The crime against everybody

Democratic systems are terribly vulnerable to fraud. Interest groups can seek concentrated benefits from the political class while the broader public is rationally uninterested. They are uninterested because any particular payoff to a group amounts to little when spread across the entire body of citizens. As a result, there is a constant cycle of advantage-taking pushed by various groups, encouraged by political leaders who benefit from being the object of lobbying and favor currying, and largely ignored by a public who obviously cannot monitor all the activity carried out by self-interested benefit seekers.

Typically, when we think about this kind of activity we are focused on professional, industrial, or labor groups developing “iron triangles” of influence that tie together interest groups, legislative committees, and members of the bureaucracy. In Minnesota something new has come to our attention with the revelation that perhaps billions of dollars or more have been scammed from taxpayers primarily by Somali-immigrant organizations claiming to provide social services that are non-existent. Christopher Rufo exposed the scandal. The New York Times reported on it. Minnesota’s governor (and former Kamala Harris running mate) Tim Walz had to withdraw from his quest for a third term and is now fighting for his political life as the executive who allowed the theft of taxpayer money to explode under his watch. A YouTube reporter (essentially a man with a camera) re-ignited the outrage when he demonstrated that some of the grant claimants appeared to be running Potemkin villages of storefronts without actual service recipients. The video has generated over 3 million views on YouTube and is one of the most viral clips of all time on X.

The scandal has brought together a potent mix of American political pathologies that includes a major immigrant group highly concentrated in one state (Somalis in Minnesota), lopsided political support from that group for one political party (the Democrats), the abuse of taxpayer funds, the exploitation of compassion, and the use of claims of racism as a shield from criticism. In this case, the abuse has been so outrageous as to weaken the defense that might normally be raised. Now, the director of the FBI, Kash Patel, has announced he is pushing resources into the state to investigate the misuse of federal funds.

I mentioned at the beginning of this piece that this kind of misuse of taxpayer money can occur because the public is unable to monitor the actual use of budget dollars. We depend on the government to police expenditures. To say as much is to be descriptive about the situation. But what about the prescriptive? In other words, we can talk about what is, but we urgently need to talk about what should be. It is likely that this case will generate a typical American pop-up of intense concern that will have some short-term impact and then wash away in the ever-moving tide of public events. But if we let that happen, then we will have resolved to be permanent, passive victims of fraud. We will have privileged those who will abuse the public trust at the expense of those who are working honestly to support themselves, their families, and their communities.

All of this is to say that we need to stop being like dogs distracted by squirrels and think with sustained attention about the nature of government and how it must work. We do not live in a world in which taxes are collected for armies, police, and courts alone. Instead, we live in one in which a tremendous volume of dollars is extracted from citizens and is then redistributed into a vast variety of activities throughout the nation and its communities. To take a tax dollar is to claim it can be better spent by the government than by the citizen. If that is what we are going to do, then we must validate the use of those tax dollars and not allow them to line the pockets of fraudsters while simultaneously creating more public debt.

There is an opening for American politicians (especially with midterms looming) to run on a demand for integrity in public spending. A fraud on taxpayers is essentially a crime against everybody that government officials can regularly monitor, punish, and rectify. The COVID crisis led us to prioritize spending during a crisis. Now, it is time to reform a system that has all too clearly generated a perfect storm of moral hazard and abuse of the public trust. Lawmakers in power didn’t care because the support they received was worth more to them than dollars wasted. Americans need to recalibrate for the long term so that our integrity is large enough to support our compassion. The fact that Minnesota Governor Tim Walz has ended his campaign for re-election is a promising sign, but a bigger reckoning must come.