It has been called the largest airborne transfer of currency in the history of the world. But finding out what happened to all the money involved has become one of the biggest financial mysteries of all time.

Source: CNBC Sources
US troops get ready to unload cash transported inside Iraq by helicopter.

Beginning in the very earliest days of the war in Iraq, the New York Federal Reserve shipped billions of dollars in physical cash to Baghdad to pay for the reopening of the government and restoration of basic services.

The money was packed onto pallets inside a heavily guarded New York Federal Reserve compound in East Rutherford, New Jersey, trucked to Andrews Air Force Base outside of Washington, and flown by military aircraft to Baghdad International Airport.

By one account, the New York Fed shipped about $40 billion in cash between 2003 and 2008. In just the first two years, the shipments included more than 281 million individual bills weighing a total of 363 tons. But soon after the money arrived in the chaos of war-torn Baghdad, the paper trail documenting who controlled it all began to go cold.

Since then, investigators have spent years trying to trace what happened to the enormous amount of money shipped in the frantic days of the occupation of Iraq. Although there have been hundreds of pages of reports, Congressional hearings, and inquiries from Washington to Baghdad, no one in Congress, a special inspector general’s office, the Department of Defense or the Iraqi government itself can say with certainty what exactly happened to all of that money.

Much of it may have been spent on the things it was intended for—but billions of dollars may have simply been stolen. The thefts likely ranged from complicated contracting schemes to brazen appropriations of billions in cash still in their New York Fed plastic wrappers.

Source: CNBC Sources
US military officers in front of billions of dollars in cash inside the vault of the Central Bank of Iraq.

To find out what happened, a special inspector general for Iraq reconstruction has focused on the chain of custody—who was responsible for the money, minute by minute, as it made its way to Baghdad.

And although the money was handled by a variety of trained American officials and military officers in the first legs of its trip halfway around the world, CNBC has learned that something unusual happened on the Baghdad side of the transaction: Each of the money flights to Baghdad was met at the airport in Iraq by the same man.

The previously unknown Coalition Provisional Authority (CPA) official was tasked with picking up the bales of billions as they were unloaded from C-17s and arranging for them to get to the Central Bank of Iraq in downtown Baghdad. It was a perilous journey of about seven miles over a road the U.S. military called “Route Irish” through territory often controlled by insurgents. Travelers faced the threat of rocket propelled grenades, mortars, car bombs and IEDs.

Transit was so dangerous that returning American GI’s often posted YouTube videos of their trips on Route Irish, just for the bragging rights of having been there.

The CPA official was a stocky, middle-aged naturalized American citizen of Lebanese descent who was born in Saudi Arabia. His first name is Basel. At his request, CNBC has agreed to withhold his last name from this story. Basel ferried cash in Baghdad for the CPA and the American embassy from 2003 until 2008—all told handling, he said, about $40 billion in cash.

His job made him the very last American to see that money before it disappeared into the vaults at the Central Bank of Iraq. And it may have made him the only person in the history of the world to oversee the movement of $40 billion in a combat zone.

It doesn’t seem that anyone in the US government planned ahead of time to put so much responsibility—and temptation—into the hands of just one man. Former Republican Connecticut Congressman Christopher Shays co-chaired the Commission on Wartime Contracting, digging into waste, fraud and abuse in Iraq. He has traveled to Iraq scores of times to oversee US efforts there. Shays did a double take when CNBC told him how much money Basel said he handled in Iraq.

“Wait, one person?” Shays asked. “One person received $40 billion?”

Asked what he thinks about that, Shays said, “It just blows you away.”

The enormous undertaking of moving the billions began in the heavily guarded Federal Reserve compound on 100 Orchard Street in East Rutherford, NJ. There, carefully screened employees loaded pallets of cash into tractor-trailers for their journey down I-95 toward Washington, DC. The money came from an account held at the New York Fed called the “Development Fund for Iraq” which was made up of billions of dollars in Saddam Hussein’s financial assets that had been frozen under various US and global sanctions regimes. They weren’t taxpayer dollars, but the US government was responsible for making sure they got where they were going.

Source: CNBC Sources
Aircraft unloading bales of cash slated for transfer to the Central Bank of Iraq.

A typical pallet held 640 bundles, which the handlers called “bricks,” with a thousand bills in each bundle. Each pallet weighed 1,500 pounds, and they were separated by color. Gold seals were used for $100 bills, brown seals held $50 bills, purple seals $20, and so on.

The operation was handled with the utmost secrecy—just imagine what could have happened if the mafia found out which trucks held the money. The chain of custody of the cash was rigorously documented as it left the custody of the New York Fed and was signed over to Air Force officers, who oversaw the loading of C-17 transport planes and flew with the bales of money on the long flight to Baghdad. When the cargo holds were unloaded in Baghdad, Basel was there. But his presence on the receiving end of the largest airborne currency transfer in history began almost entirely by accident.

As a fluent speaker of multiple Arabic dialects, Basel had come to Iraq as a civilian with the American military. Both he and his former boss say Basel was sitting in a waiting area in Saddam Hussein’s palace in early 2003, waiting for his first assignment. While he was waiting, a US Treasury official burst into the room, looking for a translator.

“I have a situation here,” the official said. Basel raised his hand to help.

Soon he found himself wrangling with a crew of Iraqi truck drivers who had been told to make a delivery to the Central Bank of Iraq. But the bank was closed for the night, and they did not understand the instructions their American overseers were trying to impart about where to store their trucks. Basel intervened, untangling the confusion.

Impressed, the Treasury official, David Nummy, recruited Basel on the spot. Nummy said he soon put Basel in charge of meeting the cash flights from Washington at Baghdad airport, largely because he found Basel to be trustworthy. “He proved himself to be very reliable,” Nummy said of Basel in an interview with CNBC. “Very competent. Very committed and he performed a great service during the time that I was there.”

“I'm not surprised that he turned out as good as he did,” Nummy said. “I think its … one of many examples we hear of people being in the right place at the right time and find their calling really by circumstance.”

Source: CNBC Sources
Pallets of cash unloaded on to the tarmac at Baghdad International Airport.

Basel said he brought two senior Iraqi government officials with him to the airport for each flight, and those people signed receipts presented by the Air Force officials for the money, witnessing each other’s signature. It was for the government’s protection—and his own. Basel wanted to be able to prove that he had turned over the money as promised. But in the chaos of war planning, no one seems to have thought about paperwork. Basel said the CPA didn’t give him any forms or documents with which to record the transfer of the billions. So he wrote up his own, using Microsoft Word.

One document Basel showed CNBC was a one-page receipt of shipment for a billion-dollar delivery in April of 2006. Basel typed it up himself. It read, in part: “This is to testify that we, the undersigned, have received in our custody from [Basel’s full name] … the total amount of USD 1,000,000,000.00 (United States Dollars One Billion Only).” At the bottom were the hastily scrawled signatures of two officials of the Central Bank of Iraq.

“Its my neck on the line,” Basel said. “I documented the hell out of this.” With the Iraqi government signatures in place, the money was in legal custody of the government of Iraq from the instant it was unloaded from the C-17s. It was Basel’s job to make sure it stayed that way, at least until it got to the vaults of the Central Bank of Iraq.

Though he said he had no formal security training, Basel demonstrated a flair for subterfuge. Knowing a successful heist of the cash would be a momentum-shifting bonanza for the growing Iraqi insurgency, Basel rolled out a variety of tricks to keep the insurgents from figuring out just how much cash was moving right past them. He didn’t repeat the same configuration of trucks and cars to carry the money, so any watching insurgents or criminals wouldn’t be able to pin down a pattern of which vehicles carried cash. On some of the most dangerous missions, he eschewed the bristling military security convoys that would be a sure sign that something important was being shipped.

Source: CNBC Sources
Iraqi couriers make a dangerous transfer of cash on the open road.

He worked on scheduling the timing of the flights, so they wouldn’t arrive in Baghdad at a dangerous moment. He hired scouts to park on overpasses and drive the route ahead of the convoy to report on suspicious activity. And he used jammers to block the cell phone signals of any insurgents who tried to call in details of the convoy’s movement or trigger a bomb in the roadway.

On one billion-dollar run, Basel used garbage trucks to throw the insurgents off the trail. “I hired garbage trucks, and in the back of the garbage truck you had $1 billion dollars.” Basel said. “And I was in the front with a gun pointed at the driver. I said to him, ‘don't try anything funny. If everything goes well, you'll make $1,000. If you make a move, I'll kill you right here and drive the rest of the way myself.’”

He said the drivers he hired were thrilled to get $1,000, and that none ever tried to steal a single bill. It helped, he said, that he never used the same driver twice.

And he was not averse to using force. “I am willing and able to engage any entity,” said. “I will open fire first and ask questions later.” He held a firm belief in overwhelming firepower. “If you want to mess with a .50 cal (machine gun), go ahead and be my guest. You will lose every time.”

Basel’s Baghdad job came with enormous risks. At one point, the insurgents placed a million-dollar bounty on his head. At another, the Iraqi government issued a warrant for his arrest. Basel laughs off both incidents, saying the bounty should have been higher, and that the arrest warrant was a political trap designed to damage his credibility.

Source: CNBC Sources
Insurgents often attacked convoy on "Route Irish" whether they knew the contents onboard or not.

He said through all that, he never lost a shipment. “My record shows, you give Basel $10 billion to deliver, and Basel delivers $10 billion plus $400,” he said. “I delivered more money than I received.” That was possible, he explained, because the U.S. military came to him with any cash they found during nighttime raids on insurgent hideouts. Figuring that money rightly belonged to the Iraqi government, Basel said he delivered it to the Central Bank along with the pallets of cash from the New York Fed.

