MyGovCost News & Blog

Will Criminal Investigation Make It Across the Bay Bridge?

Monday August 4th, 2014   •   Posted by K. Lloyd Billingsley at 9:04am PDT   •  

ct_logo_200The new eastern span of the San Francisco-Oakland Bay Bridge has already rung up $5 billion in cost overruns. The span also came in 10 years late and could well pose a danger to the public. As we recently noted, UC Berkeley structural engineering professor Abolhassan Astaneh-Asi believes the structure is unsafe and declines to use it. As Charles Piller writes in the Sacramento Bee, state Sen. Mark DeSaulnier charges that Caltrans accepted substandard work at taxpayer expense, and that this demands a criminal investigation. Taxpayers might question the timing here.

Six months ago, in January hearings on the bridge chaired by DeSaulnier, Caltrans geologist Michael Moore testified that safety problems were kept secret, ignored, and covered up. Moore duly called for a “criminal investigation.” Despite damaging testimony from whistleblowers and rather unconvincing responses from Caltrans bosses, DeSaulnier did not launch a criminal investigation. Instead he called for the California Highway Patrol, a law-enforcement agency, to conduct an “administrative investigation.” Now the senator, a Concord Democrat, wants a criminal investigation by the California attorney general or U.S. attorney.

DeSaulnier is running for Congress, and the call for a criminal investigation may well be a campaign pose. Safety and accountability are not his only concerns. In the January hearing he complained that the bridge problems had eroded public confidence and made Californians “adverse to taxes” needed for other “infrastructure” projects. The likely candidate is high-speed rail, another boondoggle.

Taxpayers should not be surprised if the criminal investigation never comes off. California AG Kamala Harris is a Democratic loyalist who has shown little interest in challenging government bureaucracy. Perhaps the U.S. Attorney would take up the cause. If some Caltrans boss does wind up facing charges, that could begin reform of a massive state agency that can waste $5 billion on an unsafe bridge before anybody does anything about it.

Bureaucrats Behaving Badly

Monday August 4th, 2014   •   Posted by Craig Eyermann at 6:55am PDT   •  

4 What’s the latest perk enjoyed by federal government bureaucrats while on the job?

It would appear to involve surfing for porn on the Internet. Jim McElhatton of the Washington Times reports:

For one Federal Communications Commission worker, his porn habit at work was easy to explain: Things were slow, he told investigators, so he perused it “out of boredom”—for up to eight hours each week.

Lack of work has emerged time and again in federal investigations, and it’s not just porn, nor is it confined to the FCC. Across government, employees caught wasting time at work say they simply didn’t have enough work to do, according to investigation records obtained under the Freedom of Information Act.


A spokesman for the FCC declined to comment on what, if any, action the agency took after the FCC’s inspector general singled out the eight-hour-a-week porn peeper.

McElhatton summarizes episodes of documented misconduct at the Government Services Administration (GSA) and as the U.S. Patent and Trademark Office, where bureaucrats are getting away with the kind of behavior that would lead to employee terminations at real jobs in the private sector:

In another recent case, a GSA employee who spent about two hours a day on a computer looking at pornography and dating sites “sometimes became bored during these long hours at the computer and would often use the computer for personal use to pass the time,” according to a case report by the GSA inspector general last year.

In a more recent and far more costly example, U.S. Patent Trial and Appeal Board paralegals received salaries and bonuses for years even though they spent much of their time watching television, shopping online, exercising and wasting time on their tablet computers, according to an investigation released this week by the Commerce Department’s inspector general. Investigators estimate that more than $4 million was spent paying employees for time they weren’t working.

A common theme that is emerging among all these stories of waste is the absence of corrective actions on the part of politically appointed and career managers at federal government agencies. One of the worst examples of that lack of effective administrative oversight has become evident at the Environmental Protection Agency (EPA), as reported by Government Executive‘s Charles S. Clark:

Tensions between the inspector general and main staff at the Environmental Protection Agency spilled into the open on Wednesday at a House oversight hearing that veered into EPA’s inability to prevent individual employee misconduct ranging from porn viewing on the job, to falsifying attendance records, to an alleged workplace assault on an investigative agent.

“The EPA is truly a broken agency,” said Rep. Darrell Issa, R-Calif., chairman of the Oversight and Government Reform Committee, in reeling off a string of stories of personnel misconduct still under adjudication in the wake of the December sentencing of EPA air quality specialist John Beale to 32 months in prison for bilking the agency of salary and expenses while performing little work under the guise of moonlighting for the CIA. What ties these stories together, according to Issa, is that the IG’s office is being blocked from uncovering the facts.

