Healthcare Reform Opens Pandora's Box

Monday, March 1, 2010 by Lurita Doan
Whatever you might think about the Healthcare legislation now making its painful way through the Congress, one thing is for certain: a new and dangerous precedent has been established by Congress and the President. In the haste to get a deal on Healthcare, Congress, with support encouragement from President Obama, has ushered in an era where federal law is to be applied unequally through out the country.

 

Applying federal laws unequally, with different standards depending upon which state an American might reside, is a gross injustice. Moreover, federal employees are going to have a new and complicated mission to figure out a way to apply the nation's rules, regulations, and laws which are no longer to be fixed and administered equally across the nation.

During the past several days, we all watched as Congress and the President established a smorgasbord of special concessions, with an incomprehensible number of special deals with several of the Democratic Senators who appeared to be fence-sitting or openly hostile in an effort to secure the 60 votes necessary to pass Healthcare reform.

Senator Mary Landrieu for example was able to obtain $300 million in Medicare subsidies and considerations for Louisiana residents, in order to secure her vote. Senator Nelson was promised an even more unusual concession for the state of Nebraska, which would provide a 100% federal reimbursement for Medicare coverage of Americans living in Nebraska. Or, put another way, the rules and regulations for federal programs such as Medicare are now to be applied across the nation differently. Rules in places such as Virginia and Florida, are going to be applied much differently than in states such as Nebraska and Louisiana.

Closed door deal making has long been a staple of Congress. Committee chairmanships have historically added ear-marked building projects, and legislative perks are the usual kinds of -dare I say it? - bribery-used by the Majority on either side, to win support of some legislative priority. Bridges to no where, posh federal buildings and facilities are built in places that make no sense, other than to please a powerful senator or congressmen, and are located across the country.

But, what we are seeing now is something far more dangerous, and Americans should be rightfully concerned. For perhaps the first time, we are seeing a Congress that is comfortable with scenarios in which a federal entitlement, mandated by law, is not applied equally to qualifying citizens of all of the 50 states. This new development goes far beyond the Congressional spoils system where specific federal earmarks for special projects or funding for a state or congressional district are offered to a favored few.

Consider for example the terrible precedent of Senator Nelson voting for a bill that will exempt the citizens of Nebraska from the rules and regulations that must apply to Americans living in the other 49 states. One has to wonder: if Senator Nelson was so supportive, why he would insist that his support is conditioned upon exempting Nebraska from the new national rules and regulations that he has agreed should apply to everyone else? Here, too, you have to wonder about the fairness of now requiring citizens of other states to, effectively be forced to subsidize those lucky Nebraskans who will be living under a different set of national rules and regulations.

Medicare is a federally mandated program, with federally mandated benefits, for all citizens, over a certain age in this country, regardless of their state of residence. But, in order to garner the necessary votes, the majority leaders in Congress appear to have changed the applicability of this entitlement, saying that despite the previous unanimity of federal coverage, different states now have different abilities to provide different federal benefits depending, arbitrarily, on the kind of hard ball that state's senator played with the Majority Leadership in Congress.

Is this really the kind of system we want?

Congress is sending a mercurial and mixed message to American citizens and to the federal workers who execute legislative policy. Federal workers have been able to count on federal programs applying equally across the federal government, across the United States. But, this new development sets a new precedent for negotiating different deals for different special interest groups across the federal government.

For example, what is to stop Congress from making some future deal to provide better wages to federal workers in one state versus another, or decides, perhaps, for union wages to be established differently for federal workers depending on the state of their employment, and a way to drive perks to certain states in return for certain voting? The answer is nothing. Pandora's box of bad government policy has been opened.

The 111th Congress has set a dreadful precedent for future dealings connected with future legislation, where legislators think only of what benefits their individual states and not necessarily what is best for the country as a whole. Worse yet, this Congress has abandoned principle in a most astonishing manner, opening the door to similar side deals and carve outs, which may or may not be made public.

Makes you wonder, just what other little side deals were promised to some reluctant Senator to secure his vote? Makes you wonder, too, will our nation, that has long prided its system of justice and fairness, now tolerate a new era where federal laws and regulations are to be applied throughout the country differently?

Previously Published on www.federalnewsradio.com

Treasury's Disastrous Auction

Thursday, February 18, 2010 by Lurita Doan
Jeers to Tim Geithner, Secretary of the Department of the Treasury, for the recent, disastrous auction of Treasury notes.

Despite repeated assurances in hearings on the Hill and in press conferences, with last week's official recognition of the $2.3 billion dollar loss from CIT Group (CIT), the Secretary's leadership strategy for government bailouts, bolstering the U.S. economy and reducing the deficit are failing miserably.

Furthermore, the entire week's $81 billion dollars of offerings, 3-year, 10-year and 30-year Treasury notes, failed to excite purchasers domestically or internationally. The Fed had to buy back over 10% of the bonds offered and the Treasury department was forced to raise its rates on the returns. All of which shows that few, including foreign governments, are willing to buy long term U.S. debt. This is REALLY bad news for our country.

The U.S. is being required to issue more and more debt, at the very time that investors are clearly unwilling to purchase that debt. President Obama recently signed a bill allowing Congress to spend more, increasing the U.S. debt ceiling to $14.3 Trillion (which is the entire Gross Domestic Product of the U.S annually) showing the severe disconnect between our ability to get other nations to support our out-of-control spending and Congress' addiction to political pork. Fiscal Discipline is much needed, but seems in short supply.

Tough Love and Bank Bailouts

Thursday, February 18, 2010 by Lurita Doan
The devastating and damning Quarterly TARP report to Congress, recently published by the TARP Special Inspector General (SIGTARP), Neal Barofsky, reveals that the $700 billion dollars spent, over the past year, by the Obama Administration in the government bailout of the "too-big-to-fail" banks did not solve the problems facing the banking industry.

Worse, bailing out the "too-big-to-fail" banks may have exacerbated the problems of bad investments, outrageous bonuses and Wall Street greed, paving the way for a repeat performance and a future requirement for even bigger bailouts.

The Obama Administration, seemingly, has failed to understand some of the basic principles of capitalism: namely, an organization rises or falls at its own risk, on its own ability, without help or handouts from the government.

A second principle of free market capitalism which the Obama Administration has failed to understand is that the free market system does not reward failure and that "handouts" from government hinder, rather than help, organizations which are failing due to flawed policies, products or services.

Capitalism is a system where the consumer punishes failure and drives innovation and change. If an organization produces something desirable, folks will flock to buy that product. If the product or service is priced correctly, the business will become profitable enough to produce more, to satisfy more customers and to reward hard-working employees.

This system has worked for over 200 years to build the greatest country in the world--our country.

The truly sad part of the Obama Administration's ignorance is that the small businesses in this country, which create 3 out of every 4 jobs, and which house most of the innovation and entrepreneurial energies of our country, are being crushed under the current policies.

When the Administration creates "too-big-to-fail" organizations, and when the Administration rewards poor decision-making and lack of strong leadership, the Administration is also punishing the many small businesses across the United States by denying those small enterprises the opportunity to step in and fill the gap created by big business incompetence. When the government bails out "too-big-to-fail" organizations, there is less capital available to be provided as credit to small businesses.

Neal Barofsky, the TARP Inspector General, has produced a painful, but honest, report that few in the White House wish to acknowledge, because Barofsky's report, in essence, states that this past year, the Obama Administration has spent almost a trillion dollars rewarding failure. Furthermore, Barofsky's 224 page report states, unequivocally, that the abuses which caused the need for the bailout have continued (77 counts of fraud this past year, among other abuses) and will cause future instability since the basic problems have never been resolved.

The lessons learned from the bank bailout are lessons that any parent, who has ever had an unruly youngster, understands: don't reward bad behavior. Furthermore, rewarding bad behavior often leads to further bad behavior. The SIGTARP report outline a course of remediation, recommendations that the IG believes should be implemented immediately. Unfortunately, neither the White House, nor the Department of the Treasury, seems to agree with the Inspector General's conclusions.

The most disturbing part of the Inspector General's report comes around page 118, in an unvarnished discussion of the dangers that lie ahead for the housing market. The report clearly believes that the bubble has yet to fully burst on the housing market, and that our country is far from reaching bottom.

In opposition to the findings of the SIGTARP, the Obama Administration believes that its efforts, and the hundreds of billions of taxpayer dollars, spent shoring up Freddie Mac and Fannie Mae have stabilized the housing market.

The time is now for the Obama administration to show some tough love. Publicly chastising banks, while punitively taxing and clandestinely soliciting and accepting campaign donations from them is a recipe for repeating the same banking disaster.

