a very mechanical department. This is not one of the big high political ones that gets mentioned in the news. It’s called the Bureau of the Fiscal Service. Most people probably never heard of it. It actually delivers prepaid debit cards both to state governments and federal agencies. So, if you ever get a benefits card or something like that, it’s probably coming from the Bureau of Fiscal Service.
The Bureau of Fiscal Service also does debt management; it issues public debt, Treasury securities. Anyway, so Fed is the bottom layer, Treasury is the payments layer, and then the most sort of subtle layer is the Office of Management and Budget (OMB). And the Office of Management and Budget is independent technically, but it sits right under the President. It’s basically the President’s centralized budget oversight office.
What happens is the OMB is responsible for getting the initial statutory interpretation and applying it in a practical way. Say you’re an agency and you get $100 billion over 10 years, because we have to do everything over 10 years, and you get that Congress isn’t going to give you a $100 billion check in 2025 and say, “All right, see you in 2035. Good luck.” That’s not how it works.
Congress will give that money authority to the Office of Management and Budget, and the Office of Management and Budget will sit down with the agency and go, “Okay, what’s the game plan, what’s the timing that we want to ration this allocation out?” And it’s supposed to be, a lot of it, essentially logistical. It’s supposed to help prevent overspending and these kinds of things. It’s not supposed to be a chance for the executive to second guess what Congress said, but it is in practice.
Those are the three layers that the OMB has to give legal authorization: “This has been pre-approved by the President.” “This message has been sponsored by.” So, they get that legal certificate and then they take it to the Treasury. The Treasury makes the instruction, the Fed follows the instruction.
Those are the three parts of the administrative state that I identify as centralized bottlenecks that everyone is entangled with. And I make the point that all of them basically have their own institutional priorities that are at odds.
Take an example. Adam Tooze, the historian, talks a lot about and others have obviously talked about the Federal Reserve’s exorbitant privilege because it’s the backstop of the entire global system. When the Fed does its Central Banking stuff, its mumbo jumbo, it has to do so simultaneously as an American agency and as a global actor. It’s a very weird tension between the two sets of political responsibilities.
And so similarly, within the government, you have the Treasury and the Fed and the OMB all having a kind of dual role. They’re themselves, they get to look after their own interests, and they’re kind of magnanimously infrastructural managers of the United States, providing GPS to the entire world for free as part of the U.S. Department of Defense. Sometimes you get a freebie, but sometimes they politicize the whole thing. And then the last fourth bit of that second section is all about congressional budgeting. It’s all about the process. It’s all about how legislation is made internally. And I pick a few different fights there, mostly with the debt ceiling, which I think is a very stupid law the way that it’s currently designed, even as it might make sense for Congress to have some power to shut off funding as part of its powers of the purse.
Then also I mention the filibuster and this other procedural rule called the “third rule,” which says that if you do budget stuff, and budget stuff today is pretty much the only thing that avoids the filibuster. So, if you don’t have a 60 vote Senate majority and you’re not willing to get rid of the filibuster, you’re stuck doing reconciliation which is only budget stuff. And that creates this very narrow straitjacket where we can only do laws that are sufficiently “budgetary” otherwise we might as well give up on them.
We’re seeing that debate right now over the continuing resolution that Chuck Schumer just said yesterday he would support, even though the Democrats don’t want him to. The Senate, the rest of the Democrats don’t want them to because it’s the only leverage they have in this Congress. They don’t have both Houses; they don’t have the President. The only thing they can do is prevent a Continuing Resolution that is outside the regular budget and therefore can’t be filibustered. This is the only point where the fact that the Republicans don’t have 60 senators could actually be a problem.
Anyway, so these different parts of the legislative process, the Byrd rule, the filibuster, forcing everyone into the budget system, you probably remember back in 2020 when Biden got in, how they were going to do the proact, this pro-labor thing, and then the “parliamentarian” in the Senate decided that it wasn’t budgetarily related enough and then kicked it out of the budget. That’s the kind of stuff that I’m talking about at that level.
Those are the four diagnosis points. You’ve got Congress at the bottom kind of screwing it up, giving contradictory directives with its debt and spending and budget and non-budget—you know, all these different dynamics. Then you’ve got the Treasury-Fed OMB, too.
Billy:
We’re talking on March 14, 2025, which is the day when everyone’s watching for whether or not the Democrats are going to sign on or not to the Continuing Budget Resolution. This is happening in the broader picture. You talk about the enduring independence of the Fed. At the same time, we have a Treasury and a Treasury Secretary who are very motivated to put pressure on the Fed—to use all of the means at their disposal to basically induce, to force a reduction in interest rates from the Fed. This is pure speculation, but it would seem that if that doesn’t work, it is highly likely they will try to replace the Chair of the Federal Reserve, they will try to take over. What’s your take on that in this moment, recognizing that there’s so many variables in play?
Rohan Grey:
I would say the big thing that historically Fed independence was built around was the ability to control interest rates. That was the thing that the 1951 Treasury Fed Accord was built around, that was the major concern about “fiscal dominance,” the idea that the Treasury and the budget system could spend however much they wanted. It was the Fed’s job to mop up afterwards rather than the Fed getting to set the terms that the Treasury can operate under, was always about interest rates.
