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The Daily
The Daily

Trump’s Taxpayer-Funded Plan

May 20, 2026 • 25m

Summary

⏱️ 8 min read

Overview

The Daily examines President Trump's controversial decision to drop his $10 billion lawsuit against the IRS and instead create an unprecedented $1.776 billion fund to compensate alleged victims of 'weaponization and lawfare.' The episode explores the tangled web of conflicts of interest, the potential beneficiaries including January 6th rioters, and the bipartisan outrage this move has sparked in Congress.

The Origins of Trump's IRS Lawsuit

The controversy began with Trump's refusal to release tax returns during his 2016 campaign, breaking standard practice. After the New York Times published leaked tax information in 2020 showing Trump paid little in federal income taxes, and ProPublica later released similar information about other wealthy Americans, the IRS discovered a leaker. Charles Littlejohn, an IRS contractor, pleaded guilty and was sentenced to prison for leaking this confidential tax data. In response, Trump and his family sued the IRS for at least $10 billion in damages.

  • Trump uniquely refused to release tax returns when running for president in 2016, creating a scandal
  • The New York Times published leaked tax information in 2020 revealing Trump paid little in federal income taxes for many years
  • Charles Littlejohn, an IRS contractor, pleaded guilty to leaking tax information and was sentenced to prison
  • Trump sued the IRS for at least $10 billion in damages for the leak
" Not only does the president control the leader of the Internal Revenue Service, the agency that he is suing, and the Treasury Department, which was also named in the suit. You know, he chooses many of the people who lead those agencies and is involved in their decision making. "

The Unprecedented Conflict of Interest

The lawsuit created an extraordinary situation where Trump controlled both sides of the legal dispute. As president, he oversees the IRS he was suing, the Treasury Department named in the suit, and the Justice Department that was supposed to defend against his claims. The judge began questioning whether a legitimate legal conflict even existed, given that Trump's personal lawyers filed the suit while Trump appointees would defend it, potentially leading to the case being dismissed.

  • The Justice Department, which should defend the IRS, is led by Todd Blanche, Trump's former personal lawyer
  • The judge questioned whether the lawsuit could proceed given the lack of genuine conflict between the parties
  • A legal principle requires two sides to actually be in conflict, or the judge must throw out the case
  • The judge asked for briefs explaining whether this was a real lawsuit or 'a charade'
" Donald Trump sits on top of both parties in this lawsuit. "
" There has to be a genuine tension between the two parties in a lawsuit, or else the judge has to throw it out. The judge can say, I can't rule on this because it's not a real lawsuit, essentially. "

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