Trump’s Taxpayer-Funded Revenge Plan

From The New York Times, I'm Rachel. Abrams and [music] this is The Daily. In a move that shocked lawmakers on both. sides of the aisle, President Trump is. dropping his $10 billion lawsuit against. the IRS. Democrats and others are crying. foul over what his administration plans. to do instead. [music]. >> Justice Department announced an almost. $2 billion fund of taxpayer money to. compensate people that the. administration [music] claims have been. victims of quote "weaponization and.

warfare." Among those who could apply. for payouts the nearly 1,600 rioters. charged in connection with the January. 6th Capitol insurrection. >> This is reimbursing people that were. horribly treated, horribly treated. It's. anti-weaponization [music]. they made. Today, my colleague Andy. Duran on the story of how this came. [music] about, who might get the money, and the bipartisan outrage that has. [music] ensued. >> He's setting up a $1.7 billion. political slush fund for the Proud Boys. and the Oath Keepers and his political.

lieutenants and hangers-on. I think that. there are a lot of questions that the. administration is going to have to. answer. >> [music]. >> It's Wednesday, May 20th. So, we have talked a lot on The Daily. about President Trump's campaign of. retribution against his enemies in his. second term, how he's wielded the. federal government to do that, and this. week it feels like we entered into a new. chapter of that story with the creation.

of this enormous fund. We're going to. talk about how the fund works and who's. likely to benefit, but before we get. into that, you, Andy, have been covering. all of this and I just want to start. with you explaining where did this fund. even come from? So, yeah, this story really starts the. first time that President Trump ran for. office in 2016. He was unique among presidential. candidates at that time and this was. something of a scandal in that he did. not release his tax returns. It was.

standard practice for presidential. candidates to put out some of their tax. information as a way to understand their. finances, and Trump didn't do that, and. this was a topic of wide interest. throughout his first term. There were. various attempts to see his tax returns, and that didn't happen until the New. York Times in 2020 published a series of. stories describing what Trump had been. doing on his taxes, and revealing that.

for many years Trump had been paying. little in federal income taxes. >> Right. And to be clear, those stories. relied on leaked tax returns. I remember. this. Yes, it wasn't clear how, it. wasn't clear where this information came. from. It could have maybe come from. accountants or lawyers who worked for. President Trump, or had worked for. President Trump, or the Trump. organization. It wasn't clear what the. source of this information was. But, reporters for the Times had gotten their. hands on and reviewed President Trump's. tax returns.

>> Mhm. Fast forward about 6 months to a. year after that, and ProPublica, a. separate news organization, they start. releasing a series of stories about the. tax strategies and tax situations of. some of the world's wealthiest people. You know, looking at the tax situations. of people like Jeff Bezos, Elon Musk, the positions they were taking on their. taxes in a lot of detail. >> [music]. >> And so, at that point it became clear. that given the tax information of so. many different people, I mean, eventually it's been disclosed that.

thousands of individuals and entities. had their information released, that. somebody within the IRS and with access. to internal IRS records must have been. the source of these stories. Put another. way, it became clear that the IRS had a. leaker. Yes, that there was somebody in their. systems who was providing this. information to the press and [music] in. the fall of 2023, somebody was. eventually caught, a man named Charles. Littlejohn, a former IRS He had been a.

contractor for the IRS. >> [music]. >> and he played guilty to having provided. this information about Trump and then. all these other wealthy individuals to. the Times and ProPublica and then he was. sentenced to prison in the beginning of. 2024. Obviously, leaking somebody's. [music] tax information is a crime. Yes, it is a crime and it's also. something that people can sue the IRS. for. So, there is a civil lawsuit. process that exists for people who think.

that their tax information has been. improperly released by the IRS. They can. sue the IRS and potentially get damages. for that. And so, in January, President. Trump, two of his sons, [music] and the. family business demanded at least $10. million from the IRS for the leak of. this information, basically arguing that. the IRS should have stopped [music]. Charles Littlejohn from being able to do. this. And as you said, people can sue the IRS. when their personal tax information is.

compromised, is leaked. That is what he. did. The difference here, though, is. that he's not just a private citizen, he. is suing a government that he oversees. Yes, I mean, this was and is an. extremely unusual situation, if not. unprecedented entirely. I mean, not only. does the president control the leader of. the Internal Revenue Service, the agency. that he is suing, and the Treasury. Department, which was also named in the. suit, you know, he chooses many of the. people who lead those agencies and is. involved in their decision-making.

