McCarthy demands full resignation of Minnesota's Democrat administration over fraud scandal

WASHINGTON — Former House Speaker Kevin McCarthy predicted Monday that Minnesota's entire Democratic administration would be forced to resign amid an ongoing fraud scandal, calling Gov. Tim Walz's decision not to seek re-election just the beginning.

"This is not the end of this story," McCarthy said on a morning news program. "I think the entire Democrat administration is going to have to resign, because this will not be the end."

McCarthy credited independent journalist Nick Shirley for sparking scrutiny with a viral video questioning daycare centers that appeared non-operational yet received public funds. He speculated that the daycares could represent the "next shoe to drop" in the investigation and alleged that Democrats were using the money to fund political campaigns.

"Republicans have to be smart," McCarthy added, urging the party to field a strong candidate in the state and referencing Rep. Tom Emmer, R-Minn., as a voice to heed. He described the situation as "another prime example of mismanaged states by Democrat liberal policies."

Walz, a Democrat who previously served as vice president under Kamala Harris, announced his decision not to run for a third term earlier Monday via a post on X, formerly Twitter.

"Minnesota has to come first – always," Walz wrote. "Today, I’m proud of the work we’ve done to make Minnesota the best place to live and raise kids. I’ve decided to step out of the race and let others worry about the election while I focus on the work."

In a separate statement, Walz accused President Donald Trump and his allies of exploiting the crisis to make the state a "colder, meaner place" by attacking residents and withholding federal funds intended for child care.

"For the last several years, an organized group of criminals have sought to take advantage of our state's generosity," the statement read. "And even as we make progress in the fight against fraudsters, we now see an organized group of political actors seeking to take advantage of the crisis."

Walz defended his administration's response, noting systemic changes including legislative tools to combat fraud, firings, prosecutions, funding cuts to suspect programs in partnership with federal authorities, enhanced program safeguards and the hiring of a new head of program integrity.

The scandal has drawn federal attention, with the FBI surging resources to Minnesota and Trump vowing to "get to the bottom of it." Investigations focus on alleged fraud in child care and nutrition programs, with some cases tied to a broader $250 million scheme described by officials as the "tip of the iceberg."

Walz's announcement comes as the state faces a funding deadline, with the Trump administration freezing certain child care payments. Political analysts suggest the move could reshape Minnesota's gubernatorial race, potentially boosting Republican challengers in a state that has leaned Democratic in recent cycles.

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