Here's Posner's opinion. (I'm linking to the opinion at "Project Posner," a website devoted to Posner's judicial opinions.)
The Court decided in Flast that they should not stand in the way of challenges to "exercises of congressional power under the taxing and spending clauses of Art. I, § 8, of the Constitution," provided that the expenditure complained of is not just "an incidental expenditure of tax funds in the administration of an essentially regulatory statute" and that "the challenged enactment exceeds specific constitutional limitations imposed upon the exercise of the congressional taxing and spending power and not simply that the enactment is generally beyond the powers delegated to Congress by Art. I, § 8." 392 U.S. at 102-03. The Court found that this two-part test was satisfied by a challenge to the use of "the taxing and spending power . . . to favor one religion over another or to support religion in general." Id. at 103....Citing precedent, Posner identified the standing problem here as involving only the "prudential" limitations on federal court jurisdiction -- as opposed to the Article III constitutional limitations. Since "the prudential principles of standing, like other common law principles, are protean and mutable," Posner thereby freed himself to speak in practical terms and to avoid the Article III doctrine -- which has tightened up in the years since Flast and which has long made Flast seem like an anomalous safe harbor for Establishment Clause litigants.
At argument the plaintiffs' counsel was unable to identify the appropriations that fund the conferences. The complaint does, however, allege that the conferences are funded by money derived from appropriations, which means from exercises of Congress's spending power rather than from, say, voluntary donations by private citizens. There is no suggestion that these are appropriations earmarked for these conferences, or for any other activities of the various Faith-Based and Community Initiatives programs, or for a statute pursuant to which the programs were created. The money must come from appropriations for the general administrative expenses, over which the President and other executive branch officials have a degree of discretionary power, of the departments that sponsor the conferences. Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2809, 2853, 3115-16, 3136, 3150, 3311-12; Department of Homeland Security Appropriations Act, 2005, Pub. L. No. 108-334, 118 Stat. 1298-99.
The difference, then, between this case on the one hand and Flast and Kendrick on the other is that the expenditures in those cases were pursuant to specific congressional grant programs, while in this case there is no statutory program, just the general "program" of appropriating some money to executive-branch departments without strings attached. The difference cannot be controlling. Suppose the Secretary of Homeland Security, who has unearmarked funds in his budget, decided to build a mosque and pay an Imam a salary to preach in it because the Secretary believed that federal financial assistance to Islam would reduce the likelihood of Islamist terrorism in the United States. No doubt so elaborate, so public, a subvention of religion would give rise to standing to sue on other grounds, just as in the St. Charles cross case; taxpayer standing in the hypothetical mosque case would not be essential to enabling a suit to be brought in federal court to challenge the violation of the establishment clause. But it would be too much of a paradox to recognize taxpayer standing only in cases in which the violation of the establishment clause was so slight or furtive that no other basis of standing could be found, and to deny it in the more serious cases.
Since the constitutionalized standing doctrine of the Burger and Rehnquist Courts presents a problem for those who want to argue that Flast was correctly decided, I should think it would be quite hard to argue nowadays that Flast ought to be broadened. Yet Flast is stare decisis, and Posner's practical reasoning is impressive. What if the Secretary of Homeland Security used general funds to build a mosque and pay an Imam?