Fall Of The Republic documents how an offshore corporate cartel is bankrupting the US economy by design. Leaders are now declaring that world government has arrived and that the dollar will be replaced by a new global currency.
President Obama has brazenly violated Article 1 Section 9 of the US Constitution by seating himself at the head of United Nations' Security Council, thus becoming the first US president to chair the world body.
A scientific dictatorship is in its final stages of completion, and laws protecting basic human rights are being abolished worldwide; an iron curtain of high-tech tyranny is now descending over the planet.
A worldwide regime controlled by an unelected corporate elite is implementing a planetary carbon tax system that will dominate all human activity and establish a system of neo-feudal slavery.
The image makers have carefully packaged Obama as the world's savior; he is the Trojan Horse manufactured to pacify the people just long enough for the globalists to complete their master plan.
This film reveals the architecture of the New World Order and what the power elite have in store for humanity. More importantly it communicates how We The People can retake control of our government, turn the criminal tide and bring the tyrants to justice.
A film by Alex jones
Government SCREWING the American people AGAIN!
The best new example is the Obamacare plan.
Now before you get emotional, pay attention to these facts.
1) GMAC, BofA, Ally, PNC and Chase have all put a moratorium on Foreclosure processing and Sales of Foreclosure properties, REO's
2) Today (10/13/2010) 40 state Attorney Generals got a deaf ear from the White House and Wall Street to have all Lending institutions halt foreclosure proceedings and have an official investigation in to the allegations, specifically dealing with "robo-stamping" of up to 42 foreclosure files per hour.
3) 44 million people in the USA have loans, of them 4 million are in distress, yet the government HAFA/HAMP program EXCLUDES Fannie Mae and Freddy Mac loans. To date only 400,000 Hafa/Hamp mods have been issued, however 196,000 have either gone back in to foreclosure ore exited the government program due to the teaser rates that continue to climb.
4) Real Estate Investors are taking the responsibility to help distressed home owners with short sales, where the banks refuse to do a proper loan modification... to be honest we (the ethical investors) would prefer the banks DO a proper loan modification.
So where is the Government really trying to help? It seems the Attorney Generals and Investors are doing the real watch-dogging and work. So this brings me back to Obamacare...do you know how it will be partially funded? They will go after investment homes, that's right, your investment property to help build your nest egg and the price is 3.8% EXTRA when the investment property is sold. Can you say redistribution of wealth?
So if you own another home, or commercial building, not only do you pay out HUGE commissions to Realtors, in addition to property taxes, now there will be an additional 3.8%, which of course will do as much damage as appraisers did from 2003-2008 by artificially raising the price to the end buyer.
However if you are interested in growing your IRA or HSA TAX FREE, my company has the answers to help you still live the American Dream of financial independence, where the government seems hell bent on keeping the proceeds for themselves. AND YES I CAN PROVE THIS with even more facts.
Contact me at info@ethicalforeclosure.com if you want more facts.
STOP BELIEVING that government is the answer, IT IS the PROBLEM, which is WHY our founders did EVERY THING possible to make and keep the central government as small as possible answering to the people and the states rights.
Tagline: It is nowhere written that the American empire goes on forever.
Plot Outline: Is American foreign policy dominated by the idea of military supremacy? Has the military become too important in American life? Jarecki’s shrewd and intelligent polemic would seem to give an affirmative answer to each of these questions.
Government Corruption
Today, the federal government is more vulnerable than ever to the influence of powerful special interests. The basic obligations of public service are undermined when an official maintains a close relationship with an industry that he or she is overseeing or regulating. The integrity of government is further jeopardized by public officials who use the resources of their office for personal, professional, or financial gain. POGO supports transparency and open government so that officials can be held accountable when they place private interests ahead of the public good. Click on the program areas below to learn more.Conflicts of Interest
Conflicts of interests often arise due to the cozy relationship between public officials and companies that do business with the government. Public confidence in the integrity of government is sorely undermined when officials use (or appear to use) their office for personal, professional, or financial gain. POGO supports increased requirements for transparency and disclosure, along with stricter enforcement of current rules and regulations, as a means of identifying and eliminating conflicts of interest and restoring the public’s faith in government.
Conflict of Interest and Ethics Resources
Government ethics is one of the most important, but often overlooked, aspects of executive and congressional branch oversight. Recent ethics and conflict of interest scandals involve the revolving door between the government and private contractors, “bribe menus,” inappropriate contract awards, and illegal lobbying – simply stated, government corruption. That corruption leads to bad deals for the government, taxpayers, and military members. This web page will provide you with many online resources.
Improper Influence
The basic obligations of public service are undermined when an official maintains a close relationship with an industry that he or she is overseeing or regulating. The integrity of government is further jeopardized by public officials who use the resources of their office for personal, professional, or financial gain. POGO supports transparency and open government so that officials can be held accountable when they place private interests ahead of the public good.
Politicization
There are several laws in place that are supposed to prohibit public officials from engaging in political activity while serving in office. However, in recent years there have been numerous examples of federal agencies using taxpayer funds to persuade the public to lobby Congress in support of the Executive Branch’s political agenda. Congress needs to draw a stronger line between public education and illegal lobbying in order to ensure that the federal government is not betraying the public’s trust by spending taxpayer funds on advertising and propaganda campaigns.
Revolving Door
POGO is concerned that far too many officials are passing through the “revolving door,” taking advantage of their public service to further their private employment. The federal government is struggling to retain skilled public servants in part because so many individuals use their office as a stepping stone to the private sector. POGO has a number of recommendations for limiting the harmful effect of the revolving door: simplify and strengthen the existing rules and regulations; require greater disclosure of individuals leaving the government to work for industries they had previously overseen; and conduct a review of the benefits, incentives, and rewards for staying in the public sector versus performing the same work as a government contractor.
The Grace Commission:
How much
waste in government?
