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How Trump’s Justice Dept. Derailed an Investigation of a Major Company

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2 years ago

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In December 2018, a team of federal law enforcement agents flew to Amsterdam to interview a witness in a yearslong criminal investigation into Caterpillar, which had avoided billions of dollars of income taxes by shifting profits to a Swiss subsidiary.

A few hours before the interview was set to begin, the agents were startled to hear that the Justice Department was telling them to cancel the long-planned meeting.

The interview was never rescheduled, and the investigation would limp along for another few years before culminating, in late 2022, with a victory for Caterpillar. The Internal Revenue Service told the giant industrial company to pay less than a quarter of the back taxes the government once claimed that Caterpillar owed and did not impose any penalties. The criminal investigation was closed without charges being filed — and even without agents having the chance to review records seized from the company.

Caterpillar appears to have defused the investigation at least in part by deploying a type of raw legal power that rarely becomes publicly visible. This account is based on interviews with people familiar with the investigation, regulatory filings and internal Justice Department emails provided to Senate investigators and reviewed by The New York Times.

In the months leading up to the canceled interview in the Netherlands, Caterpillar had enlisted a small group of well-connected lawyers to plead the company’s case. Chief among those was William P. Barr, who had served as attorney general in the George H.W. Bush administration.

Caterpillar’s attorneys met with senior federal officials, including the Justice Department’s top tax official, Richard Zuckerman, according to agency emails. The lawyers sharply criticized the conduct of one of the agents working on the Caterpillar case and questioned the legal basis for the investigation.

A week before the agents were to interview the witness in the Netherlands, President Donald J. Trump nominated Mr. Barr to return to the Justice Department as the next attorney general. Mr. Zuckerman then ordered the interview to be canceled and the inquiry halted, without getting input from the prosecutor overseeing the Caterpillar investigation, according to the emails.

The sequence of events alarmed some federal officials and set off calls for an internal investigation.

“It appears that Caterpillar was given special political treatment that the average U.S. citizen cannot obtain,” Jason LeBeau, one of the agents who worked on the investigation, wrote to the Justice Department’s inspector general late last year.

Justice Department and I.R.S. representatives declined to comment.

“Caterpillar cooperated with the government in its review of the issues, and we were pleased to have reached the resolution with the I.R.S.,” said Joan Cetera, a spokeswoman for the company.

The roots of the investigation into Caterpillar, which makes trucks, asphalt pavers and a variety of industrial parts and equipment, dated back to 2009, when a former employee filed an I.R.S. whistle-blower claim asserting that Caterpillar had fraudulently dodged billions of dollars in U.S. income taxes by improperly parking profits in a small Swiss subsidiary.

The I.R.S. later accused Caterpillar of using “an abusive tax shelter” to understate its profits in the United States by $3 billion. A Senate committee also dug into the tax strategy, unearthing internal communications and interviewing Caterpillar’s employees and outside advisers, and raised questions about its legality.

That piqued the interest of the U.S. attorney near Caterpillar’s headquarters in Peoria, Ill. A veteran prosecutor, Eugene Miller, was assigned to the case. He worked with agents from the I.R.S. and the Federal Deposit Insurance Corporation’s Office of Inspector General, including Mr. LeBeau. (The F.D.I.C. office investigates bank and securities fraud.) Mr. Miller soon convened a grand jury and began issuing subpoenas.

Investigations of corporate tax dodges are generally civil, not criminal. This was a rare exception, indicating that the federal authorities believed that Caterpillar might have engaged in deliberate wrongdoing. (The I.R.S., too, sought the Justice Department’s approval to open a criminal investigation, though it is not clear whether the agency got that clearance.)

“I suspect this is one of the bigger paper cases you (we) will ever do,” the head of the F.D.I.C. inspector general’s office emailed Mr. LeBeau in 2016. “It’s a great case.”

In early 2017, federal agents searched and seized records from several Caterpillar buildings in and around Peoria as part of the investigation.

Two weeks later, the company announced that it was hiring some Washington heavy hitters for help. Mr. Barr was one. He was joined by James Cole, who had been the No. 2 official in the Obama Justice Department.

By early 2018, the I.R.S. had informed Caterpillar that the agency was seeking taxes and penalties totaling $2.3 billion. The U.S. attorney’s criminal investigation was also moving ahead.

Mr. Barr and his colleagues met with Mr. Miller’s boss, the U.S. attorney for the central district of Illinois, and asked him to end the investigation.

