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Historically, Bolivia, Colombia, and Peru have been major drug-producing countries. Together, they account for most of the coca cultivated worldwide and for the opium poppy used to produce most of the heroin seized on the east coast of the United States. Figure 1 shows the areas in Bolivia, Colombia, and Peru where illicit drug crops are grown. The United States has supported counternarcotics efforts in Bolivia and Peru for nearly 30 years. USAID has implemented a series of alternative development projects in the coca-producing regions of these countries,while the U.S. Drug Enforcement Administration and State’s Bureau for International Narcotics and Law Enforcement have supported interdiction and voluntary and forced coca eradication programs. Due at least in part to these efforts, substantial reductions in coca cultivation were achieved in Bolivia and Peru during the mid-to-late 1990s. However, over the same period, coca cultivation in Colombia increased substantially, offsetting much of the decreases in Bolivia and Peru (see table 1). Alternative development progress in Bolivia and Peru has required a lasting host government commitment to a broader set of counternarcotics measures and years of sustained U.S. assistance to support these efforts. More specifically, our analysis of project documentation, site visits, and discussions with U.S. and host government officials and project staff indicated that government control of drug-growing areas and project sites is essential for providing access to the targeted beneficiaries as well as security for project-related trade, commercial activity, and investment. It also enables the monitoring of compliance with voluntary eradication agreements. To promote and sustain coca cultivation reductions, the host government must have a strong commitment to carry out effective interdiction and eradication policies. Without interdiction and eradication as disincentives, growers are unlikely to abandon more lucrative and easily cultivated coca crops in favor of less profitable and harder to grow licit crops or to pursue legal employment. Further, alternative development, interdiction, and eradication efforts must be carefully coordinated to achieve mutually reinforcing benefits. Table 2 summarizes several of the key lessons learned in Bolivia and Peru. Descriptions of the programs in Bolivia and Peru and more detailed discussions of the lessons learned from them are in appendixes I and II, respectively. Alternative development progress in Bolivia and Peru has required years of sustained U.S. assistance. The United States has supported alternative development projects in these countries for two decades. Together with current and planned alternative projects in Bolivia and Peru, U.S. contributions to these programs total about $455 million. Other U.S. agencies have supported interdiction and eradication efforts in Bolivia and Peru for an even longer period—nearly three decades. In combination, these programs have helped achieve reductions in the amount of coca grown in these countries. Nonetheless, the host government agencies involved in these efforts continue to depend heavily on U.S. support. For example, according to USAID officials, the United States currently finances and indirectly oversees most of the Bolivian government’s alternative development agencies in the Chapare region because the Bolivian government does not have the resources to do so on its own. Similarly, the United States provides 60 to 70 percent of the total funding for the Peruvian alternative development agency, and USAID officials said that the Peruvian government would not be able to fund the agency’s activities without U.S. support. Table 3 shows past and current U.S. funding for alternative development programs in Bolivia and Peru. Alternative development efforts in Colombia are still at an early stage, and USAID will have difficulty spending all of the funds available for these activities. Initial USAID efforts in Colombia began in 2000 by focusing on promoting poppy eradication and strengthening the Colombian government’s alternative development institution (PNDA). USAID’s current program emphasizes alternative development efforts in the coca- growing regions of southern Colombia to complement other U.S.- supported counternarcotics activities there. Alternative development activities in both poppy- and coca-growing areas are just beginning. As of September 30, 2001, USAID had spent only about $5.6 million, or 11 percent, of the $52.5 million currently available. By September 30, 2002, USAID expects its cumulative actual expenditures to reach $31.8 million, or 61 percent, of the total available in fiscal year 2001. As part of its initial effort to support the eradication of 3,000 hectares of poppy by the end of 2002, USAID awarded a $10 million contract to Chemonics International, Inc., in June 2000. Chemonics’ role was to assist PNDA in implementing poppy-related alternative development activities by promoting crop substitution, environmental improvements, and other development efforts in the poppy-growing regions of Cauca, Huila, Tolima, and Narino. After funding for Plan Colombia was approved in July 2000, USAID began planning for alternative development in Colombia’s coca-growing areas. These efforts were intended to complement the eradication and interdiction components of Plan Colombia’s first phase—the “push” into the Putumayo and Caqueta departments of southern Colombia where coca cultivation is most heavily concentrated. To quickly launch these efforts, USAID reallocated $1 million of the $10 million originally intended to support poppy eradication to fund projects aimed at strengthening PNDA’s capacity to expand its activities in coca-growing areas. USAID’s projects targeted PNDA’s information technology, financial accountability, telecommunications systems, and public relations capabilities for improvement. In April 2001, using Plan Colombia funds, USAID awarded an $87.5 million, 5-year contract to Chemonics to oversee, administer, and carry out alternative development activities in the coca-growing areas in the Putumayo and Caqueta departments. To date, USAID has programmed $42.5 million of this amount. Though it will work collaboratively in reviewing and approving alternative development projects, USAID (through Chemonics) will fund some projects and PNDA plans to fund others. In addition, USAID and Chemonics continue to support poppy eradication and institutional strengthening of PNDA. The overall alternative development approach in Colombia entails reaching agreements with communities to voluntarily eradicate illicit crops in exchange for help finding other income-producing opportunities and other assistance. The program is intended to provide incentives for small farmers (with 3 hectares or less of coca) to voluntarily eradicate their coca plants. In negotiating the community pacts, PNDA representatives met with groups of small farmers to obtain their commitment to voluntarily eradicate the illicit crops. After an eradication pact was signed, PNDA planned to provide the farmers with food crop seeds and plants or other immediate assistance. Once this assistance began, farmers were obliged to eradicate their illicit crops within 1 year. According to USAID officials, Colombian government officials recently stated that most of the coca cultivation covered by the pacts already agreed to should be voluntarily eradicated by the end of July 2002. As eradication progresses, farmers are to receive more comprehensive assistance from USAID. Initial efforts are focused on municipalities in the Putumayo, where USAID plans to support crop substitution and other income-generating activities by providing agricultural incentives, modern production and processing expertise, and credit and marketing assistance. USAID also plans to support environmental improvements through tree- growing programs in remote indigenous and tropical areas and training in pest control, forest management, and other areas. In addition, USAID plans to improve the social infrastructure in project areas by enhancing access to schools, health services, potable water, sewerage, and electricity. In August 2001, USAID reported that its goal is the voluntary eradication of 11,500 hectares of coca grown on small farms by the end of 2002, with the aim of eliminating a total of 30,000 hectares by 2005. USAID also reported that approximately 33 community eradication pacts had been signed, which covered more than 37,000 hectares of coca in the Putumayo department. In its initial design plan, USAID also noted that sustainability will be measured in terms of permanent eradication of coca and the number of farm families permanently engaged in licit productive activities and not returning to coca cultivation. USAID alternative development project activities have been limited to date, and the pace is not expected to quicken significantly until 2002. As illustrated in table 4, of the $10 million originally programmed to support poppy eradication and institutional strengthening of PNDA, USAID’s actual expenditures were only about $1.3 million, or 13 percent, as of September 30, 2001. Of the $42.5 million programmed from Plan Colombia funding, USAID’s actual expenditures were only about $4.4 million, or 10 percent, as of the same date. Combined, actual expenditures were about $5.6 million, or about 11 percent, of the $52.5 million in total available program funds. USAID officials told us that they expect project activity to accelerate in 2002. They estimate that cumulative actual expenditures in 2002 will total about $31.8 million. While USAID expects increased project activities in 2002, these activities will continue to be limited when viewed in the context of the total funding that is likely to be available for them. The administration had requested an additional $60.5 million for such activities in fiscal year 2002, but the Congress reduced the overall administration request for its Andean Counternarcotics Initiative from $731 million to $625 million, a reduction that will likely result in less funding for alternative development. As noted, USAID officials expect cumulative actual expenditures for alternative development activities in Colombia to total about $31.8 million by September 30, 2002—about 61 percent of the amount appropriated through fiscal year 2001. USAID faces a number of serious challenges in implementing a successful alternative development program in Colombia. USAID planning documents for Colombia acknowledge specific lessons learned in Bolivia and Peru and note that overcoming obstacles in Colombia will require long-term U.S. and Colombian commitments. The experiences in Bolivia and Peru demonstrate the need for host government control and security in project areas; effective interdiction operations; and careful coordination of eradication, interdiction, and alternative development efforts. However, the Colombian government does not control large parts of the coca-growing areas, limiting its ability to carry out sustained interdiction operations, and the Colombian government’s ability to effectively coordinate eradication and alternative development activities remains uncertain. Apart from these challenges, Colombia faces additional obstacles in implementing the alternative development program. Colombia has not devised a means to verify or ensure compliance by farmers participating in voluntary eradication programs, PNDA is weak and its funding for alternative development projects is not ensured, and project sites are in remote coca-growing areas where the soil quality and infrastructure are poor. The experiences in Bolivia and Peru indicate that the most critical obstacle Colombia faces is that the government does not control large parts of the Putumayo and Caqueta departments in southern Colombia where much of the coca is grown. This lack of security will seriously hamper PNDA’s ability to develop the region’s infrastructure, establish viable and reliable markets for licit products, and attract the private investment needed for long-term, income-generating development. Without government control of project sites, narcotics traffickers and guerrilla forces will continue to profit from illicit drug operations and impede legal economic activities generated by alternative development programs. USAID officials told us that armed groups have already intimidated some farmers and municipal leaders cooperating with the Colombian government. More recently, in September 2001, four employees of Colombian nongovernmental organizations working with PNDA in the Putumayo were kidnapped. According to USAID officials, two are confirmed murdered and the other two were released. As a result of these incidents, a number of nongovernmental organizations working with PNDA temporarily suspended their activities in the Putumayo in October 2001. While Colombia uses aerial spray operations to carry out an active eradication program, the government’s lack of control over many coca- growing areas limits its ability to carry out sustained ground-based interdiction operations—an essential component of the successful efforts in Bolivia and Peru. Colombian military and law enforcement units destroy some cocaine laboratories and seize narcotics and precursor chemicals during individual counternarcotics operations; however, they lack sufficient forces to maintain the permanent presence to sustain such operations on a day-to-day basis. Further complicating the problem is that a large land area ceded to one of the guerilla groups is off limits to U.S. and Colombian agencies, but is reportedly an increasing source of coca and precursor supplies. Throughout these areas, insurgents and paramilitaries operate largely with impunity. The experiences in Bolivia and Peru showed that sustained interdiction operations are necessary to disrupt coca markets and thus produce declines in the prices of coca. Without these declines, alternative development efforts are not as effective. The Colombian government’s ability to effectively coordinate eradication and alternative development activities remains uncertain. Careful coordination of these efforts was critical to their effectiveness in Bolivia and Peru. In December and February 2000, while conducting aerial eradication operations, the Colombian National Police accidentally sprayed approximately 600 to 700 hectares of an area where communities were negotiating pacts for participation in alternative development. Also, PNDA officials told us that eradication authorities had sprayed most of the Bolivar department, even though PNDA had targeted some communities in the department for participation in the alternative development program. This will likely complicate PNDA’s relations with farmers in that region. According to USAID officials, PNDA representatives currently coordinate with the Colombian National Police by indicating on a map or from an airplane the areas in the Putumayo and Caqueta departments that are in the alternative development program and should not be sprayed. Among the additional obstacles facing Colombia is the difficulty of verifying compliance with voluntary eradication pacts. The Colombian government has not determined how it will do so, and thus the reliability of the voluntary eradication pacts is uncertain. PNDA officials predict that it will be problematic and expensive to monitor compliance—a task complicated by the Colombian government’s lack of control over project sites. Until a means of verifying compliance is devised, compliance will depend upon peer pressure within a given community to prevent individuals from breaking the community’s eradication agreement with the government. Weak host-country institutions pose an additional problem in Colombia. USAID originally intended to work through the Colombian International Cooperation Agency as a host-country contracting agency for its alternative development projects. However, USAID officials told us they did not have confidence that the Colombian agency could account for the assistance in accordance with USAID requirements. USAID chose instead to contract with Chemonics to manage program resources, including procuring goods and services and awarding and managing grants. Chemonics is working on a day-to-day basis with PNDA—the institution established by the Colombian government in 1995 to deal specifically with alternative development. As noted, USAID was required to focus its initial efforts on strengthening PNDA because the organization is institutionally weak. USAID officials said that PNDA may have difficulty effectively using the additional funding that it is projected to receive for alternative development projects. While PNDA may have trouble absorbing this additional funding, the institution will have difficulty carrying out its responsibilities without it. Yet funding for important components of PNDA’s alternative development plans—from making infrastructure improvements to promoting licit crops and livestock—is not ensured. PNDA is supposed to provide immediate, short-term support to farmers cooperating in alternative development programs, bridging the gap between the signing of voluntary eradication agreements and receiving USAID assistance. Colombia developed these plans based on the expectation that it would receive about $300 million from European donors. However, little of that assistance has materialized to date. U.S. embassy officials told us that European donors are reluctant to participate in the program because, based on experiences in Bolivia and Peru, they associate it with the U.S.-supported forced eradication effort in Colombia. The poor quality of the soil and infrastructure and the remoteness of project sites in coca-growing areas are further obstacles. Unlike the poppy-growing areas in northern Colombia—which have richer soils and better developed infrastructure and are closer to markets—much of the coca-growing areas in southern Colombia have soils that are poorly suited for licit crops and a lack of basic infrastructure. According to USAID officials, these problems are more severe in the coca-growing areas of Colombia than they were in counterpart areas of Bolivia and Peru. Even when suitable crops are identified, the distances involved make it difficult to transport produce for further processing or to potential markets. For instance, a palmito (heart of palm) canning plant that the United Nations Drug Control Program built in the Putumayo department in the mid-1990s sat dormant for a number of years because the farmers growing the palm were too far away to transport their produce to the plant before it spoiled. The plant recently opened for test runs after finding farmers closer to the plant to grow the palm. Alternative development requires a long-term commitment and must be implemented with strong host-government support for sustained interdiction and eradication. The United States has provided alternative development assistance to Bolivia and Peru for nearly two decades, but little progress was made until the host government gained control of drug- growing areas and project sites, demonstrated a strong commitment to carry out effective interdiction and eradication policies, and carefully coordinated these efforts to achieve mutually reinforcing benefits. While each of these components is important, none is more so than government control of the project areas. Experience in Bolivia and Peru strongly suggests that voluntary coca eradication in Colombia is not likely to achieve hoped for reductions in coca cultivation until, at a minimum, the Colombian government can provide the security in the coca-growing regions that is essential for carrying out sustained interdiction and eradication operations, providing safe access to alternative development project sites, and attracting the private investment needed for long-term income-generating development. Considering the serious obstacles in Colombia that have impeded meaningful progress, USAID will have difficulty spending additional funds for alternative development over the next few years. Through fiscal year 2001, USAID has spent less than 11 percent of the $52.5 million available for alternative development in Colombia and does not plan to complete expenditure of these funds until at least fiscal year 2003. Nevertheless, USAID’s alternative development program documentation for Colombia still calls for dramatic reductions in coca cultivation in fiscal year 2002 through widespread voluntary eradication of coca crops by farm families who want to take advantage of alternative development assistance. Yet, few projects have been undertaken by USAID in the coca-growing regions. Because USAID faces serious obstacles to achieving widespread voluntary coca eradication in Colombia, we recommend that the USAID administrator update USAID’s project plans and spending proposals for coca elimination in Colombia to take into account the extreme difficulty in gaining access to the coca-growing regions to ensure that funds are used as effectively as possible. Because of the serious obstacles impeding alternative development in Colombia, the Congress should consider requiring that USAID demonstrate measurable progress in its current efforts to reduce coca cultivation in Colombia before any additional funding is provided for alternative development. USAID and State provided written comments on a draft of this report (see apps. III and IV, respectively). Both generally concurred with the report’s observations and conclusions. USAID noted that the report was thorough and accurate and emphasized that alternative development can only be implemented in coordination with complementary eradication and interdiction programs. USAID also generally concurred with our recommendation to the administrator to update its alternative development plans for Colombia and noted that it has already begun such a review as part of its normal performance management process. State said that the report was thoughtful and thorough and acknowledged the majority of our conclusions regarding the obstacles facing alternative development efforts in Colombia. State agreed with the report’s overall conclusion that careful coordination among alternative development, interdiction, and eradication programs is essential. It also provided further explanation of its aerial eradication program and the difficulties it has encountered in Colombia, including additional information about the accidental spraying of an alternative development project area. However, State said that it believes it is appropriate and constructive for the spraying of illicit coca to be conducted before alternative development programs are initiated in an area and suggested that the report implies a recommendation that aerial eradication and alternative development should not be conducted in the same location. We do not agree with State that the report implies such a recommendation. In fact, we cite the need for coordinating alternative development with interdiction and eradication efforts as one of the chief requirements for success. To determine the lessons learned in providing alternative development assistance to Bolivia and Peru, we interviewed cognizant officials and analyzed program documentation. Specifically, In Washington, D.C., we interviewed officials in USAID’s Office of South American Affairs and State’s Bureau for International Narcotics and Law Enforcement. We also met with officials at the two major USAID contractors that provided alternative development services in Bolivia and Peru—Development Alternatives, Inc., and Winrock International, Inc. In addition, we reviewed USAID project design and evaluation documents, contractor performance reports, and program audits. From our analysis, we determined key goals and accomplishments for the alternative development programs in Bolivia and Peru. In Bolivia and Peru, we interviewed USAID mission, U.S. embassy, host- government, and nongovernmental organization officials. We also made site visits to selected project sites and met with project beneficiaries in both countries. From our analysis, we identified critical elements that facilitated or impeded the alternative development efforts in these countries. To determine the current status of USAID’s alternative development efforts in Colombia and the challenges faced there, we interviewed cognizant officials and reviewed program planning and financial documents. Specifically, In Washington, D.C., we interviewed officials in USAID’s Office of South American Affairs and State’s Bureau for International Narcotics and Law Enforcement and analyzed USAID program plans and expenditure data to determine the progress of USAID’s efforts in Colombia. In Colombia, we interviewed USAID mission, U.S. embassy, United Nations Drug Control Program, and host-government officials, including the senior officers of PNDA—the Colombian alternative development institution. We also met with officials at Chemonics International, Inc.— the major USAID contractor for alternative development services in Colombia. In addition, we analyzed USAID, PNDA, and Chemonics project design documents and status reports. We compared the factors that impeded or facilitated alternative development in Bolivia and Peru with Colombia’s situation to identify the critical challenges faced there. We performed our work from January through December 2001 in accordance with generally accepted government auditing standards. As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from the date of this letter. At that time, we will send copies of this report to interested congressional committees, the secretary of state, and the administrator of USAID. Copies also will be made available to other interested parties upon request. If you or your staff have any questions concerning this report, please call me at (202) 512-4268. An additional GAO contact and staff acknowledgments are listed in appendix V. The United States has provided alternative development assistance to Bolivia for nearly two decades, but little progress was made until the Bolivian government controlled the project areas and demonstrated a strong commitment to coupling alternative development with other counternarcotics measures. The U.S. Agency for International Development (USAID) has funded four alternative development projects in Bolivia since 1983. The first three projects took place between 1983 and 1998 at a cost of about $117 million. These projects sought to displace the coca-based economy in the Chapare—Bolivia’s primary illicit coca- growing area (see fig. 2). However, a lack of security and eradication in project areas hampered the program’s achievements. The U.S. government also supported an unsuccessful Bolivian government program that paid farmers not to grow coca. USAID officials in Bolivia estimate that the Bolivian government used about $100 million in U.S. economic support funds to pay these compensation costs between 1987 and 1998. In contrast, strong Bolivian government support for eradication since 1997 has resulted in greater success for USAID’s fourth and current alternative development project—the Counternarcotics Consolidation of Alternative Development Efforts Project, currently estimated to cost $112 million. However, Bolivia faces challenges in implementing alternative development because the central government coalition is weakening, and as the national elections scheduled for 2002 approach, its commitment to eradication has become uncertain. USAID officials have identified a number of lessons from its alternative development program in Bolivia, many of which are relevant to USAID’s alternative development program in Colombia. For example, the success of its efforts in Bolivia depended on government control of the project areas and a secure environment, the political commitment of the Bolivian government to eradicate illicit coca, and coordination between eradication and alternative development efforts. The three USAID projects implemented before 1997 sought to develop the Chapare and displace the coca economy there. They aimed to promote coca substitution and improve farmer productivity and land use; provide infrastructure, including roads, electricity, and potable water systems; and displace the coca economy by increasing farmer profitability, private investment, market access for project-supported crops, and legal employment opportunities. However, a lack of government control and eradication in the project area limited the projects’ results. Nevertheless, according to USAID and Bolivian government officials, these projects helped lay the groundwork for better results from USAID’s current alternative development project in Bolivia. In addition, in the late 1980s, the Bolivian government used cash provided by the United States to compensate farmers for not growing coca. Most observers consider this program a failure. The Chapare Regional Development Project, implemented between 1983 and 1992 at a cost of $22.5 million, was USAID’s first alternative development effort in the Chapare. Project goals were to stimulate balanced economic growth and improve living standards through public and private sector participation, a diversified economic base, and more equitable income distribution. However, because the Bolivian government lost control of the Chapare to narcotics traffickers in 1983, USAID limited project objectives primarily to coca substitution and redirected project resources to nearby valleys in an effort to stem the tide of immigration to the Chapare. The Electrification for Sustainable Development Project was implemented between 1991 and 1996 at a cost of about $15 million. The project aimed to increase the number of people receiving electricity, expand the use of electricity for rural industry and export-related activities that would provide jobs and alleviate poverty, and improve the operational standards of rural electric distribution. The project erected power poles, laid power lines, and built an infrastructure that served 26,700 newly established electrical connections—about 78 percent over target—in the total project area, which extended well beyond the Chapare. While these benefits may have facilitated subsequent development activities, project design documents stated that the project by itself would likely have little impact on shifting labor from coca production to legal activities. Accordingly, USAID project evaluations do not cite any coca reductions resulting from this project. The Cochabamba Regional Development Project was implemented between 1991 and 1997 at a cost of $79.5 million. Whereas the Chapare project focused largely on crop substitution, the Cochabamba project was an “economy substitution” project. The goal was to increase investment, productivity, and employment in legal economic activities to help Bolivia transform its economy into a less coca-dependent one. A project evaluation found that the project improved product quality and handling, provided export incentives, and facilitated market identification and penetration. The project increased the area of legal crops under cultivation, crop yields, and crop exports—for example, banana cultivation increased from about 10,800 hectares in 1993 to more than 14,100 hectares in 1996, and annual banana yields were estimated to have increased several times; achieved Bolivia’s first exports of fresh produce—about 3,000 cartons of bananas were exported to Argentina weekly—and total exports increased a reported 564 percent; and reportedly increased annual family income derived from project-supported crops from $280 in 1993 to $520 in 1996. The project also increased the presence of nongovernmental organizations working in the Chapare, provided training to farmers, further developed the region’s economic and social infrastructure, and encouraged private sector investment. Notwithstanding these efforts, the total hectares under coca cultivation in Bolivia decreased by less than 5 percent during the life of this project. A United Nations Drug Control Program official said that such projects did not result in significant net reductions in coca cultivation because the projects were not linked with a requirement to eradicate coca. In addition to USAID’s efforts, between 1987 and 1998, the U.S. embassy’s Narcotics Affairs Section funded a Bolivian program to pay individuals cash for not growing coca. The Bolivian National Directorate for Agricultural Reconversion paid $2,000 per hectare to peasant farmers who voluntarily reduced their coca plantings. The directorate’s operating costs and the compensation paid to farmers came from U.S. cash transfers to Bolivia. U.S. officials in Bolivia estimated that the Bolivian government spent the equivalent of approximately $100 million. U.S. officials told us the program was poorly implemented and failed to produce net coca reductions. USAID officials told us that individuals were paid to not grow coca in particular areas, but they continued to cultivate coca in other areas, thus defeating the purpose of the program. In addition, two U.S. audits by the USAID inspector general found several material weaknesses in the program’s management, including inadequate verification procedures and ineligible beneficiaries. USAID’s current alternative development project in Bolivia focuses on the Bolivian government’s forced eradication policies and has had greater success than its predecessors. However, future government policy is uncertain and could pose a threat to the project’s progress. The Counternarcotics Consolidation of Alternative Development Efforts Project, USAID’s fourth and latest alternative development project in Bolivia, started in 1998 as a 5-year effort, but USAID is planning to extend the project until 2005. Project funding, currently planned at $112 million, is expected to increase. USAID designed the project to support the Bolivian government’s goal of forcibly eradicating all illegal coca in Bolivia by the end of 2002. Primarily, the project provides assistance to communities that have signed and abided by voluntary eradication agreements with the Bolivian government. In 1998 and 1999, the Bolivian government undertook an aggressive coca eradication campaign in the Chapare, which facilitated progress in alternative development. The Bolivian government eradication program reduced coca cultivation by 33 percent nationwide and reduced coca cultivation in the Chapare more than 90 percent by the end of 2000. The Bolivian government’s forced eradication campaign has encouraged many former coca growers to seek alternative economic opportunities through the current USAID project. According to State reports, as of September 30, 2000, the volume of licit alternative development production leaving the Chapare totaled $67.3 million, a 15 percent increase above calendar year 1999’s total of $58.2 million. The number of domestic agribusinesses purchasing Chapare crops or supplying agricultural inputs increased from 46 to 67. During 2000, the project gave 6,500 families technical and marketing assistance, up from 2,554 families in 1997. According to the March 2001 quarterly report on project performance, the aggregate market value of coca leaf production in the Chapare was approximately $20 million, compared to the value of alternative crops, which contributed approximately $85 million to the Bolivian economy. While achievements in the Chapare under USAID’s current project have been considerable, U.S. and Bolivian officials have expressed concern that progress in alternative development may be threatened if the Bolivian government does not support continued eradication of illicit coca. According to State officials, the Bolivian government’s governing coalition is now politically weak, and the future of the government’s eradication policy is uncertain. Bolivia’s vice president told us it would be politically impossible for the administration to repeat the 1998–1999 forced eradication campaign and that the government could be that aggressive only at the beginning of its administration. Bolivia’s vice minister for alternative development told us that the weakening of the governing coalition and the upcoming national elections have politicized eradication. Individual members have moved to negotiate the government’s eradication policy with coca producers, which he said has caused serious damage to ongoing eradication efforts. According to the vice minister, the alternative development program will suffer if coca eradication is seen as negotiable and avoidable. USAID officials have identified lessons from the agency’s alternative development program in Bolivia, many of which are relevant to USAID’s alternative development program in Colombia. For example, USAID learned that program success depended on government control of, and security in, the project area; commitment of the Bolivian government to eradicate illicit coca; and coordination with interdiction and eradication efforts. In addition, it learned that other factors, including a market- oriented strategy, beneficiary attitudes, coordinated public relations campaigns, and U.S. support for Bolivian government agencies have contributed to program progress in Bolivia. USAID’s alternative development projects in Bolivia were limited by the lack of government control of the project site and insecurity from continued social strife. Early project documents describe the Chapare as a high-risk atmosphere, noting that during much of the first project (the Chapare Regional Development Program, 1983–1992), substantial areas of the Chapare were not accessible to the Bolivian government or project personnel for security reasons. The Bolivian government lost control of the project area between 1983 and 1986, and as a result, USAID redirected its alternative development efforts away from the Chapare for several years. A 1990 project evaluation reported that cocaine traffickers effectively ran the Chapare as a free-trade, free-fire zone for several years. After the Bolivian government regained control over the Chapare, USAID resumed activities there. However, in recent years, coca union members and other groups protesting government policies have blockaded roads through the project site, preventing alternative crops from reaching markets and jeopardizing much-needed private sector investment. According to USAID, these disturbances in the project area continue to adversely affect its alternative development strategy. The coca producers’ political party is well organized, and coca union members have threatened alternative development project staff and participants. During blockades of the main Chapare access road in 2000, coca union members threatened to burn the alternative crops of association members. USAID’s current Counternarcotics Consolidation of Alternative Development Efforts Project remains vulnerable to such social strife. According to an October 2000 cable from the USAID mission in Bolivia, social strife resulted in losses to Chapare producers of about $3 million. Technical assistance was suspended and licit crop planting was delayed. Market linkages with Argentina and Chile, which had been difficult to establish, were damaged by Chapare producers’ inability to comply with delivery contracts. Financial institutions considering investing or providing services in the Chapare backed out. The mission reported that the conditions required to achieve alternative development interim objectives had been seriously affected by the road blockages and civil unrest. USAID officials told us that without security and stability, it is unlikely that the Chapare can achieve any degree of self-sustainability. Little progress was made in Bolivia until the host government undertook the aggressive eradication that has facilitated USAID’s current alternative development project. According to State, by the end of 2000, only 600 hectares of land under illicit coca cultivation remained in the Chapare, rendering the area a commercially insignificant source of illicit coca. As a result of the 1998–1999 eradication campaigns, more former coca growers are turning to alternative development activities to earn their living, and the value of licit crops under cultivation has increased significantly. The number of currently anticipated beneficiaries, about 7,300, is more than double original estimates. According to State, USAID, and other U.S. government officials in Bolivia, alternative development, narcotics and precursor chemicals interdiction, and illicit crop eradication are interdependent and mutually reinforcing components of a successful counternarcotics strategy. Interdiction and eradication are shorter term in nature; alternative development efforts take longer to implement and show results, but they are important to sustaining gains made by interdiction and eradication. USAID’s alternative development projects in Bolivia have been hindered by poor coordination between the U.S.-supported eradication effort and USAID’s alternative development efforts. For example, a former USAID official told us that State and Drug Enforcement Administration officials often did not share information about the U.S.-supported counternarcotics operations with USAID. A 1991 USAID study on coca production in the Chapare concluded that there was too little coordination at both the policy and operations level among agencies charged with interdiction and development. The director of Bolivia’s Alternative Development Regional Program, the USAID counterpart for alternative development, told us that until the end of 1996, USAID and Bolivian alternative development agencies worked almost entirely apart from U.S. and Bolivian counternarcotics enforcement agencies. More recently, the rapid pace of the Bolivian government’s eradication campaign has created gaps between eradication and alternative development assistance that can leave peasant farmers without livelihoods. The Bolivian plan has been to remove itself from the coca- cocaine business by 2002. According to a U.S. embassy official in Bolivia, the schedule for the eradication process was compressed because the current government wanted to complete the effort before the 2002 presidential election. As a result, coordination between eradication and alternative development became very difficult. According to an embassy official, the Bolivian government was eradicating 1,000 hectares a month at the peak of the 1998–1999 operation and there was no way alternative development could quickly replace the eradicated coca with crops. Accelerated eradication stressed the current project by dramatically multiplying the anticipated beneficiaries—from 3,500 to 7,300 people. State reported that the aggressive eradication program outpaced the alternative development program by a wide margin and that the Bolivian government would accelerate the alternative development project in the Chapare in an effort to close the gap. A combination of other factors have contributed to the recent successes in Bolivia. These factors are less universal than those cited above, but nevertheless USAID officials in Bolivia noted them as lessons learned for future alternative development projects. According to USAID officials in Bolivia, community self-policing, or “peer pressure,” has not been a reliable mechanism for enforcing voluntary eradication agreements. After the Bolivian government’s cash compensation program was phased out, the government began providing infrastructure and other in-kind compensation to communities that abandoned coca. However, USAID officials question assumptions that legal producer associations can prevent all of their members from producing coca. USAID officials disagree with the basic peer-pressure premise of the program because there are no long-standing, close-knit communities in the Chapare but rather loosely associated settlements. In the summer of 1999, according to USAID officials, 65 percent of the communities participating in the government’s voluntary eradication program were found to have some members who violated their coca eradication agreements, thus disqualifying the community from receiving government assistance. Suspension of assistance to an entire community or farmer group because a few members broke their compensation agreements has been counterproductive, according to USAID, because it hinders implementation of legal crop production and marketing activities and weakens alternative producer associations. USAID officials in Bolivia found that alternative development projects were needed to incorporate market-oriented strategies and overcome numerous business-related challenges to provide economic benefits for participants. For example, although the success of the Chapare Regional Development Project—USAID’s first alternative development project in Bolivia—depended on the economic viability of alternative crops adopted by farmers, a 1990 evaluation found that no studies of the markets for the proposed crop substitutes had been conducted. The evaluation also found that the Bolivian private sector was weak and cautious and did not fulfill the role envisioned by USAID in the project design. Furthermore, constraints on credit access were severe. The evaluation found that although coca production in the Chapare produced a huge inflow of cash, small farmers did not translate coca income into savings or productive assets. The subsequent alternative development project in Cochabamba was more market focused, but it also faced serious business challenges. For example, the most serious challenge in establishing export markets for project-supported crops was the inadequate volume and quality of the produce and difficulty shipping it quickly and delivering it in good condition on a consistent basis. The Consolidation of Alternative Development Efforts Project, which started in 1998 and is still under way, is almost entirely focused on leveraging the market-oriented activities of predecessor projects and improving farmer productivity, stimulating private sector investment, and facilitating market access. It also faces numerous business challenges, such as extremely poor road connections to domestic markets and markets in neighboring countries, a lack of refrigerated cargo trucks, and poor access to credit for Chapare farmers and entrepreneurs. U.S. officials emphasized the importance of an effective public relations campaign for counternarcotics programs and alternative development in particular. In Bolivia, the U.S. embassy helped build a public consensus that production of coca and cocaine was a matter of Bolivian national interest, that the cocaine consumed by Bolivians came from the Chapare, and that narcotics trafficking was retarding the country’s economic development. U.S. officials told us that public support was a necessary precondition for the Bolivian government’s campaign of accelerated, forced eradication. U.S. embassy officials recently concluded, however, that U.S. support of the Bolivian government’s public relations effort has overemphasized the cities and neglected the actual project area. To counter pro-coca and antialternative development propaganda in the Chapare, the U.S. embassy public affairs section has begun an outreach effort to radio stations there. The United States has provided alternative development assistance to Peru for nearly two decades, but little progress was made until the Peruvian government controlled the project areas and demonstrated a strong commitment to a broader set of counternarcotics measures. The U.S. Agency for International Development (USAID) has funded two alternative development projects in Peru since 1981. The first alternative development project—the Upper Huallaga Area Development (UHAD) project—took place between 1981 and 1994 at a cost of about $31 million. This project was designed to increase and diversify agricultural production in the coca- growing Upper Huallaga River Valley through agricultural assistance for alternative legal crops and improvements in roads and health and community services (see fig. 3). However, severe security constraints and a lack of marketing assistance limited its successes, and coca cultivation increased during the project’s lifetime. In contrast, several factors—particularly a strong Peruvian government commitment to counternarcotics and improvements in security and civil governance—have contributed to better results for the Alternative Development Program (ADP), USAID’s second and current alternative development project in Peru. This project, which began in 1995 and is currently estimated to cost about $195 million, has contributed to a 70 percent decline in hectares under coca cultivation. However, political uncertainty in Peru, as well as other issues, may affect future program accomplishments and sustainability. USAID officials have identified various lessons learned from the two alternative development projects in Peru, many of which are relevant to USAID’s alternative development program in Colombia. For example, the success of alternative development in Peru depended on security in program areas, the political commitment of the Peruvian government, and coordination with eradication and interdiction efforts. USAID implemented the UHAD project between August 1981 and June 1994 at a cost of approximately $31.2 million. The U.S. and Peruvian governments developed the UHAD project as part of a joint counternarcotics strategy that called for coordination among interdiction, eradication, and alternative development efforts. The UHAD project was intended to support the government of Peru’s alternative development objectives in the Huallaga Valley by strengthening local government and community participation in the alternative development process, improving the physical and social infrastructure, and promoting agricultural activities that would replace illicit crops. USAID originally limited project operations to the Upper Huallaga area, a high-jungle valley along the Huallaga River in the north-central part of Peru, but later expanded the program to the Central Huallaga Valley as well. The Special Project for the Alta (or Upper) Huallaga (PEAH), an entity of the Peruvian government, implemented the UHAD project with USAID support. During much of the UHAD project, armed subversive organizations—the Shining Path and the Tupac Amaru Revolutionary Movement—terrorized Peruvians and attacked national and local government and civilian and military targets, particularly in rural areas. Narcotics traffickers also contributed to the violence. By 1986, PEAH had become the sole Peruvian government entity remaining in the Upper Huallaga Valley because of the deteriorating security situation. As a result, USAID severely reduced planned activities in the project’s agricultural production component, including agricultural research, training, credit extension, and land titling. The project’s focus on crop substitution and a lack of technical and marketing assistance for the alternative crops further limited the success of its agricultural component. USAID made some progress in the UHAD project’s infrastructure component, with PEAH upgrading 765 kilometers of highways and 582 kilometers of access roads that helped reduce travel and transportation costs and connected farmers to buyers of the area’s agricultural products. However, terrorist activities prevented USAID from completing a major highway that was intended to connect project sites with Lima area markets as well as other infrastructure projects. Furthermore, the terrorists generally controlled the farmers’ access roads. The community development component was, at times, the only functioning element of the UHAD project. Activities fostering local participation in the design and execution of small social infrastructure projects proved successful by exposing communities to democratic principles and requiring them to contribute financially to projects from which they benefited. However, this component required the tacit approval of the terrorists. PEAH was unable to develop good working relationships with the public agencies, local governments, and community- based organizations involved, and security problems resulted in the abrogation of many agreements between PEAH and these entities. In the end, evaluations of the UHAD project cited the lack of coordination between the Peruvian government’s alternative development and eradication activities, as well as limited markets for the alternative crops that the project promoted, as factors that limited the project’s success. During the early years of the project (1981 to 1986), hectares under coca cultivation in the Upper Huallaga Valley increased fivefold from 12,000 hectares to 60,000 hectares. By 1990, these areas increased further to an estimated 70,000 to 90,000 hectares. Using lessons learned from the UHAD project, USAID initiated the current ADP in 1995. ADP is more comprehensive than the UHAD project in terms of geographic coverage and program components. ADP seeks to improve employment and income opportunities from legal economic activities, access to basic social services, public participation in decision making, and public awareness of the problems from drug use and production in five coca-growing river valleys in Peru. The return of government control, security, and civil governance in program areas, as well as the Peruvian government’s strong commitment to interdiction and eradication, have proved crucial in creating an environment conducive to alternative development. As of January 2001, USAID had spent $84.5 million for ADP; USAID estimates that ADP funding through 2003 will reach $194.5 million. ADP has made considerable progress in meeting its objectives and has contributed to significant drops in coca cultivation in Peru. The project’s strategy is based on the hypothesis that the majority of residents in coca cultivation zones will voluntarily abandon coca if they are offered alternative licit sources of income, along with improved living conditions for their communities, and if narcotics trafficking is disrupted and laws are enforced. ADP emphasizes licit economic activities, local government strengthening, and economic and social infrastructure. The component involving licit economic activities offers assistance in the production, processing, and marketing of alternative licit crops; credit programs; and land titling programs. USAID has focused these activities on the rehabilitation of coffee and cacao cultivation because of their established markets and farmer familiarity with these crops. In its local government component, the project promotes efforts to strengthen local governments, increase public participation in decision making, raise social awareness of drug production and use, and develop communities. Finally, ADP includes activities to improve the economic infrastructure—for example, the rehabilitation and maintenance of roads and bridges and the provision of social services in program areas. Improved roads and bridges are intended to create a viable transportation network for licit economic activities, while social infrastructure components involve local communities in the selection, design, financing, construction, and maintenance of small infrastructure projects such as schools, potable water systems, health posts, and minihydroelectric systems. With the return of government control, security, and civil governance in program areas in the early 1990s, as well as the Peruvian government’s strong commitment to interdiction and eradication, ADP has been able to accomplish considerably more of its objectives than the earlier UHAD project. In conjunction with eradication and interdiction efforts, ADP contributed to a 70 percent net decrease in hectares under coca cultivation in Peru from 1995 (115,300 hectares) through 2000 (34,200 hectares). According to USAID, those areas receiving greater project investment witnessed greater voluntary abandonment of coca cultivation, as well as fewer plantings of new coca crops. During 1995-2000, ADP provided production and marketing support to more than 15,000 farmers growing nearly 32,000 hectares of licit crops, particularly coffee and cacao, according to USAID officials. During that period, more than 236 metric tons of licit crops, with a gross value exceeding $46 million, were produced in program areas. The project established a $10 million rural credit system, provided training in governance skills, and strengthened two municipal associations. Through its economic and social infrastructure component, ADP has rehabilitated 1,000 kilometers of roads and 46 bridges, stone-paved 21 kilometers of roads, supported 136 engineering studies, piloted 1 regional maintenance program, and provided 3 pools of heavy equipment. In addition, the project has supported about 1,000 small social infrastructure projects involving schools, potable water systems, health posts, minihydroelectric systems, and other community improvements. As a result, the percentage of households with access to basic services in program areas increased from 16 percent to 51 percent. Finally, according to USAID, the percentage of the population recognizing drug production and consumption as damaging to society reached 94 percent. USAID officials identified various lessons learned from the UHAD project and ADP, many of which may apply to USAID’s alternative development program in Colombia. For example, the success of its alternative development program in Peru depended on government control over and security on the project sites, the political commitment of the Peruvian government, and coordination with interdiction and eradication efforts. Other factors that affected alternative development in Peru included a system for verifying compliance with eradication agreements, a market- oriented program design, national consensus on the harm caused by drug production and consumption, and a viable road network. Lack of government control and security severely limited program implementation and accomplishments in the UHAD project by causing program implementers—agricultural advisers, researchers, and financial institutions—to withdraw and residents to flee from project areas. Terrorists murdered several land surveyors, mayors, and residents, thereby halting many of the project’s activities. At one point, PEAH was the only Peruvian government institution in the Upper Huallaga Valley, after other government and private sector entities left due to the deteriorating security situation. In designing ADP, USAID officials acknowledged that ensuring security by reducing the presence of subversive and narcotics trafficker elements was a critical precondition for alternative development in program areas. Insecure areas were excluded from the program. The Peruvian government’s success in combating terrorist groups and narcotics traffickers in the mid-1990s created a more secure and amenable environment for alternative development. The return of civil governance in program areas allowed USAID-supported activities to resume. As the UHAD project was ending in the early 1990s, prospects for the success of alternative development in Peru were considered bleak, despite years of U.S. assistance. Coca cultivation had increased significantly during the 1980s. However, this changed when the Peruvian government committed to a strong counternarcotics agenda. In particular, the Peruvian Air Force conducted an aggressive interdiction campaign in which it shot down airplanes presumed to be involved in narcotics trafficking. This campaign disrupted the coca market, thereby encouraging coca growers to turn to alternative development programs. By targeting narcotics traffickers, rather than coca growers, the Peruvian government also limited resentment from farmers over the counternarcotics campaign, according to USAID and Peruvian officials. Recent political turmoil has created uncertainty about the future direction of the Peruvian government’s counternarcotics policies and may affect future program accomplishments and sustainability. Peru’s transitional government (November 2000 to July 2001) invited leaders of coca-growing syndicates to participate in formal roundtable policy discussions, raising concern among USAID officials and some ADP implementers that this would impart legitimacy to the syndicates and raise their political profile. In addition, Peru’s current administration, which came to office on July 28, 2001, is still developing its national counternarcotics policy. State and USAID officials in Peru emphasized that an effective counternarcotics strategy requires sustained interdiction, eradication, and alternative development. Interdiction and eradication disrupt the coca market, thereby creating market uncertainty and lowering prices for coca while encouraging coca farmers to consider alternative development programs. The three efforts are also complementary, but alternative development programs require longer timetables to achieve results than interdiction or eradication efforts. The cultivation and commercialization of alternative crops, development of community organizations, and improvement of social and economic infrastructures can take years to accomplish, but they have longer-lasting impacts on reducing coca cultivation. Department of State and USAID officials in Peru emphasized that coordination between eradication and alternative development is particularly important to ensure that eradication efforts do not interfere with alternative development activities and that families dependent on coca for their livelihood receive short-term emergency assistance after an eradication campaign. According to USAID officials, the Peruvian government has conducted some coca eradication campaigns in the past without coordinating these actions with USAID, thereby jeopardizing ADP activities. Such forced eradication campaigns can cause problems for ADP by creating resentment among community residents. In the earlier UHAD project, resentment against eradication efforts worsened security concerns by alienating farmers, which encouraged them to seek “protection” from terrorist groups. As in Bolivia, a combination of other factors has affected progress in Peru. The factors cited by USAID officials in Peru are similar, but not identical, to those cited by officials in Bolivia and are useful as lessons learned for future alternative development projects. According to USAID and embassy officials in Peru, although the United States has monitored overall trends in coca reduction in Peru, there is currently no way to verify whether specific Peruvian communities participating in voluntary eradication agreements are actually complying with the agreements. In September 2001, State’s inspector general found that monitoring efforts were not specific enough to establish an adequate link between investments in alternative development and coca reductions. Embassy officials, with input from USAID, are developing a monitoring system that addresses this concern. One component of the system the embassy is considering would involve a requirement for the Peruvian government to provide proof of compliance with eradication agreements before it could draw future alternative development funds. The system would likely employ the Peruvian Interior Ministry in plotting the relevant areas of farmland and monitoring the corresponding eradication efforts there. The United States would then verify the Peruvian government’s monitoring efforts from the air. Under the UHAD project, USAID emphasized agricultural production of certain crops. However, USAID did not conduct analyses or develop program strategies that fully considered the marketability of these particular crops. Without markets for the alternative crops they grew under the UHAD project, farmers derived little economic benefit from their efforts and investments. Based on this experience, USAID included a stronger market focus in the follow-on project. ADP originally focused on promoting the rehabilitation of key crops—coffee and cacao—that had proven markets and that farmers traditionally cultivated, but then abandoned, in program areas. However, historically low market prices for these commodities have limited the economic benefits to farm families. ADP is now promoting economic diversification—the cultivation of multiple crops and raising of small farm animals—to stabilize the financial income and nutritional needs of farm families, while still promoting the cultivation of traditional crops (for example, coffee and cacao) whose prices are subject to market fluctuations. USAID also is emphasizing the need to develop niche markets for alternative development products and to involve the private sector under ADP. For example, USAID has successfully marketed coffee and cacao grown under ADP to Seattle’s Best Coffee and M&M Mars Company. U.S. and Peruvian officials acknowledged that, in the past, Peruvians considered coca cultivation, drug production, and narcotics trafficking to be U.S. rather than Peruvian problems. Consequently, the Peruvian public demonstrated relatively limited support for U.S.-supported counternarcotics efforts, including alternative development. However, the Peruvian public attitude toward drug production and trafficking changed as a result of the terrorism, violence, and social disruption caused by subversive groups—who were supported by narcotics traffickers—during the 1980s and early 1990s. With public support, the Peruvian government mounted aggressive counternarcotics and counterterrorist campaigns, while minimizing public opposition and resentment against these efforts by targeting narcotics traffickers rather than the coca farmers. Public support at a community level has also helped. According to USAID officials, the involvement of beneficiaries, local community groups, and municipalities in its alternative development programs was necessary to promote sustainability. Communities have a greater incentive to embrace and sustain alternative development activities if they are involved in the design, implementation, and funding of projects that raise the quality of life in their communities. Both the UHAD project and ADP included social infrastructure activities in which communities benefited from and contributed to alternative development-supported schools, water systems, and health posts. ADP, in particular, has promoted the development and strengthening of regional and local community groups such as municipal associations, producer associations, and credit groups to encourage local communities to take ownership of their projects and expose them to the democratic process. According to USAID, strengthening local organizations is particularly important in Peru because of the national government’s highly centralized decision making and resource allocation processes. Under ADP, USAID requires local communities to prioritize their social service needs and contribute both financial and labor resources to the projects they choose. USAID also helped coffee and cacao farmers develop producer associations to assist them in marketing their crops. U.S. and Peruvian officials acknowledged that a viable rural road network is a precondition that encourages farmers to consider alternative economic activity and reduce their illicit crops voluntarily. Good roads allow farmers to obtain higher prices for their alternative crops by linking them to higher-paying nonlocal markets and by reducing transportation costs. In contrast, farmers can market coca leaves without roads by carrying coca leaves or coca paste out of their valleys or by having narcotics traffickers pick up the products from farms by airplane. Under the UHAD project, USAID had supported the completion of roads that would have linked Upper Huallaga Valley farmers to lucrative markets in Lima. However, a lack of security prevented their completion. Under ADP, USAID is supporting the rehabilitation and upgrading of important secondary rural roads and bridges in program areas. In some cases, USAID is supporting cobblestone paving of dirt roads, which also generates local employment in program areas. USAID is also supporting the formation of community-based road maintenance microenterprises. In addition to the individual named above, Dave Artadi, Mike Courts, Christian Hougen, Jason Venner, and Janey Cohen made key contributions to this report. | Since the early 1970's, the U.S. Agency for International Development (USAID) has helped Bolivian and Peruvian growers of illicit crops find legal ways to earn a living. The experiences in Bolivia and Peru indicate that effective alternative development demands a strong host government commitment to a comprehensive array of counternarcotics measures and years of sustained U.S. assistance. Chief among the specific lessons for Colombia are that progress requires host government control of drug-growing areas and a political will to interdict drug trafficking and forcibly eradicate illicit crops as well as a carefully coordinated approach to these efforts. USAID began targeting Colombia's poppy-growing areas in 2000 and expanded its program to include coca-growing areas in 2001, but most activities will not begin in earnest until 2002. The experiences in Bolivia and Peru suggest that alternative development in Colombia will not be successful unless the Colombian government controls coca-growing areas, has the capacity to carry out sustained interdiction operations, and the ability to effectively coordinate eradication and alternative development activities. |
Gaming’s culture war hasn’t ended. It’s still roiling, with new fights, new targets, new depths of ugliness, but also many of the same tactics.
If you’ve witnessed this kind of “Chanterculture”/GamerGate drama before, you know the playbook: discredit, harass, shame, isolate, maybe find a skeleton in a person’s closet that calls their reputation into question. Today’s most visible target is a woman named Alison Rapp, a mid-level marketing person at Nintendo who has been accused of somehow being a driving force behind the supposed censorship of that company’s games.
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She’s not the only target these days, but she’s the favored one. Her enemies, an amorphous group of pissed off gamers, have been relentless. But their furious online petitions, taken down because they violated community guidelines, haven’t ruined her. Digging through her Amazon wish-list and finding links to an anime body pillow to shame her hasn’t worked either. Recently, they’ve been trying to destroy her using a college paper she wrote in 2011.
I’ve been covering the ongoing cultural skirmishes over purported “censorship” of imported Japanese games for the last couple of months. They’re a natural extension of the ongoing reactionary freakout about the influence of so-called social justice warriors, those caricatured feminists supposedly out to sanitize games of sexual content. In these instances, the games in question usually have been changed—outfits modified, controversial sexual content removed, along with more run-of-the-mill changes necessary when translating a full video game—and so in the eyes of the aggrieved, the perceived agents of social justice have had a demonstrable effect.
Some of the hysteria is eye-rolling, but some of it involves understandably distinct perspectives about how a creative work in one culture should be presented in another. Most recently, I spoke with a group of reasonable-sounding fans trying to produce a more authentic translation of that Fire Emblem game. They were heavily critical of the work done by the “Treehouse,” the group at Nintendo who localize Japanese games for an American audience. These fans’ efforts focused on producing a more “authentic” translation.
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In reporting that story and others, I kept encountering the darker side of this: the anger, the personal attacks, the departure from reason that leads to smears and character assassination. Here’s just a taste of the ridiculous backlash I got just for the great sin of reporting about the subject:
That’s tame, really. When my article went online, the uglier actors in this drama could be brushed aside as fringe, but that’s changed swiftly and dramatically, particularly in regards to the campaign against Allison Rapp.
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Who exactly is going after Rapp? The easy answer is GamerGate, the all-too-familiar amorphous group of gamers who organized in summer 2014 after game designer Zoe Quinn’s sex life was made public and eventually ended up at “ethics in games journalism.” Yet even those within such circles claim this particular incident has nothing to do with GamerGate, but a spin-off group called Revolt. (Confusingly, of course, saying “it wasn’t us” is one of GamerGate’s stock defenses.)
Rapp is currently the target of a social media war attempting to get her fired by accusing her of defending pedophiles. You only need search her name on Twitter to get a taste of what’s been going on for days:
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You could also read about it at the Daily Stormer, a Neo-Nazi and white supremacist website describing Rapp as “the next logical step in the liberal march...toward wherever these women and Jews think it’s marching toward,” the result of “the impact of Jews and feminism on our society.”
The top comment on the story contains the phone numbers and email addresses for a number of top executives at Nintendo. The comment was left by Andrew “weev” Auernheimer, the infamous jailed hacker who once proudly announced he was a “long-time critic of Judaism, black culture, immigration to Western nations, and the media’s constant stream of anti-white propaganda.” Auernheimer encouraged people to contact Nintendo with a very specific tone.
“When you contact these people be very respectful, act as a concerned parent,” he writes of the Nintendo employees he’s listed. “Link to the pro-pedo statements she’s made but obviously don’t link back to DS [Daily Stormer] or she’ll be able to dismiss it as a white supremacist conspiracy.”
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“When you contact these people be very respectful, act as a concerned parent.”
Rapp doesn’t translate or localize games, but she has been outspoken on Twitter about online abuse against women in gaming. She’s been labeled an “SJW” and has received the requisite online blowback. Last October she Tweeted a list of abusive comments she said she’s received, people calling her “cancerous” and a “feminazi face piercings bitch.”
Over time, as it became obvious that Nintendo was removing some of the sexualized content from their games as they brought them to America, angry gamers looked for someone to blame and started pointing fingers at Rapp. Those efforts intensified even more in recent weeks with the discovery of a college essay she wrote in 2011 while attending Augsburg College. It’s called “Speech We Hate: An Argument for the Cessation of International Pressure on Japan to Strengthen Its Anti-Child Pornography Laws.” It’s a provocative essay about a deeply sensitive subject and is more nuanced than its detractors portray. Rapp outlines a deep cultural divide between Japan and other countries, pointing out Japan’s traditions of sexualizing young people and its free speech traditions while contrasting them with Western efforts against child porn and what she saw as imperialist pressure by the West to get Japan to change its child porn laws. Rapp, clearly a respectful fan of Japanese culture, distinguishes between exploiting real-life children and the creation of fictionalized sexual material. At no point does she defend or advocate for the abuse of children, and in fact argues for stronger laws against child exploitation.
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Tweets she made around the same time that are related to the topic have also been part of the campaign against her, as is the norm when people are targeted as Rapp has been. There’s a vague one, for example, where she’s upset about the arrest of a man found with child pornography after burglars robbed him and tipped off police. The context isn’t entirely clear, but she directs people to her paper, which criticizes the West’s disproportionate effort in tracking down exploitative media compared to identifying the systemic issues causing their creation.
Rapp’s essay isn’t perfect and her tweets suggest she was, at least years ago, someone more comfortable with the ideas of teens being seen as sex objects than the average American might be. But, no shit: it’s an essay written by a young college student who was very into Japanese culture, where societal standards are different. The basic premise of her essay says Japan should be allowed to define its own cultural boundaries and not bow to the pressures of outside forces. Ironically, while Rapp has become a symbol of the supposedly nefarious social justice warriors censoring Japanese games, she’s being attacked with an essay in which she argued that Japanese culture should stay Japanese.
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By spending paragraphs explaining Rapp’s essay and pondering five-year-old Tweets, I’ve already fallen into her critics’ trap. I’ve already spent hundreds of words deconstructing a piece of writing that was weaponized for character assassination. It’s a familiar page from the playbook in today’s video game culture wars. It’s about finding a skeleton in someone’s closet—or something that can be construed as such—and using it to undermine them.
By spending paragraphs explaining Rapp’s essay and pondering five-year-old Tweets, I’ve already fallen into her critics’ trap.
We’ve all probably said something on the Internet that’s off-color or offensive, or just not given proper context in the size of tweet. Many of us have held problematic views at different stages in our lives, particularly when engaging in intellectual exercises or writing academic papers. In the past, we’d generally expect to be given a chance to move on and leave our past selves behind. In today’s culture wars, that’s not the case. The past is present, especially when your words are only a Google search away.
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It’s easy to rip lines from the essay and make Rapp look awful, which is how the anti-sex trafficking group The Wayne Foundation got involved. On March 1, co-founder Jamie Walton, herself a victim of sex trafficking, began tweeting about how Rapp should be fired from Nintendo.
Walton claimed she spoke with Nintendo of America’s “supervisory line” and reported Rapp. She then retweeted voices of support from people, many who publicly associate with GamerGate, while saying she was “not GG” or “AGG” [anti GamerGate]. She added that she didn’t “suggest to @NintendoAmerica supervisors that @alisonrapp be fired,” but she “absolutely” thinks she should.
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It appears Walton is a genuine advocate, a victim of a horrifying crime who fights for others. She admitted to being hoodwinked by “third party trolling” in the past and said she’d recant Rapp’s information, were it to be proven untrue. Willingly or not, Walton’s given Rapp’s detractors what they were looking for: legitimacy from outsiders. It’s another weapon.
When I asked Walton how she heard about Rapp’s situation, she responded brusquely.
“I don’t have time for this, TBH,” she said over email. “I’ve been a counter trafficking survivor advocate since 2009. No one is interested in doing press about that for years, but suddenly Gamergate and anti Gamergate insert me into their dispute and the media wants to talk. All that does is break my heart. I want nothing to do with either side, and I find this entire encounter to be ludicrous.”
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Nintendo did not comment for this story, nor did Rapp. The company is notorious for staying quiet and rarely allows employees to speak outside interviews about upcoming games. But it’s not as though Nintendo couldn’t find the essay involved in the latest attacks—it’s prominently on Rapp’s Linkedin page.
Rapp hasn’t ignored what’s going on. She jokingly calls herself a “conspirator in @NintendoAmerica Treehouse” on Twitter and has pushed back against the harassment.
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“Aaaahhh, nothing quite like waking up to a bunch of GG-ers and white supremacists in my mentions, trying to ruin my life because video games,” she recently tweeted. “+1 awful thing: gg-ers bastardizing social justice language & feigning concern for at-risk groups so they can appear to be takin high ground.”
These tweets are interspersed with photos and comments about her vacation in Japan, where she’s currently on her honeymoon.
“btw thank you for your support today,” she wrote. “It’s good to hear from friends during this wacky time. Again, thank you for anything and everything you’re doing to keep my mentions from being 100% garby goober garbage.”
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The way people talk about Rapp, you’d assume she was involved in the translation of Fire Emblem Fates, a key person behind removing things like the face petting mini-game. Except there’s no proof of this. Months ago, as similar groups raged over Xenoblade Chronicles X, Rapp told me she’s not involved with localization. But in anti-progressive circles, there’s plenty of discussion regarding what she thinks about harassment and sexism. This made her a high-profile target, and the wagons circled. Which is how an essay from 2011 becomes relevant in 2016.
When it comes to Fire Emblem Fates, Rapp has not been the only person of interest. Nich Maragos, a former Atlus USA translator, now works at Nintendo. His first project at Treehouse was Fire Emblem Fates. In recent weeks, he’s been one of the people targeted by this group, in the search for a boogeyman. (I’ve cropped part of it out, but the whole image is here.)
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Archive.is links? Check. A crappy photo of the person being profiled to make them look silly? Check. The only thing missing from this image is a bunch of red lines “connecting the dots.”
To give you a sense of the angle of these attacks, when one of Maragos’ critics compiled this information on the pro-GamerGate “Kotaku in Action” (no relation!) subreddit, they concluded by pointing out that Maragos is a “NeoFAG poster,” a reference to the popular gaming message board NeoGAF, which has been hostile to GamerGate and the kinds of things posted on KiA.
Maragos’ grand offense was calling out the sexually provocative Sengan Kagura games. He also financially supports two alternative game critics through Patreon. One of those critics makes a whopping $90 per month. Would it shock you to learn the other was openly critical of the more literal-leaning fan translation of Fire Emblem Fates? Surely not. (Maragos declined comment for this story.)
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Another target, Rich Amtower, who’s worked on previous Fire Emblem localizations at Nintendo, was forced to lock his Twitter account because people were combing for ammunition from as far back as 2009. What dark secrets did they find, buried in his ancient tweets? He doesn’t actually speak Japanese. (For what it’s worth, this isn’t altogether uncommon, based on the translators and localizers I’ve talked to.)
You can’t *really* delete your past, but you can acknowledge that past you, present you, and future you may all have very different thoughts.
Since then, Amtower has deleted some old tweets and unlocked his account—for now.
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“Twitter’s too ephemeral to want all of it hanging around forever,” he said. “I saw a lot of things I’d tweeted within a specific context, quoted outside of that context, and it made me sad. You can’t *really* delete your past, but you can acknowledge that past you, present you, and future you may all have very different thoughts.” Amtower did not respond to my request for comment.
Here’s the thing: it doesn’t matter whether it’s GamerGate, Revolt, or anyone else. The group is irrelevant; it’s that the tactics used to shame and victimize have become disturbingly normalized. When one attempts to assign a name to the group perpetuating the assault—be it GamerGate, Revolt, or whatever else—those groups’ supporters immediately respond by saying that the actions of individuals don’t represent the group. (Perhaps someone can tell that to the people vilifying individuals from a large group within Nintendo.)
In fact, the campaign against Rapp has demonstrated a fascinating collection of fractures within these hard-to-pin-down groups. There’s the alleged censoring of 4chan when it comes to discussion of Alison Rapp:
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There’s Eron Gjoni, author of the relationship screed against Zoe Quinn that kicked off GamerGate, saying that “attempting to get people fired for holding problematic views is exactly the sort of thing you’re supposed to be against.”
This was enough for someone on 8chan to declare that “Eron is still an SJW feminist.”
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Others were shaken in different ways. “This has always been THE most difficult part of being in GG for me,” wrote KiA poster Aurondarklord. “Finding that balance of being effective without becoming what we hate. In this case, to be fair, at least, unlike the SJWs, what we’re accusing Alison Rapp of is at least true and we have direct evidence of it. But WHY are we doing this? What has she done, specifically, that makes her deserve to be fired? Has she attacked us in some way? Breached an ethical obligation? Provably lied to the detriment of a person or a game? Done anything other than be an SJW and believe SJW things?”
You’re so close, Aurondarklord. So close.
Others held the line. “If we fail to exert social pressure against these people,” said poster Kaarous in the same thread, “we might as well just close the sub[reddit] right now. More importantly, if we turn the ‘you should be fired’ game against them, they might actually knock it the fuck off when it starts effecting [sic] them personally and financially.”
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This is, of course, a muddled and disingenuous argument. “Them?” “These people?” Rapp doesn’t translate or localize games, and didn’t even work on Fire Emblem Fates. She’s just another person who works for a video game company and has publicly supported feminism and social justice. The campaign against her and her colleagues is a witch hunt, and just the latest of many. It won’t be the last.
Image Credit: Jim Cooke
You can reach the author of this post at [email protected] or on Twitter at @patrickklepek. ||||| Nintendo has fired Alison Rapp, a marketing staffer who became the target of a sustained campaign of criticism on social media last year after she was erroneously linked with the removal of certain sexualized sections in Japanese games for their Western release. Rapp announced her termination in a tweet, in which she said her employer had decided she was "no longer a good, safe representative of Nintendo."
The clear assumption is that Nintendo's decision was made in light of the ongoing campaign against her, but in a statement, Nintendo of America said that Rapp was terminated "due to violation of an internal company policy involving holding a second job in conflict with Nintendo's corporate culture," rather than as a result of outside pressure. "Though Ms. Rapp's termination follows her being the subject of criticism from certain groups via social media several weeks ago," the company says, "the two are absolutely not related."
Today, the decision was made: I am no longer a good, safe representative of Nintendo, and my employment has been terminated. — smol pterodactyl (@alisonrapp) March 30, 2016
A short time after Nintendo of America's statement, Rapp tweeted again, confirming that she had indeed worked a second job under a fake name while at Nintendo. Despite Nintendo's argument to the contrary, Rapp claims moonlighting was "actually accepted" at the company as policy, suggesting that it was a convenient reason to terminate her employment in an industry "afraid of women, sex-positivity, etc." Rapp also says she was stripped of her Nintendo spokesperson status after social media criticism, barred from streaming games, and "asked not to tweet about rape culture" soon after she took the job.
Do you think that if the industry wasn’t afraid of women, sex-positivity, etc. that the anon moonlighting I did would have been a problem? — smol pterodactyl (@alisonrapp) March 31, 2016
Rapp came to the attention of certain individuals on Twitter, 4Chan, and other platforms last year, after the US versions of Wii U game Xenoblade Chronicles X and 3DS title Fire Emblem Fates were tweaked from their original Japanese form, removing sections that involved surreptitious drink spiking, a face-stroking minigame, and a "boob slider" that let players inflate or deflate their character's bust. But while these sections were presumably excised because they were deemed unpalatable to Western audiences, Rapp's involvement in their removal appears to have been non-existent. Although she did work in Nintendo of America's Treehouse team — responsible for localizing games for audiences outside Japan — Rapp's role was in marketing, rather than translation, development, or editing. Indeed, she said she was in favor of some of the cut sections remaining in the game.
Rapp didn't actually localize games herself
Nonetheless, she was selected as a target for a number of individuals and groups — largely because she has been outspoken on Twitter about feminism, causing many to brand her as a "social justice warrior." That complaint mutated when it was discovered that while attending college as an undergraduate in 2011, Rapp wrote an essay that put forward an argument against Japan strengthening its anti-child pornography laws, and for an more nuanced Western understanding of Japanese cultural norms. The essay specifically makes the same culturally relativist argument that Rapp's critics were making five years later, but rather than absolve her of perceived guilt, it allowed those against her to change tack — instead of a "feminazi," she was now pro-pedophilia.
In tweets Rapp has identified the GamerGate movement as particular antagonists, saying that "GG" sympathizers had been contacting Nintendo directly with information from her personal life, but she also caught the ire of neo-Nazis. White supremacist site the Daily Stormer said Rapp showed "the impact of Jews and feminism on our society," and that she was "advocating sex with kids." Infamous harasser and white supremacist Andrew "weev" Auernheimer tried to marshal his forces, commenting on the story with contact details for Nintendo employees, and instructions to act "as a concerned parent" while making complaints about Rapp so the company couldn't trace the "white supremacist conspiracy" brewing.
She became the target of neo-Nazis and white supremacists
Nintendo says that such calculated campaigns of harassment didn't influence its decision to terminate Rapp's employment, and that as "a company committed to fostering inclusion and diversity in both our company and the broader video game industry," it "firmly reject[s] the harassment of individuals based on gender, race or personal beliefs." But when it lets one of its own go, while she's weathering exactly the kind of abuse her employer says it stands against, Nintendo's stance doesn't seem so strong.
Fact is, feminist politics, sex, etc. ARE dangerous to companies bc that's where we've let the industry go. It doesn't have to be that way. — smol pterodactyl (@alisonrapp) March 30, 2016
Update March 30th, 11:00PM ET: Updated with additional tweets confirming second job from Alison Rapp. ||||| Earlier today, former Nintendo employee Alison Rapp revealed that Nintendo had “terminated” her employment. Now, the company is elaborating on why they came to that decision.
Rapp, a member of Nintendo of America’s Treehouse localization team, no longer works for the company as of today, and the publisher says that’s because she held a second job in conflict with Nintendo’s corporate culture. She has spent the last several months fending off a targeted attack from a hate group that congregates on forums like 4Chan and Reddit. In her tweets today, Rapp suggested that Nintendo decided to part ways with her because of these attacks.
Nintendo is now firmly claiming that its decision had nothing to do with the hate group that was harassing her. The company provided GamesBeat with the following statement.
“Alison Rapp was terminated due to violation of an internal company policy involving holding a second job in conflict with Nintendo’s corporate culture. Though Ms. Rapp’s termination follows her being the subject of criticism from certain groups via social media several weeks ago, the two are absolutely not related. Nintendo is a company committed to fostering inclusion and diversity in both our company and the broader video game industry and we firmly reject the harassment of individuals based on gender, race, or personal beliefs. We wish Ms. Rapp well in her future endeavors.”
We’ve reached out to Rapp for a response to Nintendo’s comment. Additionally, we’re hoping to get Nintendo to elaborate on what aspects of its corporate culture it is claiming she violated.
While Rapp has not responded to our request, she has taken to Twitter to respond to Nintendo.
To pay off student loans (weeee), I started moonlighting under a fake name, and with no real identifiers. — smol pterodactyl (@alisonrapp) March 31, 2016
An anon found out, told them, and here we are. It was moonlighting Nintendo didn’t like, despite the fact that it was anonymous. — smol pterodactyl (@alisonrapp) March 31, 2016
Here’s the thing: Do u honestly think that without GG’s attacks, the “lateral move” and the obsessive privacy digging would have happened? — smol pterodactyl (@alisonrapp) March 31, 2016
Updated at 9:45 p.m. on Wednesday night with new tweets from Alison Rapp. | A female Nintendo employee has been fired after months of harassment from gamers who blamed her for censorship—but the company says her firing has nothing to do with her being targeted by the "GamerGate" campaign, the Verge reports. "I am no longer a good, safe representative of Nintendo, and my employment has been terminated," Seattle-based worker Alison Rapp tweeted on Wednesday, adding that the last few months have been a "whirlwind" of controversy and harassment. Nintendo says Rapp was fired for moonlighting, which is against company policy, not because of an anti-Rapp campaign led by 4chan and Reddit posters, VentureBeat reports. Rapp had been harassed by gamers who blamed her for the censorship of sexual content in Japanese games adapted for the US market, Kotaku reported earlier this month. Her foes dug through her past and online presence—even looking at things like her Amazon wish list—and tried to portray her as a "pedophile enthusiast" after uncovering a 2011 term paper in which she argued against strengthening Japan's censorship laws. After the firing, Rapp tweeted that moonlighting—which was apparently reported by one of her foes—is usually accepted at Nintendo and the "obsessive privacy digging" would not have happened if she hadn't become an online target. (Even before this, one columnist argued that it's time for women to ditch Silicon Valley.) |
(CNN) How do all seven cars and the engine of an Amtrak train jump the rails, sending passengers, luggage, laptops and more flying?
One possibility loomed over all others Wednesday: speed.
Mayor: 'Clearly he was reckless and irresponsible'
Mayor: 'Clearly he was reckless and irresponsible' 07:18
Mayor: 'Clearly he was reckless and irresponsible'
Authorities haven't said what caused the derailment of Amtrak Northeast Regional Train 188 in Philadelphia on Tuesday night, but Philadelphia Mayor Michael Nutter had harsh words for the train's engineer.
"Clearly it was reckless in terms of the driving by the engineer. There's no way in the world he should have been going that fast into the curve," Nutter told CNN's "The Situation Room."
Preliminary data show the train's speed exceeded 100 mph before the derailment. That would be more than twice the 50 mph speed limit for the curve it was in.
"I don't know what was going on with him (the engineer). I don't know what was going on in the cab, but there's really no excuse that can be offered, literally, unless he had a heart attack," Nutter said.
NTSB board member Robert Sumwalt immediately slammed the mayor's comments as inflammatory.
"You're not going to hear the NTSB making comments like that. We want to get the facts before we start making judgments," Sumwalt said.
The engineer at the helm of Amtrak Train 188 on Tuesday night, May 13, 2015, was identified to CNN as Brandon Bostian, 32, of New York.
The engineer operating the train, identified to CNN as 32-year-old Brandon Bostian from New York, applied full emergency brakes "just moments" before the train derailed, according to Sumwalt. The train was traveling about 106 mph as it headed into a left turn. The speed limit immediately before the curve was 80 mph.
An official with direct knowledge of the investigation earlier said that authorities were focusing on speed as a possible cause, given the angles of the wreckage and type of damage to the cars. The recorder, or "black box," discovered at the scene could be pivotal by showing just that, former NTSB official John Goglia said.
Peter Goelz, once a top NTSB figure and now a CNN analyst, predicted that a definitive conclusion could come soon.
"I'm afraid that this train might be going too fast for this turn," he said.
Sumwalt has said only that his team will examine things such as the condition of the track and the train, how the signals operated and "human performance."
Even if it's determined the train was going too fast, that could be because of the engineer or a mechanical issue, such as faulty brakes.
"You have a lot of questions, we have a lot of questions," Sumwalt told reporters. "We intend to answer many of those questions in the next 24 to 48 hours."
Midshipman, AP staffer among the 7 dead
Some 238 passengers and five crew members were on the train when it crashed around 9:30 p.m. Tuesday. Authorities said that at least seven people were killed.
One of those who died was Jim Gaines, a father of two who worked as a video software architect for The Associated Press, his company said
His family asked for privacy, saying: "Jim was more precious to us than we can adequately express."
Another was a U.S. Naval Academy midshipman in full uniform heading home to New York on leave from the Annapolis, Maryland, school. A family member described 20-year-old Justin Zemser as a great person and genius whose death has left his parents "beside themselves."
Derrick Griffith, dean of student affairs for City University of New York Medgar Evers College, was also among the fatalities, according to Jamilah Fraser, a spokeswoman for the university. He lived in Brooklyn.
Hospitals have treated more than 200 others, many of whom have been released. That figure included eight in critical condition at Temple University Hospital -- the closest trauma center to the crash site -- according to Herb Cushing, the hospital's medical director.
Cushing said many passengers were injured when other passengers or objects fell on them. One of those hurt is the train's engineer, who received medical treatment and was interviewed by police, Mayor Nutter said.
Bostian, the engineer, initially told Philadelphia police he could not recall his speed, according to a law enforcement source with knowledge of the investigation.
Detectives have since tried to interview the engineer of the train further. They brought him in Wednesday, but he refused to be interviewed, and left with a lawyer, according to a police official.
Police are in the process of getting a search warrant for the engineer's phone records so they can determine whether he was distracted at the time of the crash, the law enforcement official said.
Determining Bostian's blood-alcohol level immediately after the crash would be a normal part of the investigation, according to Sumwalt. Regulations require Amtrak to take a blood sample.
"It should have been done, and I have no reason to believe it was not done," Sumwalt said.
According to Bostian's LinkedIn profile, he has been an engineer for Amtrak since 2010, and was a conductor for four years before that. Prior to Amtrak, Bostian worked as a cashier at Target.
CNN spoke to a neighbor of the engineer near his home in Forest Hills, New York, who last saw him two weeks ago. Moresh Koya described Bostian as responsible and happy with his job.
Authorities have not ruled out the possibility of more victims at the crash site. Nutter noted that not everyone on Amtrak's manifest has been accounted for. He didn't specify a number.
"We are heartbroken by what we've experienced here," the mayor said early Wednesday. "We have not experienced anything like this in modern times."
'A lot of questions'
The miracle may be how some escaped relatively unscathed, given the severity of the derailment. A U.S. Department of Transportation representative told CNN that the engine and two cars were left standing upright, three cars were tipped on their sides, and one was nearly flipped over on its roof. The seventh one was "leaning hard."
"It is amazing," Nutter said. "I saw some people last night literally walking off that train. I don't know how they did it."
JUST WATCHED FBI: No indication of terrorism in Amtrak train derailment Replay More Videos ... MUST WATCH FBI: No indication of terrorism in Amtrak train derailment 01:08
The Washington-New York corridor is the busiest stretch for Amtrak nationwide. Hundreds of trains, carrying thousands of passengers, have made that trip in recent years, most of them rolling seamlessly from start to finish on a roughly 3½-hour journey.
That's what seemed to be happening Tuesday night, passenger Daniel Wetrin said.
"Everything was normal," he said. "Then it was just chaos."
Former U.S. Rep. Patrick Murphy tweeted he was aboard the train when it crashed. "Helping others," he said. "Pray for those injured." Later he shared this photo that showed a firefighter inside the train.
Jeremy Wladis was in the very last car, eating, when he noticed the train starting to do "funny things. And it gradually starts getting worse and worse."
Things started flying -- phones, laptops. "Then people."
"There were two people in the luggage rack above my head. Two women, catapulted (there)."
As she read a book in the second-to-last car, Janna D'Ambrisi said, she "felt like we were going a little too fast around a curve. The car she was in started to tip, and she was thrown onto another woman.
"People started to fall on us," she said. "I just held on to her leg and sort of bowed my head and I was kind of praying, 'Please make it stop.' "
Fortunately, D'Ambrisi's train car didn't tip over and she made it out safely. She credited many people -- including one fellow passenger who guided people with his shoes off -- for stepping up.
"Everyone was just trying to help the people who were injured, who had blood coming out of their head, their noses, to help them sit down in the dirt away from the rails," she said.
The damage this #Amtrak train sustained is unreal. pic.twitter.com/kVhZR5fxzp — Benny Polatseck (@BPolatseck) May 13, 2015
'Heavily used stretch of track'
The locomotive was built by Siemens and delivered to Amtrak in 2014 specifically for its Northeast Corridor service, a Siemens official said. That makes it fairly new, which doesn't rule out the train's condition playing a role in the crash but seemingly makes it less likely.
The stretch of track where the train derailed was not equipped with an automated speed control system called positive train control, NTSB board member Sumwalt said.
He told reporters: "We feel that had such a system been installed in this section of track, this accident would not have occurred."
Another factor that can't be discounted is where the crash happened.
"It's an extremely heavily used stretch of track," transportation analyst Matthew L. Wald said of the area. "They have trouble keeping it in a state of good repair."
JUST WATCHED Amtrak crash throws Northeast travel into turmoil Replay More Videos ... MUST WATCH Amtrak crash throws Northeast travel into turmoil 01:45
The crash threw northeast travel into turmoil Wednesday, as a delay on the line where the train derailed is a major disruption for the region. Passengers scrambled to make other arrangements with buses and commercial airlines picking up some of the slack.
The derailment was Amtrak's ninth this year, according to the Federal Railroad Administration, and while its cause has not yet been determined, some, like Wald, are already discussing the nation's aging rail infrastructure.
Noting President Barack Obama's commitment to upgrading the country's infrastructure, White House press secretary Josh Earnest said the Obama administration is "hard at work" trying to figure out what caused the crash, and that their thoughts and prayers are with the families of everyone affected.
"Along the Northeast Corridor, Amtrak is a way of life for many," the President said later in a statement. "From Washington, D.C., and Philadelphia to New York City and Boston, this is a tragedy that touches us all." ||||| The Amtrak locomotive rests at the scene of the train derailment in the Port Richmond section of Philadelphia. DAVID MAIALETTI / Staff Photographer
The Amtrak locomotive rests at the scene of the train derailment in the Port Richmond section of Philadelphia. DAVID MAIALETTI / Staff Photographer
Investigators of Tuesday's deadly Amtrak derailment say they are focusing on reports that the train was traveling more than twice the 50-mile-an-hour speed limit when it entered a sharp curve in Frankford.
An automatic train control system designed to prevent speeding was not in place where Amtrak Train 188 crashed, killing seven people and injuring more than 200.
The train's engineer, who has not been identified, declined to give a statement to police investigators and left the East Detectives Division with an attorney, police commissioner Charles H. Ramsey said Wednesday.
The train's conductor, also unidentified, was at Einstein Hospital with a skull fracture, Ramsey said.
The train reportedly was traveling over 100 m.p.h. when it entered the curve, according to people close to the investigation.
The train's "black box," which includes a speed recorder, has been recovered by investigators.
Amtrak crews have been installing "Advanced Civil Speed Enforcement" on the Northeast Corridor and other Amtrak rail routes, and were to install the system this year in the Philadelphia area.
The system is designed to prevent collisions, automatically slow speeding trains and enforce speed restrictions.
Positive Train Control, which includes Amtrak's system, is required by federal law to be installed on all passenger and major freight railroads by the end of this year.
But many railroads have asked for more time to install the expensive systems, and Congress is considering extending the deadline to 2020.
The accident happened at a sharp curve in Frankford where several rail lines merge, and trains are restricted to 50 miles per hour there.
Inquirer staff writer Mike Newall contributed to this article.
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215-854-4587
@nussbaumpaul ||||| PHILADELPHIA (AP) — The death toll climbed to seven Wednesday with the discovery of another body in the wreckage Wednesday as investigators tried to determine why an Amtrak train hurtled off the tracks while rounding a sharp curve.
Emergency personnel gather near the scene of a deadly train wreck, Wednesday, May 13, 2015, after a fatal Amtrak derailment Tuesday night, in the Port Richmond section of Philadelphia. Federal investigators... (Associated Press)
Emergency personnel work the scene of a deadly train wreck, Tuesday, May 12, 2015, in Philadelphia. An Amtrak train headed to New York City derailed and crashed in Philadelphia. (AP Photo/ Joseph Kaczmarek) (Associated Press)
Emergency personnel work on Wheatsheaf Lane near the scene of a deadly train wreck, Wednesday, May 13, 2015, in Philadelphia. An Amtrak train headed to New York City derailed and crashed in Philadelphia... (Associated Press)
Emergency personnel work at the scene of a deadly train derailment, Wednesday, May 13, 2015, in Philadelphia. The Amtrak train, headed to New York City, derailed and crashed in Philadelphia on Tuesday... (Associated Press)
Philadelphia Mayor Michael Nutter, center right, hugs Lori Dee Patterson, a nearby resident, after she handed him a cup of coffee after he spoke at a news conference near the scene of a deadly train derailment,... (Associated Press)
Emergency personnel work at the scene of a deadly train derailment, Wednesday, May 13, 2015, in Philadelphia. The Amtrak train, headed to New York City, derailed and crashed in Philadelphia on Tuesday... (Associated Press)
Philadelphia Mayor Michael Nutter speaks at a news conference near the scene of a deadly train wreck, Wednesday, May 13, 2015, in Philadelphia. An Amtrak train headed to New York City derailed and crashed... (Associated Press)
Emergency personnel walk near the scene of a deadly train wreck, Wednesday, May 13, 2015, in Philadelphia. An Amtrak train headed to New York City derailed and crashed in Philadelphia on Tuesday night.... (Associated Press)
Investigators examine the train derailment site, Wednesday, May 13, 2015, after a fatal Amtrak derailment Tuesday night, in the Port Richmond section of Philadelphia. Federal investigators arrived Wednesday... (Associated Press)
Emergency personnel gather near the scene of a deadly train wreck, Wednesday, May 13, 2015, after a fatal Amtrak derailment Tuesday night, in the Port Richmond section of Philadelphia. Federal investigators... (Associated Press)
More than 200 people were injured in the wreck that plunged screaming passengers into darkness and chaos Tuesday night.
Investigators recovered the locomotive's black box data recorders and said they expected them to yield crucial information, including how fast the train was going when it jumped the tracks in an old industrial neighborhood not far from the Delaware River shortly after 9 p.m.
"It's a devastating scene. There are many first responders out there. They are working. They are examining the equipment, seeing if there are any more people in the rail cars," Robert Sumwalt of the National Transportation Safety Board said.
Mayor Michael Nutter said some people remained unaccounted for, though he cautioned that some passengers listed on the Amtrak manifest might not have boarded the train, while others might not have checked in with authorities.
The dead included an employee of The Associated Press and a midshipman at the U.S. Naval Academy.
"We are heartbroken by what has happened here," Nutter said.
The train was en route from Washington to New York with 238 passengers and five crew members listed aboard when it lurched to the side and flew off the tracks at a notorious curve not far from the scene of one of the nation's deadliest train wrecks more than 70 years ago.
The speed limit is 70 mph just before the curve and 50 mph along the curve itself, the Federal Railroad Administration said.
Passengers scrambled through the windows of toppled cars to escape. One of the seven cars was severely mangled. Hospitals treated more than 200 people for injuries that included burns and broken bones. At least 10 were hospitalized in critical condition.
The accident closed the nation's busiest rail corridor between New York and Washington — snarling the morning commute and forcing thousands of travelers to find some other way to reach their destination — as federal investigators arrived to begin examining the twisted wreckage, the tracks and the signals.
The conductor survived and was expected to give a statement to police. The train also had a video camera in its front end that could yield clues to what happened, Sumwalt said.
Amtrak inspected the stretch of track on Tuesday, just hours before the accident, and found no defects, according to the Federal Railroad Administration.
Passenger Jillian Jorgensen, 27, was seated in the quiet car — the second passenger car — and said the train was going "fast enough for me to be worried" when it began to lurch to the right.
The train derailed, the lights went out and Jorgensen was thrown from her seat. She said she "flew across the train" and landed under some seats that had apparently broken loose from the floor.
Jorgensen, a reporter for The New York Observer who lives in Jersey City, New Jersey, said she wriggled free as fellow passengers screamed. She saw one man lying still, his face covered in blood, and a woman with a broken leg.
She climbed out an emergency exit window, and a firefighter helped her down a ladder to safety.
"It was terrifying and awful, and as it was happening it just did not feel like the kind of thing you could walk away from, so I feel very lucky," Jorgensen said in an email to the AP. "The scene in the car I was in was total disarray, and people were clearly in a great deal of pain."
Award-winning AP video software architect Jim Gaines was among those killed. Gaines, a 48-year-old father of two who joined the news agency in 1998, had attended meetings in Washington and was returning home to Plainsboro, New Jersey.
The Naval Academy did not immediately release the name of the midshipman killed. It said the student was on leave and heading home.
All seven train cars, including the engine, were in "various stages of disarray," Nutter said. He said there were cars that were "completely overturned, on their side, ripped apart."
An AP manager, Paul Cheung, was on the train and said he was watching a video on his laptop when "the train started to decelerate, like someone had slammed the brake."
"Then suddenly you could see everything starting to shake," he said. "You could see people's stuff flying over me."
Cheung said another passenger urged him to escape from the back of his car, which he did. He said he saw passengers trying to get out through the windows of cars tipped on their sides.
"The front of the train is really mangled," he said. "It's a complete wreck. The whole thing is like a pile of metal."
Gaby Rudy, an 18-year-old from Livingston, New Jersey, was headed home from George Washington University. She said she was nearly asleep when she suddenly felt the train "fall off the track."
The next few minutes were filled with broken glass and smoke, said Rudy, who suffered minor injuries. "They told us we had to run away from the train in case another train came," she said.
Another passenger, Daniel Wetrin, was among more than a dozen people taken to a nearby elementary school.
"I think the fact that I walked off kind of made it even more surreal because a lot of people didn't walk off," he said. "I walked off as if, like, I was in a movie. There were people standing around, people with bloody faces. There were people, chairs, tables mangled about in the compartment ... power cables all buckled down as you stepped off the train."
Several people, including one man complaining of neck pain, were rolled away on stretchers. Others wobbled as they walked away or were put on buses. An elderly woman was given oxygen.
The area where the wreck happened is known as Frankford Junction, situated in a neighborhood of warehouses, industrial buildings and homes.
It is not far from the site of the 1943 derailment of the Congressional Limited, from Washington to New York, which killed 79 people.
Amtrak carries 11.6 million passengers a year along its busy Northeast Corridor, which runs between Washington and Boston.
The mayor, citing the mangled tracks and downed wires, said: "There's no circumstance under which there would be any Amtrak service this week through Philadelphia."
