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 extraordinary rebuke of Trump underscored an increased appetite to flex political power among some Republican senators against the president’s actions, particularly after his endorsement against two of their Senate colleagues 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.
“They gave us an ultimatum,” a White House source said, describing how Republican lawmakers negotiated with the White House over the fund.
The fund emerged from a legal settlement between Trump and the Justice Department to resolve an unprecedented lawsuit in which the president had sued the Internal Revenue Service for $10 billion 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.
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 dealt the administration a pair of blows, issuing orders that temporarily halted the fund until June 12 and called for further review.
In a statement on Monday, a Justice Department spokesperson said the DOJ “disagrees strongly” with the temporary halting of the fund 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 a court ruling that is likely to expire this month. A DOJ spokesperson did not immediately address whether the fund had been permanently scuttled.
In a tense meeting last month between Senate Republicans and acting Attorney General Todd Blanche after the fund’s announcement, lawmakers yelled at the acting attorney general over the political optics of the fund. After that meeting, it became clear that there was no path forward, according to a White House source familiar with the matter.
“He did not come back with any answers,” the source said, referring to Blanche.
Trump is “not thrilled” but understands this is the only way forward “for now,” the source said, adding that the fund is “on hold” and warning that nothing is final until Trump announces it.
Senate Majority Leader John Thune, who has signaled for days his concerns about the fund, told reporters on Monday that he thought the best way forward would be “if the administration decides to shut it down themselves.”
He said he talked to the White House over the weekend and Trump last week, adding that he made clear he thought the fund must be ended.
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.
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 and Daniel Wallis)
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