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Monday, October 15, 2012

Education Profiteering: Wall Street's Next Big Thing?

Monday, 15 October 2012 11:05

By Jeff FauxAlterNet | News Analysis

Students in class(Photo: iseeantwan)Wall Street's involvement in the charter school movement is presented as an act of philanthropy, but it's really about greed.
The end of the Chicago teachers' strike was but a temporary regional truce in the civil war that plagues the nation's public schools. There is no end in sight, in part because -- as often happens in wartime -- the conflict is increasingly being driven by profiteers.
The familiar media narrative tells us that this is a fight over how to improve our schools. On the one side are the self-styled reformers, who argue that the central problem with American K-12 education is low-quality teachers protected by their unions. Their solution is privatization, with its most common form being the privately run but publicly financed charter school. Because charter schools are mostly unregulated, nonunion and compete for students, their promoters claim they will, ipso facto, perform better than public schools.
On the other side are teachers and their unions who are cast as villains. The conventional plot line is that they resist change, blame poverty for their schools' failings and protect their jobs and turf.
It is well known, although rarely acknowledged in the press, that the reform movement has been financed and led by the corporate class. For over twenty years large business oriented foundations, such as Gates (Microsoft), Walton (Wal-Mart) and Broad (Sun Life) have poured billions into charter school start-ups, sympathetic academics and pundits, media campaigns (including Hollywood movies) and sophisticated nurturing of the careers of privatization promoters who now dominate the education policy debate from local school boards to the US Department of Education.
In recent years, hedge fund operators, leverage-buy-out artists and investment bankers have joined the crusade. They finance schools, sit on the boards of their associations and the management companies that run them, and -- most important -- have made support of charter schools one of the criteria for campaign giving in the post-Citizens United era. Since most Republicans are already on board for privatization, the political pressure has been mostly directed at Democrats.
Thus, for example, when Andrew Cuomo wanted to get the support of hedge fund managers for his run for governor of New York, he was told to talk to Joe Williams, director of Democrats for Education Reform, a group set up to lobby liberals on privatization. Cuomo is now a champion of charter schools. As Joanne Barkan noted in a Dissent Magazine report, privatizers are even targeting school board elections, in one case spending over $630,000 to elect two members in a local school board race last year in Colorado.
Wall Street's involvement in the charter school movement -- when the media acknowledges it -- is presented as an act of philanthropy. Perhaps, as critics claim, hedge funders are meddling in an area they know nothing about. But their motives are worthy. Indeed, since they send their own children to the best private schools, their concern for other people's children seems remarkably altruistic. "Wall Street has always put its money where its interests of beliefs lie," observed this New York Times article, "But it is far less common that so many financial heavyweights would adopt a social cause like charter schools and advance it with a laser like focus in the political realm."
Yet, with the wide variety of social causes and charitable needs -- poverty, health, housing, global warming, the arts, etc. -- why would so many Wall Streeters focus laser-like on this particular issue? The Times suggest two answers. One is that the money managers are hard-nosed, data-driven investors "drawn to the business-like way in which many charter schools are run; their focus on results primarily measured by test scores."
Twenty years ago, one might have reasonably believed that the private charter schools, which are managed to produce the numbers, would produce better outcomes -- as measured by the numbers. But the overwhelming evidence is that they do not. The single most comprehensive study, by researchers at Stanford University, found that 17 percent of charter school students performed better than their public school counterparts, 46 percent no better and 37 percent worse. Stanford's conclusions have been reinforced by virtually all of the serious research, including those at the University of California, the Economic Policy Institute and the policy research firm Mathematica.
Nor do charter schools seem more efficient. Those promoted as the most successful examples have been heavily subsidized by foundations and Wall Street donors. The film, Waiting for Superman that portrays a heroic charter school organizer fighting a selfish teachers union was widely hyped in the media -- including popular TV shows like Oprah Winfrey's. Yet, as Diane Ravitch, an assistant secretary of education under George H.W. Bush and a former charter school supporter turned critic, noted, the film neglected to report that the hero educator kicked out the entire first class of the school because their test scores were too low, that the school was heavily subsidized by the pro-reform foundations and that the hero took an annual salary of four hundred thousand dollars.
Neither do the data on international comparisons support either privatization in general or charter schools in particular. The foreign education systems that out score America's are government-run, unionized, monopolies. Ravitch asks: "I look around the world and I don't see any country doing this but us. Why is that?"
Good question. Although the data do not support the supposedly data-driven privatizers' claims, their enthusiasm is undiminished. In response to an op-ed by Bill Gates that crudely misrepresented the statistics on school performance, education policy analyst Richard Rothstein observed: "It is remarkable that someone associated with technology and progress should have such a careless disregard for accuracy when it comes to the education policy in which he is now so deeply involved."
The Times' other guess about Wall Street's motives was that hedge funders are attracted to the anti-union character of the charter schools. This is undoubtedly true; the attack on the pubic schools is clearly a part of the broad conservative campaign to discredit government.