Basel said he didn’t steal any of the Baghdad billions, but he knows who stole at least some of it.

Asked whether he thinks any of the money he delivered was stolen or misappropriated, Basel said, “absolutely, without a doubt.” But asked who stole it, he said, “I’m sure I have an idea, but I can’t name names.” That’s because, he explained quietly, “I have a wife and family to worry about.”
When CNBC showed up in front of the East Rutherford Operations Center of the New York Fed to record a video segment for this story, police officers working for the Fed shooed our camera crew off the driveway and onto a small strip of public land that abuts the facility. Later, when we returned to our cars in the parking lot of a nearby convenience store, three police cars— including an unmarked car—blocked our exit. A local police officer politely asked us who we were and why we were taking pictures of the Fed. Satisfied that we were who we said we were, he let us go.

Such high-alert security is understandable, given the huge amounts of currency processed at the sleek modern facility, which was opened in 1992. The accounts held there for the Iraqi government alone are enormous. Despite the $40 billion Basel said he has distributed to the Central Bank of Iraq over the years, the value of the accounts at the New York Fed haven’t gone down—they’ve gone up.


NY Fed Won't Say How Much Money Went to Iraq

That’s because the government of Iraq continues to pour the proceeds of its newly refurbished oil industry into its accounts at the Fed in New York. In April, the Iraqi government informed the UN security council that it was going to open a new account at the Fed to replace the Development Fund for Iraq account that had been established years earlier. Baghdad will continue to operate a second account, called the “Oil Proceeds Receipts Account” that serves as a cash reserve for the Iraqi Central Bank, supporting the Iraqi currency.

The New York Fed is experienced at this sort of thing—it also holds billions in reserves for a slew of other countries around the world. The New York Fed’s website explains that it offers custodial accounts for foreign government cash and “vault services” services for their gold. The Fed invests the money in “overnight repurchase agreements, or U.S. Treasury and agency securities. The Federal Reserve does not give investment advice.”

Officials at the Fed declined to comment for this story, even to confirm the existence of Iraqi accounts it holds. But publicly, the Fed says that taken together, its gold holdings “constitute the world's largest concentration of monetary gold; the U.S. Treasury's depository at Fort Knox, Kentucky, is the second largest.”

To this day, say several sources, the New York Fed is still rolling trucks filled with bills to Baghdad. According to one source familiar with the Central Bank of Iraq, the amounts are much smaller now than they were in the early days of the war.

Many people in Iraq like to hold dollars instead of dinars. And the Central Bank sells dollars for Iraqi dinars at a fixed exchange rate in auctions it holds on most business days. According to the Central Bank of Iraq, for example, on September 12th 2011, it sold $12.3 million in cash at auction.

As for Basel, his experiences in Iraq opened up huge new opportunities for him around the world. Before the war, he lived in a modest townhouse in suburban Centreville, VA, outside of Washington, DC. But Basel didn’t return to the United States after his time in Baghdad. Instead, he set himself up as one of the world’s leading experts in transporting cash in war zones, operating a business out of his new home of Dubai, in the United Arab Emirates, where we sat down with him for an interview.

Today, Basel says he is planning a trip to Sudan, and is negotiating for a contract to transport billions of dollars in cash into newly liberated Libya.

The man who escorted $40 billion says he still needs to earn a living.



Obama Taps Taxpayers For Student Stimulus

Obama Looks to Wring Stimulus From Saturated Student Loan Market

“$1 Trillion” Can be lost eventually or more!

That's the estimated amount of student loan debt owed by Americans.

In keeping with his new campaign theme of “we can’t wait,” President Obama today will roll out a plan to put more money in the pockets of some of the nation’s 36 million student loan recipients, and less for taxpayers.

Obama has broad latitude in this area – certainly broader than the first two parts of his western campaign trip, underwater mortgages and subsidies for hiring veterans – because one of his early legislative initiatives was to have the federal government take over the student lending business in America. This takeover has been a disaster, as all Federal programs.

Obama argued for the measure in 2009 as a cost-savings initiative, saying that the old system of privately issued, government secured loans reduced the amount of available money for needy students and also prevented the feds from making the system more efficient.

Allow me to shed some light on this more efficient program.

Someone in my family was enrolling in a private university which cost about $30,000 annually, and even though qualified for substantial scholarships and grants, the total still came about $10,000 short for each school year.

The information package from the school provided a breakdown of the shortfall and described how it could be covered though various "loans" that the student qualified for if he filled in some forms. No forms were filled out as the student decided to forgo entry into the university until next year.

Nonetheless, automatically, the loans were processed, and a check was about to be mailed to the university for the $10, took calls and letters to the university and the loan processors to stop it! That's efficiency, now that the government was taking over the program! I would like to see under what legal doctrine would this student be liable for this loan repayment, if he never agreed to anything or signed anything? This is probably another "SOLYNDRA" waiting to happen.

But Obama is now seeking to use that new power to obtain a taxpayer-financed stimulus that Congress won’t approve. The idea is to cap student loan repayment rates at 10 percent of a debtor’s income that goes above the poverty line, and then limiting the life of a loan to 20 years.

Take this example: If Suzy Creamcheese gets into George Washington University and borrows from the government the requisite $212,000 to obtain an undergraduate degree, her repayment schedule will be based on what she earns. If Suzy opts to heed the president’s call for public service, and takes a job as a city social worker earning $25,000, her payments would be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total exposure.

Twenty years at that rate would have taxpayers recoup only $28,220 of their $212,000 loan to Suzy.

The president will also allow student debtors to refinance and consolidate loans on more favorable terms, further decreasing the payoff for taxpayers.

Obama’s move comes at a moment when many economists are warning of a college debt bubble that is distorting college tuition rates and threatening to further damage credit markets. The president’s move is intended to make college more affordable for more people, which will, in turn allow universities to jack up their rates.

As in the housing bubble, cheap credit on easy terms increases the amount of money chasing the product (in this case a diploma) allowing schools to increase prices. This inflation makes it harder for middle-class families to afford paying their own tuition, driving them into the government financing program, which, you guessed it, drives up costs further still.

Obama’s goals, aside from continuing to encourage young people to spurn the private sector in favor of service jobs, is to try to juice the economy. Those who participate in the program could see their monthly incomes rise by hundreds of dollars, thereby increasing the money they have to buy stuff and try to juice the economy.

A more modest program already in place has been a bit of a bust with only 1.25 percent of debtors signing up, likely because of the unpleasant notion of additional paperwork and government reporting hassles. But by sweetening the deal and putting a big PR push behind it, Obama is betting that he can get people spending in time to help shore up his re-election chances.

The best part for Obama is that he can obligate the Treasury without Congressional approval thanks to the passage of what he described as a cost-saving measure in 2009.

Update: White House Responds

A White House official responds to Power Play, saying that the president's student loan action will "almost certainly reduce" deficit spending because of the savings the administration says will be achieved by a 2010 federal college lending takeover and what the administration believes will be a lower rate of default among student debtors due to lower lending rates.

The official also stressed that the loan program is only an expedited version of the forgiveness and refinancing rules enacted by President Obama and congressional Democrats in 2010. The original law calls for the end of participants’ obligations after 25 years and caps payments at 15 percent of a debtor’s income above the poverty line.

That legislation, passed in the Senate as a rider on the president’s health law in order to use the reconciliation process that requires 50 votes instead of the usual 60 votes due to bipartisan opposition, was promised to reduce federal outlays by $68 billion over the next decade, monies which were earmarked for cost savings and an expansion of the Pell Grant program for needy college students. The funds for the stimulus endeavor announced by the president in Denver on Wednesday are said to be drawn from that cache.


Read more:


Nurse Making $270,000 in California, a retiring doctor collects $590,000 in vacation pay!

California runs the nation’s largest correctional system, with about 161,000 inmates. The U.S. Supreme Court, citing overcrowding and inadequate health care, ordered the state to reduce the prison population by 33,000 in two years.

Collective-bargaining rights granted to state workers by Governor Jerry Brown, a 73-year-old Democrat, when he first held the office three decades ago made it more difficult to pursue cost-cutting measures such as eliminating extra pay allowances or privatizing prisons. Photographer: Ken James/Bloomberg

Jean Keller earned $269,810 last year working as a nurse at a men’s prison on California’s central coast by tripling her regular pay with overtime hours.

Keller got more overtime in 2010 than any other state employee. In all, California’s public workers collected $1.7 billion of extra pay last year, more than half of it in overtime, state payroll data show. The rest was for unused vacation and union-negotiated benefits such as clothing allowances, physical-fitness incentives and special compensation in recognition of a “complex work load.”

“It’s outrageous,” said 29-year-old Gilbert Ramirez, one of about 30,000 teachers fired in California since 2007 because of budget cuts. “It boils my blood that I’m out of work and they claim they don’t have enough money to pay me.”

California paid the additional wages -- enough to fund the average salaries of about 25,000 teachers -- as it faced a $19 billion deficit and cut school spending and services for poor children and the elderly. The state may have to trim the academic year by seven days and eliminate some student busing if revenue shortfalls persist.

The extra compensation underscores a broader trend in California, where government workers are paid more than in other states for similar duties. Among them: city managers whose pay is higher than the governor’s, prison doctors who make more than counterparts in other states and Los Angeles firefighters who collect twice the national mean.

