The Trump administration is pulling the plug on a nearly $1.8 billion fund that would have paid allies of President Donald Trump, Acting Attorney General Todd Blanche told lawmakers Tuesday. It's a rare retreat for a White House that doesn't usually back down, but the political firestorm over the fund was threatening to stall other parts of the agenda.

Blanche Says Fund Will Not Proceed

"We are not moving forward with the fund, period," Blanche said during a House hearing on the Justice Department budget, according to Reuters. Rep. Grace Meng (D-N.Y.) pressed him further, asking, "Not moving forward ever?" Blanche answered, "Correct."

The blunt declaration marked a rare Trump administration reversal in the face of mounting opposition. The fund was set up to compensate people who believed the criminal justice system had improperly targeted them. But since officials established it on May 18, a judge paused it, and both Democrats and Republicans criticized it. Lawmakers were troubled by limited oversight and the possibility that people involved in the Jan. 6, 2021, attack on the U.S. Capitol could get taxpayer-funded payouts.

Tax Settlement Provision Remains Intact

The fund grew out of a settlement between Trump and the Justice Department resolving his $10 billion lawsuit against the IRS over alleged mishandling of his tax records. As part of the same deal, the IRS agreed to drop any pending probes into whether Trump had paid his fair share of taxes.

Pressed on whether the administration would also abandon that part of the settlement, Blanche said "nothing has changed with that." He said the administration was only backing away from the $1.8 billion fund.

Signs of the retreat surfaced Monday, when a person familiar with the matter told The Associated Press that Trump was reconsidering the fund. The Justice Department separately said it would comply with a Virginia court order temporarily blocking the fund for at least several weeks.

Democrats Demand Written Guarantee

At Tuesday's hearing, Democratic lawmakers pressed Blanche to put the fund's cancellation in writing. Blanche refused. "Why do I need to put something in writing?" he said. "I'm not committing to doing anything in writing."

Rep. Rosa DeLauro (D-Conn.) said Blanche should not have signed off on the tax-audit provision because he formerly served as Trump's personal attorney. Blanche said the agreement did not give Trump "blanket immunity" and rejected her criticism.

A source close to Trump told Reuters on Monday that the president is "not thrilled," but accepts the pause as the only path forward "for now."