Wall Street has always loathed the labor movement. And in the last decade it has had even more of a reason since corporate profits now depend more on cost cutting and less on the creation of new products. The Chief Finance Officer of JP Morgan reports that some 75% of the net increase in corporate profits between 2000 and 2007 -- before the financial crash -- was a result of cuts in workers' wages and benefits. Given that unions are the only serious vehicles for resistance to the corporate low-wage strategy, Wall Street's antipathy has become even stronger.
But today unions represent less than seven percent of private sector workers. And the influence of public sector unions on the bargaining position of workers in profit-making corporations is, certainly in the short run, negligible. So while hostility to unions plays a role, is it is not quite credible to believe that Wall Street profit maximizers would be spending so much of their time and money simply to beat up on a proxy for the private sector unions that they have already so beaten back.
As usual, when looking for what motivates capitalists in a market system, the answer is likely to have something to do with making money.
Having been rescued from the consequences of its own folly by the Bush/Obama bailouts with its de-regulated privileges intact, Wall Street is once more on the prowl for the new "big thing" -- a new source of potential profits upon which to build the next lucrative asset bubble.
The landscape of the coming decade is not promising. Most forecasters see a near term future of slow growth, sluggish consumer spending and government retrenchment. Despite the Federal Reserve's commitment to low interest rates there is little demand for equities, indicating widespread investor pessimism about the future. As Bill Gross, the founder of global investment giant Pimco, wrote in August, "Boomers can't take risk. Gen X and Y believe in Facebook but not its stock. Gen Z has no money."
The financial bubble of the 1990s was driven by new business start-ups exploiting technologies whose development had been subsidized by the taxpayers. The bubble of the 2000's was built on the boom in subprime mortgages organized and subsidized by Federal housing programs. But with a virtual Washington consensus on cutting back public spending, investors have little expectation of new government money being poured into some dormant economic sector on a scale sufficient to generate widespread speculative excitement.
Education privatization would not, per se, create a net new stimulus for the economy. But by diverting large existing flows of money from the public to the private sector it would create new profit-making ventures that could be capitalized and transformed into stocks, derivatives and leveraged securities. The pot has been sweetened by a 39 percent federal tax credit for financing charter school construction that can double an investor's return in seven years. The prospect of new speculative opportunities could well recharge the animal spirits upon which Wall Street depends.
Some "liberal" privatization promoters claim that charter schools should not be considered private. But that's an argument the management companies that run the schools only use when they are asking for more government funding. At the same time they argue in courts and to legislatures that as private enterprises they should not be subject to government audits, labor laws and other restrictions.
These companies rent, buy, and sell buildings; make contracts for consulting, accounting and legal services, food concessions, and transportation; and pay their managers far more than public school principals earn. In cases where city governments have given land to charter schools, for profit real estate companies have ended up owning the subsidized land and buildings. In states where charter schools are required to be nonprofit, profit-making companies can still set them up and then organize a board of neighborhood residents who will give them the right to manage the school with little or no interference.
In 2008 Dennis Bakke, CEO of Imagine Schools, a private company that managed 71 schools in eleven states, sent an email to the firm's senior staff. It reminded his managers not to give school boards the "misconception" that they were "responsible for making decisions about budget matters, school policies, hiring of the principal, and dozens of other matters." The memo suggested that the community board members be required to sign undated letters of resignation. "It is our school, our money, and our risk," he wrote, "not theirs."
The potential for private profits from publicly funded education is not limited to K-12. Profit-making universities and vocational schools -- increasingly substituting remote internet learning for classroom teachers -- are among the fastest growing businesses in the country. The sector is rife with high-pressure sales tactics and shoddy training, which leaves students - many of them low-income -- deeply in debt and no further up the job ladder. Most of their growth is financed by Federal aid and Federally guaranteed student loans.
"You start to see entire ecosystems of investment opportunity lining up," Rob Lytle, an business consultant earlier this year told a meeting of private equity investors interested in for-profit education companies. According to Stephanie Simon of Reuters, who reported on the event, investment in for profit education has already jumped from $13 million in 2005 to $389 million in 2011. Among others, Goldman Sachs and JP Morgan Chase have created multimillion-dollar funds for education investments.
These "data-driven" investors are not so much interested in students' scores, as in the opportunities to cut costs by using online technology. Ironically, while reformers insist their goal is to develop more skilled teachers, a goal of their financier allies is to get rid of them. The central question, says education entrepreneur John Katzman is "How do we use technology so that we require fewer qualified teachers?"
According to none other that Rupert Murdoch, the U.S. education industry represents a five hundred billion dollar opportunity for investors. In 2010, he hired prominent reformer Joel Klein from his post as chancellor of the New York City Department of Education to run Murdoch's education technology company. A few months later the firm received a $2.7 million contract from the city.
Charter schools, for profit on-line universities and other forms of privatization may not in the end fulfill all the dreams of its Wall Street promoters. But there is clearly money to be made here. And where there is money to be made, we can be sure that there will be money to finance political campaigns, to support career ladders that move between government and business and to bribe the media into ignoring the data. So the war on public education will continue. All of course "for the sake of the children."