He has also played an enormous role in. reshaping the Justice Department and. kind of molding it in his image in a. variety of ways. And the Justice. Department is supposed to be the IRS's. lawyer in this case. But, you know, there have been all sorts of things that. the Justice Department has done in. Trump's second term that are far beyond. what historically independent Justice. Department would do. And so. >> called on the Justice Department to. prosecute those that he considers his. political enemies. Democratic lawmakers. have faced federal investigation under.

his administration. Exactly. And the. idea that this Justice Department, which. is now led by Todd Blanche, the acting. attorney general, who was also President. Trump's personal lawyer before he. returned to the White House, would be. making decisions about how to defend a. lawsuit that the president had brought. immediately just raised all sorts of. questions about the conflict of interest. inherent in such a situation where. President Trump is obviously controlling. the private lawyers that he hired to.

bring this suit against the government. But he is also to a very unusual degree. controlling the lawyers who are supposed. to respond to this suit. >> I feel like you almost need a whiteboard. to like map out all of these conflicts. Yeah, I mean, it's just there are two. sides to the case, but Donald Trump sits. on top of both parties in this lawsuit. And so in that sense, while federal law. does allow for people to bring these. types of lawsuits against the IRS, this. case raises profound questions about.

what the outcome would be and whether. there would be a real defense of this. suit and whether the Justice Department. would contest what President Trump was. claiming in his lawsuit against the IRS. So, how does all this play out in court? Basically, given all of these tangled. web of conflicts between President Trump. and the Justice Department and the. conflict of interest between lawyers who. are working for the president in a. private capacity and the lawyers who are. working for him under the federal.

government, the judge starts to worry. that this lawsuit can't proceed. There's a legal principle that the two. sides in a lawsuit have to actually be. in conflict with each other. That you. can't sue yourself or sue your friend. and hope to go manufacture a favorable. legal ruling from a judge that will. benefit both sides. That there has to be. a genuine tension between the two. parties in a lawsuit or else the judge. has to throw it out. The judge can say I. can't rule on this because it's not a.

real lawsuit essentially. And so the. judge was questioning whether a real. lawsuit even existed here. And so she. asked the Justice Department and. President Trump's lawyers to write. briefs. They were supposed to be due. today explaining themselves and telling. her, "Are you actually fighting with. each other or is this kind of all a. charade and you have filed this lawsuit. essentially under false pretenses." In. which case the judge could have. dismissed it. And she was indicating.

that she was certainly considering just. throwing it out entirely. It was looking. like this was not going in the. president's favor in other words. Yeah. Yes. And the Justice Department was. going to have to explain that and doing. so would have potentially been very. awkward because for them to say that. this lawsuit should exist, they would. have had to show their face in this case. and say, "Here I am to oppose the. president's claims." Which people at the. Justice Department, especially this. Justice Department, didn't want to do.

Where people have gotten fired for. opposing the president. Yes, exactly. And so folks within the administration. were working feverishly last week to. avoid that scenario and to avoid. potentially embarrassing ruling from the. judge. >> [music]. >> And what they arrived at was that. President Trump would drop his lawsuit. entirely. And in exchange the Justice. Department would create this. unprecedented gigantic pot of taxpayer.

money that [music] the Justice. Department will control to compensate. victims of {quote} unquote. weaponization. >> [music]. >> We'll be right back. Okay, so Andy talked to us about this. gigantic pot of money. What do we know. about it? How is it supposed to work? Yeah, so we don't know everything yet,

but what we do know is that this will be. $1 billion $776. million. >> 1776, year of our nation's founding. Exactly, which I do not think is a. coincidence, obviously. But yeah, this. is a huge amount of money that. will be drawn from an account called the. Judgment Fund, which is basically a pot of money that. the Justice Department can use to settle.

legal claims against the United States. So anytime the government is sued and. they want to settle, they can use money. from this fund. It's not usually quite. this much that's taken out of it at a. time, but they will be withdrawing money. from that account, depositing it in a. separate account, which will be. controlled by five people appointed by. the Attorney General, and they will. consider claims from people who say that. they have been victimized by the federal. government and pay them for it.

>> Mhm. You know, there's a lot that we. still don't know and are hoping to find. out about this money, including exactly. how claims for payment will be. evaluated, what weaponization means. exactly when the Justice Department says. that, and how they'll decide how much. money they should be paid. We still. don't even know who these five people. are that will be controlling this money. and making these decisions. And. obviously, they'll will a huge role in.

all of this. So there are a lot of. questions across Washington right now. about what this could ultimately look. like. Has something like this ever happened. before? I mean, I think it's safe to say that. while the Justice Department does settle. other lawsuits, they've never done. something quite like this before. Can. you just talk a little bit, Andy, about. the types of people that theoretically. could be eligible to apply for this. fund? Like, who are we talking about. here? Yeah, so all the Justice.

Department themselves have said about. this are people who are victims of. {quote} weaponization and {quote}. lawfare. But, in terms of people who. believe that they'll be eligible and. people who are excited about this, I. mean, one of the main groups we've heard. from so far are people who were. convicted on January 6th, 2021 for. storming the Capitol and who President. Trump previously pardoned. And there are. other similar supporters and political. allies of the president who say that. under President Obama, the Justice.

