Trump Defends $1.8 Billion ‘Anti-Weaponization’ Fund as He Faces GOP Revolt

Trump touted the economy at an event in Suffern, New York. (Reuters)
By Yuval Rosenberg and Michael Rainey

Happy Friday! Tulsi Gabbard resigned today as President Trump's director of national intelligence, effective June 30. She said her husband has recently been diagnosed with a rare form of bone cancer. In a social media post, Trump said Gabbard had done "an incredible job" and that her deputy, Aaron Lukas, will oversee the nation's 18 spy agencies as acting director. Gabbard becomes the fourth Cabinet official to depart during Trump's current term.

We'll be back in your inbox after Memorial Day. Until then, here's what's happening.

Facing GOP Revolt, Trump Defends $1.8 Billion 'Anti-Weaponization' Fund

President Trump on Friday tried to defend his administration's creation of a $1.776 billion "anti-weaponization" fund expected to benefit his allies, including those who attacked the Capitol on January 6, 2021.

Critics call the Justice Department plan a Trump-directed slush fund using taxpayer money and say it is a blatant case of self-dealing.

The settlement calls for Trump and two of his sons to receive an apology from the government but no monetary payments - but it also bars the Internal Revenue Service from pursuing audits of Trump and his business. Those probes, which the president has criticized as politically motivated, reportedly could have resulted in a $100 million penalty if the IRS found wrongdoing.

Trump on Friday insisted that he was being charitable in accepting the settlement and dropping a $10 billion lawsuit against the IRS over the leak of his tax returns and other claims against the government.

"I gave up a lot of money in allowing the just announced Anti-Weaponization Fund to go forward," the president wrote on his social media site. "I could have settled my case, including the illegal release of my Tax Returns and the equally illegal BREAK IN of Mar-a-Lago, for an absolute fortune. Instead, I am helping others, who were so badly abused by an evil, corrupt, and weaponized Biden Administration, receive, at long last, JUSTICE!"

Earlier this week, Trump had claimed that he was not involved in the settlement. "I know very little about it. I wasn't involved in the whole creation of it and the negotiation," he said Monday.

His claim that he stood to reap a fortune from the IRS doesn't line up with reports that the lawsuit may have been on the verge of being thrown out by the judge overseeing the case. The Justice Department's settlement also came despite IRS officials' reported assessment that the government should move to dismiss the suit and had a good chance of winning it.

Trump's defense isn't likely to carry much weight on Capitol Hill, where the "anti-weaponization fund" has been met with staunch resistance, even among some Republicans, who are pushing back on presidential priorities they fear could cost them with voters.

"The more Trump bullies and badgers the Congress, the more they are left questioning what they have to gain, or lose, from trying to appease him, especially for those already heading for the exits," write Lisa Mascaro and Joey Cappelletti of the Associated Press.

Wild June awaits: Congressional lawmakers left the Capitol on Thursday for their Memorial Day recess after punting on some tough votes, including one in the Senate on a Republican plan to fund immigration enforcement and another on a House resolution curbing President Trump's ability to continue the war against Iran. That means June is now shaping up to be a wild and busy month for Congress ­­- and it could be a risky one for Republicans as they are forced to grapple with a number of Trump's politically treacherous priorities.

As we told you yesterday, Senate Republican leaders were forced to put off a planned vote on a $70-plus billion immigration-enforcement funding package amid intraparty opposition to the "anti-weaponization" fund.

Some Republicans had already pushed back on a plan to provide $1 billion for the Secret Service, including $220 million for President Trump's new ballroom project, as part of their immigration funding bill. And GOP senators were also perturbed by Trump's political payback against two of their own: Sen. Bill Cassidy of Louisiana, who was defeated in a primary contest last week, and Sen. John Cornyn, who Trump snubbed by endorsing a Republican challenger, Ken Paxton. Those move and others in which Trump sought to flex his control over the GOP and exact revenge against those lawmakers who he deemed insufficiently loyal led many analysts to suggest that the president was undermining Republican chances in November.

With their frustration building, GOP senators reportedly grilled acting Attorney General Todd Blanche about the $1.8 billion compensation fund during a lengthy meeting on Thursday. Several made their opposition to the idea very public. "So the nation's top law enforcement official is asking for a slush fund to pay people who assault cops?" Sen. Mitch McConnell said in a statement, referring to the rioters who attacked the Capitol in 2021. "Utterly stupid, morally wrong ­­­- Take your pick."

