Federal Budget & Tax

Federal Budget & Tax: News Blog Background

Friday, May 16, 2008

Unions Boost Wages of Lowest-Income Workers the Most

Shawn Fremstad posted yesterday on a new paper released this month by John Schmitt over at the Center for Economic and Policy Research. The paper studies the impact unions have on income and has some interesting findings:

Using national data for 2003 through 2007, we estimate that unionization raises the wages of the typical low-wage worker (one in the 10th percentile) by 20.6 percent, compared to 13.7 percent for the typical worker (one in the 50th percentile), and 6.1 percent for the typical high-wage worker (one in the 90th percentile). The traditional statistical approach applied to the same data produces an estimate of the average union wage premium of 11.9 percent, which is substantially lower than the union effect on low-wage workers (20.6 percent) and somewhat below the effect for the median- wage worker (13.7 percent).

Read the full report.

Posted by Adam Hughes, 03:32:21 PM

Thursday, May 15, 2008

Best Spin Ever: Doan Fought for Accountability!

When I posted at the end of April that the book had closed on Lurita Doan, former head of the General Services Administration, (GSA) apparently I was wrong. She has resurfaced in interviews in GovExec magazine, on Federal News Radio and most recently in this border-line ludicrous column in Federal Computer Week by Neal Fox, the former assistant commissioner of acquisition at the GSA.

Now I've come across some interesting spin in Washington in my time here, but I think this one has to take the cake. There are too many strange, misleading, and frustratingly vague statements (e.g. "Some people who had backed IGs began to have doubts.") in Fox's article to jump into all of them (Beverley Lumpkin over at POGO has a good rundown refuting many of them that is worth reading). But the overall tone of the piece implies that IG offices are a danger to good government and need to be reigned in. This perspective needs to be soundly dismissed.

Fox's main point seems to be that a thirsting for power and arrogance at the IGs office was the main issue at GSA, not any particular issue or problem they were investigating (and there were plenty). Fox's point is mind-numbingly ironic considering many of the actions the IGs office was investigating can not be seen as anything else than a power grab by a pretty arrogant Ms. Doan herself (see strong-arming contracting officers and side-stepping contracting protocols to help friends). Worst of all, Doan's unprecedented actions to attempt to cut the IG office's budget and outsource its contracting oversight responsibilities to, of all places, private contractors, was a deliberate attempt to keep prying eyes away from her attempts to operate on her own outside of federal laws and regulations.

I'm still hopeful, as I think POGO was at first glance, that vague assertions and unsubstantiated ramblings like those contained in Fox's article won't influence anyone (that would be a shame). In these times of poor oversight and significant corruption and incompetence in the federal government, we need strong IG offices more than ever to help develop a more effective and accountable government.

Posted by Adam Hughes, 12:37:26 PM

Wednesday, May 14, 2008

Ranks of Contracting Officers Grow, But Not Enough

Stephen Barr, who writes the Federal Diary column for the Washington Post, wrote on an interesting topic last week - the growth in federal contracting officers (COs) under President Bush.

Barr reported that the number of COs has increased 6.8 percent since President Bush took office, according to federal statistics. Barr also was correct in pointing out that there are concerns among many in Washington (both inside Congress and out) that despite these increases, there are still far too few COs and they receive sub par training and support in doing their jobs.

One of the most shocking things was that federal officials don't even know how many COs would be appropriate to have:

But how many contracting officers the government actually needs has not been determined, despite efforts by federal agencies, the Office of Personnel Management and the OMB over the past two years to develop plans for hiring and training contracting officers and specialists.

"We are still working real hard with OPM and the departments to try to figure out what the right number is," said Paul A. Denett, an Office of Management and Budget official in charge of government procurement policy. For his part, Denett added, "I believe we need to increase the hiring even more."

Let me give Mr. Denett a hint. You definitely need to hire more. While the COs workforce has increased 6.8 percent since Bush took office, federal contracting dollars have increased close to 100 percent - from $219.8 billion in FY 2001 to $430.1 billion in FY 2007. Those facts alone should be pushing the government to hire and better train more employees to oversee an immense area of discretionary spending by the federal government. That, plus the wide-ranging and seemingly continuous reports of waste, fraud, and abuse in federal contracting makes it almost shameful something hasn't been done already.

