After President Donald Trump launched a army operation that captured Venezuelan chief Nicolas Maduro, he introduced that America deliberate to take management of its oil income. Extra particularly, one American.
“This Oil will probably be offered at its Market Value, and that cash will probably be managed by me, as President of america of America, to make sure it’s used to profit the folks of Venezuela and america!” he proclaimed in a press release.
This wasn’t the primary time he’d used that form of language. Earlier, he introduced “offers” with allies Japan and South Korea, by which the international locations acquired tariff reduction in trade for pledging huge investments in america that Trump himself would allegedly oversee.
And in Davos, Switzerland, Trump unveiled a brand new worldwide initiative known as the “Board of Peace.” It’s being pitched by the White Home as a world downside solver, beginning with Gaza.
In keeping with an alleged draft constitution, international locations would serve restricted phrases until they pay $1 billion to fund the board. And, not coincidentally, the chairman (Trump) would have substantial management over its operations. Many American allies rapidly balked on the association, with France’s overseas minister citing the “very in depth powers” granted to the board’s chairman.
These current episodes are all a part of a broader story of Trump’s second time period: his countless quest to safe a slush fund that he can use to personally management massive sums of cash.
The slush fund, defined
To say that Trump is in an countless quest for a slush fund is to not recommend that there’s to be a literal White Home checking account along with his identify on it (he’d love that, although).
Relatively, it’s an outline of a disturbing strategy to governing: a relentless push to create discretionary swimming pools of cash and leverage factors of management that can be utilized to reward, punish, and command, all whereas attempting to dodge authorized and constitutional constraints.
When handy, he’s gone by way of Congress, whose choice to grant him a large $170 billion immigration enforcement fund in a party-line vote exterior the traditional appropriations course of is now central to coverage arguments about Immigration and Customs Enforcement after Minneapolis. Of that, ICE is slated to obtain $75 billion — tripling its annual price range.
However he’s additionally regarded for methods to seek out management over investments by way of the levers of overseas coverage — tariffs, commerce offers, overseas mergers, army seizures, diplomatic packages — that have been by no means supposed for use this manner.
For those who’re considering, “Okay, however governments negotiate offers on a regular basis,” that’s true to some extent. What’s putting is that the tariffs Trump unilaterally imposed are getting used as leverage to shake down allied international locations to feed his insatiable urge for food for grandiose headlines about alleged incoming investments.
As an alternative of enforceable commerce agreements, these offers are extra like political commitments. Locking in binding obligations and sturdy tariff adjustments usually requires congressional motion. The enforcement mechanism for these offers is principally his endless menace of upper tariffs. For instance, the administration reached a commerce cope with Europe in July, however the truce didn’t final. After Trump escalated strain over his demand for Greenland, he revived tariff threats in opposition to a number of European international locations.
The concessions Trump publicizes in these offers are additionally typically lower than they appear when the international locations fill within the particulars. Trump claimed: “I acquired [a] signing bonus from Japan of $550 billion. That’s our cash. It’s our cash to take a position, as we like.” However Japanese investments are being structured as fairness, loans, and ensures routed by way of Japanese public finance establishments and an funding committee, not a $550 billion pot of money that Trump can merely steer at will.
These “offers” are constructed to generate headlines, not binding obligations that may survive courts, Congress, and the subsequent administration. And if the administration tries to deal with these overseas pledges as cash it could actually direct, it might be making an attempt an finish round Congress’s energy of the purse and legal guidelines meant to forestall precisely that. (Extra on that later.)
Trump’s dream job: investor-in-chief
None of this got here out of nowhere. The slush-fund intuition was hiding in plain sight months earlier than the administration began dangling tariff reduction in trade for headline-grabbing “funding packages.”
The seed was planted weeks into Trump’s second time period, when he ordered his administration to plan for a United States sovereign wealth fund (SWF), a government-owned funding fund.
The thought was that the federal authorities needs to be within the enterprise of assembling a portfolio of “strategic” belongings and directing capital flows, with the president on the middle of the choice making. It’s a unhealthy thought — and one extra generally related to socialist thinkers, who see it as a solution to disperse financial positive factors within the non-public sector broadly to the general public. To Trump, although, the irresistible enchantment was that it might put him within the place of dealmaker, developer, and CEO.
The White Home ultimately realized {that a} formal SWF would require laws, which might entail governance guidelines, statutory limits, and congressional oversight. It might thus be slower, extra constrained, and tougher for Trump to manage. Tellingly, plans for the formal SWF have been subsequently shelved.
Treasury Secretary Scott Bessent confirmed the pivot away from a proper SWF when, in reference to the aforementioned shakedowns of allied international locations, he acknowledged in August, “Different international locations, in essence, are offering us with a sovereign wealth fund.” The revealing phrase is “in essence,” as a result of there’s no precise fund; there’s simply the manager department making an attempt to leverage tariffs and dealmaking to finance initiatives “owned and managed by america” that may be chosen by Trump.
What emerged was the start of an improvisational workaround, a collection of advert hoc preparations meant to imitate a fund however with out the guardrails.