The Obama Administration needs to show Freddie Mac, Fannie Mae and "too-big-to-fail" institutions some tough love by stating clearly and firmly that we are a country that believes strongly in free market capitalism, that we do not support the flawed concept of "too-big-to-fail" and that, starting now:

     

  1. Banks need to understand that they can't come to "poppa" (government) for a handout.

     

  2. That we WILL let institutions fall flat on their face-no more bailouts, that failed institutions can no longer feed at the trough of taxpayer dollars.

     

  3. That the Administration will be holding itself accountable, and in particular, the Department of Treasury, which has the responsibility to oversee these programs on behalf of the American taxpayer.

The Chinese have a saying: "it's never too late to turn back on a bad road." The SIGTARP report makes it clear that while the Obama Administration may have had the best of intentions, with PPIP, TARP, TALF and HALP, the Administration has been driving themselves, and all Americans, down a terribly, bad road.

But, the report makes it clear that it's not too late to do what's needed to protect America's future.

The recommendations in the Special Inspector General's report, (some so basic (pp.137-142), it's hard to believe they weren't already implemented) could serve as the beginning of a road map for how to correct problems in the current, failed system.

The question is: does the Obama Administration have the courage to try?
 

Published on February 2, 2010 on www.federalnewsradio.com

Hiding Problems At Federal Agencies

Thursday, February 18, 2010 by Lurita Doan
A good magician knows how to misdirect attention of the audience so that he can do something clever while the audience is looking in the wrong direction. Our government knows how to do that too and has developed a disturbing practice of releasing important information regarding key decisions in ways designed to attract the least amount of public attention and review. Here are several specific issues that the Administration would like to see buried but which presage even more important battles and changes ahead in 2010.

 

1. CBP
The recent ground breaking at the San Ysidro Port of Entry (POE) in San Diego, the largest land border POE on the Southern border of the U.S., was boycotted by citizens, business leaders, community government officials and Congressmen because of CBP's refusal, under Acting Commissioner Jayson Ahern, to implement the previously approved GSA facility design, which had been vetted and approved by the San Ysidro community. Instead, CBP is insisting on their design, which destroys business facilities, requires the relocation of local businesses, and features a pedestrian path that requires foot traffic across the border to walk over a mile without shelter from the sun and without providing restroom facilities. Earlier we learned about the 'CBPs decision to divert stimulus money away from the most critical POE and, instead spend that nearly $1 billion on dodgy projects. Now, it appears that even the large-scale projects are being mismanaged. Expect further troubles ahead.

 

2. DoD
SIGAR (Special Inspector General for Afghanistan Reconstruction) concerns with oversight irregularities and document dumps got little coverage in December, but the public rebuke issued jointly by Senators Susan Collins, Claire McCaskill and Tom Coburn indicate that scrutiny of both Inspectors General and contracting will increase in the next year as the Obama Administration increases U. S. presence and resources allocated to Afghanistan. Contracting irregularities, already highlighted in the latest DoD Inspector General's semiannual report to Congress released in early December indicate that the activities of the past year, which caused the senators so much concern, are only the tip of the iceberg.

 

3. Education
Washington D.C. school voucher program was killed by Senator Dick Durbin, but this move may set a disastrous precedent for school systems across the nation and indicates government subservience to the power of the teachers' union (NTEU) which bodes ill for the availability of choice, competition and best education options for our nation's young.

 

4. Energy and Commerce
Waxman-Markey may be DOA, with an election year approaching and angry citizens concerned about the skyrocketing deficit, but senate-confirmed, EPA, Energy and Commerce Cabinet members have shown a willingness to play second fiddle to the Energy Czar, Carol Browner, who seems willing to make sweeping policy changes via executive order, and thus bypassing the requirement for Congressional approval. For better or worse, we now have an Energy Czar with vast powers and the willingness to use that power to impose sweeping regulatory changes on large segments of our economy.

 

5. GSA
GSA and President Obama have succumbed to pressure from Labor unions and are requiring construction contracts to have a labor union component. This shameful move will drive up costs, squeeze out small business even further, and further increase the snail pace of government construction projects. Proposals were once considered on the basis of most competitive pricing, past performance and most competent proposal , but that criteria has been replaced. Now the key requirement is to have union agreement. The added burden on businesses which must now submit two bids for construction work, one with union labor and one without, is especially onerous on the small and minority business community which is 86% non-unionized.

 

6. OPM
The ascendancy of the labor unions, and the apparent favoritism shown by the Obama Administration for union interests, whether at TSA, Education or GSA may propel OPM in the middle of struggles for resources and mediation of union versus non-union federal employee interests.

 

7. SBA
The SBA seems oblivious to the anti-small business policies currently occurring, often the unintended consequences of other agencies' policies. Access to capital, bundled procurements, labor union primacy, Stimulus shut outs and the preponderance of Obama administration no-bid contracts create an uneven playing field. 2009 was a terrible year for the small business community with little sign of improvement in 2010.

 

8. State
The closing of the U.S. embassy at Yemen may begin a new era of perceived global weakness where the U.S. response to international controversy and aggression is to withdraw. Long-time, State department employee whining combined with what seems to be White House fear of conflict may signal to the rest of the world that the U.S. is no longer willing to do difficult things and make personal sacrifices for the greater good of our nation.

 

9. Treasury
Freddie Mac and Fannie Mae have recently acknowledged two startling facts. Total indebtedness had been incorrectly reported, and is now believed to be approximately $500 billion for each of the two agencies (bringing the total amount of debt to a little over $1,000,000,000,000.00). Furthermore, recent reports have revealed that HALP, the Stimulus program to restructure and rescue underwater home mortgages, has not worked as advertised. Home mortgages rescued by HALP are now failing at a rate of approximately 80%, revealing that the housing bubble still has one or two more shoes to drop, all boding ill for economic recovery.

 

10. TSA
Screeners and scandals portend longer lines for travelers. Labor unions recently introduced into TSA will be changing how this already inefficient agency does business, and not necessarily for the better. In addition, manufacturers of airport screening equipment are already salivating at the potential for additional revenue, as TSA prepares to amend its appropriations requirements to request billions of dollars of additional funding from Congress. This funding, which will likely be approved quickly, will be dumped, with vague requirements and hastily developed statements of work upon the DHS contracting workforce, who will be required to juggle other existing priorities to process the funding, thereby exacerbating the problems of slow, error-filled DHS procurements.

Undoubtedly, these ten stories will continue to unfold in the upcoming few months, but don't look for many of them on the front pages of our newspapers. Like any good magician, the Administration hopes to divert citizen attention with clever banter and a well-chosen illusion. My advice is to enjoy the show, but keep your eyes on the magician's hand underneath the table, and keep a close watch on issues released on Friday afternoons.

Published Jan 5, 2010 on www.federalnewsradio.com

Small Businesses, Job Summits, Scams and Hype

Thursday, December 3, 2009 by Lurita Doan
After 15 years as a small business owner, and as the former Administrator of the U.S. General Services Administration, I've been to the circus a few times and seen all the strings connected with small business initiatives and the federal government. Too often, small businesses are used as convenient pawns in larger political battles. But last week, government reached a new low in its craven approach to small businesses.

President Obama, no doubt, feeling the heat because reports have shown that most of the government bailout, stimulus funding bypassed small businesses, has decided to consult small business owners and to host a "jobs" summit. I was disappointed to see President Obama-the man promoting good government and the "audacity of change", is doing nothing new. Instead of making real changes to help the small business community, the Administration intends to rely on great photo ops and the triumph of form over substance.

How unoriginal; how unlikely to cause any change in an already broken system. How little leadership; how disappointing.

As most small businesses know, these "summits" are quite costly. More importantly, these "summits" accomplish little, except provide cover for the transgressor. The dog-and-pony show, small business conference/summit is non-partisan and seems to have occurred in every Administration over the past four decades.

Small business summits are triggered,usually, by one of four reasons. Check the speeches of political candidates over the past few decades. There is usually rhetoric acknowledging that small businesses are the engine that moves the economy, that small businesses create 3 out of every 4 jobs in the United States. And yet, once elected, the small business community is ignored-- until a photo op is needed or until diversity issues must be addressed.

In the course of the sham, there'll be great fanfare and publicity. Announcements of the upcoming conference will be sent to hundreds of small business associations across the U.S. and to thousands of small and minority businesses. Tens of thousands of dollars will be spent in advertising: there'll be chotskies, mailers, brochures and full page advertisements in complicit media publications. But none of these expenditures of money or effort will result in giving the small business community what they need most, a fair shot at winning government contracts, lower taxes to spur investment and hiring, and access to investment capital.

What will occur is that the entity, whether private sector or government, will take the funds expended on these trifles and claim that this funding counts towards their efforts at small business support. Some government contractors have been able to use the cost of these small business conferences as their way of meeting their small business set-aside requirements-- and complicit government allows the sham to succeed.

Nor is the White House alone.