In May 2018, Mr. Barr escalated the matter. He and Mr. Cole sent a 28-page letter to Mr. Zuckerman, the Justice Department’s top tax official, and the deputy attorney general, Rod Rosenstein.

The letter argued that the investigation violated a requirement that federal criminal tax investigations be approved by the Justice Department’s tax division. And it took particular aim at Mr. LeBeau, saying he had a “basic misunderstanding of the relevant tax rules” and was pursuing a “conspiracy theory.” The attacks were an unusual effort to undermine the credibility of an individual investigator.

To press Caterpillar’s case, Mr. Cole met several times with Mr. Zuckerman. Whereas Mr. Cole was a powerhouse lawyer in Washington, Mr. Zuckerman had only recently moved to the capital from Michigan to join the Justice Department.

Mr. Zuckerman was not a tax specialist. He had worked for years at a Detroit law firm, where his expertise was defending companies and executives. Before that, he had been a prosecutor and in the late 1970s helped investigate the disappearance of the Teamsters boss Jimmy Hoffa.

Despite the pressure from Mr. Barr and Mr. Cole, the investigation continued. Mr. LeBeau and others traveled the world to interview former Caterpillar employees.

Then, on Dec. 6, 2018, word leaked that Mr. Trump was poised to nominate Mr. Barr to succeed Jeff Sessions as attorney general. The news quickly spread through the Justice Department.

That afternoon, a lawyer in the tax division wrote to Mr. Miller, the federal prosecutor in Illinois, to ask about the extent of Caterpillar’s objections to the ongoing investigation. Mr. Miller responded that he knew of several instances of the company’s representatives protesting. He also asked what steps would be taken to wall off Mr. Barr from the investigation.

Five days later, internal emails show, Mr. Zuckerman contacted the U.S. attorney in the central district of Illinois. Mr. Zuckerman directed him not to conduct any further investigation into Caterpillar. The U.S. attorney relayed the order to Mr. Miller.

Mr. Miller was surprised. He still had not briefed Mr. Zuckerman on the investigation. Yet he was now halting the probe after recently meeting with Caterpillar’s lawyer, Mr. Cole, according to Justice Department emails.

“I wanted to confirm the direction we just received from your office,” Mr. Miller wrote to two Justice Department tax officials. Agents had already landed in the Netherlands, and two more were about to board a flight to join them. The interview with a former Caterpillar manager was due to start in 16 hours. Canceling at the last minute “may compromise our ability” to ever interview the former manager, Mr. Miller wrote.

Mr. Miller made a plea for an explanation about why the investigation was being paused. “Perhaps if we understood the underlying reasoning, we could address those concerns and still conduct the interview,” which had taken months to arrange, he wrote.

Kevin Sweeney, who spent six years in the Justice Department’s tax division, said in a recent interview that the situation sounded “very unusual” based on The Times’ description. “I would not expect the tax division to stop an investigation based on representations made by defense counsel without first having a discussion with the lead prosecutor,” he said.

Two hours after Mr. Miller sent the email, he got a response: Senior Justice Department officials had decided “that no further action,” including the planned interview, should be taken “until further notice.” (That direction was reported by Reuters in 2020.)

The agents were at a holiday party hosted by the U.S. ambassador to the Netherlands when they got a call telling them to stand down.

In early 2019, Mr. Barr’s nomination was up for Senate confirmation. He told senators that he would abide by the Justice Department’s ethics rules regarding recusing himself from matters involving clients like Caterpillar.

Shortly after the Senate voted to confirm Mr. Barr, Mr. Miller proposed to officials in Washington that the investigation be restarted. In April, he was told to hold off, an email shows.

Judith Friedman, a Justice Department lawyer who had helped arrange the canceled interview in the Netherlands, was disturbed. “I am very concerned about this case and would like to be assured that there is no political interference going on,” she wrote to a law enforcement colleague that month in an email reviewed by The Times. She suggested that someone notify the inspector general, who can field complaints about internal misconduct.

In September 2022, Caterpillar reached a settlement with the I.R.S., which assessed $490 million in taxes over a 10-year period, plus $250 million in interest. It was a fraction of the more than $2 billion in taxes that the agency previously said Caterpillar owed. (The $490 million included other issues in addition to the Swiss strategy at the heart of the investigation.) The company noted at the time that it “vigorously contested” the I.R.S.’s interpretation of the tax rules at issue.