Trump has already indicated all the way back to his first term that he doesn’t really think that the Fed should be setting interest rates in ways that are contrary to the President. He hasn’t forced the Fed to do that yet. He’s grumbled a lot about it, but he has tried to jawbone and threaten and things like that, and I would say the reason that he hasn’t gone after it directly is purely pragmatic. The bond markets would freak out for a minute, he would face the repercussions politically of that economic turmoil. And if there’s one thing right-wing billionaires know, it’s a healthy respect for the money markets. So, I think it’s not some deep, principled distinction between Federal Reserve, independents, or the other government agencies. It’s purely tactical.
“I don’t want to pick that guy off until I’ve shot everyone else in the room and I’ll fight them one-on-one” kind of thing That said, if Trump wins the kind of 1.0 unitary executive fight over the right to hire and fire employees, then yeah, Fed independence is gone. He just put his own person at the Fed. Fire all of them. And again, you know, don’t threaten me with a good time. Firing the whole Fed board and starting again just sounds nice. I got a few people we can put on that list. But anyway, the Federal Reserve becomes this flashpoint in this whole process.
My paper was originally a lot more about the Fed, but the truth of the matter is, first of all, if we lose the Fed, we’re in a whole different ballgame. If we lose Fed’s independence, we’re in a whole different ballgame over a bunch of different stuff. If the Supreme Court says that Trump can fire the entire Federal Reserve Board and appoint him tomorrow, he does. We’re in a different world on a whole bunch of questions.
But the Treasury at the moment is the one that processes the payment instructions. As recently as a week or two ago, Powell testified to Congress saying, “We don’t have any control of that. We just do whatever the Treasury sends us and we automatically process it. Sorry.” Now notably, this is very different from how they talked about with the Platinum Coin—or at least how everybody was talking about the coin. “Oh, what if they don’t accept it?” Yeah? What if they don’t accept it? Tell me. And now it’s a very different question of what if they don’t accept it. Now Powell’s saying, “I couldn’t not accept it. I wouldn’t get in the way of the Treasury.” And it’s not like he likes what’s going on with the Treasury. He’s just not wanting to be the one to fight it.
Billy:
But to bring up the Trillion Dollar Coin in this context, could we say that in retrospect it would have had a much better chance of happening, of being minted, had it been part of a raft of like 30, 40 other policies that were similarly outlandish? Yeah, maybe.
Rohan Grey:
Maybe that’s right. Or maybe if you just did it? Just do it? You know, what happens? What happens? It’s happened. The Fed’s mad about it. I can’t imagine the Fed refusing at that point. It would probably complain and it would do it and then it would tell people to never let that happen again. But yeah, this idea of what it would have meant to acknowledge just how bad it’s all going to get when we were first talking about the Coin would have been very nice.
You know, just a little snapshot of people being like, “That’s crazy!” And you’re like, “You have no idea what’s coming!” So, there is this very Cassandra-ish vibe to both Nathan’s and my work over the past month or two. There is this double sense. On one hand, there is a sense that “Oh, I’m not insane” and then the brief serene smile. On the other hand, there is a sense of “Run into the sea and drown ourselves now. Like that’s the only victory of knowing that you weren’t insane is you get to watch Troy burn. It’s pretty crazy to see these scenarios that were incredibly outlandish when we were first conceptualizing them just suddenly with life really hitting you fast.
You guys remember Sean Sebastian from Fed Up? I remember a couple years ago, he sent a message to me. H said when I first met you guys I thought you were talking about the most esoteric Naval gazey nerd stuff. And within a year of meeting you, that stuff was on the front page of the news. Yeah, that’s one finding the diamonds in the rough of the administrative refuse of the state.
Scott:
Let’s talk about your plan, or your plan for a plan. How should we go about restructuring, building this system up anew, if we ever get on to the other side of this Trump nightmare?
Rohan Grey:
I mean first of all, I was pretty happy with my metaphorical language choices. I care a lot about that kind of thing. You remember back when we talked about the Trillion Dollar Coin? You know the idea that it’s language and symbolism that works for kids? So, I was thinking a lot about what the symbolism of a new digital currency regime would be because so much of these debates, especially around Central Bank Digital Currency, is so technical and wonky and bureaucratic, you kind of fall asleep.
I was trying to think of what a more vivid founding version of that and I actually feel pretty proud of it. I worked to connect this language to specific constitutional terms and then make them real I’ll get into the full version in a second.
But just to give an example, there’s a section of the Constitution that says that “No money may be drawn from the Treasury except through appropriation made by law.” This means that all executive spending has to be able to trace its origins back to some congressionally passed statute. There’s no money in the spigot until you pass some laws. But what does it mean to withdraw money from the Treasury?
