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

(upbeat music) - This is Start Engine, I'm PJ vote. 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. They'll 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. We covered it here at Surch 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 Surch engine studios to help us understand what's going on here. I kind of want to like 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 like many years ago you got an anonymous tip, which led to a big reporting project. Can you just like sort of describe what the tip was and what the reporting project was in brief? - Sure, I was born in a log game. (laughing) I, one day, I was looking at my phone and the signal pops up and a guy wanted to get in touch with me, is 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. And 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. We showed that Jeff Bezos had literally paid zero in taxes for two years when he was a billionaire in Michael Bloomberg paid zero in taxes and Carl Icon paid zero. And what we also showed is that they pay just trifling sums of taxes compared to their wealth growth. So they avoid income and by avoiding income, they avoid taxes and their wealth grows and grows. And then often they borrow against their wealth to fund their lifestyles. At the time that you were in 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, he was a contractor for the IRS working for consulting firm Booz Allen. He's a guy named Charles Little John 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. And 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 red, most boring investigative 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 Little John and he unbeknownst 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. It was just because now he had access to more. It was easier to cross. 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 considered to be a great public service. So I consider him to be a whistleblower of great importance. And so, remember, Trump had been the first presidential candidate in a long time to not voluntarily disclose his tax returns. 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 were 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? Yeah, well, I don't really operate with a lot of hope. I was like, I don't wake up in the morning just to think, what changes will make America 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 refused to not be shocked by these things. And I refused 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. Because they, it's a simple reason is that they get to say that their buildings are losing value. It's just a, an accounting fiction. But in fact, what's happening is the buildings are appreciating value. That's the only thing that happens to property in America. And 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. But the more important thing was that they pay very little as a fraction of their kind of overall wealth growth. And so I think one of the feelings I had just as a, as a, as a person who wonders about the interlives 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 news this week? Yeah, so I mean, I don't know if he has much of an inner life that 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. They released their tax returns. So underlying that leak was this extraordinary violation of what we think is a fundamental 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. 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. weird and outrageous. It's 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. Obviously 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 non partisan 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 enormous, just tissue paper. And once you tore it up, there was nothing left standing in the Supreme Court essentially allowed him to act in this way as the executive with power over the agencies. So that was step one. Yeah. 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. And it went to a judge. And the judge said, explain to me how this is an adversarial process. Because like in theory, if I were like, uh, got in over my head on my, like, buying designer button up shirts on eBay habit. And I was like in trouble. And I like sued search engine, the business that I co-run. And then went to court, a judge would be like, this doesn't, 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, you know, didn't even get to, I mean, I, it's, it's so, it's so circular. It's so weird. Um, 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. Uh, yeah, exactly. Um, some kind of, uh, personal constraint. I, you know, I, the analogies, the analogies are hard. I mean, out past the land of analogies because we're in a place that is too strange. It's, it's, it's, it's completely mind boggling and strange and it 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's that 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. And they said, okay, 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, you know, write to you be where you 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 dollars? Yeah. 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. So so one possibility is they would have just like wired it to his chase account. Tell me just 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 the thing I know that this is bad, but it's it's so comical. It's funny. It's great content. Yeah, I like this is the kind of thing where people have said, you know, Trump's funny, you know, he's been amusing. I was sort of no longer amused, you know, it's just the idea that somehow this is ending in kind of reparations for Jan sexers. It's just literally, yeah, literally reparations, but he calls it the anti weaponization. But what what what is it? You know, what I thought that was funny was that it first was reported as a 1.7 billion dollar 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 to 1.8. It was 1.776, 1776, because they're just trolling us. Yes. And so I thought like, that's 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. Yeah. So the fund is purportedly going to go to anyone who is able to show that they were victims of the Biden administrations, you know, quote unquote weaponization, 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 dull out essentially at the president's whim. 