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The Bulwark
Receipts: Trump Planning Taxpayer-Funded $1.7 Billion Slush Fund for Political Allies
00:23:48
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- [00:00]
A
Hello, everyone. This is JVL here with my bulwark colleague Mike. I think I can just call her a good friend at this point. Kathryn Rampel, author of the Receipts newsletter. And we have a lot of really interesting first world high trust society stuff to talk about today. The kind of things that you would see in Denmark, right? Or totally or another come. Not. Not a banana republic.
- [00:33]
B
Denmark, maybe like a millennia, a millennium ago. You know, like, if we're talking feudalism type. I don't know if Denmark was actually a feudalist, but I assume it was. Yeah, maybe then maybe it's not comparison.
- [00:50]
A
If. If Macbeth taught me anything is that. No, Macbeth wasn't Hamlet. Hamlet is set in Denmark. Sorry. Okay, guys, let's go. Last night, word broke that the $10 billion lawsuit which the President of the United States had filed against his own government. Just sit with that for a moment. Was close to settling and that the terms of the settlement were. Catherine, stop me if I get any of this wrong. The government will create and fund a $1.7 billion fund which will be used to compensate victims of the Biden regime, people who believe they were wronged by the Biden regime, including people who were arrested and convicted following.
- [01:49]
B
Or pled guilty or pled guilty to
- [01:53]
A
January 6th may come and apply for compensation. The board will be governed by five members whose deliberations will be in secret. These board members can be replaced at any time, purely at the discretion of Donald Trump himself. They will do majority vote on who to give how much to the results of their deliberations. And the list of people who are given money will be secret, as will the amounts of money Donald Trump himself, the person and individual will not be one of these people. However, other organizations or people affiliated with him may apply. And there is a sunset on this fund, which is the minute he leaves office. So if there's any money left in the fund, haha, before he's about to leave office, it will be given. It will be dissolved and given back to the government so that no Democratic president could have any access to such monies.
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B
Did you ever see the movie Brewster's Millions? Oh, yeah, yeah, it's. It's.
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A
Oh yeah, Richard Pryor.
- [03:17]
B
It's a little bit like the banana republic version of Brewster's Millions. Yeah, except I think that they will have fewer problems giving away all of that money.
- [03:28]
A
So, Catherine, there's so much to talk about here, beginning with the fact that evidently all of this is legal.
- [03:35]
B
I mean, is it, I don't know,
- [03:37]
A
country where this sort of thing was just legal. Like you can be the president and you can sue, you can launch ridiculous lawsuits against people who have business before the government you had and they just have to pay you.
- [03:54]
B
Well, to be clear, this is ABC's reporting with so far unnamed sources. Nothing to my knowledge, unless I missed something this morning, nothing has been announced. So things very well could change and maybe this whole could all be different and maybe we'll be in a happier state of the world where this kind of self dealing going to orphans. Yes, exactly. Does not materialize. I don't know that I'm expecting that to happen. You know, as to the legality of this, I will leave it to an actual person with trained legal, whatever knowledge, legal skills which I do not possess. But it is certainly extremely troubling. I mean it, it is a, it sounds like it would be effectively codifying self dealing. You know, it's, it's not just that Donald Trump is like giving away contracts to friends or you know, no bid contracts to friends to pay or whatever, to redo the fountains, the reflecting pool or the ballroom or whatnot. Like there are plenty of dodgy things that have already been happening. But this feels like it's a different level in that as you point out, if this thing materializes as ABC News suggests it may, this will be in secret. Taxpayers have no way of knowing who the money is going to. Although I guess we have a sense because some people have already sued for restitution along these lines, including January Sixers, including Michael Flynn. He was one of the people I was thinking of who actually pleaded guilty to do various felonies, but now is claiming that those were political prosecutions and that he has been wronged, you know. You know, so I guess we have some sense of who's going to be arriving hat in hand or like, you know, big kava bag in hand or whatever. I don't know what the.
- [06:02]
A
Glad you say that. Here's a very, a very real thing I could actually get behind this. If one of the provisions are that all payments are in cash and come in brown paper bags. So when you get your money, you gotta show up and somebody hands you a brown paper bag just filled with hundreds.