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Associated Press reporters Maryclaire Dale, Michael R. Sisak and Josh Cornfield in Philadelphia and Joan Lowy in Washington contributed to this story. | The Amtrak train that derailed in Philadelphia last night was going more than 100mph—twice the speed limit—as it derailed while entering a curve, report the Philadelphia Inquirer and the Wall Street Journal. Each independently cites anonymous sources familiar with the investigation. The Inquirer adds that the train's unidentified engineer declined to give a statement to police while accompanied by an attorney. The conductor, meanwhile, remains hospitalized with a fractured skull. The development comes as the death toll rose to seven, with another 10 people in critical condition, reports the AP. On the brighter side, a Temple University Hospital official says most of the 23 derailment patients are "either stable or better," and most have rib fractures, CNN reports. Some people on the passenger manifest remain unaccounted for, but authorities say that could be because they weren't aboard in the first place. The train's "black box" data recorder has been recovered, but officials haven't publicly revealed what they've learned. The Philly newspaper notes that a system designed to automatically slow speeding trains is due to be in place in the Philadelphia area of the Northeast Corridor later this year. |
The Balanced Budget Act of 1997 ( P.L. 105-33 , BBA-97) established the State Children's Health Insurance Program (SCHIP) under a new Title XXI of the Social Security Act. SCHIP builds on Medicaid by providing health care coverage to low-income, uninsured children in families with incomes above applicable Medicaid income standards. The latest official numbers show that SCHIP enrollment reached a total of nearly 7.4 million children and nearly 335,000 adults in FY2008. In FY2008, federal SCHIP spending totaled $7.0 billion, with states' projected spending expected to equal $7.9 billion in FY2009. In BBA 97, Congress authorized and appropriated funds for FY1998-FY2007, with no federal appropriations slated for FY2008 and beyond. The absence of future federal appropriations triggered SCHIP legislative attention during the 110 th Congress, as reviewed in the next section. After this brief summary of past legislative action, the report provides a description of the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA 2009, H.R. 2 ) as passed in the House on January 14, 2009, and in the Senate on January 29, 2009. The overall structure of CHIPRA 2009 is similar to its two predecessors, H.R. 976 and H.R. 3963 from the 110 th Congress. Most of this report summarizes changes to current law across the major provisions of CHIPRA 2009. Where the provisions of the House and Senate versions are identical, the references in this report are simply to "CHIPRA 2009." Where the provisions differ, the House and Senate versions are described separately. During the 110 th Congress, a number of SCHIP bills saw legislative action. A majority of the SCHIP changes enacted in public laws included provisions to add additional appropriations to SCHIP, but did not make any major substantive changes to the program. The 110 th Congress enacted provisions to: address certain states' shortfalls in FY2007 federal SCHIP funding (U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, P.L. 110-28 ); provide temporary FY2008 appropriations for SCHIP through December 31, 2007 through continuing resolutions ( P.L. 110-92 , P.L. 110-116 , P.L. 110-137 , P.L. 110-149 ); and provide additional appropriations through March 31, 2009 (The Medicare, Medicaid, and SCHIP Extension Act of 2007, P.L. 110-173 ). The 110 th Congress also considered SCHIP reauthorization legislation that would have made important changes to Medicaid and SCHIP. Numerous bills were introduced, and two that were passed by Congress ( H.R. 976 and H.R. 3963 ) were vetoed by President Bush. Table 1 includes a timeline of the legislative floor action on the major SCHIP reauthorization bills during 2007. The 110 th Congress's H.R. 976 (CHIPRA I) and H.R. 3963 (CHIPRA II) shared many common elements, including national allotment appropriations totaling $61.4 billion over five years (which represented an increase of $36.2 billion over the current law baseline of $25.2 billion), distributed to states and territories using a new formula primarily based on their past and/or projected federal SCHIP spending; a new contingency fund (for making payments to states for certain shortfalls of federal SCHIP funds), which would have received deposits through a separate appropriation each year through FY2012 and made payments of up to 20% of the available national allotment for SCHIP; new performance bonus payments (for states exceeding certain child enrollment levels and states that implement certain outreach and enrollment initiatives), which were to be funded with an FY2008 appropriation of $3 billion and deposits of certain unspent SCHIP funds through FY2012; additional grants for outreach and enrollment that would have totaled $100 million each year through FY2012; provisions to remove barriers to enrollment; provisions related to benefits (e.g., dental, mental health, and Early and Periodic, Screening, Diagnosis and Treatment [EPSDT]); provisions to eliminate barriers to providing premium assistance; provisions to strengthen quality of care and health outcomes of children; program integrity and miscellaneous provisions, including some that affect the Medicaid program; and tobacco tax changes. Cost estimates from the Congressional Budget Office (CBO) indicated that H.R. 976 would have increased outlays by $34.9 billion over 5 years and by $71.5 billion over 10 years, and H.R. 3963 would have increased outlays by $35.4 billion over 5 years and by $71.5 billion over 10 years. Costs in both bills would have been offset by an increase in the federal tobacco tax (mostly from an increase in the federal tax by 61 cents per pack of cigarettes) and other changes, which the Joint Committee on Taxation (JCT) estimated would have increased on-budget revenue by $35.5 billion over 5 years and by $71.7 billion over 10 years. On any given day in 2007, approximately nine million children were without health insurance. Most of these children came from two-parent families (53%). Most had a parent who worked full time all year (60%). And other data indicate most uninsured children are eligible for Medicaid or SCHIP (62%). According to the Congressional Budget Office (CBO), the two vetoed CHIPRA bills both would have increased average monthly FY2012 Medicaid and SCHIP enrollment by 5.8 million, for a total of 34.1 million projected enrollees. In both bills, about 80% of the increased enrollment would have occurred among current eligibility groups, rather than new ones. The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA 2009, H.R. 2 ) was passed in the House on January 14, 2009, and in the Senate on January 29, 2009. The overall structure of CHIPRA 2009 is similar to its two predecessors ( H.R. 976 and H.R. 3963 from the 110 th Congress). The remainder of this report summarizes changes to current law across the major provisions of CHIPRA 2009. Cost estimates from the Congressional Budget Office (CBO) indicated that the House-passed version of H.R. 2 would increase outlays by $32.3 billion over 5 years and by $65.4 billion over 10 years. Those costs would be offset by increases in federal tobacco taxes (mostly from an increase in the federal tax by 61 cents per pack of cigarettes) and other changes, which the Joint Committee on Taxation (JCT) estimated would increase on-budget revenue by $32.5 billion over 5 years and by $65.6 billion over 10 years. CBO cost estimates initially indicated that the Senate version would increase outlays by $32.8 billion over 5 years and by $66.1 billion over 10 years. Like the House version, those costs would be offset by increases in federal tobacco taxes, which were estimated to increase on-budget revenue by $32.8 billion over 5 years and by $66.6 billion over 10 years. CBO estimated both versions of CHIPRA 2009 would increase average monthly FY2013 Medicaid and SCHIP enrollment by 6.5 million, for a total of 37.7 million projected enrollees. About 80% of the increased enrollment would occur among current eligibility groups, rather than new ones. Of the 6.5 million increased average monthly enrollment in FY2013, CBO estimates that 2.4 million (37%) would have private coverage in the absence of the legislation and that 4.1 million (63%) would be uninsured. Under current law, BBA97 created the State Children's Health Insurance Program (SCHIP) and appropriated $40 billion for SCHIP original allotments from FY1998 to FY2007. The Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA, P.L. 110-173 ) appropriated allotments and additional funding to prevent any state from running out of federal SCHIP funds before March 31, 2009. The SCHIP appropriation for original allotments in FY2007, the last year provided for in BBA97, totaled $5.04 billion. MMSEA provided that same amount annually for SCHIP allotments in FY2008 and FY2009, stating, however, that these funds "shall not be available for child health assistance [SCHIP expenditures] for items and services furnished after March 31, 2009." MMSEA also provided up to $275 million to cover any shortfalls of federal SCHIP funds for the first half of FY2009—that is, through March 31, 2009. However, even if unspent FY2008 and FY2009 allotments were available past March 31 st , 27 states would still need an additional $1.9 billion to prevent any shortfalls for the second half of FY2009. For FY2009, the current-law MMSEA allotments were determined consistent with the past several years' allotments. Of the national appropriation ($5 billion for each of FY2007, FY2008 and FY2009), the territories receive 0.25%. The remainder ($4.9875 billion for each of FY2007, FY2008 and FY2009) is divided, or allotted, among the states based on a formula using survey estimates of the number of low-income children in the state and the number of those children who were uninsured. These amounts are adjusted by a geographic adjustment factor and are limited by various floors and ceilings to ensure that a state's allotment does not vary substantially from certain past allotments. The overall structure of federal SCHIP allotments and financing in CHIPRA 2009 is similar to its two predecessors, H.R. 976 and H.R. 3963 from the 110 th Congress, and are markedly different from current law. Rather than dividing a fixed national appropriation on the basis of state survey estimates, CHIPRA 2009 would calculate a state's allotment as described below, and if the total of all the states' and territories' allotments did not exceed the national appropriation, that would be the state's allotment. The national appropriations for SCHIP allotments under CHIPRA 2009 are as follows: $10.562 billion in FY2009; $12.52 billion in FY2010; $13.459 billion in FY2011; $14.982 billion in FY2012; and $3 billion for the first half of FY2013 and $3 billion for the second half of FY2013 under the House version. Under the Senate version, the semiannual amounts would be $2.85 billion. A "one-time appropriation"—of $11.406 billion under the House version and $11.706 billion under the Senate version—would be added to the half-year amounts provided for FY2013. These provisions for FY2013 are intended to annually reduce by the "one-time appropriation" the amount of allotments assumed by the Congressional Budget Office (CBO) for fiscal years after FY2013. Although federal SCHIP allotments under BBA97 were made available for three years, allotments for FY2009 onward under CHIPRA 2009 would be available for two years, with unspent funds available for redistribution first to shortfall states and then toward bonus payments, described below. FY2009 federal SCHIP allotments for states under CHIPRA 2009 would be based on the largest of three state-specific amounts: the state's FY2008 federal SCHIP spending , multiplied by a growth factor; the state's FY2008 federal SCHIP allotment , multiplied by a growth factor; and the state's own projections of federal SCHIP spending for FY2009 , submitted by states to the Secretary of Health and Human Services (HHS) in February 2009. The largest of these three amounts would be increased by 10% and would serve as the state's FY2009 federal SCHIP allotment, as long as the national appropriation is adequate to cover all the states' and territories' FY2009 allotments. If not, allotments would be reduced proportionally. For FY2010, the allotment for a state (or territory) would be calculated as the sum of the following four amounts, if applicable, multiplied by the applicable growth factor for the year: the FY2009 SCHIP allotment; FY2006 unspent allotments redistributed to and spent by shortfall states in FY2009; Spending of funds provided to shortfall states in the first half of FY2009; and Spending of Contingency Fund payments (discussed below) in FY2009, although there may be none. For FY2011 and FY2013, the allotment for a state (or territory) would be "rebased," based on prior year spending. This would be done by multiplying the state's growth factor for the year by the new base, which would be the prior year's federal SCHIP spending from allotments, redistribution and Contingency Fund payments. For FY2012, the allotment for a state (or territory) would be calculated as the FY2011 allotment and any FY2011 Contingency Fund spending, multiplied by the state's growth factor for the year. A Child Enrollment Contingency Fund would be established and funded initially by a separate appropriation of 20% of the available national allotment for SCHIP in FY2009 (approximately $2.1 billion). For FY2010 through FY2013, the appropriation would be such sums as are necessary for making payments to eligible states for the fiscal year, as long as the annual payments do not exceed 20% of that fiscal year's available national SCHIP allotment. If a state's federal SCHIP spending in FY2009 through FY2013 exceeds its available allotments (excluding unspent allotments redistributed from other states) and if the state experienced enrollment that exceeded its target average number (FY2008 enrollment plus annual state child population growth plus one percentage point per year), payments from the Contingency Fund would be the projected federal SCHIP costs for those enrollees above the target number in the state. Funds for bonus payments would be payable in FY2009 to FY2013 to states that increase their Medicaid (not SCHIP) enrollment among low-income children above a defined baseline. To qualify for bonus payments, states would also have to implement four of the following seven outreach and enrollment activities under the House version: 12 months of continuous eligibility for Medicaid and CHIP children; Elimination of an assets test in Medicaid and CHIP, or use of administrative verification of assets; Elimination of in-person interview requirement; Use of a joint application for Medicaid and CHIP; Implementation of certain options to ease enrollees' renewal processes; Presumptive eligibility for children; and Implementation of "Express Lane," described in a separate section below. Under the Senate version, an eighth activity would be added, implementation of premium assistance, and states would have to implement five of those eight. The payments would be funded by an initial appropriation in FY2009 of $3.225 billion, along with transfers from four different potential sources: National appropriation amounts for FY2009 through FY2013 provided but not used for allotments; Redistribution amounts not spent; On October 1 of FY2010 through FY2013, any amounts in the CHIP Contingency Fund that exceed its cap (described above); and On October 1 of FY2011, any unspent amounts in the transitional coverage block grant for non-pregnant childless adults, described in a separate section below, not spent by September 30, 2011. For FY2009, the Medicaid bonus baseline would be equal to the state's average monthly number of enrolled Medicaid children in 2007, increased by state child population growth between 2007 and 2008 (estimated by the U.S. Census Bureau) plus four percentage points, further increased by state child population growth between 2008 and 2009 plus four percentage points. For subsequent years, the Medicaid bonus baseline is the prior year's plus state child population growth plus additional percentage point increases that are lower than the 4 percentage points for FY2009: for FY2010 to FY2012, 3.5 percentage points; for FY2013 to FY2015, 3 percentage points; and FY2016 onward, 2 percentage points. The first tier of bonus payments would be for child Medicaid enrollees that represent growth above the baseline less than 10%. For these Medicaid child enrollees, the bonus payment would be equal to 15% of the state share of these enrollees' projected per capita Medicaid expenditures. (Projected per capita Medicaid expenditures would be the average per capita Medicaid expenditures for children for the most recent year with actual data, increased by necessary projected annual increases in per capita National Health Expenditures.) For the second tier, 10% or more above baseline, the bonus payment would be 62.5% of the state share of these enrollees' projected per capita expenditures. An eligibility expansion would not qualify a state for additional bonus payments. In order for new Medicaid children to count toward bonus payments, they must have been able to meet the state's eligibility criteria in place on July 1, 2008. If the available funding for bonus payments to states in a given year is inadequate, the payments would be reduced proportionally. Under current law, a number of entities may make Medicaid "presumptive eligibility" determinations for children (e.g., medical providers, entities that determine eligibility for Head Start). Presumptive eligibility allows children who appear to be eligible for Medicaid based on an initial determination to be enrolled for up to two months of coverage while a final determination of eligibility is made. The bonus payment section of the Senate version of CHIPRA 2009 specifies that children who were enrolled in Medicaid through presumptive eligibility would only count for a state's bonus payments if the child was ultimately enrolled through a final determination. Under BBA97, states faced a maintenance of effort so they could not draw federal SCHIP funds for child populations already covered under Medicaid. States that had expanded Medicaid coverage to higher income children prior to SCHIP expressed that this was a penalty against their early expansion efforts. A provision was added later in SCHIP to permit 11 early expansion "qualifying states" to draw some SCHIP funds for Medicaid children above 150% of poverty, although with an additional limit in the amount besides just their available federal SCHIP funds (that is, no more than 20% from each original allotment could be spent on these Medicaid children). Like the two vetoed versions of CHIPRA from the 110 th Congress, CHIPRA 2009 would permit this spending for Medicaid children above 133% of poverty, and without the 20% limitation. The federal medical assistance percentage (FMAP) is the state-specific percentage of Medicaid service expenditures paid by the federal government. It is based on a formula that provides higher reimbursement rates to states with lower per capita incomes relative to the national average (and vice versa); it has a statutory minimum of 50% and maximum of 83%. The enhanced FMAP (E-FMAP) for SCHIP reduces the state's share under the regular FMAP by 30%. The E-FMAP has a statutory minimum of 65% and maximum of 85%. CHIPRA 2009 would reduce federal SCHIP payments for certain higher-income SCHIP children. It would specify that the regular FMAP would be used for SCHIP enrollees whose effective family income would exceed 300% of poverty using the state's policy of excluding "a block of income that is not determined by type of expense or type of income," with an exception for states that already had a federal approval plan or that had enacted a state law to submit a plan for federal approval. Under current law, children in a Medicaid-expansion SCHIP program must be paid for out of SCHIP funds at the E-FMAP. Medicaid funding for these children cannot be used until a state's available SCHIP funding is exhausted. Like CHIPRA I and II, CHIPRA 2009 would give states the option to draw Medicaid funds at the regular FMAP for Medicaid-expansion SCHIP children. Under current SCHIP law, states can cover pregnant women ages 19 and older through waiver authority or by providing coverage to unborn children as permitted through regulation. In the latter case, coverage is supposed to be limited to prenatal and delivery services. CHIPRA 2009 would allow states to cover pregnant women under SCHIP through a state plan amendment when certain conditions are met (e.g., the Medicaid income standard for pregnant women must be at least 185% FPL; no pre-existing conditions or waiting periods may be imposed; SCHIP cost-sharing protections would apply). The upper income limit may be as high as the standard applicable to SCHIP children in the state. Other eligibility restrictions applicable to SCHIP children (e.g., must be uninsured, ineligible for state employee health coverage, etc.) would also apply. The period of coverage would be during pregnancy through the postpartum period (roughly through 60 days postpartum). States would be allowed to temporarily enroll pregnant women for up to two months until a formal determination of eligibility is made. Benefits would include all services available to SCHIP children in the state as well as prenatal, delivery and postpartum care. Infants born to these pregnant women would be deemed eligible for Medicaid or SCHIP, as appropriate, and would be covered up to age one year. States could continue to cover pregnant women through waivers and the unborn child regulation. In the latter case, states would be allowed to offer postpartum services. Under current law, Section 1115 of the Social Security Act gives the Secretary of Health and Human Services (HHS) broad authority to modify many aspects of the Medicaid and SCHIP programs including expanding eligibility to populations who are not otherwise eligible for Medicaid or SCHIP (e.g., childless adults, pregnant women age 19 and older, and parents of Medicaid and SCHIP-eligible children). Certain states that have covered adults with SCHIP funds were permitted to do so almost entirely through the use of these waivers. Adult coverage waivers, which initially are effective for five years, are subject to renewal at least every three years. Prior to 2007, waiver renewals for states with adult coverage waivers were approved, even for those states that were projected to face federal SCHIP shortfalls (e.g., New Jersey, Rhode Island). Beginning in 2007, however, such waiver renewals have not been approved (e.g., Illinois, Oregon) or states have begun to transition adult populations out of SCHIP coverage (e.g., Wisconsin, Minnesota). As of January 7, 2009, 4 states have CMS authority to use SCHIP funds to extend coverage to certain childless adult populations, and 7 states have such authority to cover parent populations. CHIPRA 2009 would phase out SCHIP coverage of nonpregnant childless adults. Under the House version, SCHIP coverage of nonpregnant childless adults would be phased out after two years. In FY2011, allowable spending under the waivers would be (1) subject to a set-aside amount from a separate allotment that is tied to waiver spending for such populations in FY2010; (2) matched at the state's regular Medicaid FMP rate; and (3) available only for individuals who were actually enrolled in FY2010. States would be permitted to apply for Medicaid waivers to continue coverage for these populations, but for FY2012, such waivers would be subject to a specified budget-neutrality standard (tied to the state's 2011 spending on this population). For succeeding fiscal years, allowable spending under the waiver would be tied to the state's spending on this population in the preceding fiscal year. The Senate version would terminate SCHIP coverage of nonpregnant childless adults by the end of calendar year 2009. Like the House version, under Senate version states with existing childless adult waivers would be permitted to apply for Medicaid waivers to continue coverage for these individuals subject to a specified budget neutrality standard, but in FY2010 childless adult spending under the waiver would be tied to the state's 2009 waiver spending on this population. The Senate version would require budget neutrality standards for succeeding fiscal years to be tied to waiver spending in the preceding fiscal year. Under CHIPRA 2009, coverage of parents would still be allowed, but beginning in FY2012, allowable spending under the waivers would be subject to a set-aside amount from a separate allotment and would be matched at the state's regular Medicaid FMAP unless the state was able to prove it met certain coverage benchmarks (related to performance in providing coverage to children). In FY2013, even states meeting the coverage benchmarks would not get the enhanced FMAP for parents but an amount between the regular and enhanced FMAPs. Finally, the provision would prohibit waiver spending under the set-aside for parents whose family income exceeds the income eligibility thresholds that were in effect under the existing waivers as of the date of enactment of CHIPRA 2009. Under current law, legal immigrants arriving in the United States after August 22, 1996, are ineligible for Medicaid or SCHIP benefits for their first five years here. Coverage of such persons after the five-year bar is permitted at state option if they meet other eligibility requirements for that program. For legal immigrants (but not refugees and asylees), the law requires that their sponsor's income and resources will be taken into account in determining eligibility for those who have signed a legally binding affidavit of support. Generally speaking, for federally means-tested programs (e.g., Medicaid, TANF), the affidavit of support requires the sponsor to ensure that the new immigrant will not become a public charge and makes the sponsor financially responsible for the individual. CHIPRA 2009 would permit states to waive the five-year bar for Medicaid or SCHIP coverage to pregnant women and children who are (1) lawfully residing in the United States and (2) are otherwise eligible for such coverage. The SCHIP state plan option made available under this provision would be available only to states that (1) elect this state plan option under Medicaid and (2) in the case of pregnant women coverage, elect the SCHIP state plan option to provide assistance for pregnant women. The Senate version has two additional provisions not contained in the House version of H.R. 2 . First, it would assure that for states that elect to extend such coverage, the cost of care would not be deemed under an affidavit of support against an individual's sponsor. Second, as a part of states' redetermination processes (i.e., to redetermine eligibility at least every 12 months with respect to circumstances that may change and affect eligibility), individuals made eligible under this provision whose initial documentation showing legal residence is no longer valid would be required to show "further documentation or other evidence" that the individual continues to lawfully reside. CHIPRA 2009 restates current law that federal funding for individuals who are not lawfully residing in the United States is not allowed and that the law provides for the disallowance of federal funding of erroneous expenditures under Medicaid and SCHIP. CHIPRA 2009 would include provisions to facilitate access and enrollment in Medicaid and SCHIP. Besides the bonus payments described above, CHIPRA 2009 would authorize $100 million in outreach and enrollment grants above and beyond the regular SCHIP allotments for fiscal years 2009 through 2013. Ten percent of the allocation would be directed to a national enrollment campaign, and 10 percent would be targeted to outreach for Native American children. The remaining 80 percent would be distributed among state and local governments and to community-based organizations for purposes of conducting outreach campaigns with a particular focus on rural areas and underserved populations. Grant funds would also be targeted at proposals that address cultural and linguistic barriers to enrollment. While both versions would include outreach to Native Americans as a part of the National Enrollment Campaign, the House version would also permit grants for specific outreach efforts of Native Americans, and require the Secretary of HHS to report to Congress on the cost-effectiveness of such projects. CHIPRA 2009 would create a state option to rely on a finding from specified "Express Lane" agencies (e.g., those that administer programs such as Temporary Assistance for Needy Families, Medicaid, SCHIP, and Food Stamps) to determine whether a child under age 19 (or an age specified by the state not to exceed 21 years of age) has met one or more of the eligibility requirements (e.g., income, assets or resources, citizenship, or other criteria) necessary to determine an individual's initial eligibility, eligibility redetermination, or renewal of eligibility for medical assistance under Medicaid or SCHIP. There are a couple differences between the House version and the Senate version of H.R. 2 . While both versions give states the option of automatic enrollment through an Express Lane eligibility determination contingent on a family's signature of consent, the Senate version permits consent to also be obtained "in writing, by telephone, orally, through electronic signature, or any other means specified by the Secretary" of HHS. The Senate version would also provide states with the option to rely on an applicant's reported income as shown by state income tax records or returns. Under CHIPRA 2009, states would also be required to inform families that they may qualify for lower premium payments or more comprehensive health coverage under Medicaid if the family's income were directly evaluated by the state Medicaid agency. CHIPRA 2009 would also drop the requirement for signatures on a Medicaid or SCHIP application form under penalty of perjury. The Deficit Reduction Act of 2005 (DRA) requires citizens and nationals applying for Medicaid who claim to be citizens to provide both proof of citizenship and identity. Before DRA, states could accept self-declaration of citizenship for Medicaid, although some chose to require additional supporting evidence. CHIPRA 2009 would provide a specific alternative, which would allow a state to use the Social Security Number (SSN) provided by individuals and verified by the Social Security Administration (SSA), and provide an enhanced match for certain administrative costs. (SSNs by themselves do not denote citizenship, because certain noncitizens are eligible for them.) CHIPRA 2009 would also add a requirement for citizenship documentation in SCHIP. Under current law, states may pay a beneficiary's share of costs for group (employer-based) health insurance in SCHIP if the employer plan is cost effective relative to the amount paid to cover only the targeted low-income children and does not substitute for coverage under group health plans otherwise being provided to the children. In addition, states using SCHIP funds for employer-based plan premiums must ensure that SCHIP minimum benefits are provided and SCHIP cost-sharing ceilings are met. Under Medicaid, including a Medicaid expansion SCHIP program, states may implement a premium assistance program if the employer plan is comprehensive and cost-effective for the state. Under Medicaid, an individual's enrollment in an employer plan is considered cost-effective if paying the premiums, deductible, coinsurance and other cost-sharing obligations of the employer plan is less expensive than the state's expected cost of directly providing Medicaid-covered services. To meet the comprehensiveness test under Medicaid, states are required to provide coverage for those Medicaid-covered services that are not included in the private plans. In other words, they must provide "wrap-around" benefit coverage. It has proved prohibitive for many employer plans and states to meet all of these requirements. To circumvent these restrictions, most states operating SCHIP or Medicaid premium assistance programs do so under waivers. CHIPRA 2009 would create a new state plan option for providing premium assistance. States would have the option to offer premium assistance for Medicaid and SCHIP-eligible children and/or parents of Medicaid and/or SCHIP-eligible children where the family has access to employer-sponsored insurance (ESI) coverage, if the employer pays at least 40% of the total premium (and meets certain other requirements). Under CHIPRA 2009, a state offering premium assistance could not require SCHIP-eligible individuals to enroll in an employer's plan; individuals eligible for SCHIP and for employment-based coverage could choose to enroll in regular SCHIP rather than the premium assistance program. The premium assistance subsidy would generally be the difference between the worker's out-of-pocket premium that included the child(ren) versus only covering the employee. For employer plans that do not meet SCHIP benefit requirements, a wrap-around would be required. For the child's coverage using premium assistance, no cost-effectiveness test would be required regarding the cost of the private coverage (plus any necessary wrap-around) relative to regular SCHIP coverage. CHIPRA 2009 would establish a separate test for family coverage. If the SCHIP cost of covering the entire family in the employer-sponsored plan is less than regular SCHIP coverage for the eligible individual(s) alone, then the premium assistance subsidy could be used to pay the entire family's share of the premium. In states that offered premium assistance, CHIPRA 2009 would require states and participating employers to do outreach. Finally, states would be permitted to establish an employer-family premium assistance purchasing pool for employers with less than 250 employees who have at least one employee who is a SCHIP-eligible pregnant woman or at least one member of the family is a SCHIP-eligible child. The Senate version states that the new premium assistance provisions under Medicaid, not SCHIP, would apply to children enrolled in a Medicaid-expansion SCHIP program. CHIPRA 2009 includes several provisions designed to improve the quality of care under Medicaid and SCHIP. First, both bills would direct the Secretary of HHS to develop (1) child health quality measures, and (2) a standardized format for reporting information, and procedures to encourage states to voluntarily report on the quality of pediatric care in these two programs. Examples of these initiatives would include (1) grants and contracts to develop, test, update and disseminate evidence-based measures, (2) demonstrations to evaluate promising ideas for improving the quality of children's health care under Medicaid and SCHIP, (3) a demonstration to develop a comprehensive and systematic model for reducing child obesity, and (4) a program to encourage the creation and dissemination of a model electronic health record format for children enrolled in these two programs. The federal share of the costs association with developing or modifying existing data systems to store and report child health measures would be based on the matching rate applicable to benefits rather than one of the (typically) lower matching rates applied to different types of administrative expenses. Second, CHIPRA 2009 would improve the availability of public information regarding enrollment of children in Medicaid and SCHIP. Several reporting requirements would be added to states' annual SCHIP reports, including for example, data on eligibility criteria, access to primary and specialty care, and data on premium assistance for employer-sponsored coverage. CHIPRA 2009 would also require the Secretary to improve the timeliness of the enrollment and eligibility data for Medicaid and SCHIP children contained in the Medicaid Statistical Information System (MSIS) maintained by CMS and based on annual state reported enrollment and claims data. Finally, certain managed care safeguards applicable to Medicaid (e.g., process for enrollment, termination, and change in enrollment; beneficiary protections; quality assurance standards) would also be applied in the same manner to SCHIP. Under current law, states may provide SCHIP coverage under their Medicaid programs, create a new separate SCHIP program, or both. Under separate SCHIP programs, states may elect any of three benefit options: (1) a benchmark plan, (2) a benchmark-equivalent plan, or (3) any other plan that the Secretary of HHS deems would provide appropriate coverage for the target population (Secretary-approved coverage). Benchmark plans include (1) the standard Blue Cross/Blue Shield preferred provider option under the Federal Employees Health Benefits Program (FEHBP), (2) the coverage generally available to state employees, and (3) the coverage offered by the largest commercial HMO in the state. Benchmark-equivalent plans must cover basic benefits (i.e., inpatient and outpatient hospital services, physician services, lab/x-ray, and well-child care including immunizations), and must include at least 75% of the actuarial value of coverage under the selected benchmark plan for specific additional benefits (i.e., prescription drugs, mental health services, vision care and hearing services). CHIPRA 2009 would add or modify several benefits available to children under SCHIP. Both bills also address payment of premiums and related sanctions. Under CHIPRA 2009, dental services would become a required benefit under SCHIP and would include services necessary to prevent disease and promote oral health, restore oral structures to health and function, and treat emergency conditions. States would have the option to provide dental services through "benchmark dental benefit packages" modeled after the benchmark plans for medical services described above (e.g., FEHBP, state employees and commercial HMO options). CHIPRA 2009 also includes provisions for dental education for parents of newborns and dental services through federally qualified health centers. Information on dental providers and covered dental services would be available to the public via the federal Insure Kids Now website and hotline. The child health quality improvement activities described above would include measurement of dental treatment and services to maintain dental health. GAO would conduct a study on children's access to dental care under Medicaid and SCHIP. The report on this study would include recommendations for federal and state actions to address barriers to dental care, and the feasibility and appropriateness of using qualified mid-level providers to improve access. Under current law, children who are enrolled in a group health plan or employer-sponsored health insurance are not eligible for SCHIP coverage. Under Medicaid, beneficiaries may have such private coverage. With respect to beneficiary cost-sharing under current SCHIP law, states that implement SCHIP Medicaid expansions must follow the cost-sharing rules of the Medicaid program. For states that implement SCHIP through a separate state program, the maximum allowable amounts vary by family income level, and aggregate cost-sharing may not exceed 5% of family income for the year. The Senate version of H.R. 2 would provide a state option under separate SCHIP programs, subject to certain conditions, to provide dental-only supplemental coverage to children enrolled in group or employer coverage who otherwise meet SCHIP eligibility criteria. The provision would allow states to provide dental coverage consistent with the new dental benchmark benefits plans or cost-sharing protections for dental coverage applicable under SCHIP. States would be allowed to set the upper income level for this new benefit up to the level otherwise applicable under their separate SCHIP programs. States would not be allowed to offer dental-only supplemental coverage unless (1) the state has implemented the highest income eligibility permitted in federal SCHIP statute (or a waiver) as of January 1, 2009; (2) the state does not limit acceptance of applications for children or impose any enrollment caps, waiting lists, or similar eligibility limitations under SCHIP; and (3) the state provides benefits to all children in the state who apply for and meet the eligibility standards. In addition, states may not provide more favorable dental coverage or related cost-sharing protections for children provided dental-only supplemental coverage than the dental coverage or related cost-sharing protections for SCHIP children eligible for the full range of SCHIP benefits. States would have the option to not apply an eligibility waiting period for children provided dental-only supplemental coverage. Medicaid and SCHIP state plans may define what constitutes mental health benefits (if any). Current law prohibits group health plans from imposing annual and lifetime dollar limits on mental health and substance abuse benefits that are more restrictive than those applicable to medical and surgical coverage. Similarly, group health plans may not impose more restrictive treatment limits (e.g., total outpatient hospital visits or inpatient days) or cost-sharing requirements on mental health or substance abuse coverage compare to medical and surgical services. Under Medicaid, most individuals under age 21 receive comprehensive basic screening services (i.e., well-child visits, immunizations) as well as dental, vision and hearing services, through the Early and Periodic Screening, Diagnostic and Treatment Services or EPSDT benefit. In addition, EPSDT guarantees access to all federally coverable services necessary to treat a problem or condition among eligibles. CHIPRA 2009 would ensure that, in the case of a state SCHIP plan that provides both medical and surgical benefits and mental health or substance use disorder benefits, such a plan must ensure that the financial requirements and treatment limitations applicable to such mental health or substance use disorder benefits comply with the requirements of section 2705(a) of the Public Health Service Act in the same manner as such requirements apply to a group health plan. Generally, this means that the financial requirements and treatment limits applicable to mental health or substance use disorder benefits must be no more restrictive than the financial requirements and treatment limitations applicable to substantially all medical and surgical benefits covered under the state SCHIP plan. In addition, state SCHIP plans must also conform to additional mental health parity provisions in section 2705(a) of the Public Health Service Act with respect to availability of plan information and out-of-network providers. State SCHIP plans that include coverage of EPSDT services (as defined in Medicaid statute) would be deemed to satisfy this mental health parity requirement. Under current Medicaid law, payments to FQHCs and RHCs are based on a prospective payment system. Beginning in FY2001, per visit payments were based on 100% of average costs during 1999 and 2000 adjusted for changes in the scope of services furnished. (Special rules applied to entities first established after 2000.) For subsequent years, the per visit payment for all FQHCs and RHCs equals the amounts for the preceding fiscal year increased by the percentage increase in the Medicare Economic Index applicable to primary care services, and adjusted for any changes in the scope of services furnished during that fiscal year. In managed care contracts, states are required to make supplemental payments to the facility equal to the difference between the contracted amount and the cost-based amounts. CHIPRA 2009 would require states that operate separate and/or combination SCHIP programs to reimburse FQHCs and RHCs based on the Medicaid prospective payment system. This provision would apply to services provided on or after October 1, 2009. For FY2009, $5 million would be appropriated (to remain available until expended) to states with separate SCHIP programs for expenditures related to transitioning to a prospective payment system for FQHCs/RHCs under SCHIP. Finally, the Secretary would be required to report to Congress on the effects (if any) of the new prospective payment system on access to benefits, provider payment rates or scope of benefits. No statutory provision specifies a grace period for payment of SCHIP premiums. Federal regulations require states' SCHIP plans to describe the consequences for an enrollee or applicant who does not pay required premiums and the disenrollment protections adopted by the state. These protections must include the following: (1) the state must give enrollees reasonable notice of and an opportunity to pay past due premiums prior to disenrollment; (2) the disenrollment process must give the individual the opportunity to show a decline in family income that may qualify the individual for lower or no cost-sharing; and (3) the state must provide the enrollee with an opportunity for an impartial review to address disenrollment from the program, during which time the individual will continue to be enrolled. CHIPRA 2009 would require states to provide SCHIP enrollees with a grace period of at least 30 days from the beginning of a new coverage period to make premium payments before the individual's coverage may be terminated. Within 7 days after the first day of the grace period, the state would have to provide the individual with notice that failure to make a premium payment within the grace period will result in termination of coverage and that the individual has the right to challenge the proposed termination pursuant to the applicable federal regulations. This provision would be effective for new coverage periods beginning on or after the date of enactment of this act. A number of coverable benefits are listed in the SCHIP statute, such as "clinic services (including health center services) and other ambulatory health care services." CHIPRA 2009 provides that nothing in Title XXI shall be construed as limiting a state's ability to provide SCHIP for covered items and services furnished through school-based health centers. The Senate version would add a definition for "school-based health center" to include a health care clinic that (1) is located in or near a school facility of a school district or board of an Indian tribe (IT) or tribal organization (TO); (2) is organized through school, community, and health provider relationships; (3) is administered by a sponsoring facility (e.g., hospital, public health department, community health center, nonprofit health care agency, school or school system, or a program administered by the Indian Health Service or Bureau of Indian Affairs, or operated by an IT or TO); (4) provides primary health services through health professionals to children in accordance with state and local law, including laws relating to licensure and certification; and (5) satisfies such other requirements as a state may establish for the operation of such a clinic. The Senate version of CHIPRA 2009 would establish a new federal commission, called the Medicaid and CHIP Payment and Access Commission, or MACPAC. This commission would engage in a number of activities. MACPAC would review program policies under both Medicaid and SCHIP affecting children's access to benefits, including (1) payment policies, including the process for updating fees for different types of providers, payment methodologies, and the impact of these factors on access and quality of care; (2) the interaction of Medicaid and SCHIP payment policies with health care delivery generally; and (3) other policies, including those relating to transportation and language barriers. The commission would make recommendations to Congress concerning such access policies. Beginning in 2010, by March 1 of each year, the commission would submit a report to Congress containing the results of these reviews and MACPAC's recommendations regarding these policies. Also beginning in 2010, by June 1 of each year, the commission would submit another report to Congress containing an examination of issues affecting Medicaid and SCHIP, including the implications of changes in health care delivery in the U.S. and in the market for health care services. MACPAC would also be required to create an early warning system to identify provider shortage areas or other problems that threaten access to care or the health care status of Medicaid and SCHIP beneficiaries. In addition, if the Secretary of HHS submits a report to Congress (or any such committee) that is required by law and that relates to access policies, including payment policies, under Medicaid or SCHIP, a copy of that report must also be submitted to MACPAC. MACPAC would review such a report and submit written comments, along with any recommendations, to the House Committee on Energy and Commerce and the Senate Finance Committee not later than six months after the date of submittal of the Secretary's report to Congress. MACPAC would also be required to consult periodically with the chairmen and ranking minority members of these two congressional committees regarding MACPAC's agenda and progress toward achieving that agenda. MACPAC may conduct additional reviews, and submit additional reports to these congressional committees on such topics relating to Medicaid and SCHIP as requested by such chairmen and members, and as MACPAC deems appropriate. In addition, MACPAC would be required to transmit to the Secretary a copy of each report submitted to Congress, and must make such reports available to the public. With respect to each recommendation made in reports by MACPAC, each commission member must vote on said recommendation, and MACPAC must include, by member, the results of that vote in the report containing that recommendation. Before making any recommendations, MACPAC would be required to examine the budget consequences of such actions, directly or through consultation with appropriate experts. MACPAC would be composed of 17 members appointed by the Comptroller General. Additional provisions in the bill would further define (1) qualifications for Commission members, (2) length of tenure (three years) and procedures for filling vacancies, (3) compensation for members, (4) designation of a Chairman and Vice Chairman among members, and (5) meetings. The provision would also allow the commission to establish a paid, professional staff to assist in the commission's work. MACPAC would have the power to obtain official data from any department or agency of the U.S. government that is necessary to enable it to carry out its mission. MACPAC must (1) utilize existing information where possible, collected by its own staff or under other arrangements; (2) carry out, or award grants or contracts, for original research when existing information is inadequate; and (3) adopt procedures to allow submission of information by outside parties for MACPAC's use. The Comptroller General must have unrestricted access to the work of the commission, immediately upon request, and MACPAC may be subject to periodic audits by the Comptroller General. With respect to funding, MACPAC must submit requests for appropriations in the same manner as the Comptroller General submits such request, but amounts appropriated to MACPAC must be separate from amounts appropriated for the Comptroller General. In addition, the provision would authorize to be appropriated such sums as may be necessary to carry out the provisions of this section. The provision also requires the Comptroller General to appoint the initial members of the commission no later than January 1, 2010. Finally, not later than January 1, 2010, and annually thereafter, the Secretary of HHS, in consultation with the Secretaries of the Treasury and Labor, and the states, must submit an annual report to Congress on the financial status of, enrollment in, and spending trends for Medicaid for the fiscal year ending on September 30 of the preceding fiscal year. Federal agencies are required to annually review programs that are susceptible to significant erroneous payments, and to estimate the amount of improper payments, to report those estimates to Congress, and to submit a report on actions the agency is taking to reduce erroneous payments. On August 21, 2007, CMS issued a final rule for PERM for Medicaid and SCHIP (effective October 1, 2007) which responded to comments received on a interim final rule, and included some changes to that interim final rule. Assessments of payment error rates related to claims for both fee-for-service and managed care services, as well as eligibility determinations are made. A predecessor to PERM, called the Medicaid Eligibility Quality Control (MEQC) system, is operated by state Medicaid agencies for similar purposes. CHIPRA 2009 includes a number of detailed requirements with respect to the applicability of PERM requirements to SCHIP. For example, the provision requires that the final PERM rule include (1) clearly defined criteria for errors for both states and providers, (2) a clearly defined process for appealing error determinations by review contractors, and (3) clearly defined responsibilities and deadlines for states implementing corrective action plans. Both bills would also require the Secretary to review the MEQC requirements with the PERM requirements and coordinate consistent implementation of both sets of requirements, while reducing redundancies. The Secretary would also be required to establish state-specific sample sizes for application of PERM requirements to SCHIP. In the House version of CHIPRA 2009, this activity would begin with FY2009, while in the Senate version, this activity would begin with the first fiscal year that begins on or after the date on which the new final rule is in effect for all states. The Senate version would also require that the new final rule be promulgated not later than six months after the enactment of CHIPRA 2009. In establishing such sample sizes, the Secretary must minimize the administrative cost burden on states under Medicaid and SCHIP, and must maintain state flexibility to manage these programs. Finally, the bill would apply a federal matching rate of 90% to expenditures related to administration of PERM requirements applicable to SCHIP. The provision would also exclude from the 10% cap on SCHIP administrative expenses all expenditures related to administration of PERM requirements applicable to SCHIP. Under current law, the Secretary of Commerce was required to make appropriate adjustments to the Current Population Survey (CPS), which is the primary data source for determining states' current law SCHIP allotments, (1) to produce statistically reliable annual state data on the number of low-income children who do not have health insurance coverage, (2) to produce data that categorizes such children by family income, age, and race or ethnicity, and (3) where appropriate, to expand the sample size used in the state sampling units, to expand the number of sampling units in a state, and to include an appropriate verification element. For this purpose, $10 million was appropriated annually, beginning in FY2000. CHIPRA 2009 would provide $20 million for FY2009 and each subsequent year thereafter to produce these data for SCHIP purposes. In addition to the current-law requirements of the appropriation, for data collection beginning with FY2009, in consultation with the Secretary of HHS, the Secretary of Commerce would be required to (1) make adjustments to the CPS to develop more accurate state-specific estimates of the number of children enrolled in SCHIP or Medicaid, (2) to make adjustments to the CPS to improve the survey estimates used to determine the child population growth factor in the new financing structure under this bill and any other necessary data, (3) to include health insurance survey information for the American Community Survey (ACS) related to children, and (4) to assess whether estimates from the ACS produce more reliable estimates than the CPS for the child population growth factor in the new SCHIP financing structure established under this bill. On the basis of that assessment, the Commerce Secretary would recommend to the HHS Secretary whether ACS estimates should be used in lieu of, or in some combination with, CPS estimates for these purposes. The Secretary of HHS was required to conduct an independent evaluation of 10 states with approved SCHIP plans, and to submit a report on that study to Congress by December 31, 2001. Ten million dollars was appropriated for this purpose in FY2000 and was available for expenditure through FY2002. The 10 states chosen for the evaluation were to be ones that utilized diverse approaches to providing SCHIP coverage, represented various geographic areas (including a mix of rural and urban areas), and contained a significant portion of uninsured children. A number of matters were included in this evaluation, including (1) surveys of the target populations, (2) an evaluation of effective and ineffective outreach and enrollment strategies, and identification of enrollment barriers, (3) the extent to which coordination between Medicaid and SCHIP affected enrollment, (4) an assessment of the effects of cost-sharing on utilization, enrollment and retention, and (5) an evaluation of disenrollment or other retention issues. CHIPRA 2009 would require the Secretary of HHS to conduct a new, independent federal evaluation of 10 states with approved SCHIP plans, directly or through contracts or interagency agreements, as before. The new evaluation would be submitted to Congress by December 31, 2011. Ten million dollars would be appropriated for this purpose in FY2010 and made available for expenditure through FY2012. The current-law language for the types of states to be chosen and the matters included in the evaluation would also apply to this new evaluation. Every third fiscal year (beginning with FY2000), the Secretary (through the Inspector General of the Department of Health and Human Services) must audit a sample from among the states with an approved SCHIP state plan that does not, as a part of that plan, provide health benefits coverage under Medicaid. The Comptroller General of the United States must monitor these audits and, not later than March 1 of each fiscal year after a fiscal year in which an audit is conducted, submit a report to Congress on the results of the audit conducted during the prior fiscal year. Under CHIPRA 2009, for the purpose of evaluating and auditing the SCHIP program, the Secretary, the Office of Inspector General, and the Comptroller General would have access to any books, accounts, records, correspondence, and other documents that are related to the expenditure of federal SCHIP funds and that are in the possession, custody, or control of states, political subdivisions of states, or their grantees or contractors. This provision would also apply for the purpose of evaluating and auditing the Medicaid program. Under the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit under Medicaid, most individuals under age 21 must have access to comprehensive basic screening services (e.g., well-child visits including age-appropriate immunizations) as well as dental, vision and hearing services. In addition, EPSDT guarantees access to all federally coverable services necessary to treat a problem or condition among eligible individuals. The Deficit Reduction Act of 2005 (DRA; P.L. 109-171 ) gave states the option to provide Medicaid to certain state-specified groups through enrollment in benchmark and benchmark-equivalent coverage that is nearly identical to plans available under SCHIP. For any child under age 19 in one of the major mandatory and optional eligibility groups in Medicaid, wrap-around benefits to the DRA benchmark and benchmark-equivalent coverage includes EPSDT. CHIPRA 2009 identifies specific sections of current Medicaid law (instead of all of Title XIX as specified in DRA) that would be disregarded in order to provide benchmark benefit coverage. It also specifies that an individual's entitlement to EPSDT services would remain in tact under the Medicaid benchmark benefit package option under DRA. CHIPRA 2009 also includes additional provisions that affect the Medicaid and/or SCHIP programs. These would permit territories that qualify for the enhanced federal match that is available under Medicaid for improvements in data reporting systems to be reimbursed for such improvements outside of the territory's Medicaid spending cap; eliminate counting Medicaid child presumptive eligibility costs against SCHIP allotments; improve outreach and enrollment of Indians under Medicaid and SCHIP, and exclusion of expenditures related to these activities from the 10% limit on SCHIP expenditures related to outreach and certain other activities; require the Secretary of HHS, in consultation with other organizations, to develop a model process (and report for Congress) for the coordination of enrollment, retention, and coverage of children who frequently change their residency due to migration of families, emergency evacuations, educational needs, etc.; amend applicable federal laws to streamline coordination between public and private coverage, including making the loss of Medicaid/SCHIP eligibility a "qualifying event" for the purpose of purchasing employer-sponsored coverage, and require employers to notify families of their potential eligibility for premium assistance; prohibit the Secretary of HHS from approving any new Health Opportunity Account demonstrations as of the date of enactment of this Act; make technical corrections to selected Medicaid provisions in the Deficit Reduction Act of 2005 ( P.L. 109-171 ) that would (1) correct references to children in foster care receiving child welfare services and (2) require the Secretary to publish the provisions that the Secretary has determined do not apply in order for a state to implement a state plan amendment to provide benchmark benefits to selected Medicaid populations, and the reason for such determinations; change references to the "State Children's Health Insurance Program" and the term "SCHIP" currently used in official federal communications to "Children's Health Insurance Program" and "CHIP," respectively; provide an adjustment in the computation of the Medicaid federal medical assistance percentage (FMAP) to disregard an extraordinary employer pension contribution; prohibit the Secretary from denying federal matching payments when the state share has been transferred from or certified by certain publicly owned regional medical centers in other states if the Secretary determines that the use of such funds is proper and in the interest of the Medicaid program; extend the special disproportionate share hospital (DSH) allotment arrangements under Medicaid for Tennessee and Hawaii through a portion of FY2012; require the Comptroller General to submit a report to the Committee on Finance in the Senate and the Committee on Energy and Commerce in the House of Representatives analyzing the extent to which state payment rates for Medicaid managed care organizations are actuarially sound (in the Senate version of H.R. 2 only); establish a task force to conduct a nationwide campaign of education and outreach for small businesses regarding the availability of coverage for children through private insurance, Medicaid, and SCHIP; and include a Sense of Senate regarding access to affordable and meaningful health insurance coverage. Under current law, physicians are generally prohibited from referring Medicare patients for certain designated services to facilities in which they (or their immediate family members) have financial interests. However, among other exceptions, physicians are not prohibited from referring patients to whole hospitals in which they have ownership or investment interests. Under the House version of H.R. 2 , a hospital with physician ownership and a Medicare provider agreement on January 1, 2009, would be required to meet other specified requirements to be exempt from the self-referral ban. The hospital would have to comply with requirements that prevent conflicts of interest, ensure bona fide investment, and address patient safety concerns. Also, the percentage of total assets held in the hospital by physician owners or investors could not exceed that as of the date of enactment. With certain exceptions, these hospitals would not be able to increase the number of operating rooms, procedure rooms, and beds after the date of enactment. To the extent that such expansions are permitted, any increase would be restricted to the main campus of the applicable hospital. Hospitals that are converted from ambulatory surgical centers after the date of enactment would not be eligible for an exception from the self referral prohibition. The Senate version does not include this provision. The source of revenue for CHIPRA 2009 would be an increase in tobacco excise taxes. The legislation would also incorporate a revision in corporate estimated tax payments to shift revenues into the five-year budget horizon. The vast majority of tobacco taxes are on cigarettes, which account for 97% of federal tobacco tax revenue. Under current law, excise taxes on cigarettes and other tobacco products include the following rates: federal cigarette taxes: $0.39 per pack; small cigars: $.04 per package of 20; large cigars: 20.719% of sales price, not to exceed $48.75 per 1,000 units (i.e., a maximum tax of almost $.05 cents per cigar); chewing tobacco: $.01 per ounce; snuff: $.04 per ounce; and pipe and roll-your-own tobacco: $.07 per ounce. There are also taxes on cigarette paper and cigarette tubes. These taxes are imposed per pound and the rates are as follows: (1) $0.195 for chewing tobacco, (2) $0.585 for snuff, and (3) $1.0606 for pipe and roll-your-own tobacco. There are also taxes on large cigarettes that are essentially non-existent (although a tax is necessary for administrative reasons). The House version of H.R. 2 would increase taxes on cigarettes and tobacco-related products (effective April 1, 2009) to the following rates: federal cigarette taxes would be increased to $1.00 per pack; small cigars would have their taxes gradually increased to the same level as cigarettes: $0.25 per pack in 2009-2010, $0.50 in 2011-2012, $0.75 in 2013-2014, and $1.00 in 2015 and thereafter; large cigars would be subject to a tax of 52.4% of sales price with a maximum of $0.40 per cigar; chewing tobacco would be increased to approximately $.03 cents per ounce (and $0.50 per pound); snuff would be increased to $.09 per ounce ($1.50 per pound); pipe tobacco would be increased to $.18 per ounce ($2.8126 per pound); roll-your-own tobacco would be increased to $1.53 per ounce ($24.62 per pound). The definition of roll–your-own tobacco would be expanded to include tobacco that could be used to make cigars. The large increase in roll-your-own tobacco reflects concerns that this tobacco might substitute for cigarettes; cigarette papers taxes would rise from $1.22 per 40, to $3.13; cigarette tubes would rise from $2.44 to $6.26. CHIPRA 2009 also would include provisions affecting floor stock taxes that would apply to items removed from the manufacturer before the April 1, 2009, effective date, and subsequently sold after that date. The person holding the items on April 1, 2009, would be liable, and there would be a $500 credit per person. (A person is considered to be a controlled group. For example, a corporation can not receive the $500 credit for each of its subsidiaries.) The floor stocks tax would also apply to products in a foreign trade zone (i.e., imports). The purpose of the floor stock tax would be to prevent the stockpiling of tobacco products before the April 1, 2009, effective date for future sales. CHIPRA 2009 would also impose some regulatory and reporting requirements on manufacturers and importers of processed tobacco other than the tobacco products subject to excise taxes. Finally, CHIPRA 2009 would expand the scope of penalties for not paying the tobacco-related tax, clarify the statute of limitations, and mandate a study of tobacco smuggling. These provisions in the Senate version of H.R. 2 are essentially identical to the House version, with very small increases in tax rates across the tobacco products. However, the Senate version proposes to increase the tax on small cigars to the same level as cigarettes immediately; federal cigarette taxes would be increased to $1.0066 per pack; small cigars would have their taxes increased to the same level as cigarettes; large cigars would be subject to a tax of 52.75% of sales price with a maximum of $0.4026 per cigar; chewing tobacco would be increased to approximately $.03 cents per ounce (and $0.5033 per pound); snuff would be increased to $.09 per ounce ($1.51 per pound); pipe tobacco would be increased to $.18 per ounce ($2.8311 per pound); roll-your-own tobacco would be increased to $1.55 per ounce ($24.78 per pound). The definition of roll-your-own tobacco would be expanded to include tobacco that could be used to make cigars. The large increase in roll-your-own tobacco reflects concerns that this tobacco might substitute for cigarettes; cigarette papers taxes would rise from $1.22 per 40, to $3.15; cigarette tubes would rise from $2.44 to $6.30. Under current law, quarterly estimated corporate tax payments due in July, August, and September of 2013 are 120% of the normal required payment, with the next such payment reduced accordingly. The House version of H.R. 2 would increase this ratio to 121%, shifting $600 million of corporate taxes from FY2014 to FY2013. The Senate version of H.R. 2 would increase the ratio to 120.5% and shift $300 million of corporate taxes from FY2014 to FY2013. The current-law 120% withholding provision does not apply to firms with assets of less than $1 billion, and the withholding increase under CHIPRA 2009 would not alter that exemption. | The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA 2009, H.R. 2) was passed in the House on January 14, 2009, and in the Senate on January 29, 2009. The overall structure of CHIPRA 2009 is similar to its two predecessors, H.R. 976 and H.R. 3963 from the 110th Congress. Most of this report summarizes changes to current law across the major provisions of CHIPRA 2009. Where the provisions of the House and Senate versions are identical, the references in this report will simply be to "CHIPRA 2009." Where the provisions differ, the House and Senate versions will be described separately. |
Legislative interest in the patent system was evidenced by the introduction of reform legislation in earlier sessions of Congress. In the 111 th Congress, bills would have amended existing patent law in numerous respects, including changes to the right of a patent owner to obtain compensatory damages, the standard for judicial award of enhanced damages for willful infringement, the ability of patent owners to select the court in which they will bring suit, and the willingness of courts to accept appeals of orders interpreting a patent. Patent reform legislation introduced in earlier Congresses would have made additional changes, including modifications to the doctrine of inequitable conduct. Discussion of these issues may potentially continue in the 112 th Congress. Although the patent system has been the subject of congressional scrutiny over the past few years, the courts have also been active in making changes to important patent law principles. Many changes introduced by the judiciary have concerned topics that are also the subject of congressional consideration. For example, the Supreme Court issued an important decision concerning injunctive relief in eBay Inc. v. MercExchange , L.L.C. at the same time legislation before Congress would have addressed that issue. Some experts believe that as a result of the eBay decision, legislative reform of the principles of injunctive relief in patent law became unnecessary. Indeed, the patent reform bills placed before Congress subsequent to eBay have not addressed this issue. Review of pertinent judicial developments relating to selected patent law topics is timely for several reasons. First, an awareness of recent judicial opinions may assist understanding of the context of current legislative reform proposals. Second, some observers believe that several of these opinions have addressed the very concerns that had motivated legislative reform proposals, thereby obviating or reducing the need for congressional action. Third, a review of legislative and judicial developments provides an instructive historical narrative and allows for a comparison of relative institutional capabilities of these two branches of government. This report reviews the relationship between Congress and the courts in patent reform. It begins by offering a summary of the patent system. The report then discusses a number of topics that have been the subject of both judicial and legislative consideration. The current state of the law is then contrasted with legislative reform proposals before previous Congresses. The report closes with observations concerning the subtle interaction between legislative, administrative, and judicial actors within the patent system and their impact upon the U.S. innovation environment. The U.S. Constitution confers upon Congress the power "To promote the Progress of ... useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries...." In accordance with the Patent Act of 1952, an inventor may seek the grant of a patent by preparing and submitting an application to the U.S. Patent & Trademark Office (USPTO). USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent. USPTO procedures require examiners to determine whether the invention fulfills certain substantive standards set by the patent statute. To be patentable, an invention that constitutes a "process, machine, manufacture, or composition of matter" may be patented. It must also be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. In addition, an invention is not patentable if "the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." This requirement of "nonobviousness" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art. The invention must also be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit. In addition to these substantive requirements, the USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must disclose the "best mode," or preferred way, that the applicant knows to practice the invention. If the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Patent rights do not enforce themselves. Patent owners who wish to compel others to respect their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. Since 2005, a number of bills titled "The Patent Reform Act" have been introduced before Congress. To varying degrees, each of the bills would work substantial changes to the current patent system. The bills have differed in the specific reforms that they have proposed. The many proposed reforms have included a shift to a first-inventor-to-file priority system, allowance of assignee filing, changes to the law of patent damages, introduction of post-grant opposition proceedings, and modifications to the principle of venue as it applies to patent cases. None of this legislation has yet been enacted. Even as Congress has contemplated patent reform legislation, the courts also have been active in issuing patent decisions. Many of these rulings relate to the same legal topics that proposed legislation would address, and several made significant changes to existing law. As attorneys Bill Rooklidge and Alyson Barker observe, "through a variety of important decisions, the courts have embarked on their own patent reform." This paper next reviews a common phenomenon in patent reform: Judicial changes to legal doctrines that are the subject of pending congressional legislation. Numerous patent substantive and procedural doctrines have fallen under legislative scrutiny in recent years. A recent, recurring trend is that the courts have contemporaneously reviewed a number of the same principles. Among them are the availability of injunctions in patent cases, selection of the appropriate venue for trying a patent case, the assessment of damages against adjudicated infringers, the standards governing determinations of willful infringement, extraterritorial patent enforcement, and the availability of patents for tax planning methods. This report reviews each of these episodes in turn. Section 283 of the Patent Act allows courts to "grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." In practice, for much of its history the Federal Circuit routinely granted injunctions to patent owners that prevailed in infringement litigation. Only in rare instances, when the patented invention pertained to an important public need, would an injunction be denied. An injunction prevents the adjudicated infringer from practicing the patented invention until the patent expires. Some observers criticized injunction practice as encouraging speculation by entities that do not engage in research, development, or manufacturing, but rather acquire and enforce patents against companies with commercialized products. These speculators were sometimes termed "patent trolls," an arguably pejorative term that referred to creatures from folklore that would emerge from under a bridge in order to waylay travelers. Some manufacturers were concerned that the Federal Circuit's injunction practice provided non-manufacturing entities with too much leverage during patent licensing negotiations. In view of industry concerns, the 109 th Congress contemplated amending section 283 of the Patent Act. Under a proposal included within H.R. 2795 , the Patent Reform Act of 2005, courts would have been required to "consider the fairness of the remedy in light of all the facts and the relevant interests of the parties associated with the invention." This legislation was not enacted. As discussion of legislative proposals with respect to injunctions continued, the judiciary reached a number of rulings on this topic. One of them resulted from the well-known patent litigation concerning the BlackBerry handheld device and communication service. In that litigation, a federal district court ruled that the BlackBerry infringed patents held by New Technology Products, Inc. (NTP). When the Federal Circuit affirmed this judgment, many BlackBerry subscribers faced the unsettling prospect of an immediate interruption of service due to a court-ordered injunction. A subsequent settlement between the litigants ensured that an injunction would never come into effect. The BlackBerry patent litigation led to increasing discussion over the availability of injunctions in patent cases, perhaps in part because NTP did not commercialize the patented invention itself. Shortly after the BlackBerry litigation concluded, the Supreme Court issued an important decision concerning injunctive relief in eBay Inc. v. MercExchange, L.L.C. The patent at issue in the eBay case concerned "a system for selling goods through an 'electronic network of consignment stores.'" The district court explained that the patent proprietor, MercExchange, "does not practice its inventions and exists merely to license its patented technology to others." Although a jury concluded that eBay infringed the MercExchange patent, the district court refused to issue an injunction. The district court in part reasoned that MercExchange had licensed its patents to others, did not practice its invention, and had made comments to the media that it desired to obtain royalties from eBay rather than obtain an injunction. On appeal, the Federal Circuit rejected the district court's reasoning and ruled that MercExchange was entitled to an injunction. The appellate court explained that "[b]ecause the right to exclude recognized in a patent is but the essence of the concept of property, the general rule is that a permanent injunction will issue once infringement and validity have been adjudged." The Federal Circuit did recognize that in rare cases a court should decline to issue an injunction, such as "when a patentee's failure to practice the patented invention frustrates an important public need for the invention." In this case, however, the Federal Circuit concluded that the district court had not offered "any persuasive reason to believe this case is sufficiently exceptional to justify the denial of a permanent injunction." The Supreme Court subsequently granted certiorari and issued an opinion vacating the Federal Circuit's judgment. According to Justice Thomas, the author of the unanimous opinion of the Court, neither lower court had followed the correct rules in deciding whether to issue an injunction or not. The Supreme Court explained that the district court had incorrectly reasoned that injunctive relief was unavailable where patent proprietors chose to license their patents rather than commercialize the patented invention themselves. Justice Thomas further explained that although the Patent Act requires that injunctions issue "in accordance with the principles of equity," the Federal Circuit had ignored long-established equitable standards in following a "general rule" that injunctions issue. The Supreme Court directed lower courts to consider four traditional factors for deciding whether an injunction should issue or not in patent infringement cases. Those factors are: (1) whether the patent owner would face irreparable injury if the injunction did not issue; (2) whether the patent owner possesses an adequate legal remedy, such as monetary damages; (3) whether granting the injunction would be in the public interest; and (4) whether the balance of hardships tips in the patent owner's favor. Expressing no opinion about how these factors applied to the dispute between the litigants, the Supreme Court then remanded the case to the district court. In the wake of eBay , some courts have declined to issue injunctions against adjudicated infringers of valid and enforceable patents. Opinions upon the impact of the eBay ruling upon legislative reform of patent injunctions have varied. Some observers believed that "the Supreme Court failed to meaningfully restructure the injunctive grant process in its eBay rejection of the automatic injunction rule" and opined that "the need for legislation ... is renewed rather than removed." Others viewed the Supreme Court's ruling more favorably. For example, attorneys Bill Rooklidge and Alyson Barker describe eBay as a "solution to the perceived injunction problem" that satisfied the concerns of different constituents in the patent filed in an "elegant" manner. The latter view appears to have prevailed, however, as no subsequent versions of the Patent Reform Act have incorporated proposed reforms to injunction practice. Rooklidge and Barker have therefore concluded that the "legislative effort to reform injunctions is finished, at least for the foreseeable future." Patent reform legislation also has proposed changes to the rules governing the doctrine of venue in patent litigation. Venue principles decide which court, out of those that possess personal and subject matter jurisdiction, may most conveniently hear a particular lawsuit. Patent cases are governed by a specialized venue statute codified at 28 U.S.C. § 1400(b). That statute provides that in patent litigation, venue is proper either: (1) in the judicial district where the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business. An important question under this provision is where a corporation is deemed to "reside." Prior to 1988, a corporation was viewed as residing in its state of its incorporation. In 1988, Congress adopted a new definition of "reside" as it applies to venue for corporate defendants. Under the new definition, a corporation is presumed to reside in any judicial district to which it could be subject to personal jurisdiction at the time the litigation commences. Congress codified this change in a separate provision found at 28 U.S.C. § 1391. Although Congress arguably did not contemplate that these reforms would hold consequences for the specialized patent venue statute, the Federal Circuit nonetheless held that this amendment should also be read into § 1400(b). The result of the 1988 amendments has been significant for corporate defendants, which constitute the majority of defendants in patent litigation. Although § 1400(b) still governs venue in patent cases, few, if any plaintiffs rely upon the restrictive second prong of that section. Instead they base venue upon the "residence" requirement of the first prong—which now is entirely conterminous with personal jurisdiction, and which for larger corporations is likely to include every federal district in the country. For corporate defendants, then, the venue statute has essentially become superfluous, for the same standards governing personal jurisdiction also dictate whether a court may provide an appropriate venue or not. Some observers allege that the liberal venue statute promotes forum shopping, allowing patent proprietors to bring suit in courts that they believe favor patent owners over accused infringers. One such "magnet jurisdiction" is said to be the rural Eastern District of Texas, and in particular the Marshall, Texas, federal court. According to one account, many observers "wonder how a East Texas town of 25,000—even if it was named after Supreme Court Justice John Marshall—came to harbor an oversized share of intellectual property disputes." In addition, reportedly "many of the local lawyers who once specialized in personal injury cases are turning their attention to intellectual property law." Others believe that the existence of a single appellate court for patent cases, the Federal Circuit, minimizes forum shopping concerns, and that certain district courts attract patent cases due to their expertise and timeliness, rather than an inherent favoritism for patent holders. While the 110 th Congress was considering legislative changes, the Federal Circuit also addressed the venue laws. In its December 29, 2008, decision in In re TS Tech USA Corp ., the Federal Circuit held that the District Court for the Eastern District of Texas abused its discretion in denying a motion to transfer to another venue. Some observers believe that the TS Tech decision eliminated the need for legislative intervention, while others suggest that one current congressional proposal would codify its holding. In TS Tech , Lear Corporation brought a patent infringement suit in the Eastern District of Texas against TS Tech, which operated principal places of business in Ohio, Michigan, and Canada. The district court denied TS Tech's request for transfer to Ohio, in part reasoning that the Eastern District of Texas possessed a local interest in resolving patent infringement disputes involving products sold there. The district court also held that the district presumptively was convenient for one of the litigants because Lear had chosen to file suit there. In its review of the issue, the Federal Circuit granted TS Tech's petition to transfer the litigation to Ohio. Several factors were central to the Federal Circuit's holding. The appellate court reasoned that the district court had given too much weight to Lear's choice of venue. It further explained that the district court had not given sufficient weight to the cost of attendance for witnesses, as well as the inconvenience associated with physical and documentary evidence located distant from Texas. Finally, the Federal Circuit observed that the alleged infringing products were sold throughout the United States. As a result, the Eastern District of Texas had no greater connection to the dispute than any other venue. Some observers believe that these factors are present in many patent cases brought before the Eastern District of Texas, and possibly other magnet jurisdictions. As a result, TS Tech may mean that motions to transfer venue will be granted with greater frequency. Other observers are less impressed, believing that TS Tech did not work a "sea change" in transfer motion practice and observing that the patent dockets of the Eastern District of Texas remain active. Subsequent to TS Tech , several different versions of the Patent Reform Act have proposed changes to the venue provisions governing patent cases. In the 111 th Congress, three bills titled "The Patent Reform Act of 2009" considered this issue. They were H.R. 1260 , introduced on March 3, 2009, by Representative Conyers; S. 515 , introduced on March 3, 2009, by Senators Hatch and Leahy; and S. 610 , introduced by Senator Kyl on March 17, 2009. On April 2, 2009, the Senate Judiciary Committee voted 15-4 to bring S. 515 before the full Senate. None of this legislation was enacted. In the 111 th Congress, H.R. 1260 and S. 610 generally called for venue to exist (1) where the defendant has its principal place of business, (2) where the defendant has committed a substantial portion of its acts of infringement and has an established physical facility, (3) if the plaintiff is an institution of higher education, individual, or small business, the plaintiff's residence, or (4) the place of the plaintiff's established physical facility devoted to research, development, or manufacturing. In addition, H.R. 1260 stipulated that "a party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court." In contrast, S. 515 did not present new substantive rules for venue for patent cases. Rather, it succinctly provided that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court shall transfer any civil action arising under any Act of Congress relating to patents upon a showing that the transferee venue is clearly more convenient than the venue in which the civil action is pending." Some observers believed that S. 515 would essentially have codified the holding in the TS Tech case. Commencing with the introduction of the Patent Reform Act of 2005 in the 109 th Congress, each version of omnibus reform legislation has proposed amendments to the damages provisions of the Patent Act. These proposals have been, in the eyes of some observers, the most contentious issue within the debate over the modern patent system. This difference in views may arise from divergent conceptions over the fairness of damages awards levied against infringers. Some commentators believe that current damages standards have resulted in the systemic overcompensation of patent owners. Such overcompensation may place unreasonable royalty burdens upon producers of high technology products, ultimately impeding the process of technological innovation and dissemination that the patent system is meant to foster. Others believe that current case law appropriately assesses damages for patent infringement. These observers are concerned that this reform might overly restrict damages in patent cases, thereby discouraging voluntary licensing and promoting infringement of patent rights. Limited damage awards for patent infringement might prevent innovators from realizing the value of their inventive contributions, a principal goal of the patent system. This debate, at least in part, is fueled by the fact that marketplace circumstances often make the determination of an appropriate damages award in patent litigation very difficult. In some cases, the product or process that is found to infringe may incorporate numerous additional elements beyond the patented invention. For example, the asserted patent may relate to a single component of an audio speaker, while the accused product consists of the entire stereo system. In such circumstances, a court may apply "the entire market value rule," which "permits recovery of damages based upon the entire apparatus containing several features, where the patent-related feature is the basis for consumer demand." On the other hand, if the court determines that the infringing sales were due to many factors beyond the use of the patented invention, the court may apply principles of "apportionment" to measure damages based upon the value of the patented feature alone. As discussion of damages reform has proceeded before Congress, the courts have also been active. One of the more notable cases on patent damages principles arose from the efforts of Lucent Technologies, Inc., to enforce its so-called "Day patent," which related to a method of entering information into fields on a computer screen without using a keyboard. In 2002, Lucent brought an infringement suit against computer manufacturer Gateway, Inc. Lucent asserted that Gateway infringed the Day patent because certain software developed by Microsoft Corporation—Microsoft Money, Microsoft Outlook, and Windows Mobile—were pre-installed in Gateway computers. More particularly, Lucent asserted that the software infringed because it enables the user to select a series of numbers corresponding to a day, month, and year using graphical controls. Microsoft subsequently intervened in order to defend the "date-picker tool" found in its software. At trial, the jury found the Day patent not invalid and infringed. Lucent sought damages of $561.9 million based on 8% of Microsoft's infringing sales, while Microsoft asserted "that a lump-sum payment of $6.5 million would have been the correct amount for licensing the protected technology." The jury then awarded Lucent a single lump-sum amount of $357,693,056.18 for all three Microsoft products. Microsoft subsequently pursued an appeal. The litigation in Lucent Technologies, Inc. v. Gateway, Inc. captured the attention of many observers. In a March 3, 2009, letter addressed to Senator Patrick Leahy, Chairman of the Judiciary Committee, Senator Arlen Specter requested a delay in Senate action on the Patent Reform Act of 2009 until the Federal Circuit heard oral argument in the case . Observing a "symbiotic relationship between the judicial and legislative branches with regard to changes to the patent system," Senator Specter believed that "oral argument has the potential to facilitate a compromise or clarify the applicability of damages theories in various contexts." The Federal Circuit heard oral argument in the Lucent appeal on June 2, 2009, and issued its opinion on September 11, 2009. In its decision, the Federal Circuit upheld the lower court's determination that the Day patent was not invalid and infringed. In the most anticipated portion of the opinion, the appellate court also struck down the jury's damages award as not supported by substantial evidence. A lengthy portion of the Lucent opinion undertook a detailed review of the numerous elements—the so-called Georgia-Pacific factors—that were before the lower court when it reached its damages determination. The Federal Circuit ultimately concluded that the "evidence does not sustain a finding that, at the time of infringement, Microsoft and Lucent would have agreed to a lump-sum royalty payment subsequently amounting to approximately 8% of Microsoft's revenues for the sale of Outlook (and necessarily a larger percentage of Outlook's profits)." Some observers believe that the Federal Circuit has placed renewed emphasis upon the use of reliable evidence of damages in patent trials. For example, patent attorney Johnathan Tropp reportedly viewed Lucent as "an important signal to district courts that they have a responsibility to ... ensure that damages verdicts are appropriate and based on substantial evidence." In addition, Lucent discussed the controversial issue of apportionment. Under the facts of the case, the Federal Circuit concluded that the entire market value rule did not apply: [T]he only reasonable conclusion supported by the evidence is that the infringing use of the datepicker tool in Outlook is but a very small component of a much larger software program. The vast majority of the features, when used, do not infringe. The date-picker tool's minor role in the overall program is further confirmed when one considers the relative importance of certain other features, e.g., email. Consistent with this description of Outlook, Lucent did not carry its evidentiary burden of proving that anyone purchased Outlook because of the patented method. The Federal Circuit went on to speak in a more general way: Although our law states certain mandatory conditions for applying the entire market value rule ... the base used in a running royalty calculation can always be the value of the entire commercial embodiment, as long as the magnitude of the rate is within an acceptable range.... [E]ven when the patented invention is a small component of a much larger commercial product, awarding a reasonable royalty based on either sale price or number of units sold can be economically justified. Some disagreement has reportedly resulted from this language. As legal journalist Steven Seidenberg explains: Some say the ruling allows damages to be calculated based on an infringing product's entire market value, provided the calculation realistically reflects the patent's importance in the infringing product. Others assert that entire market value can be used only when a plaintiff's patented feature drives consumer demand for the infringing product, and that any damage calculations must reflect the relative importance of the infringing product. Each of the three patent reform bills in the 111 th Congress was introduced prior to the issuance of the Lucent opinion. At least one observer, patent lawyer Kevin McCabe, reportedly opined that "the Lucent decision is the Federal Circuit's way of showing Congress that damage reform is unnecessary." In any event, in the 111 th Congress, H.R. 1260 , S. 515 , and S. 610 each addressed monetary remedies in patent cases. In brief, both H.R. 1260 and S. 515 called for a court to select one of the following methods for determining a "reasonable royalty" as the measure of damages: (1) the economic value that is properly attributable to the patented invention's specific contribution over the prior art, (2) the entire market value rule, or (3) other factors, such as terms of the nonexclusive marketplace licensing of the invention. Both bills also stipulated that courts may receive expert testimony as an aid to the determination of the appropriate royalty. In contrast, S. 610 did not expressly address apportionment and the entire market value rule. It instead allowed courts to "consider any factors that are relevant to the determination of a reasonable royalty." However, S. 610 stipulated that the amount of royalties paid for patents other than the patent subject to litigation may only be considered in particular circumstances, and further that the financial condition of the infringer is not relevant to the reasonable royalty determination. S. 610 also required damages experts who intend to present testimony to provide data and other information from which they draw their conclusions, and also mandated that trial judges determine whether such testimony is based upon legally sufficient evidence before allowing it to be considered by a jury. The patent statute currently provides that the court "may increase the damages up to three times the amount found or assessed." An award of enhanced damages, as well as the amount by which the damages will be increased, falls within the discretion of the trial court. Although the statute does not specify the circumstances in which enhanced damages are appropriate, the Federal Circuit has limited such awards to cases of "willful infringement." The appellate court has explained that willful infringement occurs when "the infringer acted in wanton disregard of the patentee's patent rights" based upon such circumstances as copying, closeness of the case, the infringer's concealment of its conduct, and the infringer's motivations. In its 1992 opinion in Read Corp. v. Portec, Inc. , the Federal Circuit explained that: Willfulness is a determination as to a state of mind. One who has actual notice of another's patent rights has an affirmative duty to respect those rights. That affirmative duty normally entails obtaining advice of legal counsel although the absence of such advice does not mandate a finding of willfulness. As framed in Read v. Portec and numerous other judicial opinions issued prior to 2007, the willful infringement doctrine has proved controversial. Some observers believe that this doctrine ensured that patent rights will be respected in the marketplace. Critics of willful infringement believed that the possibility of trebled damages discourages individuals from reviewing issued patents. Out of fear that their inquisitiveness will result in multiple damages, innovators might simply avoid looking at patents until they are sued for infringement. To the extent this observation was correct, the law of willful infringement discouraged the dissemination of technical knowledge, thereby thwarting one of the principal goals of the patent system. Fear of increased liability for willful infringement might have also discouraged firms from challenging patents of dubious validity. In view of these critiques, Congress considered legislative amendments to the law of willful infringement as early as 2005. However, in its 2007 decision in In re Seagate Technology , the Federal Circuit made significant changes to the law of willful infringement itself. The appellate court overturned two decades of its precedent by opting to "abandon the affirmative duty of due care." The Federal Circuit instead explained that accused infringers possessed no obligation to obtain an opinion of counsel. Rather, "proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." Under this view, the "state of mind of the accused infringer is not relevant to this objective inquiry." Many observers believe that Seagate significantly limited the circumstances under which courts will conclude that an infringer acted willfully. Due to the Seagate opinion, some commentators believe that congressional reform of willful infringement principles is not needed at this time. Others are more skeptical, believing that the "new objective recklessness standard will result in little practical change because potential infringers will likely continue to seek opinions of competent counsel to protect against a charge of willful infringement." In the 111 th Congress, H.R. 1260 and S. 515 included identical language that would add several clarifications and changes to the law of willful infringement. First, a finding of willful infringement would be appropriate only where (1) the infringer received specific written notice from the patentee and continued to infringe after a reasonable opportunity to investigate; (2) the infringer intentionally copied from the patentee with knowledge of the patent; or (3) the infringer continued to infringe after an adverse court ruling. Second, willful infringement cannot be found where the infringer possessed an informed, good faith belief that its conduct was not infringing. Finally, a court may not determine willful infringement before the date on which the court determines that the patent is not invalid, enforceable, and infringed. No comparable language appeared in S. 610 . U.S. patents are generally effective only in the United States. They normally do not provide protection against acts that occur in other nations. However, one provision of the Patent Act, 35 U.S.C. § 271(f), provides U.S. patent owners with a limited measure of extraterritorial protection. Specifically, § 271(f) prohibits "supplying" a "component" of a patented invention abroad knowing that such components would be combined in a manner that would infringe the patent if such combination occurred within the United States. Congress enacted § 271(f) in order to prevent individuals from avoiding infringement liability under U.S. law by manufacturing parts domestically before shipping them abroad to be assembled into a patented device. Some observers had expressed concerns that § 271(f) had been interpreted overly broadly. In particular, the Federal Circuit had ruled that software designed in the United States, and then transmitted abroad for copying and sale, fell within § 271(f). Some commentators believed that this holding would "impose liability for software developed in America and sold overseas," with the result that "American software developers would have faced a competitive disadvantage vis-à-vis their foreign counterparts." Proposals before Congress would have addressed this concern. In the 109 th Congress, S. 3818 , titled the Patent Reform Act of 2006, would have repealed 35 U.S.C. § 271(f). However, the courts were the first to address the controversy regarding extraterritorial patent protection. In 2007, the Supreme Court issued its opinion in Microsoft Corp. v. AT&T Corp. The issue before the Court was whether § 271(f) applied to a "master disk" of software that Microsoft sent from the United States to a foreign manufacturer. The foreign manufacturer then used the disk to create multiple copies of the software that was then installed on computers that were made and sold abroad. The Supreme Court held that sending the master disk abroad did not constitute "supplying" a "component" of the foreign computers within the meaning of § 271(f). This "narrowing reading of § 271(f)" limited the liability of software firms accused of patent infringement based upon overseas activity. Possibly as a result of Microsoft v. AT&T , proposals to eliminate § 271(f) did not reappear in subsequent versions of the Patent Reform Act. As Senator Patrick Leahy explained on April 18, 2007, shortly before Microsoft v. AT&T was decided: The Patent Reform Act of 2007 is also significant for what is not included.... [W]e do not inject Congress into the ongoing litigation over the extra-territorial provision, section 271(f). S. 3818 would have repealed the provision in its entirety; the Patent Reform Act of 2007 does not, while the interpretation of the provision is currently pending before the Supreme Court. If the Court does not resolve that issue, we will revisit it in the legislative process. Although debate has continued over the soundness of the Microsoft v. AT&T ruling, the lack of legislative interest in amending or eliminating § 271(f) may suggest that concerned actors believe the Supreme Court addressed perceived problems with that statute. Controversy over the newly recognized phenomenon of patents on tax planning methods resulted in proposals to limit or prohibit them. For example, in the 110 th Congress, the Patent Reform Act of 2007 stipulated that a patent may not be obtained on a tax planning method, which was defined as "a plan, strategy, technique, or scheme that is designed to reduce, minimize, or defer, or has, when implemented, the effect of reducing, minimizing, or deferring, a taxpayer's tax liability, but does not include the use of tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns." A number of recent court decisions have explored the topic of patentable subject matter—that is to say, what sorts of advances are eligible for patenting. Most notable is the 2010 decision of the U.S. Supreme Court in Bilski v. Kappos . There the Supreme Court reviewed a lower court ruling holding that a patent on a particular "method of hedging risk in the field of commodities trading" was not eligible for patenting because the invention was neither (1) tied to a particular machine or apparatus nor (2) transformed a particular article into a different state or thing. This "machine-or-transformation" standard was widely viewed as narrowing the range of patentable subject matter. In Bilski v. Kappos , the Supreme Court ruled that the risk hedging method at issue was unpatentable. However, the Supreme Court also rejected the holding that the "machine-or-transformation" test was a categorical rule that governed which inventions were patentable. The lower court's "machine-or-transformation" standard was instead a factor to be considered in assessing patentability, the Supreme Court reasoned, but not the sole one. By a 5-4 margin, the Supreme Court also rejected the argument that business methods were categorically unpatentable. The Supreme Court further declined to announce a new test of patentable subject matter, instead suggesting that the analysis must proceed on a case-by-case basis founded on existing case law that rejected patents on laws of nature, natural phenomena and abstract ideas. The impact of the Supreme Court's ruling may influence legislative involvement with respect to tax planning method patents. Prior to the issuance of the Supreme Court opinion, Linda Beale, a member of the faculty of the Wayne State University Law School, explained that "[w]hen the Supreme Court hears the case, it may reverse Bilski and leave Congress no choice but to enact legislative exclusions to the patent laws." On the other hand, Congress may believe that the holding in Bilski v. Kappos appropriately resolves concerns pertaining to patent eligibility. The possibility of legislative intervention regarding tax planning method patents remains to be seen. This discussion of injunctions, venue, damages, willful infringement, extraterritorial patent protection, and tax strategy patents suggests that the courts have modified a number of patent law doctrines that were previously subject to congressional consideration. Of course, many of these principles had been developed through judicial opinions. To that extent, congressional interest in patent reform was itself a reaction to earlier developments in the courts. This interaction between different branches of government has become a hallmark of the recent patent reform process. Notably, the Supreme Court and Federal Circuit have not reacted to every proposal in the various Patent Reform Acts in this manner. For example, Congress has considered legislation that would permit interlocutory appeals of claim construction rulings. The Federal Circuit has not altered its general practice of disfavoring such appeals, however. It also should be appreciated that judicial opinions have worked significant changes to a number of patent principles that were not expressly the target of proposed legislative reforms. For example, some observers believe that the 2007 Supreme Court opinion in KSR v. Teleflex resulted in significant changes to the law of nonobviousness. Of course, judicial changes to one component of the patent system may have an impact upon other doctrines, including those subject to congressional scrutiny. A number of reasons may explain this pattern of judicial involvement in areas of legislative interest. First, Congress considered the initial Patent Reform Act in 2005. During the years that legislation has been pending, many patent infringement cases have been tried and appealed. The courts have therefore had many opportunities to address core patent doctrines. Second, the Federal Circuit hears all appeals from district courts across the United States in both patent acquisition and infringement cases. This concentration of appellate jurisdiction provides one court with the ability to change patent doctrine relatively quickly. Further, although the rulings of other federal courts of appeal bind only a limited portion of the country, Federal Circuit patent precedent has effect throughout the United States. Some additional factors suggest judicial interest in legislative scrutiny of the patent system. The Federal Circuit's location in Washington, DC, may imply an awareness of legislative activity involving patents. That several Federal Circuit judges formerly served as members of congressional staff may also suggest interest in patent reform efforts on the Hill. Whatever the reasons for the persistent interaction between Congress and the courts in the patent reform process, these circumstances raise a number of issues pertaining to institutional competence. The longstanding debate over whether legislatures or courts comprise the most appropriate body to work particular legal reforms has been renewed in this setting. Law professors Dan Burk and Mark Lemley side with the courts, asserting that "Congress has spent the last four years, from 2005 to 2008, in an ultimately futile effort to reform the patent system." They further contend that "[d]uring the period in which Congress tried and failed to reform the patent system, courts were actively involved in fixing many of the very same problems Congress was ultimately unable to resolve." In their view the "fact that courts proved capable of solving many of the problems on which Congress ultimately foundered" indicates that the courts are the most appropriate institution for working needed reforms to the patent laws. On the other hand, legislatures are frequently seen as possessing superior resources to investigate and develop factual evidence. Compared to the courts, Congress possesses greater research capabilities and superior means for obtaining information from informed third parties. The legislative decision-making process may better reflect the views of a wide range of stakeholders and offers the advantage of superior democratic accountability. It should also be appreciated that the judiciary does not oversee a number of significant components of the patent system. For example, the courts cannot directly influence the budget or internal operations of the USPTO. In contrast, Congress possesses authority to determine such matters as the scope of USPTO rule-making authority, the level of fees the USPTO may charge, and the agency's budget. Several previous Congresses have considered enacting a Patent Reform Act. To the extent legislative deliberations are believed to alert the courts to perceived problems with a particular doctrine, however, Congress may be seen as already having prompted a great deal of change to the patent system. Our recent experience highlighting the interaction between the different branches of government during the patent reform process suggests the importance of legislative awareness of judicial developments. It also reminds us that although courts often possess a range of options in interpreting statutory language that the legislature has chosen, authority to alter the Patent Act itself ultimately resides with Congress. | Legislative interest in the patent system has been evidenced by the introduction of reform legislation in the 111th and predecessor Congresses. These bills would have amended existing patent law in numerous respects. Although none of these bills were enacted, discussion of patent reform may continue in the 112th Congress. Although the patent system has been the subject of congressional interest over the past few years, the courts have also been active in making changes to important patent law principles. Many changes introduced by the judiciary have concerned topics that are also the subject of congressional consideration. In particular: The Supreme Court issued an important decision in 2007 concerning the availability of injunctive relief against adjudicated patent infringers in eBay v. MercExchange. In 2008, the Court of Appeals for the Federal Circuit ("Federal Circuit") reached its ruling in In re TS Tech concerning the standards for deciding which venue is appropriate for conducting a patent trial. In 2009, the Federal Circuit handed down its opinion in Lucent Technologies. v. Gateway with respect to the assessment of damages in patent infringement cases. The Federal Circuit issued a decision in 2007 concerning the availability of enhanced damages for willful patent infringers in In re Seagate Technology. The 2007 Supreme Court opinion in Microsoft v. AT&T addressed the scope of extraterritorial protection afforded to U.S. patents. The 2010 Supreme Court opinion in Bilski v. Kappos concerned the issue of patentable subject matter. Some observers believe that several of these opinions have addressed the very concerns that had motivated legislative reform proposals, thereby obviating or reducing the need for congressional action. However, other commentators believe that these decisions have not fully addressed perceived problems with principles of patent law. |
Madam Chairman and Members of the Subcommittee: We are pleased to be here today to assist the Subcommittee in its review of the Internal Revenue Service’s (IRS) tax debt collection practices. Every year IRS successfully collects over a trillion dollars in taxes owed the government, yet at the same time tens of billions more remain unpaid. As Congress works to balance the federal budget, these unpaid taxes become increasingly important, as do IRS’ efforts to collect them. While most taxpayers voluntarily pay their taxes on time, some are unable or unwilling to do so. It is this latter group whom IRS must deal with in its efforts to collect delinquent taxes. In doing so, IRS faces several significant challenges, including a lack of accurate and reliable information on either the makeup of its accounts receivable or the effectiveness of the collection tools it has at its disposal, as well as receivables that are often years old, out-of-date collection practices, and antiquated technology. It is these problems and challenges—and their results—that led us, the Office of Management and Budget (OMB), and IRS to recognize IRS’ accounts receivable as a high-risk area. To address these challenges, significant changes are needed in the way IRS does business, but IRS cannot do it alone. Recently, the IRS Commissioner has compared IRS to financial service organizations such as banks, credit card companies, and investment firms. Like these organizations, IRS processes data, maintains customer accounts, responds to account questions, and collects money owed. We agree with the Commissioner’s functional comparison and believe that, while there are significant differences between IRS and these private sector businesses, IRS may benefit from using private collectors as a part of its portfolio of collection programs, and it is reasonable to assume that IRS could learn from their best practices as it works to resolve long-standing problems with its debt collection activities. My testimony today, which is based on past reports and ongoing work, discusses the debt collection challenges facing IRS and the potential benefits of involving private parties in the collection of tax debts. A number of long-standing problems have complicated IRS’ efforts to collect its accounts receivable. Of foremost concern is the lack of reliable and accurate information on the nature of the debt and the effectiveness of IRS collection tools. Access to current and accurate information on tax debts is essential if IRS is to enhance the effectiveness of its collection tools and programs to optimize productivity, devise alternate collection strategies, and develop programs to help keep taxpayers from becoming delinquent in the first place. Without reliable information on the accounts they are trying to collect and the taxpayers who owe the debts, IRS agents generally do not know whether they are resolving cases in the most efficient and effective manner, and may spend time pursuing invalid or unproductive cases. Of the approximately $200 billion currently in the IRS accounts receivable inventory, IRS data shows that approximately $63 billion represents taxes that, although they have been assessed, may not be valid receivables, but rather are “place markers” for compliance actions. For example, under IRS procedures, when IRS’ information return matching process identifies a taxpayer who received a Form W-2 but did not file a tax return, IRS creates a return for the taxpayer. Generally, this is done using the standard deduction and single filing status, and often results in the taxpayer owing taxes. IRS then sends balance due notices to the taxpayer reflecting the amount of taxes owed as calculated by IRS—to encourage the taxpayer to file a return with the correct tax amount owed. If the taxpayer does not subsequently file the return, IRS records the amount it calculated as taxes due and generates a receivable. However, when contacted by IRS collection staff, the taxpayer may demonstrate that either no tax or a lesser amount of tax is actually owed. To more efficiently account for and collect money actually owed to the government, IRS would have to be able to differentiate these IRS-calculated accounts from those where there is an acknowledged balance due. System (ERIS) and other computerized systems. However, IRS has noted in the past that there are questions regarding the accuracy of the data produced by these systems. The age of the debts in IRS’ accounts receivable inventory is also problematic. IRS’ inventory of tax debt includes delinquent debts that may be up to 10 years old. This is because there is a 10-year statutory collection period, and IRS generally does not write off uncollectible delinquencies until this time period has expired. As a result, the receivables inventory includes old accounts that may be impossible to collect because the taxpayers cannot be located, or are deceased, or the corporations are defunct. Of the over $200 billion total receivables inventory as of September 30, 1995, IRS data show that about $38 billion was owed by either deceased taxpayers or defunct corporations. Out of a total of 460 accounts receivable cases that we reviewed in our audit of IRS’ 1995 financial statements, IRS identified 258 as currently not collectible; 198 of these cases represented defunct corporations, while the remaining 60 cases represented entities that either could not pay or could not be located. These cases represented $12 billion of the $26 billion included in accounts greater than $10 million. The age of the receivable does not reflect the additional time it took for IRS to actually assess the taxes in the first place. Enforcement tools, such as IRS’ matching programs and tax examinations, may take up to 5 years from the date the tax return is due until IRS finally assesses the additional taxes. This reduces the likelihood that the outstanding amounts will be collected. The age factor significantly affects the collectibility of the debt because, as both private and public sector collectors have attested, the older the debt, the more problematic collection becomes. Because of these and other factors, IRS considers many of the accounts in the inventory to be uncollectible. Specifically, IRS has estimated that only about $46 billion of the $200 billion inventory of tax debt as of September 30, 1995, was collectible. who have taxes withheld from their wages. Taxpayers with nonwage income are required to calculate their projected income and make estimated tax payments to IRS during the year. According to IRS data, the average tax delinquency for taxpayers with primarily nonwage income was about 4 times greater than that for wage earners—$15,800 versus $3,600. IRS data also show that, at the end of fiscal year 1995, about $75 billion, or 74 percent of the $101 billion in IRS’ inventory of tax debts owed by individuals, was owed by taxpayers whose income was primarily nonwage. IRS’ collection process was introduced several decades ago, and although some changes have been made, the process generally is costly and inefficient. The three-stage collection process—computer-generated notices and bills, telephone calls, and personal visits by collection employees—generally takes longer and is more costly than collection processes in the private sector. While the private sector emphasizes the use of telephone collection calls, a significant portion of IRS’ collection resources is allocated to field offices where personal visits are made by revenue officers. IRS has initiated programs and made procedural changes to speed up its collection process, but historically it has been reluctant to reallocate resources from the field to the earlier, more productive collection activities. IRS’ fiscal year 1997 budget request states that, although “these positions still comprise the lion’s share of IRS’ enforcement efforts, they also represent on the margin the least efficient use of IRS resources.” Due to budget cuts, however, IRS is in the process of temporarily reassigning about 300 field staff to telephone collection sites to replace temporary employees who were terminated. Upgrading its computer systems is another challenge facing IRS. IRS is in the midst of a massive long-term modernization effort—Tax Systems Modernization (TSM)—that if successful would, among other things, help IRS to better collect tax debts by providing its collectors with on-line access to information they need, when they need it. Modernized systems would also help provide the management information needed to evaluate the effectiveness of collection tools and the ability to adopt flexible and innovative collection approaches. Existing IRS computer systems do not provide ready access to needed information and, consequently, do not adequately support modern work processes. Although TSM is not expected to be completed any time in the near future, IRS has started to automate some collection activities. For example, IRS is currently developing an automated inventory delivery system that is intended to direct accounts, based on internally developed criteria, to the particular collection stage where they can be processed most efficiently and expeditiously. This system, which IRS plans to test in July 1996, is intended to move accounts through the collection process faster and cheaper than under the current system. Another effort under way involves the automation of certain field collection tasks. These tasks, like many in IRS, have for years involved the manual processing of paper, which has resulted in IRS field collection employees spending significant amounts of time on routine administrative duties. The Integrated Collection System (ICS) is a computer-based information system that is intended to automate some of the labor-intensive tasks performed by field revenue officers. While this effort is not a major technological advancement, it will be a step toward helping IRS employees be more productive by spending their time on more effective and efficient collection-related activities. Basic automation is a given in today’s business environment, and if IRS is to operate like a private sector business as it says, systems that automate basic work processes are a must. According to IRS, implementing this system in two pilot districts has resulted in increased collections, faster case closings, and less time spent on each case. IRS employees using the system were also very supportive of it and enthusiastic about its benefits. The system is currently operating in six districts, and IRS plans to roll it out in three additional districts this year. According to IRS, further implementation is dependent on future funding and final measurements of productivity. Many private and governmental entities are involved in debt collection. We believe that these entities offer the potential for improving IRS debt collection practices. For example, as is being tried currently, there may be a role for private debt collectors in collecting federal tax debt. the use of private law firms and debt collection agencies to help collect delinquent tax debts. In May 1993, we recommended that IRS test the use of private debt collectors to support its collection efforts. IRS had looked into testing the use of private collectors as early as 1991, but had not carried through with any of its plans. IRS issued a request for proposals from prospective participants in the pilot program on March 5, 1996. The proposals were due by April 12, 1996, and the pilot is to last 1 year. Under the pilot, the private collectors are to attempt to first locate and then contact delinquent taxpayers, remind them of their tax debt, and inform them of available alternatives to resolve the outstanding obligation. An important limitation of the pilot is that the private collectors will not be able to actually collect the taxes owed; rather, the intent is for them to facilitate information exchange and contacts between IRS and the taxpayer. There is an OMB policy determination and IRS Office of Chief Counsel guidance that specify that the collection of taxes is an inherently governmental function that must be performed by government employees. Private collectors, however, can perform collection-related activities, such as locating taxpayers and attempting to secure promises to pay. In addition, the private collectors will face some of the same problems in working the pilot cases that IRS employees face. First, these are not new cases. All will have already gone through much of IRS’ collection process, and in some cases, the entire process. This means, in effect, that some of the cases may have been in the accounts receivable inventory for up to 10 years, and some may involve even earlier tax years. The cases may also contain some of the other information problems we discussed previously. improve its collection programs. The private collectors will be bound by the same taxpayer rights and disclosure considerations as apply to IRS employees. Other useful information could also be obtained from the pilot. For example, IRS could learn what actions are most productive based on the type of case, type of taxpayer, and age of the account. For the information to be useful to IRS and Congress in evaluating the pilot, however, the sample of cases must be drawn and the data captured in such a way that the appropriate analyses and tests can be done. We have not analyzed IRS’ methodologies for selecting its sample of cases or for evaluating the pilot. IRS faces many challenges in its efforts to improve the management and collection of its accounts receivable. The key is to find solutions to the major problems we previously discussed and their underlying causes that affect IRS’ ability to collect more delinquent taxes. Solutions will take time because the problems are pervasive and may involve all IRS functions and processes. Currently, IRS is making some changes to its collection process as a part of its modernization effort. We reported in the past that private collectors and states that are engaged in collection activities similar to IRS’ may provide some best-practice examples for IRS to use in benchmarking its efforts. Many states use private collectors to supplement their own collection programs, thereby taking advantage of private sector capability in managing receivables, gaining access to better technology, or avoiding the expense of hiring permanent staff. Although many states—including 33 of the 43 states that responded to our survey—have used private collectors, their experiences have varied widely. collections from its proposed pilot, but not necessarily a significant windfall. IRS may, however, benefit and learn from the private companies’ collection techniques and use of technology. IRS faces significant challenges in collecting tax debts. As we have previously recommended, because the problems are pervasive across all IRS activities and processes, IRS needs to develop a detailed and comprehensive long-term plan to deal with the major challenges it faces and their interrelationships. With such a plan, IRS could better assure itself and Congress that it is on the right track and thereby better position itself to obtain the backing and support it needs. Key to improving IRS’ collections of tax debt is the need for up-to-date and accurate information as well as modern equipment and technology. IRS also needs to determine the most cost-effective ways to prevent delinquencies from occurring, as well as what it can do in its return, payment, and compliance processes to reduce the number of invalid accounts entering the collection process. To stay competitive in today’s business environment, IRS must continually strive to improve collections by testing new and innovative approaches. Madam Chairman, this concludes my prepared statement. I would be pleased to answer any questions. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO discussed the Internal Revenue Service's (IRS) tax debt collection practices. GAO noted that: (1) each year, billions of dollars in taxes remain unpaid; (2) impediments to improving tax debt collection include the lack of accurate and reliable accounts receivable data and effective collection tools and programs, a backlogged receivables inventory, outdated collection processes, and antiquated computer systems; (3) some accounts receivable may be overstated, not valid, or owed by deceased or unlocatable taxpayers and defunct businesses; (4) IRS is modernizing its information and processing systems, but these actions will not be completed for several years; (5) although IRS use of private debt collectors could increase tax collections by locating and encouraging taxpayers to pay their delinquent taxes, they cannot actually collect taxes; (6) some states have successfully used private debt collectors to increase their delinquent tax collections; (7) IRS accounts receivable have been designated a high-risk area, but IRS cannot make major changes in its business operations by itself; (8) IRS needs a comprehensive strategy to guide its efforts to improve tax debt collections, starting with having accurate and reliable information; and (9) IRS could adopt private industry practices and use private debt collectors in some collection-related activities. |
Since 1987, State has recognized that the lack of adequate controls over visa processing is a material weakness that increases U.S. vulnerability to illegal immigration and diminishes the integrity of the U.S. visa. Specific problems have included (1) inadequate management controls, (2) lax security over visas, (3) unreliable equipment, and (4) unsupervised staff. State has acknowledged that it cannot eliminate all attempts to commit fraud, but it can make it more difficult for fraud to occur by improving the security features of the visa, expanding and improving automated systems, and strengthening staff supervision. State’s Inspector General’s 1993 investigation of the issuance of visas to an ineligible visa applicant, who was subsequently convicted of conspiracy to commit terrorist acts in the United States, highlighted the need for improved internal communications at the overseas posts. In an attempt to address this problem, State established embassy committees designed to promote closer cooperation with other agencies in identifying individuals ineligible for visas. Since 1990, State has reported that the passport process is a material weakness and vulnerable to fraud, including employee malfeasance. According to State, fraudulently obtained passports are being used to enter the country illegally and create false identities to facilitate criminal activities such as narcotics and weapons trafficking, smuggling children for use in pornography, and flight to avoid prosecution from criminal charges. In an attempt to address the problem, State is redeveloping and upgrading its systems to provide comprehensive accountability and improved internal controls. We visited nine overseas posts to ascertain the extent to which State has implemented controls over passport and visa operations: Canberra and Sydney, Australia; London, England; Guatemala City, Guatemala; Tokyo, Japan; Nairobi, Kenya; Seoul, Korea; Mexico City, Mexico; and Johannesburg, South Africa. In 1989, State began the machine-readable visa program as its primary initiative for eliminating fraudulent nonimmigrant visas. The machine-readable visa is considered a more secure document than its predecessor because the new visa is printed on synthetic material that is more secure than paper, is attached to the passport, and has a machine-readable zone with an encryption code. At the ports of entry, the Immigration and Naturalization Service and U.S. Customs Service can check names by scanning the machine-readable zone of the visa. The visas also include a digitized photograph of the traveler. State introduced the machine-readable visa system in 1989. The original due date for installation of the system was 1991, but installation was delayed for 15 months for additional review and analysis of the program. State set a new goal of 1995 to complete installation. However, State’s Inspector General reported that State had not received sufficient funds to meet this goal. In 1994, after the World Trade Center bombing, the Congress directed State to install automated lookout systems at all visa-issuing posts by October 30, 1995. State also made a commitment to install the machine-readable visa system at all visa-issuing posts by the end of fiscal year 1996. The Congress authorized State to retain $107.5 million through fiscal year 1995 in machine-readable visa processing fees to fund these and other improvements. As of December 1995, State had installed its machine-readable visa system at 200 posts, and all of the posts had automated access to the Consular Lookout and Support System (CLASS) either through direct telecommunications lines to the CLASS database in Beltsville, Maryland, or via the distributed name check (DNC) system, a stand-alone personal computer system with the CLASS database on tape or compact disk. By the end of fiscal year 1996, all posts are expected to have the machine-readable visa system, be on line with CLASS, and have the DNC as a backup, according to the Bureau of Consular Affairs. State will continue to upgrade the system’s software and hardware and pilot test a new version of the system. State spent a total of about $32 million on the installations in fiscal years 1994 and 1995 and plans to spend another $45 million through fiscal year 1998. Although most posts now have automated name-check capability and machine-readable visa systems, technical problems have limited their usefulness and availability. Posts often experience transmission problems with the telecommunications lines that support the system. U.S. embassies in Mexico City, Guatemala City, Sydney, Nairobi, and Seoul, which have direct access to CLASS, have experienced problems with the telecommunications lines and interruptions of CLASS. These disruptions have resulted in considerable delays in visa issuance and weakened visa controls. For example, during our visit to Mexico City we noted that consular staff were using the old microfiche system to check names during telecommunications disruptions rather than the DNC that was designed as backup. They used the microfiche system because using the DNC to check names was often a slow process. By using the microfiche system, the post ran the risk of approving a visa for an applicant who had been recently added to CLASS but had not yet been added to microfiche. State’s Diplomatic Telecommunications Service Program Office works with the international telecommunications carriers to find solutions where possible. However, according to an official of that office, if the problem is in the telecommunications lines of the host country, little can be done except to improve the post’s backup system. The Bureau of Consular Affairs has developed a new version of the software for the DNC to serve as a faster, more reliable backup when used with a new computer. The DNC software and new personal computers were sent to over 30 high-volume posts in 1995, according to a Bureau official. In the aftermath of the World Trade Center bombing, State directed all diplomatic and consular posts to form committees with representatives from consular, political, and other appropriate agencies to meet regularly to ensure that the names of suspected terrorists and others ineligible for a visa are identified and put into the lookout system. Of the nine posts we visited, all but Sydney and Johannesburg had terrorist lookout committees, and those two posts were represented by the lookout committees at their embassies in Canberra and Pretoria, respectively. Embassy officials at two of the nine posts we visited questioned the value of the committees, mainly because of the lack of cooperation from some agencies. Some agency representatives have been reluctant to provide to the consular sections the names of suspected terrorists, or others the U.S. government may want to keep out of the country, due to the sensitivity of the information and restrictions on sharing information. Officials from one of the law enforcement agencies contacted expressed concern that the information entered into CLASS could be traced to the originating agency and compromise its work. Only one of the agency officials we interviewed said that he had seen guidance from his agency on the extent to which this agency could share information. In addition, not all agencies are represented on these committees. For example, according to a consular official, the committee in Pretoria does not include representatives from the Federal Bureau of Investigation, the Customs Service, and the Drug Enforcement Agency. Consular officials have pointed out that the lookout committees are intended to augment rather than replace coordination activities at headquarters. Additionally, according to consular officials, they are (1) working closely with individual posts to resolve coordination problems, (2) maintaining close liaison with participating agencies at the headquarters level to ensure continued cooperation and commitment, and (3) soliciting increased participation from agencies whose contributions were limited in the past. State says that it has also taken steps to clarify terrorist reporting channels. The posts we visited did not routinely comply with State’s own internal control procedures. These procedures are described fully in the Department’s Management Control Handbook and summarized for consular officers in the Consular Management Handbook. One common shortcoming was the use of Foreign Service Nationals (FSN) to check names through CLASS without the direct supervision of a U.S. officer. Other shortcomings were the lack of security over controlled equipment and supplies and the failure to report and reconcile daily activities and follow cashiering procedures. According to the Consular Management Handbook, depending on the volume of visa fraud at a post, the embassy may assign the name check function to U.S. employees or assign a U.S. employee to monitor FSN staff doing name checks. Failure to check names could lead to issuance of visas to individuals who are ineligible. In June and July of 1993, the Inspector General testified that an individual convicted of conspiracy to commit terrorist acts in the United States was able to obtain a visa even after his name was added to the lookout system because consular staff failed to do the required name check. The Inspector General further testified that adequate controls were not in place to ensure that name checks were done. FSNs were responsible for checking names at five of the posts we visited. Of those posts, Johannesburg, Sydney, and Tokyo were not equipped with the machine-readable visa system. The consular officers at these posts relied on the FSNs to notify them when an applicant’s name matched one in the CLASS database. FSNs in Johannesburg were not required to annotate the visa applications to show that the applicants’ names had been checked. Thus, the consular officers lacked any assurance that the FSNs actually checked the names or advised the consular officers of all matches. Consular officers in Tokyo and Sydney said they periodically reviewed the visa applications and observed FSNs. One of the officials acknowledged that consular officers rely more heavily on FSNs than strict adherence to State Department guidance might suggest. However, the officials did not believe the reliance on FSNs was a problem because of the low risk of fraud at their posts. Installation of the machine-readable visa system should help rectify this situation. Unless an American officer overrides it, the system provides the results of the name check for the American officer’s review. Moreover, Bureau officials believe improved procedures and software enhancements to take effect on April 30, 1996, will make unsupervised name checks impossible. Consular officers will be required to certify in writing that they have checked the automated lookout system and that there is no basis for excluding the applicant. Three of the nine posts we visited demonstrated a lack of physical security over visa equipment and supplies. Without adequate controls, funds, equipment, and supplies can be misappropriated or misused. For example, during our fieldwork at the consulate in Johannesburg, access to the nonimmigrant visa processing area was not physically restricted, and personnel from other sections of the embassy were observed traversing the consular section to reach other parts of the embassy. In addition, the safe containing visa supplies was left unsecured on several occasions, and refused visa applications were not stored in a locked storage case as required. Two of the posts we visited reported problems with using required reports to reconcile their daily activities. State’s nonimmigrant visa reconciliation procedures require the posts to (1) maintain a log of visa numbers issued and spoiled, (2) inspect spoiled visas before entering them in the log, (3) ensure that each application was approved by an authorized officer, and (4) verify that each number in the visa number series is accounted for. The failure to follow these procedures provide obvious opportunities for fraud. Consular officials in Seoul said they could not use the reports generated by the nonimmigrant visa processing system to reconcile the number of visas issued to the number of used foils. The consular officials believed this was because the system was designed for posts that accept, adjudicate, and issue visas on the same day, and posts as large as Seoul could not produce visas in one day. As a result, they said that they had developed their own system of accounting for visa foils. We also observed reconciliation problems in Sydney. Three of the posts we visited also failed to comply with established cashiering procedures such as reconciling services rendered with collections received. Routine reconciliations are an essential tool in detecting employee malfeasance. In Nairobi, neither the accountable officer nor the budget and fiscal officer reconciled collections with services. They said they were unaware of the requirement. In Johannesburg, the accountable officer was reconciling fees collected with services rendered, but was not conducting periodic unannounced cash audits as required in the Consular Management Handbook. The accountable officer for passport operations at the U.S. Embassy in Mexico City also had not conducted periodic cash audits. Automation upgrades and enhancements are the cornerstone of State’s strategy to reduce the vulnerability of passport systems to fraud. Planned efforts involve (1) installing a computer network to connect all domestic passport agencies and serve as a platform to allow State to verify the multiple issuance of passports, (2) enhancing its travel document issuance system so that the passport photo can be printed digitally, and (3) completing the upgrade of its travel document issuance system at all passport agencies. State had planned to have most of the improvements completed by December 1995. However, only one major improvement, installation of a wide-area network, had been completed by that date. The other improvements, in addition to being dependent on the wide-area network for telecommunications, are also dependent on the completion of the upgrades to the passport production system. State’s current goal is for full completion of these enhancements and upgrades by the end of 1996. State indicated that completion of these upgrades was dependent upon the availability of funds. State installed the wide-area network to connect the passport agencies with each other as the telecommunications platform for the photo digitization and the multiple issuance verification initiatives. The Multiple Issuance Verification system is expected to allow Passport Office employees to detect individuals applying at more that one office for multiple passports using the same identity—which State describes as one of the most prevalent forms of passport fraud. Without such a system, there is no way for one office to know before issuance what applications are being processed by any other office. State is also developing a system to print a digitized passport photograph. According to State, a digitized photograph will make it easier to detect a substitution—another prevalent form of passport fraud. State spent about $4.1 million for these improvements in fiscal year 1995 and plans to spend an additional $22 million through fiscal year 1998. State is using revenues from the machine-readable visa processing fees to fund these improvements. State has not completed the upgrade from the 1980 to the 1990 version of its Travel Document Issuance System, which is used to enter data, process, and track the actual production of passports. Systems in 9 of the 14 passport facilities have been upgraded. According to the Consular Bureau, the upgrade replaces an outdated minicomputer-based system with a more modern personal computer-based system, providing the interface needed to take advantage of the wide-area network and other new technologies. The conversion costs about $700,000 to $800,000 per office. Because of the high cost of the upgrade, the conversion had been proceeding at the rate of one passport agency per year. The Bureau used appropriated funds. Conversion from the 1980 version to the 1990 version of the system is a prerequisite to implementing photo digitization and the Multiple Issuance Verification System. Therefore, the Consular Bureau plans to use machine-readable visa funds to pay for the conversion of the remaining five passport facilities. At those offices, the upgrades will be coupled with the installation of the photo digitization and the multiple issuance enhancements, which the Bureau believes will reduce costs. According to a Bureau official, depending on the availability of the funds, the Bureau plans to have all systems upgraded and enhanced by the end of calendar year 1996. However, the Bureau official acknowledged that this was an ambitious goal. He said variables such as the outcome of systems tests and the possibility that three of the passport offices may move could result in delays. Table 1 shows selected activities and corresponding milestone dates. In commenting orally on a draft of this report, State Department officials generally agreed with the report’s presentation; however, they asserted that many of the generic problems listed in the report are the result of inadequate staffing and resources. They also noted that some points needed clarification or correction. We have incorporated these changes where appropriate. We conducted our review in Washington, D.C.; Canberra and Sydney, Australia; London, England; Guatemala City, Guatemala; Tokyo, Japan; Nairobi, Kenya; Seoul, Korea; Mexico City, Mexico; and Johannesburg, South Africa. We selected these posts to obtain a cross-section of large and small posts, posts with the machine-readable system, posts with the old visa-issuing system, and posts undergoing changes in their consular workloads. We obtained past State Department Inspector General reports, annual Financial Management Integrity Act reports, and other documents describing visa and passport operations; reviewed agency plans for correcting the previously identified weaknesses; and discussed the status of the corrections with Bureau of Consular Affairs officials. We observed operations at the Washington Passport Agency in Washington, D.C., and at the overseas posts we visited we observed visa and passport operations, examined passport and visa applications, and tested selected internal control procedures. We conducted our review intermittently from May 1994 to March 1996 in accordance with generally accepted government auditing standards. Copies of the report are being sent to the Secretary of State, the Director of the Office of Management and Budget, and interested congressional committees. We will also provide copies to others upon request. Please contact me at (202) 512-4128 if you or your staff have any questions concerning this report. Other major contributors are listed in appendix I. Diana M. Glod Jose M. Pena, III Michael D. Rohrback Cherie M. Starck La Verne G. Tharpes Steven K. Westley Michael C. Zola The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO reviewed the Department of State's plan to make its visa and passport operations more efficient and less vulnerable to fraud, focusing on: (1) the status of the plan's key initiatives; and (2) compliance with internal management controls by consular staff at selected posts overseas. GAO found that: (1) State's efforts to overcome the material weaknesses in visa and passport processing have had mixed results; (2) after initial delays, State has made steady progress in installing its machine-readable system (the primary initiative for eliminating visa fraud) and provided all visa-issuing posts with automated access to its global database containing names of individuals ineligible for a visa; (3) operational problems have diminished the effectiveness of these efforts including technical problems that have limited the availability and usefulness of the visa improvements, limited usefulness of embassy lookout committees because of the reluctance of some agencies to share information and the lack of representation of key agencies, and lack of compliance with management control procedures designed to decrease the vulnerability of consular operations to fraud; (4) State is behind schedule in its modernization and enhancement efforts to reduce passport fraud; (5) State originally planned to have installed a new wide-area network, developed a system to print a digitized passport photograph, and completed installation of a system to verify multiple issuance of passports by December 1995, however, only the installation of the wide-area network, upon which the other two projects depend, has been completed; (6) full implementation also depends on the completion of the modernization of the passport production system which State indicates is dependent on the availability of funding; and (7) State's current goal is for full implementation by the end of calendar year 1996. |
