Pigford: A Tragedy and a Non-Troversy

[UPDATED]

Conor Friedersdorf points to a pay-wall blocked piece by Daniel Foster in National Review on the recently-passed “Pigford II” legislation.  This story, of course, is largely being driven by Andrew Breitbart’s reporting, which alleges that Pigford claims are rife with fraud and are not properly investigated; as a result, the story goes, the taxpayers are being bilked out of billions.

More on the undisputed facts of Pigford in a moment, but for now, I’ll very briefly summarize the nature of the dispute:

• In 1999, a federal judge approved a settlement in a class action lawsuit brought by a number of black farmers against the US Department of Agriculture alleging discriminatory practices in lending between 1983 and 1997.
• Approximately 20,000 applications under the settlement were submitted prior to the deadline in 2000, but an additional 74,000 applications were filed after the deadline, and only 2000 of these were permitted to proceed.
• In 2008, Congress permitted these late-filed applicants to institute separate proceedings, but set aside only $100 million to settle these actions.
• 11 suits were then filed on behalf 0f 25,000 late applicants, and the government eventually settled these suits for $1.25 billion (collectively called “Pigford II.”).
• Two “tracks” exist for payment of claims under both Pigford I and Pigford II. The first track provides for a flat-fee payment of $50,000 as long as there exists “substantial evidence” of four facts suggesting discrimination; the second track permits much higher awards under a tougher “preponderance of the evidence standard” that also requires the applicant to demonstrate actual damages in excess of $50,000.  About 99% of applicants have chosen the first track.
• At issue is whether Congress should have recently approved the additional $1.15 billion in funds to settle Pigford II (due to a quirk in the law, settlements cannot be paid out of the government’s general judgment funds).

Conor claims Foster’s piece is worthy of discussion in a way that Breitbart’s reporting is not, but as summarized by Conor, Foster’s points are identical to Breitbart’s (whose original report is fairly restrained by Breitbart’s standards), to wit:

– Everyone agrees that between 1983 and 1997, the USDA discriminated against black farmers.

– The class action lawsuit made eligible for compensation farmers or aspiring farmers whose interests were harmed due to USDA discrimination. (There were other requirements too, but forget that for a moment.)

– According to Foster’s piece, a 1997 census study found a total of 18,500 black farmers nationwide.

– Yet there are nearly 100,000 claimants in the Pigford case.

There’s a lot more to Foster’s story, and this matter generally. But that gap between the number of claiments and the total number of black farmers in America is what struck me. If accurate it suggests widespread fraud.

These concerns are poppycock – it is simply not the case that the discrepancy between the number of claimants and the number of black farmers in 1997 “suggests widespread fraud.”  As mistermix correctly points out, some very rudimentary fact-checking provides the answers to a lot of these concerns.*

For starters, this reporting elides the extreme severity of discrimination against black farmer, especially as perpetrated by the USDA: the average market value of a farm operated by a black farmer is only about 20% of the market value of an average farm operated by a white farmer, and even in 2007 black farmers applying for federal loans were able to receive loans of only about 1/3 of the amount of the average federal loan provided to white farmers.  Notably, in its settlement agreement in Pigford I, the USDA expressly refused to agree that it would cease discrimination against black farmers in its loan programs.

Second, using the number of black-owned farms extant in 1997 as the sole baseline for comparison is absurd on its face, particularly in light of the fact that the number of black-owned farms declined by almost 50% between 1983 and 1997, and in light of the fact that the settlements cover discrimination over a 15 year period.  At the very least, then, the far more appropriate benchmark would need to be 33,250, the number of black-owned farms existing in 1983.

Third, the settlement quite appropriately covers not only actual farmers but also people who sought to acquire or start a farm and applied for a loan from the USDA.  These persons would never appear in statistics of “black farmers” since, by definition, they needed the loans to become farmers.

