The Center for Public Integrity

After years of calls for Congress to create stronger regulatory oversight of Fannie Mae and Freddie Mac, time ran out in 2008 when the two mortgage giants collapsed, forcing a costly government bailout. Congress created Fannie Mae during the Great Depression to buy mortgages and free up capital so that lenders could make more loans, especially to low- and middle-income buyers. Congress launched Freddie as a competitor in 1970. The Department of Housing and Urban Development (HUD) first assumed regulatory duties over Freddie and Fannie in 1992, while an independent office within HUD — the Office of Federal Housing Enterprise Oversight (OFHEO) — was tasked with maintaining their safety and soundness. Unlike bank regulators, OFHEO needed budget approval from a Congress — a Congress on which Freddie and Fannie lavished $170 million on lobbying over the past decade. The two companies also contributed $4.8 million in congressional campaign donations over the last 20 years.

The Executive Office of the President and the Bush administration in general have drawn widespread criticism for their push toward a “unitary executive,” a presidency with vastly increased power to interpret and implement the law. The administration’s decision to authorize warrantless wiretapping, its use of signing statements to pick and choose which portions of legislation to execute, its push for unrestricted detention of suspects in the war on terror, and its broad and aggressive assertion of executive privilege all drew bipartisan criticism. Some view the changes as a positive reassertion of executive power that was lost in the aftermath of the Watergate scandal — indeed, as far back as the dawn of the Reagan administration, current Vice President Dick Cheney had pushed incoming Reagan White House Chief of Staff James Baker to “restore power” and authority to the executive branch. Cheney and other adherents of the unitary executive believe that a powerful executive branch is especially important during time of war. Others view it as a dangerous power grab by a president unwilling to be held accountable by the judicial or legislative branches. Either way, with its opposition to both judicial review of its decisions (regarding handling of detainees, for example) and assertions of authority over Congress (as seen through its signing statements and refusal to respond to congressional subpoenas), the Bush administration has pushed executive power to a level unseen for many years. The White House press office did not respond to a request for comment, but in 2006, President Bush defended his decision-making role, noting, “I'm the decider, and I decide what's best.”

Like any large business, the U.S. government suffers from personnel problems and employs human assets who are not fully utilized; unlike a business, however, the government’s human capital problem impacts citizens across the country, both in the delivery of services and in how efficiently taxpayer money is spent. In 2001, the Government Accountability Office (GAO) added “Strategic Human Capital Management” to its list of high-risk areas. Despite some progress, the human capital problem has remained on the high-risk list for the past seven years.

Among the problems: a lack of long term planning for top management positions vital to ensuring consistency — the Health Care Finance Administration that runs Medicare, for example, had 19 different administrators between 1977 and 2001 — and the absence of a “results-oriented” culture, leaving a bureaucracy in which the there is no incentive to do good work. The problem is not limited to one department, but affects the entire spectrum of government agencies, according to federal auditors. The original GAO report warned that the situation is creating a “government-wide risk” that endangers the “federal government’s ability to effectively serve the American people, ” and that officials have “often acted as if people were costs to be cut rather than assets to be valued.”

Follow-up:
Since the 2001 GAO report, reforms have helped alter the way agencies manage their human capital. Agencies continue to struggle with meeting higher standards called for by the GAO and the Office of Personnel Management. The newest GAO High-Risk Areas report, due out in January 2009, will evaluate whether the government-wide human capital problem has improved during the last two years.

The government’s $700 billion financial rescue plan may itself be in need of rescue, if early assessments are any indication. The credit markets are still floundering, and questions are arising already about the Department of Treasury’s administration of the plan. Before the ink was dry on the Troubled Asset Relief Program (TARP) — it was signed into law October 3 — Treasury officials had decided not to use the money to buy troubled assets at all, as the program envisioned. Instead, they decided to follow the lead of foreign governments and pour cash directly into banks to improve their balance sheets and persuade them to resume lending. Treasury so far has injected more than $150 billion in capital into 52 institutions, but the nation’s businesses and consumers have yet to see credit loosen. The crunch is so bad that vehicle sales in the United States plunged to their lowest rate in 26 years in November, helping to push automakers to seek their own bailout. The Government Accountability Office (GAO), while allowing that the TARP program is new and the challenge daunting, warns that Treasury has not yet put into place a system to gauge the program’s success. The department does not have conflict of interest rules in place, nor any monitoring of the bailout law’s requirement limiting compensation for executives of participating banks, the GAO said. Treasury interim Assistant Secretary Neel Kashkari said in a letter to the GAO that “more can and will be done” to improve transparency and communication, and he agreed that Treasury needs to develop a means to ensure compliance with provisions of the law. But Elizabeth Warren, chairwoman of Congress’ own panel overseeing the bailout, has raised a more fundamental question — whether Treasury understands why banks aren’t lending, and whether more attention should be paid to shoring up the finances of households instead of banks.