Because you and I might think, “Oh, it’s the Treasury Department.” And there was a Treasury Department pretty much immediately after the Constitution was set up. And the Treasury Department was an extremely unusual agency, very close to the Constitution, very close to Congress, I should say. It was separate from all the other executive agencies—you know, Department of War, Department of State. These were presidential agencies. Congress was almost thought of as a legislative agency. But even back then, there were agents, entities that were independent of the Treasury with their budgeting, most notably the Mint, to a degree, and secondly, the Sinking Fund. The sinking fund was like a proto-Federal Reserve. It bought and sold government debt to stabilize the value of government debt. Anyway, all that’s to say that we have this word in the Constitution that says “Treasury,” and we can’t draw money from it unless we pass appropriations.
But courts have said that the Federal Reserve is part of the Treasury. Courts have said that if you are an individual Post Office person and you collect dollars in the till in a random Post Office building, that’s part of the Treasury. So, the Treasury is this great big entity in the sky. You know, it’s the way all public money comes through the Treasury. But it doesn’t exist; it’s a constitutional concept. There is a thing called the Treasury Department and there’s a thing called the Constitutional Treasury and they’re different.
So, trying to think of these moments where even words like “coining money” or “borrowing on the public debt”—these are words that we have in the Constitution but they were written in reference to specific material processes, right? They were referencing a specific kind of technology, a specific kind of setup. This becomes a question of the Constitution actually is already making reference.
It’s like if the Constitution talked about a Sega Mega Drive or a Game Boy or something. It’s historically situated in a particular moment. And you’d be like, “Well, what’s a Game Boy?” “Well, you have an emulator, right?” “We have an emulator. You put it on a computer. You can play Game Boy.” “Oh, okay. So it’s that program. Yes, but it used to be in a box.” “Really? A box?” “Yeah, it’s a small little handheld one. It’s crazy.” You know, it’s that kind of logic.
You actually have to historicize the technology of money at the point of the Constitution to then look at what they’re doing, to then try to repurpose it today.
Okay, so that’s the preamble. What’s the vision? It’s got three pieces of technology. First is a big database. This one’s pretty simple. I call it the “Congressional Fiscal Record.” And this is basically just the Congressional Record, or maybe the US Code, somewhere between these. It’s just a list of all the laws that Congress passes—a database stored by both Houses simultaneously. You know, you need two keys to turn it on kind of thing. And laws put into this system are edited, like you edit a Wikipedia page.
So you need 51 votes in the Senate, plus a majority of votes in the House, plus the President’s signature. Or, if you don’t have the signature, then you need a supermajority and you can make edits to this system. It’s like permissions of a website.
And the law on that is digitally native. What I mean by that is you can program in conditions, you can program in references to third party things. So you can say, “If the inflation rate drops below 2% in accordance with the Bureau of Labor Statistics’ analysis X.” And then if that analysis changes out in the world, the software law itself will update. It uses various sorts of smart contract technology and other things like that. So, that’s all there.
And the other thing about it, I mentioned that with reconciliation you’re not supposed to do things that are outside of the budget. Unless they have a budget impact, you have to go back to the regular 60 vote filibuster game, which is basically impossible, so everything has to be budget related. This kind of flips the logic. Everything’s budget related until said otherwise. You’ll appreciate this as people that talk about at distance causality and interdependency. What I am trying to say is that everything is budget. Everything relies on money until you want to create a legal fiction to say this doesn’t. Fine, but we all know that everything is connected. “Everything’s everything, man.” So, I use the example in the article of the “light budget.” You know, if you need lights to do any other part of the law, then then all laws are dependent on the light budget, right? If you need the judiciary to work then every other law in the whole economy requires a judicial budget. So, you a law saying what we’re going to do is make it easier for unions to negotiate, and then the parliamentarian in her infinite wisdom may say, “That’s not budgetary.” And you say, “Well, last I checked, it involves the National Labor Relations Board, and they have a budget; so I’m asking them to spend their budget doing different stuff. That’s pretty budgetary to me, right?
That’s the idea at the legislative level, have a big database that Congress runs, and that is the law. At least for the budget, that is what the law is.
If you’re wondering what the statute says, it’s whatever is connected to that system because Congress has the powers of the purse. Create money, borrow money, spend money, tax money, regulate its value, draw money from the Treasury.
Okay, so that’s step one, you pass a law there.
But the challenge is the same challenge that we mentioned at the beginning, which is sometimes Congress doesn’t have time to micromanage at the point of passing legislation. You’re in the middle of scrambling to get a bill passed. It’s 11:59 on a Friday. Everyone’s about to get their jets and go home. And you don’t have the time to go, “Well, how much per year over 10 years? Yeah, we’re giving them $100 billion, but how much per year?” “I don’t know. Let someone else deal with that.”
Currently, the way that we let someone else deal with it, as I said, is we delegate it to the Office of Management and Budget and the executive. That means that eventually the President takes it over, which means more and more and more of the legislative power goes to the President. So, Congress sets some very big, broad target or limit and then the executive does most of the actual budgeting.
The second part of this process is basically re-absorbing what you could consider micro-legislative or infra-legislative clarification. When we said $100 billion a year, what we actually meant was $10 billion, $100 billion over a decade, what we actually meant was 10 billion a year. And rather than letting the executive do that, because it’s an interpretive, adjudicated question, it’s not executing the spending. The spending has to be executed by the payment system and the agency. It’s just interpreting Congress’s own laws in more detail.
