President Trump is backing off his plan to establish a $1.8 billion fund to compensate individuals claiming victimization by unfair government prosecution, caving to bipartisan criticism that it was a scheme to reward political allies with taxpayer money. Two sources familiar with the matter said Trump had been leaning toward scrapping the fund amid mounting pressure from Capitol Hill.

The Justice Department signaled retreat on Monday, agreeing to a federal judge's temporary order halting fund activation until a June 12 hearing. Judge Kathleen M. Williams reopened Trump's underlying $10 billion lawsuit against the I.R.S., citing 'grievous allegations' that the settlement was 'premised on deception.' The fund emerged from Trump's lawsuit blaming the IRS for leaking his tax returns during his first term.

Republican senators expressed serious doubts about Trump's commitment to killing the fund entirely, with Senator John Thune acknowledging concerns about potential veto threats. The retreat came after rare intraparty pushback, as GOP lawmakers abandoned filibuster-proof funding bills rather than support Trump's personal agenda.

Senate Democrats, led by Chuck Schumer, launched coordinated efforts to 'kill the slush fund' through amendments and floor votes. Even if abandoned, allies could pursue individual lawsuits for restitution. The episode reveals growing friction between Trump and congressional Republicans over his interventionist legal strategies.