The numbers and details are staggering: Over the course of four fiscal years, at least 5,000 pieces of property, including computers, all-terrain vehicles, and digital cameras worth about $15.8 million, were lost or stolen from the Indian Health Service (IHS), a division of the Department of Health and Human Services (HHS). Following a whistleblower’s tip in June 2007, Government Accountability Office (GAO) investigators began looking into the IHS, which is meant to provide personal and public health services to American Indians. They found a division plagued by a “weak internal control environment,” which demanded little accountability for property and held little regard for protecting personal data.

Some of the electronics that went missing were used to store personal information. For instance, a computer containing a database of uranium miners’ names, along with their Social Security numbers and medical histories, was carried out of an IHS hospital in New Mexico. Though IHS attempted to contact the miners, the agency didn’t issue a press release. And throughout the course of the investigation, “IHS made a concerted effort to obstruct our work,” GAO investigators reported, including lying to investigators claiming that IHS had recovered about 800 of the items reported missing. In addition to the waste of taxpayer money, the loss and theft of property denied the recipients access to critical items, like Jaws of Life equipment that can save lives after automobile and other accidents, Jacqueline L. Pata, the executive director of the National Congress of American Indians, told The Washington Post. An IHS spokesman refused to comment beyond reactions the agency provided to the GAO, which are documented in the report.

The U.S. military failed to provide adequate body armor and armored vehicles to soldiers and Marines fighting the Iraq war. Key assumptions made before the invasion and early in the occupation of Iraq proved faulty: namely, that the Iraqi people would welcome the United States’ presence and that the American military would not face an insurgency. In April 2003 military supply chiefs told the Department of Defense’s (DOD) Army Strategic Planning Board, led by General Richard Cody, that there was enough body armor and that the 50,000 troops behind the front lines did not need armor, according to a 2005 piece in The New York Times. By mid-May, as troops behind front lines faced attacks, Cody reversed that decision and ordered body armor for all, “regardless of duty position.” The case was similar for military vehicles. According to an Army history: “When OIF [Operation Iraqi Freedom] began, as in every previous war the U.S. Army has fought, logistical vehicles were largely unarmored or lightly armed. . . . The ‘360-degree’ Iraqi insurgency once again exposed the danger of this approach.” The early missteps were soon compounded by other problems. It took time for the bureaucracy at the Pentagon to move; for example, at one point, the Army's equipment manager reportedly reduced the priority level of armor to the same status of socks. Also, DOD relied on several unproven contractors, which led to delays. The result was that for too long too few troops had adequate armor in a conflict that turned out to have no front lines. Soldiers almost anywhere in Iraq could be targeted, especially by the insurgents’ weapon of choice, improvised explosive devices (IEDs). Between the beginning of the conflict in March 2003 through November 1, 2008, 2,145 troops were killed and nearly 21,000 troops were wounded by IEDs and other types of explosive devices in Iraq.

Established in response to the chaos of the 2000 election, the U.S. Election Assistance Commission (EAC), by many accounts, has been ineffective thus far in smoothing out the nation’s voting problems. The commission, created as part of the 2002 Help America Vote Act (HAVA), is an “independent, bipartisan commission” tasked with “developing guidance to meet HAVA requirements, adopting voluntary voting system guidelines, and serving as a national clearinghouse of information about election administration,” as well as accrediting testing laboratories and certifying voting systems.