The Congressional Budget Act of 1974 (hereinafter referred to as the Budget Act) establishes a requirement for Congress to adopt a budget resolution each year. The budget resolution represents an agreement between the House and Senate on a budgetary plan for the upcoming fiscal year (and several out years). The budget resolution does not become law; therefore no money is spent or collected as a result of its adoption. Instead, the outline is designed to establish parameters within which Congress will consider subsequent budgetary legislation that will fulfill the budgetary plan. Once the budget resolution has been agreed to by both chambers, certain levels contained in it are enforceable through points of order. This means that if subsequent legislation was being considered on the House or Senate floor that would violate certain levels established by the budget resolution, a Member could raise a point of order against the consideration of that legislation. Generally, such points of order can be waived in the House by a simple majority of Members and in the Senate by three-fifths of all Senators. The idea of a "traditional" budget resolution means a budget resolution as defined by the Budget Act, which specifies the way that a budget resolution shall be developed and considered and what components it must include. Specifically, it states that House and Senate Budget Committees shall develop the budget resolution, and in doing this, the Committees must hold hearings and receive testimony from Members of Congress and "such appropriate representatives of Federal departments and agencies, the general public, and national organizations as the committee deems desirable." Further, it states that the budget committees will receive input from their congressional colleagues in at least two ways: (1) through "consultation" with committees during the preparation of the budget resolution (the act applies only to the House Budget Committee) and 2) through the review of "Views and Estimates," which are required to be submitted by committees to the Budget Committee and reflect information on the desired levels of spending and revenue within the relevant committee's jurisdiction. The act also specifies how the budget resolution shall be considered by the House and Senate. For example, the Budget Act specifies that the budget resolution be debated for up to 50 hours in the Senate, with amendments permitted, and not subject to filibuster. The Budget Act requires that the budget resolution include the budgetary levels noted below either in the text of the budget resolution on in the accompanying report. It should be noted that while the Budget Act requires the inclusion of all of these levels, not all of these levels are enforceable by points of order. Some levels in the budget resolution are, therefore, included only for informational purposes. Provisions below that are enforceable are marked with an asterisk. total spending for the upcoming fiscal year and at least four out years*; total revenues for the upcoming fiscal year and at least four out years*; the amount, if any, by which the aggregate level of revenues should be increased or decreased by legislation for the upcoming fiscal year and at least four out years; the surplus/deficit for the upcoming fiscal year and at least four out years; new spending for each major functional category for the upcoming fiscal year and at least four out years; the public debt for the upcoming fiscal year and at least four out years; (in the Senate only) Social Security spending and revenue levels*; and amounts of spending allocated among committees*. It is common for the budget resolution to include other optional components such as those listed below. Provisions triggering the reconciliation process . If Congress intends to use the reconciliation process, it must include reconciliation directives (also referred to as reconciliation instructions) in the budget resolution. These directives instruct individual committees to develop and report legislation that would change laws within their respective jurisdictions related to direct spending, revenue, or the debt limit. Such reconciliation legislation is then eligible to be considered under special expedited procedures in both the House and Senate. Procedural provisions . A budget resolution typically includes procedural provisions such as House and Senate budgetary rules (enforced by points of order) and direction on the budgetary treatment of certain activities (such as energy savings contracts). Reserve funds and adjustments . Congress frequently includes "reserve funds" and "adjustments" in the annual budget resolution. These provisions provide the chairs of the House or Senate Budget Committees with the authority to adjust the budgetary allocations, aggregates, and levels in the future if certain conditions are met. Generally, the goal of reserve funds or adjustment is to allow certain policies to be considered on the floor without triggering a point of order for violating levels in the budget resolution. Policy statements . The budget resolution sometimes includes policy provisions that typically apply only to the House. These statements express the underlying assumptions, preferences, or priorities of the budget resolution but are not binding. The Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123), enacted February 9, 2018, amended the statutory discretionary spending limits for FY2018 and FY2019. BBA 2018 comprised several other components as well, one of which was related to a congressional budget resolution for FY2019. The budget resolution provisions included in the BBA 2018 require the House and Senate Budget Committee chairs to each file a statement of budgetary levels, which would have effect in the respective chamber as if they had been included in a budget resolution. These levels are required to be filed for publication in the Congressional R ecord between April 15, 2018, and May 15, 2018. The Budget Committee chairs are not given discretion to file any budgetary levels they wish. Instead, the BBA 2018 requires that (1) for discretionary spending, the filed levels be consistent with the statutory limits on discretionary spending (that were amended by the BBA 2018) and (2) for mandatory spending and revenue levels, the filed levels be consistent with the most recent baseline of the Congressional Budget Office (CBO), which was released on April 9, 2018. The baseline is a projection of federal spending and revenue that would occur if existing law were left unchanged . The BBA provisions also give the Budget Committee chairs the option of including in the filing some specified provisions of the FY2018 budget resolution ( H.Con.Res. 71 [115 th Congress]), which was agreed to by Congress in October 2017. The Senate-related section in the BBA 2018 states that when the Senate Budget Committee chair files the required levels, the filing may also include for FY2019 the deficit-neutral reserve funds contained in the FY2018 budget resolution. See Appendix B for a full listing of these provisions. Likewise, the House-related section in the BBA 2018 states that when the House Budget Committee chair files the required levels, the filing may also include for FY2019 specified provisions contained in the FY2018 budget resolution, which include adjustments as well as procedural provisions. See Appendix C for a full listing of these provisions. The existence of the BBA 2018 provisions, however, does not preclude Congress from acting on a traditional budget resolution for FY2019, so Congress still has the option to consider a budget resolution that differs from the levels and components included in the BBA 2018 budget resolution provisions. In fact, the BBA 2018 specifies that the budget resolution sections shall expire if a concurrent resolution on the budget for FY2019 is agreed to by both the Senate and the House. Below, Table 1 and Table 2 compare the components of the budget resolution provisions included in the BBA 2018 with the common components of a traditional budget resolution. As described above, the Budget Act requires Congress to include certain components in a budget resolution while also giving Congress the option of including other types of material. Again, not all of these levels are enforceable through points of order. In the absence of agreement on a budget resolution, Congress will often employ alternative legislative tools to serve as a substitute for a budget resolution. These substitutes are typically referred to as "deeming resolutions," because they are deemed to serve in place of a budget resolution for the purposes of establishing enforceable budget levels for the upcoming fiscal year. Such mechanisms are not formally defined and have no specifically prescribed content. Instead, they simply represent the House and Senate, sometimes separately, using some alternative legislative procedures to deal with enforcement issues. Deeming resolutions can vary significantly in content and timing. Congress has included budget resolution provisions like the ones in the BBA 2018 in prior legislation related to the statutory discretionary spending limits. In each case noted below, the levels required to be filed were baseline levels of spending and revenue that would occur if existing law were left unchanged. The Budget Control Act of 2011 ( P.L. 112-25 ), which re-established statutory limits on discretionary spending, included a section requiring the Senate Budget Committee chair to file enforceable budgetary levels for FY2012 and for FY2013 in the absence of a traditional budget resolution in the Senate. The Bipartisan Budget Act of 2013 (often referred to as the Murray-Ryan Agreement, P.L. 113-67 ), which increased discretionary spending limits for both defense and nondefense for FY2014 and FY2015, included sections designed to serve as substitutes for a traditional congressional budget resolution in both the House and Senate for each FY2014 and FY2015. The Bipartisan Budget Act of 2015 ( P.L. 114-74 ), which increased discretionary spending limits for both defense and nondefense for FY2016 and FY2017, included a section requiring the Senate Budget Committee chair to file enforceable budgetary levels for FY2017 in the absence of a traditional budget resolution in the Senate. Appendix A. Relevant Text of the BBA 2018 Division C-Budgetary and Other Matters Title I- Budget Enforcement SEC. 30103. Authority for fiscal year 2019 budget resolution in the Senate. (a) Fiscal year 2019.—For purposes of enforcing the Congressional Budget Act of 1974 (2 U.S.C. 621 et seq.) after April 15, 2018, and enforcing budgetary points of order in prior concurrent resolutions on the budget, the allocations, aggregates, and levels provided for in subsection (b) shall apply in the Senate in the same manner as for a concurrent resolution on the budget for fiscal year 2019 with appropriate budgetary levels for fiscal years 2020 through 2028. (b) Committee allocations, aggregates, and levels.—After April 15, 2018, but not later than May 15, 2018, the Chairman of the Committee on the Budget of the Senate shall file— (1) for the Committee on Appropriations, committee allocations for fiscal year 2019 consistent with discretionary spending limits set forth in section 251(c)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by this Act, for the purposes of enforcing section 302 of the Congressional Budget Act of 1974 (2 U.S.C. 633); (2) for all committees other than the Committee on Appropriations, committee allocations for fiscal years 2019, 2019 through 2023, and 2019 through 2028 consistent with the most recent baseline of the Congressional Budget Office, as adjusted for the budgetary effects of any provision of law enacted during the period beginning on the date such baseline is issued and ending on the date of submission of such statement, for the purposes of enforcing section 302 of the Congressional Budget Act of 1974 (2 U.S.C. 633); (3) aggregate spending levels for fiscal year 2019 in accordance with the allocations established under paragraphs (1) and (2), for the purpose of enforcing section 311 of the Congressional Budget Act of 1974 (2 U.S.C. 642); (4) aggregate revenue levels for fiscal years 2019, 2019 through 2023, and 2019 through 2028 consistent with the most recent baseline of the Congressional Budget Office, as adjusted for the budgetary effects of any provision of law enacted during the period beginning on the date such baseline is issued and ending on the date of submission of such statement, for the purpose of enforcing section 311 of the Congressional Budget Act of 1974 (2 U.S.C. 642); and (5) levels of Social Security revenues and outlays for fiscal years 2019, 2019 through 2023, and 2019 through 2028 consistent with the most recent baseline of the Congressional Budget Office, as adjusted for the budgetary effects of any provision of law enacted during the period beginning on the date such baseline is issued and ending on the date of submission of such statement, for the purpose of enforcing sections 302 and 311 of the Congressional Budget Act of 1974 (2 U.S.C. 633 and 642). (c) Additional matter.—The filing referred to in subsection (b) may also include for fiscal year 2019 the deficit-neutral reserve funds contained in title III of H.Con.Res. 71 (115 th Congress) updated by one fiscal year. (d) Expiration.—This section shall expire if a concurrent resolution on the budget for fiscal year 2019 is agreed to by the Senate and the House of Representatives pursuant to section 301 of the Congressional Budget Act of 1974 (2 U.S.C. 632). SEC. 30104. Authority for fiscal year 2019 budget resolution in the House of Representatives. (a) Fiscal year 2019.—If a concurrent resolution on the budget for fiscal year 2019 has not been adopted by April 15, 2018, for the purpose of enforcing the Congressional Budget Act of 1974, the allocations, aggregates, and levels provided for in subsection (b) shall apply in the House of Representatives after April 15, 2018, in the same manner as for a concurrent resolution on the budget for fiscal year 2019 with appropriate budgetary levels for fiscal year 2019 and for fiscal years 2020 through 2028. (b) Committee Allocations, Aggregates, and Levels.—In the House of Representatives, the Chair of the Committee on the Budget shall submit a statement for publication in the Congressional Record after April 15, 2018, but not later than May 15, 2018, containing— (1) for the Committee on Appropriations, committee allocations for fiscal year 2019 for discretionary budget authority at the total level set forth in section 251(c)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by this Act, and the outlays flowing therefrom, and committee allocations for fiscal year 2019 for current law mandatory budget authority and outlays, for the purpose of enforcing section 302 of the Congressional Budget Act of 1974; (2) for all committees other than the Committee on Appropriations, committee allocations for fiscal year 2019 and for the period of fiscal years 2019 through 2028 at the levels included in the most recent baseline of the Congressional Budget Office, as adjusted for the budgetary effects of any provision of law enacted during the period beginning on the date such baseline is issued and ending on the date of submission of such statement, for the purpose of enforcing section 302 of the Congressional Budget Act of 1974; and (3) aggregate spending levels for fiscal year 2019 and aggregate revenue levels for fiscal year 2019 and for the period of fiscal years 2019 through 2028, at the levels included in the most recent baseline of the Congressional Budget Office, as adjusted for the budgetary effects of any provision of law enacted during the period beginning on the date such baseline is issued and ending on the date of submission of such statement, for the purpose of enforcing section 311 of the Congressional Budget Act of 1974. (c) Additional Matter.—The statement referred to in subsection (b) may also include for fiscal year 2019, the matter contained in the provisions referred to in subsection (f)(1). (d) Fiscal Year 2019 Allocation to the Committee on Appropriations.—If the statement referred to in subsection (b) is not filed by May 15, 2018, then the matter referred to in subsection (b)(1) shall be submitted by the Chair of the Committee on the Budget for publication in the Congressional Record on the next day that the House of Representatives is in session. (e) Adjustments.—The chair of the Committee on the Budget of the House of Representatives may adjust the levels included in the statement referred to in subsection (b) to reflect the budgetary effects of any legislation enacted during the 115 th Congress that reduces the deficit or as otherwise necessary. (f) Application.—Upon submission of the statement referred to in subsection (b)— (1) all references in sections 5101 through 5112, sections 5201 through 5205, section 5301, and section 5401 of House Concurrent Resolution 71 (115 th Congress) to a fiscal year shall be considered for all purposes in the House to be references to the succeeding fiscal year; and (2) all references in the provisions referred to in paragraph (1) to allocations, aggregates, or other appropriate levels in "this concurrent resolution", "the most recently agreed to concurrent resolution on the budget", or "this resolution" shall be considered for all purposes in the House to be references to the allocations, aggregates, or other appropriate levels contained in the statement referred to in subsection (b), as adjusted. (g) Expiration.—Subsections (a) through (f) shall no longer apply if a concurrent resolution on the budget for fiscal year 2019 is agreed to by the Senate and House of Representatives. Appendix B. Senate Provisions of H.Con.Res. 71 That May Be Included in Senate Filing TITLE III—RESERVE FUNDS SEC. 3001. DEFICIT-NEUTRAL RESERVE FUND TO PROTECT FLEXIBLE AND AFFORDABLE HEALTH CARE FOR ALL. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to repealing or replacing the Patient Protection and Affordable Care Act ( P.L. 111-148 ; 124 Stat. 119) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ; 124 Stat. 1029), by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over the period of the total of fiscal years 2018 through 2027. SEC. 3004. DEFICIT-NEUTRAL RESERVE FUND FOR EXTENDING THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to an extension of the State Children's Health Insurance Program, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3005. DEFICIT-NEUTRAL RESERVE FUND TO STRENGTHEN AMERICAN FAMILIES. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) addressing the opioid and substance abuse crisis; (2) protecting and assisting victims of domestic abuse; (3) foster care, child care, marriage, and fatherhood programs; (4) making it easier to save for retirement; (5) reforming the American public housing system; (6) the Community Development Block Grant Program; or (7) extending expiring health care provisions, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3006. DEFICIT-NEUTRAL RESERVE FUND TO PROMOTE INNOVATIVE EDUCATIONAL AND NUTRITIONAL MODELS AND SYSTEMS FOR AMERICAN STUDENTS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) amending the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.); (2) ensuring State flexibility in education; (3) enhancing outcomes with Federal workforce development, job training, and reemployment programs; (4) the consolidation and streamlining of overlapping early learning and child care programs; (5) educational programs for individuals with disabilities; or (6) child nutrition programs, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3007. DEFICIT-NEUTRAL RESERVE FUND TO IMPROVE THE AMERICAN BANKING SYSTEM. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to the American banking system by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3008. DEFICIT-NEUTRAL RESERVE FUND TO PROMOTE AMERICAN AGRICULTURE, ENERGY, TRANSPORTATION, AND INFRASTRUCTURE IMPROVEMENTS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) the Farm Bill; (2) American energy policies; (3) the Nuclear Regulatory Commission; (4) North American energy development; (5) infrastructure, transportation, and water development; (6) the Federal Aviation Administration; (7) the National Flood Insurance Program; (8) State mineral royalty revenues; or (9) soda ash royalties, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3009. DEFICIT-NEUTRAL RESERVE FUND TO RESTORE AMERICAN MILITARY POWER. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) improving military readiness, including deferred Facilities Sustainment Restoration and Modernization; (2) military technological superiority; (3) structural defense reforms; or (4) strengthening cybersecurity efforts, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3010. DEFICIT-NEUTRAL RESERVE FUND FOR VETERANS AND SERVICE MEMBERS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to improving the delivery of benefits and services to veterans and service members by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3011. DEFICIT-NEUTRAL RESERVE FUND FOR PUBLIC LANDS AND THE ENVIRONMENT. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.); (2) forest health and wildfire prevention and control; (3) resources for wildland firefighting for the Forest Service and Department of Interior; (4) the payments in lieu of taxes program; or (5) the secure rural schools and community self-determination program, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3012. DEFICIT-NEUTRAL RESERVE FUND TO SECURE THE AMERICAN BORDER. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) securing the border of the United States; (2) ending human trafficking; or (3) stopping the transportation of narcotics into the United States, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3013. DEFICIT-NEUTRAL RESERVE FUND TO PROMOTE ECONOMIC GROWTH, THE PRIVATE SECTOR, AND TO ENHANCE JOB CREATION. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to— (1) reducing costs to businesses and individuals stemming from Federal regulations; (2) increasing commerce and economic growth; or (3) enhancing job creation, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3014. DEFICIT-NEUTRAL RESERVE FUND FOR LEGISLATION MODIFYING STATUTORY BUDGETARY CONTROLS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to modifying statutory budget controls, which may include adjustments to the discretionary spending limits and changes to the scope of sequestration as carried out by the Office of Management and Budget, such as for the Financial Accounting Standards Board, Public Company Accounting Oversight Board, Securities Investor Protection Corporation, and other similar entities, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over the period of the total of fiscal years 2018 through 2027. SEC. 3015. DEFICIT-NEUTRAL RESERVE FUND TO PREVENT THE TAXPAYER BAILOUT OF PENSION PLANS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to the prevention of taxpayer bailout of pension plans, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3016. DEFICIT-NEUTRAL RESERVE FUND RELATING TO IMPLEMENTING WORK REQUIREMENTS IN ALL MEANS-TESTED FEDERAL WELFARE PROGRAMS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to implementing work requirements in all means-tested Federal welfare programs by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3017. DEFICIT-NEUTRAL RESERVE FUND TO PROTECT MEDICARE AND REPEAL THE INDEPENDENT PAYMENT ADVISORY BOARD. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to protecting the Medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), which may include repealing the Independent Payment Advisory Board established under section 1899A of such Act (42 U.S.C. 1395kkk), by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3018. DEFICIT-NEUTRAL RESERVE FUND RELATING TO AFFORDABLE CHILD AND DEPENDENT CARE. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to making the cost of child and dependent care more affordable and useful for American families by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3019. DEFICIT-NEUTRAL RESERVE FUND RELATING TO WORKER TRAINING PROGRAMS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to worker training programs, such as training programs that target workers that need advanced skills to progress in their current profession or apprenticeship or certificate programs that provide retraining for a new industry, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3021. DEFICIT-NEUTRAL RESERVE FUND RELATING TO PROTECTING MEDICARE AND MEDICAID. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to protecting the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), which may include strengthening and improving Medicaid for the most vulnerable populations, and extending the life of the Federal Hospital Insurance Trust Fund by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3022. DEFICIT-NEUTRAL RESERVE FUND RELATING TO THE PROVISION OF TAX RELIEF FOR FAMILIES WITH CHILDREN. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to changes in Federal tax laws, which may include lowering taxes on families with children, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over the period of the total of fiscal years 2018 through 2027. SEC. 3023. DEFICIT-NEUTRAL RESERVE FUND RELATING TO THE PROVISION OF TAX RELIEF FOR SMALL BUSINESSES. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to changes in Federal tax laws, which may include the provision of tax relief for small businesses, along with provisions to prevent upper-income taxpayers from sheltering income from taxation at the appropriate rate, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over the period of the total of fiscal years 2018 through 2027. SEC. 3024. DEFICIT-NEUTRAL RESERVE FUND RELATING TO TAX RELIEF FOR HARD-WORKING MIDDLE-CLASS AMERICANS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to changes in Federal tax laws, which may include reducing federal deductions, such as the state and local tax deduction which disproportionally favors high-income individuals, to ensure relief for middle-income taxpayers, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2027. SEC. 3025. DEFICIT-NEUTRAL RESERVE FUND RELATING TO MAKING THE AMERICAN TAX SYSTEM SIMPLER AND FAIRER FOR ALL AMERICANS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to changes in Federal tax laws, which may include provisions to make the American tax system simpler and fairer for all Americans, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over the period of the total of fiscal years 2018 through 2027. SEC. 3026. DEFICIT-NEUTRAL RESERVE FUND RELATING TO TAX CUTS FOR WORKING AMERICAN FAMILIES. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to increasing per-child Federal tax relief, which may include amending the child tax credit, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3027. DEFICIT-NEUTRAL RESERVE FUND RELATING TO THE PROVISION OF INCENTIVES FOR BUSINESSES TO INVEST IN AMERICA AND CREATE JOBS IN AMERICA. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to changes in Federal tax laws, which may include international tax provisions that provide or enhance incentives for businesses to invest in America, generate American jobs, retain American jobs, and return jobs to America, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3028. DEFICIT-NEUTRAL RESERVE FUND RELATING TO ELIMINATING TAX BREAKS FOR COMPANIES THAT SHIP JOBS TO FOREIGN COUNTRIES. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to eliminating tax breaks for companies that outsource jobs to foreign countries, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3029. DEFICIT-NEUTRAL RESERVE FUND RELATING TO PROVIDING FULL, PERMANENT, AND MANDATORY FUNDING FOR THE PAYMENT IN LIEU OF TAXES PROGRAM. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to providing full, permanent, and mandatory funding for the payment in lieu of taxes program by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. SEC. 3030. DEFICIT-NEUTRAL RESERVE FUND RELATING TO TAX REFORM WHICH MAINTAINS THE PROGRESSIVITY OF THE TAX SYSTEM. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to changes in Federal tax laws, which may include tax reform proposals to ensure that the reformed tax code parallels the existing tax code with respect to relative burdens and does not shift the tax burden from high-income to lower- and middle-income taxpayers, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over the period of the total of fiscal years 2018 through 2027. SEC. 3031. DEFICIT-NEUTRAL RESERVE FUND RELATING TO SIGNIFICANTLY IMPROVING THE BUDGET PROCESS. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution, and make adjustments to the pay-as-you-go ledger, for one or more bills, joint resolutions, amendments, amendments between the Houses, motions, or conference reports relating to significantly improving the budget process by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2018 through 2022 or the period of the total of fiscal years 2018 through 2027. Appendix C. House Provisions of H.Con.Res. 71 That May Be Included in House Filing TITLE V—BUDGET PROCESS IN THE HOUSE OF REPRESENTATIVES Subtitle A—Budget Enforcement SEC. 5101. POINT OF ORDER AGAINST INCREASING LONG-TERM DIRECT SPENDING. (a) Point of Order- It shall not be in order in the House of Representatives to consider any bill or joint resolution, or amendment thereto or conference report thereon, that would cause a net increase in direct spending in excess of $2,500,000,000 in any of the 4 consecutive 10-fiscal year periods described in subsection (b). (b) Congressional Budget Office Analysis of Proposals- The Director of the Congressional Budget Office shall, to the extent practicable, prepare an estimate of whether a bill or joint resolution reported by a committee (other than the Committee on Appropriations), or amendment thereto or conference report thereon, would cause, relative to current law, a net increase in direct spending in the House of Representatives, in excess of $2,500,000,000 in any of the 4 consecutive 10-fiscal year periods beginning after the last fiscal year of this concurrent resolution. (c) Limitation- In the House of Representatives, the provisions of this section shall not apply to any bills or joint resolutions, or amendments thereto or conference reports thereon, for which the chair of the Committee on the Budget has made adjustments to the allocations, aggregates, or other budgetary levels in this concurrent resolution. (d) Determinations of Budget Levels- For purposes of this section, the levels of net increases in direct spending shall be determined on the basis of estimates provided by the chair of the Committee on the Budget of the House of Representatives. (e) Sunset- This section shall have no force or effect after September 30, 2018. SEC. 5102. ALLOCATION FOR OVERSEAS CONTINGENCY OPERATIONS/GLOBAL WAR ON TERRORISM. (a) Separate Allocation for Overseas Contingency Operations/Global War on Terrorism- In the House of Representatives, there shall be a separate allocation of new budget authority and outlays provided to the Committee on Appropriations for the purposes of Overseas Contingency Operations/Global War on Terrorism, which shall be deemed to be an allocation under section 302(a) of the Congressional Budget Act of 1974. Section 302(a)(3) of such Act shall not apply to such separate allocation. (b) Section 302 Allocations- The separate allocation referred to in subsection (a) shall be the exclusive allocation for Overseas Contingency Operations/Global War on Terrorism under section 302(b) of the Congressional Budget Act of 1974. The Committee on Appropriations of the House of Representatives may provide suballocations of such separate allocation under such section 302(b). (c) Application- For purposes of enforcing the separate allocation referred to in subsection (a) under section 302(f) of the Congressional Budget Act of 1974, the `first fiscal year' and the `total of fiscal years' shall be deemed to refer to fiscal year 2018. Section 302(c) of such Act shall not apply to such separate allocation. (d) Designations- New budget authority or outlays shall only be counted toward the allocation referred to in subsection (a) if designated pursuant to section 251(b)(2)(A)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985. (e) Adjustments- For purposes of subsection (a) for fiscal year 2018, no adjustment shall be made under section 314(a) of the Congressional Budget Act of 1974 if any adjustment would be made under section 251(b)(2)(A)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985. SEC. 5103. LIMITATION ON CHANGES IN CERTAIN MANDATORY PROGRAMS. (a) Definition- In this section, the term `change in mandatory programs' means a provision that— (1) would have been estimated as affecting direct spending or receipts under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 (as in effect prior to September 30, 2002) if the provision were included in legislation other than appropriation Acts; and (2) results in a net decrease in budget authority in the budget year, but does not result in a net decrease in outlays over the total of the current year, the budget year, and all fiscal years covered under the most recently agreed to concurrent resolution on the budget. (b) Point of Order in the House of Representatives- (1) IN GENERAL- A provision in a bill or joint resolution making appropriations for a full fiscal year that proposes a change in mandatory programs that, if enacted, would cause the absolute value of the total budget authority of all such changes in mandatory programs enacted in relation to a full fiscal year to be more than the amount specified in paragraph (3), shall not be in order in the House of Representatives. (2) AMENDMENTS AND CONFERENCE REPORTS- It shall not be in order in the House of Representatives to consider an amendment to, or a conference report on, a bill or joint resolution making appropriations for a full fiscal year if such amendment thereto or conference report thereon proposes a change in mandatory programs that, if enacted, would cause the absolute value of the total budget authority of all such changes in mandatory programs enacted in relation to a full fiscal year to be more than the amount specified in paragraph (3). (3) AMOUNT- The amount specified in this paragraph is— (A) for fiscal year 2018, $19,100,000,000; (B) for fiscal year 2019, $17,000,000,000; and (C) for fiscal year 2020, $15,000,000,000. (c) Determination- For purposes of this section, budgetary levels shall be determined on the basis of estimates provided by the chair of the Committee on the Budget of the House of Representatives. SEC. 5104. LIMITATION ON ADVANCE APPROPRIATIONS. (a) In General- In the House of Representatives, except as provided for in subsection (b), any general appropriation bill or bill or joint resolution continuing appropriations, or amendment thereto or conference report thereon, may not provide advance appropriations. (b) Exceptions- An advance appropriation may be provided for programs, projects, activities, or accounts identified in the report or the joint explanatory statement of managers, as applicable, accompanying this concurrent resolution under the following headings: (1) GENERAL- `Accounts Identified for Advance Appropriations'. (2) VETERANS- `Veterans Accounts Identified for Advance Appropriations'. (c) Limitations- The aggregate level of advance appropriations shall not exceed the following: (1) GENERAL- $28,852,000,000 in new budget authority for all programs identified pursuant to subsection (b)(1). (2) VETERANS- $70,699,313,000 in new budget authority for programs in the Department of Veterans Affairs identified pursuant to subsection (b)(2). (d) Definition- In this section, the term `advance appropriation' means any new discretionary budget authority provided in a general appropriation bill or joint resolution continuing appropriations for fiscal year 2018, or any amendment thereto or conference report thereon, that first becomes available for the first fiscal year following fiscal year 2018. SEC. 5105. ESTIMATES OF DEBT SERVICE COSTS. In the House of Representatives, the chair of the Committee on the Budget may direct the Congressional Budget Office to include, in any estimate prepared under section 402 of the Congressional Budget Act of 1974 with respect to any bill or joint resolution, an estimate of any change in debt service costs resulting from carrying out such bill or resolution. Any estimate of debt service costs provided under this section shall be advisory and shall not be used for purposes of enforcement of such Act, the Rules of the House of Representatives, or this concurrent resolution. This section shall not apply to authorizations of programs funded by discretionary spending or to appropriation bills or joint resolutions, but shall apply to changes in the authorization level of appropriated entitlements. SEC. 5106. FAIR-VALUE CREDIT ESTIMATES. (a) All Credit Programs- Whenever the Director of the Congressional Budget Office provides an estimate of any measure that establishes or modifies any program providing loans or loan guarantees, the Director shall also, to the extent practicable, provide a fair-value estimate of such loan or loan guarantee program if requested by the chair of the Committee on the Budget of the House of Representatives. (b) Student Financial Assistance and Housing Programs- The Director of the Congressional Budget Office shall provide, to the extent practicable, a fair-value estimate as part of any estimate for any measure that establishes or modifies a loan or loan guarantee program for student financial assistance or housing (including residential mortgage). (c) Baseline Estimates- The Congressional Budget Office shall include estimates, on a fair-value and credit reform basis, of loan and loan guarantee programs for student financial assistance, housing (including residential mortgage), and such other major loan and loan guarantee programs, as practicable, in its The Budget and Economic Outlook: 2018 to 2027. (d) Enforcement in the House of Representatives- If the Director of the Congressional Budget Office provides an estimate pursuant to subsection (a) or (b), the chair of the Committee on the Budget of the House of Representatives may use such estimate to determine compliance with the Congressional Budget Act of 1974 and other budget enforcement requirements. SEC. 5107. ESTIMATES OF MACROECONOMIC EFFECTS OF MAJOR LEGISLATION. (a) CBO and JCT Estimates- During the 115 th Congress, any estimate of major legislation considered in the House of Representatives provided by the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974 or by the Joint Committee on Taxation to the Congressional Budget Office under section 201(f) of such Act shall, to the extent practicable, incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such major legislation. (b) Contents- Any estimate referred to in subsection (a) shall, to the extent practicable, include— (1) a qualitative assessment of the budgetary effects (including macroeconomic variables described in subsection (a)) of the major legislation in the 20-fiscal year period beginning after the last fiscal year of the most recently agreed to concurrent resolution on the budget that sets forth budgetary levels required under section 301 of the Congressional Budget Act of 1974; and (2) an identification of the critical assumptions and the source of data underlying that estimate. (c) Definitions- In this section: (1) MAJOR LEGISLATION- The term `major legislation' means a bill or joint resolution, or amendment thereto or conference report thereon— (A) for which an estimate is required to be prepared pursuant to section 402 of the Congressional Budget Act of 1974 (2 U.S.C. 653) and that causes a gross budgetary effect (before incorporating macroeconomic effects and not including timing shifts) in a fiscal year in the period of years of the most recently agreed to concurrent resolution on the budget equal to or greater than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; or (B) designated as such by— (i) the chair of the Committee on the Budget of the House of Representatives for all direct spending legislation; or (ii) the Member who is Chairman or Vice Chairman of the Joint Committee on Taxation for revenue legislation. (2) BUDGETARY EFFECTS- The term `budgetary effects' means changes in revenues, direct spending outlays, and deficits. (3) TIMING SHIFTS- The term `timing shifts' means— (A) provisions that cause a delay of the date on which outlays flowing from direct spending would otherwise occur from one fiscal year to the next fiscal year; or (B) provisions that cause an acceleration of the date on which revenues would otherwise occur from one fiscal year to the prior fiscal year. SEC. 5108. ADJUSTMENTS FOR IMPROVED CONTROL OF BUDGETARY RESOURCES. (a) Adjustments of Discretionary and Direct Spending Levels- In the House of Representatives, if a committee (other than the Committee on Appropriations) reports a bill or joint resolution, or an amendment thereto is offered or conference report thereon is submitted, providing for a decrease in direct spending (budget authority and outlays flowing therefrom) for any fiscal year and also provides for an authorization of appropriations for the same purpose, upon the enactment of such measure, the chair of the Committee on the Budget may decrease the allocation to the applicable authorizing committee that reports such measure and increase the allocation of discretionary spending (budget authority and outlays flowing therefrom) to the Committee on Appropriations for fiscal year 2018 by an amount equal to the new budget authority (and outlays flowing therefrom) provided for in a bill or joint resolution making appropriations for the same purpose. (b) Determinations- In the House of Representatives, for purposes of enforcing this concurrent resolution, the allocations and aggregate levels of new budget authority, outlays, direct spending, revenues, deficits, and surpluses for fiscal year 2018 and the total of fiscal years 2018 through 2027 shall be determined on the basis of estimates made by the chair of the Committee on the Budget and such chair may adjust the applicable levels in this concurrent resolution. SEC. 5109. SCORING RULE FOR ENERGY SAVINGS PERFORMANCE CONTRACTS. (a) In General- The Director of the Congressional Budget Office shall estimate provisions of any bill or joint resolution, or amendment thereto or conference report thereon, that provides the authority to enter into or modify any covered energy savings contract on a net present value basis (NPV). (b) NPV Calculations- The net present value of any covered energy savings contract shall be calculated as follows: (1) The discount rate shall reflect market risk. (2) The cash flows shall include, whether classified as mandatory or discretionary, payments to contractors under the terms of their contracts, payments to contractors for other services, and direct savings in energy and energy-related costs. (3) The stream of payments shall cover the period covered by the contracts but not to exceed 25 years. (c) Definition- As used in this section, the term `covered energy savings contract' means— (1) an energy savings performance contract authorized under section 801 of the National Energy Conservation Policy Act; or (2) a utility energy service contract, as described in the Office of Management and Budget Memorandum on Federal Use of Energy Savings Performance Contracting, dated July 25, 1998 (M-98-13), and the Office of Management and Budget Memorandum on the Federal Use of Energy Saving Performance Contracts and Utility Energy Service Contracts, dated September 28, 2015 (M-12-21), or any successor to either memorandum. (d) Enforcement in the House of Representatives- In the House of Representatives, if any net present value of any covered energy savings contract calculated under subsection (b) results in a net savings, then the budgetary effects of such contract shall not be counted for purposes of titles III and IV of the Congressional Budget Act of 1974, this concurrent resolution, or clause 10 of rule XXI of the Rules of the House of Representatives. (e) Classification of Spending- For purposes of budget enforcement, the estimated net present value of the budget authority provided by the measure, and outlays flowing therefrom, shall be classified as direct spending. (f) Sense of the House of Representatives- It is the sense of the House of Representatives that— (1) the Director of the Office of Management and Budget, in consultation with the Director of the Congressional Budget Office, should separately identify the cash flows under subsection (b)(2) and include such information in the President's annual budget submission under section 1105(a) of title 31, United States Code; and (2) the scoring method used in this section should not be used to score any contracts other than covered energy savings contracts. SEC. 5110. LIMITATION ON TRANSFERS FROM THE GENERAL FUND OF THE TREASURY TO THE HIGHWAY TRUST FUND. In the House of Representatives, for purposes of the Congressional Budget Act of 1974, the Balanced Budget and Emergency Deficit Control Act of 1985, and the rules or orders of the House of Representatives, a bill or joint resolution, or an amendment thereto or conference report thereon, that transfers funds from the general fund of the Treasury to the Highway Trust Fund shall be counted as new budget authority and outlays equal to the amount of the transfer in the fiscal year the transfer occurs. SEC. 5111. PROHIBITION ON USE OF FEDERAL RESERVE SURPLUSES AS AN OFFSET. In the House of Representatives, any provision of a bill or joint resolution, or amendment thereto or conference report thereon, that transfers any portion of the net surplus of the Federal Reserve System to the general fund of the Treasury shall not be counted for purposes of enforcing the Congressional Budget Act of 1974, this concurrent resolution, or clause 10 of rule XXI of the Rules of the House of Representatives. SEC. 5112. PROHIBITION ON USE OF GUARANTEE FEES AS AN OFFSET. In the House of Representatives, any provision of a bill or joint resolution, or amendment thereto or conference report thereon, that increases, or extends the increase of, any guarantee fees of the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) shall not be counted for purposes of enforcing the Congressional Budget Act of 1974, this concurrent resolution, or clause 10 of rule XXI of the Rules of the House of Representatives. Subtitle B — Other Provisions SEC. 5201. BUDGETARY TREATMENT OF ADMINISTRATIVE EXPENSES. (a) In General- In the House of Representatives, notwithstanding section 302(a)(1) of the Congressional Budget Act of 1974, section 13301 of the Budget Enforcement Act of 1990, and section 2009a of title 39, United States Code, the report or the joint explanatory statement, as applicable, accompanying this concurrent resolution shall include in its allocation to the Committee on Appropriations under section 302(a) of the Congressional Budget Act of 1974 amounts for the discretionary administrative expenses of the Social Security Administration and the United States Postal Service. (b) Special Rule- In the House of Representatives, for purposes of enforcing section 302(f) of the Congressional Budget Act of 1974, estimates of the levels of total new budget authority and total outlays provided by a measure shall include any discretionary amounts described in subsection (a). SEC. 5202. APPLICATION AND EFFECT OF CHANGES IN ALLOCATIONS AND AGGREGATES. (a) Application- In the House of Representatives, any adjustments of the allocations, aggregates, and other budgetary levels made pursuant to this concurrent resolution shall— (1) apply while that measure is under consideration; (2) take effect upon the enactment of that measure; and (3) be published in the Congressional Record as soon as practicable. (b) Effect of Changed Allocations and Aggregates- Revised allocations and aggregates resulting from these adjustments shall be considered for the purposes of the Congressional Budget Act of 1974 as the allocations and aggregates contained in this concurrent resolution. (c) Budget Committee Determinations- For purposes of this concurrent resolution, the budgetary levels for a fiscal year or period of fiscal years shall be determined on the basis of estimates made by the chair of the Committee on the Budget of the House of Representatives. (d) Aggregates, Allocations and Application- In the House of Representatives, for purposes of this concurrent resolution and budget enforcement, the consideration of any bill or joint resolution, or amendment thereto or conference report thereon, for which the chair of the Committee on the Budget makes adjustments or revisions in the allocations, aggregates, and other budgetary levels of this concurrent resolution shall not be subject to the points of order set forth in clause 10 of rule XXI of the Rules of the House of Representatives or section 5101 of this concurrent resolution. (e) Other Adjustments- The chair of the Committee on the Budget of the House of Representatives may adjust other appropriate levels in this concurrent resolution depending on congressional action on pending reconciliation legislation. SEC. 5203. ADJUSTMENTS TO REFLECT CHANGES IN CONCEPTS AND DEFINITIONS. In the House of Representatives, the chair of the Committee on the Budget may adjust the appropriate aggregates, allocations, and other budgetary levels in this concurrent resolution for any change in budgetary concepts and definitions consistent with section 251(b)(1) of the Balanced Budget and Emergency Deficit Control Act of 1985. SEC. 5204. ADJUSTMENT FOR CHANGES IN THE BASELINE. In the House of Representatives, the chair of the Committee on the Budget may adjust the allocations, aggregates, reconciliation targets, and other appropriate budgetary levels in this concurrent resolution to reflect changes resulting from the Congressional Budget Office's update to its baseline for fiscal years 2018 through 2027. SEC. 5205. APPLICATION OF RULE REGARDING LIMITS ON DISCRETIONARY SPENDING. Section 314(f) of the Congressional Budget Act of 1974 shall not apply in the House of Representatives to any bill, joint resolution, or amendment that provides new budget authority for a fiscal year or to any conference report on any such bill or resolution if— (1) the enactment of that bill or resolution; (2) the adoption and enactment of that amendment; or (3) the enactment of that bill or resolution in the form recommended in that conference report, would not cause the 302(a) allocation to the Committee on Appropriations for fiscal year 2018 to be exceeded. Subtitle C—Adjustment Authority SEC. 5301. ADJUSTMENT AUTHORITY FOR AMENDMENTS TO STATUTORY CAPS . During the 115 th Congress, if a measure becomes law that amends the discretionary spending limits established under section 251(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 901(c)), such as a measure increasing the limit for the revised security category for fiscal year 2018 to be $640,000,000,000, the chair of the Committee on the Budget of the House of Representatives may adjust the allocation called for under section 302(a) of the Congressional Budget Act of 1974 (2 U.S.C. 633(a)) to the appropriate committee or committees of the House of Representatives, and may adjust all other budgetary aggregates, allocations, levels, and limits contained in this resolution, as necessary, consistent with such measure. Subtitle D—Reserve Funds SEC. 5401. RESERVE FUND FOR INVESTMENTS IN NATIONAL INFRASTRUCTURE. In the House of Representatives, the chair of the Committee on the Budget may adjust the allocations, aggregates, and other appropriate levels in this concurrent resolution for any bill or joint resolution, or amendment thereto or conference report thereon, that invests in national infrastructure to the extent that such measure is deficit neutral for the total of fiscal years 2018 through 2027. | The Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123), enacted February 9, 2018, amended the statutory discretionary spending limits for FY2018 and FY2019. BBA 2018 comprised several other components as well, one of which was related to a congressional budget resolution for FY2019. These BBA 2018 "budget resolution" provisions (which may be referred to as a "deemer" or a budget resolution substitute) provide the House and Senate with enforceable levels of spending and revenue for FY2019 in ways that a "traditional" budget resolution would. While it is not unusual for Congress to employ such budget resolution substitutes, these substitutes differ from a "traditional" budget resolution in several ways. The idea of a "traditional" budget resolution means a budget resolution as defined by the Congressional Budget Act, which specifies the way that a budget resolution shall be developed and considered and what components it must include. Budget resolution substitutes, such as the one in the BBA 2018, are not developed or considered in the manner specified by the Congressional Budget Act, nor do they include all of the components required by the act. Further, traditional budget resolutions often reflect a budget plan that differs from current law, while substitutes such as the BBA 2018 provisions set budgetary levels that are a reflection of baseline levels of spending and revenue that would occur if existing law were left unchanged. Additionally, traditional budget resolutions often include provisions triggering the budget reconciliation process; substitute provisions do not. These provisions, however, do not preclude Congress from acting on a traditional budget resolution for FY2019. This means that Congress still has the option to consider a budget resolution for FY2019 even if it differs from the levels and components included in the BBA 2018 budget resolution provisions. |
Medicaid is a joint federal-state health program for the poor that expended $159 billion in fiscal year 1995 to provide health care coverage for over 40 million people. Because of its size and complex structure, Medicaid is vulnerable to fraud and abuse. State Medicaid agencies have the primary responsibility to protect the program’s financial integrity and to ensure that beneficiaries have access to quality care. This includes ensuring that appropriate safeguards are in place to remove providers that commit fraud or abuse, or are incompetent, from state programs. At the federal level, the Secretary of HHS has delegated to the OIG the authority under sections 1128 and 1156 of the Social Security Act to exclude health care providers from most federal health care programs.The OIG, through its Office of Investigations, is required to exclude, nationwide, providers who have been convicted of Medicare- or Medicaid-related fraud and patient abuse or neglect, and felonies related to health care fraud and controlled substances. These actions are termed “mandatory exclusions.” The OIG also has authority to exclude other individuals or entities if the OIG determines that the particular facts in a case meet its criteria. These so-called “permissive exclusions” may be based on, for example, submitting excessive claims, license suspensions and revocations, and sanctions imposed by federal or state health agencies. (See the appendix for a complete list of exclusion authorities.) The OIG field offices receive referrals of sanction actions taken by state Medicaid agencies, licensing boards, Medicaid fraud control units (MFCU),and others. For mandatory cases, they assemble and forward to headquarters the case files containing evidence of a provider’s criminal conviction. For referrals falling under the permissive exclusion authorities, the field offices receive documents related to disciplinary actions taken by state Medicaid agencies, licensing boards, or others. They assess the relevant facts and forward to OIG headquarters the cases they recommend for exclusion. OIG headquarters makes the final decision about whether to exclude the provider from program participation. When the OIG excludes a provider, it sends notification letters to organizations such as state Medicaid agencies, Medicare claims-processing contractors, state licensing boards, and MFCUs in the states where the provider is known to practice or operate. When applicable, the provider’s employer is also notified. In addition, information on excluded providers is disseminated nationally through monthly reports and semiannual cumulative listings. As of February 1996—the latest date for which cumulative data were prepared—the OIG had excluded 8,830 providers from federal health care programs nationwide. Three exclusion categories—conviction for program-related crime, conviction for patient abuse or neglect, and license suspensions and revocations—accounted for 76 percent of these nationwide exclusions. In reviewing the OIG’s exclusion of state-referred cases, we identified a number of cases—including those involving mandatory exclusions or serious quality of care issues—that remained unresolved for long periods of time. In the Chicago and Washington field offices, for example, we found delays that were due, at least in part, to state Medicaid agencies and MFCUs not always submitting documentation the field offices needed to process the exclusion. Thus, the completeness of the documentation provided by these agencies varied, necessitating frequent back-and-forth telephone contacts and correspondence to obtain data. The Washington field office advised us that it could take as long as 2 months to obtain needed documentation from state agencies. In other instances, however, case files showed long periods of inactivity with no apparent explanation for the delays. In one case, a pharmacy was terminated for overbilling the Illinois Medicaid program by over $117,000. It took the Chicago field office 15 months to forward the case to headquarters for exclusion. The case file showed no activity for extended periods of time, including a 10-month period. In another case, the field office referred a provider to headquarters for exclusion 19 months after the Illinois MFCU notified it that the provider had pled guilty in state court to falsely billing for Medicaid services. Two and one-half months after the case was forwarded to OIG headquarters, the provider was excluded nationwide. Another weakness we identified in the OIG’s process involves inconsistencies among its field offices in how they use their discretionary authority and the types of cases they refer to headquarters. This is especially true in the case of permissive exclusions, where the field offices may decide whether to recommend exclusion. year later, however, the OIG rescinded this guidance and state agencies were asked to once again refer all cases. We also observed apparent inconsistencies in the way field offices are processing permissive cases. As a result, providers with equally serious problems could be treated differently by the OIG depending on their location. For example, an official in the Washington field office told us that the office would not consider recommending nationwide exclusion unless the state Medicaid agency had excluded the provider, or a licensing board had revoked a license, for at least 1 year. The Chicago and New York field offices, however, use a 2-year rule of thumb. During our state visits we found that states were not always notifying the OIG of certain providers effectively excluded from the respective state’s Medicaid program. One state we visited sometimes permits providers who are being considered for removal from their Medicaid programs to “voluntarily” withdraw rather than face formal sanction. Another state sometimes terminates on short notice providers it suspects of engaging in improper or inappropriate activities. Neither type of withdrawal is reported to the OIG. While this results in safeguards for those states’ Medicaid programs and beneficiaries, it affords no protection for Medicare or other states’ Medicaid programs. not report these actions to the state licensing board or the OIG, the providers may continue to provide harmful, unnecessary, or excessive services to beneficiaries in other federal or state programs. Currently, about 23 percent of the physicians not allowed to participate in the Illinois Medicaid program have withdrawn in lieu of an action against them. We found that some of the providers who had withdrawn for what appeared to be serious quality of care problems were still able to bill Medicare in Illinois. For example, Medicare paid a podiatrist over $20,000 for services provided to program beneficiaries since he withdrew from the Illinois Medicaid program in August 1995. The podiatrist withdrew from the program after the state alleged that he had provided grossly inferior care to Medicaid recipients. An Illinois Medicaid official told us that he did not believe that the settlement agreements preclude the state from formally referring withdrawals to outside organizations. If the state agency started to do so, however, he believed that providers would soon opt to pursue the formal sanction route rather than withdrawing. Consequently, the state might lose a valuable tool for removing undesirable providers from Medicaid and would be forced to spend more time pursuing exclusion. This official speculated that had Illinois not aggressively moved to remove these providers from the Medicaid program through voluntary withdrawals, the providers would still be in the program. We do not know how prevalent voluntary withdrawals are nationwide. Most of the other states we visited told us they do not allow providers to withdraw from their programs to avoid formal sanction. Although New York sometimes allows providers to withdraw from its program, state Medicaid officials told us these cases are reported to the OIG, the state licensing board, and others. Certain providers New York suspects of abuse, however, are terminated but not reported to the OIG. We were informed by New York officials that state program regulations permit either the provider or state Medicaid agency to terminate a provider’s participation in the program upon 30 days’ written notice. According to state officials, this practice has been used primarily against pharmacies that the state suspected were heavily involved in dispensing drugs with a street market. As a result, the state agency has been able to deal quickly with pharmacies that it believed were involved in drug diversion. Like voluntary withdrawals in Illinois, however, these cases are not reported to the OIG. The OIG widely disseminates information on excluded providers through monthly reports and periodic cumulative listings to various state and federal agencies so that they, too, will remove these providers from their programs. We found, however, that for several reasons states sometimes have difficulty identifying and excluding providers who appear on the lists. First, the states have difficulty identifying individuals—such as nurses, pharmacists, or physicians—who are employed by hospitals, nursing homes, pharmacies, and health maintenance organizations that bill the program under the entities’ billing number. These providers, once sanctioned, can change employers or move to other states and potentially continue to provide services through federal health care programs without detection. Second, providers sometimes are not identified because states tend to use the OIG’s monthly list for a onetime check against their active provider files. However, they may not review prior monthly lists to check a provider who applies for program participation in a subsequent month. Thus, a provider could later enroll in the state’s Medicaid program after being excluded nationwide by the OIG and not be detected. Finally, some states do not always check providers appearing on the list who have out-of-state addresses. An official in Missouri, for example, told us that although they check the OIG monthly list with in-state and border state addresses, they do not check names from other states. New York officials also told us that it would be time-consuming to check the list of their Medicaid providers against the entire OIG list each month; instead, they only check for New York addresses. In addition, they said the OIG’s cumulative list is cumbersome to use and the information is not formatted in a way that would permit a large state, such as New York, to match provider names. When we performed a computer match of the OIG exclusion list to Illinois’ enrolled provider file, we found 13 out-of-state providers who had been excluded by the OIG between 1988 and 1995 but who were still enrolled in the Illinois Medicaid program. One of them had received almost $25,000 in Medicaid payments since being excluded by the OIG. Although the others had not billed the program since they were excluded by the OIG, state Medicaid officials acknowledged that they would have been paid had they submitted claims. Although we attempted to identify the magnitude and pervasiveness of problems in the exclusion process, we were unable to do so—primarily because of a lack of case file documentation at the OIG field offices. In our visits to OIG field offices, we found that they were not always able to fully account for the number of referrals they received from the states. For example, the Chicago field office could not locate 5 of 17 referrals sent by a state Medicaid agency during 1994 and 1995. As a result, it could not confirm that it had received the referrals or explain why it had not considered exclusion. Our review of these five cases at the state Medicaid agency determined that three of them involved what appeared to be serious quality of care issues. For example, in April 1995, the Illinois Medicaid agency excluded a dentist from its program for providing care that placed his patients at risk of harm. Among the charges was that the dentist had performed surgical extractions and had given patients general anesthesia without documented need. The state Medicaid agency’s case file on this dentist showed that he had been referred to the OIG in June 1995. When we inquired at the Chicago field office in March 1996, however, no record could be found of the case. Subsequent to our inquiry, the office opened a case file on the dentist, but as of August 8, 1996, the case had not been forwarded to headquarters for a final decision. Since this dentist was excluded from Medicaid, he has received almost $12,000 for services provided to Medicare patients. When discussing weaknesses in the OIG’s exclusion process with headquarters officials, they acknowledged that improvements are needed and informed us of a recent initiative to increase the number and quality of exclusion cases being forwarded from the field offices. In May 1996, the OIG began an effort to identify all mandatory exclusion cases referred to them by the states, along with permissive exclusion cases meeting certain criteria. Staff performing this function will receive extra training on the processing of provider exclusions submitted by state agencies. OIG officials also attributed these problems to resource cuts over the last several years. With the recent enactment of the Health Insurance Portability and Accountability Act of 1996, officials believe they will be able to obtain additional resources to further address these problems. state’s Medicaid program can continue to do so in Medicare or in other states. Because of the amount of communication and coordination that is needed at the state and federal levels, the referral and exclusion process is complex. Nevertheless, we believe that more attention must be paid to a system that works to protect beneficiaries from substandard care and helps ensure the integrity of federal health programs. Although the OIG believes its initiatives and the potential for additional investigative resources will help remedy weaknesses in the long term, we believe that the OIG could take immediate action in several areas that would substantially improve its effectiveness. For example, the OIG could provide more guidance for OIG field staff and the states to facilitate the prompt preparation of case files—including required documentation—for OIG decisions. It could also clarify guidance for the field offices to ensure more consistency in the cases that are sent forward to headquarters for a final decision. Furthermore, it could explore ways to ensure that states quickly identify and act to remove OIG-excluded providers from Medicaid participation. Finally, the OIG may want to ask states to begin reporting information on those who have agreed to withdraw from a state Medicaid program rather than subject themselves to the formal sanction process. Mr. Chairman, this concludes my statement. I would be happy to respond to any questions that you or Members of the Subcommittee may have. For more information on this testimony, please call Kathy Allen, Assistant Director, at (202) 512-7059. Other major contributors included Jon Barker, Bob Ferschl, Bob Lippencott, Al Schnupp, and Ted Wagner. 1128(a)(1) 1128(a)(2) Conviction for patient abuse or neglect 1128(b)(1) Conviction related to health care fraud (non-HHS) 1128(b)(2) Conviction related to obstruction of an investigation 1128(b)(3) Conviction related to controlled substances 1128(b)(4) 1128(b)(5) Suspension or exclusion under a federal or state health care program 1128(b)(6) Excessive claims or furnishing of unnecessary or substandard items and services 1128(b)(7) Fraud, kickbacks, and other related activities 1128(b)(8) Entities owned or controlled by a sanctioned individual 1128(b)(9) Failure to disclose required information 1128(b)(10) Failure to supply requested information on subcontractors and suppliers 1128(b)(11) Failure to provide payment information 1128(b)(12) Failure to grant immediate access 1128(b)(13) Failure to take corrective action 1128(b)(14) Default on health education loan or scholarship obligations Imposition of a civil money penalty or assessment 1156(b) The first copy of each GAO report and testimony is free. 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A recorded menu will provide information on how to obtain these lists. | GAO discussed whether the Department of Health and Human Services' (HHS) Office of Inspector General's (OIG) process for removing fraudulent health care providers from all federal health programs. GAO noted that: (1) weaknesses within HHS OIG allow sanctioned health care providers to remain in federal health care programs; (2) these weaknesses include lengthy delays in the OIG decision-making process, inconsistencies among OIG field offices, states not informing OIG of the providers withdrawing from state Medicaid programs, and states using information from OIG to remove excluded providers from state programs; (3) these problems compromise the financial integrity of the Medicaid program; (4) OIG field offices are unable to account for the number of referrals they receive from OIG state offices; (5) health care providers deemed unfit in one state continue to participate in Medicaid programs in other states; (6) OIG needs to consider whether it is capable of protecting beneficiaries from substandard care and ensuring the integrity of the federal health care system; and (7) OIG could become more efficient in detecting fraudulent health care providers by providing more guidance for OIG field staff, timely preparing individual case files, clarifying guidance for OIG field offices, ensuring that states act quickly in removing OIG-excluded providers from Medicaid participation, and requiring states to report providers' voluntary withdrawal from Medicaid programs to OIG field offices. |
The World Health Organization (WHO) established the U.N.’s first program to respond to HIV/AIDS in 1987. Later that same year, the U.N. General Assembly encouraged WHO to continue its efforts and urged all appropriate U.N. system organizations to support AIDS control efforts. In the early 1990s, U.N. officials and bilateral donors increasingly recognized the need for a multisectoral response to the complex challenges of the HIV/AIDS pandemic, including the social, economic, and development issues contributing to the spread of the virus. They realized that WHO’s medically based approach was insufficient to effectively combat the virus. In response, the United Nation’s Economic and Social Council established the Joint United Nations Programme on HIV/AIDS and operations started in 1996. The mission of UNAIDS is to strengthen and support an expanded response to HIV/AIDS aimed at preventing the transmission of HIV, providing care and support, reducing the vulnerability of individuals and communities to the worldwide epidemic, and alleviating its impact. UNAIDS was not expected to fund the efforts of the global community. Intended to be a model of U.N. reform, UNAIDS is the United Nations’ first joint, cosponsored program of its type. UNAIDS is comprised of a Secretariat and seven U.N. cosponsors that act at the global, regional, and country levels. UNAIDS’ Programme Coordinating Board is the governing body for all programmatic issues concerning policy, strategy, finance, and monitoring and evaluation of UNAIDS. Through the Committee of Cosponsoring Organizations, the cosponsors’ executive heads or their representatives meet twice a year to consider matters concerning UNAIDS and to provide input into UNAIDS' policies and strategies. The UNAIDS Secretariat, headquartered in Geneva, Switzerland, and acting primarily at the global level, is in charge of the overall coordination and management of UNAIDS and leads the International Partnership Against AIDS in Africa. The seven cosponsors are independent U.N. agencies that have programs in regions and countries worldwide. By joining the UNAIDS partnership, they committed to joint planning and action against HIV/AIDS. Cosponsors are charged with integrating HIV/AIDS-related strategies, policies, programs, and activities into the work of their respective agencies. Figure 1 shows the organizational structure of UNAIDS. The United Nations creates U.N. “theme groups” on specific issues to facilitate its efforts at the country level and to promote a more coherent U.N. response to national priorities. For example, one type of theme group focuses on the environment and sustainable development, and another on the empowerment of women. The U.N. has 132 theme groups on HIV/AIDS that serve as UNAIDS’ primary mechanism for assisting developing countries. They are composed primarily of the senior staff of UNAIDS’ cosponsors and are located in-country. The theme groups’ principal objectives are to coordinate the U.N. response at the country level and to support national governments and others in their efforts to mount an effective and comprehensive response to HIV/AIDS. Theme groups are expected to share information, plan, and monitor coordinated actions with their U.N. partners and, in some cases, jointly finance major AIDS-related activities in support of host governments and national partners, such as nongovernmental organizations. In priority countries, the theme group may be supported by a Country Programme Advisor, a country-based Secretariat staff member. In addition to supporting the broader U.N. system, to build national commitment to HIV/AIDS action, this advisor is expected to provide information and guidance to a range of host country partners including government departments, nongovernmental and community-based organizations, and people living with HIV/AIDS. UNAIDS is funded through voluntary contributions from national governments, cosponsors’ cash contributions, and private donations. None of its funds comes from the U.N. budget or from U.N. member states’ assessed contributions. UNAIDS' biennium budgets (including the Secretariat’s and cosponsors’ activities at the global and regional levels) were $120 million for both the 1996-1997 biennium and the 1998-1999 biennium. The budget for 2000-2001 is $140 million. Cosponsors also provide funding for their HIV/AIDS-related activities from their core budgets and solicit supplemental funding for their country-level activities from bilateral donors and other sources, such as foundations. The United States is the largest contributor to UNAIDS, providing $34 million for the 1996-1997 biennium, $31 million for the 1998-1999 biennium, and approximately $32 million for the 2000-2001 biennium. The State Department is the United States’ liaison with multilateral organizations such as the United Nations, and the U.S. Agency for International Development (USAID) manages U.S. funding to UNAIDS and coordinates and participates in the U.S. delegation to UNAIDS’ governing board. UNAIDS has made progress toward increasing global coordination and commitment to HIV/AIDS since we last reported in 1998. UNAIDS is developing a U.N. system strategic plan that will help coordinate the U.N.’s HIV/AIDS-related programs and activities. In addition, UNAIDS’ cosponsors have increased their commitment and efforts to integrate HIV/AIDS into the work of their agencies; however, progress varies from cosponsor to cosponsor. UNAIDS’ advocacy efforts, especially those of the UNAIDS Secretariat, have helped increase national and international commitment and approaches to the worldwide epidemic. Funding by U.N. and bilateral donors has also increased. However, UNAIDS’ efforts at the country level are weak. UNAIDS’ theme groups continue to have difficulty organizing a unified U.N. response and helping host countries combat HIV/AIDS. Country Programme Advisors—the Secretariat’s country-based staff—also have not been as effective as expected in supporting HIV/AIDS efforts of the theme groups and host countries. According to the UNAIDS governing board, the success of UNAIDS is highly dependent on collaboration within the U.N. system. However, half of UNAIDS’ donors surveyed did not believe that the Secretariat had been as successful as originally expected in facilitating the coordination of U.N. actions on HIV/AIDS. According to USAID officials, the Secretariat’s lack of clear guidance and coordination produced, in part, confusion within the U.N. system about the roles of the Secretariat and cosponsors. In response, the Secretariat is facilitating the development of the U.N. System Strategic Plan for HIV/AIDS for 2001-2005. The plan is designed to provide a more coherent U.N. response to HIV/AIDS, documenting the efforts of the Secretariat, 7 U.N. cosponsors, and 21 other U.N. agencies, such as the International Labour Organization and the Food and Agriculture Organization. The Secretariat stated the plan will be presented to UNAIDS’ governing board by June 2001. In addition, the Secretariat and cosponsors began conducting detailed reviews of each of the cosponsors’ HIV/AIDS programs in March 2000. These reviews profile each cosponsor’s mandate, structure, operations and budget, and HIV/AIDS-related work. The reviews are intended to improve UNAIDS’ strategic planning and collaboration and to increase understanding within UNAIDS about each of the cosponsors’ roles and responsibilities. UNAIDS cosponsors’ commitment to HIV/AIDS has increased since we last reported. Over the past 2 years, the executive boards of several cosponsors have issued statements to strengthen agency action on HIV/AIDS. For example, in January 2000, WHO’s Executive Board requested that the Director General strengthen the agency’s involvement in the UNAIDS effort and give HIV/AIDS priority in its budget. All UNAIDS cosponsors’ executive directors now speak at major international meetings and events, advocating for increased attention and activities to combat HIV/AIDS. Some cosponsors also have elevated the position of the HIV/AIDS unit or focal point organizationally to highlight the visibility and importance of the issue within the agency. For example, in 1999, to focus on its HIV/AIDS efforts in sub-Saharan Africa, the World Bank created a new office that reports to the agency’s Office of the Regional Vice Presidents. The same year, the U.N. Children’s Fund established a senior- level post and unit at their headquarters. On the other hand, the cosponsors’ progress toward integrating HIV/AIDS into their agency strategies, programs, and activities has varied and continues to evolve. For example, an external evaluation of the U.N. Development Programme’s HIV/AIDS program, prepared in 2000, found that HIV/AIDS had not been fully integrated into the agency’s work. In response, the Development Programme made HIV/AIDS one of its top priorities and launched a resource mobilization campaign to support country-level activities, among other efforts. The U.N. Population Fund also evaluated its HIV/AIDS programs and concluded in its 1999 report that many of the agency’s efforts to integrate HIV/AIDS were superficial. In response, the Population Fund made HIV/AIDS a top priority as part of its 2001 agency realignment process—an action that the agency expects will accelerate efforts to integrate HIV/AIDS into its existing programs. The Executive Director of UNAIDS said that further strengthening cosponsor commitment and integration of HIV/AIDS is a top internal challenge for UNAIDS. Appendix III briefly describes the HIV/AIDS programs and key activities of each of UNAIDS’ cosponsors. UNAIDS’ major donors, U.S. government officials, cosponsor officials, and others credit UNAIDS, especially the Secretariat, with contributing to the national and international communities’ increased awareness of and commitment to the fight against HIV/AIDS. They also credit UNAIDS and the Secretariat with helping to reframe HIV/AIDS as an issue involving all sectors rather than an issue involving only the health sector. Many national governments around the world were slow to respond to the HIV/AIDS epidemic, even those in the most affected areas in sub-Saharan Africa. In response, UNAIDS’ Executive Director visited 21 developing countries in 1999 and 2000, including 14 African countries. In those countries, the Executive Director stressed the importance of mobilizing efforts to combat HIV/AIDS and taking a multisectoral approach to the countries’ presidents and other high-level national leaders. For example, UNAIDS’ Executive Director met with the Prime Minister of Ethiopia in September 1999 to advocate for a high-level, expanded, and multisectoral response. In April 2000, the President of Ethiopia launched the National Council on AIDS, supported by a National Secretariat in the Office of the Prime Minister and composed of multisectoral subcommittees. With assistance from the Secretariat and the World Bank, some countries are incorporating responses to HIV/AIDS into their country’s long-term multisectoral development plans. UNAIDS also has worked with the international community, including the private sector, to broaden and increase efforts to combat HIV/AIDS. In December 2000, the Secretariat, several cosponsors, and the Japanese government collaborated to develop detailed strategies, goals, and targets for the Group of Eight’s plan to address HIV/AIDS and other infectious diseases. In addition, in September 2000, the Secretariat, WHO, and the European Commission conducted a high-level meeting to explore additional multisectoral actions that the European Union could take against poverty and communicable diseases such as HIV. UNAIDS also worked to get the private sector more involved in international efforts to combat HIV/AIDS. The Secretariat and the World Bank, together with USAID and several U.S. foundations, convened 15 major U.S. foundations in January 2000 and presented data on the foundations’ limited expenditures on HIV/AIDS. According to the Secretariat, the foundations subsequently committed to providing more funding. In April 2000, one attendee the Bill and Melinda Gates Foundation--announced a $57 million grant to expand national HIV/AIDS programs for youth in Botswana, Ghana, Uganda, and Tanzania. The Secretariat also has helped cultivate the involvement of the U.N. Foundation in global efforts against HIV/AIDS. Since 1998, the U.N. Foundation has allocated at least $25 million for HIV/AIDS-related activities implemented by UNAIDS’ cosponsors in southern Africa and Ukraine. Cosponsors reported that estimated spending for HIV/AIDS programs has increased significantly in the past 2 years. However, most of the increased spending came from the World Bank, which provides loans to national governments for specific HIV/AIDS-related projects. Bilateral donor funding increased slightly in 1998 over previous years, but funding has increased considerably among some donors since then. Despite these efforts, total funding for HIV/AIDS efforts is well below what experts estimate is needed to effectively combat HIV/AIDS around the world. Table 1 shows estimated spending for HIV/AIDS by UNAIDS’ cosponsors from 1996 to 1999. Overall, UNAIDS’ cosponsors have increased spending for HIV/AIDS programs and activities from $296.9 million in the 1996-1997 biennium to $658.1 million in the 1998-1999 biennium. Most of this increase (96 percent) came from the World Bank. Four other cosponsors increased spending for HIV/AIDS-related activities, although some did so only slightly. The U.N. Development Programme decreased its spending for HIV/AIDS. Cosponsor officials cited several reasons that affected their ability to increase HIV/AIDS spending. First, several cosponsors’ budgets have either declined or remained stable over the past few years. For example, the U.N. Population Fund’s overall budget declined from $628.7 million in the 1996-1997 biennium to $581.7 million in the 1998-1999 biennium. Second, earmarked funds for activities other than HIV/AIDS have increased. For example, although the U.N. Development Programme’s overall agency budget has increased from $4.3 billion in the 1996-1997 biennium to $4.8 billion in the 1998-1999 biennium, the percentage of its budget that was earmarked for specific efforts increased from 62 percent to 70 percent. Finally, the strength of the U.S. dollar has led to poor exchange rates with other countries, reducing the value of bilateral donor contributions to overall agency budgets. For example, according to U.N. Population Fund officials, some bilateral donors made substantial increases in contributions to the agency from 1999 to 2000, but these increases were neutralized by the exchange rate. According to the UNAIDS Secretariat, while bilateral donors maintained their spending for HIV/AIDS in 1996 and 1997 at $273 million each year, funding increased slightly in 1998 to $293 million. As of May 2001, the Secretariat could not provide us with more current data, but evidence from specific countries suggests that funding has increased further. For example, the United States committed approximately $466 million in 2001 compared with the $293 million spent by all bilateral donors, including the United States, in 1998. Canada announced in June 2000 that, over the next 3 years, it would increase its international HIV/AIDS spending from $20 million to $60 million per year. According to the Secretariat, most major bilateral donors have increased their HIV/AIDS funding for Africa since 2000. However, these increases are much less than the minimum of $3 billion that UNAIDS estimates may be needed annually for basic HIV/AIDS prevention, treatment, and care in the sub-Saharan Africa region alone. The U.N. Secretary-General is currently advocating for the creation and funding of a global AIDS fund that would support HIV/AIDS activities in developing countries. The U.S. Administration pledged $200 million to the fund in May 2001. One of UNAIDS’ primary functions is to strengthen host nations’ capacities to plan, coordinate, implement, and monitor the overall response to HIV/AIDS. However, UNAIDS’ governing board, donors, and senior officials do not believe that UNAIDS has been as effective as expected at the country level. The performance of UNAIDS’ theme groups varies widely, and their overall performance in facilitating the U.N. response at the country level and in providing effective assistance to host countries’ efforts to combat HIV/AIDS has been weak. In addition, UNAIDS cosponsors and the Secretariat do not hold theme groups sufficiently accountable for their efforts. The Secretariat’s Country Programme Advisors have not been as effective as expected in supporting the theme groups’ and host countries’ HIV/AIDS efforts. The Secretariat has not provided the advisors with sufficient guidance and training and initially did not hire individuals with the right mix of skills. According to UNAIDS’ 2000 survey of its donors, UNAIDS has not been as successful as they expected in strengthening governments’ HIV/AIDS activities and ensuring that appropriate and effective policies and strategies are implemented to address HIV/AIDS. In addition, the survey said that donors believe UNAIDS has been weak in promoting broad-based political and social commitment and action to prevent and respond to HIV/AIDS at the country level. According to the survey, donors’ perception of UNAIDS’ lack of sufficient relevance at the country level could be a threat to future funding. UNAIDS’ governing board said that the ultimate test of UNAIDS’ success lies in the degree to which it successfully helps host countries combat HIV/AIDS. However, at the latest meeting of UNAIDS’ governing board in December 2000, both the governing board and UNAIDS’ Executive Director noted that UNAIDS needed to improve its country-level response. The governing board emphasized that a coordinated, consistent U.N. response was needed and that improving the performance of UNAIDS’ theme groups required urgent attention. UNAIDS’ Executive Director concurred with the board’s assessment, saying that these tasks are a formidable challenge and that strengthening UNAIDS’ country-level efforts is one of UNAIDS’ top internal challenges. UNAIDS’ 132 theme groups on HIV/AIDS—composed primarily of cosponsors’ senior in-country staff—are UNAIDS’ primary mechanism at the country level to coordinate the U.N. response and support host countries’ efforts against HIV/AIDS. However, overall theme group performance varies considerably. For example, in surveying 36 USAID missions worldwide, we asked about the extent to which the theme groups were strengthening the overall national government response to HIV/AIDS. Of the 24 missions responding, 8 said to a very or great extent, 7 said to a moderate extent, and 9 said to some, little, or no extent. In addition, UNAIDS’ annual surveys of its theme groups from 1996-1999 indicate that they have made little progress in key areas, including developing an advocacy plan, mobilizing resources, and developing a U.N. system integrated plan on HIV/AIDS. According to the UNAIDS Secretariat, theme groups are expected to develop joint advocacy action plans to plan and manage joint advocacy work on HIV/AIDS and to clarify what the theme group is advocating and by whom and how. UNAIDS’ annual surveys show that, in 1997, 31 percent of theme groups surveyed had developed a systematic approach to advocacy in the form of a strategy or plan. In 1999, 37 percent of theme groups had developed an advocacy plan or strategy. Since UNAIDS is not a funding agency, mobilizing resources to support country-level efforts against the epidemic is another key role of the theme group. According to UNAIDS, in 1997, under one-half of UNAIDS’ theme groups were mobilizing resources for HIV/AIDS activities, a figure that increased to about one-half in 1999. Most resource mobilization efforts were ad hoc, with only one-quarter of theme groups having developed a systematic approach to resource mobilization as expected. According to the UNAIDS Secretariat, a U.N. system integrated plan on HIV/AIDS is the basis for coordinated U.N. support to the national response and is the single most valuable indicator of the U.N.’s commitment at the country level. However, according to UNAIDS, as of February 2000, only 18 out of 86 theme groups surveyed had completed an integrated plan and one-half had yet to take any steps to begin the process of completing one. In 1998, we found that UNAIDS’ theme groups were ineffective for a number of reasons. The UNAIDS Secretariat did not provide timely guidance about operations or responsibilities. In addition, UNAIDS’ cosponsor staff at the country level were not committed to the UNAIDS mandate, nor were they held accountable by their respective agencies for their participation in the theme groups or for the theme groups’ results in supporting national HIV/AIDS efforts. In our most recent work, we found that some of the cosponsors and the Secretariat still do not hold theme group members accountable for results. For example, while the Director-General of WHO directed their country directors to participate in theme groups, WHO does not assess their involvement as part of their annual performance review. Neither the World Bank nor the U.N. International Drug Control Programme requires theme group involvement or includes it as a required element in annual performance reviews of senior country-level staff. The UNAIDS Secretariat also does not hold theme groups accountable for results. While the Secretariat has no organizational authority over the cosponsors’ country-level representatives, the theme groups are expected to undertake a number of activities, including developing advocacy and resource mobilization plans. The Secretariat’s annual surveys of theme groups are one way that UNAIDS obtains information on theme group operations. However, these surveys currently focus only on the internal operations and management of the theme group rather than the implementation of these plans or the extent to which theme groups are successful in their other efforts to support host countries’ HIV/AIDS efforts. The Secretariat said that it is improving the annual surveys to allow for tracking of theme group results. Also, in recognition of the continuing challenges with theme groups, UNAIDS created the Interagency Task Team on Theme Group Operations, and the Secretariat created a new Theme Group Support Unit. According to U.S. officials and officials from both the UNAIDS Secretariat and cosponsors, Country Programme Advisors—the Secretariat’s country- based staff—have not been effective as expected in supporting HIV/AIDS efforts of the theme groups and host countries. For example, guidance provided by the UNAIDS Secretariat instructs the advisors to advocate to national governments for expanded efforts on HIV/AIDS but provides no guidance on what to do or how to do it. Without adequate guidance or training, an advisor’s success is dependent on his or her personal talents and skills. According to the Secretariat, many advisors have not been successful because they lack crucial diplomatic skills and were not hired at a rank high enough to successfully interact with and influence U.N. and host country government officials. In some instances, the Secretariat has increased the grade level at which these advisors are hired and is in the process of hiring new advisors with the right skills. UNAIDS also held a meeting on developing a plan of action to better focus their recruiting efforts and support the advisors in their work. While the UNAIDS Secretariat was not intended to fund or implement HIV/AIDS activities, it does provide small amounts of funding to support theme group proposals for projects to stimulate national HIV/AIDS efforts. These funds are also expected to help theme groups leverage funds from other sources. These funds could be used, for example, to support activities to design and develop national strategic plans or to support the development of major grants or loans to address HIV/AIDS. UNAIDS provided $22.9 million in these funds for the 1998-1999 biennium and allocated about $23.5 million for the 2000-2001 biennium. After an evaluation of the funding process in June 1999, UNAIDS found that 65 percent of projects receiving such funds succeeded in leveraging additional funds and, in some cases, in involving new sectors and partners. However, the evaluation also found that theme groups generally were not committed to submitting proposal requests, were not adequately involved in the proposal process, and did not always possess the technical expertise needed to develop a quality proposal. In addition, the evaluation found that the Country Programme Advisors had not assisted theme groups in preparing proposals to the extent that the Secretariat had expected. According to UNAIDS' Secretariat, the proposal process has been streamlined for the current biennium. UNAIDS is charged with developing and providing information to enhance the U.N. and global response to the HIV/AIDS worldwide epidemic. The UNAIDS Secretariat has continued to improve its technical support and best practice materials since we last reported, but the best practice materials have not been sufficiently distributed. The Secretariat also has made progress in tracking the pandemic but has encountered difficulties in tracking the national and international response to the pandemic with regard to funding and activities. In addition, the Secretariat’s monitoring and evaluation efforts have various weaknesses, and UNAIDS still cannot report overall results or measure progress towards its objectives, especially at the country level. As a result, UNAIDS is constrained in its ability to make management decisions based on data or to ensure its donors that it is using program resources productively. A key function of the UNAIDS Secretariat is to arrange for and provide selected technical support and to identify, develop, and disseminate best practices. In our 1998 report, we said that the Secretariat had not adequately mobilized regional resources to provide technical support. Since then, the UNAIDS Secretariat has established and supported Technical Resource Networks to help arrange the technical support needed by U.N. organizations and others working on HIV/AIDS activities. These networks consist of groups of individuals, communities, and institutions that are expected to share information, provide peer support, and help identify sources of technical information and assistance to those working on HIV/AIDS issues. The Secretariat has facilitated the creation of 13 networks since 1998 and has provided financial and technical support— such as facilitating discussions on technical issues related to HIV/AIDS— to 49 networks worldwide. For example, the Secretariat initiated the Forum of Condom Social Marketing network in 1998 and, with the cosponsors, has supported groups such as the Asian and European Harm Reduction Networks and the Religious Alliance Against AIDS in Africa. To help improve the technical capacity of U.N. cosponsors and others working on HIV/AIDS-related activities in a number of geographic regions, in 1996, the Secretariat and cosponsors began establishing regional technical teams to serve groups of countries. These intercountry teams— locate in Abidjan, Cote d’Ivoire (western and central Africa); Pretoria, South Africa (eastern and southern Africa); and Bangkok, Thailand (Asia and the Pacific)—are expected to facilitate existing intercountry initiatives or networks and develop new mechanisms of exchange and collaboration; help arrange for technical assistance from other organizations, universities, and private consultants; and mobilize additional resources for subregional HIV/AIDS efforts. To help determine whether these teams were meeting their objectives, the Secretariat commissioned an evaluation of the Inter-country Team for Western and Central Africa, published in January 2001, which assessed the team’s relevance, effectiveness, and efficiency. The evaluation found that the team was very useful in exchanging and disseminating information, but that it was less successful in arranging for technical assistance. UNAIDS’ best practice collection includes a series of technical updates, key materials, and case studies that provide strategies and approaches to prevent infection, provide care to those already infected, and alleviate the impact of HIV/AIDS on those affected. Topics include improving the safety of blood products, caring for individuals infected by HIV and tuberculosis, and increasing access to HIV-related drugs. In 1998, we reported that these materials were too general and lacked “how-to” guidance. In 1999, the Secretariat commissioned an independent evaluation of the effectiveness, relevance, and efficiency of the best practice materials. The review surveyed 164 users who considered the best practice materials to be authoritative, high quality, user friendly, and comprehensive in coverage. However, the review concluded that the Secretariat should develop materials more suited to local circumstances. Some steps have been taken to increase local specificity in best practice materials. The UNAIDS Secretariat has worked with some countries, such as Brazil, to develop best practices that focus on successful approaches and activities taken by organizations in that country. The review also concluded that the distribution of the materials should be improved. The review found, for example, that the Country Programme Advisors—the Secretariat’s country-based staff—had not systematically distributed the materials and may not have been sufficiently aware of their responsibilities in this regard. In January 2001, a senior Secretariat official noted that, while distribution was still a problem, the Secretariat was trying to address this issue. The UNAIDS Secretariat is responsible for developing accurate, up-to-date information on the worldwide epidemic and for tracking the international community’s response. According to UNAIDS’ 2000 donor survey, donors believe that the Secretariat has done well in tracking the pandemic. For example, the Secretariat and WHO participate in the UNAIDS/WHO Working Group on Global HIV/AIDS and Sexually Transmitted Infection Surveillance to compile the best epidemiological information available. From this data, the Secretariat calculates national HIV infection rates, which are helpful in raising awareness about the spread of the virus and in stimulating action. The working group also established the Reference Group on HIV/AIDS Estimates, Modeling and Projections, which, according to UNAIDS, has helped set clearer international standards for assessing AIDS and its impact and is expected to improve the production of country-specific estimates of HIV prevalence. However, according to the Secretariat, efforts still need to be increased to support HIV surveillance activities at the country level. The Secretariat also noted that WHO has taken steps to increase its efforts in this area. The UNAIDS Secretariat is also expected to track national and international responses to the pandemic. Various problems, however, have hindered its efforts in this area. To track funding, the Secretariat conducted a study with Harvard University in 1996 and then with the Netherlands Interdisciplinary Demographic Institute’s Resource Flows Project in 1999 to obtain data on HIV/AIDS spending by major bilateral donors, the United Nations, and developing countries. According to the Secretariat, getting these entities to report data to the contractor has been a major challenge, as has been reaching consensus on what counts as an HIV/AIDS project or activity. In addition, developing countries do not systematically track HIV/AIDS spending. To improve the monitoring and tracking of international and national resource flows, the Secretariat has established a specific unit with devoted staff resources. The Secretariat also has been developing and implementing the Country Response Information System since 2000. This database is intended to facilitate the compilation, analysis, and dissemination of relevant information by country on HIV epidemics and HIV/AIDS-related programs and activities by all relevant in-country partners. According to the Secretariat, compiling this information has been extremely difficult and more complex than originally envisioned, and it is behind in efforts in this area. The Secretariat expects to complete a prototype in the second quarter of 2001. UNAIDS’ governing board directed UNAIDS at its creation to implement the principles of performance-based programming and to use measurable objectives in assessing its performance. We reported in 1998 that the Secretariat was in the process of developing a monitoring and evaluation plan. UNAIDS' governing board approved a plan in December 1998 that consisted of multiple elements, including a draft conceptual framework, theme group surveys, and one-time evaluations of several of the Secretariat’s specific functions, such as the best practice collection. Since then, a unified budget and workplan with performance indicators was added. Key elements of the overall plan—the conceptual framework and the unified budget and workplan—need to be improved. Furthermore, despite these evaluative efforts, UNAIDS still cannot measure progress towards achieving its objectives or overall results, especially at the country level. Although the United Nations is not required to comply with the U.S. Government Performance and Results Act, we used the principles laid out in the act to identify the elements of a successful performance-based system. These include (1) a clearly defined mission, (2) establishment of long-term strategic and annual goals, (3) measurement of performance against the goals, and (4) public reporting of results. The act seeks to link resources and performance so that an organization can show what it has accomplished compared with the money it has spent and so that it can be held accountable for the levels of performance achieved. Using the Results Act as a guide, we identified four major weaknesses in UNAIDS’ Monitoring and Evaluation Framework. First, the Framework primarily addresses the Secretariat’s outputs even though the Framework’s outcomes and impacts also apply to the cosponsors. Second, because the Framework’s outputs focus on the Secretariat, which acts primarily at the global level, the Framework does not sufficiently address UNAIDS’ performance at the country level. Third, the Framework’s outputs, outcomes, and impacts are not clearly linked, making it difficult to assess the cause and effect of UNAIDS’ specific activities. Fourth, the Framework does not establish specific performance baselines, targets, or other quantitative measures that could help UNAIDS measure overall results and progress towards achieving its objectives or expected outcomes. UNAIDS’ Unified Budget and Workplan 2000-2001, a separate performance-related instrument, provides additional documentation that compensates for some of the shortcomings of the monitoring and evaluation framework. For example, the Workplan provides UNAIDS’ mission statement, goals, and the strategic objectives leading to those goals. It also provides information on the Secretariat’s and cosponsors’ global and regional activities; includes more specific linkages between outputs, indicators, and objectives; and better accounts for the respective roles and responsibilities of the Secretariat and cosponsors. However, the Workplan also has a number of weaknesses. For example, the Workplan does not include quantifiable performance targets that would define success and help UNAIDS to measure its progress. The Workplan also does not always indicate what is needed to accomplish the stated objectives. For example, one objective is to “mobilize political and public support for UNAIDS’ priority themes and initiatives and to provide leadership and guidance in advocacy, public information, and resource mobilization efforts.” The only output for this objective—communication activities—is vague. Furthermore, like the Framework, the Workplan does not always sufficiently link its components, making it difficult to assess the cause and effect of UNAIDS’ actions. Senior Secretariat officials acknowledge that the Unified Budget and Workplan 2000-2001 has deficiencies. They said that it was the first document of its kind, compiled quickly, and did not have high-quality indicators. In addition, because it is organized thematically rather than functionally, they said it is difficult to track or assess UNAIDS’ progress in achieving its overall objectives. They also said that developing a performance-based plan with quality indicators has been especially challenging because the U.N. system lacks an evaluative culture. However, they believe the Unified Budget and Workplan 2000-2001 is an important first step. UNAIDS Secretariat officials said that evaluation efforts overall have been hampered by inadequate and inconsistent resources. Changes in personnel and reliance on consultants over the past several years have resulted in a lack of continuity and variable levels of effort. It was not until early 1998 that a staff person was hired to lead a performance evaluation unit. The unit is currently authorized three full-time professional staff and is supplemented periodically by staff on part-time loan from other agencies. Because all Secretariat positions are time-limited, there is greater turnover than normal and difficulty in recruiting and retraining skilled staff. UNAIDS and U.S. government officials told us that, although UNAIDS has certain advantages in the fight against HIV/AIDS, a number of key factors, some of which are external to the organization, have hindered its progress. UNAIDS was established to be the primary advocate for global action on HIV/AIDS and has advantages over other organizations, such as bilateral donor agencies, that combat HIV/AIDS. For example, as a U.N. organization, UNAIDS may have more credibility than other organizations, and thus be more effective, because it is seen as a neutral entity that does not represent any one government. In addition, UNAIDS often has access to higher-level government officials than do bilateral development agencies, and it sometimes operates in countries where bilateral agencies and other organizations do not because of conflict, political tension, or lack of compelling interest. However, UNAIDS’ broad mission, organizational structure, initial lack of a political mandate, and a lack of timely follow-through have hampered its progress. While UNAIDS has a broad and challenging mission, its progress depends on actions taken by other entities, such as international donors, nongovernmental organizations, the private sector, and national governments. National government leadership on HIV/AIDS is particularly essential to an effective response to HIV/AIDS, but many national governments around the world have been slow to respond to the crisis. For example, until 1999, the President of Zimbabwe denied that HIV/AIDS was a problem in his country; the government of India was similarly slow to respond. HIV/AIDS is also an extraordinarily complex disease for which there is no cure. Combating the pandemic requires a multisectoral approach that involves addressing the many medical, cultural, behavioral, economic, social, and political aspects that surround the virus and contribute to its impact. As a joint and cosponsored program, UNAIDS’ structure is complicated and progress depends heavily on the collegiality, cooperation, and consensus of the Secretariat and seven cosponsors. According to UNAIDS and U.S. government officials, these qualities were not evident during UNAIDS’ first several years. They noted that, even though UNAIDS is a joint program, it was created without the buy-in of the cosponsors. According to senior Secretariat and cosponsor officials, because UNAIDS was imposed on the cosponsors, there was a certain amount of hostility within the program. Furthermore, the cosponsors viewed the Secretariat as competing for funding and were confused about their role within the joint program. As a result, until recently, cosponsors were not fully committed either to incorporating HIV/AIDS into their respective mandates or to participating in UNAIDS. Since each cosponsor is accountable only to its own independent executive board, neither the Secretariat nor UNAIDS’ governing board had controlling organizational authority over the cosponsors. Thus, little could be done to exert pressure on the cosponsors to become effective partners within UNAIDS. UNAIDS’ effectiveness was further hampered, according to U.S. government officials, because it was created without the necessary political mandate or funding from the major bilateral donors or the United Nations. According to a senior Secretariat official, the bilateral donors heavily influenced the creation of UNAIDS; however, when political pressure was needed to intensify and fund UNAIDS’ cosponsors’ HIV/AIDS programs, bilateral donors provided little assistance. In addition, according to U.S. officials, the United Nations, particularly the Secretary- General, had other priorities on which to focus. The bilateral donors and the United Nations are beginning to provide needed political and financial support. For example, in January 2000, the U.N. Security Council held a session, in part due to U.S. influence, to address the impact of AIDS on global peace and security—the first session ever held on a health-related matter. Finally, according to U.S. officials, while UNAIDS initiates many activities, it does not always execute them in a timely way, further delaying an effective response. For example, according to USAID officials, UNAIDS has initiated various regional strategies to address HIV/AIDS, such as the International Partnership Against AIDS in Africa and the Eastern European Regional Strategy, but did not facilitate timely efforts to move these agreements forward. According to the Secretariat, it does not have sufficient capacity to always follow through in a timely manner on the efforts it initiates, such as the International Partnership Against AIDS in Africa. UNAIDS was given an enormous challenge when it was created to lead and expand U.N. and global efforts to combat HIV/AIDS. Intended to be a model of U.N. reform, UNAIDS was the U.N.’s first joint and cosponsored program of its type. Because there was no precedent, UNAIDS had to learn to function effectively, depending heavily on the collegiality and cooperation of the Secretariat and seven cosponsors. Despite these challenges, UNAIDS has made progress in many areas, especially in improving U.N. coordination and advocating for an enhanced global response to the HIV/AIDS pandemic. However, while UNAIDS’ cosponsors have recently intensified their commitment and efforts to integrate HIV/AIDS into their strategies and programs, their slow response has made it more difficult for UNAIDS to achieve its mission. UNAIDS has not lived up to expectations with regard to its efforts at the country level. Overall, UNAIDS’ Secretariat and cosponsors’ representatives in developing countries continue to have difficulty organizing their efforts and providing assistance to host governments and others, and UNAIDS does not hold them accountable for results. Some cosponsors still do not require their senior country-level representatives to actively participate in theme groups or have not established performance expectations related to theme group activities. In addition, while the Secretariat surveys theme group activities annually, oversight is limited because it does not focus on results. Five years after its creation, the Secretariat has yet to implement a monitoring and evaluation plan that would enable UNAIDS to determine the important results of its overall efforts and measure progress toward achieving its objectives. A quality performance evaluation plan is critical to assure UNAIDS’ donors and others in the international community that UNAIDS is using its resources productively, that it is relevant, and that it is achieving its mission, especially at the country level. This is particularly important because UNAIDS’ donors have indicated that future funding increases for UNAIDS may depend on its effectiveness in showing results at the country level. To help UNAIDS achieve progress toward its mission and to help demonstrate this progress, we recommend that the Secretary of State direct U.S. representatives on the cosponsors’ executive boards to request the respective cosponsor: to accelerate its efforts to integrate HIV/AIDS into the work of its agency, and to hold country-level staff accountable for (1) participation in theme groups and (2) the results of theme groups’ efforts to help host countries combat HIV/AIDS. The Secretary of State and the Administrator, USAID, request that the UNAIDS Secretariat and cosponsors improve UNAIDS’ monitoring and evaluation efforts in order to determine the results of its overall efforts and measure progress, especially at the country level. We received written comments on a draft of this report from the Department of State, USAID, and UNAIDS, which are reprinted in appendixes IV-VI. At our request, the UNAIDS Secretariat requested and received comments from UNAIDS cosponsors that were included in UNAIDS' written comments. In addition, USAID and UNAIDS also provided technical comments to update or clarify key information that we incorporated, where appropriate. USAID and the Department of State generally agreed that the program improvements we recommended were needed. USAID stated that it found the report to be fair and accurate and that, as a member of the U.S. delegation to UNAIDS’ governing board, it will focus its efforts on the recommendations and other issues cited in our report. In addition, USAID said that it had recently provided extensive written comments to UNAIDS on the draft U.N. System Strategic Plan 2001-2005 to help ensure that the plan resulted in increased accountability and improvements at the country level. While USAID said that it appreciated our acknowledgment of the impact of external factors on UNAIDS’ progress, it noted that the lack of bilateral government support following UNAIDS’ creation did not apply to USAID. In responding to our recommendations, the Department of State stated that it would instruct its delegations to encourage the cosponsors to cooperate more fully with UNAIDS, especially at the country level. In addition, the Department noted that our report will be of immense value to the UNAIDS governing board-commissioned evaluation, currently in progress, which is reviewing the entire scope of UNAIDS activities after 5 years of effort. UNAIDS generally agreed with our findings and recommendations and noted that the report will provide valuable input to the commission that UNAIDS’ governing board established to review UNAIDS’ progress. However, UNAIDS stated that our report did not give the Secretariat and the cosponsors sufficient credit for the many accomplishments they have made since we last reported in 1998. Accordingly, UNAIDS’ comments detailed numerous examples of activities undertaken, including high-level statements made, "information flows improved," documents written, and processes improved to demonstrate further the collective accomplishments of the Secretariat and the cosponsors since 1998. We disagree that our report did not provide UNAIDS with sufficient credit for its accomplishments since 1998. We believe that our report provides a fair assessment of UNAIDS' progress. Our report affirms that UNAIDS has contributed to increased commitments and funding for AIDS efforts by the U.N. and national and international entities. Through UNAIDS, the international community’s response to AIDS has broadened from one that is focused exclusively on health to one that focuses on multiple sectors. Further, we note the progress UNAIDS has made in providing countries with technical support and best practices materials, tracking the epidemic, and increasing U.N. coordination. Where there are deficiencies in UNAIDS’ efforts—at the country level and with its monitoring and evaluation framework—they are deficiencies that UNAIDS, the State Department, and USAID collectively agree are in critical areas that need improvement. While we have included, where appropriate, additional information to address UNAIDS' comments, our overall conclusions remain unchanged. As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 15 days after the date of this letter. At that time, we will send copies to appropriate congressional committees; the Honorable Colin Powell, the Secretary of State; the Honorable Andrew S. Natsios, Administrator of USAID; and the Executive Director of UNAIDS. We will also make copies available to interested parties upon request. If you or your staff have any questions concerning this report, please call me at (202) 512-8979. An additional GAO contact and staff acknowledgments are listed in appendix VII. Because of the catastrophic HIV/AIDS epidemic in Africa and the inadequate national and international response, the Joint United Nations Programme on HIV/AIDS (UNAIDS) initiated the International Partnership Against AIDS in Africa (the Partnership) in 1999. The Partnership is made up of African governments, the U.N., donors, the private sector, and the community sector. The objective of the Partnership is to increase coordination among the five partners and to expand their efforts against HIV/AIDS in each African country. To achieve this objective, the Partnership aims to establish and maintain processes through which these groups can collaborate more effectively at the country level to curtail the spread of HIV and sharply reduce AIDS’ impact on human suffering and declines in human, social, and economic development. The vision of the Partnership is that African nations with the support of the international community will implement and sustain larger-scale, more effective multisectoral national responses to HIV/AIDS within the next decade than they have in the past. According to the Partnership’s guiding document, The International Partnership Against AIDS in Africa: A Framework for Action, dated May 2000, each partner has a specific role to play. African governments are expected to provide national leadership and adequate resources to fight HIV/AIDS in their respective countries. U.N. organizations are expected to enhance U.N. coordination and the global response and to provide program and financial support. Donors are expected to mobilize national and international efforts and to provide the necessary financial assistance to support the Partnership’s actions to address HIV/AIDS. The private sector is expected to provide expertise and resources, and the community sector is expected to enhance local ownership of the Partnership. In addition, all partners have a role in advocacy, policy development, and resource mobilization. The UNAIDS Secretariat facilitated the development of the Partnership’s framework and is responsible for coordinating the implementation of the Partnership. The Secretariat is not responsible for providing funding to the Partnership. According to the UNAIDS Secretariat, the Partnership has achieved many of its milestones and has made some progress toward achieving its objectives. For example, one of the Partnership’s milestones was that, by the end of 2000, at least 12 countries were to have developed national strategic plans for HIV/AIDS, and according to the Secretariat, a total of 13 countries had achieved this goal. For example, the Partnership helped develop the National Strategic Plan for HIV/AIDS in Ghana and Burkina Faso and helped revise the national strategic plans of Ethiopia, Malawi, Zambia, and Mozambique. According to the Secretariat, these plans have resulted in the formation of wider and more effective partnerships to combat HIV/AIDS and have encouraged increased internal and external mobilization of financial resources. Also, the UNAIDS’ intercountry team in eastern and southern Africa helped establish technical networks on five subjects, including traditional medicine and AIDS counseling, and the intercountry team in Abidjan, Cote d’Ivoire, helped establish networks on three subjects, as expected, by December 2000. According to the Secretariat, progress is still being made toward milestones that had not been met as of January 2001. However, several respondents to our survey of U.S. Agency for International Development (USAID) missions expressed reservations about whether HIV/AIDS-related events occurring in the country could be directly attributed to the Partnership, since the Partnership is an enhancement of UNAIDS’ and other partners’ ongoing efforts in Africa. For example, USAID officials in Malawi stated that the Partnership’s collaborative principles have been implemented in that country since 1997, which was prior to the Partnership’s inception. The Secretariat also gives the Partnership credit for increases in World Bank loans and bilateral funding that have been announced by several bilateral donor countries, including the United States, Sweden, Canada, Norway, and Japan. While these events may have coincided with the implementation of the Partnership, a true cause and effect relationship is difficult to establish. Officials from USAID and the cosponsors have said that there is confusion about the Partnership and concern about its implementation. USAID agency officials said that the Partnership is poorly implemented and that there is general confusion within their own and other agencies, especially about how the Partnership will be implemented in country. For example, they had recently spoken to one cosponsor’s representative to UNAIDS who thought that the Partnership had ended. A member of the U.S. delegation to UNAIDS’ governing board told us that the Partnership generally lacked coordination among the five partners. Several cosponsor officials also indicated that there was confusion about the Partnership. One cosponsor told us that the Partnership did not have much substance beyond its guiding document and that their country-level offices in sub- Saharan Africa may be unaware of the Partnership. Agency officials stated that the UNAIDS Secretariat needs to provide the Partnership with greater leadership. In our survey of USAID missions in African countries key partners in the Partnership’s coordination efforts we asked whether the Partnership had achieved its objective to increase coordination among the five partners and expand their efforts against HIV/AIDS in Africa. Two of the 10 USAID/Africa missions that responded to this inquiry said that the Partnership had resulted in better coordination, 3 said it had not, and 5 did not know. Of those that did not know, the USAID mission in Kenya said that the Partnership was not well understood and that they had not heard much about it. We also asked whether the Partnership had resulted in an expanded response to HIV/AIDS. Of the 10 responding, 4 answered yes, 3 said no, and 3 did not know. The USAID mission in Ghana reported that the Partnership had contributed to increased media attention on HIV/AIDS and more programs addressing the epidemic. However, the USAID mission in Tanzania reported that the Partnership was duplicating existing national programs and hindering constructive efforts to combat HIV/AIDS in that country. One factor that may contribute to the confusion and lack of coordination among partners is that, while the framework identifies the partners, their responsibilities, and the deadlines of some objectives and activities, it does not identify who is responsible or accountable for initiating the Partnership at the country level or the actions that should be taken if this leadership is not forthcoming. For example, a respondent to our survey from the USAID mission in Zimbabwe said that no one person or organization is leading the Partnership at the country level and thus nothing is being accomplished. A senior Secretariat official agreed that the Secretariat has been weak in communicating effectively about the Partnership. However, according to this official, the Secretariat is in the process of developing additional guidance on coordination for country- level partners, which will be based on lessons learned by partners in several countries, such as Burkina Faso and Tanzania, that have task forces to lead coordination efforts. The Secretariat is in the process of synthesizing these experiences and developing additional guidance for the Partnership. The Chairman of the Senate Subcommittee on African Affairs, Senate Foreign Relations Committee, requested that we (1) assess the progress of the Joint United Nations Programme on HIV/AIDS, especially at the country level, toward increasing the coordination and commitment of the U.N. and global community; (2) assess UNAIDS’ progress in providing technical support and information and in developing a monitoring and evaluation plan to measure results; and (3) identify factors that may have affected UNAIDS’ progress. In addition, we were asked to provide information on the status of the International Partnership Against AIDS in Africa. To identify whether UNAIDS has made progress toward increasing U.N. coordination and commitment, especially at the country level, we interviewed senior officials from the UNAIDS Secretariat in Geneva, Switzerland, and the HIV/AIDS staff from each of the seven cosponsors. We also spoke with key officials from the U.S. Agency for International Development (USAID); the White House Office of National AIDS Policy; Department of Health and Human Services; the State Department; U.S. missions to the United Nations in New York City and Geneva; and Family Health International, a U.S.-based contractor working on HIV/AIDS issues. We reviewed extensive documentation from the Secretariat and from each of the seven UNAIDS cosponsors, including strategic plans, annual and biennial reports, progress reports, the Unified Budget and Workplan 2000- 2001, evaluations of the Secretariat’s and cosponsors’ HIV/AIDS programs and activities, budget and financial data, UNAIDS governing board documents, general HIV/AIDS program description documents, press releases, interagency memorandums of understanding, and memorandums to staff and major public speeches of the cosponsors’ executive directors. We also reviewed a UNAIDS-commissioned survey of 12 of its leading bilateral donors, issued in September 2000, that solicited perspectives on the extent to which UNAIDS has been successful in its roles and responsibilities. To obtain additional information on UNAIDS’ efforts at the country level, we reviewed the Secretariat’s annual surveys of theme group operations from 1996 to 1999. In addition, we conducted a survey of 36 USAID missions worldwide and received 27 responses that provided perspectives on the theme groups’ effectiveness in assisting host country efforts to combat HIV/AIDS. Of the total 82 USAID missions worldwide, we selected 36 missions to survey, on the basis that they had been involved in HIV/AIDS activities for at least 2 years. To determine UNAIDS’ progress in providing technical support and information and in developing a monitoring and evaluation plan to measure results, we interviewed senior officials from the UNAIDS Secretariat in Geneva, and key officials from USAID, the U.S. mission to Geneva, the Department of Health and Human Services, and Family Health International. We reviewed extensive documentation from UNAIDS, including governing board documents reporting on annual and biennial progress; monitoring and evaluation documents, including the Unified Budget and Workplan 2000-2001, the monitoring and evaluation framework, and commissioned evaluations of the Inter-country Team in West and Central Africa; the Secretariat’s best practice materials; and the Secretariat’s strategic planning and development fund process. We also reviewed a UNAIDS’-commissioned survey of 12 of its leading bilateral donors, issued September 2000, that solicited perspectives on the extent to which UNAIDS has been successful in its roles and responsibilities, as well as a UNAIDS biannual epidemiological report. In addition, in assessing UNAIDS’ monitoring and evaluation efforts, we used the principles contained in the Government Performance and Results Act of 1993 to identify the key elements of a successful performance-based system. To identify factors that may have affected UNAIDS’ progress, we interviewed key officials from the UNAIDS Secretariat, cosponsors, USAID, the Department of Health and Human Services, the State Department, the U.S. missions to the United Nations in New York and Geneva, and Family Health International. To determine the status of the International Partnership Against AIDS in Africa, we held discussions with UNAIDS Secretariat and cosponsor officials and also with officials from USAID, the U.S. mission to the United Nations in Geneva, and the Department of Health and Human Services. We reviewed key documents, such as the Partnership’s framework for action, progress reports, weekly bulletins, and meeting reports. In addition, we reviewed an analysis completed by the Secretariat in January 2001 on the Partnership’s progress toward its milestones, as outlined in the framework. As part of our survey of UNAIDS’ efforts at the country level, we asked USAID mission officials whether the Partnership had achieved its objectives. From the 22 missions surveyed in Africa, we received 12 responses, 10 that answered our survey questions and 2 that provided other comments. We conducted our work from August 2000 through May 2001 in accordance with generally accepted government auditing standards. UNAIDS is expected to bring together the efforts and resources of seven U.N. system organizations to help prevent new HIV infections, care for those already infected, and mitigate the impact of the pandemic. Each cosponsor is to contribute to UNAIDS’ work according to its comparative advantage and expertise. The following briefly describes the seven cosponsors’ HIV/AIDS programs and selected activities, according to information they provided. The mission of the U.N. Children’s Fund (UNICEF) is to advocate for the protection of children’s rights, to help meet their basic needs, and to expand their opportunities to reach their full potential. UNICEF supports services to the poor, rebuilds schools in war-torn societies, and promotes equal rights for girls and women. Within UNAIDS, UNICEF is the chief advocate for children and their families. UNICEF’s goal is to address the underlying causes of the AIDS epidemic; reduce the vulnerability of children, adolescents, and women to HIV/AIDS; and mitigate the impact of disease and death due to AIDS. According to UNICEF, it supports HIV/AIDS programs in 160 countries and focuses its efforts in five areas: (1) breaking the conspiracy of silence about HIV/AIDS, (2) providing primary prevention to young people, (3) reducing mother-to-child HIV transmission, (4) caring for orphans and children living in families affected by HIV/AIDS, and (5) supporting UNICEF staff members affected by HIV/AIDS. For example, in the area of primary prevention to young people, UNICEF is funding scouting groups in Cote d’Ivoire to disseminate HIV/AIDS prevention messages through games, songs, and popular drama and to provide counseling to their peers. In 1999, to help reduce mother-to- child transmission, 11 countries took part in a UNICEF-supported pilot program that offers voluntary and confidential counseling and testing to women and their partners, administers anti-retroviral medication to pregnant HIV-positive women, and provides information about infant feeding options. In Malawi, UNICEF has assisted the government in developing its national orphan policy and the National Orphan Care Programme, which emphasizes family-based care and provides support to extended families for the care of orphans. The goal of the U.N. Development Programme is to eradicate poverty through sustainable human development. The Programme serves more than 170 countries and territories around the world through 132 country offices and technical networks. The Programme contributes to UNAIDS by helping developing countries meet the governance challenge posed by HIV/AIDS and by helping them mitigate the impact of the disease on the poor. The Programme provides advice and development services to developing country governments and civil society groups in the following areas: (1) promoting top-level political commitment through advocacy and policy dialogue; (2) strengthening countries’ capacity to plan, fund, manage, and implement national responses to the HIV/AIDS epidemic; (3) providing guidance on integrating HIV/AIDS priorities into the core of development planning; and (4) providing policy advice to the most affected countries on maintaining governance structures and essential services affected by HIV/AIDS. In addition, the Programme promotes a human rights approach that includes helping national governments formulate anti-discrimination laws and supports public information and media campaigns on HIV/AIDS in developing countries such as Bangladesh, Peru, Laos, and Turkmenistan. In several sub-Saharan African countries, the Programme is sponsoring policy studies to help governments deal with HIV/AIDS’ impact on specific sectors, poverty reduction efforts, and macroeconomic planning. In Botswana, the Programme supported the publication of a National Human Development Report that focused on how HIV/AIDS is reducing economic growth and increasing poverty in that country. The mission of the U.N. International Drug Control Programme is to work with nations and people worldwide to tackle the global drug problem and its consequences. Through its 22 field offices, the Programme contributes to UNAIDS’s work by helping to prevent the spread of HIV through drug abuse. The Programme’s prevention activities have focused primarily on children and adolescents and emphasize the prevention of both drug use and the risky sexual behaviors associated with drug use. For example, in Brazil, the Drug Control Programme developed short prevention videos, which are shown in the streets in regions with the highest crack use, to target drug abuse among street children. In Thailand, in coordination with U.N. Population Fund, the Programme is supporting activities that are aimed at educating Muslim adolescents on reproductive health, drug abuse prevention, and HIV/AIDS. The mandate of the U.N. Educational, Scientific, and Cultural Organization (UNESCO) is to foster international cooperation in intellectual activities designed to promote human rights, establish a just and lasting peace, and further the general welfare of mankind. UNESCO has 73 field offices and units in different parts of the world. In the context of UNAIDS, UNESCO focuses its efforts on five major areas: (1) education, (2) basic research, (3) culture, (4) human rights and social and human sciences, and (5) public information and awareness. For example, in Brazil, UNESCO is currently cooperating with the U.N. International Drug Control Programme and the Brazilian Health Ministry to provide HIV education in schools to heighten awareness of HIV and prevent its transmission. In south Asia, UNESCO published a media handbook on AIDS in eight different south Asian languages. UNESCO also has been active in promoting research on AIDS in cooperation with the World Foundation for AIDS Research and Prevention. The primary mandate of the U.N. Population Fund is to help ensure universal access by all couples and individuals to high-quality reproductive health services by 2015. In developing countries, the Fund works to improve reproductive health and family planning services on the basis of individual choice and to formulate population policies in support of sustainable development. The Population Fund supports HIV/AIDS activities in 138 countries. The Fund addresses the prevention of HIV transmission and focuses on (1) supporting information, education, and communication programs for youth and adolescents both in and out of schools; (2) providing young people greater access to youth friendly reproductive health information, counseling, and services; (3) advocating for relevant youth policies that recognize the rights of young people and promote their reproductive health; and (4) addressing gender equity issues. The Population Fund is the largest international supplier of condoms and is UNAIDS’ focal point for condom programming. The Fund manages a database on reproductive health commodities and administers the Global Contraceptive Commodity Programme, which maintains stocks of condoms to expedite delivery to requesting countries. The Fund also works to promote the greater involvement of men in HIV prevention. For example, in parts of Africa, Asia, and Central America, the Fund supports services, information, and counseling to encourage long-distance truck drivers to adopt safer sexual practices. In addition, the Fund has been working with government and national partners to promote programs and policies that advance reproductive health and well-being. For example, in the Islamic Republic of Iran, the Fund, in conjunction with the Ministry of Education, helped distribute 700,000 copies of a poster on HIV/AIDS transmission and prevention along with 200,000 copies of a pamphlet designed for teachers to schools nationwide. WHO’s objective is to attain the highest possible levels of health by all peoples. WHO performs a range of advisory, technical, and policy-setting functions, including (1) providing evidence-based guidance in health; (2) setting global standards for health; (3) cooperating with governments in strengthening national health systems; and (4) developing and transferring appropriate health technology, information, and standards. As a UNAIDS cosponsor and the leading international health agency, WHO works to strengthen the health sector’s response to the worldwide HIV/AIDS epidemic and provide technical assistance to countries to improve their health policies, planning, and implementation of HIV/AIDS prevention and care interventions. For example, according to WHO, it has supported and coordinated research and provided technical support on HIV/AIDS-related issues such as the prevention and treatment of sexually transmitted infections, reproductive health, essential drugs, vaccine development, blood safety, and substance use. WHO has also developed a generic protocol for planning and implementing pilot projects to prevent mother- to-child transmission of HIV in low-income countries in Africa, Asia, and Latin America. In addition, WHO has projects in several countries with high HIV prevalence to develop national plans and implement activities for strengthening care and psychosocial support to people living with HIV/AIDS. WHO is a key partner in global surveillance of HIV infection and its behavioral determinants, including developing surveillance guidelines, updating the global database on HIV/AIDS, and producing fact sheets and reports on HIV/AIDS. The mandate of the World Bank, the world’s largest source of development assistance, is to alleviate poverty and improve the quality of life. Through its loans, policy advice, and technical assistance, the World Bank supports a broad range of programs aimed at reducing poverty and improving living standards in the developing world. As a UNAIDS’ cosponsor, the World Bank provides loans and credits to national governments to implement HIV/AIDS programs. The World Bank committed more than $1.3 billion to 109 HIV/AIDS-related projects in 57 countries from 1986 to the end of January 2001. A recent innovation in the Bank’s support to HIV/AIDS is its multicountry program approach to lending. In September 2000, the World Bank approved the Multi-Country HIV/AIDS Program for Africa, providing $500 million in flexible and rapid funding for projects to fight the epidemic in sub-Saharan Africa. A similar multicountry program totaling about $100 million in loans and credits for the Caribbean is under way. To strengthen the Bank’s capacity to respond to HIV/AIDS as a major development issue in Africa, the Bank created ACTAfrica, a dedicated HIV/AIDS unit directly under the Office of the Regional Vice Presidents. In addition to lending in all regions of the world, the Bank is also involved in policy dialogue about HIV/AIDS with high- level officials in the government and civil society. It is also working with the U.S. Treasury to establish the International AIDS Trust Fund for HIV/AIDS activities in those countries hardest hit by the epidemic or at high risk of being so. The United States is providing $20 million to initially capitalize the fund, and contributions will be sought from other donors. The following is GAO’s comment on USAID’s letter dated May 11, 2001. In commenting on our first recommendation, USAID suggested that it is not the U.S. representatives’ role on the cosponsors’ executive boards to “propose” initiatives to the cosponsors but rather to “request” them to take action. We modified the recommendation to address this point. The following are GAO’s comments on UNAIDS’ letter dated May 14, 2001. 1. UNAIDS commented that they disagreed with our use of a response from the donor survey to support our finding that their efforts at the country level were weak. The donor survey stated that half of the donors responding (the survey was sent to 16 of UNAIDS’ leading bilateral donors, and 12 responded) believed that UNAIDS was not as successful as expected in promoting broad-based political and social commitment at the country level. We did not rely solely on the donor survey; other evidence corroborates the donor’s concern about UNAIDS’ performance at the country level. First, the donor survey also found that donors believed that UNAIDS had not been as successful as they expected in strengthening governments’ HIV/AIDS activities and ensuring that appropriate and effective policies and strategies are implemented to address HIV/AIDS. Second, the Secretariat’s latest annual surveys of theme groups showed that, between 1997 and 1999, theme groups had made little progress in key areas, such as joint advocacy action plans and developing a U. N. system integrated plan on HIV/AIDS. Our December 2000 survey of USAID missions showed that, after 5 years of experience, theme groups' performance in strengthening the overall national government response to HIV/AIDS varied widely. Third, senior UNAIDS officials and members of the UNAIDS governing board stated in December 2000 that UNAIDS needed to improve its country-level response. The governing board said that the performance of UNAIDS’ theme groups required urgent attention, and UNAIDS' Executive Director said that strengthening UNAIDS’ country- level efforts is one of UNAIDS’ top internal challenges. This collective evidence demonstrates that UNAIDS must strengthen its efforts at the country level. 2. While UNAIDS agreed with our finding that country-level efforts need to be strengthened, it also commented that we placed too much emphasis on theme group efforts at the country level without considering broader U.N. systemwide efforts. We recognize that there are broader U.N. efforts, such as the Resident Coordinator System and the Common Country Assessment/United Nations Development Assistance Framework process. However, UNAIDS’ documents state that UNAIDS’ theme groups are its “main mechanism” for coordinating HIV/AIDS activities at the country level. Our analysis therefore focused on this mechanism. 3. UNAIDS commented that we did not credit the U.N. Development Programme for actions taken as a result of an HIV/AIDS program evaluation, prepared in 2000, which found that the agency had not fully integrated HIV/AIDS into its strategies, programs, and activities. We revised the report to include updated information on action taken in response to the evaluation. 4. UNAIDS was concerned that we did not reflect the cosponsors’ creation of new positions and units focused on HIV/AIDS and cited numerous examples of these changes. While we may not have cited every example of actions taken by the cosponsors, we did recognize that some cosponsors had elevated the position of the HIV/AIDS issue organizationally and provided an example. We revised the report to include an additional example of steps taken by the U.N. Children’s Fund. 5. UNAIDS commented that, while they agreed that country-level coordination and implementation needs strengthening, we had downplayed how much progress the United Nations has achieved in coordinating action at the country level. UNAIDS stated that we did not sufficiently credit them for the Global Strategy Framework, regional strategy development processes, partner programme reviews, improved cosponsor responses to HIV/AIDS, and a greater understanding of the epidemic at the country level. UNAIDS comments also provided additional examples of activities they believed contributed to an enhanced country- level response. We disagree that we downplayed UNAIDS’ efforts. For example, our report credits UNAIDS for facilitating the development of U.N. System Strategic Plan and conducting the detailed reviews of the cosponsors’ HIV/AIDS programs (Partner Programme Reviews), as well as for the cosponsors’ improved commitment and response to HIV/AIDS. The report does not discuss the Global Strategy Framework on HIV/AIDS because it has only recently been finalized and thus it is too soon to gauge whether this document will increase international commitment, action, or results. Also, in the absence of an effective monitoring and evaluation plan that has clear performance indicators, it is difficult to isolate UNAIDS contributions from those of the many entities working at the country level to combat HIV/AIDS, including national governments, bilateral donors, nongovernmental organizations, and foundations. 6. UNAIDS stated that we characterized theme group responsibilities too broadly and that it was never envisioned that U.N. theme groups would serve as an operational entity or as the primary mechanism for assisting developing countries. Our report clearly explains the role of the theme groups in the background section and elsewhere as, among other things, a facilitator for coordinating the U.N. response at the country level. This characterization came from UNAIDS documents that state: “In developing countries, UNAIDS operates mainly through the country-based staff of its seven cosponsors. Meeting as the host country’s U.N. Theme Group on HIV/AIDS, representatives of the cosponsoring organizations share information, plans and monitor coordinated action….” 7. UNAIDS commented that theme groups are not responsible for resource mobilization. However, UNAIDS provided us the Resource Guide for Theme Groups, which devotes one of its five sections to resource mobilization. This section states that “resource mobilization at the country level is a key role of the Theme Group.” To avoid any confusion, we modified the text. 8. UNAIDS noted that our report lacked clarity with regard to the role of the Country Programme Advisor and the operation of the Programme Acceleration Funds. To avoid any confusion about the Country Programme Advisor’s role, we modified the text. The information we presented in the report on the operation of the Programme Acceleration Funds was taken directly from UNAIDS documents—primarily the 1999 evaluation of the funding process. 9. UNAIDS provided information on the additional number of integrated U.N. workplans that have been prepared, to demonstrate the progress theme groups have made in developing a more unified U.N. response to HIV/AIDS. However, we were not able to corroborate this information. In addition, while the information UNAIDS presented shows the number of workplans completed, it does not indicate the quality and content of the plans and the extent to which they have been implemented. 10. UNAIDS provided more current information on action taken to strengthen the performance of theme groups and Country Programme Advisors--the Secretariat’s country-based staff. We revised the report to highlight some of these actions. 11. UNAIDS stated that the Unified Budget and Workplan 2000-2001 includes quantifiable performance targets. However, UNAIDS did not provide specific examples of such targets with its comments. In examining UNAIDS’ Unified Budget and Workplan in detail during our review, we noted that it contained outcome indictors. However, the workplan did not identify specific performance baselines, targets, or other measures that would enable UNAIDS to determine whether it had succeeded in its efforts and measure progress toward its objectives. 12. UNAIDS commented that its overall monitoring and evaluation plan included several one-time evaluations of specific efforts, such as UNAIDS’ development of best practices. We revised the report to clarify that UNAIDS considers these one-time evaluations part of its overall monitoring and evaluation plan. 13. UNAIDS raised several concerns about the report’s methodology and presentation. First, UNAIDS commented that the report focused too much on the findings contained in our 1998 report and did not adequately credit UNAIDS for the progress it has made. We disagree. We believe we have given credit to UNAIDS for progress in a number of areas, several of which were of specific concern in our 1998 report. For example, the report highlights increased U.N. and international commitment and funding to HIV/AIDS efforts, as well as a broadened approach to addressing HIV/AIDS from one that was exclusively health oriented to one that is now multisectoral. Further, the report notes the progress made on technical support and best practices, tracking the epidemic, and increasing U.N. coordination. However, our report also focused on those areas most needing improvement—namely, UNAIDS’ country-level efforts and monitoring and evaluation of UNAIDS’ progress and results. These are areas that the Department of State, USAID, and UNAIDS agree need improvement. Where appropriate, we have modified our report and included some additional information. Second, UNAIDS commented that the report will be out of date by the time it is issued. We disagree. The changing political climate surrounding HIV/AIDS issues does not negate the report’s conclusions and recommendations. For example, UNAIDS’ comments stated that not only did they agree that HIV/AIDS-related efforts at the country level need strengthening but that these efforts will certainly remain the central theme for “at least the next decade.” Furthermore, the current debate to establish a $7 billion to $10 billion global trust fund to address the HIV/AIDS crisis in developing countries makes the issues cited in our report even more timely and critical. The challenges UNAIDS faced in mobilizing international support for HIV/AIDS efforts, marshalling donors’ financial commitments, and establishing a system to evaluate program results are important lessons learned that should inform the current debate on a new global AIDS trust fund. UNAIDS’ comments also noted that documentation used to support the report was largely constructed with data compiled from the previous year. We used the most current data supplied by UNAIDS and other information to conduct our analysis, including several of UNAIDS’ and its governing board’s commissioned evaluations. In addition, we conducted our own survey of USAID missions to obtain perspective on UNAIDS’ country-level efforts in December 2000. Third, UNAIDS noted that the report contained selective quotations from several of UNAIDS’ evaluations and surveys of specific functions, at the same time pointing out that UNAIDS’ monitoring and evaluation efforts are insufficient. We believe our use of available data and information contained in UNAIDS’ evaluations was appropriate for depicting the steps taken in and weaknesses of UNAIDS’ efforts. However, while this information was useful, it does not provide the results of UNAIDS’ overall efforts or progress made toward its objectives. With bilateral and other donors responding to UNAIDS’ call for increased resources to combat HIV/AIDS, a quality monitoring and evaluation effort, which includes a clearly defined mission, long-term strategic and short-term goals, measurement of performance against defined goals, and public reporting of results, is even more important. In addition to Mr. Hutton, Leslie Bharadwaja, Sharon Caudle, Lynn Cothern, Francisco Enriquez, Aleta Hancock, Lynne Holloway, Stanley Kostyla, and Hector Wong made key contributions to this report. | Despite efforts by the international community to reduce the spread of the human immunodeficiency virus, AIDS is now the fourth leading cause of death in the world and the primary cause of death in sub-Saharan Africa. The Joint United Nations Programme on HIV/AIDS (UNAIDS), funded in part by the United States, is one important international effort against the disease. UNAIDS was established by the United Nations (U.N.) in 1996 to provide coordinated U.N. action and to lead and promote an expanded global response to the worldwide epidemic. This report (1) assesses UNAIDS' progress, especially at the country level, toward increasing the coordination and commitment of the U.N. and global community; (2) assesses UNAIDS' progress in providing technical assistance and information and in developing a monitoring and evaluation plan to measure results; and (3) identifies factors that may have affected UNAIDS' progress. GAO found that UNAIDS has made progress in increasing U.N. coordination and enhancing the global response to the worldwide HIV/AIDS epidemic, but its country-level efforts need to be strengthened. UNAIDS has provided financial and technical support to about 50 HIV/AIDS technical networks worldwide, but has not been as successful in tracking the funding and actions host governments and others have taken to address the AIDS problem. UNAIDS has also been unable to follow its intended model of U.N. reform, whereby a single Secretariat together with several U.N. agencies would marshal the U.N. and global community's resources to address the AIDS epidemic. |
