Uncommon Sense

politics and society are, unfortunately, much the same thing

How did federal agency get $500M from stimulus? ‘We misled Congress’

How did federal agency get $500M from stimulus? ‘We misled Congress,’ ex-official says
June 18, 2015 by Judson Berger

On paper, it sounded like a true government success story: The Social Security Administration in September opened a “state-of-the-art” data center in Maryland, housing wage and benefit information on almost every American, “on time and under budget.”

However, six years after Congress approved a half-billion dollars for the project — the largest building project funded by the 2009 stimulus — a whistleblower says the center was built on a lie.

“We misled Congress,” Michael Keegan, a former associate commissioner who worked on the project, told FoxNews.com.

Officials originally claimed they needed the $500 million to replace their entire, 30-year-old National Computer Center located at agency headquarters in Woodlawn, Md. But Keegan says they overstated their case — the agency has no plans to replace the center, and only moved a fraction of the NCC to the new site.

Keegan’s claims were first heard last week at a Senate Homeland Security Committee hearing, where he testified on alleged retaliation he faced as a whistleblower. Though two watchdog agencies previously discarded his complaints, documents submitted to Congress and obtained by FoxNews.com along with congressional records appear to back him up, at least in part. They show:

1) SSA officials told Congress in 2009, and as late as 2011, they planned to “replace” the National Computer Center, using $500 million from the stimulus.

2) That never happened. Rather, the agency built a new data center called theNational Support Center, in Urbana, Md. This now houses data center functions from the National Computer Center, and is what was touted inSeptember 2014. But the original, supposedly outdated NCC continues to operate, and hundreds still work there. And transcribed depositions from Keegan’s lawsuit against the agency show top officials indeed have no plans to replace the entire NCC.

Keegan maintains the agency didn’t have to move anybody out of the NCC, and could have simply renovated the floor holding the old data center.

“The data center occupies one half of one floor in a four-story building,” he told FoxNews.com. “We didn’t need to build [the new center] to begin with.”

Agency leaders disagree, and forged ahead. Yet the records show while officials originally talked about replacing the building, there are no plans to do so now.

‘[W]e have yet to receive a coherent response from the agency as to the reasons it didn’t do what it told Congress had to be done.’

– Morris Fischer, attorney for ex-SSA official

Acting Commissioner Carolyn Colvin said in a deposition she “did not” know of any plan to abandon the NCC or move all its workers to another site. Other officials echoed this statement.

“After seven months, we have yet to receive a coherent response from the agency as to the reasons it didn’t do what it told Congress had to be done,” Keegan’s attorney Morris Fischer said.

Former SSA Commissioner Michael Astrue, who led the agency under President George W. Bush and for several years under President Obama, also said he’s not sure why the building isn’t being replaced entirely.

Astrue said he made the original decision to replace the NCC, toward the end of the Bush administration. He said the building was “antiquated and fraying,” and was worried a disruption in payments could send “the entire economy into recession.” A backup SSA center in North Carolina, he said, was not enough.

Astrue said his intention was to replace and phase out the NCC entirely, and disputed Keegan’s claims that Congress was misled. He maintains the proposal was the “correct decision.”

But he said he was “surprised” to learn the NCC is still in operation. He doesn’t know why.

The agency’s claims to Congress over the years were, at best, confusing.

In congressional hearings in 2009, SSA officials repeatedly said they planned to use stimulus funds to replace the NCC. In one April 2009 hearing, Mary Glenn-Croft, a deputy commissioner at SSA, said the funds “will help us process our increasing workloads and replace our aging National Computer Center.”

But officials also occasionally referred to simply building a new “data center.”

This may have given the agency just enough wiggle room.

When the Office of the Inspector General reviewed Keegan’s complaints, it concluded the SSA “did not mislead” Congress to believe the NCC wouldn’t be needed. At the same time, the OIG acknowledged SSA talked about “replacing” the center and “did not implicitly state” it would stay in use. (Further, while IG Patrick P. O’Carroll, Jr., oversaw the spending, he also was among those making the case for the project, telling Congress in 2009 the NCC was “rapidly approaching obsolescence.”)

