Six years ago Congress imposed a mandate on how much ethanol and other biofuels must be mixed into gasoline. Now the Environmental Protection Agency (EPA) is proposing the first-ever cut in that amount. That has politicians perturbed, but for the wrong reasons.
The mandate was for 15 percent ethanol — standard stocks contain 10 percent or less — but consumers were rejecting that blend because of potential damage to their engines, on which they rely heavily. EPA officials and petroleum industry spokesmen acknowledged the dangers of the “blend wall” for consumers. For politicians the problem was something else.
Senator Charles Grassley of Iowa denounced “misguided” rules that would kill jobs, dirty the air and protect “the stranglehold Big Oil has on the country’s fuel supply.” He said this was a step back from “lessening our reliance on foreign sources of oil.” But with U.S. oil production booming, that dependence is largely a thing of the past. The United States is on track to become the world’s biggest oil producer by 2015. Shale production, fracking, and lower overall demand for fuel — abetted by electric cars and hybrids — have teamed to make ethanol less attractive to producers and consumers alike.
This is a classic example of federal policy failing to keep pace with reality and politicians defending it for political reasons. For the EPA to recognize that federal regulations can actually harm consumers represents something of a departure for the agency, which employs 17,000 and deploys a budget of $8 billion.
As we noted, EPA boss Al Armendariz, an Obama appointee, compared EPA enforcement style to the Roman army crucifying locals to set an example. And EPA “management analyst” Susie Goldring thought that Argentine Stalinist Ernesto “Che” Guevara was a fine example to get the EPA caught up on Hispanic culture.
We also noted the case of John Beale, an EPA manager who claimed to work for the CIA, failed to show up for years, and defrauded taxpayers of $1 million. The EPA even paid this fraudster “retention bonuses,” after he retired. In hearings on the case, it emerged that the EPA shows “an absence of even basic internal controls.” So plenty of room for reform, but maybe the EPA is finally giving it a shot.
In calling for the first-ever cut in the ethanol blend, the EPA shows itself more sensible than Congress. On the other hand, that is not terribly difficult to pull off.
In Washington, D.C., an investigation by James Rosen and Marisa Taylor of the McClatchy news service has found that the Defense Finance and Accounting Service (DFAS), which the Pentagon set up over twenty years ago to strengthen the accountability of its spending, has broken down. Worse, it appears that Defense Department officials are currently working to prevent an accurate account of the Pentagon’s spending from being made:
Among the signs of dysfunction, according to interviews with key players, internal emails, memos and other documents obtained by McClatchy, are:
– Outside audits by a certified public accounting firm of the Defense Finance and Accounting Service’s books turned out to be shoddy, according to the Pentagon’s own accountants, although that same CPA firm had endorsed the agency’s previous fiscal records for years.
– In reaction to the skeptical evaluations, Pentagon officials pressured their accountants to suppress their findings, then backdated documents in what appears to have been an effort to conceal the critiques.
– The Defense Department’s Office of the Inspector General, which was brought in to watchdog the audit, not only helped squelch the critical work but also allowed the outside firm to be paid despite the serious questions about the quality of its work.
The inability to conduct accurate audits of defense spending matters because of its sheer amount, which represents nearly one-fifth of the federal government total spending of $3.5 trillion in 2013, and coincidentally, an amount in the same ballpark as the government’s annual budget deficit of $680 billion for 2013. With numbers like that, being off by even a small percentage in the accounting can cost taxpayers tens of millions of dollars.
And like any good investigative story coming out of Washington, D.C., there would appear to be a cover up underway:
In April 2010, three months after being backed by their bosses, the inspector general’s two lead accountants of the audits received letters informing them that their assignments had been “terminated,” according to documents reviewed by McClatchy.
Even more unusual, the terminations were retroactive to Jan. 27, 2010 – the precise point when the inspector general’s office had informed the Defense Finance and Accounting Service that it would not endorse the 2009 audit.
“They wanted to get rid of us because we were seeing the naughty-naughty,” said a member of the inspector general’s audit team, who spoke on condition of anonymity for fear of retaliation.
The retroactive terminations effectively wiped the slate clean, turned back the clock and removed from the official record the inspector general accountants’ critical findings that the audit did not meet professional standards.
The termination letters were signed by Normand Gomolak Jr., the principal contracting officer with the Defense Finance and Accounting Service.
And so, the audit’s findings miraculously disappeared. Funny how the federal government’s bureaucrats can make that kind of magic happen.