RS20995 -- India and Pakistan: U.S. Economic Sanctions Updated February 3, 2003 In May 1998, India and Pakistan each conducted tests of nuclear explosive devices, triggering sweeping U.S. economic sanctions as required by the ArmsExport Control Act (AECA) and the Export-Import Bank Act. (2) Prior to the tests, for international treaty purposes, the two countries were classified asnon-nuclear-weapon states; the tests put each country in jeopardy of world condemnation and sanctions. In theUnited States, the law required the President toimpose the following restrictions or prohibitions on U.S. relations with both India and Pakistan: termination of U.S.foreign assistance other than humanitarianor food assistance; termination of U.S. government sales of defense articles and services, design and constructionservices, licenses for exporting U.S.Munitions List (USML) items; termination of foreign military financing; denial of most U.S. government-backedcredit or financial assistance; U.S. oppositionto loans or assistance from any international financial institution; prohibition of most U.S. bank-backed loans orcredits; prohibition on licensing exports of"specific goods and technology"; and denial of credit or other Export-Import Bank support for exports to eithercountry. Since 1990, Pakistan had been under a sanctions regime that was mandated by another provision of U.S. law pertaining to U.S. foreign assistance. The Pressleramendment, added in 1985 to the Foreign Assistance Act of 1961, requires the President to determine that Pakistandoes not possess a nuclear explosive deviceand that any proposed U.S. assistance would reduce the risk of obtaining such a device. (3) President Reagan and President Bush issued determinations each yearuntil 1990, when then-President Bush did not make the finding required to make assistance available. In 1995, thisrequirement was changed to apply only tomilitary assistance to Pakistan, making the country eligible for other foreign assistance. During the Clinton Administration. Almost immediately after the 1998 imposition of sanctions on India andPakistan required in the Arms Export Control Act, Congress intervened on behalf of U.S. wheat growers by passingthe Agriculture Export Relief Act, signedinto law on July 14, 1998. (4) The Act amended theAECA to exempt various Department of Agriculture-backed funding from sanctions applied pursuant tosection 102 of that Act. This freed up U.S. wheat farmers to participate in auctions in which Pakistan was asubstantial buyer. Congress later passed theIndia-Pakistan Relief Act of 1998, signed into law by the President on October 21, 1998. (5) This Act authorized the President to waive, for a period of one year,the application of sanctions relating to U.S. foreign assistance, U.S. government nonmilitary transactions, the U.S.position on loans or assistance byinternational financial institutions, and U.S. commercial bank transactions. President Clinton quickly made use ofhis new authority, announcing on November7, 1998, that certain transactions and support would be restored. The authority granted to the President in each of these 1998 laws, however, was limited to a one-year period. Additional legislation was required to make theauthority permanent. Congress provided permanent waiver authority in the Department of Defense AppropriationsAct, FY2000, signed into law on October25, 1999. (6) This Act gave the President the authorityto waive all the economic sanctions imposed against India and Pakistan in response to the nuclear tests,including for the first time those sanctions related to military assistance, USML licenses, and exports to hightechnology entities. To waive those sanctionspertaining to the sales of defense articles, defense services, design or construction services, foreign militaryfinancing, or export licenses for specific goods andtechnology (the sanctions related to, or with possible, military applications), current law requires the President todetermine and certify to Congress "that theapplication of the restriction would not be in the national security interests of the United States." President Clintonexercised this authority on October 27,1999, when he waived the applicability of nonmilitary restrictions for India, on Export-Import Bank loans andcredits, Overseas Private Investment Corporation(OPIC) funding, Trade and Development Agency (TDA) export support, International Military Education andTraining (IMET) programs, U.S. commercialbanks transactions and loans, Department of Agriculture (USDA) export credits, and specific conservation-orientedassistance. For Pakistan, he waived therestrictions on USDA credits and U.S. commercial bank loans and transactions. During the Bush Administration. Throughout the first eight months of 2001, the Bush administration hadhinted that the United States would like to remove the sanctions imposed against India and, to a lesser extent,Pakistan. (7) India's foreign and defense ministervisited Washington in April; Chairman of the Joint Chiefs of State, General Shelton visited India in May to discussmilitary-to-military relations. In May, 2001,and again in August, Deputy Secretary of State Richard Armitage visited India and publically stated the UnitedStates' interests in fully normalizing relationswith the country. In August 2001, U.S. Trade Representative Robert Zoellick visited India to promote global tradetalks. Regarding Pakistan, Secretary of State Powell met with its foreign minister in Washington in June. They reportedly discussed Afghanistan and the Taliban,terrorism, democracy, nuclear proliferation, and sanctions. (8) After the terrorist attack on the United States on September 11, 2001, because of Pakistan's unique position - both geographic and political - vis-a-visAfghanistan, policymakers recognized the urgency by which U.S.-Pakistan relations had to be mended. At the sametime, parity had to be maintained in termsof India. As a result, the President exercised the authority granted him in the Defense Appropriations Act, FY2000,on September 22, 2001, when he lifted allnuclear test-related economic sanctions against the two countries after finding that denying export licenses andassistance was not in the national securityinterests of the United States. (9) Today, the solevestige of the nuclear sanctions is the listing of four Indian and 20 Pakistani entities (and their subsidiaries) onthe Commerce Department's list of entities for which export licenses are required. By comparison, restricted entitiesnumbered in the hundreds in the wake ofthe 1998 nuclear tests. (10) Pakistan continued to be ineligible for most forms of U.S. foreign assistance under a provision of the annual foreign assistance appropriations act that bansforeign assistance "to any country whose duly elected head of government is deposed by military coup or decree." Pakistan's current leader, General PervezMusharraf seized power and overthrew a democratically elected government in October 1999. He declared himselfPresident on June 20, 2001. Pakistan wasalso denied most U.S. foreign assistance for falling into arrears in servicing its debt to the United States. (11) Pakistan was found to be in arrears under termsofthe Foreign Assistance Act in September 2000, and under terms of the Foreign Operations Appropriations Act inMarch 2001. (12) At the end of 1999, Pakistan'sinternational debt was $30.7 billion, of which $2.38 billion was owed to the United States ($1.14 billion in AIDloans, $981 million in food aid, $139 million inExport Import Bank loans, and $119 million in military loans). Two steps were taken to relieve the prohibition on U.S. foreign aid. First, on September 24, 2001, the U.S. Ambassador to Pakistan signed an agreement inPakistan to reschedule $379 million of its debt to the United States, enough to cancel the arrearage. (13) Then Congress passed a bill to exempt Pakistanfrom thesections of law that prohibit making foreign assistance available to any country governed by a military thatoverthrew a democratically elected regime. ThePresident signed S. 1465 into law on October 27, 2001; its authority to waive the sanctions related to bothdemocracy and debt arrearage remainsavailable through FY2003, provided the President determines that making foreign assistance available "facilitatesthe transition to democratic rule in Pakistan"and "is important to United States efforts to respond to, deter, or prevent acts of international terrorism." (14) Prior to the passage of S. 1465 , President Bush invoked the authority granted him in sec. 614 of the Foreign Assistance Act of 1961 (22 U.S.C.2364) to provide $50 million in Economic Support Funds to Pakistan on September 28, 2001, without regard torestrictions in that Act or the ForeignOperations Act that are applicable to Pakistan. The President made another $50 million available under the sameauthority on October 16, 2001. These twodisbursements were part of the Administration's proposed $600 million package of assistance to Pakistan. ThePresident also released $25 million inEmergency Migration and Refugee Funds to Pakistan around the same time. (15) Funding derived from the 2001 Emergency Supplemental AppropriationsActincludes the balance of the President's package to Pakistan ($500 million), and another $73 million for bordersecurity between Pakistan and Afghanistan. (16) On October 5, the President made another $100 million available for management of the emerging Afghan refugeecrisis - $50 million in food assistance toAfghanistan and neighboring countries, and $50 million in Migration and Refugee Assistance to be administeredthrough the United Nations and associatednongovernmental organizations tending to the Pakistan-Afghanistan border. None of these recent fund releases wassubject to sanctions. And on September 26,2001, the International Monetary Fund determined that Pakistan had met the requirements to become eligible for$135 million, to complete disbursement of a$600 million loan. (17) Any lingering doubts about the repair of U.S. relations with India and Pakistan were dispelled in the President's FY2003 budget proposal, shown below. (18) INDIA PAKISTAN | In 1998, India and Pakistan each conducted tests of nuclear explosive devices, drawingworld condemnation. TheUnited States and a number of India's and Pakistan's major trading partners imposed economic sanctions in response. Most U.S. economic sanctions werelifted or eased within a few months of their imposition, however, and Congress gave the President the authority toremove all remaining restrictions in 1999. The sanctions were lifted incrementally. President Bush issued a final determination on September 22, 2001,to remove the remaining restrictions, finding that denying export licenses and assistance was not in the national security interests of the United States. Today, four Indian and 20 Pakistani entities (and their subsidiaries) remain on the Commerce Department's listof entities for which export licenses arerequired. By comparison, restricted entities numbered in the hundreds in the wake of the 1998 nuclear tests. Anexport license is still required to ship missiletechnology-controlled or nuclear proliferation-controlled items to users in either country, but the Department ofCommerce no longer views such licenseapplications with a presumption of denying their issuance. Apart from the sanctions imposed following the nuclear tests, the United States prohibited foreign aid toPakistan when that country fell into arrears in servicingits debt to the United States in late 1998, a prohibition reenforced when Pakistan's military forces overthrew thedemocratic government in late 1999. Post-September 11 cooperation between the United States and Pakistan included a rescheduling of the debt and newlegislation to waive the so-calleddemocracy sanctions. Pakistan thus became eligible to receive U.S. foreign assistance through FY2003 when, unlessit holds free and fair elections, restrictionson foreign aid could be reimposed. |
Several Interior agencies are responsible for carrying out the Secretary’s Indian trust responsibilities. These agencies include the Bureau of Indian Affairs (BIA) and its Office of Trust Responsibilities (OTR), which is responsible for resource management and land and lease ownership information; BIA’s 12 Area Offices and 85 Agency Offices; the Bureau of Land Management (BLM) and its lease inspection and enforcement functions; and the Minerals Management Service’s (MMS) Royalty Management Program, which collects and accounts for oil and gas royalties on Indian leases. In addition, an Office of the Special Trustee for American Indians was established by the American Indian Trust Fund Management Reform Act of 1994. This office, implemented by Secretarial Order in February 1996, has oversight responsibility over Indian trust fund and asset management programs in BIA, BLM, and MMS. The Order transferred BIA’s Office of Trust Funds Management (OTFM) to the Office of the Special Trustee for American Indians and gave the Special Trustee responsibility for the financial trust services performed at BIA’s Area and Agency Offices. At the end of fiscal year 1995, OTFM reported that Indian trust fund accounts totaled about $2.6 billion, including approximately $2.1 billion for about 1,500 tribal accounts and about $453 million for nearly 390,000 Individual Indian Money (IIM) accounts. The balances in the trust fund accounts have accumulated primarily from payments of claims; oil, gas, and coal royalties; land use agreements; and investment income. Fiscal year 1995 reported receipts to the trust accounts from these sources totaled about $1.9 billion, and disbursements from the trust accounts to tribes and individual Indians totaled about $1.7 billion. OTFM uses two primary systems to account for the Indian trust funds—an interim, core general ledger and investment system and BIA’s Integrated Resources Management System (IRMS). OTR’s realty office uses the Land Records Information System (LRIS) to record official Indian land and beneficial ownership information. BLM maintains a separate system for recording mineral lease and production information and MMS maintains separate royalty accounting and production information systems. Our assessment of BIA’s trust fund reconciliation and reporting to tribes is detailed in our May 1996 report, which covered our efforts to monitor BIA’s reconciliation project over the past 5 and one-half years. As you requested, we also assessed Interior’s trust fund management improvement initiatives. In order to do this, we contacted the Special Trustee for American Indians, OTFM officials, and OTR’s Land Records Officer for information on the status of their management improvement plans and initiatives. We also contacted tribal representatives for their views. We focused on Interior agency actions to address recommendations in our previous reports and testimonies and obtained information on new initiatives. BIA recently completed its tribal trust fund reconciliation project which involved a massive effort to locate supporting documentation and reconstruct historical trust fund transactions so that account balances could be validated. BIA provided a report package to each tribe on its reconciliation results in January, 1996. Interior’s prototype summary reconciliation report to tribes shows that BIA’s reconciliation contractor verified 218,531 of tribes’ noninvestment receipt and disbursement transactions that were recorded in the trust fund general ledger. However, despite over 5 years of effort and about $21 million in contracting fees, due to missing records, a total of $2.4 billion for 32,901 receipt and disbursement transactions recorded in the general ledger could not be traced to supporting documentation and only 10 percent of the leases selected for reconciliation could be verified. In addition, BIA’s reconciliation report package did not disclose known limitations in the scope and methodology used for the reconciliation process. For example, BIA did not disclose or discuss the procedures included in the reconciliation contract which were not performed or could not be completed. Also, BIA did not explain substantial changes in scope or procedures contained in contract modifications and issue papers, such as accounts and time periods that were not covered and alternative source documents used. Further, BIA did not disclose that the universe of leases was unknown or the extent to which substitutions were made to the lease sample originally selected for reconciliation. In order for the tribes to conclude on whether the reconciliation represents as full and complete an accounting as possible, it was important that BIA explain the limitations in reconciliation scope and methodology and the procedures specified under the original contract that were not performed or were not completed. At a February 1996 meeting in Albuquerque, New Mexico, where BIA and its reconciliation contractor summarized the reconciliation results, tribes raised questions about the adequacy and reliability of the reconciliation results. The American Indian Trust Fund Management Reform Act of 1994 required that the Secretary of the Interior report to the House Committee on Resources and the Senate Committee on Indian Affairs by May 31, 1996, including a description of the methodology used in reconciling trust fund accounts and the tribes’ conclusions as to whether the reconciliation represents as full and complete an accounting of their funds as possible. During BIA’s February 1996 meeting with tribes to discuss the reconciliation reports and results, several tribes stated that they would need significant time to review their reconciliation reports and the supporting documents. OTFM planned five regional meetings between March 1996 and July 1996 to serve as workshops to assist individual tribes in reviewing their reconciliation results. Because BIA has not yet held all of the scheduled meetings to discuss account holder issues and comments and many account holders have not communicated their acceptance or dispute of their reconciled account balances, the Secretary has provided an interim report on account holders’ communications through April 30, 1996. The Secretary plans to submit a final report on account holder attestations of their acceptance or dispute of their reconciled account balances by November 15, 1996. According to the Secretary’s May 31, 1996, report 3 tribes, including 2 tribes for which additional pilot reconciliation procedures were performed, have disputed their reconciled account balances; 2 tribes with nominal balances have accepted their reconciled account 275 tribes, including 3 tribes that had additional pilot reconciliation procedures performed, have not yet decided whether to accept or dispute their account balances. Tribal representatives have told us that they are still reviewing their reconciliation report packages and that they have a number of questions and concerns about the results. If Interior is not able to reach agreement with tribes on the reconciliation results, a legislated settlement process would prove useful in resolving disputes about account balances. Our March 1995 testimony suggested that the Congress consider establishing a legislated settlement process. Our September 1995 report provided draft settlement legislation for discussion purposes. The draft legislation would provide for a mediation process and, if mediation does not resolve disputes, a binding arbitration process. The proposed process draws on advice provided us by the Federal Mediation and Conciliation Service and the rules of the American Arbitration Association. Both of these organizations have extensive experience in the use of third party facilitators to provide alternative dispute resolution. The proposed process offers a number of benefits, including flexibility in presentation of evidence and, because the decision of the arbitrators would be binding and could not be appealed, a final resolution of the dispute. In addition, arbitration has generally been found to be less costly than litigation. BIA’s reconciliation project attempted to discover any discrepancies between its accounting information and historical transactions that occurred prior to fiscal year 1993. While it is important for the Congress to consider legislating a settlement process to resolve discrepancies in account balances, unless the deficiencies in Interior’s trust fund management that allowed those discrepancies to occur are corrected, such discrepancies could continue to occur, possibly leading to a need for future reconciliation and settlement efforts. Since 1991, our testimonies and reports on BIA’s efforts to reconcile trust fund accounts have recommended a number of corrective actions to help ensure that trust fund accounts are accurately maintained in the future. While OTFM and OTR have undertaken a number of corrective actions, progress has been slow, results have been limited, and further actions are needed. OTFM, Interior, and OTR have initiated several trust fund management improvements during the past 3 years. These include acquiring a cadre of experienced trust fund financial management staff; issuing trust fund IIM accounting procedures to BIA field offices, developing records management procedures manuals, and issuing a trust fund loss policy; implementing an interim, core general ledger and investment accounting system and performing daily cash reconciliations; studying IIM and subsidiary system issues; reinstating annual trust fund financial statement audits; and initiating improvements to the Land Records Information System. Our 1991 testimonies and June 1992 report identified a lack of trained and experienced trust fund financial management staff. Previous studies and audits by Interior’s Inspector General and public accounting firms also identified this problem. Our June 1992 report recommended that BIA prepare an organization and staffing analysis to determine appropriate roles, responsibilities, authorities, and training and supervisory needs as a basis for sound trust fund management. In response to our recommendation, in 1992, OTFM contracted for a staffing and workload analysis and developed an organization plan to address critical trust fund management functions. The appropriations committees approved OTFM’s 1994 reorganization plan. As of October 1995, OTFM had made significant progress in hiring qualified financial management and systems staff. However, during fiscal year 1996, 27 BIA personnel displaced by BIA’s reduction-in-force were reassigned to OTFM. This represents about one-third of OTFM’s on board staff. Some of these reassigned staff displaced OTFM staff, while others filled vacant positions that would otherwise have been filled through specialized hiring. As a result, OTFM will face the challenge of providing additional supervision and training for these reassigned staff while continuing to work with BIA’s Area and Agency Office trust accountants to monitor corrective actions and plan for additional improvements. Our April 1991 testimony identified a lack of consistent, written policies and procedures for trust fund management. We recommended that BIA develop policies and procedures to ensure that trust fund balances remain accurate once the accounts are reconciled. Our April 1994 testimonyreiterated this recommendation and further recommended that BIA initiate efforts to develop complete and consistent written trust fund management policies and procedures and place a priority on their issuance. BIA has not yet developed a comprehensive set of policies and procedures for trust fund management. However, OTFM developed two volumes of trust fund IIM accounting procedures for use by BIA’s Area and Agency Office trust fund accountants and provided them to BIA’s Area and Agency Offices during 1995. Also, during 1995, OTFM developed two records management manuals, which address file improvements and records disposition. Missing records were the primary reason that many trust fund accounts could not be reconciled during BIA’s recent reconciliation effort. In addition, OTFM is developing a records management implementation plan, including an automated records inventory system. In January 1992 and again in January 1994, we reported that BIA’s trust fund loss policy did not address the need for systems and procedures to prevent and detect losses, nor did it instruct BIA staff on how to resolve losses if they occurred. The policy did not address what constitutes sufficient documentation to establish the existence of a loss, and its definition of loss did not include interest that was earned but not credited to the appropriate account. Our January 1994 report suggested a number of improvements, such as articulating steps to detect, prevent, and resolve losses. OTFM addressed our suggestions and issued a revised trust fund loss policy in 1995. However, while OTFM has made progress in developing policies and procedures, OTFM officials told us that BIA’s Area and Agency Office trust accountants have not consistently implemented these policies and procedures. In addition to developing selected policies and procedures, OTFM officials told us that they began performing monthly reconciliations of the trust fund general ledger to Treasury records in fiscal year 1993 and that they work with BIA Area and Agency Offices to ensure that unreconciled amounts are properly resolved. OTFM officials also told us that they have had limited resources to monitor Agency Office reconciliation performance and assist BIA Agency Office personnel in resolving reconciliation discrepancies. While we have not reviewed this reconciliation process, it is expected that it would be reviewed in connection with recently reinstated trust fund financial statement audits. In addition, an OTFM official told us that a lack of resources has impeded OTFM’s performance of its quality assurance function, which was established to perform internal reviews to help ensure the quality of trust fund management across BIA offices. For example, according to the OTFM official, until recently, funds were not available to travel to Area and Agency Offices to determine whether the accounting desk procedures and trust fund loss policy have been properly implemented. Our June 1992 report recommended that BIA review its current systems as a basis for determining whether systems modifications will most efficiently bring about needed improvements or whether alternatives should be considered, including cross-servicing arrangements, contracting for automated data processing services, or new systems design and development. In response to our recommendation, OTFM explored commercially available off-the-shelf trust accounting systems and contracted for an interim, core general ledger and investment accounting system. OTFM made a number of other improvements related to implementing the interim, core trust accounting system. For example, OTFM obtained Office of the Comptroller of the Currency assistance to develop core general ledger and investment accounting system operating procedures; initiated direct deposit of collections to BIA Treasury accounts through the Automated Clearing House; initiated automated payment processing, including electronic certification, to facilitate direct deposit of receipts to tribal accounts; conducted a user survey and developed a systems user guide; established a help desk to assist system users by providing information on the new system, including a remote communication package for tribal dial-in capability; and provided system access to Area and Agency Offices and tribal personnel. While the new system has eliminated the need for manual reconciliations between the general ledger and investment system and facilitates reporting and account statement preparation, tribes and Indian groups have told us that the new account statements do not provide sufficient detail for them to understand their account activity. For example, they said that because principal and interest are combined in the account statements, it is difficult to determine interest earnings. They told us that the account statements also lack information on investment yields, duration to maturity, and adequate benchmarking. For tribes that have authority to spend interest earnings, but not principal amounts, this lack of detail presents accountability problems. Representatives of some tribes told us that they either have or plan to acquire systems to fill this information gap. OTFM is planning system enhancements to separately identify principal and interest earnings. However, additional enhancements would be needed to address investment management information needs. In January 1996, the Special Trustee formed a working group consisting of tribal representatives and members of allottee associations, which represent individual Indians; BIA and Office of the Special Trustee field office staff; and OTFM staff to address IIM and subsidiary accounting issues. In addition, OTFM has scheduled four consultation meetings with tribes and individual Indians between June and August 1996 to determine how best to provide customer services to IIM account holders. These groups will also consider ways to reduce the number of small, inactive IIM accounts. According to the Special Trustee, about 225,000 IIM accounts have balances of less than $10. In 1995, OTFM initiated a contract to resume audits of the trust fund financial statements. OTFM had not had a trust fund financial statement audit since 1990, pending completion of the trust fund account reconciliation project. The fiscal year 1995 audit is covering the trust fund Statement of Assets and Trust Fund Balances, and the fiscal year 1996 audit will cover the same statement and a Statement of Changes in Trust Fund Balances. In 1993, BIA’s Office of Trust Responsibility (OTR) initiated improvements to its Land Records Information System (LRIS). These improvements were to automate the chain-of-title function and result in more timely land ownership determinations. In September 1994, we reported that OTR had 2-year backlogs in ownership determinations and recordkeeping which could have a significant impact on the accuracy of trust fund accounting data. We recommended that BIA provide additional resources to reduce these backlogs, through temporary hiring or contracting, until the LRIS improvements could be completed. However, according to OTR’s Land Records Officer, the additional resources were not made available as a result of fiscal year 1995 and 1996 budget cuts. Instead, BIA eliminated 6 Land Title and Records Office positions in fiscal year 1995 and an additional 30 positions in BIA’s fiscal year 1996 reduction-in-force. As a result, OTR’s five Land Title and Records Offices and its four Title Service Offices now have a combined staff of 90 full-time equivalent (FTE) positions—compared with 126 staff on September 30, 1994—to work on the backlog in title ownership determinations and recordkeeping while also handling current ownership determination requests. While current OTR backlogs are somewhat less than in 1994, BIA’s Land Records Officer estimates that over 104 staff years of effort would be needed to eliminate the current backlog. However, because LRIS improvements are on hold, these backlogs are likely to grow. While BIA and OTFM have begun actions to address many of our past recommendations for management improvements, progress has been limited and additional improvements are needed to ensure that trust funds are accurately maintained in the future and the needs of the beneficiaries are well-served. For example, BIA’s IRMS subsidiary and IIM system may contain unverified and potentially incorrect information on land and lease ownership that some BIA offices may be using to distribute trust fund receipts to account holders. According to a BIA official, some of BIA’s Agency Office staff update IRMS ownership files based on unverified information they have developed because LRIS information is significantly out-of-date. Our September 1994 report stated that without administrative review and final determination and certification of ownerships, there is no assurance that the ownership information in BIA’s accounting system is accurate. Our report also stated that eliminating redundant systems would help to ensure that only official, certified data are used to distribute trust fund revenue to account holders. Although Interior formed a study team to develop an IIM subsidiary system plan, the team’s August 1995 report did not include a detailed systems plan. Further, BIA and OTFM have not yet performed an adequate user needs assessment; explored the costs and benefits of systems options and alternatives; or developed a systems architecture as a framework for integrating trust fund accounting, land and lease ownership, and other trust fund and asset management systems. However, even if OTR resolves its ownership determination and recordkeeping backlogs and OTFM acquires reliable IIM and subsidiary accounting systems, IIM accounting will continue to be problematic due to fractionated ownerships. Under current practices, fractionated ownerships, which result from inheritances, will continue to complicate ownership determinations, accounting, and reconciliation efforts because of the increasing number of ownership determinations and trust fund accounts that will be needed. Our April 1994 testimony stated that BIA lacked an accounts receivable system. Interior officials told us that developing an accounts receivable system would be problematic because BIA does not have a master lease file as a basis for determining its accounts receivable. As a result, BIA does not know the total number of leases that it is responsible for managing or whether it is collecting revenues from all active leases. BIA has not yet begun to plan for or develop a master lease file. In addition, BIA and OTFM have not developed a comprehensive set of trust fund management policies and procedures. Comprehensive written policies and procedures, if consistently implemented, would help to ensure proper trust fund accounting practices. Also, to encourage consistent implementation of policies and procedures, quality assurance reviews and audits are an important tool. In 1994, OTFM developed a plan to contract for investment custodian and advisor services. These initiatives were planned for implementation in fiscal year 1995. However, OTFM has delayed its contract solicitation for investment custodian services until the end of June 1996 and has only recently begun to develop a contract solicitation for investment advisors. OTFM officials told us that a lack of resources has caused them to delay contracting for these services. Since 1991, our testimonies and reports have called for Interior to develop a comprehensive strategic plan to guide trust fund management improvements across Interior agencies. We have criticized Interior’s past planning efforts as piecemeal corrective action plans which fell short of identifying the departmentwide improvements needed to ensure sound trust fund management. Our June 1992 and September 1994 reports and our April 1994 testimony recommended that Interior’s strategic plan address needed improvements across Interior agencies, including BIA, BLM, and MMS. We endorsed the American Indian Trust Fund Management Reform Act of 1994, which established a Special Trustee for American Indians reporting directly to the Secretary of the Interior. The act made the Special Trustee responsible for overseeing Indian trust fund management across these Interior agencies and required the Special Trustee to develop a comprehensive strategic plan for trust fund management. The Senate confirmed the appointment of the Special Trustee for American Indians in September 1995. In February 1996, the Special Trustee reported that the $447,000 provided for his office for fiscal year 1996 is insufficient to finance the development of a comprehensive strategic plan for trust fund financial management. Despite the funding limitations, using contractor assistance, the Special Trustee has prepared an initial assessment and strategic planning concept paper. However, the concept paper focuses on one potential system solution for addressing critical OTFM and BIA financial management information requirements and does not address other alternatives. It also does not address programs across Interior agencies or all needed improvements. In addition, the concept paper does not explain the rationale for many of the assumptions that support the detail for the $147 million estimate to implement the specified improvements. In contrast to the concept paper, a comprehensive strategic plan would reflect the requirements of the Department, BIA, BLM, MMS, OTFM, and other Interior agency Indian trust programs. It would also address the relationships of the strategic plans for each of these entities, including information resource management, policies and procedures, and automated systems. In addition, a comprehensive strategic plan would address various trust fund related systems options and alternatives and their associated costs and benefits. For example, the concept paper proposes acquiring new trust fund general ledger and subsidiary accounting systems but, unlike a strategic plan, it does not analyze the costs, benefits, advantages, and disadvantages of enhancing OTFM’s current core general ledger and investment system or contracting for services instead of acquiring new systems. Further, since 1993, OTR has been planning for LRIS upgrades, including automated chain-of-title, which would facilitate ownership determinations and recordkeeping. Because it is planned that LRIS will provide a BIA link to Interior’s core Automated Land Records Management System (ALMRS), a comprehensive strategic plan would need to consider the merits of LRIS in determining how trust ownership and accounting information needs can best be addressed. ALMRS is being developed by BLM at an estimated cost of $450 million. Because ALMRS and LRIS were costly to develop and they contain interrelated data, a comprehensive strategic plan would also need to consider the advantages and disadvantages of linking LRIS to the trust fund accounting system, as compared with acquiring a new land records and ownership system, in determining the best way to manage Indian trust funds and assets. The Special Trustee and OTFM Director told us that they currently lack the resources to adequately plan for and acquire needed trust fund system improvements. However, without accurate, up-to-date ownership and subsidiary accounting information, trust fund account statements will continue to be unreliable. The Special Trustee told us that due to limited resources and the need for timely solutions, he is considering ways to use changes in policies and procedures to deal with some trust fund management problems. Many of the problems identified in his concept paper are not strictly systems problems, and they do not necessarily require systems solutions. We agree that certain changes should be considered that would not require systems solutions. For example, centralizing management functions could help resolve the problems of inconsistent ownership determinations and inconsistent accounting practices. The centralization of some functions, such as handling trust fund collections through lock box payments to banks, could also result in management efficiencies. Similarly, ownership determination and recordkeeping backlogs might be better addressed by centralizing the five Land Title and Records Offices and using contractor assistance or temporary employees until system improvements are in place. Even with centralization of some functions, customer information and services could continue to be provided locally for customer convenience. Although OTFM made a massive attempt to reconcile tribal accounts, missing records and systems limitations made a full reconciliation impossible. Also, cost considerations and the potential for missing records made individual Indian account reconciliations impractical. A legislated settlement process could be used to resolve questions about tribal account balances. Three major factors—lack of comprehensive planning, lack of management commitment across the organization, and limited resources—have impeded Interior’s progress in correcting long-standing trust fund management problems. When the trust fund reconciliation project was initiated, it was envisioned that by the time it was completed, adequate organizational structures, staffing, systems, and policies and procedures would be in place to ensure that trust fund accounts were accurately maintained in the future. However, piecemeal planning and corrective actions continue, and Interior still lacks a departmentwide strategic plan to correct trust fund management problems. In addition, while it is critical that all parts of the organization are committed to supporting and implementing trust fund management improvement initiatives, some BIA field offices are continuing to follow improper and inconsistent accounting practices. Given the continuing difficulty in managing a trust program across approximately 60 BIA offices, it is important to consider streamlining options such as centralization of collections, accounting, and land title and recordkeeping functions. Finally, Interior and BIA officials told us that they lack the resources to implement many needed corrective actions. However, the development of a comprehensive strategic plan that addresses interrelated functions and systems, identifies costs and benefits of options and alternatives, and establishes realistic milestones is a necessary first step. A departmentwide plan would provide the basis for management and congressional decisions on requests for resources. Mr. Chairman, this concludes my statement. I would be glad to answer any questions that you or the Members of the Task Force might have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO discussed the Department of the Interior's management of Indian trust funds. GAO noted that: (1) the Bureau of Indian Affairs (BIA) has completed its reconciliation of trust fund accounts, but the accounts could not be fully reconciled due to missing records and the lack of an audit trail; (2) the January 1996 BIA report to the tribes did not explain limitations in scope and methodologies used for the reconciliation process; (3) two tribes have accepted their reconciliation results, three tribes are disputing their results, and the remaining 275 tribes have not yet decided whether to accept or dispute their reconciliation results; (4) if Interior cannot resolve the tribes' concerns, the disputes can be resolved through a legislated settlement process; (5) Interior's trust fund management improvements will take several years to complete; (6) although BIA is replacing its inadequate management and accounting systems, it has not developed systems requirements to ensure that the new systems provide accurate information; (7) Interior has appointed a special trustee for Native Americans who has developed an outline of needed trust fund management improvements, but this outline needs to include various departmentwide options and alternatives and their associated costs and benefits to become a comprehensive strategic plan; and (8) resource constraints have limited Interior's ability to make trust fund management improvements. |
Unemployment Compensation for Ex-Servicemembers (UCX) provides income support to former active duty military personnel or reservists, who were recently released from active duty, while they search for work. The Emergency Unemployment Compensation Act of 1991 ( P.L. 102-164 ) provides that former servicemembers be treated the same as other unemployed workers with respect to benefit levels, the waiting period for benefits, and benefit duration. Once entitlement to regular unemployment benefits is exhausted, former servicemembers may qualify the Extended Benefit (EB) payments if the program is active and available in their states. From July 2008 through December 2013, the temporary Emergency Unemployment Compensation (EUC08) benefit might have been available for additional weeks of unemployment benefits. The EUC08 program's authorization terminated on December 28, 2013, for all unemployed persons. Unlike regular unemployment compensation (UC) benefits, UCX benefits and any subsequent EB benefits based on military service are not paid for by state unemployment taxes. Instead, the state submits the amount of benefits paid by the state to the former employing service (for example, the Air Force). Then, the service reimburses the state for the UCX benefits out of the service's operating budget. These UCX reimbursements flow as transfers from the appropriate military services' appropriated operating funds into the Unemployment Trust Fund (UTF) account for such reimbursements (the Federal Employees Compensation Account, FECA). Then, FECA transfers funds to the proper state account within the UTF. For example, if a former naval officer living in California claimed UCX benefits, the Navy would transfer funds from its operating budget into FECA. The funds would then be transferred to California's account within the UTF to reimburse California for those UCX benefit expenditures. A former servicemember may receive a combined unemployment benefit (UC and UCX) if the unemployment benefit is based upon a period that included military service as well as other employment. In general, based upon each state's law, only the amount of the benefit that is attributable to military service would be charged to the agency. For FY2015, approximately $474 billion in unemployment benefits were distributed to former military personnel based upon military service. (See Table 1 for details.) All of the $474 billion was for UCX and EB benefits (and thus, paid by the former employing service). Former servicemembers may apply for UCX benefits in any state. Generally they would apply in the state where they are searching for employment. (This is different than in the regular UC program, where benefits are required to be filed based on the work location of the unemployed worker's previous employment.) UC eligibility criteria and benefits vary by state. Former servicemembers must meet the same criteria that civilian workers are required to meet for their UC benefit eligibility. Thus, two former servicemembers with the same earnings and work history may qualify for different amounts of benefits if they file for UCX in different states. The equivalent military measurement of wages and time in service are used to determine eligibility and benefit levels. Active military personnel are considered to be working and thus cannot qualify for UCX or regular state UC benefits. If the former servicemember was originally in the active duty military, he or she must have left military service under honorable conditions and either completed a full term of service or have been released early under a qualifying reason. If the former servicemember was a reservist formerly on active duty, he or she must have been on active duty for at least 180 continuous days. UCX benefits are not payable during periods in which the former servicemember is eligible to receive certain allowances or educational assistance allowances from the Survivors' and Dependents' Educational Assistance Program, the Department of Veterans' Affairs Vocational Rehabilitation and Education Program, or Post-9/11 Veterans Educational Assistance. Participation in the Montgomery GI bill does not preclude receipt of UCX benefits; however, having student status does limit UC benefit eligibility in most states, and these limitations would extend to those workers receiving UCX benefits. Many states exclude workers while they attend school, and some states include vacation periods in that exclusion. When a former servicemember was previously self-employed or was a sole-proprietor, the worker would have been excluded from receiving UC benefits. After active duty, if the former servicemember is unemployed, the former servicemember would qualify for UCX benefits based on military service. However, most states require that the worker be searching for employment and would not pau benefits to a worker who was reestablishing self-employment or a small business. Table 1 contains the total unemployment benefit expenditures associated with former military service from FY2000 through FY2015. In addition, the expenditures are separated into benefits that were charged back to the service unit and those (temporary) unemployment benefits that were paid directly out of the General Fund of the Treasury. The years of high of unemployment during the most recent recession rapidly increased expenditures associated with former military servicemembers from 2009 through 2011. In addition, in the Army and Marine Corps began to increase separations from the services as part of the drawdown efforts that began in 2011. In 2007, approximately $462 million in UCX benefits were paid to former servicmembers. With the authorization and subsequent expansions of the temporary Emergency Unemployment Compensation of 2008 (EUC08; first authorized by P.L. 110-252 , expired December 28, 2013), the temporary provisions allowing more states the option to provide EB, and an additional $25/week payment (Federal Additional Compensation, FAC; first authorized by P.L. 111-5 , expired June 2, 2010), the unemployment expenditures associated with former military service rapidly increased. By 2011, almost $1.9 billion of unemployment benefits were spent on former servicemembers based upon their service records. Just over half ($948 million) was spent on UCX and EB for former servicemembers. An additional $920 million was paid out as EUC08 and FAC benefits. Beginning in 2012, the expenditures began to decline (partially attributable to changes in the EUC08 program, which was legislatively reduced in size by P.L. 112-96 in three phases) but remained substantially above pre-recessionary levels. By FY2014, EUC08 benefits were only available for the first quarter of the fiscal year and total unemployment benefit expenditures attributable to military service decreased to just over $700 million. In FY2015, total UCX expenditures had dropped to $474 million. Treatment of civilian spouses who quit their employment because their military spouse was transferred varies greatly among the states. In the majority of states, a quit to follow a transferred spouse may be deemed a "good personal" cause and the newly unemployed worker may receive UC benefits. However, some state UC programs do not award UC benefits to workers who quit their jobs because a spouse was transferred, deeming this as a "voluntary quit." The laws of the state may go further and include a specific disqualification for claimants who quit work to relocate with a spouse until certain additional income is generated. The disqualification following a "voluntary quit" continues until the claimant returns to work, completes a specified duration of work, and earns wages of a specified amount. In other states, the disqualification is time-limited. These states penalize the worker for quitting, but recognize that economic conditions may be such that even a person who diligently seeks work may find none. The reasoning is that beyond a certain point, if a diligent job seeker is still unemployed, such continuing unemployment is attributable to labor market conditions rather than their decision to quit. Thus, spouses relocating to areas of high unemployment or limited opportunities may become eligible for benefits even if initially disqualified. Twenty-seven states and the District of Columbia allow UC benefits if a worker quits to accompany a spouse who has been transferred regardless of military status (labeled "Y" in Table 2 ). In addition, another 20 states have special exceptions for workers who quit to follow their transferred military spouse (labeled as "Military only"). Only Idaho, Louisiana, and North Dakota do not consider quitting to follow a military spouse a voluntary quit "good cause." State unemployment taxes are levied on employers based on a combination of established rates and the employer's past history of its workers using the UC system. Generally, employers with a greater history of unemployed workers would have a worse experience rating and would pay higher state unemployment taxes. Military service of business owners or employees may impact the tax rate that certain employers face. Furthermore, if workers who quit to join a transferred military spouse receive UC benefits, this may impact the overall state unemployment tax burden of most, if not all, of the state's employers. Below are some examples of these situations: A business owner, if called up for active military service, may need to lay off some or all of the business's workers. Once the business owner returns from military service, the revival of the business may mean that the small business may face a new, higher state unemployment tax rate. If the servicemember serves for less than two years, some of the worker's UCX benefit may be based on nonmilitary work. (These workers receive a hybrid UC/UCX benefit.) In some states, their former (civilian) employers may face a state unemployment tax increase as a result. Workers who quit their jobs and move to accompany their military spouse may receive UC benefits in many states as listed in Table 2 . These states do not charge UC benefits to employer accounts when workers voluntarily quit their jobs to accompany a transferred military spouse. The benefits paid to a worker accompanying a military spouse generally would not increase the state unemployment taxes of the worker's former employer. However, these benefits are still charged to the state's account within the UTF. As a result, the cost of benefits is passed on to the state's employers as a socialized cost and may increase the overall state unemployment tax rate. States may choose to create provisions that remove or limit these tax increases in certain situations. For example: In Illinois, business owners who are called to active duty from the reserves and had to close their firms are not charged for the increases attributable to UC benefits for the workers who lose their jobs on account of the closure. When the business owner returns and reopens his or her business, the business's state unemployment tax rate is not increased. Some states provide for the non-charging of benefits for unemployment directly resulting from reinstatement of another employee upon his or her completion of uniformed service duty. Senator Ron Johnson sponsored S. 1356 , which was enacted as the National Defense Authorization Act for Fiscal Year 2016, P.L. 114-92 . In addition to many other actions, the law altered certain conditions for individuals to receive UCX. The law generally prohibits the concurrent receipt of UCX and Post-9/11 Veterans Educational Assistance but did provide exceptions. In addition, the law doubled the number of days (from 90 to 180 continuous days) a reserve member of the Armed Forces would have to be on active duty to qualify for UCX. Two earlier proposals had similar provisions, but did not include exceptions to the prohibition of concurrent receipt. Representative Mac Thornberry sponsored H.R. 1735 , the National Defense Authorization Act for Fiscal Year 2016 (vetoed by President Obama on October 22, 2015). The bill contained two provisions regarding unemployment compensation for former servicemembers. Section 535 of S. 1376 includes a provision that would prohibit the concurrent receipt of unemployment benefits for former military servicemembers (UCX) and Post-9/11 Veterans Educational Assistance. Section 592 of the bill would double the number of days a reserve member of the armed forces would have to be on active duty to qualify for UCX (from 90 to 180). Senator John McCain sponsored an identically named bill ( S. 1376 ) that contained similar provisions. | The Unemployment Compensation (UC) program contains several provisions relevant to current and former military service personnel and their families. The UC program does not provide benefits for military servicemembers on active duty. However, former active duty military personnel (and certain reservists) recently separated from active duty may be eligible for Unemployment Compensation for Ex-Servicemembers (UCX). Spouses of military service personnel who voluntarily quit a job to accompany their spouses on account of a military transfer may be eligible for UC benefits, based on the laws of the state where the civilian spouse was employed. Military service of business owners, employees, and employees' spouses may impact the state unemployment tax rate that certain employers face. States may choose to create provisions that remove or limit these tax increases in certain situations. In addition to many other actions, P.L. 114-92 alters certain requirements for individuals to receive UCX. The new law prohibits the concurrent receipt of UCX and Post-9/11 Veterans Educational Assistance but does provide exceptions. In addition, the law doubles the number of days (from 90 to 180 continuous days) a reserve member of the Armed Forces would have to be on active duty to qualify for UCX. Two proposals earlier in the 114th Congress, H.R. 1735 and S. 1376, had similar provisions, but did not include exceptions to the prohibition of concurrent receipt. Individuals should contact their state's unemployment agency to obtain information on how to apply for and receive unemployment benefits based upon military service. The U.S. Department of Labor (DOL) maintains a website with links to each state's agency at http://www.workforcesecurity.doleta.gov/map.asp. |
The Comanche helicopter program began in 1983 to provide a family of high technology, low-cost aircraft that would replace the Army’s light helicopter fleet, which includes the AH-1 Cobra, OH-58 Kiowa, OH-6 Cayuse, and the UH-1 Iroquois (Huey). The Army subsequently decided to develop only a single Comanche aircraft capable of conducting either armed reconnaissance or attack missions. The Army intends for the Comanche to be part of its future or “objective” force. The Comanche is designed to have improved speed, agility, aircrew visibility, reliability, availability, and maintainability over current reconnaissance and attack helicopters. The helicopter is also designed for low observability (stealth) and is expected to be capable of deploying over long ranges without refueling. Lastly, the Comanche is being designed to provide enemy information to force commanders at all levels. Critical to achieving the Comanche’s desired capabilities is the successful development and integration of advanced technologies, especially for the mission equipment package. The mission equipment package includes an integrated communication system, piloting system, target acquisition system, navigation system, helmet-mounted display, survivability and early warning equipment, mission computer, and weapon management system. The Comanche program started in 1983 and is currently projected to continue through fiscal year 2028. A timeline of the Comanche’s acquisition history and schedule is provided below. Since our August 1999 review, the Comanche program’s estimated cost has increased significantly—from $43.3 billion to $48.1 billion—and costs are expected to increase further. In addition, the Comanche continues to experience scheduling delays and performance risks. These problems are due to a range of factors, such as understated acquisition program cost estimates; ambitious flight test schedules with substantial concurrency in test events; delays in another DOD program which had been counted on to develop a critical component of the aircraft; inadequate facilities to fully test and integrate system hardware and software; and considerable growth in aircraft weight. The Army has not updated the Comanche’s cost or schedule estimates since April 2000 and does not plan such an update until its in-progress program review in January 2003. The Comanche program’s latest cost estimate, in April 2000, shows estimated costs have increased by almost $4.8 billion—from $43.3 billion to $48.1 billion—since our last report. Table 2 identifies where the cost estimate has changed. The $75.3 million increase in research, development, testing, and evaluation resulted from added testing for the Comanche program. During the Milestone II decision process, the Defense Acquisition Executive directed that the Comanche testing program be expanded by adding more testing to fully demonstrate the aircraft’s reliability before completion of its engineering and manufacturing development phase. The $4.777 billion increase in estimated production cost was to address DOD concerns about the long-term affordability and stability of the Comanche program. Specifically, DOD directed the Army to add 10 percent to Comanche’s production unit cost estimate in order to ensure that annual planned procurement funding would be sufficient to cover planned procurement quantities. To reduce the annual funding increase resulting from this directive, the Army reduced Comanche’s peak annual production rate from 72 aircraft per year to 62 per year, which extended the planned delivery schedule by 3 years. The $67.5 million reduction in estimated military construction costs reflects changes in anticipated needs for operating and maintenance facilities. In January 2001, DOD added about $504 million in funding to the Comanche program over the next few years. About $84 million of the additional funds are earmarked for research, development, test, and evaluation, and the remaining $420 million for production. These additional funds have not yet been reflected in the program’s official cost estimates. The program office plans to use the additional development funding to at least partially address what had been unfunded requirements in three areas considered to be high risk: (1) developing and integrating the mission equipment package; (2) developing the technology to detect and isolate equipment problems (automatic fault isolation); and (3) developing and integrating satellite communication capabilities. The section on performance discusses these areas in more detail. The Comanche’s most recent cost estimate was made in April 2000, when DOD approved the program for entry into the engineering and manufacturing development phase. At that time, DOD’s Cost Analysis Improvement Group estimated that the Comanche program would need an additional $180 million for its engineering and manufacturing development phase. However, the higher costs estimated by the Cost Analysis Group were not included in the cost estimate when the program office established a new baseline for the Comanche program in April 2000. The Comanche program is scheduled for an in-progress program review in January 2003 to review, among other things, its cost estimate. DOD believes that this January 2003 review, along with other major program reviews and oversight processes will permit successful management of program risks. The Deputy Program Manager acknowledged that the Army’s cost estimate for the Comanche may need to be revised at this point. The Comanche program office also maintains a list of unfunded requirements. The additional funds recently added to the program have reduced these funding requirements, but the revised list still has unfunded requirements in the amount of $68 million. The program office acknowledges that, unless additional funds are obtained, some yet-to-be- determined program performance requirements could be impacted. We have reported that when development work and low-rate initial production are done concurrently, significant schedule delays that cause cost increases and other problems are not uncommon in early production. Also, production processes are often not able to consistently yield output of high quality when full-rate production begins. DOD’s guidance also states that programs in which development work and low-rate initial production are done concurrently typically have a higher risk of production items having to be retrofitted to make them work properly and of system design not being thoroughly tested. We have also reported that the discovery of problems in testing conducted late in development is a fairly common occurrence on DOD programs, as is the attendant “late cycle churn”, that is, the unanticipated effort that must be invested to overcome such problems. Further, these problems could be exacerbated if the program plans to produce a significant number of systems during the low-rate initial production period, before design and testing are completed. In August 1999, we reported that the Army would experience a 19-month delay in testing because the first pre-production aircraft for testing were expected to be delivered 19 months later than planned. We noted that, by retaining the December 2006 initial operating capability date, the delay in acquiring test aircraft would compress the majority of Comanche’s flight- test schedule into the last 3 years of development. The compressed flight- test schedule would, in turn, shorten the available time for completing all test events and taking necessary corrective actions before the full-rate production decision. Since our last report, the first pre-production aircraft to be used for development testing is now scheduled for delivery in January 2004, adding an additional 3-month delay to the 19-month delay we reported in August 1999. As shown in figure 1 below, the delivery of pre-production Comanche aircraft has been delayed and, because the Army has retained the December 2006 full-rate production decision, the time available for testing, assessing, and correcting problems has been reduced. Many critical test events are now scheduled late in the development stages—during the low-rate initial production phase of the program—and, as shown in figure 2, many developmental and operational test events are scheduled to be conducted concurrently. The combination of compressing the development schedule and undertaking developmental and operational testing activities concurrently leaves the Army with little room to accommodate any delays that may result from assessing, correcting, and retesting problems found during testing. In Comanche’s case, several critical subsystems—to be included in the mission equipment package—may not be available until the development flight-testing is well underway. These subsystems are very complex, state-of-the-art systems that have not been demonstrated on a helicopter platform like Comanche. As testing proceeds, any problems found will need to be analyzed, fixed, and retested. However, with the ambitious test schedule, there may not be time available between test events to correct problems and prepare properly for the next event. Further, the Army’s schedule for developing and testing software for the Comanche may not be completed prior to the full-rate production decision. The contractor is experiencing a shortage of software engineers available to work on the Comanche contract. In addition, only about 1.4 million of the projected 1.9 million lines of computer code for the Comanche’s mission equipment package will be completed by the time the package is to be tested on the initial pre-production aircraft. Additional segments of computer code for the mission equipment package will be introduced as developmental testing is underway. At this point, it is uncertain if all of the computer code for the full mission equipment package will be completed by the time the Army is scheduled to make a full-rate production decision for Comanche in late 2006. Finally, the Army plans to use pre-production aircraft that it considers production-representative for operational flight-testing. Before this testing is complete, the Army plans to begin producing a total of 84 low-rate initial production aircraft. These aircraft are to be used to equip Army helicopter units and to ramp-up production. To produce that many aircraft during low-rate initial production, the Army will have to ramp-up its production capabilities rapidly and at a time when the aircraft design is still evolving as new subsystems are introduced and test results are evaluated. Specifically, the Army does not plan to freeze Comanche’s design configuration until January 2006, or six months after the low-rate initial production decision point. Making design changes and retrofits to a large number of aircraft already produced could be costly. In our last report, we noted that the Army was making modifications to the Comanche that would adversely impact some of the Comanche’s planned performance capabilities; for example, some modifications have added weight and drag to the aircraft. While their exact impacts are still unknown, these changes increase the risk that the Comanche’s planned performance goals may not be achieved. The Comanche continues to have several areas of high technical risk that jeopardize the achievement of several critical performance requirements. The Comanche’s ability to climb at a rate of 500 feet per minute is a key performance requirement for the aircraft. Since we last reported on the Comanche program, the aircraft’s projected empty weight has increased by 653 pounds—from 8,822 pounds to 9,475 pounds. At the current projected design weight of 9,475 pounds, the Comanche program office has acknowledged that the helicopter cannot achieve the required vertical rate of climb of 500 feet per minute without increasing the horsepower of the current engine. Consequently, the program office has assessed its achievement of the weight requirement as high risk. The Army offered its prime contractor for Comanche’s development, Boeing-Sirkosky, an award fee of $1.4 million to reduce its projected weight to 9,250 pounds. However, the contractor did not achieve the first iteration of weight reduction in December 2000. The program office is considering increasing the incentive fee to $5 million for the contractor to reduce the projected weight to 9,300 pounds in December 2001. The program office believes that it can achieve its vertical rate of climb, even with the increase in Comanche’s weight, by increasing the horsepower of Comanche’s T-801 engine from its current horsepower rating of 1131 to 1201. The program office estimates that the increase in the engine’s power can be obtained at a cost of about $13 million, and this approach will be less costly than other weight reduction efforts. However, an increase in engine performance could adversely affect the expected life of the engine since it will have to perform about 47 degrees hotter than is normally required. According to the program office, this increased performance may not have an appreciable impact on the engine’s life. As noted earlier in this report, the successful development and integration of the mission equipment package is critical to meeting Comanche’s performance requirements. This package includes an integrated communications system, piloting system, target acquisition system, navigation system, helmet-mounted display, survivability and early warning equipment, mission computer, and weapons management system. The program office has assessed the achievement of this portion of its development effort as high risk. In order to reduce this risk, the Army had planned to develop a mobile integration laboratory, called a hotbench, which simulates Comanche’s hardware, to integrate and test mission equipment package software before installing the software on the flight test aircraft. However, due to a shortage of development funds, the Army had listed the hotbench as an unfunded requirement. DOD recently provided additional funding to the Comanche program, which the program office plans to use to fully fund the hotbench. Despite the additional funding for the hotbench, the program office continues to acknowledge that integration of Comanche’s mission equipment package as an area of high technical risk. A critical Comanche requirement is an on-board fault detection system that can rapidly and accurately provide information about equipment problems. With an on-board fault isolation system, the Army would be able to promptly identify and correct potential problems in advance, according to the Comanche’s operational requirements document. Additionally, without the system, the time and cost of maintaining the aircraft will likely increase. According to the Army, this system needs to be 75 to 95 percent accurate—75 percent for mechanical and electrical equipment and 95 percent for avionics and electronics equipment. The Comanche program office has concluded that this requirement will be difficult to achieve within the current cost, weight, and packaging constraints, and does not expect to achieve a mature fault detection and fault isolation capability until 2 years after initial fielding. According to the program office, this system depends, in part, on a database built on flight data and equipment failure experience; therefore, the system becomes better with additional flight hours. The program office anticipates that after 2 years of flight testing, the system should meet the full level of predictability required. Although some of the recently provided development funding will be used by the Army in this area, the Comanche program has identified an additional $20 million unfunded requirement for the fault isolation capability. In some battle situations, the Army plans to use Comanche as a deep reconnaissance aircraft to provide critical information and situational awareness to joint forces. Satellite communication technology is necessary for the helicopter to be able to achieve the “beyond-line-of- sight” capability needed to carry out this function, according to the Comanche operational requirement document. To meet this need, the Army was planning to rely on satellite communication technology being developed and miniaturized as part of the Joint Strike Fighter program, which is being developed jointly by the Air Force, Navy, and Marines. However, in May 2000, Congress provided that the Joint Strike Fighter program could not enter into the engineering and manufacturing development phase until the Secretary of Defense certified the technological maturity of its critical technologies. This has delayed the Joint Strike Fighter program’s schedule for beginning its engineering and manufacturing development phase. When assessing the risk of its dependency on the Joint Strike Fighter’s program, the Comanche program office concluded that the helicopters in low-rate initial production would not have the beyond-line-of-sight communication capability if the Joint Strike Fighter program was delayed. The program office now believes that it must develop its own satellite communication capability. However, the development schedule remains high-risk for the timely inclusion of this capability on the initially fielded Comanche helicopters. The Army has estimated that it will require about $58 million to develop this capability and plans to fully fund this effort with additional funds recently provided by DOD. Our work on best practices has found that product development in successful commercial firms is a clearly defined undertaking for which firms insist on having in hand the technology that meets customers’ needs before starting. The firms demand—and receive—specific knowledge about a new product before production begins. And, they do not go forward unless a strong business case on which the program was originally justified continues to hold true. Such a knowledge-based process is essential to commercial firms getting better cost, schedule, and performance outcomes. It enables decision-makers to be reasonably certain about critical facets of the product under development when they need it. At the point of going into production, successful firms will already know that (1) technologies match customer requirements, that is, they can fit onto a product and function as expected, (2) the product’s design meets performance requirements, and (3) the product can be produced within cost, schedule, and quality targets. The Comanche program does not yet have this knowledge and is not likely to have this knowledge when it plans to begin low-rate initial production in June 2005. First, the Army does not yet know and it will not know until well after its low-rate initial production decision whether certain technologies being developed will fit on the helicopter and function as expected. Our reporton incorporating new technologies into programs indicated that demonstrating a high level of maturity before new technologies are incorporated into product development programs puts those programs into a better position to succeed. Further, technologies that were included in a product development before they were mature later contributed to cost increases and schedule delays to those products. While the Comanche program has made progress in the technology readiness level of its critical components, integration of those components into subsystems, such as the mission equipment package, and the helicopter as a whole remains high-risk. In addition, the integration, development, and configuration of key satellite communication technology for inclusion in the integrated communication, navigation, and identification avionics has also been assessed as high risk. Finally, some of the technologies have not been developed to meet Comanche’s specific configuration requirements. For instance, the Comanche’s second generation forward-looking infrared sensor has been tested and proven on the Black Hawk helicopter by the Army’s night vision laboratory but not on the Comanche itself. Such testing needs to be done to ensure that the system can work together with other unique systems being developed for the Comanche, including the piloting, target acquisition, and navigation systems, which work as one unit. Comanche’s contractor has maintained that its mission equipment package technology is challenging because some key components have not been developed and configured in the required manner for the helicopter’s intended mission. Second, as discussed earlier, the Army does not yet know and may not know until well after the start of low-rate initial production, whether performance requirements can be met—including vertical rate of climb, on-board fault isolation, and beyond-line-of-sight communication requirements. The Army plans to conduct a limited user test before it begins low-rate initial production but it is a rudimentary test and not a complete operational test that fully demonstrates the aircraft’s capabilities. By compressing many key events late in the development schedule and conducting developmental and operational testing activities concurrently, the Army is running the risk of not fully demonstrating many of its critical capabilities before its planned full-rate production decision. Under current plans, for example, the Army will not complete a full demonstration of its integrated mission equipment package until December 2006—over a full year after its low-rate initial production decision and within the same month that the Army plans to make its decision on Comanche full-rate production. Third, as noted earlier, it is still uncertain whether the Comanche can be developed within cost and scheduling estimates. Although additional costs have been identified for the Comanche since it was last restructured, the full development cost will not be known until critical technology is fully developed, integrated, and tested. This will not occur until well after a low- rate initial production decision has been made in June 2005. The program office believes that it will know the cost of the initial production aircraft, which will have been negotiated prior to the low-rate initial production decision. However, at that time, the program office and the contractor will have limited experience and data relative to producing the fully developed Comanche helicopter. Until more experience and data is available, there is not a high level of confidence in the Army’s production cost estimate. Further, the Director of Operational Test and Evaluation in assessing the results of the Comanche milestone II test data indicated that it is highly unlikely that the Army can deliver the expected system performance within the current budget and schedule. The Director's assessment revealed that, without an operational assessment of an integrated system, it is difficult to predict with any degree of confidence whether (1) the individual subsystems can be successfully integrated, (2) the subsystems will function properly in an operational environment, or (3) the subsystems, in concert, will provide the anticipated benefits in operational performance. In 1999, we reported that the Army started the Comanche’s program development too early in terms of technology readiness, which is contrary to best commercial practices. Further, in approving the program for engineering and manufacturing development, the Army accelerated the development of some components, reduced the number of test aircraft, and compressed the test schedule. Two years later, the program is confronted with rising development costs, a compressed development schedule, and several major areas of high technical risk. The Army plans to proceed to low-rate initial production in June 2005 and full-rate production in December 2006, both of which could be well in advance of attaining sufficient knowledge of the helicopter’s technical maturity, demonstrated performance capabilities, and production costs. With such a scenario, the potential for adverse program outcomes is high—higher than expected costs, longer than expected schedules, and uncertain performance. DOD and Army officials acknowledge that the current program cost and schedule objectives are not achievable and should be changed to reflect more realistic objectives, but they believe that the planned January 2003 review for the Comanche program is the appropriate time to address such changes. Such a delay in revising the program’s cost and schedule estimate limits the visibility and knowledge that Army and DOD management as well as the Congress needs to (1) provide program oversight and direction; (2) make effective cost, schedule, and performance trade-off decisions; and (3) assess affordability and annual funding requirements. To improve management oversight and direction and achieve more favorable program outcomes, this report recommends that the Secretary of the Army reassess the program’s cost, schedule, and performance objectives, and revise those objectives to more achievable levels prior to submitting its next fiscal year budget. In commenting on a draft of this report, DOD partially concurred with our recommendation. DOD noted that it agrees with some of our concerns and recognizes there are risks in the currently planned Comanche engineering and manufacturing development program. DOD noted that these risks were understood during the Comanche milestone II review. At that time, the Defense Acquisition Executive directed that the program proceed as planned, but that interim decision reviews be conducted in January 2003 and June 2005 to review program status. DOD stated that these reviews, along with other major program review and oversight processes, will permit successful management of program risks. Nevertheless, DOD stated that it is currently examining whether any of Comanche's requirements should be deferred, in order to reduce the risk of not meeting cost and schedule objectives. DOD's examination of Comanche's requirements is consistent with our recommendation. We continue to believe that DOD should report on the results of this examination and any revisions to the program’s objectives to the defense committees of the Congress with its next budget request. DOD disagreed with a reference to our previous Comanche report stating that current program risks are caused by, among other things, the program being allowed to enter engineering and manufacturing development prior to maturation of key technologies. DOD maintains that the Comanche program successfully demonstrated its exit criteria prior to entering engineering and manufacturing development. However, the Comanche program’s demonstration of its exit criteria was not sufficient as a basis to move forward in the acquisition process. For example, the exit criteria did not require that the technologies used in Comanche be at or above specific levels of demonstrated readiness. As we previously reported, the Army's own assessments clearly indicated that several key areas of technology were not at those levels called for in commercial best practices guidelines. DOD's comments are reprinted in appendix I. Other comments provided by DOD were incorporated in the report as appropriate. To evaluate changes in the Comanche’s status with regard to cost, schedule, and performance and assess whether the Army has the certainty it needs to proceed with beginning production, we examined and compared program schedules, pertinent cost documents, and acquisition strategies, and discussed potential changes and causative factors with cognizant Comanche program officials. We analyzed flight-test plans, schedules, and reports and discussed significant issues with program officials. We reviewed program documents related to risk and analyzed program risks and development problems by comparing them with various test schedules and plans. To assess performance capabilities before beginning with production, we analyzed required and projected performance and compared it with the Comanche’s operational requirements. We relied on previous GAO best practices work to examine Comanche’s technological readiness levels for key program technologies. Our analyses focused on the impact of Comanche’s cost, schedule, and performance on the Army’s ability to field a Comanche helicopter that would meet its requirements and incorporate technological upgrades in its helicopter fleet. In performing our work, we obtained pertinent program documents and interviewed officials from the offices of the Secretary of Defense and the Army, Washington, D.C.; the Program Executive Office-Aviation and Comanche Program Office, Redstone Arsenal, Alabama; the U.S. Army Training and Doctrine Command, Fort Rucker, Alabama; the Comanche Joint Project Office, Huntsville, Alabama; and the Aviation Test and Evaluation Command, Alexandria, Virginia. We conducted our review from September 2000 through March 2001 in accordance with generally accepted government auditing standards. As agreed with your office, unless you publicly announce the contents of this report earlier, we will not distribute this report until 5 days from its date. At that time, we will send copies of this report to the Honorable Donald H. Rumsfeld, Secretary of Defense; the Honorable Thomas White, Secretary of the Army; Director, Office of Management and Budget; and other interested congressional committees and parties. We will also make copies available to others upon request. If you have any questions regarding this report, please contact me on (202) 512-4530. GAO contacts and major contributors to this report are listed in appendix II. In addition to those named above, Leon S. Gill, Wendy Smythe, Gary Middleton, and Cristina Chaplain made key contributions to this report. | As of August 1, 1999, the Army's Comanche helicopter program faced significant risks related to cost overruns, scheduling delays, and degraded performance. GAO concluded that proceeding to the next development phase with high levels of uncertainty was not in accordance with best practices followed by successful commercial firms. This report evaluates changes since 1999 in the Comanche's cost, schedule, and performance, and assesses whether the Army will have the knowledge it needs to proceed with its current production plans. GAO found that the Comanche program's total development and production cost estimate has increased by almost $4.8 billion. However, areas of high technical risks and unfunded requirements could further increase the program's costs. The program office does not plan to update its April 2000 current estimate to reflect these increases until January 2003. The Comanche's December 2006 full rate production decision date has not changed even though the risks of not meeting this date have increased. The Army continues to face the risk that critical performance requirements may not be met--at least for the helicopters it will initially produce. The Department of Defense (DOD) recently provided $84 million in additional development funding to help reduce some of these high-risk areas. Additionally, the Army is not likely to have the knowledge it needs to begin production when scheduled. It is also not likely to know whether some technologies being developed, such as those used for the mission equipment package, will work on the helicopter and function as expected. DOD is also unlikely to know whether the helicopter can be produced within current cost estimates. |
VA employs approximately 10,000 physicians in its 158 medical centers. To help ensure that the care these physicians provide meets accepted professional standards, VA uses several systems to monitor and evaluate physician practice. These systems include surgical case review, external peer review, credentialing and privileging, malpractice claim analysis, and occurrence screens. An integral part of VA’s process is physician peer review—physicians evaluating the medical care provided by other physicians. Peer review in VA is used by medical centers to determine if practitioner care is less than optimal and is initiated when an occurrence screen identifies potential quality of care problems. Peer review is also used to establish the basis for the granting of privileges to physicians and to examine malpractice claims made against health care professionals in the medical center. No disciplinary action is taken against a physician’s privileges after a peer review following an occurrence screen. This is because quality assurance information, such as occurrence screen peer review data, is confidential and cannot be used in disciplinary proceedings. However, peer review findings can be used by medical center management to initiate a formal investigation of a physician’s performance or conduct after which disciplinary action can be taken. VA guidance, issued in April 1994, presents various methods for conducting peer review but does not mandate a specific peer review technique. Specifically, the guidance discusses the disadvantages of the single reviewer approach and presents three types of multiple reviewer techniques: (1) committee review, (2) multiple independent review, and (3) discussion to consensus. At the six medical centers we visited, two methods of peer review were being utilized: multiple independent review and committee review. (See app. II for a discussion of these approaches.) Regardless of the approach used, the result of any peer review is an evaluation of the care provided by a practitioner and a preliminary determination as to how, in the reviewer’s opinion, other physicians would have handled the case. Cases rated as a level 1 (most experienced, competent practitioners would handle case similarly) usually receive no further action. Cases rated as a level 2 (most experienced, competent practitioners might handle the case differently) or a level 3 (most experienced, competent practitioners would handle the case differently) receive a supervisory review by the responsible clinical service chief, such as the chief of surgery. All physicians and dentists employed by VA are subject to privileging procedures. Privileging is the process by which a practitioner is granted permission by the institution to provide medical or other patient care services within defined limits on the basis of an individual’s clinical competence as determined by peer references. Privileging is done at the time of employment and every 2 years thereafter. However, a physician’s privileges can be examined at any time if a question about his or her performance or competence is raised. The National Practitioner Data Bank was created under Title IV of Public Law 99-660, the Health Care Quality Improvement Act of 1986. The act calls for (1) insurance companies and certain self-insured health care entities to report malpractice payments made for the benefit of a physician, dentist, or other licensed health care practitioner to the Data Bank and (2) hospitals and other authorized health care entities, licensing boards, and professional societies to report professional review actions relating to possible incompetence or improper professional conduct adversely affecting the clinical privileges, licensure, or membership in a professional society of a practitioner for longer than 30 days to the Data Bank. The intent of the act is to improve the quality of medical care by encouraging physicians, dentists, and other health care practitioners to identify and discipline those who engage in unprofessional behavior and to restrict the ability of incompetent physicians, dentists, and other health care practitioners to move from state to state without disclosure or discovery of their previous damaging or incompetent performance. The Data Bank acts as a clearinghouse for information about licensed practitioners’ paid malpractice claims and adverse actions on licensure, clinical privileges, and professional society membership. It has two main functions: (1) responding to queries about practitioners from authorized health care entities and hospitals and (2) collecting and storing adverse actions and malpractice payment information. Although the act does not require VA medical centers to participate in the Data Bank, it directs the Secretary of Health and Human Services (HHS) to enter into a memorandum of understanding with the Administrator of the Veterans Administration (now VA) to apply the reporting requirements of the act to health care facilities under VA’s jurisdiction. Accordingly, a memorandum of understanding was signed in November 1990, followed by interpretive rules effective October 1991. VA’s physician peer review process is identifying cases needing management attention at the six medical centers that we visited. Specifically, in fiscal year 1993, peer reviewers at these locations reviewed a total of 563 cases referred from the occurrence screen process involving potential quality of care problems. In 373 of these cases, peer reviewers decided that most experienced, competent practitioners would have handled the case similarly; in 136 cases, the peer reviewers believed that most experienced, competent practitioners might have handled the case differently; and in 54 cases, the peer reviewers believed that most experienced, competent practitioners would have handled the case differently. Each of the VA medical centers that we visited uses occurrence screens to identify potential physician performance problems that may warrant a peer review. Under this process, cases are screened against a predetermined list of criteria, usually by nurses. Those cases that involve one or more of the occurrences will be reviewed to identify possible problems in patient care. Occurrences that are reviewed include, but are not limited to, the following: readmittance within 10 days of an inpatient stay; readmittance within 3 days of an outpatient visit; return to special care unit, such as intensive care; return to operating room; and death. Any case for which the occurrence screen results show that a potential quality of care problem may exist is referred to the cognizant service chief for medical peer review. Table 1 shows, by medical center, how the peer reviewers rated the 563 cases. VA guidance governing peer review of potential quality of care problems identified through occurrence screens states that when peer review indicates that practitioner care is less than optimal, the cases are sent to the service chief for a determination regarding corrective action. The actions chosen by the service chief will be communicated in writing to the chief of staff and the occurrence screen program coordinator. If no action is considered necessary, a notation to that effect should be made by the service chief. However, VA guidance does not explicitly state the extent to which (1) discussions with a practitioner should be documented or (2) the reasons for no action being taken should be justified. As a result, the worksheets provided to the occurrence screen coordinator generally contained no elaboration on the action taken. Of the 50 cases we reviewed where peer reviewers believed that most experienced, competent practitioners would have handled the case differently than the physician under review, 32 resulted in a discussion with the physician, 4 resulted in no action, 8 resulted in a policy change, and 6 resulted in counseling. Table 2 shows how the service chiefs at the medical centers we visited dealt with cases that their peer reviewers believed most experienced, competent practitioners would have handled differently. Service chiefs clearly favored a discussion of problems over any other type of action. But in 32 of the 50 level 3 cases in which a discussion took place, when we asked for documentation about what was actually discussed with the practitioner about the peer review findings or what, if any, corrective actions were agreed upon, we were told by staff that they could not find information in either the occurrence screen worksheets or minutes of the service meetings. Further, in the 4 cases we reviewed in which no action was taken by a service chief on peer reviewers’ findings, there was no indication in the occurrence screen worksheets as to why a decision to take no action was justified. VA regulations require cases meeting the occurrence screen criteria to be entered into an ongoing occurrence screen database, which is reviewed and analyzed regularly to identify patterns that may be problematic. However, when actions taken by the service chiefs are not being documented for future reference, corrective actions, if taken, cannot be identified and trends cannot be established to point the way for improvement. In 14 cases, evidence was present that action was taken on the peer reviewer’s findings. Specifically, in 8 cases, medical center management revised certain policies and procedures to ensure that the problems identified by peer reviewers would not recur. In 6 cases, physicians were provided counseling on the basis of the peer reviewer’s findings and a record of the incident was placed in the physician’s privileging file. The incidents triggering formal counseling included inappropriate medical management of a patient with diabetes; failure to diagnose, monitor, and treat patients; failure to communicate resuscitation plans for a terminally ill patient; failure to monitor patient response to medication and take appropriate action; and failure to assess a patient and order the correct dose of medication. Experts believe that a significant impediment to effective peer review is the inherent subjectivity involved in determining whether a potential quality of care problem exists. The development of practice guidelines that peer reviewers can use to make performance judgments is one method suggested by experts to reduce the subjectivity. For example, practice guidelines could reduce the tendency on the part of some peer reviewers to focus on the effect of a bad patient outcome rather than whether the standard of care was met. In a 1992 Journal of the American Medical Association article, an official in VA’s Office of Quality Management stated that the development of practice guidelines would be a great aid to improve peer review. In a corroborating article, the physician writing about peer review states that peer judgments regarding appropriateness of care are strongly influenced by perceived outcomes. This suggests that the standard of care is often unclear to reviewers. Practice guidelines are being developed with increasing frequency in both VA and the medical community as a whole. However, at least one expert does not believe that it will be possible to design guidelines that will take into account every possible factor that might constitute an exception to the standard. “picking skilled physician-reviewers may be the central and critical step. Simply choosing a peer physician may not be the best strategy; rather, identifying an expert in both the condition under study and in quality assessment purposes and techniques may be required.” At the six medical centers we visited, we found that classification of peer review findings is a highly subjective activity because no systemwide clinical criterion exists for peer reviewers to determine whether physicians would or would not have performed in the same manner as the physician under review. As indicated above, such a situation is not unique to VA and will be resolved only when a complete set of practice guidelines is used routinely. Until such criteria are generally available, a case that might be a level 1 in VA medical center A might be a level 3 in VA medical center F. Levels assigned to cases may also vary among the specialty services within the medical center. The degree to which the concept of peer review is accepted or embraced by physicians depends to a great extent on how the results of peer review are utilized by medical center management. Although we found differences among services within medical centers, four of the six VA medical centers we visited are using peer review primarily to evaluate physician performance and identify physicians who may have contributed to adverse patient outcomes. This approach is resulting in negative perceptions of the peer review process and is impeding its acceptance among physicians. At these facilities, several physicians questioned the usefulness of the peer review process and did not view it as having an important role in identifying opportunities for improving care. These physicians contend that peer review duplicates other quality assurance monitors. For example, the medical service units at each of the VA medical centers we visited hold morbidity and mortality conferences to discuss all deaths and clinical complications that occurred during the week preceding the meeting. Some of these cases are later selected for peer review. But, according to physicians involved in peer review, the peer reviews do not identify any issues that are not identified and discussed in the morbidity and mortality conferences. Physicians also told us that peer review committee findings have more credibility than the findings of a single peer reviewer because the subjectivity inherent in determining quality of care is reduced. Other benefits of the committee approach include identifying the underlying problem that led to an adverse outcome and greater physician acceptance of peer review. Physicians told us that by focusing on the identification of system issues, they are better able to identify the underlying cause of an adverse outcome and prevent it from occurring again. Physicians who are members of peer review committees also told us that the anonymity associated with peer review committees allows them to be open and honest in their evaluations. Officials from one VA medical center that switched from using a single reviewer to a peer review committee stated that the number of cases rated level 2 or 3 rose when they began using a peer review committee. Specifically, during the first 5 months of 1994, the committee assigned more level 3 designations to cases than did individual reviewers in all of 1993. At another medical center that began using peer review committees, the number of cases rated level 2 or 3 by a committee increased by more than 60 percent. The Health Care Quality Improvement Act of 1986 requires that all malpractice claims paid on the behalf of a practitioner be reported to the Data Bank. However, under rules setting forth VA’s policy for participation in the Data Bank, VA will file a report with the Data Bank regarding any malpractice payment for the benefit of a physician, dentist, or other licensed practitioner only when the director of the facility at which the act or omission occurred affirms the conclusion of a peer review panel that payment was related to substandard care, professional incompetence, or professional misconduct. Thus, before reporting a practitioner to the Data Bank after a malpractice payment is made, VA is in effect requiring the peer review panel to make a determination that either the standard of care was not met or that a practitioner was guilty of professional incompetence or misconduct. Adherence to these procedures results in VA medical centers’ not reporting to the Data Bank all malpractice payments made on behalf of their practitioners. The process followed by VA medical centers to deal with malpractice claims is as follows: Within 30 days of a claim being filed, the appropriate VA district counsel notifies the medical center involved in providing the medical care identified in the allegations that a claim has been filed. Medical center personnel then conduct a peer review to determine if the appropriate standards of care were met. These standards can relate to any part of the system (for example, hospital, outpatient care, equipment, systems in place, and practitioners). The medical center forwards the results of the peer review along with a copy of the Tort Claim Information System data and a copy of the patient’s medical record to both the Armed Forces Institute of Pathology and the appropriate VA district counsel. Upon receipt of the results of the initial peer review, the district counsel can make a request for the medical opinion of an external expert. Finally, the VA district counsel can settle or deny a claim. If a payment is made on the claim, the responsible medical center director will convene a second peer review panel to determine if an identifiable licensed health care practitioner is involved in the case. During this review, a determination is made as to whether the acts or omission of the practitioners in relation to the patient injury for which the settlement or judgment was made constituted care that did not meet generally accepted standards of professional competence or conduct. The recommendations of this panel should determine whether the practitioner involved in the incident is reported to the Data Bank. However, before approving the report, the director will notify the practitioner to be reported and provide him or her with an opportunity to discuss the situation with appropriate medical center officials, including the director. At the six medical centers we visited, we reviewed 53 paid claim files in which the claim alleged that an adverse patient outcome was caused by a licensed practitioner(s). We found that it was possible to determine the practitioner(s) associated with the adverse patient outcome in each of the 53 claims. However, only four of these individuals were reported to the Data Bank. The remaining practitioners were not reported for a variety of reasons, including determination by the panel that the standard of care was met (13); inability to identify the practitioner responsible for the patient (3); problem was considered to be a system failure (4); belief that the resident rather than the attending physician was to blame for the incident (3); patient was at fault (2); no evidence of misconduct, negligence, or malpractice (6); panel split on the need to report (1); and practitioner behavior was not clearly outside the standards of practice (1). Further, from October 28, 1991, to September 30, 1994, only 73 practitioners from 1,047 paid claims for all VA medical centers were reported to the Data Bank. (See app. III.) In his response to this report, VA’s Under Secretary for Health stated that there is not necessarily an identifiable practitioner associated with every malpractice claim because (1) malpractice claims involving VA are filed against the United States of America and typically do not name practitioners, (2) payments made are on behalf of care provided at a VA facility, and (3) the act or omission for which payment was made is not necessarily practitioner-related. The Under Secretary concluded that (1) the VA peer review process is necessary to determine if there is an identifiable licensed health care provider for whom it can be said that payment was made and (2) only if there is an identifiable practitioner can it be said that the payment was on his or her behalf. We agree that malpractice claims are filed against the United States of America and not against individual practitioners. We found, however, that identifying practitioners involved in a malpractice claim and on whose behalf it can be said payment was made is not difficult. Our review of 558 malpractice claims involving VA that were paid during fiscal years 1992 and 1993 shows that 422, or 76 percent, involved claims in which it was alleged that an adverse patient outcome was caused by a licensed practitioner(s). Of these practitioners, 409 were physicians. Under its memorandum of understanding with HHS, VA has agreed to report to the Data Bank through state licensing boards any action that for longer than 30 days reduces, restricts, suspends, or revokes the clinical privileges of a physician or dentist due to incompetence or improper professional conduct. However, regardless of the length of time an individual’s privileges have been affected, VA will not report adverse actions, including suspensions lasting longer than 30 days, to the Data Bank until all internal appeals have been satisfied. Such a policy is not required by the act and can delay reporting for a considerable time. For example, one VA medical center we visited suspended the privileges of two physicians in 1993 and terminated their employment in 1994. One of these physicians was reinstated in March 1995 with a formal reprimand. As of April 4, 1995, the other was still involved in the internal appeals process. Neither has been reported to the Data Bank. VA’s privileging process includes, among other things, evaluation of a physician’s relevant experience and current competence. It also includes consideration of any information related to medical malpractice allegations or judgments, loss of medical staff membership, loss or reduction of clinical privileges, or challenges to licensure. In addition, the evaluation must be determined using evidence of an individual’s current competence. Initial privileging is done at the time of employment and every 2 years thereafter. However, a physician’s privileges can be examined at any time if the situation requires it; for example, when there is a question of physician competency or professional conduct. From October 28, 1991, through September 30, 1994, nine medical centers reported 11 adverse actions to the Data Bank. However, our analysis shows that the adverse reporting rate for VA medical centers is lower than the adverse reporting rate of community hospitals. For example, in California, VA has 4,008 beds and reported 2 adverse actions for an average reporting rate of 0.50 reports per 1,000 beds. Conversely, community hospitals in California have 105,270 beds and reported 390 adverse actions for an average reporting rate of 3.7 reports per 1,000 beds. (See app. IV for a complete reporting comparison by state.) The Under Secretary for Health, in responding to this report, stated that VA reporting rates are not comparable with community hospital rates because VA practitioners are employees of VA, not independent entrepreneurs. The Under Secretary believes that through appropriate supervision, service chiefs at the medical centers are identifying problems and through supervision and progressive discipline, if necessary, issues are handled before formal privileging actions occur. Conversely, in a community hospital, practitioners are not typically employees of the organization, and the formal privileging review process is the only legitimate process for review. The Under Secretary noted, however, that VA policy requires that licensed health care practitioners who leave VA employment while under investigation be reported to the Data Bank immediately. Service chiefs at the medical centers we visited told us that they use formal and informal processes to deal with physicians who have performance problems. Formal procedures require due process hearings that (1) take time to administer, (2) require much documentation, and (3) involve extensive understanding of the regulations and guidelines governing such actions. For example, in fiscal years 1993 and 1994, action was taken to officially remove three physicians at the medical centers we visited. The time involved from the initiation of disciplinary action to ultimate removal ranged from 5-1/2 months to a little over 1 year. Reasons for the varying time frames include complexity of the issues involved (such as professional misconduct versus quality of care), multiple independent peer reviews necessary in two cases and not in the other, and the extent to which the physicians fought the disciplinary actions. In each case, the physician’s privileges were restricted for more than 30 days; however, only one of the three cases was reported to the Data Bank. VA policy requires that the appeals process be completed before any case is reported to the Data Bank, and these physicians had appealed the suspension and revocation of their privileges and the termination of their employment. Service chiefs at the medical centers we visited also used an informal process to remove physicians who had performance problems. However, the effect is that physicians who may have performance problems are not reported to the Data Bank. Further, one service chief told us that he tends to hire part-time physicians to avoid having to adhere to the formal procedures for dealing with problem physicians. The following is an example of a situation that resulted in the removal of a problem physician through informal means. A service chief reduced a physician’s privileges and personally supervised the physician for 6 months to determine the physician’s competence level. The service chief concluded that the physicians’ medical skills did not improve during the time of observation and recommended to the physician that he resign. The physician took this advice and resigned from the medical center. But no documentation of restricted privileges or other problems appeared in the physician’s credentialing and privileging file. Although physician peer review is performed at the VA medical centers that we visited and cases of questionable quality of care are identified, actions taken by service chiefs as the result of peer review findings are seldom made a matter of record in peer review files. Such information could allow management to track the performance of practitioners over time and help ensure that any pattern of less than optimal care is quickly identified. Documentation also establishes the degree to which management addressed the issues raised by peer reviewers. From an organizational perspective, this establishes accountability on the part of service chiefs, increases practitioner awareness of the importance that the medical center places on the delivery of quality care, and is a good risk-management tool because it requires managers to go on record as to how a potential problem was addressed. By establishing restrictive Data Bank reporting procedures, VA has shielded its physicians from the professional accountability that is required of private sector practitioners. In so doing, VA could be facilitating the delivery of substandard care outside the VA health care system by allowing practitioners with poor performance records to leave its employment with no record of having been involved in a malpractice claim or an adverse action. Conversely, failure to report also allows some physicians who provide patients with less than optimal care to remain in the VA system without any indication on their record that problems may exist with their performance. We recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health to require service chiefs to fully document all discussions held with practitioners involved in cases that peer reviewers conclude that most experienced, competent practitioners might or would have handled differently, and revise the criteria now being used by medical centers to report VA practitioners to the National Practitioner Data Bank so that they are more consistent with the reporting practices now used in the private sector. VA’s Under Secretary for Health concurred with our recommendation that service chiefs fully document all discussions held with practitioners and stated that VA will reinforce, on a systemwide basis, the requirement that service chiefs must fully document appropriate actions taken in response to peer review conclusions. The Under Secretary also concurred in principle with our recommendation relating to reporting to the National Practitioner Data Bank. While he does not believe that a change in policy is needed for the reporting of malpractice payments, he does agree that more timely reporting of initial summary suspensions of physician privileges lasting longer than 30 days is an option. In this regard, he said that a group of knowledgeable program staff will explore all policy options and report their recommendations to him by the end of September 1995. Under VA’s current procedures, the postpayment peer review is made to determine if there is an identifiable licensed health care practitioner responsible for a breach in care. The Under Secretary stated that effective May 19, 1995, these reviews will be completed outside of the medical center for which payment was made (for example, in another medical center). This is an interim measure, and VA is in the process of pursuing peer review options that are external to the VA system, such as utilization of the clinical reviewers participating in VA’s External Peer Review Program. We disagree with the Under Secretary’s contention that no policy change is needed with respect to the reporting of malpractice payments. VA’s policy of reporting only those malpractice payments involving practitioners who have been determined to have breached the standard of care remains more restrictive than required under Public Law 99-660. The law requires only that all malpractice payments made on behalf of a physician or licensed health care practitioner be reported to the Data Bank. In addition, the law states that payment of a claim should not be construed as creating a presumption that medical malpractice has occurred. Thus, any post-payment peer review need only determine that the payment was for the benefit of a practitioner, not that it results from a breach in care. We also believe that reporting initial summary suspensions rather than only final actions should be viewed as more than an option. VA’s memorandum of understanding with HHS clearly states that it will report to the Data Bank any action that for longer than 30 days reduces, restricts, suspends, or revokes the clinical privileges of a physician or dentist due to incompetence or improper professional conduct. As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its issue date. At that time, copies will be sent to appropriate congressional committees; the Secretary of Veterans Affairs; the Director, Office of Management and Budget; and other interested parties. We will also make copies available to others upon request. If you have questions on this report, please contact James Carlan, Assistant Director, Federal Health Care Delivery Issues, on (202) 512-7120. Other staff contributing to this report were team coordinators Patrick Gallagher and Patricia Jones and team members Deena M. El-Attar, Barbara Mulliken, and George Bogart. To accomplish our review, we interviewed VA’s medical inspector and officials in VA’s Professional Affairs Office, Quality Management Planning and Evaluation Office, Office of Personnel and Labor Relations, and Office of General Counsel. The objective of these interviews was to obtain information on (1) the role of peer review in evaluating physicians and reporting to the National Practitioner Data Bank and state licensing boards and (2) how VA’s Tort Claim Information System (TCIS) was developed and is being utilized. We also visited six VA medical centersselected on the basis of the number of paid malpractice claims made on behalf of these facilities. At each location, we (1) interviewed quality assurance personnel, physicians who served as peer reviewers, and service chiefs to obtain their perspectives on the peer review process and (2) reviewed policies and procedures for peer review quality assurance programs, minutes of any meetings that dealt with potential quality of care issues, and documentation pertaining to 191 peer reviews made as a result of an occurrence screen. We also reviewed peer review documentation for 80 tort claims paid and pending for practitioners in 1992 and 1993 at the six medical centers we visited. In addition, we obtained the Armed Forces Institute of Pathology analysis of VA tort claim information for fiscal year 1993 for all VA medical centers and reviewed HHS information on VA’s participation in reporting to the Data Bank. Under the multiple independent reviewer approach, which is being used at the Cleveland, Hines, and Martinsburg medical centers, physicians selected by the service chief individually review the work of a colleague within the same service; for example, surgeons review the work of other surgeons. During this review, the medical records associated with a case are examined and any physicians or others involved in the case may be interviewed. Each peer reviewer independently evaluates the quality of care involved in the case and makes a preliminary determination as to how, in his or her opinion, other physicians would have handled the case. In those cases where the service chief and a peer reviewer disagree, the service chief’s opinion will prevail. The service chief also determines the extent to which follow-up action will be taken on the case. The Fayetteville, Houston, and St. Louis medical centers use a committee approach to peer review. While each committee is multidisciplinary and comprised of elected or appointed representatives from the major medical services such as surgery and medicine, each committee conducts peer reviews somewhat differently. In Fayetteville, the peer review committee, which consists of all the service chiefs, performs the peer review as a group and determines what action to take. The Houston peer review committee selects individual members of the peer review committee to review cases and present their findings to the entire committee for discussion and level determination. While the committee makes the final peer review level determination, the service chiefs determine what action to take. In St. Louis, all service level peer reviews are submitted to a Quality Assurance/Quality Improvement Committee, which then performs another peer review to validate the original review. The committee has the final decision-making authority regarding the level assigned and will often recommend what action should be taken and then follow up to ensure that the recommended action occurs. East Orange, New Jersey (continued) This appendix presents a comparison of VA’s and community hospitals’ reported adverse actions per 1,000 hospital beds. This analysis shows that VA hospitals are not reporting at the same rate as other hospitals in the same state. The analysis used information from an HHS Inspector General’s report that concluded that most hospitals are underreporting to the Data Bank. VA’s adverse action reports are from its first 3 years’ participation in the Data Bank, October 28, 1991, through September 30, 1994. The community hospitals’ adverse action reports are from the first 3-1/2 years of the Data Bank’s operation, September 1, 1990, through December 31, 1993. Only nine VA medical centers in seven states reported adverse actions. Hospitals in all states reported adverse actions. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (301) 258-4097 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO examined the relationship between problem identification and problem resolution in the Department of Veterans Affairs' (VA) physician peer review process, focusing on: (1) how the results of VA peer review are being used in disciplining physicians with performance problems; (2) the impediments to effective peer review; and (3) whether VA is taking action against physicians who are not performing in accordance with professional standards. GAO found that: (1) actions taken by VA to address quality of care problems are often limited to undocumented discussions with the physicians involved; (2) there is generally no record of the extent to which quality of care problems are addressed or the actions taken to deal with the problems identified; (3) VA is developing practice guidelines and using peer review to help reduce heavy reliance on professional judgment in peer review; and (4) VA medical centers are not reporting many actions taken against physicians to the National Practitioner Data Bank because of their restrictive reporting procedures. |
Wilmington, North Carolina (CNN) Few places in North Carolina got rain on Tuesday, but that didn't stop some bloated rivers from rising.