On the House side, Republican leaders faced the prospect yesterday that a vote on a war powers resolution would result in a defeat for the president. So they postponed the vote until after the holiday break, when Speaker Mike Johnson can better ensure that Trump won't face an embarrassing rebuke.

"Let's be clear: Republicans pulled this vote because they knew they were going to lose it," said Rep. Gregory Meeks, the top Democrat on the House Foreign Affairs Committee. "They know that as Americans head into Memorial Day weekend paying over $4.50 a gallon at the pump, they cannot go home and explain they voted to keep this war going. So instead of casting that vote, they ran from it."

Quote of the Day: An Independent Fed Chair?

"I want Kevin to be totally independent and just do a great job."

  • President Trump, at the swearing-in ceremony Friday for new Federal Reserve Chair Kevin Warsh. Trump's comment was perhaps belied by the somewhat unusual setting for the event, the White House's East Room, and by the fact that the president spoke for more than 20 minutes before inviting Supreme Court Justice Clarence Thomas to swear in Warsh, who then delivered a much shorter speech.

"I intend to fill the role of chairman with energy and purpose," Warsh said. He promised to "lead a reform-oriented Federal Reserve" and said he would strive to serve the national interest.

Prior to today, the last Fed chair to be sworn in at the White House was Alan Greenspan in 1987. More recent Fed chairs have been sworn in by fellow central bank board members at Fed headquarters.

Trump has pressed the Fed to lower interest rates, but Warsh takes the helm at a time when resurgent inflationary pressures are raising the possibility of rate hikes rather than cuts.

"I can no longer rule out rate hikes further down the road if inflation does not abate soon, and that is especially true if measures of inflation expectations, some of which have risen lately, show signs of becoming unanchored," Fed Governor Christopher Waller said in a speech Friday. "With regard to future rate cuts, I am going to need to see improvement on inflation or a significant deterioration in the labor market before I would consider reducing the policy rate. So, on net, my current policy position is to hold rates steady for the near term."

Consumer Sentiment Crashes to Record Low

It turns out Americans really don't like soaring prices for gasoline and other essential goods.

A popular measure of consumer sentiment fell to a record low of 44.8 in May, according to data released by the University of Michigan on Friday. By comparison, the average reading for consumer sentiment over the last 20 years is 78.

"Consumer sentiment fell for the third straight month as supply disruptions in the Strait of Hormuz continue to boost gasoline prices," Joanne Hsu, chief economist at the Surveys of Consumer Sentiment, said in a statement. "Sentiment is now just below the previous historical trough seen in June 2022. Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run."

Survey respondents expect inflation to rise to 4.8% over the next year, a huge jump from the 3.4% inflation rate predicted in February, before the start of the war with Iran. Over the long run, consumers now expect inflation to rise to 3.9%, up from the 3.5% long-run reading in February.

Changing sentiments among Republicans and independents played a major role in the deteriorating outlook. Although the outlook for Democrats held relatively steady, the other groups registered more negative views, particularly on inflation. Hsu said that for Republicans and independents, "long-run inflation expectations are currently more than double their February 2025 reading on a monthly basis."

Conflicting signs: The remarkably dour outlook comes at a time when stocks are sitting at all-time highs, and the labor market continues to hold up despite rising prices.

Christopher Rupkey, chief economist at FwdBonds, noted that inflation is more important day-to-day than the stock market for most Americans. "The American consumer is treading water here, and the income tax refunds must be gone already or the money spent on the higher prices seen everywhere in the economy," he wrote in a note Friday, per CNN. "The stock market record highs are having no effect whatsoever on cheering consumers up which means most Americans have the money locked up in 401K retirement accounts that cannot be drawn on to make life easier now."

Setting a record: The chart below from market strategist Charlie Bilello highlights the events that helped drive consumer sentiment to previous lows. Consumer outlook is now worse than it was during the brutal recessions of the early 1980s, the Great Recession of 2008-2009 and the pandemic-related inflation spike of 2022.

The chart below from market strategist Charlie Bilello highlights the events that helped drive consumer sentiment to previous lows.

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