In June, the White Home pressured Japan’s Nippon Metal into giving the president a “golden share” — a non-monetary stake that comes with substantial management over its enterprise selections — as a part of its buy of U.S. Metal in an effort to safe a deal approving the sale.
Following Trump’s public humiliation of Intel CEO Lip-Bu Tan in August, the federal government acquired a 10 p.c fairness stake within the storied, however troubled, semiconductor firm. The acquisition was funded by beforehand awarded — however not but totally paid — grants to Intel underneath the Biden administration’s CHIPS and Science Act, plus further cash tied to a program to provide chips for the Pentagon. The association wasn’t introduced as a brief emergency instrument, as had been the case with previous authorities fairness acquisitions; as a substitute, it was portrayed as an indefinite strategic possession place.
Different fairness offers have drawn on totally different justifications and funding streams. The Pentagon’s current fairness stake in protection contractor L3Harris is an ideal illustration of how the administration makes it up because it goes, deal by deal. On January 13, the Division of Protection introduced a $1 billion funding structured to present the federal government an fairness stake in a rocket motor firm that L3Harris will spin off later in 2026. The Pentagon framed it as the primary “direct to provider” deal of its form, tied to multi-year procurement and rushing the manufacturing of rocket motors wanted for missiles. However the fairness stake was pointless, because the Pentagon might have achieved its targets with the procurement instruments it already has.
That issues, as a result of it creates an apparent battle of curiosity. The federal government turns into the client, regulator, and partial proprietor of a agency that can compete for presidency enterprise. The inducement downside needs to be apparent: When Washington owns a part of an organization, it has a stake within the firm’s success, and a political stake in guaranteeing it doesn’t fail. That’s one purpose federal fairness stakes have been traditionally related to emergencies moderately than peacetime political dealmaking.
Because it stands, the administration has acquired fairness stakes in 12 non-public firms, together with a number of mineral producers and an vitality firm. The administration has made clear its intention to contemplate buying fairness stakes in further firms and industries.
Then, there’s the administration’s “pay-to-play” chip export scheme that takes the slush fund mentality and dispenses with the pretense that the first motivation is the US’s industrial capability. In December, the administration mentioned it might enable Nvidia and AMD to export explicit chips to China — overruling critics who fearful the transfer would reduce into America’s lead on a key expertise with safety implications — in trade for a 25 p.c reduce of the gross sales. Observers famous that the Structure bars taxes on exports.
Cue the improvisation. Trump in the end imposed a narrowly focused 25 p.c tariff on sure superior chips, together with those Nvidia and AMD might promote to China, utilizing a nationwide safety order tied to a Part 232 investigation underneath the Commerce Enlargement Act of 1962. As international expertise knowledgeable Paul Triolo defined, “There isn’t any precedent for such a strategy to tariffs and semiconductor coverage. It is a coverage designed particularly for Nvidia and AMD to have the ability to ship superior GPUs to China and for the US authorities to connect a ‘chip tax’ to this course of in a method that doesn’t violate present legal guidelines.”
It’s a transparent instance of the administration’s governing type: continuously rejiggering the authorized construction of a scheme to protect the underlying objective — cash and management — whereas avoiding the obvious authorized obstacles. With the direct reduce of export gross sales initially touted by Trump trying constitutionally dicey, the White Home shifted to an import tariff ploy that may very well be framed because the president merely exercising commerce powers delegated to him by Congress.
The deeper downside is what this type of improvisation invitations. Even when Congress doesn’t get a vote on an export choice, the system ordinarily runs by way of businesses, written requirements, and a paper path. These guardrails exist to make conflicts of curiosity simpler to identify and tougher to use. That concern reared its head in late January, when the Wall Road Journal reported {that a} United Arab Emirates-backed entity linked to an Emirati royal bought 49% of the Trump household’s crypto enterprise, World Liberty Monetary, for $500 million, with roughly half paid up entrance. The report connects the funding timeline to subsequent US-UAE negotiations and, in the end, to an settlement permitting the export of tightly managed superior AI chips.
If correct, a overseas curiosity trying to receive superior American chips positioned a big wager on a fledgling enterprise tied on to the incoming president, his household, and shut associates. Even when no quid professional quo may be confirmed, the mere look of a “pay for play” scheme involving a nationwide safety matter is disturbing. And it lands amid broader considerations that the Trump household and associates have been monetizing proximity to presidential energy.
Okay, however is any of this authorized?
The Structure offers Congress the ability of the purse, stating that “no cash shall be drawn from the Treasury” until the legislative department formally permits it. It’s the central guardrail in opposition to Trump’s mentality that cash may be raised and deployed based mostly on presidential discretion moderately than congressional authorization.
Federal price range regulation reinforces this precept.
The Antideficiency Act bars businesses from obligating or spending federal funds upfront of, or past, a congressional appropriation. And the Miscellaneous Receipts statute typically requires that cash acquired by the federal government be deposited within the Treasury as miscellaneous receipts until particularly approved for deposit elsewhere. Once more, these guidelines exist to forestall businesses — and presidents — from creating their very own pots of cash exterior of Congress’s management.