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 dollar fund. And that's coming out of an existing amount, a pot that Congress allocated in the 1950s. And what was the pot like the one of the questions I just had is like the why like almost 2 billion dollars. Obviously, like the founding fathers were not like there should be a fund for the president to pay his friends and punish his enemies. Like why was this money 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 is happened in the 50s and 60s. And 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. So there's an existing pot of money for when the government makes mistakes. Yes. It's just not supposed to go in this direction from this person. That's supposed to be Trump's pay bank. Right. I mean, this is this 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 locate this fund and I 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. So it was not the slush fund for the person who used the president for his funds. I mean, this is what the constitutional crisis is about. And this is a constitutional crisis. It is a use-sertation 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. That's 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 and then this is actually a secret board We don't know who's going to be appointed to it five people appointed by Todd Blanch 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. 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 One piece of evidence for Jesse's theory that the 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 I'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 for me. He routinely reports on stories that outrage him He tries to bring outrageous to light 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 two billion dollars 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 The Trump has about two billion dollars now and he fulfills his promise to pay the January 6th instruction us 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 two billion dollars in his discretion And he won't have to tell us who he pays it to And Jesse points out this fund also contains language that's meant to inoculate Trump His family and his family organization from IRS audits Pass 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 and the next election But it also has a lot to do with us With what we decide is worth our sustained attention We're gonna 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 can 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 you Welcome back to the show 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 for 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 used 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 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 accrued to them and 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 So it's been building and building and now there's a lot of good policy thinking about how to properly tax the wealthy But the wealthy have gotten so much richer in the time that This has been building and they've consolidated so much more power and are spending so much more on our elections That uh, you know the I would say the forces of democracy continue to be Losing this but they haven't lost But do you feel like like I've just been surprised I feel conflicted About how to think about what's happening right now in America where I feel like when I look at the conversations around taxes I see like Attempts to tax the wealthy More competently which they seem to like Evade very easily and I see a general feeling where the the reaction Almost seems to be like well just like rather than The wealthy should pay more billionaires should pay more I feel like where I'm actually seeing energy is well maybe nobody should pay taxes Yeah, and like I'm not saying like I enjoy tax day, but it's a place where I feel like civic and I've been I feel like what I see like no tax on tips forever. It feels like it's just like we're just sort of starting to arrange carve out after carve out after carve out Rather like the the feeling is like Almost a kind of like nihilism. That's what I feel like I pick up when I read what I say Yeah, I completely agree with you and I wish that I think you are in a category of about seven people in America who are sort of happy about paying taxes in the way that you just described which is admirable and correct which is that it is a civic duty it's a responsibility and should be a point to pride If we could get back to that we would be in a much better place and I think that Part of the idea of taxing the wealthy is not to strip them of their wealth which the taxes wouldn't do but to Require them to contribute to our shared prosperity and the project of American shared prosperity has completely collapsed and been destroyed over the last sort of 50 years I think but Yes, I think you're right that Because of people's cynicism and because of this kind of collapse in The faith in any institution in American society to make things better including the government Even Democrats have said well, we want to start to exempting other people whole classes of people from paying taxes And so you see from Senator Cory Booker and Chris van Holland efforts to Exempt greater numbers of people who make less money from paying federal income tax And that's a really a terrible move in my view It's totally wrong. We should all pay taxes and we should all pay taxes in proportion to our interest come, and we should define our income correctly. And then we can actually tax the wealthy and draw up more from the wealthy as a higher percentage than from the poor. But yes, the direction of sort of starting to piecemeal exempt everyone else from taxes will destroy us. I mean, a functioning society has to collect taxes well and equitably. And before you have a democracy, you have to have a functioning society and the functioning society is based on equitable tax collection. And if you don't have that, you collapse. That's the lesson of history. Yeah, I think what is strange about this era is like for the people who support Trump, but also for the people who resist them or just like him or just don't vote for him. The way where everyone seems to be continuously mirroring each other is to say like the system's rig, the institutions are crumbling. Let's make it worse. And that's like, I don't know what you do with that. I just noticed that it worries me. Well, look at Mamdani. Mamdani is running on the idea of government. And he's saying government is good and we have to make government good. Yeah, we can't deliver. If we don't