After the Biden administration took over in 2021, the Justice Department still didn’t pursue the investigation. At the end of 2022, the department’s tax division informed Caterpillar “that it does not have a pending criminal tax matter,” according to a securities filing. Last year, the government began returning the materials that agents had seized in the 2017 raids.

In his letter to the Justice Department’s inspector general, Mr. LeBeau said that investigators had not even been allowed to review most of the seized records, which he said was “completely unprecedented” in his 22-year career.

Glenn Thrush contributed reporting. Kitty Bennett contributed research.

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Economics

U.S.- Canada Trade Talks Collapse; Carney Says Retaliatory Tariffs Begin September 8

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2 days ago

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September 1, 2026

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U.S.- Canada Trade Talks Collapse; Carney Says Retaliatory Tariffs Begin September 8

Trade negotiations between the United States and Canada collapsed this week, with Canadian Prime Minister Mark Carney announcing that retaliatory tariffs on U.S. goods will take effect September 8, 2026. The breakdown follows the Trump administration’s imposition of 50% tariffs on certain Canadian goods, according to reporting from CNBC and the Washington Post.

What Happened

CNBC reported the collapse of talks as part of its ongoing business news coverage on August 22, 2026, noting the story as one of the week’s most significant developments for cross-border trade. The Washington Post’s business desk, in coverage also published August 22-23, quoted Carney characterizing President Trump’s 50% tariffs as “a miscalculation,” and confirmed the September 8 date for Canada’s retaliatory measures.

As of this writing, specific details on which categories of U.S. goods will be subject to Canadian retaliatory tariffs have not been fully reported. This article will be updated with additional specifics as they become available from primary government sources.

Why This Matters for Markets and Consumers

Trade disputes between the U.S. and its largest trading partners tend to have ripple effects across supply chains, consumer prices, and specific industry sectors with cross-border exposure. A Washington Post analysis accompanying the coverage noted that other countries unhappy with existing U.S. trade arrangements are likely watching the U.S.-Canada breakdown closely, suggesting the dispute could have implications beyond the immediate bilateral relationship.

Broader Context: A Volatile Week for Cross-Border and Fiscal News

The trade breakdown arrived during an already turbulent week for U.S. economic news. The same week saw the national debt cross $40 trillion for the first time, a sharp rise in Treasury bond market volatility, and the Treasury Department doubling the size of its debt buyback program. Whether the trade dispute has any direct connection to these fiscal and monetary developments has not been established in current reporting, but the concentration of major economic stories in the same week has drawn attention from market commentators tracking overall macroeconomic risk.

How This Fits the Broader Trade Policy Pattern

The U.S.-Canada breakdown is not occurring in isolation. Trade policy has been an active area of U.S. economic policymaking throughout 2026, with tariff actions and negotiations affecting multiple trading partners over the course of the year. Canada has historically been among the United States’ largest trading partners by total trade volume, meaning a prolonged dispute carries more direct economic exposure for both economies than a similar breakdown with a smaller trading partner would.

Industries with integrated North American supply chains — including automotive manufacturing, agriculture, and energy — have historically been among the most exposed to U.S.-Canada trade friction, given the degree to which components and raw materials cross the border multiple times during production. Businesses in these sectors should treat the September 8 deadline as a planning point regardless of whether it ultimately takes effect as announced.

What We Don’t Yet Know

Several material details remain unconfirmed or unreported as of this writing:

– The specific list of U.S. product categories subject to Canadian retaliatory tariffs
– Whether any further negotiations are scheduled between the September 8 deadline and the present
– Potential exemptions for critical supply chains, such as energy or auto parts, which have historically received special treatment in prior U.S.-Canada trade disputes

What to Watch Next

Businesses with cross-border exposure to Canadian suppliers or customers should monitor official statements from the U.S. Trade Representative’s office and Canada’s Department of Global Affairs for detailed tariff schedules ahead of the September 8 implementation date. Given the fluid nature of trade negotiations, a resumption of talks or a modified agreement before that date remains possible and would supersede current retaliatory tariff plans.

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U.S. National Debt Surpasses $40 Trillion for the First Time: What It Means for the Economy

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2 weeks ago

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August 23, 2026

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US Debt is now 40 trillions

The U.S. gross national debt crossed $40 trillion for the first time this week, according to Treasury Department data reported by NPR on August 20, 2026. The milestone caps a period of rapid fiscal expansion: the debt has doubled since 2017, and the federal government now spends more than $1 trillion a year just servicing interest on what it owes.

