Why do we have to pay into the new Anti-Weaponization Fund?

0:28Jesse Eisinger:This is Search Engine. I'm PJ Vogt. No question too big, no question too small, no question too taxing. We were not supposed to have an episode this week, and yet here we are. All because of a big national news story that has been developing. A story that we here at the show have not been able to stop talking about. President Trump's anti-weaponization fund. The origin story of that fund actually begins years ago with an enormous IRS leak. A leak that let the American public see both Trump's tax returns, as well as the tax information of hundreds of American billionaires. It was obvious at the time that this was a huge story.

1:09Jesse Eisinger:We covered it here at Search Engine. What was not obvious, though, was where it would lead. Jesse Eisinger, a journalist at ProPublica, played a weirdly large role in the chain reaction that's led us to today. So we asked him back to Search Engine Studios to help us understand what's going on here. I kind of want to return to the story that you told last time we spoke, but I know not everyone will have listened to that episode. Can you just tell me, many years ago, you got an anonymous tip which led to a big reporting project. Can you just describe what the tip was and what the reporting project was in brief?

1:48Jesse Eisinger:Sure. I was born in a log cabin. I, one day, I was looking at my phone and a signal pops up and a guy wanted to get in touch with me. It was a tip like I get many times a week. And this one turned out to be the greatest tip I've ever had. Eventually, the guy leaked to us the tax information for all of the wealthiest people in America, all the household names that you could imagine, Jeff Bezos, Michael Bloomberg, George Soros, Warren Buffett, Bill Gates, et cetera, et cetera, Elon Musk. And then we gathered a huge team at ProPublica to report on the tax returns. And Paul Keel was my partner in this.

2:38And we eventually, over years, published over 50 stories based on these returns about the tax avoidance strategies of the wealthy. And the big picture is, surprise, surprise, the lay understanding of our tax system is that it's extraordinarily unfair and that people who are extremely wealthy avoid taxes in myriad ways, some of them entirely legal and very simple to do. What we did was very powerful because we named names. So, we showed that Jeff Bezos had literally paid zero in taxes for two years when he was a billionaire, and Michael Bloomberg paid zero in taxes, and Carl Icahn paid zero. And what we also showed is that they pay just trifling sums of taxes compared to their wealth growth.

3:33So, they avoid income, and by avoiding income, they avoid taxes, and their wealth grows and grows, and then often they borrow against their wealth.

3:43Jesse Eisinger:to fund their lifestyles. At the time that you were writing your story, you didn't know the identity of the person who was leaking to you, but later he was caught, he was arrested, and so you found out his identity. Yes. Yeah, he was a contractor for the IRS working for a consulting firm, Booz Allen. He's a guy named Charles Littlejohn, and he had actually leaked the Trump tax returns to the New York Times and provided them with the information to write their blockbuster story on Trump's tax avoidance strategies. Huge, important public service. And then he realized that the problem of tax avoidance was much bigger than one person and wanted to expose the tax avoidance strategies of the wealthiest among us.

4:34And that's when he came to us. He had seen – Paul and I had done a series of stories. I like to think of it as the least read, most boring, investigated series of all time, which was about the gutting of the IRS. But one person who was very important actually read that, which was Charles Littlejohn, and he, unbeknownst to us, we didn't know his identity as you just said, he gave us the tax returns. And then that actually got him caught. if he had just leaked the tax returns of Trump, he wouldn't have gotten caught. He would have gotten away with it.

5:12Jesse Eisinger:Was it just because now he had accessed more? It was easier to cross-reference? Yeah, it was much easier to figure out where it came from. And one person's tax returns could have come from so many different areas that the IRS didn't even occur to them to kind of do a search for that kind of query. But the massive queries that Little John had done just stuck out. They're very obvious. And so the IRS figured it out. They charged him. He pled guilty and is now serving a five-year prison sentence, which is the longest sentence for anyone who leaked non-classified information in American history for what I consider to be a great public service.

5:55So I consider him to be a whistleblower of great importance. And so I remember Trump had been the first presidential candidate in a long time to not voluntarily disclose his tax returns.

6:09Jesse Eisinger:People had a lot of questions about whether he was paying taxes, like about his money. And so I remember the moment that his tax return was published. I remember the reporting that you guys did about just sort of the way the wealthy were engaging in tax avoidance. at the time of like that reporting, as you're working on it, what was your sort of like, if you'd stopped and thought, I don't know if you did, but like the best case scenario of like Trump's tax return is going to come to light. All these other people's tax strategies are going to come to light. Like what was the like hopeful outcome of what all that could mean?