STEVEN KELMAN
TERE ARE FEW BELIEFS more
deeply embedded in the popular consciousness than that government
wastes a lot of money. Seymour Martin Lipset and William
Schneider, in their book The Confidence Gap, report that in surveys
asking people how much of each tax dollar they think the federal
government wastes, the median response is 48¢. Lipset and
Schneider argue that the paradox of simultaneous public support for
tax cuts, and f6r maintaining or increasing spending in all major
categories of government programs, is explained by the perception
that waste in government is so rampant that there can be big spending
reductions without service rollbacks.
Last January the President's Private Sector Survey on Cost Control
(generally known as the "Grace Commission" after its head,
J. Peter Grace, Chief Executive Officer of W.R. Grace & Co.),
delivered its final reports. The Grace Commission recruited over
2,000 corporate executives to scrutinize the government. Announcing
the report, Peter Grace told the press that President Reagan had
asked him to look at government agencies as if considering a merger
or takeover. "The President's private sector survey would not acquire
the government" was the conclusion, he stated. No wonder. He
found that, over a three-year period, a total of $424 billion in say-
62
THE GRACE COMMISSION: HOW MUCH WASTEIN GOVERNMENT? 63
ings could be obtained from controlling waste, "without weakening
America's needed defense build-up and without in any way harming
necessary social welfare programs." These were stupendous
numbers, almost enough to eliminate federal deficits.
But they were not uncontroversial. With the perspective of someone
interested in how government can be managed better, I spent
time examining some specific allegations of waste the Grace Commission
made in areas where, first, there is general agreement--public
and governmental--that the activity being undertaken is worthwhile,
and second, there are examples of the private sector producing
the same output, so that the relative costs to government and to
the private sector can be compared. The Grace Commission issued
48 reports and made a now-notorious 2,478 recommendations, so it
was obviously impossible to examine any significant percentage.
But in the press packet accompanying the Grace Commission report,
there was a chart entitled "Ten Random Examples of Bureaucratic
Absurdity" (which was picked up in the New York Times story on
the Commission), and I examined those ten._ Also, I examined recommendations
the Commission made involving the General Services
Administration (GSA) and the Veterans Administration (VA),
because the responsibilities of both agencies include tasks very similar
to ones private firms undertake.
The case of the $91 screw
(1) "The Pentagon has been buying screws, available in any
hardware store for 3 cents, for $91 each.'"
There have been many widely publicized examples of the apparently
outrageous prices paid for spare parts for weapons--S110 for a
4¢ diode, $9,609 for a 12¢ Allen wrench, and $1,118 for a plastic
cap for a navigator's seat.
One has reason to doubt these stories, even before further investigation,
on strictly logical grounds. To suggest that defense contractors
could routinely charge the government $110 for something
they got for a few pennies is to suggest that the defense contracting
business is the easiest avenue to unearned fortune since the invention
of plunder. In fact, it turns out that the Defense Department
has not negligently allowed itself to be hoodwinked. Most of these
1 Of these, four proved not to be "bureaucratic absurdity" after all, but rather policies
enacted by Congress. So only six cases were investigated. In addition, I examined
the issue of Defense Department spare parts prices (which appeared in the press packet
under another listing) because the issue had received so much media attention and
because it had the horror-story sound of the other examples of "bureaucratic absurdity."
64 THE PUBLIC INTEREST
cases have a common explanation, which involves an accounting
quirk in pricing material purchased from contractors.
Any time anybody buys something, the price includes not only
the direct cost of the materials, machines, and labor to produce it,
but also a share of the company's overhead expenses--ranging from
running the legal department to renting corporate headquarters.
Defense Department acquisition rules prescribe that a defense contractor's
overhead expenses be allocated to each shipment at some
fixed proportion of the value of the procurement. Thus, if the direct
cost of a weapon is $5 million, a company might be authorized to
tack on, illustratively, 20 percent or $1 million, for overhead expenses.
The same percentage may also be added to the direct costs
of other items procured, such as spare parts. Thus $1 million would
be added to a spare parts order for $5 million, just as it would be to
a fighter plane order.
The Pentagon orders many different spare parts at one time.
Often in the past, contractors have, simply as a matter of accounting
convenience, allocated the overhead to the individual parts
on an "item" basis rather than a "value" basis. Say that the $20 million
order is for 10,000 parts, some of which have a direct cost of
$25,000 each and others of 4¢ each. Instead of apportioning the
$1 million total overhead such that the $25,000 part gets a lot and
the 4¢ part a little, the computer printout will allocate $100 to each
part. This produces a charge to the government of $25,100 for the
expensive part and $100.04 for the cheap one.
Although this produces horror stories, nothing horrible has occurred.
The total overhead represents real resources legitimately
charged to the government. If the $100 doesn't get allocated to the
4¢ diode, the diode no longer appears to be so outrageously expensive.
But the $100 doesn't disappear, nor should it. The overhead is
just allocated elsewhere.
There is one mildly distressing aspect of this practice. The spreading
of overhead costs over a contractor's entire production appears
to reduce the up-front costs of new weapons systems, since research
and development for the weapon is charged to spare parts as well.
This, in turn, makes new weapons systems appear less expensive
than they really are, and distorts political discussions of a system's
costs and benefits. But that has nothing to do with "not minding the
store."
Other horror stories have a different explanation. Many parts
the Defense Department procures are "common use items," the same
as commercially produced parts that might be used in a car as well
as a tank. Other items need to be custom designed, which often proTHE
GRACE COMMISSION: HOW MUCH WASTE IN GOVERNMENT? 65
duces an extremely high price per unit, because, unlike Chevrolets,
much military equipment is produced in very small quantities and
thus requires only a few of the same spare parts. The initial cost to
design the part, and make the machine die or molding to produce
it, must then be spread out over only a few units. (If it costs $3,000
to design and tool up a plastic cap, that will add only 1¢ to the cost
of the cap if 300,000 are produced, but $1,000 if three are produced.)
The economics of tooling-up do suggest that common-use parts
be used when possible, and the Defense Department does make
efforts to get common-use items. Spare parts are frequently procured
on a sole-source basis from the contractors for the original weapon.
When the contractor submits designs for spare parts, he must designate
those which are common-use. This list is reviewed by a Defense
Department contracting officer, who makes suggestions for expanding
common-use procurement when appropriate. After the contractor
proposes prices, the contracting officer requests an independent
evaluation of the offer by Defense Department value engineers,
who may question whether a newly designated part is sufficiently
different from common-use items to justify special tooling-up. But
special design is sometimes necessary.