Why the Debt Load Is Accelerating

The debt has not grown at a steady pace. Instead, a combination of pandemic-era spending, tax policy changes, and elevated interest rates has compounded the federal government’s borrowing costs. As older Treasury bonds issued at lower rates mature, they are being refinanced at today’s higher prevailing rates, which pushes up the government’s annual interest bill even without any new borrowing.

That interest bill is no longer a minor line item. At more than $1 trillion annually, debt servicing now competes directly with discretionary spending on defense, infrastructure, and social programs. Economists watching the trend note that this dynamic can become self-reinforcing: higher interest costs widen the deficit, which requires more borrowing, which in turn raises future interest costs.

Bond Market Reaction

The debt milestone arrived during a volatile week for Treasury bonds. Bond prices fell even as equity markets touched record highs, a divergence that market analysts describe as bond investors signaling concern about the sustainability of federal borrowing, even as stock investors remain focused on corporate earnings and AI-driven growth.

U.S. Treasury Secretary Scott Bessent responded to the bond market pressure by expanding the Treasury’s debt buyback program, telling CNBC the size of buyback operations had been doubled to at least $4 billion per operation, with room to increase further. Buybacks are intended to support demand for existing Treasury securities and help stabilize yields during periods of market stress.

What Rising Debt Means for Ordinary Households

For everyday consumers, the national debt level itself is abstract, but its downstream effects are not. Elevated Treasury yields tend to push up borrowing costs across the economy, including mortgage rates, auto loans, and business credit. The same week the $40 trillion milestone was confirmed, average 30-year mortgage rates moved sharply, illustrating how bond market volatility connects directly to household borrowing costs.

Rising federal interest costs also narrow the government’s fiscal flexibility. As a larger share of the federal budget goes toward servicing debt rather than funding programs, policymakers face growing pressure to either cut spending, raise revenue, or both — choices that carry direct economic consequences for households and businesses alike.

What to Watch Next

The debt trajectory is expected to remain a central topic at the Federal Reserve’s Jackson Hole Economic Symposium, scheduled for August 27–29, 2026 — the first such gathering under new Fed Chair Kevin Warsh, who was confirmed by the Senate in a 54-45 vote in May 2026. While the symposium’s stated theme is financial innovation and payments policy, fiscal sustainability and its interaction with monetary policy are likely to feature in sideline discussions given the scale of the debt milestone.

Investors and households should watch upcoming Treasury auction results and any further changes to the buyback program as early indicators of how markets are digesting the government’s borrowing needs. A weak auction — one that requires higher yields to attract sufficient buyers — would be a signal that investor appetite for U.S. debt is softening further.

The $40 trillion figure is a threshold, not a crisis in itself. But combined with a bond market already showing signs of strain, it adds urgency to a fiscal conversation that has largely been deferred by successive Congresses and administrations.

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Economic Profile of the United States of America (2026–2030 Horizon)

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August 22, 2026

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Economic Profile of the United States of America (2026–2030 Horizon)

Executive Summary & Core Macro Outlook

The United States enters the 2026–2030 macroeconomic window as the unquestioned heavyweight of nominal economic output, retaining its status as the primary engine of global financial liquidity, private enterprise innovation, and high-margin technological deployment. According to multi-year projections from the International Monetary Fund (IMF) World Economic Outlook and complementary datasets from the World Bank, the US nominal Gross Domestic Product (GDP) is projected to reach $32.38 trillion by 2026, accounting for approximately 25% of global nominal output and roughly 14.5% of world GDP measured at Purchasing Power Parity (PPP).

Unlike many of its advanced-economy peers across Western Europe and East Asia—which are grappling with acute demographic contraction and structural energy shocks—the United States demonstrates remarkable macroeconomic resilience. The IMF projects a real GDP Compound Annual Growth Rate (CAGR) of 2.1% to 2.3% through 2030. This expansion is sustained by three structural anchors: unmatched capital depth driving massive private-sector investment in Artificial Intelligence (AI) infrastructure, complete energy independence as a net exporter of hydrocarbons and liquefied natural gas (LNG), and high labor productivity gains that cushion the economy against rising debt-servicing costs.

