A sweeping plan championed by President Donald Trump to distribute nearly $1.8 billion to individuals claiming they were targeted by government “weaponization” has been shelved after an unusually forceful backlash from within his own party.
The proposed fund, valued at approximately $1.776 billion, had been designed as part of a settlement tied to Trump’s legal dispute with the Internal Revenue Service over the handling of his tax records. The money was intended to compensate people who argued they had suffered from politically motivated government actions.
But what began as a signature initiative quickly ran into a wall of resistance on Capitol Hill.
Republican senators, returning to Washington after the Memorial Day recess, reportedly made clear to the White House that the proposal had become politically untenable. Their opposition came amid broader negotiations over a separate $72 billion package aimed at financing Immigration and Customs Enforcement and Border Patrol operations.
The standoff revealed a rare crack in Republican unity around Trump. Lawmakers who have often aligned themselves closely with the president pushed back aggressively, worried that the compensation program could ultimately benefit participants involved in the January 6, 2021, Capitol riot.
Critics from both parties labeled the initiative a taxpayer-funded giveaway, arguing that its structure lacked sufficient safeguards regarding who could receive payments.
The controversy intensified when federal judges in Virginia and Florida issued orders temporarily freezing the program and calling for additional review. The rulings halted implementation at least through mid-June.
The Justice Department responded by saying it strongly disagreed with the courts’ decisions but would comply with the orders while they remain in effect. The department stopped short of confirming whether the fund had been permanently abandoned.
Behind the scenes, the dispute has also placed added scrutiny on acting Attorney General Todd Blanche, who has emerged as one of the administration’s most prominent legal figures. Since taking over the department in April, Blanche has overseen a series of investigations and actions aligned with Trump’s longstanding claims that federal institutions were used against him and his allies.
According to people familiar with internal discussions, senators confronted Blanche during a heated meeting following the announcement of the fund, questioning both its legal foundation and its political consequences. The encounter underscored growing concerns among lawmakers about defending the proposal publicly.
As criticism mounted, some administration officials sought to distance the White House from the idea, suggesting that Justice Department lawyers played a leading role in shaping the settlement framework. Others disputed that characterization, noting that senior department officials and legal advisers were involved in discussions surrounding the agreement.
Trump is said to be unhappy with the setback but recognizes the political realities confronting the plan. Congressional leaders have signaled that the easiest path forward would be for the administration itself to formally terminate the initiative rather than continue fighting over it.
Even so, skepticism remains. Democratic lawmakers, joined by some Republicans, have questioned whether the fund is truly dead or merely paused. Efforts are already underway in the Senate to block any future attempt to revive a similar compensation program.
Another unresolved issue concerns a separate provision in the settlement agreement that restricted the IRS from pursuing audits related to Trump, members of his family, and his businesses for tax returns filed before May 18. It remains unclear whether the suspension of the compensation fund will have any effect on those protections.
For now, one of the most ambitious and controversial proposals of Trump’s second term appears stuck between court orders, congressional resistance and uncertainty inside his own administration.