Contractors have something of an incentive to propose customdesigned
parts, since a contractor is allowed to take a standard percentage
profit, which in dollar terms is of course far greater for a
$1,000 item than a $1 item. Cheating is presumably discouraged by
the negative impact repeated discovery would have on the contractor's
relations with the Defense Department. But the Department
has an enormous review task--there are about 300,000 parts in an
airplane--and sometimes an item that should have been classified
as common-use ends up getting designed to order. This is what happened
in the case of the $1,118 plastic cap. In the widely publicized
case of the $9,609 Allen wrench, however, the system did work.
General Dynamics proposed a custom-designed wrench, but the
Pentagon's value review engineer found that the function could be
performed equally well by an ordinary wrench. The Defense Department
never ordered the custom-designed version, and is now increasing
its scrutiny for common-use items. The additional scrutiny may
cost more than it saves, but the issue to the Defense Department at
this point is the credibility of the defense buildup.
The outrageous case of building management
(2) "In comparison to a private sector company, managing comparable
building space, the General Services Administration employs
66 THE PUBLIC INTEREST
17 times as many people and spends almost 14 times as much on
total management costs."
This contention is so wildly inaccurate that it is hard to know
where to begin. The best place to start is with two whopping errors
in the numbers the Grace Commission provided on the private sector
firm being compared with GSA. The chart the Commission provided
stated that the property management division of a large life
insurance firm was managing 10,000 buildings, "comparable building
space" to GSA. In fact, no insurance company has a portfolio
anywhere near that large. The correct number for the insurance
company is not 10,000 buildings, but 1,000, which is not comparable
to GSA at all. Furthermore, the Grace Commission states that
the insurance company employs a total of 300 professionals, 100 in
central administration, and 200 under contract. It turns out, however,
that the company in question does not employ 200 individuals
under contract, but rather hires 200 property management Jirms
actually to manage its buildings. Each of these firms in turn has
many professionals working for it.
The figure the Commission chart provided for GSA professionals
--5,000--is also exaggerated. About one-third of these are clerical
and other non-professional employees (the Grace Commission simply
looked at total white-collar employment at the Public Buildings Service).
And about 800 of this number manage GSA design and construction,
overseeing the contract process for construction of new
buildings as well as repairs and alterations of existing buildings; the
people who do this for the insurance company work in a different
division, and thus aren't included in the employment figures the
Grace Commission provided. So the number of professionals working
on building management at GSA is really around 2,700, rather
than 5,000.
Although all this indicates that the Grace Commission is monumentally
mistaken, a precise comparison is difficult to make. One
would need to know how many professionals the building management
contractors employ, and the insurance company itself doesn't
know that. Beyond that, the nature of the GSA portfolio and the
insurance company's portfolio is different. Over two-thirds of the
GSA buildings are leased space rather than owned space; this requires
people to work on initial lease bids and on lease renewals
(neither of which applies to the insurance company), but does not
require government-provided building management services. Over
1,000 of the GSA buildings are (owned or leased) local social security
offices, which are considerably smaller than the properties an
TIlE GRACE COMMISSION: ttOW MUCh WASTE 1N GOVERNMENT? 67
insurance company owns. GSA officials would themselves concede
that they probably have a larger staff for comparable functions
than a private sector counterpart, because GSA requires more levels
of review on contracting and leasing decisions to assure due process
and to minimize corruption. But the difference is nothing like 17 to 1.
The $61,250 nursing home bed
(3) "The VA spends $61,250 per bed to construct nursing homes
--almost four times the $16,000 per bed cost of a maior private sector
nursing home operator."
The Grace Commission averaged the cost of six VA nursing
homes, and the average was raised dramatically by the reported
$113,500 per-bed cost of construction of a home in Martinsburg,
West Virginia. This nursing home was being built simultaneously
with a VA hospital adjacent to it, and the cost the Grace Commission
reported included construction costs for a domiciliary that was
part of the whole medical center, as well as site preparation and
utilities for the entire complex. The actual cost for the nursing home
at: that site was $29,000 per bed, bringing the average cost per bed
for the six facilities down from $61,000 to $47,000. Furthermore,
the cost of three of the VA homes was significantly higher than usual
because of unfavorable site conditions (such as confined space for
construction, thus requiring off-site warehousing of building materials).
Site conditions were unfavorable because the nursing homes
were being built next to already-existing VA hospitals, pursuant to
VA policy. The average cost of the remaining three homes, built
under normal site conditions, was $39,000 a bed. So while the Commission
exaggerates, there remains a substantial difference compared
with the private sector, even if one considers only the homes
constructed on normal site conditions.
Why these differences? Whatever the answer, one can be relatively
confident that it is not the result of lazy government construction
workers or bloated construction material prices paid by government.
In fact, the VA does not construct nursing homes itself. It
takes its nursing home specifications and puts them out to bid by
building contractors. The low bid wins.
The truth is that what the VA calls a nursing home is in many
ways of much higher quality than what private-sector chains produce.
These quality differences increase the cost of a VA nursing
home relative to a private one.
The most obvious differences involve the physical designs. VA
facilities have been top-of-the-line. Homes have routinely included
68 THE PUBLIC INTEREST
balconies in each room, occupational therapy areas, quiet rooms,
extensive recreation space, and on-premises artwork. The VA policy
of building homes contiguous to VA hospitals rather than freestanding,
as the private company Beverly does, is also quality-driven; it
provides nursing home residents quick access to hospital services
and allows more rapid treatment of medical emergencies. That policy
drives up costs in a number of ways, however. The VA got into
the nursing home business relatively recently, and most homes are
built on existing hospital sites. Often, however, these sites are too
small to be ideal for new construction. That can raise costs by requiring
construction in cramped or otherwise difficult situations. And
frequently there is not enough land to build single-story homes,
which are marginally cheaper to construct than the two-story homes
the VA often must build. Is it worthwhile to produce this level of
quality? That is a matter of debate. But it is not an issue of "waste,"
as the term is typically used.
