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US Agriculture Department Pays to Grow Soybeans in Foreign Nation


Tuesday July 29th, 2014   •   Posted by Craig Eyermann at 6:12am PDT   •  

soybeans Did you know that the U.S. Department of Agriculture has paid over $34 million to grow soybeans in Afghanistan since 2009? The Special Inspector General for Afghanistan Reconstruction (SIGAR) just delivered a report of their review of the program, finding evidence that the entire initiative is a multi-million dollar waste of time, money and resources.

First, some basic background about the history of this particular initiative, which had its origin in a July 2009 proposal from the American Soybean Association (ASA) lobbying group that requested funding under the federal government’s “Food for Progress” program, which is intended to help poor, developing nations build up their agricultural industry infrastructure:

In FY 2010, USDA signed a Food for Progress agreement with the American Soybean Association that would support the Soybeans in Agriculture Renewal of Afghanistan Initiative (SARAI). USDA modified the agreement in 2010 and twice in 2012 to approve adjustments in the commodity sales process, the donation of commodities, and activity descriptions and targets. USDA provided a total of $34.4 million of commodities, associated transportation, and administrative funds through this agreement.

Five years later, John F. Sopko, the Special Inspector General for Afghanistan Reconstruction, has found some problems with what the Department of Agriculture has been doing:

  • The USDA confirmed that soybean production in Afghanistan has not met expectations and that there are doubts concerning the long-term sustainability of a soybean processing factory built as part of the project.
  • The project’s implementer, the American Soybean Association, did not conduct feasibility or value-chain studies prior to initiation of the project in 2010.
  • Scientific research conducted for the UK Department for International Development between 2005 and 2008 concluded that soybeans were inappropriate for conditions and farming practices in northern Afghanistan, where the program was implemented.
  • Despite the lack of prior planning and analysis, and despite evidence that may have put the success of the program in doubt, USDA provided $34.4 million in commodities, transportation, and administrative funds to ASA for SARAI.

So, to recap, nobody in a position of responsibility with respect to this program at the U.S. Department of Agriculture ever bothered to do any kind of analysis or investigation to determine if the program could even be successful, because if they had, they would have learned that the whole effort would be a monumental waste of time because northern Afghanistan, where the crops would be attempted to be grown, is not fertile enough to grow soybeans and yield meaningful harvests using the farming methods used in that part of the world.

Put a little differently, because the U.S. federal government spends far more money than it has in revenues, it had to borrow money in order to be able to ship U.S. soybean seeds halfway across the world to be planted in fields where they would not yield significant crops to sustain the soybean processing facility that the ASA and USDA established in that country. The only way the U.S. Department of Agriculture could have wasted so much time, effort and money more efficiently would have been to cut out the ASA lobbying group from its role as middle man and primary beneficiary of the program and plant the equivalent number of dollar bills directly in the soil of northern Afghanistan.

Which, if you think about it, would have produced exactly the same benefit.

DEA Hemp Madness


Monday July 28th, 2014   •   Posted by K. Lloyd Billingsley at 7:02am PDT   •  

Hemp-rope_200Rep. Jared Polis recently went on record stating that DEA boss Michele Leonhard “is a terrible agency head.” The liberal Colorado Democrat has a strong case, but there’s more to it than that. Sen. Mitch McConnell, a conservative Kentucky Republican, blasted the DEA for wasting limited resources by impounding hemp seeds destined for research and industrial purposes. Hemp cannot make a person high, but as we noted last year, hemp can be used in snacks, clothing, body-care products, paper, and as a building composite for housing and even car parts. The United States is the world’s leading consumer of hemp products, but these come from outside the country, primarily Canada. Until recently, the United States was the only major industrialized country to ban the growing of hemp, which the DEA still targets. This hurts the American economy, particularly farmers.

In May the DEA seized 250 pounds of hemp seeds sent from Italy to the University of Kentucky. In June it seized 350 pounds of Canadian hemp seeds destined for a farm in Colorado, where hemp cultivation is legal under the latest farm bill, as it is in Kentucky. Rep. Thomas Massie wondered how American farmers were going to grow hemp without seeds. Kentucky agriculture commissioner James Comer charged that the DEA was violating federal law. “The DEA doesn’t determine the law, Congress determines the law,” Comer told reporters. “That’s a problem we’ve got in our country: These government agencies have taken on a life of their own ... and their number one priority, it seems, is self-preservation.”