6:46Yeah, well, I don't really operate with a lot of hope. I'm like, I don't wake up in the morning just thinking, okay, what changes will make American society better today? I can't wait to see them. But, you know, I think the system should be reformed and can be reformed to make the wealthiest pay more. And so you take somebody like Donald Trump, and one of the things that was – I was shocked by it, and I refuse to not be shocked by these things, and I refuse to kind of succumb to cynicism, is that he literally did not pay taxes for years and years. And it turns out that he's not alone because commercial real estate billionaires can pay zero in taxes.

7:41It's because they – it's a simple reason is that they get to say that their buildings are losing value. It's just an accounting fiction. But in fact, what's happening is the buildings are appreciating value. That tends to be what happens to property in America. Yes, especially in New York, right? And so the properties go up in value. But these billionaires sometimes can say to the IRS, I'm personally losing$100 million a year. You see these people with these ludicrous, absurd statements of, you know, nine-figure losses on income. And so that's the magic of accounting. So there are billionaires often who pay zero in federal income tax.

8:29But the more important thing was that they pay very little as a fraction of their kind of overall wealth growth.

8:36Jesse Eisinger:And so I think one of the feelings I just as a person who wonders about the inner lives of other people, including the president, one of the things I'd wondered about was like, honestly, like, did he care? You know what I mean? I was like, does he care? Can you tell me about the nudes this week? Yeah. So, I mean, I don't know if he has much of an inner life. the president, did he care? You mean, was he upset or offended about having his taxes leaked? Yeah. He, Trump, repeatedly acted as if he was violated for this. Now, as you just said, what he was doing was violating a norm of behavior that had lasted for about 50 years for major presidential candidates.

9:22They released their tax returns. So underlying that leak was this extraordinary violation of what we think is a fundamental kind of aspect of transparency when we come to our major political leaders. So what he did was he waited for a while, and then he sued the IRS in one of the most extraordinary actions that any president has taken in American history.

9:51Jesse Eisinger:So tell me about why that's extraordinary. Tell me about the lawsuit. Like, what was unusual about the lawsuit? It was so mind-bending and weird and outrageous. It's actually pretty hard to kind of understand what happened. But what he did was he, in his personal capacity, sued the federal government, which he runs, for$10 billion for having allowed the leak of his tax returns. So he, the private citizen, is suing the government, but he's essentially, he's on both sides of that lawsuit. Right. There had to be steps that were taken before he could even effectuate this lawsuit. And the first step was that he's taken over the executive branch of the federal government, the administrative state of the federal government.

10:46Obviously, he is the executive. He was legitimately elected. But we had norms of independence for our federal agencies that had grown up really in the post-Watergate era but had been developing for a long time. The idea of an independent civil service had been developed for well over 100 years. And what Trump said was, no, I control everything. There is no such thing as an independent agency. There is no such thing as a nonpartisan civil service. I have control over every agency, including the Department of Justice, which had really acted very independently since Watergate. But it turned out it was just a norm.

11:31It was just tissue paper. And once you tore it up, there was nothing left standing. And the Supreme Court essentially allowed him to act in this way as the executive with power over the agencies. So that was step one. Step two was to take control of the Republican Party so much that Congress was supine and has been throughout the second administration. So he had to have those two things in place. And then once he had that in place, what he could do was sue the federal government. So the Department of Justice was responding to his suit on behalf of the Treasury Department and the IRS. And then they were in a position where they were purportedly adversarial.

12:18And it went to a judge. And the judge said, explain to me how this is an adversarial process.

12:25Jesse Eisinger:Because in theory, if I were like, got in over my head on my buying designer button-up shirts on eBay Habit, and I was in trouble, and I sued Search Engine, the business that I co-run, and then went to court, a judge would be like, you can't be in a fight with Search Engine. Like, if you want to take money from search engine, take money from search engine. But you can't say that you're fighting with search engine and the court has to provide relief because obviously you don't have an adversarial relationship to search engine. I think that was a pretty good analogy, but like not even – Punch it up.

13:00Didn't even get to – I mean, like, it's so circular. It's so weird. You know, you can imagine that you're engaged in an adversarial process with your employer. But this is like – it's like suing yourself over having bought too many shirts. I'd say it's not a terrible idea. Yeah, exactly. Some kind of personal constraint. You know, the analogies are hard.

