Reed Irvine - Editor
THE DEPARTMENT OF EMBEZZLEMENT
In AIM Report 2000 # 9, "Cooking the Books at Education," we cited reports from Department of Education whistleblower, John Gard and others that the amount of missing, mismanaged or stolen money at the department is as high as $6 billion. Gard was escorted from agency property by armed federal security guards for exposing this waste, mismanagement and corruption. Now a report, "Government at the Brink," issued in June by the Senate Committee on Governmental Affairs, says that the figure is even higher. It states, "The Education Department reported in its financial statements that it had $7.5 billion in the bank when it actually owed that money to the U.S. Treasury." The department's books are actually off by $15 billion, about a third of what it spends annually.
Other examples of mismanagement, waste, fraud and abuse cited in the report include an $11 billion cost overrun on a federal road construction project in Boston known as "the Big Dig,;" $3 billion that is missing from a federal trust fund for American Indians; the Pentagon's failure to pass an audit and account for billions of dollars, at a time when it claims it needs more money for military readiness; and NASA mission failures, including the Mars Polar Lander failure, which stemmed from the use of English measurements by one team and metric measurements by another team to design and program the vehicle. These are four of the federal government's "Top Ten" management failures cited by the Senate report.
Drawing on work by the General Accounting Office and others, the report says federal overpayments in just the few programs that report them amount to more than $20 billion annually. It says, "Neither the federal government as a whole nor many agencies can pass a basic financial audit. The books don't add up, major expenditures are missing, large amounts of property and equipment can't be located, and often, agencies don't even know how much they have." Even the Internal Revenue Service is charged with not knowing "how much it actually collects in Social Security and Medicare" taxes.
The report indicates that the real legacy of the Clinton-Gore ad- ministration has been to leave the American people an executive branch of government whose "core management problems," in the words of Senator Fred Thompson, "have persisted for years, and, in fact, have grown worse." Thompson presented a copy of the report to Bush Office of Management and Budget Director Mitchell E. Daniels, Jr., at a press conference in Washington. In accepting the report, Daniels complained that politicians find it more rewarding to announce a new program than fix an existing one. He could have said that politicians find it more rewarding to spend money on a failing program than fix it. That applies to the Department of Education.
Fox News, the Washington Times, the Washington Post, and USA Today ran stories about this report, and Cal Thomas, whose column is widely syndicated, wrote a good column about it. Since the report was written when Sen. Fred Thompson, R-Tenn., was chairman of the Governmental Affairs Committee, his report got good coverage in Tennessee. ABC, CBS and NBC ignored it on their evening news programs, and the New York Times did not see fit to report this exposé of waste, mismanagement and corruption in the federal government.
Any hope of Congress getting to the bottom of these scandals may have been lost when Democrats took control of the U.S. Senate. Senator Joseph Lieberman, the Democrats' vice presidential candidate in the last election, assumed control of the Senate Governmental Affairs Committee and quickly indicated that he would use it for political purposes, holding hearings to attack the Bush administration's environmental and energy policies. Senator Larry Craig said Lieberman, who is considering a run for president in 2004, was "turning the Governmental Affairs Committee into a politically charged committee." Lieberman could use the committee to expose some serious flaws in the education bill backed by the Bush administration that just passed the Senate. But he won't do that because he and his fellow Democrats, led by Senator Ted Kennedy, want to give even more money to the mismanaged Department of Education than Bush.
As the Thompson report was being released, the Senate was completing work on an education bill that dramatically increases the amount of spending by the education department. A conference committee will iron out the differences between the House and Senate bills sometime this summer so President Bush can sign the final bill before the next school year commences. There is still time to fix the problems at the education department, if the Bush administration finds the political will to bring John Gard back to the agency.
Our AIM Report on the scandal at the Department of Education was republished on the Internet by NewsMax.com. It caught the attention of Sean Hannity, co-host of the Fox News Channel's Hannity & Colmes show, and Cliff Kincaid, who wrote the story, appeared on the show on June 13 to discuss it. The Department of Education declined to send a representative to respond to the charges. The task of defending the department was left to Eleanor Clift, a contributing editor of Newsweek and a Fox News political analyst, who agreed to appear even though she was not very familiar with the facts in this case. What follows is an edited transcript of the discussion on Hannity & Colmes.
