This is the Cato Daily Podcast for Tuesday, May 17th, 2022. I'm Kila Brown.

Big firms that choose to settle claims of misconduct with the Justice Department once again find themselves encouraged to take a deal.

And that deal sometimes means avoiding massive fines in exchange for funding pet causes,

sometimes overtly political ones for the administration. So says Cato's Will Yeatman. He argues it's a

powerful way to subvert Congress's power of the purse and leave taxpayers in the lurch too.

If you are a, let's say a polluting industry

or just say a disfavored industry

and the Justice Department brings charges

and you are found liable in some way and fines are levied.

Where does that money go?

Civil penalties, fines, those monies go to the United States Treasury.

And that's required by the Constitution?

Well, indeed, look, there are exceptions, for example, how the certain agencies like the

CFPB are funded directly from the Federal Reserve. But yes, it's a general matter and making

it simple, yes, the Constitution requires that money to go to the U.S. Treasury and it can only, you know,

flow out from the U.S Treasury by Act of Congress.

Okay so what is the difference between that and industries settling with the

government and instead of paying fines directly to the

Treasury, they fund some project. it's a tremendous difference.

I mean, as a matter of the Constitution, it's quite frankly an affront to the Congress's

exclusive power of the purse when these monies instead of going

into the U.S. Treasury go to fund pet projects of the administration in question.

...