Currently a right wing talking point:
So I take anything on Foxnews with a grain of salt so large it’s actually a boulder. Whats the straight dope on this?
It’s legit.
The DOJ has brought discrimination cases and then offered to settle for an amount that makes paying for a defense a more costly option. The catch is that the DOJ has settled in exchange for making contributions to third party groups, not necessarily the injured party.
Critics argue that any settlements should be paid to the government and/or to the injured party and that by permitting settlement payments to third parties this subverts Congressional oversight.
This is not just a Obama thing. It’s been going on at least since GWB’s administration.
See this opinion piece in the Federalist Society for a bit of elaboration and some good cites.
Remember, if this is allowed to stand then each succeeding administration could let the DOJ settle cases contingent on “donations” to politically favored groups. Anyone want a housing discrimination case under the Trump administration settled with a large donation to the NRA?
Ok interesting, but does anyone have a list of which third party groups the settlement cases have donated money to and how much? If they’re donating to non political non profit organisations thats a rather different thing from a “slush fund”.
Also does the DOJ choose which third party it goes to or can the Bank etc in question when settling the case decide who the money goes to? That makes a big difference as well.
Not sure if there is a comprehensive list out there…
In October 2016 Senator Chuck Grassely wrote a letter to Attorney General Lynch in which he stated
So Grassley’s complaint, at least, is that the DOJ chose the recipients of the “donations” in respect to the settlements the letter referred to. (Settlements with Bank of America, JP Morgan Chase and Citibank settlements generating at least $150 million in direct donations and $490 million more indirectly diverted to third parties.)
Further, Grassely’s complaint is that the DOJ chose recipients of settlement funds which were organizations which Congress specifically chose not to fund.
I doubt its possible to find the settlements which result in donations.
grants.gov is a central place for information about grants that the video was about
https://www.grants.gov/web/grants/learn-grants/grant-making-agencies/department-of-justice.html
Ok yes I can see this is a real issue that is “problematic”… but calling it “Obama’s slush fund” is 100 percent inaccurate. Obama has no control over the money now, its already been donated. And a slush fund is a fund for illicit purposes, usually for bribery or personal gain. So far from the list of organisations that received payment, none of them are advocacy groups for Democrats. They’re non profit organisations that help lower income people, no matter what their political affiliation is.
Lastly GWB used this process as well, so it’s been abused by both parties…not exclusive to Democrats.
Per an article on Legal News Line about a proposed law banning such third party donations in settlements…
[ul]
[li]The US Coast Guard Academy Alumni Association was the beneficiary of a $1 million donation to settle a Clean Water Act violation case brought against a wastewater treatment plant in 2006 under the Bush administration.[/li]
[li]The National Fish and Wildlife Foundation received $50,000 “community service payment” to settle a case brought against Gibson Guitars in 2012.[/li][/ul]
Some settlement agreements provided such favorable terms that a "donation"was all but certain. In some instances the DOJ offered to reduce a portion of the agreed upon penalty on a 2 for 1 basis if the accused company would contribute to certain third party beneficiaries. So an agreed $1 million penalty that would need to be paid to the government becomes $500 thousand going to some third party organization.
There is a long held standard that if it happens on your watch, its your problem. It happened on Obama’s watch so his name can be attached to it. Why does that not apply here?
Personally I think the practice should be done away with completely.
A tangential issue, but I found this interesting: some states allow an education tax credit, which allows corporations to make donations to non-profit school voucher organizations in lieu of paying state taxes. The non-profits then can use the donated funds for religious education programs that might not survive scrutiny if the funds had been provided by the state government. Summary here:
Yes, he’s responsible for what happened on his watch.
However, for a media organization to omit a relevant fact, namely that it was done not just during the Obama administration, but also during the Bush administration, can be seen as misleading.
If just Obama did it, that’s one thing.
If it’s been done by at least two different administrations, of different political parties, that puts a different light on it.
Wait, in the countries I know (Australia and the UK) any donations to a registered charity by a corporation are 100 percent tax deductible. Is that not true in the US?
In the US, charitable contributions are fully tax deductible, but that term may have a different meaning here. If I donate $1,000 to a charity, my income for tax purposes is $1,000 lower. This means I save roughly $250 on my tax bill (assuming I’m in the 25% tax bracket).
Here, a tax credit is a special benefit that provides for a offset of actual taxes. They are rarer, but one example is that if you buy an electric car, you get a $7,500 tax credit that wipes out that much of your tax bill.