Sunday, October 14, 2012

Michael Goodwin: Dems Finally Go Bonkers


NY POST Last Updated:4:19 AM, October 14, 2012
Posted:12:21 AM, October 14, 2012
After enduring three days of outlandish claims and grievances about American life at the Charlotte convention, I wrote that “something shocking is happening to the Democratic Party.”
Five weeks later, I must amend the observation. The soul-sapping transformation is no longer “happening.” It is complete.
The Democratic Party has lost its mind and its way. Its political philosophy of inclusion and progress has been consumed by virulent strains of anger, dishonesty and intolerance. Its leaders don’t just want to win an election; they want to silence any American who disagrees with them.
Consider the latest evidence.
The White House, on defense over the assassination of our Libyan ambassador after Washington reduced security, launched a frantic search for a scapegoat. It first blamed protests over an anti-Muslim video and, when forced to admit the protests never existed, pointed fingers at intelligence officials and managers in the State Department. Watch your back, Hillary.
A campaign aide, with a straight face, also insisted that the terrorist attack is an issue only because Republicans politicized it. The buck doesn’t stop at this president’s desk.
A desperate Obama resorts to calling his opponent a “liar,” and his latest promise is to preserve taxpayer subsidies for public television’s cash cow, Big Bird. The tactic is denounced even by supporters as more cartoonish than the giant yellow canary. No matter — it’s a victory because another day passes without discussion of jobs, the debt, deficit or Iran.
Then there is Joe Biden. As I predicted, his manic behavior at the veep debate won the approval of Dems despondent over Obama’s flop at his debate. Biden’s rude laughs, snorts and sneers, combined with hectoring accusations of Paul Ryan, were catnip for those who see Republicans as unworthy and illegitimate.
They actually applaud that Biden’s interruptions — more than 100 of them — prevented any sustained, serious discussion. To hell with America, party comes first.
Despite Biden’s assertion that “facts matter,” they didn’t to him. Catholic bishops insist he misstated the terms of ObamaCare’s contraception mandate on their institutions. And although he was patently dishonest about his own votes on Iraq and Afghanistan, no Dem complained because they loved his venomous attacks on Ryan. As reader David Zukerman put it, “To see or hear Biden is to understand that, for the hard left, reality is a function of expression, and to understand, further, why there is an absence of any bipartisan spirit in Washington.”
To that point, there is zero evidence that those not already committed to Obama were impressed by Biden’s buffoonery, but MSNBC and The New York Times are back on the bus. Mission accomplished.
Romney and Ryan, of course, are big boys who can take care of themselves. But what of ordinary citizens who come up against Democratic malice and its media cheerleaders? Who will protect them?
That’s what Bill Skuby wants to know. The owner of a men’s shop in Spring Lake, NJ, Skuby is a Republican who decorated his store window with a racy Halloween display mocking Obama. He put an Obama mask over a skeleton, and had a tombstone with a reference to ObamaCare and an Internet composite of the president as an African-style witch doctor.
In response, Skuby won support from hundreds of people in what he calls his “1 percent town” but also “about 15 to 20 death threats.” He has been called a racist, a coffee shop got a bomb threat while he was there and The Star-Ledger urged a boycott of his store.
“I’m no racist, but I am anti-Obama,” Skuby tells me by phone. “Don’t I have a right to be? Isn’t this still America?”
The witch-doctor image was in bad taste and offensive, and Skuby agreed to remove it after complaints. But he says the rest of the display is staying because he believes defeating Obama is essential for the future of the country. He is also furious at the double standard coming from the left.
“It was OK for them to burn effigies of George Bush,” he says. “And they call Romney a liar, a thief and a murderer. But I can’t criticize Obama?”
That’s no longer a simple question. In theory, free speech still exists. But to the new Democrats, speech is free only to those who spout the party line. Everybody else must pay a price.
Keep on blabbing, Bloomy!
Prematurely tired of questions about potential successors and their promises, Mayor Bloomberg said he won’t take more questions on the topic.
“I’m not going to spend the next year answering ‘what do you think’ of every potential candidate’s ideas,” he told reporters. “I’m going to spend my time being mayor.”
It’s a bold promise and also a bad idea, for him and the city.
Like it or not, the campaign will revolve around the city Bloomberg shaped over 12 years. He’ll get plaudits and brickbats, especially during what is likely to be a hotly contested Democratic primary.
Understandably, the mayor doesn’t want to be drawn into the weeds of candidate talking points. Nor does he want to share the spotlight as he races to finish his tenure.
But his vow of silence would deprive voters of his experience and judgment on important matters. Look at how his back-of-the-hand slap to a call for tax hikes by Public Advocate Bill de Blasio settled the issue, at least for now. Similarly, legislation pending before the City Council, such as mandated sick leave for businesses and pushes to micromanage the Police Department, are certain to be re-aired. Scores of other policies, ranging from schools to bicycle lanes to his ban on big sugar drinks, will be fair game.
While my bet is that Bloomy will find it impossible to stay silent, he shouldn’t even try. He owes his supporters help as they navigate a campaign where unions already demand that the next mayor throw open the vault and leave it open.
Taking a turn for the worse
Thanks to Ronald Reagan’s success against Jimmy Carter, every challenger uses his campaign question: Are you better off than you were four years ago?
The answer New Yorkers are giving should worry Albany. A Siena College poll found 47 percent of state residents say they’re worse off now, while 35 percent believe they’re better off.
Gov. Cuomo isn’t facing voters this year, but the finding gives him every reason to push harder against the status quo.
As for legislators, they’re mostly hopeless, which is why Cuomo must separate himself from them.
Ain’t that the tooth!
After watching the two debates, reader Leonard Toboroff spots a pattern. He writes, “It’s simple: Romney and Ryan are up against two dental patients. One is on Novocain and the other is on laughing gas.”

