Walz-era fraud scandal takes center stage as Klobuchar, GOP rival clash in debate: 'Why didn't you do more?'

Democratic Sen. Amy Klobuchar and Republican state House Speaker Lisa Demuth traded fire over Minnesota's massive fraud scandal as they faced off for the first time on the debate stage in the race to replace embattled Gov. Tim Walz.

The race is unfolding against the backdrop of the state's welfare assistance fraud scandal, which has attracted national attention for nearly a year and prompted Walz, a two-term Democrat, to abandon his 2026 re-election bid. The fraud schemes, involving pandemic-era social services, siphoned hundreds of millions, and potentially billions, of taxpayer dollars from federal and state programs in Minnesota.

Demuth is aiming to become the first Republican in twenty years to win a gubernatorial election in the blue-leaning Midwestern state. Polls indicate Klobuchar holding an upper single digit lead over Demuth, and the Fox News Power Rankings rate the race Likely Democrat.

Demuth, during the first half of the debate, repeatedly steered the conversation to the fraud scandal.

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"We have allowed a culture of waste and fraud to go on far too long and we can’t keep going this way," she said, as she worked to link Klobuchar to Walz, who has taken full responsibility for the scandal.

"Klobuchar, referring to Walz, said, "I have been very clear. I would have caught that fraud. I would have done something about it. We have very different backgrounds."

Demuth asked her rival, "You could have reached out to the governor and said I think we have a problem in Minnesota... Why didn't you do more."

And Demuth asked, "Why weren’t you at the hearings about fraud in your own Senate Judicial Committee hearing when we had Minnesotans who were concerned about fraud."

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Klobuchar, pushing back, highlighted that "the minute that the fraud went public, I did something that was real….. I called the justice department and asked for more resources. The senator said her actions led to more federal prosecutors assigned to investigate the fraud scandal. "That’s doing the real work," she emphasized.

Responding to Demuth's claims of missing hearings, which Fox News Digital reported on earlier this year, Klobuchar said, "I’ve been at a dozen hearings where I’ve raised or asked questions about fraud. The particular hearing that was raised here was a subcommittee that I was not even on."

Demuth also pledged to fire "all of the commissioners in the state of Minnesota" in order to start "fresh" after the fraud scandal.

The two candidates also sparred over healthcare, with Demuth pointing to Klobuchar's support of ObamaCare as being tied to the rising healthcare costs in the state.

"We must recognize that our healthcare costs have exploded across the country and in Minnesota because of the Affordable Care Act," Demuth said. "The senator said that it would bring the cost of our healthcare down, we could access whatever we needed and it would be more affordable. That is absolutely untrue where we find ourselves today."

The two candidates, in what was billed as a business forum hosted by the Minnesota Chamber of Commerce, also took aim at each other over high gas prices, healthcare, paid family and medical leave, and efforts to cap insulin costs.

On state taxes, both seemed in agreement.

"Tax hikes are absolutely off the table for me," Demuth emphasized.

Klobuchar said, "I’ve made clear I’m not going to increase taxes." And she touted, "I’ve been willing to take on my own party on taxes in the past."

Klobuchar launched her gubernatorial campaign in January, three weeks after Walz, who served as the Democrats' 2024 vice presidential nominee, dropped his re-election bid.

Klobuchar, who was first elected to the Senate in 2006, won all four of her Senate elections by healthy margins, including a nearly 16-point re-election in 2024. Before serving in the Senate, Klobuchar was elected twice as county attorney in Hennepin County, Minnesota's most populous. She also ran unsuccessfully for the 2020 Democratic presidential nomination.

She captured nearly 90% of the vote in the August Democratic primary against a large field of longshot rivals.

Demuth, who was first elected to the Minnesota House in 2018, has served as GOP leader in the chamber since the start of 2023 and as speaker for the past year and a half,

In the GOP gubernatorial primary, Demuth topped a crowded field, defeated by 11-points second place finisher Mike Lindell, the My Pillow founder and former CEO who is a close ally of President Donald Trump and who joined the president in denying former President Joe Biden's victory in the 2020 White House race. Trump endorsed Lindell a month before the August 11 primary.