What Should the Government Do About Farmer Fraud?

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Photo: Marvin Joseph/The Washington Post

There's an interesting story in today's New York Times about the fallout from a 1999 settlement, often called the "Pigford case" after the class-action lawsuit that created it, in which the U.S. government agreed to make payments to African-American farmers to compensate them for racial discrimination in a federal farm loans program, but inadvertently set in motion a billion-dollar gravy train that has come under scrutiny for cases of obvious fraud and advantage-taking.

It's a long story, and I don't expect everyone to be as fascinated with agriculture policy as I am. But here's the bullet-point version:

  • For decades, African-American farmers were routinely discriminated against by federal loan officials when they went to borrow money to pay for their farming costs.
  • In 1999, the Clinton administration settled a class-action lawsuit brought by a group of black farmers and agreed to pay claimants $50,000 apiece if they could prove that they had experienced race-based discrimination in getting a farm loan.
  • But the Agriculture Department was bad at record-keeping, so it couldn't really prove that black farmers who said they'd been discriminated against really had been — or, for that matter, that they had ever applied for farm loans in the first place.
  • Once they learned that the government was just cutting checks to African-American farmers on the honor system, Hispanic, Native American, and female farmers wanted in, too. So, with the support of lobbyists and politicians, they got lumped into the settlement process.
  • Fraud, abuse, etc. Some minorities who aren't actually farmers have applied for and gotten $50,000 checks from the government, and the compensation program is a big mess that will cost a lot more taxpayer money than originally intended.

The Times story — which has sent the conservative blogosphere on a victory lap — reminds me a lot of the story "Planet Money" did on Social Security disability insurance a few weeks ago. Both stories enraged big-government skeptics because the authors found anecdotal examples of people willfully defrauding a government-run program. But both stories failed as substantive policy discussions because they allowed those individual cases of obvious fraud to overshadow the very real good that these programs do.

If you're a conservative who hates the idea of disability benefits for poor people or reparations for black farmers, of course, the evidence of a social program's usefulness doesn't much matter — the programs are ipso facto bad. But for liberals who generally support a strong safety net and public policy that actively tries to combat discrimination, the obvious question is this: Should we accept fraud in government-run programs we believe in?

We know that minority farmers have been discriminated against in a harmful and systematic way. "That's just a fact," one USDA official said back in 1999, when the original settlement was struck. One internal probe conducted by the USDA found that local loan officials in certain districts were consistently "rude and insensitive to black farmers," and that different methods were used to calculate black farmers' projected crop sizes than were used to calculate the crop sizes of white farmers, giving them less opportunity when it came to getting loans.

Moreover, we know that many of the claims being filed by farmers today are entirely legitimate. Tom Vilsack, the agriculture secretary, told the Times that 30 percent of claims under the USDA's settlement are rejected. That's not what you'd expect to find in a rubber-stamp program that is handing out money willy-nilly.

But because of the specific details of the Pigford case, and the fact that the USDA doesn't have many of the documents it would need to verify the authenticity of claims, the government has no real way to be more selective about how it compensates victims of discrimination without shutting off the spigot altogether. As Mother Jones' Kevin Drum says: "You can either set a high bar for evidence of discrimination, knowing that it will unfairly deny compensation to lots of people who were treated wrongly. Or you can set a low bar, knowing that this will unfairly give money to lots of people who don't deserve it."

There's no doubt that choosing the latter solution has resulted in some instances of fraud. The Times has sketchy-looking claim sheets running alongside its story, including some in which young children filed claims of long-ago racial discrimination that clearly never happened. The Times also found a fraudster in action: a black farm organizer named Thomas Burrell who goes to African-American churches and essentially urges people to lie to the government in order to get $50,000 apiece.

So here's the crucial question: If you believe that compensating minority farmers for racial discrimination in a federal loan process is a good idea, and if you also believe that the system set up to provide that compensation is inherently subject to some amount of fraud, what do you do? If we want the government to institute social programs that help the disadvantaged, do we have to get used to the idea that waste and abuse, in some form or another, will always exist?

This isn't a new question, but in the era of "smaller, smarter government," liberals have mostly avoided coming to grips with the fact that even a well-run social safety net will sometimes invite mischief. Any time you have a government-run program that hands out money or other non-monetary benefits, someone, somewhere will find a way to claim those benefits without deserving them.

That's not a reason to cut benefits entirely, of course. (Medicare fraud happens routinely, for example, but you don't hear many people suggesting ending the program altogether.) But often, conversations about whether a given government program is good or bad come down to loud, shouty debates about what tiny percentage of the time it can be gamed. President Obama's stimulus bill in 2009 had shockingly low levels of abuse; yet, if all you heard about were the instances of fraud, as many conservatives did, the whole thing seemed like an invitation to giant, Tammany Hall–style graft. The same thing happens to anti-discrimination policies like affirmative action, whose opponents delight in pointing out the tiny percentage of cases in which the system doesn't work as designed, obscuring the vast majority of cases in which it does. And it would be a shame if the Times' attention to the Pigford case ended up creating political pressure to end compensatory payments to all minority farmers, even the ones who legitimately deserve to get paid.

Racial discrimination is a uniquely terrible thing. Our government did it routinely, for a long time, in ways that have affected the status and hopes of generations of African-Americans, Native Americans, Hispanic people, and women. In most industries, we've decided as a nation to let bygones be bygones, and create forward-looking policy designed to level the playing field for future generations without redressing past wrongs. In farming, a court of law has decided that the discrimination was so financially harmful, and so recent, that reparations were in order.

And if, in the process of handing out that money, a few checks inevitably end up going to people who don't deserve them, is that the worst thing? Maybe we should be up front: A little waste might be part of the price we have to pay for equality.