The cost of constructing VA nursing homes can be reduced by
decreasing quality. In 1981 the VA established a task force on nursing
home construction cost reduction, after private nursing home
chains had called cost differences to the attention of congressional
oversight committees. The task force proposed a number of design
changes that will reduce the cost of new VA nursing homes by about
$12,000 per bed. They include eliminating balconies, making ceilings
eight rather than nine feet high, reducing recreation room and
dining room space by 35 percent, and reducing landscaping by half.
Another part of higher VA construction costs stems from the special
requirements of government procurement. The most obvious
are ones such as Davis-Bacon, and the preference given to Americanmade
products and to minority and small-business enterprises.
When the government builds a nursing home, it has decided not just
to build a home but also to aid small business and American-made
products. Again, this is not "waste," but rather government policy.
The entire mode of procurement in government is a less obvious,
but very important, source of additional costs. Private sector nursing
home chains generally establish ongoing relationships with construction
firms in an area (often two firms, each to serve as a competitive
check on the other), to whom they turn again and again.
This allows them to avoid the costs of gearing up for new bidding
procedures for each job. By contracting for several jobs at the same
time, it allows the general contractor to obtain lower prices from
subcontractors and suppliers, who give quantity discounts for the
larger volume of work. It allows the contractors to become familiar
THE GRAGE COMMISSION: HOW MUCH WASTEIN GOVERNMENT? 69
with the details of how the firm wants the home built and to look
for ways to build more economically, since investments in such
efforts can be capitalized over a number of projects. The VA, by
contrast, must gear up for a de novo bidding procedure, open to all,
for each construction contract, with detailed functional specifications
(rather than brand-specific ones) so that nobody is excluded
from bidding. There are many layers of review within the VA to
ensure that specifications inhibit no one, and to clear any deviations
by the procurement or project staff from the rule that the lowest bid
must be accepted. These procurement methods entail extensive
additional costs, both because any individual act of procurement is
more complicated (developing functional specifications, layers of
review) and personnel-intensive, and because there are far more
separate procurement decisions to be made (the de novo bidding
process). Although the monetary costs of these procedures outweigh
their monetary benefits (or else private firms would follow similar
procedures) none of them, again, constitutes a clear example of
waste. At worst, they reflect mistaken policies. They produce outputs
with "quality" features not found in private home construction
such as equal opportunity for all businesses to compete and a minimization
of kickbacks.
Where does all this leave the VA/private sector comparison? I
start with a $39,000 per bed average figure for the nursing homes
built on normal site conditions, and I subtract $6,000 per bed in
savings from the cost-control task force. 2 This brings the VA cost
clown to $33,000 a bed, compared with $16,000 in the private sector:
about twice as much, rather than four times as much. The costs of
Davis-Bacon and various statutory procurement preferences, of
complex procurement procedures that must be repeated each time a
home is built, of any remaining quality difference compared with
private sector homes, and of any extra costs from two-story construction,
reduce the differences further. Since no study exists of the
accumulated effect of those factors, it is impossible to say how much
of the VA/private sector difference that does remain is simple waste.
My suspicion is that something does remain, but that the differences
are not dramatic.
2 I subtract $6,000 rather than the estimated $12,000 in savings because some of
the changes the VA is making bring VA nursing homes below Beverly's standards--for
example, the ceilings in VA homes will now be lower than those in Beverly homes.
Lacking time, or expertise in architecture, to allow an exact estimate of "the costreduction
steps that bring the VA homes to the same level as Beverly's, I have taken a
figure of one-half, the arbitrary nature of which the reader should'be aware of.
70 THE PUBLIC INTEREST
The freight-charges boondoggle
(4) "The government spends almost $5 billion annually on ]reight
charges but doesn't bother to negotiate volume discounts with suppliers."
The Grace Commission's own backup material regarding this
claim turns out not even to make the eontention that the government
"doesn't bother to negotiate volume discounts." In fact, it
turns out that virtually all government freight is moved at rates discounted
for volume.
The problem is a more subtle one. Before trucking deregulation,
freight tariffs were fixed. Deregulation in 1980 produced an avalanche
of different rates (similar to the situation for airline travelers).
Suddenly, there were differences in fares charged for a given
route and many lower tariffs for full-load shipments.
Deregulation opened up opportunities for savings on freight
expenses, but the proliferation of rates increased the informationprocessing
requirements for taking advantage of those possibilities.
Very quickly, computer software companies began offering packages
that allow a shipper to determine the cheapest available rate,
and also to determine what shipments from several sources within
the organization might be going to the same place at the same time,
so that full-load discounts can be obtained. These systems have
spread quickly in the private sector since 1980.
In 1981 the General Services Administration, which administers
shipping for most of the government, began to look at these new
computer systems, but decided they were still too new to try. In the
summer of 1983 they decided to procure one, and the system they
selected went on-line in March 1984.
The mailing list fiasco
(5) "Government mailing lists erroneously repeat the same addresses
as many as 29 times."
This statement, though ambiguous, seems to suggest that somewhere
there is a government mailing list that has the same address
on it 29 times, causing 29 copies of the same publication to be sent
to one location. The implication is that government officials simply
never bothered to check the list for such wasteful duplication.
This example of 29 repetitions comes from a 1980 effort by the
Office of Human Development Services in HHS to improve its management
of mailing lists. The Office was formed in the mid-1970s as
an umbrella organization for a large number of already existing
rl'l|l:: GRACE COMMISSION: HOW MUCII WASTE IN GOVERNMENT? 71
agencies, such as the Administration on Aging and the Administration
for Children, Youth and Families. Each of these separate organizations,
quite naturally, maintained its own mailing lists--usually,
in fact, a number of different mailing lists, such as lists of subscribers
to an agency magazine, media contacts, libraries, or recipients
of grant award information. There were about 300 different mailing
lists in all.
In 1979, a newly appointed manager of the Office of Public
Affairs at Human Development Services persuaded his boss to authorize
a project to centralize and modernize the organization's mailing
lists. The 300 lists were combined into one master list. A "positive
purge" was conducted, whereby every person on any of the lists had
to return a card in order to stay on. The Public Affairs Office also
began to rent commercially available lists--of libraries, professors
of social work, etc.--as an alternative to maintaining and updating
its own lists.