Union-negotiated “pay differentials,” requirements that workers take monthly furloughs and staff cuts that heaped extra work onto remaining employees combined to inflate overtime and other non-salaried pay, the data show. So did inefficiencies in management of state departments, said Dan Pellissier, a deputy cabinet secretary under former Governor Arnold Schwarzenegger.

“It’s just a mess,” said Pellissier, now head of a group pushing for changes in public employee pensions. “The way the state establishes its pay classifications is very complex and often obscure. What we need is transparency and disclosure and a fair accounting of what those costs are so we know if we are paying the right amount for labor.”

Among those who got large payouts are a prison doctor who cashed out more than $590,000 of vacation time when he retired, a computer specialist in the Legislature’s legal office who got $61,905 in overtime on top of his $71,560 salary, a psychiatrist for the Developmental Services Department who received $97,700 in extra-duty pay and the head of the state gambling commission, who banked $169,623 in unused holiday pay.

Collective-bargaining rights granted to state workers by Governor Jerry Brown, a 73-year-old Democrat, when he first held the office three decades ago made it more difficult to pursue cost-cutting measures such as eliminating extra pay allowances or privatizing prisons.

Union-backed provisions, among other things, allow employees to collect as much as $1,200 in “arduous duty” pay for projects requiring long hours and, in the case of prison guards, receive a $130-a-month fitness bonus for getting annual physical exams, even if they aren’t fit.

“I’m so angry as a taxpayer,” said Marilyn Cohen, chief executive officer of Envision Capital Management in Los Angeles, who manages $250 million of fixed-income assets, including California debt. “This makes me sick. I don’t know what it is going to take for this state to come to its Jesus moment.”

Unpaid Days Off

State rules allow employees to cash out unused vacation at their highest salary levels regardless of when the time was accrued. Cash-strapped departments have held off hiring new staff, pushing existing workers to put in extra hours to get the jobs done.

Three unpaid days off each month, instituted by Schwarzenegger, helped depress regular wages paid last year and forced overtime compensation for employees, such as prison guards, who had to work through them. The first six months of the furloughs, for instance, cost California $52 million in accrued vacation time for prison guards alone, according to findings by the state Senate Office of Oversight and Outcomes.

New York also paid its employees more than their normal pay in 2010 -- though less than in California. New York state workers took in about $1.5 billion above regular pay, or about $9,348 per employee on average, compared with $10,643 in California, a comparison of the states’ pay databases shows.

In California, the amount of extra compensation grew from $1.67 billion in 2008 to $1.7 billion last year. In 2007, the year the state budget reached its record high, employees got $1.9 billion in additional pay, according to the California controller’s office.
Payroll Costs

The government has tried to curb its payroll costs, including a hiring freeze ordered by Brown in February. California now has the fourth leanest state workforce in the U.S., behind Florida, Arizona and Illinois, at about 11 state employees for every 1,000 residents, according to 2009 data from the U.S. Census Bureau. The state paid $906 million in overtime last year, nearly three-quarters of it in agencies where staffing is required around the clock, such as prisons, mental- health hospitals and the highway patrol.

“The hiring freeze put in place by the governor has prevented the state from hiring as many employees as it could have, which has reduced the overall state employment level,” Elizabeth Ashford, a spokeswoman for the governor, said in an e- mail. “This has saved the state millions and millions of dollars.”
Largest Union

Service Employees International Union Local 1000, the largest union of state employees in California with about 95,000 members, agreed to concessions last year aimed at reducing overtime, spokesman Jim Zamora said.

State workers, for example, used to be able to collect overtime anytime they worked certain holidays such as Martin Luther King Day, Cesar Chavez Day or the day after Thanksgiving. Now they can only collect the extra pay if the holiday is in addition to a full week of work. State workers also must pay more toward their own pensions, Zamora said.

“We entered the collective bargaining process with an open mind and a desire to help the state work though its financial problems and to make things work,” Zamora said.

In addition to the overtime, state workers in California collected $472 million last year in bonuses and extra compensation for additional duties and qualifications such as speaking more than one language, obtaining a commercial driver’s license or having to make a presentation to the governor, the payroll data show.
Additional Wages

California unions have secured almost 400 pay differentials granting additional wages to state employees.

Certain workers at the Department of General Services, for example, are eligible for a $10,000 annual bonus for “exceptional performance.” Some accountants working at San Quentin prison outside San Francisco get $200 a month as a retention bonus on top of their $3,209 maximum monthly salary. Hydroelectric plant workers get an extra $1.10 an hour to work rotating shifts, in addition to the $32 to $38 an hour a senior operator typically makes.

Workers tasked with fielding phone calls from the public at the Consumer Affairs Department earn an extra $100 a month “in recognition of the complex work load and level and knowledge required to receive and respond to consumer calls.”

Besides overtime, extra-duty pay and bonuses, state workers got payments totaling $293 million, mostly for unused vacation and accrued leave. The state also paid out $25 million more to 74,000 workers for fringe benefits such as clothing allowances and mileage.
New York Pay

California will spend 8 percent of its $86 billion general- fund budget this fiscal year on wages. In New York, by comparison, payroll expenses will account for 9.8 percent of the $56.9 billion budget.

The average state worker in California made $58,340 in total pay last year, according to data provided by the controller’s office. Per-capita income for all employees in California, public and private, was $42,578, the U.S. Commerce Department said.

The state pays employees time-and-a-half for overtime. That’s still cheaper than hiring an additional worker full time to cover the overtime hours, because the state would also have to pay the new worker benefits that can equal one-third of salary, says Lynelle Jolley, spokeswoman for the Personnel Administration Department.

“When you look at individual employees, some of them rake in a lot of money, but from the employer’s perspective you have to ask is that cheaper than paying to have someone else on the payroll,” she said.
Prisons, Mental Health

More than half of the overtime was accrued by just two state agencies: prisons and mental health, both of which must operate around the clock with required staffing levels.

Keller, the nurse at a prison near San Luis Obispo who tripled her pay with overtime, worked 2,450 extra hours in 2010, or 102 full days. Some of that was required overtime, though she volunteered as well, said Nancy Kincaid, spokeswoman for the federal court-appointed receiver that runs California’s prison health-care system.

Keller wasn’t alone. Nurses working in California’s crowded prison system earned $54 million in overtime in 2010, an average of $13,600 each, in addition to their regular pay. Nurses working in mental health hospitals got $41 million more in overtime. Through her supervisor, Keller declined to comment.
‘Meet That Minimum’

“When you run a 24-7 health-care facility, you are required in order to have your license to have a certain number of staff,” Kincaid said. “You have to meet that minimum. So if you don’t have enough staff to cover for vacations or when someone is sick, then you have to go to registry or someone has to work overtime.” Registry refers to hiring temporary nurses.

California state employees can cash out unused vacation when they resign or retire. The practice of banking such pay for retirement is so prevalent that the Personnel Administration Department keeps a Lump Sum Separation Pay Calculator on its web page.

State policy says workers shouldn’t accumulate more than 640 hours of vacation time, yet many do. When workers breach the cap, managers are supposed to develop a plan to draw down the time. But the law doesn’t forbid employees from banking the hours, and state data show that many take more than 640 hours worth of pay when they leave.

Terri Ciau retired last year as the executive director of the California Gambling Control Commission and cashed out $169,623 in vacation time she had banked during her career. She declined to comment.
‘Within the Rules’

“It was strictly within the rules,” said 65-year-old Jay Wickizer, a retired section chief for the Department of Forestry and Fire Protection said of his own $294,440 vacation payout when he left last year at a salary of $83,100. “Sometimes you just don’t have the time to take vacation.”

Fong Lai, the retired prison doctor who got $590,000 in vacation pay, couldn’t be located for comment. Matt Hazel, the computer specialist who received $61,905 in overtime, and Daisy Demaranville, the psychiatrist who collected $97,700 in extra- duty pay, weren’t unavailable to comment, their supervisors said.

Schwarzenegger, a Republican who often battled with unions over contracts, won concessions last year with 150,000 state workers that require them to contribute between 2 percent and 5 percent more toward their own pension benefits and increased years of service to qualify for full benefits.

Brown struck similar deals with 51,000 more employees earlier this year.
Unlimited Accumulation

Those compacts allow guards to accumulate an unlimited amount of unused vacation and sick leave. The guards had faced an 80-day cap on how much they could bank, though in practice the cap was ignored to maintain minimum staffing levels amid mandated furloughs.

Brown’s deals also cut state worker pay by about 4.6 percent in the current fiscal year through an unpaid day of leave once a month. Yet employees already in the top range of their salaries would get a pay increase equal to their higher pension contributions beginning next year.

“It’s fiscal insanity,” said Assemblyman Tim Donnelly, a Republican from Hesperia, criticizing “this notion of spending money and paying people more than we need at a time when every department is broke, when we are starving our local schools and we are cutting public safety.”
Hiring Freeze

The governor has taken other steps to curb payroll costs. In February he imposed a statewide hiring freeze, one part of an effort he said could trim $363 million in operational costs this year. He also said he will propose a package of reforms to state and local government pensions. Brown ordered state workers to hand in half of the 96,000 government-paid mobile phones and reduce the fleet of 13,600 vehicles by half.

The state’s $1.7 billion in 2010 non-salaried pay “includes all the various forms of disability pay as well as hundreds of different kinds of add-ons to pay that range from recruitment incentives for hard-to-recruit areas, education differentials, night-shift differentials, bilingual pay, hazardous duty pay, etc.,” Ashford, Brown’s spokeswoman, said by e-mail.