The cases, detailed by witnesses from the inspector general’s office, include a $120,000 a year, bonus-winning, still active employee who spent two to six hours a day visiting porn websites and downloading 7,000 pornographic files to an agency shared server. Another involves the human resources manager who failed to spot Beale’s fraudulent explanations for his absences, and a third involves an ill employee confined for a year in an assisted living facility but still collecting full pay.

A fourth, perhaps most dramatic, episode involves an allegation that Steven Williams of EPA’s Office of Homeland Security in October 2013 committed an “assault” on Office of the Inspector General special agent Elisabeth Heller Drake in an EPA hallway as she sought to inform him of his obligation to remain silent about what she termed her “difficult” interview with him on an investigation.

The EPA, of course, is the federal government agency that had to direct the employees at its regional office in Denver, Colorado, to stop its employees from “placing feces in the hallway.”

All in all, what these episodes suggest is that the top federal officials at these government agencies are tolerating hostile work environments at multiple federal government workplaces that are rapidly becoming defined by their dysfunctional cultures.

Science: Cutting Spending Better Than Raising Taxes

Thursday July 31st, 2014   •   Posted by Craig Eyermann at 4:11am PDT   •  

16111092_S What is the best way to reduce a government’s budget deficit?

A new working paper by European Central Bank economist Maria Grazia Attinasi and International Monetary Fund economist Alexander Klemm once again confirms what we’ve long argued: when it comes to preserving the prospects for economic growth, cutting government spending is a much more effective way to go about reducing a government’s budget deficit than is increasing taxes.

Attinasi and Klemm came to that conclusion after reviewing the impact of discretionary fiscal policy on the economic growth of 18 countries in the European Union over the years from 1998 through 2011, finding that “expenditure-based adjustments” (spending cuts) are much less harmful to economic growth than “revenue-based adjustments” (tax hikes). In particular, they found that indirect tax increases, such as those associated with excise taxes and the kind of Value Added Tax that is levied in most E.U. nations against consumer goods and services, have a “particularly strong negative impact” upon economic growth when nations are experiencing recessionary conditions.

But their findings go well beyond that basic insight. They also found that although cutting government spending can have a small negative impact on economic growth in the short term (less than one year), it has a minimal impact at longer terms and that front-loading spending cuts is much less harmful than dragging them out over longer periods of time.

What’s more interesting is that they found that most of the negative impact of government spending cuts in the short term has to do with cuts to programs that involve investments in things like public infrastructure. Other types of government spending cuts, such as cuts in government subsidies that support consumption and the compensation of public employees, turned out to have no statistically significant impact upon economic growth.

What that means is that these two things, government subsidies and public employee compensation, are the first two things that should be cut when reducing a government’s budget deficit is necessary, because they are nearly free of pain where the nation’s economy and economic growth prospects are concerned.

Eighteen nations in the European Union have taken more than a decade to learn that lesson, backed by science, the hard way. And still, the leaders of some of those nations haven’t learned from the sad examples of their neighbors’ experiences and are still far from becoming illuminated, even as their neighbors recover from their mistakes.

Much less across the Atlantic Ocean, where economic growth forecasts for 2014 are now being slashed because those important lessons are continuing to be denied.

IRS-FEC Axis Abuses Taxpayers

Wednesday July 30th, 2014   •   Posted by K. Lloyd Billingsley at 7:08am PDT   •  

FEC-Logo200With all the excitement in Ukraine, the Middle East, and Central America, a key domestic development has failed to draw the attention it deserves. The Federal Election Commission (FEC) has joined the IRS in a cover-up of illegal activity.

As the Daily Caller notes, when former IRS official Lois Lerner worked at the FEC’s enforcement division, one of her colleagues was April Sands, an attorney who resigned from the FEC in April after admitting violations of the Hatch Act. In a federal government agency that is supposed to ensure free and fair elections, Sands conducted partisan political activity. As David Martosko pointed out in the Daily Mail, Sands was known as “Obama’s girl” at the FEC. When FEC inspectors attempted an investigation they found that Sands had experienced computer problems and the FEC had recycled her hard drive. So Sands’ emails were not available.

This is the same story advanced by the IRS on behalf of Lois Lerner, who spearheaded a campaign against groups who favor limited government, lower taxes, and clean elections. Lerner claimed she had done nothing wrong but took the Fifth Amendment before a House oversight committee. Lerner’s computer mysteriously crashed, and her email records conveniently disappeared. The IRS now pegs the number of mysterious computer crashes as “less than 20,” but it can’t say if the emails were somehow backed up. To that record now add the computer of April Sands, with others at the FEC doubtless to follow.

A ballpark figure for the odds that these computer crashes happened by chance, or even due to simple incompetence, is zero. If “less than 20” witnesses mysteriously disappeared a week before a trial, the victims of malfeasance would hardly expect justice to be done. For all but the willfully blind, what is going on should be abundantly clear. Federal government agencies are abusing American taxpayers on a massive scale.

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!


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.

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