Preference or Prejudice?

Below is my column in The Hill on the recent decision of a federal judge that the Biden Administration was engaged in racial and gender discrimination in the administration of the pandemic relief under the American Rescue Plan Act. It is a question that is now being raised in a variety of federal programs under the Biden Administration.

President Biden has spoken out often, eloquently and passionately against the “ugly poison” of discrimination and racism in our government. So a ruling by a federal district court in Texas this week was particularly jarring: Judge Reed O’Connor found that the Biden administration engaged in systemic gender and race discrimination to implement COVID-19 relief for American restaurants. Café owner Philip Greer had claimed in a lawsuit against the Small Business Administration (SBA) that, while white, he needs the same rescue as minority restaurateurs under the newly enacted American Rescue Plan Act.

Greer’s Ranch Café reportedly lost over $100,000 during the pandemic. Like many restaurateurs, Greer was delighted to hear about the Restaurant Restoration Fund approved by Congress. However, he soon learned that, due to his race, he could not be considered until other applicants were allowed to seek funds. The White House and the Democratic-controlled Congress insisted that various groups should be first in line, including women, minorities and “socially and economically disadvantaged” people.

The government confirmed that $2.7 billion already has been distributed through the fund and that there are almost 150,000 pending applications from owners with preferential treatment. As a result, owners like Greer fear not just delayed payments but the exhaustion of the $28.6 billion allocated under the program. The SBA confirms it already has requests for $65 billion in payments under the fund.

The Biden administration agreed that such classifications, particularly based on race, must satisfy the highest constitutional burden of “strict scrutiny.” That means such classifications are unconstitutional unless they are “narrowly tailored” to serve a “compelling governmental interest.” However, the Justice Department cited studies that women and minorities historically have fewer lender resources and, before the pandemic, often were less likely to receive credit. There is ample support for that claim. The legal question is whether historical disparities are enough to justify a system of race and gender preferences when all restaurants were impacted by the pandemic.

In 1989, the Supreme Court ruled that a minority set-aside program in Virginia was unconstitutional under the Equal Protection Clause. The government cited historical barriers for minority enterprises, but the court balked. It noted that “identified discrimination” in the past “would give … government license to create a patchwork of racial preferences based on statistical generalizations about any field of endeavor.” When using racial classifications, the divided court stressed that “simply legislative assurances of good intention cannot suffice.”

Judge O’Connor relied on such precedent to declare the enforcement of the criteria for COVID-19 relief to be raw racial and gender discrimination. His ruling can be appealed, but it highlights a concern over a variety of state and federal COVID-19 programs enforcing racial and gender criteria. In Oregon, a state COVID-19 program for black businesses, called the Oregon Cares Fund, was challenged by a Mexican-American café owner and others under the Equal Protection Clause. While legislative counsel and some legal experts raised concerns over the constitutionality of the law, a trial court rejected the challenge. Other such cases are continuing.

Courts have allowed minority set-asides to remedy past inequities. Such programs often are created solely for that purpose and, thus, are treated as a remedial benefit for a targeted group, as opposed to an exclusionary denial for other groups. These cases can present difficult questions of what is needed to enforce a racially discriminatory policy and when a legislative remedial measure becomes either a form of reparation or discrimination.

The question is, when should preference be given over a common resource desperately needed by everyone?

For example, the Biden administration and many states gave preferential treatment to minority communities in the allocation of early vaccines; states like Montana and Vermont gave people of color priority in receiving shots. That meant many other citizens had to wait, due to their race, for a vaccine in the middle of a lethal pandemic. Yet, advocates cited greater vaccine “hesitancy” in minority areas and other historic barriers to medicine as justification.

The court’s concern in the Greer case is that the Biden administration’s rationale would allow the use of racially discriminatory policies throughout the government. This is a far more nuanced constitutional issue than past challenges. Rather than impose a quota system or a direct exclusionary policy, Greer and others complain that the government can achieve the same result by prioritizing certain groups in the receipt of benefits.

The alternative is to maintain a bright line against the use of racial criteria in government programs. In a 2007 case, Chief Justice John Roberts stated that position most succinctly by declaring that the “way to stop discriminating on the basis of race is to stop discriminating on the basis of race.”

Even if such categories pass constitutional muster, there is the question of selecting groups for favored treatment. In the case of Oregon’s fund, Latino owners were excluded. Under the American Rescue Plan, anyone can qualify for preferential treatment if they claim to be part of a group that has “been subjected to racial or ethnic prejudice or cultural bias within American society.” It is the legislative version of the special graduation held at the University of Portland for “QTBIPOC (LGBTQIA and/or BIPOC).” Once the inclusions were defined, the only major exclusion was straight white males.

The question is whether an American Rescue Plan can tell white owners to wait for a rescue that might not come. Of course, as with vaccine priority programs, the preference given minorities was designed to be short-lived and, as a result, difficult to challenge. However, the underlying issue likely will remain as the Biden administration uses racial and gender criteria in a variety of government programs and resources. Indeed, the same logic was used in other programs like the special COVID-19 relief funds for black farmers.

The courts must resolve where to draw this line when limited funds can result in the reduction or denial of government aid based solely on skin color or gender. That fear of a zero-sum game for public aid will deepen our divisions and undermine the worthy unifying theme struck by President Biden in his campaign. Racial discrimination is indeed a “poison” in our body politic even when done for the best of motivations. The question is, how much can the body politic tolerate?