It’s Congress saying, “Here’s the overall picture. For more, see my subordinate. For more, see my number two in the Committee on Education. They’ll give you more information about how to spend these funds.” That’s the design. The technology for that I am calling “Congress’s the Congressional Treasury ATM.” And I like that idea. I’m very proud of that one. ATM: you consider it as an Automated Treasury Machine or an Appropriations Transfer Mechanism Either way, visually it’s an ATM and it would be in Congress.
It’d be a big secure mainframe. You know, maybe behind glass looking like a cool quantum computer or something; but you know something out of Devs, if you’ve seen that show. That would be essentially a very secure system and it would be the place where you get new digital dollars from. And that would be in the form of digital coins. Now. the ATM wouldn’t actually have the coins in them It would just have the permissions to access the coins right. Classic Warren Mosler: the government doesn’t have or not have money. You would just have the ATM and then individual government executive branch actions like the Department of Education Treasury Secretary whoever else would go there or virtually go there. And they would withdraw the digital coins onto their own local wallets or hardware devices. So, this implicitly assumes an e-cash model in the background. But that’s not the point of this paper.
The idea that there’s a device that you can hold locally in your agency—and hold the funds there—that doesn’t attach to a larger bank account. There’s no Fed behind it processing the transactions. This is a digital purse. Congress is basically sending big wads of greenbacks to everybody, big pallets of cash into your agency. But it’s all digitally controlled, so it’s harder to steal anyway the Treasury ATM the way that you get the money from the ATM.
The linkage between that and the first bit of technology I mentioned is a credit card. Now I know we hate the idea that the government has to borrow on the credit card, but this is not that. This is a kind of creative repurposing. This is the public credit. This is the full faith and credit and it only happens within the government. So, you can’t take that credit card and spend anywhere. It’s not a spending card out in the world. It’s purely an internal government credit that Congress gives executive branch actors.
You get statutory authority. Congress passes a law saying a hundred billion dollars for the Department of Education. You as the Education Secretary get a virtual card. The card is just a set of permissions and login details. It’s just a complicated user profile configuration is what it really is. But let’s call it a credit card so it will be easy for the journalists to keep up. And the word public credit is in the Constitution. We have these cards and when you go to Congress after a bill is passed, you say “Hi, I’d like my spending card please” then they go “Okay, let’s work out what details we’re programming into this card for you.” Now, that whole process of the OMB—what they call “apportionment,” that rationing that I mentioned—that is now folded into Congress at the point of programming your access to Congress’s money. And that’s Congress’s machine.
This is a server that is held at Congress, which means access to it is like the Congressional Library. It’s something that Congress is allowed to control as part of its legislative branch resources. So if you, an agency, think that we authorised you to get some money, come on in, let’s chat about it, let’s see if we did.
You know, “I want it to be the statute.” I see, okay, “How much do you think you’re entitled to?” “Oh, you think you’re entitled to $10 billion per year for 10 years? Alright, that works for us. Yeah, I think that’s a fair interpretation of the statute, here you go, Here’s your authorization.” And then you go back and you take your spending card and you can withdraw dollars.
And notably, what this does is get rid of borrowing: no government debt. It gets rid of the Treasury as the payments instruction coordinator. That’s partially automated and partially goes back to agencies.
And I only mentioned a little bit. It’s probably the subject for another paper. But to keep monetary policy working, maybe I’ve got my thoughts about monetary policy for a different day, but I’m picking my battles at the moment. And if you want to keep monetary policy working under this regime, Nathan and I, when we first came up with the Trillion Dollar Coin, we were talking about the central bank issuing its own securities: Federal Reserve securities. And the idea was when the Fed does monetary policy, it’s basically swapping back and forth between its own reserves and treasury debt. But it can’t control treasury debt.
So, it’s like trying to drive when half of the accelerator is in someone else’s car and you’re calling them and being like, “Can you please press the accelerator right now? Quick, quick, quick: Take it off!” You know it’s a stupid coordination game where you’re trying to gamble with somebody else’s chips and, in so doing, taking all of that responsibility and giving it to the Fed. You want to do monetary policy? You want to interest rates? You want to issue your own government, you know.
Positive interest, high maturity—you know, go for it. I’m calling those “e-silver” to go with “e-gold,” which is my little “fuck you” to the libertarian. You know that we’re taking gold back from them because gold was always nominal? You just didn’t realize. You didn’t appreciate it was always the conceptual layer added on top of the metal that mattered. All the Kings knew and they were crying it up and down. So fuck it. It’s digital gold and digital silver. Let’s do it. We and the public even get gold.
It’s supposed to be silver. That’s the small person’s money. But no, the public deserves the gold coin. You financial markets, if you want some weird secondary silver coins to play with, we will let the Fed make silver coins. That’s fun. And so, there’s a way to conceptually and practically separate monetary and fiscal policy that actually has its roots in a very sophisticated Central bank securities framework, but now I get to make it with fun coins.