Fourteen river gauges recorded levels above major flood stage, the North Carolina Emergency Management agency tweeted.
Many of those waterways were rising or cresting, though a few were receding.
The Cape Fear River near Fayetteville was rising and has quadrupled in depth, and it's only going to get worse -- likely bringing more misery.
But there are glimmers of hope in the wake of Florence. Some North Carolina residents were being told they can return home to the beachside community of Wrightsville.
'This isn't a river ... this is Interstate 40'
Four days ago, the Cape Fear River near Fayetteville was 15 feet deep. By Tuesday afternoon, it had topped 60 feet -- and it still hasn't crested.
You can clearly see the water levels rising in Cape Fear River as we compare photos from Sunday to Today. #capefear #Florence #ReadyNC #ReadyFay pic.twitter.com/jiPUCVpLBP — Fayetteville Police (@FayettevillePD) September 18, 2018
Overflow from the river downstream has already created a new waterway on what used to be Interstate 40 in Pender County.
"This isn't a river ... this is Interstate 40," the state's transportation department tweeted, along with drone footage of the scene. "This illustrates our message that travel in this area is impassable and unsafe."
The good news was that the Lumber River, which has spilled into the town of Lumberton, was slowly receding -- though it was expected to still be at major flood stage on Sunday.
This isn't a river...this is Interstate 40. @NCAviation captured this drone footage today as part of damage assessment near mile marker 387 in Pender County. This illustrates our message that travel in this area is impassable and unsafe. #FlorenceNC pic.twitter.com/28Ok6Tjpcu — NCDOT (@NCDOT) September 17, 2018
When it comes to flooding, no one cares that Florence has left the Carolinas. Rivers gushing downstream toward already flooded cities mean more homes are at risk.
"The next 48 hours are extremely critical," said Brock Long, head of the Federal Emergency Management Agency.
Fayetteville City Manager Doug Hewett said 12,000 residents are "in harm's way" as the Cape Fear River keeps growing. He said the river is expected to crest at 61 to 62 feet around noon Wednesday.
New death in North Carolina
On Tuesday, North Carolina Gov. Roy Cooper reported a 26th death in the state from Florence -- and warned the danger will continue.
"I can't stress enough: Never drive through floodwaters. Don't drive around barricades," Cooper said. "Roads remain dangerous, and new road closings are still happening."
More than 1,000 roads are closed across the state Tuesday, officials said, and about 343,000 people are still without power.
Residents get glimpses of damage after Florence
Photos: In pictures: Hurricane Florence and its aftermath Photos: In pictures: Hurricane Florence and its aftermath Maura Walbourne sits in the front of a canoe as she looks inside her flooded home in Conway, South Carolina, on Sunday, September 23. Hide Caption 1 of 72 Photos: In pictures: Hurricane Florence and its aftermath A home in Conway, South Carolina, is inundated by floodwaters on Wednesday, September 26, one week after Hurricane Florence. Hide Caption 2 of 72 Photos: In pictures: Hurricane Florence and its aftermath Taylor James navigates floodwaters in a boat in front of Trinity United Methodist Church in Conway, South Carolina on Wednesday, September 26. Hide Caption 3 of 72 Photos: In pictures: Hurricane Florence and its aftermath Floodwaters from the Neuse River cover part of Kinston, North Carolina, on Monday, September 24. Hide Caption 4 of 72 Photos: In pictures: Hurricane Florence and its aftermath Brian Terry looks at the floodwaters outside his home in Brittons Neck, South Carolina, on Saturday, September 22. Hide Caption 5 of 72 Photos: In pictures: Hurricane Florence and its aftermath An officer with the South Carolina State Highway Patrol marks the water level of Highway 22 on Saturday. Hide Caption 6 of 72 Photos: In pictures: Hurricane Florence and its aftermath Avery Singleton takes a boat to Pine Grove Baptist Church in Brittons Neck, South Carolina, on Saturday. Hide Caption 7 of 72 Photos: In pictures: Hurricane Florence and its aftermath President Donald Trump hands out food at Temple Baptist Church, where food and other supplies were being distributed Wednesday, September 19, as part of Hurricane Florence recovery efforts in New Bern, North Carolina. Hide Caption 8 of 72 Photos: In pictures: Hurricane Florence and its aftermath Trump shakes hands as he visits the New Bern church on Wednesday. Hide Caption 9 of 72 Photos: In pictures: Hurricane Florence and its aftermath A woman in Currie, North Carolina, sits on a damaged road surrounded by floodwaters on Tuesday, September 18. Hide Caption 10 of 72 Photos: In pictures: Hurricane Florence and its aftermath Ronnie Gainey pulls an electric guitar from his flooded home in Darlington, South Carolina. Hide Caption 11 of 72 Photos: In pictures: Hurricane Florence and its aftermath Two people near Wallace, South Carolina, sit on the top of a vehicle that was caught in flooding on Monday, September 17. Hide Caption 12 of 72 Photos: In pictures: Hurricane Florence and its aftermath Rescue personnel help people evacuate a flooded area in Spring Lake, North Carolina. Hide Caption 13 of 72 Photos: In pictures: Hurricane Florence and its aftermath Floodwaters surround a trailer in Pollocksville, North Carolina, on September 17. Hide Caption 14 of 72 Photos: In pictures: Hurricane Florence and its aftermath Pollocksville resident Willie Schubert cradles his dog, Lucky, atop a stranded van as they await help from the US Coast Guard on September 17. Hide Caption 15 of 72 Photos: In pictures: Hurricane Florence and its aftermath Floodwaters are seen on North Carolina's Emerald Isle on Sunday, September 16. Hide Caption 16 of 72 Photos: In pictures: Hurricane Florence and its aftermath Chicken farm buildings are inundated with floodwaters near Trenton, North Carolina, on September 16. Hide Caption 17 of 72 Photos: In pictures: Hurricane Florence and its aftermath Panicked dogs left caged by their owner are rescued by volunteer Ryan Nichols in Leland, North Carolina, on September 16. Hide Caption 18 of 72 Photos: In pictures: Hurricane Florence and its aftermath A church is partially submerged in Richlands, North Carolina, on September 16. Hide Caption 19 of 72 Photos: In pictures: Hurricane Florence and its aftermath Coast Guard member Blake Gwinn helps Josephine Horne escape her flooded home in Columbus County, North Carolina, on September 16. Hide Caption 20 of 72 Photos: In pictures: Hurricane Florence and its aftermath A large tree lies on top of a mobile home in Newport, North Carolina, on September 16. Hide Caption 21 of 72 Photos: In pictures: Hurricane Florence and its aftermath John Hendren leads horses to safety after the US Coast Guard helped cut up a fallen tree that had trapped the animals in a flooded field in Lumberton, North Carolina. Hide Caption 22 of 72 Photos: In pictures: Hurricane Florence and its aftermath Tony Thompson stands in the wreckage of his mobile home as Florence moved inland over Newport, North Carolina, on September 16. Hide Caption 23 of 72 Photos: In pictures: Hurricane Florence and its aftermath A woman and a young girl walk down a flooded road in Pollocksville on September 16. Hide Caption 24 of 72 Photos: In pictures: Hurricane Florence and its aftermath Floodwaters inundate parts of Trenton, North Carolina, on September 16. Hide Caption 25 of 72 Photos: In pictures: Hurricane Florence and its aftermath Members of the Coast Guard help a stranded motorist in floodwaters in Lumberton, North Carolina, on September 16. Hide Caption 26 of 72 Photos: In pictures: Hurricane Florence and its aftermath A man peers from his flooded home in Lumberton on September 16. Hide Caption 27 of 72 Photos: In pictures: Hurricane Florence and its aftermath Members of a search-and-rescue team help an elderly resident onto a bus as they evacuate an assisted living facility in Fayetteville, North Carolina, on Saturday, September 15. Hide Caption 28 of 72 Photos: In pictures: Hurricane Florence and its aftermath A member of the US Coast Guard checks on homes after Florence hit Newport, North Carolina, on September 15 . Hide Caption 29 of 72 Photos: In pictures: Hurricane Florence and its aftermath A neighbor takes photos of a boat smashed against a car garage near the Neuse River in New Bern on Saturday. Hide Caption 30 of 72 Photos: In pictures: Hurricane Florence and its aftermath A truck is submerged in floodwaters in Jacksonville, North Carolina, on Saturday. Hide Caption 31 of 72 Photos: In pictures: Hurricane Florence and its aftermath Joseph Eudi surveys debris and storm damage at a home in New Bern, North Carolina, on September 15. Hide Caption 32 of 72 Photos: In pictures: Hurricane Florence and its aftermath A woman calls for help at her flooded residence as Florence brought large amounts of rain and floodwaters to Lumberton, North Carolina, on Saturday. Hide Caption 33 of 72 Photos: In pictures: Hurricane Florence and its aftermath People wait in line to fill gas cans at a gas station that was damaged when Florence hit Wilmington, North Carolina, on Saturday. Hide Caption 34 of 72 Photos: In pictures: Hurricane Florence and its aftermath A baseball field on Mill Creek Road is filled with floodwater after Florence hit Newport, North Carolina, on Saturday. Hide Caption 35 of 72 Photos: In pictures: Hurricane Florence and its aftermath Mike Pollack searches for a drain in the yard of his flooded waterfront home in Wilmington, North Carolina, on Saturday. Hide Caption 36 of 72 Photos: In pictures: Hurricane Florence and its aftermath Floodwaters from Florence inundate the town of Engelhard, North Carolina, on Saturday. Hide Caption 37 of 72 Photos: In pictures: Hurricane Florence and its aftermath Ray Baca of Wilmington, North Carolina, checks his phone as he sits on a bench. Hide Caption 38 of 72 Photos: In pictures: Hurricane Florence and its aftermath A sailboat lifted by storm surge leans against a building at Bridgepointe Marina in New Bern, North Carolina, on Saturday, a day after Florence's landfall. Hide Caption 39 of 72 Photos: In pictures: Hurricane Florence and its aftermath Kim Adams wades through floodwaters surrounding her home in Southport, North Carolina, on September 15. Hide Caption 40 of 72 Photos: In pictures: Hurricane Florence and its aftermath Volunteers help rescue three children from a flooded home in James City, North Carolina, on Friday, September 14. Hide Caption 41 of 72 Photos: In pictures: Hurricane Florence and its aftermath Russ Lewis covers his eyes from wind and sand in Myrtle Beach, South Carolina, on September 14. Hide Caption 42 of 72 Photos: In pictures: Hurricane Florence and its aftermath Volunteers help rescue people from their flooded homes in New Bern on September 14. Hide Caption 43 of 72 Photos: In pictures: Hurricane Florence and its aftermath Waves crash into the Second Avenue Pier in Myrtle Beach on September 14. Hide Caption 44 of 72 Photos: In pictures: Hurricane Florence and its aftermath The storm leaves a tree toppled in New Bern on September 14. Hide Caption 45 of 72 Photos: In pictures: Hurricane Florence and its aftermath Soldiers from the North Carolina National Guard reinforce a low-lying area with sandbags in Lumberton, North Carolina, on September 14. Hide Caption 46 of 72 Photos: In pictures: Hurricane Florence and its aftermath Robert Simmons Jr. and his kitten are rescued from floodwaters in New Bern on September 14. Hide Caption 47 of 72 Photos: In pictures: Hurricane Florence and its aftermath Teddie Davis checks on one of the New Bern's signature bear statues toppled by the storm on September 14. Another one of the bears, in the background, ended up in the middle of a downtown street. Hide Caption 48 of 72 Photos: In pictures: Hurricane Florence and its aftermath Rising waters threaten downtown Washington, North Carolina, as the Pamlico River overruns its banks on September 14. Hide Caption 49 of 72 Photos: In pictures: Hurricane Florence and its aftermath An abandoned van sits on a flooded road near New Bern on September 14. Hide Caption 50 of 72 Photos: In pictures: Hurricane Florence and its aftermath A boat sits wedged in trees in Oriental, North Carolina, near New Bern, on September 14. Hide Caption 51 of 72 Photos: In pictures: Hurricane Florence and its aftermath Members of a Federal Emergency Management Agency team from California search a flooded neighborhood in Fairfield Harbour, North Carolina, on September 14. Hide Caption 52 of 72 Photos: In pictures: Hurricane Florence and its aftermath Rescue workers attempt to remove a giant tree that fell onto a house in Wilmington, North Carolina, on September 14. Two people died when the tree collapsed -- among the first storm-related deaths due to Hurricane Florence. Hide Caption 53 of 72 Photos: In pictures: Hurricane Florence and its aftermath Electric poles that snapped in half sway from their wires in Wilmington on September 14. Hide Caption 54 of 72 Photos: In pictures: Hurricane Florence and its aftermath Lee Casteen, left, and Try Hinton use a chainsaw to clear a tree blocking a road in Wilmington on September 14. Hide Caption 55 of 72 Photos: In pictures: Hurricane Florence and its aftermath Rescue workers help a woman and her dog from a flooded house in James City on September 14. Hide Caption 56 of 72 Photos: In pictures: Hurricane Florence and its aftermath Michael Nelson floats in a boat fashioned from a metal tub and fishing floats after the Neuse River flooded September 13 in New Bern. Hide Caption 57 of 72 Photos: In pictures: Hurricane Florence and its aftermath Powerful winds and waves destroy portions of a boat dock and boardwalk in Atlantic Beach on September 13. Hide Caption 58 of 72 Photos: In pictures: Hurricane Florence and its aftermath Residents wade through streets flooded by the Neuse River in New Bern on September 13. Hide Caption 59 of 72 Photos: In pictures: Hurricane Florence and its aftermath Astronaut Alexander Gerst posted this photo on Twitter of Hurricane Florence saying, "It's chilling, even from space." Gerst is aboard the International Space Station. Hide Caption 60 of 72 Photos: In pictures: Hurricane Florence and its aftermath Evacuees take refuge at Burgaw Middle School in Burgaw, North Carolina, on September 12. Hide Caption 61 of 72 Photos: In pictures: Hurricane Florence and its aftermath Marge Brown says goodbye to her father, George Brown, before his evacuation from a health care home in Morehead City, North Carolina, on September 12. Hide Caption 62 of 72 Photos: In pictures: Hurricane Florence and its aftermath Workers take boats out of the water in Wanchese Harbor in Wanchese, North Carolina, on September 12 as the Outer Banks prepares for Florence. Hide Caption 63 of 72 Photos: In pictures: Hurricane Florence and its aftermath Astronaut Gerst also posted this photo to Twitter on September 12, saying, "Watch out, America! #HurricaneFlorence is so enormous, we could only capture her with a super wide-angle lens from the @Space_Station, 400 km directly above the eye. Get prepared on the East Coast, this is a no-kidding nightmare coming for you." Hide Caption 64 of 72 Photos: In pictures: Hurricane Florence and its aftermath Jeff Bryant, left, and James Evans board the windows of a business in Myrtle Beach, South Carolina, on Tuesday, September 11. Hide Caption 65 of 72 Photos: In pictures: Hurricane Florence and its aftermath People fill sandbags in Wrightsville Beach, North Carolina, on September 11. Hide Caption 66 of 72 Photos: In pictures: Hurricane Florence and its aftermath Both lanes of Interstate 26 flow westbound in North Charleston, South Carolina, toward Columbia as people evacuate inland on September 11. Hide Caption 67 of 72 Photos: In pictures: Hurricane Florence and its aftermath Laura Gretch holds Frances, a Chihuahua mix, as she helps unload cats and dogs arriving at the Humane Rescue Alliance in Washington from Norfolk, Virginia, on September 11. Hide Caption 68 of 72 Photos: In pictures: Hurricane Florence and its aftermath Veronica Gallardo and Robert Kelly place a plastic tarp over an American flag inside the Casemate Museum at Fort Monroe in Hampton, Virginia, on September 11. Hide Caption 69 of 72 Photos: In pictures: Hurricane Florence and its aftermath A man eyes a store's bare bread shelves as people stock up on food in Myrtle Beach on September 11. Hide Caption 70 of 72 Photos: In pictures: Hurricane Florence and its aftermath Chuck Ledford, left, watches cartoons on a phone with his daughter Misty as they seek shelter at Emma B. Trask Middle School in Wilmington, North Carolina, on Tuesday, September 11. Hide Caption 71 of 72 Photos: In pictures: Hurricane Florence and its aftermath Scott Fleenor, bottom, and Jeremiah Trendell board over the windows of a business in Myrtle Beach. Hide Caption 72 of 72
For the first time since Florence ravaged North Carolina, residents in the island town of Wrightsville Beach were allowed to return home Tuesday.
But it will be a while before life gets back to normal. A curfew will be in place from 8 p.m. to 6 a.m., and access to the nearest big city on the mainland -- Wilmington -- is still greatly hampered.
"While the island itself did not sustain severe damage, at this time most roads leading to the Wilmington area are impassable due to flooding," the town's website says.
Flooding so bad, the river gauge broke
In North Carolina, cities such as Wilmington and Lumberton are bracing for more flooding.
Wilmington was the epicenter of Florence's destruction. Rainfall totals of 26.58 inches have submerged much of the city, effectively cutting it off from the rest of the state.
But by Tuesday morning, a bit of good news: Two roadways previously blocked are now passable, Wilmington Mayor Bill Saffo said. Eastbound I-40 at Exit 373 and westbound US 421 at Exit 385 are now open.
In Lumberton, where residents scrambled to plug the levee system , parts of Interstate 95 will remain closed until the Lumber River drops below 21 feet. That might not happen until next week, said Corey Walters, the city's deputy director of public works.
But it's impossible to say how deep the Lumber River is now, because the official river gauge stopped working a few days ago. Walters estimated the current depth is about 25 feet.
- About 1,000 road closures
- No safe/reliable route for public to/from Wilmington
- Sections of I-95/40 flooded. No reopen time at this time.
- Avoid areas S of US 64/east of I-73/I-74
- https://t.co/Pbux7IDYBi: Use route dropdown
(📷 @NCAviation; I-95 exits 17-19/Lumberton) pic.twitter.com/YMlKxnfPal — NCDOT (@NCDOT) September 18, 2018
High waters have kept even FEMA crews and Duke Energy trucks away.
Wilmington will have its wettest year in the city's 140 years of record-keeping. More than 86 inches of rain have fallen so far. On average, Wilmington gets about 43 inches by this time of the year.
More than a dozen tornadoes strike Virginia
Before Florence sputters out for good, it also struck Virginia with a litany of tornadoes. An estimated 15 to 20 tornadoes touched down in at least six counties Monday, the state's Department of Emergency Management Joint Information Center said.
One tornado caused the first Florence-related death in Virginia when a building collapsed in Chesterfield County south of Richmond.
Video captures tornado tear apart Chesterfield buildings https://t.co/8Htcv88isp pic.twitter.com/VJtiTDyALB — WTVR CBS 6 Richmond (@CBS6) September 17, 2018
Chesterfield Fire and EMS spokesman Lt. Jason Elmore tweeted drone footage of the tornado's destruction, including buildings that were annihilated.
Drone footage taken in the area of Hull Street Road/Speeks Drive today pic.twitter.com/eTbSkW0CmX — Lt. Jason Elmore (@CFEMSPIO) September 18, 2018
Learning 'how vulnerable we all are'
In South Carolina, John Cassidy's 27-year-old printing business in Conway was on the brink of flooding Monday. Water was inches away from the door at Duplicates INK, but that didn't stop Cassidy or his employees.
The owner of Duplicates INK, a printing company in South Carolina, said the business kept operating.
They were trying to get one last big order out before the water moved in, and they put sandbags around the biggest, most expensive pieces of equipment hoping to safeguard them.
"It just makes you realize how vulnerable we all are," Cassidy said.
"I've accepted it, my building is gonna be flooded. We're just going to deal with what we have to deal with and be as tough as we can be and move through it. It sucks."
Cassidy said he continued working because he made commitments to his customers, and because 10 families rely on paychecks from the business.
"We can't just shut the door down," he said.
Cassidy plans to relocate his staff to a building in downtown Conway, CNN affiliate WBTW reported. He said several competitors and friends will help fill the company's orders for them.
33 deaths now linked to Florence
Of the 33 storm-related deaths, at least 26 were in North Carolina, six were in South Carolina and one was in Virginia. They include:
• A 3-month-old who died when a tree fell on a mobile home in Dallas, North Carolina.
• One-year-old Kaiden Lee-Welch, who was swept away by rushing waters Sunday and later found dead in Union County, North Carolina.
• An elderly Union County man whose body was found in his submerged car.
• Three people who died in flash flooding or "swift water on roads" in Duplin County, North Carolina.
• A woman who went into cardiac arrest in Pender County, North Carolina. When emergency responders tried to reach her, their path was blocked by fallen trees.
• An 81-year-old man who fell and struck his head while packing to evacuate in Wayne County, North Carolina.
Florence's finale: Heavy rainfall in the Northeast
#Florence isn't finished just yet, but check out this 4-day #GOESEast timelapse of the storm. Northern portions of the mid-Atlantic states into southern New England could still see heavy rain today as the storm moves across the northeast. More: https://t.co/O5rGwuZfPF pic.twitter.com/dAZbhH061D — NOAA Satellites (@NOAASatellites) September 18, 2018
On Tuesday, Florence was about 45 miles west-northwest of Boston, the National Weather Service said. It was moving northeast at 25 mph.
The storm is expected to produce "heavy to excessive rainfall" throughout Tuesday in parts of the northern Mid-Atlantic states and southern New England.
By Tuesday night, after its five-day assault on the East Coast, Florence was expected to finally move offshore into the Atlantic, where it will dissipate. ||||| South Carolina Gov. Henry McMaster, right, and National Guard Lt. Col. Jay McElveen give thumbs-up to rescue workers after Hurricane Florence struck the Carolinas, Monday, Sept. 17, 2018, near Wallace,... (Associated Press)
South Carolina Gov. Henry McMaster, right, and National Guard Lt. Col. Jay McElveen give thumbs-up to rescue workers after Hurricane Florence struck the Carolinas, Monday, Sept. 17, 2018, near Wallace, S.C. A fire rescue team saved two people stuck on the roof of a vehicle in floodwaters caused by the... (Associated Press)
WILMINGTON, N.C. (AP) — With one of North Carolina's largest cities still mostly cut off by floodwaters from Hurricane Florence, officials prepared to begin distributing food, water and tarps to Wilmington residents as yet more people were rescued from submerged inland neighborhoods.
Workers will begin handing out supplies to stranded residents in the city of 120,000 people beginning Tuesday morning, county officials say.
One road was opened into Wilmington at least briefly, officials said, and items have been brought into the city by big military trucks and helicopters, which also have been used to pluck hundreds of harried people from atop homes and other structures.
"Thank you," a shirtless Willie Schubert mouthed to members of a Coast Guard helicopter crew who picked up him and his dog Lucky from atop a house encircled by water in Pollocksville on Monday. It wasn't clear how long he had been stranded.
The death toll from Florence rose to at least 32 in three states, with 25 fatalities in North Carolina, as remnants of the once-powerful Category 4 hurricane — now reduced to a rainy, windy mass of low pressure — speeded up toward the heavily populated Northeast.
The victims include a 1-year-old boy who was swept away after his mother drove into floodwaters and lost her grip on him while trying to get back to dry land in North Carolina. Authorities in Virginia said one person was dead after an apparent tornado.
The rain finally stopped and the sun peeked through, but North Carolina Gov. Roy Cooper warned that dangerously high water would persist for days. He urged residents who were evacuated from the hardest-hit areas to stay away because of closed roads and catastrophic flooding that submerged entire communities.
"There's too much going on," he told a news conference.
Crews have conducted about 700 rescues in New Hanover County, where Wilmington is located. More than 60 percent of homes and businesses were without power, authorities said. Roads are being cleared and the landfill is open to accept storm refuse.
Mayor Bill Saffo said he was working with the governor's office to get more fuel into Wilmington.
"At this time, things are moving as well as can be in the city," he said.
Compounding problems, downed power lines and broken trees crisscrossed many roads in Wilmington three days after Florence made landfall. The smell of broken pine trees wafted through damaged neighborhoods.
At the White House, President Donald Trump said almost 20,000 military personnel and federal workers were deployed to help with the aftermath.
"We will do whatever it takes to keep the American people safe," Trump said.
Preliminary statistics from the National Oceanic and Atmospheric Administration showed Florence had the fourth-highest rainfall total of any hurricane to hit the U.S. mainland since 1950, with 35.94 inches (91.2 centimeters) at Elizabethtown, North Carolina. Harvey's total of 60.58 inches (153.87 centimeters) last year in Texas is No. 1.
Desperate for gas to run a generator at home, Nick Monroe waited in a half-mile-long (more than .8-kilometer) line at a Speedway station even though the pumps were wrapped in plastic. His power went off Thursday before Florence hit the coast, but he couldn't recall exactly when.
"It's all kind of a blur," Monroe said.
At another gas station, a long line of vehicles followed a tanker truck that pulled in with 8,800 gallons (33,000 liters) of fuel.
Downgraded from a tropical depression, the deadly storm still had abundant rain and top winds around 25 mph (40 kph). Forecasters said it was expected to continue toward the Northeast, which is in for as much as 4 inches (10 centimeters) of rain, before the system moves offshore again.
Emergency officials had difficulty keeping up with the scope of the spreading disaster.
In Lumberton, where the Lumber River inundated homes, Fire Chief John Paul Ivey couldn't even count how many calls authorities had received about people needing to be rescued.
"We've been going so hard and fast we don't have a number yet," he said.
___
Waggoner reported from Raleigh, North Carolina. Associated Press photographer Steve Helber in Pollocksville, North Carolina, and AP writers Jonathan Drew in Lumberton, North Carolina; Gary Robertson in Raleigh; and Jay Reeves in Atlanta contributed to this report.
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Follow Martha Waggoner on Twitter at http://twitter.com/mjwaggonernc
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For the latest on Hurricane Florence, visit https://www.apnews.com/tag/Hurricanes | Florence itself is finally out of the Carolinas, though flooding dangers are nowhere near done. Wilmington, NC, for example, remains essentially cut off from the rest of the state, though large military trucks and helicopters were able to provide some relief to those stuck in the city, which is normally home to 120,000 people, reports the AP. Meanwhile, the storm system—now a post-tropical cyclone—was moving north, expected to deliver "heavy to potentially excessive rainfall" to states such as Pennsylvania, New York, and Massachusetts before finally going offshore Tuesday night, says the National Weather Service, per CNN. The Northeast could get up to four inches of rain. The death toll is currently at 32, with most of the victims in North Carolina. Early numbers back up the assertion that Florence's real risk was in the water, not the wind. Stats from the National Oceanic and Atmospheric Administration show Florence dumped 35.94 inches of rain at Elizabethtown, NC, the fourth-highest total of any hurricane on the US mainland since 1950. At No. 1 is last year's Hurricane Harvey, which dropped 60.58 inches in Texas. |
As they attempt to sound distressed over Jamal Khashoggi’s murder, Western governments are understandably being less than candid about their records of facilitating Saudi violence at home and regionally.
French President Emmanuel Macron has been among the worst culprits, recently claiming that it was false to say Saudi Arabia is a major client of the French arms industry. Macron's defence minister, however, told lawmakers those arms sales were crucial for French jobs.
France is the world’s third-largest weapons dealer, with exports rising considerably during the past decade. Saudi Arabia was its second-largest customer in that period.
With his background in banking, Macron can surely calculate that there is big money involved: Saudi Arabia bought more than €11 billion ($12bn) in French arms between 2008 and 2017.
Audacious spin
Since becoming president last year, Macron has acted as something of an image consultant to Saudi Crown Prince Mohammed bin Salman. When the crown prince visited Paris in April, Macron hosted a dinner for him and Saad Hariri, Lebanon's prime minister. Photos were circulated of the three admiring Delacroix’s masterpiece Liberty Leading the People. All the tension caused by the Saudis holding Hariri hostage several months earlier was magicked away.
Macron pledged full support for Saudi Arabia’s “security” as it warded off ballistic missiles fired from Yemen. It was audacious spin. Saudi Arabia is the chief aggressor in Yemen; its military offensive has exacerbated a humanitarian crisis to such an extent that the UN is warning a famine may be imminent. Yet, Macron has cast Saudi authorities as blameless victims.
Assurances from Paris that the weapons have only been used for defensive purposes along the Saudi-Yemeni border have been contradicted by the arms industry
European Union law stipulates that weapons may not be sold abroad if there is a "clear risk" they will be used in conflicts. France is not respecting its obligations. The Saudi air strikes on Yemen began in 2015. Last year, the Saudis ordered more than €1 billion ($1.1bn) worth of weapons from France, according to Le Monde.
Assurances from Paris that the weapons have only been used for defensive purposes along the Saudi-Yemeni border have been contradicted by the arms industry.
One French firm, Nexter, has bragged about how the region’s armies were strongly impressed by the performance of its tanks in Yemen. Flying tankers made by Airbus have been used to refuel the F-15s that are vital to the Saudi war effort, and France has provided training to Saudi military pilots within the past year.
Oil supplies
Following Khashoggi’s murder, numerous corporations withdrew from the Future Investment Initiative, a Riyadh conference. Total, the French energy giant, nonetheless insisted on participating. It is not hard to work out why: Saudi Arabia is a top supplier of oil to France.
Total has been active in Saudi Arabia for decades and has lately been eyeing opportunities in its petrol station market. The "reformers" of Riyadh are now allowing women to drive. Under different circumstances, Total might very well be presenting its new investments as a contribution towards gender equality.
People attend the Future Investment Initiative in Riyadh on 24 October 2018 (AFP)
Earlier this year, Macron said that France and Saudi Arabia shared a determination to "fight actively against all forms of terrorism". If Macron really holds that rosy view, he should read a recent paper from Institut Montaigne, a think-tank with documented connections to his political "movement" En Marche.
Saudi Arabia, that paper notes, has been exporting the extremist religious ideology since the 1960s through "theoretically autonomous institutions" that are actually at the heart of the state. As well as seeking to have a monopoly on Islam, the Saudis display an "expansionist fervour" that has been “supported by funding from the oil industry”.
Eroding civil liberties
Scholar Gilbert Achcar has called Saudi Arabia "the least democratic, most misogynist, most fundamentalist country on the planet".
Rather than holding Saudi authorities responsible for promoting extremism, France has entered into lucrative arms and oil deals with them. France has simultaneously eroded civil liberties at home. Dissent has been severely curtailed through a far-reaching "counter-terrorism" bill. French Muslims have been treated as a suspect people. Intentionally or otherwise, state policy encourages bigotry.
READ MORE ► How Jamal Khashoggi's murder could reshape the Middle East order
A few months before he became president, Macron described colonisation as a “crime against humanity”. More recently, he acknowledged that France practised torture in Algeria.
Macron made his admission due to persistent campaigning by the widow of Maurice Audin, a political activist killed by French forces in Algeria 61 years ago. France’s meddling in the Middle East stretches back much further. Through the 1916 Sykes-Picot accord, Britain and France in effect carved up the region between them. The imperial powers of that epoch chose a network of strongmen to run affairs in their interests.
Lip service has subsequently been paid to the idea of self-determination. Yet the philosophy - for want of a better word - behind Sykes-Picot still pervades in the foreign ministries of London and Paris. Power, cash and influence trump almost everything else.
More interventionism
Expecting Macron to bring any kind of progressive change would be naive. The programme on which he fought the 2017 election indicated that he wished to be even more interventionist in the Middle East than his predecessors.
About half of all French arms exports are destined for the Middle East. Saudi Arabia is not the only state to have used French weapons in its attacks on Yemen: up to 80 French tanks sold to the United Arab Emirates - part of a Saudi-led military coalition - have been deployed during that war.
France’s conduct in the Middle East proves it is more than happy to facilitate violence
Egypt, meanwhile, bought more than €4 billion ($4.5bn) in French weapons from 2012 to 2017. Some of the Egyptian troops who committed the August 2013 massacre against protesters in Cairo fired from armoured vehicles supplied by France.
Macron apparently does not want to mark the 100th anniversary of the armistice ending the First World War with a military parade. His decision may disappoint US President Donald Trump, according to The Telegraph. It does not mean that Macron has come out as a pacifist: France’s conduct in the Middle East proves it is more than happy to facilitate violence.
- David Cronin is a journalist and activist living in Brussels. His book Balfour's Shadow: A Century of British Support for Zionism and Israel is published by Pluto Press. He is also the author of Europe's Alliance With Israel: Aiding the Occupation (Pluto, 2011) and Corporate Europe: How Big Business Sets Policies on Food, Climate and War (Pluto, 2013).
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
Photo: French President Emmanuel Macron shakes hands with Saudi Crown Prince Mohammed bin Salman in Paris on 10 April 2018 (AFP)
This article is available in French on Middle East Eye French edition. ||||| Uploaded on Nov 30, 2018
The Saudi crown prince and the French president have an informal conversation on the sidelines of the summit, standing close together and apparently unaware their conversation is being recorded. It is unclear what the subject of the snatched and only partly audible conversation is, but it sounds like Macron replies to the crown prince’s assurances: 'I do worry. I am worried ... I told you.' Macron then says something inaudible, to which the Saudi leader says: 'It’s OK. I can deal with it.' The Khashoggi murder and the threat of mass starvation in Yemen have cast a heavy shadow over the crown prince’s attendance at the meeting of the world’s 20 biggest economies ||||| The Saudi crown prince, Mohammed bin Salman, suspected of ordering the murder of the dissident writer Jamal Khashoggi and accused of war crimes in the Yemen conflict, has told the French president, Emmanuel Macron, “Don’t worry” at the G20 summit in Buenos Aires.
The two leaders were having an informal conversation on the sidelines of the summit, standing close together and apparently unaware their conversation was being recorded. The subject of the snatched conversation was not immediately clear but a French presidential aide said afterwards that the Khashoggi murder and the Yemen conflict were the two key topics of the short exchange.
According to a Guardian analysis of their only partly audible conversation, Macron replies to the crown prince’s assurances: “I do worry. I am worried … I told you.”
G20 summit: can world leaders find unity – or is it simply showboating? Read more
“Yes, you told me,” the prince says. “Thank you very much.”
“You never listen to me,” Macron says.
“No, I listen, of course,” replied Prince Mohammed, smiling broadly after apparently becoming aware of a television camera.
“Because I told you. It was more important for you,” Macron says, and gives a tight smile, before turning away from the camera to speak further to the prince.
Macron then says something inaudible, to which the Saudi leader says: “It’s OK. I can deal with it.”
After another indecipherable segment of conversation, Macron says: “I am a man of my word.”
The Élysée Palace said the two leaders had a five-minute exchange on the sidelines of the summit in which Macron conveyed a “very firm” message to the prince over the killing and the need to find a political solution for the situation in Yemen.
Play Video 0:24 Putin and Saudi crown prince high-five at G20 summit – video
The Saudi prince’s decision to attend the G20 summit in Buenos Aires represented a calculated risk, as it was unclear whether the other leaders would condemn him. Many of his closest aides and security staff were involved in Khashoggi’s murder on 2 October in the Saudi consulate in Istanbul, and the CIA has reportedly assessed that the prince gave the order for the execution.
The results of the 33-year-old Saudi leader’s gambit were mixed at the start of the two-day summit. Macron and the UK’s prime minister, Theresa May, agreed to meet him. May insisted she had strong words to convey about the Khashoggi murder and the need for a full accounting of Riyadh’s alleged involvement.
During a group photo marking the start of the summit, the prince stood at the far edge of the group, largely ignored and left alone as soon as it was over. But a few minutes later, Vladimir Putin greeted the Saudi prince warmly, giving him a high five as they sat down together at the large ring-shaped table for the first group session.
Facebook Twitter Pinterest Mohammed bin Salman, top centre, stands apart as Theresa May passes by in front. Photograph: Ricardo Mazalán/AP
Putin also came to the Argentinian capital fighting pariah status after an incident in the Azov Sea on Sunday in which Russian vessels rammed a Ukrainian tugboat and opened fire on two small Ukrainian navy cutters it was accompanying.
Russian forces seized the vessels and their crew and Moscow’s refusal to return them was the reason Donald Trump offered for his decision to cancel a bilateral meeting with Putin, which had been planned for Friday morning.
As Russian actions in the Sea of Azov had been known for days, there was speculation in Washington that the real reason for the change of mind was the court appearance of Trump’s former lawyer, Michael Cohen, on Thursday in which he pleaded guilty to lying to Congress about the extent and duration of negotiations with the Kremlin about a possible Trump hotel in Moscow, continuing up to July 2016, at the height of the presidential election campaign.
Trump, whose campaign is being investigated for its alleged links to the Kremlin, had denied any business dealings in Russia.
On Friday, Russian media reported that Trump and Putin would meet informally at the fringes of the full G20 summit, but a White House official said no such “pull aside” had been scheduled.
Facebook Twitter Pinterest Donald Trump, right, looks at Vladimir Putin at the G20 leaders’ summit. Photograph: Juan Mabromata/AFP/Getty Images
There was similar uncertainty over whether Trump would meet the Saudi crown prince, whom the president has supported in the face of US intelligence findings of his alleged culpability in the Khashoggi murder. The administration also suffered a significant rebuke from the Senate, which ignored the urging of top Trump officials and refused to shelve a debate on whether to cut US military support for the Saudi-led military campaign in Yemen.
The Saudi-owned broadcaster Al Arabiyah reported that the crown prince and Trump had held a “friendly meeting” on the sidelines of the summit, but the White House said the encounter only amounted to an exchange of pleasantries, similar to the US president’s greeting with every other leader.
Before arriving in Buenos Aires, Trump had declared himself willing to meet the crown prince, while his national security adviser, John Bolton, ruled it out, saying there was no room in the president’s schedule. The US secretary of state, Mike Pompeo, met his Saudi counterpart, Adel al-Jubeir, separately in a meeting that a statement said was focused on planned Yemen peace talks next week, “as well as the importance of making progress on the investigation into Jamal Khashoggi’s death”.
On leaving the meeting, the Saudi foreign minister described it as “very productive”, saying they have discussed “challenges in the region and the bilateral relationship and ways of moving it forward”. Asked if they had also discussed Khashoggi, he did not reply.
Trump began the day by attending a signing ceremony for a new trade agreement with Mexico and Canada, the USMCA, to replace the 1994 North American Free Trade Agreement (Nafta). .
“Just signed one of the most important, and largest, Trade Deals in US and World History,” Trump announced in a tweet. “The United States, Mexico and Canada worked so well together in crafting this great document. The terrible NAFTA will soon be gone. The USMCA will be fantastic for all!”
Experts say the USMCA is a slightly tweaked and updated version of Nafta, which Trump has persistently pilloried. In his own remarks the Canadian prime minister, Justin Trudeau, repeatedly referred to the deal as “the new Nafta”, a formulation he must have known would annoy the prickly US president.
Play Video 0:31 Trump walks off leaving Mauricio Macri standing alone at G20 – video
The leaders began the summit without Germany’s chancellor, Angela Merkel, whose plane had broken down on the way to Argentina and who was making her way to Buenos Aires on commercial flights, leaving May the only female leader at the meeting.
As the proceedings began, it was unclear whether the participants would be able to agree on a final statement as the US had objected to some of the draft language on free trade and the need for multilateralism. The statement had not been settled by Friday afternoon, according to diplomats at the summit.
Referring to some of the difficulties in finding even the most basic common language, the European council president, Donald Tusk, told journalists: “As this is a difficult moment for international cooperation, I would like to appeal to the leaders to use this summit, including their bilateral and informal exchanges, to seriously discuss real issues such as trade wars, the tragic situation in Syria and Yemen and the Russian aggression in Ukraine.”
“I see no reason why the G20 leaders shouldn’t have a meaningful discussion about solving these problems. Especially because all the instruments lie in their hands,” Tusk said. “The only condition is goodwill.” | French President Emmanuel Macron chatted privately Friday with Saudi Arabia's controversial crown prince on the sidelines of the G-20 summit, but some intriguing snippets were caught by microphones. (Watch the video.) The Guardian provides some highlights as Macron appears to be trying to advise and/or warn Mohammed bin Salman, while the prince seeks to reassure him that he's got a handle on things: Macron: “I do worry. I am worried … I told you.” Prince: “Yes, you told me. Thank you very much.” Macron: “You never listen to me." Prince: “No, I listen, of course." Macron: "Because I told you. It was more important for you." Prince: “It’s OK. I can deal with it.” So what are they talking about? A spokesman for Macron said later that the two primarily discussed allegations of Saudi war crimes in Yemen and the killing of journalist Jamal Khashoggi. A critical analysis at Middle East Eye before the summit began noted that Saudi Arabia is an important buyer of French weapons and finds that Macron "has acted as something of an image consultant" to the prince over the last year. (The prince had an enthusiastic greeting for Vladimir Putin.) |
Inspiring a New Generation to Defy the Bounds of Innovation: A Moonshot to Cure Cancer.
Three months ago, I called for a “moonshot” to cure cancer.
Tonight, the President tasked me with leading a new, national mission to get this done.
It’s personal for me. But it’s also personal for nearly every American, and millions of people around the world. We all know someone who has had cancer, or is fighting to beat it. They’re our family, friends, and co-workers.
Today, cancer is the leading cause of death worldwide. And that’s only expected to increase in the coming decades — unless we make more progress today.
I know we can.
From my own personal experience, I’ve learned that research and therapies are on the cusp of incredible breakthroughs. Just in the past four years, we’ve seen amazing advancements. And this is an inflection point.
Over the course of the past few months, I’ve met with nearly 200 of the world’s top cancer physicians, researchers, and philanthropists.
And the goal of this initiative — this “Moonshot” — is to seize this moment. To accelerate our efforts to progress towards a cure, and to unleash new discoveries and breakthroughs for other deadly diseases. ||||| A billionaire entrepreneur has pulled together a coalition of drugmakers to speed development of what researchers believe could be a powerful weapon against cancers -- potent combinations of new drugs that harness the body’s immune system.
So-called immunotherapies help disease-fighting cells attack tumors. Yet researchers believe they may work best when two, three or more of the drugs are used together -- overwhelming a tumor’s cellular defenses with attacks from all sides.
The group brought together by Patrick Soon-Shiong calls itself Moonshot 2020 and also includes academic institutions and insurers. Its leaders hope to get competing drug and biotech companies to work together on the combination treatments rather than developing their own compounds in isolation.
“The key contribution here is the ability to run combination studies with drugs from multiple pharma companies in a rapid manner,” said Manuel Hidalgo, clinical director of the Cancer Center at Beth Israel Deaconess Medical Center in Boston. “Combination studies with unapproved drugs from different pharma companies are not easy to do, and we want to be able combine three to four drugs, not just two."
While the immunotherapies have side effects of their own, physicians have hoped they can be better tailored to a patient’s tumor profile, and someday replace or supplement chemotherapy, which is thought of as a blunt tool with high toxicity.
The group aims to complete clinical trials for up to 20 tumor types in as many as 20,000 patients by the year 2020, according to a statement issued at the J.P. Morgan Healthcare Conference in San Francisco. Participating drugmakers include Amgen Inc., Celgene Corp., GlaxoSmithKline Plc and NantWorks LLC, as well as health insurer Independence Blue Cross and Bank of America Corp., which is self-insured, according to the statement.
Biden Meeting
Members of the coalition met with U.S. Vice President Joseph Biden, who said in a November speech that a “moonshot" was needed to cure cancer. Biden’s speech came after meeting with Soon-Shiong, the billionaire said. The coalition hasn’t asked the Obama administration for financial support, according to NantWorks.
All 20,000 patients will have their tumors genetically sequenced, and the plan is to create a patient registry where drugmakers can search for specific patients that fit the criteria for their trials, said Soon-Shiong, chief executive officer of NantWorks. Soon-Shiong became a billionaire through drug companies he started and sold, APP Pharmaceuticals Inc. and Abraxis BioScience Inc.
“People in large pharma now realize they can’t go it alone," Soon-Shiong said in an interview. The coalition is in very early stages and hadn’t determined yet how much each participant might contribute financially and how the group would collectively maintain a database of patients, he said.
Independence Blue Cross will cover patient costs related to trials for its members, and will also cover genomic sequencing performed by Soon-Shiong’s company NantHealth, according to spokeswoman Elizabeth Sell. The Philadelphia-based health insurer covers 10 million people in 34 states and Washington, D.C., according to its website. |||||
President Barack Obama tasked Vice President Joe Biden with curing cancer during Tuesday’s State of the Union—much to Biden’s apparent surprise.
Obama announced a new national cancer initiative, fronted by the Vice President. “Tonight, I’m announcing a new national effort to get it done. And because he’s gone to the mat for all of us, on so many issues over the past forty years, I’m putting Joe in charge of Mission Control,” Obama said. “For the loved ones we’ve all lost, for the family we can still save, let’s make America the country that cures cancer once and for all.”
This was much to the surprise of Biden, who reacted quickly, mouthing to House Speaker Paul Ryan that the initiative was “news to me.”
The Vice President’s office was not surprised though, as they quickly posted a briefing on Biden’s “moonshot” to cure cancer on the blogging platform Medium. His son, Joseph “Beau” Biden passed away to brain cancer last May, which inspired his father to take on the issue. Through the initiative, Biden will says he will work with private industry, government, doctors, patients and more to “target investment, coordinate across silos and increase access to information for everyone in the cancer community.
“I know that we can help solidify a genuine global commitment to end cancer as we know it today—and inspire a new generation of scientists to pursue new discoveries and the bounds of human endeavor,” Biden wrote on Medium. ||||| Vice President Joe Biden announced today that he won’t be running for president in 2016 but vowed to spend his last 15 months in office working to “silence this deadly disease.”
Biden also resurrected the “Moonshot” analogy first used by M.D. Anderson to describe its vast initiative to cure cancer:
“And I believe that we need a moon shot in this country to cure cancer. It’s personal. But I know we can do this. The president and I have already been working hard on increasing funding for research and development, because there are so many breakthroughs just on the horizon in science and medicine, the things that are just about to happen. And we can make them real with an absolute national commitment to end cancer, as we know it today.”
He added that “If I could be anything, I’d have wanted to be the president who ended cancer. Because I believe it’s possible.”
On several occasions here at HealthNewsReview.org we’ve issued cautions about making such flamboyant, unsubstantiated promises when talking about cancer cures. The president of the Fred Hutchinson Cancer Research Center made a similar claim earlier this year. Steve Miles, MD, offered a caution then that applies to Biden’s claim as well. Making these types of claims “exploits fear, generates marketing stampedes that run roughshod over deliberate research and somehow manages to draw money into those who claim to not be in it for the money.” Miles is professor of Medicine and Bioethics at the University of Minnesota’s Center for Bioethics.
We hope health and political reporters don’t pile on with hype as they did when M.D. Anderson announced its cancer “Moonshot.”
Kathlyn Stone is an associate editor with HealthNewsReview.org. ||||| CLOSE President Obama announced a new national effort to cure cancer and asked Vice President Joe Biden to lead the charge. Biden's son, Beau, died from brain cancer in May 2015. VPC
Vice President Biden, with President Obama at his side, in the Rose Garden of the White House on Oct. 21, 2015. (Photo: Jim Lo Scalzo, European Pressphoto Agency)
WASHINGTON — President Obama announced during his State of the Union Address that he’s putting Vice President Biden in charge of carrying out the “moonshot” to cure cancer that Biden called for following his son’s death.
"Last month, (Biden) worked with this Congress to give scientists at the National Institutes of Health the strongest resources they’ve had in over a decade," Obama said. "Tonight, I’m announcing a new national effort to get it done. And because he’s gone to the mat for all of us, on so many issues over the past forty years, I’m putting Joe in charge of Mission Control. For the loved ones we’ve all lost, for the family we can still save, let’s make America the country that cures cancer once and for all."
Biden, in announcing his decision to not run for president in October, said the country needs “a moonshot” to cure cancer and vowed to spend his next 15 months in office fighting for increased funding for research and development. He said the issue is “personal” to him after the loss of his 46-year-old son, Beau, Delaware’s former attorney general, to brain cancer on May 30.
In a post Tuesday night on his Medium channel, Biden wrote that cancer research and therapies are “on the cusp of incredible breakthroughs” but science, data and research results are “trapped in silos, preventing faster progress and greater reach to patients.”
He wrote that he plans to increase public and private resources to fight cancer and break down “silos” to help cancer fighters share information and work together. Later this month he will chair the first of several meetings with cabinet secretaries and heads of relevant agencies to discuss ways to boost funding for cancer research and treatment.
“The goal of this initiative is simple — to double the rate of progress,” he wrote in the post that appeared during Obama’s address. “To make a decade worth of advances in five years.”
Biden and his staff have participated in dozens of listening sessions over the last few months to learn about the current state of cancer research and treatment and potential opportunities to advance the pace of progress, according to his office.
His staff met on Friday with a panel of 15 cancer researchers and physician-scientists, convened by the American Association for Cancer Research, to discuss the potential in areas such as precision medicine and immunotherapy.
“There’s no question they are in the process of compiling information, talking to the broader cancer research community, so they can get a broad spectrum of ideas,” said Jon Retzlaff, AACR’s policy director.
Retzlaff credited lobbying by Biden and other congressional leaders with helping secure a $2-billion increase for NIH in this year’s spending legislation, the most significant increase in NIH funding in a dozen years. The National Cancer Institute, which is part of NIH and the federal government's principal agency for cancer research and training, saw more than a 5% funding boost, he said.
“He was calling on people at the very end to get the omnibus (spending bill) passed,” Retzlaff said. “He’s been a tremendous supporter of medical research throughout his tenure as Vice President, as well as during his time in Congress.”
The House passed "21st Century Cures" legislation in July that includes provisions designed to foster collaborative research and data-sharing. Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, said Biden is committed to helping get "important, bipartisan reforms through the Senate and into law" after the two spoke before Obama's address.
“The talk of a ‘moon shot’ is the exact mindset we need - America can and should lead the way,” Upton said in a statement following Obama's address. “We welcome every voice, including the president’s and vice president’s to the conversation, as we work to get 21st Century Cures across the finish line. The clock is ticking for every family facing an incurable disease.”
White House spokesman Josh Earnest said during a Tuesday briefing with regional reporters that there is bipartisan interest in investments in medical innovation and research and development. Republican interest in the economic and scientific benefits of investments in medical breakthroughs is “clearly consistent with the kind of a ‘moon shot’ that the vice president has talked about,” Earnest said.
“I would add that to the list of things that we’re hopeful we can make some progress with Congress on this year,” he said.
Biden has met over the past few months with nearly 200 of the world’s top cancer physicians, researchers and philanthropists.
On Friday, he heads to the Abramson Cancer Center at the University of Pennsylvania’s Perelman School of Medicine to talk to their physicians and researchers. He meets next week with international experts at the National Economic Forum in Davos, Switzerland.
“This is our moonshot,” Biden wrote in the Medium post. “I know that we can help solidify a genuine global commitment to end cancer as we know it today — and inspire a new generation of scientists to pursue new discoveries and the bounds of human endeavor.
Contributing: Gregory Korte, USA TODAY
Follow @ngaudiano on Twitter.
Read or Share this story: http://usat.ly/1RkQa8w ||||| Vice President Joe Biden could use some advice on his "moonshot" to improve the diagnosis and treatment of cancer.
Vice President Joe Biden unveiled his “moonshot” initiative against cancer Tuesday following a shout-out from President Obama during the State of the Union address. Biden said it’s time to “accelerate our efforts to progress towards a cure, and to unleash new discoveries and breakthroughs for other deadly diseases.”
Biden’s aides have already held a series of closed-door meetings with cancer researchers.
Read more: Biden lays out road map for his ‘moonshot’ against cancer
STAT asked experts inside and outside the cancer world what advice they would offer the vice president to help move his project forward.
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Barrett Rollins: Share data from cancer patients
Otis Brawley: Use influence even after leaving office
Gary Gilliland: Make existing potentially curative treatments available to all
Austin Frakt: Invest in data infrastructure and access
By Barrett Rollins: I had the honor to be part of the contingent from the American Association for Cancer Research (AACR) that met last week with Vice President Biden’s staff. We proposed two efforts that could be accomplished in the near term and that could provide substantial advances against cancer. Both revolved around sharing data from cancer patients.
At Dana-Farber Cancer Institute, DNA from every patient’s tumor undergoes multigene panel testing as part of our Profile project. Using a technology known as next generation sequencing, we check for the presence of mutations in more than 300 genes. Other major cancer centers also use multigene panel testing for many of their patients. The results have uncovered amazing things about cancer, some of which have led to new treatments.
Presidents have been promising to cure cancer for 45 years, but cancer is still very much with us. Alex Hogan/STAT
Most of this sequencing is being paid for by philanthropy and institutional dollars. That isn’t sustainable. The time is right for insurers to start paying for it. We recommended that the vice president ask the Centers for Medicare and Medicaid Services to consider reimbursing multigene panel sequencing for cancer. This would vastly increase the number of cancer patients who have their tumors sequenced.
The AACR got the attention of the vice president’s staff in part because of the association’s Project GENIE. Seven institutions are pooling their clinical sequencing data and all of the clinical data associated with it. Projects analyzing these data are already underway. But the AACR doesn’t have the money or the resources to do this on a national scale. The vice president and his office could influence the Office of the National Coordinator for Health Information Technology or other entity to build a repository for sequencing data from all around the country. This would rapidly move the needle in understanding cancer and treating it more effectively.
Today, detailed genomic information about cancer is available only from comprehensive cancer centers or from individuals who have the money to pay for sequencing their tumors. We need to democratize genomic information as it applies to cancer by expanding the number of cancer patients who have their tumor genes sequenced. The benefits of this kind of testing are already so manifest that it should be made available to everyone with cancer.
Barrett J. Rollins, MD, is the chief scientific officer at the Dana-Farber Cancer Institute and the Linde Family Professor of Medicine at Harvard Medical School.
Otis Brawley: Cancer has been with us for thousands of years. It will not be cured in a year’s time but will take concerted, long-term, sustained effort. That said, there are several things the vice president could do in the short term to improve cancer treatment and survival.
Gathering and analyzing data about large numbers of cancer patients could provide quick and important advances. The vice president could help overcome privacy laws that do relatively little to protect privacy but a lot to keep researchers from collecting meaningful data. HIPPA and other laws — or incorrect interpretations of them — prevent researchers from sharing genetic and other data. For example, a project called CancerLinQ, organized by the American Society of Clinical Oncology, aims to improve cancer care by gathering data from around the country. But real or perceived privacy issues, along with difficulties connecting disparate electronic health records, may scuttle it.
Logistic issues and less-than-optimal care account for far too many early deaths from cancer. In Atlanta, 7 percent of black women and 2 percent of white women diagnosed with early, low-stage breast cancer don’t get treated within one year of their diagnoses. The delays, which can affect survival, are often due to problems like inability to get to a treatment center, not being able to take time off of work, and other logistic issues. Twenty percent of women with breast cancer get less-than-optimal treatment; the percentages are even higher for other cancers.
“Moonshot” may be an appropriate description for the vice president’s initiative. When John F. Kennedy announced he wanted to put a man on the moon by the end of the decade, much of the engineering to do that already existed. What was needed was someone to put together all the pieces of the puzzle. Applying the science and discoveries that we already have to the American population could go a long way to preventing deaths from cancer.
Finally, it would be wonderful to see the vice president continue to be a champion for good science and clinical work after he leaves office. As someone who is liked and respected by both Democrats and Republicans, he has the opportunity and standing to provide American medicine and American science with guidance that is sorely needed.
Otis Brawley, MD, is the chief medical and scientific officer for the American Cancer Society and professor at Emory University.
By Gary Gilliland: It’s fantastic that the vice president has decided to launch a concerted effort to fight cancer. The timing is excellent, since we are at an inflection point in the way we think about cancer treatment.
This is a very different time than when President Nixon declared his war on cancer in 1971. We couldn’t see the light at the end of the tunnel then. Now we can.
Four or five years ago, there was little we could do for cancers like metastatic melanoma and metastatic lung cancer. Today, we are telling many patients that we can cure these diseases. This change was brought about largely because we have learned to harness the power of the immune system to attack cancer, just as it attacks foreign invaders like bacteria and viruses.
Drugs like pembrolizumab (Keytruda) — which was used to treat former President Jimmy Carter’s advanced melanoma — take the brakes off the immune system and let it go after tumors with relatively few side effects.
When I think about what the vice president could do in a relatively short time to fight cancer, it’s not about tumor sequencing or data sharing. There’s no question that these are really important and will lead to new insights, but they will take some time to pay off. Instead, I think a “moonshot” should aim to make the new, potentially curative therapies available to everyone with cancer, not just to those being treated at designated comprehensive cancer centers. We have these therapies; let’s get them out there.
With something as potentially devastating as cancer, which affects so many individuals and so many families, you don’t want to overpromise and underdeliver. But I truly believe that we have the opportunity to move forward quickly and have a more dramatic impact on cancer outcomes in the next few years than we have had in the last 50.
Gary Gilliland, MD, is the president and director of the Fred Hutchinson Cancer Research Center in Seattle.
By Austin Frakt: I would urge the vice president to invest in data infrastructure and access.
Researchers spend a shockingly large amount of time accessing, or trying to access, data they need to do their work. It can take many steps to obtain clinical or administrative data, sometimes even data that has been collected specifically for researchers to use. Having to take many steps to access data, or having to overcome barriers to do it, slows research. Beefing up data availability and data infrastructure and removing regulatory and other obstacles would speed up research. Because they would accelerate a wide range of work, these are useful steps even when specific research areas haven’t yet been defined. They would give researchers and research organizations more time to efficiently and effectively do actual research instead of dealing with red tape.
Some red tape provides important functions. For example, it’s essential that clinical trial or administrative data be handled carefully, especially when it contains personal information. But the requirements often go too far and the hurdles can take too long to clear, bringing research to a crawl.
For example, the Centers for Medicare and Medicaid Services recently began removing from the data they provide to researchers all records for patients with substance use disorder diagnoses. This makes it difficult to study the opioid crisis, the spread and treatment of hepatitis C (which disproportionately affects substance users), and a wide range of mental health care. This new barrier to data, which had been previously available, has derailed productive researchers who now must figure out new ways to conduct their work.
In my world, such data infrastructure issues are common. I’d be surprised if they aren’t just as common in cancer research as well.
Austin Frakt, PhD (@afrakt), is a health economist in the US Department of Veteran Affairs and associate professor at Boston University’s School of Medicine and School of Public Health. He is also an editor-in-chief of The Incidental Economist.