Posted by Adam Hughes, 02:58:17 PM

Friday, May 02, 2008

Ed. Dept: Bush's Reading First Flunks Test

When we last left Reading First -- the Bush Administration's "education program," in which the Education Department "inappropriately influence[d] the use of certain programs and assessments" and "created an environment that allowed real and perceived conflicts of interest" -- the president was decrying the slashing of its FY 2008 budget by congressional appropriators.

In March, at a Reading First program directors' meeting, Secretary of Education Margaret Spellings implored the directors to "fight fiercely" for the program because "[]y]ou have seen the benefits of this program." And Tennessee Reading First director James Herman claimed that the program "has made so much of a difference in the lives of so many people."

According to a report released Thursday by the Education Department that Reading First doesn't actually make a difference:

On average, across the 18 participating sites, estimated impacts on student reading comprehension test scores were not statistically significant.

Average impacts on reading comprehension and classroom instruction did not change systematically over time as sites gained experience with Reading First.

Posted by Craig Jennings, 12:25:49 PM

Thursday, May 01, 2008

Op-Ed Dismissive of Contractor Oversight, Calls for More Contractors

WaPo published an op-ed Monday in which former senior Department of Defense officials Dov S. Zakheim and Lt. Gen. Ronald T. Kadish (Ret.) note a recent GAO report that finds massive cost and schedule overruns in weapons acquisitions by the Pentagon. The report implicates a degradation of competition between contracting firms resulting in, according to Zajheim and Kadish (ZK, hereafter), "a kind of 'design bureau' competition, similar to what the Soviet Union used."

After complaining about an Air Force tanker project won by EADS, a European defense contractor, ZK conclude that what's really needed to curtail waste, fraud, and abuse in military contracting is increased competition in the defense market spurred by an increase in domestic defense firms. Without really explaining why, they also claim that "[m]ore regulations and bureaucratic restrictions on contractors are not the answer."

Although the consolidations helped contractors survive the spending cuts, they now threaten to undermine the industry. That's because many in Congress and at the Pentagon want to impose stricter oversight and controls on weapons manufacturing and development while simultaneously demanding more competition -- driving the system to an immature and evolving "globalized" marketplace.

Here's the thing though: Better oversight and better procurement practices may not "fix the problem," but because of the nature of the defense "market," it may be the government's only tool to increase acquisition value.

Read more...

Posted by Craig Jennings, 11:08:38 AM

Wednesday, April 30, 2008

First Jackson, Now Lurita Doan Falls

The long saga of General Services Administrator Lurita Doan has finally come to an end - the White House fired her yesterday. We have posted extensively on Doan's short tenure at the GSA on this blog, in our press room, and in the Watcher as well. It seemed there just was never enough print space to truly capture all the corrupt, illegal, and unethical behavior of Ms. Doan (also see here, here, here, and here).

My only question at this point is, why was she fired now? It's been 11 months since the independent Office of Special Counsel recommended to President Bush that Doan be fired for blatant violations of the Hatch Act - which prohibits the use of federal resources for partisan political activities. It certainly does seem like strange timing, but I suppose I should stop being surprised by the bizarre actions of this administration.

It is time to say farewell and good luck to Administrator Doan. Thanks, Ms. Doan, for wasting our money, helping out your friends with no-bid contracts, hiding the truth by interfering with oversight investigations, attempting to intimidate an Inspector General's office, violating federal law, keeping us entertained at many congressional hearings with your poor memory and shifty ways, and generally, making life interesting here at this watchdog organization. You certainly weren't dull.

Posted by Adam Hughes, 09:11:18 AM

Friday, April 25, 2008

The Magic of the Market

In the WaPo, Christopher Lee reports on how the President's Competitive Sourcing Initiative^® is going.

"The competitive sourcing initiative did little to improve management, produced a ton of worthless paper, demoralized thousands of workers and cost a bundle, all to prove that federal employees are pretty good after all," said Paul C. Light, a professor of government at New York University's Wagner Graduate School of Public Service.

The president's program was implemented to bring the magical cost-cutting powers of the market to the federal government by pitting government employees against private contractors in a bidding war. So far, 83 percent of competitively-sourced have been won by federal workers.