The DEA campaign against legal hemp seeds suggests the commissioner has a strong case. With a budget approaching $3 billion, the DEA also continues to oppose the medical marijuana movement, which has advanced in 22 states. The DEA even maintains a museum in Arlington, Virginia. The displays include part of a California dispensary that federal agents shut down.

Who’s Lending the Most Money to the U.S. Government These Days?


Thursday July 24th, 2014   •   Posted by Craig Eyermann at 7:13am PDT   •  

14763947_S Earlier this week, we looked at who has accumulated the biggest piles of debt issued by the U.S. federal government. But which of these players do you suppose is loaning the U.S. government the most money today?

Political Calculations found some surprising results:

Even though the Federal Reserve has been reducing its purchases of U.S. government-issued debt securities since the beginning of 2014, as of 28 May 2014, it has boosted its net holdings of the federal government’s liabilities by $148.8 billion. Meanwhile, the U.S. federal government borrowed an additional $138.1 billion from 1 January 2014 through 28 May 2014.

Or rather, the Federal Reserve has acquired 107.7% of the net new debt that has been issued by the U.S. Treasury and other federal government agencies during the first five months of 2014.

That’s possible because of two factors. First, with the bills for U.S. federal income taxes coming due on 15 April 2014, the federal government experiences a surge of tax revenue during this part of the year, which can be enough to allow it to run a short-term surplus, reducing its need to borrow money during this period of time.

Second, the Federal Reserve is displacing other entities that lend money to the U.S. government, who are seeing their share of debt issued by the U.S. government fall as the debt they hold matures. That allows the U.S. Treasury to roll over a portion of the existing national debt and borrow more money, in this case, from the Fed, which doesn’t show up as a net increase in the overall size of the national debt.

And that is how the U.S. Federal Reserve can lend more money to the U.S. federal government than the U.S. government appears to have borrowed, even as the Fed is reducing the amount it lends to the government!

What do you say we rename the U.S. Federal Reserve to something more catchy like the “Iron Bank of Braavos“?

And when do you suppose that the Iron Bank will have its due?

Nanny State Surge


Wednesday July 23rd, 2014   •   Posted by K. Lloyd Billingsley at 7:20am PDT   •  

NannyState_200Every five years, the federal departments of Agriculture and Health and Human Services convene the Dietary Guidelines Advisory Committee. The DGAC mission is to make sound nutritional recommendations based on the best scientific research. Unfortunately as Independent Institute Research Fellow Ernest Pasour notes, in recent years, the DGAC has conscripted nutritional concerns in the cause of environmental zealotry. That mission creep has now been escalated with the selection of Angie Tagtow as executive director of the U.S. Department of Agriculture’s Center for Nutrition Policy and Promotion.

Americans would expect that someone in that position would have a PhD, but unlike her predecessors Angie Tagtow doesn’t. Her master’s degree from Iowa State is in “Family and Consumer Sciences Education.” She is hardly the best person for the job in terms of expertise, but she excels in activism. Tagtow is the founder of Environmental Nutrition Solutions, a consulting firm that promotes “sustainable, ecologically sound, socially acceptable” food systems.

As CNPP boss, Tagtow will oversee the 2015 DGAC and doubtless stuff it full of Nanny State provisions. She believes that “policy dictates everything” and has called for “food system reform” to accompany the Affordable Care Act, also known as Obamacare. Tagtow wants those in the Supplemental Nutritional Assistance Program (SNAP) to use their Electronic Benefit Transfer (EBT) card to buy vegetable seeds and purchase “seasonal produce.” So she will likely attempt to reconfigure welfare benefits in line with her agenda. Americans’ health takes a back seat to the health of the planet.

Should a bureaucratically bloated federal government be telling people what to eat? After all, sound nutritional information is available on every hand. Given that reality, it follows that the nation does not need the CNPP or the DGAC. As Ernest Pasour noted:

“Elimination of the committee is probably asking too much of an administration that adds new federal bureaus and entitlements, even in a recession. But a future administration might consider putting the committee on a starvation diet.”

