Tag: taxpayer dollars

U.S. Taxpayers Subsidize Afghan Insurgents

Less than a week after President Barack Obama made a surprise visit to Afghanistan and proclaimed, “We broke the Taliban’s momentum,” the chairs of the Senate and House intelligence committees offered a candid assessment of the U.S. mission. Senator Dianne Feinstein (D-CA), alongside Representative Mike Rogers (R-MI), said on CNN’s “State of the Union,” “I think we’d both say that what we found is that the Taliban is stronger.” Their observations are the type of unvarnished truth that our military and civilian leaders typically avoid. U.S. and NATO officials meeting in Chicago later this month should take heed, especially since American taxpayer dollars are helping to fund the insurgents we’re fighting.

In a not-much publicized report last August from the Commission on Wartime Contracting in Iraq and Afghanistan, researchers found that after the illegal opium trade, the largest source of funding for the insurgency was U.S. contracting dollars. It found that Afghan companies under the Host Nation Trucking program use private security contractors who then turn around and pay insurgents and warlords who control the roads we must use. Although the Commission on Wartime Contracting report did not mention how much was funneled to the insurgency, a similar protection racket was also uncovered a couple of years ago.

Task Force 2010, assembled by General David Petraeus, examined the connections between insurgents and criminal networks on the one hand and Afghan companies and their subcontractors for transportation, construction, and other services on the other. The task force estimated that $360 million in U.S. tax dollars ended up in the hands of insurgents and other “malign actors,” including criminals, warlords, and power-brokers.

The $360 million “represents a fraction of the $31 billion in active U.S. contracts that the task force reviewed,” Associated Press reporters Deb Riechmann and Richard Lardner explained. As Brussels-based International Crisis Group observed in a depressingly frank June 2011 report:

Insecurity and the inflow of billions of dollars in international assistance has failed to significantly strengthen the state’s capacity to provide security or basic services and has instead, by progressively fusing the interests of political gatekeepers and insurgent commanders, provided new opportunities for criminals and insurgents to expand their influence inside the government. The economy as a result is increasingly dominated by a criminal oligarchy of politically connected businessmen.

Is it any wonder why pouring massive piles of cash into a broken and war-ravaged system resulted in failure? Those who follow the news from Afghanistan will see how rent-seeking inadvertently strengthens that country’s twin evils: corruption and insecurity. As journalist Douglas A. Wissing writes in his eye-opening new book, Funding the Enemy: How U.S. Taxpayers Bankroll the Taliban, in addition to foreign development advisers preoccupied with their own career advancement, development money itself was not countering the insurgency but rather paying for it. Combined with an enemy whose strategy was always about exhaustion, the result has been catastrophic.

Wissing writes, “I learned that the linkage between third-world development and US national security that foreign-aid lobbyists peddled to American policymakers was a faith-based doctrine with almost no foundation in research.” Year after year, the American public was spoon-fed government reports that lacked honesty about why our top-down security and development programs were constantly failing. Buildings were poorly constructed. Projects were bereft of proper oversight. Schools were built without teachers to staff them. Road construction contracts financed insurgent racketeering operations.

The undistorted evidence of a European-based think tank, a bipartisan congressional commission, and a report from military experts, assembled by the war’s former commander, leads to one conclusion: the war is inadvertently throwing American taxpayer dollars at insurgents killing American troops. What about this self-aggrandizing system is making Americans safer? Moreover, what about the safety of the Afghans whom planners in Washington swore to protect from the Taliban? In spite of the tripling of U.S. troops since 2008, a recent report by the U.N. mission concluded that 2011 was the fifth straight year in which civilian casualties rose.

As Feinstein said to CNN on Sunday, “The Taliban has a shadow system of governors in many provinces. They’ve gone up north. They’ve gone to the east. Attacks are up.” After over a decade of inadvertently funding the enemy and alienating the local people, Americans should not be surprised with such a dire outcome. If anything, they should be surprised that their elected leaders are finally telling the truth.

Cross-posted from the Skeptics at the National Interest.

Public Housing for the Dead

The HUD Inspector General’s Office released an audit earlier this week on the department’s progress in making sure local public housing agencies aren’t subsidizing the deceased. According to the report, local “agencies made an estimated $15.2 million in payments on behalf of deceased tenants that they should have identified and corrected.”

The audit found the following “significant weaknesses:”

  • HUD and local agencies did not have effective policies related to deceased tenants.
  • Local agencies did not provide accurate and reliable information to HUD.
  • HUD and local agencies did not safeguard assets to ensure correct assistance payments.

This report is a small illustration of the fundamental problems with the federal government subsidizing local governments. The local public housing agencies are supposed to be monitoring how money is spent and reporting to HUD. HUD is supposed to be monitoring the local public housing agencies. But no one does a very good monitoring job, despite the piles of regulations and paperwork that every level of government has to deal with for such subsidies. The muddled web of responsibilities also makes it easy for fraud artists to take advantage.

Last week, HUD’s IG reported that the department is sending $220 million in stimulus funds to local agencies already known to misspend taxpayer dollars.

From USA Today:

The government is sending millions of dollars in stimulus aid to communities and housing agencies that federal watchdogs have concluded are unable to spend it appropriately, increasing the risk that the money will be wasted.

Since July, auditors working for the Department of Housing and Urban Development’s inspector general have scrutinized at least 22 cities, counties and housing authorities in 15 states and Puerto Rico to measure whether they can handle stimulus funds effectively. Only six, they found, could do so.