Department, the FBI improperly. investigated them basically because they. were Trump supporters and now this is. their opportunity to get money to make. them whole from that experience. But. again, there are all sorts of questions. swirling around this and we don't know. if these payments would be specifically. to pay back any sort of legal fees they. may have incurred or if there will just. be payments beyond that where they could. basically profit from the experience. overall. So, there's not necessarily. going to be clear receipts about who's.

receiving this money and how much money. they're receiving. And so, based on what. we know right now, this entire operation. might be very hidden from public view. But obviously, you know, that's a live. question. I think to a lot of people. though, the idea that somebody who. stormed the Capitol on January 6th could. get paid by the government would be. shocking, to put it mildly. Like, we are. talking about in some cases. convicted criminals who could.

theoretically get money from a. government that they attacked. Is that. right? That is certainly the scenario that. people are asking a lot of questions. about and that certainly seems possible. under the way that this fund has been. set up for sure. It would also by the. way explain some of the reaction that we. have heard to this announcement about. this money that we've seen from both. sides of the aisle. Yeah, so the acting attorney general. Todd Blanche happened to be scheduled to. testify on Capitol Hill on Tuesday to.

discuss appropriations the Justice. Department's budget. Good morning to all. of you ranking member Van Hollen. Senator Collins Senator Moran good. morning. Thank you for the opportunity to present. President Trump's fiscal year 2027. budget. >> During the hearing Blanche defended the. arrangement by saying that the judgment. fund this pot of money had been used in. similar ways in the past. It is true. that this is unusual. That is true. Um. but it is not unprecedented and it was. done to. >> And he told the committee that anyone. could get money out of the fund.

regardless of their politics. It's not. limited to Republicans. It's not limited. to Biden. >> it was. It's not limited to to the Biden. weaponization. It's not limited to in. any way scope or form to January 6th or. to Jack Smith. There's no limitation on. the. on the claims. But that hearing quickly became. basically an opportunity for lawmakers. and particularly Democrats to really.

push him on this arrangement. Mr. Attorney General this is an outrageous. unprecedented slush fund. And push him. on what they called a slush fund that. the administration had set up to pay the. president's political allies. Will. individuals who assaulted Capitol Hill. police officers be eligible for this. fund? Well, as it makes plain anybody in this. country is eligible to apply if they. believe they are a victim of. weaponization. >> Mr. Attorney General, let me ask you. this. In particular, these Democrats. wanted to know whether people who.

stormed the Capitol on January 6th would. be beneficiary of these funds. >> [music]. >> That is pure theft of public funds. And rewarding individuals who committed. crimes is obscene. Every American can see through this. illegal, corrupt, self-dealing scheme. Senator Chris Van Hollen accused Blanche. of public theft of this money and said. that it was part of President Trump's. broader revenge tour during his second. term in office. Mr. Blanche, the record.

is crystal clear. You are still acting. as the president's personal lawyer, not. as acting. Attorney General. It is hard to justify. giving you any funds. that will enable this pattern of. wrongdoing to continue. [music]. Thank you, Mr. Chairman. But there are also signs that. Republicans on Capitol Hill are a little. squeamish about this whole idea. You.

start to see some some questions from. them about what this money could be for. and how it could be used. And even the. Senate Majority Leader, John Thune, Mr. Chairman, another topic. Another topic. The Acting Attorney. >> outside of the hearing made some. comments to reporters on Tuesday, essentially suggesting that Congress. will be taking a close look at this pot. of money. Do you believe this is a. legitimate fund and do you believe those. terms are fair? I think that there are. and and will be continue to be a lot of. questions around that that the.

administration is going to have to. answer. Leader, last week And so even. some of the mild discontent that we're. seeing right now publicly from top. Republican lawmakers is, I think, an. indication that this is not something. again that even people in President. Trump's party are excited about or proud. of and it sounds like there are concerns. too even within the Trump. administration. The top lawyer at the. Treasury Department which will play a. role in creating this fund suddenly. resigned on Monday just hours after its.

creation and my initial reporting is. that this resignation was in part. because of the creation of this fund. I. want to ask about President Trump. himself and whether he is going to. benefit from this. But he's obviously. the one who sued the IRS, right? So can. he apply for this fund? So the Justice. Department has said that the president. himself and his two sons and the Trump. organization which again are the people. who and the entities that brought the. suit in the first place will not be paid. out of the fund themselves. That said we.

learned on Tuesday that another. provision in this agreement between. Trump and the Justice Department is that. the IRS will drop any audits it has of. Trump, his family members and any. related business entities which is. itself very unusual and extraordinary. concession to make to the president and. is also one that could directly benefit. him financially. I mean there it's. unclear what sort of audits the.

