by guest poster Gary Farber.
How much is $50 billion?
That's how much the president proposes we spend:
[...] It calls for a quick infusion of $50 billion in government spending that White House officials said could spur job growth as early as next year — if Congress approves. [...] Central to the plan is the president’s call for an “infrastructure bank,” which would be run by the government but would pool tax dollars with private investment, the White House says. [...] Specifically, the president wants to rebuild 150,000 miles of road, lay and maintain 4,000 miles of rail track, restore 150 miles of runways and advance a next-generation air-traffic control system.
The White House did not offer a price tag for the full measure or say how many jobs it would create. If Congress simply reauthorized the expired transportation bill and accounted for inflation, the new measure would cost about $350 billion over the next six years. But Mr. Obama wants to “frontload” the new bill with an additional $50 billion in initial investment to generate jobs, and vowed it would be “fully paid for.” The White House is proposing to offset the $50 billion by eliminating tax breaks and subsidies for the oil and gas industry.
After months of campaigning on the theme that the president’s $787 billion stimulus package was wasteful, Republicans sought Monday to tag the new plan with the stimulus label. The Republican National Committee called it “stimulus déjà vu,” and Representative Eric Cantor of Virginia, the House Republican whip, characterized it as “yet another government stimulus effort.”
Which sounds good to me, if not to you, but we can all agree that we don't want to "waste" money.
Even before the announcement Monday, Republicans were expressing caution.
“It’s important to keep in mind that increased spending — no matter the method of delivery — is not free,” said Representative Pat Tiberi, an Ohio Republican who is on a Ways and Means subcommittee that held hearings on the bank this year. He warned that “federally guaranteed borrowing and lending could place taxpayers on the hook should the proposed bank fail.”
Such concern might have come earlier:
- The Department of Defense is unable to account for the use of $8.7 billion of the $9.1 billion it spent on reconstruction in Iraq.
- Source: Special Inspector General for Iraq Reconstruction (PDF).
You can't trust the Democrats not to waste money:
An audit recently conducted by the Special Inspector General for Iraq Reconstruction (SIGIR)has found that the Pentagon cannot account for 96 percent of the $9.1 billion it has been receiving since 2004 to rebuild the war-torn nation, a state of affairs that the report blames on poor internal controls within the Department of Defense (DoD) that left the money vulnerable to “inappropriate uses and undetected loss.”
The audit specifically concerns the Development Fund for Iraq (DFI), an income source separate from the, so far, $53 billion appropriated by Congress for the same purpose. Established in 2003, the fund is made up of Iraqi petroleum revenues, frozen Iraqi assets and leftover monies from the now defunct Oil for Food program, meaning that, despite being used by the U.S. government, it technically belongs to Iraq.
According to the special inspector general’s report, government agencies handling money that doesn’t belong to the federal government are required by the Treasury Department to establish special Deposit Fund Accounts, a “key financial management tool” that allows for the maintenance of accountability and oversight. By the time the DoD comptroller even got around to establishing guidance for these accounts, six months had already passed and, even with the instructions for how to set up these accounts now released, only one branch actually managed to do so: Army Central Command (ARCENT).
How much worse could it be?
[...] While the goal of the audit, to determine whether DoD organizations adequately accounted for the funds they received from the DFI, had been achieved, said the report, it had been significantly hampered by the fact that many DoD organizations maintained few or no records of their use of the Iraqi funding. Even when records were maintained, not all of them were complete. Further, said the report, auditors were unable to locate personnel with knowledge of DFI activities between 2003 and 2005, when the largest part of contracting activities from the fund occurred. This led to situations where the Pentagon was unable to explain how vast sums of money were actually spent.
“For example, DoD could not provide documentation to substantiate how it spent $2.6 billion,” said the report.
Yes, they couldn't even find people who had a clue as to what the Development Fund for Iraq was doing during its most active years.
Of course, that's just the DFI money.
Auditors are currently about halfway finished with another, much larger audit of the more than $50 billion worth of reconstruction funds. Much like this audit, that investigation, though not yet complete, has already discovered numerous instances of waste, fraud and abuse that include duplicate payments, cash payments to fictitious contractors, pay-to-play bribes and simple “pilfering of cash.”
Yep, it's much worse.
A special multi-agency task force has been using complex data mining techniques to examine more than $50 billion that various military and civilian organizations have been spent, supposedly, to aid the reconstruct of war torn Iraq. The task force is about halfway done with its investigation, having sifted through about $28 billion already.
Through its investigation, the task force, Special Inspector General for Iraq Reconstruction, has already discovered schemes such as duplicate payments, cash payments to fictitious contractors, pay-to-play bribes and simple “pilfering of cash.” These have added up to hundreds of millions of dollars lost to wide scale corruption and theft.
This could be an extremely conservative estimate. An Iraqi official in 2008 told the Senate Democratic Policy Committee that some $13 billion worth of reconstruction funds have been lost to corruption. Auditors found that many projects that had already been paid for were simply not implemented and that, in Iraq, “nobody cares” about investigating these cases.
Imagine if the Bush administration and Republican Congress hadn't let these tens of billions disappear behind the Iraqi couch cushions like this.
But that's the past, you say?
How about Afghanistan?
After five years of investigations and 250,000 pages of audits, Stuart W. Bowen Jr. wishes he could say that the $50 billion cost of the U.S. reconstruction effort in Iraq was money accounted for and well spent.
"But that's just not happened," Bowen said.
Instead, the largest single-country relief and reconstruction project in U.S. history -- most of it done by private U.S. contractors -- was full of wasted funds, fraud and a lack of accountability under what Bowen, the congressionally mandated special inspector general for Iraq reconstruction, calls an "ad hoc-racy" of lax or nonexistent government planning and supervision.
And despite the Iraq experience, he said, the United States is making many of the same mistakes again in Afghanistan, where U.S. reconstruction expenditures stand at more than $30 billion and counting.
"It's too late to do the structural part and make it quickly applicable to Afghanistan," Bowen said in an interview last week. None of the substantive changes in oversight, contracting and reconstruction planning or personnel assignments that Congress, auditors and outside experts proposed as the Iraq debacle unfolded has been implemented in Afghanistan.
I know it's crazy, but what if we spent that money on infrastructure in America, paying American workers to build things we use? Where could we spend $50 billion?
Where could we have spent one trillion dollars?
by guest poster Gary Farber.