Saturday, October 13, 2012

Restructuring An Unsustainable Federal Spending Machine by Larry Fisher

Restructuring An Unsustainable Federal Spending Machine by Larry Fisher

The U.S. government's precipitous fall from solvent democracy to abusive, secretive, and bankrupt oligarchy began with the 1978 Civil Service Reform Act (CSRA) and a legislative mandate to promote government efficiency and accountability. This legislation violated one of our forefather's checks and balances by replacing its apolitical civil service professionals with corporate managers and more politically-astute civil service bureaucrats.

Larry Fisher

Restructuring An Unsustainable Federal Spending Machine
October 9, 2012 at 11:13:58
By Larry Fisher

The U.S. government's precipitous fall from solvent democracy to abusive, secretive, and bankrupt oligarchy began with the 1978 Civil Service Reform Act (CSRA) and a legislative mandate to promote government efficiency and accountability. This legislation violated one of our forefather's checks and balances by replacing its apolitical civil service professionals with corporate managers and more politically-astute civil service bureaucrats. These private and public sector managers would now fill newly created senior executive service (SES) political appointee positions within the executive and judicial branches. This meant that, post 1978, each incoming administration's President, Vice President, and their executive schedule (EX) political appointees could now use (or be used by) those inherited SES executive and judicial branch political appointee managers. The 1978 CSRA law also encouraged the movement of EX / SES political appointees between their parent corporations and temporary government positions thereby allowing these revolving door bureaucrats (RDBs) to dominate every facet of the government's operation. Thirty-four years later, those corporate-driven, deregulation, outsourcing, and war-related RDBs have structured (undermined) an entire bureaucracy to ensure the compliant and unquestioning civil service bureaucrats needed to rubberstamp the corporate takeover of the U.S. government.

President Obama is a prime example of just how successful this corporate takeover was, largely because of his decision not to follow thru on the "open, transparent, and accountable" government reforms that got him elected. Instead, he and his EX political appointees used, without question, the very same RDBs that precipitated the 1980's collapse of the savings and loan companies, 2008 economic crisis, and 16 trillion dollars in national debt. Today, all three government branches still work as one, transferring trillions of dollars in wealth from the taxpayer to corrupt politicians, RDBs, and corporations. The executive branches' RDBs use taxpayer dollars to provide meaningless public sector services (while covering-up all levels of collusion/corruption) and then pay (again) for equally deficient corporate goods and services. The judicial branches' RDBs give free "get out of jail passes" to public and private-sector criminals. The legislative branch (Congress) gets paid twice, once by the taxpayer, and yet again by lobbyists, while undermining the executive and judicial branches, and enriching themselves. With no checks and balances between all three government branches, the taxpayers are subsidizing a federal spending machine that will ultimately collapse, no matter the severity of cuts to the bureaucracy or American people's services. Bankrupt corporations are required to restructure. The government must now restructure, starting with the elimination of all RDBs, and term limits for Congress.