Again, you can explain this to kids, right? “Why are those coins there? Oh, that’s for weird investors. You know those big companies. They don’t like to use our money.” There we are, that wasn’t hard. I just explained to a six-year-old. So, those are two layers.
Third big layer, last big layer, is what I’m calling the “Federated Fiscal Ledger.” And this was also a bit of an unusual thing. I didn’t know this coming into the paper. I didn’t think of this, I should say, coming to this paper. But the Constitution actually specifies that Congress is required to keep and periodically publish a record of all public spending and taxes collected. It’s actually supposed to prepare a budget for the public to hold them accountable.
When they say, “We told the executive to spend X, the executive spent Y. Here’s our attempt to resolve those things X, Y, Z.” Through that, I propose that we essentially create a distributed ledger—a semi-distributed ledger I should say—where Congress has a master budget and then each individual agency has its own local accounting budget software, but that syncs up directly to the Treasury, to Congress’s. It’s like you’ve got the master ship and there’s a thousand satellite ships and each one of those is constantly uploading their own data back to the mainframe.
Put those three things together, what do you get? You get a database for all the laws, you get an administrative interface that the executive branch can go and speak to Congress and get clarity and whatever else about how those laws spend money, and then you’ve got a final accounting record of the money that was actually spent.
A lot of this stuff is already being done, but then it’s very convoluted and certainly very conceptually hard to explain to the public way. I mean, you guys are smart, we’re sitting here with lot of time. Management budget quick pop quiz: What did I say? No, it’s hard right? It’s complicated. So, part of the problem is we’ve already shot ourselves in the foot about doing this stuff properly when we design it in such a way to make it impossible for everyone to understand
Scott:
Let’s do a roundup that is kid-friendly, journalistically friendly about the consequences. So, we’ve now got many choke points.
Rohan Grey:
The funding Treasury refuses to honor the payments, OMB doesn’t give out those money disbursements, certificates of legitimacy.
Scott:
And Congress is being undermined
Rohan Grey:
Congress tells itself not to issue debt but also to spend and causes the Trillion Dollar Coin crisis. Congress says to itself that we’ll only pass budget laws, but then says nothing is budget related, you know.
Scott:
So, your proposal is more transparent and keeps the power of the purse with Congress from beginning to end.
Rohan Grey:
Yeah. I mean, you’ll appreciate this too. There’s very much a “the only way out is through” vibe to some of this, which is that, as I said before, historical trend towards greater centralization of individual functions. If you think about it, the Fed’s getting a lot of payments being processed from banks and elsewhere. What Treasury is essentially doing is saying, “I am not going to require you Fed to engage with every government agency. That’s a goddamn nightmare. I’ll handle all of them. I’ll just give you like a common set of instructions.” Fed says, “Thank you. I hate people. I hate people who aren’t bankers.”
So, there’s a sense in which if you just stopped and looked at that functionally, saying, “Hey, you know what? If there’s one person that can consolidate all of the identical forms of payment instructions before sending it to the person that has to get 7,000 emails in their inbox, that’s probably a nice, that’s probably a useful thing. That makes sense to me.” To go from that to, “And therefore, we should make that person directly politically answerable.” “No, you lost me again. I’m a parliamentarian, you know.”
There is that kind of dynamic of understanding that these problems are baked into the technicals and that we want to lean into the technical efficiencies of those. But if we’re creative about the legal arrangements, we don’t have to give up the constitutional separation of powers along the way just to get a slightly more bureaucratically efficient fiscal administrative system.
Scott:
There is the ultimate lesson, which we all know and we just presume in every single thing that we say here. But that I think it needs to be said. You know, we want this episode to go viral and I want everybody to be listening to it and not just people who already are in the club and know all about it. The lesson is: Money is essentially a public utility that is created endogenously based on political design. We don’t never have to ask where are we going to get the money. Instead, the question is, “How are we going to design the system and how is the money going to be created? Through what processes and what technology? And who is going to receive it and for what purposes? Are those purposes good or bad?”
Rohan Grey:
And that decision should ultimately start with Congress. It shouldn’t be something that the President gets to go, “Well, you say whatever you want at the beginning and I’ll do whatever I want at the end.” We might as well give up on the idea of representative government, if that’s what the situation is. You know, we just have a monarch that we occasionally don’t kill, and we call that democracy.
But, yes, I would say one of the big conceptual ideas, which I didn’t mention when I first introduced it a second ago, is when you can digitize the law, you can actually make the law itself the payment software. Like the actual physical law. Imagine if we wrote a statute saying here’s how much to spend and at the bottom it had like a bunch of checks with serrated paper and you pass the statute. Everyone goes “right” and they rip off the bottom of the statute and they distribute the checks out. That’s what I’m doing digitally. The law itself is the password authority. It is the keys for the servers that authorize this amount of spending. So, I am making the material of Congress, the stuff that Congress actually makes, that it is allowed and expected to make, that is accounting spreadsheets and laws, and I’m turning that into the technology of the money, or at least the first step of the technology.
