Gov. Tim Walz takes a selfie with Lt. Gov. Peggy Flanagan after giving his final State of the State address Tuesday, April 28, 2026 in the Minnesota House chambers in Saint Paul. (Photo by Nicole Neri/Minnesota Reformer)
ST. PAUL, Minn. (Minnesota Reformer) — Republicans have a one-word message for voters in 2026: fraud.
The fraud crisis in Minnesota’s social service programs is feeding Republican dreams of ending their 20-year losing streak in statewide races despite midterm headwinds for the party in the White House.
The attacks on Lt. Gov. Peggy Flanagan in her campaign for U.S. Senate are particularly sharp given her proximity to the slow-rolling wreck that upended the state’s Department of Human Services and was weaponized by the Trump administration to halt critical Medicaid payments and target the state with an unprecedented immigration crackdown.
Despite being far outspent, Flanagan is running a toss-up race against a moderate primary opponent, U.S. Rep. Angie Craig, by energizing the party’s base with a vision of socialized health insurance and higher taxes on the wealthy and corporations. That platform makes her a fitting successor to progressive giants like Sens. Tina Smith, Al Franken and Paul Wellstone, who have held the seat.
“Big change doesn’t happen because powerful people suddenly decide that they care. It happens because ordinary people organize, fight like hell, and refuse to give up,” Flanagan said at a recent campaign rally headlined by Sen. Bernie Sanders.
Craig argues that a Flanagan primary win gambles with Democrats’ narrow path to retaking the Senate and putting a check on President Donald Trump. Flanagan must sell her vision to general election voters and reassure the 81% of likely voters who say they’re concerned about fraud in state government, according to a recent poll by the Star Tribune/KARE 11/Hubbard School of Journalism and Mass Communication.
Flanagan has repeated the same response virtually verbatim when asked about her failure to intervene earlier in the fraud crisis that has unfolded over her second term as lieutenant governor.
“The governor has said that the buck stops with him and he took the lead here,” Flanagan said in an interview with the Reformer.
The answer reveals a fact that’s not particularly flattering: The lieutenant governor wasn’t responsible for much of anything for the past eight years beyond being available for public appearances and taking the helm during the governor’s colonoscopy.
Walz, who ended his reelection campaign after a wave of attacks and scrutiny over fraud, has notably not endorsed Flanagan’s Senate bid, while first lady Gwen Walz endorsed Craig this week.
Craig’s campaign seeks to define Flanagan as too inexperienced and too closely tied to the fraud scandal to defeat a Republican in November, especially one like Michele Tafoya, who has proven to be a formidable fundraiser and enjoys strong name recognition from her career as an NFL sideline reporter.
“(Fraud) is the No. 1 issue in Minnesota for general election voters,” Craig said in an interview. “Republicans want to run against the lieutenant governor. They would prefer to run against her over me.”
A powerful messenger
Flanagan’s wide smile and stylish wardrobe, often showcasing Native American designers, exude a warm charisma that makes her easily likeable. At 46 years old, she would also still count as a young voice in the Senate, where the median age is 64, and could be a zealous advocate for progressive policies for decades to come.
She is an engaging orator, a talent she’s been able to hone over the years crisscrossing the state championing the administration’s successes: free school meals, paid family leave, an expanded child tax credit.
Lt. Gov. Peggy Flanagan is congratulated by her aunt, Mary Hartmann, after winning the endorsement for a U.S. Senate seat at the 2026 DFL State Convention Saturday, May 30, 2026 in Rochester, Minnesota. (Photo by Nicole Neri/Minnesota Reformer)
A citizen of the White Earth Nation, Flanagan would be the first Native American woman elected to the Senate. Her name in Ojibwe, as she always introduces herself, is Gizhiiwewidamikwe — “speaks in a loud and clear voice woman.”
Her biography allows her to speak personally and knowledgeably about the causes she has championed her entire career. She was raised mostly by a single mother and benefited from the stability of Section 8 housing and food stamps.
After college she worked on Wellstone’s campaign — de rigueur for any Democrat alive in Minnesota in the 1990s and early 2000s — and then worked for Wellstone Action, the nonprofit dedicated to carrying on his legacy by training organizers and candidates, Walz among them. She served on the Minneapolis School Board and led the Children’s Defense Fund-Minnesota before winning election to the state House and being tapped as Walz’s running mate.
For Walz, then seen as a moderate Democrat from a swing congressional district in southern Minnesota, she helped drum up enthusiasm from the urban progressive wing. For her, it offered a chance to ascend to statewide office after just two terms in the state Legislature and made her the highest-ranking Native American woman elected in executive office in the country.
While publicly the administration conveyed a close governing partnership — “Lt. Gov. Peggy Flanagan” featured prominently on every news release — behind the scenes Flanagan was largely iced out from the work of governing as the administration responded to crisis after crisis: COVID-19, the murder of George Floyd, the progressive backlash to the Line 3 replacement pipeline and, then, fraud.
She did help the Walz administration maintain important relationships with tribal leaders and influential progressive organizations, but she was not in tough budget negotiations with the Legislature or managing a portfolio, as her predecessor, Tina Smith, was known to do. Flanagan didn’t have any “real work,” according to a source in the Walz administration who was granted anonymity because they were not authorized to speak about the Senate race.
