Trump's $1.776 Billion Payout Plan Advances Despite Court Ruling and GOP Opposition
Key Takeaways
- •The proposed $1.776 billion fund would direct payments to Trump supporters and Trump-affiliated institutions, stemming from a lawsuit Trump filed against the IRS over the 2018 leak of his tax returns.
- •Federal Judge Kathleen M. Williams overturned the settlement, ruling that it constituted illegal self-dealing and could not be ethically carried out.
- •Republican senators Thom Tillis and John Cornyn have led opposition to the fund, citing support from additional GOP colleagues including Bill Cassidy and Lisa Murkowski.
- •The dispute has stalled the confirmation of acting Attorney General Todd Blanche, as he has refused to commit to killing the fund.
- •The Judgment Fund, administered by the Treasury Department, is a permanent appropriation designed to pay court-ordered and settled claims against the federal government under the Federal Tort Claims Act of 1946.
President Donald Trump's economic agenda has drawn sharp criticism from observers who describe it as a system of patronage, using labels such as "crony capitalism" and "communism of pelf." At the center of the current controversy is a proposed $1.776 billion fund that would direct payments to Trump supporters who claim they were targeted or persecuted by the federal government. The initiative is expected to move forward despite being struck down by a federal judge and facing significant pushback from within Trump's own Republican Party.
Legal commentator and attorney Katie Phang, speaking on MS NOW, detailed the mechanism behind the fund. "The $1.8 billion slush fund that would help these insurrectionists would be coming from a bigger pot called the Judgment Fund, right?" she said. The Judgment Fund, Phang explained, "is used to pay out settlements and verdicts and judgments that stem from Federal Tort Claims Act litigation, or claims made against the federal government." The Judgment Fund is a permanent, indefinite appropriation administered by the Treasury Department that covers court-ordered and settled claims against the United States. Congress created the FTCA in 1946 as a limited waiver of sovereign immunity, allowing private parties to sue the federal government for certain torts committed by federal employees.
Under normal circumstances, those FTCA claims undergo review by the Department of Justice. "The government screws up, they've got to pay it out," Phang noted, emphasizing that legitimate gatekeeping is built into the process.
Phang argued that the current situation is fundamentally different. "The real corruption here is the initiation of the lawsuit and its genesis. Trump wanted to give cover to create the slush fund for the insurrectionists and for his buddies whom he wanted to be able to pay out money to, including people like Michael Caputo, Steve Bannon, and Michael Flynn," she said. "So he created this lawsuit with the whole charade of it. And when a federal judge busted him on it, he essentially said, 'Oh well, I can just do this the way I want to through a bill.'"
That legislative route also faces obstacles, according to Phang, who cited Senator Thom Tillis's position that Republicans would not provide the support needed to pass such a measure.
Trump's pick for attorney general, acting attorney general Todd Blanche, has been unable to secure confirmation partly because of this dispute. Republican senators Thom Tillis of North Carolina and John Cornyn of Texas have opposed Blanche over his refusal to commit to killing the fund. The standoff underscores how the dispute has spilled beyond a single policy question into a broader test of Senate leverage over the executive branch's nominee for the nation's top law enforcement position.
MS NOW political analyst Steve Benen observed that the issue has become politically damaging enough that Republican lawmakers — typically deferential to Trump — have broken ranks.
"John Cornyn and Thom Tillis are taking the lead on this," Benen said. "But according to both of them, they're not alone. They say that they're representing a variety of Republican senators who share the same concerns they do about the Blanche nomination."
Benen pointed to additional Republican dissenters, including Senator Bill Cassidy of Louisiana, who has voiced concerns, and Senator Lisa Murkowski of Alaska, who suggested that Blanche's confirmation "isn't going to happen."
"We're seeing broader concern among GOP senators saying maybe Blanche's nomination is no longer a sure thing," Benen added.
The proposed fund originated from a lawsuit Trump filed against the IRS after an independent contractor leaked his tax returns in 2018, revealing that he had paid no income taxes for multiple years and had a series of previously undisclosed business failures. Although prior victims of similar leaks received only apologies and no financial compensation, Trump sued the IRS for $10 billion.
The presiding judge questioned the lawsuit's legality, noting the inherent conflict: Trump controls both the IRS — the agency being sued — and the Justice Department, which is tasked with defending the IRS. The president and Blanche moved swiftly to "settle" the case for $1.776 billion, with the funds earmarked for Trump supporters and Trump-affiliated institutions. The settlement also included a pledge to exempt Trump and his family from all future audits.
Judge Kathleen M. Williams swiftly overturned the settlement, ruling that it constituted illegal self-dealing and could not be ethically carried out.
Not all potential recipients share the view that the fund is improper. Sam Nunberg, a former 2016 Trump campaign aide and lawyer, told AlterNet in June that he supports the so-called "anti-weaponization fund."
"If it's a political witch hunt, yeah. I think there should be some kind of compensation fund for it, and I don't care what party the people are from," Nunberg argued.