This story has been updated to include comments from Gary Gilliland. | President Obama put Joe Biden in charge of a national "moonshot" to cure cancer during Tuesday night's State of the Union address. Some related reading: Given the myriad cancers out there, it won't be one giant moonshot so much as many smaller moonshots, reports the Washington Post. One tangible idea: creation of a massive national database of all cancer patients and their treatments. Gathering that kind of data might require Biden to use his clout to overcome well-meaning privacy laws such as HIPAA, one expert tells STAT. Biden himself explains the "personal" mission in a post at Medium. "The science is ready." But during the State of the Union, he seemed surprised at Obama's announcement, notes Time. One buzzword is "immunotherapies," and a billionaire entrepreneur has created a coalition of drug and biotech companies to work on combination treatments rather than focusing on single drugs, reports Bloomberg. The group is called Moonshot 2020 and has met with Biden. The VP has been working on this for about three months now, and USA Today has an overview of the progress (lots of "listening sessions" so far, but also increased funding for the NIH). Health News Review hates the term "moonshot" because of the "flamboyant, unsubstantiated promises" it fosters. |
Advances in technology and medicine and economic changes have created more potential for people with disabilities to engage in employment. Moreover, there has been a trend toward greater inclusion of and participation by people with disabilities in the mainstream of society. These changes have sparked an increased interest in public policy on the employment of people with disabilities. In this report, we focus on Disability Insurance (DI) and Supplemental Security Income (SSI)—the two largest federal programs providing assistance to people with disabilities. Provisions contained in the legislation that created DI and SSI focus on returning people with disabilities to self-supporting employment whenever possible. Yet, very few people have left the disability rolls to return to work. DI is the nation’s primary source of income replacement for workers with disabilities who have paid Social Security taxes and are entitled to benefits. SSI provides federal and state assistance to people who are aged, blind, or disabled, regardless of Social Security coverage, whose income and resources are below a specified amount. DI and SSI are administered by the Social Security Administration (SSA) with the assistance of state agencies. Estimates of the number of people with disabilities in the United States depend on the definition of disability. The Survey of Income and Program Participation—an ongoing study by the U.S. Census Bureau of the economic well-being of the civilian noninstitutionalized population—reports about 51.5 million people with some type of work or functional limitation. Approximately 43 million people are reported as having disabilities when using the definition of disability in the Americans With Disabilities Act of 1990 (ADA). According to ADA, having a physical or mental impairment substantially limiting one or more major life activity, having a record of such an impairment, or being regarded as having such an impairment constitutes disability. When disability is defined by inability to work or perform other major activities, the size of the population with disabilities is much smaller. For instance, about 16 million persons are work disabled according to the U.S. Census Bureau’s 1993 Current Population Survey, which defines work disability as a self-reported limitation in the type or amount of work a person is able to perform because of chronic illness or impairment. Working-age adults with disabilities can obtain benefits in the form of services and short- and long-term cash assistance from a number of public and private programs (see app. I). After the onset of a disabling condition, workers may be eligible for return-to-work services, such as rehabilitation. The aim of such return-to-work services is to maintain workers in their current work setting. These services are provided through various means, including employers, private disability insurers, state or private nonprofit vocational rehabilitation programs, and workers’ compensation programs. If, however, a worker is temporarily unable to work while recovering from an illness or injury but is expected to recover, the worker may turn to short-term cash benefits to replace lost wages. To illustrate, in the case of a temporary inability to work caused by an illness or an off-the-job injury, a person might be eligible for short-term cash disability benefits from state temporary disability insurance. Five states provide this type of benefit.Or, a worker might be eligible for paid sick leave or sickness or accident insurance benefits if a policy is provided by the employer or purchased by the worker. If the worker is injured on the job but is expected to recover, he or she may be eligible for temporary workers’ compensation benefits. Once the worker recovers and returns to the workplace, temporary cash benefits end. Those who do not return to work may seek long-term cash benefits to replace lost wages. They may be eligible for private disability insurance benefits—either employer-provided or from a personal policy—or, if injured on the job, for workers’ compensation. In some cases, workers can supplement DI coverage—the country’s long-term public disability insurance program for workers—with cash benefits from private long-term disability insurance. But a worker who is not eligible for cash benefits from either private insurance or workers’ compensation and is unable to be accommodated in the workplace may discover that DI offers the only potential for wage replacement. Long-term benefits may also be sought by people with disabilities who have low income and limited assets, regardless of their work histories. Individuals with little or no work history are unlikely to be covered by employer-provided disability insurance. Moreover, it is unlikely that such individuals could afford to purchase a private disability policy. These individuals may apply for SSI benefits. SSI provides income support at the national level regardless of work connection for low-income people with disabilities. DI and SSI are the two major public programs serving people with disabilities. In 1994, 3.3 million disabled workers were enrolled in DI and received, on average, about $660 a month; 2.4 million adults aged 18 to 64 were enrolled in SSI and received, on average, about $360 a month (beneficiaries in the 48 states plus the District of Columbia that provided a monthly SSI supplement in 1994 received, on average, an additional $103). In addition, 671,000 more people were concurrently enrolled in both programs, and 841,000 children with disabilities received SSI benefits. DI is designed to insure covered workers against loss of income due to a disabling condition. The program was established in 1956 under title II of the Social Security Act. At that time, its primary purpose was to prevent “loss or reduction of benefit rights” for wage earners who became disabled and were considered unable to continue paying Social Security taxes. The program provided payment of cash benefits to disabled workers aged 50 or older. Benefits for dependents of disabled workers were provided by the 1958 Social Security Amendments, and benefits to disabled workers under age 50 were provided by the 1960 amendments. The Congress authorized Medicare coverage for DI beneficiaries in 1972, making it available to beneficiaries after they have received cash benefits for 24 months. Those who have worked long enough and recently enough become insured for DI coverage, but there is no requirement that a disabling impairment happen on or because of the job. The DI program is funded through Federal Insurance Contributions Act (FICA) taxes paid into a trust fund by employers and workers. The SSI program was authorized in 1972 under title XVI of the Social Security Act as a means-tested income assistance program for the aged, blind, or disabled. In most cases, SSI beneficiaries are eligible for Medicaid coverage. SSI raised to the federal level preexisting federal/state welfare programs authorized under various provisions of the Social Security Act. Unlike DI beneficiaries, SSI disabled recipients do not need to have a work history to qualify for benefits, but they must have low income and limited assets. The SSI program is funded through general revenues. The Social Security Act defines disability as the inability to engage in any substantial gainful activity (SGA) because of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last 12 months or longer. Moreover, the act states that the impairment must be of such severity that a person not only is unable to do his or her previous work but, considering his or her age, education, and work experience, is unable to engage in any other kind of substantial work that exists in the national economy. To apply for DI or SSI benefits, a person must file an application at any one of 1,300 SSA field offices or other authorized locations. For SSA to determine whether an applicant qualifies for disability benefits, the application proceeds through a five-step evaluation process (see app. II). In step one, an SSA field office determines if an applicant is currently engaged in SGA. If an applicant is found not to be engaged in SGA, the field office forwards the application to a state Disability Determination Service (DDS) office for processing through the remaining four steps until a determination of disability or no disability is reached. A DDS office develops medical, functional, vocational, and other necessary evidence; evaluates it; and determines whether the applicant meets the disability criteria set forth in SSA regulations. Once the DDS has determined that the applicant meets the criteria, SSA calculates the benefits payable and makes the award. SSA pays the costs incurred by DDSs in evaluating applications, including the expense of collecting medical evidence they request from hospitals, clinics, or other institutions. There are 54 DDSs throughout the country employing about 12,000 full-time and 2,000 part-time employees. SSA reported that in fiscal year 1994 the DDSs processed about 2.6 million initial claims, and the total DDS budget was about $1.1 billion. Applicants denied benefits after the initial DDS review may request a reconsideration by the DDS office. If still not satisfied, they can appeal to an administrative law judge. If denied again, they may appeal to the SSA Appeals Council and, later, to the federal district courts. Once a person is on the disability rolls, disability benefits continue until one of three things happens: the beneficiary dies; SSA determines that the beneficiary is no longer eligible for benefits; or, for DI beneficiaries, benefits convert to Social Security retirement benefits at age 65. Generally, a beneficiary loses eligibility for benefits under one of two conditions: (1) a beneficiary earns more income than allowed by program rules (the monthly ceiling is $500 for disabled DI beneficiaries and $960 for blind DI beneficiaries; for SSI, the ceiling varies from state to state—for example, $1,464 in Pennsylvania and $1,855 in California) or (2) SSA decides that a beneficiary’s medical condition has improved to the point that he or she is no longer considered disabled and can now perform work at the SGA level. In order to make this latter determination, SSA periodically performs continuing disability reviews. The law requires SSA to conduct such a review at least once every 3 years on DI beneficiaries whose medical improvement is possible or expected. When medical improvement is not expected, SSA is required to schedule a continuing disability review at least once every 7 years. The Social Security Act states that people applying for disability benefits should be promptly referred to state vocational rehabilitation (VR) agencies for services in order to maximize the number of such individuals who can return to productive activity. However, the act does not require that all applicants be referred to VR agencies because doing so would not be useful in many circumstances (for example, a 62-year-old person who experienced an accident resulting in total paralysis would be unlikely to benefit sufficiently from VR to return to work). DDS offices decide whether or not to refer applicants to state VR agencies. DDS offices make referral decisions using SSA’s recommended criteria and additional criteria developed in consultation with state VR agencies to screen out applicants who are not considered to be reasonable candidates for rehabilitation. Once a referral has been made, a state VR agency weighs the candidate’s potential for rehabilitation against that of other VR applicants. If the VR agency decides to offer services to the applicant, it contacts the applicant directly. State VR agencies also provide rehabilitation services to people not involved with the DI and SSI programs. VR services include, for example, guidance, counseling, and job placement, as well as therapy and training. State VR agencies are reimbursed by the federal government for the rehabilitation cost of each DI/SSI client who is returned to employment at the SGA level for 9 continuous months. The Social Security Act provides for withholding benefits from beneficiaries for refusal, without good cause, to accept rehabilitation services offered to them. A beneficiary who engages in work encounters additional challenges, however. By returning to work, a beneficiary trades guaranteed monthly income and premium-free medical coverage for the uncertainties of competitive employment. To reduce this risk, the Congress has established program provisions, referred to as work incentives, to safeguard cash and medical benefits while a beneficiary tries to return to work. For example, DI provisions allow beneficiaries to engage in a trial work period during which they can earn any amount without affecting their benefits.Beneficiaries who complete a trial work period but who do not medically recover can retain Medicare coverage for at least an additional 39 months. In addition, cash benefits can be reinstated for any month within a 36-month period following the end of a trial work period if a beneficiary’s earnings drop below the SGA level. Under SSI provisions, beneficiaries whose impairments continue are allowed to earn above the SGA level and to continue to receive reduced cash benefits indefinitely. Also, SSI beneficiaries whose earnings eliminate eligibility for cash benefits can continue to receive Medicaid coverage if their incomes remain within certain limits. Despite congressional interest in helping return DI and SSI beneficiaries to employment, few beneficiaries engage in work while on the rolls and fewer still leave the rolls to return to work. In a recent month, for example, about 8 percent of SSI recipients aged 18 to 64 reported any earnings, and about 1 percent of DI beneficiaries reported earning $500 or more. Moreover, during each of the past several years, about 6,000 of the more than 3 million DI beneficiaries have been terminated from the rolls because they returned to work. Although SSA does not count the number of SSI beneficiaries terminated because of return to work, it has estimated that few are terminated for this reason. The proportion of beneficiaries who return to work (1 in 500 for DI) would be higher if candidates unlikely to obtain gainful employment were excluded from the equation. Such candidates include, for example, beneficiaries who are expected to die or to reach retirement age within a few years following benefit award. SSA research findings provide some estimate of the size of these groups. Among a cohort of beneficiaries who entered DI in 1988, 28 percent died and 17 percent reached 65 within 5-1/2 years. Also, among cohorts of recipients who entered SSI between 1974 and 1982, 28 percent died or reached 65 within 10 years. Moreover, 46 percent of all working-aged DI and SSI beneficiaries are 50 or older. While age alone may be neither an accurate nor appropriate predictor of return-to-work potential, older workers who become disabled generally are less likely to recover functioning and return to work than younger workers. The Chairman of the Senate Special Committee on Aging asked us to examine trends in the DI and SSI programs and determine why few beneficiaries are returned to substantial gainful employment. On the basis of subsequent discussions with his office, we designed our study to do the following: describe changes in the number and characteristics of DI and SSI program beneficiaries over time and the implications of these changes for returning beneficiaries to work; analyze the disability determination process to assess whether it can accurately distinguish between applicants who can work and those who cannot; and evaluate the effect of the disability determination process, work incentives, and vocational rehabilitation on returning DI and SSI beneficiaries to work. To do this work, we reviewed the extant literature and synthesized our prior work and reports published by SSA, the Congressional Research Service (CRS), and others; analyzed information from SSA; interviewed federal and state agency officials, experts, and advocates; observed DDS operations; and conducted six focus groups around the country with people receiving federal disability benefits. We also convened a panel of disability experts (see app. III) to review our findings and comment on the report’s accuracy, completeness, objectivity, and soundness. A bibliography of the literature we used in our analysis and a list of related GAO products are presented at the end of this report. We did not independently verify the accuracy of the data used in the analysis of this report. Our work was performed between February 1994 and December 1995 in accordance with generally accepted government auditing standards. The number of beneficiaries and the cost of program benefits have grown rapidly since the mid-1980s. Program growth is attributed to factors that increased the number of people coming onto the rolls and decreased the number leaving. As the beneficiary population has grown, a greater portion of beneficiaries now have impairments—especially mental impairments—that are likely to keep them on the rolls for longer periods than in the past. Also, the beneficiary population has proportionately more middle-aged adults and fewer older beneficiaries, although trends in recent years suggest that the relative numbers of older beneficiaries may increase in the years ahead. For the current beneficiary population, there are challenges to develop effective return-to-work strategies that will recognize and flexibly respond to individual differences. However, while economic changes may have had a mixed impact on work opportunities for people with disabilities, technological and medical advances—along with a trend toward inclusion of and participation by people with disabilities in mainstream society—have created more potential for some people with disabilities to engage in gainful work. Between 1985 and 1994, the combined DI and SSI beneficiary population increased 70 percent and the inflation-adjusted cost of cash benefits grew 66 percent. Although the reasons for growth are not fully understood, a number of factors are believed to have increased the number of people who entered the programs and decreased the number who were terminated. These factors include eligibility expansion; program outreach; fewer continuing disability reviews; and occurrences external to the programs, for example, a downturn in the business cycle and demographic changes. At the same time, the portion of the adult beneficiary population with longer-lasting impairments has increased since the mid-1980s. This trend has been driven especially by increases in the proportion of beneficiaries with mental impairments. In 1994, more people qualified for disability benefits because of mental retardation and mental illness than any other impairment category. Compared with beneficiaries with shorter-term impairments, a lower proportion of beneficiaries with longer-term impairments are terminated from the rolls each year because of death. The growing proportion of beneficiaries with longer-lasting impairments means that the beneficiary population, on average, is likely to spend more time on the rolls before reaching age 65. In addition, the beneficiary population has become, on average, modestly but steadily younger since the mid-1980s. The proportion of adult beneficiaries who are middle-aged has steadily increased as the proportion who are older has declined. However, this trend reversed slightly between 1992 and 1994. Coupled with the aging of the “baby boom” cohort, this suggests that the age of the beneficiary population may increase in the years ahead. DI and SSI caseloads and expenditures increased dramatically between 1985 and 1994, and the pace of this growth accelerated in the early 1990s. As a result of this rapid growth, concern arose regarding the adequacy of the DI Trust Fund. Responding to estimates that the DI Trust Fund would be depleted in 1995, the Congress reallocated payroll tax receipts in 1994 from the Social Security Old Age and Survivors Trust Fund into the DI Trust Fund. SSA has estimated that by the end of 2016 this measure will have transferred $499 billion from the Old Age and Survivors Insurance Trust Fund into the DI Trust Fund. In 1985, 4.2 million blind and disabled persons under age 65 received DI or SSI benefits: 2.3 million received DI benefits, 1.6 million blind and disabled adults and children received SSI, and about 324,000 people received both DI and SSI benefits. By 1994, the number of blind and disabled people under age 65 receiving DI or SSI benefits reached 7.2 million. The DI beneficiary population increased 41 percent, the SSI beneficiary population increased 105 percent, and the number of people receiving both DI and SSI increased 107 percent. (See table 2.1.) Moreover, 37 percent of the growth between 1985 and 1994 in the overall size of the disability rolls occurred between 1992 and 1994 (see fig. 2.1). Appendix IV presents information on the entire 1985 to 1994 period. As the number of DI and SSI beneficiaries increased, so did the amount paid in cash benefits. In 1985, SSA paid $17 billion in DI cash benefits and $7 billion in SSI cash benefits. By 1994, cash benefits reached $34 billion for DI and $19 billion for SSI. Overall, the combined DI and SSI cash benefits increased from $23 billion to $53 billion in 10 years (adjusted for inflation, the increase in the value of cash benefits was 66 percent). Moreover, the cost of DI and SSI benefits nearly doubles when including the cost of health care coverage. In 1994, the cost of providing Medicare and Medicaid to beneficiaries was about $48 billion, bringing the federal cost of cash benefits and health care coverage for disabled beneficiaries in that year to about $101 billion. Although the reasons for growth and their relative effects are not fully understood, multiple factors contributed to the increase in program growth. The following factors affected program growth by bringing more people into the programs and lowering the rate at which some beneficiaries left the programs. The eligibility standards, especially for mental impairments (which include mental retardation and mental illness), were expanded in the mid- to late 1980s. Standards expanded largely because of the effects of legislative, regulatory, and judicial action. For example, additions were made to the listing of medical criteria used by SSA to determine program eligibility, which gave greater weight to evidence gathered from an applicant’s own physician, and more consideration was granted to pain and functional deficits in social relations and in concentration. The purpose of SSA’s outreach efforts has been to reduce the barriers that prevented or discouraged potentially eligible individuals from applying for SSI benefits. SSA has conducted several outreach efforts since program authorization in 1972. Around the late 1980s, congressional and agency actions were taken to ensure that all segments of the potential SSI population were made aware of their potential eligibility. For instance, a permanent outreach program for disabled and blind children was established by the Omnibus Budget Reconciliation Act of 1989; SSA made SSI outreach an ongoing agency priority in 1989; and, in 1990, the Congress mandated that SSA expand the scope of its SSI outreach efforts. Since 1990, the Congress has appropriated $33 million for SSA to complete a series of outreach demonstration projects. Economic factors play an important role in the decisions of people with disabilities to seek disability benefits, particularly DI benefits, according to an SSA-sponsored study on the demographic and economic determinants of growth in SSA disability programs. Factors that reduce the rewards of participating in the labor force for people with disabilities, such as downturns in the business cycle, make leaving the labor force and applying for benefits more attractive to people with disabilities. However, while economic downturns contribute to program growth, no evidence exists that there has been a concomitant exit from the DI rolls when the economy has improved. Many state and local governments actively encouraged and assisted disabled recipients of state-funded general assistance (GA) to apply for SSI benefits when GA was cut in these jurisdictions. These state and local efforts to shift public assistance recipients with disabilities onto the SSI rolls appeared to increase the number of SSI (and, to a lesser extent, DI) applications and awards, according to the SSA-sponsored study on growth in the disability programs. An increase in the number of people without affordable health insurance may have affected the size of DI and SSI. The uninsured population under age 65 in the United States grew by 5 million persons between 1988 and 1992. Coupled with this growth, limitations in employer-based health care coverage for chronic conditions may have prompted some individuals to apply for DI or SSI for health care protection. Demographic changes have played a role in program growth. For example, the aging baby boom cohort born between 1946 and 1964 (which increased the number of people in middle age during the late 1980s and early 1990s), greater labor force participation among women (which increased the number of women insured for disability benefits), and declines in marriage rates (which may have limited the income support provided by spouses of people with disabilities) have been associated with increases in program applications and awards. Also, the growing number of immigrants admitted annually for legal residence in the United States may have contributed to SSI growth. In 1993, 880,00 immigrants were admitted to the United States, compared with 570,000 in 1985. In addition, nearly 3 million formerly illegal immigrants attained legal residence status under the Immigration Reform and Control Act of 1986. This increased immigrant population is likely to have contributed to the rising portion of disabled immigrants on SSI, which increased from less than 2 percent of the SSI disabled population in 1982 to about 6 percent in 1993. As more people were enrolled, the DI termination rate decreased and the SSI termination rate remained stable, thereby resulting in a net increase in DI and SSI program size. The DI termination rate decreased from 13.1 percent in 1985 to 10.8 percent in 1992 (between 1970 and 1984, the DI termination rate fluctuated between 14 and 19 percent). The termination rate for each of the major reasons for exiting DI—conversion to retirement benefits at age 65, death, failure to meet medical criteria, and return to work—decreased during this period (reaching age 65 and dying accounted for the vast majority of instances of termination from 1985 to 1992). Between 1988 and 1993, the SSI termination rate for adults with disabilities remained around 16 percent. A factor contributing to the decrease in DI terminations due to medical recovery (which was relatively low from 1985 to 1992) may have been the reduction in the number of continuing disability reviews (CDR) performed by SSA. In the early 1990s, because of SSA resource constraints and increasing initial claims workloads, the number of DI CDRs declined dramatically. In 1995, the backlog of CDRs for DI beneficiaries was about 1.5 million cases, with about 500,000 additional cases coming due each year. SSA researchers have found that the types of impairments that qualify people for benefits are associated with different lengths of entitlement.The researchers calculated average length of stay on the disability rolls for DI and SSI cohorts who were awarded benefits (“awardees”) from 1975 through 1993. For DI awardees, on average, mental impairments (16 years); diseases of the nervous system (13 years); and musculoskeletal impairments (10 years) lead to the longest entitlement periods. Between 1986 and 1994, the proportion of DI beneficiaries with any one of these three impairment types increased from 54 percent to 62 percent (see table 2.2). Most of this growth occurred within the category of mental impairment, which increased from 24 percent of the DI beneficiary population in 1986 to 31 percent in 1994. The trend toward a greater portion of beneficiaries with longer-lasting impairments signifies lengthy stays on the rolls for some. For SSI adult awardees, on average, mental impairments and diseases of the nervous system also lead to the longest entitlement periods. The proportion of adult SSI beneficiaries with either of these impairment types increased from 60 percent in 1986 to 65 percent in 1994. In 1994, about 57 percent of adult SSI beneficiaries had a mental impairment, up from 50 percent in 1986. (See table 2.3.) Between 1986 and 1994, the proportion of adult beneficiaries who were middle aged steadily increased as the proportion who were older than middle aged declined. Although this trend signified that the beneficiary population had become younger, it did not signify that the population was young, as only 10 percent of the adult DI/SSI disability rolls consisted of persons aged 18 to 29 in 1994. Moreover, the proportion of older new awardees increased slightly in recent years, suggesting that the beneficiary population will become older in the years ahead if this trend persists. Among the DI population, the proportion of beneficiaries aged 30 to 49 steadily increased from 30 percent in 1986 to 40 percent in 1994. While the proportion of DI beneficiaries who were younger remained around 4 percent during this time, the proportion of older DI beneficiaries steadily decreased from 66 percent in 1986 to 56 percent in 1994. Likewise, within SSI, the proportion of beneficiaries who were middle aged increased as the proportions of beneficiaries who were older or younger decreased. The proportion of SSI beneficiaries aged 30 to 49 increased from 36 percent in 1986 to 46 percent in 1994. During this time, the proportion of beneficiaries who were older decreased from 40 percent to 35 percent, and the proportion of beneficiaries who were younger decreased from 23 percent to 19 percent. (See table 2.4.) The trend toward serving a greater proportion of beneficiaries who were middle aged was also generally evident among new awardees. While the proportion of DI awardees who were under 35 fluctuated somewhere around 17 percent between 1986 and 1994, the proportion of DI awardees who were middle aged steadily increased from 25 percent to 31 percent; the proportion of DI awardees who were older than middle aged steadily decreased, except in 1994, from 55 percent to 51 percent. Between 1993 and 1994, however, the proportion of DI awardees who were between 50 and 64 increased nearly 3 percentage points (an increasing proportion of DI awardees who are older may continue into the future as the baby boom cohort turns 50 and older). Likewise, the proportion of SSI middle-aged awardees increased modestly between 1986 and 1992; between 1992 and 1993, the proportion of middle-aged awardees decreased as the proportion of older awardees and, to a lesser extent, younger awardees increased. Overall, the proportions of younger, middle-aged, and older SSI awardees in 1993 were roughly equal. (See table 2.5.) Developing effective return-to-work strategies for people with disabilities presents challenges to policymakers. For example, strategies need to recognize individual differences and abilities and should have the flexibility and capacity to provide varying levels and types of assistance. Some people may require a one-time medical intervention, while others may need ongoing and changing levels of medical support; some individuals may require remedial retraining, and others may need education and job coaching. Moreover, beneficiaries with limited work histories present particular challenges in finding and maintaining employment. In addition to needing to learn basic skills and work habits, some beneficiaries, for example, may need to overcome social isolation and low self-esteem in order to function at the workplace. Also, even jobs that pay low wages may not be widely available for some beneficiaries and may become more scarce in the future. Real wages for the least skilled workers have declined since the late 1970s. Current welfare reform proposals call for sending low-skilled people into the labor market, so competition for low-wage jobs may increase. Also, the U.S. economy may be moving toward more temporary or part-time work (which generally offers little if any health care coverage and other benefits). While this trend would match the needs of some beneficiaries who cannot or do not want to work full-time, it would also make the road to economic self-sufficiency more difficult and less attractive than public support for others, particularly for those who earn low wages. In addition, employment may be more easily disrupted for some people with disabilities, thereby creating additional challenges to developing successful return-to-work mechanisms. For instance, people with visual impairments who work in office settings may undergo more adjustment than other workers if an office converts from a text- to a graphics-mode of communication. At a more basic level, some people with disabilities may experience difficulty in getting to work in the event of inclement weather or changes in public transportation schedules. Moreover, the nature of some disabilities may make it difficult for some workers to engage in full-time work while other disabilities may stigmatize individuals and perhaps make them appear less attractive to employers. Finally, a shift in the U.S. economy from labor/manufacturing to skill/service-based jobs may have had a negative impact on the job opportunities for some people with mental impairments. Although efforts to maximize the work potential of people currently on the disability rolls face many challenges, numerous technological and medical advances and economic changes have created more potential for some people with disabilities to engage in work. Electronic communications and assistive technologies—such as synthetic voice systems, standing wheelchairs, and modified automobiles and vans—have given greater independence and more work potential to some people with disabilities. Advances in the management of disability—like medication to control mental illness or computer-aided prosthetic devices that return some functioning to the impaired—have helped reduce the severity of some disabilities. Also, the shift in the U.S. economy toward the service industry may have opened new opportunities for some people with physical impairments. Moreover, over the last several decades, there has been a trend toward greater inclusion of and participation by people with disabilities in the mainstream of society. For instance, over the past 2 decades people with disabilities have sought to remove environmental barriers that impede them from fully participating in their communities. Additionally, the ADA supports the full participation of people with disabilities in society and fosters the expectation that people with disabilities can work. The ADA prohibits employers from discriminating against qualified individuals with disabilities and requires employers—without undue hardship—to make reasonable workplace accommodations. The Social Security Act requires that the assessment of an applicant’s work incapacity be based on the presence of medically determinable physical and mental impairments. The findings of the studies we reviewed generally agree that difficult measurement and conceptual issues complicate the use of medical conditions as the basis for decisions on work incapacity. Indeed, making valid decisions about who can work and who cannot is very difficult. While decisions may be more clear cut in the case of people whose impairments inherently and permanently prevent work, disability determinations may be much more difficult concerning people who may have a reasonable chance of work if they receive appropriate assistance and support. Nonmedical factors may play a crucial role in determining the extent to which people in this latter group can engage in substantial gainful activity. Compounding decision-making difficulties are program features that, taken together, can undermine the incentive to attempt work. First, the “either/or” focus of the disability determination process encourages applicants to concentrate on their inabilities. Moreover, people who have successfully established their disability to SSA staff may have little reason or desire to attempt rehabilitation and competitive work. Second, the benefit structure can provide disincentives to low-wage workers. Third, work incentives, which few beneficiaries take advantage of, are generally ineffective in encouraging return to work. Finally, VR plays a limited role in the disability programs because beneficiaries have poor and untimely access to services, and the long-term gains for people who receive VR services are generally lacking. As a result, the design and implementation of DI and SSI undermine the ability of SSA to identify and expand work capacities of beneficiaries and return them to substantial gainful employment. Table 3.1 summarizes these program weaknesses. The Social Security Act defines disability as the inability to engage in any SGA because of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last 12 months or longer. A physical or mental impairment is one that results from anatomical, physiological, or psychological abnormalities that are demonstrable by medically acceptable clinical and laboratory diagnostic techniques. The statutory requirement for disability presumes that some medical conditions are sufficient, in themselves, to prevent individuals from engaging in substantial gainful employment. The presumed link between inability to work and presence of a medical condition establishes the basis for SSA’s award of disability benefits. SSA maintains a Listing of Impairments containing medical conditions that are, according to SSA, ordinarily severe enough in themselves to prevent an individual from engaging in any SGA. About 70 percent of new awardees are eligible for disability because their impairments meet or equal the listings. Applicants whose impairments do not meet or equal the medical listings are further evaluated on the basis of nonmedical factors, including residual functional capacity (RFC), age, education, and vocational skills. Relevant studies indicate that the scientific link between work incapacity and medical condition is a weak one. While it is reasonable to expect that some medical impairments can completely prevent individuals from engaging in any minimal work activity (for example, people who are quadriplegic with profound mental retardation), it is less clear that some other impairments that qualify individuals for disability benefits completely prevent individuals from engaging in any SGA (for example, people who are missing both feet). Moreover, while most medical impairments may have some influence over the extent to which an individual is capable of engaging in gainful activity, other factors—vocational, psychological, economic, environmental, and motivational—are often considered to be more important determinants of work capacity. Concerns about the relationship between medical status and work incapacity were raised before the DI program was implemented. In deliberations leading up to the establishment of the DI program, the 1948 Advisory Council on Social Security recommended that compensable disabilities be restricted to those that can be “objectively determined by medical examination or tests.” However, physicians testified before the Congress that disability determination is inherently subjective and they could not provide the kind of objective determination that policymakers desired. According to this view, physicians can attest to the existence of medical impairments but they cannot quantify inability to work, and they cannot certify that the impairments render a person unable to work. “information about a claimant’s medical condition and vocational background cannot conclusively demonstrate that he or she cannot work. Except in the case of very severe disabilities and relatively minor disabilities, the current state of knowledge and technology does not enable the quantification of disabilities or the definition of categories of disability which reliably correlate an impairment with a particular individual’s capacity to work.” Studies we reviewed show that sorting people into two mutually exclusive categories—either not having the ability to engage in SGA or having the capacity to do so—can lead to questionable decisions. Many people with disabilities may have some capacity to work, especially if given appropriate treatment and support, and these cases are likely to be the ones that result in different decisions by different decisionmakers. Using medical criteria as the basis for these decisions attempts to impose precision on an imprecise process. Decision-making as implemented under current law involves significant judgment, which may result in some applicants’ receiving benefits while others with similar limitations in their capacities are denied benefits. Such a disparity illustrates the inherent subjectivity of making disability determinations; it does not imply that DDSs could make more accurate decisions under current decision-making procedures. Two of the studies we reviewed compared disability decisions made by DDS/SSA with nonbinding decisions on the same cases made by independent decisionmakers. In one study, a team of vocational and health care professionals reached decisions opposite from those reached by DDS/SSA in 30 percent of cases: DDS/SSA approved 37 percent of the cases denied by the teams and denied 27 percent of the cases approved by the teams. The other study found that a team of mental health workers could not agree on a disability decision in 47 percent of DI/SSI cases involving people with mental impairments. Among the cases allowed by the team, 88 percent were also allowed by the DDS; but of the cases denied by the team, 55 percent were allowed by the DDS (overall, the team reached conclusions opposite from those of the DDS in about one out of every four cases). The findings of one other study and a survey we conducted suggest that disability decisions are not accurate predictors of work capacity. The study found that, among a sample of people who had physical impairments that met or equaled the listings but who were not enrolled in DI or SSI, about 61 percent of men and 32 percent of women were employed 2 years after being diagnosed with their physical impairment. The survey we conducted showed that about 58 percent of DI applicants who were denied benefits in 1984 and who were not receiving DI benefits as of 1987 reported that they were not working (over two-thirds of these nonworking applicants had been out of the workforce for at least 3 years). Moreover, the self-reported functional and health status of the nonworking denied group was nearly indistinguishable from the status of a sample of DI beneficiaries accepted into the program in 1984. Appendix V contains more details on the studies cited. Two aspects of the disability determination process—the disability decision itself and the application process—may promote inability to work. Eligibility for disability benefits is an “either/or” decision. The Social Security Act characterizes individuals as either unable to engage in any substantial gainful employment or having the capacity to work. Because the decision is a dichotomy—the result is either full award of benefits or denial of benefits—applicants have a strong incentive to promote their limitations in order to establish their inability to work and thus qualify for benefits. Conversely, applicants have a disincentive to demonstrate any capacity to work at all. Moreover, the process of applying for disability benefits has been characterized in the literature we reviewed as long, cumbersome, and possibly debilitating in itself because of the certification and labeling of the individual as disabled. The length of the determination process ranges from a minimum of several months to 18 months or longer for individuals who are initially denied benefits and appeal. During this time, an applicant meets with his or her physician, SSA staff, and others in an attempt to establish disability. Some individuals completing the process may become entrenched in their perceived inability to work, which can possibly lead to a gradual decrease in actual work ability. SSA survey results indicate that nearly one-half of DI and SSI applicants with a work history reported being out of the workforce for more than 6 months in the period immediately preceding application for benefits.Consequently, their skills and work habits may have declined prior to application. And, since these individuals are unlikely to participate in any substantial gainful employment during the application process, the erosion of skills may be exacerbated, further contributing to a decline in their motivation or ability to work. Applicants who successfully meet the programs’ definition of disabled may be poor candidates for attempting a return to work. They have been through a lengthy process that required them to prove an inability to work. They have provided information about their disabilities before program officials and the health care community, and family and friends may have helped to demonstrate their work incapacity. Moreover, being out of the workforce may have degraded their marketability. The literature suggests that these factors can reduce receptivity to VR and work incentives as well as the motivation to develop or regain the ability to engage in gainful employment. The degree to which this may occur, however, will vary among beneficiaries. A small portion of people do, in fact, leave the rolls by returning to work. Cash and medical benefits themselves are another factor that can reduce beneficiaries’ motivation to work and receptivity to work incentives and VR. The average monthly benefit value in 1994 for DI and SSI beneficiaries was about $1,050 and $930, respectively. As part of their consideration of whether to undergo rehabilitation, attempt work, or both, beneficiaries may weigh the financial gains of working against the value of their monthly cash and medical benefits. On the one hand, rehabilitation and work require significant time commitment and the chance of success is unknown; on the other hand, program benefits are secure and free individuals from having to devote time to secure economic stability. Some people may opt to live at a lower income level rather than at a marginally higher income level if the latter requires a major commitment of time and energy. Some people with disabilities commit significant amounts of time to performing daily activities (bathing, dressing, and eating), self-managing their impairments or receiving medical treatment, or meeting their transportation needs. The time required to perform these and other activities can reduce the time available for work and influence an individual’s decision to opt for benefits over work. People who have less time available for full-time work may see some value in part-time work. However, if part-time work pays less than the value of lost benefits, then a person would actually be financially better off to receive benefits rather than to work. From our fieldwork and analysis of several studies, we identified weaknesses in the design and implementation of work incentive provisions. While some provisions effectively reduce the risk of returning to work, others do little to remove work disincentives. Studies conducted by SSA researchers and others have questioned the effectiveness of the work incentive provisions and have cited many of the same design and implementation problems raised during our discussions with disability advocates and program and rehabilitation officials. The DI and SSI programs offer a number of work incentives to encourage beneficiaries to return to work. For both populations, work incentive provisions safeguard cash and medical benefits and retain beneficiaries’ program eligibility during work attempts. However, work incentive provisions differ significantly between the two programs, providing differing levels of benefit protection for DI and SSI beneficiaries. One significant difference between the two programs is that a DI beneficiary’s cash benefit stops completely after the trial work period (if it is determined that work is at the SGA level), while an SSI recipient’s cash benefit is gradually reduced to ease the transition back to work. Another difference is that a DI beneficiary can purchase Medicare coverage as an ex-beneficiary, although it is expensive for lower-wage earners to do so, but an SSI recipient may lose Medicaid coverage once he or she exceeds a certain income level. A number of work incentive provisions exist within each program, and, depending upon an individual’s particular situation, certain provisions may be more useful than others. If, for example, a DI beneficiary engages in work and earns more than $500 a month but needs a wheelchair and special transportation in order to work, the beneficiary may use the Impairment-Related Work Expenses (IRWE) provision to maintain eligibility while working. This provision allows a DI or SSI beneficiary to deduct work expenses that are related to the impairment from gross earnings, which are used to determine continuing eligibility. Without this provision, someone with high disability-related work expenses could be financially harmed by returning to work. On the other hand, a beneficiary such as a construction worker who became eligible due to blindness may need to acquire new skills in order to return to work. The Plan for Achieving Self-Support (PASS) provision allows DI beneficiaries to become eligible for SSI, or SSI beneficiaries to increase the amount of their monthly cash benefits, by excluding from the SSI eligibility and benefit calculations income or resources set aside to pursue a work goal. Table 3.2 highlights each program’s work incentive provisions. Despite the ways in which work incentive provisions can provide some financial protection for those who want to return to work, work incentive provisions do not appear to be appropriately designed to motivate beneficiaries to work. In fact, from an SSA survey of DI beneficiaries, it was found that only about 2 percent said that their decision to attempt work was influenced by the work incentive provisions. Our review, as well as other studies, identified a number of design weaknesses that diminish the work incentives’ intended benefit safeguards. Research conducted by SSA researchers and others suggests that DI work incentive provisions are actually disincentives. DI work incentives provide for a trial work period in which a beneficiary may earn any amount for 9 months (which need not be consecutive) within a 60-month period and still receive full cash and medical benefits. At the end of the trial work period, if a beneficiary’s countable earnings are more than $500 a month, cash benefits continue for an additional 3-month grace period and then stop. For 36 months after the trial work period ends, referred to as the extended period of eligibility, cash benefits will be reinstated for any month in which the person does not earn more than $500 a month in countable income. After the completion of the trial work period, a beneficiary’s countable earnings in excess of $500 a month cause a precipitous drop in monthly income—from full benefits to no cash benefit. SSA researchers have noted that such a drop in income is a considerable disincentive to finishing the trial work period as well as to beginning work. Cash and medical benefits continue indefinitely for a DI beneficiary as long as the beneficiary does not earn more than $500 a month in countable income or does not medically recover. Especially for beneficiaries with low earnings, it may be more financially advantageous to quit work, or work part time, and continue to receive disability payments than to earn more than $500 a month in countable income. As illustrated in table 3.3, some beneficiaries would be making a rational economic decision to limit work in order to continue receiving benefits. Table 3.3 presents a simplified scenario illustrating the financial disincentive to work for some DI beneficiaries. If a beneficiary works and earns $500 a month in countable income and continues to receive the average DI cash benefit, his or her total monthly income would be $1,160. At minimum wage ($4.25 an hour), the beneficiary would need to work 27 hours a week to earn $500. But, if that same beneficiary earned $1 more, so that earnings were greater than $500 a month, cash benefits would stop, and the $1 additional earnings would cost the beneficiary $659 in monthly income. To maintain a monthly income of $1,160, the beneficiary would have to work 63 hours each week in a minimum-wage-paying job. A review of the effectiveness of DI work incentive provisions performed by the Office of Inspector General (OIG) at HHS found that some beneficiaries who had completed a trial work period subsequently reduced their earnings so they could continue to receive the full cash benefit amount, causing their total monthly income (wages plus cash benefit) to be higher than it would have been from earnings alone. The OIG observed that these beneficiaries were making “financially correct decisions,” a conclusion that table 3.3 supports. Of 63 cases reviewed, 9 beneficiaries—or 14 percent—had reduced their earnings in order to continue to receive cash benefits. Although it is uncertain whether this behavior is widespread, data from a study of beneficiary participation in DI work incentive provisions indicate that only 6 percent of the beneficiaries successfully completed a trial work period, and more than half of those never left the program. In addition to losing cash benefits, beneficiaries who work and continue to earn countable income above certain amounts will eventually lose medical coverage even though they have not necessarily medically improved or obtained affordable coverage elsewhere. Disability advocates and VR counselors that we spoke with believe that the fear of losing medical coverage is one of the most significant barriers to the participation of SSI and DI beneficiaries in a VR program, their return to work, or both. DI work incentive provisions provide up to 4 years of premium-free Medicare coverage when a person who continues to be medically disabled goes to work and earns more than $500 a month in countable income. When premium-free coverage ends, these individuals may purchase Medicare coverage at the same monthly premium paid by uninsured retired beneficiaries. However, the monthly premium—exceeding $300 for full coverage in 1996—may be a hardship for some beneficiaries, especially individuals with low earnings. In a study of DI beneficiary work attempts, SSA researchers noted that “the eventual loss of Medicare coverage which, for some beneficiaries, is worth as much as cash benefits, adds to a feeling of future financial insecurity and discourages work.” SSI beneficiaries who lose medical coverage because they exceed the earnings limit do not have the option of purchasing Medicaid. In most states, section 1619 work incentives allow beneficiaries to keep Medicaid coverage even when earnings exceed $500 a month. SSI beneficiaries may keep their Medicaid coverage until earnings increase to a point—referred to as the threshold amount—that SSA considers high enough to replace SSI cash and Medicaid benefits. Beneficiaries who lose Medicaid could be uninsurable or face prohibitively high premiums. It may matter little how much a beneficiary can earn by returning to work if he or she cannot buy health insurance because of a disabling condition. Even if a beneficiary is able to obtain health insurance, he or she may still be subject to a waiting period and exclusion for preexisting conditions. Other studies have also identified the risk of losing medical coverage as a major barrier to beneficiaries’ returning to work. For example, the fear of losing Medicaid and Medicare was identified as perhaps the single greatest barrier to employment by the President’s Committee on Employment of People With Disabilities. Its study reportedly included the views of more than 1,200 leaders of every major disability constituency in every state. In a recent OIG/HHS survey of disability program applicants, 75 percent of the DI applicants and 79 percent of the SSI applicants rated continued medical coverage as very important to encouraging work. Beneficiaries with low income may be receiving benefits from other programs—for example, food stamps, housing assistance, and energy assistance. SSI and DI work incentives do not protect beneficiaries from losing benefits from other programs. During our visits with disability advocates and rehabilitation counselors, we were told of instances in which beneficiaries had little option other than to quit work because they could not afford to lose their housing assistance. Thus, beneficiaries faced with losing their medical benefits and benefits from other programs if they return to work have an incentive to forgo work in order to continue receiving cash, medical, and other types of assistance. Implementation problems further limit the effectiveness of work incentive provisions in two ways. First, beneficiaries are generally unaware of the work incentive provisions. Second, if beneficiaries are aware of the provisions, they generally do not understand their complexities. For work incentives to influence behavior, beneficiaries need to be aware of the work incentive provisions. Disability advocate groups and VR counselors told us, however, that beneficiaries generally are unaware of the work incentive provisions. SSA researchers have found that, among a sample of DI beneficiaries, 80 percent were unaware of the work incentive provisions at the time they returned to work. This lack of knowledge of work incentives is due, in part, to SSA’s emphasizing disability determination over encouraging or helping beneficiaries to work. SSA claims representatives told us that they devote most of their time to assisting beneficiaries to apply for benefits, leaving little time to inform them of work incentive provisions. When work is discussed, it is generally in the context of the application process and how earnings may result in lower benefits or no benefits at all. Although some claims representatives do spend time discussing the work incentive provisions, they recognize that time spent on work incentives is quite brief and that it occurs at the end of a lengthy application process in which they have already provided beneficiaries with a large amount of information. Further, the evidence we reviewed indicated that, at the time of application, individuals are focused on establishing their inability to work and not on initiating efforts to obtain employment. Other claims representatives told us that they discuss work incentive provisions only if the beneficiary expresses a desire to work, while still others said they provide brochures describing work incentive provisions or rely on SSA headquarters to provide this information. Claims representatives, disability advocates, and VR counselors told us that most beneficiaries who are aware of the work incentive provisions do not understand them. In fact, counselors and advocates who help beneficiaries return to work are not always able to explain how work incentives apply to a person’s particular situation, because they are not fully aware of or do not understand all the provisions themselves. Claims representatives, who spend most of their time processing claims, are not always familiar with work incentive provisions, either. During group discussions with claims representatives, we found that although some appeared to have a good working knowledge of the work incentive provisions, some were not aware of certain provisions while others appeared to be confused by them. The difficulty in understanding work incentives is heightened for the 11 percent of the beneficiary population who receive both DI and SSI. For these concurrent beneficiaries, the SSI work incentive provisions apply to the SSI portion of their cash benefit and the DI provisions apply to the DI portion of their cash benefit. In some SSA district offices, concurrent beneficiaries must go to two different claims representatives to handle their cases. In addition, when reporting earnings to SSA, these beneficiaries must report their earnings to both programs, each of which has its own reporting requirements and processes. For example, DI requires that reported earnings reflect when the income was earned, while SSI requires that reported earnings reflect when the income was received. Some beneficiaries who receive DI and SSI benefits do not understand the different reporting requirements. If these beneficiaries report earnings only to one program, for example, they may be overpaid by the program that does not receive the earnings data. Beneficiaries can become even more confused and anxious about working when they later receive a notice of overpayment. Studies have also found that beneficiaries generally do not understand work incentive provisions. For example, one study concluded that DI and SSI work incentive policies and procedures were neither well understood nor operating smoothly administratively. Another study noted that DI beneficiaries who were aware of work incentive provisions were unfamiliar with the details and had conflicting interpretations. The study also found that claims representatives had a large number of responsibilities and used very little of their time advising beneficiaries about return to work. Moreover, the claims representatives said that the complexity of the work incentives made the provisions hard for even them to master. The Disability Advisory Council also concluded that beneficiaries did not understand the work incentive provisions. The Council stated that better understanding of the provisions would help beneficiaries dispel their fears and encourage them to test their work capacity. The application process and weak DI and SSI program work incentive provisions can discourage a beneficiary from attempting to return to work. Structural weaknesses in the VR system—spanning SSA, the DDSs, and the state VR agencies—further diminish the chances that a beneficiary will return to work. The Social Security Act established the policy that the maximum number of individuals applying for disability benefits should be rehabilitated into productive activity. People applying for disability benefits are to be promptly referred to state VR agencies for rehabilitation services. VR services are intended to prepare individuals with disabilities for work opportunities. However, VR has a limited impact on DI and SSI, as state agencies successfully rehabilitate only about 1 out of every 1,000 beneficiaries, on average, each year. With few beneficiaries referred by DDSs for VR services, and fewer still accepted by VR agencies as clients, access to VR services through the DDS referral process is limited. DDSs refer for VR services, on average, only about 8 percent of DI and SSI applicants awarded benefits. And although less is known about how many DDS referrals are accepted by state VR agencies, previously we estimated that less than 10 percent of beneficiaries referred by DDSs were accepted by VR agencies as clients.Several factors contribute to limited access. SSA’s national screening guidelines are intended to ensure that all disabled applicants with rehabilitation potential are given the opportunity to receive services. The national guidelines counsel DDSs to refer all applicants for VR services except those with terminal illnesses, severe or rapidly progressive impairments not responding to treatment, or other characteristics that make rehabilitation and sustained work unlikely. Using SSA’s national guidelines as a basis, however, some DDSs, working in conjunction with state VR agencies to reflect state agency priorities, have developed additional criteria for the DDSs to apply in screening out certain categories of beneficiaries for referral. In this way, some VR agencies have limited the types of referrals they receive to those they consider to be the best VR candidates. These added criteria are more restrictive than SSA’s national guidelines. For example, California’s state VR agency and state DDS have agreed to limit referrals to beneficiaries who are high-school-educated (or the equivalent), 18 to 45 years old, and have an orthopedic or visual impairment (if a DI beneficiary) or an orthopedic, visual, or mental retardation impairment (if an SSI beneficiary). California developed its criteria to overcome problems encountered with large numbers of unevaluated referrals that it considered too time consuming and unproductive to deal with. These criteria, if strictly applied, would preclude from referral for VR services, for instance, a DI beneficiary with a mental impairment. Some state policies also restrict VR services to people capable of working a minimum number of hours per week. This restriction, according to the President’s Committee on Employment of People With Disabilities, blocks people with disabilities who can work fewer than a prescribed minimum number of hours per week from VR services that could help them become more employable. Although SSA monitors the volume, timeliness, and quality of the benefit application process, little information is routinely collected on the referral process. To illustrate, although SSA began early in 1996 to track the number of DDS-referred beneficiaries accepted for VR services, SSA does not track the number of DDS-referred beneficiaries successfully rehabilitated (SSA-defined success); SSA does not collect information on the reasons that some DDS referrals are not accepted for services or successfully rehabilitated; and the DDSs do not review the referral process as part of the DDS quality assurance process. Information such as this could help evaluate and improve the referral process, including the quality of the referrals, and also reward employees for their accomplishments in referral activities. Nevertheless, the Joint VR Referral Task Force, a multiagency group that sought to improve the VR referral process, reported that no work credit or other recognition was associated with the referral process in SSA’s field offices. By not routinely monitoring the performance of the referral process, SSA and DDSs tell their employees that referring beneficiaries for VR has relatively low priority compared with claims processing tasks. A message of low priority greatly diminishes the incentive for SSA field office and DDS employees to spend time informing individuals about the referral process and assessing beneficiaries’ potential for referral, thereby negatively affecting the number of referrals. Not all people referred to state VR agencies are accepted for VR services. State VR agencies use their own selection processes to identify individuals they believe will be best served by VR services. Some state VR agency counselors view DI and SSI beneficiaries as relatively less attractive candidates for VR services than VR candidates who are not beneficiaries, thereby reducing the number of DDS referrals that they accept. When choosing between DI and SSI beneficiaries and others, for example, some counselors are influenced by two different perceptions of beneficiaries: they are seen either as less needy than other potential VR candidates who are unemployed and lack disability benefits or as more difficult to rehabilitate because they are more severely disabled and less motivated to participate in rehabilitation than other persons referred for VR services. In either case, some VR counselors are less willing to accept DI and SSI beneficiaries as clients. Moreover, no follow-up exists between the DDS examiner who refers the beneficiary and the VR counselor who receives the referral, unlike other sources of referrals for the VR agencies. In light of the evidence that beneficiaries are sometimes perceived as less attractive VR candidates than non-SSA clients, lack of a support network to advocate personally on behalf of beneficiaries may mean that beneficiaries will be at a disadvantage in the selection of people served by VR agencies when this type of support exists for referrals from other sources. However, attitudes held by some VR counselors toward beneficiaries may not be unrealistic. For instance, the average cost of VR services for a beneficiary who was successfully rehabilitated (VR-defined success) was about $4,000 in fiscal year 1992; in comparison, the cost of services for a successfully rehabilitated nonbeneficiary was about $2,500. Disincentives discussed above can impede beneficiaries’ motivation to return to work and may cause beneficiaries to be unreceptive to VR. Clients with poor motivation to seek and gain employment can prevent VR agencies from achieving a high rate of success. Studies have questioned whether the VR reimbursement system motivates state VR agencies to accept DI and SSI beneficiaries. Through 1981, SSA allocated funds to state VR agencies to finance VR services provided to beneficiaries regardless of rehabilitation outcome. Under the current VR reimbursement program established by the Congress in 1981, SSA reimburses state VR agencies only for costs incurred in successfully rehabilitating DI and SSI beneficiaries (SSA-defined success). The Congress intended this “success-based” reimbursement system to provide state VR agencies with an incentive to rehabilitate beneficiaries to SSA’s standards. We reported previously that VR agencies became more cautious about accepting DI beneficiaries for services following implementation of the current reimbursement system. They were more cautious because of (1) the perceived lower likelihood of success with DI beneficiaries and (2) the uncertainty of getting SSA reimbursement for the cost of VR services because SSA had a considerable backlog of claims for VR reimbursement at the time. The HHS/OIG found little evidence in 1990 that the reimbursement system was inducing states to increase the number of SSA clients served.With two exceptions, the sampled states had made no special efforts to enroll SSA beneficiaries in VR programs, and none had established any special rehabilitation activities for them. In spite of the Congress’ intent to motivate state agencies to rehabilitate beneficiaries, the OIG found that, because of implementation problems, states had little incentive to rehabilitate SSA clients. Problems included, for example, delays in receiving reimbursements from SSA and policies in some states that required reimbursements to be deposited into a state’s general fund rather than into a VR agency’s operating budget. Thus, problems in implementation have hampered testing the full potential of the success-based reimbursement system. SSA field office employees are required by agency regulations to inform applicants for disability benefits that they may be contacted by a state VR agency about an opportunity for rehabilitation. Employees also are required to inform applicants that refusal to accept rehabilitation services offered to them, without good cause, can result in the withholding of benefits. Moreover, employees are expected to give written materials about VR services to anyone who inquires about disability benefits. In spite of these policies, a 1995 HHS/OIG survey of DI and SSI applicants found that respondents were generally uninformed about VR. More than two-thirds of the respondents said that they had not been told or did not recall having been told that they might be contacted about VR services. Three out of every four respondents said that they had not been told or did not recall having been told that benefit payments might stop if they refused to participate in VR. Moreover, three out of every four respondents said they had not received or did not recall having received materials about VR services. If not informed about VR services, the chances of beneficiaries’ becoming rehabilitated and returning to the workforce may be reduced. Responding to findings by the Joint VR Referral Task Force that beneficiaries lacked awareness about rehabilitation opportunities, SSA has recently developed and distributed a brochure on VR for its field offices to disseminate to beneficiaries. The availability of updated materials on VR, however, does not guarantee that a beneficiary will be thoroughly familiar with VR services, as SSA and DDS employees generally lack incentives to educate beneficiaries about VR. In addition to the lack of awareness and support, beneficiaries generally lack encouragement to take part in VR services. For example, some state VR agencies make little or no attempt to contact beneficiaries and involve them in their VR programs or actively encourage them to become interested in VR. Additionally, fewer than half the applicants surveyed by the OIG in 1995 reported that someone had encouraged them to participate in VR. And only one out of every four applicants surveyed reported having received encouragement from SSA employees to take part in VR services. Since beneficiaries’ initial exposure to the possibility of VR occurs at the same time that they are trying to establish inability to work, limited encouragement can further distance them from seeking VR services. Even if a beneficiary is referred for VR services and accepted by a VR agency, studies have questioned the effectiveness of VR services. In 1993, we evaluated the long-term results of state VR services by examining the employment status of VR clients (including SSA beneficiaries) over an 8-year period following receipt of services. We found that gains in employment and earnings of clients who had been successfully rehabilitated (VR-defined success) faded after about 2 years, with earnings for many returning to near or below the pre-VR program level after 8 years. Clients who had been successfully rehabilitated had better work and earnings histories than clients who had dropped out of the VR program. However, clients who had not been rehabilitated, but had received many of the services that rehabilitated clients had received, did no better in later employment and earnings than VR dropouts who had received no services after an initial VR evaluation. Obtaining sustained, gainful work for clients is not always the focus of state VR agencies, which may be one reason that long-term gains are limited. Each client served works with the state VR agency to establish an individual rehabilitation plan. The plan includes an achievable vocational goal considered to be “suitable employment” for the client. The VR agency considers a client to be successfully rehabilitated following 60 days of suitable employment (VR-defined success). Suitable employment need not involve wages or salary and may include, for example, working as an unpaid homemaker or family worker. The suitable employment found for about 10 percent of state VR agencies’ successful cases in fiscal year 1992 was as unpaid homemakers. Moreover, more than one of every four DI beneficiaries rehabilitated in fiscal year 1992 was an unpaid homemaker. The VR 60-day measure of success is less rigorous than SSA’s criterion of employment at SGA for 9 continuous months. State VR agency employees, accountable to their states for success according to the 60-day measure, may not necessarily be geared toward providing beneficiaries with services oriented toward achieving and maintaining long-term gainful employment. Strong organizational incentives—pay, promotion, and recognition—may incline VR counselors toward providing services suitable for short-term employment or homemaker activity rather than for longer-term competitive employment. Moreover, studies show that few beneficiaries receive VR services that are associated with returning beneficiaries to work. SSA researchers reported that certain VR services—job placement, vocational training, and general education—had a significant and positive effect on the tendency for DI beneficiaries to return to work. This finding is supported by another study of the same population, in which about one-half to two-thirds of DI beneficiaries who received these types of VR services indicated that the services helped them return to work or continue working. The latter study found, however, that these VR services were offered to a small segment of the relatively few DI beneficiaries who received VR: only 6 percent received job placement services, 12 percent received vocational training, and 7 percent received general education. A similar message was reported by the 1988 Disability Advisory Council. The Council heard testimony that some state VR agencies did not provide adequate job placement and job retention services, and it recommended that VR programs for beneficiaries be geared toward these services. Findings from research we reviewed generally agreed that rehabilitation, including treatment, offered close to the onset of disabling impairments has the greatest likelihood of success. In fact, the literature emphasizes that “early” intervention for disabled workers is “not a question of months, but of days or even hours.” However, by the time a person applies for DI or SSI benefits, in many cases the chance for early work-site intervention has been lost. SSA survey results indicate that nearly 40 percent of DI/SSI applicants with a work history reported being out of the workforce for more than 12 months in the period immediately prior to applying for disability benefits. The application process further delays the provision of VR services. The period during which applicants are being certified and labeled as disabled is generally a lengthy one during which applicants risk becoming entrenched in their self-perceived inability to work. According to SSA’s Associate Commissioner for Disability, “DDSs refer some individuals...to the state [VR agencies] at the same time we notify these individuals of disability decisions. Arguably, this is the least appropriate time to discuss VR or employment.” The timing of the referral can diminish the effectiveness of VR in rehabilitating individuals and encouraging them to return to work. Extended absence from the workplace reinforces a person’s self-perceived inability to work and drains one’s motivation to work. As a consequence, receptiveness to participate in rehabilitation and job placement activities can decline. The VR service delivery structure may contribute to the limited gains in employment and earnings derived from state VR services. DDSs refer beneficiaries to the state VR agency network for services. Since state VR agencies select the service providers, little competition exists in this network to help ensure that beneficiaries receive high-quality, cost-effective services. Beneficiaries cannot choose among public and private service providers operating in a competitive market to find the one that provides the services they believe are most valuable. New authority in SSA’s regulations allows SSA to refer people to private VR providers when the state VR agencies refuse or are unable to serve referrals. SSA put into place the information system needed to begin implementation of these regulations early in 1996 and expects to have some private entities providing VR to its referrals by the summer of 1996. Although the regulations introduce limited competition in providing VR services to DI and SSI beneficiaries, two factors may limit participation by private VR providers. First, state VR agencies have 4 months to accept or reject a referral before beneficiaries can receive services from private providers. This first right of refusal may result in state agencies’ selecting beneficiaries who are the easiest to rehabilitate and employ, thereby leaving the most difficult cases for the private market to serve. Second, some private providers have criticized the practice of reimbursing for services only after clients have been employed at SGA for 9 continuous months. A representative of these providers calls the timing of this payment mechanism “unworkable” for the private sector because of the financial burden and risk it imposes on providers. In effect, allowing private sector providers access to beneficiaries only after the public sector rejects them means that private sector providers will continue playing a secondary role in the market. Consequently, choice and competition will remain curtailed, and the quality of VR services is not likely to change. In recent years, the potential for some DI and SSI beneficiaries to engage in substantial gainful employment has increased because of advances in assistive technologies and the medical management of disabilities, as well as an increasing trend toward the integration of people with disabilities into society. The Congress has signaled an interest in taking advantage of these changes to enhance the employment opportunities for DI and SSI beneficiaries. A significant portion of people receiving disability benefits may not be likely candidates for rehabilitation and return to work, however. For instance, almost one-half of a cohort of beneficiaries who entered DI in 1988 died or reached the age of 65 in less than 6 years. Furthermore, almost one-half of the adult DI and SSI beneficiary population was aged 50 or older in 1994. On the other hand, there is a meaningful portion of working-age beneficiaries who can be expected to survive for many years, and who may be candidates to return to work. SSA testified before the House Committee on Ways and Means in 1990 that almost one-third of DI and SSI beneficiaries are very good candidates for VR. Furthermore, 35 percent of the 84,000 DI beneficiaries who responded to a questionnaire in May 1993 that asked if their medical conditions had changed indicated an interest in receiving rehabilitation or other services that could help them get back to work. Weaknesses in the design and implementation of the DI and SSI programs, however, mean that little has been done to identify and encourage the productive capacities of beneficiaries who might be able to benefit from rehabilitation and employment assistance. The disability determination process encourages applicants to focus on their incapacities and, coupled with a strong financial incentive to retain benefits, may create little interest in returning to work. Work incentives may not overcome the risk of lost income faced by beneficiaries attempting trial work or the risk of losing medical coverage when successfully employed. SSA does not adequately promote work incentives, and the complexities of the work incentives—especially in the absence of clear guidance from SSA staff—are difficult for beneficiaries to understand. Also, state VR services do not appear to be accessible to many beneficiaries, and their effectiveness in securing long-term financial gains for beneficiaries has been called into question. The cumulative effect of these weaknesses is diminished capacity of the DI and SSI programs to return people to work. Indeed, we testified in May 1995 that SSA required a broader management focus to do more to improve the productive capacity of DI and SSI beneficiaries. In light of these weaknesses, SSA needs to place much greater emphasis on achieving return-to-work outcomes. Doing this will require SSA to restructure its existing strategies for identifying and enhancing the productive capacities of beneficiaries. SSA’s success in restructuring is likely to be dependent upon a multifaceted approach. For instance, expanding VR opportunities may not facilitate long-term employment among beneficiaries if people continue to fear that working their way off the rolls will lead to loss of health insurance. Also, educating beneficiaries about work incentives and VR services may have little impact if beneficiaries are better off financially not working than attempting to work. Examples such as these suggest that the full impact of restructuring return-to-work efforts may be limited unless these efforts are integrated into a unified and consistent strategy. As an initial step in restructuring its return-to-work strategy, SSA needs to identify the size and characteristics of the beneficiary population that has a reasonable chance of achieving gainful employment. SSA also needs to identify how the design and implementation of the DI/SSI application process, benefit structure, work incentives, and VR service provider system can be restructured to facilitate employment opportunities. Throughout such efforts, special attention should be given to developing data on the costs and benefits of various return-to-work strategies, as this will be essential input for policymakers considering redesign options. Finally, success in improving return-to-work rates will be likely to extend beyond the control of SSA alone to other federal agencies—such as the Department of Education and the Department of Labor, which have jurisdiction over issues affecting the rehabilitation and employment of people with disabilities—and to the private sector as well. SSA may find that restructuring its return-to-work strategies requires legislative action. For instance, the experts we interviewed, as well as much of the literature we reviewed, underscored the influence of treatment, supports, and services on the work capacities of people with disabilities. However, current law does not require the evaluation of an individual’s capacities to consider such enabling supports and services. Thus, to the extent that decisions on work capacity and successful return-to-work outcomes depend upon such supports and services, SSA may wish to propose legislative reform to the disability determination process, benefit structure, and other areas of program design. We recommend that the Commissioner of SSA take immediate action to place greater priority on return to work, including designing more effective means to more accurately identify and expand beneficiaries’ work capacities and better implementing existing return-to-work mechanisms. As part of this effort, the Commissioner of SSA should develop a legislative package for those areas in which SSA does not currently have legislative authority to enact change, in order to position the agency to expeditiously redirect its emphasis on return to work. In commenting on a draft of this report, the Commissioner of Social Security concurred with our findings and conclusions (see app. VI) but did not indicate whether or not she would take action to implement our recommendation. The Commissioner agreed that DI and SSI beneficiaries face a number of barriers and disincentives that impede entry into the workforce. She also agreed that many current beneficiaries have the potential to return to work and that making program improvements will involve input from a network of federal, state, and private sector players. The Commissioner made a number of technical comments, which we have incorporated where appropriate. | Pursuant to a congressional request, GAO provided information on the Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) programs, focusing on program weaknesses that impede the Social Security Administration (SSA) from identifying and expanding beneficiaries' return-to-work capabilities. GAO found that: (1) between 1985 and 1994, the combined DI and SSI beneficiary population increased 70 percent and the inflation-adjusted cost of cash benefits grew 66 percent; (2) increases were due to eligibility expansion, program outreach, fewer continuing disability reviews, economic factors, and demographic changes; (3) the beneficiary population is also growing younger and more beneficiaries have longer-term impairments; (4) the development of effective return-to-work strategies for people with severe disabilities is challenging because individuals may require various and changing levels of medical intervention or support, remedial retraining, education, or job coaching; (5) technological and medical advances and economic and social changes have created more potential for some individuals with disabilities to engage in work; (6) the SSI and DI benefit structure, their focus on inabilities rather than abilities, and poor access to rehabilitation services further complicate the difficult process of making disability and work capability determinations; and (7) although the programs offer such work incentives as trial work periods, extended eligibility, earned income exclusion, work expense subsidies, continued health insurance coverage, and reentitlement, they are not appropriately designed or implemented to motivate beneficiaries to return to work. |
CLOSE Scoring win after win in the Super Tuesday contests, Donald Trump took a big step towards clinching the Republican nomination, while rivals Ted Cruz and Marco Rubio held onto hope and vowed to fight on. (March 2) AP
Hillary might look like a shoo-in with African-American voters, but don't be too sure.
Trump rally in Columbus, Ohio, on March 1, 2016. (Photo: John Minchillo, AP)
With Hillary Clinton racking up more overwhelming victories in Super Tuesday primaries thanks to the overwhelming support of African-American voters, the conventional wisdom is that she has the black vote on lockdown. She might be wrong.
Clinton has already been endorsed by most members of the Congressional Black Caucus, many big city black mayors and other notable black elected officials from California to the Carolinas.
Additionally, she’s also getting not so subtle signs of support from Obama White House insiders and a few shout-outs from President Obama himself. Initially, the president promised to remain neutral until the primary season was over, but he recently appeared to ever so gently open the door to an endorsement of his former secretary of State sooner than expected.
Personally, I never thought Obama would wait that long, not after what Bill Clinton did for him at the Democratic National Convention in 2012 to help energize his re-election campaign. I suspect Obama would love nothing more than to even the score by repaying the debt he owes the Clintons. Politics is funny. First, they run against each other in a nasty campaign with racial overtones, then they feign friendship and work together, then Bill gallops in to help Barack win a second term, and now Hillary needs the president’s support to win the presidency herself. Talk about triangulation.
Nonetheless, the conventional wisdom is that black voters have forgiven the Clintons for their attempt to diminish Obama's 2008 presidential campaign, and this time around, they’ve got Hillary’s back. Except everyone knows that in this presidential election cycle, conventional wisdom left the building long before the train ever left the station. Something tells me that if Donald Trump is indeed the Republican nominee, it might be a miscalculation for Democrats to take for granted that black voters are a lock for their nominee, even with the first black president and Barack Obama both campaigning for her.
For starters, charisma, charm and likeability aren’t transferable. While the chance to elect the first woman president is indeed tantalizing for many, in black America specifically, it’s not exactly the same as watching an African-American first family taking up residence at 1600 Pennsylvania Ave. Indeed, even women haven’t as yet rallied en masse around Hillary the way black folk did around Obama.
Second, the number of everyday black voters we assume will dismiss Trump because of his anti-immigrant and anti-Muslim attacks might well be inflated. While I certainly have had my say about Trump being a “religious and racial arsonist” (and he responded quickly on Twitter), not everyone in black America agrees with me. I have been taken aback by myriad conversations I’ve had with black folk who don’t find those comments by Trump necessarily or automatically disqualifying. In the coming days, we will see whether his initial refusal last Sunday on CNN to disavow the endorsement of David Duke, the Ku Klux Klan and white supremacy might anger black voters. Interestingly, almost two months ago, CNN ran a story about a white supremacist group doing robocalls for Trump in Iowa. He didn’t denounce them then and seems not to have suffered for it.
Third, though it is true that black/brown political coalitions have had strategic successes, it is also true that there have been plenty of other occasions where the interests of black and brown voters didn’t exactly align. In California where I live, Latinos are still smarting from the lack of black voter support in 1994 to help defeat the anti-immigrant Proposition 187. At best, it’s a big assumption to think that both the black political establishment and everyday black voters share the same sentiment on Trump’s anti-immigrant stance. Scary, but honestly, I’m not so sure.
POLICING THE USA: A look at race, justice, media
Fourth, it’s telling how quiet the black elites have been, those who travel in social circles with Trump, even as he has been taken to task time and again for his racial if not racist language. There have been some exceptions — Harry Belafonte and Danny Glover come to mind — but the relative silence of the black establishment class has been chilling. Recently, I read a national newspaper feature about Trump and his relationships with notable high-profile black Americans. Interestingly, nobody really wanted to go on record criticizing The Donald.
I’ve talked privately to some of Trump’s black friends since I read that piece, and to a person, their critique of him is highly nuanced. Men and women from black America's most privileged class, either genuinely like this guy or they’re afraid of being caught in his social media meat grinder. Those whose job it is to comment on politics have been strong in condemning Trump, but those who earn their wealth elsewhere have been too quiet. In any event, it’s going to be interesting to watch how these BFOTs (black friends of Trump) support the Democratic nominee even as they try to remain neutral on Trump.
Finally, it’s mind-numbing to some of us that a reckless member of the billionaire class has somehow convinced hardworking, everyday people that he is their savior. But all rich guys aren’t created equal. Ultimately, Trump’s policies might not be that different from what Mitt Romney’s would have been, but they apparently sound different to working class voters.
For many black voters, I think it’s fair to say that, at the moment, at least, Trump is no Romney.
Consequently, there is no reason to believe that if he is his party’s nominee, Donald Trump wouldn’t make a serious play for black voters. Who knows how many he might skim? In a close election, it might not take much.
Tavis Smiley, a member of USA TODAY's Board of Contributors, is managing editor of Tavis Smiley on PBS and author of The Covenant with Black America: Ten Years Later.
In addition to its own editorials, USA TODAY publishes diverse opinions from outside writers, including our Board of Contributors. To read more columns like this, go to the Opinion front page.
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(Mar. 5) AP 11 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Stakes High for Rubio in Florida | 2:08 As Republican Presidential Candidate Marco Rubio cast his early ballot in his home state of Florida Wednesday, he faces stiff competition for the state's 99 delegates. (March 3) AP 12 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: Trump Trying to Carry Out 'Con Job' | 1:09 Republican presidential candidate Sen. Marco Rubio has a sharp message about Donald Trump for Michigan voters as the March 8 primary nears. He told a crowd north of Detroit that the billionaire is trying to "carry out a con job". (March 2) AP 13 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Raw: Rubio Casts Early Ballot in Florida | 0:47 Marco Rubio casts an early ballot in Florida's March 15 primary, insisting that he has a shot at winning the GOP presidential nomination despite strong Super Tuesday showings by Donald Trump and Ted Cruz. (Mar. 2) AP 14 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Supporters Say They're In It 'Till The End | 1:18 Republican presidential hopeful Marco Rubio's supporters say they're 'in it to win it,' and vowed to support him all the way 'till the end, despite Super Tuesday's disappointing results. (Mar. 2) AP 15 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: Staying in 'as long as it takes' | 1:49 Republican presidential candidate Marco Rubio said he will stay in the race 'as long as it takes,' saying his campaign is gaining momentum following the last debate. (March 1) AP 16 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: GOP 'will never be held by a con artist' | 1:52 Speaking at a Super Tuesday rally at his hometown in Miami, Florida Sen. Marco Rubio criticized the night's big winner among Republicans: Donald Trump. Rubio said he has begun "to unmask the true nature" of Trump, whom he called a "con artist." (Mar AP 17 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio, Cruz Take on Trump in Fiery Debate Brawl | 2:59 Brawling from the get-go, Senators Marco Rubio and Ted Cruz went hard after Donald Trump in the latest Republican presidential debate, attacking the front-runner's position on immigration, his privileged background, his speaking style and more. (Feb AP 18 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Pushed for Land Deal While Fla Legislator | 2:33 GOP presidential candidate Marco Rubio advocated before South Florida officials in 2002 to allow development on restricted land near the Everglades. Rubio's team says the former state legislator didn't lobby in the traditional sense. (Feb. 24) AP 19 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Why back Rubio? Voter says because he can beat Clinton | 0:28 Las Vegas man explains why he's backing Rubio. RGJ-Gannett 20 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: 'Not Going to Close Guantanamo' | 0:45 Republican presidential candidate Sen. Marco Rubio says that if elected president he will keep Guantanamo Bay open and keep captured terrorists there for questioning. (Feb. 23) AP 21 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: 'We Have To Unite' In Order To Win | 1:24 Republican presidential candidate Sen. Marco Rubio wrapped up Sunday campaigning with a rally in Nevada, which hosts its presidential caucuses on Tuesday. (Feb. 22) AP 22 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio: It's a '3-person race' after SC | 1:17 South Carolina Gov. Nikki Haley joins Republican presidential candidate Marco Rubio to thank his supporters for "changing the race" in the South Carolina GOP primary. USA TODAY 23 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL South Carolina Gov. Haley Endorses Marco Rubio | 1:44 South Carolina Gov. Nikki Haley endorsed Marco Rubio on Wednesday, three days ahead of Saturday's first-in-the-South Republican presidential primary. (Feb. 17) AP 24 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Burnishes Conservative Credentials in SC | 1:48 Campaigning in the critically important primary state of South Carolina, Republican presidential candidate Marco Rubio is making his closing arguments to Mount Pleasant voters. (Feb. 17) AP 25 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL A week after a poor debate performance, Rubio wins one | 1:06 In a CBS poll, 32 percent of respondents said Marco Rubio won Saturday night's GOP debate. Video provided by Newsy Newslook 26 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Fact check: False claims by Republican candidates | 2:13 Donald Trump, Ted Cruz and Jeb Bush all misspoke during the ninth Republican debate. USA TODAY 27 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Republican candidates intensify attacks during debate | 1:57 Republican candidates took jabs at each other in an intense debate hosted by CBS, and the feud between Jeb Bush and Donald Trump has moved well beyond simple clashes over policy. VPC 28 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio's candy bar catastrophe ends in dental work | 0:41 Marco Rubio had to take a break from campaigning to make a stop at a dentist's office after he cracked his molar on a frozen Twix bar. Video provided by Newsy Newslook 29 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio looks for a fresh start in South Carolina | 1:45 Campaigning in Spartanburg, South Carolina, Marco Rubio shares his vision for America if he's elected president. Rubio comes off a fifth place finish in New Hampshire behind Jeb Bush. (Feb. 10) AP 30 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio struggling, will he hold on? | 0:53 Instead of giving Donald Trump a run for his money in the Republican Presidential race, Marco Rubio looks tired as he enters a critical day in New Hampshire. USA TODAY 31 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio: 'Disappointment not on you, it's on me' | 2:09 Marco Rubio says he's disappointed in his performance Tuesday in New Hampshire's Republican presidential primary, and he's blaming himself. The Florida senator pointed to his performance in the last Republican debate on Saturday as the reason. (Feb. AP 32 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: 'We Feel Real Good' About N.H. Primary | 1:07 As voters continued casting ballots in New Hampshire's first in the nation primary Tuesday, Republican presidential candidate Marco Rubio greeted supporters outside a high school in Windham and said he felt good about the state of his campaign. (Feb AP 33 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Take-Aways: Rubio Shaken, Trump Not Stirred | 1:19 There have been no higher stakes on a Republican debate stage in the 2016 campaign for president than there were Saturday night. (Feb. 7) AP 34 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio battled Christie, Trump got booed in GOP debate | 2:07 Republican presidential candidates Marco Rubio battled Chris Christie while Trump got booed after telling Jeb Bush to be quiet. VPC 35 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: 'Hope We Have Momentum' In New Hampshire | 2:02 Speaking in Manchester, Republican presidential candidate Sen. Marco Rubio said he's feeling good about the state of his campaign in New Hampshire. He also rejected claims by New Jersey Gov. Christ Christie that his candidacy exists in a bubble. (Fe AP 36 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: 'I Can't Wait' To Run Against Hillary | 1:17 Republican presidential candidate Sen. Marco Rubio says Democrats do not want to run against him because he wants to grow the conservative movement. (Feb. 4) AP 37 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: Election is 'Referendum on Identity' | 2:37 Republican presidential candidate Senator Marco Rubio says that this year's election is a referendum on identity asking voters to decide what kind of country they want to be in the 21st century. (Feb 3) AP 38 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio pulls strong 3rd place finish in Iowa caucus | 0:46 Senator Marco Rubio pulls strong 3rd place finish in Iowa caucus 39 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio says why it's his turn to be president | 1:06 GOP candidate Marco Rubio says that despite being criticized for his youth, it is his turn to be president because he can reunite the Republican party. WHO 40 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio: "I Am Grateful to You, Iowa." | 1:28 Republican Presidential candidate, Florida Sen. Marco Rubio delivered a hopeful message and thanked supporters in Iowa, vowing to be back next year as President. Rubio then said he was ready to continue on to New Hampshire. (Feb. 1) AP 41 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Details Immigration Plan on Campaign Bus | 1:04 Speaking to the Associated Press on his campaign bus, Republican presidential hopeful Sen. Marco Rubio says that if he is elected president, he will not look to deport 12 million people in the U.S. illegally. (Jan. 29) AP 42 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Mustard Minute: Marco Rubio plays cornhole overhand | 1:14 Presidential candidate Marco Rubio played cornhole with some Iowa State University students. His form was not ideal. Time_Sports 43 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL As Rubio rises, the media keeps bringing up 'trivial' past | 1:44 Once again, the candidate is calling out a newspaper for reporting on what he sees as trivial issues from his past. Video provided by Newsy Newslook 44 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Works to Win Christian Vote in Iowa | 0:48 Republican presidential hopeful Marco Rubio is promoting his Christian faith as he campaigns across Iowa. During an event on Monday, Rubio said his faith "is the single greatest influence" in his life. (Jan. 18) AP 45 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Treats His Kids to Campaign Sledding Break | 0:40 Republican presidential candidate, Senator Marco Rubio, took a break from campaigning Wednesday to watch his kids go sledding near the Iowa State Capitol. (Dec. 31) AP 46 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Debate Takeaways: Cruz, Rubio Clash on policy | 2:28 Nine Republican presidential candidates took the stage Tuesday night for a debate that focused almost exclusively on foreign policy. Here's a look at some of the key takeaways from the last GOP presidential debate of the year. (Dec. 16) AP 47 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio tweaks abortion stance criticized by Dems | 1:26 In an Associated Press interview Republican presidential candidate Marco Rubio says he would sign an abortion bill that provides exceptions for the life of the mother if elected president. (Nov. 25) AP 48 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Talks to AP on How He'd Deal With Cuba | 1:53 In an exclusive interview with the Associated Press, Republican presidential candidate Marco Rubio explains why rolling back President Barack Obama's Cuba policy would be near the top of his list of presidential priorities. (Nov. 19) AP 49 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio snatches 1st place in GOP Power Rankings | 2:09 Senator Marco Rubio moves up to first place in USA Today's GOP Power Rankings. Rubio's strong debate performance propels him forward. 50 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Rubio Shines, Bush Deflates in GOP Campaign | 2:00 Wednesday's GOP presidential debate dominated this week in the campaign with Sen. Marco Rubio getting a big boost and former Florida Gov. Jeb Bush struggling to maintain his footing. AP's Julie Bykowicz describes this week in politics. (Oct. 30) AP 51 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Bush to Rubio: 'Just resign' from Senate seat | 0:31 The old friends weren't so friendly at Wednesday's GOP debate. Video provided by Newsy Newslook 52 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Bush And Rubio Tangle In Republican Debate | 1:58 Floridians Jeb Bush and Marco Rubio clashed for control of the party's more mainstream wing as the third Republican debate opened in Boulder, Colorado on Wednesday. (Oct. 28) AP 53 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Presidential hopefuls, other republicans speak in Iowa | 4:20 Watch highlights from the Iowa Faith & Freedom Coalition, including current and likely presidential contenders Marco Rubio, Rand Paul, Rick Perry, Bobby Jindal, Rick Santorum, Mike Huckabee, Ted Cruz and Scott Walker. Des Moines Register 54 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Sen. Rubio quotes movie 'Taken' while talking jihadism | 1:06 Florida Senator Marco Rubio quotes the movie 'Taken' while addressing his position on dealing with terrorism and jihadists at the South Carolina Freedom Summit. VPC 55 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio gets a poll bounce | 1:02 Marco Rubio got a bounce from his presidential announcement. A new CNN/ORC International poll released last night has two takeaways that are good news for the Florida senator, who officially jumped into the 2016 race on April 13. Wochit 56 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL On tax day, Rubio wants changes | 0:55 Republican presidential candidate Sen. Marco Rubio called for changes to the U.S. tax code that he says will encourage job growth and leave more money in the pickets of Americans. (April 15) AP 57 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL 10 fun facts about Marco Rubio | 1:36 Florida Senator Marco Rubio has officially thrown his hat into the ring for the 2016 Presidential race. Here are 10 fun facts about him. VPC 58 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio announces 2016 presidential bid | 2:10 Republican Senator Marco Rubio from Florida announced his 2016 presidential bid and called Hillary Clinton "a leader from yesterday" that will take the nation back to the past. VPC 59 of 60 Skip in Skip x Embed x Share CLOSE MARCO RUBIO ON THE CAMPAIGN TRAIL Marco Rubio's 2016 presidential run: Why it matters | 1:36 USA TODAY's Washington Bureau Chief Susan Page lists four reasons Marco Rubio is worth watching in the 2016 presidential race. USA TODAY 60 of 60 Last VideoNext Video Marco Rubio Ends White House Bid
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Read or Share this story: http://usat.ly/1oXknPt ||||| CLOSE Scoring win after win in the Super Tuesday contests, Donald Trump took a big step towards clinching the Republican nomination, while rivals Ted Cruz and Marco Rubio held onto hope and vowed to fight on. (March 2) AP
Hillary might look like a shoo-in with African-American voters, but don't be too sure.
Trump rally in Columbus, Ohio, on March 1, 2016. (Photo: John Minchillo, AP)
With Hillary Clinton racking up more overwhelming victories in Super Tuesday primaries thanks to the overwhelming support of African-American voters, the conventional wisdom is that she has the black vote on lockdown. She might be wrong.
Clinton has already been endorsed by most members of the Congressional Black Caucus, many big city black mayors and other notable black elected officials from California to the Carolinas.
Additionally, she’s also getting not so subtle signs of support from Obama White House insiders and a few shout-outs from President Obama himself. Initially, the president promised to remain neutral until the primary season was over, but he recently appeared to ever so gently open the door to an endorsement of his former secretary of State sooner than expected.
Personally, I never thought Obama would wait that long, not after what Bill Clinton did for him at the Democratic National Convention in 2012 to help energize his re-election campaign. I suspect Obama would love nothing more than to even the score by repaying the debt he owes the Clintons. Politics is funny. First, they run against each other in a nasty campaign with racial overtones, then they feign friendship and work together, then Bill gallops in to help Barack win a second term, and now Hillary needs the president’s support to win the presidency herself. Talk about triangulation.
Nonetheless, the conventional wisdom is that black voters have forgiven the Clintons for their attempt to diminish Obama's 2008 presidential campaign, and this time around, they’ve got Hillary’s back. Except everyone knows that in this presidential election cycle, conventional wisdom left the building long before the train ever left the station. Something tells me that if Donald Trump is indeed the Republican nominee, it might be a miscalculation for Democrats to take for granted that black voters are a lock for their nominee, even with the first black president and Barack Obama both campaigning for her.
For starters, charisma, charm and likeability aren’t transferable. While the chance to elect the first woman president is indeed tantalizing for many, in black America specifically, it’s not exactly the same as watching an African-American first family taking up residence at 1600 Pennsylvania Ave. Indeed, even women haven’t as yet rallied en masse around Hillary the way black folk did around Obama.
Second, the number of everyday black voters we assume will dismiss Trump because of his anti-immigrant and anti-Muslim attacks might well be inflated. While I certainly have had my say about Trump being a “religious and racial arsonist” (and he responded quickly on Twitter), not everyone in black America agrees with me. I have been taken aback by myriad conversations I’ve had with black folk who don’t find those comments by Trump necessarily or automatically disqualifying. In the coming days, we will see whether his initial refusal last Sunday on CNN to disavow the endorsement of David Duke, the Ku Klux Klan and white supremacy might anger black voters. Interestingly, almost two months ago, CNN ran a story about a white supremacist group doing robocalls for Trump in Iowa. He didn’t denounce them then and seems not to have suffered for it.
Third, though it is true that black/brown political coalitions have had strategic successes, it is also true that there have been plenty of other occasions where the interests of black and brown voters didn’t exactly align. In California where I live, Latinos are still smarting from the lack of black voter support in 1994 to help defeat the anti-immigrant Proposition 187. At best, it’s a big assumption to think that both the black political establishment and everyday black voters share the same sentiment on Trump’s anti-immigrant stance. Scary, but honestly, I’m not so sure.
POLICING THE USA: A look at race, justice, media
Fourth, it’s telling how quiet the black elites have been, those who travel in social circles with Trump, even as he has been taken to task time and again for his racial if not racist language. There have been some exceptions — Harry Belafonte and Danny Glover come to mind — but the relative silence of the black establishment class has been chilling. Recently, I read a national newspaper feature about Trump and his relationships with notable high-profile black Americans. Interestingly, nobody really wanted to go on record criticizing The Donald.
I’ve talked privately to some of Trump’s black friends since I read that piece, and to a person, their critique of him is highly nuanced. Men and women from black America's most privileged class, either genuinely like this guy or they’re afraid of being caught in his social media meat grinder. Those whose job it is to comment on politics have been strong in condemning Trump, but those who earn their wealth elsewhere have been too quiet. In any event, it’s going to be interesting to watch how these BFOTs (black friends of Trump) support the Democratic nominee even as they try to remain neutral on Trump.
Finally, it’s mind-numbing to some of us that a reckless member of the billionaire class has somehow convinced hardworking, everyday people that he is their savior. But all rich guys aren’t created equal. Ultimately, Trump’s policies might not be that different from what Mitt Romney’s would have been, but they apparently sound different to working class voters.
For many black voters, I think it’s fair to say that, at the moment, at least, Trump is no Romney.
Consequently, there is no reason to believe that if he is his party’s nominee, Donald Trump wouldn’t make a serious play for black voters. Who knows how many he might skim? In a close election, it might not take much.
Tavis Smiley, a member of USA TODAY's Board of Contributors, is managing editor of Tavis Smiley on PBS and author of The Covenant with Black America: Ten Years Later.
In addition to its own editorials, USA TODAY publishes diverse opinions from outside writers, including our Board of Contributors. To read more columns like this, go to the Opinion front page.
Read or Share this story: http://usat.ly/1oXknPt | If the general election comes down to Hillary Clinton vs. Donald Trump, conventional wisdom suggests that Clinton has a lock on the black vote. After all, African Americans have flocked to her during the primaries, and she'll have the enthusiastic backing of the nation's first black president. Trump, on the other hand, keeps running into problems like this one involving white supremacist David Duke. But at USA Today, Tavis Smiley writes that conventional wisdom doesn't apply to this election and that Democrats will be making a serious "miscalculation" if they assume black voters will pick Clinton. He lays out a few reasons, perhaps the most interesting being the silence he's noticed from the group he labels the BFOTs—Black Friends of Trump. These are the "black elite" who travel in the same social circles as the billionaire. "The relative silence of the black establishment class has been chilling," he writes. With a few exceptions from the likes of Harry Belafonte and Danny Glover, nobody in this group seems willing to publicly condemn Trump for his statements or policies. They "either genuinely like this guy or they’re afraid of being caught in his social media meat grinder." It's among the reasons Smiley thinks Trump has a genuine chance with a decent number of African Americans. "Who knows how much he might skim?" he writes. "In a close election, it might not take much." (Click for his full column and the rest of his rationale.) |
In 1986, the Congress replaced CSRS with FERS for federal employees hired beginning January 1, 1984, in part to (1) recognize the inclusion of federal employees under Social Security and (2) reduce federal pension costs. Among the concerns of congressional deliberators in crafting FERS were that its retirement benefits be comparable with those under CSRS and enable employees to maintain their standard of living in retirement. To accomplish these and other goals, FERS provides a retirement benefit that comprises three components: a basic FERS annuity, Social Security payments, and TSP payments. The total income from these sources is meant to help individuals to receive retirement benefits comparable with CSRS benefits and commensurate with their retirement income goals. The basic FERS annuity is similar to CSRS in that it guarantees a specific monthly retirement benefit based on age, length of creditable service, and the average of the highest 3 consecutive years’ salaries. However, the FERS annuity is lower because its benefit formula credits each year of service generally at 1 percent while CSRS service credits range from 1.5 to 2 percent per year of service. In addition, cost-of-living adjustments authorized by FERS are lower and generally are not provided before age 62. Unlike the FERS basic annuity, the benefit provided under Social Security’s benefit formula declines as a proportion of individuals’ preretirement earnings as their earnings increase. For example, a person aged 62, with a certain lifetime earnings pattern and earnings of $20,000 in his or her final year of employment, would receive Social Security benefits that represent about 35 percent of those earnings. In contrast, a person aged 62, with a certain lifetime earnings pattern and earnings of $75,000 in his or her final year of employment, would receive a benefit that represents just about 17 percent of those earnings. Pension professionals believe that to maintain roughly the same living standard in retirement, individuals’ income needs generally range from 60 to 80 percent of their preretirement annual pretax earnings. Among other things, retirees typically pay less taxes, do not have work-related expenses such as daily commuting costs and clothing needs, may no longer have dependent children, and may have their mortgages paid. TSP is administered by the Federal Retirement Thrift Investment Board, which is an independent agency. The Board consists of five part-time members who are appointed by the President. TSP’s daily activities are carried out by a staff headed by an executive director selected by the Board. Retirement benefits from TSP are the flexible component of FERS because they depend on the amount that is in each employee’s account at retirement. Thus, TSP can help FERS-covered employees to save toward a total retirement benefit that is commensurate with their retirement income goals. Employees under FERS are automatically enrolled in TSP because federal agencies are required to contribute an amount equal to 1 percent of their employees’ salaries to the plan. In addition, employees can make voluntary contributions up to 10 percent of their salaries: agencies match the first 3 percent on a dollar-for-dollar basis and the next 2 percent at 50 cents to a dollar, for a 5 percent total agency contribution; additional employee contributions are not matched, but all contributions and earnings thereon are tax deferred. CSRS employees may also participate in TSP by contributing up to 5 percent of their salaries; while there is no agency match, the contributions and earnings are tax deferred. However, all employee contributions are limited to a statutory inflation-adjusted cap, which was $8,994 in 1993. TSP contributions can be invested in a federal government securities fund (G fund), a commercial bond fund (F fund), and a commercial large capitalization stock fund (C fund). The C and F funds are passively managed index funds that track changes in a certain body of securities in the stock and bond markets. These investment options were specified in TSP’s statute, which also provided for adding investment options, via amendments, at the request of TSP’s Board. In addition, TSP’s law restricted the amounts that could be invested in the C and F funds through 1990.With the lifting of the restriction in 1991, employees have increased their contributions to the C and F funds. For example, in January 1991 about 5 percent and 2 percent of contributions were going into the C and F funds, respectively, while in August 1994 the comparable rates were 35 percent and 10 percent. In January 1995, TSP contributions and earnings were invested as shown in table 1. TSP’s three funds have had different average annual rates of return since 1987. The C fund has averaged 12.5 percent, a higher return than the F and G funds’ average earnings of about 8.0 percent each over the 7 years of plan experience. The C and F funds also have been more volatile than the G fund as shown in figure 1. Figure 1 shows that a $1,000 investment in the C fund on January 1, 1987, would grow to $2,452 over the following 7 years based on actual annual rates of return. Similarly, $1,000 investments in the F and G funds would grow to $1,836 and $1,868, respectively, over the same period. The higher returns available from the C fund also connote the somewhat higher risks inherent in a stock portfolio. Thus, the retirement income TSP ultimately provides a participant will depend on how much the individual has contributed and on the rates of return earned on those contributions. Since returns and risks are related, the ability to diversify investments among stocks and bonds is an important factor for participants in a program such as TSP because it allows them to tailor their investment portfolios to reflect the level of risk they are willing to assume. The proportion of FERS-covered employees contributing to TSP has steadily increased. For example, in September 1987 some 219,000 FERS-covered employees (about 38 percent) were making voluntary contributions to TSP; whereas, in September 1994 about 942,000 (76 percent) were doing so. However, the degree of voluntary participation in TSP has varied considerably among salary ranges as shown in table 2. Most of the 300,000 (24 percent) FERS-covered employees who did not make any voluntary contributions were lower-paid workers. Historically, such employees have been less likely to make voluntary contributions than have employees in the middle and higher salary ranges. However, as the table shows, the lower salary ranges have shown the greater increase over time in the percentage of individuals who make contributions. Overall, in 1993 FERS-covered employees making voluntary contributions were deferring an average of 5.7 percent of their salaries compared with 3.7 percent in 1987. The deferral rates varied from 4.4 percent of their salaries for low-wage employees to 7.2 percent for the highest-wage employees as table 3 shows. Also, as with the percentage of employees making contributions, deferral rates vary among salary groups. The deferral rate among employees in the lower salary range has also increased the least compared with the rates of the other employees since 1987—about 27 percent compared with over 50 percent for all but the highest salary range. The 41-percent increase in the highest salary range may be partly due to the statutory inflation-adjusted cap on annual contributions, which was $8,994 for 1993. Our analysis showed a disparity in the extent to which higher- and lower-paid employees under FERS may need to contribute to TSP to achieve total FERS retirement benefits that would be commensurate with their preretirement standard of living. In general, lower-paid workers may achieve retirement income goals, or total benefits that are in the range of 60 to 80 percent of final annual earnings, with minimal TSP deferral rates, while higher-paid workers need to defer at correspondingly higher rates. A July 1986 Congressional Research Service report included illustrative comparisons of the replacement rates under FERS and CSRS for various retirement assumptions and TSP benefits from (1) just the mandatory agency 1-percent contribution and (2) employee voluntary contributions of 5 percent. In our analysis, we updated the Congressional Research Service’s illustration for employees retiring after 30 years of service at age 62. Our analysis showed that such employees with earnings in the lower salary ranges might achieve a level of FERS benefits that would be within 60 to 80 percent of final annual earnings with just their agencies’ mandatory 1-percent contribution but that employees in the higher salary ranges would not. However, using conservative assumptions of TSP returns of 6.1 percent, contributions of 5 percent throughout their careers would also provide higher-paid employees with an overall FERS replacement rate within this range as shown in table 4. Again, the disparity in the total replacement rates largely results from the varying level of benefits that Social Security provides to individuals in different earnings brackets. As table 4 shows, the Social Security replacement rate is just 14 percent for an employee aged 62 with final pretax wages of $100,000 but over twice as high (35 percent) for someone with final wages of $20,000. Furthermore, table 4 shows that a 5-percent deferral provides a total FERS replacement rate for higher-paid workers that is in the lower end of the range that pension professionals believe is needed (that is, the 64 and 68 percent shown in table 4). These lower replacement rates may not reflect such individuals’ retirement income goals and, consequently, these employees would need to contribute more than 5 percent to TSP to achieve a higher level of total FERS benefits. In general, the lower TSP’s investment earnings are the more an individual would need to contribute in order to reach a certain total FERS replacement rate goal; conversely, higher TSP returns would provide individuals with a higher retirement income than they projected as their goal at a given deferral rate. For example, using TSP’s actual average rate of return of 8.95 percent for the period 1988 to 1994 produces TSP replacement rates that are about 50 percent higher than those shown in table 4. The TSP Board produces and provides to federal agencies a variety of educational materials for their employees. Among other things, these leaflets, pamphlets, and brochures emphasize the monetary benefits of TSP, such as the advantages of tax deferral, the effects of compounding, and the higher returns possible from beginning to make contributions early in one’s career. In addition, these materials inform employees about the pros and cons, including potential risks, of investing in each of TSP’s three funds and the earnings history of each fund. However, TSP’s educational materials are not explicit in discussing the importance of employee TSP contributions in achieving total FERS retirement benefits that would be commensurate with preretirement living standards, that is, benefits in the range of 60 to 80 percent of earnings. For example, the materials do not include illustrative examples of FERS replacement rates at varying TSP deferral rates and their effect on total FERS benefits. Private sector plans have such examples in their educational materials. Were TSP’s Board to revise its materials to include that type of example, it would need to do so in collaboration with the federal Office of Personnel Management (OPM), which has some responsibility for overall FERS education, including establishing training programs for agency retirement counselors. In May 1995, TSP’s Board decided to seek legislation that would add two investment options: an indexed domestic small capitalization equity fund and an indexed international equity fund. The Board selected these funds because they add diversity and provide the opportunity for greater returns than the current options though at somewhat increased risk. Adding the two funds would make TSP’s number of investment options and mix more like those provided under private sector section 401(k) plans. TSP’s Board began looking into the possibility of increasing the number of investment options in 1992 after the statutory restrictions on C and F fund investments expired. Among other things, the Board reviewed the investment options generally available under section 401(k) plans and the returns and risks associated with them. On average, most private sector section 401(k) plans offer four or more investment options that include a number of bond and stock funds of varying risk. The Board’s actions to broaden TSP’s investment options are consistent with pension professionals’ beliefs that employees should have a variety of investment options encompassing a range of risks and returns to provide the opportunity for higher earnings that would increase their retirement nest eggs. The new options would allow TSP participants to diversify their investments. The new funds would complement the C fund, which has historically outperformed the G and F funds by an average of about 4.5 percentage points since 1987. Proposed legislation to add the options was introduced in the Senate on July 27, 1995, and in the House of Representatives on September 12, 1995. TSP was designed to provide one source of retirement income for FERS-covered employees. However, unlike the two other FERS components whose benefits are determined by formula and are constant for individuals with the same work histories, TSP’s benefits will vary according to the amounts that employees have contributed and the investment returns on those contributions. Because of the effects of Social Security’s benefit formula, higher-paid workers will be more dependent on TSP income than lower-paid workers in maintaining their standard of living in retirement. TSP’s educational materials, however, are not explicit in making this distinction. These materials should explain and provide examples of contribution rates and their relationship to preretirement earnings and potential retirement income. TSP was also designed to be a retirement savings vehicle for federal employees that is similar to section 401(k) plans for workers in the private sector. The addition of the indexed domestic small capitalization equity and indexed international equity funds will provide federal employees the same opportunity that those in the private sector have for tailoring their investment portfolios to reflect the returns they seek and the risks they are willing to undertake. We recommend that to help ensure that TSP participants have investment opportunities similar to those available under comparable private sector plans, the Congress enact legislation adding the two investment options sought by TSP’s Board. We recommend that the Board, in collaboration with OPM, include in TSP’s educational materials (1) an explanation of TSP’s pivotal role in enabling employees under FERS to achieve their retirement income goals and (2) explicit illustrations of the effects of TSP deferral rates on total FERS benefits. The Federal Retirement Thrift Investment Board provided written comments on a draft of this report (see app. II). The Board disagreed with our recommendation that TSP’s educational materials include an explanation of TSP’s role in FERS and explicit examples of the effect of TSP deferral rates on total FERS benefits. The Board stated that such actions by TSP would constitute employee education about FERS, which is an OPM responsibility under the FERS statute. The Board noted that its educational materials are replete with illustrations that show the dramatic effect of contributions and investment earnings on the size of an employee’s TSP account. However, the Board added that the materials do not analyze or explain the impact that employee TSP accounts will have on total FERS retirement income because FERS legislation gave that responsibility to OPM. Also, the Board provided some technical comments that we incorporated in the report as appropriate. While OPM has some responsibility for FERS education, such as establishing training programs for agency retirement counselors, we do not agree that authority to educate employees on the effects of TSP investments on their total FERS benefits is vested exclusively in OPM. We continue to believe that the Board is in a better position to develop educational materials that include explicit examples of TSP’s potential effects on FERS retirement income. Such examples would demonstrate TSP’s pivotal role in the context of FERS, particularly given the effect of Social Security’s benefit formula. For example, an OPM booklet on FERS includes examples of replacement rates for four individuals retiring at various ages, with differing work histories of federal and nonfederal service, and with TSP deferral rates of 3 and 5 percent. However, while the examples are helpful in showing the increased benefits derived from contributions at 5 percent compared with 3 percent, they are not explicit in demonstrating TSP’s significance in overall FERS benefits at retirement. Without its FERS context, we believe the value of TSP’s educational materials to the individual employee is greatly diminished. Furthermore, TSP is the appropriate source for such information because it periodically contacts all employees who participate in the plan—including those not making any voluntary contributions. Accordingly, we believe that TSP should prepare such educational materials. OPM officials stated that the Board could do so in collaboration with OPM. As arranged with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 5 days after its issue date. At that time, we will send copies of this report to other congressional committees and members with an interest in this matter and to others upon request. Our review was performed under the direction of Donald C. Snyder, Assistant Director. Other contributors were Endel P. Kaseoru, Evaluator-in-Charge, and evaluators Carolina M. Morgan and Gregory Curtis. If you or your staff have any questions about this report, please call me on (202) 512-7215 or Mr. Snyder on (202) 512-7204. We calculated illustrative FERS replacement rates for each of the program’s three components—the basic FERS annuity, Social Security benefits, and TSP—for employees retiring with 30 years of service at age 62, the average federal retirement age in 1994 for regular retirements. To make our calculations, we simulated the salary histories of five hypothetical federal employees and estimated the annuities they would receive under certain assumptions. The time frame for our analysis was 1986 through 2015. To produce the salary histories for our model, we used wage growth rates that are consistent with federal General Schedule salaries. The workers in our model began their federal careers in 1986 at entry-level salaries for GS-2, –3, –5, –7, and –9 and retired in January 2016 at age 62 with final annual salaries, as measured in 1995 dollars, of $20,000, $30,000, $45,000, $75,000, and $100,000. We first created an inflation-adjusted earnings history for these workers and then converted it to current year earnings using the actual inflation rates from 1986 to 1995 and 3.4 percent thereafter. To determine employees’ FERS annuities, we used the basic FERS annuity formula in the law. However, while the formula computes the benefit at 33 percent of the average of the highest 3 consecutive years’ salaries, the replacement rate is less than 33 percent because the estimated wages grow in each of the 3 years prior to retirement; thus, the 3-year average used to calculate the annuity is lower than the final year’s wages. To calculate Social Security benefits, we used the “ANYPIA” software program provided by the Social Security Administration’s Office of the Actuary. In applying this program, we used the alternative I assumptions of future economic activity from the 1994 report of the Board of Trustees of the Federal Old Age and Survivors Insurance and Disability Insurance Trust Funds. The alternative I assumptions are conservative, and thus they produced replacement rates that were lower by 1 to 5 percentage points than the rates produced by alternatives II and III. To calculate the TSP replacement rates, we estimated the balance in the individuals’ accounts at retirement based on employee and agency contributions of 5 percent each and the agency-only 1-percent contribution. For our baseline analysis, we assumed that the accounts earned a conservative return of 6.1 percent, the same rate the Congressional Research Service used in its analysis. We also calculated replacement rates using a weighted average of actual TSP returns from 1988 to 1994 of 8.95 percent. This higher annual rate of return produced TSP replacement rates that were about 50 percent higher for each salary level. We then calculated an annuity for each account balance using a worksheet in TSP’s annuities booklet. We assumed an increasing single life annuity at 6-percent interest, the rate used in TSP’s worksheet. The replacement rates we computed, shown in table 4, vary by final year wage because each had a different growth rate over the 30 years we modeled. We also tested different rates of wage growth, returns on TSP, and the FERS annuity and found the results were consistent across the five final salaries we modeled. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (301) 258-4097 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO provided information on the Federal Employee Retirement System (FERS), focusing on: (1) the extent to which employees under FERS voluntarily contribute to the Thrift Savings Plan (TSP); (2) how well TSP educational materials address the importance of employee participation; and (3) whether there should be additional TSP investment options. GAO found that: (1) as of September 1994, about 76 percent of FERS employees voluntarily contributed an average of 5.7 percent of their salaries to TSP; (2) most of the non-contributing employees were in lower pay grades; (3) lower paid workers contribute less of their salaries to TSP because social security benefits are proportionally higher for lower income workers; (4) these workers may not need to contribute as much to TSP in order to maintain their preretirement standard of living; (5) mid- and high-pay level workers need to contribute at least 5 percent of their salaries over their careers to achieve 60 to 80 percent of preretirement income; (6) although TSP educational materials extensively discuss the plan's financial aspects, they do not explicitly discuss the importance of employee participation in TSP; (7) the TSP Board is seeking legislation that would add two stock fund options to the three investment options it already offers in order to make these options more similar to those available in private-sector plans; and (8) although they carry a higher investment risk, these new investment options could potentially produce higher earnings for plan participants. |
