The Project On Government Oversight (POGO) Blog

To Finally Resolve Nuclear Power Plant Security Weaknesses, Obama Needs to Appoint New Commissioners

For the second time in two weeks, Commissioners at the Nuclear Regulatory Commission (NRC) have rejected staff recommendations to improve security at nuclear power plants by a tie vote of two-two.  NRC rules establish that a tie vote means a rejected vote.

The first NRC action was to reject a staff recommendation that would have provided the public with more information on the results of security inspections at nuclear power plants.  This is a topic that POGO feels strongly about: in fact, we recently submitted public comments in favor of the staff recommendations.

And just days ago, two of the Commissioners rejected another staff recommendation to make the NRC's Design Basis Threat (DBT) more realistic by increasing the number of adversaries that nuclear power plants have to defend against and to include more lethal weapons that are commonly used by terrorists.  For years, POGO has been critical of the NRC's unrealistic and diluted DBT.

The NRC Commissioners are not doing the American people any favors by dismissing the recommendations of their staff security experts about how to protect these nuclear power plants from a realistic threat.

These recent tie votes demonstrate the need for President Obama to both appoint a Commissioner to fill the NRC's vacant fifth seat and to designate a new Chairman.

President Obama should appoint someone who is dedicated to improving nuclear security.  This is an opportunity to show that he is serious about his commitment to prevent nuclear terrorism.

-- Ingrid Drake and Peter Stockton

Producing Reform at Interior

Last week, Interior Department Secretary Ken Salazar's remarks to department employees emphasized ethics and accountability--a theme he also stressed in his confirmation hearing.  POGO hopes that he'll be successful, but I do want to take issue with one statement he made:

In the last few years, this Department has suffered because of ethical lapses and criminal activity at the highest level.  That doesn’t mean to say that the people of the Department of the Interior are bad people, because they are not.  You know how one apple in a bushel can spoil the whole bushel?  There has been, essentially, a picture of this department that has been painted unfairly on the backs of career employees because of the actions of political appointees.

Secretary Salazar is right when he says that there were several bad apples.  But he is severely underestimating the scale of the problem if he thinks that it's just a matter of a few individuals stepping out of line.  If Secretary Salazar wants to improve royalty management, he needs to recognize that there are systemic and structural problems that need to be solved.  And it's not just a Bush administration problem--POGO released our first report in 1995, under Clinton. 

There's a lot of work to do to assure taxpayers the government is collecting all of the royalties owed on their lands.  Auditing needs to be improved, the merits of the Royalty-In-Kind program need to be reconsidered (and to be honest, the program should be shut down), and Salazar was right when he said that department ethics reform needs to have statutory support (*cough* perhaps something like this).  So yes, there were some bad apples that have since left, but until there are more reforms to clear the bushels, taxpayers won't have the protections they deserve against the rotten produce.

-- Mandy Smithberger

"Uniquely Qualified"

Oh come on.  Yes, if you're okay with the status quo, William Lynn is perfectly well qualified to be the Deputy Secretary of Defense.  But I thought we were supposed to have entered a new day.  In fact, both Obama and McCain were competing as to who was going to be the biggest reformer.  And Obama did come out of the box with what appeared to be transformative ethics and openness standards.

But why balk at implementing them at the Pentagon?  It is ridiculous to argue that the only people qualified to run this agency are those who have come from the military-industrial complex.  Why undermine the weight of these reforms by waiving them when they really matter?  Now that President Obama's giving waivers, how do we know he isn't going to waive his revolving door restrictions when officials leave his Administration, a la Clinton?

Moreover, what exactly makes Lynn "uniquely qualified"?  Being a lobbyist certainly doesn't give one the significant management experience the Deputy Secretary of Defense will need.  And one could argue that anyone who has been in charge of the Pentagon's finances over the past couple of decades should not be asked to come back.

I would suggest that President Obama go outside the typical channels and consider successful business leaders from sectors that actually do have their house in order.  There are people who have run multi-billion dollar companies with good management and accountability track records.  Why not try one of them?

Senator McCain (R-AZ) has slowed the confirmation process by requesting answers from Lynn regarding exactly what his recusal will entail.  (Yes, I saw McCain on the Sunday morning talk show saying that, although he's disappointed, he thinks it's likely Lynn will be confirmed--but a girl can dream, can't she?)

If, in the end, Lynn is confirmed, I hope he and any other future recipients of ethics rule waivers are required to compensate for their pass--maybe a permanent recusal from matters involving their former employer while serving as a public official?

-- Danielle Brian

More Uncertainty on the Ethical Propriety of Picking Lynn

In addition to the Senate Armed Services Committee waiting to see if William J. Lynn III can ethically and effectively serve as the Deputy Secretary of Defense, it looks like President Obama isn't sure either.  When confronted by Politico's Jonathan Martin about the choice during a surprise visit with the White House press corps, President Obama abruptly ended his meet and greet with the press.  Video below (the question about Lynn begins at 3:20):

-- Mandy Smithberger

Whistleblower Protection Language Goes Missing from White House Website

Perhaps it's a technical glitch.  But we hope the Obama Administration has not forgotten the importance of strengthening whistleblower protections.