The remainder of this article provides background information to understand why the government must be restructured in order to implement some very necessary checks and balances to eliminate the trillion dollar annual deficits and cut the 16 trillion in national debt. This documentation is examined in two sections: (1) An Unsustainable Federal Spending Machine and (2) Restructure the Government and Cut Annual Operating Costs by a Minimal 50%. The first section contains internet links to magazine / newspaper articles, and whistleblower documentation detailing how all three government branches work as one to enrich themselves and their corporate benefactors, to the detriment of the American people. The second section emphasizes the need for an "open, transparent, and accountable" government that includes permanent roles for government unions and whistleblowers to address over 30 years of internal threats to this government's financial and national security. Why? Because, together, these entities have a vested interest, the knowledge, and the experience to eliminate waste, fraud, and abuse of the taxpayer's money as one of those hidden and politically-induced costs that dwarf all other government operating costs. The best possible, and positive, way for unions to protect their employees is by having the highest qualified and credentialed government managers to mentor, rather than abuse and fire, their employees. Oversight and enforcement of upgraded Office of Personnel Management (OPM) position standards ensures the highest qualified managers, promotes efficiency, and cuts waste, a win/win for the next administration and the American people. The whistleblower community has a varying array of professionals including scientists, doctors, lawyers, engineers, procurement specialists, accountants, auditors, and other professionals that can work with the next administration to cut the government's operating costs by a minimal 50% in two ways: (1) eliminate bogus, politically-inspired contracts and contractors that waste the taxpayer's money and produce nothing of value, and (2) identify the specific legislative and government reforms needed restore the checks and balances between all 3 government branches. The last page of this article contains an initial and open list of some of those proposed reforms that will be forwarded to government unions and the whistleblower community for their additions, and edits. The final list will be publicized and forwarded to the next administration and to Congress, for their review and discussion with both government unions and the whistleblower community.

(1) An Unsustainable Federal Spending Machine

Look at the facts and realize that, in just over 30 years, the federal debt has skyrocketed by over 15 trillion dollars, from 930 billion in 1980 to 16.3 trillion in 2012. Realize that both Republicans and Democrats undermined the Constitution and broke the government's laws by either weakening the government's infrastructure to implement its deregulation, outsourcing, and war-related political agendas, and/or in covering up that fact. Either way, over 2.5 million security (FBI, CIA, and NSA) and non-security civil-service professionals have faced over three decades' worth of political pressures to hide all levels of collusion, corruption, and blatant government waste; those whistleblowers who spoke out and told the truth were then illegally undermined in the following ways: (1) harassed, retaliated against, ostracized, and fired, (2) forced to sign settlement agreements barring them from future federal jobs, and (3) covertly eliminated the minimal 4-year college degree OPM requirement from professional-position standards, beginning in the 1980s for accountant , auditor, and Department of Energy (DOE) engineer positions, and probably others. These political maneuvers not only replaced the 1980s professionals but further ensured that all new hires were equally unqualified to obtain the compliant and unquestioning bureaucracy needed to rubberstamp the government's inane deregulation, outsourcing, and war-related agendas., (4) Congress' ongoing failure to pass real whistleblower-protection legislation, and (5) politicians and/or political appointee RDB cover-ups of blatant government waste and wrongdoing by abusing the State Secrets Privilege (SSP) and confidential business information (CBI) policies.

Corporate profits (and reduced expenses) require the highest qualified staff and managers and the unconditional support of everyone up the corporate chain-of-command. The same conditions also apply for eliminating the waste, fraud, and abuse of the taxpayer's money. The following three government branch sections, (1A) executive, (1B) judicial, and (1C) legislative branch, illustrate how politicians and public officials within all three branches undermine the U.S. government, its technical professionals, and the very citizens they were paid to protect.

(1A) Executive Branch - Three executive-branch examples involving the Securities and Exchange Commission (SEC), Federal Drug Administration (FDA), and a government-wide (intentional) failure to produce accurate financial statements illustrate the need to restructure this branch, starting at the top with the elimination of all RDBs.

SEC -- The American people have paid EX / SES political appointee RDBs from Goldman Sachs, AIG, Lehman Brothers, etc., to manage the SEC. Instead, these RDBs eliminated SEC civil-service professionals for questioning their parent corporation's illegal activities and then shredded documentation involving over 18,000 cases against many of these same firms. Please read Matt Taibbi's Rolling Stone article, "Is the SEC Covering Up Wall Street Crimes?"