Doubly disappointing was Goldman Sachs' announcement, in response to enormous political pressure about their generous bonuses, that Goldman, too, will launch a small business effort, complete with the typical, showcased conference--clearly a move recycled from failed government initiatives.

Goldman's conference and small business program is a craven PR move which will feature almost ½ of 1% of the annual Goldman bonus pool. Here we go again. Goldman's explanation in the press, that they were "offering charity to small businesses, was about as insulting as is imaginable-even if their partner in the endeavor is the inestimable, entrepreneur-extraordinaire, Warren Buffet.

If Goldman wanted to do something for the small business community, they could have pushed low-interest, credit lines down to small business, but that would be more difficult. Far easier to push the tired idea of yet another small business summit and hope no one notices that Goldman's effort has little impact on small business and is an obvious smoke screen to cover the real issue of a $16.7billion dollar Goldman bonus pool, derived with the help of $10 billion dollars of American taxpayer guarantees.

Creating jobs is possible. I know. I created hundreds of jobs during a decade and a half as a small business owner. Creating jobs requires a system that encourages risk taking because it makes it possible for risk takers to reap rewards. What government can do is provide regulatory relief for many of the arcane and obsolete requirements, rather than a hand out.

Government should acknowledges that it can't create the kinds of jobs that provide long-term economic growth—only the private sector can do that—because any job the government creates comes at the cost of an increased tax burden or increased borrowing to pay for those government jobs.

As Congresswoman Nydia Velasquez, Chair of the House Small Business committee, is often heard saying: " small businesses want a hand up, not a hand out." Clearly, neither Warren Buffet, nor Goldman Sachs, nor Karen Mills, the SBA Administrator, nor President Obama got the memo.

Creating jobs is fairly straightforward. Getting big businesses, the SBA and the White House to abandon shop-worn ideas that stifle innovation, crush competitiveness, and condescend to small businesses—well, that's a lot harder.

Previously Published at  Federal News Radio 1500 AM

OMB's FY10 Mid-Session Budget Review - What's Different, What's Missing?

Friday, September 4, 2009 by Lurita Doan

What's missing and what's different from a standard, annual federal report is often just as telling as what is included in the report. The FY10 Mid-Session Budget Review is a prime example. The previous year's report issued by OMB Director, Jim Nussle, discusses revised estimates for a five year period from 2008 to 2013, whereas current OMB Director, Peter Orszag, has taken a ten year approach, covering revised estimates from 2009-2019.

Expanding the scope of the report has created the advantage of providing Americans with a view of future financial woes, and, at the same time, pushes out to the long term some of the negative consequences for current, excessive, federal spending. Changing the time frame of the report also diminishes the negative consequences of recent decisions by allowing time and favorable assumptions to work their magic.

Take a hard look at OMB's recent report and you will see what I mean. OMB has made very optimistic assumptions of future economic growth, for example, "exceed 4% per year 2012-2014)and wildly optimistic assumptions of future interest rates ( approximately 3.6% per year), which has the combined effect of reducing likely long term deficit forecasts. OMB paints the rosiest of rosy scenarios.

Noticeably, what's missing in the recent Mid-Session report are the various discussions about balanced budget and taxation. The previous report had a chart titled "Americans Are Not Undertaxed". That chart has disappeared in the current version. One can only hope that this omission reflects a new realization that taxes have grown too high. Then again, the current report has approximately 10 pages devoted to receipts (taxes) that are anticipated in the next 10 years.

Perhaps most disturbing is the entry in the Current Report, on page 45, titled "Upper-Income Tax Provisions Dedicated to Deficit Reductions". Line-items on these financial charts show, numerically, the extraordinary tax burden which the Administration anticipates placing on income earners of $200,000 and above.

Interestingly, the traditional tables which list the "Discretionary Funding by Category and Discretionary Funding by Major Agency" have been reduced in the current report to simply reporting the funding by Agency.

This abbreviation is a pity because the category area of spending is where the previous Administration provided transparency and listed the financial data for certain types of discretionary spending such as the Global War on Terror or Veterans Affairs or Hurricane Katrina Supplementals. We still hear from time to time, claims of the Administration's devotion to transparency, but that commitment does not apply to report on the budget. Indeed, it is becoming more difficult to know exactly how and where the money is being spent

The current report provides a brief discussion of some of the programs, such as TARP and SNAP, in the "Expenditures" section, but the reporting and discussion is sparse. Three pages seem hardly sufficient to cover the trillions encompassed by the many entries in this category of spending.

The "Expenditures" section would have been an excellent place for the current Administration leadership to list the various costs for Bailouts, Stimulus, and other subsidy programs that would be a bit more transparent than is currently display in the convoluted Recovery.gov website.

While the current mid-session review places extensive blame on the previous Administration for the financial problems it inherited, there is little discussion of "promoting economic growth, providing tax relief for all Americans, and ensuring fiscal discipline , all which were leading topics in the previous mid-session report. Now, more than ever, promoting ways to grow the economy should be at the top of every American's "to do" list.

The one fact which the numbers reported in OMB's current mid-session report does make clear is that, contrary to what is stated in the Summary, on page one, that the Obama Administration did not inherit a $1.3Trillion dollar deficit. On page 37, the financial tables clearly show that the Obama Administration inherited a $459 billion dollar deficit. This discrepancy, once again demonstrates that it is far more important to look at the actual budgetary figures rather than trusting the rhetoric. The rhetoric may mislead but the numbers never do.

The report also holds some good news. The Obama Administration has made good on its word, and apparently found $622 billion in savings over ten years (p. 3). The bad news is that instead of applying it to reducing the deficit, they intend to apply it to healthcare reform. Parents who have struggled with assertions from a teenage daughter, who "saves" a $100 by buying a $150 pair of shoes, will no doubt struggle with this claim as well.

Lastly, the Office of Management and Budget's the FY10 Mid-Session Budget Review report provides a bleak outlook for the next 10 years and shows that the recovery will be much slower than is currently being discussed. Americans should take heed. Moreover, good government demands that these sorts of documents which were rarely read, and never much scrutinized in the past, need to be in the future. With so much hope and faith for economic growth now in the hands and direct control of the government, Americans would be wise to pay particular attention to these budgetary issues.

Previously published on Federal News Radio

How To Soak the Rich: Lessons from Mary Poppins

Friday, September 4, 2009 by Lurita Doan

 

 

President Obama and obliging Congressional leaders are intent on raising taxes on the highest earners. OK I get it. Congress and the President believe that the easiest way to fund the expansion of government and the many new government experiments, such as cap and trade and healthcare reform, is by raising taxes on the top wage earners.

I won't debate the "fairness" of asking such a small number of people to pay such a disproportionately large amount of the tax. Nor will I debate the long-term, and downright scary, consequences of 50% of adult Americans now paying little or no taxes. But, as long as the government is intent on soaking the rich, why not go about it more effectively?

First, understand that the top 1% of all Americans carry the heaviest tax load. They are "super taxpayers" and pay 40% of all the taxes in America and will soon pay even more. These increased taxes will be a bitter pill for the richest Americans to swallow. But, government can take a lesson from Mary Poppins, and use a spoon full of sugar to help the medicine go down.

Here's how.

Since only 3 million of the 300 million Americans are "super taxpayers", the government should find ways to reward and encourage them to continue to pay taxes. Just as American Express recognizes its top, credit-worthy spenders with a Black, titanium "Centurion" card, our government could issue a unique identification card and license plate, to the top 1% Americans paying most of the tax. Perhaps, the card could appropriately feature a picture of Atlas holding up the world, and would recognize super taxpayers with special privileges?

For example, Atlas Card holders could be allowed unrestricted use of HOV lanes during morning and rush hour commutes. This amenity wouldn't cost anything, is unlikely to increase traffic congestion, and super taxpayers might appreciate the gesture -- as a spoonful of sugar.

At Airports and other government facilities, special lanes and access already exist to speed airline pilots and stewardesses through the long lines of other travelers. Why not let the super taxpayers also enjoy the perk?

Diplomats, regularly, jump to the front of the line to clear immigration when returning from travel overseas. Why not let the super taxpayer enjoy the same benefit? In reality, considering their financial essentialness, isn't the super taxpayer just as important to our nation than, say the man serving as the Charge d' Affairs from the some obscure foreign nation, or a junior diplomat?

What about parking? Why not reserve a few reserved parking spots next to the handicapped spaces? Dulles International and Reagan National Airports have special reserved parking for Congressmen and Senators. Aren't the super taxpayers who are paying for most of the government's spending more important than the guys that are just dreaming up the new programs and new ways to spend?

Let's let the Atlas Cardholders park their cars just a little bit closer. Why not have the Senators and Congressmen to share their privileged spots with the guys that have to pay for it all? Better yet, maybe Congressmen could park over in the economy section and ride the bus and save some taxpayer money in the process?