California deploys some of the highest income and sales taxes in the nation, but the Golden State’s pillage people are worried that they might not be high enough. They now want to more than double registration fees on motor vehicles, more accurately known as the car tax. The car tax is based on .65 percent of the vehicle’s value, but a proposed measure for the 2014 ballot would add a one-percent surcharge to the value of a vehicle each year. By one estimate, the 1 percent surcharge would raise the license fee of a 2013 Honda Civic from $52 to $130.
This idea comes from Will Kempton, from 2004 to 2009 director of Caltrans, the massive state agency responsible for highway, bridge, and rail transportation planning, construction, and maintenance. Kempton is now executive director of Transportation California, a non-profit that is “tackling the job of developing significant new revenue streams that are needed to make sure our transportation system is up to meeting the needs of California’s economy and its people.” So it’s a pro-tax lobby that has enjoyed remarkable success.
Kempton is teaming with Jim Earp of the California Alliance for Jobs, which helped secure “more than $35 billion in state and local transportation funding measures.” So it too is a pro-tax lobby. Conveniently enough, Earp is also a member of the California Transportation Commission, “an active participant in the initiation and development of State and Federal legislation that seeks to secure financial stability for the State’s transportation needs.” So it’s an official state-funded tax lobby, and member Earp warns that “California is facing a transportation funding crisis.”
Kempton claims the state is running out of money for road maintenance and that some $20 billion in voter-approved borrowing “has already been spoken for.” He didn’t say who spoke for it, how it had been spent, or whether there had been any waste or fraud in the spending. Embattled taxpayers might recall the new span of the Bay Bridge, a state project overseen by Caltrans. The bridge cost $5 billion more than the original budget and construction lingered nine years past the initial completion date, with a total cost of $6.4 billion. Likewise, the Devil’s Slide tunnel on Highway 1 was supposed to cost $322 million and open in 2010. It opened in March 2013 costing $439 million.
These cases and many others confirm that waste is inherent in the system, but the pillage people always want more money. That is bad news for California workers heavily dependent on their cars. If politicians and state officials wanted to help those workers, they would limit the car tax in the style of Proposition 13, which limits property tax. But that remains unlikely in a virtual one-party state where government greed knows no bounds.
As everybody knows, so far Obamacare succeeds only at taking away the insurance people already have and leaving them with higher premiums and weaker coverage. Now another government plan is jolting Americans with sticker shock. As this report notes, changes in federal flood insurance are beginning to quadruple premiums in some areas, harming homeowners and threatening real estate markets. On one property in California’s central valley the premium rose from $800 a year to $4,500 a year. The premium on a home on Merritt Island in the Sacramento-San Joaquin Delta rose from $1,000 a year to $1,000 a month, a yearly tab of $12,079. The prohibitive insurance cost devalued the property.
This has all been caused by the Biggert-Waters Flood Insurance Reform Act, a 2012 measure to bail out the National Flood Insurance Program, which was $18 billion in debt. After Hurricane Sandy, the debt increased to $30 billion. Rep. Maxine Waters, author of the act, now concedes that it imposed thousands of “unreasonable” premium increases and is backing a bill to reform her own legislation, very much in the style of Obamacare. One fix would delay some increases by four years and require the Federal Emergency Management Agency (FEMA) to conduct an “affordability study.” Another would exempt agricultural buildings.
As it stands, Biggert-Waters will affect more people in 2014, possible all owner-occupied homes in certain areas. But FEMA bosses can’t say when this will happen or who will be affected. That makes perfect sense because FEMA, part of the Department of Homeland Security, is one of the more inept federal agencies. Despite a budget of $10 billion it remains a bust at managing emergencies. In fact, in the wake of Hurricane Katrina, Walmart did a better job getting actual relief supplies to victims. In general, the federal flood insurance program is a disaster and as much underwater as many embattled homeowners.
Politicians and bureaucrats are most concerned with bailing out a failed federal program. That’s why Biggert-Waters sticks Americans with sky-high premiums, devalues their assets, and leaves them more vulnerable. Politicians likely knew this in the first place but went ahead anyway. When the damage began to surface, they made a lame attempt at a fix. So it’s all very much like Obamacare.
Back on October 27, 2013, we shared John Taylor’s graph showing the difference between the amount of spending outlays involved in the House and Senate Budget proposals for the U.S. government’s 2014 fiscal year:
At the time, we noted that the question before U.S. lawmakers was where they would really draw the line for future spending? Would it be at the lower level drawn for the House budget proposal? Would it be drawn at the much higher level for the Senate’s budget proposal? Or would it be somewhere in between?