Given Democratic voters’ anger over the second Trump administration and the often feckless response from Washington Democrats, however, the details of her work responsibilities may be of little concern compared to what she stands for.
She’s for Medicare for all, universal childcare, national paid family leave and raising the federal minimum wage from $7.25 to $20 an hour.
On a few divisive issues, she is still careful to hedge her positions with the shrewdness of someone who’s run a statewide campaign.
Abolish ICE? She supports “ripping ICE apart” while maintaining strong borders.
Ban mining near the Boundary Waters Canoe Area Wilderness? She says the Boundary Waters is a sacred place but doesn’t commit to a permanent ban.
“We’ve not seen a real world example of of this type of mining being done in a way that would not impact the Boundary Waters, and that really concerns me. But on an issue like this, it’s not helpful long-term to just shut down the conversation forever.”
Sen. Tina Smith, Rep. Ilhan Omar and Attorney General Keith Ellison joined Lt. Gov. Peggy Flanagan on stage at First Avenue in Minneapolis at a rally for Flanagan’s Senate race headlined by Sen. Bernie Sanders on July 20, 2026. (Photo by Glen Stubbe/Minnesota Reformer)
Despite the campaign’s bitterness, Craig and Flanagan agree on most things — if not always on the finer details: banning corporate money in elections, expanding the Supreme Court, allowing Medicare to negotiate drug prices, making it easier for workers to unionize, providing undocumented immigrants a path to legal status, eliminating taxes on Social Security.
Her campaign has drawn the enthusiastic support of Smith, who initially said she would stay neutral in the race to replace her.
“I would move hell or high water to make sure that Peggy Flanagan is the next senator from Minnesota,” Smith said at the Sanders rally for Flanagan.
“I’ve seen senators that go along to get along, that hoard their power, that protect themselves, and pacify big money. And then I’ve seen senators who are fighters, people who are determined, who have the strength and the conviction, people who are not afraid to challenge the powers that be, people who want to get big things done … that is our lieutenant governor,” Smith said.
Flanagan is relying on these progressive endorsements and grassroots energy to overcome her relatively meager fundraising — which she has marketed as an advantage à la the “many over the money.”
The primary could be the most expensive in state history. Craig has raised $12 million for her campaign compared to Flanagan’s $6 million. The main super PAC backing Craig, North Star Dawn, has spent more than $18 million in support of her campaign, with spending by other groups likely to bring the total over $20 million. The main PAC backing Flanagan, the Democratic Lieutenant Governors Association, has spent about $2 million to support Flanagan with ads attacking Craig.
The stubborn stain of fraud
Flanagan has taken credit for some of the most popular achievements of the Walz administration — paid family leave and initiatives on homelessness, for instance.
She chairs the Minnesota Interagency Council on Homelessness, which “leads the state’s efforts to move toward housing, health, and racial justice for people experiencing homelessness.”
Lt. Gov. Peggy Flanagan talks to demonstrators as hundreds of people protest the immigration policies of the Trump administration during and after a press conference with United States Secretary of Homeland Security Kristi Noem at the The Bishop Henry Whipple Federal Building Friday, Oct. 24, 2025. (Photo by Nicole Neri/Minnesota Reformer)
But even that anodyne responsibility has become vulnerable to a line of attack on fraud, illustrating the crisis’s far-reaching tentacles. Walz was forced to shut down one of the state’s major programs aimed at helping homeless people find and maintain housing, called Housing Stabilization Services, because it was suspected of being virtually all fraud.
Spending on Housing Stabilization Services jumped over 30-fold — from $3.3 million when it started in 2020 to $108.8 million in 2024. The program was so easy to scam, according to former Assistant U.S. Attorney Joseph Thompson, that it led to “fraud tourism.”
Minnesota’s spending across that program and 13 other Medicaid programs more than doubled in the five years before the Walz administration deemed them “high risk” for fraud, waste and abuse — and began taking drastic measures to rein in spending.
Federal prosecutors have charged some 30 people in schemes totaling $125 million targeting these programs serving the most vulnerable — disabled people, children with autism and homeless individuals. Another 68 have been convicted in the Feeding Our Future fraud scheme that siphoned at least $250 million from a pandemic program funding meals for kids.
Flanagan said she is upset by the fraud but encouraged by the steps Walz and the Legislature have taken to root it out, including a bipartisan bill to create an Office of Inspector General. She said she supports the anti-fraud policy package proposed by Sen. Amy Klobuchar in her bid for governor.
Despite being in Washington, Craig would also face attacks on the fraud issue. Republicans will bring it up in every race, no matter the Democrat.
“The DFL could run Bugs Bunny and the message would be about fraud. From top to bottom, the Democrats funded and enabled Minnesotans being robbed,” said John Rouleau, a Republican political advisor.
Craig says she knows those attacks are coming but says they just won’t stick to her.
“I absolutely am confident that I’ll be able to take that bat and swing at any attack on fraud they have,” Craig said. “(Flanagan) has a unique liability.”
Flanagan accuses Republicans and Craig of using the issue for “political theater” while accusing them of a different kind of fraud. Craig for taking millions from corporations and special interest groups while supporting the cryptocurrency industry and weapons sales to Israel; Trump for enriching himself and his family through the White House.
“They’re trying to distract from the massive corruption that’s happening in Washington,” Flanagan said.
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