The Trump administration is considering the establishment of a $1.7 billion fund to compensate the president’s allies and others investigated by the Justice Department under former President Joseph R. Biden Jr., creating an ethical and political minefield for Republicans and the department’s leadership.
The unusual plan, which Democrats and former government officials have criticized as a vast political slush fund financed by taxpayers, is being fast-tracked but has yet to be finalized or approved, according to people familiar with the situation.
The Justice Department is modeling the program, in part, on a landmark $760 million settlement fund the Obama administration created to compensate Native American farmers and ranchers who were deprived of access to federal subsidies for decades. Payments in that settlement came from the Judgment Fund — an uncapped pot of money that does not require congressional approval and is maintained by the Treasury Department.
Why Now?
The proposal comes in response to various claims President Trump has made against a federal government he himself now controls. He has sought compensation for the leak of his tax returns during his first term, as well as the investigations into his handling of classified documents after he left office and into his 2016 campaign’s potential ties to Russia.
The idea of establishing a government fund to pay Trump’s political allies has gained traction internally as the Justice Department and White House try to resolve a $10 billion lawsuit Trump filed in January against the Internal Revenue Service. The judge overseeing that case is considering throwing out Trump’s suit because it is riddled with perceived conflicts of interest and the potential for self-dealing.
A compensation fund for Trump allies — but not for the president himself — would offer a short-term fix, allowing the president to receive a deliverable benefit from the lawsuit before the judge could dismiss it, according to officials briefed on its details.
Who Would Get Paid?
People in Trump’s orbit have for months discussed a compensation fund for his allies who incurred significant legal fees during the various investigations that ensnared Trump and his aides. It could extend to the nearly 1,600 people charged in connection with the attack on the Capitol on January 6, 2021. The move would, in many respects, act as a bookend to Trump’s issuance of clemency to those convicted of crimes during the Capitol riot — felons now valorized by his appointees as heroic and as “survivors” who have been victimized.
The fund would also address Trump’s separate pair of administrative claims against the Justice Department for its previous investigations into him. Trump has asked for $230 million for those claims.
It was not immediately clear where the fund would draw money from. But officials with the Treasury Department have been part of internal discussions.
The Legal Minefield
Trump’s suit against the IRS turns on the leak of his tax returns to The New York Times in 2019. Trump, two of his sons, and his family business demanded at least $10 billion, arguing that the IRS should have done more to prevent a former contractor from leaking tax information.
The case sits on shaky legal ground. Judge Kathleen M. Williams has questioned whether Trump’s lawsuit is valid given that, as president, he controls both the lawyers bringing the suit and the government attorneys who have to respond to it. It is a basic legal principle that the two sides in a lawsuit must be actually opposed to each other. Otherwise, there is no conflict for a judge to even consider.
Judge Williams ordered Trump and the Justice Department to write briefs by May 20 outlining whether they were in opposition. She also asked six prominent outside lawyers to evaluate whether the lawsuit could proceed at all given the self-dealing involved.
On Thursday night, those lawyers outlined a series of questions the judge should consider asking the Justice Department — and which officials there might find awkward to answer. They suggested the court grill the department about measures lawyers have taken to ensure they can act in the “independent” interests of the IRS, not those of the president.
To avoid having to explain themselves, the Justice Department and White House are now racing to iron out a settlement and withdraw the suit before the judge can evaluate its legitimacy, The Times reported this week.
Political Fallout
The compensation plan could be political poison for Republicans already weakened by Trump’s plummeting popularity ahead of the midterm elections.
“An insane level of corruption — even for Trump,” Senator Elizabeth Warren, a Massachusetts Democrat, wrote on X. “A $1.7 BILLION slush fund for Trump’s hand-picked stooges to hand money to January 6 insurrectionists and his political allies.”
Brandon DeBot, a senior attorney adviser at New York University’s Tax Law Center, called the proposed fund an “absurd and extraordinary” exchange for dropping a lawsuit that the government would have fiercely fought against anyone other than Trump.
The situation also places acting Attorney General Todd Blanche, the former lead lawyer on Trump’s defense team, in a difficult position. Moderate Republicans in the Senate have said they would support Blanche’s potential permanent nomination if he were to recognize that the January 6 attacks were a disgrace. Blanche had resisted a push to pay restitution to any of the rioters, according to a person familiar with the discussions. It is not clear what has changed.
The Bottom Line
The Trump administration is considering a $1.7 billion fund to compensate allies investigated under the Biden administration, including potentially the nearly 1,600 people charged in connection with the January 6 Capitol attack. The plan, which Democrats have called a “slush fund,” is being fast-tracked as the Justice Department tries to resolve a $10 billion lawsuit Trump filed against the IRS over the leak of his tax returns. A judge is considering throwing out that lawsuit due to conflicts of interest and self-dealing. The fund would be modeled on a 2010 settlement for Native American farmers and would draw from an uncapped Treasury account that does not require congressional approval.
The proposal is not finalized. But the fact that it is being discussed at all has already sparked outrage — and raised fundamental questions about whether the government can pay the president’s allies without becoming an instrument of the president’s personal grievances.