president himself may be facing right. now but it's potentially a protection. that could deliver him tens of millions. of dollars in direct financial benefit. if if the IRS was planning to charge him. more in taxes and now they are not going. to be able to under this agreement. That. is something that could go directly into. his pockets. He might avoid giant tax. bills to the tunes of tens of millions. of dollars is what you're saying. I mean. essentially again the Times has reported. and it's been publicly reported that the. president has faced audits in the past.

in which if. the IRS won essentially the president. would owe more than a hundred million. dollars in additional taxes. And so we. don't know what the situation is now, what odds he and his family members may. be facing, but this has robbed the IRS. of the opportunity to demand that the. Trumps pay the taxes that the IRS says. that they may owe under the law. Is. there anything that anybody in Congress, or anybody for that matter, can do to.

stop this if they find it objectionable? We'll find out. So, I think on one. level, there was an attempt by some. House Democrats to intervene in the. original lawsuit that President Trump. filed and can further try and convince. the judge to put a stop to it. Obviously, that ship has now sailed. So, I think the question now is whether. Congress takes any steps to change how. money can be spent on legal settlements. generally, or specifically trying to. address this situation. So, under the.

Constitution, Congress has the power of. the purse. That's a power that's. certainly been eroded under this. presidency and that the Trump. administration has tried to kind of pull. back into the executive branch, but it. is something that, at least. theoretically, Congress could take some. steps and pass some laws to address, but. it's unclear if that will actually. happen. I don't think I'm going out on a. limb here by saying that most people. probably did not even know that this pot. of money existed for the DOJ to use.

until this week, probably. So, you are. in a good position to kind of help us. make sense of this. Like, what should we. make of the fact that this money is now. being used in this way? I think we. should think about this in a broader. context of what President Trump has. hoped to accomplish in his return to. office. And one of his main goals was. obviously retribution against people and. agencies that he saw as having been. opposed to him the first time he was in. office and while he was out of it. And I.

think what this usage of the fund. indicates is that now the Trump. administration is making that next step. from revenge to compensation for. President Trump's allies. And some. ethics experts and watchdogs are calling. this the most corrupt act in American. history. Just to bring it back to where. we started, what this represents is also. not just using the DOJ to punish. enemies, but using it to reward allies. Yes, exactly. But I think there is a.

significant difference and advancement. of that agenda in this prospect of. directly paying people of essentially. the president's choosing with taxpayer. dollars. >> Mhm. There are almost no limits or. controls on how this money will be used. These people who will be selected by. Todd Blanche, the president's former. defense lawyer, will have seemingly. total freedom to give money to whoever. they deem is worthy of it and to give.

them as much money as they want. >> [music]. >> And so this is a very aggressive and. extraordinary use of the money that we, the American public, all pay on our. taxes and that the government borrows on. our behalf. And it could go to simply. whoever has been loyal to the president. They could be cashing out to the tunes. of thousands or tens of thousands, hundreds of thousands, or even millions. of dollars. And so it's a It is just a.

really radical and striking situation. Andy Duran, thank you so much. >> Thanks for having me. >> [music]. [music]. >> We'll be right back.

Here's what else you need to know today. In a closely watched Republican primary, seven-term Congressman Thomas Massie. [music] of Kentucky was defeated by. President Trump's handpicked challenger. Ed Gallrein. I want to thank President. Trump. for his support, >> [cheering]. [applause]. >> his endorsement, and his counsel. as I navigated this campaign, which is a. journey. Massie lost caps a remarkable.

demonstration across three states of. Trump's power to exile his opponents. from the Republican Party. In a matter of weeks, Trump ousted five. Republican state lawmakers in Indiana. who opposed [music] his plan to redraw. election maps there, a US senator from. Louisiana who voted to impeach Trump, [music] and now Massie, who broke with. Trump on several key issues, including. Jeffrey Epstein. For 14 years, those. SOBs in Washington tried to buy my vote.

They couldn't buy it. And the Senate [music] agreed to take up. a measure to force President Trump to. either end the war in Iran or secure. approval [music] from Congress to. continue it. The move comes after a. handful of Republicans joined Democrats. in pushing forward with a resolution. that [music] the GOP has managed to. block for months. Today's episode was produced by Lexi Dio. [music] and Stella Tan. It was edited by. Rachel Quester and Lisa Balin. It. contains music by Dan Wong, Alicia Bitu,

[music] Marion Lozano, and Dan Powell. Our theme music is by Wonderly. This. episode was engineered by Chris Wood. Special thanks [music] to Alan Feuer. >> [music]. >> That's [music] it for The Daily. I'm. Rachel Abrams. See you tomorrow.