Many might see these special perks as some kind of class warfare. Some might be aghast at the sight of a rich dude zooming past them in the HOV lane on I-95. But, before you succumb to cries of elitism and knee-jerk negativity, consider the benefits.

Providing the perception of privilege, at little or no additional cost to the government, might encourage the near-rich, those taxpayers that are in the top 5%, to work even harder, with the knowledge that one day, they too, may make it to the top 1%, and garner special Atlas cardholder privileges.

The enhanced profile of the Atlas cardholder, offers an immediate financial benefit for the rest of the nation. Someone in the top 1% may soon be forking over 60% of their income. Essentially, they (please don't tell them this) are modern-day, indentured servants who work at less than ½ wages, for the benefit of the rest of the nation, and pay for 60% of all government spending.

Our nation is best served if the super taxpayers continue to pay. So, we need to encourage them and speed their way towards working harder and earning even more. After all, the government knows, full well, that it will pocket most of their earnings.

I can even imagine the day, in the not too distant future, that instead of class envy, the sight of a top 1%er moving through the airport lines will evoke cheers from the rest of us. You'd hear cries of: "Way to go!!" Maybe a pat on the back accompanied by: "Love what you're doing!", "Keep it Up!. Or, perhaps, a high five and, an exclamation of my personal favorite: "YOU DA MAN!"

After all, let's face it: regardless of what you call them -- super taxpayers, indentured servants or Atlas Card Holders --our country can't go on without them.

Previously published  on Federal News Radio.com  

Reevaluating Cash For Clunkers: Will It Be Worth It?

Friday, September 4, 2009 by Lurita Doan

The Cash for Clunkers (C.A.R.S.) program was declared an "unqualified success" by Secretary LaHood who, this week, ended the program two and a half months earlier than the November 1, 2009 date intended by Congress.

President Obama said the C.A.R.S. program was "successful beyond anybody's imagination". Certainly, struggling, auto companies (GM, Ford, Chrysler, Fiat, and especially Toyota) were among the program's strongest supporters, and have seen consumers return to car showrooms this past month. But, is a one-time, one-and-a-half month, uptick in car sales for some car dealers worth the full, economic costs of the Clunkers program?

Two other questions should be answered before declaring the Clunker program successful. Did C.A.R.S. achieve its goal, announced back in April 2009, "to stimulate demand for American cars while making the U.S. auto fleet cleaner, greener and more efficient?" And perhaps more importantly, how adept was the government in running this program in a cost efficient manner?

Congress has appropriated $3 billion for the National Highway Traffic Safety Administration (NHTSA) to administer the C.A.R.S programs and provide approximately a $4500 cash rebate to buyers of approximately 457,000 new cars. Previously, I've expressed concern about the program's execution risks, questioning the ability of the government to quickly and efficiently ramp up a national program of this magnitude.

By July, NHTSA had hired approximately 300 employees to process claims in July. One month later, Secretary LaHood said NHTSA has approximately 1,100 folks to process and administer the program, almost quadrupling the number of personnel processing claims. But at what cost?

If these employees are government contractors, then NHTSA most likely engaged in the kind of no-bid contracting that President Obama and Congress claim to abhor. If the personnel were detailed from other DoT divisions, then there may be critical projects which now have stalled due to lack of personnel.

Or, if NHTSA directly hired these folks, then the ongoing, life-cycle costs of 1100 federal employees have consequences which will cost the agency billions of dollars.

Underestimating personnel requirements is just one of the execution risks when the government runs any program. In the C.A.R.S. program, the government also underestimated consumer interest.

Applications for the $4500 rebate exceeded expectations -- twice.

The NHTSA staff is swamped, and auto dealers have become frustrated with the slow pace of government processing the rebates. The government's underestimation, of consumer interest and its own processing time requirements, has caused the program to be canceled prematurely.

Our government also underestimated the infrastructure costs associated with the Clunker program. Government programs and employees need office space, IT support, office supplies, infrastructure, managers, and in this particular case, a unique and robust website capable of handling large transactions hourly.

That costs.

A lot.

Originally, I estimated that when the fully loaded cost of government are added to the $4500 rebate, the program would cost American taxpayers approximately $6000 per car. But, after the recent hiring binge at NHTSA, clearly, the actual costs to taxpayers will be much higher.

So, what is the cost of that money?

The federal government is running huge annual deficits and was forced to borrow the $3 billion that funded the C.A.R.S. program. President Obama's FY10 budget calls for annual, deficits of over $1 trillion, for the next 10 years. Allegedly, the federal government will begin to pay down the debt at that time.

The U.S. government is in the same boat as any overstretched consumer with too much credit card debt, who has no ability to pay off his credit card principal, and, is barely capable of making interest payments. According to plan, the $3 billion for the CARS program will not be repaid for at least 10 years.

If we are lucky, and if interest rates for government debt stays low, the costs of financing the $3billion will stay at 4%, which is about the yield on a 10-yr Treasury Bond. Even a small, 4% interest rate, when compounded on a $3 billion ten year loan, will add another $1.3 billion in financing costs to the Clunkers' program . Which brings the total dollars expended to $4.3 billion.

(Of course, $1.3 billion in interest is a conservative estimate, and could be quite a bit more if the government doesn't pay down the principal.)

When all program costs are added up, Americans may find that what it takes to run the program, borrow the money, pay the interest and provide the rebate will be over $4.3 billion for around 457,000 cars. Or put another way, each $4500 clunker rebate will cost American taxpayers almost $10,000.

Our government rarely runs large programs cheaply or efficiently. Cost overruns, unanticipated expenses and delays frequently occur. Other expected benefits from the Clunker program may be elusive.

Based upon anecdotal information, the Clunkers program do

Instead, Toyotas and Honda led the lists. More disturbing still, since no social security numbers are required, many of the recipients of the $4500 clunker rebate may turn out to be foreigners or illegal immigrants.

Secretary LaHood called the Clunker program an unqualified success.

After a critical review of the full costs, benefits, and goals achieved, more than a few Americans taxpayers may conclude that the costs, of almost $10,000 per clunker, were not worth the benefits.

Our government has borrowed money, to give $4,500 to someone who may, or may not, be a U.S. citizen, to buy a car, which may or may not be from an American company, and which may or may not make the environment cleaner or greener, at a cost of about $10,000 per trade-in. The way I see it, that's a clunker of a deal.

es not seem to have "stimulated demand" for American cars.


 

Republicans and the Recovery

Thursday, July 30, 2009 by Lurita Doan

Politico –Arena Commenatry

http://www.politico.com/arena/bio/lurita_doan.html

 

What "smart political response"–quoting Larry Kudlow–can the GOP craft so that the administration doesn’t get credit for an economic recovery?

 
 
 


The GOP would be wise not to worry about who gets the credit, if and when a recovery occurs. Republicans need to break with the past and not follow the sorry example of Democrats during the last Administration, who were knee-jerk, reflexively, anti-Bush, no matter what the issue.

The GOP needs to take the higher ground and earn back the respect that once was theirs, but which they forfeited. Ultimately, it’s not about who gets credit; it’s about our nation. It’s about putting in place long-term policies that will lead to long-term growth and prosperity.

The challenge for the GOP is to push pro-growth strategies and turn back the national, wealth-destruction efforts now being pushed by President Obama, Nancy Pelosi, Henry Waxman and Harry Reid.

As it becomes increasingly clear that the Obama Administration’s policies don’t work, and as our country is left with a HUGE debt that has to be repaid, we will need to muster the political leadership, both Republicans and Democrats, to undo the damage—and, at the rate the abuses are being crammed down the throats of the American people, clearly, it’s going to take exceptional leadership.

 

Published 29 July 2009 in Politico


OBAMA: Time To Sacrifice A Pawn

Saturday, July 25, 2009 by Lurita Doan

President Obama may need to sacrifice a pawn… soon. Bad economic news is piling up fast. Unemployment levels are rising. The Stimulus hasn't worked as advertised, and many Americans are worried that the Obama Administration may be juggling too many initiatives. Enter the Pawn.

Remember the chess pawn? Limited range of motion and often sacrificed for the greater good? Sacrificing a pawn at critical moments can reap big gains. A dead pawn buys time, diverts attention, and allows the bigger pieces a chance to reposition themselves. So, Team Obama may divert some attention from the mounting problems by pushing a pawn forward to take the fall.

A political pawn's purpose is simple. And there are two kinds of pawns--those who see it coming, and those who don't.

The typical, political pawn is unknowing, and, thus, surprised when his boss publicly gives him the axe and blames him for a failed initiative. When that occurs, as LBJ said: "it's like being a jacka** in a hailstorm, there's nothing to do but stand there and take it".