What you and I use to buy coffee is a whole separate conversation. This is intra-governmental. This is inter-branch. I think the big innovation that comes with being able to do it that way is that you can have qualitative credit lines. We have credit lines today. People understand this intuitively. If you have a black Amex card, how much can you spend? It’s an infinity sign. We actually have an infinity sign out in the world. But it’s that idea of giving you a qualitative credit line so that if you had a statute that says, you know, fix potholes, how much can you spend? As much as needed to fix potholes.
If I start launching an arts and crafts education service, I’ve done the wrong thing. If I start building another skyscraper, then I probably misinterpreted what filling up a pothole means in a really reasonable legal sense, right? So, there’s a sense in which qualitative credit lines allow you to be far more creative with budgeting in an MMT sense.
They also allow you to completely invert the theory of budgeting because the way that the congressional budget process today works is it’s all focused around not only it being budgetary but these macro figures, the size of the deficit, the amount of national debt you can issue, total spending amounts. Then they go back to individual agencies and they say only spend with this amount. We’ve agreed that the headline number is X. We’ve all got a piece of X and if we don’t stay within X, none of this gets done. Where I switch you to a qualitative credit line is basically saying, “We know this thing needs to be done. Spend as much as you need to.”
And we have versions of that today. For example, the Consumer Financial Protection Bureau uniquely was set up so that it was a Bureau of the Fed. That’s why it’s called the Bureau actually, because it’s a Bureau of the Federal Reserve, but it’s completely independent legally. It’s only on paper by the Federal Reserve. But it was kept out of the budget process, so it doesn’t go through an annual congressional reauthorization and it was kept out of the OMB’s purview and it doesn’t go through the Treasury because it’s already at the Fed. So, of all the layers that I mentioned before, the 1, 2, 3, 4 layers, the only one that the CFPB is vulnerable to is the Fed, is the Fed access with the banking account.
But the reason that it is the case that way is because, and honestly credit to Elizabeth Warren, I didn’t appreciate how genius the financial design was when I first looked at the CFPB. But the CFPB is set up so that they, like a lot of financial regulatory agencies, eat what they kill. If you fine people, you get to keep the fines and use that for future regulatory efforts. But they also have a special provision that says if you don’t have enough money from that, you can request from the Fed up to a certain amount and they just have to give it to you. So, they can literally just request money for their budget and it just gets printed by the money printer. We have an agency that is already doing this in a very convoluted back end way.
Interestingly enough, it already went to the Supreme Court last year with the CFPB versus Consumer Financial Case and the Supreme Court upheld its constitutionality. They said that as long as you specify the purpose for which the money is used, it could be open-ended. It doesn’t have to specify an amount. It doesn’t even have to specify the process by which you make those choices. It just has to specify some money and the purpose and that’s it.
A lot of what’s baked into this structure is trying to capture these benefits of the structural change, but to bring them back into Congress.
Billy:
Just on that point really quickly: how is it possible then that the CFPB could have been so innervated so quickly by the Trump administration?
Rohan Grey:
It was because they had already won on the governance layer. They’d already won on the issue of the sort of 1.0 unitary executive theory.
Now, I think, so in that situation, if there was an earlier CFPB case that went to the Supreme Court, seal of law, that said the single director of the CFPB being not fireable for cause violated the take care cause of presidential separation of powers. So they basically invalidated that, like, I don’t know how many years ago, five, six years ago, something like that.
Since then, the CFME director serves at the pleasure of the President, which is why now he’s appointed Vought, who is his OMB director, who has also indicated that he doesn’t believe the Empowerment Act is constitutional. He’s already put that guy in there like he did the first time around. And yeah, essentially once you can kill it from the inside, you can kill it from the inside. But you could take that funding model and you could apply it to an entity with a different governance arrangement and that could still survive.
Now what you point out is a very important problem which is the challenge for complete Unitary Executive control that the President should be able to fire everybody, the last case that’s been holding out against that, it goes back to the 1930s, is a case the Company’s Executor. The Company’s Executor was about the FTC, but it was about …. they have a multi -member head system, a multi-member commission. So, the argument then was that unlike the CFPB, the multi-member commission allows both parties to have some input, even if one party is the majority or whatever it is. The Supreme has narrowed it down with the CFPB case. So, anything that isn’t a multi-member thing is definitely not allowed, and there’s a pretty good chance they’re going to kill that too next. On that front, it doesn’t stop Trump from putting somebody into the top of the agency.
What it still does though, and this is important, is it puts operational control over the data and the processing systems back with Treasury. The executive branch, the Fed, the Treasury, the President, they can still do last mile stuff, but Congress has reclaimed the power to say when we have and have not told you to spend money. We actually have a mechanism to very clearly say, “No, we actually wanted you to spend this much and you haven’t done it. Don’t worry about the vague statutes. We’ve gone all the way down to the details.” That’s what this does is it doesn’t solve the problem of the President being able to control the entire administrative state, but it does take the money power and make sure that Congress has the final kind of control over it.