The income from Trump’s tariffs goes to the Treasury, for instance, and turning it into spending requires congressional motion. That hasn’t stopped the president from wildly claiming he can use tariff revenues to pay for every little thing from a “Dream Navy,” to changing the federal revenue tax, to $2,000 stimulus checks. However he’s made no progress on truly advancing these priorities utilizing the cash in query.
These constraints don’t routinely resolve each questionable motion. Over time, Congress has delegated substantial energy to the manager department. Whether or not the manager department has misused that delegated energy is a query for the courts. Within the meantime, Congress can — and will — conduct oversight of the administration’s maneuvering.
For fairness acquisitions, the administration is counting on present Pentagon industrial base authorities and repurposed funds to accumulate stakes in firms. Unresolved points embody whether or not these statutes and appropriations clearly authorize fairness possession and, if the federal government later receives dividends or sells the stake, whether or not congressional price range guidelines, such because the MRA, require the funds to be returned to the Treasury moderately than reused by the businesses.
The authorized and constitutional restraints clarify why Trump’s slush-fund hunt retains producing extra questions than solutions. The schemes are laborious to sq. with the elemental separation of powers, so artistic authorized justifications and improvisation are required.
The Venezuelan oil proceeds saga exhibits how Trump’s abrupt public decrees can flip into difficult schemes after they power his apparatchiks to behave. Trump initially mentioned he would management the cash, declaring that “I don’t must seek the advice of with anyone” to take management of the oil.
After Trump’s preliminary declare, the White Home issued an govt order invoking emergency powers to maintain courts from steering Venezuelan oil income to the nation’s collectors. It creates “Overseas Authorities Deposit Funds,” which means proceeds held in designated Treasury accounts. Treasury’s Workplace of Overseas Belongings Management then issued a normal license allowing sure Venezuelan oil transactions however requiring funds that may in any other case go to sanctioned Venezuelan entities to be routed first into Treasury accounts.
The order says the cash stays Venezuela’s sovereign property, but the Treasury might launch it solely on the Secretary of State’s path. The administration says, “It’s not our cash,” but it surely nonetheless controls the spigot.
Confusion deepened when studies mentioned $500 million from the primary gross sales sat in a US-controlled account in Qatar earlier than being returned to Venezuela. Reuters quoted an administration official saying the Qatar fund is non permanent and future proceeds are anticipated to go right into a US-based account.
Secretary of State Marco Rubio advised the Senate that the US controls solely the disbursement of funds, that Venezuela will submit month-to-month price range requests for administration approval, and that audits will make sure the funds profit Venezuelans. However a Treasury-held, State-directed custodial fund that successfully governs a overseas authorities’s cash is uncommon, and the administration hasn’t clearly recognized the statute authorizing this construction or defined the way it can realistically audit and implement spending inside Venezuela.
The continuing murkiness blurs who controls what, the place, and underneath what authorized authority.
The administration’s Board of Peace initiative holds comparable considerations. In keeping with the draft constitution, a rustic’s membership could be restricted to a three-year time period until it contributes $1 billion “in money funds” to increase it. Even when the White Home claims this isn’t a “charge,” the plain questions stay. The place would the cash go? Who would management it? What’s the authorized authority for the president to solicit contributions from overseas governments? What about Congress?
On Thursday, Trump introduced that the US will contribute $10 billion to his board. That, as soon as once more, instantly raised the query of how the president can do it if Congress hasn’t appropriated the cash. As CNN reporter Aaron Blake famous, “critics have likened [the Board] to a large slush fund Trump will management.” One other day, extra questions.
This isn’t a steady solution to govern
A purpose why these “offers” preserve producing questions is that the administration is dancing across the federal authorities’s core design. Congress is meant to manage the purse, and presidents aren’t presupposed to create their very own financing mechanisms.
Even for those who assume the administration is performing in good religion — an unwarranted assumption — its strategy erodes the concept that federal energy needs to be exercised by way of normal guidelines moderately than customized offers. Commerce coverage shouldn’t be a way for the president to shake down allies. Export controls are presupposed to be about safety, not income era. Subsidy packages are presupposed to be debated and approved by Congress, not transformed into partial authorities possession of personal firms. And emergency powers are presupposed to be extraordinary, not an excuse to behave on autocratic instincts.
The query, “Is that this authorized?” subsequently can’t be answered with a easy sure or no. Because the Supreme Courtroom’s looming ruling on Trump’s “emergency” tariffs portends, some actions might survive judicial assessment; others might not.
However the long-term danger isn’t just that Trump is likely to be doing one thing unlawful. The long-term danger is that his presidency is normalizing treating the receipt and disbursement of cash as devices of private energy. Had been this occurring underneath a Democratic administration, congressional Republicans could be outraged. As an alternative, they’ve collectively buried their heads within the sand. If and when a future Democratic administration takes benefit of the precedents being set by Trump, they’ll have solely their very own willful cowardice accountable.