Ramirez, the Los Angeles teacher who lost his job in 2009, lived off unemployment benefits until they ran out. He postponed his wedding and said he almost became homeless before his brother agreed to let him sleep in a spare room.

“Outrage would be the word,” Ramirez said. “They confiscated my career.”

That my friends id why the states and the federal government wants to raise your taxes; so that they can pay outrageous salaries to unionized state and federal workers!


Suspected Lawmaker in Scheme Funneling Funds to Benefit Friends, Ex-Staffers
By Paul Singer
Roll Call Staff

Neither Rep. John Murtha nor anybody from KSA Consulting was ever charged with a crime, and it is unclear what happened to the FBI’s investigation.

How about Pelosi/Obama killed the investigation for a suspicion?

Companies Follow Murtha’s Earmark Trail
DOJ Says Murtha Earmark Money Was Illicitly Distributed
Firm Tied to Murtha Earmarks Goes Dark
PMA Founder Magliocchetti Sentenced
Cleland Leaves Disability Group

Last week’s release of FBI documents finally put in writing what nobody had ever said on the record: The FBI suspected that former Rep. John Murtha (D-Pa.) and lobbyists close to him were running a scheme to funnel earmarks to sham companies and nonprofits to benefit the lawmaker’s friends and former staffers.

Bits and pieces of this story were kicked around for years before Murtha died in February 2010. The Los Angeles Times, Roll Call, the Washington Post and others had documented the odd appearance of earmarks for tiny defense contractors that just happened to open an office in western Pennsylvania and just happened to hire one of the lobbying firms close to Murtha and just happened to begin making campaign donations to Murtha and other Members of Congress close to him.

Reporters could do little but assemble the coincidences and couldn’t prove there was anything wrong with the bigger picture.

But it turns out the FBI was reading the stories and was very interested — interested enough that the Justice Department had opened a criminal investigation into Murtha and some of the lobbyists in his orbit, a fact that never leaked while Murtha was alive.

In part, the probe never leaked precisely because he was alive.

The watchdog group Citizens for Responsibility and Ethics in Washington filed a Freedom of Information Act request for Justice Department files on Murtha and other Members of Congress. Its requests have been denied for the living Members on the grounds that they have a right to privacy, CREW Executive Director Melanie Sloan said last week. Murtha’s death eliminated the privacy exemption, and the Justice Department handed over a heavily redacted bunch of files to CREW on Oct. 14.

The files spell out for the first time a theory of the case that explains what Murtha’s cronies may have been up to.

In a memo dated June 19, 2009, FBI field agents requested the bureau “open a full public corruption investigation” regarding KSA Consulting, the lobbying firm that employed at various times the Congressman’s longtime defense aide Carmen Scialabba and the Congressman’s brother, Robert Murtha, widely known as Kit.

The FBI field agents concluded that “the relationships between Congressman John Murtha ... and employees and partners of KSA Consulting provide for a potential Honest Services Fraud ... if Congressman Murtha influenced the awarding of contracts to KSA-controlled entities or clients, in exchange for some personal benefit to the Congressman. KSA principals may also have committed Honest Services Fraud by lobbying Murtha to direct earmarks to KSA clients who ‘passed-thru’ the funds to subcontractor firms that did little actual work and were owned by KSA principles.”

Neither Murtha nor anybody from KSA was ever charged with a crime, and it is unclear what happened to the investigation.

A Nonprofit Called PAID

The best place to understand the FBI’s theory of the case is a defunct nonprofit called the Pennsylvania Association for Individuals with Disabilities, which had as its mission helping people with disabilities find employment.

Murtha announced the creation of PAID on June 1, 2001, saying that Aeptec Microsystems Inc., a company that he helped bring to western Pennsylvania, would be opening a new headquarters and hiring two clients of the new organization. The company had just hired KSA Consulting as its lobbying firm. Murtha was the honorary chairman of PAID, and his longtime defense appropriations aide, Scialabba, was listed as the founder of the group.

PAID’s board of directors was a who’s who of lobbyists connected to Murtha, as well as executives from firms that had received Murtha earmarks, including KSA founder Ken Stalder. In May 2002, David Fyock, CEO of MountainTop Technologies, a Johnstown firm that received many Murtha earmarks, testified before Congress in his capacity as the vice president of PAID. In an odd quirk of timing, the Justice Department inspector general released a report Monday concluding that while MountainTop had a federal grant to distribute resources to local police departments, Murtha’s office actually made the decisions about which departments got funding, and MountainTop served simply as a “pass through.” The IG report was first reported by the website Main Justice.

Scialabba left Murtha’s office at the end of 2002, according to Congressional pay records maintained by LegiStorm. By Dec. 1, 2002, he was registered as a lobbyist at KSA.

Roll Call investigated PAID in 2007 and could find little evidence that the group was doing anything. A spokeswoman for the U.S. Department of Labor told Roll Call that PAID had received $650,000 in “earmark grants” sponsored by Murtha in 2003 and 2004, but the group’s access to the funding was restricted because PAID had significant turnover and “did not have anyone qualified to make decisions or sign off on invoices.”

The FBI thought PAID may have been set up simply to provide a financial cushion for Scialabba, who was apparently having financial troubles. While the names in the documents obtained by CREW are redacted, the description matches Scialabba, and tax liens noted in the document match liens against Scialabba. “If PAID was set-up for the purpose of unjustly enriching [Scialabba], it appears that [Scialabba] and Murtha may have engaged in a conspiracy that could potentially violate federal statutes,” the FBI file reads.

Federal tax forms filed by PAID do not indicate any salary for Scialabba, so it is not clear how the group might have benefited him.

PAID is no longer in business. Its phone has been disconnected, and a receptionist in the building where the group had its office said that PAID moved out in February 2010 — the same month Murtha died.

Scialabba has never been charged in the case, and phone messages left on what appears to be his home phone were not returned.

Criminal Convictions

Aeptec and KSA were also at the center of the one Murtha earmark that resulted in criminal convictions.

By 2004, Murtha had helped Aeptec secure millions in earmarks, and in April of that year, the Congressman announced the opening of a new building in Indiana, Pa., that Aeptec would occupy. At the time, Aeptec’s lobbyists at KSA included Stalder, Scialabba and Kit Murtha.

But later that year, someone discovered a problem with Aeptec. “They were outsourcing to Taiwan,” Stalder told Roll Call in a June 2007 interview. A Murtha spokesman told Roll Call in 2009, “there was an import/export issue that had involved Aeptec, and when this was brought to light, they disappeared as a company.”

By the end of 2004, KSA had terminated its relationship with Aeptec, and in early 2005 — with Murtha as ranking member of the Appropriations Subcommittee on Defense — the House approved a supplemental defense spending bill with a technical amendment that stripped the firm’s funding. The technical amendment directed the Pentagon to transfer $8.2 million from Aeptec projects to a program known as the “Mobile Common Data Link Gateway.” That project was an earmark for Coherent Systems Inc., another KSA client.

The Mobile Gateway earmark money ended up scattered among companies that had close ties to KSA.

In 2009, the Justice Department filed charges against Coherent CEO Richard Ianieri, alleging that he had used money from the Mobile Gateway project to buy products unrelated to the contract from several companies, including KSA clients VidiaFusion and Gensym.

VidiaFusion had no website, no telephone number and no email address. The address listed for VidiaFusion on the lobbying registration form submitted by KSA is a condominium building in West Palm Beach, Fla. The Florida secretary of state has no record of a company called VidiaFusion. The government charged that Ianieri paid VidiaFusion $274,660 for “software” that was unrelated to the Gateway project and was never used.

Ianieri also transferred $300,000 to Gensym, another KSA client, which was passing funding through to a subcontractor called Applied Technology. The FBI described Applied Technology as “an example of a KSA-created business that acquired federal earmarks and has no legitimate purpose.”

The FBI records indicate two KSA lobbyists were on the Applied Technology payroll, though their names have been redacted.

Ianieri pleaded guilty to filing false purchase orders and accepting a kickback from another company close to Murtha, Kuchera Defense Systems, and was sentenced to a fine and probation.

Coherent did deliver to the Air Force a vehicle-based communications system envisioned in the original “Mobile Gateway” earmark.

Mark O’Hair, an Air Force contracting official who oversaw the Gateway contracts, and contractor Richard Schaller, who was paid by Ianieri, both went to jail for their roles in the scheme, but nobody else was ever charged. There is no evidence that the FBI conducted a serious probe of who in Murtha’s office might have known about the bogus earmarks.

Roll Call reported in March 2010 that KSA had folded. Stalder and other KSA lobbyists appear to have created a new firm called Edge Solutions, but the phone number at that office is now disconnected and emails sent to Edge Solutions went unanswered.

Potential Cases Not Pursued

The FBI files uncovered by CREW offer a tantalizing array of hints of other possible malfeasance.

Federal agents had begun investigating Murtha in 2007 upon hearing allegations that the PMA Group, a lobbying firm run by former defense appropriations staffer Paul Magliocchetti, had paid for Murtha to have a driver. The PMA Group was raided by the FBI in February 2008, and the firm shut down the following year. Magliocchetti is serving a 27-month prison sentence for running a scheme to reimburse friends, family members and colleagues for hundreds of thousands of dollars worth of campaign contributions to Murtha and other Members of Congress.

The FBI investigation also suggested that a staff member in Murtha’s office may have failed to disclose thousands of dollars in income and assets on her annual financial disclosure forms; that money from Murtha’s campaign fund may have been used to buy guns for the personal use of another Murtha staffer; that Murtha may have steered contracts and earmarks to other family members; that staff members may have violated the one-year ban on lobbying Murtha’s office after leaving his employ; and that KSA may have run a fraudulent political action committee.

