The Trump administration signaled Monday it would abandon a controversial $1.8 billion fund designed to compensate allies deemed victims of what officials called "lawfare and weaponization," capitulating after an unusually fierce revolt from Senate Republicans who threatened to side with Democrats to kill it.
The Justice Department cited a federal judge's temporary restraining order blocking the fund as justification for backing away, though the decision came only after party-line tensions nearly derailed a broader Republican effort to fund immigration enforcement through Congress.
The fund had been established through a settlement in Trump's lawsuit against the IRS and was supposed to compensate the former president's allies, critics say, potentially including January 6 insurrectionists and members of Trump's family. The administration named no commissioners to oversee it, despite a mandate to do so within 30 days of the settlement announced May 18.
At a May 21 closed-door meeting with acting Attorney General Todd Blanche, roughly half the Republican Senate conference erupted in opposition, according to Senator Ted Cruz of Texas. "There were multiple senators yelling at the Attorney General, saying this feels like self-dealing," Cruz said on his podcast. He described a "jailbreak of Republicans" threatening to vote with Democrats to kill the entire reconciliation bill if the fund remained.
Republicans control 53 Senate seats to Democrats' 47, making defections potentially fatal to party-line legislation. With a House margin of just five seats, they had little margin for error on reconciliation, a budget mechanism that bypasses a filibuster.
The fund had stalled negotiations over a reconciliation bill intended to fund U.S. Immigration and Customs Enforcement and Border Patrol through the end of Trump's term. Those two agencies were omitted from the Department of Homeland Security appropriations bill passed earlier this year.
Senate Majority Leader John Thune, R-South Dakota, stopped short Monday of committing to legislation permanently banning the fund, saying he preferred the administration shut it down on its own. "That would be the ideal outcome," Thune said when asked if the White House needed to pledge it would not revive the scheme later.
Democrats made clear they don't trust the retreat. Senate Minority Leader Chuck Schumer said on the Senate floor that "Trump's word is nowhere near enough" and promised to introduce legislation permanently banning any such fund. "If Trump and Republicans are truly abandoning this corrupt scheme, they should have zero problem banning it in law," he said.
Schumer warned that the fund as structured could funnel taxpayer money to "MAGA billionaires, cop-beating January 6 insurrectionists and [Trump's] own family." He pledged that if Republicans attempt to push the reconciliation bill again, "the first amendment I will offer will be to ban the slush fund permanently, and forever."
Skye Perryman, president of the watchdog group Democracy Forward, which filed one of multiple lawsuits challenging the fund, called a full administration reversal a "major victory" but said her organization would remain in court. "Until the administration fully abandons the scheme, it's beyond dispute that it will not recur, and our clients' harm is remedied, we will be in court challenging it," she said.
At least four separate lawsuits had been filed against the fund in Virginia, Washington, D.C., and California. The Virginia suit was brought by a prosecutor fired by Trump for investigating January 6. Capitol Police officers who defended the building that day also sued in Washington, D.C.
A federal judge in Florida had asked for additional briefing after 35 retired federal judges wrote that the settlement establishing the fund appeared to involve "collusion" and "fraud on the Court."
Author Sarah Mitchell: "The GOP rebellion here reveals the fund was indefensible even to Trump's own allies, but Schumer's right not to take the retreat at face value. Until it's banned in law, this scheme isn't truly dead."
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