War Profiteers Stealing Our Lunch Money

about : contact : TCS home : donate War Profiteers Stealing Our Lunch Money Volume XIV No. 47: November 20, 2009 You would think that $8.5 billion would buy a lot of chow for our soldiers in Iraq. But instead of purchasing grub for mess hall trays, federal prosecutors say a lot of that coin went to overhead, inflated prices and lining pockets of a wealthy Kuwaiti family whose business got the contract. But thanks to a whistleblower and a nineteenth-century war profiteering statute, taxpayers may actually get some of that money back. The U.S. Attorney’s Atlanta office on Monday handed down an indictment against the Public Warehousing Company (PWC) for defrauding the United States. PWC, now reincorporated under the name Agility, was second only to Kellogg, Brown and Root (KBR) as the military’s largest logistics contractor in Iraq. The story of PWC’s meteoric rise to the top of the U.S. contingency contracting pile demonstrates how the U.S. military’s blind dependence on outsourcing encourages companies to reinvent themselves as contracting concierges, administering to America’s every need. According to a civil suit filed by a whistleblower, PWC obtained the first of two multi-billion contracts from the Army to supply local products to troops at Camp Doha in 2003. Over the next several years, the company expanded its operations to include subcontractors around the world—some operated by the same people as PWC—that provided the military with everything from auto parts to T-bone steaks.  PWC allegedly fattened their bottom line by manipulating its partners operations to enable PWC to charge the U.S. government more and pocket the difference. This was accomplished by persuading suppliers to use consolidation centers that added overhead costs and maniplulating packaging to increase their distribution fees, among other creative scams. The PWC story is one of the more detailed and depraved of the many we have heard about war profiteering in Iraq and Afghanistan. Entities such as the Special Inspector General for Iraq Reconstruction and the Commission on Wartime Contracting in Iraq and Afghanistan have found billions in waste due to overbilling and other fraudulent actions by logistics contractors such as KBR. In fact, KBR whistleblowers have testified that KBR actually hired PWC as a subcontractor, resulting in tripled food prices that were ultimately passed on to U.S. taxpayers. But the legal details of the case contain a note of hope. While the indictment was attracting all the media’s attention, the Department of Justice announced that it would join a civil suit filed against PWC by the same whistleblower behind the criminal case. Individuals can file suits on behalf of the government under the qui tam provision of the False Claims Act (FCA), a statute created to stop war profiteering in the Civil War. Only civil cases can get back the money stolen from the government. The Justice Department’s actions show a departure from the government’s previous reluctance to join qui tam lawsuits. Without the power—and finances—of the U.S. government behind them, many lawsuits against rapacious contractors wither on the vine. One well-known case was against Custer Battles, a Virginia contractor accused of filing outrageously fraudulent invoices with the Coalition Provisional Authority (CPA) that ran the reconstruction operation in the early days of the Iraq war. An initial finding that would have forced the company to pay back  filched funds was overturned by a judge who ruled that the CPA was not part of the U.S. government—a finding that would be hard to reach if the government was a plaintiff. Finally seeing the government taking a stand against war profiteering may have reverberations beyond this case. Scores of False Claims Act cases still idle in the courts. By devoting the time and resources these cases deserve, the Justice Department may at last recoup at least part of the money—and dignity—taken from taxpayers by crooked contractors. Let us know what you think. Support Taxpayers for Common Sense Contribute by mail with this Printer-Friendly Form Going on at Taxpayer.net This Week UPDATE: Fiscal Year 2010 Earmark Databases - Final Homeland Security and Agriculture Bills Added (11/16) Dollars Fly Overseas to Military Bases The Amazing Waste: Hydrogen Fuel Cell Funding Make the Contractor Performance Database Available to the Public Washington's Best Kept Secret Oil and Gas Royalties: "Relief" for Oil and Gas Companies, a Fiscal Headache for Taxpayers TCS in the News TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our redesigned website.   We Need Your Support! TCS needs you to help us fight government waste Click here to Join Today! Current Action Items Stop Billions in Treasury-Backed Loan Guarantees for Risky Energy Projects GO » Stop Subsidizing Wealthy Companies GO » Not Saving Salmon Could Cost Taxpayers Billions GO » Notable Quote "who knows, man, who really knows. There are 130,000 reports out there.'' -Ed Pounds, Director of Communications for Recovery.gov, when asked why stimulus recipients would pluck random numbers - 26, 45, 14 - to fill in for their congressional district.   Got a quote or article about wasteful spending you think should be featured in the wastebasket? Send us your ideas and comments You have received this email because you signed up for the weekly wastebasket at www.taxpayer.net Support our work. It takes staff resources and money to produce the Wasetbasket. Please consider making a donation today

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Glenn Beck Spoofs

Jon Stewart
http://www.newser.com/story/73500/jon-stewart-channels-glenn-beck.html