- [06:25]
B
Will it have like the exploding ink? Will it have the exploding ink like they have in the movies, you know, when somebody tries to rob the bank?
- [06:31]
A
No, I think, I think it's just pure drug deal. Let's just, let's just call it what it is.
- [06:38]
B
I, yeah, I don't know. It's very disturbing either way.
- [06:41]
A
Weird way this Is, I mean, Donald Trump is an innovator in many ways. No, I mean this sincerely. So what he did with CBS and ABC with his absolutely ludicrous lawsuits before he took office was a way of legalizing bribery, right? I mean, it was just, it's just extortion. But he was like, oh, we can do this legally. You just filed this dumbest lawsuit you can come up with. And as long as they voluntarily settle with you, it is just like having an open air drug market, right? This is like, see, now it's all five by five or I mean, or
- [07:23]
B
his meme coins for that matter.
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A
His meme coins right here. I'm going to start a meme coin so that if you want to pay me off, I just, I'll see the, the blockchain ledger and I'll know that you, you saved me a bunch of money for these things and I got a taste of it. And, and that's right. Nobody had ever thought to do this with the presidency. And he, he did it. Good on him, I guess. And I hear this is not really normally a Catherine Rampel question is more of a Sarah Longwell question, but I'm gonna ask anyway. Do you believe it is possible to put this genie back in the bottle through legislation? Because I do not. My tentative view is that it is impossible to fully legislate against this sort of thing. And once society demonstrates its willingness to tolerate these things, like you can, you can try closing loopholes, you could try making things illegal, but you're always going to be behind the next Donald Trump. And this is what happens in low trust societies, right? In low trust societies, you, this is a whole branch of economics about trust and, and how that functions and what you have to do and the, the, the economic drag that being in a low trust society creates, et cetera, et cetera. So I don't know, can I put a quarter in the machine on this?
- [08:58]
B
And we also used to enforce the Foreign Corrupt Practices act, which tried to discourage this kind of palm greasing in other countries. And we would hold American companies accountable, or at least companies that did business in America accountable, if in fact they participated in corruption, bribery, various kinds of quid pro quos, not very well disguised quid pro quos, which is what these are. We would hold companies accountable because we saw ourselves as upholding these kinds of standards for the world and we thought it was good for the business environment, for that matter, for selfish reasons, it
- [09:39]
A
was helpful to our own businesses. Right? I mean, so American businesses, which would go into foreign markets that were corrupt and would be shaken down would get to say, hey, I would love to pay you off to get access to this market, but I can't because we're not allowed to.
- [09:54]
B
Exactly.
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A
Right. I mean, this is. It was good for American businesses to have this sort of protection.
- [09:59]
B
Yes. It was good for American businesses to basically be able to throw the US Government under the bus. Don't blame me for not. I would love to give you a bribe, but I just can't because I'm going to, you know, get fined or sent to prison or what have you in the United States. That was useful. It was useful for other companies around the world as well, you know, for. For having integrity of markets. If the winner of a market, the winner of a contract is the one that actually has the best goods or the most efficient operations, as opposed to the one that had given the biggest bribe. This was all constructive to economic growth, to all these sort of abstract things. All of these things contributed to it. And to your point about, can you. Is it a legislative problem? I don't know if it's a legislative problem. Like, can you not legislate against this? I think probably you could. I think it's more of an executive branch problem because somebody has to enforce those laws. The reason I mentioned the Foreign Corrupt Practices act is that it is still a law on the books and it was enforced for many years. And the Hatch Act.
- [11:11]
A
Sure.