Federal $25 Billion Drug Bust


Monday July 21st, 2014   •   Posted by K. Lloyd Billingsley at 7:07am PDT   •  

Drug-bust_200Michael Botticelli, the federal “drug czar” and adviser to Barack Obama, wants to spend $25 billion next year to fight drugs. A report to Congress from the drug czar’s office said, “we must seek to avoid oversimplified debates between the idea of a war on drugs and the notion of legalization as a panacea.” The proposal to spend $25 billion came a day after Washington state allowed the sale of marijuana in the style of Colorado. California voters authorized medical marijuana in 1996.

As for oversimplification, how about the idea that a “war on drugs” declared by Richard Nixon in 1971 can solve the problem by spending $1 trillion? “What do we have to show for it?” asked Richard Branson on CNN. “The U.S. has the largest prison population in the world, with about 2.3 million behind bars. More than half a million of those people are incarcerated for a drug law violation. What a waste of young lives.”

Likewise, Allison Schrager notes in the Huffington Post that the United States spends more than $40 billion each year on drug prohibition, and that is only the explicit cost. Implicit costs include “increased violence, otherwise productive citizens in prison, and perpetual poverty, both at home and, especially, abroad.”

The federal Drug Enforcement Administration, launched by Richard Nixon, started with a budget of $65 million in 1972. In 2014 the budget approaches $3 billion, and DEA bosses want to keep the money coming. In Washington more money is the answer to everything. That’s why the war on drugs continues, despite massive costs, casualties, and collateral damage.

Who Owns America’s Debt?


Monday July 21st, 2014   •   Posted by Craig Eyermann at 7:03am PDT   •  

Who are the major holders of debt issued by the U.S. federal government going into the summer of 2014?

The answers are revealed in the chart below!

summer-2014-who-owns-us-national-debt-2014-05-28-to-31

Political Calculations observes:

On the whole, there haven’t been many changes since our previous edition. We see that the debt reported to be held by Belgium is still considerably inflated over historic levels, as this nation’s banks would appear to have acted on behalf of Russian interests seeking to place their U.S. government-issued debt holdings in non-Russian financial institutions ahead of and in the months following Russia’s actions to seize control of Crimea from Ukraine.

The direct holdings of U.S. Treasuries by Russian and Russian-based interests peaked in October 2013 at $149.9 billion and began moving out of Russia in the following months, well ahead of when Russian actions in support of separatists in Crimea and the eastern regions of Ukraine became overt.

They fell to a level of $100.4 billion in March 2014, before rebounding to $116.4 billion in April 2014 as Russia appeared to back off its direct support of the ethnic-Russian separatists in Ukraine.

In May 2014, however, the direct holdings of U.S. government-issued debt by Russian-based interests began declining again, to $111.4 billion, suggesting the anticipation of actions that would expand the conflict.

With that being the case, in addition to seeing to whom the U.S. government is beholden in sustaining its desired level of spending, monitoring the transfers of these holdings among international institutions may provide an early warning of impending overt actions by foreign interests intent on pursuing policies of aggression on the world stage.

Long-Term Budget Outlook Deteriorates


Thursday July 17th, 2014   •   Posted by Craig Eyermann at 6:37am PDT   •  

The Congressional Budget Office (CBO) has issued its Long-Term Budget Outlook for 2014. Compared to previous reports, it projects a slightly worse outlook for the nation’s fiscal situation, which results from the CBO’s new assessment that the U.S. economy’s potential for stronger economic growth in the future is lacking.

The Washington Examiner‘s Joseph Lawler explains:

The CBO, Congress’ nonpartisan budget scorekeeper, estimated that the budget outlook has deteriorated slightly since its 2013 projections: The federal debt is now projected to be 106 percent of the country’s economic output in 2039, up from 102 percent previously, if current law is maintained. In a more realistic scenario, allowing for likely fixes to the budget, that total will be 180 percent. Both scenarios involve the nation’s obligations on an “upward path relative to the size of the economy, a trend that could not be sustained indefinitely.”

