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The Trump administration announced Monday that it is establishing a $1.776 billion compensation fund for people who claim they were targeted by the Biden administration’s Justice Department, a move critics immediately condemned as a taxpayer-funded political slush fund designed to benefit Trump allies and supporters.
The announcement came shortly after President Donald Trump withdrew his $10 billion lawsuit against the Internal Revenue Service, a legal maneuver that effectively sidestepped judicial scrutiny as the administration moved ahead with the unprecedented compensation program.
According to a Justice Department statement, the fund is intended “to provide a systematic process to hear and redress claims of others who suffered weaponization and lawfare.”
Acting Attorney General Todd Blanche defended the initiative, saying the federal government “should never be weaponized against any American.”
“As part of this settlement, we are setting up a lawful process for victims of lawfare and weaponization to be heard and seek redress,” Blanche said.
The symbolic value of the fund — $1.776 billion — appears to reference the year 1776.
The announcement marks another extraordinary escalation in Trump’s efforts to seek financial damages from agencies within the federal government he now oversees as president.
By voluntarily dismissing the IRS lawsuit before a settlement could formally proceed through court, Trump’s legal team effectively removed U.S. District Judge Kathleen Williams from overseeing or approving any agreement tied to the case.
Judge Williams had already raised concerns about whether the lawsuit represented a legitimate legal dispute, given that Trump controls both the executive branch agencies named in the suit and the Justice Department attorneys responsible for defending them.
Last month, Williams ordered Trump’s attorneys and the Justice Department to explain whether the two sides were truly adversarial or effectively cooperating toward a mutually agreed outcome.
But in Monday’s filing, Trump’s legal team argued that because the lawsuit had been dismissed entirely, “no judicial analysis is appropriate.”
The original lawsuit centered on the 2019 leak of Trump’s tax returns to The New York Times and ProPublica by a former IRS contractor. Trump, his sons and the Trump Organization alleged the IRS failed to adequately protect confidential tax records.
Legal experts had questioned the strength of the lawsuit, noting that the Justice Department historically defended the government in similar tax disclosure cases involving private citizens.
The dismissal immediately triggered backlash from congressional Democrats.
Just minutes after Trump’s attorneys filed the withdrawal, 93 Democratic lawmakers submitted court papers accusing the administration of “colluding” to engineer a settlement outside traditional judicial oversight.
“Never in the history of the United States has a sitting president sought a monetary settlement from the government he leads — let alone sought many billions of dollars in taxpayer funds,” attorneys representing the lawmakers wrote.
The lawmakers argued Trump’s abrupt dismissal prevented meaningful court review and undercut efforts to challenge the arrangement before a judge could intervene.
The administration has framed the fund as a broader effort to compensate individuals who claim they were unfairly targeted during the Biden administration, including alleged victims of political prosecutions, investigations or other forms of government “weaponization.”
Critics, however, warn the structure of the compensation process could allow Trump allies — including Jan. 6 defendants and organizations connected to the president — to receive taxpayer-funded payouts with limited public oversight.
The Justice Department has not yet released detailed criteria for determining eligibility or distributing the funds.
The controversy also comes as the Trump administration continues operating its “Weaponization Working Group,” an initiative launched earlier this year to investigate alleged anti-conservative bias and misconduct by federal agencies during the Biden presidency.