After $225 million in administrative costs and five years of putting decent-paying, benefit-providing jobs on the auction block, the Bush Administration has shown that the federal government is better at providing federal-government services more efficiently than most private firms.

Posted by Craig Jennings, 05:47:30 PM

Thursday, April 24, 2008

Feds Return Virtual Border Fence to Boeing

Here's a short item reported ($) in CongressDaily yesterday afternoon that as escaped most mainstream media coverage. Apparently the federal government, specifically officials at the Customs and Border Protection office, have decided to scrap continued work on a brand new, $20 million virtual fence along the Arizona-Mexico border. The initiative, called Project 28, was awarded to Boeing, Inc., as part of a $67 million contract to provide advanced border protection technologies.

Project 28 has experienced repeated delays (in June 2007 and again in February 2008) due to technical problems and software glitches since it began about 18 months ago, and now that the government has accepted the program infrastructure from Boeing, it found out it doesn't work. The Government Accountability Office (GAO) has testified before Congress that the technology provided under the contract "did not fully meet user needs and the project's design will not be used as the basis for future" development of border protection technologies.

Does Boeing owe the government $20 million? Find out...

Posted by Adam Hughes, 05:45:15 PM

Wednesday, April 23, 2008

Contractor Accountability Heats Up

Scott Amey over at the Project on Government Oversight reminded us on Monday that there has been a lot of long overdue action in Washington this month to hold federal contractors more accountable. Scott has a nice summary of some of the bills garnering attention in the House and a few other snipits from the past few weeks related to federal contracting. (Read Scott's summary). Two of the bills Scott mentions (H.R. 5712 and H.R. 3033 will be considered on the House floor this week. Another one, H.R. 3928 - which would require disclosure of the names and salaries of the most highly compensated officers of any contractor receiving more than 80 percent of their annual gross review from federal contracts, will also be considered on the floor this week.

In addition, House Oversight and Government Reform Chairman Henry Waxman (D-CA) - who you can give a great deal of the credit for getting many of the current efforts off the ground - sent letters yesterday to KBR, Inc., and 14 other contractors who are working in Iraq and Afghanistan requesting information about the use of off-shore subsidiaries to reduce federal tax liability (KRB, Inc. letter, Sample of letter to other contractors).

This request is a follow-up to a briefing given to the House committee by employees of KBR, Inc. at the end of March after it was disclosed in the Boston Globe that KBR used offshore subsidiaries to avoid payroll taxes for Social Security and Medicare. The House has already begun to correct this loophole with legislation (H.R. 5602) that would treat foreign subsidiaries performing services under contract with the government as American companies for the purposes of payroll taxes. But it is good Waxman is continuing to dig for more dirt on the tax evasion techniques of federal contractors and general waste and abuse of federal resources - something he has gotten used to doing during his career, according to this profile of Waxman in The Hill newspaper.

Update: Another upcoming item on contracting I neglected to mention is an oversight hearing being held by Sen. Byron Dorgan (D-ND) in the Democratic Policy Committee on contract abuses in Iraq. Dorgan and the DPC will hear testimony on April 28 at 2:00 pm from three whistleblowers who were former employees with contractors working in Iraq. The hearing will be in room 406 of the Dirksen Senate Office Building.

Posted by Adam Hughes, 09:00:18 AM

Wednesday, April 16, 2008

House Committee Approves Contractor Fraud Loophole Fix

By a voice vote, the the House Oversight and Government Reform Committee approved a bill (HR 5712) that would close a loophole in the Federal Acquisition Regulation (FAR) that excuses federal contractors working overseas from reporting fraud. The loophole was inserted into the federal procurement rules and was published in November of last year as part of a contracting oversight measure. Called a "drafting error" by GSA chief acquisition officer David Drabkin, the loophole exempts companies performing federal contracts overseas from mandatory reporting of employee contract fraud.

For more background on (with hints of Administration shenanigans), see:

AP: Administration says contracting fraud loophole was mistake
Brattleboro Reformer: Official says fraud loophole was a mistake
GovExec: House committee approves bill to close contracting loophole
GovExec: Much-derided overseas contracting loophole to be closed

Posted by Craig Jennings, 06:07:41 PM

House Passes HR 5719
Tax Act Would End IRS's Private Debt Collection Program

After fending off an effort to attach an immigration provision, the House passed HR 5719 by a vote of 238-179.