Lawler hones in on the cause of the deterioration in the CBO’s long-term projections:

... the worsening debt-to-GDP ratio is not due to greater debt accumulation, according to the CBO. Instead, it’s a function of slower anticipated economic growth. The CBO had previously downgraded its estimates of economic growth to reflect the economy’s weak performance in recent years and its projections for slower labor force and productivity growth.

The chart below shows how the national debt held by the public, which does not include the debt held by government entities (such as Social Security’s trust fund), is expected to change as part of the CBO’s alternative fiscal scenario.

cbo-alt-fisc-outlook-2014-debt-held-by-public-projection-2014-2050

The CBO projects this value only up through 2050, because after that point, the portion of the U.S. national debt held by the public will exceed 250% of GDP and the CBO is not confident of its ability to forecast GDP in that kind of economic environment. The CBO lacks confidence in its ability to anticipate how much productive economic activity would be “crowded out” by the kind of chronic budget deficits that the U.S. federal government would be running at that point. Although they expect that the growth rate of GDP would be progressively forced lower over time as a result, they do not know by how much.

References:

Congressional Budget Office. The 2014 Long-Term Budget Outlook. [PDF Document]. Data and Technical Information [Excel Spreadsheet]. 15 July 2014.

Coastal Commission Carries On Fine Tradition of Bad Government


Wednesday July 16th, 2014   •   Posted by K. Lloyd Billingsley at 7:01am PDT   •  

CCC_200The California Coastal Commission (CCC) is an unelected body that overrides the elected governments of coastal counties and cities on land use and property rights issues. The Commission wields enormous clout, but for more than 30 years it has lobbied for the power to levy fines directly, instead of going through the courts. As Josh Richman noted in the San Jose Mercury News, the state has now given the Commission this power.

Thanks to a budget trailer bill by Assembly Speaker Toni Atkins, San Diego Democrat, the CCC can now avoid the courts and fine property owners they believe are illegally blocking public access to beaches. But, “the commission’s new power could affect landowners all up and down the coast.”

Atkins’s bill was not the subject of debate or hearings, but she told reporters, “I feel pretty comfortable that I haven’t gone out on a limb.” Property rights advocates didn’t see it that way. Damien Schiff of the Pacific Legal Foundation called it a “game changer” that would force property owners into costly litigation if they believe a fine is improper. Schiff expects the Commission to ask for an expansion of its new power. Atkins said that was unfounded and unreasonable and that the Commission would not “overreach.”

It certainly has in the past, violating property rights, quashing development, evicting families, and making the coast an enclave for the wealthy.

Bruce Johnson, founding research director of the Independent Institute, was one of the original appointees to the California Coastal Commission in 1973. He resigned after six months as he witnessed the rampant corruption, ignorance, and injustice underlying the Commission’s operations. In the 1990s, Commissioner Mark Nathanson served prison time for shaking down celebrities. The new power to levy fines will make that kind of corruption much more likely. And even more power is surely on the way.

Speaker Atkins claimed that the power to levy fines “is a small piece of what they should be allowed to do in order to protect the coast.” So the expansion of Commission power is indeed on Atkins’s agenda, and to get more power the Commissioners never need to face the voters. In California, regulatory zealots are number one. Taxpayers aren’t even number two.

Overclassified Waste


Tuesday July 15th, 2014   •   Posted by Craig Eyermann at 6:41am PDT   •  

20935045_S The problems plaguing the Department of Veterans Affairs are deep and systemic. New evidence has come to light indicating that the cancer of corruption and incompetence permeating the VA is even deeper than we knew. The Huffington Post reports:

The scandal-plagued Department of Veterans Affairs is systematically overpaying clerks, administrators and other support staff, according to internal audits, draining tens of millions of dollars that could be used instead to ease the VA’s acute shortage of doctors and nurses.

The jobs of some 13,000 VA support staff have been flagged by auditors as potentially misclassified, in many cases resulting in inflated salaries that have gone uncorrected for as long as 14 years.