FDA scientists are also constantly under attack for questioning the EX / SES political-appointee RDB medical-review process that places their parent corporation profits above the safety of the American people. The following FDA scientist quote in a 2009 Truthout article raises legitimate questions over the government's continued use of EX / SES political appointee RDBs to fill managerial positions at federal department, bureau, and agency levels:

"Currently, there is an atmosphere at FDA in which the honest employee fears the dishonest employee (political-appointee RDB/unqualified civil-service managers)."

A recent July 2012 New York Times story, "Vast FDA Effort Tracked Emails of Its Scientists," expands on the above 2009 story and details how FDA political-appointee RDB managers tracked internal scientist emails to Congress and the media, like criminals. Why? Because they voiced their professional concerns and exercised their 1st amendment rights, and, for this, four professional scientists were fired.

Government-Wide (Intentional) Failure to Produce Accurate Financial Statements

The Department of Defense (DOD) and all other executive-branch non-DOD entities, known as the 24 Chief Financial Officer (CFO) Act department, bureau, and agency offices, have no ability to provide an accurate accounting of the taxpayer's money, by design. The problem is not technical but political and involves the ongoing and ever-changing, politically-induced deficiencies that create an unnecessary and unending dependence on financial-management contractors (FMCs); those FMCs include the American Institute of Certified Public Accountants (AICPA), financial-software companies, and management-consulting firms. Politicians violated their most basic fiduciary responsibility to the American people when they allowed the AICPA to oversee two deficient accounting standards, one for the federal government and yet another for state and local governments. The AICPA's public-sector accounting standards are not based on generally accepted accounting principles (GAAP) and are thus incapable of generating accurate public-sector financial statements for federal (DOD and the 24 CFO Act entities), state, and local governments. This is because politicians control, and intentionally thwart, the generation of accurate public-sector financial statements, via their political appointees, for two reasons, to: (1) prevent any level of accountability and responsibility to its citizens, (2) create a lucrative and ongoing revenue source (redistribution of wealth) from taxpayer, to contractor (for unnecessary contracts), and then back to the politician (in the form of campaign contributions). See the below DOD and 24 CFO Act entities' articles and other documentation to see how this collusion, corruption, coercion, and exorbitant taxpayer waste works within the federal government.

Two DOD articles highlight the sheer hypocrisy of both parties' feigned interest in accounting for the taxpayer's money, how all three government branches intentionally undermine its civil service accountants and auditors, and how those deficient accounting systems provide a lucrative and ongoing revenue source for politicians and their campaign contributing benefactors, the FMCs. On February, 11, 2009, a CBS News article, "The War On Waste" described DOD's inability to account for $2.3 trillion in transactions and how Jim Minnery, a DOD auditor, was dumbfounded at his supervisor's total lack of concern over serious accounting-related problems. On January 30, 2012, The Intel Hub article, "DOD Can't Account for Billions in Iraq," raised the issue that DOD's inability to account for billions of dollars of Iraq's, and the taxpayer's, money was not so much an issue of incompetence but that "individuals in government were conspiring to cash in."

DOD's cover-ups also mirror what has occurred within all 24 CFO Act entities. In October 1987, Government Accountability Office (GAO) and Treasury Department political appointee RDBs knowingly outsourced the FMC's deficient (non GAAP-based) financial software to all 24 CFO Act entities. This government-wide outsourcing initiative also included a concurrent effort to eliminate the minimal 4-year college accounting degree OPM requirement for professional accountants and auditors and to replace those professionals with former accounting clerks. Today, 25 years later, with multibillions already spent on deficient non GAAP-based financial software (with no end in sight), all 24 CFO Act entities still rely on manually manipulated (fudged) Excel spreadsheet totals to prepare all 24 CFO Act entities' financial statements. But, how is this possible? The answer is that the only professional accountants involved in the process are the FMCs. The FMCs design, implement, train these clerks (now accountant managers) to use this deficient accounting software, and then audit their own deficient processes. Then, these (new) accountant managers are forced into eliminating the few remaining whistleblower accountants (and auditors) since they lack the technical credentials to refute their assertions of deficient systems and the resultant waste, fraud, and abuse of the taxpayer's money, a lose/lose for everyone involved.

