Trump’s $1.8B 'Weaponization' Compensation Fund on Hold After Congressional Backlash
Congressional Opposition and Legal Challenges Surrounding the Compensation Fund
By Nandita Bose, Steve Holland, Dan Rosenzweig-Ziff and Richard Cowan
WASHINGTON, June 1 (Reuters) - President Donald Trump's nearly $1.8 billion fund to compensate victims of alleged government “weaponization" has been put on hold after the White House faced fierce opposition from Republicans in Congress, three sources familiar with the plan said on Monday.
The rare rebuke of Trump demonstrated some Republicans' increased willingness to flex their political power against the president, particularly after his endorsement of Texas Attorney General Ken Paxton over incumbent Senator John Cornyn ahead of a crucial midterm election.
The proposal was dropped as senators returned to Washington after their Memorial Day break and faced an impasse with the president over a $72 billion bill to fund ICE and Border Patrol operations. Speaking to reporters, Senate Majority Leader John Thune said he made clear to the White House the fund needed to be killed.
Republican Resistance and White House Negotiations
"They gave us an ultimatum," a White House source said, describing how Republican lawmakers negotiated with the White House over the fund. The White House's goal is to speed passage of the funding package, said the source, who like other sources spoke on the condition of anonymity to discuss internal deliberations.
The Republican rebellion was an extraordinary act of defiance given Trump's insistence on loyalty and his threats to back primary candidates against those who do not toe the line.
Origins and Purpose of the Fund
The fund emerged from a legal settlement between Trump and the Justice Department to resolve an unprecedented $10 billion lawsuit against the IRS over the alleged mishandling of his tax records. The $1.776 billion was meant to pay people who said they had been the subject of government abuse.
Legal and Political Backlash
The fund sparked swift legal challenges and political uproar, including from Senate Republicans, who expressed anger that people who attacked the U.S. Capitol on January 6, 2021, could receive taxpayer-funded payouts. Critics condemned it as a slush fund.
On Friday, federal judges in Virginia and Florida issued orders that temporarily halted the fund until June 12 and called for further review, respectively.
Justice Department Response
In a statement on Monday, a Justice Department spokesperson said the DOJ "disagrees strongly" with those decisions but, "the Department will abide by the Court's ruling."
The Justice Department statement did not commit to abandoning the fund entirely, only to following the court ruling pausing the fund that is likely to expire this month. A DOJ spokesperson did not immediately address whether the fund had been permanently scuttled.
Blanche’s Role and Senate Approval Concerns
BLANCHE AUDITION AT STAKE
Since taking over as acting attorney general in April, Todd Blanche has moved quickly to prosecute Trump’s perceived enemies as he seeks to secure the job on a permanent basis. The department secured criminal charges against former FBI Director James Comey, ramped up its investigation into former CIA Director John Brennan and removed press releases from its website about prosecutions of rioters who attacked the U.S. Capitol on January 6, 2021.
But the backlash over the fund may represent the stiffest challenge yet to his bid to win the job permanently, raising questions over whether he can earn Senate approval if Trump names him as attorney general.
White House and DOJ Dynamics
Two sources sought to distance the White House from the fund, claiming it was the Justice Department and Blanche's idea.
A Justice Department official, speaking on condition of anonymity to speak freely, said Blanche was never in settlement negotiations. But Trent McCotter, Blanche's senior deputy, and attorneys from DOJ's Office of Legal Counsel were, said a source familiar with the matter.
In a tense meeting last month between Senate Republicans and Blanche after the fund’s announcement, lawmakers yelled at the acting attorney general over the political optics of the fund. "He did not come back with any answers," a White House source said, referring to Blanche.
Trump’s Reaction and Future of the Fund
TRUMP 'NOT THRILLED'
Trump is "not thrilled" but understands this is the only way forward "for now," the source said, while adding that nothing is final until Trump announces it.
Thune, who said he talked to the White House over the weekend, told reporters on Monday that he thought the best way forward would be "if the administration decides to shut it down themselves."
House Speaker Mike Johnson also held a lengthy meeting at the White House on Monday to discuss the subject, a source familiar with the matter said.
Democratic and Republican Concerns
Democrats and some Republicans questioned whether it was really killed and want guarantees it won't come back in another form.
"This week, Senate Democrats will push legislation to ban this slush fund and ensure no president can ever do this again," Senate Minority Leader Chuck Schumer wrote on X.
IRS Settlement and Future Implications
The settlement agreement also barred the IRS from pursuing any audits into past tax claims for Trump, his relatives and his companies for any tax returns filed before May 18. It was not clear how or whether the pausing of the fund would affect any possible audits of Trump's past tax claims.
(Reporting by Nandita Bose, Steve Holland, Dan Rosenzweig-Ziff, Richard Cowan and Andrew Goudsward; Editing by Colleen Jenkins, Michael Learmonth, Daniel Wallis and Cynthia Osterman)