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B
And these are things that are no longer enforced, not because Congress has repealed them, but because we have an executive branch that is unwilling to enforce them. And, in fact, correct me if I'm wrong, but I'm pretty sure Trump even, like, issued an executive order at some point. He certainly talked about wanting to relax enforcement of the Foreign Corrupt Practices Act. So the real question is, for the next administration that comes in, if it is a democratic presidency, how will they deal with a lot of these kinds of, at best, unsavory transactions? And I don't know, but I am heartened by the fact that there are at least some CEOs that are thinking about this. Like, I think it was Jamie Dimon who a few months ago said that JP Morgan was not going to be giving money as a donation to Trump's ballroom because he was not sure the bank was not sure about how those kinds of transactions or donations would be seen by future Justice Departments. And I thought that was a good thing, that there is still some concern that maybe someone down the line will enforce the law. And again, I don't know exactly what statute would be relevant Here, because I am not a lawyer. But certainly we have dealt with the problem of corruption that even the most creative forms of corruption before we've had movies made about sting operations and everything else. It's not always like here, I write you a check and in exchange you give me this contract or you give me this whatever. You pass this law, you change this regulation. I think that's the simplest version of it. But there are a lot of other permutations of bribery that we have seen before. Maybe not quite as creative as what Donald Trump is doing, but there's a gradation here and we've been able to prosecute those before. So the real question is, will future executive br. Will future DOJs actually enforce the laws we already have without needing to pass new laws? And do today's, you know, C Suite executives, among others, oh, January Sixers, for that matter, do they believe that we will at some point revert back to rule of law? And that's the part that I am more dubious of.
- [13:38]
A
Yeah. I mean, my view on this is that the answer is, is a supply side problem and that. So I find it hard to see why we would ever have another Republican led executive branch in which the Department of Justice is independent. I mean, they've just seen that there's no price to be paid really for just having the DOJ be a wholly owned subsidiary. So that'll be just sort of baked in for all future Republican presidents. And so the only way to combat that is that when you do have an independent doj, it has to attack all of the business side people for any potential breaches of law that happened prior in prior administrations. Because you have to establish some deterrence for future executives who look at that and say, I understand that, you know, J.D. vance's Department of Justice won't prosecute me for, for participating in this, but you know, Democrat X might down the line. And J.D. vance ain't gonna pardon me. J.D. vance will pardon the people inside his administration. He's not gonna pardon me.
- [14:51]
B
Yeah. This is why I'm very interested to know what's going to happen in some place like Hungary. And I'd love to talk with an expert on the political system there, like, how difficult will it be to reconstitute democratic norms? How much of it will be done through these, through the legal system, through holding people accountable. I don't know. I don't know enough about that country and how it works and what, what's his name, Magyar, is likely to do. But I would love to know more about how this has worked in other countries, you know, what, what kind of truth and reconciliation process.
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A
So I'm glad you.
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B
Possible and necessary.
- [15:30]
A
I'm glad you brought up that phrase because I've been saying for a decade that when and if we succeed in pushing back this, this authoritarian attempt and we get past this moment, America will require a truth and reconciliation moment in order to put this to bed. Otherwise, it'll come back. And because the monkey's paw is real, it turns out we are getting truth and reconciliation because in the ABC News piece, I don't know if you caught this, but a source inside the administration says that this slush fund is basically a truth and reconciliation commission. So we're getting the truth and reconciliation, but it's against the people who are on the side of the rule of law, the democracy. Thank you, monkeys. Paul, I appreciate it. I appreciate it. Just an amazing, amazing thing. It almost is like minuscule compared to this. But the other thing we, we got in the last 24 hours is reporting that Donald Trump traded a whole lot of stocks up in advance of making decisions about government contracts. So this is, I think from notice Trump purchased 1 million, between 1 million and $5 million worth of Nvidia stock on February 10, a week before Nvidia announced a major computer processing power deal with Meta. Sure.
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B
I don't know why this is so funny to you. This is.
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A
Previously, Trump had purchased between 500,000 and a million dollars worth of Nvidia stock on January 6, the week before the Commerce Department. Commerce Department approved the sale of Nvidia chips to China. Sure, why not? There's more. There's stuff with paler. There's stuff with stuff with who else? Amd I mean, Catherine. I guess, I mean part of this. So part of this is the legal side, which I know is not what you are most predisposed to talk about. But if you go and sit around with a bunch of econ professors, they will tell you that corruption like this is a tax on economic efficiency.
- [17:58]
B
Oh, absolutely, absolutely.