In the course of this project, it was discovered that one address
(a social service agency) appeared 29 times. But this was 29 times on
300 different lists, and these 300 lists generally received different
publications. In other words, the addressee might have been on one
list to receive the Mental Disability Law Reporter, on another for
press releases from the Administration on Aging, and on a third for
information about grant availability from the Office of Handicapped
Individuals. The addressee wasn't receiving 29 copies of any
one publication. At worst, as the person in charge of the reform
effort told me, an addressee appearing 29 times might receive five
copies of a single publication--but only in the rare cases when a
mailing went to several of the agency's different lists. There were
certainly some examples of duplications on the same list: Although
federal law requires annual canvassing of individual agency lists for
duplication, compliance is mixed.
Although the quality of mailing list management within the government
varies, there is no doubt that significant improvements
could be made. There have been major changes in the mailing list
business during the last decade, with the increased use of computers
for list generation and management. Simple software now exists to
purge lists of duplication, and with the growth of list brokers there
is no longer any need for an organization to attempt to maintain its
own lists of nursing home administrators, libraries, or public health
professors. The government is now beginning to adapt to these
changes.
72 THE PUBLIC INTEREST
The scandal of seized assets
(6) "The ]ustice Department iust sits on the cash seized from
criminals, not bothering to deposit the money in interest bearing
accounts while cases are being adjudicated."
Traditionally, cash seized from criminals was indeed not deposited
in interest-bearing accounts. "Not bothering," however, was
not the reason. Prosecuting attorneys wanted the actual bills in
hand, to impress juries with wads of ill-gotten lucre. Depositing the
money would have meant losing the ability to show it to juries: The
only thing available would have been a statement in a government
bank accountl Furthermore, some jurisdictions require that actual
bills be submitted as evidence.
Until quite recently, very little cash was seized from criminal
suspects. In the late 1970s, however, the Justice Department began
actively to seize cash and physical assets (such as cars and boats)
--and to seek their forfeiture--as a tactic against organized crime.
Soon thereafter, the Department realized that this vast quantity
of physical assets had created a management problem. The Justice
Department's policy was not to question legitimate third-party liens
on seized assets, so that if there was a $110,000 loan outstanding on
a $150,000 boat, the government would not contest the bank's right
to collect $110,000 from the sale of the boat. The frequent problem
is that the hypothetical boat might deteriorate badly while in the
government's possession. When sold after being forfeited, less than
$110,000 might be realized; the government would have to make up
the difference. The local U.S. Attorney offices had no capability to
manage seized assets while they awaited disposition (lawyers are
experts at trying cases, not managing property), and no centralized
management system had ever been developed because there were so
few seized assets.
In 1981, the Justice Department appointed a task force to examine
the management of seized assets. It issued a report in 1982, recommending
that the Department establish a central organizational
capability, through the U.S. Marshal Service, to manage seized
assets for local U.S. Attorney offices. Agreement having been obtained
within the Department (including from the U.S. Attorney
offices), this new capability is now being established.
The shocking sloth of loan collectors
(7) "HUD makes only 3 attempts to collect loans versus 24 to
36 tries in the private sector."
THE GRACE COMMISSION: HOW MUCH WASTE IN GOVERNMENT? 73
This refers to loan collection procedures for two programs--a
Housing and Urban Development credit insurance program for regular
property improvement loans (Title I), and HUD's direct, subsidized
loan program for property-improvement loans in disadvantaged
areas (Section 312). Title I is an old program (enacted in
1934) that does not have income restrictions; Section 312 is a War
on Poverty-era program that is targeted to poorer neighborhoods.
Again, the comparison the Grace Commission presents is exaggerated.
First, the Grace Commission's own backup material refers
to two or three loan collection tries per month in the private sector
(compared to a total of three in HUD), but collection activity, in
both the private sector and HUD, proceeds for only four months
before legal action is commenced or the loan abandoned. The press
packet figure of "24 to 36 tries in the private sector" comes from
incorrectly assuming that collection activity at private banks goes
on for an entire year. Even accepting the Grace Commission comparison
at face value, the proper number is thus eight to 12 tries in
the private sector, not 24 to 36. Second, HUD loan collection officers
generally do not make a written record of telephone calls they
make to delinquents, so Grace Commission investigators looking
only at the written record underestimated the number of collection
tries HUD made. Finally, and crucially, there has been collection
activity on these loans before they are sent to HUD. Title I loans are
made by regular banks, and Title I regulations mandate that the
banks pursue their own normal debt-collection efforts before passing
the loans on to HUD; for the Section 312 loans that HUD makes
directly, Fannie Mae (the Federal National Mortgage Association),
which services the loans, engages in some mild collection activity
(dunning letters but no phone calls or contacts with an employer)
before passing the loans on. HUD isn't starting from scratch on collections,
as the Grace Commission's comparison suggests.
None of this is to suggest that there have been no problems with
debt-collection at HUD. Although the regulations call for banks to
pursue normal debt-collection efforts first, HUD officials concede
that compliance is mixed. Also, when their own collection efforts
fail, private banks give potentially collectible loans to private collection
agencies, and HUD gives them to the Department of Justice
for prosecution. Attorneys there have regarded these as low-priority
cases and have not prosecuted them in a timely way--something
that debt-collection experts regard as crucial to any chance of recovery.
Finally, at least for Section 312 loans, management at HUD has
probably always regarded these loans as a sort of disguised social
74 THE PUBLIC INTEREST
assistance program, and has seen the idea of banging on the doors of
poor people to get them to pay as distasteful. Loan collection efforts
for the 312 program traditionally received little attention from top
management. (The Title I program, by contrast, turns a profit for
the government.)