Unknowing pawns rarely recover from this kind of public dumping, and usually disappear, returning to their hometowns.

The second kind of pawn, the sentient political pawn knows it may be sacrificed, and has accepted the risks, perhaps out of loyalty, or a belief in the cause. Sentient pawns are keenly aware of the axe looming over their heads. They duck and dodge, weaving their way into as many essential issues and positions as possible, as a counter cure to getting the axe.

The sentient pawn is also a promotable pawn. As in chess, political pawns are the "lowliest piece", but can be promoted if they are wily enough and ambitious enough to survive. In chess, the only way to get promoted as a pawn is to work your way down the chess board, in an often complicated series of moves. In politics, it's no different.

Sacrificing the pawn, though regrettable, serves a purpose. For example, the pawn's termination may be the only way to appease the opposition, to give them "a head" on the chopping block. In those cases, the pawn has to be significant enough for the opposition to feel it got a head, but axing the pawn should, ideally, also solve one of the king's internal problems. Perhaps, the pawn is an individual who is advancing policy lines and issues that the Administration doesn't want to purse. In those cases, offering up the pawn serves everyone's best interests-except of course, the pawn's

But who are the pawns? Warren Buffet once said: "look around the room; if you can't identify the patsy, the patsy is you". Often, in meetings, there are unspoken questions: who is the pawn? When will he/she be sacrificed?

Perhaps someone from the Small Business Administration (SBA) might be a perfect pawn. Maybe, even Karen Mills, the head of the SBA? The Obama Administration is facing a growing animus as the Administration's anti-small business bias becomes increasingly obvious.

The clamor of small business owners continues to grow as it becomes clearer that the Obama Administration intends to increase taxes on small business and entrepreneurs to pay for all the new, governmental experiments in Energy and Healthcare. To divert attention, it may be time to sacrifice a pawn.

Since SBA employees recently crashed their computer system because too many, during office hours, were logged into the live data stream of Michael Jackson's funeral, that may provide just another justification.

Sacrificing this pawn might allow Obama to send a signal that bad behavior won't be tolerated, while providing flexibility to bring in new leadership with a more engaged approach to small businesses.

How about a sentient pawn? Ben Bernanke, the head of the Fed, is struggling to be a voice of reason in the mounting spending madness, but the Administration seems to be irritated that Bernanke's not playing along with the team. He's a carryover from the previous Administration which works against him, and allows Team Obama to continue efforts to pin all blame for the economic mess on the past administration.

Poorly-placed, isolated, sentient pawns, with no friendly pawns nearby, cannot retreat to a more favorable position, so we see Bernanke striving to make the media rounds, preaching to the choir: the Business community and Wall Street, his natural allies. Maybe he can protect himself, maybe not.

Regardless, the Obama economic plan isn't working. Each set of stats released puts the Administration increasingly in the hot seat. History suggests they are going to have to sacrifice a pawn soon.

Move Over Smoot-Hawley. We Now Have Waxman-Markey.

Thursday, July 16, 2009 by Lurita Doan

As Published in Politico -- The Arena


Move over Smoot-Hawley. We now have the Waxman-Markey bill that will go down in history as the greatest self-inflicted economic disaster ever imposed by Congress. Waxman-Markey is a travesty of a sham of legislation that does very little to address energy requirements or encourage freedom from our nation’s dependence on foreign oil. Crucial issues like the need to combine thoughtful conservation with the need to build additional nuclear plants and responsibly develop our own fossils fuels were avoided. Instead, we have a 1300+ page monstrosity that creates new governmental intrusions into the kinds of lightbulbs Americans are able to use and the temperature of hot tubs.

Washington Post: Caveat Lector

Tuesday, July 14, 2009 by Lurita Doan

Revelations that the Washington Post offered access to key policy makers in the Obama Administration and in Congress for $25,000 to $250,000 may have shocked some. But, critical readers of the Washington Post concluded, long ago, that this once-great newspaper is less an objective reporter of news and political insight, and more often, an active player in the political process.

 

Articles and opinions appear in the Post sometimes at the behest of advocates on the left, with which the Post is in allegiance, and as we have recently learned, as political payola to the highest bidder.

Many are probably wondering: how much does it cost for a Washington Post article or lead editorial to be slanted your way? Could it really be as little as $25,000? And as an article upgrade, what enhancements does $250,000 buy? Perhaps 10 such articles on the back pages or would they agree, instead, to splash your views on page 1, above the fold, with art? None of those details have yet been disclosed.

What we do know is that there is a cozy relationship between "those powerful few" certain members of Congress, key Administration officials and the Washington Post. Moreover, it seems, in a flagrant pay for play scheme, anyone with the money and the will can buy access.

But then, that's been known for years.

Congressmen, such as Henry Waxman, have been unusually skilled at exploiting the collapse of journalistic integrity at the Washington Post. Waxman has seemingly perfected the technique of punishing his political enemies with the most salacious charges possible, and, magically, the Post finds room on page 1 to regurgitate this political attack.

Companies that sell goods or services to the federal government would often find themselves attacked by Waxman and labeled as crooks and liars. Then, based upon the press reports that he says are "disturbing", Waxman cranks up a Congressional investigation to further demean and destroy.

By the time the facts reveal that the charges are bogus, Waxman has moved on to another victim. The Post, meanwhile, may decide to bury the follow up story somewhere on page E99, or print a small correction, weeks later, but just as often, it drops the story and heads to happier hunting grounds.

Scandal mongering has a rich, American tradition. Newspapers in the early 1800s were the first to develop sophisticated systems to simultaneously advance a narrow political agenda and attack political enemies, while masking their political activism behind a false wall of objectivity.

Political elites, like Thomas Jefferson, Ben Franklin and Alexander Hamilton were often those pulling the strings. Each used selected newspapers to criticize, demean, and attempt to destroy their political rivals. Later, at the turn of the 20th century, yellow journalism feuds between Pulitzer and Hearst enterprises featured ever more sensationalized headlines, in efforts to beat the competition.

In the 1800s, even though most articles were signed with pseudonyms, most readers knew that different newspapers carried distinct party lines. The Pennsylvania Gazette was a Ben Franklin Paper, while the New York Post was a Federalist paper backed by Hamilton. Most people understood that each paper carried a political bias and that truth could only be carefully extracted by reading the competing journals. The Washington Post, by contrast, still advances the false notion of its objectivity and denies its political bias.

More interesting than the exposure of the Washington Post's undeniable bias is the question: who are the senior Obama officials and key members of Congress whom the Post regards as "those powerful few" that had agreed to attend the Washington Post's salon? And more importantly: what was promised in exchange? Perhaps, glowing press coverage masquerading as the news?

How pathetic that this once grand newspaper is forced to chicanery, trying to pump revenues by using an age-old scheme of influence peddling. And, what an abomination for elected officials and "those powerful few" to attend and participate in something so brazenly inappropriate.

The Obama Administration and the Washington Post have been loud advocates of full transparency.  I encourage them to disclose the list of "those powerful few" scheduled to attend the Post's salon.

Consumers have long understood the wisdom of caveat emptor. Harmful poisons and cigarettes are required to have warnings. Perhaps it would now be appropriate, in the interest of consumer protection, to print a warning label on the Post.  Caveat Lector (let the reader beware) added to the masthead would be about right.


 

Previously printed at www.federalnewsradio.com

Waxman-Markey Madness

Thursday, July 2, 2009 by Lurita Doan

Jeers To Members of Congress who passed H.R. 2454 (Cap and Trade), none of whom had read the 1300+ page bill in its entirety.

The 111th Congressional leadership promised increased accountability, but instead, has encouraged irresponsibility. Not even the bill's sponsors (Waxman-Markey) have read the bill including all amendments.

Of course,many may recall that earlier this year I criticized Congress for voting on the $787 billion stimulus bill without ever reading it. Now, we have the Cap and Trade Bill that will add roughly $1 trillion in new energy costs to the economy, and no one in Congress has yet read that bill in its entirety either.

Clearly, the 111th Congress is one of the most irresponsible legislative bodies that our nation has ever produced.

Huge new spending, which the nation can't afford, is pushed through, with little debate, and with few, if any, members understanding what is in the bills that they vote on.

If this trend continues, (and I suspect it will), get ready for a 1500+ page HealthCare bill, with a $1 trillion+ price tag, that will pass without a single member ever completely reading that bill either.

(Previously published on www.federalnewsradio.com)

Is Twittering All There Is?

Thursday, July 2, 2009 by Lurita Doan

President Obama is up on Twitter. And Facebook, and My Space, and the White House has been YouTubing since almost day one. Without a doubt, the White House is fully engaged in 21st century social media. And, I am happy for President Obama.

On the surface, these attempts seem to be a good, first effort at fulfilling a campaign promise for transparency.