The rest — in line to receive more than $220 million in stimulus aid — had shortcomings ranging from poor management to inadequate staffing that threatened their ability to spend the money quickly and appropriately, a series of audit reports show.

According to a HUD spokesperson, the department is “spending millions of dollars to help local officials spend stimulus money effectively.” Maybe that’s true, but all monitoring help is a pure loss to taxpayers and the private sector economy.

Even when the federal oversight does find problems, the money often keeps flowing anyway. As the article notes:

USA TODAY reported in April that HUD planned to send $300 million in stimulus money to public housing authorities that had been repeatedly faulted by outside auditors for mishandling other forms of federal aid. Congress gave the Obama administration permission to withhold stimulus money from some of those agencies, but HUD opted earlier this year not to do so.

For more on fraud and abuse in federal programs, including housing subsidies, see this essay.

Abortion Funding and Health Care

President Obama’s approach to health care reform – forcing taxpayers to subsidize health insurance for tens of millions of Americans – cannot not change the status quo on abortion.

Either those taxpayer dollars will fund abortions, or the restrictions necessary to prevent taxpayer funding will curtail access to private abortion coverage. There is no middle ground.

Thus both sides’ fears are justified. Both sides of the abortion debate are learning why government should not subsidize health care. Tip of the hat to President Obama for creating this teachable moment.

Meanwhile, Catholics should be outraged at the United States Conference of Catholic Bishops (to which my grandfather served as counsel). Yes, the USCCB helped prevent taxpayer funding of abortions in the House bill. But at the same time, those naughty bishops have abandoned the Church’s doctrine of subsidiarity by endorsing the rest of the Democrats’ plan to centralize power in Washington.

As it happens, Caesar is the main source of funding for Catholic hospitals. That may explain why the bishops are so eager to render unto, ahem, Him.

Cross-posted at Politico’s Health Care Arena.

Stimulus and Boondoggles

The New York Times has a story on some of the more controversial ways in which state and local government are using so-called federal “stimulus” dollars.  If anything, it provides some interesting background on the history of the word boondoggle (not surprisingly, it entered the American lexicon during the New Deal).  The gist of the piece is that one person’s boondoggle is another person’s…turtle crossing…skateboard park…or airport for an island in Alaska with 170 people on it.  One New Dealer found this out decades ago:

Robert D. Leighninger Jr., a sociologist who wrote “Long-Range Public Investment: The Forgotten Legacy of the New Deal” (South Carolina University Press, 2007), recounted the story of a Works Progress Administration official in Arizona who went off in search of boondoggles, and discovered that the towns he visited seemed to like their own projects but questioned those of their neighbors.  “I’ve been hunting all over the state for one, but everywhere I go I’m told it’s in the next county,” the official was quoted as saying in a 1936 newspaper article. “So far I haven’t been able to catch up with a real, live one.”

Naturally, that attitude is alive and well today.  I know more than a few folks in central Pennsylvania who thought Alaska’s “Bridge to Nowhere” was a waste of their federal taxpayer dollars but the “Road to Nowhere” in their own backyard was other people’s money well spent.  Of course the folks in central Pennsylvania don’t like being taxed by the federal government to pay for a bridge in Alaska – they don’t benefit, but bear a portion of the cost.  And that’s a fundamental problem with federal subsidization of activities that are – at most – the proper domain of state and local government.

Set aside the fact that the Constitution never intended for the federal government to make such expenditures.  While any of these controversial parochial projects will technically have benefits, sound economic decision-making would seek to optimize those benefits versus the costs.  In the politicized world of the congressional sausage factory, costs scarcely factor into the equation given that the burden is borne by million of taxpayers spread out across the country.  Therefore, I think the few in Congress who crusade against these perceived boondoggles should spend more time trying to educate their colleagues (don’t laugh) and the public on the need to limit the federal government’s ability to spend the money in the first place.

For more on the problems with the federal subsidization of state and local government, please see this Cato Policy Analysis from my colleague Chris Edwards.

Bank ‘Stress Tests’ Need Transparency

As the bank stress tests are released, it is vital that the public receive specific and detailed information on each financial institution.  The Administration’s and the Federal Reserve’s continued policy of attempting to disguise the differing health of each bank has been a failure.  What is best for the taxpayer and the investing public is sufficient information to separate the good banks from the bad.

For those institutions which lack sufficient capital to remain solvent, they should seek private capital or else be closed and resolved.  Too many taxpayer dollars have already been wasted keeping alive failed institutions.  The Administration’s policy of keeping failed institutions on taxpayer-financed life-support only serves to retard the market’s ability to move assets away from those who do not, or cannot, make productive use of them toward those who can.  It is time to remember that the unparalleled wealth-creating engine of the market depends as much on allowing failure as it does in encouraging success.

Banks passing the stress tests should be allowed and encouraged to re-pay their TARP funds as soon as possible, and with no additional strings attached.  More importantly, the Administration should use any returned TARP funds to pay-down the increasing government debt, rather than be diverted to bailing-out other failed companies.

The Beginnings of Earmark Transparency

Under reforms announced in March, House members have to publicly declare the earmarks they’re requesting from the Appropriations Committee. Most of the requests have now been published and WashingtonWatch.com has assembled a state-by-state catalogue of links to Members’ earmark requests.

Getting earmark requests published is progress. Getting them published in uniform, machine-readable formats would allow the public to do really thorough oversight of all the projects that Members of Congress think federal taxpayer dollars should go to.

In December, we had a policy forum called “Just Give Us the Data!” where we explored some of the current issues in government transparency.