We now know the answer. Paul Ryan, the House’s budget committee chairman, has indicated that the line will be drawn at the higher level indicated by the Senate’s budget proposal. The Hill reports:
House Budget Committee Chairman Paul Ryan (R-Wis.) said Tuesday that the country doesn’t need to worry about another government shutdown in January when the current stopgap spending bill runs out.
The government shutdown lasted for 16 days in October after Republicans demanded that President Obama defund his signature healthcare law.
To avoid another shutdown, Ryan said either he and Senate Budget Chairwoman Patty Murray (D-Wash.) would strike a budget deal or Congress would pass a stopgap keeping existing spending levels.
“Either of those two scenarios will prevail and we will not have a government shutdown,” he said at the Wall Street Journal annual CEO Council. “We will keep the government funding at the current level if need be.”
Ryan said that he does not believe there will be any brinkmanship over the debt ceiling in February either. He said Republicans now understand that a shutdown won’t stop ObamaCare because it is a mandatory program, not a discretionary agency budget line item.
That Obamacare was set up as a “mandatory” expenditure is an important consideration, because the federal government’s budgets only deal with so-called “discretionary” expenditures that are funded from general tax revenues. Because mandatory budget items, which include things like paying interest on the national debt and programs funded by dedicated taxes, such Social Security, Medicare, Medicaid, and now Obamacare, have their spending set up on automatic pilot, there isn’t anything that can be negotiated in the regular budget that can affect the amount that is spent on these things.
So why is former Vice-Presidential candidate Paul Ryan throwing in the towel on lower spending?
There is very likely some high level strategy here going on with respect to the current debate over the Obamacare mandatory spending program. By indicating that he will accept the higher level of spending that the Democratic party majority in the Senate desires, Ryan is removing a significant barrier that could keep the members of that party unified in the face of the growing opposition of the American public to both President Obama’s preferred policies and Obamacare.
By being able to split off the Democratic Party Senators who increasingly fear for their re-election in 2014, Ryan is betting that he can force the reform of the federal government’s unsustainable mandatory spending programs, especially Obamacare, while at the same time, revisiting discretionary spending after the 2014 elections, which would be possible if the leadership of the Senate changes hands.
Procurement scandals are common in the U.S. military and seldom the sort of thing anyone could make up. In the latest, as reported by the Washington Post, the U.S. Navy paid $1.6 million for firearm silencers valued at $8,000 – more than 200 times the manufacturing cost – and that most likely never should have been ordered in the first place.
The silencers emerged not from any longstanding armament firm but from Mark Landersman, a “hot-rod auto mechanic” in Temecula, California, who declared bankruptcy in 2012. Mark Landersman happens to be the brother of David Landersman, a retired Marine colonel and senior director for plans, policy, oversight and integration intelligence with the Navy.
As the allegations have it, David Landersman sent his brother links to a website with instructions about building silencers. David Landersman also secured a $2 million budget supplement for “studies, assessments and research.” He transferred the money to the CACI corporation, instructing it not to seek any competitive bids but to buy the silencers from a new company Mark Landersman had incorporated, supposedly unsurpassed in expertise.
Mark Landersman tapped his former machinist, Carlos C. Robles, to build 349 of the silencers, which he called “small-engine mufflers.” The manufacturing cost was $8,000 and the Navy paid $1.6 million. The silencers were untraceable and supposedly purchased for SEAL Team 6, but SEAL officials told the Naval Criminal Investigative Service they didn’t know anything about it.
Mark Landersman is the only person to be arrested and charged in the case. David Landersman and Lee Hall, another intelligence official under investigation, have been placed on administrative leave. In that deal they keep all their pay and benefits, do not perform any work, and essentially do whatever they like.
As the Washington Post noted, the Navy is also investigating Vice Admiral Ted “Twig” Branch, director of naval intelligence, and Rear Admiral Bruce Loveless, director of intelligence operations, in bribery scandal. According to allegations, they provided sensitive information to Singapore-based contractor Glenn Defense Marine Asia in exchange for money and prostitute services. The investigations “expose how easy it can be for contractors and insiders to defraud the service of millions of dollars” and “call into question the Navy’s ability to prevent fraud.”
Today, we’re going to tie together a number of threads that we’ve been following with respect to the implementation of the Patient Protection and Affordable Care Act (a.k.a. “Obamacare”), because they just all intersected each other.