HANNITY: The Department of Education has lost up to 450 million of American taxpayer dollars in the past few years due to what education secretary Roderick Paige calls ‘mismanagement and fraud.' He has assured that the department will have a clean audit within 18 months but many say that the department should be deprived of funding until all the money is accounted for. All this as Congress and the White House are looking to increase the department's budget significantly. Should the department be trusted with your tax dollars in light of these problems? Joining us from Washington, Cliff Kincaid. He's with the group Accuracy in Media. And Eleanor Clift, Fox News political analyst and Newsweek contributing editor, is back with us. Cliff, I read your report, the L.A. Times report, the Washington Post had a report. I've got to tell you it should anger each and every American taxpayer out here because what we're really talking about is waste, fraud, abuse and mismanagement at an agency that even President Bush is thinking of increasing spending 11 percent. Democrats want a 35 percent increase. But they can't manage the money we give them.
KINCAID: That's right. I recently interviewed an Education Department whistleblower, John Gard, who has documented incredible examples of waste, fraud, and corruption and abuse in the department. His case has been upheld by the Office of Special Counsel, which says there's been gross mismanagement in the department. As you say, the department hopes to pass an audit in 18 months. The agency has not passed an audit for 3 straight years and the amount of missing, stolen or unaccounted for money could go up as high as 15 billion — that's with a B — 15 billion dollars.
HANNITY: Let me go to Eleanor. Eleanor, here they failed, the Department of Education. These are our tax dollars and I know some people on the left aren't as concerned about these things. But hardworking Americans contribute to this. They have failed 3 straight audits. One, two, three. Why should we give them one additional dollar until they start accounting for the money we already give them?
CLIFT: First of all, in Washington you have to get accustomed to seeing millions in perspective. The department of education has, I believe, a 44 billion dollar budget. So this is a relatively small sum.
HANNITY: Up to six billion dollars is almost one-seventh of that 44 billion.
CLIFT: I think it's 450 million in the account that I read. The Los Angeles Times points out that this audit also says that most of these sums have been recovered. I take my cue from Secretary of Education Rod Paige who declines to blame his predecessor. He points out that these kinds of problems have existed for some time.
HANNITY: As far as Cliff's reporting, and he interviewed one of the leading accountants in this case, a whistleblower who paid a political price, it could be 6 billion. Cliff is saying as much as 15 billion. That amounts to a minimum of one-seventh of the total budget of the Department of Education. And if they can't manage or if they're mismanaging the funds we give them, Cliff, I don't think they have earned our trust to turn over billions more which is what they're asking for.
KINCAID: That's exactly right. This whistleblower, John Gard, was a systems analyst in the office of the Chief Financial Officer. As I point out, his case has been upheld. But when he started blowing the whistle on the corruption under former education secretary Richard Riley, he was escorted from agency property by armed federal security guards. He has offered to the Bush administration to come back to education to help clean up the mess, make sure the money goes for the children. The Bush administration and most of Congress are not interested.
COLMES: Let me first of all agree with you in principle. I think if this amount of waste is taking place, it's horrendous. I am a leftist who does care about taxpayer dollars and how they're spent. Not all liberals want to see mismanagement and waste. But look, many people I fear will use your work to try to argue that we should do away with the department. And I don't think this is a reason to do away with the education department, is it?
KINCAID: That's not John Gard's purpose in going public with these allegations. He just wants to make sure that the agency lives by the laws and the constitution. He wants to make sure the mess is cleaned up and he's been offering to the Bush administration, "Bring me back, I'll help you clean up the mess." Let me remind you that literally two weeks ago the U.S. attorney in Washington, D.C. issued a grand jury indictment of 11 people, four of them current members of the education department, for a million-dollar fraud scheme. That's just the tip of the iceberg. Senator Thompson just last week issued a report, "Government at the Brink," about waste, fraud and abuse in the department, pointing out the education department said they had $7.5 billion on the plus side in their account when they actually owed that money.
COLMES: You raise the specter of officials of the Clinton administration embezzling money. You say that in your report. Do you have any proof of that? Can you point the finger at who might have done this?
