CNBC’s Andrew Ross Sorkin and Joe Kernen grilled Southern District of New York U.S. Attorney Jay Clayton on Thursday as he claimed a potential $1.776 billion IRS fund to settle a lawsuit by President Donald Trump is a “pretty good deal” for the government.

Clayton joined Squawk Box, where Sorkin brought up reports of a potential fund being set up that would allow people who feel they were unfairly targeted by the IRS or DOJ under former President Joe Biden to file claims.

Critics have described the potential fund as a “slush fund” for the president’s allies. According to reporting from ABC News, the fund would be overseen by third parties and not directly pay the president. The deal was reportedly devised after lawyers were unable to find a legal avenue to pay the president. Trump is suing the IRS for $10 billion over a former official leaking past tax returns while he was a private citizen.

Sorkin asked about the perception of such a fund and the implications as Trump would be settling with a government he’s technically in charge of.

“Anybody whose tax returns have been intentionally leaked should have recourse against the government,” Clayton said.

“$10 billion worth of recourse?” Kernen asked, adding, “It doesn’t smell right” that Trump would be settling with his “own government.”

Kernen pressed further, noting that even a number of conservative voices have raised concerns about the potential fund.

“So did he get any money out of his tax returns being leaked?” Clayton asked.

“By settling and putting this provision to not look back at his audits, he could have benefited,” Kernen countered.

“Would you take that settlement? I’d take that settlement, on either side,” Clayton said.

“I’m trying to help you here, Andrew, and you’re silent,” Kernen said.

“I’m trying to understand why you’d say, look, my question is slightly different, Jay. You said you take the settlement on either side, and I’m just trying to understand why do you take that settlement on the other side,” Sorkin said, tapping back in.

He added, “Pretend it’s not the president. Pretend it’s me. And let’s say you thought that I was a tax cheat. Why would you — I’m not saying that he was a tax cheat, I’m just saying, let’s say you thought that I owed the government money. Wouldn’t you want me to pay the money? Why would the government not want me to pay the money?”

Clayton argued:

Andrew, we have two things going on here. We intentionally leak your tax returns to embarrass you in the public. You have a claim against us. There’s an audit that we don’t know whether there’s money owed or not owed. To resolve that, we say, you know what, Andrew? We’re gonna drop the audit. We’re going to move on, and you’re going drop your claim against us for trying to name and shame you. That’s a deal I think that, you know, is actually a pretty good deal for the government if the government intentionally leaked somebody’s tax returns. That’s a horrible thing.

Sorkin agreed the leaking is wrong, but asked again whether the president being the one suing changes the “dynamic” of the situation.

“Is the president supposed to say, you know what, you can do whatever you want to me, and I have no recourse? And it was done when he was a private citizen,” Clayton said.

“I have no idea what’s in the tax returns, and I’m arguing that we should be doing one thing or the other. I’m just suggesting that I think because of the perception of it, there’s a question about how it should be done,” Sorkin said.

Kernen argued Trump doesn’t care about perception or consequences when it comes to the lawsuit.

“I think the president is so PO’d at what was done to him that if he can do something, he’s not even gonna care about it. He doesn’t care about the repercussions at this point,” he said.

“No, I think that’s probably right. I mean, I imagine he feels — I’m not disputing that,” Sorkin said.

Watch above via CNBC.

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