Five Former Treasury Secretaries: Our Democracy Is Under Siege
The New York Times, Feb. 10, 2025
By Robert E. Rubin, Lawrence H. Summers, Timothy F. Geithner, Jacob J. Lew and Janet L. Yellen
The writers are former Treasury secretaries.
When we had the honor of being sworn in as the 70th, 71st, 75th, 76th and 78th secretaries of the Treasury, we took an oath to support and defend the United States Constitution.
Our roles were multifaceted. We sought to develop sound policy to advance the president’s agenda and represent the economic interests of the United States on the world stage. But in doing that, we recognized that our most fundamental responsibility was the faithful execution of the laws and Constitution of the United States…
The nation’s payment system has historically been operated by a very small group of nonpartisan career civil servants. In recent days, that norm has been upended, and the roles of these nonpartisan officials have been compromised by political actors from the so-called Department of Government Efficiency…
We take the extraordinary step of writing this piece because we are alarmed about the risks of arbitrary and capricious political control of federal payments, which would be unlawful and corrosive to our democracy…The role of the Treasury Department — and of the executive branch more broadly — is not to make determinations about which promises of federal funding made by Congress it will keep, and which it will not. …
Any hint of the selective suspension of congressionally authorized payments will be a breach of trust and ultimately, a form of default. And our credibility, once lost, will prove difficult to regain. [end quote]
Defaulting on any aspect of federal payment commitments would cause a crisis that could downgrade the credit of Treasury debt. Treasury yields would rise as the markets would re-price (dump) Treasuries.
That would cause a major financial crisis. Every corner of the asset markets would be impacted and the cost of servicing the federal debt would skyrocket.
President Trump clearly doesn’t understand the seriousness of the situation.
Companies run by President Trump have declared bankruptcy 6 times. He never suffered for that so he treats default casually.
Mark Zuckerberg, the founder of Facebook, coined the phrase “move fast and break things”. Tech bros like Elon Musk seem to have internalized this ethos.
But breaking the Treasury Department by firing competent employees, screwing up its computer code or failing to pay Congressionally-mandated spending (especially interest on Treasury debt) could cause a crisis similar to 2008.
This won’t be a black swan since it’s happening right before our eyes. That’s why the 5 Treasury Secretaries warned.
Wendy