Tad DeHaven and Molly Nixon
The settlement in Donald Trump’s lawsuit against the Internal Revenue Service, in which the president was effectively both plaintiff and defendant, creates a taxpayer-financed, nearly $1.8 billion compensation fund for non-parties claiming to have been victims of the federal government’s “lawfare” or “weaponization.” Both the process and the resulting fund raise serious constitutional and policy concerns.
A New Program, Not a Legal Remedy
Trump’s claims in the settled lawsuit were not frivolous. The improper disclosure of Trump’s private tax information by an IRS contractor was a serious breach, and the contractor was criminally prosecuted and sentenced to prison. Government abuse is real, leaks of private tax information are serious, and politically motivated investigations and prosecutions, if proved, deserve remedies.
But it’s worth emphasizing the litigation’s novelty. Federal courts are constitutionally limited to adjudicating “cases” or “controversies,” and longstanding precedent interpreting that constraint requires that the parties facing each other be genuinely adverse. Here, both sides of the lawsuit were subject to the direction of the same person—Donald Trump—a “unique dynamic” that prompted the judge to raise concerns as to whether it was properly before the court.
Those concerns were mooted by Trump’s voluntary dismissal of the case following a settlement agreement that says Trump, Donald Trump Jr., Eric Trump, and the Trump Organization will receive a formal apology, but “will not receive any monetary payment or damages of any kind.” Fair enough. (A later addendum appears to raise additional concerns by purporting to give Trump and related parties a broad release from certain tax-related claims or reviews. That provision deserves scrutiny in its own right.)
But the agreement also establishes an “Anti-Weaponization Fund” (AWF) to compensate purported victims of government lawfare and weaponization. Settlements usually resolve claims between parties. This agreement, by contrast, says the AWF’s corpus does not represent the value of Trump’s claims, but is based on the “projected valuation of future claimants’ claims.” It is, in essence, the creation of a new spending program without congressional authorization. That fits the administration’s well-established pattern of improvising ways for Trump to bypass Congress in an “endless quest to secure a slush fund that he can use to personally control large sums of money.”
Echoes of Familiar Tactics
This scheme was not written on a blank slate. The settlement combines elements of two practices used by prior administrations, most controversially during the Obama presidency.
The first, “sue-and-settle,” is a practice in which a party—typically an advocacy group—sues a federal agency under a friendly administration, alleging the failure to do something required by law, and the government agrees, often through a judicially-enforceable consent decree, to take an action it already wanted to pursue rather than defend the agency. It’s controversial because such cases appear to use the court system collusively to achieve a shared policy goal; one that would otherwise have required a resource-intensive process, including public participation.
The settlement between Trump and the IRS will look collusive to many, establishing a program that—but for this settlement—would have required congressional authorization and appropriation.
The second similar precedent is that of settlements requiring payments to third parties, which have rightly sparked outrage among congressional Republicans and others. These agreements were reached in federal government enforcement proceedings against private parties and required the settling defendants to provide funds to non-profit groups aligned with the administration or to invest in other projects that political leadership deemed valuable.
These were so unpopular that the House passed bills blocking them in at least three congresses, each time under Republican control and with the support of several current administration appointees. (A version has also been introduced in this Congress.) While these cases were not considered collusive, they were—like the AWF—perceived as political efforts to reward favored non-parties.
Whither Congress?
There is, of course, a difference here: the AWF will be funded directly by taxpayer dollars. You may be scratching your head because the Constitution explicitly provides that “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Unfortunately, as with much federal spending, Congress put the payment of judgments on autopilot, establishing a Judgment Fund with a permanent, indefinite appropriation to pay many judgments and settlements against the United States.
That system provides no congressional check on specific settlement payments and few meaningful constraints. The Judgment Fund has already been tapped for millions of dollars in payouts to resolve cases brought by the President’s allies and supporters who claimed they were targeted during previous administrations, including Carter Page and Michael Flynn.
Because the government is settling Trump’s case, the AWF’s nearly $1.8 billion pot will come out of that same Judgment Fund. The Attorney General’s order establishing the AWF cites as precedent several cases in which the US Department of Agriculture resolved discrimination claims brought by Native American, Hispanic, and female farmers, stating that those cases were “settled on similar terms.”
That comparison may be a tough sell.
