Trump admin scraps $1.8 billion settlement fund after GOP revolt

Acting Attorney General Todd Blanche said Tuesday the Trump administration will scrap a nearly $1.8 billion settlement fund after Senate Republicans demanded its cancellation as a condition for advancing immigration enforcement legislation.

The fund — originating from a Trump lawsuit settlement over the leak of his tax returns — was introduced with no advance notice to Congress and quickly drew bipartisan alarm over fears it could compensate participants in the Jan. 6, 2021 Capitol attack. The decision removes a central obstacle to Republican immigration enforcement legislation that stalled when senators left Washington on May 21.

Blanche made the announcement during testimony before a House committee, according to ABC7 Los Angeles. "We are not moving forward with the fund, period," Blanche said.

Senate Majority Leader John Thune told reporters he had spoken with Blanche before the hearing and confirmed the fund's fate. "The conversation I had with him was very definitive," Thune said.

Republican senators had explicitly tied their votes on immigration enforcement funding to the fund's cancellation. Sen. John Kennedy of Louisiana captured the standoff before the announcement, telling reporters: "Right now, the reconciliation bill looks like a broken arm with the bones sticking out. It won't move this week, in my opinion, unless we have some resolution on the weaponization account."

Anger over the fund came to a head in a closed-door meeting between Republican senators and Blanche. Sen. Ted Cruz of Texas described it on his podcast as "one of the roughest meetings I've seen in my entire time in the Senate." Senators had left Washington on May 21 without passing the immigration legislation in a public display of the rift.

A federal legal challenge also complicated implementation. U.S. District Judge Leonie Brinkema issued a two-week temporary halt on the fund, with a hearing set for June 12 to determine whether the pause should be extended.

Senate Democratic Leader Chuck Schumer said Tuesday that canceling the fund by executive action was not enough. "The only way to ensure Trump's $2 billion, taxpayer-funded giveaway to Trump's MAGA allies never sees the light of day is to abolish it by law," Schumer said.

The fund's collapse removes a key sticking point that left Republican immigration enforcement legislation in limbo for nearly two weeks. Whether the Senate can now advance the broader reconciliation package remains an open question.