Treasury secretary: NYC needs to replace $4M taken from 9/11 fund

Treasury Secretary Steven Mnuchin told Mayor Bill de Blasio that the city is responsible for reimbursing the funds the federal government wrongly removed from the FDNY's World Trade Center Health Program


By Michael McAuliff
New York Daily News

WASHINGTON — Treasury Secretary Steve Mnuchin has a message for ailing 9/11 New York City firefighters whose funding his agency has withheld: We’re not giving your money back — go ask NYC.

For years, the U.S. Treasury Department has withheld nearly $4 million from the Fire Department of New York’s World Trade Center Health Program to satisfy still-unexplained debts that other, unrelated city agencies have with the federal government.

Treasury Secretary Steven Mnuchin told New York City Mayor Bill de Blasio last week that the city is responsible for reimbursing the $4 million the federal government wrongly took from the FDNY's World Trade Center Health Program. (Photo/Toni L. Sandys, Getty Images, TNS)
Treasury Secretary Steven Mnuchin told New York City Mayor Bill de Blasio last week that the city is responsible for reimbursing the $4 million the federal government wrongly took from the FDNY's World Trade Center Health Program. (Photo/Toni L. Sandys, Getty Images, TNS)

Mnuchin sent a letter to Mayor Bill de Blasio on Thursday saying that the city should make up the shortfall. And if the city doesn’t pay up, Mnuchin threatened to take other federal health care funding meant for New York, and give that to the Fire Department instead.

“We agree it is unfair to burden FDNY with delinquent debts of other NYC government entities. The City government should directly reimburse FDNY,” Mnuchin wrote.

And if de Blasio refuses, Mnuchin said the Treasury, together with the U.S. Department of Health and Human Services, “will facilitate offsets against future federal payments owed to NYC, which would permit the release of funds to FDNY as such substitute offsets are made.”

“Treasury needs to stop double-talking and pay up,” said Senate Minority Leader Chuck Schumer’s spokesman Angelo Roefaro. “This is their fault and they need to fix it, now. Enough already.”

The junior U.S. senator from New York, Kirsten Gillibrand, agreed.

“The administration has withheld almost $4 million from the FDNY and now wants NYC to cover for it. It’s completely unacceptable — the administration needs to end this deception and release the funding New Yorkers need.”

The Treasury secretary’s hardball offer is an unexpected turn in a convoluted tale.

According to federal law, when a federal agency can’t collect a debt, it refers the debt to the Treasury Department and something called the Treasury Offset Program, which then skims it off future federal payments to the debtor.

The treatment program’s money got vacuumed up in that because it is under the same tax ID as the rest of the city government.

But the law, written in part by Rep. Carolyn Maloney, D-N.Y., in 1994, has a loophole that says Mnuchin can exempt offsets if they would harm a program that Congress wants to be funded, such as the 9/11 treatment program.

Hailing from Long Island, Rep. Pete King, R-N.Y., first began asking about the missing cash early this year, and made it formal with a pointed letter back in June when Treasury failed to find a solution.

Asked about Mnuchin’s hardline stance Friday, Maloney again pointed back to the law she helped write.

“It is absurd that Secretary Mnuchin hasn’t yet taken action to rectify the problem,” Maloney said. “The Debt Collection Improvement Act (PL 104-134), which I worked on with then Oversight Committee Chair Steven Horn, clearly gives the secretary and his department the ability and discretion to make sure that this program is made whole. He needs to stop playing games with these heroes’ lives.”

FDNY Chief Medical Officer Dr. David Prezant, who runs the treatment program, has told the New York Daily News that he was able to function despite the dunning because the city and Fire Department could afford to front the missing money.

But with the coronavirus emergency and U.S. Senate’s failure to pass more COVID-19 relief legislation, the cupboard is bare. The program has some 21 vacant staff positions that Prezant can’t fill. It means there will not be enough staff to help responders who are sick from their 9/11 service when they need it.

While the law says Mnuchin has the power to spare such a program from offsets, a Treasury spokesperson insisted that it is not really a Treasury Department problem, since the money originally came from the Department of Health and Human Services, which runs the National Institute for Occupational Safety and Health and the Centers for Medicare & Medicaid Services.

Such a reading casts the Treasury Department as a passive intermediary, although it runs the offset program. The spokesperson confirmed that HHS would have to ask for a solution, but added that HHS does not believe it has the authority to refund past offsets.

According to advocates looking for a solution, it’s relatively simple. The agency that funds the treatment program is the NIOSH, which uses the CMS to send the checks. Since the outstanding debt appears to involve Medicare, CMS administrator Seema Verma would just have to write a letter asking Mnuchin not to punish the FDNY.

Verma recently called the situation “unacceptable,” though she does not appear to have taken any action.

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©2020 New York Daily News

McClatchy-Tribune News Service

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