First, let’s begin by filling in more of the map showing the number of individual health insurance policies that have been terminated as a direct result of the requirements of the Obamacare law, which we have now updated through all the information we have available through November 15, 2013:
An interactive version of this map is available here, which also includes the recently released data on the number of individuals who have placed a health insurance plan in the shopping cart in their state’s or the federal government’s health insurance “marketplace.” Through November 15, 2013, we now count 4,886,923 individuals, in the 33 states for which we have at least partial data, who have received notifications from their health insurance companies that their policies are either being cancelled or will not be renewed because of the requirements of the Obamacare law.
Because President Obama and many of the members of his political party had repeatedly promised the American people that “if you like your plan, you can keep your plan,” including after the law had been passed, having so many people lose the plans that they specifically shopped for and chose based on their actual individual needs has created a political crisis — one that destroys their credibility with the American people, which is putting them at risk of losing their political power.
Under intense pressure from the members of his political party serving in the U.S. Congress who fear for their political futures, President Obama was forced to pledge at his November 14, 2013 press conference that he would allow health insurers to continue offering health insurance plans that fail to meet the requirements of the Affordable Care Act law for another year.
That creates major problems — particularly for the health insurance companies who have partnered with the Obama administration in participating in the state and federal government-run health insurance exchanges. In addition to the massive logistical headache of trying to revamp all their business systems to support the President’s arbitrary choice to allow the older plans to continue to be available, they must face the negative impact to their business.
Here, because younger and healthier customers now have the option to continue their more affordable current coverage, the health insurers are at risk of being forced to operate at a loss — putting their businesses at risk of survival.
And to deal with that problem, it would appear that President Obama will provide the health insurers with a bailout. The Heritage Foundation’s Chris Jacobs explains:
As previously reported, the Administration’s latest plan waives many of the costly mandates included in Obamacare that are scheduled to take effect on January 1, 2014. The guidance says that these requirements will be waived—in clear violation of the text of the law—for one year for all plans renewed between January 1, 2014, and October 1, 2014. CMS also implies these waivers could be extended, stating it will “assess…whether to extend [the waivers] beyond the specified timeframe.”
However, the real story is buried in the final paragraph of the three-page memo, where CMS implies it is exploring options to provide additional payments to insurers to offset their losses from this Obamacare debacle:
Though this transitional policy was not anticipated by health insurance issuers when setting rates for 2014, the risk corridor program should help ameliorate unanticipated changes in premium revenue. We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.
To translate into English: If some Americans can keep their pre-Obamacare health plans next year, they will not enroll in the Obamacare exchanges. That means the enrollees in the exchanges are likely to be sicker than insurers previously expected. Already this afternoon, the health insurance industry trade association has alleged the President’s “fix” could have a significant impact on premiums in the marketplace, for that very reason.
In the absence of a new budget passed by the U.S. Congress to specifically authorize such an expenditure, there is only one place from which President Obama can tap funds to support such a bailout of his crony corporate insurance companies: the Health Insurance Reform Implementation Fund (HIRIF), a.k.a. the “Obamacare Slush Fund.“
Previously, we estimated back on October 31, 2013 that this fund had just $189 million left of its original $1 billion total. In addition to being the Department of Health and Human Services’ source of funds for repairing the dysfunctional Healthcare.gov website and the deficient back-end IT systems that support it, HHS was also planning to spend $163 billion of that amount in the federal government’s current 2014 fiscal year on other things to make the implementation of Obamacare a success.
Since a very large portion of that money is now going to have to go to fix the Healthcare.gov website and to bail out health insurers at risk of going under as a result of President Obama’s arbitrary choice, that means that it is now even more likely that the implementation of Obamacare will fail.
Unless, that is, President Obama and the members of his political party in Congress, who are solely responsible for the passage of the Affordable Care Act in the first place, compromise with their political opposition on a new budget for the federal government.
That will provide an interesting dynamic to the debate as it develops, as both President Obama and the U.S. Congress will have to revisit the debt ceiling crisis in January 2014. Only this time, President Obama and the members of his party will have to compromise with their political opposition to avoid having Obamacare become an unmitigated failure at the same time the nation risks entering into a full or technical default on its obligations under their watch.
President Barack Obama’s announced intention is to bring “quality, affordable,” health insurance to the uninsured. That is not likely to happen for some time, if at all, given the debacle of the rollout. But Obamacare has already succeeded in taking away health insurance from some 19 million people in the individual market. Those people purchased the health insurance they believed best met their needs. It was what they wanted and in many cases, including that of this writer, they were happy with their health plan and wanted to keep it.