The organization of debt collection at HUD has also failed to
reflect changes in private debt collection practices. HUD standard
operating procedures continued to call for personal dunning visits to
delinquents, although banks had concluded over a decade ago that
such efforts (earlier traditional in the industry) were generally not
cost-effective. And HUD was very slow to computerize debt information,
which resulted both in a great deal of clerical work for loan
collectors (reducing the time available for collection activities) and
in poor control over the status of files. The Section 312 program
began to move toward computerization (and now to contracting out
its debt collection to a private firm) after a critical report by the
General Accounting Office in 1979; Title I has only recently computerized
its collection activities, after a decision to do so was made
by the assistant secretary appointed by President Reagan.
Fat City at the VA
Beyond the issue of nursing home beds, the Grace Commission
made a number of specific contentions about Veterans Administration
activities that are similar to private sector activities, but allegedly
cost much more.
Perhaps the most dramatic was that it costs the VA $140 to process
a claim for hospital coverage, compared to $3 to $6 for private
sector insurance companies. This is wildly inaccurate. The Grace
Commission listed the General Accounting Office as its source, but
the GAO denies ever having made such a calculation. Dividing the
total dollars spent by the total number of claims the VA processes
yields a cost of $5-$7 per claim. This figure is still slightly higher
than the private sector average, but the VA's claim-processing procedure
is necessarily more complicated. In processing a claim, an
insurance company often must determine only the amounts for
which a beneficiary is covered. Statutes determining eligibility for
VA medical care, by contrast, often restrict coverage to health problems
related to service injuries, to emergency treatment, and so
forth. This frequently requires extensive investigation. Whether VA
claims-processing is still somewhat more costly even after these differences
have been taken into account is hard to say.
THE (;RACE COMMISSION: HOW MUCU WASTE IN GOVERNMENT? 75
Also in the area of claims processing, the Grace Commission
stated that it takes the VA 25 to 40 days of internal processing time
(that is, after all the appropriate documentation had come in) to
process a veteran's pension or compensation claim, compared to an
average of four days in the private sector for processing similar longterm
disability claims.
The Grace Commission contention is correct. The main reason
for the difference is that the VA's procedure requires more layers of
review. In the private sector, the entire process would typically be
handled by a single person. The claim reviewer would request any
information needed, review it, and authorize payment. The VA
procedure, by contrast, involves four separate reviews. First, a
medical rating board makes a medical judgment about the extent of
disability. At this point local representatives of service organizations
such as the American Legion examine and comment on the file, as
authorized by statute. Then an adjudicator determines how much
money the claimant will receive. And finally an authorizer reviews
the case from scratch. This procedure is designed to provide safeguards
for veterans.
The Commission also made two criticisms of the way the VA
purchases drugs and supplies for its hospitals. The first was that the
VA does not make sufficient use of bulk discounts. Proprietary hospital
chains, the report stated, obtain 75 to 85 percent of their supplies
through bulk purchases, the VA only 60 percent.
The Grace Commission figures are correct. Why the difference?
Essentially, the explanation involves the fast pace of change in medical
technology. New medical products come on the market constantly.
They are typically used first at scattered local hospitals,
where some doctor, one way or another, has found out about them.
If the innovation is a good one, use will gradually spread, but in the
early stages there is insufficient national demand to warrant national
(i.e., bulk discounted) purchasing. Gradually, though, successful
new products are bought in sufficient quantity to warrant this move.
It is the slowness of the VA, compared with the private sector, in
moving its purchases of new products from local to national contracts
that accounts for the greater proportion of local purchases.
This is because the VA's system for purchasing supplies is not computerized;
other uses of the VA's computer budget have hitherto
been regarded as higher priorities.
The other Commission criticism involved the method of storage
for supplies procured through national contracts. Since the 1940s,
the VA has operated central warehouses to supply individual hospi76
THE PUBLIC INTEREST
tals. Products are delivered directly to warehouses and transported
to individual hospitals as they are ordered. Advances in distribution
technology, the Commission stated, have made warehouses uneconomical;
proprietary hospital chains, the report said, have rejected
warehousing.
The VA presents different figures. It claims that running a warehouse
system adds only 15 percent to costs, not the 30 percent that
the Grace Commission claimed. The VA claims that this 15 percent
is more than offset by the lower prices that suppliers charge for
single-point delivery to warehouses, as against multiple-point delivery
to individual hospitals. They point to several studies by the General
Accounting Office and the VA Inspector-General supporting
the cost-effectiveness of the depots.
It is hard to know whom to believe. On the one hand, the VA
provides specific dollar breakdowns of its costs for running the warehouses,
while the Grace Commission merely cites "experts in materials
management.'" What /s clear, however, is that the VA does
worry about the cost-effectiveness of running central warehouses.
The VA generates computer data on each item procured to the warehouses,
terminating those that do not meet its criteria for warehousing:
When the warehouses were first established, all nationallyprocured
products went through them; now, only about half do.
On the other hand, if private hospital chains have indeed considered
and rejected a warehousing system, and if their situation is
comparable, that is strong evidence on the other side. Top management
at the VA, itself unsure, has now commissioned an outside
consultant to study the warehouses.
Torpor at the GSA
Two of the specific Grace Commission claims about the GSA
involve maintenance management and energy conservation.
The Commission claimed that "maintenance productivity,"
defined as the proportion of maintenance workers on the job at any
given moment, was 60 to 65 percent in well-managed private firms
but only 40 to 45 percent in the government. It is difficult to determine
whether these claims are accurate. The "survey" of government
performance to which the report referred turns out to have
been, to put it generously, far more impressionistic than the report
implies. A Commission member simply made casual observations at
government locations he was visiting in connection with his other
Commission responsibilities. That the evidence is impressionistic
does not, of course, mean it is incorrect. The GSA itself doesn't genTHE
GRACE COMMISSION: HOW MUCH WASTE IN GOVERNMENT? 77
erally measure maintenance productivity the way the Grace Commission
does (and differences in how to measure it are apparently
quite common), so there is no hard evidence to contradict the report.
But what one can say is that traditionally, in both the private and
public sectors, maintenance was scheduled manually. Over the last
five years or so, though, the private sector has come more and more
to rely on computerized maintenance management systems. These
decrease the non-productive time of maintenance workers by allowing
them to perform several activities on each trip to a given building.