Upon searching the new White House website today, a national security whistleblower who we support could no longer find the Protect Whistleblowers section that was included in the White House ethics agenda just yesterday.  Being the diligent public servant that they are, this whistleblower had the foresight to take a screen shot of the page (the missing section is highlighted in yellow).

Now there is no mention of whistleblowers anywhere on whitehouse.gov.

POGO realizes that the White House is very busy right now, but we hope they correct this omission, as it sends the wrong message to federal employees who expect to be protected from retaliation if they report fraud, waste, and abuse in the government.

The site asks visitors to the Ethics section to “check back soon.”  We'll keep you posted if the whistleblower language reappears.

-- Ingrid Drake

Advice and Questions for Salazar

After watching Sen. and Secretary of the Interior nominee Ken Salazar's (D-CO) confirmation hearing, and his commitment to restoring the integrity of the Department of the Interior, I'm cautiously optimistic and hope that he follows through.  I was encouraged that he wants to strengthen the reforms by giving them a statutory basis.  Of course, we have some very specific ideas about past legislation that Salazar should support, and a few other recommendations to offer in this effort.

On the same day, a press release from the Federal Energy Regulatory Commission (FERC) highlights a potential issue that wasn't high on my radar--collusion in the bidding process for drilling on federal lands.  The FERC approved "four stipulation and consent agreements, representing more than $8 million in civil penalties and disgorgement of approximately $4 million, and issued two orders to show cause resulting from an 18-month investigation into allegedly fraudulent conduct in open season bidding for natural gas transportation capacity"--specifically, violating FERC's anti-manipulation regulation.

So it appears there may be problems with industry collusion in government bidding, in addition to the transparency issues, and the now famous December 19th Bureau of Land Management (BLM) auction that may confirm suspicions that the bidding process is not sufficiently competitive.  For those who are interested in this issue, Joseph Stiglitz has done some great work on problems with the auction process in Escaping the Resource Curse--you can also get a taste of it in his Nobel Prize lecture.  But lacking the personal expertise to say more, I think this news does suggest that there needs to be more transparency in the land management process, from the bidding to the collection and follow-up audits, to assure taxpayers they are getting the money they deserve for their natural resources.

But real assurances for taxpayers means that Salazar's confirmation hearing should have included more specific measures to make the department--and especially the Minerals Management Service (MMS)--more effective, in addition to making it more ethical.  Like Ingrid and Peter, I have a few questions I would have liked raised:

With Some Hesitation, Senate Releases Second Half of Bailout Funds

After a period of intense lobbying by President-elect Obama and his economic team, the Senate voted 52-42 yesterday against a resolution that would have blocked the release of the second installment of $350 billion in Troubled Asset Relief Program (TARP) funds.  (The House could still vote against the release, but it would be meaningless because the law requires action by both the House and Senate to block the funds.)

This clears the way for the President-elect to pursue his plans for the bailout.  Lawrence Summers, Obama's pick to head up the National Economic Council, wrote to Congress yesterday with a more detailed proposal, including a commitment to spend up to $100 billion in a “sweeping effort to address the foreclosure crisis,” and a pledge to impose more restrictions on firms that receive TARP funds.  In addition, Obama's team is considering an even more dramatic proposal to set up a “bad bank” that would absorb hundreds of billions of dollars in banks' toxic assets.  But we've seen in the past how the government's bailout plans can change at the last second, so we'll just have to wait and see what shape the bailout actually takes under an Obama administration.  In the meantime, some conservatives are even wondering if the bailout is unconstitutional.

We've also learned this morning that Bank of America, which recently acquired Merrill Lynch, just received $20 billion in bailout funds under Treasury's Targeted Investment Program, a deal that was modeled on the November bailout of Citigroup (for those keeping track, this is the third time BofA has been the recipient of TARP funds, bringing the running total to $45 billion).  The government has also agreed to limit the company's losses on $118 billion in troubled assets.  Interestingly, it looks like Treasury was already making plans for the BofA bailout even before Congress agreed to release the second $350 billion in TARP funds.

-- Michael Smallberg

Sharing is Caring

In the Federal Times write up of the federal government forecast for 2009, part of the forecast for the Office of the Director of National Intelligence is as follows: “But part of Blair's challenge will be to overturn elements of the work-force culture--such as employees' reluctance to share information.”

Retired Admiral Dennis C. Blair knows from personal experience how challenging this can be.  While he was at the Institute for Defense Analyses (IDA), their conflict of interest policy included a provision that “Each Trustee is urged to consult with the Chairman of the Board if he or she has questions about the appropriateness of participating in, or voting on, any given issue.”  Yet despite this policy, the Department of Defense Inspector General found: “Admiral Blair testified…he determined it was not necessary to disqualify himself from limited participation in the ICE.  Further, he confirmed that he reached this decision without consulting anyone at IDA.” (emphasis POGO's)

One of the clear themes emerging from the confirmation hearings this week is that Congress wants more transparency and disclosures from the executive branch.  Obviously the nature of the work Admiral Blair will be performing and managing significantly limits this, but if confirmed, we hope that Blair appreciates the need to confer with others when making decisions.