KINCAID: We've just had the indictments of 11 people for a one million dollar fraud scheme, four of them education department employees. John Gard says the system has been so bad in education in terms of disbursing money that it may be impossible to determine who stole money and how much money was stolen. But he's willing to go back and help put people in jail.
COLMES: What about that Eleanor? If this guy is a legitimate whistleblower, should he be protected? Should he...be escorted out with armed guards? And if he is on to something, should be given the opportunity to let that information be heard?
CLIFT: I'm not familiar with Mr. Gard. I would have to know a lot more about what he's saying because the charges being leveled here tonight sound to me pretty hyperbolic without any evidence to support them. The entire U.S. Congress and the Bush White House would not be ignoring all of this if this was true. Frankly, the Department of Education has been a favorite whipping boy for people from the right for a long time and we've got an education bill that's about to pass, and the timing here is good for the opponents.
COLMES: Cliff, I would think a lot of people who agree with you may want the dissolution of the Department of Education, who may be supporters of President Bush. Why isn't the President coming forward and being part of what you're doing? He's got an education budget that gives that department the largest increase of any other cabinet agency — a $4.5 billion increase over the 2001 budget. A billion dollars to states to help students with disabilities, a billion to Pell Grants to help disadvantaged students. I could go on and on and on. A lot of additional money being put into the department. You should be going after President Bush.
KINCAID: I have been, and I have criticized the President. I think you answered your own question. That's why nobody wants to talk about waste, fraud and abuse and corruption because everybody thinks the answer is to spend more money on the Department of Education. It's like writing enough checks or throwing money out of a helicopter. Perhaps some deserving people will get a few bucks but that's the way to run a department. If a business ran this way, it would have been shut down years ago. John Gard suggests they ought to take this department, put it into receivership or appoint a grandmaster to run it — like the old agencies of the D.C. government years ago. It's beyond control. It's out of control.
COLMES: There's been some problems. Everybody knows that. But the department has taken steps. They've limited the credit card spending to $2500.
KINCAID: You're wrong. Let me tell you. John Gard says the main problem over there is the grants payment administration, the computer system for disbursing money and grants. There is no security over it. They have no audit trail. They don't know where the money's going, and the problem continues to this day.
COLMES: According to the education department today — we spoke with them — that's been changed. There's a limit on credit card spending...
KINCAID: I'm not talking about credit cards. I‘m talking about the computer system that disburses grants and money. They say they brought in a new software program to solve some of the problem but that doesn't get to the heart of it.
The comments by Alan Colmes, based on what the education department told him, show that the agency is trying to divert attention away from the massive problems in the accounting system and focus on credit cards, an area of fraud that can be easily fixed.
As Colmes also indicated, the Bush Administration has worked to spend more federal dollars on education and has been reluctant to tell the truth about the massive fraud and theft in the department. But in addition to our own reporting on this matter, one of the best new conservative columnists, Michelle Malkin, has been speaking out, highlighting the indictment that Cliff mentioned on the Hannity & Colmes show in her own syndicated column under the headline, "The Department of Embezzlement." In her column, which appeared in the Washington Times, she noted that the indictment came down on the very day that the House of Representatives had passed the president's "No Child Left Behind" education bill. Malkin said that, in the wake of the indictment, the slogan should be changed to "No Dime Left Behind."
Calling the education department a "black hole" for money, she noted that the U.S. Attorney for Washington, D.C. had issued indictments against 11 people involved in a theft ring of outside contractors working with Education Department employees. Three former employees have already pled guilty. Malkin said, "I read the federal grand jury's 64-page indictment papers over the weekend. I wish every member of Congress would do the same. This million-dollar enterprise may just be the tip of the iceberg of fraudulent federal spending ‘for the children.'" Of course, the size of this iceberg has now been estimated at $15 billion by the Thompson report.
For those who claim such theft is rare, Malkin points out that funds intended for education have been embezzled to pay for luxury cars, real estate, diapers and rent. "If this agency were a private company, it would have been shut down by government regulators long ago," she says. "Instead, it grows fatter and more unaccountable every year. Republicans, who once led the crusade to eliminate the department, are now tripping over each other to feed the beast."