SouthPark
http://www.southparkstudios.com/clips/255334/?tab=featured

More Cash for Real Clunkers

about : contact : TCS home : donate More Cash for Real Clunkers Volume XIV No. 46: November 13, 2009 With all the other issues dominating the headlines, it's easy to forget taxpayers are still dealing with, and face major risks from, the bailout.  In fact, just this week, we got a $5 billion reminder. In a new twist on “cash for clunkers”, Treasury announced GMAC is sidling up to the taxpayer trough again. Founded in 1919 as the General Motors Acceptance Corporation, GMAC is now majority-owned by Cerberus Capital, a private-equity firm.  GMAC transformed itself into a bank last December in order to tap TARP (the bailout). Sweet deal for them. Even before this latest request, they had already received $12.5 billion in taxpayer funds.  Back in the spring, GMAC was one of the 19 financial institutions subjected to Treasury “stress tests” to see if they retained enough capital to weather future financial storms.  Treasury determined ten banks needed to raise an additional $74.6 billion, and GMAC in particular had to find another $11.5 billion. Well, nine of those banks were able to find private investors, but Treasury says GMAC failed to raise the full amount. GMAC is now turning to taxpayers for $5.6 billion more, bringing its total taxpayer support to more than $18 billion dollars. GMAC’s survival is perceived as vital to returning US car manufacturers to profitability. GMAC acts as the main financing vehicle for both new purchases of GM cars and for wholesale inventory at GM dealers. And starting in April, it began doing the same for Chrysler dealers and purchasers.  But providing more taxpayer dollars under TARP’s Automotive Industry Financing Program masks the real problem of GMAC and is illustrative of the problems still dragging down the entire economy. Buoyed by the 3 billion dollar cash for clunkers program, GMAC's car loan division did quite well the last quarter, turning a profit. Buuutttt (you knew there was a “but” coming didn’t you) their home finance division, which was one of the largest subprime mortgage lenders, continues to bleed money. And at $3.6 billion (p. 20), is the second largest participant in the Administration’s mortgage modification program.  Bad mortgage debt continues to drag down the economy and keep us from wholly moving into a full-fledged economic recovery. And speaking of bad mortgage debt, you can’t help but talk about Fannie and Freddie. While owning or guaranteeing nearly $3 trillion in home mortgages, Fannie Mae lost $18.9 billion in the third quarter, bringing its total 2009 losses to just under $57 billion. And taxpayers are pretty much footing the bill for all of these losses. Combine the cash spent shoring up Fannie Mae with taxpayer payments to its sibling Freddie Mac, and you have a whopping $110.6 billion spent to keep these "Government Sponsored Entities" afloat. And that's just drawing on a $400 billion line of credit authorized last spring. The problem is, we are where we are. And GMAC, Fannie and Freddie are only the tip of the bailout iceberg. Sure, Treasury has been repaid $73 billion and obtained profits of $13 billion, but in aggregate, we still have $1.1 trillion reserved for the various bailouts and more than $560 billion committed. The TARP Inspector General Neil Barofsky has said repeatedly that taxpayers are not going to get a lot of this bailout money back. So at some point we have to make the decision to pull the financial plug on some of these entities, or at the very least, unwind the taxpayer backing. As Treasury Secretary Geithner said recently, “No financial system can operate efficiently if financial institutions and investors assume that government will protect them from the consequences of failure." Let us know what you think. Support Taxpayers for Common Sense Contribute by mail with this Printer-Friendly Form Going on at Taxpayer.net This Week Dollars Fly Overseas to Military Bases The Amazing Waste: Hydrogen Fuel Cell Funding Make the Contractor Performance Database Available to the Public Washington's Best Kept Secret Oil and Gas Royalties: "Relief" for Oil and Gas Companies, a Fiscal Headache for Taxpayers Taxpayer Risk Soars as Congress Considers Nuclear Option Bailout Bank Bios TCS Staff are compiling profiles of all financial institutions receiving funds under the 2008 Emergency Economic Stabilization Act. See all completed bios here. TCS in the News TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our redesigned website.   We Need Your Support! TCS needs you to help us fight government waste Click here to Join Today! Current Action Items Stop Billions in Treasury-Backed Loan Guarantees for Risky Energy Projects GO » Stop Subsidizing Wealthy Companies GO » Not Saving Salmon Could Cost Taxpayers Billions GO » Notable Quote "It had to be written by someone inside the banks, because buried every few pages is a tricky and devilish 'exception.' It would greatly surprise me if these poison pills originated from anyone on Capitol Hill or the Treasury." -Michael Greenberger, University of Maryland law professor and former financial regulator on the House's financial reform bill, The Nation   Got a quote or article about wasteful spending you think should be featured in the wastebasket? Send us your ideas and comments You have received this email because you signed up for the weekly wastebasket at www.taxpayer.net Support our work. It takes staff resources and money to produce the Wasetbasket. Please consider making a donation today

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Texas, the Eyes of Justice Are Upon You

http://www.pbs.org/moyers/journal/blog/2009/10/bill_moyers_michael_winship_te.html

Michael Winship: Don’t Believe Everything the Oracle Tells You

What did last week's election results mean?

http://www.pbs.org/moyers/journal/blog/2009/11/michael_winship_dont_believe_e.html

Bill Moyers Essay: Restoring Accountability for Washington's Wars

http://www.pbs.org/moyers/journal/blog/2009/11/bill_moyers_essay_restoring_ac.html

