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President Barack Obama is proposing that the government provide $1.25 billion to settle discrimination claims by black farmers against the Agriculture Department.

The White House said the money would be included in the president’s 2010 budget request to be unveiled Thursday.

Obama had taken criticism earlier this year from black farmers and lawmakers who said the federal government was neglecting the need for more money to fund claims under a decade-old class-action lawsuit against the government.

In a statement, Obama said the proposed settlement funds would “close this chapter” in the agency’s history and allow it to move on.

“My hope is that the farmers and their families who were denied access to USDA loans and programs will be made whole and will have the chance to rebuild their lives and their businesses,” he said.

John Boyd, who has spearheaded the litigation as head of the National Black Farmers Association and has been particularly critical of Obama recently, called the proposal a “step in the right direction.”

But he said more money would be needed.

“We think this is a good step in the negotiating process. We’re glad to know this issue is on the president’s radar screen and we commend him for taking this step,” he said. But “we need to make sure that none of the black farmers are left out.”

At issue is the class-action Pigford lawsuit, named after Timothy Pigford, a black farmer from North Carolina who was among the original plaintiffs. Thousands of farmers sued USDA claiming they had for years been denied government loans and other assistance that routinely went to whites. The government settled in 1999 and has paid out nearly $1 billion in damages on almost 16,000 claims.

Since then, other farmers have pushed to reopen the case because they missed deadlines for filing. Many said they didn’t know that damages were available.

Last year, Congress passed a proposal sponsored by then-Sen. Obama and others to give more farmers a chance at a settlement. But the measure included a budget of only $100 million — far short of what is likely needed. With an estimated 65,000 additional claims, some estimate the case could cost the government another $2 billion or $3 billion.

While Obama’s proposal represents a marked shift from the Bush administration, which had fought paying new claims, it was unclear how the plan might be received on Capitol Hill. Many lawmakers think the payments should not be capped and that the government should pay however much it costs to resolve successful claims.

Earlier this week, Sens. Charles Grassley, R-Iowa, and Kay Hagan, D-N.C., introduced legislation that would allow access to an unlimited judgment fund at the Department of Treasury to pay successful claims

“I don’t know other fields of litigation where there’s a limit on the payments,” Rep. G.K. Butterfield, D-N.C., said Wednesday, speaking before the White House announced the proposal.

Most claimants in the original case opted to seek expedited payments that required a relatively low burden of proof. The payments were $50,000 plus $12,500 in tax breaks.