The indictment charges 11 people, including four employees of the department, and says the defendants conspired to defraud the department by participating in a scheme whereby they would order items on a Bell Atlantic contract, have them paid for by the department, and keep those items for their own use. The items include 10 Gateway computers and accessories, 15 printers, 4 Yamaha CD drives, 9 laptops for family birthday and graduation gifts, a 61" Sony television, 7 cell phones (on which a total of nearly 12,000 calls were made), 169 cordless phones (46 with caller ID, 5 with headsets), 6 Olympus digital cameras and 4 Olympus printers, 8 Sony digital cameras and accessories, 4 Sony digital camcorders and accessories, 4 Sony Handycams and accessories, 4 Sony video Walkmans, 7 PalmPilot personal organizers, 50 Motorola Talkabouts, and 2 Philips audio CD recorders. The ring allegedly revolved around Elizabeth C. Mellen, an award-winning, high-ranking telecommunications specialist in the department's Office of the Chief Information Officer. As Malkin puts it, "Mellen and her family apparently turned the Education Department into their own Home Shopping Network."
This scandal should have been big news, especially in Washing-ton. The indictments of Department of Education employees for financial fraud were being handed down at a time when Congress was giving the agency more money. But the Washington Post relegated the story to page two of the Metro section. It was the fifth item in a "Crime & Justice" round-up of local news.
The indictments were announced by U.S. Attorney Kenneth Wainstein, who will soon be replaced by a Bush appointee. His office would not comment when we asked if their attorneys had spoken with whistleblower John Gard, who says dozens of agency employees had improper access to millions of Education Department dollars. Gard tells us that he has not been contacted by the office. Whatever the fate of the fraud investigations, the Bush administration can help rectify the situation by bringing Gard back to the department and getting to the bottom of the financial mismanagement. John Gard risked his career by exposing this scandalous misuse of taxpayer dollars. No one knows better than he how the system was abused and manipulated. He has been kept on the payroll, but he has been relieved of his duties. Rather than make use of his expertise to help clean up the mess, the department appears to be planning to terminate him, which is the fate of nearly all whistleblowers.
Unfortunately, Secretary Roderick Paige has taken a largely "see no evil" approach to the problem and is uncomfortable with even the limited amount of factual reporting about the scandal that has taken place. As Eleanor Clift indicated, he isn't interested in holding his predecessor or the Clinton-Gore holdovers in the department accountable. Six days after the indictments were handed down, Paige sent the following memo, "Building an Accountability Culture," to all department employees.
"I want you to know how much I respect and appreciate the dedication, professionalism and integrity with which you go about your important work of ensuring educational opportunity and quality for all Americans. Unfortunately, some media attention lately has been focused on a few isolated events and has ignored the many positive contributions made by ED employees.
"The most important asset of a Government agency is the public's respect and confidence. As with an individual, an organization's reputation can be tarnished by even a few incidents of waste or misconduct. You can help build a stronger "accountability culture" in many ways. You can help clarify organizational and individual performance goals; identify positive results we provide for the taxpayer; suggest ways we can improve our program results; and de-sign and embrace improved internal controls—safety procedures that protect against errors or abuse. In addition, if you observe individual behavior that does not meet the high-est ethical standards or work practices that could lead to waste or abuse of public funds, please alert your supervisor or call the Inspector General's Hotline (1-800-MISUSED).
"As you know, I've created a Management Improvement Team (MIT) composed of senior career staff who are looking for ways to strengthen our Department's fiscal and management systems as well as our cultural values and standards. If you have suggestions, please send an email message to ‘Management Improvement.' In addition, during the coming weeks the MIT and I will be holding dialogue sessions with managers and staff around the Department.
"As we pursue the President's ‘No Child Left Behind' agenda and other important educational goals for the American people, let's all keep in mind the President's expectation that Federal officials and staff will be exemplars of civility, common decency and bipartisanship. Please help me and your Department colleagues build a stronger sense of public confidence and trust in this Department and its work."
Anyone familiar with the treatment of John Gard has to wonder how Secretary Paige could possibly expect Education Department employees to report "behavior that does not meet the highest ethical standards or work practices that could lead to waste or abuse of public funds" when they know that John Gard, who did exactly that, faces the loss of his job for having done so. He filed a complaint about his treatment with the Office of Special Counsel, which ruled that he was in the right, but he remains an outcast. If Paige wants to be taken seriously, he must return John Gard to his job.