deliver on our promises, we erode people's confidence. And so it's a principle about the project of creating a society and having a governing body over that and having the governing body actually work for people. Yeah, and you see him kind of trying to build like if right now so much of politics is what can you make legible on social media on the internet. The thing that I see him trying to make legible is functioning government. The thing I see him doing pretty often is to be like, here are city workers fixing potholes. Here is what happens when it snows. Even the police department in New York City the other day had confiscated a bunch of illegal, dangerous street bikes and they were running them over with a bulldozer. But I was like, okay, they're trying to show in some way the message seems to be, I mean, this is not how they would put it, but as a message you can read in it and I can read in it like your tax dollars are going to something keeping your taxes. Basically, yeah, I don't know, but I think he's saying, we can't make all these promises and then not only not deliver on them, but not show people. We need to show people what we do for a living. You know, where the money's going. How it's working, I think it's a purposeful strategy. I think it's well thought out. And Democrats have been kind of conceding this idea that government was ineffective, inefficient, and sort of the wrong idea since Clinton really. You know, Clinton sort of said the Arab government is over. I think they've been running away from government. And you know, one idea would be to embrace the idea of government and try to make it work for people. Jesse Eisinger, he's an assistant managing editor at ProPublica and a staunch Republican. If you liked what you heard here, I have fantastic news for you. Jesse's outfit ProPublica just launched a podcast called PaperTrail. It's ambitious work. They're doing real reported stories. The kind of thing you don't always get to hear on audio podcasts these days. They just launched. If you're curious, just stick around after this break. You can hear a trailer of their new show. (upbeat music) (gentle music) - Hi, I'm Jessica Lesnop, and I'm a reporter at ProPublica and the host of a new podcast called PaperTrail. On this new show, we're gonna show you that investigative journalism is powerful, and here's how I know that. Many years ago, I was working as a reporter at a tiny newspaper in Missouri, and I got this crazy tip about a man in prison. He'd been convicted of armed robbery when he was in his 20s and sentenced, but then the government made a huge mistake. They never actually sent him to prison. They just forgot about him. By the time they realized their mistake, 13 years had passed, and he'd become this pretty upstanding guy. Wife and kids, he didn't even like to swear. Even the victim of the robbery told me this guy shouldn't have to go to prison after all this time. But instead of dropping it, they arrested him in front of his family and locked him up. I was already a pretty cynical person at the time, and this story was not helping. But I published a story anyway, and the case wound up getting a bunch of attention. A while later, he gets a new court hearing. I walk in, his wife is there, she's all dressed up, and I'm like, this is going to suck. This is just going to be some kind of pointless, procedural thing where they're just gonna confirm he's completely screwed. Instead, the judge gets up there and starts talking, and he lays out the facts of the case. And some of the details I thought had to have come from my story. And then he concludes that putting the guy in prison now serves no purpose. And he says to the guy, you can go home, like right now. He walks out hand in hand with his wife. And I got into my car. I was like, I do not understand what just happened. I am not, and everything happens for a reason, kind of person. I was not even particularly optimistic. And this was the closest thing to a spiritual experience that I have ever had. It felt like magic. (soft music) - Investigative journalism is an act of optimism. And it's all we do at ProPublica. We're an independent, non-profit investigative newsroom, and we focus on corruption and abuse of power. - We look under rocks for secrets. What's not being told? - On this show, we're gonna bring you inside a new investigation every episode. We're gonna call out things we see that are wrong, things that affect your life and my life. This could happen to anybody. - The law seemed patently unfair. That's just a system that's not humane. It's not sustainable, and it's not right. - Because when the public knows the truth. - A bombshell report by ProPublica reveals just how little the wealthiest Americans have been paying in taxes. - Those are just some of the lavish gifts that Justice Clarence Thomas has been given by wealthy benefactors. According to a new investigative report by ProPublica uncovered serious problems with some prescription medication produced in foreign countries. - Not always, but more often than you'd think things change. - Supreme Court has adopted its first code of ethics into it, which owns TurboTax, was ordered to pay $141 million to roughly 4.4 million people in laws get passed. - Say representatives gave initial approval to the life of the mother acts, clarifying when doctors can perform abortions. - Powerful leaders are held accountable. - Breaking news here, Homeland Security Secretary Christy Nome fired. - People walk out of prison and cynics like me turn into optimists. I'm Jessica Lessonop, and I'll be your guide. This is PaperTrail. (upbeat music) - Surge Engine is a presentation of Odyssey. It was created by me, Hijavot, and Shruthy Pinaminani. Garrett Graham is our senior producer, Emily Maltaher is our associate producer. Theme, Original Composition, and Mixing by Armand Bizarreon. Fact checking this week by Piper Dumont. Our executive producer is Leah Restennis, thanks to the rest of the team at Odyssey. Rob Morandi, Craig Cox, Eric Donnelly, Collingayner, more current Josephina Frances, Kirk Courtney, and Hillary Shaft. If you have a business and would like to advertise on our show, please email us, [email protected], subject line, advertising. If you are a listener and do not want to hear ads on our show, [BLANK_AUDIO] Cognito mode. Search engine.show. You also get bonus episodes. This week we had one about Taiwan. It's very fascinating. Thank you for listening. We'll see you in two weeks.