B (3:19)

Jonathan, so you've been our guy covering the fraud scandal. Like talk about it from that perspective. What's going on there?

D (3:27)

Yeah, so it's actually this is like a pattern of fraud. There's a 10 year story here. It goes back to 2015 where sort of the first incidents where they discovered there were some providers of like, you know, subsidized daycare that were over billing the state for the services they were providing. And you know, that kind of thing happens all the time. But it was on a very large scale and there were investigations of it and there were some prosecutions. And this pattern started to develop where there were lots of social service providers popping up in Minnesota billing the state for services. And you know, it was childcare, autism, support services, food banks, that sort of thing and taking money. And then they'd investigate and find out, well, they didn't really provide the services or they, you know, charged too much. Now that kind of thing happens all the time all across America. I mean it's part of, you know, the world. We have corruption and programs. You try to catch it. What, what made this different was the fact that the scale and particularly during COVID when the pandemic, as part of pandemic relief, all this money was made available, much of it from the federal government. Federal government would give money to the states. The states would then give it to these agencies. We're trying to feed people, take care of people don't have their jobs. And a lot of the controls were loosened. Well afterwards they went back and they discovered one charity in particular, charity that was supposed to be providing food assistance. 150 to $100 million of fraud, which is a lot of money even in this world. There have been prosecutions over that. However, it appears that even after that prosecution, more of this fraud was taking place. And that's kind of where we got to the story kind of kicking up in the last few weeks because the federal prosecutor, actually the same one who had found that food charity scam, announced that they were finding evidence of much more widespread fraud, that possibly even the amount of dollars involved could reach into the billions, which on a state level, even over time. That's a lot of money. It had become a political fight and a lot of scrutiny on the Waltz administration. Like, hey, are you guys asleep at the switch? What's going on? There were suggestions that maybe it was not just that they were asleep with the switch, but was there some kind of political favoritism involved here? And of course, a key element of this was most of the charities involved were tied to the Somali community of Minnesota in terms of who they served and also who ran them. And this sort of, it was almost like a perfect storm. And it was like giving, you know, jet fuel to the right wing machine because it allowed them to sort of pull together all of their arguments to say, you know, in fact, what's going on in Minnesota is you have the Somali community soaking up welfare dollars and then greasing the skids somehow of the political machine to get them to look the other way. And you had now, you know, in the last couple weeks over the holidays being this, you had citizen journalists running around up to daycares, like, is there a real daycare here? This Somali daycare looks like a fake. And it just blew up and became this giant controversy. And that's where we are.

B (6:35)

Lauren, just a quick question on this and Jonathan, if you know the answer I take you to, which is, is Tim Walls culpable? Like, do we, do we think part of the reason he's resigning is that there's things that are going to come out in these investigations where he wasn't doing adequate fraud prevention, where he was out of. I think this is, this is sort of what's being lobbed at them is that because this is just to take Jonathan Cohen's point about it, pulling together a bunch of streams, it's sort of like DEI Woke meets, immigration meets Ilhan Omar meets all of the things that really like tickle the pleasure centers of online. Right? But I think for him to Resign. To me, it was sort of like, oh, wait, is there, is there, there, there over this? Lauren, what do you know?

C (7:23)

I don't, I don't know if there's going to be like, some smoking gun there. And maybe Jonathan knows more, but I think he certainly felt like, look, I'm, I'm the governor at a certain point, like, you do take some responsibility or the person that's in charge here, you can't really come out of this sort of completely clean. And voters, understandably, are going to look to him for, for. And obviously it's like, mostly Republicans in the state that were kind of starting to come after him for this. But even with some Democrats in the state and some, like, opinion writers that are really, really influential in the state, had kind of started to say recently, in the past few days, like, look, we like him, but this wasn't okay. We did not handle this correctly. So I am curious, like, in the next few days, as we start to get more reporting about how this decision came about, I wouldn't be surprised if there was some conversation within the party about, like, this just can't, can't continue.

B (8:19)

John, do you know?

D (8:21)

So I'll say I don't know, because nobody knows. Well, I guess somebody knows. But I mean, this is a very Mercury situation, both in the sense that we are getting new information, there are investigations that are ongoing, and we're all trying to sort out what's real and what's not. When you have actual, you know, you have what you hear from federal prosecutors, you have what's reported by real journalists who, you know, check their facts, and then you have all kinds of hysterical stuff being put out on social media, on Twitter, and then being amplified by everyone from Trump to Elon Musk? And it's quite hard to know what's going on. So I would say, at the very least, I think that we can say for sure that there was a lot of fraud in Minnesota on a very large scale. And when you're the governor of a state and that's happened on your watch, you are in some way culpable in the sense that you didn't stop it. That's your job, right? I mean, good government means managing these programs. Now, to what extent, you know, was this a function of why was there a failure? You know, was this, was this because the states, you know, didn't have enough resources to watch fraud, which may have had nothing to do with Waltz? It may have had something, you know, was it the fact that, you know, there were, there were people in the legislature fighting him, you can imagine a spectrum of possibilities on one end where Waltz actually was doing the best he could with the resources he had. And actually by stepping down now, he's doing really an honorable thing to kind of walk out of the way and say, look, we need to investigate this. My election becomes a distraction. In fact, there was a column from an influential political reporter columnist in Minneapolis who quoted a former Republican governor who basically advised this, that Walsh should not run for reelection. Should. Let's get some kind of blue ribbon commission here and figure out what went wrong here. So you can imagine that end of the spectrum. There is another.