I HAVE BEEN ASKING FRIENDS AND ACQUAINTANCES IF THEY HAD HEARD ANYTHING about the ozone hole over Antarctica lately. Very few of them have. I then ask if they think that it has decreased, remained about the same or increased in size since freon and other chlorofluorocarbons, CFCs, that were supposed to be causing it were phased out and then banned in 1995. So far, I have found only two people, a reporter for the Associated Press, and my ophthalmologist, who knew that it had greatly increased in size. The others could only guess, and nearly all guessed wrong. They thought that it had decreased in size or remained about the same. Before the ban on CFCs was imposed in 1995, increases in the size of the Antarctic ozone hole were regularly treated as important news. But last September when its area set a new record of 17.6 million square miles, nearly twice the area of North America, it was not treated as an important story. It got relatively little coverage. A Nexis search covering the period from Sept. 1, 2000 to mid June, found only some100 stories about it.
YOU MAY RECALL THAT IN FEBRUARY 1992, THERE WAS A REPORT THAT GOT A LOT OF media attention. It was about an ozone hole that might be opening up over the Arctic for the first time. It was suggested that it might extend as far south as Kennebunkport, Maine, where the Bush family has a summer home. This report is given credit for persuading President George H.W. Bush to support making the ban on CFCs effective in 1995 instead of 1999. There was no hole over the Arctic, and Kennebunkport was never in danger of getting hit with heavy ultra-violet radiation. That and other scare stories were an essential part of the drive to get freon and other CFCs banned on the ground that they were causing the depletion of the ozone in the stratosphere.
THE NEWS MEDIA COOPERATED BEAUTIFULLY, JUST AS THEY HAVE DONE WITH RESPECT to scare stories about global warming. Reporters and editors seem to derive great satisfaction from their ability to get our use of things like freon and fossil fuels banned or curtailed on the ground that they endanger our health or the environment. So far, the banning of CFCs has failed to halt the growth of the Antarctic ozone hole, much less shrink it. This has taken those who promoted the ban by surprise. In reporting the record size of the hole in 1998, the National Aeronautic and Space Agency, NASA, had an explanation that allayed any concerns that the ban had not had any effect. It said, "Scientists are not concerned that the hole might be growing because they know it is the direct result of unusually cold stratospheric temperatures." It predicted that ozone losses resulting from CFCs and other sources of chlorine would be reduced as we moved into the twenty-first century.
BUT WHEN THE SIZE OF THE ANTARCTIC OZONE HOLE SET A NEW RECORD LAST YEAR, scientists at NASA and the World Meteorological Organization in Geneva who had promoted the CFC ban as the solution to the ozone hole problem expressed disappointment. Dr. Michael H. Proffitt, senior scientist at the WMO, said, "I've been very much expecting a turnaround, a leveling off." A source at NASA says there were many disappointed people at NASA when they learned that the hole had set a new record. A NASA program called the Stratospheric Aerosol and Gas Experiment, SAGE, has concluded that "aerosols such as those produced by major volcanic eruptions" are a factor in causing the ozone losses. NASA says this is "a finding contrary to predictions of classical atmospheric chemistry models." Those are the models on which the ban on CFCs was based.
DURING THE GREAT DEBATE OVER BANNING CFCS TO COMBAT THE DESTRUCTION OF THE stratospheric ozone, the point was often made that volcanic eruptions were responsible for a far greater quantity of ozone-destroying chemicals than were man-made CFCs. At that time the role played by volcanoes was brush-ed aside. There is nothing man can do about them. The discovery that the ban on CFCs is not achieving the desired results may be viewed as the failure of a very costly experiment that the media did a lot to promote. What is needed now is some honest reporting about the failure of that experiment. The Washington Post used a 200-word AP story to report the record-breaking ozone hole. It said that CFCs in the stratosphere were "leveling off" but it could take twenty years for the ozone to recover, but it didn't explain why. Nor did it mention Dr. Proffitt's disappointment that the turnaround had not been seen already.