Like the OIG, the Office of Special Counsel last year also said they could not determine whether agency leaders misled Congress. Keegan disputes these findings.

The Social Security Administration has not yet responded to a request for comment from FoxNews.com.

The agency has said the new data center will meet SSA’s “anticipated IT workloads for at least the next 20 years.” The full budget for the project reportedly was about $750 million; it’s unclear what the final price tag was for the “under budget” building, or what happened to the unused money.

Keegan suspects agency leaders pushed for the new building because they saw it as a “slam dunk” once word got out in 2009 about stimulus funding. “I think every IT person wants a new toy,” he said, and they decided to go for “the whole ball of wax.”

Of the new building, he said, “It’s palatial.”

Astrue, speaking with FoxNews.com, acknowledged the offer of stimulus funds prompted his agency to make the case for the building.

“That money was going to get spent one way or the other,” he said, claiming the SSA project was more worthy than many others. “And Congress agreed.”

Keegan’s complaints are now at the center of nasty legal dispute over his treatment at the agency. As project executive for the center’s construction, he said he brought his concerns to his higher-ups, but was subsequently placed under an internal probe and relieved of his duties. He said he was confined to an empty office with little or no work to do until mid-2014, when he retired early.

bureaucracy, congress, corruption, ethics, fraud, funding, government, greed, nanny state, politics, scandal, spending, stimulus, taxes

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government aid and World Bank projects are not enough to spur lasting recovery

August 21, 2014 by Amity Shlaes

New Orleans is growing, but is New Orleans back?

Not entirely.

That’s the exchange we’ll all be hearing in the coming weeks as the city marks the ninth anniversary of Hurricane Katrina. Interesting new businesses have sprung up. Many schools are better than they used to be. New Orleans has more bicycle paths. But the city can’t claim the population it had in July 2005. And poverty rates have increased from their level in the first hopeful years after the storm.

This outcome disappoints, and it also challenges received wisdom. Americans nurse their own very private and personal storm of emoto-thoughts when it comes to natural disasters. We want to do something, so we look for theories that support action. One such theory is that restoring old structures or hurricane and flood spending can so stimulate economic activity at a disaster site that the place will emerge better than it would have been prior to the misfortune. Our officials routinely buttress this thesis.

In addition to such arguments for government or private spending, we see a second theory: disaster as a kind of natural selection of businesses. There’s yet a third theory, which is related: that disaster spaces can benefit from a specific version of Joseph Schumpeter’s “creative destruction.” In this view, the same disaster environment that is hostile to humans is especially hospitable to innovators. Technological innovators flock in and drive out old backward technology, yielding productivity gains that also render New Orleans, or any other such unfortunate locale, superior to its old self.

This optimism speaks well of our national character, but not necessarily of our logic. For a systematic and global sweep of the evidence suggests that New Orleans is no exception: We often tend to overrate the quality of post-disaster intervention. Economists Solomon Hsiang and Amir S. Jina recently studied economies of nations that had endured the prototypical natural disaster, the cyclone. Studying 6,700 cyclones that took place around the world between 1950 and 2008, the pair published a National Bureau of Economic Research paper supplying strong evidence that national economies decline compared with their pre-disaster trend and “do not recover.” Wrote the authors: “The data reject hypotheses that disasters stimulate growth or that short-run losses disappear.” The conclusion: Cyclone-hit countries, rich or poor, experience such losses. Places where very big cyclones hit lose 3.7 years of development over the following two decades. This blow compares to a tax increase of 1 percent of gross domestic product, or a currency crisis.

“There is no creative destruction,” Jina told me, repeating what he had said to writers at The Atlantic.

Three findings of the Hsiang-Jina report stand out. The first is that their study includes the contributions of international disaster aid. Since international aid money usually, if not always, buys something at the disaster site, this suggests that our faith in spending might be too strong. “We can’t test whether aid and government spending is good or bad, but we can just say it is not doing what some people claim it is,” says Jina.

