Trump's Social Security chief backs down from 'shutting down' agency

WASHINGTON (Reuters) -The head of the U.S. Social Security Administration has backed down from "shutting down the agency" after a federal judge rebuked him for misinterpreting a court ruling that limited billionaire Elon Musk's access to agency information.

The agency's leader, Leland Dudek, who has been cooperating with a Musk-led group tasked with reducing government waste, said in a statement on Friday that the court had clarified its ruling.

"Therefore, I am not shutting down the agency," said Dudek, who was appointed by U.S. President Donald Trump as the agency's acting commissioner.

The Social Security Administration administers benefits for tens of millions of older Americans and people with disabilities.

Since taking office in January, Trump has vowed to reduce the size of government, tapping Musk to lead an effort to reduce government waste. Trump and Musk say social security fraud is rampant and that Musk's group, known as DOGE, needs access to agency data to identify people committing fraud to receive benefits payments.

But on Thursday, U.S. District Judge Ellen Lipton Hollander ruled the agency probably violated privacy laws by giving Musk aides "unbridled access" to the data of millions of Americans. She ordered a halt to detailed record-sharing between Dudek's agency and Musk's DOGE.

Dudek told U.S. media outlets including Bloomberg News and the Washington Post that the court's order would require him also to restrict access to the information for agency employees, which would effectively shut the agency down.

Hollander dismissed that view on Friday. "Such assertions about the scope of the order are inaccurate," the judge wrote in a letter to government counsel.

She said her ruling on Thursday stated clearly that Musk's team could still access records when personally identifiable information, such as names and social security numbers, had been redacted. The judge said the order was clear that agency employees could still access the unredacted documents.

"Any suggestion that the order may require the delay or suspension of benefit payments is incorrect," Hollander said.

The case has shed light on the amount of personal information DOGE staffers have been given access to in the databases, and Thursday's ruling was one of the most significant legal setbacks for DOGE to date.

Thursday's ruling said the information in the Social Security Administration's records includes social security numbers, personal medical and mental health records, driver's license details, bank account data, tax information, earnings history, birth and marriage records, and employment and employer records.

(Reporting by Jason Lange in Washington; Editing by Mary Milliken and Daniel Wallis)