There is no evidence in the released documents that the FBI pursed any of these cases.

Sloan of CREW said the FBI files prove a long-sought point: “It was as bad as we said it was. It wasn’t nothing; it wasn’t OK.”


By: Katherine Ernst
You Say You Want a Revolution
What do the Wall Street protesters want? You know, stuff . . .

F. D. ROSEVELT KNOWS WHAT TO DO. So reads a patch of the cardboard-carpet corner of Zuccotti Park, Lower Manhattan home base for the “Occupy Wall Street” protest. There was a second “o” above “Rosevelt,” with an arrow pointing between letters “o” and “s,” lest you think the erstwhile revolutionary who inked the sign is a few bongos short of a drum circle. When “the world is watching,” though, you should probably make sure your ace spell-checker is on duty.

The cardboard carpet is both adorably predictable and a little creepy: BILDERBERGERS WE KNOW WHERE YOU LIVE; MY PARENTS WERE FORCED FED A PREDATORY LOAN THEY COULDN’T AFFORD! THANKS HANK PAULSON!; WHERE’S MY FORESKIN? END MALE GENITAL MUTILATION. On one side, Japanese tourists take pictures and Scoop Bradys like me take notes; on the other, drab students scribble more bon mots, play guitar, or catch some shut-eye on a sea of cruddy tarps. There’s the obligatory drum circle to the east, a little cigarette-rolling enclave in the back. The ambitious give out pamphlets around the perimeter.

I chatted with some of the throng. All wanted me to know they were speaking only for themselves, not the group. So what’s the endgame here? “Uh . . . that’s hard to explain,” said Moses, a nice young man. His answer was a nonsensical roundabout, but he used the phrase “socio-economic” a lot. He implied he was unemployed, so I inquired about a dream job. “To be a decent human being . . . to not live in reaction to a market.” Gotcha.

Becca, a sweet “organic gardener” from Brooklyn, was there to “end a capitalist system that treats people like cattle” and live in an America where everyone has “equal wealth.” She wanted a country with a “high tax,” a la “Sweden and Finland,” to ensure “personal well-being.” (Those Scandinavian examples both have a much lower corporate tax rate—26 percent and 26.3 percent, respectively— than the U.S.’s 35 percent rate, but let’s not get hung up on details.) Then the irony gods flexed their muscles as a friend interrupted Becca; she handed him her Visa card to order something over the phone. The revolution will not be televised, but it will be magnetized.

Most everyone is aware of how unserious Occupy Wall Street is. The New Republic mocks it. Salon laments its fecklessness, and then curses Fox News for noticing it. Mother Jones sheepishly dubs the childish schizophrenia “The Kitchen Sink Approach” in a piece on the movement’s inertia. Nicolas Kristof of the New York Times, who must’ve seen Zuccotti Park through beer goggles, concedes: “Where the movement falters is in its demands: It doesn’t really have any. . . . So let me try to help.” He then offers some straight-laced financial bullet points, some nice tax n’ trade talk, as though the protesters just needed Dad to take off the training wheels so they can speed off by themselves into adulthood.

As much as the Zuccotti kids like to compare themselves with the “Arab Street,” they’re really much closer, I think, to their cousins across the pond. A Q&A with some of those rioters on the BBC swiftly became infamous. What are you all raising hell for, asked the Beeb, after two young girls giggled over their “free alcohol!” “It’s the government’s fault. I don’t know,” admitted one. “Conservatives,” chirped her friend. “Yeah, I forget who it is. I don’t know.” They eventually settled on an answer: “It’s the rich people, the people that got businesses, and that’s why all of this is happening, because of rich people. So we’re just showing the rich people we can do what we want.”

There’s this running gag on the Internet where, whenever someone makes a mountain out of a molehill—“GRRR! Glee sucking this season!!! FML!!!—someone retorts, “#FirstWorldProblems.” Three simple words, but they illustrate one’s lack of proportion with comparative ease. When life is exponentially easier for you than it was for most of the world throughout most of human history— right up until the mid-twentieth century—boredom creates a vacuum. To be a hero, you have to create your own dragon to slay. But fighting real oppression, the kind ayatollahs dispense daily? Too brutal, too gauche. Mastering the intricacies of credit-default swaps so as to articulate an effective reform of the broken financial system? Way too tough. Better to create a dragon that can only be slain with performance-art zombie metaphors.

Indeed, any honest contact with this group brings to mind some textbook Eric Hoffer, True Believer stuff:

The permanent misfits can find salvation only in a complete separation from the self; and they usually find it by losing themselves in the compact collectivity of a mass movement. By renouncing individual will, judgment and ambition, and dedicating all their powers to the service of an eternal cause, they are at last lifted off the endless treadmill which can never lead them to fulfillment.

New York magazine polled “100 protesters who are in it for the long haul.” The numbers: 50 percent of the group is aged 20-29 (a whopping 60 percent are under 30), 66 percent are male, and 55 percent didn’t vote in the last election (you might want to try the ballot box first, guys). The real takeaway is this, though: 34 percent are “convinced the U.S. is no better than, say, Al-Qaeda.” In other words, a significant percentage of this tiny-but-loud group of protesters are chasing a dragon.

Despite the copycat protests springing up around the world and bravos from Congress’s fringes, that’s not a recipe for an enduring movement. The “endless treadmill” has a way of tiring even the stalwart. I asked Becca how long she thinks she’ll make the trek to Zuccotti. “Well, it’s getting really cold,” she mused, non-ironically.

Ah, just what every revolution needs to succeed: a fair-weather friend.

Katherine Ernst is a writer living in New York City.


With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.

Vice President Joseph Biden heralded the Energy Department's $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the job of assembling the flashy electric Fisker Karma sports car has been outsourced to Finland.

"There was no contract manufacturer in the U.S. that could actually produce our vehicle," the car company's founder and namesake told ABC News. "They don't exist here."

Henrik Fisker said the U.S. money so far has been spent on engineering and design work that stayed in the U.S., not on the 500 manufacturing jobs that went to a rural Finnish firm, Valmet Automotive.

"We're not in the business of failing; we're in the business of winning. So we make the right decision for the business," Fisker said. "That's why we went to Finland."

The loan to Fisker is part of a $1 billion bet the Energy Department has made in two politically connected California-based electric carmakers producing sporty -- and pricey -- cutting-edge autos. Fisker Automotive, backed by a powerhouse venture capital firm whose partners include former Vice President Al Gore, predicts it will eventually be churning out tens of thousands of electric sports sedans at the shuttered GM factory it bought in Delaware. And Tesla Motors, whose prime backers include PayPal mogul Elon Musk and Google co-founders Larry Page and Sergey Brin, says it will do the same in a massive facility tooling up in Silicon Valley.

For more on the Fisker and Tesla loans and the Obama administration's green auto loan program, watch "Good Morning America," "World News with Diane Sawyer," and "Nightline."

An investigation by ABC News and the Center for Public Integrity's iWatch News that will air on "Good Morning America" found that the DOE's bet carries risks for taxpayers, has raised concern among industry observers and government auditors, and adds to questions about the way billions of dollars in loans for smart cars and green energy companies have been awarded. Fisker is more than a year behind rolling out its $97,000 luxury vehicle bankrolled in part with DOE money. While more are promised soon, just 40 of its Karma cars (below) have been manufactured and only two delivered to customers' driveways, including one to movie star Leonardo DiCaprio. Tesla's SEC filings reveal the start-up has lost money every quarter. And while its federal funding is intended to help it mass produce a new $57,400 Model S sedan, the company has no experience in a project so vast.

READ the iWATCH News Story on Tesla and Fisker

There is intense scrutiny of the decisions made by the Department of Energy as it invests billions of taxpayer dollars in alternative energy. The questions come in the wake of the administration's failed $535 million investment in solar panel maker Solyndra. The company's collapse, bankruptcy and raid by FBI agents generated a litany of questions about how the Energy Department doles out billions in highly sought after green energy seed money.

A key question, experts and investigators say, is whether another Solyndra is in the offing.

In interviews, executives with Tesla and Fisker said comparisons to Solyndra are unfounded. Each said the government's investments will ultimately pay off by supporting a fleet of electric cars that will ease the nation's dependence on fuel and benefit the environment.

"It's absolutely a worthwhile risk," said Diarmuid O'Connell, vice president of corporate and business development for Tesla Motors. "I absolutely believe it was a good bet for American taxpayers." Tesla has said its mass production of the sedan will ultimately lead to profitability.

Henrik Fisker, the renowned auto designer who founded the car company that carries his name, said his company holds tremendous promise and has accumulated $600 million in private financing.

When asked directly by ABC News if taxpayers should worry about the more than $500 million in federal funds on the line, he was emphatic: "No, I don't think they need to worry about it," Fisker said. When asked if Fisker might be the next Solyndra, he said, "Absolutely not."

Fisker: We Didn't Want to Be Solyndra

In a lengthy interview, Fisker said he apprised the Department of Energy of his decision to assemble the high-priced Karma in Finland after he could not find an American facility that could handle the work. They signed off, he said, so long as he did not spend the federal loan money in Finland -- something he says the company has taken care to avoid. He said the decision, ultimately, was to help prevent his company from following the path of Solyndra, which exhausted nearly all of its loan money on a high-tech solar manufacturing plant in Freemont, California.

"If you just start doing like what Solyndra did, making a factory in a place where it was too expensive to manufacture … [you] obviously fail," he said.