The second finding is that repeat disasters further burden the economies they hit, resulting “in an accumulation of income losses over time.” In other words, what is true once is also true the second time, with even greater impact. Perhaps those New Orleans families who have chosen to settle somewhere else have made the correct choice.

But the third point is perhaps the subtlest and most interesting. Economies do experience a jolt of growth when governments or private companies, not to mention international nonprofits and agencies, dump cash and rock concerts in the rush that follows tragedy. That jolt may include food, bottled water, and blankets that save lives. But economically, a jolt is just a jolt. The growth is not sustained. The true economic picture, and a negative one, comes clear over the long term, the 10- or twenty-year period. The only reason we have not noticed this, as the authors point out, is that “the gradual nature of these losses renders them inconspicuous to the casual observer.” Politicians think in election cycles, and so do voters, which explains why we may heretofore have found it expedient to ignore any evidence of long-term weakness that came before us.

The authors’ first big takeaway relates to global warming, which, even by conservative estimates, is likely to provoke more cyclones. The authors estimate that to sustain traditional growth patterns, the world’s nations will need to find, one way or another, $10 trillion more than they had planned to.

But the greater value of this study is in how it might help sort out what part of the disaster response results from fallacy. Now the evidence is there: Government spending alone simply does not do the trick. Big aid might not do the trick, either. And what about “creative destruction”?

Here one might reach a conclusion that differs from Jina’s. The “creative destruction” of which he spoke, and of which the development community speaks, is innovation catalyzed by disaster. The error here might be in believing that disasters foster extensive extra creative destruction. Perhaps the broader force of creative destruction, for which there is plenty of evidence, is not prompted by disaster: E-mail killed the fax without the necessity of any hurricane.

The work of Hsiang and Jina suggests that a fruitful research topic would be whether wars, so similar to disaster, actually foster the level of innovation traditionally assumed. The cyclone study also raises the question of whether authorities ought to focus on delivering humanitarian support exclusively, and abandon aid. After all, many of us, most notably Simeon Djankov, have found evidence of an aid curse.”

The perspicacious Joe Carter at Acton Institute writes that this study brought to mind the famous “broken window” thesis of the French philosopher Frédéric Bastiat, who sets forth this scenario: Suppose a window breaks at a shop. The bystanders invariably comment consolingly that at least some good will come of it all, for a glazier will get business, and, they ask, “What would become of the glaziers if panes of glass were never broken?” But this “seen” benefit obscures the unseen loss: that the cash spent to repair the window might have been invested more profitably by the shopkeeper, creating benefit elsewhere. Hsiang and Jina vindicate Bastiat. But they also undermine John Maynard Keynes.

In any case, “The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth,” this paper’s formal title, provokes more thought than a dozen other scholarly tracts. Any one of its ideas is worth considering, and preferably before the next hurricane.

original article: Emotional Storms Are No Response for Disasters

bureaucracy, charity, crisis, economics, economy, funding, government, hurricanes, ideology, innovation, nanny state, spending, stimulus, study

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Liquidating false ideas of Austrian economics

January 24, 2012 by Anthony J. Evans

IN A recent article in the Daily Telegraph, Ambrose Evans-Pritchard argued that “policy defeatism is in the air, and Austro-liquidationists are winning the popular debate”. “Austro-liquidationists” is a neat slur, managing to damn Austrian economics as both terrifyingly extreme and stupefyingly technical at the same time. But Evans-Pritchard misrepresents the Austrian school, while also overestimating its influence. Martin Wolf of the Financial Times was equally wrong to write in 2010 that “Austrians also say – as their predecessors said in the 1930s – that the right response is to let everything rotten be liquidated, while continuing to balance the budget as the economy implodes. I find this unconvincing.”

One of the unique insights of Austrian business cycle theory is that excessive credit creation has the potential to induce entrepreneurial errors, and the resulting correction process will be unavoidable and costly. So Austrians do tend to stress the need for malinvestment to be liquidated and are sceptical of attempts to stimulate aggregate demand.