- [18:00]
A
Can you talk a little bit about this and explain why people should care? Because it does. It isn't just like, oh, so Trump gets a little bit rich. This stuff drags down the entire macro economy. Move to from high trust to low trust. It, it makes everything go slower and cost more and it's very bad. Can you explain to the people why?
- [18:21]
B
Yeah, because it's not a victimless crime. When Donald Trump is using his insider information to enrich himself by front running other trades, the other people on the other sides of those trades lose out. And you might say, like, who cares? It might be your pension fund, you know, or, or some other, you know, some, some other institutional money that affects you. So you probably should care. Might be your 401k. But aside from the, the individual losers, you basically degrade the entire quality of the market. I wrote something actually maybe a month ago about how in Trump's economy, either you're an insider or a chump, and that's really what this is about, that if you are trading on anything in the markets and you don't have inside information, you are losing, you are losing that bet because somebody else, because there's asymmetric information there and somebody else is going to take advantage of you. And what that means is if degrades the trust in the ability of any transaction to be fair and for, for people to participate essentially in the marketplace in various ways. So, you know, just like a very small microcosm of this is prediction markets, right? It's like, who. The prediction markets themselves are actually quite anxious. You know, Kalshi and Polymarket, they're quite anxious now about insider trading because it's like it's a PR problem for them, but it's also a, a customer problem for them. Nobody wants to participate or fewer people will want to participate if they know that the system is rigged against them. And there's, that's, that's one like, very small, easy thing to under, to wrap your head around. But this is true for the market writ large, for anybody who's trading oil or investing in stocks or, or any other financial asset. And so what happens is you're not going to have capital flowing to the places it's going to flow. That's one problem, which again, sounds abstract and maybe people don't care, but that's how you get economic growth, is by having the people with the good ideas get the funding so they can execute those ideas. And the people with the bad ideas or the badly executed companies fall. And it's sort of like survival of the fittest, but it all gets distorted if instead capital is going to places where companies have the strongest connection to strongest political connections. There was a great story, maybe we talked about it at some point on our live chat in the past, I forget, but there was something in Bloomberg a few months ago about how all of these institutional investors were now taking into greater account when they make their investments, how close the leadership of a particular company is to this president, rather than do they have a good product, are they reaching the right customer base? And Audience, Are they well run? Do they have the smartest people? You know, all of the things that you would normally think about as the core criteria for whether a place is whether a company or a project is a good thing to invest in. Instead, it's about nepotism, it's about corruption, it's about, you know, who has the president's ear or who is least likely to get targeted for, for that matter, by the president in a fit of rage. So all of those things are bad for economic growth, they're bad for markets, they're bad for living standards in the end, because it means that, you know, we just don't have the same kinds of innovation and smartly run companies and products that you would have if you have rule of law. Rule of law and democracy are critical for thriving capitalism. It's not an afterthought, it's not like an orthogonal thing that we shouldn't care about. It's. It drives me crazy to no end that we have so many executives in this country, so many actors in corporate America who act as if, you know, Donald Trump does all of these crazy things and sure, he's corrupt and he says crazy shit or whatever, but that has nothing to do with me. No, for selfish reasons, you should care, because rule of law, the degradation of rule of law is the thing that holds our entire economy or that will undermine our entire economy.
- [22:41]
A
So Russia saw a version of this early in the Ukraine war where the Russian defense industry famously is just Putin cronies, right? And so, you know, how do you get a defense contract in Russia? You, you be close to Vladimir Putin. It has no, no bearing on, you know, the quality of your product, right? Is your fifth generation fighter good or bad? Is your weapon system good or bad? None of that matters. And when they invaded Ukraine, it turned out like none of their stuff worked. And this is why. Right?
- [23:16]
B
And yeah, it's the corruption tax.
- [23:18]
A
Yeah, it is. It is the corruption tax. All right, on the other side of this, we're going to have a scintillating conversation about bond markets. Catherine and I were joking about this before because what I really wanted to talk about today is the bond market. And she and I were like, does anybody care about that?
- [23:34]
B
We will make you mortgage if you have a mortgage, if you have a car loan, if you have a credit card bill, you should care.
- [23:43]
A
You wrote about the new chair of the Fed, Kevin Warsh, who was voting.