The computerized systems also make it easy to compare the
amount of time actually spent on a task with the standard amount
of time for such a task.
In 1982 GSA began to investigate acquisition of such a computerized
maintenance management system: Maintenance managers
had seen these systems on exhibit at trade shows and read about
them in the trade press. They wanted to keep up with the "state of
the art." After examination of prototypes and delays for budget
approval, a system has now been leased and has begun to operate.
On another subject, the Grace Commission stated that "although
GSA has reduced annual energy costs significantly by daytime cleaning
and other measures, little has been done to implement an Energy
Management Control System, which has proved highly successful in
the private sector." Such systems monitor data on building temperature
and "enable heating and cooling units to be turned on and off
--remotely and automatically--according to predetermined conditions."
But the "other measures" GSA has already taken accomplish
much of what energy management control systems do. Government
buildings already have timers and other devices to turn heating and
cooling off and on. Buildings constructed since 1974 have centralized
computer systems for this purpose. Consumption since 1973 in
GSA buildings is down 30 percent even in the face of the rising demands
owing to office automation. The Commission states that an
energy management control system reduces consumption by 5 to
10 percent. GSA believes that the marginal benefit of adding such
systems to the measures already undertaken rarely outweighs the
marginal cost.
Waste in government?
There are a number of conclusions one can draw from all of this.
First, the horror stories one hears are almost always gross exaggerations.
What we have seen suggests that those responsible for the
78 THE PUBLIC INTEREST
activities in question generally pay attention to costs, and have a
fairly good sense of ways to keep them down. People are too quick
to conclude that programs are wasteful when they think the programs
are not worthwhile. But if the government efficiently delivers
a worthless product, the criticism should be directed at the decision
to deliver the product, not vented in charges of incompetence and
venality against those making the deliveries.
Second, some differences between relative costs to government
and to the private sector occur because the government, superficial
similarities notwithstanding, is in fact producing something very
different. This is most obviously the case when, for instance, the VA
puts balconies outside its nursing home rooms. But it is also the case
when agencies follow cumbersome procurement procedures designed
not solely to procure certain goods, but also to ensure due-process
for vendors and special aid for disadvantaged businesses. There may
indeed be incentives in some government programs, such as those
administered by the VA, to overproduce quality. And it may be that
we are spending too much for due process. But the extra money
entailed has not simply disappeared down a black hole.
Third, even after taking account of quality differences, it is
probably true that government generally produces a given output
less efficiently than the private sector. If I had to hazard a guess, I
would say that the government might typically use, not four times
or 17 times as many resources as the private sector to produce a
given output, but perhaps 1.2 times. That is less dramatic, but it
does add up. Even if it adds up only to several billion dollars, rather
than to the Grace Commission's fantasy figures, such a sum is negligible
only to those who, to paraphrase Everett Dirksen, have gotten
so used to spending a billion here and a billion there that they forget
it eventually adds up to real money.
Fourth, government is not very good at turning on a dime. As
we have seen, there are many situations in which the environment
changed--computer programs becoming available, for example--
and it took more time for government to adapt than for the private
sector. But, as we have also seen, the government does in fact adapt.
But if the Grace Commission exaggerates badly, waste is nonetheless
a problem. We should, with modest expectations, still look
to see what changes are possible that might, at the margin, improve
things.
First, public managers should aggressively look for quantifiable
measures of performance. How many complainants does an employee
of a local Social Security office see each hour, how many
THE GRACE COMMISSION: HOW MUCH WASTE IN GOVERNMENT? 79
complainants must return with the same problem, how satisfied are
complainants with their treatment? Private sector experience suggests
that such results-oriented measures can work well. In a number
of the Grace Commission examples, managers did have good
performance measures available, and performance in fact turned
out to be competent. Sociologists and political scientists writing
about organizations are remarkably sensitive to the difficulty of
developing such measures for government, and to their possible perverse
effects. (The literature is filled with observations along these
lines: Judging the performance of an inspector by the number of
inspections encourages cursory inspections, of small establishments
only.)
But the private-sector doesn't seem to be as gloomy. Andrew
Grove, president of the highly successful Silicon Valley firm Intel,
notes the problem of the perverse consequences of performance indicators,
but suggests that this can frequently be handled by developing
pairs of measures. For example, companies keep inventories to
avoid shortages, but carrying inventory costs money. If only shortages
are measured, this will encourage overaccumulation of inventory.
Therefore, he suggests, pair a measure of shortages with one of
inventory carrying costs.
Second, government functions, particularly non-core functions,
should be contracted out to private organizations if the same output
can be produced more cheaply that way. The issue of contracting
out services occasions enormous controversy, mostly of an ideological
nature. Yet contracting out occurs all the time within the private
sector itself, without ideological overtones. To take some traditional
examples, large corporations hire advertising agencies and
law firms, rather than keeping everything in-house. More recently
there have emerged rapidly growing firms that provide laundry,
food, and maintenance services for hospitals and businesses. Private
sector firms frequently discover that specialized service providers
are more efficient than in-house provision, because of various economies
of scale. It shouldn't be surprising if this is frequently the case
for government as well. If top management in government agencies
prefers to devote its attention to grand issues of public policy, this is
all the more reason to let other services be performed by those willing
to toil in less glamorous vineyards.
Third, one spur to competent performance is a desire to live up
to the standards of one's profession. The decision to adopt a computerized
maintenance management system in GSA is a good example;
the GSA officials regard themselves as professional building
80 THE PUBLIC INTEREST
managers. More broadly, government officials may perform well
because they are proud to be in the public service. They believe they
are helping people who might not otherwise be helped. The very
fact that the organization for which they work is not trying to "make
a buck" can be a source of motivation. Whether or not businessmen
believe that only the bottom line can motivate, GSA officials I spoke
with made it clear that during the energy crisis they believed it was
their patriotic duty to reduce energy consumption in government
buildings.
Since living up to professional standards and keeping up with
the profession are important substitutes for a missing marketplace
environment, the development of a sense of identification with a
larger professional community should usually be encouraged (though
there are cases where professional identification can have a negative
impact: If government lawyers can't conceive of any way to accomplish
governmental purposes besides bringing lawsuits, we will have
a problem). Since pay scales for top government managers will never
be high enough to allow the public sector to motivate by appealing
to the prospect of great personal wealth, this alternative will have
to do.