13:31Jesse Eisinger:Are we out past the land of analogies because we're in a place that is too strange? It's completely mind-boggling and strange and really impossible to understand like how it could happen because then what happened was they got into settlement negotiations with themselves. And Trump actually joked about it. He said, I'm negotiating with myself over the settlement because the judge in this said there is no adversarial relationship. You don't have a case. You don't have a controversy. So there's nothing for me to adjudicate here, or I think there's nothing here. So you're going to have to brief me on why this is.

14:11And they said, OK, we're going to withdraw the lawsuit and then we're just going to negotiate a settlement with ourselves. And so Todd Blanche, the acting attorney general, who was the former personal lawyer for Trump, was negotiating with Trump over, you know, I thought it was like, well, how blank would the check that we can write to you be? Can we make it more blank so you can fill in whatever number you can? He sued for$10 billion, which was a ludicrous number, but why not$20 or$100 billion? But then there was this twist where they decided not to just hand Trump money. They had this new strategy, which is to create this fund.

14:56Jesse Eisinger:So one possibility is they would have just like wired it to his Chase account. Tell me, before you get to the analysis about the fund, what is the fund? Okay. So what happened was they reached a settlement, and the settlement is the anti-weaponization fund. And I – I know that this is bad, but it's – It's so comical. It's funny. It's funny. It's great content. Yeah, I feel like this is the kind of thing where people have said, you know, Trump's funny. You know, he's been amusing. I'm sort of no longer amused, you know. It's just like the idea that somehow this is ending in kind of reparations for Jan Sixers.

15:38Jesse Eisinger:It's just— Literally, yeah. Literally reparations. But he calls it the anti-weaponization fund. What is it— Yeah, so, you know, what I thought that was funny was that it first was reported as a$1.7 billion fund. I was like, that's such a weird random number. Why not two? Why not have a round number? And then it changed to 1.8. I was like, well, why did they go from 1.7 to 1.8? And the reason was that it was never 1.7 or 1.8. It was 1.776, 1776, because they're just trolling us. And so I thought, like, I was just so annoyed by the trolling. You know, you can imagine that they're going to do all the Instagram posts celebrating their anti-weaponization fund checks.

16:26Yeah, yeah, yeah. So the fund is purportedly going to go to anyone who is able to show that they were victims of the Biden administration's, you know, quote unquote weaponization. Yeah. Which really just means law enforcement. And they haven't really defined it. It's going to be a very secretive slush fund that they can dole out essentially at the president's whim.

16:53Jesse Eisinger:And it's not clear that they will have to say who they've given the money to. Like, that is one of the things that there's question marks around. Yeah, well, they might not be able to because you're not allowed to disclose who government money went to without the consent of the recipient. So, there's going to be all sorts of questions about transparency and process here. So, what happens is they built this 1.7, we're going to round up to$1.8 billion fund. and that's coming out of an existing amount, a pot that Congress allocated in the 1950s. And what was the pot? One of the questions I just had is like, almost$2 billion, obviously the founding fathers were not like, there should be a fund for the president to pay his friends and punish his enemies.

17:44Jesse Eisinger:Why was this money even there? Yeah, right. So what happened was the government occasionally gets sued and there's some wrongs, and then the government will pay out funds. And what Congress did was say, look, you know, we're not going to authorize this in each individual case. So, we're going to give the Treasury, this happened in the 50s and 60s, we're going to give the Treasury a fund where if there's a serious legal process where there's real parties who are adversarial, overseen by a judge, where there's a presentation of evidence and a gathering of facts and some determination of real victims, then they'll be able to pay this fund out and Congress doesn't have to authorize it in each individual case.

18:33Jesse Eisinger:So there's an existing pot of money for when the government makes mistakes. It's just not supposed to go in this direction from this person. It's not supposed to be Trump's piggyback. Right. I mean, this is his innovation, and you kind of have to hand it to him because they're groundbreaking in their imagination and brazenness about how to use the levers of presidential power. And one of them is to, you know, locate this fund and understand its capacity and then transfer the money for this kind of purpose, which is a really corrupt purpose. Because it was never used to benefit political patrons or allies of the president.

19:15So it was not the slush fund for the personal use of the president for his funds. I mean, this is what the constitutional crisis is about. And this is a constitutional crisis. It is a usurpation of congressional authority over the power of the purse, and this is an utter abuse of power from the executive in a way that's almost worse than having him personally profit from this. This is what the crisis is. So it's in the dark going to be subverted for American taxpayer dollars. You know, my dollars and your dollars are going to go into this fund. And then without any process of transparency or any ex ante criteria, you know, so somebody, anybody can petition the government.