Fourth, until 2002, no statistical distinction was made between “black farmers” and “black-owned farms,” which is important in light of the fact that any farmer would have been eligible to apply for one of these loans.  We do know that when this distinction started to be made, in 2002, there were at least 50% more “black farmers” than “black-0wned farms.”  Assuming these statistics would have been similar in 1982, then the number of “black farmers” in 1983 would have been at least 50,000.

Fifth, these claims ignore the possibility of farms changing ownership during that 15 year period, thus creating multiple possible claimants.

Sixth, nowhere in Conor’s post or Breitbart’s original reporting is there a mention of the fact that just because a claim is made does not mean it will be granted; instead, both seem to believe that claims will be rubber stamped once made.  But to the contrary, 30% of claims that were made under Pigford I were ultimately denied, and there’s no reason to believe that the rate will be any lower under Pigford II; this is an abnormally high rate of denial for a class action settlement, suggesting that the USDA is in fact reviewing claims quite carefully.

Lastly, there are certainly going to be other legitimate claimants who would not fall into the categories outlined above.  But even if there are not, a quick look at the numbers I’ve put together here quickly reveals that we are well within the realm of reasonableness: if the remaining claims are all approved at the same rate as the Pigford I claims, there will be a total of between 60,000 and 65,000 approved claims.  We know that, at a minimum, there were 50,000 black farmers in 1983 who were eligible to apply for these loans.  Given that, is it conceivable that there were at least an additional 10-15,000 people who attempted to become farmers but were denied the needed loans from the USDA or who simply obtained their farms (whether through inheritance or otherwise) subsequent to 1983?  I think the answer to that is “absolutely.”

None of this is to say that there hasn’t been and will not be successful fraudulent abuse of these settlements.  Where such fraud is discovered, clearly it should be prosecuted.  And no doubt, given the stakes involved, it should not be a surprise if these settlements turn out to be more prone to fraud than most – we are talking about large sums of money readily available with a relatively low burden of proof.  Unfortunately, such a low burden of proof is probably necessary here – unless the overwhelming majority of claims are in fact fraudulent, it’s safe to assume that forcing them to be tried under a higher standard of proof would impose far more costs than they would save.

What is appalling here is the ease with which the information I’ve noted above is readily available, and the utter failure of both Breitbart and Conor (and, I assume, Foster) to cite any of it.  Increasingly, it seems that the role of more high-brow political journalism is simply to, consciously or not, provide intellectual cover for the base’s ill-supported memes rather than seeking truth or attempting to challenge the base.  Instead of talking to the base, they merely parrot it.**

[UPDATE: 1.  In the comments below, Conor acknowledges his error, for which he certainly deserves credit, and which is something that is certainly all-too-rare in the blogosphere.

2.  Re-reading the original Breitbart piece, there is something that is uniquely conspicuous by its absence: the utter lack of any reference to a FOIA request to review Pigford applications, and especially to review Pigford applications that were approved.  Maybe I’m wrong, but these documents should fall squarely within the type of information required to be disclosed under FOIA, and would provide ample opportunity for analysis that would readily either confirm or disprove Breitbart’s central allegations.  This absence is particularly conspicuous given that Breitbart seems to have been working on the story for quite some time.  Yet I’ve not seen a single “expose” of the alleged scheme in these cases, including Breitbart’s, that does much more than quote anecdotes and largely unsupported insinuations, primarily from anonymous officials, many of whom clearly have every reason in the world to underestimate the amount of discrimination involved.  Some claiming to be a journalist like Breitbart should know just how readily a FOIA request would be able to prove or disprove the claims at issue, yet FOIA is conspicuous here only by its absence.]

*Unfortunately, mistermix stops his fact-checking at the point where the linked-to report discusses payouts under Pigford I, rather than the potential payouts under Pigford II, which are the real issue here; then again, Conor’s post does not do anything to distinguish between the two cases either.

**I’m aware that this is basically Conor’s beef about movement publications as well, but that does not make him immune from this trap – it need not be a conscious decision.