Treasury Secretary Scott Bessent dismissed a proposal by California Gov. Gavin Newsom (D-CA) to tax payouts from a federal fund [1].
The clash highlights the deepening fiscal and ideological divide between the federal administration and California over the management of the $1.8 billion [2] anti-weaponization fund.
During a press briefing at the White House in Washington, D.C., Bessent addressed the plan proposed by Newsom to impose a 100% [1] tax on payments originating from the fund. Bessent said the proposal was nonsensical and harmful to the intended purpose of the initiative.
Bessent said, "There's no cure for stupid" [3].
The anti-weaponization fund, totaling $1.8 billion [2], was established to counter the perceived political weaponization of government agencies. Newsom's proposal would effectively neutralize the financial benefit of those payouts for recipients within California by claiming the entirety of the funds through state taxation.
Bessent did not provide a detailed legislative counter-proposal during the briefing but maintained that the state's attempt to seize the payments was an overreach. The Treasury Secretary said the move would undermine the federal objective of the fund.
This interaction follows a series of disputes between the Newsom administration and the federal government regarding the implementation of Trump-era policies. The 100% [1] tax rate is an unprecedented measure for a state to apply to a specific federal fund payout, effectively treating the disbursement as a taxable event that returns all proceeds to the state treasury.
“"There's no cure for stupid."”
This dispute represents a direct conflict between federal spending authority and state taxing power. By proposing a 100% tax, California is attempting to use its fiscal autonomy to nullify a federal policy it opposes. This sets a potential precedent for other states to use aggressive taxation as a tool to counteract federal grants or payouts that contradict state political agendas.