President Barack Obama told the nation multiple times that “If you like your health care plan, you’ll be able to keep your health care plan. Period.” The New York Times calls this an “incorrect promise,” but to all but the willfully blind it is a lie. Millions of others are happy with the employer-provided coverage they now stand to lose. So the law is first and foremost a taking, an example of what we might call Obamarxism: From each, the health plan he already had; to each, a more expensive plan with things he doesn’t need or want.
It also violates the principle precept of medical ethics: primum non nocere or “first do no harm,” also known as non-maleficience. Faced with a health-related problem, in other words, better not to do something that will cause more harm than good. Obamacare certainly does that. As one observer noted, the law is based on mendacity, paternalism and subterfuge, but there’s more to it.
As Mark Twain said, the man who does not read has no advantage over the man who cannot read. Obamacare is evidence of that because legislators passed this law without reading it. So it might as well have been passed by illiterates and looks very much like it was, a sterling example of unintelligent design. Here we have a bad idea, administered by incompetent bureaucrats through a dysfunctional and insecure website, and abetted by “navigators” who could well be convicted felons. All told, Obamacare is perhaps the greatest example of government abuse, waste, and fraud in recent history.
Elon Musk of Tesla got a U.S. federal government loan of $465 million to produce the upscale Tesla Model S electric car. At more than $70,000 the car is too expensive for most consumers and as Britain’s “Top Gear” found, the car ran far less between charges than Elon Musk claimed. Now other problems have emerged.
In recent months, three Tesla Model S cars caught on fire, the last two reportedly caused by road debris. The other fire occurred in Mexico when the car hit a wall. No injuries reported in the fires, but the National Highway Traffic Safety Administration (NHTSA) is looking into the safety issue. As it happens, safety problems are not limited to the pricey Tesla Model S.
Recall that Fisker Automotive, Inc, got a federal loan of $529 million to produce its $100,000 Fisker Karma hybrid, built not in America by American workers but in Finland by Finnish workers. Before Fisker went bankrupt, 16 of its upscale vehicles caught fire and blew up during Hurricane Sandy.
In 2011 in Hangzhou, China, an electric Zotye Multipla taxi burst into flames for reasons. Chinese firefighters were unable to discern. Apparently it was an absolute “fireball” that firefighters could not control, and the second such fire that year. That’s not good for areas of high population density, though the passengers and drivers apparently escaped unharmed.
Electric vehicles could well be unsafe at any speed, but they have not attracted attention from alleged consumer watchdog Ralph Nader. Likewise, the safety problems have not caused the federal government to revise its stimulus policies. Those may be risky for taxpayers, but they certainly proved bountiful for Tesla’s CEO Elon Musk. The man whose luxury plug-ins are catching fire plunked down $17 million for a 20,248-square-foot Bel-Air mansion with a gym, seven bedrooms, 10 bathrooms, tennis court, motor court, and a swimming pool.
How come the Department of Health and Human Services didn’t have to shut down its efforts to implement the Patient Protection and Affordable Care Act during the recent partial federal government shutdown?
The reason comes down to the law itself. Members of the Democratic party, who were in the majority in both the U.S. House of Representatives and the U.S. Senate when the law was passed through only their unanimous effort, made sure that the law included a special fund that would be used to implement its provisions—the Health Insurance Reform Implementation Fund (HIRIF).
They set aside $1 billion for the Department of Health and Human Services to support not just its implementation efforts (the troubled Healthcare.gov website and the IT systems that support it), but also other those of other federal government agencies such as the Internal Revenue Service.
They’ve been spending that money ever since. The chart below shows how they’ve either spent, or have proposed to spend, that money for each of the federal government’s fiscal years from 2010 through 2014:
Through the end of Fiscal Year 2013, which ended on September 30, 2013, the Department of Health and Human Services indicates that it has spent $811 million of its $1 billion slush fund, which indicates that they have $189 million left to spend before they run out of money.
They were planning to spend $163 million in Obamacare implentation activities in the current fiscal year (FY2014). However, you can bet that they were planning to spend that money on things other than trying to make the Healthcare.gov website and the IT systems they built to support it work.
Something, not just the Healthcare.gov website, isn’t going to get done....
U.S. Department of Health and Human Services. Fiscal Year 2012 Budget in Brief. Advancing the Health, Safety, and Well-Being of Our People. [PDF Document]. 2011.
U.S. Department of Health and Human Services. Fiscal Year 2013 Budget in Brief. Strengthening Health and Opportunity for All Americans. [PDF Document]. 2012.
U.S. Department of Health and Human Services. Fiscal Year 2014 Budget in Brief. Strengthening Health and Opportunity for All Americans. [PDF Document]. 2013.