Trump administration abandons $1.8 billion payout fund after revolt by GOP

Acting attorney general Todd Blanche said Tuesday the Justice Department would abandon plans for a $1.8 billion fund to compensate people who claim they were unfairly investigated, potentially ending a standoff with Republican lawmakers who have refused to fund immigration enforcement agencies over concerns on the payout fund.

Dissolving the fund before it could begin disbursing payments allows the Trump administration to assuage lawmakers’ concerns that the taxpayer money could be used to compensate people who attacked the U.S. Capitol on Jan. 6, 2021.

“We are not moving forward with the fund, period,” Blanche said.

“Not moving forward with the fund ever?” Rep. Grace Meng (D-New York) asked him asked him in a House Committee overseeing the Justice Department.

“Correct,” Blanche said.

The Trump administration seemed to have little choice but to declare the fund dead in order to salvage a key part of the Trump administration’s aggressive and costly immigration agenda. Some Republicans said they would accept nothing less than an explicit guarantee from Blanche that there would be no payout fund if the administration wanted money for its immigration enforcement agencies.

The Trump administration’s retreat was a rare instance of congressional Republicans defying President Donald Trump and prevailing, and it comes roughly five months before midterm elections that will decide control of Congress. The payout fund laid bare strains between the president and a Republican Party that has more often than not bent to his will.

For days, Senate Republicans had expressed alarm at Trump’s decision to set up the fund. Republicans defied Trump by leaving Washington last month without passing legislation to fund immigration enforcement agencies due to concerns about the fund.

The Justice Department said Monday it would comply with a court order temporarily blocking the unpopular fund, a striking reversal from days earlier, when it vowed not to let judges’ “policy preferences” stand in its way.

But some Senate Republicans felt that move was not enough — and wanted to hear from the president himself. The court order blocked the administration from making payouts from the fund only for two weeks and did not weigh in on its legal merits.

In the hours leading up to Blanche’s testimony Tuesday afternoon, Senate Majority Leader John Thune (R-South Dakota) said he believed after speaking with Blanche on Tuesday that Blanche’s testimony would make clear that the fund is no more.

“I think his statements are going to be very definitive, very clear and create the certainty that I hope all of our members and House members need as well in order for us to proceed on the reconciliation bill,” Thune told reporters, referring to the stalled immigration enforcement legislation. “But I’m not guaranteeing that happens yet.”

Shortly before Blanche’s testimony, House Speaker Mike Johnson (R-Louisiana), who met with Trump for three hours Monday, said he also believed the fund was “off the table.”

Trump’s intention was for the fund to compensate Americans harmed by the government regardless of political party, Johnson said Tuesday afternoon. “That’s what was behind it,” he told reporters. “But I don’t think it was fully understood, and that’s what it made it a difficult thing.”

Even if the administration had not abandoned the fund, it was likely to face serious legal hurdles. Two courts have taken steps to scrutinize aspects of the fund, and other challenges were pending.

In one decision in the Eastern District of Virginia, U.S. District Judge Leonie M. Brinkema scheduled a hearing for next week to determine whether the fund should remain blocked while the court considers the merits of a lawsuit that argues the fund is illegal.

Republicans are working to pass legislation important to Trump that funds two agencies — Immigration and Customs Enforcement, and Customs and Border Protection — for the next three years. Trump had asked Congress to pass the legislation by Monday, but Senate Republicans refused to pass the legislation last month until the administration addressed the controversy over the fund.

Senate Republicans plan to use a special process known as reconciliation to pass the government funding bill without Democratic votes, but the party’s 53-47 majority in the chamber means they need the support of all but three Republican senators if every senator is voting.

Democrats had made clear they would try to force Republicans to take politically uncomfortable votes on amendments related to the payout fund if they tried to jump-start Trump’s stalled immigration enforcement agenda. Shortly before Blanche’s testimony, at least one Republican, Sen. Thom Tillis (North Carolina), who has criticized attempts to downplay the Jan. 6 attack, said he also planned to introduce an amendment to bar the administration from resurrecting the fund in the future.

“I just feel like we just need to do a Wayback Machine and just pretend like this never existed and take whatever steps are necessary to make sure it can never exist or disburse,” Tillis told reporters. “Not in the current environment. There are other mechanisms for people who were over-prosecuted.”

The administration agreed to set up the payout fund as part of a settlement in exchange for Trump dropping a $10 billion lawsuit he filed against the IRS over the 2019 leak of his confidential tax records.

One of the deal’s most valuable provisions for Trump appears likely to survive no matter what happens to the payout fund. Under the settlement, the Justice Department agreed it was “forever barred” from prosecuting potential crimes over tax filings by Trump, his family or his companies from before the agreement. A person familiar with the matter, speaking on the condition of anonymity to discuss plans that have not been made public, said that arrangement is expected to remain even if the administration scraps the fund.

On Tuesday morning, a spokesman for Trump’s personal legal team defended the underlying case, saying the IRS had “wrongly allowed a rogue, politically motivated employee” to leak confidential information about Trump, his family and his company to news organizations. “President Trump continues to hold those who wrong America and Americans accountable,” the spokesman said.

In addition to the Brinkema ruling, another federal judge in Florida last week ordered Trump and his family to respond to “grievous allegations” that the fund constituted an act of fraud, using a rare judicial authority to investigate misconduct against the court. That judicial investigation is in its nascent stages; the judge asked Trump and his family to respond to the allegations of misconduct by June 12.

Even if the administration follows through with abandoning the fund, Trump could find other ways to reward allies who claim they were victims of a weaponized Justice Department.

For example, under the Federal Tort Claims Act, people are entitled to file claims against the federal government if they feel they were wrongly hurt by government actions. Thousands of such claims are filed each year, including many that have come from Jan. 6 defendants.

Those claims have kept coming amid the uncertainty on the payout fund. Peter Ticktin, an attorney who has filed for compensation on behalf of Jan. 6 defendants, said he sought payments Friday for nine more clients, arguing in a court filing that each was owed more than $1 million for medical bills, lost income, pain and suffering, emotional distress, loss of liberty and damage to their reputations.

“If there’s a fund, that makes it all a little bit easier,” Ticktin said. “But if there’s no such fund at all, the government needs to settle these lawsuits.”

The Justice Department could decide to settle these claims before they are brought to court, effectively deciding who deserves to be paid for damages by the federal government. That claims process is typically not made public.

• Meryl Kornfield, Mariana Alfaro and Anna Liss-Roy contributed to this report.