By some key measures, Tesla is ahead of Fisker. More than 2,000 of its first electric car, the Tesla Roadster, are on the road, while Fisker is just starting to get its first car into showrooms. And Tesla is further along in advancing a second, lower-cost car, the Model S. While both firms boast of big dollar private investments, Tesla's vulnerabilities are more publicly visible through its SEC filings, in contrast to the privately held Fisker.

Chelsea Sexton, a 20-year veteran of the electric car movement and an outspoken advocate for alternative fuel vehicles, said she can plainly see the risks, even though her husband works for Tesla.

"None of us with any experience in the industry think there's any sort of guarantee they'll make it," Sexton said of Tesla. "It looks pretty good right now, they're building out their plant, things seem to be on track, so we're all encouraged. But you know, we watched GM and Chrysler go bankrupt."

Energy Department officials said such loans, by their nature, are risky because the department is financing innovative, potentially game-changing technologies that could deliver long-term benefits. They said neither firm has missed a loan payment, or sought help from the department to restructure their lending agreements.

"Two years ago, critics said we shouldn't be investing in American auto manufacturing at all because the industry wouldn't survive," said Damien LaVera, an Energy Department spokesman. "They were wrong then and they're wrong today. From well-established names like Ford to innovative startups like Tesla and Fisker, America's auto industry is being reinvented. Continuing this turnaround demands more innovation, not defeatism. While supporting innovative technologies always carries a degree of risk, these investments deliver long-term benefits."

Yet an audit this year by the Government Accountability Office, the investigative arm of Congress, criticized the Energy Department for not keeping close enough tabs on its fleet of auto loans -- including those to Fisker and Tesla -- to ensure they meet benchmarks. The funding was issued under the $25 billion Advanced Technology Vehicles Manufacturing loan program, one piece of a giant umbrella of DOE loans and loan guarantees going out the door.

"DOE cannot be assured that the projects are on track to deliver the vehicles as agreed," said the GAO report examining the department's ATVM program. "It also means that U.S. taxpayers do not know whether they are getting what they paid for through the loans."

Tesla and Fisker stand in rare company in securing the ATVM loans. To date, records show, more than 95 percent of applicants are still awaiting approval or have been rejected from the loan pool.

Between them, Fisker, at $529 million, and Tesla, at $465 million, have secured nearly $1 billion to jump-start production of their cars. Combined, the companies have already drawn down more than $300 million, Federal Financing Bank records show.

Industry watchers question whether the Department of Energy had the auto industry know-how to make an informed choice, and they worry that another government-backed failure could damage the very industry the program intended to help.

"I think we'll absolutely end up having our version of Solyndra in the transport world based on the way the DOE has, and seems to still be executing its loan program without enough veteran diligence in the process," Sexton said.

The majority of the DOE funding for Fisker is earmarked for the company to develop a less costly, mass market sedan, called Project Nina. Energy officials issued the loans for a car that, even two years later, has not been publicly revealed.

"A half billion dollars for a car that no one has seen a picture of, in the Fisker Nina, was a bit more surprising to people," Sexton said.

Fisker said the mass market car Nina has been designed and built, but it remains under wraps to maintain a competitive edge.

Heavyweight Support

Standing in a shuttered General Motors plant in Wilmington, Del., Vice President Biden proclaimed that a half-billion-dollar Department of Energy loan would transform the idled site into a production line for electric cars.

"Folks, we're making a bet," Biden said on Oct. 27, 2009. "We're making a bet on the future, we're making a bet on the American people, we're making a bet on the market, we're making a bet on innovation."

The announcement that the plant would re-open followed a heavy lobbying push by Delaware politicians from both parties, who cited the news as a sign of industry's turnaround. In September 2009, Republican Rep. Mike Castle wrote directly to Energy Secretary Steven Chu, saying the Fisker proposal had "great merit," and urging Chu to give the company "careful consideration" for the loan.

The governor and state politicians took turns, along with Biden, to proclaim the project to cheering blue-collar workers clad in jeans, caps and jackets. They said it would produce thousands of jobs and have cars rolling off the line by next year. Fisker said he remains convinced those jobs will come. While he has hired marketing, design and engineering teams in the U.S., the auto plant jobs in Wilmington right now number about 100.

The Department of Energy loan to Fisker closed in April 2010, and again Biden took center stage in a department statement announcing the loan. "The story of Fisker is a story of ingenuity of an American company, a commitment to innovation by the U.S. government and the perseverance of the American auto industry," said the vice president.

ABC News sent questions to the White House Monday and requested an interview with the vice president. Biden was not made available, but an official in his office said "the Office of the Vice President did not encourage the Department of Energy to choose any particular company over any other but, like others in the Administration, supported the Department's loan program and the creation of car manufacturing jobs in the United States."

Energy Department officials have been steadfast that politics never entered the picture and each project was screened by professionals and secured on the merits. And executives from Tesla and Fisker said they won government support because their projects had the best shot at success. They said the involvement of well-connected figures in their companies should not suggest they attempted to use special influence to secure the loans.

Both companies have political heavyweights behind them. One of Fisker's biggest financial supporters, records show, is the California venture capital firm Kleiner Perkins Caufield & Byers. The firm financially supports numerous green-tech firms, records show.

Kleiner Perkins partner John Doerr, a California billionaire who made a fortune investing in Google, hosted President Obama at a February dinner for high-tech executives at his secluded estate south of San Francisco. Doerr and Kleiner Perkins executives have contributed more than $1 million to federal political causes and campaigns over the last two decades, primarily supporting Democrats. Doerr serves on Obama's Council on Jobs and Competitiveness. Doerr has not replied to interview requests since March.

Former Vice President Al Gore is another Kleiner Perkins senior partner. Gore could not be reached for comment.

"Their major venture investor is Kleiner Perkins, who has Al Gore as a partner and is certainly politically connected in general," said industry observer Sexton. "Whether that played a role or not is up to the DOE to explain."

Tesla brings political pull, as well. A former Tesla board member, Steve Westly, is an Obama bundler who raised hundreds of thousands of dollars for the president in 2008 and for his 2012 re-election campaign. His Westly Group was also a financial supporter of Tesla Motors until Tesla went public in 2010, and Westly continues to back the company. Westly has declined interview requests since February, but has appeared in multiple conferences, forums and TV interviews publicly praising Tesla Motors.

Tesla's founder and CEO, Elon Musk, is a hearty political contributor who has primarily backed Democrats, including Obama. According to published reports, another Tesla investor is Nick Pritzker, a donor to Obama and a cousin of Penny Pritzker, the national finance chair of Obama's 2008 campaign.

O'Connell, the Tesla executive, said political muscle played no role in the company's award of the $465 million in loans, noting that the initial application was filed under Bush -- though landed under Obama.

Demonstrated Track Record'

In Tesla's case, as in Fisker's, the government loan was broken into two parts.

The first chunk, for $365 million, is to finance a manufacturing facility for the Tesla Model S sedan, Tesla's lower-cost answer to its pricey Roadster.

The other $100 million funded a facility to manufacture battery packs and electric drive trains used by Teslas and other automakers, including the Smart For Two city car by Daimler. Tesla points to such partnerships - along with investments from Toyota and Panasonic - as signs that long established companies believe in its cars.

"We have a demonstrated track record on the financial side," O'Connell said, "that should give great comfort to the American taxpayer, as they think about a loan that's helped us to accelerate our business model."

Unlike Fisker, Tesla is a public company. Its SEC filings offer a more sober assessment of the obstacles it faces on the road to profitability.

Tesla has yet to turn a profit and suffered net losses in each quarter. "Since inception and through the three and six months ended June 30, 2011, we had accumulated net losses of $522.8 million," its most recent 10-K form shows.

It has no experience in high-volume manufacturing of electric cars, its filings say -- the very project it sees as the road toward profitability. Tesla said it encountered "significant delays" in launching the Roadster - and acknowledges that developing the Model S will be a more complex undertaking. The newer car is the project financed by DOE.

"We have no experience to date in high volume manufacturing of our electric vehicles," Tesla's SEC filings say. "Our future business depends in large part on our ability to execute on our plans to develop, manufacture, market and sell our planned Model S electric vehicle."

The Roadster was produced in small quantities with the body assembled by Lotus in the United Kingdom and final assembly by the company at its facility in Menlo Park, Calif. The Model S, by contrast, will have much greater volume and be manufactured in Fremont, Calif. The company said production will begin next year.

Industry observers say Tesla's grand plan to launch the Model S is fraught with challenges.

"They want to scale up production from 1,000 cars a year to 20,000 cars a year, [and] that's going to be a very hard trick for them to do," said Alex Taylor, a veteran auto industry analyst and writer. "They want to make most of their own parts; Detroit can't do that because it's too inefficient. And Tesla wants to own its own dealerships. Henry Ford tried that back in the 1920s and gave it up because it was too difficult."

O'Connell said the SEC filings present worst case scenarios. He said the company, and its major investors, believe the risk will reap rewards.

"It is a risky venture in the best heritage of some of the other great companies that have grown up in the Silicon Valley," he said. "This is a place where people propose ideas, finance those ideas, achieve milestones, attract a greater finance, and succeed along the way."

I WILL GIVE IT ODDS 1,000 TO ONE, Las Vegas style...against the taxpayers ever seeing their money.


50 Examples of Government Waste

BY: Conn Carroll

The Congressional Budget Office reported that the U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945.