The technology staff at the White House made many of these social media develop when I was the GSA Administrator. The mechanics of implementing a social media strategy for the Obama Administration are in good hands with these folks.

What I am concerned about is the Administration's execution on the promises of performance, accountability and transparency. These goals are not accomplished solely by participating in social media, or by disseminating press releases and video clips.

One important example of true transparency would be providing the unvarnished, unsculpted, unmanipulated data regarding federal budget and stimulus financial expenditures and decisions affecting American taxpayers and American citizens.

I find it curious that within these first 100 days the White House is able to "tweet" and "friend" and "follow" in an elegant and sophisticated way, but is unable to fulfill the basic promise of transparency - namely providing visibility to the actual act of governing.

While there has been lots of flashy, new, social media engagement, Americans are still largely in the dark about if, where, how, and when much of the stimulus money has been spent.

Recovery.gov, one of the federal government's websites, designed to provide "accountability and transparency", is, at the time I am writing this, displaying little specific financial information, choosing instead to characterize $787 Billion in taxpayer money in categorized, colored bubbles of varying sizes, or simplistic tables providing no details. If you were hoping to find clear, accurate, detailed data on government spending, prepare to be disappointed.

Another site, www.data.gov shows "Coming Soon" centered in a blue bordered text box. "Coming soon" seems to be firmly rooted and has been the most consistent entry. And, www.grants.gov provides little additional visibility into Recovery Act funding expenditures, creating a circular reference back to Recovery.gov.

Opaque, unclear, irritating? Certainly.

The point is we have entered an age where rhetoric can easily triumph over reality and where form often replaces substance, and few care to discern the difference.

Growing up as I did with a father whose favorite saying was "facta, non verba" - deeds, not words - I have long believed what one did epitomized one's priorities. Now, the challenges to integrity caused by "doublespeak" are a daily fact of life.

Americans seem to have grown used to what appears to be governmental incompetence and government's inability to provide accurate and timely information. But why? The tools are all there. All congressional bills, all financial expenditures, all agency budgets are already in digital format.

I remain amazed by a political process that allows $787 billion of taxpayer dollars to be allocated by a Congress, where easily 85% of the Congressmen openly admit to not reading the bill prior to voting for it.

How simple it would be, if one were genuinely committed to transparency, to post the raw data online and let the American people judge for themselves if government is doing the will of the people.

President Obama has an important opportunity before him. An opportunity to prove that his Administration is committed to substance over form, committed to true transparency, committed to doing more than just fostering the appearance of change.

Let's hope that the President now applies as much effort to making the real business of government transparent as he did to making the public aware of his "coolness" in participating in social media.

(Previously published on www.federalnewsradio.com)

Waxman-Markey: Speed Spewing Cap and Trade

Thursday, July 2, 2009 by Lurita Doan

We live in a representative democracy, where we place a lot of trust in our elected officials and their powers of judgment. We trust them to represent our concerns in their deliberations. But, most importantly, we trust that they will deliberate, before taking action.

 

Recently, Congress betrayed that trust by passing a $787 Billion dollar spending bill that no member of Congress had read in its entirety prior to the vote. And, like naughty children who didn't thoroughly prepare for an exam and who want the failing grade not to count, Congress is asking us, after a negative GAO report, to grade their performance on a curve and redefine what "stimulus success" means.

Americans shook their heads and figured it would never happen again.

But they're wrong!

In a move that makes a mockery of our legislative process, Congressman Waxman has hired, at taxpayer expense, Douglas Wilder, a professional speed reader to spew out one of the most complicated and expensive legislation ever proposed, the Cap and Trade Bill. Such a reading is largely unintelligible and universally worthless, but will allow Waxman to claim that the bill has been read before being voted into law.

Taxpayers may find it unbelievable that Congressional leaders rarely read legislation in its entirety, especially when the proposed bill brings increased spending or new taxes of nearly $1 trillion. Congress should think, long and hard, before passing a trillion dollar spending bill that will usher in new restrictions over nearly half of the US economy. But, not only have few Members actually read the 900+ page document, the actual author, Congressman Waxman, brazenly admitted to a colleague he had not read the very bill that he is sponsoring, which bears his name.

Apparently, the only way to get Congressman Waxman to read his own bill was to hire a speed spewer.

Forget for a moment that Waxman is hiring a speed reader at tax payer expense (probably using a sole source award, with no competition, for which in the past he has expressed much false outrage). Forget too, that as a Congressman, he has a responsibility to read legislation before voting on it, especially if it's his legislation!

A bigger problem is an erosion of the faith Americans have in our system of democracy and fair play. Speed reading a trillion dollar bill is gimmicky and non-substantive, as is much of Waxman's legislation. Even with a motor mouth at the podium, the bill takes an estimated 9 hours to read. A more competent statesman would spend that time in composing more thoughtful legislation, rather than advocating a bloated 937 page bill that even Waxman refuses to read in its entirety.

Waxman's bill is stuffed with weighty matters such as new restrictions on candelabras (page 158). Read on to page 268 and you discover Waxman's proposed legislation intends to limit the illumination of underwater lights in swimming pools. Water coolers are covered on page 288, and the truly intrepid can push on to learn federal government will limit energy consumption of hot tubs.

But, if any of this makes you laugh, let me tell you: the joke's on you.

Henry Waxman may be a buffoon, but he understands how to ram bad legislation through a numb congress. His new legislation will eventually limit all C02 emissions, impose almost a trillion dollars of new taxes, and force new regulations on everything from power plants to candelabras and hot tubs.

Historians, economists, and political scientists have increasingly implied that America has lost its ability to lead. They say we can't manage our resources and economy effectively, or inspire the world, or serve as that beacon on the hill to those that aspire to something greater.

But, they are wrong.

I still believe that America's best days are still ahead. But, if you want to see why so many thoughtful people believe our nation is in decline, just watch Henry Waxman's speed reader canard and see the circus.

Henry Waxman has a reputation as a fierce partisan, willing to play fast and loose with the facts, and providing his loyalists with a great show. Integrity and fairness hold little sway over him. But, Waxman's buffoonery, complete with a speed spewer to belch out his dizzy, 937 page legislation is a new low.

Once again, legislation that no one (except the contracted speed reader) has actually read, will increase taxes on every American and usher in a new, horrific, regulatory regime, costing Americans around $1 trillion a year.

Not so funny now is it?

 

(Previously published on www.federalnewsradio.com)

The Job Creation Two-Step

Thursday, July 2, 2009 by Lurita Doan

Watch closely and you will see the Obama Administration and senior members of Congress beginning to do the old, Washington two-step, as it becomes increasingly clear that the promised benefits from the bailouts and stimulus remain elusive.

Six months ago, Americans were told the $2 trillion dollar deficit would spark the economy and create new jobs. But jobs are not being created, though billions have been spent.

President Obama and Congressional leaders promised 3.5 million jobs would be created if the $787 billion dollar stimulus package was passed. Jobs would be saved by various multi-billion dollar bailouts. And, in Mid-May of 2009, the President's Council of Economic Advisors issued a report reinforcing the assertion that 1.5 million of these jobs would be created by 4th quarter of 2009.

Perhaps it's time for some new estimates and a dose of reality.

The Department of Labor reported that in May, non-farm payrolls fell by 345,000 jobs. But the federal government's flaky accounting, softening the job loss by adding 220,000 bogus jobs by making a birth/death adjustment, is even more troubling. The Labor department guessed how many jobs might have been created by companies too new or too small to participate in the survey. But this adjustment is only a wild guess and, most likely, a lot fewer than 220,000 new jobs were added by newly-created businesses last month. So, the real monthly job loss may be closer to 565,000. Ouch!

Optimists believe the job creation numbers can improve, with 250,000 stimulus jobs created each month from now through December. That's a lot of jobs. It's becoming increasingly obvious that the stimulus plan may not come close to creating that many new jobs. So senior leaders in Congress and the Administration are beginning to panic.

Clearly, the Administration knew they were unlikely to meet the goal of creating 3.5 million jobs when they changed their metrics and rhetoric to include the number of "saved" jobs as well as "created" jobs. Accurately measuring a "job saved" is almost impossible. And altering metrics, after realizing that the stimulus plan has troubles, is disingenuous.

Who remembers the President's own economic advisors' assertions that 1,085,355 jobs would be created for every $100 Billion of government stimulus spending, resulting in an average cost to taxpayers of approximately $92,000 for each new job created?

Recovery.gov reports that, as of May 30, 2009, federal agencies have spent approximately $43.7 billion. According to the Council's formula, American taxpayers should have seen approximately 473,000 jobs created. Instead, on average, a half million jobs have been lost each month, since the stimulus package was rammed through a dazed Congress.