Making Sense of the Health Care Debate

A blog commenting on current events about the effort to reform health care.

http://prescriptions.blogs.nytimes.com/

Glenn Greenwald and Afghanistan plus other topics

http://www.pbs.org/moyers/journal/blog/2009/10/web_exclusive_glenn_greenwald.html

GOP Tries to Recapture Town Hall Anger

http://www.politico.com/news/stories/1109/29378.html

Popping the Hydrogen Hoopla Balloon

about : contact : TCS home : donate Popping the Hydrogen Hoopla Balloon Volume XIV No. 45: November 6, 2009 Congress snuck a Halloween budget trick into the energy spending bill President Obama signed last week. Well, actually it was a $100 million treat for the hydrogen fuel cell (HFC) research and development (R&D) program that the President tried to pare back after previous administrations spent $1.4 billion over the years on this energy white elephant. While some lawmakers are mesmerized by the alchemy-like idea of turning water into energy, hydrogen is not a silver bullet for all our energy ills. In theory, it’s a pretty picture: hydrogen provides carbon-free energy with no by-product but water. But in reality, HFC technology relies on pure hydrogen, which must be produced from natural gas, coal, biomass, nuclear, or water in an expensive, energy-intensive process. So there goes that zero-emission argument. But the problems don’t stop there. The infrastructure required to transition to hydrogen-fueled transportation simply doesn’t exist. It’s a Catch-22 that has a choke-hold on investment—no one will buy hydrogen cars until an infrastructure is in place, and industry won’t develop the infrastructure if no one is buying hydrogen cars. Energy Secretary Chu, a Nobel-prize winner in physics, has stated that hydrogen technology would need not one, but four scientific “miracles” to make it a practical energy source. With such colossal barriers, Secretary Chu did the rational thing: he stated that a hydrogen car economy in the next few decades was “unlikely,” and that funding was better spent elsewhere. Consequently, the Administration cut $100.7 million for hydrogen and fuel cell programs in the FY10 budget. But Congress had different ideas. Not only did lawmakers reinstate the funding, Congress responded by ramping up hydrogen fuel cell research and development, even as private investment and the scientific community were diverting resources away from HFCs and toward more promising alternatives. The federal funding frenzy for hydrogen research isn’t new. HFC technology received $50 million a year under President Clinton’s Partnership for a New Generation of Vehicles (PNGV) program, and well over a billion dollars under the FreedomCAR initiative during George W. Bush’s presidency. All that money spent and very little return, just more debt. Hydrogen technology is still not cost-effective or commercially viable, but Congress just won’t let it go. Because of the immense barriers to implementation, claiming that hydrogen fuel cells are part of the climate change solution is simply shortsighted. Commercialization of HFC vehicles is not just out of reach—it’s way past the horizon. And money spent on pie-in-the-sky dreams steals resources from more promising solutions. Rather than launching hundreds of millions of dollars at the mirage in the far distance, we should invest in the renewable technologies that are within view. It’s well past time to stop throwing good money after bad. Sure driving around in purportedly zero-emission hydrogen cars may paint a pretty picture, but the ugly reality is that after spending $1.4 billion over the last several years we’re not even close. Besides, we are nowhere near the cost curve for commercialization. According to the CEO of General Motors Fritz Henderson, a HFC vehicle is ten times more expensive than its alternative, the electric vehicle. Henderson said the 500-lb gorilla isn’t hydrogen technology, “the issue is always cost, 100 percent cost.” We couldn't agree more. Let us know what you think. Support Taxpayers for Common Sense Contribute by mail with this Printer-Friendly Form Going on at Taxpayer.net This Week The Amazing Waste: Hydrogen Fuel Cell Funding Make the Contractor Performance Database Available to the Public Washington's Best Kept Secret Oil and Gas Royalties: "Relief" for Oil and Gas Companies, a Fiscal Headache for Taxpayers Taxpayer Risk Soars as Congress Considers Nuclear Option Bailout Bank Bios TCS Staff are compiling profiles of all financial institutions receiving funds under the 2008 Emergency Economic Stabilization Act. See all completed bios here. TCS in the News TCS was cited in dozens of stories this past week. Check them all out in the Headlines About TCS section of our redesigned website.   We Need Your Support! TCS needs you to help us fight government waste Click here to Join Today! Current Action Items Stop Billions in Treasury-Backed Loan Guarantees for Risky Energy Projects GO » Stop Subsidizing Wealthy Companies GO » Not Saving Salmon Could Cost Taxpayers Billions GO » Notable Quote "The fact that there is no upfront cost is both the beauty and danger of guarantees. They are perhaps too tempting." -Elizabeth Warren, Chair of the Congressional Oversight Panel on a new report revealing that the government guaranteed $4.3 trillion in financial assets this past year, Reuters   Got a quote or article about wasteful spending you think should be featured in the wastebasket? Send us your ideas and comments You have received this email because you signed up for the weekly wastebasket at www.taxpayer.net Support our work. It takes staff resources and money to produce the Wasetbasket. Please consider making a donation today

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