-- Mandy Smithberger

POGO's Transition Recommendations Performing Well

So I'm sure POGO blog readers (and our friends on Twitter) think we're just bragging when we talk about how our transition team recommendations are getting traction.  But we're genuinely surprised and excited when we see things like Peter Orszag speaking about the Program Assessment Rating Tool (PART):

It is not particularly effective. Frankly, most federal officials don’t even know about it; only a quarter of senior government officials have even heard of PART.  And most who are knowledgeable don’t use it.  There’s a lot of going through the motions, filling out forms.

It was developed without consultation with Congress and the agencies, and it’s too focused on process rather than outcome.

Of course, the first thing we say in our recommendations for the next administration is:

Some federal agencies are no longer accomplishing their mandated missions.  Other agencies are working towards missions that are no longer relevant to 21st century challenges.  Agencies are already engaged in strategic planning and self-evaluation through the Government Performance and Results Act (GPRA) and Performance Assessment Rating Tool (PART) processes.  However, this information is used infrequently. Furthermore, such efforts generally focus more on quantifiable measures of success, and inadequately measure the quality and relevance of the work of the agency – in other words the output of an agency rather than the impact of its work. (emphasis mine)

But we can't take all the credit.  OMB Watch has been doing a lot of great work on how the federal government should evaluate agency performance for years.

-- Mandy Smithberger

Treasury Secretary Nominee Failed to Pay His Taxes?!

Sen. Chuck Grassley (R-IA), the Watchdog's Watchdog, has, along with the chair of the Senate Finance Committee, Max Baucus (D-MT), released some pretty disturbing documents regarding the repeated failure to pay required taxes by Tim Geithner, the Obama pick to head up Treasury.  Yep, that would be the Treasury Department--the parent agency of the IRS.

The underpayments are mostly related to Geithner's time at the International Monetary Fund.  All U.S. citizens who work for the I.M.F. are required to file self-employment payroll taxes, since the I.M.F., as an international organization, does not withhold these taxes for Social Security and Medicare.  After a 2006 IRS audit found that the payroll taxes were missing on his 2003 and 2004 returns, Geithner paid additional taxes and interest of $16,732 (the IRS declined to impose any penalties).  Geithner then voluntarily amended his tax returns for 2001 and 2002 for an additional $25,970, but only after the Obama transition team discovered the same lapse in his payroll taxes (check out Geithner's tax records to learn more).

The documents also reveal that Geithner failed to ascertain whether or not his housekeeper was legally allowed to work in the the U.S.  Do we really have yet another nominee with a nanny problem?  When will these people learn???  Geithner's scheduled confirmation hearing has now been postponed.

-- Beverley Lumpkin

Two More Insurance Companies to Qualify for TARP Funds

According to the Washington Post, Hartford Financial and Lincoln National--both of which were identified in POGO's December letter to Congress as companies attempting to gain back-door access to Troubled Asset Relief Program (TARP) funds--have recently been approved as thrift holding companies by the Office of Thrift Supervision.  Becoming thrifts allows the two insurance companies to purchase existing banks, which will then make them eligible to receive TARP funds.  According to the Post, Hartford is buying the Florida-based Federal Trust Bank for about $10 million, and Lincoln is trying to purchase Newton County Loan and Savings, based in Goodland, Indiana.  Hartford is expecting to qualify for anywhere between $1.1 and $3.4 billion in bailout funds as a result of its investment.

Now hold on.  According to the Emergency Economic Stabilization Act, the TARP is meant to “provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers”?  In November, Treasury used this authority to invest $40 billion in another insurance company, AIG, which was identified as being "systematically significant and at substantial risk of failure."  However, just a few months ago, both Hartford and Lincoln claimed to be financially stable.  So why are these companies suddenly eligible for bailout funds?  I know that $1.1 to $3.4 billion may not seem like much, but should Treasury be giving out any money to companies that appear to be violating the spirit, if not the letter, of the original bailout legislation?

The potential for these companies to receive bailout funds provides more ammo in the battle for expanded oversight of the TARP.  While there may not be anything illegal happening in these transactions, it seems clear that Treasury is straying from its original intentions in the bailout legislation.  POGO and many others have repeatedly called for improved regulation of the bailout.  Now, as Congress debates whether or not to release the remaining $350 billion in TARP funds, with various bills and proposals making the rounds, we hope that taxpayers finally get the protections they deserve.

Be sure to tune in later this afternoon for a House Financial Services Committee hearing on the use of TARP funds in the next administration.

-- Eric Orenstein

Confirmation Hearing for DOE Secretary Set to Begin

The Senate Committee on Energy and Natural Resources will be holding a confirmation hearing at 10:00 A.M. this morning to consider the nomination of Steven Chu as Secretary of Energy.  You can watch a live webcast here.

Be sure to check back later for a post-hearing analysis, including a list of questions we wish the Committee would have asked Chu.

-- Michael Smallberg