Trump administration is scrapping $1.8B fund meant to compensate president's allies, Blanche says

"Not moving forward, ever?” asked Rep. Grace Meng, a New York Democrat.

“Correct,” Blanche answered.

The blunt declaration marked an extraordinary, and rare, turnabout in the face of mounting political opposition to a fund officials said was intended to compensate people who believe they have been improperly targeted by the criminal justice system. But since the fund’s creation two weeks ago, it’s been paused by a judge and lambasted by Democrats and Republicans alike who said they were troubled by a lack of oversight of the money disbursement and the potential for payouts to participants in the violent Jan. 6, 2021, riot at the U.S. Capitol.

The fund drew concerns even from Republicans

The furor especially complicated matters in the Senate, where Republicans defiantly left town nearly two weeks ago without passing legislation to fund President Donald Trump’s immigration enforcement agencies after Democrats said they would offer amendments to scrap or scale back the compensation fund. Furious, Senate Republicans jettisoned White House security money from the bill and made clear they would not pass the legislation at all unless the administration made major changes to the plan. They had sought reassurances from Blanche before moving forward.

The $1.776 billion “Anti-Weaponization Fund” was established to resolve Trump’s lawsuit against the Internal Revenue Service over the leak of his tax returns. The Justice Department had said it was an appropriate measure to correct what officials have insisted was the weaponization of federal law enforcement under the Biden administration, when Trump faced criminal charges and several of his allies were investigated and prosecuted.

The administration had said that anyone who felt unfairly persecuted could apply for compensation regardless of political affiliation, but Blanche's refusal to publicly foreclose the possibility that people convicted of crimes of violence in the Jan. 6 riot could get payouts alarmed lawmakers. A five-member commission was to have been responsible for deciding on the payouts.

Blanche made clear Tuesday that he stood behind the rationale for the fund even as he was abandoning its implementation, saying: “This Department of Justice was weaponized against many, many Americans. And we’re trying every day to to fix it. And we’ve made a lot of progress, but we have a lot more to do.”

Merrick Garland, the attorney general under President Joe Biden, has denied allegations of politicization and said his decisions followed the facts, the evidence and the law. The Justice Department under his leadership investigated prominent Democrats too, mostly notably by appointing a special counsel to investigate Biden's handling of classified information and another special counsel who brought tax and gun charges against Biden's son Hunter.

As part of the same deal to resolve the tax lawsuit, the IRS agreed to drop any pending probes of Trump over whether he’s paid his fair share of taxes. Pressed over whether it was also abandoning that part of the deal, Blanche said “nothing has changed with that,” and said the administration was only abandoning plans to create the $1.8 billion fund.

The administration had earlier hinted at a retreat

Signs of the retreat surfaced Monday when a person familiar with the matter said the Republican president was reconsidering whether to move forward with the fund, while the Justice Department said it would comply with a Virginia court temporarily blocking the fund effectively agreeing to pause the plan for at least two weeks.

Senate Majority Leader John Thune said Monday that he hoped the White House would move to drop the fund, telling reporters, “I do think the best way to handle it is if the administration decides to shut it down themselves."

The hearing Tuesday before a House Appropriations subcommittee was scheduled for discussion of the Justice Department's budget, but lawmakers quickly focused their questioning on the fund.

“This administration has engaged in what are perhaps the most brazen acts of flagrant corruption I’ve ever seen,” Rep. Rosa DeLauro, a Democrat from Connecticut, said before Blanche announced the abandonment of the fund. “And you are at the center of many of them, Mr. Blanche.”

She called it “a corrupt payout scheme for the president and his political allies. It is shameful.”

Courts reacted coolly to the fund

The Justice Department’s efforts to move forward with the fund were also facing headwinds in the courts after several lawsuits filed by Trump critics, including a fired Jan. 6 prosecutor and two police officers who helped defend the Capitol.

On Friday, a federal judge in Virginia halted the fund’s formation and any potential payouts for at least two weeks and scheduled a June 12 hearing for arguments on whether to extend her order. Separately, the judge in Florida overseeing Trump’s lawsuit against the IRS had ordered the president’s attorneys to respond to “grievous allegations” by settlement critics that Trump abandoned his claims to avoid the court’s scrutiny of an illegal deal.

Skye Perryman, president and CEO of Democracy Forward — which brought one of the lawsuits — said of Blanche’s comments Tuesday, “If you can say it on TV, you should say it in court.”

Associated Press writer Mary Clare Jalonick in Washington contributed to this report.