Spinmeisters are struggling to put a positive slant on the bad news, saying the job loss was nowhere near as bad as it could have been, or, certainly, less bad than April's. Cold comfort when the interest on the $787 Billion dollar "stimulus" projects, such as saving the marsh rat, costs taxpayers millions in debt service each month, while billions in bailout money have been lost.

Don't believe me? The Obama Administration has spent, and lost, more taxpayer money trying to bailout GM than it spends annually on NASA. They spent more on a failed AIG strategy than it takes to run the entire State Department. And worse, unless the Administration and Congress get serious about the budget crisis, the annual debt service will exceed all line items in the President's budget, surpassing even DoD, within 6 years.

Even understanding what government-sector jobs are created by the stimulus is difficult. Many federal agencies have expediently updated their www.usajobs.gov entries, claiming that all of the jobs available, even those listed prior to the stimulus, are Recovery Act jobs.

If the Obama Administration follows its usual M.O., then the upcoming few weeks will see them in denial, doing the Washington two-step, redefining "jobs saved" or "jobs created". There will be a parsing of "jobs" versus "job hours" and what really constitutes an "FTE". They may even crank up the old fear-mongering machine, insisting another stimulus spending orgy is necessary.

What probably won't happen is an acknowledgement that, at least so far, the stimulus isn't working.

We haven't heard a lot from the Administration on the poor show surrounding their four month attempt at job creation. Hopefully, they'll stop the Washington two-step, and the current job numbers will serve as a wake-up call that the government's intrusion into business is the surest way to kill jobs, not create them.


(Previously published on www.federalnewsradio.com)

OBAMA to Inspectors General: Thanks--Now You Can Go

Thursday, June 18, 2009 by Lurita Doan

President Obama will likely demand the resignation of many of the current Inspectors General throughout the federal government, in the upcoming few months.  The AmeriCorps IG conundrum that captured headlines last week is the first.

Don't be surprised: more will follow.

During the past few years, Congress has turned the Inspector General's audit oversight function into a partisan hit squad that seemed to have one mission: go to any length necessary to discredit, disparage, and frustrate the efforts of every agency chief throughout the Bush Administration.

The IGs have an important job to help uncover inefficiencies, as well as identify examples of waste and abuse. But often, IGs were encouraged by Congress to dive deep into the political arena instead of focusing on the difficult job of auditing programs, making cost effective recommendations for improvement to program managers and working with their departments to improve government.

A fiercely partisan, Democratic Congress struck a not-too-subtle deal with inspectors general: produce the dirt in exchange for expanded budgets and greater autonomy with little oversight or review. And, the deal worked.

Over the past few years, it seems, IGs have beaten a path to the door of Congressmen Waxman and a few others, with lurid tales of misdeeds and corruption. Congressmen, such as Henry Waxman (D-CA), would ensure the tales were embellished, then leaked to a compliant and biased media, that promptly found room on page one to blast the Bush Administration.

The charges might have been bogus and the claims of misconduct falsified and exaggerated. So what? What mattered was the volume of the allegations portraying Bush Administration appointees as incompetent fools.

Announcing surprise, after reading the very story that staff had shared with the media, Congress would then demand hearings. Plunging deeper into the mire, milking every last drop of sensationalized media coverage helped them replenish their campaign coffers. There was little interest in applying common sense accountability over the Inspectors General.

At the same time, evidence began to indicate that IGs not only were deviating from their core mission, but were often, themselves, a source of the waste, fraud and abuse they were established to eliminate. IGs spent lavishly on redundant computer systems, misallocated funds, and conducted shameful persecutions of other federal employees.

When whistleblowers came forward, with specific examples of misconduct and poor management within the IG ranks, they were ignored and then quickly reassigned to other agencies. Put simply, the normal rules did not apply. All that mattered was that IGs keep generating the sensationalized dirt that Congress demanded. After digging a dry hole, Congress tends to shout "Eureka!!" and move their digging efforts to another site and continue the process.

However, that party is over. It's time for IGs to return to their core mission or be replaced.

The firing of the AmeriCorps IG serves as a warning shot over the bow. If President Obama is able to remove the IG with little controversy, then more dismissals will certainly follow. The Obama Administration needs to ensure that IGs are not given the same unrestricted role to harass, damage, and disparage its appointees with impunity.

President Obama and Chief of Staff, Rahm Emmanuel, understand how the IG game has been played and now seem determined to replace them with new IGs that are focused squarely on performing their statutory responsibilities.

By this standard, most of the existing IGs will have to go, and we should expect that the Administration will claim that a new, more objective and professional group will need to be appointed, with the goal of returning the IGs to their statutory responsibilities, of being an honest broker to both identify problems and to help improve agency performance.

Meanwhile, a more important message will be sent: that IGs will no longer be protected and encouraged to work more closely with the media than the agency in which they serve. No longer will IG misconduct, under the guise of oversight, be allowed to flourish unchecked.

For several years, I have contended that not all Inspectors General are knowledgeable; not all are unbiased, and not all are fair. Now, clearly, President Obama has come to the same conclusion.

As Washington knows, "elections have consequences". No longer is there a reason to empower and encourage IGs to continue the scandal-mongering scheme. That ship has sailed. The question now is how quickly and completely will President Obama disassemble the current IG apparatus that has served the nation so poorly and served Congress so well.

Is This Czar Really Necessary?

Friday, June 5, 2009 by Lurita Doan

The old adage used to be that not everyone could be a chief. But, in the Obama administration, apparently everyone in the federal governmentcan be a Czar. Last week, the President announced his decision to appoint yet another czar, a Cybersecurity Coordinator.

 

To date, the President has named 21 different czars, responsible for everything from healthcare to border security, and now cybersecurity.  Multiple appointments defy the primary characteristic of the original Russian czars. There was never more than one at a time, and they had autocratic power.

 

In contrast, the many czars appointed by President Obama have neither autonomy nor authority and seem only to erode the statutory responsibilities of Senate confirmed Cabinet member.

The announcement of the Cybersecurity Coordinator brings three questions immediately to mind.

First, how will the President ensure that the newest czar's responsibilities do not duplicate the efforts of the federal CIO, Kundra, and the federal CTO, Chopra?

Second, how can accountability be ensured when so many responsibilities are divided among so many masters ?

Third, where's the funding source for this new position and its accompanying organizational infrastructure?

Kundra's announced responsibilities involved directing "policy and strategic planning of federal information technology investment with responsibility for oversight of information security and privacy across the government". Chopra's responsibilities were described similarly, but his status as a Senate-confirmed appointee clearly indicated his seniority.

For Kundra and Chopra, both credible techies, the arrival of yet another technology strategist competing for the President's attention potentially increases the confusion.

Accountability for outcomes in the federal government is challenging enough at the best of times, but with so many cooks stirring the same broth, some degree of confusion is inevitable. Furthermore, the Cybersecurity coordinator, according to the President, will report "frequently" to him but report directly to the National Security Advisor and the Director of National Economic Council. And, that's just for starters.

This is presidential decision-making at its worst.

Too many strong willed people with duplicative responsibilities and no clear direct line of responsibility is a recipe for confusion. Make no mistake, it will end badly.

How this Coordinator will interface with the oversight from Congress is not clear either, since this appointee will not be Senate confirmed.

Senator Susan Collins correctly identified one of the greatest execution risks as the potential for internal conflicts and bureaucratic in-fighting between the Cybersecurity Coordinator and the leaders in DHS responsible for a similar mission. As she pointed out, the issue of national cybersecurity is simply too important to have any ambiguity.

There's also the funding issue.

Last week, President Obama informed American citizens that the money had run out and the government was now in deficit spending. So, it is mystifying why he would waste federal money creating a duplicative office, with redundant, ill-defined responsibilities.

Czars need staff, office space and associated technology necessary to perform the job. The President seems to be increasing unnecessary spending to support his new czar when a more responsible course of action might be to cut redundant positions and programs.

I understand and agree that Cybersecurity protection as a priority is long overdue in the federal government. But, the President seems confused about what he hopes the new czar will accomplish. He stated that the new office "will not include monitoring private sector networks or internet traffic". But we all know that many private sector companies and organizations are involved in the daily support of America's cyber defense.

Several studies, ranging from 2002 to 2008, have shown that terrorist cells use the private sector internet infrastructure to conduct espionage, recruiting, propaganda dissemination and fund raising. Al-Qaeda and other organizations frequently rely on private "front" companies and "front" charities to communicate and to receive contributions.

Looks to me like the President's cyber czar is not going to tackle the tough issues.

If the Cybersecurity Coordinator is only strategizing and organizing security of the federal infrastructure, then that is a mission that could, and perhaps should, have been left to the Federal CIO and CTO.

If the mission remains as broad as stated, then the federal Cybersecurity Coordinator is going to be much more intrusive into private sector infrastructure and ultimately more intrusive into the private lives of citizens than the President stated.

