Washington: President Donald Trump settled his lawsuit against the US tax office through the creation of an unusual multibillion-dollar fund to compensate victims of supposed government “weaponisation”, which was immediately described by Democrats as a MAGA slush fund.
The Department of Justice – whose acting head is Trump’s former personal lawyer, Todd Blanche – announced that as part of the settlement, it would set aside $US1.776 billion ($2.48 billion) for the “Anti-Weaponisation Fund”, which will award damages to people claiming to be victims of US government lawfare.
While the Justice Department stated there were no partisan requirements to file a claim, Blanche indicated the aim was to redress what the Trump administration regards as the weaponisation of the US federal government under Trump’s predecessor, Joe Biden.
“The machinery of government should never be weaponised against any American, and it is this department’s intention to make right the wrongs that were previously done while ensuring this never happens again,” said Blanche.
“As part of this settlement, we are setting up a lawful process for victims of lawfare and weaponisation to be heard and seek redress.”
Democrats widely expect the money to be used to compensate people who were convicted or charged over the January 6 riots at the US Capitol, whom Trump pardoned on his first day back in office. That could theoretically include Trump allies such as Steve Bannon or trade counsellor Peter Navarro, who went to prison for defying a congressional subpoena over the matter.
Former secretary of state Hillary Clinton said on X: “Trump didn’t just pardon his followers who stormed the US Capitol. He’s now set them up for payments through a slush fund he created to reward his allies – out of your tax dollars. You could not make this up.”
Trump, his sons and the family business sued the Internal Revenue Service for $US10 billion in January, arguing the tax agency should have done more to prevent a former IRS contractor from leaking their tax returns to media outlets during the president’s first term.
Those outlets, The New York Times and ProPublica, reported that Trump paid little to no income tax during his first year in the White House and in most previous years over a 15-year period, after declaring he had lost much more money than he made. Trump had long fought to keep the records secret.
The contractor, Charles Littlejohn, later pleaded guilty to leaking the documents and is serving a five-year jail sentence.
Trump’s lawsuit filed in the Southern District of Florida created a highly unusual situation where the president was suing the government he administers.
The judge, Kathleen Williams, had indicated the case may be unworkable, as “he is the sitting president and his named adversaries are entities whose decisions are subject to his direction”.
As part of the settlement announced on Monday (Washington time), Trump and his family will receive a formal apology, but no financial compensation, the Department of Justice said.
But the so-called anti-weaponisation fund instantly alarmed Democrats who accused the Trump administration of funnelling taxpayers’ money to its allies.
More than 90 of them signed an urgent amicus brief filed in the Florida court to try to stop the settlement. They contend only Congress can appropriate federal money, and it has not approved the creation of such a fund.
The Justice Department said the money would come from the existing Judgment Fund, which is used to settle and pay cases. It argued there was a precedent: a $US760 million fund created by the Obama administration to redress claims of racism by the Department of Agriculture over decades.
But Massachusetts senator Elizabeth Warren said the latest announcement was “a giant slush fund of taxpayer dollars for [Trump’s] MAGA buddies”, labelling it “corruption on steroids”.
The US attorney-general – who serves Trump – will appoint five members to run the fund, one of whom will be chosen in consultation with congressional leaders. The president can remove any member at will, but their replacement “must be chosen the same way as the replaced member was selected”.
Jamie Raskin, the top Democrat on the House Judiciary Committee, said the fund would be “completely under the control of [Trump’s] sycophants and cronies”.
“He can dismiss them anytime if they’re not doing exactly what he wants,” Raskin told cable network MS-NOW. “He can literally direct them to give money to this or that person based on personal favour for whatever reason he wants. There’s no rule of law, or rhyme or reason to any of it.”
The House Judiciary Democrats also called Trump’s lawsuit a “sham” that was lodged to instigate a favourable settlement.
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Michael Koziol is the North America correspondent for The Age and Sydney Morning Herald. He is a former Sydney editor, Sun-Herald deputy editor and a federal political reporter in Canberra.Connect via X or email.