Perhaps with everything going on in the Middle East and gasoline prices rising here at home, President Trump was hoping the settlement agreement entered into between the Trump family and the Department of Justice last week would attract little attention. Unfortunately for congressional Republicans seeking reelection, that wasn’t the case. The roughly $1.8 billion fund is purportedly intended to compensate victims of the Biden administration’s “weaponization” of the Justice Department, a cohort that apparently includes those convicted of crimes after storming the U.S. Capitol on Jan. 6, 2021.
President Trump’s “payout pot for punks,” as retiring Republican Sen. Thom Tillis labeled it, will do nothing to help GOP candidates win over the independent voters he needs to avoid a blue wave in November. Independents have soured on the current administration in a profound way. Based on numerous polls completed over the past month, President Trump’s approval rating among independents is consistently running around 26% – a full 10 points below where it stood prior to the Democrats’ 41-seat gain in the 2018 midterms. The recent fleecing of the federal treasury will only continue to suppress those numbers.
In public opinion surveys done over the last dozen years, government ethics and corruption have consistently ranked among the top two concerns of independent voters. Many Americans have disaffiliated from both major political parties because they believe our system of government is inherently corrupt and exists mainly for the benefit of insiders. The slush fund established as part of the settlement agreement between the president’s family and the Department of Justice is just a continuation of the graft that has been the hallmark of the president’s second term – and it proves their point. A more egregious example of an insider using government for personal benefit would be hard to conceive, unless the Treasury Secretary started shuttling gold bars from Fort Knox to be stored in a bathroom at Mar-a-Lago.
The lawsuit was filed in response to a government contractor stealing the tax returns of thousands of wealthy and prominent Americans and leaking them to Pro-Publica and the New York Times. Among those targeted were the president, his adult sons, Ken Griffin, Elon Musk, and the Trump Organization. They were among some 400,000 returns leaked between 2018 and 2020 by Booz Allen Hamilton employee Charles Littlejohn, who was ultimately sentenced to five years in prison for his actions.
Under existing federal law, each victim of Littlejohn’s disclosures was entitled to seek either actual damages or $1,000 per act of unauthorized disclosure. Rather than suing Booz Allen, the Trump family sued the Internal Revenue Service and the Treasury Department for $10 billion, arguing that each individual view of a news story containing the leaked information constituted a separate tort. They attempted to bolster the claim by contending that the disclosures damaged their professional reputations.
Although tax returns are certainly intended to be private, it’s questionable whether the disclosures harmed the Trump Organization and its principals in any tangible way. Voluminous public records were already available about the Trump family’s business dealings, so it is hard to imagine the tax return disclosures did anything beyond confirming the misgivings that millions of Americans already held about the president’s business acumen. Moreover, banks and other financial counterparties routinely require financial disclosures, including tax returns, from clients before entering into business relationships with them. The leak simply gave them access to something they would likely have acquired anyway.
Not surprisingly, many legal analysts were deeply skeptical of the lawsuit. For one thing, the two-year statute of limitations had clearly run out. The disclosure was publicly known as of September 2020, yet Trump waited more than five years to file his suit – until Jan. 20, 2026, when he controlled both sides of the case. Under Article III of the U.S. Constitution, federal courts can only be used to adjudicate actual “cases or controversies,” which means that litigants must have adverse interests. In this case, Trump was suing an entity that he controlled. A federal judge appeared to be on the verge of tossing the case because at the time the dubious settlement was announced, the plaintiff and the defendant were one.
As a general rule, the government is immune from claims of this type unless Congress has waived that immunity. Also, third parties are not liable for the illegal actions of independent contractors acting outside the scope of their responsibilities. Finally, damages would have been extraordinarily difficult to prove, notwithstanding the novel legal theory that the $1,000 statutory penalty applied some ten million times.
Apparently, the IRS knew all this. Career IRS lawyers reportedly drafted a 25-page legal memo recommending that the Department of Justice file a motion to dismiss. Federal District Court Judge Kathleen Williams ordered the parties to justify why it should proceed, noting among other concerns that Trump was effectively controlling both sides of the litigation.
The manner in which the settlement was reached was a masterclass in accountability avoidance. The case was dismissed and the settlement entered into just two days before the parties were required to report back to the judge. Notably, the only government signatory to the agreement was Acting Attorney General Todd Blanche – the president’s former personal attorney. The IRS did not sign the agreement, yet it is now bound by it, including the provision permanently barring it from auditing any of the plaintiffs’ prior tax returns. The roughly $1.8 billion will come from a permanent federal Judgment Fund, thereby avoiding a congressional vote that would almost certainly have sunk the arrangement.
The fund will be administered by a five-member commission appointed by the attorney general, each of whose members the president may remove without cause at any time. That structure – and the president’s clear control over it – creates little more than a vehicle for Trump to reward loyalty, particularly from those willing to take up arms or attempt to subvert the law on his behalf. The process requires no public disclosures, is insulated from any appeal, and doesn’t close until the month after the November 2028 presidential election. What could go wrong?
The image of a corrupt administration is now indelibly etched in the minds of independent voters. November 2026 cannot come soon enough for many of them.