I’ve never heard of any other program in the US that allows taxpayers to choose whether they pay taxes or pay someone else with a dollar-for-dollar elimination of one’s tax bill.
“100% tax deductible” is not the same thing as “in lieu of paying taxes”. Let’s say that your tax rate is 30%, you’re bringing in 1 million dollars, and you donate 300,000 dollars. With a regular donation, you’d subtract 300,000 from 1 million to get 700,000 dollars, and then pay 30% tax on that 700,000, or 210,000 in taxes (net take-home of 490,000 dollars). If you can make the donation in lieu of tax, however, you instead calculate your tax on 1 million, or 300,000 dollars, and then pay that money to the charity instead of to the government, for a net take-home of 700,000 dollars.
Note that in the first case, making the donation will always decrease your net take-home (not counting things like goodwill and marketing value from the donation). It’ll just decrease it by an amount less than the amount of the donation, because the government is effectively chipping in part by decreasing your taxes. But in the second case, the donation won’t change your take-home at all, and so as long as there’s any value at all for you in the donation itself, it’s a no-brainer.
There have always been procedures and processes that can be abused in government, as well as that can be made to look bad when they aren’t being abused, by political hacks.
I tend to suspect, given the present obvious tendency of the current administration to blow all sorts of things out of proportion when it can be linked to someone in the opposition, that this is overall, an entirely bogus “scandal.”
Unless and until I see those on the attack, detailing 100% of the situations, including all the instances where GOP and Trump associated organizations benefited, I’l suspect that this is just another “hey! look over there!” trick, to get back at the justice department people who are saying “no” to some of the more unconstitutional or clumsy demands by the current administration.
Point taken. But to call it “Obama’s slush fund” is to suggest that he could then use the money for any purpose, especially illegal purposes. Neither Obama nor Bush seems to have done it. That said, it seems like a bad idea. I guess it is the corporate version of community service.
It’s available… and takes some jumping through hoops to see the monies going to third parties. Let’s look at the DOJ settlement with Citibank over toxic mortgages.
The settlement agreement press release is here: Office of Public Affairs | Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages | United States Department of Justice announcing a $7 billion settlement.
The actual text of the settlement agreement can be reached through the link at the above link press release. Or just click here: https://www.justice.gov/iso/opa/resources/471201471413656848428.pdf (pdf link)
Most of the payments are exactly what we would hope for. Penalty to the US government and state governments, as well as means of restitution to affected persons. But skip on down to Annex 2, link at the bottom of the above mentioned press release, or just click here: https://www.justice.gov/iso/opa/resources/649201471413721380969.pdf (pdf link)
Scroll on down to page 11. Note item D where.
And see that is states: D. $1.00 payment = $2.00 Credit and Menu Item 4D Minimum = $25 million payment
That is at least $25 million in payment for which Citibank is getting 2:1 credit.
So, who gets the money? Other banks, credit unions or community organizations who were not a part of this litigation. Per footnote 20 payment goes to certified Community Development Financial Institutions. The link of the footnote is now dead, but you can go to the CDFI webpage and click the link for a list of certified organizations. (opens as Excel link)
And item E.
Which again gets "E. $1.00 payment = $2.00 Credit " treatment. That is money going to state bar associations, legal aid organizations, etc… who were not parties to the litigation.
And note just below item F… "115% Early Incentive Credit for Menu
Items 4A-F " So make the payment early and get extra credit!
This is not at all a ‘slush fund’ and is a common thing across different administrations and often state governments as well. The general idea is that if there’s a settlement involving a fine, it makes sense for that money to go towards making things better in the area of the violation, rather than just going into the general federal (or state) treasury (which is where a generic fine would go). So, for instance, a settlement over environmental violations might include the violater paying to purchase land and donate it to a land trust, or buying equipment for the local fire department to respond to hazardous material spills. In all cases, the violator has to agree (they can always say, “no thanks, I’ll just pay the entire amount as a fine”).
There are concerns about making sure projects are appropriate, and so forth, but it’s common in many areas, and there are typically extra reviews in place. I know of at least one really good project that was turned down because it didn’t make it through the extra review, because it didn’t quite fit the narrow definition of acceptable projects.
TLDR: not a ‘slush fund’, happened in multiple Republican and Democratic administrations, including at states as well as federal.