THAT STATEMENT WAS FOUND IN A 956-WORD STORY BURIED DEEP INSIDE THE NEW York Times. But the Times was not ready to declare the CFC ban a failure. It said the hole is the legacy of decades of emissions of CFCs, and it suggested that now global warming might explain its expansion despite the CFC ban. The idea is that greenhouse gases that are supposed to be trapping heat and warming the lower atmosphere are causing a cooling of the stratosphere which might be contributing to the growth of the Antarctic ozone hole. However, its source, Dr. Proffitt, cautioned that it is too early to definitively draw this conclusion.
ONE BIG OBSTACLE TO DRAWING THAT CONCLUSION IS THAT THE SATELLITE TEMPERATURE data, which measure trends in the lower atmosphere very accurately, show no significant cooling trend over the past 22 years, while the surface data were showing a warming trend. We pointed out in our last AIM Report that in September 1999, a conference of leading global warming modelers from many countries, including the United States, was held at the Max-Planck Meteorological Institute in Hamburg, Germany. According to the German newspaper, Frankfurter Allgemeine Zeitung, the conferees finally faced up to the discrepancy between the surface-temperature trend and the trend in the lower atmosphere, knowing that the global warming theory does not allow for such a discrepancy. According to the newspaper, they realized that their models were unable to resolve this problem. A similar conclusion was reached by a National Research Council panel in this country. News stories about its report, which was released in January 2000, did not focus on this problem as the German newspaper did.
THE SCIENTISTS WHO HAVE BEEN PUSHING THE GLOBAL WARMING THEORY HATE TO ADMIT that the satellite temperature data prove that all the time, effort and money poured into developing computer models that "prove" that the Earth is heating up has been an enormous waste. Admitting that the evidence does not support their theory is more than painful; it means the loss of the huge government grants that have funded their research and public relations campaigns. It is harder to understand why the journalists who have helped them frighten the public and the politicians into supporting their costly research and their even more costly remedies for the alleged problem refuse to report that the satellite data are admittedly a serious problem for the climate modelers. When empirical evidence does not support a hypothesis, the hypothesis is rejected, but in this case, many scientists and nearly all journalists are rejecting the empirical evidence. We were stampeded into banning CFCs, because the public and the politicians were sold on the hypothesis that CFCs were causing the Antarctic ozone hole and posing a serious threat to life on Earth. Skeptics argued that there was insufficient evidence to support this hypothesis, but we went ahead with a costly experiment. Five years after the CFC ban, the Antarctic ozone hole was bigger than ever. The experiment appears to have failed. Its backers are grasping for explanations. Their disappointment is palpable. The news media are not crying disaster as the ozone hole expands, perhaps fearing that publicizing this failure will reduce support for the equally dubious global-warming experiment.
WE HAVE HAD AN EXCHANGE OF LETTERS WITH KATHERINE HATTON, VICE PRESIDENT and General Counsel of the Philadelpia Inquirer, concerning a demand by Jeffrey Fleishman that we retract and apologize for having made statements about his reporting on fighting between the Serbs and the KLA in the village of Racak, Kosovo. I acknowledged in the AIM Report last September that I had been mistaken in saying that there had been no fighting on Sunday, January 17, 1999 and was wrong in charging that Mr. Fleishman had fabricated an account of the fighting that took place that day. Mr. Fleishman and the Inquirer requested a formal retraction and apology and asked that we remove from our Web site the inaccurate statements I had made about Mr. Fleishman's reporting of the events of that day. I am happy to do so with the following statement, which Ms. Hatton assures us will resolve this matter to the satisfaction of Mr. Fleishman and the Inquirer.
ACCURACY IN MEDIA (AIM) RETRACTS ALL OF ITS ASSERTIONS CHALLENGING THE authenticity and credibility of Jeffrey Fleishman's reporting in the Philadelphia Inquirer about fighting at Racak, Kosovo on January 17, 1999. Fleishman was in Racak. He did report on the fighting at the time, as did other reporters. AIM's characterization of Mr. Fleishman's reporting as "pure fiction" and "imaginative writing" was unfounded. Nor should AIM have compared Mr. Fleishman to Janet Cooke. It was also unfair for AIM to publish assertions about Mr. Fleishman's reporting without first making an attempt to contact him. Accuracy in Media regrets our errors and apologizes to Mr. Fleishman and the Inquirer. Reed Irvine can be reached at email@example.com