This is Search Engine. I'm PJ Voat. No question too big. No question too small. No question to 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. 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 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 the law of Kevin. One day I was looking at my phone and the 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. Then we gathered a huge team at ProPublica to report on the tax returns and Paul Keel was my partner in this. We eventually over years published over 50 stories based on these returns about the tax avoidance strategies of the wealthy. 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 and Michael Bloomberg paid zero in taxes and Carl Icahn paid zero. What we also showed is that they pay just trifling sums of taxes compared to their wealth growth. 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 reading 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 a 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. 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 Little John 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. Just because now he had access to more, it was easier to cross that. 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 do a search for that kind of query but the massive queries that Little John had done just stuck out. They're very obvious 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. 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 that reporting as you were working on it, what was if you'd stopped and thought, I don't know if you did, but the best case scenario of Trump's tax return is going to come to light, all these other people's tax strategies are going to come to light, what was the hopeful outcome of what all that could mean? Yeah, well, I don't really operate with a lot of hope. I don't wake up in the morning just to think what changes will make American society better today. I can't wait to see them. But 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. It'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's the sense of what happens to property in America. Especially in New York. 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 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 just as a, as a, 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 news 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, they 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. So tell me about why that's extraordinary. Tell me about the lawsuit. Like, what was unusual about the lawsuit? Yeah, it was so mind bending and 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 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. It 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, and it went to a judge. And the judge said, explain to me how this is an adversarial process. 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. 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 not even- Punch it up. Didn't even get to- I mean, it's so circular, it's so weird. You can imagine that you're engaged in an adversarial process with your employer, but this is like suing yourself over having bought too many shirts. This is not a terrible idea. Yeah, exactly. Some kind of personal constraint. The analogies are hard. 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 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. They said, okay, we're going to withdraw the lawsuit, and then we're just going to negotiate a settlement with ourselves. Todd Blanche, the acting attorney general, who was the former personal lawyer for Trump, was negotiating with Trump over, 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? 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. One possibility is they would have just 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. I know that this is bad, but it's so comical. It's funny. It's great content. This is the kind of thing where people have said, Trump's funny. He's been amusing. I started no longer amused. It's just the idea that somehow this is ending in kind of reparations for Jan Sexers. It's just literally reparations. He calls it the anti-weaponization fund. What is it? 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? Then it changed to 1.8. I was like, well, why did they go from 1.7 to 1.8? The reason was that it was never 1.7 to 1.8. It was 1.776, 1776, because they're just trolling us. I thought, that's just so annoyed by the trolling. You can imagine that they're going to do all the Instagram posts celebrating their anti-weaponization fund checks. The fund is purportedly going to go to anyone who is able to show that they were victims of the Biden administration's quote unquote weaponization, which really just means law enforcement. 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. It's not clear that they will have to say who they've given the money to. 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. There's going to be all sorts of questions about transparency and process here. What happens is they built this 1.7. We're going to round up to $1.8 billion fund. It's coming out of an existing amount, a pot that Congress allocated in the 1950s. What was the pot? One of the questions I just had is, the 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. Why was this money even there? Yeah, right. What happened was the government occasionally gets sued and there's some wrongs and then the government will pay out funds. What Congress did was say, look, we're not going to authorize this in each individual case. We're going to give the treasury, this is what 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. 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. It's not supposed to be Trump's payback. 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 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 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 a 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. 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 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. 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 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. The 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've 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 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. 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. We'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. 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 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. 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 having all of these benefits accrue 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. Bernie Sanders and Elizabeth Warren ran on wealth taxes. Occupy Wall Street brought this to the fore with the 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 the forces of democracy continue to be losing this, but they haven't lost. But do you feel 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 attempts to tax the wealthy more competently, which they seem to evade very easily. And I see a general feeling where the reaction almost seems to be like, well, 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. And I'm not saying I enjoy a tax day, but it's a place where I feel like civic. And I feel like what I see, no tax on tips or whatever. It feels like we're just starting to arrange carve out after carve out after carve out. Rather, the feeling is almost a kind of 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 of 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 exempting other people, whole classes of people from paying taxes. And so you see from Senator Cory Booker and Chris Van Hollen 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. That's totally wrong. We should all pay taxes, and we should all pay taxes in proportion to our income, and we should define our income correctly. And then we can actually tax the wealthy and draw 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 him or dislike him or just don't vote for him, the way where everyone seems to be continuously mirroring each other is to say like, the systems rigged, 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, no worries, May. 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. 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. Like 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. Like, even like 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 it's a message you can read in it, and I can read in it. Like, your tax dollars are going to something, keep paying your taxes. Basically, yeah, no, no, no. 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, 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 and inefficient and sort of the wrong idea since Clinton really. Clinton sort of said the era of big government is over. I think they've been running away from government. And 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 Propublga and a staunch Republican. If you liked what you heard here, I have fantastic news for you. Jesse's outfit, Propublga, just launched a podcast called Paper Trail. 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. Hi. I'm Jessica Lestop and I'm a reporter at Propublga. And the host of a new podcast called Paper Trail. On this new show, we're going to 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 the 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 going to 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. Investigative journalism is an act of optimism. And it's all we do at ProPublica. We're an independent nonprofit 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 going to bring you inside a new investigation every episode. We're going to 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. ProPublica uncovered serious problems with some prescription medication produced in foreign countries. Not always, but more often than you'd think things change. The 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. Laws get passed. State 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 Kristina Umfired. People walk out of prison and cynics, like me, turn into optimists. I'm Jessica Lussentopf and I'll be your guide. This is PaperTrail. Sir Gengen is a presentation of Odyssey, was created by me, PJ Voet, and Shruti Pinnamanani. Garrett Graham is our senior producer, Emily Maltahera is our associate producer. Theme, original composition, and mixing by Armin Bazarian. Fact-checking this week by Piper Dumont. Our executive producer is Leah Rhys-Dennis, thanks to the rest of the team at Odyssey. Rob Morandy, Craig Cox, Eric Donnelly, Colin Gainer, Moir Curran, Josephina Francis, Kirk Courtney, and Hilary Schaap. If you have a business and would like to advertise on our show, please email us, PJVote85 at gmail.com, subject line, advertising. If you are a listener and do not want to hear ads on our show, sign up for incognito mode. SearchEngine.show, you will also get bonus episodes. This week we had one about Taiwan, it was very fascinating. Thank you for listening, we'll see you in two weeks.
