Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR Network. I’m your host, Greg Sargent.
So in short, Trump effectively ordered his own DOJ to reach an agreement with him to transfer over a billion dollars in taxpayer funds into a new fund that he apparently controls and can use to reward allies. How is this possible? Is there any recourse? And also, isn’t this going to backfire? A new poll shows Trump is getting absolutely crushed on the economy. So good luck, Republicans, defending this new arrangement.
Harry Litman: Hey, good to be here, Greg. Thanks.
But let’s put that aside for now. DOJ, which theoretically is supposed to be defending the IRS against Trump’s lawsuit, now reached an agreement with Trump to settle the suit. A judge was probably set to throw the suit out, but this new arrangement circumvents that. Harry, can you explain in really simple terms what just happened here with the settlement?
So by doing this so-called voluntary settlement, the DOJ hopes that it doesn’t have to face the music on saying whether it’s a real lawsuit or not. And they can just go around and create this fund without any use of the court.
Just to back up for context, there’s something that already exists called the Treasury Department Judgment Fund. Now this entity pays out money to victims of the U.S. government who successfully bring claims against the government. That fund is subject to various statutory restrictions and oversight since Congress created it.
But the key thing here, Harry, if I understand this correctly, is this new entity won’t be in the control of the U.S. government in any sense. Per further reporting, Trump will have total control over the fund’s members. It operates outside the U.S. government.
Litman: Correct. Or maybe you could say, Greg, constraints that anybody will enforce, because there are constraints here. Even with what the DOJ is saying, Congress has permitted DOJ to settle, but only real lawsuits.
Sargent: Okay, Harry. So what you’re saying here is that this fund can only exist theoretically under the law—this new fund that Trump’s creating—if the lawsuit that Donald Trump and DOJ are settling with each other is a real lawsuit. But the rub becomes who decides whether the lawsuit is real or not. Does the judge have the authority to step in and say, this is not a real lawsuit, therefore the settlement is void, or not?
It is illegal because Congress has said you can use this money only to actually settle real cases. And it’s a fake case. But who can come in now and say this fund is phony baloney? They’re going to say nobody has standing. Members of Congress—93 of them filed a brief this morning saying you can’t do that, but they don’t, I think, have standing. They’ll say that you can’t go to the court now because the case has been voluntarily dismissed. It is violating the law. It’s going to be—can they get away with it?
Litman: Very close: Because he’s voluntarily dismissed it. So that goes over there. She can say, you really were abusing me and there’s a rule that says you can’t—I’m thinking of sanctions here. She can say other things, but I think this separate creation of the fund, she now—and this is the design—no longer can really do anything with. And they will take her right away up to the higher court if she tries.
Litman: It all depends—if I can be Clintonesque here—on the meaning of what “can” means. It’s not legal. The question is, can they be stopped?
Sargent: Okay. Now this entirely circumvents Congress. Congress didn’t create this fund—the Trump fund—though it did create the bigger thing that the money is coming out of. As you pointed out, a number of Democrats just entered a filing in the court where the lawsuit was being litigated, arguing that Trump and DOJ colluded to agree on this corrupt settlement payout to Trump’s fund.
Litman: It gets decided in the first instance by the court. And I wish they did, but the law out there—and the law that they’ll bang right into if it goes higher—says that they don’t, that it’s really for Congress to push back. I do think, Greg, now that people are aware of what happened, you’re going to see oversight, you’re going to see a spotlight.
Sargent: Could a majority in Congress have the standing to do this?
Of course he would veto it, but yes, if everyone were in on it—and, the political oversight, is going to cause Republicans to be in an uncomfortable spot of supporting this totally rank violation, including the possibility that if all of Congress were to come in, possibly there’d be standing.
Litman: Your scenario, Greg, 100 percent solid. Were they to do that and pass a law? Can’t do it. Congress appropriates money, after all. That’s one of like six problems with what he’s trying to do here.
Litman: I think so. I think this is the worst thing that’s happened in the government since the actual pardons on January 6th. I do think the Democrats will try hard to force some kind of vote that makes Republicans have to take some ownership here, because this stinks to high heaven and no Republican will want to put their imprimatur on it. So that’ll be the political maneuvering—to try to make that happen.
They are stopping the ballroom money—the billion dollars that Trump and the White House are demanding for security for his ballroom. Republicans are genuinely split over that and the fate of that is hanging in the balance. So here’s a case where I think this could be just as hard for Republicans to support.
If he had just come out and said, I’m going to give out $1.7 billion of your money—sorry about how expensive gas is—to the people who stormed the barricades, people would really have a political meltdown. He’s doing that, but worse, because he’s trying to, in a convoluted and secretive way, make it look like it’s just a settlement of a case, which it is not. So yes, if Republicans have to own it in some way, I think that could really pose the possibility of more space and daylight between them and Trump now.
Now to your point about how this is going to be bad for Republicans, we just had a New York Times poll with absolutely brutal news for them. Trump’s approval is only 37 percent and on the economy, it’s 33 percent with 64 percent disapproving—31 points underwater on the economy.
So if I’m a House Republican, I’m absolutely dreading having to defend an arrangement where Trump is getting handed a $1.8 billion slush fund while ordinary Americans are suffering economically, right?
But I surely agree. This news on polls is, I think, unprecedentedly bad. We are getting very late in the day for them to have to defend such a stinking-to-hell arrangement as this phony baloney settlement is.
Litman: So I think it’s going to be a political question. So I might punt that back to you. I do think that the judge is going to come in and say, the nerve, how can you do this, and make trouble. But it won’t be trouble that goes to the lawsuit. So I think it will come to Congress.
Sargent: So the judge is basically going to say, I’m sorry, Democrats who have brought this action, you don’t have standing to do it.
Sargent: At the end of the day, Republicans are going to regret this victory for Trump. Harry Littman, thanks for walking us through all that complexity, man. It’s pretty dispiriting stuff.
Litman: Hey, thanks a lot, Greg. Always good being with you.
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