For this reason Austrians tend to advocate a more laissez-faire attitude towards policy, but this does not imply “doing nothing”. On the contrary, there are many important policy ideas that would help this adjustment process: increasing labour flexibility, reducing barriers to investment and reducing marginal tax rates where this would boost revenue are just three examples. The key is that policymakers should allow the business community to lead the recovery, rather than attempting to take their place. The most dangerous risk is that policymakers deem “doing anything” to be better than “doing nothing”, and make policy errors that compound the original problem.

But accepting the necessity of some liquidation and warning against the harm caused by doing too much is not what Evans-Pritchard and Wolf have in mind. They are alluding to the Great Depression, when Treasury secretary Andrew Mellon is said to have advised President Herbert Hoover: “Liquidate labour, liquidate stocks, liquidate farmers, liquidate real estate… purge the rottenness out of the system.”

Unfortunately, that doesn’t square with the facts, which demonstrate that it is simply disingenuous to present the Depression as an Austrian plot.

In 2008, the US academic Lawrence H. White investigated these claims. He found that Austrian scholars “did not prescribe a monetary policy of ‘liquidationism’” during the early years of the Great Depression and that in any case the work of the period’s key Austrian economists Friedrich Hayek and Lionel Robbins was not available to the Federal Reserve, who were instead driven by a very different doctrine, known as “real bills”. The quotes of Mellon are derived from Hoover’s memoirs and do not square with Mellon’s public statements – or Hayek’s view that it was harmful to allow a shrinking money supply to drive down incomes. Indeed, many Austrians point to the Federal Reserve’s decision to allow monetary policy to tighten in the 1930s as a chief cause of the length and duration of the Great Depression.

Austro-liquidationists make for alarming bogeymen, but real Austrian policies are more humane and, so far, much less influential. Unfortunately, the truth is so often more nuanced than a good insult.

original article: Liquidating false ideas of Austrian economics

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They opposed raising the debt ceiling before they supported it

Flashback 2004: Chris Matthews and Andrea Mitchell Think Raising Debt Ceiling ‘Big Embarrassment for Republicans’
July 8, 2011 by Noel Sheppard

MSNBC’s Chris Matthews and Andrea Mitchell have been telling viewers in recent days that Republicans considering blocking an increase in the debt ceiling could be creating a financial crisis.

Seven years ago after George W. Bush was re-elected and the debt ceiling had been raised in November 2004, the perilously liberal couple felt Republicans should be “embarrassed” for having done so

read full article here

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Still think big government knows best? Check history first.

Economists: The stimulus didn’t help
April 26, 2010 by Hibah Yousuf

NEW YORK (CNNMoney.com) — The recovery is picking up steam as employers boost payrolls, but economists think the government’s stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years — but a majority of respondents felt the fiscal stimulus had no impact.

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House’s Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.

Wall Street didn’t cause crash of ’08
April 26, 2010 by David Frum

Washington (CNN) — Financial reform? Not exactly. The bill before Congress does nothing to address the fundamental background causes of the crash of 2008.

Wall Street may have been the instrument of the crash. But the crash was made elsewhere: in Washington’s failed policies for middle-class families — and in China’s distorted rush for economic growth.

The story is not a simple one. But I hope you will pay attention to the details. If you don’t, you may find that the pocket that has been picked is your own.

bureaucracy, economics, economy, gaffe, government, ideology, left wing, liberalism, marxism, nanny state, philosophy, political correctness, politics, public policy, regulation, socialism, spending, stimulus, study

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Credit scores can drop after getting loan help

Credit scores can drop after getting loan help
March 19, 2010 by Alan Zibel

WASHINGTON (AP) — Some homeowners who sign up for the government’s mortgage assistance program are getting a nasty surprise: Lower credit scores.

For borrowers who are making their payments on time but are on the verge of default, the Obama administration’s loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job.