Macroeconomic Data Matrix (2026–2030 Projections)

Economic MetricIMF / World Bank Baseline (2026–2030)Global Benchmark & Context
Nominal GDP (2026 Projection)~$32.38 TrillionRank #1 Globally
GDP at Purchasing Power Parity (PPP)~$32.40 TrillionRank #2 Globally (Behind China’s ~$38.5T PPP)
Projected Real GDP CAGR (2026–2030)2.1% – 2.3%Top decile among G7 advanced economies
Gross Public Debt (% of GDP)~122.5% – 128.0%Structural fiscal deficit trajectory
Core Inflation Rate (PCE Target)Stabilizing at 2.0% – 2.2%Federal Reserve inflation target alignment
Current Account Balance (% of GDP)-2.8% to -3.2%Persistent capital import & reserve currency demand

Deep Structural Growth Drivers

1. The AI Infrastructure Hyper-Cycle & TFP Expansion

The defining growth catalyst for the US economy over the 2026–2030 horizon is the unprecedented scale of private capital expenditure (Capex) poured into artificial intelligence infrastructure, enterprise software integration, and advanced computing hardware.

Major technology mega-caps and private equity funds are directing hundreds of billions of dollars annually into hyper-scale data centers, domestic semiconductor fabrication, high-voltage electrical grid upgrades, and AI-driven workflow platforms. According to World Bank economic research, technological adoption across American service and manufacturing sectors is driving a notable uptick in Total Factor Productivity (TFP). This productivity surge allows US companies to expand profit margins and output even in an environment characterized by higher structural real interest rates and tight skilled-labor markets.

2. Deep Capital Markets and Private Sector Liquidity

The structural backbone of US economic outperformance remains its financial system. US capital markets represent over 40% of global equity market capitalization and a vast majority of global venture capital and private credit assets.

This liquidity creates an efficient mechanism for capital allocation: high-potential emerging industries (such as quantum computing, synthetic biology, and advanced defense technology) receive early-stage funding at a scale that no other national market can match. When global monetary conditions tighten, global capital flees toward safety and yield, reinforcing US capital depth and lowering the relative cost of equity capital for American corporations.

3. Net Energy Independence & Industrial Cost Advantages

Unlike industrial hubs in Germany, Japan, or South Korea—which remain highly vulnerable to volatile sea-lane logistics and imported fuel price spikes—the United States operates as a major net exporter of petroleum, natural gas, and refined chemical products.

Access to abundant, cheap domestic natural gas provides US heavy industry, advanced manufacturing, and electricity-hungry data centers with a persistent structural cost advantage. Furthermore, federal policy frameworks (including the CHIPS and Science Act and clean energy tax provisions) continue to catalyze domestic private manufacturing investment, re-shoring high-value supply chains from East Asia back to the American Sunbelt and Midwest.

Macroeconomic Vulnerabilities & Downside Risks

1. Structural Sovereign Debt Trajectory

The most significant medium-term threat to US macroeconomic stability is the path of federal public debt. With gross national debt exceeding 120% of GDP and annual federal deficits running between 5% and 7% of GDP, the US fiscal baseline faces increasing structural pressure.

As older legacy low-yield Treasury bonds mature, they are refinanced at higher prevailing interest rates. According to IMF fiscal monitor assessments, federal net interest payments are absorbing an expanding share of total fiscal revenue, crowding out discretionary spending and narrowing the government’s capacity to deploy counter-cyclical fiscal stimulus during future downturns.

2. Commercial Real Estate (CRE) & Banking Sector Realignment

The structural transformation toward hybrid work models has permanently altered office space utilization across major US metropolitan areas. Regional and community banks, which hold a disproportionate share of commercial real estate debt, face ongoing balance-sheet pressure as legacy office loans mature and require refinancing at lower property valuations and higher interest rates. While systemic money-center banks remain well-capitalized, localized credit tightening from regional lenders presents a headwind for small-and-medium enterprise (SME) borrowing.

High-Outperformance Sector Matrix (2026–2030)
  1. Enterprise AI, Cloud Compute, & Cybersecurity: Companies building enterprise-grade software, AI agents, cloud architectures, and specialized hardware protection layers.
  2. Next-Generation Energy & Grid Modernization: Power generation utilities, high-voltage electrical equipment makers, small modular nuclear reactor (SMR) developers, and energy storage systems catering to exponential data center energy demands.
  3. Advanced Defense Technology & Aerospace: Autonomous systems, satellite networks, hypersonic defense, and advanced materials supplying both domestic security needs and global allied demand.

Strategic Summary for Global Investors & Executives

The United States through 2030 remains the ultimate high-volume, high-yield destination for institutional capital. While fiscal debt risks require long-term monitoring, the immediate 5-year outlook is defined by strong technology-driven productivity, resilient private consumption, and unmatched market liquidity. For global corporations and institutional allocators, exposure to the US economy remains an indispensable pillar of long-term growth strategy.

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