The Center for Public Integrity

As America approaches a historic transfer of power, it is becoming ever-clearer what a daunting set of tasks awaits the new administration. When Barack Obama takes the oath of office at noon on January 20 he will inherit an economy collapsing before our eyes and a pair of ongoing wars in Afghanistan and Iraq. But he will also inherit a federal government whose machinery should bear an “out of order” sign.

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.