Housing counselors say it’s unfair, especially because the news often comes as a surprise to homeowners.

bureaucracy, crisis, economics, economy, funding, government, nanny state, politics, public policy, recession, spending, stimulus, unintended consequences

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Homebuyer credit not jolting housing market

Homebuyer credit not jolting housing market
March 1, 2010 by AP

It sounded like a great idea three months ago: Hand homeowners a $6,500 tax credit to find a new place to live, giving a thrust of energy to the housing market’s recovery.

So far, people are staying put.

In November, the federal government extended a tax credit of up to $8,000 for people who hadn’t owned a home for three years. This credit had helped boost home sales last summer and fall. Seeking to build on that momentum, the government added a new credit of up to $6,500 for current homeowners, hoping it would transform them into house-hunters this winter and spring.

But real estate agents around the country say the credit is doing little to elevate sales. Reasons vary.

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Forget accuracy or the 5 million lost jobs, Obama wants the credit

White House says stimulus has saved two million jobs
January 13, 2010 by Alister Bull

WASHINGTON (Reuters) – President Barack Obama’s emergency spending measures last year saved up to 2 million U.S. jobs, the White House said on Wednesday, but it warned that the outlook for the economy remained uncertain.

Obama, anxious to reduce double-digit U.S. unemployment which has dented his popularity, has already called for additional government measures to boost jobs on top of the $787 billion stimulus package he signed in February 2009.

Christina Romer, head of Obama’s Council of Economic Advisers, said she expects positive job creation by the spring, but stressed that there was definitely a need for additional “targeted action” to aid employment.

The White House, using two different approaches to figure out the impact of the stimulus package, estimates that U.S. employment had been raised by between 1-1/2 and 2 million jobs by the end of 2009 as a result of the stimulus measures.

Romer said she thinks the stimulus measures will have saved up to 3.5 million jobs by year’s end.

Democrats, bailout, budget, bureaucracy, crisis, economics, economy, funding, government, ideology, indoctrination, left wing, liberalism, nanny state, pandering, philosophy, political correctness, politics, propaganda, recession, socialism, spending, stimulus

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Surprise: some reasons not to accept a government bailout

Obama to Announce Fee on 20 Banks to Recoup TARP
January 13, 2010 by Julianna Goldman and Ryan J. Donmoyer

Jan. 13 (Bloomberg) — President Barack Obama will announce his intention to impose a fee on more than 20 of the country’s largest banks and financial institutions to help recoup taxpayer bailout money and trim the federal budget deficit, an administration official said.

The fees, expected to be spread over as many as 10 years, will be based on the leverage or amount of liability each firm has, said the official, who spoke on the condition of anonymity.

Dem Congressman introduces 50% tax on bonuses
January 12, 2010 by Eric Zimmermann (hat tip to Lux Libertas)

Rep. Peter Welch (D-Vt.) will introduce legislation that would impose a 50% tax on excessive bonuses at firms that received bailout funds.

The “Wall Street Bonus Tax Act” would apply only to bonuses over $50,000, and would use the tax revenue to support loans to small businesses.

Welch unveiled the proposal at a press conference in Burlington this morning.

“As most Americans struggle to endure a long and wrenching recession, the same Wall Street bankers who came to the American taxpayer with hat in hand are now preparing to pocket record-breaking bonuses,” said Welch. “Financial firms that received taxpayer assistance must remember that they owe their return to profitability to hardworking Americans.”

Note to Rep. Welch: being coerced and bullied into accepting government bailout is not the same going to you with “hat in hand”. Government greed is always hidden in a cloak of compassion.

Democrats, bailout, bullies, bureaucracy, crisis, elitism, funding, government, greed, ideology, left wing, liberalism, marxism, nanny state, oppression, pandering, philosophy, political correctness, politics, propaganda, public policy, recession, regulation, socialism, spending, stimulus, taxes

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AP shows economic stimulus spending was useless

AP IMPACT: Road projects don’t help unemployment
January 11, 2010 by MATT APUZZO and BRETT J. BLACKLEDGE

WASHINGTON (AP) – Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are “at the heart of our effort to accelerate job growth.”

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