More generally, we need desperately to foster within government
the sense that public managers are indeed managers. At the
end of his Managing the Public's Business, Laurence E. Lynn, Jr.,
who has had extensive experience in government, stated that improvments
in governmental competence require that public managers
"take the time to manage." This statement is noteworthy for what it
suggests about current practice. One would think it superfluous,
and certainly it would be if directed at most private sector managers.
Yet many career government managers, promoted because they
were good at lower-level jobs calling for individual accomplishment,
are never told that being a good manager is not the same as
being a good individual achiever; and many politically appointed
executives have had no previous management experience. The
increased use of management training for newly appointed career
managers, as well as (if I may be permitted a bit of institutional
chauvinism) the growth of professional schools in public policy and
management, can contribute to the growth of this necessary culture
of public management.
Finally, a number of institutional changes, some moderately difficult
and others excruciatingly so, would help. Some changes in
the budget process could address the problem of waste specifically.
Annual appropriations cycles often waste money, since weapons
THE GRACE COMMISSION: HOW MUCH WASTE IN GOVERNMENT? 81
systems and spare parts, for instance, may have to be ordered in
uneconomical quantities in order to stay within the year's budget.
There are cautious signs of willingness in Congress to accept multiyear
procurements, as well as so-called "zero year appropriations,"
wherein an agency can spend a certain sum for capital equipment,
but the year is not specified.
Furthermore, unlike a typical private firm, the federal government
does not have a capital budget separate from its operating
budget. In private firms, capital expenditures, such as plant and
equipment, are not regarded only as current outlays, but also as
sources of future revenues (or savings). If a manager wishes to invest
$10 million in some new equipment, he needs to justify that the
stream of future revenue (or savings) as a result of the investment is
likely to be greater than the cost of capital for the investment. Normally,
any investments that meet this test are approved, independent
of how much or how little money that means spending during
a given year.
The federal budget discourages this. The emphasis is, instead,
on an overall level of expenditure, using the previous year's level as
a baseline. It is often difficult to get "blips," in the form of lumpy
single-year investments, approved, even if spending a chunk of
money now will save lots more in the future. The government thus
tends to underinvest in capital equipment, such as computers.
Larger, and much more difficult, institutional changes would
address not just waste but the broader questions of government performance.
One of the greatest differences between the public and
the private sectors is the generally greater rule-boundedness in government.
Procurement is a typical example: The resources spent on
development of detailed functional product specifications to assure
access to bidding by many competitors, the strict rules for accepting
the lowest bids, the extensive clearances through which all procurement
decisions must go to minimize corruption--these not only probably
cost more money than they save (or else the private sector
would generally use government-style procurement systems, which
it doesn't), they also turn government officials into clerks. Rules and
clearances also explain the frequent slowness of government's reactions
to new situations. Public managers need to be freer to make
decisions, to take initiatives, and to innovate; then they must be
held responsible for the results.
Having said that, I am unable to present a proposal for making
it happen. It is all too easy to understand the incentives that produce
fixation, among elected officials and in the media, on wrong
82 THE PUBLIC INTEREST
doing, scandal, and horror stories--and hence on rules on clearances
to prevent them from taking place. I have only two thoughts. One is
that those concerned with public-sector performance need to think
seriously about how to make marginal improvements that do not
run afoul of these constraints: Are there ways, for example, to structure
the procurement system to minimize kickbacks without forcing
everything through multiple layers of review? The second thought is
that when all else fails, a resort to the merits of the argument may
be in order. There are certainly at least some journalists and elected
officials who might emphasize a broader view of governmental
accountability, if they can be persuaded that attention solely to
wrongdoing hurts rather than helps the performance of government,
not to speak of public confidence in our institutions.
Good performance by government consists of more than just
controlling costs. It requires that elected officials and managers
select worthwhile things for government to produce in the first place.
And it requires that attention be paid to quality as well, since the
cheapest way to produce something may not be the best way. The
suggestions outlined here would, I believe, improve the overall quality
of government performance, not just reduce waste. By contrast,
efforts to "combat waste" by introducing additional rules and additional
layers of control are likely to hinder good performance--and
may, as the example of the procurement system suggests, not even
reduce costs. Yet it is exactly the headline-grabbing horror stories,
such as the ones in which the Grace Commission specialized, that
lead more than anything to the development of ever-newer rules
and clearance points. In this sense, the Grace Commission may have
betrayed the "war on waste" it set out to wage.
__________________________________________________________________________________
Dead – The united States of America
Dateline: Washington DC – 3/21/2010
Murdered in plain site, in full view of the 300 million+ of its Citizens, the Republic, formerly known as the united States of America breathed its last breath.
Killed off by members of Congress who were sworn to uphold its Constitution, the Congress and their accomplice, Barak Hussein Obama conspired to rid its Citizens of their God given right to manage their private affairs such as medical health care.
As the reputed president of the former Republic, Barak Hussein Obama, in his own words did admit at George Mason University, “And in just a few days, a century-long struggle will culminate in a historic vote“, the killing off of the former Republic was pre-meditated with a conspiracy lasting a hundred years.
The Democrats championing the health care bill, while the Republicans feigned an attack against it, proved much too strong for weary Republic that had been battling socialist tendencies for many years.
Socialism, like the cancer that it is, was hiding within the body of the Republic masquerading as other maladies, like “liberalism” and “progressive”, slowly tearing apart the very fabric of the American body.
The once proud American Republic, the shining light on the hill, the torch lighting the world to freedom, lives no more.
She is survived by formerly free Citizens who are to be cared for by the social utopia Congress from cradle to grave and all points in between.
No mention of a burial or funeral service. Lady Liberty shines “freedom” no more to the world. She will only mark the spot where the ghosts of liberty and justice one lived.
May God have Mercy on us all!
THE CIA AND THE GOVERNMENT HAVE BEEN SUCKERING US AND THE WORLD FOR MANY YEARS