And because the bonuses earned by the VA’s “overclassified” employees are often set as a percentage of their base annual salary as per their union contracts, these thousands of excessively paid VA employees doubly benefit from their administrators’ and managers’ deliberate failure to correct these errors. They triply benefit when you realize that their excessive wages and salaries also inflate their already overly generous pension benefits.

We say “deliberate failure” because the Department of Veterans Affairs managers and senior leadership acted to derail and obstruct the efforts to impose fiscal discipline upon them:

Rather than moving quickly to correct these costly errors, VA officials two years ago halted a broad internal review mandated by federal law. As a result, the overpayments continue.

Moreover, in the two years since thousands of misclassified jobs were identified, hundreds of additional positions have been filled at improperly high salaries. Internal VA documents obtained by The Huffington Post show that between September 2013 and May 2014, for instance, overpayments in annual salaries for the latter jobs alone came to $24.4 million, not counting benefits.

The federal government’s contracts with the American Federation of Government Employees (AFGE) prevents the pay of these employees who have been misclassified into higher pay brackets from having their salaries reduced to the levels that would apply if they were correctly classified.

We should note that placing employees into higher paying classifications than their actual skills and experience warrant is one way in which the government department’s administrators could get around the pay freeze that was passed into law in 2010. While pay raises for federal government workers were restricted, placing employees into open positions with higher paying job classifications was not. This “pay grade creep” became the bureaucrats’ preferred method to get around the pay freeze.

As for what might explain why the VA’s senior leadership would terminate efforts to bring fiscal discipline to the VA’s employment practices, we should note that in 2008, 96% of the AFGE’s political donations in that election year, totaling hundreds of thousands of dollars, went to Democratic Party candidates, including Barack Obama, who was elected president. In 2011, the AFGE cranked up its donations to “vulnerable” members of President Obama’s political party in the U.S. Congress, which coincides with when the VA’s senior administrators terminated the effort to correct the problem.

Looking the other way where the interests of the very deep-pocketed AFGE then would be an easy way that the political appointees running the VA could return the union’s ongoing political favors.

There is an obvious solution for this situation. Given what we’re still learning about the scandal, we’re afraid that it will not be achievable while the current management remains in place.

Until they’re replaced, we can expect that the waste will both continue and grow.

The $3.7 Billion Child Trafficking Tab


Monday July 14th, 2014   •   Posted by K. Lloyd Billingsley at 7:05am PDT   •  

border_200Already at stratospheric levels, your federal government costs have gone up $3.7 billion, the amount U.S. President Barack Obama wants to address the massive influx of more than 50,000 unaccompanied minors. This new imposition on embattled American taxpayers flows from the ruling-class notion that the United States must be wet-nurse to the world.

If anybody in Honduras, Guatemala, and El Salvador happens to be poor and living in fear of crime, that is unfortunate. It does not follow, however, that those persons should leave their native countries and come to the United States. Better choices include the Central American nations of Costa Rica, and Panama, and South American nations such as Venezuela, Ecuador, and Bolivia. Or consider Cuba, which in 2011 Newsweek proclaimed as one of the best countries in the world to live. In similar style, CNN has hailed Cuban health care as a model for the United States, so the kids would get better care. There would be no language barrier in any of those countries or in Mexico, but Mexico simply abets the trafficking of minors to the United States. The USA remains the default destination because of the welfare state and the prospect of jobs.

Hondurans, Guatemalans, and Salvadorans could have more jobs at home if their own countries would strengthen property rights and adopt free-market reforms. Those nations have no incentive to reform as long as they can ship their troubles to the United States, the welfare wet-nurse to the world. But will the $3.7 billion really help the kids?

As Steven Dennis notes in Roll Call, about half the money goes toward “beefed-up enforcement and court proceedings aimed at accelerating the deportations of the children and adults.” A full $1.8 billion goes to “the Department of Health and Human Services to pay for the care of children and families while they await proceedings.” The State Department gets $300 million “used in part to advertise in Central American countries to tell parents not to send the children to the United States and that they will not be allowed to stay if they arrive.” That should do the trick, all right.

So listen up, you 50,000 unaccompanied minors, here’s the way it works in the USA: Despite the humanitarian rhetoric, bureaucrats get first dibs on the dough. They are number one, and like American taxpayers, you ain’t even number two.

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