B (10:07)

Oh, did we lose Cone?

C (10:08)

I think he just froze. Yeah.

B (10:10)

Okay. All right, well, while he's frozen, he's probably gonna, like, pop back up and he's gonna be mid sentence. But while he's got. While he's working that out, I. I got political questions for you.

C (10:17)

Yeah, let's.

B (10:18)

So, because picking up on what he was saying, the idea that this might ultimately be a good thing, that's my first instinct. Right. Is to say, all right, so Klobuchar runs for governor. It. There's a couple of Senate seats open in a wave election year, or what is likely to be a wave election year for the Democrats. And so they have a chance for two fresh new senators, one of whom is Angie Craig, who I really like. The other ones, that more progressive lady who I don't like as much, but who is. Was running away with the primary. And so, like, just lay out the political landscape for Minnesota now in terms of Walt's getting out of the way.

C (10:58)

Yeah. I mean, Angie Craig is in that primary with Peggy Flanagan, which is kind of interesting because she's also the lieutenant governor. So she's going to kind of have to deal with these same questions about this fraud scandal. But what I think is the Klobuchar part is really interesting. And I've just been, like, chatting with some people quickly this morning who are close to her that are emphasized that she has not made up her mind yet. But I still think it's fascinating that she would leave the Senate to go run for governor, which kind of does not speak well of, you know, how people are feeling about D.C. these days at all. And she was obviously a presidential candidate at one point. She was in the mix for potential 20, 28. So I'm curious how that sort of influences her decision on what she would do in a presidential primary. But I think the point that Jonathan was making before he froze, I think is really important. There's a lot of folks who I think feel like this does really speak well of Tim Walls. It's kind of like the almost, you know, the exact opposite sort of situation that we saw with Joe Biden. Like, he, he's saw the writing on the wall and, you know, he put the health of the party before his own personal ambitions. And I'm kind of curious and I don't know your thoughts on this, but, like, whether that starts to change in the Democratic psyche a bit like post Biden do leaders start to sort of just like, put the party's health before their own personal ambitions in a way that maybe wasn't the norm before? I don't know.

B (12:35)

I don't. I don't know about. For everybody. I do think that Tim Walls. Welcome back, John. I think that, like, here's. I'm gonna. I've been waiting for an opening to say a thing that I want to say. And, and it might be slightly uncharitable of me, but I was rip shit about them choosing Tim Walls as the vice presidential candidate. I thought that was a ridiculous choice. I. This, this gut, weird, like, quick gut level thing. Just because he was getting some traction by calling Republicans weird. He always struck me as a liberal's idea of what might make a crossover type person, picking someone from a solidly blue state when things were on a knife's edge. Like, I couldn't have less good feelings, not about Walls himself. Like, he was a good governor for his state, but, like, as a national figure. I. I always thought it was a. A mistake. And I was, I was really concerned about him being in the 2028 mix as president. I thought that was going to be a huge mistake. And then watching. So, like. But he has been through, even though it was like this very truncated version, he's been through the wringer of a presidential cycle and has seen. And in some ways that can make you say, oh, I can do this. Like, I. I can. I could do this if I had more time. I'd do better. But can also show you how quickly things can turn, how a scandal like this can dog you, how at the center of the political conversation right now, with immigration being the kind of issue, it is that right now feeds off of a narrative around. Not just like that. Like, even people who come here legally are sort of taking the resources of Americans. Like, that is the right's central point. That is America first, that is Stephen Miller. And like, he was going to end up right at the center of that. And you can't. There are ways you can be the big antagonist on that. You can fight back against that. You can't do it when you're sitting on top of a scandal this big. And so to answer your question, I do think that Tim Walls had a close enough seat to the Joe Biden thing and to see how all of this impacted it, that he was uniquely positioned to say, you know what, I got to get out of the way, that he would. Would be in a similar. He would be making a similar mistake if he were to try to fight through it. And so I sort of. I very much commend this decision, especially because there's so many people who are in a good position to take over. Like, if, you know, Klobuchar is going to come in and, like, for Klobuchar, she's not so old. Like, being the governor of Minnesota now, like, isn't a bad place to then, you know, look down the road for her political career. So I don't see it as an end to her political career. But anyway, I just. That Tim. Tim Walls. I don't know even, like, knowing that this was. Because this was in the papers, like, people did know about this. I'm actually surprised it didn't come up during the presidential election more. But this was always then sitting there as this massive vulnerability that you think wouldn't. The vetting process would have been kind of. It's like what happens when you have, like, no vetting process because you're moving so fast. Because, yeah, it would have come out in a normal political cycle.

