Trump administration destroys $1.8B US fund meant to compensate president's allies

The Trump administration is scrapping plans to create a $1.8 billion fund aimed at compensating allies of the Republican president, a top Justice Department official said Tuesday as he backed away from a plan that has faced court challenges and serious political backlash that threatened to derail key aspects of the White House's agenda.

“We are not moving forward with this fund,” said acting US Attorney General Todd Blanche. “Time.”

But Blanche also told lawmakers that a deal with Trump to block future audits of her family's past tax records would remain in place.

The fund emerged from a formal agreement between President Donald Trump and the Justice Department to settle Trump's unprecedented lawsuit against the IRS over alleged mishandling of his tax records.

The fund was withdrawn after angry Republican lawmakers said it would threaten the passage of $72 billion to fund Trump's immigration campaign.

Blanche, a former Trump lawyer, has held the top job at the Justice Department since early April, when Trump fired Pam Bondi as attorney general. A person familiar with White House thinking said Blanche's future depends on her ability to address Republican lawmakers' concerns about the fund.

The US$1.776-billion fund is meant to pay people who say they have been abused by the government, and Blanche angered senators last month when she did not commit to excluding people who abused police during the violence at the Capitol on January 6, 2021.

White House officials spent much of Monday calling lawmakers to assure them there would be no payoff after the Republican coup, two sources familiar with the matter said, speaking on condition of anonymity.

The White House referred questions to the Justice Department, where a spokesman said compensating victims of government abuse remains a priority for the administration.

“The purpose of the fund was to continue the program to correct the mistakes made by previous administrations, but due to this misunderstanding, DOJ is not continuing the fund,” said spokeswoman Emily Covington.

'Not committing to do anything in writing'

At a press conference on Tuesday afternoon, Democratic lawmakers insisted on making a promise that the fund was dead, but Blanche said she would not put that in writing.

“Why do I have to write something?” Blanche said. “I'm not committed to doing anything in writing.”

Democratic Representative Rosa DeLauro said Blanche should not have signed the part of the deal that blocks future tax audits of Trump and his businesses, noting that she was previously Trump's lawyer.

“You just gave the president and his family the right to exempt about $100 million in taxes,” DeLauro said, referring to reports that Trump could face that amount in an IRS tax penalty.

“Don't you see that there is a conflict of interest in what you are doing here as acting attorney general of the United States?”

Blanche said the deal did not give Trump “blanket protection” and rejected DeLauro's criticism.

“What's the argument?” Blanche answered. “The story that I had a job and I have a current job?”

House Republicans at the hearing did not criticize the fund.

Peter Ticktin, a lawyer representing more than 400 defendants Jan. 6, said that he and his clients are not shocked by this announcement.

“They're still waiting to be paid,” said Ticktin, who filed a lawsuit against 10 defendants asking for up to $3 million. “They trust Donald Trump.”