The President owes Congress and the American people a clearly defined organizational chart of the Cybersecurity czar's responsibilities and organizational structure. Duties need to be clearly delineated and the President should explain why he thinks these duties can't be performed by any of the various existing members of his Cabinet. All effective organizations are distinguished by having clear and unambiguous lines of authority and responsibility.

The 21 different Presidential czars have muddled lines of authority and accountability. Here too, the Senate would be wise to question whether or not the President's apparent move to appoint czars to handle key issues as supernumeraries not subject to Senate confirmation, review, or accountability is constitutional.

Appointing czars provides the President with great press and might be a temporary boon in opinion polls, but it is rotten policy and a terrible precedent, laced with all sorts of complications.

As with so many of the President's moves, clearly, the long term costs have not been considered, and it's the American taxpayer who will have to pay for that omission.

Forgotten Federal Contracting Officers

Saturday, March 7, 2009 by Lurita Doan

The $787 Billion dollar economic "stimulus" is, perhaps, most noticeable for what it does not contain: substantial support, either ideological or financial,  for federal contracting officers. 

Federal procurement reform, one of many campaign promises, and the subject of a recent Presidential speech, has been delayed until some time in September 2009, months from now.  The Obama Administration seems to have broken faith with our nation's contracting officers, and once again put the cart before the horse.

While there is much rhetoric in the media touting the President’s “detailed plan” to address procurement reform, a close examination of President Obama’s speech, reveals there are no details, only promises to plan for a plan.

Neglecting our federal procurement force comes at a cost, and that cost will be high. Our procurement system is undermanned and burdened with process issues.

Federal procurement professionals have been attacked, unappreciated, and demoralized over a period of years. Too few contracting officers have been made responsible for ever increasing amounts of federal spending, stretching the workforce too fast and too far.

Some in Congress, then, have compounded the problem by abandoning a common sense approach to oversight, and instead chose to create a false impression of widespread, endemic fraud and abuse within the federal contracting system. Suggesting that federal contracting officers are universally corrupt and inattentive is wrong and unfair. Perhaps, it was convenient to find someone to blame, and contracting officers became a convenient target.

The stimulus bill advances the notion that the already strained and demoralized federal procurement force can effectively administer an additional $400 billion in federal spending. Moreover, it seems that procurement professionals will be asked to do it even more to help the President achieve his goal of quickly getting the federal money committed. Fat chance.

Instead, we may reap the bitter harvest from a decade of indifference to our contracting workforce. At precisely the time when the nation needs efficient and timely procurements, we may see a slowing down of what is already a long and tortuous procurement process.

Consider, for example, the mismanagement of the DoD procurement process over the past few years. In a desire for a quick fix to cut costs, DoD decided in the 1990s to cut the number of contracting officers. This short-term fix caused an overworked contracting staff to become even more overburdened.

The problem was then compounded with new demands, and an 85% increase in spending to support the wars in Iraq and Afghanistan. A depleted procurement force had little time to prepare solid statements of work, and many times were unable to properly hold competitive bids to meet urgent demands. So, too often, sloppy contracts were hastily pulled together, and many no bid contracts were issued in order to reduce time to award.

Of course, several legendary cases involving real wrong doing by contracting officers graced the front pages of the newspapers. But this evidence of corruption of a few, does not mean that all contracting officers are corrupt. Finger-pointing, often considered an effective form of oversight, failed to identify lack of contracting officers as the single greatest factor leading to cases of waste.

With the second stimulus bill, we seem to be repeating the missteps that led to procurement problems in DoD. Only now, we risk wasteful spending on a much grander scale. Just imagine, courtesy of the second stimulus, the increased opportunity for error as contracting officers try to expedite procurements demanded by Congress, just as a depleted and demoralized federal procurement force attempts to handle a 100% increase over the FY09 budget.

What makes procurement officers particularly angry is that the stimulus bill finds funding to support even the marsh mouse in San Francisco, but nothing for the people that will assume full responsibility for the huge wave of federal stimulus procurements.

Even worse, Congress simultaneously doubled down on its heroin-like demand for show-trials, witch hunts and old-fashioned, media grabbing, "gotcha" events. Speaker Pelosi recently announced the intent to hold even more oversight hearings to examine abuses in the contracting system.

While there is no direct support, of any kind, for federal procurement professionals, Inspectors General, long a creature of Congress, will receive huge, new, appropriations to investigate any procedural missteps, both real and imagined. Conveniently, the federal procurement force seems to be positioned to take the blame for the inevitable problems and disappointments of an ineffective and poorly planned stimulus.

Don't be too surprised if procurement professions decide to move more slowly and more deliberately in awarding Stimulus procurements. Even though no additional funding is provided, the stimulus stipulates a dramatic increase in reporting requirements for contracting officers.

Given the advance notice for show trials, procurement professionals are wise to adhere to the established, albeit often lengthy, procurement orthodoxy, to avoid making even the smallest procedural error.

Procurement officials have learned that a simple mistake, or even honest disagreement with any in the oversight community, could potentially be a career ender. The deck is stacked, with procurement officers holding only 2s, 3s, 6s, and 9s. All the aces have been dealt to someone else. Even the marsh mouse is viewed as more deserving of Congressional support.

Congress and the President have made a grave mistake in neglecting our federal procurement workforce. Let's hope they correct this pattern of neglect soon.

Zero Based Budgeting and Stimulus Bloat

Wednesday, February 18, 2009 by Lurita Doan

The federal government has crammed the Second Economic Stimulus full of pork projects. Some of my previous op-eds have discussed the deleterious effects of the government’s proposed second stimulus (Some honest truth on building infrastructure, Economic Stimulus: Same Old Whine New Bottle, Job Creation: The Art of The Possible).

The unintended consequences of the congressionally approved "stimulus" will burden our children and our grandchildren under a mountain of debt, even though the stimulus will not have solved our nation's economic problems. Instead, future generations will be faced with the same challenge. Why? Because the U.S. government does not apply the fiscal discipline of "zero based budgeting" when planning its budget every year.

"Zero based budgeting" is a fiscally disciplined practice, desperately needed by our federal government, wherein every division within every federal agency builds a budget from the bottom up each year, and determines what it needs to perform the work it is tasked to do on behalf of the American people.

Our current system is one of "incremental" budgeting. Agency heads only document the need for increases over the previous year's budget. Our current budget process assumes that Congressional approval of a previous year's funding is sufficient justification to form the base funding of the upcoming year.

There is little oversight on the process, little consideration of whether the funding was judiciously spent or if the program was successful. Most dangerous of all, our current budgetary system does not account easily for one-time expenditures.

The current format of the second economic stimulus is filled with new projects, siphoned in from every wish list of every federal, state and local official, as well as the wish lists from well-positioned lobbying groups. Then, the second economic stimulus was further bloated when legislators crammed it full of increases to existing entitlement programs. For example, funding for the McKinney Act for the homeless has increased to $6 Billion, up $4 Billion from 2008 when the funding appropriated by Congress for the homeless was $2 Billion.

In cases such as these, for existing entitlement programs that cannot be characterized as one-time infrastructure projects, there is a great risk that the funding provided from the second economic stimulus will be absorbed into the expectations of all and form the base for the 2010 and 2011 fiscal years' budgets that OMB and the President will be presenting to Congress.

A close examination of the proposed, second economic stimulus will reveal that almost half of the proposed stimulus falls into this category. Today's benefit will have become tomorrow's entitlement. This means that, each year forward, at a minimum, our government will place our country in yet another half a trillion dollars, of further deficit spending. In other words, next year, by absorbing the stimulus, our nation's legislators will double the deficit from this year which, sadly is double that of 2008.

And, if you consider the Obama Administration's promised "jobs creation program", that, too, becomes yet another entitlement that must be sustained. Otherwise, two years from now, the jobless rate returns to its current level, and our country will face the same jobless numbers that concern us now.

The Office of Management and Budget is the agency with the responsibility to assist federal agencies prepare the comprehensive budget that the President submits, each year, to Congress. But, agency heads are inexperienced with developing zero based budgeting, and Congress, for the most part, seems disinclined to insist upon it.

While others in government are busy bilking the American taxpayer with a bloated second economic stimulus package, let's hope that OMB is developing a strategy and the tools to develop internal controls and accounting mechanisms to track the differences between the existing budget and the upcoming bloat of supposed "one time" projects embedded in the stimulus.

OMB is already off to a slow start, and at a bit of a disadvantage with the resignation of the nominee for the Deputy Director of Management of OMB, and certainly, under the previous Administration, OMB was disinclined to enforce the discipline of zero based budgeting.

Let's hope, for the sake of future generations, that OMB will be committed to fiscal discipline, to creating a zero based budgeting process that will, at the very least, ensure that future generations don't find themselves in the mess that we have made.