The all-encompassing nature of these 24 CFO Act entity cover-ups and the extremes that these (new) accountant managers are willing to take is best illustrated by the Environmental Protection Agency's (EPA), Office of the Chief Financial Office (OCFO). Over the course of a 20-year period, these cover-ups included EPA's and a government-wide inability to generate accurate financial statements. EPA's desperation to hide these deficiencies included ongoing threats, retaliation, lying under oath, conspiracy to cover-up those lies, abuse of the freedom of information act (FOIA), abuse of the government's confidential business information (CBI) policies, and a myriad of violations of Congress' laws, and EPA's rules and regulations. The entities involved in these all encompassing cover-ups included the EPA Administrator, OCFO, Office of Inspector General (OIG), Office of General Counsel (OGC), and other outside offices such as the Office of Special Counsel (OSC) that was (on paper) supposed to protect whistleblowers. Documentation describing the above events appears in the National Accountant Whistleblower Coalition (NAWBC) website, Documentation Section. This documentation includes internal emails, letters to : Chairman, Government Affairs Committee (Senator Fred Thompson) , OPED article , certified letters to GAO's current and former Comptroller General's of the U.S . questioning the accuracy of 14 years of their written Congressional testimony, Congress (Pelosi & Reid) , OSC 2010 cover-up , FOIA & CBI abuse , EPA Administrator, CFO, OIG, and OGC cover-up , and much more

(1B) Judicial Branch - Like the prior executive branch examples, Eric Holder (RDB political appointee) first worked in the Justice Department and then obtained a position in the Covington & Burlington law firm defending clients like Goldman Sachs, JP Morgan, Chase, and others. So, why are we surprised that these same firms were never held accountable? Like the executive branch, the judicial branch must also include the elimination of all political appointee RDBs and be restructured, top to bottom. For details supporting these statements, see the Newsweek May 14, 2012 issue , "Why Can't Obama Bring Wall Street to Justice?"

(1C) Congress (legislative branch) - Congress gets paid twice, once by taxpayers, and then again by lobbyists for undermining that legislation. A single example illustrates how these Congressional rewrites of their own legislation makes a mockery of Congress' legislation and all government laws. Consider that in the 1860's Congress passed the False Claims Act, or Lincoln Law, to hold unscrupulous contractors accountable for repaying the government for their sale of decrepit horses, faulty ammunition, etc. Today, Congress has rewritten the False Claims Act and rendered that legislation meaningless by exempting the executive, judicial, and legislative branches from prosecution for their joint roles in (now) allowing both public and private sector contractors to deliver (knowingly) deficient goods and services." Payment for those deficient goods and services are, of course, complements of the U.S. taxpayer, as illustrated in sections (1A) and (1B), above. For more information on how Congress, the White House, and lobbyists work together to undermine the American people's interests, please read Matt Taibbi's Rolling Stone article , "The Slow Painful Death of Dodd Frank."

Look at the above executive, judicial, and legislative branch examples and realize that the 15 trillion dollar spike in the national debt involved the redistribution of trillions of dollars in wealth from the taxpayer to greedy and corrupt politicians, bureaucrats, and corporations, all for producing nothing of value. Today, the American people have the choice of allowing both Republicans and Democrats to make their arbitrary and superficial 10% cuts to a 100% dysfunctional bureaucracy. Or, work with unions, whistleblowers, and the next administration to demand the necessary executive, judicial, and legislative branch reforms and checks and balances to dramatically cut the government's operating costs, as summarized in the next section.

(2) Restructure the Government and Cut Annual Operating Costs By a Minimal 50%

There is no credible reason why the federal government cannot reduce its annual operating costs by a minimal 50% simply by eliminating waste, fraud, and abuse of the taxpayer's money as one of its (now) acceptable government operating costs. But, how do you achieve that goal with three dysfunctional government branches that are no longer independent, no checks and balances, and over 30 years of successful efforts to politicize and weaken government infrastructures involving over 2.5 million career civil servants? These 50% cost reductions will occur with the able assistance of both government unions and whistleblowers involving the following government-wide restructuring efforts: (1) review, upgrade, and enforcement of OPM position standards that are on a par with the private sector, (2) eliminate all executive and judicial branch EX / SES political appointee RDBs, and (3) replace those executive and judicial RDB positions, and any civil service managers who do not meet the OPM's upgraded position standards, with those civil service managers who do meet those newly upgraded OPM position standards, and (4) eliminate bogus, politically-sponsored contracts and contractors that wastes the taxpayer's money and produces nothing of value.

Note: (a) There should be a minimal 6 month retention period for SES executive and judicial branch political appointee RDBs and civil service managers who will be replaced so that they can explain the operation to those civil service managers who will replace them, and (b) each incoming administration deals directly with apolitical, technically qualified career civil service professionals who are insulated from each administration's political agendas and pressures, as before the 1978 CSRA.