Former President Ronald Reagan called the right to vote “the crown jewel of American liberties,” but after the controversial 2000 election, Democrats and Republicans agreed major legislation was needed to address serious problems in the election system. The EAC got off to a stumbling start, chronically short of funds – receiving only $1.2 million of $10 million authorized in 2004 – and unable to secure office space for its first two years. Subsequently, the commission came under significant criticism — including multiple reprimands from the Government Accountability Office — for its failure to establish and maintain a clearinghouse of information on how state and local governments implemented guidelines and operated voting systems. The EAC admitted it was “resource constrained” in its ability to ensure voting systems “perform securely and reliably.”

The Bush Administration’s regulatory approach to toxic mercury emissions from coal-fired power plants was struck down by a federal court that concluded the government flouted health law in a manner reminiscent of Alice in Wonderland. The National Academies’ National Research Council has found that some 60,000 newborns a year are at risk for neurological problems such as impaired motor function due to mercury—the largest source of which is coal-fired power plants. The Food and Drug Administration urges pregnant women to limit fish intake due to widespread contamination with mercury that made its way into the food chain. In its waning days, the Clinton administration listed mercury as a toxic substance subject to strict regulation as a health threat, but the Environmental Protection Agency (EPA), under President Bush, proposed a rule to reclassify mercury from coal-fired plants under a different section of the Clean Air Act (CAA). The EPA’s rule would have set an overall limit on mercury, while giving coal plants flexibility to meet the goal or purchase “emissions rights” from other plants—known as a “cap-and-trade” program.

For many injured veterans — aging former soldiers as well as younger ones recently back from Iraq and Afghanistan — disability claims are a vital and necessary source of income. The Department of Veterans Affairs (VA), however, has long failed to process claims in a timely manner, forcing many vets to wait an average of six months for their claim to be processed, and as long as two years to wait for an appeal. The Government Accountability Office (GAO) reported a growing backlog of claims and lengthy processing times in 2001, and the problem has persisted. By February 2007, the backlog had grown to almost 400,000 — more than 130,000 of which had exceeded the VA’s 160-day goal to process a claim. This is due in part to the growing number of returning veterans from Iraq and Afghanistan filing disability claims — total claims have jumped from about 579,000 in 2000 to some 806,000 in 2006, a 39 percent increase. The Senate unanimously passed a measure in 2007 to provide the VA with $70.3 million to eliminate the backlog of disability claims by hiring new processors and implementing better staff training. But increasing the number of processors on staff did not immediately solve the crisis. The GAO says that increased numbers must be paired with “adequate training and performance management” in order to issue timely and accurate decisions. Daniel Akaka, Democrat of Hawaii and chairman of the Senate Committee on Veterans’ Affairs, has called for better technology, improved employee training, and an enhanced claims process to end the long delays. Until the problems are fixed, the persistent delays mean that tens of thousands of veterans and their families will continue to struggle financially.

Over the course of the Bush administration, the Department of the Interior (DOI) has been hit with troubling — and repeated — reports of politically inappropriate activity at the agency. The litany of concerns prompted Earl Devaney, the department’s inspector general (IG), to claim that “short of a crime, anything goes at the highest levels of the Department of the Interior.” In one controversial 2002 episode, political appointee Anne Klee helped negotiate the proposed purchase of mineral rights — estimated by the Minerals Management Service to be worth $68 million — from the powerful Collier family, which at one time owned 1.25 million acres of Florida land. According to IG Devaney, department officials including Klee were in constant conflict with career agency staff members and provided “incomplete” information in order to arrange a tentative sale price of $120 million, plus up to $350 million in tax breaks for the sellers; the deal eventually fell apart. In 2004, Interior Deputy Secretary J. Steven Griles was cleared of ethics violation charges, but in 2007, he pleaded guilty to charges of lying to the U.S. Senate about his connections with infamous lobbyist Jack Abramoff, to whom he provided “advice and intervention on issues within DOI,” according to prosecutors; Griles was sentenced to ten months in prison. A second official from the department received two years probation and a fine for failing to report gifts from Abramoff while working as an overseer for the Northern Marina Islands, which retained Abramoff as a lobbyist. Also in 2007, the deputy assistant secretary for Fish, Wildlife and Parks, Julie MacDonald, admitted to leaking internal documents — in violation of federal regulations — about endangered species to pro-industry groups, including the Chevron Corporation and the conservative Pacific Legal Foundation.