Long before the Obama administration, the federal government has funneled billions of dollars to progressive causes and activist organizations such as the National Council of La Raza and the National Urban League, through a series of grant programs. In addition, during the Obama years, the federal government induced corporations to kick in money to a so-called “slush fund” for progressive political organizations, according to Judicial Watch -- a nonprofit watchdog group. Donations to progressive groups by corporations that had been sued by the government allowed them to reduce the level of fines owed to the government.
In cases when the Department of Justice sues financial institutions for alleged racial discrimination and mortgage abuse, those institutions can settle their cases with the federal government by donating funds to non-government third-party institutions, such as La Raza. The government does not specify how the funds are to be used.
Fox News contributor Mike Huckabee said that regardless of ideology, the slush fund violates the Constitution because only Congress can allocate money in that way. "Somebody ought to go to jail for this," he said, calling the fund "a case where liberals have played Robin Hood." He said, “They've stolen from the government and given it to their pals," he said.
Study shows hundreds of millions went to progressives
In May 2016, Sen. Ron Johnson (R-Wis.) issued a report
on the Obama administration’s suits against financial institutions in the wake of the 2008 financial crash. Hundreds of millions of dollars from settlement funds were disbursed.
The inquiry showed that Obama’s DOJ collected more than $575 million through three settlements with large financial institutions. Under federal law, DOJ can collect a 3 percent fee on settlement funds related to its civil enforcement efforts. However, since the creation of this authority in 1993, DOJ’s total collections and the 3 percent payments to the department have grown over time. To date, the department has retained a total of $575.7 million from the housing settlements with JPMorgan, Bank of America, and Citigroup. This is a considerable increase when compared to 2013, when the agency collected only $158.3 million. According to Fox News, investigators have accounted for $3 billion paid to “non-victim entities.”
Other examples of the redirecting of funds can be found in the FY16 Enacted Congressional Appropriation, in which Congress allotted $47 million for the HUD Housing Counseling. Congress allocated $385 million in fiscal 2016 to the Legal Services Corporation to distribute to 133 providers of legal services for the poor across the country. Those very same providers, and others, received funds from a $412 million settlement of a federal case against Bank of America. Those funds were distributed through state organizations. Another source of income for progressive causes may come from Volkswagen, which reached a $1.2 billion settlement with the federal government.
Republicans believe banks and other entities are incentivized to donate the funds to nonprofits rather than giving it to consumers, thus empowering organizations that thwart policies and initiatives of the Trump administration. Critics of the scheme contend that it is unknown exactly where the funds are going and that DOJ bureaucrats are using their enforcement authority to take billions from taxpayers in order to fund projects and programs sponsored by left-wing organizations while circumventing the constitutional power of the purse granted to Congress.
Left-wing ethnic organizations receiving funds
Among the organizations receiving federal funding through this method is the National Community Reinvestment Coalition (NCRC), the National Urban League, and the National Council of the La Raza (NCLR). NCLR’s website indicates that the organization provides counseling to homebuyers, works on healthcare initiatives, and administers 115 charter schools in several states that foster Latino ethnic identity. The group also vigorously advocates for racial preferences and affirmative action, immigration, bilingual education, and amnesty for illegal aliens. NCLR has been strongly opposed to President Donald Trump’s immigration policies.
According to the above-referenced report by the Senate Committee on Homeland Security and Government Affairs, NCRC has a “checkered history” of promoting “illegal immigration and advocating for benefits and driver’s licenses for undocumented immigrants.” NCRC was adamantly opposed to the confirmation of Attorney General Jeff Sessions. That report also found that the “DOJ bypassed Congress to use a portion of the settlements to finance the administration’s housing policy.”
Stop Settlement Slush Fund Act
Sen. James Lankford (R-Okla) has introduced legislation entitled the Stop Settlement Slush Fund Act of 2017. In the House of Representatives, House Judiciary Chairman Bob Goodlatte (R-VA) has introduced a companion bill. In a statement, Goodlatte said, “Congress must permanently end the abuses Obama’s Justice Department exploited to use settlements to funnel money to their liberal friends.” Goodlatte drafted legislation last year to end the slush fund practice when he saw that Bank of America was able to wipe $225 million off its $16.6 billion settlement with DOJ by $100 million to leftist nonprofits and legal groups. "When DOJ recovers money from parties who have broken the law,” Goodlatte said last year, “those funds should be going to victims, or to the Treasury so that Congress can ensure accountability for how the funds are spent." Goodlatte said that funds should not be used by Obama “pet liberal groups."
At the Department of Justice, as at other federal government agencies, there are career bureaucrats and appointees who are holdovers from previous administrations. These government employees decide on which groups are to receive grants, as well as the funds disbursed by the so-called slush fund.
There remain grants that are to be disbursed to nonprofit groups such as La Raza, even under the Trump administration. For example, on February 1, DOJ announced that it was accepting applications for its Title II Formula Grants Program, which supposedly supports initiatives to keep low-level juvenile offenders out jail. Individual grants of up to $100,000 are available of the total $300,000 apportioned. The funds are intended for public and private non-profit organizations and for city or county governments that provide direct service to children ages 10 to 14. They are administered through sub-grants to units of local government and/or non-profit organizations.
Conservatives have warned in the past that programs and grants offered by the federal government end up in the coffers of organizations that thwart Republican initiatives. For example, nationally syndicated columnist Star Parker voiced opposition in 2005 to the Bush administration’s so-called “Faith-based Initiative,” which provided funds to religiously-affiliated institutions for community projects.
Parker cautioned Christian churches against receiving government largesse, contending that it is not the government’s place to take money from taxpayers and conduct wealth redistribution to the poor. Parker contends that government social welfare projects, even if they are managed by religious groups, cannot resolve poverty. "Frankly," she said, "it's hurting the situation because most people are not thinking too deeply about it." Parker said "They figure somebody else is doing it - that Uncle Sam is doing it. Most churches today don't even have an outreach directly to help people that are in a crisis."