The initial (and open) list of executive, judicial, and legislative branch items below contains a mission statement for each branch, i.e. executive branch (improve efficiency / cut government waste), along with a list of actions for that specific branch. As noted previously, this initial list will be forwarded to the whistleblower community and government unions for their additions and edits. The final list will then be publicized and then forwarded to the next administration and Congress for discussions with both government unions and the whistleblower community.


Executive Branch (improve efficiency / cut government waste)

- Open, transparent, and accountable government mandate (for all administrations)

- Select most qualified civil service manager to oversee previous RDB positions

- Eliminate bogus, politically-inspired contracts / contractors

- Redesign organization structure(s) based upon clean lines of authority and responsibility

- Write mission statement for that department and each of the branches within that department

- Fill those branches with the most qualified civil service managers and they can, in turn, seek the most qualified individuals for their staff (in accordance with those upgraded OPM position standards)

Judicial branch (prosecute public / private sector criminals)

- Felony charges for public officials who ignore documented whistleblower warnings

- Felony charges for lobbyists and Congressman who weaken existing legislation

Legislative Branch (write legislation that supports executive / judicial branch missions)

- Term limits (automatic elections for exceeding those time frames i.e. 12 years)

- Automatic recall vote for members who refuse to release their tax returns

- Same retirement / medical benefits as civil service employees

- Government version of the Sarbanes Oxley Act

- Rescind 1978 CSRA (Constitutional amendment -- CA)

- Rescind Citizens United Act (CA)

- Whistleblower protection legislation for security / non security whistleblowers (CA)

Larry Fisher
I graduated from Michigan Technological University (MTU) in June 1968 with a BSBA in Accounting. I have been a federal accountant for 40 years, 25 of which were as an accountant whistleblower. A few of the more notable events that led me down the whistleblower path and my mindset that this government is corrupt, corporate-driven, and owned by special interest groups include a few of the following incidents.

In the early 1980's, I accepted a position as an Accounting Branch Chief at the Veterans Administration (1980 -- 1986). My section was responsible for consolidating the VA hospital's accounting data to prepare the Agency's Treasury Department and Office of Management and Budget (OMB) financial statements. The documentation provided by these agencies was so bad that the VA's accounting staff used crib notes, rote formulas, and large manual adjustments to hide all out of balance conditions. When I contacted these agencies to request an explanation of their procedures, I could find no one. My request for the VA to formally contact the Central Agencies (GAO, OMB, Treasury, and GSA) to address these problems was turned down. Here I was the Branch Chief of one of the largest federal agencies and no one within the VA or the Central Agencies could explain how or why federal agencies prepared their financial statements.

In search of a solution, I spent three years (on my own time) modifying the American Institute of Certified Public Accountant (AICPA) private sector accounting standard to fit the government's unique accounting and budgeting needs. The government accounting prototype (GAP) that I developed was based on generally accepted accounting principles (GAAP) and thus capable of generating all government accounting and budgeting financial statements from a single trial balance. During that time, I visited my MTU accounting professor, Sam Tidwell, in Copper Harbor, Michigan a couple of times to get his input on my idea and to find out why MTU lacked any meaningful government accounting classes. His position was that my idea would never fly simply because there were too many politicians, too many different and self-serving agendas, and no one was interested in providing an accurate accounting of our tax dollars. When I mentioned that I planned on pursuing this idea, his parting words, in his inimitable Mississippi drawl, were "Fisha, if you go down that road, you will find that you have a Tiga by the tail." We laughed. I didn't believe him at the time. But, as usual, Sam was right.

Upon completion of the GAP model, I wrote a companion book, "Principles of Accounting, Budgeting, and Cash Management for Government." About the time that I finished the book, my staff found a $ 40 million dollar antideficiency violation (VA exceeded their budget). I was asked to sign a letter authorizing the necessary adjustments to hide the problem. I refused. Another manager, two levels up from me, signed the letter for me while I was on leave. I resigned from the VA in October 1986, citing, "falsification of the agency's financial statements" as my reason for leaving. My personnel records were illegally altered to attribute my resignation to "conflicting views over systems improvement." During my subsequent one year unpaid sabbatical, I lobbied members of Congress and the Central Agencies to adopt a public sector GAAP-based standard in late 1986. On October 13, 1987, I was hired as a Treasury systems accountant along with five other professional accountants to review software that had already been placed on the GSA schedule so that all federal agencies could bypass any procurement red tape. The rest of my government accountant career has been spent raising red flags over the Central Agencies' release of untested financial software to all federal agencies. I retired on January 1, 2011 as a GS-14 accounting clerk with a real fear of this government and its unwarranted claims of a democracy. ;