Those cases did indeed tap the Judgment Fund, but the eligible claimants for those funds were generally within the category of those whose cases had been settled. And claimants sought compensation for the same USDA discrimination alleged in the lawsuits.
The Trump settlement, by contrast, anticipates that AWF claimants will be—not the plaintiffs in the case, or even similarly situated individuals whose confidential tax returns were improperly disclosed—but the far more attenuated victims of “Lawfare” and “Weaponization,” defined vaguely in the Settlement Agreement as the “sustained use of the levers of government power by Democrat elected officials, political and career federal employees, contractors, and agents in order to target individuals, groups, and entities for improper and unlawful political, personal, and/or ideological reasons.”
The phrases “lawfare” and “weaponization” refer to real and troubling practices but are, to a significant degree, subject to the eye of the beholder. That doesn’t mean every claim is meritless, but the terms provide the AWF with broad discretion to decide who qualifies, what procedures apply, and what relief should be awarded.
What’s more, the claims processes in the cited settlements were administered by neutral third parties. The AWF, again by contrast, will consist of five members appointed by the Attorney General and removable by Trump in his capacity as president, not as the individual settling the lawsuit.
These distinctions may not ultimately present legal infirmities. And it isn’t immediately apparent that anyone would have standing to challenge the AWF’s legality in court, regardless. But they create, at the very least, the appearance of a corrupt process designed to accomplish a crooked end—payouts to political allies. And the use of the courts, the Department of Justice, and, of course, the office of the president in that endeavor risks doing serious, hard-to-remedy damage to their institutional legitimacy.
Worse, the scheme could be repeated in a variety of contexts, creating a significant end-run around the appropriations process. For example, an administration that has not obtained the funding it sought from Congress for a grant program could settle a friendly lawsuit using Judgment Fund dollars to cover the absent appropriation. Perhaps that possibility, along with the now bipartisan frustration over collusive litigation, could prompt renewed interest in asserting congressional control and oversight over at least this use of taxpayer funds.
The Fund’s Design Invites Abuse
The legal questions are serious enough, but the fund’s design makes the practical danger obvious.
The fund determines its own procedures for submitting, receiving, processing, granting, or denying claims. It may make those procedures public “in whole or in part,” at its discretion. It’s required to provide confidential reports to the Attorney General identifying claimants who receive relief and the nature of that relief. But the agreement does not establish anything like normal public reporting, independent review, or transparent standards.
The settlement also says there shall be “no appeal, arbitration, or judicial review” of claims, offers, or other determinations made by the fund. A denied claimant may still seek relief elsewhere if otherwise allowed by law. But the AWF’s decisions are insulated from review.
Then there’s the matter of leftover money. The fund stops processing claims by December 1, 2028. Any remaining balance after December 15, 2028, must be transferred before January 1, 2029, to the Department of Commerce, the Department of the Interior, or another “appropriate” federal government account designated by the president.
That provision is hard to square with the claim that the fund is merely compensating victims of unlawful government conduct. If the money is truly tied to the projected value of future claims, unspent funds shouldn’t be diverted by the president to another government account. The timing only reinforces this concern as the redirection would occur in the final weeks of Trump’s second term.
So the settlement creates a nearly $1.8 billion fund, gives executive-branch appointees broad control over eligibility and procedures, allows opacity, blocks review of fund determinations, and lets leftover taxpayer money be redirected to another account chosen by the president.
That is not how neutral legal redress should be structured, but it is how one would design a political slush fund.
Conclusion: The Anti-Weaponization Fund is Itself Weaponizable
Federal power can be, and has been, abused. If government officials leak private tax information, misuse law enforcement power, or target citizens because of their politics, those are serious abuses. But the remedy for weaponized government should not be more weaponized government.
The AWF is being presented as a cure for politicized government, but its description thus far suggests otherwise. Indeed, it creates an opportunity for the administration to engage in a variant of the abuse the settlement seeks to remedy.
Congress can create compensation programs, courts can adjudicate claims, and the government can settle cases within lawful limits. But the executive branch should not be able to transform a settlement into a standing slush fund for favored categories of claimants. The constitutional and political-economy problems are the same: unchecked executive discretion over taxpayer money.
If this settlement stands, future presidents will have a roadmap for turning lawsuits into spending programs and political grievances into taxpayer-financed payouts.
Congress should not let that happen.