20:03And then this is actually a secret board. We don't know who's going to be appointed to it. five people appointed by Todd Blanche, the president's former personal attorney, acting attorney general, is going to oversee these five people, but they serve at the pleasure of the president. So the president could fire them at any time. And as we've seen, he will fire people at any time. And then they will decide in private who gets this money. It's crazy. It's crazy. It's crazy that it's happening. But I do feel like this may be breaking through to some extent because it's so brazen.

20:50One piece of evidence for Jesse's theory that this story is so unusually brazen that it even breaks through to the people who don't spend much of their time being outraged is that it broke through to me. My nervous system rejects outrage. I only really like stories that invite lots of feelings, not knowing, complexity. President uses taxpayer money to make personal slash fund is not a normal search engine story. But it's where we are this week because it genuinely did grab my attention, genuinely forced me to feel things that I try not to feel because I think if you feel them too often, they do something bad to your brain.

21:26I'm sure our next episode will be more normal, but this week, I feel like I've huffed a can of MSNBC. I solemnly apologize. Jesse is different from me. He routinely reports on stories that outrage him. He tries to bring outrageous delight on behalf of the public interest. But even for him, this is a story where, when he imagines its next act, his imagination offers some particularly bleak outcomes. To Jesse, the possibility that Trump just pays his friends about$2 billion of taxpayer money, so it'll somehow end up back in his pocket, would actually be not as bad as another outcome. The worst one he can imagine is this.

22:12That Trump has about$2 billion now, and he fulfills his promise to pay the January 6th insurrectionists. And now, he has something that looks a little bit like a paramilitary group. People who do violence at his command, who he then gets out of jail and pays. What does he do with them next? Is America flirting with something darker here than we flirted with before? I don't know what to make of that. You can make the mistake of driving yourself crazy imagining terrible futures. You can make the mistake of summoning terrible futures by telling yourself they'll never arrive. But the facts that we know are that the president has nearly$2 billion at his discretion, and he won't have to tell us who he pays it to.

22:54And, Jesse points out, this fund also contains language that's meant to inoculate Trump, his family, and his family organization from IRS audits. Past audits and possibly future audits, depending on how a court interprets the language here. All of this, of course, will be challenged in court. To some degree, what happens next has to do with judges and politicians in the next election, but it also has a lot to do with us. with what we decide is worth our sustained attention.

23:28We're going to take a short break. When we return, we will go back, in a way, to the beginning. This whole story started, weirdly, because a lot of very wealthy people wanted to avoid paying their taxes. And some journalists thought if they could get more people talking about this, that might be a good thing. People are talking about it. has it been a good thing? Honestly, the answer will surprise you. It'll surprise you after these ads.

24:22Welcome back to the show.

24:27Jesse Eisinger:So here's something I think about sometimes. When there's an unsolved problem in American life, whether it's immigration policy, whether it's taxes, sometimes the problem benefits from more attention accruing to it. But just as often, the heat of public attention can actually make things worse. The politicians begin to politic, sober voices leave the field. I'm describing a thing that I don't think I need to describe, because you live here too. Jesse cared about tax policy before it was, and I use this term very loosely, cool. Or as nerds would put it, before it was more highly salient. One feature of that newfound salience is Trump's fund.

25:09Jesse Eisinger:Another, though, is lots more conversation and policy ideas aimed at changing American tax policy. Jesse is famously not an optimist, not an optimist, just a grouch who works all day trying to make an impossible world better. But I wanted to know what Jesse sees when he looks out now at the current landscape of American tax policy. We're in a race between the oligarchs and democracy. So people are very angry about billionaires on the left and the right and feel like American society is fundamentally not working. And they blame the wealthy for absorbing too many of the resources and profiting unfairly and, you know, having all of these benefits accrue to them.

26:02And they're still struggling. And I sort of think that critique is fundamentally true in American life. And then there's a lot of ferment about taxing the wealthy now, which I think we contributed to that conversation. You know, Bernie Sanders and Elizabeth Warren ran on wealth taxes. Occupy Wall Street brought this kind of to the fore with the kind of 99 % and 1 % language. So I think it's been building since the financial crisis, really, which was a collapse in the American order up to then. And we've been struggling to kind of replace it. And people have thought that banks, bankers, Wall Street, the wealthy have been screwing us for a long time.