The bill would end the IRS's private debt collection (PDC) program if signed into law. It was this provision and a proposed change to the rules of health savings accounts (HSAs) that drew vocal opposition from Republicans.

While the fortunes of the bill in the Senate are uncertain -- Sen. Charles Grassley (R-IA) is a staunch supporter of the PDC initiative -- The House vote indicates an override of a veto is unlikely.

For more details about bill, read this Watcher article.

Posted by Craig Jennings, 09:29:49 AM

Tuesday, April 15, 2008

President Threatens to Veto HR 5719, the Taxpayer Assistance and Simplification Act of 2008

President Bush has threatened to veto HR 5719, the bill recently approved by the House Ways & Means Committee and expected to see House floor action today. The bill would end the IRS's private debt collection (PDC) program, require that disbursements from health savings accounts (HSAs) be substantiated (i.e. require submission of receipts), and implement a bevy of other tax policies.

The president feels that the federal government should continue to waste money on the PDC initiative, because he would rather put taxpayer data at risk and open citizens to abusive debt collection practices than divert federal funds to more efficient and transparent tax collection methods.

Bush also objects to the changes to the HSA code, because requiring HSA account holders to prove that withdrawals from their accounts are, in fact, for approved purposes, would result in a lower usage rate of such accounts.

Posted by Craig Jennings, 01:16:06 PM

Monday, April 14, 2008

Private Tax Collection Sign On Letter

OMB Watch has signed on to a National Treasury Employees Union letter that calls on Representatives to support H.R. 5719, the "Taxpayer Assistance and Simplification Act of 20080." The bill would, among other things, end the private debt collection program, which is not only fiscally irresponsible, but puts sensitive taxpayer data at risk and opens citizens to abusive collection practices.

If you would like to sign on to the letter, email Matt Socknat at NTEU -
(email address appears as an image and is un-clickable to prevent spam)

Update: The letter sign-on deadline has passed. You can read the letter here.

Posted by Craig Jennings, 04:12:46 PM

Thursday, April 10, 2008

W&M Twofer: Contractor Provision Passed with Tax Bill

The Taxpayer Assistance and Simplification Act (H.R. 5719) approved by the House Ways & Means Committee yesterday contains a measure that would force U.S. firms employing workers through foreign shell companies to pay Social Security and Medicare taxes if the work is performed under a contract with the federal government.

The provision's language is lifted from the Fair Share Act of 2008 (H.R. 5602), which was introduced in the Senate and House on March 13. The measure would bring in, over ten years, $846 million in new revenue.

See this Watcher piece for more details on the Fair Share Act of 2008.

Posted by Craig Jennings, 10:28:27 AM

Wednesday, April 09, 2008

Ways & Means Looks to End Private Tax Collection

The House Ways & Means Committee is expected ($) to markup legislation (H.R. 5719) today that would end the IRS's private tax collection initiative. Today's markup begins another attempt to put the kibosh on this wasteful program. Efforts to end the program have been stymied in the past by Senate opposition and House parliamentary rules. The latest effort to end the program was initially inserted in the FY 2008 Financial Services appropriations bill in the House but was stripped out prior to including the bills language in the FY 2008 omnibus spending measure.

The truncation of the program would be welcome development for advocates of fiscal responsibility and good governance. National Taxpayer Advocate Nina Olso recently testified that the IRS's continued operation of the program ultimately deprives the Treasury of some $91 million per year. And although tax collection is an inherently governmental function, citizens are not privy to the methods that these firms employ, while the collection agencies are not accountable to elected officials.

Committee member Rep. Tom Reynolds (R-NY) strongly objects to Rangel's bill despite his support for other provisions in the measure. Reynolds was the author the original legislation that initiated the program, and his rabid support for the program may be explained by the $16,600 in campaign contributions he has received from one of the two firms (Pioneer Credit Recovery) which contracts with the IRS in the private debt collection program.

Posted by Craig Jennings, 11:49:56 AM

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