The need for reform in the U.S. government’s financial systems has never been more urgent, including the lesser-known Judgment Fund, which is responsible for paying legal judgments and settlements against the federal government. It plays a crucial role in ensuring that the United States fulfills its legal obligations.
But this fund is fraught with mismanagement, a lack of oversight, and a lack of transparency. The good news is that we are at a crossroads where reform is not just popular, but possible. By harnessing the momentum created by the Department of Government Efficiency, we can seize the opportunity to modernize and streamline the Judgment Fund.
The Judgment Fund was set up for practical reasons so that Congress does not have to approve of every payment made for judgments. But this has the practical effect of a blank check for agencies to pay out their liabilities.
While the fund serves an essential purpose, its operations are largely opaque, leaving taxpayers in the dark about how their money is spent and whether it is being used appropriately. This is problematic because of a strategy that is covertly used to change policies and how laws are enforced within the U.S.
This strategy is called “sue and settle,” where a plaintiff will file a lawsuit against a like-minded government agency seeking an injunction that would prevent the enforcement of that law or policy. The agency, whose leadership sympathizes or aligns with the plaintiff, will “settle” the lawsuit, agreeing to not enforce the law or policy. It serves as an end around to getting Congress to change a law or the agency to use its rulemaking procedures.
What is particularly egregious is that the Judgment Fund pays the plaintiffs’ attorney fees and costs. Not only are policies changed in a suspect way, but the taxpayer is forced to pay for the effort.
For an annual cost of $3 billion to $4 billion, the public should have a better handle on where this money is going. But as it stands, the Treasury’s Judgment Fund website does not sufficiently disclose fund disbursements. While the payments are posted to the website, the sheer volume of judgments payable by the Judgment Fund makes it near impossible for the average person to decipher who is receiving payments and who the Judgment Fund’s frequent fliers are. When there is a system where plaintiffs can leverage the courts to affect policy, better transparency is sorely needed.
It is difficult to decipher where exactly the fraud, abuse, or waste is without transparency. Updating the reporting requirements for the Treasury Department is where reform should start. And this is where DOGE’s example can be used.
DOGE has successfully introduced technological tools and streamlined processes to reduce waste and improve government accountability through the use of emerging technologies such as artificial intelligence. The progress made by DOGE in other areas of government efficiency offers a practical model for tracking the Judgment Fund. In the same way, technology could be used to organize the judgments paid by the Judgment Fund.
Once this information is organized, the next step should be to determine where the waste, fraud, and abuse may be occurring. The Government Accountability Office should review the data to identify who abuses the fund. When it is known what agencies draw upon the blank check of the Judgment Fund the most, and what plaintiffs benefit the most, we can start demanding answers from the government officials responsible.
CONGRESS ‘IRATE’ OVER ASTONISHING NATIONAL SECURITY BREACH
The end goal, perhaps at a later date, is to achieve accountability with the Judgment Fund. The agencies who cause liabilities for the taxpayer should also be forced to answer to Congress and the people—at the very least by written explanations. This is particularly true when cases are settled.
Now is the time to act. We have a rare opportunity to modernize the Judgment Fund, improving government accountability and reducing waste. By implementing the changes through technology, taking inspiration from DOGE’s recent successes, we can create a more streamlined, effective system for handling federal claims. Let’s not waste this opportunity to improve one of the most important yet overlooked aspects of federal financial management.
Curtis Schube is the executive director of the Council to Modernize Governance, a think tank committed to making the administration of government more efficient, representative, and restrained. He is formerly a constitutional and administrative law attorney.