C (15:51)

It's a good example of why more time, you know, might not actually have been the best thing for the Harris campaign, despite. Despite what her book might say.

B (16:00)

Yeah. So, Jonathan, where. Where's this whole. So. So we were talking about the political implications. I got it off my chest, my feelings about Tim Walls going back, because I got yelled at a lot. Everybody was mad at me. They were.

D (16:14)

I remember.

B (16:15)

I remember get on board with Walls. And I was like, this guy's not going to get it done. But. So we're talking about the political implications. I do think, though, now this is a. This is bigger than Minnesota. This is like this fraud case. And Jonathan, you're sitting there saying, like, oh, well, this happens everywhere. I don't think. I'm not sure that's a great talking point for Democrats for their programs.

D (16:38)

It's not. It's not. And. And it is bigger than Minnesota. And this is absolute poison politically. You know, I'm not even thinking so much. I mean, it could be poison for A candidate or in an election where I think about this is as poison for the ideas and what Democrats want to do. So much of the Democratic Party's project, Right. What do they stand for is sort of, you know, providing healthcare, providing, you know, standing up for these programs that help people. And it's a winning issue for them generally. But if there is a. If there is a chink in that arm or there's a place politically where it's always been vulnerable. And this, you know, goes back decades. Right. When people feel like their money is being wasted or stolen, they don't, you know, they get very upset, understandably. Right. People have a right to know that if my tax dollars are going to fund programs for people, that the money is going to get to people and not line the pockets of grifters. It is so important for Democrats and for people who support Democrats to be able to show these programs work. So when you have an example like this, where the money is going, you know, is being wasted, is being stolen. Right. And then you throw onto that that it's benefiting an immigrant community, which, as you said, it's like a perfect. You know, this touches all. All the notes that the Republicans want to use and people who oppose government want to use. That is a really dangerous thing. That's why. I mean, absolutely. I mean, you know, in some ways, I think Walt's doing this for this sort of, you know, you know, Walt stepping down is a kind of smart thing to do for. For the political. For the Democrats of Minnesota. You know, I think, you know, potentially getting on top of this or confronting this is also really important for the party as a whole nationally and its brand and its ideas and going forward. I mean, you know, it's hard to know how these things play politically, but certainly if I were a Democrat running for president in 2028, I might, you know, be thinking very hard. It may, you know, if I was a governor, that I could point to places where I got tough on corruption, where I showed that I care about this. Because, yes. Telling people that sometimes, you know, there's always going to be some waste. Not really a comforting point for a lot of people. They want to know that money is going to be spent well. And so that is the. That is, I think, the broader political danger here.

B (18:43)

Lauren, last. Last political thoughts from you.

C (18:46)

Yeah, I think just jumping off that we don't know the answer to this yet because obviously Klobuchar hasn't made up her mind. We got to see who. Who. How this kind of plays out for who runs. But it is going to be really interesting to see how they try and address what you just mentioned, Jonathan, in this governor's race, they're going to have to talk about it. And I think that will be like, a really sort of, like, ripe ground to try and work on some of that messaging. Obviously, it's a little uncomfortable because implicitly that means you've got to criticize walls in that campaign. So I think this, what was going to be, you know, somewhat uneventful Democratic candidate race is now going to be, I think, pretty interesting.

B (19:25)

Yeah. And, you know, one thing that happened over the break just on. On a political note is I got a text from Kamala Harris about the fact that she is. She is starting a pack and she's, you know, keeping her eye on things. And I was like, oh, oh, man. Doesn't this also reflect on her in terms of choosing, like, isn't. I don't know if it. Does it matter that she's pretty closely tied to Walls in terms of her thinking about her next steps?

C (19:52)

No, I don't think so. I mean, it was so short and it was so rushed. I have a hard time if voters have an issue with Harris. I think there's going to be, like, 10 other things before you get to walls is how I view it.

B (20:06)

What was your gut reaction when you got that text message to her? Yeah, didn't we all get it, Dude.

C (20:13)

I get so many attacks from Harris every day. Yeah. But in general, I would say I'm just kind of like, like, okay. I don't know. She's about to start this whole second half of her book tour all throughout the south, which feels like a very clear play for Super Tuesday type states. That's what she's spending the next two months doing. And I don't know, I'm just kind of like, okay, I don't think like an insider, I think an outsider is where things are headed for 2028. But we've got plenty of time to talk about that, Sarah.

B (20:43)

Oh, and we will. I will take every second of that time. All right. Lauren Egan, Jonathan Cohn, thanks for jumping on to break this down. It was pretty interesting. It was an interesting. I. I guess I could have maybe seen it coming, but I didn't really think. I think people are taken, caught off guard. Although when you think about it, for five seconds, makes sense. And as my last parting shot on Tim Walls, I will say I do think this is doing the right thing for the party. So good for you. And I think if you assume the body blows that this is going to come politically. Then you get double points for good. Good helping out of the party. Guys, go subscribe to the Bulwark feed. Join Bulwark plus, do all the things and we will see you next time. Bye.