And this was my other big insight moment, my big aha light bulb moment. It’s a very MMT inspired concept, so hopefully you’ll appreciate it, too. It’s that there are very strict limits on Congress doing executive functions, right? Just as we’re trying to make sure that the executive doesn’t do congressional functions. But what I am describing is not executing the spending but keeping score, being the scorekeeper. And not only being the scorekeeper, being the scorekeeper who controls the scoreboard.
Scott:
And it turns out: that’s not neutral.
Rohan Grey:
Turns out that’s incredibly not neutral. Right, exactly. And not only that, turns out Congress actually has that power. It has the power to record laws. Both Houses have the keep their own journal of laws and it has the power to keep an accountant statement. Those are, you could call them “executive acts,” they’re certainly practical acts, right? Those are physical material acts in the real world. This isn’t brain in a vat. You have to keep an accounting spreadsheet. And that together is the basis of what I’m doing with this technology.
I’m not going and saying, “What if Congress was the executive branch?” That’s reductive. I’m saying what if you were sitting in your basement watching a football game and the referee decided to give somebody six points and you thought that they didn’t deserve it and then the entire rest of the world is like, “Well actually, you’re the guy, not the referee.” So you keep scoring your basement and that’s the real score, right? You just happen to be the CEO of FIFA or something, of NFL or something.
My point is, you, wherever the legitimate consent of the people’s version of the ledger is, is the true ledger. If the President disagrees, if the Supreme Court disagrees, yeah? You and who’s democracy? If we say when we wrote this law, this is what we mean specifically about spending, then it should be up to Congress to set that score. And that score is the most legitimate version of that score within any of the branches because that’s Congress’s constitutional prerogative.
Billy:
In this scheme, would it be possible to hold a director of one of the departments or agencies in the executive in contempt of Congress if they failed to administer or to draw what they’ve been directed to.
Rohan Grey:
By the Congress? Yes. This is a way of reducing executive discretion over its interpretation of Congress’s directives in such ways that allow it to effectively undermine those directives. When we said spend and you’re like maybe not, we’re like no, actually spend.
The other thing that it does is that it creates a direct link to each administrative agency. In the past, it was Congress to OMB, OMB to the world, you know. But now it would be Congress as a hub and spoke for every administrative agency. But if Linda McMahon says, “I’m just not going to come take the check or the credit, you know, the debit card.”
Billy:
Yeah, right.
Rohan Grey:
Then that beef is with Congress and Linda McMahon. It’s not all through the President
And theoretically, you know, if there was a constitutional crisis, just hypothetically, if there was a straight up constitutional showdown over this … Say Congress went to the judiciary and the judiciary said, “No, they’re supposed to spend. They’re in contempt.” What if Trump said, “I’m not leaving the building”? It sounds kind of crazy to start to think of what a slow-boiling, non-violent civil war could look like, but it could actually take place over control of the money.
If Congress said, “The Department of Education has to be funded.” Trump said, “I’m not leave in the building,” then maybe Congress appoints an interim person. Maybe it goes to the deputy director and says, “Would you take the card if we give it to you and then we will in an emergency sense appoint you as the interim Treasury Secretary and basically invalidate that other guy.” But we have the power to do that now with Congress. We can give anybody that public credit card. You see what I’m saying? You don’t need to have the internal administrative infrastructure of the existing agency. That agency could now be an enemy of the state, you know?
Color that department building out in red on the map and now you’re just funding the new Department of Education out of the basement. And it sounds extreme, right? It sounds extreme to imagine the United States in that state of decline. But one of my favorite pieces that I assign in a lot of my classes on Law, Money and Technology is a piece from the New Yorker called “Estonia’s Digital Government.”
And it’s all about how Estonia, like very early on, built all these systems to integrate their digital information such that there’s one web portal, government web portal, that has everything from your taxes to your student loans to your healthcare information to your voting information to your, you know, whether you’ve got a speeding ticket. And the way that they did that in this incredibly interesting way was they passed a law saying the government can only ask for your data once.
Think about that for a second. It means that every government form that asks for your name can’t ask for it again. It has to ask to access your existing name information. And then they put that whole set of information under your control. Largely. Anyway, all of which is to say the reason that Estonia did that is because it’s terrified of being invaded by Russia again. So they are basically preparing in advance to have a kind of digital infrastructure that could be managed on the go for a government in exile. It happened before. Governments have been in exile for decades. What would it look like for Congress to build technology that allows it to directly empower its own appointed agents without relying on the whole complex administrative apparatus out there that the President controls?
Billy:
In a way that is probably to more people more intuitively consistent with the Constitution.
Rohan Grey:
That’s the thing. And if you look at all the verbs in the Constitution, like “coining money,” okay, the Executive takes his credit card, goes to the ATM, coins money. Okay, “drawing money from the treasury,” that’s the act of going with your credit card and drawing it from this Digital Treasury Server.
The act of “borrowing,” we’ve repurposed that word now in the Constitution. Borrowing is the thing that the government does from the people: not through the bond markets out there, backwards to Congress. It flips the bond market logic to be internally facing. The bond vigilantes are us, it’s Congress. We’re the bond vigilantes. We’ve always been the bond vigilantes. As Stephanie Kelton says: “If you find the votes, you find the money.” So, this takes public credit and repurposes that term, it repurposes taxation, purposes publishing a statement into accounts.
