| Earlier this year, President Donald Trump, his sons Donald Jr. and Eric, and the Trump organization sued the Internal Revenue Service (IRS) for $10 billion in damages for the leak of their tax information in 2020. As I explained in a column on this site shortly thereafter, the lawsuit was highly problematic for numerous reasons. | | The suit was filed well past the running of the statute of limitations. It was based on wrongdoing by Charles Littlejohn, a former IRS contractor who acted without authorization. To the extent that the IRS might have inadequately supervised Littlejohn, that was Trump’s own fault, as the leak occurred when the IRS was part of his own first administration. The $10 billion figure had no real basis in fact, especially when one considers the typical results of lawsuits under the statute that Trump invoked. And most crucially, given how the Department of Justice (DOJ) has abandoned its tradition of independent judgment during the second Trump administration, the case lacked what lawyers call adversarialness—the basic requirement that the parties on opposite sides of the case actually have different interests and positions. | | Accordingly, the judge to whom the case was assigned had asked Trump’s personal lawyers and the DOJ lawyers to file briefs due this week explaining why there was a genuine adversarial dispute falling within the jurisdiction of the federal courts, which, under the Constitution, may only adjudicate genuine “cases” and “controversies.” No doubt fearing that they had nothing persuasive to say in response, just before the deadline, Trump dropped his lawsuit in exchange for what appear to be two key concessions by the IRS. | | First, DOJ will deposit $1.776 billion into an “Anti-Weaponization Fund” to compensate victims of what the settlement agreement calls “Lawfare” and “Weaponization” of government. Although Acting Attorney General and Trump loyalist Todd Blanche testified before Congress that anyone can apply for such compensation, regardless of party, the agreement strongly suggests that complaints by actual victims of government weaponization by the Trump administration—people like James Comey, Letitia James, and lawyers for the law firms Trump’s executive orders sought to punish for representing interests adverse to his own—will be denied. In defining lawfare and weaponization, the settlement agreement asserts that they consist of “sustained use of the levers of government power by Democrat elected officials,” giving as ostensible examples only alleged abuses by Democratic administrations. Moreover, the attorney general has the sole authority to appoint the five members of the Anti-Weaponization Fund. In the unlikely event that a member mistakenly believes that Trump will tolerate dispensing funds to Trump’s own victims or that funds should be denied to any of Trump’s favored recipients, the settlement agreement stipulates that the president “can remove any Member without Cause.” | | Second, in a separate document signed by Acting Attorney General Blanche, the government stipulated that as part of the settlement agreement, it is “FOREVER BARRED” from pursuing any claims against Trump, his sons, or the Trump organization “currently pending or that could be pending (including tax returns filed before the Effective Date [of the agreement]).” Trump was unlikely to be issued a tax deficiency notice by his own IRS, but the language of the agreement means that even in a future Democratic administration, the IRS would be barred from collecting under-reported taxes. That is a significant giveaway because for everyone else, an understatement of gross income on a tax return of 25 percent or more can result in liability up to six years after the return was filed. Because Trump and his family are obtaining enormous wealth through corrupt and opaque means, this provision alone could result in hundreds of millions of dollars in avoided tax payments. | | What Can Be Done? | | When news of the settlement broke, politicians and pundits were quick to criticize it as corrupt self-dealing and a giveaway to Trump’s allies and cronies. When questioned by members of Congress this week, Acting Attorney General Blanche refused to answer the question whether persons convicted of committing violent assaults against police officers during the January 6 riot would be eligible for compensation from the Anti-Weaponization Fund. Meanwhile, the settlement agreement establishing the fund lists legitimate law enforcement operations as examples of lawfare and weaponization. These include the FBI raid on Mar-a-Lago after Trump refused to voluntarily return classified documents he unlawfully removed from the White House and what the agreement calls “the Russia collusion hoax.” Blanche’s non-answer and these disturbing paradigm cases make it entirely plausible that Fund members hand-picked by Blanche and Trump will in fact provide taxpayer-funded payouts to violent January 6 rioters. | | Can anything be done to block that result? In the short run, probably not. Millions of taxpayers will be understandably upset about the creation of a slush fund from which our corrupt president can make payments to his criminal allies. However, taxpayers generally lack legal standing to challenge unlawful expenditures. To be sure, two police officers who were attacked by the January 6 insurrectionists and continue to receive vile threats from them have filed their own suit. They are very sympathetic, but they also may lack standing, given the difficulty of tracing a possible future payout to Capitol rioters to ongoing or future harm to the police officers. Moreover, it is not even clear that the Anti-Weaponization Fund is unlawful. | | Article I, Section 9 of the Constitution forbids the payment of funds out of the Treasury unless Congress has passed a law authorizing an appropriation. Prior to 1956, if a money judgment was issued as a result of a lawsuit against the United States, the plaintiff also usually required a separate act of Congress to actually receive payment, but that process was time-consuming and burdensome. Thus, in that year Congress enacted a standing appropriation to pay such judgments up to $100,000. In 1977, Congress eliminated the cap. The current version of the standing appropriation statute contains no limit on the size of the fund to pay “final judgments, awards, compromise settlements.” | | The settlement between Trump and his own DOJ exploits the so-called judgment fund created by the standing appropriation statute as the source of money for the Anti-Weaponization Fund. Trump and DOJ arbitrarily capped payouts at $1.776 billion for symbolic purposes but, in principle, they could have provided even more money. The Treasury might have given Trump, his sons, and the Trump Organization the full $10 billion for which they sued—or even more. Although such a payout, like the Anti-Weaponization Fund itself, would be a corrupt abuse of the judgment fund, it would not necessarily be unlawful. | | If we had a Congress with integrity, it would act swiftly and on a bipartisan basis to repeal authority for the president and attorney general to abuse the judgment fund in the way that they have. However, we lack such a Congress. Accordingly, reform will only come, if at all, when Democrats hold Congress and the presidency. | | What should they do then to ensure that another future president with no sense of shame cannot abuse the judgment fund? Reinstating a cap on the judgment fund is one option. The old cap of $100,000 is almost certainly too low, but there is probably some figure sufficiently high to prevent Congress from needing to address repeated small-potatoes claims but sufficiently low as not to allow wholesale abuse. | | Even so, however, a damages cap can only do so much. Suppose the cap were $1 million. We can imagine a future corrupt president who brings 1,776 separate lawsuits and has his subservient DOJ settle each of them for $1 million to be paid into a newly created fund. The result would be no different from the actual Trump/Blanche Anti-Weaponization Fund. Thus, instead of or in addition to a renewed judgment fund cap, a future Congress should consider additional checks. | | One possibility would be to forbid the use of the judgment fund to create separately administered entities (such as the Anti-Weaponization Fund) without specific congressional authorization. In addition, Congress could forbid the use of the judgment fund to make any payments to anyone other than plaintiffs who filed claims against the government. More radically still, Congress could forbid the use of the judgment fund to make any payments to persons who have not filed suit and then forbid the use of the fund to make payments in settlement of dismissed claims without judicial approval. That would be a radical step because, except for approving consent decrees, courts generally do not involve themselves in approving or disapproving settlements. | | No doubt additional remedies might be floated, but none will be viable unless and until we have a Congress that cares to guard the power of the purse against an insatiably greedy president. |
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