Donald Trump has more than earned his reputation as a Beltway disruptor. But his latest gambit — involving his unique settlement with the IRS — poses serious constitutional questions and will cause unnecessary disruption for Republican congressional candidates as the party strives to hold majorities in the midterm elections.
Recall that Mr. Trump and thousands of other wealthy Americans were victimized when an IRS contractor in 2019 and 2020 — trying to make an ill-considered point about “inequality,” the rich and income taxes — leaked copies of their tax returns to the The New York Times and ProPublica. The contractor, Charles Littlejohn, was eventually sentenced to five years in prison.
Several victims filed suit seeking compensation from the IRS. Some of those civil cases are pending. A handful have been settled. Mr. Trump joined the club in January, suing the tax agency for $10 billion. But Mr. Trump was the duly elected president of the United States at the time, the head of the executive branch, which oversees the IRS. The judge assigned the case recognized the obvious issues, The Wall Street Journal noted, and “wasn’t sure she had jurisdiction” to even hear it.
The case should have been put on hold until after Mr. Trump left office. Instead, the Department of Justice announced this week that it would settle the matter and establish a $1.776 billion fund to compensate victims of government overreach while also agreeing to never again audit the president or his family members. Did Mr. Trump settle with himself?
Democrats are apoplectic, and they have a point about the procedures established to tap the fund, which involves a board controlled by the president and no judicial oversight. The money is set to come from a Justice Department account already in place to cover the costs of government legal settlements. But such deals typically occur through an established legal process.
Directing money generated by federal settlements toward favored special interests has long been a lucrative parlor game for Democrats. Note the green special interests that lined up at the trough to tap a portion of the cash set aside in the VW emissions scandal as just one example. For a second, consider the Obama administration forcing banks to donate to La Raza as part of a settlement over the 2008 mortgage crisis. But at least the administration of these “slush finds” was subject to approval by the courts.
Yes, victims of government abuse may deserve compensation on a case-by-case basis. But the IRS deal with Mr. Trump — given the latter is boss of the former — ignores the separation of powers doctrine and is unlikely to survive even cursory judicial review. And, from a political standpoint, it will certainly mean some uncomfortable questions for GOP candidates as they seek to protect their majorities this November.
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