Washington will spend $33,932 per household in 2009–$8,000 per household more than last year. Following President Barack Obama’s budget, Washington will be spending $33,000 per household (adjusted for inflation) by 2019, and that does not include the costs of Obamacare. This spending is not inevitable.

In the 1980s and 1990s, Washington consistently spent $21,000 per household (adjusted for inflation). Simply returning to that level would balance the budget by 2012 without any tax hikes. Alternatively, returning to the $25,000 per household level (adjusted for inflation) that Washington spent before the current recession would likely balance the budget by 2019 without any tax hikes.

To help move back to these healthier levels of spending, Heritage Senior Policy Analyst Brian Riedl has identified 50 Examples of Government Waste. Eliminating waste cannot balance the budget. But here’s a start:

1. The federal government made at least $72 billion in improper payments in 2008.
2. Washington spends $92 billion on corporate welfare (excluding TARP) versus $71 billion on homeland security.
3. Washington spends $25 billion annually maintaining unused or vacant federal properties.
4. Government auditors spent the past five years examining all federal programs and found that 22 percent of them–costing taxpayers a total of $123 billion annually–fail to show any positive impact on the populations they serve.
5. The Congressional Budget Office published a “Budget Options” series identifying more than $100 billion in potential spending cuts.
6. Examples from multiple Government Accountability Office (GAO) reports of wasteful duplication include 342 economic development programs; 130 programs serving the disabled; 130 programs serving at-risk youth; 90 early childhood development programs; 75 programs funding international education, cultural, and training exchange activities; and 72 safe water programs.
7. Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.
8. A GAO audit classified nearly half of all purchases on government credit cards as improper, fraudulent, or embezzled. Examples of taxpayer-funded purchases include gambling, mortgage payments, liquor, lingerie, iPods, Xboxes, jewelry, Internet dating services, and Hawaiian vacations. In one extraordinary example, the Postal Service spent $13,500 on one dinner at a Ruth’s Chris Steakhouse, including “over 200 appetizers and over $3,000 of alcohol, including more than 40 bottles of wine costing more than $50 each and brand-name liquor such as Courvoisier, Belvedere and Johnny Walker Gold.” The 81 guests consumed an average of $167 worth of food and drink apiece.
9. Federal agencies are delinquent on nearly 20 percent of employee travel charge cards, costing taxpayers hundreds of millions of dollars annually.
10. The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.
11. The Pentagon recently spent $998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida.
12. Over half of all farm subsidies go to commercial farms, which report average household incomes of $200,000.
13. Health care fraud is estimated to cost taxpayers more than $60 billion annually.
14. A GAO audit found that 95 Pentagon weapons systems suffered from a combined $295 billion in cost overruns.
15. The refusal of many federal employees to fly coach costs taxpayers $146 million annually in flight upgrades.
16. Washington will spend $126 million in 2009 to enhance the Kennedy family legacy in Massachusetts. Additionally, Senator John Kerry (D-MA) diverted $20 million from the 2010 defense budget to subsidize a new Edward M. Kennedy Institute.
17. Federal investigators have launched more than 20 criminal fraud investigations related to the TARP financial bailout.
18. Despite trillion-dollar deficits, last year’s 10,160 earmarks included $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; and $75,000 for the Totally Teen Zone in Albany, Georgia.
19. The federal government owns more than 50,000 vacant homes.
20. The Federal Communications Commission spent $350,000 to sponsor NASCAR driver David Gilliland.
21. Members of Congress have spent hundreds of thousands of taxpayer dollars supplying their offices with popcorn machines, plasma televisions, DVD equipment, ionic air fresheners, camcorders, and signature machines–plus $24,730 leasing a Lexus, $1,434 on a digital camera, and $84,000 on personalized calendars.
22. More than $13 billion in Iraq aid has been classified as wasted or stolen. Another $7.8 billion cannot be accounted for.
23. Fraud related to Hurricane Katrina spending is estimated to top $2 billion. In addition, debit cards provided to hurricane victims were used to pay for Caribbean vacations, NFL tickets, Dom Perignon champagne, “Girls Gone Wild” videos, and at least one sex change operation.
24. Auditors discovered that 900,000 of the 2.5 million recipients of emergency Katrina assistance provided false names, addresses, or Social Security numbers or submitted multiple applications.
25. Congress recently gave Alaska Airlines $500,000 to paint a Chinook salmon on a Boeing 737.
26. The Transportation Department will subsidize up to $2,000 per flight for direct flights between Washington, D.C., and the small hometown of Congressman Hal Rogers (R-KY)–but only on Monday mornings and Friday evenings, when lawmakers, staff, and lobbyists usually fly. Rogers is a member of the Appropriations Committee, which writes the Transportation Department’s budget.
27. Washington has spent $3 billion re-sanding beaches–even as this new sand washes back into the ocean.
28. A Department of Agriculture report concedes that much of the $2.5 billion in “stimulus” funding for broadband Internet will be wasted.
29. The Defense Department wasted $100 million on unused flight tickets and never bothered to collect refunds even though the tickets were refundable.
30. Washington spends $60,000 per hour shooting Air Force One photo-ops in front of national landmarks.
31. Over one recent 18-month period, Air Force and Navy personnel used government-funded credit cards to charge at least $102,400 on admission to entertainment events, $48,250 on gambling, $69,300 on cruises, and $73,950 on exotic dance clubs and prostitutes.
32. Members of Congress are set to pay themselves $90 million to increase their franked mailings for the 2010 election year.
33. Congress has ignored efficiency recommendations from the Department of Health and Human Services that would save $9 billion annually.
34. Taxpayers are funding paintings of high-ranking government officials at a cost of up to $50,000 apiece.
35. The state of Washington sent $1 food stamp checks to 250,000 households in order to raise state caseload figures and trigger $43 million in additional federal funds.
36. Suburban families are receiving large farm subsidies for the grass in their backyards–subsidies that many of these families never requested and do not want.
37. Congress appropriated $20 million for “commemoration of success” celebrations related to Iraq and Afghanistan.
38. Homeland Security employee purchases include 63-inch plasma TVs, iPods, and $230 for a beer brewing kit.
39. Two drafting errors in the 2005 Deficit Reduction Act resulted in a $2 billion taxpayer cost.
40. North Ridgeville, Ohio, received $800,000 in “stimulus” funds for a project that its mayor described as “a long way from the top priority.”
41. The National Institutes of Health spends $1.3 million per month to rent a lab that it cannot use.
42. Congress recently spent $2.4 billion on 10 new jets that the Pentagon insists it does not need and will not use.
43. Lawmakers diverted $13 million from Hurricane Katrina relief spending to build a museum celebrating the Army Corps of Engineers–the agency partially responsible for the failed levees that flooded New Orleans.
44. Medicare officials recently mailed $50 million in erroneous refunds to 230,000 Medicare recipients.
45. Audits showed $34 billion worth of Department of Homeland Security contracts contained significant waste, fraud, and abuse.
46. Washington recently spent $1.8 million to help build a private golf course in Atlanta, Georgia.
47. The Advanced Technology Program spends $150 million annually subsidizing private businesses; 40 percent of this funding goes to Fortune 500 companies.
48. Congressional investigators were able to receive $55,000 in federal student loan funding for a fictional college they created to test the Department of Education.
49. The Conservation Reserve program pays farmers $2 billion annually not to farm their land.
50. The Commerce Department has lost 1,137 computers since 2001, many containing Americans’ personal data.

At a time when the U.S. national debt is closing in on 14 trillion dollars, government waste just seems more out of control than ever. The following are 20 of the craziest things that the U.S. government is spending money on....

#1 A total of $3 million has been granted to researchers at the University of California at Irvine so that they can play video games such as World of Warcraft. The goal of this "video game research" is reportedly to study how "emerging forms of communication, including multiplayer computer games and online virtual worlds such as World of Warcraft and Second Life can help organizations collaborate and compete more effectively in the global marketplace."

#2 The U.S. Department of Agriculture gave the University of New Hampshire $700,000 this year to study methane gas emissions from dairy cows.

#3 $615,000 was given to the University of California at Santa Cruz to digitize photos, T-shirts and concert tickets belonging to the Grateful Dead.

#4 A professor at Stanford University received $239,100 to study how Americans use the Internet to find love. So far one of the key findings of this "research" is that the Internet is a safer and more discreet way to find same-sex partners.

#5 The National Science Foundation spent $216,000 to study whether or not politicians "gain or lose support by taking ambiguous positions."

#6 The National Institutes of Health spent approximately $442,340 to study the behavior of male prostitutes in Vietnam.

#7 Approximately $1 million of U.S. taxpayer money was used to create poetry for the Little Rock, New Orleans, Milwaukee and Chicago zoos. The goal of the "poetry" is to help raise awareness on environmental issues.

#8 The U.S. Department of Veterans Affairs spent $175 million during 2010 to maintain hundreds of buildings that it does not even use. This includes a pink, octagonal monkey house in the city of Dayton, Ohio.

#9 $1.8 million of U.S. taxpayer dollars went for a "museum of neon signs" in Las Vegas, Nevada.

#10 $35 million was reportedly paid out by Medicare to 118 "phantom" medical clinics that never even existed. Apparently these "phantom" medical clinics were established by a network of criminal gangs as a way to defraud the U.S. government.

#11 The Conservation Commission of Monkton, Vermont got $150,000 from the federal government to construct a "critter crossing". Thanks to U.S. government money, the lives of "thousands" of migrating salamanders are now being saved.

#12 In California, one park received $440,000 in federal funds to perform "green energy upgrades" on a building that has not been used for a decade.

#13 $440,955 was spent this past year on an office for former Speaker of the House Dennis Hastert that he rarely even visits.