Billy:
Could you say restores?
Rohan Grey:
Yeah, restores. I mean, I would say that the original plan was that the Treasury Department was Congress’s Department. So, this is restoring that version of the Treasury and renationalizing it within Congress, but mostly automating it. And leaving the Treasury Department as its own separate executive state.
Scott:
I have a question that I would assume might be impossible to answer, but I’m gonna ask it anyway. Do you have a sense of where this specifically fiscal Executive Unitary Power coup comes from? Are there Federalist Society papers about, you know, occupying the Treasury and occupying all of these offices in the Bureau of the Fiscal Service and carrying out what is being done? How ad hoc is this?
As you said, most of us don’t realize that this infrastructure is there because it’s invisible and that means it’s doing its job. But I also think about when Paul Krugman recently interviewed Nathan Tankus. And Krugman, you know this highly respected New York Times columnist, admitted: “I don’t ever think about the payment system. I don’t really know how it works. Let’s talk about the ‘plumbing.’” If Paul Krugman doesn’t know about the “plumbing” and never thinks about plumbing …
Rohan Grey:
It’s all in his undergraduate econ textbook somewhere.
Scott:
Yeah, right. Yeah, he cites a certain point in that interview he cites econ textbooks.
Rohan Grey:
Oh, you don’t get through a day without Paul plugging his textbook.
Scott: If this infrastructure is so invisible, where does its visibility show up in the right wing and how do they know about it? And then when they do know about it, how do they and who is strategically planning to take it over?
Rohan Grey:
I would say two things. I’d say first of all, if you’re going to play hardball, the answer is every tool you have. We talk about this all the time. Watching Chuck Schumer just capitulate on the continuing resolution. You can tell what fighting hardball looks like because it’s what the Democrats don’t do. You can tell when someone’s using every tool at their disposal. And even if they lose some of them, that’s okay. You miss 100% of the shots you don’t take.
So, there’s a sense in which this isn’t, I would say, the one true strategy they’ve had. It’s just a strategy. They’re using all the strategies. This one happens to be very effective.
Now how did they know? As I said, I think the Mnuchin thing with the post office was a moment of realization that the Treasury is a very unique actor. The OMB, as I said, doesn’t really control the underlying payments, and the Fed is very independent. So, if you want to have as much technical control in a politicized place, Treasury is your point in the process.
I think the minutiae and stuff at the Post Office was a canary in the coal mine for that. But most importantly, which we haven’t really talked about, is that the way that Trump has done all of this: he’s sent his Doge boys in there. He’s sent Elon Musk, and Elon Musk is doing this. There’s another version paper I could have written for a different audience. I would have lost everybody. But he’s gone after the data in general, right? He’s not just going after payments control. That, I think, is the most operationalized part. He is setting his AI voraciously consuming GrokBot on a lot of that: IRS data, higher ed student loan data, social security data. So, this to me is a matter of Trump sitting down with Musk and Musk going, “I can take over government, that’s easy. I run massive companies all the time. How do you think I run them? I run them with a software. I don’t go visit plants and speak to people.”
I think a lot of this is just the Trump strategy of “fight every fight, never back down, never see a power that you didn’t want to absorb into your own power” combined with Elon Musk’s tech guy thing. So when I consider hacking there, this is partially what it is. You’ve got a guy who cosplays a hacker, you know, he pretends to be a gamer. I gave a talk at school the other day and I called it “Pwning the Republic” and the definition that I found of pwning from the Oxford English Dictionary was “to inflict a humiliating defeat on another person, especially in a video game, or two, to take over an operational system. So I was like, yeah, that sounds right. That’s what it is. They are pwning the Republic for sure.
Billy:
Well, Roman Gray, the paper’s called “Digitizing the Fisc.” Where can people find it?
Rohan Grey:
It’s on my website.
Rohan Grey:
I’ve also got Twitter feeds. You can look at the top pinned Twitter feed and I’ll probably eventually have it on my website and relatively soon.
Billy:
Well, I’d love to leave on a more optimistic note. Is that possible?
Rohan Grey:
Yeah, I would say one of the optimistic things is that pretty much most of these technologies are around. The hardest digital currency technology spec problem is the last mile, putting a card in people’s hands. Very different internally within the government. So, this isn’t a utopian idea. It’s a radical idea, but it’s doable.
The good news about this is that sometimes, I wouldn’t have wished what’s happening right now on anybody, but sometimes it takes breaking something to recast it better. This system was already broken is the big takeaway. This was not a good working system before Trump came along.
There’s a line in there, the line I put in the article from Hari Seldon from Foundation—which is one of my absolute favorite TV shows of all time at the moment—is like, “A rotten tree trunk appears strong until a storm breaks it in two.” We can do something about this tree trunk now that we’ve revealed how rotten it is.
Billy:
Thank you so much for joining us. I look forward to talking again soon.
Rohan Grey:
Thanks. Take it easy.
* Thanks to the Money on the Left production team: William Saas (audio editor), Scott Ferguson (transcription), & Robert Rusch (graphic art)