In September 1978, the governments of Egypt and Israel signed the Camp David Accords, which, on March 26, 1979, culminated in the Treaty of Peace, signed by the leaders of Egypt and Israel and witnessed by the President of the United States. While annex I, article VI of the treaty specifically proposes that U.N. forces and observers supervise these security arrangements, the United States committed in a formal exchange of letters with the presidents of Egypt and Israel to ensure the establishment of an acceptable alternative multinational force if the U.N. process failed. Efforts were made during the following 2 years to secure a U.N. force and observers as contemplated by the Treaty of Peace. However, on May 18, 1981, the President of the United Nations Security Council announced the proposal to establish U.N. forces and observers in the Sinai had been rejected. Consequently, on August 3, 1981, a Protocol to the treaty was signed by the governments of Egypt and Israel and witnessed by the United States, establishing the Multinational Force and Observers (MFO). The MFO is an independent, international peacekeeping organization, established outside the U.N. framework, to monitor Israeli and Egyptian compliance with Treaty of Peace provisions. Since 1982, the MFO has acted as an observer, reporter, and monitor of security provisions, as well as an active liaison between Israel and Egypt. The MFO was jointly conceived by Israel and Egypt, with a firm U.S. diplomatic, military, and financial commitment. The Protocol, when combined with annex I of the Treaty of Peace, serves as the mandate and charter of the MFO. It sets forth the organization, functions, privileges, and immunities of the MFO and its members. The Protocol specifically substituted the MFO for the U.N. force and observers stipulated in the treaty, making the MFO responsible for monitoring compliance with, and reporting of any violations of, the military limitations specified in the treaty. Annex I to the Treaty of Peace establishes three security zones (A, B, and C) within the Sinai and one in Israel (zone D) along the international border and specifies military personnel and equipment limitations of each. Figure 1.1 illustrates the zones. Planning and preparation for MFO deployment occurred from August 1981 until its deployment in March 1982 with significant U.S. involvement. During this period, (1) the MFO was headquartered in Northern Virginia, (2) the U.S. Army Corps of Engineers accomplished all new construction in the Sinai at the site of a vacated Israeli air base in the Northern Sinai and at a totally undeveloped area in the Southern Sinai, and (3) the United States assisted in obtaining MFO participants from other governments. Although deployed in March 1982, the MFO formally assumed its functions on April 25, 1982, in conjunction with the day of final Israeli withdrawal from the Sinai. Since inception of the MFO, the U.S. government has provided diplomatic, military and financial support. The scope of these contributions are discussed in chapters 2 and 3. Under the Protocol, the mission of the MFO is to undertake the functions and responsibilities stipulated in the treaty for the U.N. forces and observers. Specifically, these functions are: Operation of checkpoints, reconnaissance patrols, and observation posts along the international boundary and line B, and within zone C. Periodic verification of the implementation of the provisions of the Treaty of Peace, to be carried out not less than twice a month unless otherwise agreed by the Parties. Additional verification within 48 hours after receipt of a request from either party. Ensuring the freedom of navigation through the Strait of Tiran. In addition to military forces at checkpoints in the Sinai, the MFO has a Coastal Patrol Unit and civilian observers who conduct both ground and air surveillance. The annex to the Treaty’s Protocol prescribes specific guidelines and responsibilities for the MFO organization, management, and operation. The Director General of the MFO is responsible for overall management and control and has staff at four locations: (1) MFO Headquarters in Rome, Italy; (2) Force Headquarters and operations in the Sinai; (3) offices representing the Director General in Cairo; and (4) Tel Aviv. Figure 1.2 shows the organizational structure of the MFO. The MFO headquarters staff in Rome, at the time of our review, was composed of 15 international personnel, the majority being from the United States, and 16 Italian nationals. The Director General, always a U.S. national, serves a 4-year term, which may be renewed or terminated by the Parties to the treaty. The Director General and his staff oversee all MFO operations, including legal and financial matters, contracts, procurement, facilities management, personnel and recruitment, morale and welfare programs, troop rotation arrangements, and program evaluation. Additionally, they handle all diplomatic matters between the MFO, Egypt, and Israel, as well as the governments of the countries that provide troops and financial contributions to the MFO. The Protocol also gives the Director General, his deputy, the force commander, and their spouses and minor children the privileges and immunities accorded to diplomatic convoys in accordance with international law. The functions of the force in the Sinai are controlled from the Force Commander’s Headquarters at the northern base at el Gorah by the force commander, appointed by the Director General with the approval of the Parties. The force commander is of general officer rank, serves a 3-year term, and cannot be from the United States. Sinai activities fall into four main operational areas: the operation of troops in the field and ships at sea to provide a constant presence; reconnaissance and verification of zones A, B, C, and D by the Civilian Observer Unit; liaison between the MFO and the two host nations; and logistical support required to sustain the force. The MFO in the Sinai is composed of military and civilian contingents, each performing specific operational functions. The United States, Colombia, and Fiji provide infantry battalions that perform observation missions in zone C from 31 remote observations posts and checkpoints. In addition, the United States, Canada, France, the Netherlands, New Zealand, Uruguay, Italy, Norway, and Australia provide support units such as engineers and headquarters staff personnel to the MFO. The size of the military force at the time of our review was about 1,987. The United States provides the largest contingent to the MFO, about 985 troops (50 percent of the force), including a logistics support battalion that shares logistical support tasks with MFO support contractor in the Sinai, with other contingents, and with the MFO offices in Cairo and Tel Aviv. The MFO offices in Cairo and Tel Aviv serve as the MFO diplomatic representative to the receiving state and manage procurement and financial functions. A civilian observer unit of 15 U.S. nationals performs observation and verification missions in zones A, B, C, and D. The MFO also includes 30 other civilians, and approximately 127 international hire civilian contractor personnel stationed in the Sinai performing a variety of support functions, including laundry and food preparation. The MFO support contractor also utilizes approximately 520 Egyptian nationals. Table 1.1 shows the role and responsibilities of each participating nation as well as the number of personnel allotted. The MFO logistics operations are directed by the Director General through the director of logistics, facilities, and contracts, and are carried out in the field by the force in the Sinai and the offices in Cairo and Tel Aviv. Headquarters logistics responsibilities involve implementing the Director General’s logistics policies regarding procurement, maintenance, engineering and facilities, transportation, contracting, stock control, and property accountability and disposal. At the force level, the chief of support, a U.S. Army colonel, is responsible for all support activities, including supply, transportation, food services, contracting, maintenance, and engineering. Field offices in Cairo and Tel Aviv procure supplies from commercial vendors primarily located in these countries. Logistical functions within the force as of November 1994 are predominantly performed by the 428 troops of the U.S. 1st Support Battalion. These operations are discussed in chapter 2 of this report. In addition to the United States, France, Uruguay, New Zealand, Canada, and the Netherlands also provide MFO with logistics support. Specifically, France provides MFO with a fixed-wing aviation unit consisting of 1 DHC-6 Twin Otter and 17 aircrew, support, and maintenance personnel. The Uruguayan and New Zealand contingents provide MFO with drivers and engineers. Canada provides air traffic control support, and the Netherlands provides signal communications specialists. The MFO also uses support contractors to perform many logistics functions, including administrative and clerical support; maintenance of facilities; vehicles, grounds, and electronic equipment; fire prevention; food services; personal services (barber and tailor/laundry); and receipt, distribution, and storage of certain classes of supplies. U.S. military and financial participation in the MFO is managed by the State Department’s Bureau of Near Eastern Affairs, with the Department of Defense (DOD) input regarding military matters. The Bureau, established by a State Department notice dated March 5, 1982, serves as the single focal point for the U.S. government regarding liaison and coordination of all aspects of U.S. participation in the MFO. This includes the responsibility for overseeing U.S. interests in MFO operations such as the budgeting of U.S. funding to the MFO, assessing whether the U.S. contributions and other resources provided to the MFO are being properly used, and annually reporting U.S. costs incurred and military participation to Congress. The Army serves as the DOD’s executive agent for matters pertaining to U.S. military participation in and support of the MFO. The MFO mission is assigned to the Commander, XVIIIth Airborne Corps, U.S. Forces Command. We initiated this study in response to a request from the Chairman and Ranking Member of the House Committee on International Relations to examine U.S. participation in the MFO. Our specific objectives were to describe and assess (1) the level of U.S. participation, training, and operational impacts; (2) the actual cost of MFO operations, the U.S. contribution, and any cost-saving opportunities; (3) State oversight of the U.S. contribution; and (4) views of the State Department and other relevant parties on the MFO performance and lessons learned. For objectives 1, 2, and 4, we performed our work at the MFO Headquarters in Rome, Force Headquarters in the northern and southern Sinai, remote observation posts throughout the Sinai, and MFO offices in Cairo and Tel Aviv. At the MFO Headquarters, we met with the Director General and officials from the following offices: (a) comptroller; (b) policy, planning, and operations; (c) logistic, facilities, and contracts; and (d) political affairs and general counsel. In the Sinai, we visited the MFO North Camp, where we interviewed the force commander, senior U.S. military officials at the Force Headquarters, civilian observers, U.S. infantry battalion and 1st Support Battalion personnel, and support contractors performing logistical functions. The Director General directed that all documents we reviewed and/or requested be individually reviewed and cleared by the general counsel prior to release. Aside from this administrative formality, the MFO assisted us with accommodations in the field and generally cooperated with this review. To gain Israeli and Egyptian government perspectives on MFO effectiveness as a peacekeeping operation, we met with Egyptian and Israeli officials from the Headquarters of the Egyptian Liaison Agency With International Organizations and the Israeli Defense Force Liaison Unit. For objectives 2, 3, and 4, we interviewed officials and reviewed documents from the DOD and Department of State. We performed our work at the State Department Bureau of Near East and South Asian Affairs; the Office of the Under Secretary of Defense (Policy); the Army Operations, Readiness and Mobilization Directorate Operations and Contingency Plans Division; Politico-Military Affairs Division; DOD Joint Chiefs of Staff Strategic Planning Directorate (J5); Department of the Army Budget; Headquarters, XVIIIth Airborne Corps, Fort Bragg; and the Headquarters Forces Command Operations and Budget office, Fort McPherson, Georgia. We performed our review from February 1994 to February 1995 in accordance with generally accepted government auditing standards. We obtained agency comments from State, DOD, and the MFO. Since inception of the MFO, the United States has always provided significant military and civilian support. The United States provides the largest military contingent, constituting 49.6 percent of the total force at the time of our review. U.S. forces perform infantry battalion functions, provide a large proportion of MFO logistical and medical support, and serve on the headquarters staff in the Sinai. In addition, the United States gives the MFO direct use of the U.S. Army’s logistics system, including access to excess defense articles. According to MFO and U.S. Army officials, opportunities may exist to reduce the number of U.S. Army logistical personnel. U.S. troops assigned to the MFO must receive predeployment training, training while deployed, and training upon completion of their MFO tour. According to Army officials, the MFO commitment contributes to the strain on Army resources. To help alleviate the strain, starting in January 1995, the Army pilot tested a mixed infantry battalion comprising active duty, National Guard, and Reserve forces. U.S. military forces deployed to the MFO include an infantry battalion, a logistics support battalion, and Force Headquarters staff personnel. An infantry battalion tailored to the MFO mission is drawn from active units of the XVIIIth Airborne Corps every 6 months. The overall strength of U.S. armed forces participating in the MFO as of November 1994 was 985, which is below the 1,200 member maximum limit authorized by Congress. Appendix IV shows U.S. and other participant force strength in the MFO since inception. The infantry battalion deployed to the MFO totals approximately 529 persons and is stationed at South Camp at Sharm el-Sheikh. This battalion operates observation posts and checkpoints and conducts patrols in the southern sector of the Sinai, which runs along the Gulf of Aqaba, from Sharm el-Sheikh to Taba. In addition, a logistics support battalion of 428 people based at both North and South Camps provides staff for (1) two dispensaries; (2) an explosive ordnance disposal detachment; (3) a transportation element that handles long-distance ground transportation; (4) a small maintenance detachment for U.S.-made radios and weapons; (5) a supply and service unit that deals with the requisition, receipt, storage, and distribution of all classes of supply; (6) an aviation unit, including 10 helicopters, crews, and maintenance personnel; and (7) an Army post office detachment. Figure 2.1 shows the percentage of logistical troops by MFO participating nation. Additionally, 28 officers and enlisted men are assigned to various positions on the force commander’s staff at el-Gorah. In 1982, at MFO request, the Army authorized the MFO to purchase supplies and equipment from DOD’s supply system. The MFO has used this authorization since 1982 to procure significant portions of its supplies, ranging from 80 percent of its supplies in 1982 to 20 percent in 1993. The MFO also has access to excess defense articles, defined as property items no longer needed by the particular service and not originally procured in anticipation of military assistance or sales. The MFO authorization is identical to that of any U.S. Army unit, and as with other Army units, receives a higher priority than other U.S. services requesting excess Army articles. In fiscal years 1993 and 1994, the MFO acquired excess articles that became available during the closing of U.S. Army installations in Europe. The MFO paid the shipping costs and received such items as generators, binoculars, tables, refrigerators, and medical equipment ranging from heart monitors, centrifuges, and ultrasonic cleaners to treadmills. The transfer of this equipment benefited the MFO in a number of ways. For example, according to MFO and Army officials, the MFO medical facility was substantially upgraded as a result of excess Army articles, and some medical problems that once required emergency medical evacuation to Israel can now be performed in-house. According to DOD officials, the continuous subtraction of the equivalent of two light infantry battalions, and associated administrative headquarters support to the MFO, when combined with other global commitments, contributes to straining Army infantry and support resources—particularly as the Army downsizes. However, they did not provide specific details on the operational impact. In January 1995, the Joint Chiefs of Staff conducted a study to assess options and strategies regarding U.S. military participation in the MFO. The study concluded, among other things, that there is no military requirement for the deployment of elite or even active U.S. forces to the MFO. The study further concluded that the costs to the Army of participating in the MFO are: a reduction of one infantry brigade equivalent from the combat-ready force structure caused by the continuous commitment of three active/reserve infantry battalions for MFO unique training, deployment, and post-MFO requalification; a loss of support personnel in specific skill fields deployed for 1 year to the 1st Support Battalion; and a negative impact on personnel readiness of other units caused by the ripple effect of the special personnel requirements of the MFO. Predeployment training focuses on the MFO mission and is provided in the United States. It includes individual, collective, and specialized tasks tailored to support the mission. Individual training tasks include peacekeeping skills and procedures; MFO rules of engagement, observation and reporting procedures; desert operations and survival, aircraft, vehicle, and uniform recognition; and Arabic customs and language. Collective training includes vehicle patrolling, outpost operations, and squad-level operations. Specialty training includes food handling and cooking, generator operation, and remote field sanitation operations. Light infantry units assigned to the MFO receive a minimum of 3 months of predeployment training. Support troops receive a 1-week predeployment orientation at Fort Bragg. Shortly after arriving in the Sinai, all troops receive orientation training to complement predeployment training and to ensure units are prepared to undertake their missions. It includes follow-on training to previous instruction that can be conducted under actual environmental conditions as well as new subjects that were not suitable for inclusion in predeployment training. Troops assigned to infantry or logistics support battalions receive orientation training that includes standards of conduct, minefield procedures, and preventive medicine. Specialized training in communications, desert driving, and special equipment usage is also provided where applicable. According to MFO officials, orientation training lasts about 1 week. Each contingent also conducts continuation or in-Sinai training in appropriate mission related subjects, such as peacekeeping skills and procedures, weapons qualification, and night vision techniques. According to MFO officials, the frequency and type of in-Sinai training is based on the respective unit commander’s assessment of need or as directed by the force commander. According to DOD officials, the MFO commitment necessitates post-deployment training for Army units deployed. U.S. forces returning from MFO duty must receive post-deployment training in required individual and collective skills before returning to their normal military functions. According to Army officials, required skills of many returning units are degraded during their MFO experience. According to DOD officials, peace operations require a significant change in orientation for military personnel. While most facets of normal military operations apply to peace operations, peace operations require an adjustment of attitude and approach. According to DOD officials, commanders at the home station must allocate sufficient resources and time for training in order to regain collective and individual standards required for the unit’s primary war fighting mission. This post-deployment training, redevelops skills and abilities that may have been affected by the nature of MFO peace operations. For example, while performing the MFO mission, U.S. units are prohibited from (1) all parachute jumping and training involving parachute drops of equipment; (2) detonating explosives, mines, and grenades for training; and (3) conducting live firing by elements larger than a platoon size. The extent of post-deployment training required is determined by the U.S. home station commander. According to DOD officials, individual post-deployment training generally takes about a month and collective training about 3 months. In October 1993, the Army Chief of Staff approved a pilot program to organize, train, and deploy a composite light infantry battalion of Army National Guard and Reserve volunteer soldiers and regular Army soldiers to the MFO. The program, officially designated “MFO Sinai Initiative,” was designed to determine the extent to which reservists can be used to enhance the Army’s ability to perform peacekeeping missions as a way to relieve the strain on active forces. The composite force deployed to the MFO in January 1995 following individual and collective training at Fort Bragg, North Carolina, in November 1994. The U.S. Army plans to rotate composite battalions in the future depending on the success of the pilot initiative, the availability of volunteers, and other factors. According to DOD, the cost of implementing the pilot initiative is about $15 million. This amount is in addition to other DOD costs to support the MFO. While the Sinai initiative marks the first time reservists will be used to support active troops in the MFO operation, it does not mark the first time they have been used for peacetime operations. For example, reservists have supported active forces in operations involving disaster relief and humanitarian assistance. In the Sinai initiative, the National Guard and Reserve, whose participation is strictly voluntary, will constitute 80 percent of the force; active service soldiers, in positions of leadership, will constitute the remaining 20 percent. Despite the recent transfer by MFO of some U.S. logistical functions to its existing support contractor, U.S. logistical troop levels have not been correspondingly reduced. In August 1994, MFO began transferring some U.S. logistical supply functions, such as the storing of commercial vehicle parts and construction materials, to a contractor. According to MFO management, the U.S. soldiers responsible for this function will be replaced by contractor employees who are more experienced in managing an inventory system of commercial items. These same MFO officials indicated that these U.S. logistical troops continue to be needed for emergencies, contingency operations, and other logistics support functions such as moving materials, closing warehouses, and counting stocks. In addition, according to U.S. Army documentation, since transportation support is conducted with commercial vehicles and augmented by drivers from New Zealand and Uruguay, an opportunity exists to transfer responsibility for transportation support to the contractor and/or other participating states. In June 1995, after the completion of our fieldwork, State officials told us that MFO had eliminated six 1st Support Battalion positions and was considering replacing U.S. truck drivers with Egyptian contractors. However, they agreed with DOD officials that changes in U.S. force levels were subject to political constraints. U.S. participation in the Civilian Observer Unit was established by a letter from the Secretary of State to the Foreign Ministers of Egypt and Israel that accompanied the signing of the Protocol to the treaty on August 3, 1981. The letter offered an observer unit composed of American citizens to verify party compliance with Treaty of Peace provisions. Presently, the unit contains 15 U.S. nationals, approximately half being on transfer from the U.S. government and under contract to the MFO, the other contracted directly by the MFO. Quite separate from the observation carried out in zone C by the three infantry battalions of the force, only the Civilian Observer Unit performs regular observation and verification missions throughout all four zones of the treaty area in Egypt and Israel. Verification missions last from 2 to 4 days and employ MFO helicopters and vehicles to move the teams of observers throughout the four zones. During these missions, observers are accompanied by Israeli or Egyptian liaison officers, depending on which country the zone resides. During the course of a complete cycle of missions, the observers cover all the Egyptian and Israeli installations within the four zones to verify treaty limitations on personnel, armaments, and military infrastructure. Verification missions occur at least twice a month. Observers must also be prepared to undertake additional verifications within 48 hours of a request from either the Israeli or Egyptian government. According to MFO officials, violations of the provisions of the treaty are rare. They are typically the result of technical errors by individuals regarding military restrictions and have been easily rectified by the Parties. According to the Director General’s 1994 Trilateral Report, in fiscal year 1993, there were three deviations from the terms of the treaty. The details of violations are reported only to the Parties. Thus, we could not verify the violations or their rectification. In fiscal year 1993, the operating budget of the MFO totaled $56.1 million, excluding in-kind contributions and nonreimbursable costs borne by participating and donor nations. The operating budget is funded primarily by assessed contributions from the United States, Egypt, and Israel, with each country being assessed one-third of the cost, after small contributions from Germany and Japan. The 11 participating nations provide the military personnel and equipment and supplies. Since MFO inception in 1982, the United States has provided the largest percentage of MFO funding and resources. In fiscal year 1993, the incremental cost of U.S. participation was $18.6 millon, while the total cost was $64.4 million. This includes the annual assessment cost of $17.8 million and DOD costs of $46.6 million for troops. As a result of troop, personnel, and other cost reductions, the operating costs of the MFO have steadily declined since 1989, which has decreased the U.S. assessment cost accordingly. However, the total cost of the U.S. participation in the MFO has increased during recent years due to the higher military salaries paid to U.S. soldiers and reimbursement costs for food and base support. The total cost of the MFO consists of its annual budgeted operating costs, in-kind contributions, and nonreimbursable costs borne by the participating and donor nations. The operating costs include expenses such as personnel, supplies and materials, contractual services, troop rotations, and equipment acquisition. In addition, there are in-kind contributions and nonreimbursable costs borne by the developed participating nations, particularly the United States, France, and Italy. These include capital equipment and excess property donations, and the salaries of the troops provided by these countries. Also, the MFO is reimbursed by participating developed nations for providing food, lodging, and base support to the troops of these nations while they are on duty at the MFO. For the United States, this is done through a credit to the account of the MFO for the amount of expense (offset cost) that the United States would have incurred for lodging and base support had its troops remained at home. According to MFO officials, the MFO does not have sufficient information to determine the total amount of unbudgeted contributions provided by the participating nations. The MFO provides transportation, food, lodging, base support, and a modified U.N. rate for troops of developing countries participating in the MFO. The operating budgets of the MFO for fiscal years 1989 through 1993 and their funding sources are shown in table 3.1. The total annual operating expense of the MFO since its inception in fiscal year 1982 is shown in figure 3.1. A detailed discussion on the contribution of troops, equipment and logistical support provided by the participating nations is discussed in chapter 2. The funding and resources the United States provides to the MFO includes (1) the annual assessment contribution of one-third of the MFO operation costs and (2) about 50 percent of the MFO military contingent. The MFO also receives U.S. Army excess defense articles as discussed in chapter 2. The cost of providing U.S. troops to the MFO is paid out of the DOD regular operating budget. In contrast, the one-third U.S. assessment is paid directly from appropriated funds to the State Department for peacekeeping operations. Table 3.2 shows the costs of the U.S. participation in the MFO by category for fiscal years 1989 through 1993. Table 3.2 illustrates that while the actual cost of the U.S. participation in the MFO for fiscal year 1993 was $64.4 million, the incremental or additional cost to the United States for its participation was $18.6 million. The $45.8 million difference represents DOD costs that were either reimbursed by the MFO ($2.8 million) or costs that DOD would have incurred had its troops remained in the United States ($36.1 million salary costs and $6.9 million offset costs for MFO food and base support provided to U.S. troops). Of the $18.6 million incremental costs, $17.8 million is for the U.S. annual assessment and the remaining $0.8 million is the DOD incremental cost for predeployment training and unreimbursed travel. Table 3.2 does not include the costs of excess defense articles and capital equipment donated by the United States to the MFO. The cost of these activities is not tracked by DOD. The MFO has progressively reduced its operating cost since fiscal year 1982. Figure 3.1 illustrates the decreases in the operating budget. MFO stated that it is implementing measures to further reduce these costs, to maintain current budgetary levels despite inflation costing about $1 million per year. While the decrease in MFO operating costs has resulted in corresponding reductions in the U.S. incremental costs, the total cost of the U.S. participation has gradually increased since 1989. This is because although U.S. troop levels have decreased, their salaries and the offset costs have increased. Also shown in figure 3.1, the operating budget of the MFO has progressively decreased from $103 million in fiscal year 1983, the year after its inception, to $56.1 million in fiscal year 1993. MFO fiscal year 1982 budget was about $225 million, primarily for start-up costs that included construction of bases and facilities. Cost reductions of $28.8 million between fiscal years 1983 and 1989 were primarily due to the completion of start-up activities and the stabilization of operations. Since fiscal year 1989, cost reductions of $18.1 million have primarily resulted from significant reductions in military and civilian personnel strength and through a host of cost-reduction initiatives by MFO management including reductions in force vehicles, resale of used vehicles, and tighter inventory controls. The MFO total military strength was substantially reduced by 586 troops between 1988 and 1993 to 2,063 troops. However, many of these reductions came from contingents of developing nations, such as Fiji and Colombia, which maximized MFO cost reductions because the MFO pays transportation, maintenance costs, and a modified U.N. rate for these troops. In addition, MFO civilian personnel, excluding support contractor personnel, were reduced from 63 in fiscal year 1987 to 49 in fiscal 1993, which resulted in further cost reductions. The primary reasons for the increased actual cost of U.S. participation in the MFO are increases in both military pay and the offset costs credited by DOD to the MFO for providing food, lodging, and base support to U.S. troops. While the U.S. authorized troop strength at the MFO decreased from 1,045 in fiscal year 1990 to 984 in fiscal year 1993, military pay raises increased the salary cost of these troops from about $31 million in fiscal year 1990 to $36.1 million for fiscal year 1993, and U.S. offset costs almost doubled from $3.6 million to $6.9 million, primarily because of changes in the Army’s procedure for calculating these costs. According to Army officials, this procedure incorrectly included in the offset the costs of certain services not provided to U.S. troops by the MFO. Prompted, in part, by our review of the offset issue, DOD and MFO were able to agree on a methodology to compute offset costs for fiscal year 1994 and future years. The MFO is widely viewed by United States and international officials as effectively performing its duties in a cost-efficient manner. This view is primarily held because of the sustained peace between Egypt and Israel, which has provided a supportive environment for the mission’s success and for active cost containment measures. According to State, MFO, Egyptian, and Israeli officials, the MFO has helped sustain peace between Egypt and Israel by serving as liaison and monitor of the treaty provisions. According to many officials interviewed, the MFO operational success can be attributed to several factors, including inherited advantageous conditions resulting from the way the MFO was established, the Israeli/Egyptian commitment to peace, significant U.S. military and financial support, and financial co-responsibility placed on the Parties. As a result of the favorable circumstances surrounding the establishment of the MFO, particularly when compared to other peacekeeping operations, some officials believed that the MFO model may not be readily applicable to more challenging peacekeeping scenarios. However, the factors contributing to the MFO operational success may serve as lessons learned for future peacekeeping operations. State, DOD, Israeli, and Egyptian officials all view the MFO as effectively performing its mission of monitoring, liaison, and reporting treaty provisions and violations. State Department officials view the MFO as an instrument of U.S. foreign policy in the Middle East that should remain until sustained regional peace is achieved. According to State officials, the MFO is an operationally and cost-effective peacekeeping operation that has helped bridge confidence and communication between Egypt and Israel. U.S. Army officials, while viewing the MFO as operationally effective, have concerns about the level of U.S. participation, the operational impacts to the Army, and the lack of an end date. These officials view the MFO as an indefinite Army commitment. According to Egyptian liaison officials, the MFO has helped build confidence between the Israelis and Egyptians by supervising adherence to the treaty. The liaison system promotes mutual dialogue and has assisted in solving some challenges of both parties. These Egyptian officials, although agreeing with their governments support of the MFO, expressed concerns about the open ended term of the MFO and questioned whether the MFO could be reduced to an observer only force. Egyptian officials were pleased with the reductions in costs but would like to see additional cuts. According to Israeli officials, the MFO has been successful in supervising the conditions of the treaty and in building the confidence of the Parties. It is their view that the MFO works because it has effectively supplemented Israel’s and Egypt’s strategic interests by securing the provisions of the treaty and providing a large U.S. military role. Officials viewed the United States as essential to the MFO success and emphasized that any significant reductions in U.S. forces could send a signal of lessened U.S. commitment during current and future regional peace initiatives. According to DOD officials, the MFO began under almost optimum conditions and was provided opportunities for success that are not typical of most peacekeeping operations. Consequently, these officials believe that the MFO model would not apply to more challenging and hostile peacekeeping scenarios. The MFO was preceded by a panoply of cease fire and withdrawal agreements, negotiations, and U.N. peacekeeping forces between October 1973 and March 1979. These activities effectively transformed the Sinai Peninsula from a violent battlefield to a tranquil state prior to the deployment of the MFO. Thus, the MFO inherited a peaceful operating environment. In addition, the MFO began with (1) a firm commitment to peace between the Parties, as indicated by a formal treaty of peace and a thorough Protocol; (2) an established geographic buffer zone in which to operate; (3) substantial U.S. government military and financial commitments; (4) a barren, scarcely populated operating environment; and (5) a largely U.S. Army managed logistics system. According to DOD officials, these conditions created an almost clinical environment for MFO operations. For example, the MFO buffer zone, zone C, is free from the hostilities of many peacekeeping operations. The operating area is large, stretching over 10,000 square miles, but is largely unpopulated. Consequently, according to DOD, any military or terrorist threat to MFO ground forces in the Sinai is minimal. These officials believe that this MFO model may not directly apply to an environment that is urban or densely populated with potentially hostile parties over which a central government would have little control and where urban guerilla warfare is a possibility. In addition, officials emphasized that the MFO always had a U.S. managed and designed logistics system with a direct link to the U.S. Army. The MFO compares best with a traditional U.N. Chapter VI peacekeeping operation responsible for observing and reporting as opposed to a peace enforcement Chapter VII operation. This is primarily because the MFO mandate is to supervise the security arrangements of the Treaty of Peace by observing and reporting violations and demanding rectification. The MFO was not intended to serve as a fighting force or to repel national or factional armies. According to DOD officials, the MFO strength lies not in its military capability, but in the commitment of Israel and Egypt to peace, and the political support of the participating states. According to U.S. and international officials, while the MFO has been successful, there are several lessons that can be learned from its structure and operation. In terms of U.S. commitment and oversight, the MFO arrangement has an open-ended U.S. participation agreement, without a formal requirement for periodic U.S. reassessments, and has no formal executive board to oversee its operations. The positive lessons from the MFO are that it: (1) began with a detailed charter or mandate fully supported by all parties, (2) makes parties of the peace treaty financially accountable, (3) incorporated standardized and interoperable field equipment, and (4) has an active liaison system with the Parties. U.S. participation in the MFO does not have an end date or incremental drawdown provision. According to DOD and Army officials, U.S. arrangements in any similar future peacekeeping operation should include provisions for drawdown and eventual termination. Other participating developed nations have periodic renewal provisions in their participation agreements. Consequently, these nations formally renegotiate their participation with the MFO at specified intervals. In contrast, the United States does not have any renewal provision in its participation agreement, thus periodic reassessment is not formally accomplished. According to U.S. Army officials, there should be formal periodic reassessments of the level of U.S. military participation in the MFO, particularly in light of other global demands. According to these officials, over a decade of Israeli-Egyptian peace warrants such reassessment, particularly in light of growing military requirements elsewhere, and reduced budgets and resources. In addition, the MFO does not have any formal executive oversight such as a board of directors or an independent audit entity as discussed in chapter 5 of this report. While the broad management discretion granted to the Director General by the Protocol has benefits such as cost cutting flexibility, a more formal oversight mechanism could strengthen financial accountability and deter misuse of expenditures. Thus, we believe that any future operation should include a formal mechanism for adequate oversight of the U.S. contribution. On the other hand, a positive lesson can be learned from the way the MFO charter is constructed. The MFO charter, unlike many peacekeeping operations, provides details regarding the responsibilities, organization, operations, military command structure, financing, and administration of the MFO. According to MFO officials, there are few aspects of the MFO peacekeeping tasks that require further expansion or interpretation by the military staff of the MFO. According to DOD and State officials, few peacekeeping missions have ever deployed with such a complete working document as the MFO charter. In contrast, DOD officials note U.N. mandates are often ambiguous and ill-defined, thereby complicating peacekeeping operations. These officials cite favorable political circumstances and the existence of an agreement between the Parties as largely determining the specificity and realism of the mandate and ultimately the success or failure of the operation. These officials also stated that where the United Nations has been given similar favorable circumstances for mandates and terms of reference deriving from a disengagement agreement between motivated adversaries, results have been favorable. Another potential lesson learned is MFO financing method. According to MFO officials, unlike other peacekeeping operations, the Parties to the MFO share in direct funding, thus each has a vested interest in cost containment. The financial arrangements also make the MFO directly accountable to the fund’s contributors, resulting in a contractor-client relationship. According to MFO, State, and DOD officials, this arrangement is advantageous because it actively engages former adversaries in the financial planning of the peacekeeping operation. As for the contributions of the participating states, arrangements for external funding sources should be maximized while international interest is high. This could work to reduce the financial burden of the one-third assessment on the United States. According to MFO officials, the MFO waited several years before trying to recruit external donors, with only modest results. In addition, since its inception, the MFO has used a system of commercial procurement, contracting, and equipment standardization. MFO procurement emphasizes the use of local markets to increase competition and reduce costs. The MFO derives additional revenue from sales of used vehicle and excess scrap. Equipment standardization is also emphasized. According to MFO officials, the principle underlying MFO logistics was that to promote fairness and efficiency, each military unit, regardless of its resources, would receive the same type of equipment. In contrast, many U.N. peacekeeping operations maintain a variety of equipment and maintenance standards in different contingents. The sophisticated equipment in the observation posts, the vehicles, and the communications and mission-related equipment are all standardized and are the property of the MFO. According to MFO, this has been accomplished by procuring certain models of equipment from specific manufacturers, such as General Motors for commercial vehicles and Motorola for radio communication equipment. Standardization presents several logistical advantages: (1) maintenance is easier, (2) incoming battalions do not have to bring their own sophisticated equipment and vehicles with them and all their diverse maintenance problems, and (3) it reinforces the integrated appearance of the force. In addition, interoperability of communication and electronics systems is achieved. The MFO liaison system also serves as a model for developing peaceful relations and cooperation. According to MFO officials, the liaison system fosters contact and permits parties to address and resolve issues at graduated levels, serving as an instrument to adapt treaty conditions to changing realities on the ground. The State Department has responsibility for overseeing U.S. participation in the MFO and is required to annually report to Congress on MFO activities, including the cost to the United States. DOD provides State data on the total cost of deploying and maintaining U.S. troops at the MFO. We believe that State could improve its oversight as well as the quality of the annual reports it sends to Congress. These reports have contained inaccuracies and did not show the total U.S. cost of participation in the MFO, due in part to inaccurate data submitted by DOD on troop costs. State has taken a hands-off approach to MFO and does not adequately assess whether U.S. contributions to the MFO are spent efficiently and properly. For example, State was not knowledgeable of important changes in MFO policies and procedures that had an impact on U.S. costs. In addition, State does not (1) know if the MFO has adequate internal management and accounting controls in place to deter the misuse of U.S. contributions, (2) obtain and review all audit reports issued by the MFO external auditor, or (3) analyze MFO financial statements to detect items that may impact the U.S. contribution. Effective State oversight is needed because (1) MFO Director General has broad management authority, (2) MFO does not have a formal board of directors or governing body that provides executive oversight for the accountability of the expenditure of funds, and (3) MFO does not have an independent audit committee to oversee external audits. During our review, we observed that State officials were not knowledgeable of details related to salary, benefits, and other matters involving the MFO, which have had an effect on the cost of operation. For example, until we began our inquiry, State was unaware of many details relating to the Director General’s salary and benefits or other MFO expenditures made on his behalf. We also noted that MFO policies and procedures for designating dependents of MFO officials were changed by the MFO two times in 1992 and 1994. They were changed in 1992 to broaden the definition of dependent to include persons other than spouses, unmarried children, or dependent parents as dependents. In 1994, following the conclusion of our fieldwork, the policies and procedures were revised by the MFO to expand the definition of an authorized dependent. Specifically, the new regulation states that a person is an authorized dependent if he/she has been so designated by the MFO staff member and so approved by the Director General. While other members of the MFO may benefit from these changes, the MFO general counsel told us and congressional staff in February 1995 that the changes were made to accommodate the personal circumstances of the Director General, who was already receiving dependent benefits for individuals who were not his spouse or unmarried dependent children. In an August 10, 1994, letter to State, the Director General explained that housing used by the former Director General, who was a bachelor, was not suitable for his household and went on to explain the security and furnishing upgrades and improvements to his MFO-provided residence that were necessary to accommodate his household. He also stated that the MFO pays his dependents’ elementary and high school fees and annual dependent education travel, a benefit that is available to all members of the MFO international staff. In response to our inquiry, State Department officials said that they were aware that the Director General had a nontraditional family and that some accommodation would be necessary in order for him to accept the initial appointment in 1988. However, they stated that they were not aware of the specific changes made to MFO policies to satisfy this accommodation, which had an affect on benefits and privileges. In view of the fact that the Director General has such broad latitude to modify regulations and procedures without external approval, we believe it is important for State to be aware of all policy changes that may affect costs. The Protocol to the treaty establishing the MFO does not provide for a governing body for executive oversight of the MFO, or an independent audit entity. It gives the MFO Director General broad management authority, with a requirement to report developments relating to the functioning of the MFO to the Parties. According to MFO officials, the annual Trilateral meeting fulfills the purpose of a “board of directors” because the Director General makes a detailed statement covering MFO operations, administration for the prior fiscal year, and issues and funding requirements for the new fiscal year, and invites practical suggestions from representatives from the funds contributing countries participating in the meeting. In addition, annual budgets are submitted to financial contributors for approval. According to MFO officials, the U.S. government, as a participant, is on the “board of directors” of the MFO. State officials agree that the statements at the Trilateral meeting, informal discussions, and site visits throughout the year constitute adequate oversight. However, we believe that the Director General’s statements at the Trilateral meeting and informal discussions throughout the year do not constitute a sufficient oversight mechanism to prevent the potential misuse of U.S. contributions. In contrast, other international organizations have an independent governing body above the chief executive to oversee and approve operations and finances. For example, both the North Atlantic Treaty Organization (NATO) and the Organization for Economic Co-Operation and Development have councils to perform oversight of their operations and serve as the highest decision-making bodies. The MFO also does not have an independent audit entity between the Director General and the external auditor to oversee the audit and report to management on its performance and results and the disposition of any recommendations resulting from the audit. The MFO Director General selects, directs, and receives the report of the external auditor, Price Waterhouse. In contrast, other international organizations we examined such as NATO, the Organization of American States, and the European Union, all have independent external audit committees that perform or oversee external audits and are independent of the governing body or chief executive. The lack of a fully engaged “board of directors” or audit committee results in the Director General essentially having carte blanche authority to run the organization. We believe that in the absence of a formal executive governing body, improved State oversight of U.S. contributions is essential. State relies on the audit report of the MFO external auditor, Price Waterhouse, for assurance that the MFO has adequate internal controls. This report, along with a separate management letter, is prepared in accordance with generally accepted auditing standards and expresses the auditor’s opinion on whether the financial statements are free of material misstatement. However, generally accepted auditing standards do not require the report to include an opinion on the adequacy of the MFO internal controls. Accordingly, while the audit report provides assurance that the data in the MFO financial statements are free of material misstatement, it does not provide State assurance that the MFO has adequate internal accounting controls in place to deter the improper use of U.S. contributions. We found that State did not request, obtain, or review the annual management letter provided by the external auditor to the MFO management. We obtained copies of the management letter for fiscal years 1990, 1991, and 1993 and noted that although they do not express an opinion on the MFO internal controls, they do discuss internal control matters and problems noted during the audit, recommendations for corrective action, and responses by the MFO management. Although this letter would not provide State with a basis for determining whether the MFO internal controls were adequate, it does provide information on internal control problems found during the external audit and corrective actions taken by the MFO management. In order to determine whether the MFO internal controls are adequate, State could ask the MFO to engage its external auditor to perform a separate audit and issue an opinion on its internal controls. Since the United States is a primary contributor, State should then request that the MFO provide State with a copy of this report as the representative of the U.S. government. State Department officials believe they are fulfilling their oversight responsibilities by relying on the audit report, the MFO published financial statements, and the integrity of the MFO management, which is heavily staffed by former State Department employees. They did not want to micromanage the MFO. However, they agreed that periodic separate reviews of the MFO internal controls by the external auditor and reviews of the external auditor’s management letters to the MFO would provide further assurance that the MFO had adequate internal controls in place and would strengthen State’s oversight over U.S. contributions. During our review, we noted two items relating to U.S. contributions that prompted changes to the MFO financial statements and a reduction in the U.S. assessment for fiscal year 1994. These items could have been detected several years ago by State if it had regularly reviewed the MFO published financial statements and the FX account audit reports. In one instance, we noted that for fiscal year 1993 and prior years, the MFO financial statements did not disclose the amounts of DOD reimbursement to the MFO for providing food, lodging, and base support to U.S. troops on duty at the MFO ($6.9 million for fiscal year 1993). This reimbursement amount is not shown as revenue in the income statement, but is applied as a net against the expense of personnel in the MFO income statement with no explanatory footnote. After we informed MFO officials that this did not provide full disclosure of the U.S. contribution, they included an explanation in the MFO financial statements for fiscal year 1994. We also found that State was unaware of the total amount of loans made by the MFO from its operating budget to its FX account and how much of these loans remained outstanding. The FX is a self-sustaining consumer goods store that serves the MFO military and civilian personnel stationed in the Sinai. The MFO external auditor performs a separate audit on the FX account annually; however, State had not requested, obtained, or reviewed the reports resulting from these audits. Several weeks after our inquiry, an MFO official told us that the outstanding loan amount shown on the MFO financial statements did not agree with the outstanding amount shown on the FX financial statements. He stated that the FX financial statements showed that the FX owes a loan balance of $1.53 million to the MFO, while the MFO financial statements showed the loan owed to them was $1 million—or $530,000 less. The official noted that the reason for the differences was that the MFO had written off $530,000 of the FX loan on the books several years ago because they had determined this amount to be uncollectible, which is in accord with generally accepted accounting principles. State was unaware of this transaction, although the MFO had reported the loan write-off in its financial statements for fiscal year 1985, the year that it occurred. Prompted by our inquiry and the improved financial condition of the FX since the loan write-offs, the MFO reinstated the loan write-off on its fiscal year 1994 financial statements, and the resulting $530,000 of income will be credited to the three contributing countries, reducing the U.S. assessment for fiscal year 1995 by $177,000. State officials noted that in the past they did not believe it was necessary to request the audit reports of the FX account because it is a separate, self-sustaining account, funded from sales to the MFO soldiers. However, we believe that the United States has an interest in this account because the FX was established through loans from the MFO operating funds, one-third of which is paid by the United States. Also, U.S. military personnel make up about half of the soldiers who use the FX, which has total annual sales of about $5 million and annual income of about $553,000. MFO officials stated that the FX profits are used to fund morale support activities for the MFO military personnel. If State had been receiving and examining the audited financial statement of both the FX and the MFO, it could have noted the improved financial condition of the FX account and could have taken appropriate action so that the United States could have realized the reduction earlier. State officials stated that in the future they would request and review the external auditors report of the FX account in order to strengthen the performance of their oversight responsibilities. The legislation authorizing U.S. participation in the MFO requires that the President submit an annual report to Congress on the activities of the MFO that describes all costs borne by the U.S. government in its relationship with the MFO whether the United States was reimbursed for these costs or not. This report is prepared by the State Department with input from the Department of the Army, which is the DOD executive agent for matters pertaining to the MFO. We found that none of the previous reports included the annual assessment paid from the State’s budget to the MFO ($18.3 million for fiscal year 1993) as its share of the total operating costs of the MFO. This is covered separately in State’s congressional presentation and other budget presentations to Congress. State maintained that it does not include the annual assessment in the annual report because it would make the report too lengthy. However, State could include the amount of the assessment in the report and refer the reader to the congressional presentation for details on how this amount was computed. This would enable Congress to have access to the full cost of the MFO to the United States in one document. Subsequent to the completion of our fieldwork, State officials agreed that the annual assessment amount should be included in the MFO report to Congress and included it in the 1994 report. Also, we found that the annual report contained an inaccuracy in the amounts shown for the salary costs of military personnel for 1 year. For fiscal year 1992, military salary costs reported were only $12.1 million, which was less than half of what was reported for fiscal years 1991 and 1993. Army officials have recomputed the salary costs to correct the discrepancy. We recommend that the Secretary of State improve the oversight of the MFO by (1) examining the MFO annual published financial statements for discrepancies, (2) requesting and reviewing all reports issued by the MFO external auditors, (3) request the MFO to have its external auditor periodically perform a separate audit of the MFO management and internal accounting controls and provide a copy of the resulting report to State, and (4) include the U.S. annual assessment cost contribution of one-third of the MFO operating costs in its annual report to Congress on the MFO. In commenting on a draft of this report State disagreed with our conclusion that greater State oversight of U.S. contributions to the MFO is needed. State asserts that it has been U.S. policy to grant the MFO considerable latitude in the way it manages its operations and that this policy creates a limited framework for oversight. Consequently, State’s oversight of U.S. contributions is accomplished by frequent informal discussions and infrequent formal meetings, such as the annual Trilateral meeting. In addition, State asserts its review of the MFO external audit, published financial report, and annual budget submission provides an adequate oversight and reassessment mechanism. Nonetheless, State agreed to implement all but one of our recommendations to improve oversight. State’s comments on the report and our response are in appendix V of this report. We continue to believe that the reviews of the external auditor’s report, published financial reports, and annual budget submissions do not provide adequate oversight of U.S. contributions to the MFO. Under the MFO management and operating structure, once the budget is endorsed by the signatories, the Director General has great latitude over the expenditure of funds as well as the processes used to account for them. As pointed out in this report, this arrangement is unique to the MFO. In all other international organizations we observed, there is an executive oversight board that is independent of those charged with day-to-day operations. The actions that State has already taken in response to our review should improve its oversight capability; however, additional steps need to be taken. State objected to an annual audit of the MFO internal controls, and we changed the report to clarify the recommendation for periodic audits. The MFO provided general comments, citing its operational and financial successes since inception, and its continued efforts to reduce costs. We previously met with MFO officials on a draft of this report contents and made changes to the draft where appropriate. DOD agreed with all of the report findings relevant to DOD and reported that it has taken actions that address concerns we raised in a draft of this report about the accuracy on cost data it was providing to State regarding its participation in the MFO. If fully implemented, these actions should satisfy the intent of our recommendation. Therefore, we are no longer making a recommendation to DOD. | Pursuant to a congressional request, GAO reviewed U.S participation in the Multinational Force and Observers (MFO), focusing on: (1) U.S. contributions to MFO and measures taken to reduce MFO costs; (2) the operational impacts of U.S. participation in MFO; (3) the Department of State's oversight of U.S. participation in MFO; and (4) views of MFO performance and lessons learned. GAO found that: (1) the United States provides one-third of MFO operating expenses and the largest military contingent; (2) while U.S. annual assessments of MFO operating costs have steadily declined since 1989, the Department of Defense's (DOD) costs have increased, mainly due to salary increases; (3) Army operations have been impacted by the cumulative effects of DOD contingency efforts, but opportunities may exist to reduce the impact by reducing the number of logistical troops and using reserve forces; (4) despite MFO operational success and its ability to reduce certain costs, State needs to improve its oversight of U.S. participation in MFO because of inadequate internal controls and auditing procedures and the quality of its reporting to Congress; and (5) State and international officials view MFO as an operationally effective peacekeeping operation that has helped sustain peace between Egypt and Israel since 1982, while DOD views MFO as a limited operation that is not applicable to more hostile peacekeeping environments. |
Ray Bradbury, the prolific science fiction and fantasy writer who mixed social commentary with warnings about modern technology’s dark side in short stories and novels such as “Fahrenheit 451,” has died. He was 91.
He died yesterday, the Associated Press reported, citing his daughter, Alexandra Bradbury, who didn’t have additional details. He lived in the Cheviot Hills neighborhood of Los Angeles.
Bradbury’s love for writing transcended form and genre, resulting in more than 500 published works ranging from novels such as “Something Wicked This Way Comes” (1962) to poems, screenplays and short stories that were compiled into collections, including “The Martian Chronicles” (1950) and “The Illustrated Man” (1951).
Bradbury was perhaps best known for “Fahrenheit 451,” a stark depiction of a dystopian future in which a totalitarian society censors its citizens and firefighters torch books. The title refers to the temperature at which paper burns.
Published in 1953, the book is now taught in schools as a companion to another modern classic that depicts the dangers of totalitarianism, George Orwell’s “1984.” Bradbury himself insisted that while his novel had political implications, his primary concern was propagating critical thought.
“I wasn’t trying to predict the future,” he told the Wall Street Journal in 2003. “I was trying to prevent it.”
First Book
Bradbury’s writing sometimes frustrated his science-fiction contemporaries, who said his visions of the future were based on fantasy, not grounded in fact. His first book, “The Martian Chronicles,” took the liberty of adding an atmosphere to Mars where scientists had already discovered that none exists.
Bradbury was awarded the National Medal of Arts from President George W. Bush in 2004. He also received the National Book Foundation Medal for Distinguished Contribution to American Letters, the O. Henry Prize for short stories of exceptional merit and a special distinguished-career citation from the Pulitzer Prize board in 2007.
He also had an asteroid named after him, and received a star on the Hollywood Walk of Fame.
Ray Douglas Bradbury was born in Waukegan, Illinois, on Aug. 22, 1920, to Leonard Spaulding Bradbury and Esther Marie Moberg Bradbury.
His older brother and younger sister both died of the flu when the family was living in Illinois, sparing only Bradbury and another brother.
Performing Magic
The family was hit hard by the Depression. Leonard, a telephone technician, moved the family between Waukegan and Tucson, Arizona, looking for work while Bradbury escaped reality by practicing magic.
“I had decided to be a magician well before I decided to be a writer,” he said in a 1996 interview with Playboy magazine. “I was the little boy who would get up onstage and do magic wearing a fake mustache, which would fall off during the performance. I’m still trying to perform those tricks. Now I do it with writing.”
A carnival magician named Mr. Electrico singled out an 11- year-old Bradbury at a show, knighting him with the pronouncement, “Live Forever!”
“I decided that was the greatest idea I had ever heard,” Bradbury later told his biographer, Garyn Roberts, a professor at Northwestern Michigan College in Traverse City.
After that, he made a lifelong habit of writing every day. The carnival theme would later resurface in sinister form in “Something Wicked This Way Comes.”
Move West
Bradbury’s young life changed dramatically when, with only $40 in his pocket, his father moved the family to Los Angeles to seek work. The small-town boy from Illinois was star-struck.
“I skated all over town, hell-bent on getting autographs from glamorous stars,” he told Playboy. “It was glorious.”
With voracious appetites for cinema, he and his mother saw 10 to 12 films a week.
Unable to afford college, Bradbury spent the next few years peddling newspapers on Los Angeles street corners, writing and hanging out in libraries. The ambitious teenager sought out science fiction writer Robert Heinlein and introduced himself.
Heinlein “became my teacher and accepted me into his group, although I was lousy,” Bradbury said.
By age 20, he had several stories accepted by Script magazine and by 25 was a regular contributor to Weird Tales.
Bradbury said he found his voice at 22 with his short story “The Lake,” and gained the confidence to write full time. He would later brag that unlike most writers he never had a dry spell in his entire career.
First Date
“I wake early and hear my morning voices leaping around in my head like jumping beans,” he once said. “I get out of bed to trap them before they escape.”
One hot afternoon in a Los Angeles bookshop, Bradbury met Marguerite “Maggie” Susan McClure, a clerk there.
“I’m going to the moon someday,” he told her. “Wanna come?” The two went out for coffee, which turned into cocktails, which turned into dinner. The witty, literary couple quickly fell in love and married in 1947. Maggie became the only girl Bradbury ever dated, the mother of their four daughters and his wife for 56 years. She died in 2003.
Though “The Martian Chronicles” received a rave review in the New York Times, it was “Fahrenheit 451” that earned Bradbury widespread recognition.
‘Conformist Hells’
Readers responded to the world of protagonist Guy Montag, a fireman who sets books ablaze. In the novel Montag begins to question his vocation and discovers censorship was used to avoid conflicts arising from critical thought. He becomes an accidental fugitive, whose only crime is the attempt to reclaim the intellectual freedom still found in our contemporary world.
“Bradbury’s is the most skillfully drawn of all science fiction’s conformist hells,” acclaimed British author Kingsley Amis said of the book.
The novel was made into a 1966 film by the acclaimed French director Francois Truffaut. It was also adapted as an opera by Georgia Holof and David Mettere, which was first produced at the Indiana Civic Theater in Fort Wayne, Indiana, in 1988.
Bradbury’s prose stood out for its ability to bring a human warmth and nostalgia to the fantasy genre. While many of his colleagues pursued the possibilities of science, Bradbury used his imagination to depart from the ordinary only to return to the values that remain irrevocably human.
Low-Tech Writer
Unlike many science fiction writers, Bradbury’s fascination with fantasy reflected an aversion to technology, not a love of it. The Los Angeles resident didn’t drive and did his daily writing on a typewriter.
“Fahrenheit 451” received a new wave of attention when the politically independent Bradbury lashed out at filmmaker Michael Moore for co-opting his title for the 2004 documentary “Fahrenheit 9/11.”
Moore’s award-winning box-office hit presented an unflattering critique of the Bush administration. Bradbury, who said he didn’t believe in political parties, hadn’t seen the film and was unconcerned with its politics or financial gain.
“The point is that he stole something,” Bradbury said in a 2004 interview with Chris Matthews of MSNBC. “All I want is to have it returned.”
While Moore eventually called to apologize, Bradbury said the filmmaker never called back, as promised, to discuss changing the title.
Rejection Slips
Even with all of this acclaim, Bradbury was nevertheless no stranger to disappointment. In a 2001 video interview for a fan website, Bradbury joked that he held the record for rejections from the New Yorker magazine.
“When you reject the 301st short story, we should have a party,” Bradbury said of the magazine, in which he was published only one time, in 1947.
Bradbury continued to write late into his life, although he had suffered a stroke in 1999 and had deteriorating eyesight. He wrote with the help of his daughters in the basement of his Los Angeles home, according to Roberts, his biographer.
In 2006, he published “Farewell Summer,” the third installment of a trilogy inspired by his childhood in Illinois, after “Dandelion Wine” (1957) and “Something Wicked.”
Bradbury adapted some of his earlier works to the stage, including tales from his novels about Illinois. The trio of nostalgic short plays was titled “Ray Bradbury’s Green Town,” and was performed in California in 2007.
Bradbury is survived by his four daughters, Susan Marguerite, Ramona, Bettina and Alexandra, eight grandchildren and several cats.
When asked by the Sacramento Bee in 2006 what he would like to see on his epitaph, Bradbury replied, “It should read, ‘Here lies a man who loved life from beginning to end, and he’s sorry that the goddamn thing is over.’”
To contact the editor responsible for this story: Charles W. Stevens at [email protected] ||||| Bradbury died Tuesday night in Los Angeles, his agent Michael Congdon confirmed. His family said in a statement that he had suffered from a long illness.Author of more than 27 novels and story collections—most famously "The Martian Chronicles," "Fahrenheit 451," "Dandelion Wine" and "Something Wicked This Way Comes"—and more than 600 short stories, Bradbury has frequently been credited with elevating the often-maligned reputation of science fiction . Some say he singlehandedly helped to move the genre into the realm of literature."The only figure comparable to mention would be [Robert A.] Heinlein and then later [ Arthur C.] Clarke ," said Gregory Benford , a UC Irvine physics professor who is also a Nebula award-winning science fiction writer. "But Bradbury, in the '40s and '50s, became the name brand."Much of Bradbury's accessibility and ultimate popularity had to do with his gift as a stylist—his ability to write lyrically and evocatively of lands an imagination away, worlds he anchored in the here and now with a sense of visual clarity and small-town familiarity.The late Sam Moskowitz, the preeminent historian of science fiction, once offered this assessment: "In style, few match him. And the uniqueness of a story of Mars or Venus told in the contrasting literary rhythms of Hemingway and Thomas Wolfe is enough to fascinate any critic."As influenced by George Bernard Shaw and William Shakespeare as he was by Jules Verne and Edgar Rice Burroughs , Bradbury was an expert of the taut tale, the last-sentence twist. And he was more celebrated for short fiction than his longer works."It's telling that we read Bradbury for his short stories," said Benford. "They are glimpses. The most important thing about writers is how they exist in our memories. Having read Bradbury is like having seen a striking glimpse out of a car window and then being whisked away."An example is from 1957's "Dandelion Wine":"The sidewalks were haunted by dust ghosts all night as the furnace wind summoned them up, swung them about and gentled them down in a warm spice on the lawns. Trees, shaken by the footsteps of late-night strollers, sifted avalanches of dust. From midnight on, it seemed a volcano beyond the town was showering red-hot ashes everywhere, crusting slumberless night watchman and irritable dogs. Each house was a yellow attic smoldering with spontaneous combustion at three in the morning."Bradbury's poetically drawn and atmospheric fictions—horror, fantasy, shadowy American gothics—explored life's secret corners: what was hidden in the margins of the official family narrative, or the white noise whirring uncomfortably just below the placid surface. He offered a set of metaphors and life puzzles to ponder for the rocket age and beyond, and has influenced a wide swath of popular culture--from children's writer R.L. Stine and singer Elton John (who penned his hit "Rocket Man" as an homage), to architect Jon Jerde who enlisted Bradbury to consider and offer suggestions about reimagining public spaces.Bradbury frequently attempted to shrug out of the narrow "sci-fi" designation, not because he was put off by it, but rather because he believed it was imprecise."I'm not a science fiction writer," he was frequently quoted as saying. "I've written only one book of science fiction ["Fahrenheit 451"]. All the others are fantasy. Fantasies are things that can't happen, and science fiction is about things that can happen."It wasn't merely semantics.His stories were multilayered and ambitious. Bradbury was far less concerned with mechanics—how many tanks of fuel it took to get to Mars and with what rocket—than what happened once the crew landed there, or what they would impose on their environment. "He had this flair for getting to really major issues," said Paul Alkon, emeritus professor of English and American literature at USC."He wasn't interested in current doctrines of political correctness or particular forms of society. Not what was wrong in '58 or 2001 but the kinds of issues that are with us every year." ||||| Ray Bradbury , a master of science fiction whose imaginative and lyrical evocations of the future reflected both the optimism and the anxieties of his own postwar America, died on Tuesday in Los Angeles. He was 91.
His death was confirmed by his agent, Michael Congdon.
By many estimations Mr. Bradbury was the writer most responsible for bringing modern science fiction into the literary mainstream. His name would appear near the top of any list of major science fiction writers of the 20th century, beside those of Isaac Asimov, Arthur C. Clarke, Robert A. Heinlein and the Polish author Stanislaw Lem. His books are still being taught in schools, where many a reader has been introduced to them half a century after they first appeared. Many readers have said Mr. Bradbury’s stories fired their own imaginations.
More than eight million copies of his books have been sold in 36 languages. They include the short-story collections “The Martian Chronicles,” “The Illustrated Man” and “The Golden Apples of the Sun,” and the novels “Fahrenheit 451” and “Something Wicked This Way Comes.”
Though none of his works won a Pulitzer Prize, Mr. Bradbury received a Pulitzer citation in 2007 “for his distinguished, prolific and deeply influential career as an unmatched author of science fiction and fantasy.”
His writing career stretched across 70 years, to the last weeks of his life. The New Yorker published an autobiographical essay by Mr. Bradbury in its June 4 double issue devoted to science fiction. There he recalled his “hungry imagination” as a boy in Illinois.
“It was one frenzy after one elation after one enthusiasm after one hysteria after another,” he wrote, noting, “You rarely have such fevers later in life that fill your entire day with emotion.”
Mr. Bradbury sold his first story to a magazine called Super Science Stories in his early 20s. By 30 he had made his reputation with “The Martian Chronicles,” a collection of thematically linked stories published in 1950.
The book celebrated the romance of space travel while condemning the social abuses that modern technology had made possible, and its impact was immediate and lasting. Critics who had dismissed science fiction as adolescent prattle praised “Chronicles” as stylishly written morality tales set in a future that seemed just around the corner.
Mr. Bradbury was hardly the first writer to represent science and technology as a mixed bag of blessings and abominations. The advent of the atomic bomb in 1945 left many Americans deeply ambivalent toward science. The same “super science” that had ended World War II now appeared to threaten the very existence of civilization. Science fiction writers, who were accustomed to thinking about the role of science in society, had trenchant things to say about the nuclear threat.
But the audience for science fiction, published mostly in pulp magazines, was small and insignificant. Mr. Bradbury looked to a larger audience: the readers of mass-circulation magazines like Mademoiselle and The Saturday Evening Post. These readers had no patience for the technical jargon of the science fiction pulps. So he eliminated the jargon; he packaged his troubling speculations about the future in an appealing blend of cozy colloquialisms and poetic metaphors.
Though his books became a staple of high school and college English courses, Mr. Bradbury himself disdained formal education. He went so far as to attribute his success as a writer to his never having gone to college.
Instead, he read everything he could get his hands on: Edgar Allan Poe, Jules Verne, H. G. Wells, Edgar Rice Burroughs, Thomas Wolfe, Ernest Hemingway . He paid homage to them in 1971 in the essay “How Instead of Being Educated in College, I Was Graduated From Libraries.” (Late in life he took an active role in fund-raising efforts for public libraries in Southern California.)
Mr. Bradbury referred to himself as an “idea writer,” by which he meant something quite different from erudite or scholarly. “I have fun with ideas; I play with them,” he said. “ I’m not a serious person, and I don’t like serious people. I don’t see myself as a philosopher. That’s awfully boring.”
He added, “My goal is to entertain myself and others.”
He described his method of composition as “word association,” often triggered by a favorite line of poetry.
Mr. Bradbury’s passion for books found expression in his dystopian novel “Fahrenheit 451,” published in 1953. But he drew his primary inspiration from his childhood. He boasted that he had total recall of his earliest years, including the moment of his birth. Readers had no reason to doubt him. As for the protagonists of his stories, no matter how far they journeyed from home, they learned that they could never escape the past.
In his best stories and in his autobiographical novel, “Dandelion Wine” (1957), he gave voice to both the joys and fears of childhood, as well as its wonders.
“Dandelion Wine” begins before dawn on the first day of summer. From a window, Douglas Spaulding, 12, looks out upon his town, “covered over with darkness and at ease in bed.” He has a task to perform. ||||| Despite the exhortations of Mr Electrico, a carnival sideshow act with an electrified sword who demanded that a 12-year-old Ray Bradbury "live forever!", one of the most well-loved and highly-regarded modern writers of the fantastic has died.
At 91, though, he left a body of work that might just fulfil the prophecy of that showman in Waukegan, Illinois, in 1932.
One of the most widely read authors of his generation, Bradbury published a string of titles in the early 1950s – The Martian Chronicles, The Illustrated Man and Fahrenheit 451 – that captured the political fears of a generation and fueled renewed interest in futurist literature.
His most famous work, Fahrenheit 451, named for a proposed temperature at which books combust, imagines a golden age of war and ignorance in which "firemen" burn books instead of putting out fires. Ever since its publication in 1953, the book has been a mainstay of high school English syllabuses.
The news of his death, in southern California, was broken by the sci-fi news website Io9. It quoted his grandson, Danny Karapetian, as saying: "If I had to make any statement, it would be how much I love and miss him, and I look forward to hearing everyone's memories about him. He influenced so many artists, writers, teachers, scientists, and it's always really touching and comforting to hear their stories. Your stories.
"His legacy lives on in his monumental body of books, film, television and theater, but more importantly, in the minds and hearts of anyone who read him, because to read him was to know him. He was the biggest kid I know."
It was Bradbury's encounter at that Labor Day carnival in his home town that set him on the path of becoming a writer, and laid the groundwork for his unique brand of sometimes creepy, sometimes folksy, often slyly subversive fantastical Americana of whispering winds, sinister circuses, fretting about modern life and how humanity copes – or not – with relocating to distant worlds.
After being told by Mr Electrico that he was the reincarnation of the showman's friend who died in France in the Great War, Bradbury ruminated on his website in 2001: "Why did he say that? I don't know. Was there something in my eagerness, my passion for life, my being ready for some sort of new activity? I don't know the answer to that. All I know is that he said, "Live forever" and gave me a future and in doing so, gave me a past many years before, when his friend died in France.
"Leaving the carnival grounds that day I stood by the carousel and watched the horses go round and round to the music of Beautiful Ohio. Standing there, the tears poured down my face, for I felt that something strange and wonderful had happened to me because of my encounter with Mr Electrico.
"I went home and the next day traveled to Arizona with my folks. When we arrived there a few days later I began to write, full-time. I have written every single day of my life since that day 69 years ago."
Bradbury was born in 1920 in Waukegan, Illinois, moving with his family to Los Angeles as a teenager. His first collection of short stories, Dark Carnival, was published in 1947. His best known books were published in the early 1950s. He has a star on the Hollywood walk of fame.
In addition to novels, Bradbury wrote screenplays and scripts for TV shows such as Alfred Hitchcock Presents and The Twilight Zone.
In 1954, Bradbury received the National Institute of Arts and Letters Award. He was awarded a National Medal of Art by President George W Bush in 2004. He received the O Henry Prize twice and a National Book Foundation medal. He won an Emmy for scripting the Halloween Tree for television.
Bradbury published an essay last week in the New Yorker about what inspired him to write fiction.
He wrote: "I memorized all of John Carter and Tarzan, and sat on my grandparents' front lawn repeating the stories to anyone who would sit and listen. I would go out to that lawn on summer nights and reach up to the red light of Mars and say, 'Take me home!'
"I yearned to fly away and land there in the strange dusts that blew over dead-sea bottoms toward the ancient cities."
Karapetian noted a particular line written by his grandfather about death. He told Io9: "If you're looking for any single passage to remember him by, I just picked up my copy of The Illustrated Man, my favorite of his books. The introduction is entitled 'Dancing, So As Not to Be Dead,' and there are some great lines about death. My favorite:
"My tunes and numbers are here. They have filled my years, the years when I refused to die. And in order to do that I wrote, I wrote, I wrote, at noon or 3am.
"So as not to be dead.'"
• This article was amended on 6 June 2012. The original erroneously described how, in Fahrenheit 451, "firefighters" burn books instead of putting out fires. This has been corrected to say: "firemen". | A sampling of the salutes being directed toward Ray Bradbury, who has died at age 91: Gerald Jonas, New York Times: "By many estimations Mr. Bradbury was the writer most responsible for bringing modern science fiction into the literary mainstream." Lynell George, Los Angeles Times: "Bradbury was far less concerned with mechanics—how many tanks of fuel it took to get to Mars and with what rocket—than what happened once the crew landed there, or what they would impose on their environment." He had a knack for getting to the "really major issues," says one English professor. Tom McCarthy and David Barnett, the Guardian: "One of the most widely read authors of his generation, Bradbury published a string of titles in the early 1950s—The Martian Chronicles, The Illustrated Man and Fahrenheit 451—that captured the political fears of a generation and fueled renewed interest in futurist literature." Laura Tillman, BusinessWeek: "Bradbury’s prose stood out for its ability to bring a human warmth and nostalgia to the fantasy genre. While many of his colleagues pursued the possibilities of science, Bradbury used his imagination to depart from the ordinary only to return to the values that remain irrevocably human." Bradbury himself: “I wasn’t trying to predict the future,” he told the Wall Street Journal in 2003. “I was trying to prevent it.” |
The Area program is a sea-based weapon system being developed by the Ballistic Missile Defense Organization (BMDO) and the Navy to defeat theater ballistic missiles. The system is considered a high-priority “core” theater missile defense program by BMDO and the Congress. It supports the national objective of protecting U.S. and allied deployed forces, population centers, and industrial facilities from theater missile attacks. The mission of the Navy Area program is to provide a near-term, short-range tactical ballistic missile defense capability until ground forces, including other ballistic missile defense systems, can be set up. The Navy Area system is part of a “family of missile defense systems” that also includes the Army’s Patriot PAC-3 system to help defend against short-range missiles and the Navy’s Theater-wide and the Army’s Theater High Altitude Area Defense systems for defending against long-range missiles. According to proponents, the advantages of Navy missile defense systems over ground-based systems are that Navy ships (1) are likely to be relatively close to any areas of potential conflict and (2) do not require host nation agreement to be deployed to the area. As a result, the Navy systems can be deployed more readily than other systems. According to the Navy, its Area program also takes advantage of existing infrastructure. It is to be incorporated into existing AEGIS weapon systems and consists of a modified AEGIS combat system and modified Navy command and control systems to enable detection, tracking, and engagement of theater ballistic missiles. Changes needed to give the AEGIS system ballistic missile defense capabilities primarily involve software changes and increased computer capability. Modifications are also to be made to the existing Standard Missile-2, Block IV, and are to include adding an infrared seeker and a radio-frequency adjunct sensor to enable the missile to home and fuze on attacking ballistic missiles. This modified missile is designated as the Standard Missile-2, Block IVA. Modifications are also to be made to the ship’s vertical launching system. These modifications are intended to provide AEGIS ships with a theater ballistic missile defense capability while allowing them to maintain their ability to conduct anti-air warfare against aircraft and cruise missiles. To equip 57 AEGIS destroyers and 22 AEGIS cruisers with theater missile defense capability between fiscal year 1998 and 2011, the Navy plans to buy 1,500 Standard Missile-2, Block IVAs. The Navy also plans to field a prototype system—the User Operational Evaluation System (UOES)—beginning in September 1999. UOES provides for an interim ballistic missile defense capability and allows for fleet personnel to evaluate the system. The Navy plans to equip 2 cruisers with a total of 35 UOES missiles available for testing and/or use in a national emergency. The total cost of the Navy Area program is projected to be $8.98 billion, including $2.05 billion for development, $4.18 billion for procurement, and $2.76 billion for operation and support. As of the end of fiscal year 1997, more than $900 million has been appropriated for system development. The Department of Defense (DOD) requested about $283 million in fiscal year 1998—$267.8 million for development and $15.4 million for production. Figure 1 shows the concept of the Navy Area program. The Area program entered the engineering and manufacturing development phase of the DOD weapon systems acquisition process earlier this year, but the activities that had to be accomplished before the engineering and manufacturing development phase could begin took about 14 months longer than expected. The initial Area program schedule projected that the engineering and manufacturing development phase would begin in December 1995 and that full-rate production would begin in September 1999. Engineering and manufacturing development actually began in February 1997 and the current schedule shows that full-rate production will begin in August 2001. According to program officials, this delay was due to the following reasons: The Standard Missile Company—a joint venture between the Raytheon Company and the Hughes Missile Systems Company—took longer than expected to establish, which delayed the Area program in obtaining test missiles. A congressional budget cut for fiscal year 1995 and DOD accounting changes slowed the progress of the program. Technical problems that occurred in the two flight tests prior to the engineering and manufacturing development phase caused about a 6-month delay. Concurrent with the flight test delay, there was also a delay related to the completion of the Standard missile preliminary design, due to additional time being required to complete cost performance tradeoffs. The Area program acquisition plan has an optimistic schedule for conducting operational tests, which could result in the system remaining in a low-rate initial production phase longer than currently planned if the test program experiences serious problems. Between November 2000 and March 2001, the Navy plans to conduct developmental and operational tests at the Pacific Missile Range Facility that will involve intercept attempts with a total of 32 missiles, an average rate of about 8 test firings a month. Program officials told us that such a test schedule is not unusual in Navy testing, which is typically conducted based upon range availability and ship operational commitments. According to these officials, test programs for earlier versions of the Standard missile were also compressed. For example, they indicated that the Block IIIB program conducted 14 operational test intercepts in 3 days and the Block IV program conducted 7 developmental/operational intercept tests in 2 days. However, according to DOD officials, these tests were anti-air warfare tests, with which the Navy has a great deal of experience, and not theater missile defense tests. Navy test officials agreed that the Area system’s test schedule is ambitious, but said that it was “doable.” They said that some of the testing will involve multiple simultaneous engagements, which will use several missiles in a brief period of time. Despite the program office’s optimism, some DOD testing and program analysis officials expressed skepticism that the Navy could complete the planned test program on schedule. One DOD official said that it was not realistic for the Navy to maintain this test schedule, citing delays with other test programs such as tests of the Army’s Patriot PAC-3 system as well as problems with the Area system’s earlier flight demonstration tests. An internal DOD analysis noted that DOD “has yet to demonstrate the feasibility of such an aggressive test schedule for a [theater ballistic missile defense] program.” According to the analysis, the best demonstrated program schedule experience to date was about 11 weeks between successful intercepts of theater ballistic missile targets. Testing officials agreed that if the test program experiences serious problems, it will cause schedule delays. The Navy plans to begin low-rate initial production of Area program missiles in June 2000 before conducting any operational tests of the system. The combined developmental and operational tests scheduled to begin in November 2000 are the first fully integrated shipboard system tests planned for this program. Figure 2 displays the current testing and production schedule. The Navy indicated that it intends to use the results of the operational assessment in the June 2000 decision to begin low-rate production of the missiles. However, operational assessments will be based on developmental tests conducted by the contractor at White Sands Missile Range rather than on the results of realistic field testing. It will not provide a comparable quality of information for decisionmakers that can be obtained from independent operational tests. For example, according to the Area program’s Test and Evaluation Master Plan, “no critical operational issues will be resolved” during the White Sands testing. According to Navy test officials, critical operational issues can only be resolved during tests at sea such as the operational tests to be conducted at the Pacific Missile Range Facility between November 2000 and March 2001. Tests at White Sands are limited because the system is not subjected to conditions found at sea such as salt water and the movement of the ship and because they will not use the AEGIS SPY-1 radar. According to Navy officials, the program needs to begin low-rate production in June 2000—5 months before system level developmental and operational tests are scheduled to begin—because of the urgent need for the system and to maintain an efficient flow in Standard missile production. Our review indicated that the following two factors raise some question about the criticality that the Navy attributes to initiating low-rate initial production. The Navy’s stated urgent need for the Area program may be met in part by the UOES system. The UOES prototype system is scheduled to be available in September 1999. If the UOES meets it objectives, it will provide some operational capability until the more capable system is available. The Navy plans to provide two cruisers with a UOES capability, and the ships are to be initially equipped with a total of 35 UOES missiles. Although many of these missiles are to be expended in tests, a small number will remain. The need to maintain Standard missile production is not solely dependent on the initial production of missiles for the Area program. Even without low-rate production of the Area program’s Block IVA missile, Standard missile production will continue. Production of an earlier version of the missile—the Block IIIB—began in fiscal year 1997 and is scheduled to continue at least through fiscal year 2003. Navy officials acknowledge that even though the configurations of the Block IIIB and Block IVA missiles are different, a high degree of commonality exists between the missiles both at the section level and at lower assembly levels. The Navy and the Standard Missile Company have identified minimum sustaining rates for major sections of the Standard missile. In most of the cases we examined, the minimum sustaining rate is met or almost met without production of the Block IVA low-rate initial production missiles. For example, the minimum sustaining rate for the warhead in fiscal year 1999 is 96 units. Total production that year is expected to be 251 units, of which only 34 are Block IVA units. The primary exception is the Block IVA booster, which is not a component of the Block IIIB missile, and thus cannot meet its minimum sustaining rate without Block IVA units. Figure 3 shows planned production of the various configurations of the Standard missile. The Navy plans to produce 185 Block IVA missiles—12 percent of its total planned production quantity—during low-rate production. The estimated cost for these 185 missiles is $568.2 million. Scheduling low-rate initial production concurrent with testing increases risk. A DOD analysis concluded that planning low-rate production concurrent with the Navy Area test program was risky, noting that if problems are uncovered during the test phase, the program may need to acquire additional hardware and incur redesign costs. Testing problems could also cause the missile to remain in low-rate production longer than currently planned. Slippage in the development of the Navy Area program has already occurred and the planned test schedule is optimistic. Unless the acquisition plan and/or the testing schedule is revised, the Navy will not have reasonable assurance that the system will adequately perform before the Navy commits itself to the production of the Block IVA interceptor missiles. The Navy currently plans to contract for the low-rate initial production of 185 Block IVA missiles, at an estimated cost of about $568.2 million, prior to the completion of any realistic operational testing. The Navy intends to rely on assessments that do not provide the quality of data that realistic field testing provides. We are concerned that the Navy will make a premature commitment to the production of unproven missiles. The Navy acknowledges that risks are involved but believes it must maintain the existing schedule because of the urgent need for the system and to maintain an efficient flow in Standard missile production. Our review indicates that if the initial production decision on the Block IVA was delayed, the contractor could still generally maintain minimum sustaining rates of production by continuing to work on an earlier version of the Standard missile that will still be in production and has a high degree of commonality with the Block IVA missile. Moreover, the Navy would also have UOES to provide some intercept capability until the fully operational Navy Area program demonstrates its expected capability. Therefore, we recommend that you direct BMDO to revise the Navy Area Theater Ballistic Missile Defense program’s acquisition plan and/or its operational testing schedule to ensure that the low-rate initial production decision on the 185 Block IVA missiles is made contingent on the Director, Operational Test and Evaluation, certifying, based on sufficient independent testing in an operational environment, that the system has the potential to meet its key performance requirements. In commenting on a draft of this report, DOD disagreed with our recommendation. First, DOD stated that postponing acquisition is contrary to the purpose of low-rate initial production as codified in title 10 of the U.S. Code. Second, DOD said that complying with our recommendation would cause a delay in low-rate initial production missile deliveries, resulting in an inventory of seven UOES missiles—too few to respond to any contingency. Third, DOD said implementing our recommendation would impact the production of key Standard missile components, resulting in substantial restart costs and risks. We recognize that title 10 specifies the purposes for low-rate initial production. The statutes, however, do not include specific standards on when programs should begin low-rate initial production, or the type and amount of testing to be done before production begins. The thrust of our recommendation is that conducting realistic testing prior to the production of system components reduces risk and minimizes the procurement of unproven equipment. Further, implementing our recommendation could also reduce the number of Area systems that may have to be modified based on the results of operational testing. DOD also says that delaying low-rate initial production missile deliveries beyond operational testing would result in an inventory of seven UOES missiles—too few to respond to any contingency. DOD’s comments suggest that implementing our recommendation would mean delaying low-rate initial production until all operational testing is completed in March 2001. We are not suggesting such a delay in the program schedule, but rather that the schedule be adjusted so that some operational testing be conducted prior to the low-rate initial production decision currently planned for June 2000. While DOD says that a delay could reduce the number of missiles available for contingency operations for a short period, the current schedule already includes a period of reduced availability. Under the current schedule, only seven missiles will be available for contingency operations from the completion of operational testing in March 2001 until the first low-rate initial production missile delivery begins in June 2001. In addition, under the current schedule, by the time operational testing begins in November 2000, the Navy will have already committed to low-rate initial production at a cost of $568.2 million. Furthermore, DOD notes that the low-rate initial production missiles are required to respond to a national emergency. Therefore, we believe it is important that the Navy be able to demonstrate the missile system’s operational capability to respond in such an emergency. DOD also notes that Block IIIB missile production will not meet minimum sustaining rate quantities for all components. According to DOD, delaying low-rate initial production of Block IVA missiles would shut down booster production and cause the guidance section to fall below minimum sustaining rates for a 2-year period. DOD’s comments indicate that restart costs and risks associated with restarting would be substantial. We recognize that the minimum sustaining rate for the booster will not be met without production of boosters for the Block IVA missile. However, even without the Block IVA missile, expected production of the guidance section would equal 96 percent of the minimum sustaining rate in both fiscal years 1999 and 2000. We asked Navy officials for an estimate of the restart costs and they told us that a minimum of $9.1 million in restart costs would be incurred for the booster and a component of the guidance section. According to these officials, cost risks associated with requalification of unique Block IVA component sub-vendors are not included in this estimate. Given that each Block IVA missile is expected to cost an average of about $2 million, it could easily cost more to fix already produced missiles if problems are revealed during subsequent testing, than it could cost to restart production. We believe it may be more cost-effective to incur some restart costs, rather than enter production without adequate testing. Consequently, we believe our recommendation is still appropriate. DOD’s comments are reprinted in appendix I. We have incorporated DOD’s technical comments as appropriate. To determine whether the Navy Area Theater Ballistic Missile Defense program has met its milestones to date and its remaining schedule appears realistic, we interviewed agency officials and analyzed pertinent program cost, schedule, and requirements documentation. We analyzed the status of the program, the various factors that led to the 2-year slippage in the program schedule, and the technical risks that remain. To determine whether the tests being conducted or planned will be adequate to demonstrate the system’s capabilities before production begins, we interviewed agency officials and analyzed pertinent test plans and schedules. We examined how many flight tests will be conducted before deployment of the UOES system, whether planned tests would realistically measure the system’s performance, the risks associated with a compressed operational test schedule, and the risks associated with beginning low-rate initial production before conducting any system level operational tests. We interviewed responsible agency officials at the following locations: the Office of the Secretary of Defense, Headquarters, BMDO, and the Office of the Director, Operational Test and Evaluation, in Washington, D.C.; the Navy’s Program Executive Office (Theater Air Defense), Program Office for Standard Missile and Vertical Launching Systems, and Program Office for the AEGIS Weapon System, in Washington, D.C.; and the Navy’s Operational Test and Evaluation Force in Norfolk, Virginia. We conducted our work from September 1996 to August 1997 in accordance with generally accepted government auditing standards. As you know, the head of a federal agency is required by 31 U.S.C. 720 to submit a written statement of actions taken on our recommendations to the Senate Committee on Governmental Affairs and the House Committee on Government Reform and Oversight not later than 60 days after the date of this report. A written statement also must be submitted to the Senate and House Committees on Appropriations with the agency’s first request for appropriations made more than 60 days after the date of the report. We are sending copies of this report to appropriate congressional committees; the Director of the BMDO; and the Secretaries of the Army, the Navy, and the Air Force. We will also make copies available to others on request. If you or your staff have any questions concerning this report, please contact me on (202) 512-4841. Major contributors to this report were Tom Schulz, Lee Edwards, David Hand, and Judy Lasley. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO reviewed the Navy Area Theater Ballistic Missile Defense program to determine whether the: (1) program has met its milestones to date and its remaining schedule appears realistic; and (2) tests being conducted or planned will be adequate to demonstrate the system's capabilities before production begins. GAO noted that: (1) the Area program has experienced schedule slips totalling about 14 months due to several reasons, including technical problems in the two flight tests conducted prior to the engineering and manufacturing development phase; (2) further schedule slips are possible because of the acquisition plan's highly optimistic schedule for conducting operational tests; (3) slippages in completing these tests could result in the system remaining in a low-rate production phase longer than planned; (4) the Navy plans to begin production of Area program missiles before conducting any operational tests of the systems; (5) according to the Navy, it needs to begin low-rate initial production of the missiles in June 2000--5 months before system level developmental and operational tests are scheduled to begin--because of the urgent need for the system and to maintain an efficient flow in missile production; and (6) in GAO's opinion, two factors raise some questions about the Navy's rationale for the criticality of initiating low-rate initial production, namely: (a) a prototype system capability consisting of two cruisers equipped with User Operational Evaluation System missiles will be in service at that time; and (b) an earlier version of the Standard missile will still be in production, diminishing the need for low-rate production of the Block IVA missile to avoid a production gap. |
Rich in calcium, iron and protein, gluten-free teff offers Ethiopia the promise of new and lucrative markets in the west
At Addis Ababa airport, visitors are greeted by pictures of golden grains, minute ochre-red seeds and a group of men gathered around a giant pancake. Billboards boast: "Teff: the ultimate gluten-free crop!"
Ethiopia is one of the world's poorest countries, well-known for its precarious food security situation. But it is also the native home of teff, a highly nutritious ancient grain increasingly finding its way into health-food shops and supermarkets in Europe and America.
Teff's tiny seeds – the size of poppy seeds – are high in calcium, iron and protein, and boast an impressive set of amino acids. Naturally gluten-free, the grain can substitute for wheat flour in anything from bread and pasta to waffles and pizza bases. Like quinoa, the Andean grain, teff's superb nutritional profile offers the promise of new and lucrative markets in the west.
In Ethiopia, teff is a national obsession. Grown by an estimated 6.3 million farmers, fields of the crop cover more than 20% of all land under cultivation. Ground into flour and used to make injera, the spongy fermented flatbread that is basic to Ethiopian cuisine, the grain is central to many religious and cultural ceremonies. Across the country, and in neighbouring Eritrea, diners gather around large pieces of injera, which doubles as cutlery, scooping up stews and feeding one another as a sign of loyalty or friendship – a tradition known as gursha.
Outside diaspora communities in the west, teff has flown under the radar for decades. But growing appetite for traditional crops and booming health-food and gluten-free markets are breathing new life into the grain, increasingly touted as Ethiopia's "second gift to the world", after coffee.
Sophie Kebede, a London-based entrepreneur who, with her husband, owns Tobia Teff, a UK company specialising in the grain, says she was "flabbergasted" when she discovered its nutritional value. "I didn't know it was so sought after … I am of Ethiopian origin; I've been eating injera all my life."
The gluten-free market is the backbone of Kebede's business. Today, Planet Organic shops in London stock 1kg bags of Tobia Teff flour (£7 each), while 300g packets of its teff breakfast cereal sit alongside milled flaxseed and organic, sugar-free Swiss muesli, and cost £5.44 The company also sells readymade, gluten-free teff bread with raisin, onion, sunflower and other varieties. (Teff is available at other UK stockists).
As western consumers acquire a taste for teff, how to ensure that Ethiopia and its farmers benefit from new global markets is a critical question. Growing demand for so-called ancient grains has not always been a straightforward win for poor communities. In Bolivia and Peru, reports of rising incomes owing to the now-global quinoa trade have come alongside those of malnutrition and conflicts over land as farmers sell their entire crop to meet western demand.
The tiny seeds are rich in nutrients. Photograph: Elissa Jobson
Ethiopia's growing middle class is also pushing up demand for teff, and rising domestic prices over the past decade have put the grain out of reach of the poorest. Today, most small farmers sell the bulk of what they grow to consumers in the city.
This may have helped boost incomes in some rural areas but it has had nutritional consequences, says the government, as teff is the most nutritionally valuable grain in the country. Estimates suggest that while those in urban areas eat up to 61kg of teff a year, in rural areas, the figure is 20kg. The type consumed differs too: the wealthy almost exclusively eat the more expensive magna and white teff varieties; less well-off consumers tend to eat less-valuable red and mixed teff, and more than half combine it with cheaper cereals such as sorghum and maize.
The Ethiopian government wants to double teff production by 2015. Its strategy, published in 2013, argues that the grain could play an important role in school meals and emergency aid programmes, and help reduce malnutrition – particularly among children and adolescents.
It notes that teff is also gluten-free, so it is well suited to address growing global gluten-free demand, and calls on companies to start testing, promoting and mass manufacturing teff-based products such as cakes and biscuits.
Though Ethiopia has a fast-growing economy, it remains on the UN's list of least-developed countries. An estimated 20% of under-fives are malnourished or suffer stunted growth, and the UN's World Food Programme estimates the costs of chronic malnutrition could be worth 16.5% of GDP.
The government's agricultural transformation agency aims to boost yields by developing improved varieties of the grain, along with new planting techniques and tools to reduce post-harvest losses.
The Syngenta Foundation, the non-profit arm of the Swiss seeds and pesticides company, has also joined the quest for increased teff production.
Government restrictions, instituted in 2006, forbid the export of raw teff grain, only allowing shipments of injera and other processed products. But this could change: the goal is to produce enough teff for domestic consumption and a strong export market, according to the government's strategy.
In Addis Ababa, the Ethiopian capital, dozens of women painstakingly sift and mill teff at the factories of Mama Fresh Injera, one of the few domestic companies that exports teff products.
The Mama Fresh factory in Addis Ababa. The family firm has set its sights on the gluten-free market in the west. Photograph: Elissa Jobson
Mama Fresh is a family firm that has been selling injera to top restaurants and hotels in the Ethiopian capital for years. It also ships the flatbread to Finland, Germany, Sweden and the US, primarily for consumption by diaspora communities. But the company has its eye on the gluten-free market. It aims to double exports to America in 2014, and will soon start producing teff-based pizzas, bread and cookies.
David Hallam, trade and markets director at the UN's Food and Agriculture Organisation, says while there is money to be made from new global markets for traditional crops, governments have to support small-scale producers to ensure they share the benefits of increased trade.
"Typically, these products are going to go through many hands before they reach the shelves of Sainsbury's or wherever. There are [profit] margins at every step, and small farmers are not necessarily well placed to bargain with the bigger traders," says Hallam, who sees quinoa's popularity as a cautionary tale of how export opportunities can be a mixed blessing for poor countries.
Regassa Feyissa, an Ethiopian agricultural scientist and former head of the national Institute for Biodiversity, warns that without careful planning, increased teff production for export may displace other important crops for farmers. And efforts to boost production could benefit business interests at the expense of small farmers.
With little Ethiopian teff on the international market, farmers in the US have started planting the crop. Farmers in Europe, Israel and Australia have also experimented with it.
Kebede says she gets her grain from farms in southern Europe, though she would prefer to source it from Ethiopia. "Teff is second nature to an Ethiopian; so who better to supply it? We have this sought after grain being grown in the country, so why can't an Ethiopian farmer benefit from this?" ||||| The grain is hot on the heels of other 'super foods' such as the acai berry. Here are a couple of suggestions on how to use it
Food that's sourced well usually tends to taste good too. Maybe that's why so many food lovers go out of their way to sample ingredients from developing countries, looking for authenticity and a worthy way of spending their grocery money.
Teff, the highly nutritionous grain from Ethiopia, is the latest of these so-called super foods. Its popularity could help to boost the country's food security and export earnings.
To take an earlier example, it is said that the rise of the acai berry – a "superfruit" espoused by Oprah Winfrey – has transformed the economy of the Amazon state of Pará, creating thousands of jobs.
Recently, I went to the highlands of Colombia to witness an attempt to take a traditional crop and target it at US and European markets. It could pull poor hill-farmers in the Andes out of poverty (or the need to grow coca), and the company producing it runs its factories with a policy of giving work to single mothers. Goldenberries are the dried fruit of a plant more commonly known as the cape gooseberry – high in potassium, fibre and antioxidants they have found a niche on the lucrative health-food shelves as a "superfruit".
For those who care more about tackling poverty than middle-class health worries, the important thing is that goldenberries resist industrialisation. To farm the bushes you need patience and your hands – their branches need to be tied into a complex web of threads to protect the fruit. They can be grown on hillsides, in poor soil. So, they are small-farmer friendly – and they taste good. Better, certainly, than cranberries, also dubbed a superfruit, which can be laden with added sugar especially when industrially produced by monopolistic corporates.
Export crops from developing countries have a chequered history. Too often, as soon as their profit potential is recognised, big business steps in to maximise gain and grab the value generated by processing the raw material. Subsequently, having established monopolies, the corporates put the squeeze on prices paid to the farmers. Stories of exploitation in the cocoa and coffee trade in the 20th century include enslavement, hunger and poverty among the farmers who grow the crop.
There are troubling stories behind the boom in quinoa – the trendy health food of our times, now too expensive for the Bolivians who really need its nutritional benefits. Modern, intensive farming of quinoa is also proving to have scary environmental impacts.
And so to teff. Anyone who knows it is probably familiar with it as a flour, usually encountered in north-east Africa's injera bread.
Currently, buying teff flour in Britain is not going to help any Ethiopian farmer. It is imported from the Netherlands or the US. But once rules are changed, as importers hope, the grain may prove more interesting as an ingredient than the flour.
I had a go at cooking with some Dutch teff grain that I bought online – and I gave some of it to the chefs at a favourite local restaurant, Edinburgh's Earthy Foods, on the grounds that they know their way around exotic grains and pulses.
It is the world's smallest food grain. The problem with cooking it is immediately apparent – when I tried to rinse a cup of teff grain in cold water, it all fell straight through my sieve and into the sink.
When I put some in a pan, I started thinking in terms of barley risotto or bulgur wheat, the base of tabbouleh. So I fried some chopped onion and mixed in the tiny teff grains with a vegetable stock cube and half the volume again of water. After 15 minutes it was dry, and we ate the sticky result with lemon juice and sea salt.
I liked the graininess and the red-brown colour – it could have been dried herring roe. I simmered the rest with puy lentils and chopped beetroot in a strong stock, mixed with chopped fennel bulb, parsley, lemon and balsamic vinegar. This became a salad that made people ask for more. And it left them very healthy.
Sarah McCaffer, a chef at Earthy in Edinburgh, came up with a different, much more delicious idea:
Teff pancakes (makes six)
Teff pancakes with berries and maple syrup. Photograph: Alex Renton
250g teff grain
80g wholegrain spelt flour (for gluten-free pancakes use gluten-free flour)
1 tablespoon baking powder
2 eggs
1 tablespoon maple syrup
150g live plain yoghurt
1 teaspoon coconut oil
Fresh or frozen berries
Mix together the teff, spelt flour, baking powder, eggs, syrup and yoghurt in a bowl and let the mixture sit for 15 minutes or so.
To cook, heat the coconut oil in a nonstick pan over a medium heat. When its hot, add a heaped tablespoon of the batter into the pan and place some berries on top.
Wait until the pancake starts to bubble, then carefully flip over and cook the other side until dark golden brown.
Serve with extra berries, greek yoghurt and maple syrup.
Share your traditional recipes
We'd like to hear more about your little known traditional foods and recipes. Why is it special? How do you prepare and eat it? ||||| Meet teff, the cool new grain that—from the looks of it—is poised to overtake quinoa as the superfood everyone’s talking about.
Teff is a tiny seed that’s high in calcium, iron, and protein, while also being low in fat, and high in fiber. Plus, it contains all eight essential amino acids. Wait there’s more: Diabetics love teff because it’s good for controlling blood sugar, and it’s gluten-free, which makes it a fantastic option for folks with celiacs disease or those who are simply gluten intolerant, as it can serve as a substitute for wheat flour in pretty much anything.
MORE: 5 Healthy Dinner Recipes to Make at Home Every Night Next Week
You can use teff in virtually everything from thickening soups and stews, to baking breads and cookies. It can also be used as a substitute for quinoa when making salads and side dishes.
Teff also happens to be the national crop of Ethiopia, and it’s a main ingredient in Ethiopia’s popular spongy injera bread. Teff growth covers around 20 percent of all cultivated land in the African country, and its growing popularity in the west could mean good things for the poverty-rampant nation.
Sp, what does teff taste like? Fans say it has an earthy flavor with a slight hazelnut taste. We say: We can’t wait to try it. ||||| Some see the growing popularity of teff, Ethiopia’s staple grain, as an opportunity for the country, but will this come at a price for the poor? Laurinda Luffman finds out.
Many traditional meals in Ethiopia centre around a grass grain called teff. This small grain is ground into flour to make a pancake-style bread known as injera. The flat injera is either used as a ‘plate’ for stews or torn off in chunks and dipped in dishes and sauces.
Teff seeds may be tiny compared with other common grains such as wheat or barley, but they are packed with goodness. High in calcium, iron and protein, teff could be described as a ‘super grain’. Gram for gram, it contains more fibre-rich bran and nutritious germ than any other grain. And since it’s naturally gluten-free, teff also makes a good substitute for wheat flour.
A growing western market
Just as quinoa has been adopted by health-conscious consumers in the West, teff is now being seen as an excellent wheat alternative. Increasingly, it can be found in health-food shops and supermarkets in Europe and America. This presents a growing opportunity for Ethiopia’s farmers. There are more than 6 million teff growers in Ethiopia and the crop covers at least a fifth of all land under cultivation. However, some agricultural experts are worried about the possible effect of teff exports.
Reports from Bolivia and Peru suggest that the global trade in quinoa has led to increasing malnutrition and conflicts over land. According to a recent article in the Guardian, the growing demand for teff, particularly among Ethiopia’s expanding middle class, is already causing domestic prices for the grain to rise. This means small farmers are selling the bulk of their crop to urban consumers and the grain is no longer within reach of many poor rural Ethiopians.
Lessons to learn
People harvest teff in Northern Ethiopia
Last year the Ethiopian government set out plans to double teff production by 2015. Government strategy sees teff playing an important role in reducing malnutrition through its inclusion in school meals and emergency food programmes. Despite the country’s growing economy, Ethiopia is still a least-developed nation and 29% of the country’s under-fives remain underweight (according to the World Health Organisation). The UN’s World Food Programme estimates that malnutrition could be costing the country 16.5% of its gross domestic product.
Currently exports of teff are tightly controlled, but with growing market opportunities, this could change. With improved grain varieties and better planting techniques, harvests can certainly be boosted in the future. Nevertheless, experts warn that lessons from South America should be learnt. Careful planning is needed to make sure that business and export interests are not put ahead of domestic consumers and small farmers. Otherwise, any teff boom could come at the expense of the poorest Ethiopians.
We work in seven locations across Ethiopia, from the capital Addis Abeba to the drought-prone Harrar. Find out how we are helping the country's most vulnerable children. ||||| The Grub Glossary is a weekly collection of foods, their definitions and where to find them.
Quinoa was so 2013.
Besides the ethical concerns about eating quinoa, there's an entirely "new" cast of ancient grains that will be stealing the spotlight in 2014. Ancient grains, or heritage grains, are essentially just long-standing grains that have remained relatively unchanged over the past several thousand years.
This year, names like teff, amaranth and freekeh will be popping up in stores, and most likely on menus.
Amaranth [am-er-enth]
Cultivated for 8,000 years, Amaranth was a staple for the Aztecs. Its cultivation was outlawed by the conquistadors, but continued to grow as a weed and subsequently maintained its genetic base. Today it is grown in some parts of Mexico where it is used to make a candy called, Alegria during festivals.
Amaranth grain is really a seed and can be pressed for oil. However, it is nondigestible in raw form and therefore must be cooked before being eaten. The seed is high in minerals lysine, magnesium and calcium, high in protein and iron and is gluten-free.
For recipes and other preparations of amaranth, look here.
Freekeh, frikh, farik [free-ka; frih-kuh; fare-ek]
Freekeh is unripe durum wheat that is harvested when still green and burned to remove the husk. Although the husk is removed, the burning still gives the wheat a slight smoky flavor. Because it is drawn from unripe durum wheat, this is a grain that has a "seasonal" period and was, and still is, celebrated in parts of the world.
The grain is high in protein and fiber and can be cooked like rice.
Kamut [kah-moot]
Kamut is actually the trademarked name of Khorasan wheat, an ancient wheat species twice the size of modern-day wheat known for its nutty flavor. Khorasan refers to a historical region in the Middle East, in what is now Afghanistan. It contains higher amounts of protein, minerals and amino acids than modern-day wheat.
Mack and Bob Quinn cultivated a specific variety of Khorasan wheat for over 10 years and trademarked it as Kamut to preserve its form. The world "kamut" means "wheat, grain and wheaten bread" according to an Egyptian Hieroglyphic dictionary and can be trademarked with the word because it belongs to a dead language.
For basic cooking instructions, look here.
Millet [mill-it]
Millet comes from a group of small-seeded grasses. Pearl millet is the most widely grown varietal and is an important crop in India and parts of Africa. The majority of the millet grown in the United States, proso millet, is grown for bird seed. Millet is also used as a grazing crop in parts of the world.
Millet remains an important part of the diet in developing countries. The grain is high in protein and iron. Some varieties of millet are also high in calcium. Millet must be cooked, its raw form is nondigestible.
Millet is a gluten-free grain.
For more information on millet, including how to cook it, visit here.
Spelt [spell-t]
Spelt, dinkel wheat or hulled wheat, is an ancient species of wheat, dating back to the fifth millennium B.C. It is sold as flour in many health food stores and has found renewed use in breads and other cereals (see: spelt pasta), as well as being an occasional ingredient in Dutch Jenever (a juniper-flavored distillate), beers in Belgium and Bavaria and vodkas across Europe.
It is high in protein and dietary fiber and its moderate amount of gluten makes it suitable for some baking purposes.
Teff [teh-ff]
Teff, Ethiopian millet or taf, is a species of lovegrass native to the highlands of Ethiopia. The word "teff" is thought to be related to the word "lost" in Amharic, a Semitic language spoken in Ethiopia, because of its tiny size — roughly the size of a poppy seed.
The size of the grain however has been key in its utilization across Ethiopia because it requires little more than a handful to sow a field and uses less fuel to cook. The grain is also hugely versatile, thriving in areas of drought and sodden soil in varied altitudes.
Nutritionally, teff is high in protein, calcium and dietary fiber and has high levels of magnesium, phosphorous, iron, copper, zinc, thiamin and other minerals. Additionally, teff is an option for those with Celiac's disease, as the gluten in the grain does not contain the protein that causes a reaction.
Teff is used to make injera [in-jare-uh], the spongy, sourdough-esque bread served with Ethiopian food, alcoholic beverages and as building material (when mixed with mud).
You can find teff at health food stores. For how to cook, look here.
-- Samantha Bakall
| Get ready to hear a lot about an ancient grain from Ethiopia called teff, reports the Guardian, which suggests it's poised to take the place once held by quinoa as king of the "super grains." Teff seeds are nutrition bombs, high in calcium, iron, protein, and amino acids. They also happen to be naturally gluten-free and can sub in for wheat flour in pretty much everything. (Like pancakes.) The gluten-free market is booming in the west, and teff is showing up more and more in health-food shops and specialty markets, write Claire Provost and Elissa Jobson. But they suggest we haven't seen anything yet. (An earlier post at the Oregonian also predicts teff will be a hot commodity in 2014.) The grain has long been a nutritional staple in Ethiopia, mostly in its injera bread. (Think "earthy flavor with a slight hazelnut taste," says StyleCaster.) And while it now accounts for 20% of the nation's agriculture, the government wants to double production by 2015. Of course, this raises the same kinds of ethical concerns that have plagued quinoa in South America: Ethiopia suffers from widespread malnutrition, and "careful planning is needed to make sure that business and export interests are not put ahead of domestic consumers and small farmers," says a post at SOS Children's Villages. "Otherwise, any teff boom could come at the expense of the poorest Ethiopians." (In other nutrition news, read how soda's caramel coloring might pose a danger.) |
The Protection of Lawful Commerce in Arms Act (PLCAA) was passed in 2005. The act generally shields federally licensed manufacturers, dealers, and sellers of firearms or ammunition, as well as trade associations, from any civil action "resulting from the criminal or unlawful misuse" of a firearms or ammunition. The act lists six exceptions where civil suits may be maintained but otherwise requires that lawsuits, pending at the time of enactment, brought by shooting victims and municipalities "be immediately dismissed by the court in which the action was brought or is currently pending." The PLCAA was considered and passed at a time when victims of shooting incidents, as well as municipalities with high incidences of firearms-related crimes, brought civil suits seeking damages and injunctive relief against out-of-state manufacturers and sellers of firearms as one tactic to inhibit the flow of firearms into illegal markets. The statute's findings state that the lawsuits seeking to hold "an entire industry for harm that is solely caused by others is an abuse of the legal system," and that the businesses targeted should not be liable for the harm caused by third parties who criminally or unlawfully misuse firearms products that function as designed and intended. Senator Larry E. Craig, sponsor of the legislation, said that the bill "will put an end to politically-motivated lawsuits against the firearms industry," and added, "[t]hese outrageous lawsuits attempting to hold law-abiding industry responsible for the acts of criminals are a threat to jobs and the economy, jeopardize the exercise of constitutionally-protected freedoms, undermine national security, and circumvent Congress and state legislatures." In contrast, opponents of the legislation, like Dennis Henigan of the Brady Legal Action Project, countered, "The gun lobby is trying to radically change the rules, to make irresponsible gun dealers and the makers of defective guns the only business[es] in America exempt from longstanding principles of negligence, nuisance and product liability." The main provision of the PLCAA provides: "A qualified civil liability action may not be brought in any Federal or State court." Whether the PLCAA bars a civil suit depends on if the action brought is a "qualified civil liability action," which is defined as: a civil action or proceeding or an administrative proceeding brought by any person against a manufacturer or seller of a qualified product, or a trade association, for damages, punitive damages, injunctive or declaratory relief, abatement, restitution, fines, or penalties, or other relief, resulting from the criminal or unlawful misuse of a qualified product by the person or a third party.... Although a qualified civil liability action, by its own definition, appears to bar administrative proceedings, it is unclear whether the statute actually does so because the main provision of the PLCAA prohibits civil suits from being brought in courts. Notably, administrative proceedings are not brought in courts although appeals of them may be. If the statute is meant to cover administrative proceedings, then the effect of its doing so is not clear. The PLCAA lists six types of lawsuits that do not qualify as a "qualified civil liability action," and that therefore are not barred by the statute. Each of these exceptions is discussed below. Under the first exception, a civil suit would not be prohibited against a transferor ( i.e. , a federal firearms licensee) if the transferor was convicted under 18 U.S.C. §924(h), which makes it unlawful for anyone to "knowingly transfer[] a firearm, knowing that such firearm will be used to commit a crime of violence ... or a drug trafficking crime." Additionally, the transferee, or receiver, of the firearm needs to have been convicted for the civil action to be permitted, but the type of conviction necessary is unclear. The transferee's conviction cannot refer to §924(h) because this provision only applies to a transferor of a firearm. It may be the case that the conviction must be of a "crime of violence" or a "drug trafficking crime," as defined by federal statute, as those are the crimes that the transferor must have had knowledge of in order to be convicted under §924(h). The second exception specifically refers to actions against "a seller," and the PLCAA's definition of "seller" may exclude some manufacturers from being included under this second exception, in which case they would continue to be immune from suits for negligent entrustment or negligence per se. Under the PLCAA, a "seller" includes a "dealer (as defined in section 921(a)(11) of title 18) ... who is engaged in the business as such a dealer and who is licensed to engage in the business" under title 18. A "dealer," under § 921(a)(11), includes a person who is "engaged in the business of selling firearms at wholesale or retail," and thus could include a manufacturer because it likely sells its products at wholesale. However, under limited circumstances, federal regulation provides that a firearms manufacturer is not required "to obtain a dealer's license in order to engage in the business on the licensed premises as a dealer of the same type of firearms authorized by the license to be imported or manufactured." If a manufacturer meets this condition, then it is not required to obtain a "dealer's license," in which case it would likely be excluded from the definition of "seller" under the PLCAA. Although the PLCAA defines "negligent entrustment" as "the supplying of a qualified product by a seller for use by another person when the seller knows, or reasonably should know, the person to whom the product is supplied is likely to, and does, use the product in a manner involving unreasonable risk of physical injury to the person or others," a plaintiff's claim of negligent entrustment will be asserted under state law. For example, Washington state courts have held that a common law tort claim of negligent entrustment can be brought against both retail firearms dealers and manufacturers. However, even if a state has its own interpretation and permits a suit for negligent entrustment to proceed against a manufacturer, the federal definition of "seller" might preclude such a suit. This means that a manufacturer excepted from the federal requirement to obtain a "dealer's license," as described above, would not qualify as a "seller" under PLCAA and therefore would continue to be immune from suits for negligent entrustment. Alternatively, a manufacturer who is licensed as a dealer under federal law would qualify as a "seller" and would be subject to suits for negligent entrustment. Under the second exception, a "seller" may also be subject to an action for "negligence per se," a term that the PLCAA does not define. This term generally means "[n]egligence established as a matter of law, so that breach of the duty is not a jury question." In other words, a court could adopt the requirements of a legislative enactment or regulation as the standard of conduct for a reasonable person. If it does so, then the individual who violates the legislation or regulation is automatically deemed negligent and the jury is not asked to determine if such individual acted in a reasonable manner. Thus, whether a violation of a statute constitutes negligence per se is a question of state law. Accordingly, a plaintiff may proceed under the second exception of the PLCAA if he alleges that the seller violated a statute and that relevant statute provides that one may be held strictly liable for violating the particular statute or regulation. Conversely, if applicable state law allows the question of negligence to go to the jury even when the defendant has violated a statute or regulation—in other words, there is no negligence per se rule—then the second exception would not apply and such a suit would be barred by the PLCAA unless it qualified as an another listed exception. This third exception to the PLCAA is known as the "predicate exception," because it essentially requires the plaintiff to assert, as part of her claim, that the manufacturer or seller knowingly committed a violation of an underlying statute, i.e. , a "predicate statute." A case that proceeds under the third exception has often turned on whether the predicate statute is "applicable to the sale or marketing of the product." The U.S. Court of Appeals for the Second Circuit (Second Circuit) in City of New York v. Beretta U.S.A. Corp. held that the PLCAA barred the action because the criminal nuisance law upon which the City relied "does not fall within the contours of the Act's predicate exception." The City had alleged that the firearms suppliers violated the State of New York's criminal nuisance provision, which provides that one is guilty of such an offense if, by conduct that is "either unlawful in itself or unreasonable under all circumstances, knowingly or recklessly creates or maintains a condition which endangers the safety or health of a considerable number of persons ... " While the City acknowledged that the criminal nuisance statute was one of general applicability, it argued that the provisions could be applied to the sale or marketing and thus fell within the predicate exception. The firearms suppliers, on the other hand, argued that the predicate exception "was intended to include statutes that specifically and expressly regulate the firearms industry." The Second Circuit, in determining the meaning of a law "applicable to the sale or marketing of [firearms]," agreed with neither the City nor the firearms suppliers. Rather, the court concluded that the predicate exception: (1) does not include the New York criminal nuisance law asserted by the plaintiffs; (2) does encompass statutes that expressly regulate firearms, or that have been declared by courts to apply to the sale and marketing of firearms; and (3) does cover statutes that do not expressly regulate firearms, but that clearly implicate the purchase and sale of firearms. Similarly, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) in Ileto v. Glock rejected the plaintiffs' claim that California's public nuisance statutes can be predicate statutes that are encompassed under the PLCAA's third exception. The parties disputed whether the California tort statutes are "applicable to the sale or marketing of [firearms]," and each side advanced an interpretation of "applicable" similar to their counterparts in City of New York . The Ninth Circuit also found that the term "'applicable' has a spectrum of meanings, including the two poles identified by the parties." The court in Ileto declared that the PLCAA preempted common law claims, like general tort theories of liability, even if such claims are codified by state law, as is the case in California. However, the Ninth Circuit did not go as far as the Second Circuit to outline the contours of the types of laws that might be acceptable as predicate statutes under the exception. Rather, it declined to "express any view on the scope of the predicate exception with respect to any other statute." Although the federal courts have rejected both criminal and public nuisance laws as statutes that would be encompassed by the predicate exception, it appears that only one state court reached the opposite conclusion. The State of Indiana court of appeals in Smith & Wesson Corp. v. City of Gary, Indiana rejected the manufacturers' argument that the term "applicable" is limited to those statutes that regulate the manner in which a firearm is sold or marketed, i.e. , "statutes specifying when, where, how, and to whom a firearm may be sold or marketed." Rather, the court found that "on the face of the [predicate exception's language], Indiana's public nuisance statute appears applicable to the sale or marketing of firearms." Furthermore, the court did not believe that the PLCAA requires an underlying violation of a statute applicable to the sale or marketing of firearms because "unlawful conduct was not a requirement of a public nuisance claim." However, the appeals court recognized that even if the PLCAA were to require an underlying violation of a statute directly applicable to the sale of a firearm, the City already had alleged such violations in its complaint. Despite reaching the opposite conclusion, the Ninth Circuit in Ileto , remarked that that this case was of "limited persuasive value," because the court's decision was based, in part, on the fact that the plaintiffs in City of Gary had alleged violations of the state's statutory firearms regulations, which did not occur in the Ninth Circuit case. As indicated by these cases, plaintiffs who have brought challenges under the predicate exception generally have not been successful. Yet, the New York State appellate division in Williams v. Beemiller, Inc. , allowed a civil suit against a manufacturer, distributor, and dealer to proceed under the predicate exception. The complaint listed several causes of action, including that the defendants had intentionally violated federal, state, and local legislative enactments by permitting straw purchases to occur, i.e. , the sale of firearms to an individual who purchased firearms on behalf of another whom the dealer knew or had reasonable cause to believe was ineligible to purchase weapons. The court held that the claims were not barred by the PLCAA because the plaintiffs had sufficiently alleged facts to support a finding that the defendants knowingly violated the Gun Control Act, which makes it unlawful for any licensee to knowingly make any false entry in, or fail to properly maintain, any record that he is legally required to keep. Unlike the rejected nuisance laws, the court, by allowing the suit to proceed, acknowledged that provisions of the Gun Control Act are "applicable to firearms" sales and therefore could be used as predicate statutes for the predicate exception. Although the plaintiffs overcame this procedural hurdle, they must still demonstrate that the defendant knowingly violated the federal statute and that violation of the statute was the "proximate cause" of their injuries. If the plaintiffs prevail in the Williams case, the door to civil litigation against licensed firearms suppliers might be once again slightly opened, as others could take similar action based on the same grounds. The fourth and fifth exceptions appear to be straightforward in that they permit breach of contract or warranty actions against a seller as well as tort actions for injuries incurred as a result of a design defect or manufacturing defect. Notably, there is an exception to the fifth exception. The exception appears to preclude a suit "where the discharge of the product was caused by a volitional act that constituted a criminal offense" because that act would be considered "the sole proximate cause of any resulting death, personal injuries, or property damage." For example, if a criminal fired a gun without aiming at his victim, but the bullet hit the victim as a result of a manufacturing or design defect, then the injured person would be statutorily barred from a suit against the manufacturer. However, if a criminal used a gun while committing an offense and the gun fired spontaneously without his pulling the trigger, different questions may be raised. Would committing the offense constitute a "volitional act" that would immunize the manufacturer from suit? Additionally, does the phrase "constituted a criminal offense" mean that the criminal had to have been convicted by proof beyond a reasonable doubt as required in criminal prosecution, or merely that the plaintiff would have to prove, by a preponderance of the evidence (the standard for civil suits), that the defendant's volitional act constituted a criminal offense? If the latter, would the plaintiff be permitted to prove in a civil suit that the criminal's volitional act constituted a criminal offense even if the criminal had been previously acquitted for that offense? The last exception to the PLCAA is also straightforward. The act does not prevent the Attorney General from enforcing the relevant Gun Control Act or National Firearms Act against federal firearms licensees through the administrative or civil proceedings provided for in those statutes. Many civil lawsuits against federal firearms licensees have been dismissed since the enactment of the PLCAA. It may be the case that entities or individuals have been deterred from bringing suit due to the federal provision or from other plaintiffs' lack of success under the statutory exceptions. In the past year, however, at least one court has permitted a lawsuit to proceed under the predicate exception, finding that provisions of the Gun Control Act are "applicable to the sale or marketing of guns," and therefore may be used as the underlying predicate statute to assert a state tort law claim against a federal firearms licensee. Yet, whether the plaintiffs are able to prove their claims will likely depend on their success in the discovery process, in which case they may face other procedural obstacles to obtaining information. | The Protection of Lawful Commerce in Arms Act (PLCAA, P.L. 109-92) was passed in 2005. The PLCAA generally shields licensed manufacturers, dealers, and sellers of firearms or ammunition, as well as trade associations, from any civil action "resulting from the criminal or unlawful misuse" of a firearm or ammunition, but lists six exceptions where civil suits may be maintained. This act was introduced in response to litigation brought by municipalities and victims of shooting incidents against federally licensed firearms manufacturers and dealers, some of whom were located outside the state where the injuries occurred. Consequently, most lawsuits brought after the enactment of this law have been dismissed notwithstanding the exceptions that would permit a civil suit to proceed against a federal firearms licensee. This report provides an overview of the PLCAA and its exceptions, and discusses recent judicial developments. |
Here’s the two-step proposal Boehner is circulating. Note that the title isn’t “An approach to raising the debt ceiling,” or “An approach to reducing the deficit and cutting spending.” It’s the:
Two-Step Approach to Hold President Obama Accountable
Republicans insisted that if the president wants his debt ceiling increase, the American people will require serious spending cuts and reforms. This two-step approach meets House Republicans’ criteria by (1) making spending cuts that are larger than any debt ceiling increase; (2) implementing spending caps to restrain future spending; and (3) advancing the cause of the Balanced Budget Amendment – without tax hikes on families and job creators. Although this is not the House-passed “Cut, Cap, and Balance,” it is a package that reflects the principles of Cut, Cap, and Balance. Here is more information on the plan:
• Cuts that exceed the debt hike. The framework would cut and cap discretionary spending immediately, saving $1.2 trillion over 10 years (subject to CBO confirmation), and raise the debt ceiling by less – up to $1 trillion.