#14 One Tennessee library was given $5,000 in federal funds to host a series of video game parties.

#15 The U.S. Census Bureau spent $2.5 million on a television commercial during the Super Bowl that was so poorly produced that virtually nobody understood what is was trying to say.

#16 A professor at Dartmouth University received $137,530 to create a "recession-themed" video game entitled "Layoff".

#17 The National Science Foundation gave the Minnesota Zoo over $600,000 so that they could develop an online video game called "Wolfquest".

#18 A pizzeria in Iowa was given $60,000 to renovate the pizzeria's facade and give it a more "inviting feel".

#19 The U.S. Department of Agriculture gave one enterprising group of farmers $30,000 to develop a tourist-friendly database of farms that host guests for overnight "haycations". This one sounds like something that Dwight Schrute would have dreamed up.

#20 Almost unbelievably, the National Institutes of Health was given $800,000 in "stimulus funds" to study the impact of a "genital-washing program" on men in South Africa.

In light of all this, is it any wonder why the approval rating of Congress recently hit another new record low?

According to the most recent Gallup poll, only 13 percent of Americans approve of the job that Congress is doing.

Just think about that - only 13 percent!

Our politicians seem very confused about why there is so much anger in the country today. Well, there are certainly a lot of reasons for it, including the fact that the U.S. economy is on the verge of collapse, but it certainly doesn't help that our government is basically flushing our tax dollars down the toilet and spending them on some of the most wasteful things imaginable.


Elizabeth Cox, Washi
Speaking of government waste has the thought occured to anyone that the reason the administration does not want the bills proposed to be read is because of the pet projects that are hung on the bills. Especially the Obamacare health bill?

Albert campbellsvill
I just don't know what to say,this just makes you sick if you have any kind of common sense.Ive said for years if they ended fraud,waste and theft we would have a huge surplus.these people steeling from us is downright evil,but they are never held accountable.I thought Obama was going to fix all this,CHANGE WE CAN BELIEVE IN.

bobbie Jay
Thank you Conn and Brian.

If given an in depth research of Obama's employment history and present demeanor, there's little doubt he is directly or indirectly involved in most of the waste. He ignores his duty to correct the current waste. His will is to increase.

John, Madison, WI
Hmmm. NO mention of the 2 wars and direct spending on TARP. Guess those were too obvious.

Sudbrook, Balt
Is there no mercy in Congress on real people who go without things so that they can waste money?

James Becker
Would we really want 'this government' to run our health care?

Paul Dibble Ada, MI
I think this kind of waste is inevitable in government--regardless of who is in power. The answer is not cleaning up the waste (though we can try). The answer is reducing the size and power of the government.

Greg Lawritson, Sout · 105 weeks ago
.... what's the difference between what's been found and organized crime? Nothing. It's all about self-entitlement on the backs of others under the threat of harsh consequences. Instead of "Knuckles and "Guido" visiting you late one night to help you find your wallet, ... we have the IRS performing 'walletectomies' without due process of law. Try and find an attorney who will honestly fight the IRS, ... near impossible. We are self destructing - imploding from the inside, ... we'll continue to ignore what has been described above and stand by apathetically, hanging on to our individual slice of freedom and job like zebras in the herd hoping the lions in Washington don't pick us off to quickly. I love this country, but am ashamed of our leadership and what they are doing to our legacy.

D.R., Orlando, FL
If the waste is in the private sector, the tax payers are not being forced to pay for the waste, whoever owns the company is. And if the company owner can discover who is robbing his company he can have them charged, tried and sent to prison if found guilty. Unfortunately, in the government sector the crooks get made cabinet secretaries, presidential "czars", congress people, and senators so they can rob the tax payers ever more!

Patricia Brittell
I think I made a comment in another issue that would have fit this better. I will just shorten it to say this; Obama wants to get as many people on welfare as possible. This is in the plan to overtake the government and bring about a dictatorship. When people completely depend on the government to feed, house, and medicate them the country will go broke because there won't be enough taxes or tax payers to keep up the handouts. It might sound crazy to you, but think about it. I would venture to say most of the uneployment right now quit their jobs because, woopee, now they can sit on their ass and get paid for it. We have millions on welfare, the give-me-free individuals.

Then the big Corporations take their business' to foreign countries so they can pay cheap wages. Everything thats happening now was a plan years ago and the very wealthy hired Obama as their puppet to reinforce the evils with his charismatic speeches. We need more than money to fight, we need people in huge numbers if we want to win back our free country and the Constitution.

Bobbie Jay
That's right. Private sector pays their own money if trouble arises, without infringing on the tax payer. Everything the government is doing outside their job of upholding the American Constitution, is a total violation and financial infringement on innocent taxpayers who are accustomed to living by the American Constitution that the government is freely destroying...

When there's financial mayhem in government it is usually covered up and an increase of tax to boot. More government thievery!

U.S. Will Pay $2.6 Million to Train Chinese Prostitutes to Drink Responsibly on the Job | Republican Party of Milwaukee County
[...] by Edwin Mora, Tuesday, May 12, 2009 ( -- The National Institute of Alcohol Abuse and Alcoholism (NIAA), a part of the National Institutes of Health (NIH), will pay $2.6 million in U.S. tax dollars to train Chinese prostitutes to drink responsibly on the job. Dr. Xiaoming Li, the researcher conducting the program, is director of the Prevention Research Center at Wayne State University School of Medicine in Detroit. The grant, made last November, refers to prostitutes as "female sex workers"--or FSW--and their handlers as "gatekeepers." . . . Li said his study is being done in China rather than the U.S. because prostitution occurs with alcohol use in the United States like it does in China, Americans will be able to benefit from the project’s findings. Read more at (The above is one of) 50 Examples of Government Waste Read more examples at ttp:// [...]

Miles, California
"Before we get too self-righteous about government misallocations, is there any documentation about private sector misallocations?"

There aren't any because the private sector has economic calculation through the free price mechanism. Anyone who's taken a basic course in Econ 101 would tell you that. An act of waste from a private institution would be a loss of profit, which is that last thing a private institution would want to do. It would mean debt and impoverishment for workers and employees (not to mention shareholders). Government however, isn't driven by that same price mechanism. They coercively plunder revenue and redistribute wealth in accordance to THEIR own consent as opposed to the consumers. People voluntarily consent to the purchase of private services, ergo the businesses adjusts their product/services to the consumers desires to remain profitable. People DON'T voluntarily consent to the purchase of government services, ergo government has no motivation to remain profitable nor do they understand what the citizens truly want or need to improve the quality in product/services. The government isn't threatened to remain profitable from price and competition like business is nor are they motivated to improve their quality of service/product again like the business is.

As for abolishing organizations? Yes, as long as they're government run. I'd vote for any politician promising to have a field day gutting these frivolous and unconstitutional bureaucracies.

Donn, Ohio
After reading this list, I don't think I will be so sick about not being able to pay my back taxes due to loss of work.

David California
Gee I wonder why folks don't like paying taxes. It seems to me if the Government would clean up its act we would have no taxes at all.


Dems' 900 Days Of Irresponsibility

Over the weekend, Senate Democrats passed a dubious milestone — going 900 days without fulfilling their legal obligation to pass a budget. Worse is the fact that this gross dereliction of duty has gone largely unnoticed.

You have to go all the way back to April 29, 2009 — just three months after President Obama took the oath of office — to find the last time Senate Democrats managed to discharge their legal obligation to produce a budget plan.

That's right — legal obligation. It says right in the Congressional Budget Act of 1974 that the Senate must produce a budget resolution by April of each year.

Instead, all the country has gotten from Senate Democrats are excuses.

In May, Majority Leader Harry Reid, D-Nev., said "it would be foolish for us to do a budget at this stage," since the so-called Gang of Six was working with Vice President Biden to come up with a debt reduction deal.

In early July, Republicans sent a letter to Reid asking where the Democrats' budget was. Turns out, Senate Budget Committee Chairman Kent Conrad, D-N.D., had a plan ready to be unveiled, but Reid forced him to keep it locked up. Ostensibly that was because of the then-ongoing debt ceiling talks.

Democrats did, however, find the time in May to force a vote on the House Republican budget plan, but only in hopes of embarrassing their Senate counterparts.

Obama's hardly been any better. His latest budget was so outrageously irresponsible that the entire Senate, including every single Democrat, voted against it.
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So, without any budget plan to guide them, here's what Congress managed to do in the 29 months since the Senate last passed a plan:

• Spent a total of $8.5 trillion.

• Ran up monthly deficits totaling $2.6 trillion.

• Added $3.6 trillion to the national debt — a stunning 32% increase.

Now it's the middle of October, with the debt deal done months ago, and there's still no Senate plan anywhere in sight. What's Reid's new excuse?

Turns out, he doesn't have to make one up, since the debt deal Obama signed in August lets the Senate off the budget hook for another two years.

According to a Democratic Policy and Communications Center memo obtained by Commentary magazine in August, "One important but overlooked element of the bipartisan debt limit compromise is that it ... in effect, 'deems' a budget resolution passed for each of the next two fiscal years."

This, the memo says, "significantly reduces the chances of a sequel to last spring's government shutdown drama."

But what it really does is let Democrats continue to play political games with the budget, attacking serious, credible GOP proposals without ever having to offer anything concrete of their own.

Earlier this year, Obama said that "families across this country understand what it takes to manage a budget," and that "it's time Washington acted as responsibly as our families do."

He's right. Except that it's members of his own party who refuse to act like responsible adults.