• Caps to control future spending. The framework imposes spending caps that would establish clear limits on future spending and serve as a barrier against government expansion while the economy grows. Failure to remain below these caps will trigger automatic across-the-board cuts (otherwise known as sequestration).
• Balanced Budget Amendment. The framework advances the cause of the Balanced Budget Amendment by requiring the House and Senate to vote on the measure after Oct. 1, but before the end of the year, allowing the American people time to build sufficient support for this popular reform.
• Entitlement Reforms & Savings. The framework creates a Joint Committee of Congress that is required to report legislation that would produce a proposal to reduce the deficit by at least $1.8 trillion over 10 years. Each chamber would consider the proposal of the joint committee on an up-or-down basis without any amendments. If the proposal is enacted, then the president would be authorized to request a debt limit increase of $1.6 trillion.
• No Tax Hikes. The framework included no tax hikes, a key principle that Republicans have been fighting for since Day 1. ||||| President Obama and House Speaker John A. Boehner escalated their battle over the national debt on Monday, pressing their arguments in a pair of prime-time television addresses as Congress remained at a loss over how to keep the United States from defaulting next week for the first time.
The challenge facing any plan for reducing the debt was underscored when a new Republican proposal to raise the ceiling on federal borrowing was met Monday with misgivings by some conservatives and skepticism by many GOP freshmen. That called into question whether Boehner (R-Ohio) could even get his own caucus to back his approach.
As Boehner tried to rally support for his two-step plan to cut $3 trillion in spending, Senate Majority Leader Harry M. Reid (D-Nev.) offered a strikingly similar proposal for increasing the debt limit before the Aug. 2 deadline. The two leaders, however, remained bitterly divided over Boehner’s demand to hold another vote next year to further expand the government’s borrowing authority.
With financial markets warily watching the Capitol Hill drama, Obama used his 15-minute address from the White House to urge “shared sacrifice” in tackling the debt, calling for deep cuts in federal spending to be coupled with higher taxes on the wealthy and on large corporations.
He slammed Boehner for calling for another vote on the issue next year, saying: “We know what we have to do to reduce our deficits; there’s no point in putting the economy at risk by kicking the can further down the road.”
Boehner countered with a shorter speech from the Capitol, in which he blamed the fiscal crisis on Washington’s spending and urged deep cuts to cure it. He said Reid’s plan lacks the kind of real spending cuts needed for the government to operate within its means.
“While the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill,” Boehner said, predicting his approach would prevail.
The government has exceeded its $14.3 trillion debt limit, and Treasury Secretary Timothy F. Geithner has said that without action by Aug. 2, the government will not be able to pay its bills. Credit-rating firms warned that they could downgrade the U.S. debt, which could spur higher interest rates and cause aftershocks in global markets.
Absent an agreement between Boehner and Reid, the House and the Senate are headed for a high-wire act this week.
Neither leader was certain that he could rally the votes to win — with Boehner making the first move for a possible Wednesday vote. With few House Democrats expected to support his approach, Boehner would need the support of an overwhelming majority of his 240-member conference.
But those hopes were dampened Monday by conservative opposition to the plan, highlighted by Rep. Jim Jordan (Ohio), who leads a conservative caucus of more than 170 GOP members. Jordan is one of 39 House Republicans who previously took a pledge vowing to increase the debt ceiling only in return for Congress sending to the states a constitutional amendment requiring a balanced budget.
Reid’s measure faces its own hurdles because Republicans criticize some of his savings as accounting tricks. So Reid continued private talks with Senate Republicans in an effort to modify Boehner’s package to make it more palatable to Obama, who has previously said he would veto any proposal that provided only a short-term increase in the debt ceiling.
Both plans call for deep reductions to federal agencies over the next decade, and neither would immediately require increased tax revenue or deep cuts to entitlement programs, such as Medicare.
Boehner’s plan includes an immediate increase in the debt ceiling of up to $1 trillion, paired with $1.2 trillion in spending cuts over the next decade. A new bipartisan committee of 12 lawmakers would be directed to come up with an additional $1.8 trillion in deficit savings and send its recommendations to Congress for fast-track approval without any amendments allowed.
If such a plan were approved, Obama could request up to $1.5 trillion in new borrowing authority early next year, and Congress could block it only with a two-thirds majority in each chamber.
The Reid bill includes upfront spending cuts that would exceed the size of the proposed increase in the debt ceiling. This approach, too, would create a 12-member committee to produce a broad strategy for reducing the deficit by the end of the year.
Although both bills propose to decrease agency spending, including $1.2 trillion at the Pentagon over the next decade, congressional budget analysts would credit the Reid bill with an additional $1.5 trillion in debt reduction.
If the Boehner bill passed the House, Senate Democrats might use the legislation as the basis for raising the debt ceiling. They were continuing Monday to work with Minority Leader Mitch McConnell (R-Ky.) on ways to modify the proposal, Democratic aides said. If the Boehner measure failed, Senate Democrats would push for their own measure.
Highlighting the stakes were the dueling prime-time addresses, which were scheduled only hours beforehand.
Speaking from the East Room, Obama warned that, without compromise, the government “would not have enough money to pay all of our bills — bills that include monthly Social Security checks, [and] veterans’ benefits.”
In the professorial tone that has won admirers and critics, Obama explained what a default and the resulting downgrade of U.S. credit would mean.
“Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis — this one caused almost entirely by Washington,” he said.
He rejected Boehner’s proposal for a short-term increase in the debt ceiling because it would leave the economy “held captive” to the threat of a default. “This is no way to run the greatest country on Earth. It’s a dangerous game that we’ve never played before, and we can’t afford to play it now,” the president said.
In remarks that immediately followed Obama’s, Boehner said he “gave it my all” in negotiating with the White House over a “grand bargain” that could have yielded trillions of dollars in savings and raised the debt ceiling through 2013. That effort failed, Boehner said, because Obama had increased his demand for more tax revenue, which Republicans adamantly oppose.
“The president has often said we need a ‘balanced’ approach — which in Washington means: We spend more, you pay more,” Boehner said from his office suites at the Capitol.
The speaker also challenged Obama to help him break the “grip” of the national debt on the stagnant economy. “We are up to the task, and I hope President Obama will join us in this work,” Boehner said.
The speeches ended an intense day in Washington. Anxiety hung over several closed-door party caucuses across the Capitol.
After a 75-minute briefing Monday afternoon, rank-and-file Republicans exited a basement room at the Capitol with mixed reviews of Boehner’s approach. He can count on a core group of at least 100 longtime GOP members, lawmakers said.
Many Republicans, particularly among the 87 freshmen, said they need more time to process the complex details of a proposal that would set up a handful of votes over the next six months.
“I think there are some very interesting parts, and the bill has not been put in print yet, and until it’s put in print, I don’t know that I can say one way or the other,” said Rep. Diane Black (Tenn.), whom GOP leaders often point to as a favorite among the newcomers.
Asked Monday if his plan could win enough Republican votes, Boehner deferred to House Majority Whip Kevin McCarthy (Calif.).
“We ask all Democrats that want to join with us to put this House on the right path, that they could join with us on this bill,” said McCarthy, the party’s top vote counter.
Democrats, in turn, are urging Republicans to back Reid’s approach, saying GOP members have previously supported every item in the package. Among these are $100 billion in savings identified during bipartisan talks led by Vice President Biden, including up to $15 billion in cuts to farm subsidies and $40 billion from reducing fraud and abuse in government programs. There also is $400 billion in savings from reduced interest payments on a lower national debt and $1 trillion from winding down the wars in Iraq and Afghanistan.
House Republicans have been reluctant to count war savings in debt-limit talks, but Democrats note that House Budget Committee Chairman Paul Ryan (R-Wis.) included those savings in the budget blueprint that passed the House this year.
Still, a Ryan spokesman dismissed the Reid proposal.
“An honest budget cannot claim to save taxpayers’ dollars by cutting spending that was not requested and will not be spent,” Conor Sweeney said in an e-mail. “Senate Democrats are employing a budget gimmick that will not fool the credit markets.”
But Reid said his proposal represents the only option for pushing a debt-limit increase through Congress — and getting it signed by the president.
“This isn’t a game of chicken. This is a game of reality,” Reid told reporters. “We’re about to go over a cliff.” ||||| In response to Mr. Obama, Mr. Boehner said: “The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen.”
Mr. Boehner urged the president to sign a Republican plan to raise the debt limit. “If the president signs it,” he said, “the ‘crisis’ atmosphere he has created will simply disappear. The debt limit will be raised.”
Earlier in the day, in dueling news conferences on Capitol Hill, neither side showed any willingness to budge even though time was running very short, creating a distinct air of uncertainty around the Capitol about how the debt limit conflict would end.
“We’re about to go over the cliff,” Senator Harry Reid , the Nevada Democrat who serves as majority leader, said Monday afternoon as he outlined his plan.
The back and forth began when House Republicans rolled out a two-stage deficit reduction plan that would allow the $14.3 trillion federal debt limit to rise immediately by about $1 trillion in exchange for $1.2 trillion in spending cuts, and tie a second increase early next year to the ability of a new bipartisan Congressional committee to produce more deficit reduction measures.
Mr. Reid dismissed the House Republican plan as a “nonstarter” and said Republicans were essentially trying to embarrass Mr. Obama in the middle of the 2012 election year by forcing another debt limit showdown. He said Democrats would not go along with any plan that did not guarantee a debt limit increase through next year.
Democrats countered with a $2.7 trillion menu of spending cuts and an increase in the debt limit through 2012. Neither plan would require any new revenue.
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The approach assembled by Mr. Reid quickly received the president’s endorsement. Over the next 10 years, it would cut $1.2 trillion from federal agency budgets and wring savings from recurring programs like agriculture subsidies. Like some earlier Republican plans, the plan also counts about $1 trillion in savings from winding down combat operations in Iraq and Afghanistan , a point objected to by House Republicans who consider such savings as budget trickery since they would occur regardless.
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“The plan is full of gimmicks,” Mr. Boehner told reporters about the Reid proposal, saying it makes no “real changes in the spending structure of our government, and it doesn’t deal with the biggest drivers of our deficit and our debt, and that would be entitlement programs.”
Rushing to beat the Senate to the punch, House Republican leaders were hoping to win approval of their measure on Wednesday and then send it to the Senate. The plan would cut current spending and put legal limits on future spending, saving what Republicans estimate to be about $1.2 trillion over 10 years. That approach would allow a debt limit increase that would extend into early next year.
At the same time, a new 12-member committee evenly divided between Democrats and Republicans would be assigned the job of finding an additional $1.8 trillion in savings. The panel would have special privileges to bring legislation before the House and Senate, and its proposal would not be subjected to amendment or Senate filibuster . If the plan passed, the president could seek a further $1.6 trillion increase in the debt limit based on the new committee’s proposal.
In addition, members of the Senate and House would also be required to vote on a balanced-budget amendment to the Constitution after Oct. 1 but before the end of the year — a key demand from many House conservatives.
With House Democrats likely to line up solidly against Mr. Boehner’s plan, the Republican leadership was pleading for support among the conservative rank and file, portraying it as the best alternative to end the impasse, even though it might fall short of the deep cuts many of the Republican newcomers want.
Some of the most conservative Republican House members, including Representative Allen West of Florida , endorsed it after the leadership made its case in an afternoon meeting. But others were balking, putting the plan’s success at risk should the Republican leadership be forced to rely solely on Republican votes. By day’s end, several Republicans — including Representative Jim Jordan of Ohio , the head of the conservative Republican Study Committee — said Mr. Boehner did not have their vote.
“I can’t support it in its current form,” said Representative Trey Gowdy of South Carolina , citing insufficient cuts and “the dearth of confidence I have in a 12-member commission being able to do what Congress hasn’t been able to do.”
At least two Senate conservatives also came out against the House plan, showing that it would face some resistance there from both parties.
Mr. Reid and his fellow Democratic leaders have their own vote problems since they will almost certainly need 60 votes to break a filibuster and advance their proposal. That would require Mr. Reid to hold all the members of his party and win over at least seven Republicans.
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In a tactical move, Mr. Reid on Monday night declined to begin the procedural steps needed to force a Senate vote Wednesday, preferring instead to see how Mr. Boehner fared in the House. | John Boehner and Harry Reid put forth starkly divergent plans for dealing with the debt ceiling, reports the Washington Post, with the White House jumping up to support the Senate Democrats' version and denounce the GOP's "my way or the highway approach." Boehner's vision is a short-term fix that's similar to the House's Cut, Cap, and Balance Act—but the House speaker says it's capable of passing both chambers, though the White House and Reid have branded it a "non-starter." Reid's plan reaches longer-term, but abandons earlier demands for significant revenue increases, notes Politico. A breakdown, via the Post's Ezra Klein: Boehner's plan, aka "The Two-Step Approach to Hold President Obama Accountable:" Cuts discretionary spending, to the tune of $1.2 trillion over a decade. Tasks a congressional panel with cutting another $1.8 trillion, likely via entitlement reform and savings, over a decade. Raises the debt ceiling by up to $1 trillion, about another six months. It could then be renewed a second time. No new taxes. Reid's plan: Would cut a smaller $2.7 trillion over 10 years, including an estimate $1 trillion from winding down wars in Afghanistan and Iraq. The GOP is likely to brand this a sleight of hand, notes the New York Times. Extends the debt ceiling by $2.4 trillion, which would run through 2013. Abandons Democrats' insistence on new taxes or revenues. |
To establish and manage its inventories, the Coast Guard must comply with the criteria contained in federal property management regulations and with the Department of Transportation’s (DOT) policy. Federal property management regulations state that each agency shall establish and maintain control of inventories to ensure that total costs will be kept to a minimum consistent with the needs of the agency’s programs. DOT’s policy states that inventories will be established and maintained only when it is more costly to purchase items on a case-by-case basis or when the items are so critical that a delay in delivery would negatively affect an agency’s mission. The policy also states that inventories must be managed in an effective manner to ensure that timely and adequate support is rendered and that optimum inventory levels are maintained. Within the Coast Guard, supply centers located at Curtis Bay and Baltimore, Maryland, stock about 18,000 different parts, including mechanical, electrical, radar, communication, computer, and hull items; these parts are valued at about $140 million. In addition, the Coast Guard authorizes each cutter to maintain a parts and supplies inventory that ranges in value from a few thousand dollars to over a million dollars, depending on the cutter’s size, missions, and operating area. However, individual purchases are restricted to established price thresholds that vary, depending on the cutter’s class; the thresholds range up to $5,000 for large cutters. (Table II.1 lists the 41 different classes of Coast Guard cutters.) For example, the cutters usually purchase such items as nuts and bolts, valves, seals, gaskets and other minor repair parts with their operating budgets. According to Coast Guard officials, about 55 percent of the cutters’ parts and supplies are purchased directly from commercial contractors and about 45 percent are purchased from the federal supply system. The cutters’ purchases from the federal supply system are divided between orders from the two Coast Guard supply centers and orders from other government agencies. Such other agencies as the Defense Logistics Agency; the Departments of the Army, Navy, and Air Force; and the General Services Administration fill about 90 percent of orders for parts from the federal supply system, while the Coast Guard’s two supply centers in Maryland fill the remaining 10 percent. Since storage space is limited on most vessels, cutters also store some of their parts at individual onshore storage facilities, including movable storage in tractor trailers, as well as at typical warehouse-type buildings. The Coast Guard does not have the organizational structure or computer systems necessary to effectively manage its parts and supplies inventory for its cutters. As a result, the Coast Guard does not know the value, type, quantity, and condition of many of the spare and repair parts in the overall inventory. In addition, the Coast Guard does not know whether cutters have a shortage or an excess of parts or whether the parts are available when needed. Management responsibilities for buying, storing, issuing, and tracking parts and supplies in the Coast Guard’s inventories are spread across various internal and external organizations. For example, the Maintenance and Logistics Commands at Alameda, California, and Governors Island, New York, manage the parts used during overhauls of cutters; the Coast Guard’s two supply centers in Maryland manage the unique parts needed by the cutters they support; and individual cutters manage parts they need to keep them operationally ready. However, no one organization or individual is responsible for consolidating inventory data and tracking the type, quantity, condition, or value of the Coast Guard’s total cutter inventory. The Coast Guard’s fragmented management structure also limits the agency’s ability to determine whether cutters have a shortage or an excess of parts and whether the parts are readily available when needed. We found, for example, that one cutter had 34 excess fuel injector nozzles (above its allowance of 16 nozzles), which cost about $580 each, and two excess starters (above its allowance of one starter), which cost approximately $6,600 each. During our visits to other cutters, we noted many other such excess items as drill presses, main engine cylinder heads, insulation, computer monitors, and galley equipment. Supply officials on the cutters told us that the excesses in their inventories were the result of several factors. For example, sometimes cutters procured larger quantities than needed to take advantage of volume discounts. However, if the Coast Guard centrally managed—at headquarters, a Maintenance and Logistics Command, or a supply center—the total cutter inventory, wherever located, it might be able to transfer excess items to cutters that have shortages of those items. For example, the Atlantic Coast Maintenance and Logistics Command purchased more than 15 new starters in 1 year, while one cutter had 2 excess starters in its inventory. Despite these excesses, officials responsible for the individual cutters’ inventories told us that they also had shortages of parts. For example, one cutter had parts shortages totaling $250,000 for such electronic items as circuit boards for radar and communication systems. According to these officials, these kinds of shortages occurred primarily because funding was not available to replenish the cutters’ parts or because the required parts were never issued when the cutters were first commissioned. If the Coast Guard centrally managed its total cutter inventory, some of these shortages might have been filled with excess items from other vessels’ inventories. The cutter officers noted, however, that although the shortages had not significantly affected their missions, they had resulted in costly emergency purchases that would not have been necessary if the parts had been in the cutters’ inventories, as required. During our visits, we found that many items in the cutter inventories were not available to the vessels when they were at sea. Each of the cutters we visited stored a portion of its inventory in its own individual onshore storage facility. Since no one was available to issue parts from these individual storage facilities when the cutters were at sea, these inventories were not fully utilized. We noted such useful items as valves, filters, engine and hydraulic oil, mooring lines, and damage control equipment—fire hoses and nozzles, submersible pumps, shoring, plugs, and oxygen canisters—in the individual onshore facilities. Unlike the Coast Guard, the Navy stores parts for its ships in centralized base supply centers and does not maintain individual onshore storage facilities for its ships. According to Navy officials, the centralized base supply centers provide more effective support than individual storage facilities because personnel are available at the centers to issue parts to the ships whenever the parts are needed. The centers can, for example, send the needed parts to ships at sea via another ship or an aircraft. When a Coast Guard cutter is at sea, no one is available to issue parts from the cutter’s individual onshore storage facility. According to Coast Guard officials, the agency is studying the use of regional support centers, but it does not expect to consolidate the individual onshore storage facilities before fiscal year 2002, when it expects to have total “visibility” of its cutters’ individual inventories. The Coast Guard uses several different systems to manage the cutters’ individual inventories. For example, during our visits to nine cutters, we observed a manual and three different computerized inventory control systems. However, the three automated systems that we observed could not exchange data with each other or with the systems at headquarters, the Maintenance and Logistics Commands, or the supply centers. To help ensure effective inventory management and to distribute parts more efficiently, the Coast Guard plans to implement a single automated system, CMplus, on its 101 largest cutters. The Coast Guard expects this system to integrate inventory and maintenance information into a larger fleet logistics system that will enable cutter crews to share data with each other, headquarters, the Maintenance and Logistics Commands, and the supply centers by the year 2002. According to Coast Guard officials, they expect to spend over $27 million to install the CMplus system on the cutters. Although we agree with the goals of the CMplus system, the Coast Guard can take interim actions to enhance the distribution of its inventory between now and the year 2002, when CMplus will be fully implemented. For example, the Coast Guard can utilize the most widely used, existing inventory system to enhance the distribution of parts by sending the inventory information to headquarters and to the Maintenance and Logistics Commands for analysis. In 1993, Coast Guard headquarters and one Maintenance and Logistics Command analyzed the inventories held by all of the 270-foot cutters. Because all 13 of these cutters used the same computer system, the Coast Guard was able to consolidate their inventory data. The data showed that the 13 cutters had more than $11 million worth of excess parts in their inventories and that $3 million of the excess could be redistributed among the cutters to offset their parts allowance shortfalls and reduce future acquisitions. The Coast Guard incurred minimal time and costs (less than 1 staff year) to perform the analysis because all of the 270-foot cutters had conducted full physical inventories of their parts and supplies and implemented a computerized inventory control program. Moreover, the payoff was significant and could be increased if the Coast Guard conducted similar analyses for most other classes of cutters because they have also already conducted full physical inventories when they implemented their computerized inventory control systems. Although such analyses could greatly improve the distribution of parts and supplies, they could not themselves ensure the optimal distribution of inventories for two reasons. First, because the cutters cannot directly transmit inventory data to the Maintenance and Logistics Commands conducting the analysis, the consolidated inventory information would not be current when the cutters began to redistribute their parts. Second, the Maintenance and Logistics Command conducted the redistribution study on a single class of cutters because conducting a fleetwide study would have taken much longer using current computer resources. If future analyses are conducted for only one class of cutter at a time, parts and supplies will not be redistributed between classes. When the Coast Guard’s fleet logistics system is implemented, it will deal with these two limitations of the current system. In 1993, the Coast Guard issued its Logistics Master Plan. The plan addresses numerous issues—for example, the Coast Guard’s lack of central management for the cutter inventories. The plan includes short-term actions that the Coast Guard expected to complete by fiscal year 1994, mid-term actions to be completed by fiscal year 1997, and 26 long-term actions that the Coast Guard expected to complete by the end of fiscal year 2002. Although we agree with the plan’s direction, we found that some initiatives are already behind schedule, increasing the potential for delays in the Coast Guard’s long-term efforts to centrally manage its inventories by fiscal year 2002. (App. I lists some of the initiatives that are in progress or planned.) Coast Guard officials told us that before the agency can centrally manage its inventory, they must complete the following long-term initiatives in the Logistics Master Plan: Develop a fully integrated, real-time computer system to track and consolidate inventory and maintenance information for the cutters. Create a single organization to integrate the maintenance guidance, technical, and supply functions now performed by headquarters and the two inventory supply centers. Designate an official to be responsible for all fleet logistics. We found that the completion of these and many other long-term initiatives in the plan are contingent upon the Coast Guard’s successfully completing numerous near- and mid-term initiatives. However, the Coast Guard has already experienced schedule slippages with some of the near- and mid-term initiatives begun in 1993 and 1994. For example, the Coast Guard had expected to implement the following new initiatives: A computerized inventory control system, CMplus, on the first cutter of the 378-foot class by the end of 1993. However, the system will not be operational until December 1994 (a 1-year delay) because of such operational commitments as transporting Haitian and Cuban refugees. According to officials, CMplus is a critical part of the Coast Guard’s long-term initiative to develop a fully integrated, real-time system to track and consolidate inventory and maintenance data for its cutters. A computer system at Curtis Bay by the fourth quarter of fiscal year 1994. However, the Coast Guard does not expect to have the system fully implemented until the third quarter of fiscal year 1996 (almost a 2-year delay) because of a 1-year delay in the award of the hardware contract and because of software development problems. According to officials, this system is needed to enable the Coast Guard to track and consolidate inventory and maintenance data for the cutters. Centralized shoreside support for its 110-foot cutters (49 vessels) by fiscal year 1996. The Coast Guard now expects to have this new management structure by fiscal year 1998 (a 2-year delay). Until that time, according to officials, the Coast Guard cannot centrally manage its cutter inventories because it does not have visibility of the inventories. The $140 million inventory held at the Coast Guard’s two supply centers does not reflect the agency’s total investment in spare and repair parts for its cutters. The Coast Guard does not know the type, quantity, condition, or total value of its total inventory of parts and supplies for its cutters. However, the Coast Guard estimates that it has additional inventory worth approximately $200 million stored onboard its cutters and in the cutters’ individual onshore storage facilities. Although Coast Guard officials contend that the agency’s lack of information on parts and supplies has not significantly affected the Coast Guard’s mission, it has resulted in inefficient management of resources. Consequently, the agency cannot minimize the cost of its total inventory as required by federal property management regulations and DOT’s policy. In addition, the Coast Guard does not expect to complete its integrated system to enhance the use and distribution of its inventory until the year 2002. Yet delays of as much as 2 years for some early initiatives raise concerns that the Coast Guard will not meet its targeted completion date. Since the Coast Guard may take many years to improve its inventory management system, some actions now could help alleviate shortages and excesses and help the Coast Guard better utilize its inventories. To enable the Coast Guard to manage its cutter inventories more effectively between now and when the Logistics Master Plan is fully implemented, we recommend that the Secretary of Transportation direct the Coast Guard Commandant to take the following interim actions: Make the use of the current automated inventory control program mandatory on all cutters that have sufficient computer hardware and have not implemented CMplus, consolidate and analyze inventory data for each class, and redistribute excess parts from additional cutter classes as warranted. Where economically feasible, consolidate at regional support centers those cutter inventories that are located at individual onshore storage facilities, particularly where several cutters from the same class are clustered or where the cutters’ individual onshore storage facilities are housed within a single building. Move up the implementation date for the Coast Guard’s initiative to establish a single source of accountability for all fleet logistics. This action will allow the Coast Guard to better coordinate interim actions to improve management of its cutter inventories while the fleetwide logistics system is being developed. We discussed this report with the Coast Guard’s Chief, Logistics Management Division, Office of Engineering, Logistics, and Development, and with other program officials, and we have incorporated their comments as appropriate. These officials generally agreed with our findings and recommendations. We conducted our work between November 1993 and December 1994 in accordance with generally accepted government auditing standards. Our objectives, scope, and methodology are discussed in appendix II. We are sending copies of this report today to the Secretary of Transportation; the Commandant, Coast Guard; and the Director, Office of Management and Budget. We will make copies available to others upon request. This work was performed under my direction. If you have any questions, I can be reached at (202) 512-2834. Major contributors to this report are listed in appendix III. The Coast Guard’s Logistics Master Plan sets out short-, mid-, and long-term objectives to improve the agency’s inventory controls by fiscal year 2002. This appendix provides (1) a brief description of the major initiatives related to central management of the Coast Guard’s inventories and (2) the status of the initiatives that were scheduled for completion in fiscal years 1993 and 1994. The Coast Guard relocated the Brooklyn, New York, supply center to Baltimore in 1993, as planned. This action was the first step toward the Coast Guard’s creating a single organization to integrate the maintenance, technical, and supply functions now performed by headquarters and the two inventory supply centers. The Coast Guard designated one Maintenance and Logistics Command to be responsible for an entire class of cutters, regardless of their home ports, including the development of a maintenance plan that lists the minimum information needed for a major overhaul or minor repairs at shipyards and bases. This initiative helped Curtis Bay to increase the availability of parts for 270-foot cutters from 65 percent in March 1992 to 94 percent in March 1994. In addition, the Coast Guard developed improved maintenance plans and long-range forecasts for its 210-, 180-, 157-, and 140-foot cutters in 1993 and 1994, as scheduled. The Coast Guard implemented a central supply department on its 378-foot cutters in 1992 and on its 399- and 270-foot cutters in 1993, as scheduled. Previously the Coast Guard maintained department-level inventories on these cutters that resulted in duplicate procurements, excess spare parts, reduced storage capacities, and longer casualty response times, according to Coast Guard officials. The new centralized supply departments have helped to alleviate many of these problems because all of the cutters’ parts information is located in one data base. Centralization of parts information also helps to save space on the cutters because duplicate parts that were previously stocked by more than one department are readily visible and can either be used, transferred, or scrapped. Finally, a central supply department increases operational readiness because procurements are coordinated across departments, making more effective use of available spare parts funding. The Coast Guard implemented an automated system, CMplus, to integrate shipboard supply and maintenance information on three of its cutters. According to Coast Guard officials, this system will be the cornerstone of its centralized fleet logistics system. The Coast Guard implemented the system on 1 of its 210-foot cutters (a class of 16 vessels), 1 of its 270-foot cutters (a class of 13 vessels), and 1 of its 378-foot cutters (a class of 12 vessels) in 1994. The Coast Guard had placed a prototype CMplus system on a 140-foot cutter in 1992 and had expected to implement the system on its eight remaining 140-foot cutters by the fourth quarter of 1994, but this date has slipped to fiscal year 1997. The Coast Guard had expected to purchase the hardware to replace its supply center computers in the fourth quarter of fiscal year 1993. Although the agency has purchased developmental hardware for the new system, procurement of the new production hardware is now scheduled for the third quarter of fiscal year 1995. This purchase is a key step in instituting the standardized fleet logistics system that the Coast Guard expects to have fully operational by the year 2002. The Coast Guard had expected to develop the software for its new supply center computer system by the end of 1994. Although the Coast Guard wants to get the new system on line as quickly as possible, the projected date for the initial software has slipped to the third quarter of 1996 because of technical difficulties and a delay in purchasing the needed hardware. Develop improved maintenance plans and long-range spare parts forecasts for the 110-foot cutters. Implement a central supply department on the 210-, 140-, and 110-foot cutters and study the feasibility of implementing it on smaller cutters and bases. Analyze the feasibility of transferring management of such consumable items as nuts, bolts, and bearings to the Defense Logistics Agency. Install the new automated inventory control system on the remaining 270-foot cutters and on the 399-foot cutters. Implement building block, software application groups for a standardized fleetwide logistic system. The application groups will include maintenance planning, scheduling, funds management, parts tracking, contract management, supply performance measures, and cost analysis. Install the new automated inventory control system on the remainder of the 378-foot and 210-foot cutters and on the 110-foot cutters. Integrate maintenance, technical, and supply functions, which are now performed by headquarters and the two supply centers, into a central engineering logistics center at Curtis Bay. Designate a single official responsible for all logistics. Complete procurement of both the hardware and software for the standardized fleet logistics system and implement the remaining software application groups, including customer service, technical information, and equipment management. The Coast Guard expects that this system will integrate shipboard logistics systems with shoreside systems so that the supply centers will have information about the cutters’ inventories, equipment usage, and costs. The former Chairman, Subcommittee on Oversight of Government Management, Senate Committee on Governmental Affairs, asked us to examine the Coast Guard’s inventory management system to identify any wasteful or inefficient practices that should be changed. As agreed with the former Chairman’s office, we focused our review on the Coast Guard’s inventory management system for its 240 cutters (vessels 65 to 399 feet in length) and developed the following specific questions to guide our work. First, does the Coast Guard have the systems needed to effectively manage its inventory of spare and repair parts and supplies? Second, if not, what initiatives does the Coast Guard have under way to improve its inventory management? In preparing this report, we reviewed federal property management regulations (41 C.F.R. 101); the Department of Transportation’s Order 4420.5, Management of Material Inventories; and the Coast Guard’s Supply Policy and Procedures Manual. To determine the cost effectiveness of the Coast Guard’s inventory management systems, we met with officials from the Coast Guard’s supply centers at Baltimore and Curtis Bay, Maryland, and reviewed their instructions, notices, and video tapes related to inventory management and supply support. We also reviewed Curtis Bay’s Supply Activity Reports for 1989 through 1993 and its list of inventory items for the 378-, 270-, and 210-foot cutters. We also met with officials from headquarters; the Maintenance and Logistic Command for the Atlantic Fleet; the Coast Guard District Five Office and the Naval Engineering Support Unit in Portsmouth, Virginia; the Coast Guard Group/Air Station in Cape May, New Jersey; and individual cutters. Using the Coast Guard’s register of cutters, we selected a judgmental sample of cutters to visit. Because of the large number of Coast Guard cutters (240), we defined our sample in three ways. First, we selected only cutters that were at least 82 feet long because larger cutters typically hold more inventory than smaller cutters. Second, we visited only cutters that had at least five ships in the class because we wanted the cutters to be typical of the largest number of cutters possible. Finally, when two or more classes existed for vessels of the same length and type (i.e., 210-foot, medium endurance cutters, 210A and 210B), we visited only one cutter from the combined classes because the cutters in the combined classes were still very similar to each other. Table II.1 lists the type, class, and number of Coast Guard cutters. Table II.2 lists the name, type, location, and size of each of the nine cutters we visited. The classes of the nine cutters account for 178 of the Coast Guard’s 240 cutters. (continued) Philadelphia, Pa. Governors Island, N.Y. Cape May, N.J. Cape May, N.J. Cape May, N.J. Cape May, N.J. Boston, Mass. Newport, R.I. Portsmouth, Va. To determine the Coast Guard’s initiatives related to its inventory controls, we reviewed the Coast Guard’s 1993 Logistics Master Plan. We also obtained information on the actions that the Coast Guard had undertaken that were not part of the Logistics Master Plan, such as the Supply Center Information Systems Plan and user manuals for the computerized inventory systems used on the Coast Guard’s larger cutters. We met with headquarters, supply center, and Maintenance and Logistics Command officials who were responsible for these initiatives to determine their status and obtain clarification on the benefits expected. (App. I describes some of the initiatives and their status.) M. Glenn Knoepfle, Adviser Michael J. Ferren, Evaluator-in-Charge The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (301) 258-4097 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO reviewed the Coast Guard's inventory management system for its fleet of 240 cutters to identify any wasteful or inefficient practices that should be changed, focusing on: (1) whether the Coast Guard has the systems it needs to effectively manage its inventory of spare and repair parts and supplies; and (2) initiatives the Coast Guard has under way to improve its inventory management. GAO found that: (1) the Coast Guard does not have the organizational structure or computer systems necessary to effectively manage its inventory for supporting cutters; (2) the Coast Guard does not know the value, type, quantity, and condition of many of the spare and repair parts in its inventory and cannot determine whether cutters have a shortage or an excess of parts, or whether the parts are readily available; (3) Coast Guard officials believe that the lack of inventory management information has not seriously affected the Coast Guard's ability to carry out its missions, although they acknowledge that it has resulted in costly purchases and excess inventory; (4) the Coast Guard plans to take actions to improve its inventory control problems by fiscal year 2002; and (5) some of the Coast Guard's initiatives are already behind schedule, delaying both its short-term actions and its long-term inventory management efforts. |
In the 1970s and the 1980s, Congress received numerous reports about problems with the weapon acquisition process, namely that weapon systems often failed to meet their military missions, were operationally unreliable, and had defects in materials or workmanship. To address manufacturing deficiencies and performance shortcomings, Congress began requiring the Department of Defense (DOD) to obtain written warranties on all production contracts for weapon systems costing over $100,000 per unit or whose eventual acquisition cost is more than $10,000,000. Congress expected that obtaining cost-effective warranties would enable DOD to hold contractors accountable for the performance of their systems and that the risk of financial consequences would encourage contractors to improve the quality and reliability of the systems. In 1984, when the warranty provision was first enacted, many DOD and industry officials criticized the law as being impractical, unworkable, and potentially costly. An amended version enacted in the 1985 DOD Authorization Act and codified as 10 U.S.C. 2403, was intended to correct the problems. For most non-weapon system purchases, the Federal Acquisition Regulation (FAR) prescribes the procedures and purposes of obtaining a warranty. Under the FAR, the use of a warranty is not mandatory. The FAR allows contracting officers to require contractors to provide warranties on products sold to the government. The decision is based on a determination that a warranty would be in the government’s best interest. In addition, the Defense Federal Acquisition Regulation Supplement (DFARS) provides additional guidance on when it is appropriate to obtain a weapon system warranty. Under 10 U.S.C. 2403, an agency head is prohibited from entering into a production contract for a weapon system with a per unit cost greater than $100,000, or a total system cost over $10 million, unless the prime contractor provides a warranty. The prime contractor must warrant that items provided under the contract (1) conform to the design and manufacturing requirements delineated in the contract, (2) are free from all defects in materials and workmanship at the time of delivery, and (3) meet the essential performance requirements delineated in the contract. Contractors are not required to provide a warranty on government-furnished equipment. If the Secretary of Defense determines that a warranty is not in the interest of national defense or that a warranty will not be cost-effective, he may waive all or part of the warranty requirement. The Secretary cannot delegate the waiver authority below the level of an Assistant Secretary of Defense or of a military department. The Secretary must also notify the Senate Committee on Armed Services and the House Committee on National Security before granting a waiver for a major weapon system. Generally, warranties require that the contractor repair or replace noncomplying or defective goods covered by the warranty without cost to the government and/or pay the government’s costs of correcting the defective condition. Warranted defects or deficiencies may be caused by poor design, faulty manufacturing processes, or the use of materials that do not meet contract specifications. The cost and coverage of warranties are negotiated on a contract-by-contract basis. Typical weapon system warranties fall into one of the following three categories: failure-free, threshold, and systemic. When a system is covered by a failure-free warranty, the contractor is obligated to correct all defects that occur during the warranty period. Although a failure-free warranty is easy to implement, it is associated with high costs due to the higher risks assumed by the contractor. A threshold warranty requires a contractor to remedy a defect when a threshold, such as a predetermined number of part or system failures, is exceeded. This type of warranty recognizes that all weapon systems malfunction to some degree, and the warranty only requires action if the weapon system does not meet the agreed-upon reliability levels. A systemic warranty covers a system against a defect that occurs with regularity throughout a production lot or fleet. In the case of systemic warranties, the government must prove that the defects are occurring regularly by either conducting its own investigation or supervising an investigation by the contractor. Once the government proves that a systemic defect exists, the contractor is responsible for replacing or repairing all of the items produced under the circumstances that caused the defect. Some systemic warranties also require the contractor to redesign warranted items if the defect is the result of a design problem. A DOD weapon system may be covered by multiple types of warranties. For example, an item may be covered by a failure-free warranty until it is transferred to a unit, and then covered by a systemic warranty. In 1987, we reported that the military services were obtaining warranties without assessing cost-effectiveness. We also found that warranty terms and conditions were not clearly stated in most contracts. Also, many warranties did not delineate whether redesign was a remedy if performance requirements were not met. We concluded that this situation could result in warranty administration problems. In 1989, we reported that (1) the Office of the Secretary of Defense was not actively overseeing warranty administration by the services; (2) the services had not established a fully effective warranty administration system; (3) the procurement activities had problems performing cost-effectiveness analyses; and (4) the services, therefore, did not know whether they should seek warranty waivers. We concluded that DOD had little assurance that warranty benefits were being fully realized. DOD’s Director for Defense Procurement, in 1992, proposed repealing the warranty law. This initiative was included as Section 620 of DOD’s Legislative Program for the 103rd Congress. In a January 1993 report, DOD’s Acquisition Law Advisory Panel, referred to as the Section 800 Panel, recommended repealing the warranty law based upon two reviews that highlighted significant problems with the administration and effectiveness of the law. These reviews found that (1) waiver requests were not seriously considered, (2) the use of waivers had been “virtually nil,” (3) contractor expenses for warranty repairs were less than the negotiated price for the warranty in four out of five cases, (4) only two out of seven threshold warranties ever reached the threshold, (5) no claims had been made on systemic warranties reviewed, and (6) service regulations requiring post-award reviews of warranty cost-effectiveness were not enforced. The Panel’s alternate recommendation was to revise 10 U.S.C. 2403 to address the implementation problems. The Section 800 Panel sought greater flexibility in implementing and tailoring warranties, as well as limiting warranties to major weapon systems. Furthermore, the Section 800 Panel recommended that the waiver approval authority be lowered from the Assistant Secretary level and that a policy statement be issued encouraging the use of waivers when a warranty is not cost-effective. Congress did not repeal the warranty law. Instead, the Federal Acquisition Streamlining Act of 1994 (P.L. 103-355) modified the congressional notification requirement so that an annual report of waivers granted is no longer required, although the defense committees are still to be notified before a waiver is granted for a major weapon system. The act also required DOD to issue guidance on negotiating cost-effective warranties and on waivers. In response, DOD revised subpart 246.7 of DFARS to stress that the use of weapon system warranties may not be appropriate in all situations and that a waiver should be obtained if a warranty is not cost-effective or in the interest of national defense. Our objectives were to determine whether the warranties being obtained for weapon systems provide the expected benefits to the government, and to assess whether the use of warranties, as required by law, is compatible with the acquisition of weapon systems. We analyzed the warranty legislation, DOD and service policy guidance and regulations, and procurement activity guidelines governing the use of warranties in weapon system acquisitions. To obtain insight into the types of issues faced in managing a warranty program, we gathered warranty information from 22 ongoing acquisition programs and reviewed the results of warranty studies performed by the DOD Inspector General, the Office of Defense Procurement, the Acquisition Law Advisory Panel, and others. We selected systems based on the contract value and the type of weapon system for contracts awarded between 1984 and 1994. Our report focuses on the use warranties for DOD major weapon systems and does not cover the use of warranties on commercial subcomponents in weapon systems or commercial items. In some instances, the information available in contract files was limited because the services had not collected the information or there was a lack of centralized documentation. Our work was performed primarily at the six commands responsible for managing the major acquisition programs we selected for our review. The following are the procurement commands visited: Aviation and Troop Command Missile Command Tank-Automotive and Armaments Command Naval Sea Systems Command Naval Air Systems Command At the procurement commands, we reviewed contract files, including basic contract information, warranty and inspection clauses, cost-effectiveness studies, and correspondence. We supplemented the information by interviewing program management, as well as defense contracting, policy, and legal officials. We also held discussions with officials from the Office of the Secretary of Defense and the Defense Systems Management College. In addition, we contacted selected contractor and professional association officials to obtain their viewpoints on the advantages and disadvantages of using warranties in major weapon system acquisitions. We performed our review from November 1994 through February 1996 in accordance with generally accepted government auditing standards. DOD is obtaining weapon system warranties that are not cost-effective because it does not use waivers as expected by Congress and does not perform adequate cost-benefit analyses or post-award assessments to ensure that the decisions to obtain or not to obtain a warranty are based on a valid foundation. Congress did not intend for DOD to obtain warranties that were not cost-effective. Therefore, the warranty law allows the Secretary of Defense to waive the use of a warranty if the Secretary determines that it would not be cost-effective. However, none of the warranties we reviewed, where claim and price data was available, were cost-effective. We found that the government paid $94 million and collected $5 million on these weapon system warranties. We also calculate that the military services spend approximately $271 million annually to pay for warranties. Further, this cost is only the warranty price paid to the contractor. It does not include the additional costs to the government of negotiating and administering warranties. Reviews by others have also found that weapon system warranties are generally not cost-effective. Warranties have both quantified and unquantified costs. The quantified cost is the negotiated price for the warranty, while the unquantified cost includes the negotiation and subsequent administration of warranties. Warranties also provide both quantified and unquantified benefits. The quantified benefit to the government includes financial compensation received as a result of claims and low-cost or no-cost proposals to correct problems, while the unquantified benefits claimed by program officials include prepaid maintenance support for field units and the value of having a process in place for readily resolving product performance problems. We found that the weapon system warranties purchased by DOD were not cost-effective. We were able to obtain warranty price and claim data on four weapon systems and eight contracts. In every case where price and claim data was available, the warranty price exceeded the value of the claims made. The combined warranty price was $94 million, the value of the warranty claims was $5 million, and the quantified price exceeded the quantified benefit by $89 million. (See app. I.) For example: The government paid $12 million for the F-15E (1) design and manufacture and (2) materials and workmanship warranties for the 1989 and 1990 contracts, which covered the purchase of 72 aircraft. The program office identified 260 potential warranty claims, of which 134 were agreed to and corrected by the contractor. There were 126 claims that were not agreed to by the contractor for a variety of reasons, including the fact that failed parts were unavailable for contractor inspection. The program office estimated that the average cost to fix each problem was $3,000 and that the total financial benefit to the government was $402,000. The quantified costs, therefore, exceeded the quantified benefits by about $11.6 million. The F-16 Multiyear II warranty price for 720 aircraft procured between 1986 and 1989 was $27.86 million. In a 1991 study, the program office calculated that the warranty benefit was $2.78 million, or about 10 percent of the warranty price. While the warranty coverage had not expired at the time, the study did project a total potential benefit of $9.94 million for this warranty, or 36 percent of the warranty price. The study found “little tangible return on investment” for this warranty. The program office was unable to provide final claim figures. The Multiple Launch Rocket System 1985 warranty cost $1.584 million. The estimated value of the warranty claims was $126,000. Therefore, the quantified cost exceeded the quantified benefit by $1.458 million. In 1992, the Army found a similarly large imbalance between the costs incurred and the total dollars recovered under several warranties. A review of 36 expired warranties on 12 weapon systems at the Missile Command through December 1990 showed that the warranty cost for these contracts was $27.9 million and the dollar value of the warranted repairs was $12.5 million—meaning that these warranties had a negative monetary return on investment of $15.4 million. The Air Force has also recognized that it has been obtaining some non-cost-effective warranties. The Deputy Assistant Secretary of the Air Force for Contracting, stated in a memorandum in 1992, “. . . we agree that warranties are not always cost-effective. Recent experience indicates that contractors are unwilling to provide reasonable cost proposals in some cases, even when historical warranty cost data is available that suggests a much lower warranty price is appropriate.” The warranty price does not include all warranty costs to the government. The costs not included in the warranty price are associated with warranty development, administration, training, the need to obtain and provide special data, in-plant warranty monitoring, special transportation, increased spare component requirements because of longer logistical repair times, decreased competition opportunities, and reduced self-sufficiency of the military services. We did not estimate these additional costs to the government. In some cases, we had no basis for an estimate and in others the additional costs due to the warranty could not be readily identified. One cause for the quantified cost exceeding quantified benefits is the low claims submission rate for warranted items. Air Force officials told us that one reason for the low claims rate is that submitting warranty reports and holding parts for warranty purposes is contrary to the primary mission of field units—to repair the equipment as soon as possible so that the equipment and the unit can resume its mission. A warranty functions contrary to the primary mission by requiring maintenance personnel to hold parts until a determination can be made as to whether the part is warranted and how it should be repaired. In addition, maintenance personnel sometimes replace broken parts on one system with good parts from one or more other systems to keep the maximum number of weapon systems operating and available, thereby fulfilling their primary mission. As a consequence, the broken or defective parts are moved from their original weapon system. This can void a warranty, which can require that the part submitted for a warranty claim come from the original weapon system that the contractor delivered to the service. The Tank-Automotive and Armaments Command official responsible for their cost-effectiveness analyses said that historically contractors only accept about 30 percent of potential claims. As a result of the claims submission problem, the Tank-Automotive and Armaments Command is primarily obtaining systemic warranties instead of threshold warranties. However, according to this official, the Tank-Automotive and Armaments Command has never successfully filed a systemic warranty claim, and the probability that claims will be filed under a systemic warranty is zero. A report on the Army’s warranty program further supports the claims submission problem. “Claims submission from the field is low. Only a fraction of the work orders are submitted for claims. For many of these, the data are inaccurate and incomplete.” The report looked at several commands and weapon systems and calculated that, at the Tank-Automotive and Armaments Command, only 537 actual claims were made out of 8,567 potential claims for 21 contracts. The Air Force faces similar low claims submission problems. Officials from the Air Force Materiel Command stated that the lack of reports filed on warranted items from the field is a serious problem. They further stated that the most important mission to field personnel is to repair the items as soon as possible so that the aircraft can resume its mission. Many Air Force warranties rely on the submission of product quality deficiency reports for filing claims. An Air Force Inspector General’s reportestimated that only 15 to 20 percent of failures are actually reported on these forms because they are complicated and cumbersome for maintenance personnel to fill out. Therefore, the Air Force estimates that 80 to 85 percent of failures go unreported. In addition to the lack of incentives for field staff to track and report warranty claims, there is a lack of credible data systems and manpower to administer warranty claims. One Air Force official responsible for overseeing warranties at a major command said that because no system is in place to track the warranties or to process claims efficiently, administering the program is a “nightmare.” The Deputy Assistant Secretary of the Air Force for Contracting indicated in 1992 that (1) the problems with warranty administration are not new and (2) the Air Force does not possess and has not been able to develop data systems designed to track warranted items. He added that the lack of necessary manpower resources in the field and in the program offices for accomplishing warranty administration compounded this problem. Claimed warranty benefits include providing support that could be viewed as a form of prepaid maintenance and a process for resolving product performance problems. Viewed as prepaid maintenance, warranties pay contractors a sum of money up front based on an estimate of the number of defects that the government might claim. The contractor keeps the difference between actual claims and the warranty price as his profit. If the 1989 and 1990 F-15E contracts were considered a form of prepaid maintenance, then the government paid the contractor $12 million and made claims totaling $402,000. The contractor kept as profit $11.6 million. Further, the warranty provides the government a process for dealing with the contractor and delineates the contractor’s responsibilities. However, the value of this process seems to vary from system to system. While several program officials told us that the contractors settled claims and fixed problems much more quickly under a warranty, other officials said that the penalties to the contractor are low under a warranty and that contractors routinely dispute government claims. According to one Air Force official, the Air Force has had poor results in getting a return on the claims it has filed. Warranty officials stated that contractors often stall and argue about claims because (1) the contractor asserts that it could have repaired the item more quickly or efficiently, if government maintenance personnel repair an item and bill the contractor; (2) the maintenance personnel did not keep the broken part for contractor inspection; (3) the contractor may believe that the weapon system was operated outside the performance parameters to which it was designed or the maintenance personnel damaged the part using improper procedures, and (4) the contractor may find that the defective part has been shifted from the original weapon system in which it was delivered to the government. Congress included a provision in the warranty law that allows the Secretary of Defense or his designee (no lower than an Assistant Secretary of Defense or a military department) to waive the requirement for a weapon system warranty for either national defense or cost-effectiveness reasons. However, since 1985 only 21 waiver requests DOD-wide have reached the assistant secretary level. Of those, 15 have been approved. The conference report accompanying the bill repealing the 1984 warranty law and enacting the current section 2403 noted clearly that the House and Senate Committees on Armed Services did not intend DOD obtain to warranties that are not cost-effective. The report stated that “a failure to conduct cost-benefit analyses and to process waivers where cost-effective guarantees are not obtainable would defeat the legislative intent of congressional warranty initiatives.” The majority of program officials we interviewed said that they do not consider waivers a viable option because of (1) the high placement of the waiver approval authority required by the warranty law (2) the potential for negative attention being focused on the program by these high level officials, and (3) the administrative burden of processing a waiver request. The result of this reluctance to seek waivers is that warranties have become essentially mandatory for all major contracts. This was noted by the DOD Acquisition Law Advisory Panel (the Section 800 Panel) in a January 1993 report where it stated that “the reluctance of DOD to issue warranty waivers fosters the use of warranties without regard to their cost-effectiveness.” Service officials at several major commands and at the assistant secretary level said that requests for waivers bring unwanted and often negative attention to an acquisition program. One service official stated that there is a definite “stigma” attached to waiver requests and another referred to it as a “nightmare.” Further, waiver requests impose a significant burden on the program office, which has to generate all the necessary paperwork, including cost-benefit analyses, and brief them up the chain of command to the assistant secretary level, with little or no expectation that a waiver will be approved. As an example, the F-16 program office sought a waiver for the essential performance warranty of the third F-16 multiyear contract in November 1991. The entire process—from the completion of the cost-benefit analysis and decision to seek a waiver to the rejection of the waiver request—took 11 months. This was the first attempt by this program office to obtain a waiver for the weapon system. The second attempt, on the 1994 procurement, was rejected after 8 months. The Air Force waiver approval process for the F-16 is shown in figure 2.1. The cost-benefit analysis for the third multiyear warranty concluded that both the design and manufacture as well as the materials and workmanship warranties would not be cost-effective. According to an Air Force program official involved in seeking these waivers, the program office did not request a waiver on these parts of the warranty because it believed it would be impossible to get approval. In addition, the official said that the program office was certain that it would be directed to renegotiate these warranties with the contractor. Rather than seek a waiver for these warranties, the program office focused on what it considered its strongest case for a waiver, the essential performance warranty. The contractor had produced approximately 1,500 F-16s when the program office began seeking a waiver and, according to an official in the program office, the program office knew how the aircraft would perform and also knew that the essential performance warranty would provide no benefit to the government. The program office therefore sought a waiver, which was denied because the warranty covered only subsystems rather than the entire weapon system. The assistant secretary indicated a warranty covering the entire weapon system was needed before a decision on whether to grant a waiver could be made. The F-16 program office again sought and was denied a waiver for the essential performance requirement warranty for the fiscal year 1994 procurement. According to Air Force officials, a determination was made at the assistant secretary level that, pursuant to the law, a front-line fighter (a major weapon system) should have a warranty and the F-16, because it is a system that has been in production for many years, should have enough data to craft a valid warranty. Therefore, the waiver request was rejected. The warranty obtained contained no risk to the contractor because the warranty was tied to performance measurements that the system had already passed, a fact the contractor and the government already knew. The warranty thresholds have a mission reliability of 90 percent and aircraft availability of 85 percent. The aircraft achieved a mission reliability rate of 97.2 percent and an aircraft availability rate of 91 percent during the official measurement period. This warranty was a warranty in name only. It was clear to us from discussions with several officials that they believe that obtaining a warranty requires a relatively small amount of time and effort for the program office compared to the amount of time and effort required to avoid spending that money by obtaining a waiver. In addition, according to officials at a major Air Force command, contractors are aware that waivers are exceedingly difficult to obtain and may insist on a high warranty price if the program office seeks an effective warranty. This in turn may drive the program office to obtain reduced warranty coverage to reduce the warranty price. Program managers do not request a waiver because they believe it will not be granted and, consequently, unnecessary or costly warranties are purchased. As required by the Federal Acquisition Streamlining Act of 1994 (P.L.103-355), DOD revised DFARS regarding weapon system warranties. The new regulations provide guidelines for contracting officers and program managers to use when developing and negotiating weapon system warranties. These regulations state that the use of a weapon system warranty may not be appropriate in all situations. Further, a waiver should be requested if it is determined that obtaining a warranty is not cost-effective or is inconsistent with the national defense. However, program managers still need to obtain a waiver before deciding not to obtain a warranty. That process has not been affected by the revised regulations. The warranty law requires DOD to obtain a warranty unless the Secretary of Defense determines that warranty would not be cost-effective or in the interest of the national defense. Applicable regulations (DFARS 246.770-7) require that a cost-benefit analysis be conducted and documented in the contract file to determine if the warranty is cost-effective. The Air Force and the Army had conducted cost-benefit analyses for 21 of the warranties on the 30 contracts we reviewed. The cost-benefit analyses performed, however, were inadequate because (1) the warranties were often not separately priced, (2) the government’s administrative costs were not fully included, (3) the analyses assumed all potential defects would be identified and claims submitted, and (4) they did not include a present value analysis. The Navy conducted only one cost-benefit analysis and has not adhered to DFARS 246.770-7, which states that “in assessing the cost effectiveness of a proposed warranty, perform an analysis which considers both the quantitative and qualitative costs and benefits of the warranty.” The Navy’s policy is to obtain what it calls “no-cost” warranties. However, no warranty is without cost, and not separately pricing a warranty does not mean the government does not incur a cost for the warranty, only that the price of the warranty is built into the cost of the system. Contracts in all services are often signed without separately pricing the warranty. Of the 38 contracts we reviewed, 24 warranties were not separately priced. Instead, the warranty price was included in the price of the product, thereby making it almost impossible to perform a realistic cost-benefit analysis. The services have different policies on pricing a warranty. Although the Air Force’s policy since 1994 has been to separately price all warranties, the Army does not require that the warranty be separately priced, and the Navy maintains that it is not appropriate to negotiate additional costs for weapon system warranties. In addition, we were told by a DOD official that the government often pays twice for the warranty, once in the actual price of the product and separately in the price of a warranty. The services performed cost-benefit analyses for 22 out of the 38 contracts we reviewed. In general, these cost-benefit analyses do not appear to fully include the administrative costs paid by the government for warranty development and administration. Thus, the cost element of the analysis is kept artificially low. However, the Tank-Automotive and Armaments Command uses an estimate, developed in the early 1980s, that calculates the administrative costs of processing each warranty claim as $150. The Army could not provide us with a copy of the study from which this figure was obtained. The cost-benefit analyses generally assume that all or a high percentage of claims will be made and accepted. We found that the U.S. Army Missile Command and the U. S. Army Tank-Automotive and Armaments Command sometimes made greatly different claims submission and acceptance assumptions when analyzing the costs and benefits of warranties. The 1989 Multiple Launch Rocket System cost-benefit analysis by the Missile Command assumed claims would always be filed and accepted when warranted items break. The Tank-Automotive and Armaments Command official responsible for its cost-effectiveness analyses used a range of 20 to 90 percent for the probability that claims would be filed. As discussed previously, Army and Air Force studies indicate that actual claims submission from the field is low. In the case of the Air Force, possibly as low as 15 to 20 percent of actual failures. Nine of 12 cost-benefit analyses we sampled did not conduct a present value analysis as part of the cost-effectiveness review. Cost-benefit analyses normally involve comparing different costs incurred at different times. For two or more alternatives to be compared on an equal economic basis, it is necessary to consider the costs of each alternative currently or at their “present values.” This recognizes that money has earning power over time. A present value analysis is important because it allows the comparison of current expenses with expected future benefits by taking into account the time value of money. Without a present value analysis, comparing a contract with and without a warranty cannot be done because the stream of dollars involved are not comparable. Our review indicated that the services had not prepared post-award assessments in 35 of 38 warranties that we reviewed. There are two types of post-award assessments required, an in-process assessment and a final payoff assessment. The in-process assessments evaluate whether the claims made under a warranty justify its cost and document the desirable and undesirable warranty provisions and tasks for follow-on procurements. A final payoff assessment evaluates the economic benefits derived from the warranty compared to the cost of corrective actions had there been no warranty. Army regulations specifically require an in-process and final payoff assessments. Air Force regulations only require annual assessments and specify how the assessments should be performed. Navy regulations only require that data be collected to perform an annual assessment of warranty activity but does not require a final payoff assessment. Cost-effectiveness analyses and final payoff assessments provide the management tools and internal controls that are essential and critically needed to make sure the intent of the law is satisfied in a way that adequately protects the interests of the Army. Without cost-effectiveness analyses and warranty assessments, there is little assurance that the warranties obtained and the associated costs were commensurate with the benefits received. According to Air Force officials with one program office, their office knows it will have to obtain warranties “no matter what,” so there is no reason for a post-award assessment. These officials were referring to the difficulty of receiving a waiver from the requirement to obtain a warranty, discussed previously. For the 18 Army contracts we reviewed, the Army either ignored the requirement to conduct the final payoff assessments or ignored findings that showed the warranty benefits did not justify the costs. For example, the 1987 Multiple Launch Rocket System final payoff assessment specifically cited the fact that the thresholds were set so that the government would repair the first four failures on each launcher, but only about one claim was actually filed per launcher. Because the performance thresholds were set so high, the warranty was unlikely to serve as an incentive to the contractor to improve the system’s reliability and the warranty may have had a negative effect on reliability. The Army obtained a follow-on warranty. Air Force regulations covering post-award assessments require the program manager to monitor warranty feasibility and cost-effectiveness using annual warranty activity reports submitted by the contractor or the government. These assessments are to include a remarks section that “identifies the warranted tasks or services that are considered desirable or undesirable based on the claim frequency, failure mode, and dollar value.” The Air Force had not completed this annual assessment on any of the 12 Air Force contracts we reviewed. In 1987, the Navy issued instructions on warranties and stated that the Chief of Naval Operations will develop a system for collecting and analyzing actual warranty use and claim data on an annual basis. To date, the Navy has not approved a warranty information system. We found only one of the eight naval systems we reviewed had performed a post-award assessment. Air Force program officials stated that final payoff assessments and post-award assessments are difficult to perform for two reasons. First, the warranty is not always separately priced. Second, the weapon system warranted may have had many engineering changes from the time the contract was initially signed until the end of the warranty period. These changes make comparing expected costs and benefits to actual costs and benefits difficult because the initially projected and actually produced weapon systems are different. Weapon system warranties are generally not cost-effective. They have resulted in a significant cost to the government that substantially exceeds their benefit. The necessity of negotiating and administering the warranties also imposes a large, but unquantified burden on the services. The waiver process has resulted in a system in which warranties are virtually mandatory. In this system, the program office seeking a waiver must demonstrate why a warranty would not be cost-effective and seek approval from an assistant secretary. It is easier and less disruptive for that program office to obtain a warranty, regardless of whether it is necessary or cost-effective, than it is to seek a waiver. Because the waiver process is so burdensome and protracted, warranties are obtained without regard to their cost-effectiveness and the officials in the program offices have no incentive to conduct rigorous cost-benefit analyses. In addition, post-award assessments have little value to program officials as tools to identify desirable and undesirable warranties for future contracts because they believe warranties will have to be obtained “no matter what.” The current DFARS revision, which stresses that weapon system warranties may not be appropriate in all situations, is a step in the right direction. However, it is inadequate to resolve the difficulties in obtaining a waiver because the regulation could not change the high level required for approving waivers. The waiver approval authority is stipulated in the law itself, and the incentives that arise from it could not have been changed by this revision. As DOD and Congress proceed with acquisition reform, we believe they need to reexamine the need for and practical implementation of weapon system warranties. Requiring the routine use of warranties in weapon system acquisitions is often not appropriate and does not provide the government much in the way of benefits. The Institute for Defense Analyses has identified three functions of a warranty in weapon system acquisitions—insurance, assurance-validation, and incentivization. In the commercial marketplace, warranties have similar functions. Commercial buyers believe warranties protect them against catastrophic financial losses and excessive operating costs through a warranty’s insurance aspect. A warranty may also indicate to a buyer that a product is of better quality, which can be equated to the assurance-validation function, and may motivate the contractor to maintain product quality, which equates to the incentivization function.However, these functions are not as significant in weapon system acquisitions as they are in buying a commercial product on the open market. For insurance to be cost-effective to the buyer, the risk must be shared and spread over many insured customers, which is not the case in weapon acquisitions. DOD is the only buyer of most weapon systems and must pay the full cost of the insurance provided by the warranty. Also, DOD already has quality assurance processes built into its contracts to ensure that the product complies with all contract specifications. This lessens the need for a warranty’s assurance-validation function. Finally, in our review of 20 weapon systems, we could not find any evidence that indicated that a warranty was a factor in improving system reliability. Since none of the traditional benefits conferred by warranties apply to weapon system purchases, the main benefit that warranties seem to provide is the extension of the time period DOD has to identify defects to be corrected by the contractor. Commercial buyers are interested in stabilizing their operating costs and protecting themselves against catastrophic losses. A manufacturer’s warranty provides a commercial buyer with a measure of insurance against the risks of repair or replacement costs. If a warranted product does not perform as specified, the buyer whose product failed does not face a total financial loss. The concept of insurance is based on the principle of shared risk. In the commercial marketplace, the cost of offering a warranty is shared by many buyers who individually pay a small amount of the total warranty as part of the product’s price. Manufacturers generally estimate how many of their products will be defective and price the product to cover this risk. However, because DOD is usually the only buyer for a weapon system, the contractor cannot allocate the cost of insuring against that risk among multiple buyers. The complete cost for the estimated risk must be borne by the sole buyer or absorbed by the contractor. If it is borne by the buyer it becomes the price of the warranty. If it is absorbed by the contractor then it is a cost that must be covered by the price of the system. In both cases the buyer pays. A further factor in the cost of a warranty is the extent of unproven technology or innovative design that a weapon system encompasses, which may cause the contractor to perceive its financial risk is significant. This will tend to drive up the warranty price to the government and causes the contractors to try to limit warranty coverage as much as possible. As a result, insuring against weapon system failures generally is not beneficial to the government since the government will be responsible for 100 percent of the estimated cost of that risk. The government will only achieve a positive financial result if failures in the system substantially exceed the contractor’s estimates of risk. While it may seem that a warranty would make sense in cases where the extent of system failures exceeds the cost of the warranty, this occurs in very few instances and the cost of insuring all weapon systems to cover costs in these instances is not a good financial decision. It is for this reason that the government maintains a policy of self-insurance against losses in almost all other areas. A RAND study reported that shifting financial risk to the manufacturer is seldom an appropriate or sufficient rationale for obtaining a weapon system warranty, for the same reason that it is not to the government’s advantage to buy insurance from a commercial firm. Another factor limiting the potential insurance benefits of warranties is the relationship of the government to major defense contractors. If a contractor were someday to incur large losses as a result of a warranty on a weapon system, the threat of insolvency might cause the government to excuse the contractor from its warranty obligation. Historically, when a defense firm incurs large losses because of a contract, the government has taken action to provide relief and prevent the firm from going out of business. DOD’s ability to provide extraordinary contractual relief to a defense contractor is recognized in Public Law 85-804. From 1959 to 1993, DOD used this provision to provide over $4.3 billion (in constant 1996 dollars) in relief to assist contractors in recovering from losses. As a result, the utility of warranties may be limited to collecting small or marginal amounts from a contractor rather than making good a catastrophic loss. The second purpose of warranties is assurance-validation. Applied to weapon systems, assurance-validation means assuring DOD that the manufacturer’s product conforms to the design, quality, and performance levels specified in the contract. Although DOD is moving more toward a commercial acquisition system, it uses many quality assurance processes to verify product quality and contract conformance independent of the warranty clauses. Since the cognizant contract administration office is responsible for verifying that the accepted product conforms to the specifications in the contract, the assurance-validation function of a weapon system warranty may not be necessary. In weapon system acquisitions, DOD uses many different program management tools to reduce the inherent risks of the acquisition process. DOD’s weapon acquisition policies seek to reduce the risk of obtaining a poor quality product by establishing a disciplined multiphased process that (1) translates mission needs into stable and affordable programs; (2) acquires quality products; and (3) provides a program management structure that has clear lines of responsibility, authority, and accountability. As each weapon system progresses through the phases, it is subject to comprehensive programmatic reviews. During the reviews, an assessment is made of the program’s accomplishments to date, plans for the next phase, and acquisition strategies for the remainder of the program. Additionally, the program risks and risk management planning is evaluated. In theory, for each of the acquisition phases, program-specific results are required before a program is permitted to proceed to the next phase. For example, a program may be required to demonstrate the maturity of a manufacturing process before being permitted to start production. Techniques available to manage risk include the use of technology demonstrations and prototyping to test hardware, software, manufacturing processes and/or critical subsystems. Another technique is to test and evaluate the weapon system or its components to determine system maturity and identify technical risks. Finally, DOD establishes quality assurance programs to provide confidence that a weapon system will conform to the technical requirements and provide satisfactory performance. A warranty is one more management tool at DOD’s disposal to assure quality as the weapon system begins to be put in use. Given the extensive quality assurance efforts made over the whole development and production cycle, however, a warranty may actually be insurance against the failure of the quality assurance process. Finally, warranties are supposed to serve as an incentive to manufacturers to improve quality. Conceptually, all warranties motivate a manufacturer to improve product quality because the goal is to maximize profits by not having to perform warranty service. However, when a commercial manufacturer provides a warranty, it generally knows the projected failure rates of the product and the probable repair costs. The costs for these failures are included in the cost of the product. Efforts to keep commercial prices competitive probably undercuts the incentive to make additional profit by pricing the warranty higher than its expected cost. In the commercial market, a warranty may also signal product quality to the buyer because the commercial buyer generally is not familiar with how the product was made and does not know how the product will perform.Therefore, the warranty becomes a marketing tool to help sell the product by convincing the buyer it is a superior product. In weapon acquisition, the contractor is generally not faced with direct price competition. Absent direct price competition, there is no incentive for the contractor to limit its ability to fully cover the estimated cost of risks of system failure being warranted. Further, the marketing aspects of a warranty are for the most part irrelevant to DOD. The warranty’s indication of manufacturer confidence in product quality is not needed because, as shown in the previous section, DOD is not a typical consumer. DOD is knowledgeable about how the weapons it obtains are made and in some cases helped to design the system. Generally, DOD knows how the product will perform and uses other management techniques to maintain product quality. In addition, the majority of officials in the weapon system program offices we visited stated that either (1) the warranties had not induced the contractors to take actions to improve the quality of their warranted products or (2) if there were quality and reliability improvements due to the warranty, those improvements were marginal and unmeasurable. For example, the F-15 warranty manager stated that the contractor has not designed components of the weapon system differently nor is the contractor building the weapon system differently because of the warranty. The F-110 engine warranty manager also said that the warranty has not helped to improve the reliability of the engine. In a report issued in August 1992, the U.S. Army Materiel Systems Analysis Activity, reached a similar conclusion regarding different warranties on several systems. The report stated: “It is extremely unlikely that hardware improvements that were performed under the warranty would not have been performed had there not been a warranty. Therefore, it is unlikely that any reliability growth from these improvements could be attributed to the warranty.” The report stated that no models were available that could be used to measure reliability improvements resulting from a warranty. With or without a warranty, a contractor is obligated to produce a product that complies with the terms delineated in the contract, including all design, manufacturing, and performance specifications. During DOD’s inspection and quality assurance processes, the government needs to identify defects or deficiencies and notify the contractor of problems at the earliest reasonable time. If DOD did not obtain a warranty, the contractor could be released from any further obligation to correct problems once the government accepted the product. A warranty extends beyond acceptance the period during which the government can identify defects and require the contractor to correct them at no charge. Prior to acceptance, if defects are discovered, the government, even without a warranty, can (1) order the contractor to correct the defects at no additional charge, (2) reject the nonconforming product, (3) terminate the contract for default, or (4) seek a price reduction. A warranty obligates the contractor to correct defects, even if the government did not identify them before acceptance. This can reduce disputes because the warranty eliminates the need to prove where and when a defect came into existence. For example, in the case of a failure-free warranty, the government merely needs to demonstrate that an item does not work. A warranty also supplements inspection by providing the opportunity to observe the product’s performance during a period of use when additional problems may become apparent. However, a properly structured test program could identify such problems early in the acquisition process, when it is less costly to address deficiencies. In a contract without a warranty, the government’s acceptance of the product generally ends the contractor’s obligation. Even without a warranty, however, the government can revoke its acceptance and hold the contractor financially accountable if latent defects are discovered. In cases of latent defects, the government must demonstrate that the defects existed at the time of delivery, but could not have been discovered by a reasonable inspection. While warranties may have value to a consumer in the commercial world, obtaining a warranty for a weapon system may be a flawed concept because (1) the government does not need the insurance coverage provided by a warranty and cannot share the expense of the warranty with other customers; (2) warranties are an expensive way to assure the quality of a weapon system; (3) DOD’s quality assurance activities, should provide much greater assurance of compliance with contract specifications than does a warranty; and (4) warranties may not cause contractors to improve the quality of the weapon systems’ they produce. Further, weapon system warranties provide very limited benefits to the government. The only measurable benefit of a warranty is the ability to have the contractor correct defects for some negotiated period after acceptance of the product, and as discussed in the prior chapter this comes at a high cost. We believe warranties should be used judiciously and only in cases where their cost-effectiveness can be clearly demonstrated. We recommend that the Secretary of Defense establish an expedited waiver process that limits the disincentives inherent in the current process. We also recommend that the Secretary of Defense revise DOD’s acquisition policies to adequately manage those warranties that the military services determine should be obtained. Consideration should be given to (1) requiring that all weapon system warranties be separately priced in order to allow meaningful cost-benefit analyses; (2) improving cost-benefit analyses through more realistically reflecting the likelihood of claim submission, performing present value analyses, and including the government’s administrative costs; and (3) ensuring that the services enforce the regulations requiring post-award assessments of weapon system warranties so that the services will know why these warranties were or were not beneficial to the government. We also recommend that the Secretary of Defense direct the Secretaries of the Air Force and the Navy revise their regulations to require a final payoff assessment for weapon system warranties as the basis for purchasing more beneficial follow-on warranties and building institutional knowledge for procuring and administering effective warranties. The administrative problems that we have identified appear to be unintended consequences of the warranty law due to the de facto mandatory nature of warranties. Attempts to administratively correct the problem have not been very successful. Since DOD continues to have problems administering weapon system warranties and the warranties provide minimal benefits for the costs incurred, Congress should repeal 10 U.S.C. 2403. Were the warranty requirement repealed, DOD and the services would still have management flexibility to obtain warranties for major weapon systems only when deemed appropriate. As was done prior to the warranty law, DOD and the services would rely on the FAR and their own policies to determine when it is appropriate to obtain a weapon system warranty. The decision should be documented as part of the system acquisition strategy. In commenting on a draft of this report, DOD stated that it “strongly supports” our recommendation that Congress should repeal 10 U.S.C. 2403. Since 1992, DOD has supported the need for congressional repeal of the weapon system warranty law. DOD only partially concurred with the recommendations to the Secretary of Defense, stating that the solution to the problems we cited is repeal of the law. DOD indicated that it will ask the military departments to review their warranty waiver process. DOD noted, however, that in order to remove the disincentives and streamline the waiver process it needs relief from the congressional notification requirement and the warranty waiver approval level. DOD stated that it did not see the need to separately price warranties because it has insight into warranty costs through cost reporting and can project warranty cost from actual claim data. Although DOD currently has insight into warranty costs, we found that this information is often not used in the cost-benefit analyses. Therefore, we believe that separately pricing the warranty would permit DOD to perform better warranty cost-benefit analyses. DOD stated that all the military departments have in place regulations that require post-award assessments, but acknowledged that the military departments were not fully complying with existing regulations. DOD stated that it would reiterate the importance of such assessments in a memorandum to the military departments. Our review indicated, however, that only the Army’s regulation specifically requires a final pay-off assessment to determine the economic benefit derived from a warranty. We believe that the Air Force and the Navy regulations should be revised to explicitly require final payoff assessments. DOD’s comments are reprinted in their entirety in appendix II. | GAO reviewed the Department of Defense's (DOD) use of major weapon system warranties, focusing on whether these warranties: (1) provide expected benefits to the government; and (2) are compatible with the weapon systems acquisition process. GAO found that: (1) DOD receives about $1 in direct benefit for every $19 paid to a contractor for a warranty; (2) DOD program officials rarely seek to waive the warranty requirement because waivers require the approval of an Assistant Secretary of Defense and congressional defense authorization and appropriations committees; (3) despite DOD regulations that require a cost-benefit analysis to determine if the warranty is cost-effective, some cost-benefit analyses are inadequate; (4) the military services are not conducting post-award assessments to determine whether warranty costs are commensurate with the benefits received and to identify advantageous and disadvantageous warranty provisions for future contracts; (5) the government has traditionally self-insured because its large resources make protection against catastrophic loss unnecessary, and it is often the sole buyer for a product and cannot share the insurance costs with other buyers; (6) because a contractor cannot allocate the cost of insuring against the risk of failure among multiple buyers, DOD ends up bearing the entire estimated cost; (7) DOD officials said that warranties do not motivate contractors to improve the quality of their products; and (8) warranties only extend the period that DOD can determine that a product does not conform to contract specifications and requirements and require the contractor to make repairs. |
Mitt Romney continues to resist pressure to turn over more tax returns. In an interview today he said he is “simply not enthusiastic about giving them hundreds or thousands of more pages to pick through, distort, and lie about.”
The call for more information about Romney’s financial past, however, is bipartisan. A poll released today found fifty six percent of all voters, including sixty one percent of independents, think that Romney should release twelve years of returns.
These fifteen prominent Republicans are calling on Romney to release more tax returns, now:
1. George Will. On ABC’s “This Week,” Will, a long-time conservative commentator and Washington Post columnist, said, “The costs of not releasing the returns are clear, therefore he must have calculated that there are higher costs in releasing them.” At one point, he even played devil’s advocate to Republican consultant Mary Matalin, who was defending Romney.
2. Bill Kristol. “Here’s what he should do,” said Kristol, another conservative commentator, on Fox News. “He should release the tax returns tomorrow. This is crazy… you’ve got to release 6, 8, 10 years of back tax returns. Take the hit for a day or two. Then give a serious speech on Thursday.”
3. Ron Paul. Unitl just days ago, Paul was the other Republican presidential candidate. He is also one of those calling for Romney to release the returns. Paul told Politico today, “Politically, I think that would help him. …In the scheme of things politically, you know, it looks like releasing tax returns is what the people want.”
4. Alabama Gov. Robert Bentley. The Alabama Governor actually went further than others in suggesting that perhaps Romney is hiding something by not releasing his tax returns. “If you have things to hide, then maybe you’re doing things wrong,” he told the AP. “I think you ought to be willing to release everything to the American people.“
5. Michael Steele. The former chair of the Republican National Committee is pushing for release. He claims it will help voters trust Romney, especially since he claims there is nothing to see in the returns: “If there’s nothing there, there’s no ‘there’ there, don’t create a ‘there.’ Put out as much information as you can. Even if you don’t release 12 years worth of tax returns, at least three, four, five.”
6. Rep. Walter Jones. In an interview with CNN, the Republican Congressman from North Carolina said, “I think he should release his financial records and I think if he does it in July it would be a lot better than in October. …whenever you are asking for the vote of the American people you need to fully disclose what your holdings are, if you have any.”
7. Ana Navarro. “He should just release the stupid taxes and eliminate the Obama campaign tactic of insinuating he’s got something to hide,” the former adviser to John McCain said. “The Obama people are going to keep the issue alive and it has the potential of mushrooming into a bigger issue. …It’s time to just pull off the band-aid.”
8. Rep. Pete Sessions. Sessions (R-TX) leads the National Republican Congressional Committee, and even he called Romney’s tax returns “fair game” and a “legitimate question.” In an interview with CNN, Sessions said that “[Romney’s] personal finances, the way he does things, his record, are fair game.”
9. Gov. Haley Barbour. The Mississippi Governor has been outspoken about the need for Romney to hand over the documents. “The advice I would give Romney is: Who cares about your tax returns? Release ’em!” Barbour said in a phone interview. “We need for this campaign to be about Obama’s record.” Earlier this week, Barbour also called for Romney to release the returns on CNN.
10. Matthew Dowd. This conservative commentator called it “arrogance” that Romney was not releasing his returns. Joining forced with Bill Kristol, Dowd spoke candidly about his doubts around Romney’s tax returns: “There is obviously something because if there was nothing there he would say have it…But I think the bigger thing is, it’s arrogance. Many of these politicians think I can do this, I can get away with this.”
11. Rick Tyler. Republican strategist and former adviser to Newt Gingrich’s campaign had this to say about Romney’s returns: “Mitt Romney had an opportunity to answer these questions during the primary. …He did not answer these questions and now they’re coming up again. …Only [Romney] can provide that information. …Or we’ll just have drip, drip, drip to November.”
12. John Weaver. This Republican strategist had a straightforward message that got picked up as a quote-of-the day. In regard to Romney releasing his returns, he said, “There is no whining in politics. …Stop demanding an apology, release your tax returns.”
13. Brit Hume. The conservative Fox News commentator told fellow Fox man Bill O’Reilly, “Any time it’s disclosure versus non-disclosure, you always wonder whether it isn’t better to put it out there. And if it turns out that if people get to hear once again that Mitt Romney is a very very rich man. …I guess the Obama team would have some sport with that for a couple days.”
14. David Frum. The conservative journalist David Frum Tweeted his opinion on the tax release controversy. “Tax returns the next problem. Releasing returns under pressure: more weakness, more pain,” he wrote in one tweet. “Do promptly and cheerfully what you will eventually have to do anyway,” he added.
15. John Feehery. This Republican strategist joined the growing list of Republicans asking Romney to release the returns when speaking with Andrea Mitchell on MSNBC. “Might as well get it over with,” he told her, “Couple of years, get it over with.”
16. Gov. Rick Perry Texas Governor and former Republican Presidential candidate Rick Perry (R) has come out and urged Romney to release his returns. According to the AP, “Perry said that anyone running for office should give people what he called ‘backgrounds,’ including tax returns, if asked and if the requests are within reason.” When Perry was running for President, he released 10 years of returns.
17. Sen. Chuck Grassley The Iowa Republican joins the fray, The Hill reports: “”I don’t think he should be called on to do anything extraordinary other than what other presidential candidates have done.’ When asked if he thought Romney should do as much as prior presidential nominees have, meaning release more returns, Grassley said, ‘based upon my comment, I’d have to say yes.'”
18. Sen. Dick Lugar In an interview with CBS, Lugar, who himself ran for president in 1998, said it would be smart for Romney to release more returns. “‘It was quite a number which we released.’ …He added it would be “prudent” for Romney to release more years of his tax returns. ‘I have no idea on why he has restricted the number to this point,’ Lugar said.”
19. Wayne MacDonald The chair of the New Hampshire GOP came out and told the Washington Post in a phone interview that Romney should probably just release the returns. “Certainly, I don’t think Mitt Romney has anything to hide, and probably the best thing to do is to eliminate any chance for (the Democrats) to make this an issue,” he said. New Hampshire will be an important state in the election.
20. Mike Murphy The Daily Beast adds another person, long-time GOP consultant and former Romney employee, to the ever-growing list: “‘Why they didn’t release more of this material a year ago is confusing to me,’ says Mike Murphy, a veteran GOP consultant who has worked for Romney in the past.” ||||| Earlier today, Mitt Romney spoke with National Review Online about life on the trail, his meeting with Dick Cheney, and his upcoming trip to Europe. He called from western Pennsylvania, where he will later hold a rally at a wireless company.
A few days ago, you visited Vice President Cheney. Did he have any advice for you?
We did speak, at some length, about foreign-policy matters, in particular the circumstances surrounding some of the foreign-policy decisions of the Bush administration. I discussed with him the process of decision-making, and he described the individuals, the types of meetings that occurred, and the expression of views. Of course, I did not get him to tell me about individual personalities and their own perspectives, but rather the process by which the White House was able to take on important issues.
Speaking of Cheney, what makes a good vice president?
Well, I can’t speak for other people who’ve run for office and what they’ve looked for in a person who would be their vice president. In my own view, the people I’ve worked with over my career have been people who have the capacity to lead, who share my philosophy, and in some cases, people who provide perspectives and skills that I may not share.
We’ve heard a lot about Bain this week. How would you rate the press coverage?
I don’t see a lot of the press coverage because my travel schedule keeps me from seeing all of it. A long time ago, I got good advice from a friend who said, “Don’t read the papers, they’ll only throw you off of your message.” I don’t worry a lot about what’s being said from day to day. My own view is that people will recognize that I was instrumental in helping build a very successful business that employed a lot of people, and that our business was able to invest in other people’s dreams, many of which were successful.
Chicago mayor Rahm Emanuel says you should stop whining about the Bain attacks. What’s your response?
I only call people out when they are being dishonest.#more#
Looking back, how did your time at Bain prepare you for the presidency?
Your life experiences can come together and prepare you for responsibilities later in life. In my own experience, my family life, learning from the example of my parents, my life in my church, my education, my years in consulting, my years in the investment world, my leadership at the Olympics, and finally my leadership in Massachusetts — this all contributed to the person I am today and the capability I have to lead. With regard to Bain in particular, I had about ten years in consulting and 14 or 15 years in the investment world. The 25 years I spent in business gave me an understanding of how business decisions are made, as well as an understanding of the actions that are destructive to job creation and the actions that encourage job creation. I’ve watched this president, and his policies have made it harder to create jobs. His economic philosophy, shockingly revealed in his comment a day or so ago, is the reason why he has been so unsuccessful in reigniting economic growth.
Up in Boston, does your campaign have a similar corporate culture? Do you run it the Bain way, with horizontal leadership and vigorous debate?
Bain Capital was a firm that I led for 14 or 15 years, and Bain Consulting was an enterprise I led for two years as CEO. Our campaign is not modeled after either group.
For much of this week, you’ve been asked about your tax returns. What’s the downside to releasing your pre-2010 financial records?
My tax returns that have already been released number into the hundreds of pages. And we will be releasing tax returns for the most current year as soon as those are prepared. They will also number in the hundreds of pages. In the political environment that exists today, the opposition research of the Obama campaign is looking for anything they can use to distract from the failure of the president to reignite our economy. And I’m simply not enthusiastic about giving them hundreds or thousands of more pages to pick through, distort, and lie about.
From a political perspective, a lot of pundits wonder why you haven’t gotten rid of your offshore accounts. Can you explain why you have not done that?
Well, first of all, all of my investments are managed in a blind trust. By virtue of that, the decisions made by the trustee are the decisions that determine where the investments are. Secondly, the so-called offshore account in the Cayman Islands, for instance, is an account established by a U.S. firm to allow foreign investors to invest in U.S. enterprises and not be subject to taxes outside of their own jurisdiction. So in many instances, the investments in something of that nature are brought back into the United States. The world of finance is not as simple as some would have you believe. Sometimes a foreign entity is formed to allow foreign investors to invest in the United States, which may well be the case with the entities that Democrats are describing as foreign accounts.
Former president George W. Bush is coming out with a new book, The 4% Solution, about economic growth. Is 4 percent growth viable?
He’s absolutely right that we’re not growing fast enough. The president’s policies have failed to create the kind of GDP growth that America could achieve. Job growth is well beneath the level we should be seeing, and that results from an economy that’s growing much less swiftly than it could. My policies are designed to achieve 4 percent per year growth of the GDP. I would also note that I would hope we could see a rate a good deal higher than that on a temporary basis after we come out of the economic doldrums of the Obama years.
In late June, when the Supreme Court upheld the president’s health-care law, Chief Justice Roberts disappointed many conservatives. Did Roberts’s ruling change your perspective on how you, as president, would evaluate a Supreme Court nominee?
I disagreed with the Roberts decision and I would be interested in an evaluation of a Supreme Court nominee that looked at his or her thinking on making difficult constitutional decisions. We don’t yet know the rationale fully behind Roberts’s change of opinion, but when we do, it will tell us more about the nature of someone we would nominate. I suspect that Justice Roberts shied away from making a big decision, despite his conviction that the Constitution, in reality, would have led to striking down Obamacare.
You’re heading abroad next week. Why are you going to Europe?
Foreign affairs and associations with foreign leaders are an important part of the presidency, a position I hope to achieve.
Upon your return, you’ll have a small window before the national convention. What’s your core campaign message, your big theme, between now and Tampa?
You’re going to have to wait to find out. If I told you that now, I wouldn’t have anything to spring on you guys after I get back.
The Democratic National Convention is being held in early September. Do you plan on campaigning while the Democrats are hosting their convention in Charlotte?
We haven’t got plans right now, but that’s a decision we’ll make down the road.
You’ve written many of your own speeches. Are you already working on your convention speech?
I am not yet working on my convention speech.
With that, Romney was whisked away to his next event. He’ll be in Bowling Green, Ohio, on Wednesday, and he’ll head across the pond early next week. Inside the Beltway, the vice-presidential speculation continues, but for now, there is little news on the veep front. ||||| It's not clear if voters really care about the fact that Mitt Romney hasn't revealed more than one year of taxes, but the talk surrounding this issue is so loud that it's a "win" for Obama because it's a topic other than the economy and jobs.
A growing number of Republicans think that obviously Romney should release his taxes. But only he knows what's in his returns, and he does not think it's so obvious.
So everyone has their theories.
One easy possibility is that it's just a matter of drawing more attention to the fact that he is really rich and his tax rate isn't all that high. But this doesn't make sense since this would only confirm what everyone really knows.
Joshua Green at Bloomberg has what is the most logical theory so far... which is that thanks to the economic collapse of 2008, and the massive losses he probably suffered, Romney might not have paid any taxes in 2009, thanks to tax-loss carryforwards.
As a member of the ultra-rich, Romney probably wasn’t spared major losses. And it’s possible that he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009. If true, this would be politically deadly for him. Even assuming that his return was thoroughly clean and legal — a safe assumption, it seems to me — the fallout would dwarf the controversy that attended the news that Romney had paid a tax rate of only 14 percent in 2010 and estimated he’d pay a similar rate in 2011.
We're not sure whether Green is right that it would be politically "deadly" though we could certainly see why Romney wouldn't want this known, if it were true.
Incidentally, another more exotic possibility that had come to mind is that somehow Mitt Romney made a windfall profit in 2008-2009, perhaps by being part of a fund that was short housing or bet on the bank bailouts. That's 100% speculation, but it would also be the kind of thing that would be deadly (probably more deadly than $0 taxes). It also would have been somewhat unplannable.
A problem with the tax loss carryforwards argument is that if Romney knew he'd be running in 2009 (and he probably did) then you'd think he'd have gone out of his way not to do anything that might look bad, even if 100% by the book.
Going back to the no tax issue, former political strategist and now media guy Peter Feld notes that the latest Obama TV ad specifically raises the possibility that Romney paid $0 in taxes. So in the absence of counter-evidence it seems likely that this is the theory that will become the most popular. ||||| 2012 campaign
As George Will and many others have noted, there must be something truly damaging in Romney’s pre-2010 tax returns for him to willingly endure the criticism and scrutiny that has accompanied his refusal to release them—a refusal he reiterated on Friday, even as the issue, and the matter of his departure date from Bain Capital, has engulfed the campaign. “The cost of not releasing the returns are clear,” Will said on ABC’s This Week on Sunday. “Therefore, he must have calculated that there are higher costs in releasing them.”
So what could it be that Romney is so determined not to disclose?
Last night I had dinner with some (non-Bain) private equity executives, and I took the opportunity to quiz them on the topic and test my own theories about Romney’s tax returns. Let me emphasize that I have no idea what is in those returns, and neither did anyone I spoke with. What follows is unfounded, though not implausible, speculation. The most intriguing scenario that emerged about what could be lurking in those returns is as follows:
When the stock market collapsed in 2008, the wealthiest investors fared worse than everyone else. (See, for instance, this Merrill Lynch study.) The “ultra-rich”—those with fortunes of more than $30 million—fared worst of all, losing on average about 25 percent of their net worth. “There was really nowhere to hide as an investor in 2008,” Merrill Lynch’s president of global wealth management pointed out in 2009. “No region ended the year unscathed.”
As a member of the ultra-rich, Romney probably wasn’t spared major losses. And it’s possible he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009. If true, this would be politically deadly for him. Even assuming that his return was thoroughly clean and legal—a safe assumption, it seems to me—the fallout would dwarf the controversy that attended the news that Romney had paid a tax rate of just 14 percent in 2010 and that estimated he’d pay a similar rate in 2011.
The “zero tax in 2009” theory—again, this is sheer speculation—gains further sustenance when you consider it’s the only year for which nobody knows anything about Romney’s taxes. He’s revealed what’s in his 2010 and 2011 returns, and he reportedly submitted 20-some years’ worth of returns to the McCain campaign when he was being vetted for vice president in 2008. Steve Schmidt, McCain’s chief strategist in that campaign, said on MSNBC last night that while he didn’t examine Romney’s returns himself, nothing that McCain’s vetters found in them disqualified Romney from consideration.
That would indicate that 2009 is singularly important and, if there’s anything to this theory, incredibly vexing for Romney because there’s no way he could release additional returns without including that year. And the chaos that would ensue would be bad enough that it’s probably worth enduring significant damage to avoid. ||||| Mitt Romney is steadfastly resisting calls to release additional years of his personal tax returns, arguing — not without good reason — that this demand is part of a fishing expedition by the Obama campaign, which hopes to exploit Romney’s personal wealth and successful business career as part of a class-warfare election strategy. Romney argues that whatever he releases will not be enough to satisfy the Obama campaign and its factota in the media, who are, once again, proving their bias and double standards. Romney is right, but he should release the returns anyway. Let them go fish.
We doubt that there is anything truly surprising in Romney’s additional personal tax returns (he’s already released 2010 and will release more from 2011). We already know that he has made vast amounts of money, that he gives generously to his church and to charities, that he has set up trusts for his family, that he maintains bank accounts and investments overseas, and that he takes advantages of such benefits as are available to him under our ridiculously complex tax code. If there is scandal to be had of that, it can be had from the information that already is available. But there is no scandal in that: Romney is a wealthy man — and he has complicated personal finances, something that is typical of wealthy men. In fact, Romney’s personal finances are a very good case study in what’s wrong with the American tax system and regulatory climate.
The Romney campaign says he has released as many returns as candidate John Kerry did in 2004, and cites Teresa Heinz Kerry’s refusal to release any of her tax returns. Neither is an apt comparison. John Kerry actually released returns from 1999 through 2003, and also released tax returns during his Senate runs. As for Teresa Heinz, Romney isn’t the wealthy spouse of a candidate, but the candidate himself. In 2008, John McCain released two years of returns, but he had been filling out financial disclosure forms for decades as a senator. Romney protests that he is not legally obliged to release any tax returns. Of course not. He is no longer in the realm of the private sector, though, where he can comply with the letter of the law with the Securities and Exchange Commission and leave it at that. Perceptions matter.
Romney may feel impatience with requirements that the political culture imposes on a presidential candidate that he feels are pointless (and inconvenient). But he’s a politician running for the highest office in the land, and his current posture is probably unsustainable. In all likelihood, he won’t be able to maintain a position that looks secretive and is a departure from campaign conventions. The only question is whether he releases more returns now, or later — after playing more defense on the issue and sustaining more hits. There will surely be a press feeding frenzy over new returns, but better to weather it in the middle of July.
If he releases more returns, Romney will be in a better position to resist the inevitable demands for even more disclosures. More important, he will be in a better position to pivot his campaign to what should be its focus — telling a story, through a series of detailed, substantive speeches, about where he wants to take the country. It is to President Obama’s advantage to fight the election out over tactics and minutiae. By drawing out the argument over the returns, Romney is playing into the president’s hands. He should release them, respond to any attacks they bring, and move on. | Scores of prominent Republicans are ratcheting up pressure on Mitt Romney to release his tax returns, notes ThinkProgress, but the candidate tells the National Review that he's not thrilled about giving the Obama camp "more pages to pick through, distort and lie about." (The editors at the conservative site sympathize, but called on him to release them anyway.) At Bloomberg/BusinessWeek, Joshua Green floats a theory that might explain Romney's reticence: Maybe he paid no federal taxes in 2009. How so? Like other uber-rich investors, Romney probably lost a lot of money in the 2008 market collapse. "It’s possible he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens," he ended up paying nothing to Uncle Sam in '09. "If true, this would be politically deadly for him," writes Green. At Business Insider, Joe Weisenthal thinks the theory has much merit, though he disagrees that Romney would be "politically dead" if true. Another possibility: Romney made a nice profit in 2008-09, maybe through a fund that bet on the bailouts. That's "100% speculation," admits Weisenthal. But unless Romney releases the actual returns, he can surely expect more of it. |
Story highlights Two U.S. warships moving to Libyan coast, officials say
Officials describe four-hour onslaught in Benghazi
Libya's prime minister apologizes for the "cowardly criminal act"
"Make no mistake, justice will be done," Obama says
The United States on Wednesday vowed to avenge the killings of its ambassador to Libya and three other Americans, moving warships toward the Libyan coast and preparing to track the suspected perpetrators with surveillance drones, officials said.
The slain ambassador, Chris Stevens , helped save Libya's eastern city of Benghazi during last year's revolution. He died there Tuesday night, along with another diplomat and two State Department security officers, when a mob stormed the U.S. Consulate and set it ablaze.
The Benghazi consulate was one of several American diplomatic missions that faced protests after the online release of a film that ridiculed Muslims and depicted the Prophet Mohammed as a child molester, womanizer and ruthless killer.
But U.S. sources said Wednesday the four-hour assault in Benghazi had been planned, with the attackers using the protest as a diversion.
"We will not waver in our commitment to see that justice is done for this terrible act," President Barack Obama said. "And make no mistake, justice will be done."
JUST WATCHED Ambassador killed in city he helped save Replay More Videos ... MUST WATCH Ambassador killed in city he helped save 01:55
A senior U.S. official told CNN that American surveillance drones are expected to join the hunt for jihadists who may be tied to the attack. The drones are expected to gather intelligence that will be turned over to Libyan officials for strikes, the official said.
But two American destroyers also are being moved toward the Libyan coast, two U.S. officials told CNN. Both the USS Laboon and USS McFaul are equipped with satellite-guided Tomahawk cruise missiles that can be programmed to hit specific targets.
The move "will give the administration flexibility" in case the administration orders action against targets inside Libya, one senior official said. The McFaul was making a port call on Mediterranean island of Crete, while the Laboon was outside Gibraltar, a few days away from Libya.
Libya's leaders apologized for the attack, with Prime Minister Abdurrahim el-Keib calling it a "cowardly, criminal act." And Obama said that despite the inflammatory movie, the violence was unwarranted.
"Since our founding, the United States has been a nation that respects all faiths. We reject all efforts to denigrate the religious beliefs of others," he said. "But there is absolutely no justification for this type of senseless violence -- none."
U.S. and NATO warplanes helped the Benghazi-based rebellion drive on Libyan strongman Moammar Gadhafi last August. The jihadists suspected in Tuesday night's attack "are a very small minority" who are taking advantage of a fledgling democracy, Ali Suleiman Aujali, the Libyan ambassador the United States, told CNN's "Amanpour."
"The good thing about this is the majority -- 95, 98% of the Libyan people -- care not for this," he said.
Sources tracking militant Islamist groups in eastern Libya say a pro-al Qaeda group responsible for a previous armed assault on the Benghazi consulate is the chief suspect. A senior defense official told CNN the drones would be part of "a stepped-up, more focused search" for a particular insurgent cell that may have been behind the killings.
The FBI also is investigating, the bureau said Wednesday.
In June, a senior Libyan official told CNN that U.S. controllers were already flying the unmanned craft over suspected jihadist training camps in eastern Libya because of concerns about rising activity by al Qaeda and like-minded groups in the region.
Tuesday's attack took place on the 11th anniversary of the al Qaeda attacks on New York and Washington. But White House National Security Council spokesman Tommy Vietor said assigning any motive for the attack was "premature."
"As the president said, make no mistake, we will work with the Libyan government to bring to justice the killers who attacked our people." Vietor said.
Gunfire erupted outside the consulate about 10 p.m. (4 p.m. ET), senior administration officials told reporters. The officials, who spoke on condition of anonymity, said the attackers broke into the consulate compound about 15 minutes later.
The main building was set ablaze by a rocket-propelled grenade, a senior U.S. official familiar with the details told CNN earlier. Three people -- Stevens, Foreign Service information management officer Sean Smith and a U.S. security officer -- were inside at the time, according to the senior administration officials who briefed reporters Wednesday afternoon.
The security officer managed to get out and brought others back to retrieve Smith and Stevens, the officials said, but they found Smith dead and Stevens missing. The ambassador's body was handed over to U.S. personnel at the airport after dawn, the officials said.
JUST WATCHED Ambassador 'loved Libya so much' Replay More Videos ... MUST WATCH Ambassador 'loved Libya so much' 02:18
"There are reports out there that I cannot confirm that he was brought to the hospital by Libyans who found him," one of the officials said. "Obviously, he had to get there somehow. No Americans were responsible for that."
JUST WATCHED Images of the Libya attack Replay More Videos ... MUST WATCH Images of the Libya attack 01:17
JUST WATCHED Libya struggling to deal with militants Replay More Videos ... MUST WATCH Libya struggling to deal with militants 04:22
Two U.S. security guards were killed and two more wounded in the next hour, as they attempted to re-establish control of the consulate compound. Libyan security forces helped retake the complex about 2:30 a.m., the officials said.
American sources could not say whether the attackers instigated the protest or merely took advantage of it, and they say they don't believe Stevens was specifically targeted.
Secretary of State Hillary Clinton dispatched Stevens to Libya to be the American link to rebel forces battling to overthrow Gadhafi.
"He arrived on a cargo ship in the port of Benghazi and began building our relationships with Libya's revolutionaries," Clinton said Wednesday. "He risked his life to stop a tyrant, then gave his life trying to build a better Libya."
At a Washington news conference held by American religious leaders to condemn both the violence and the anti-Muslim film, Aujali called Stevens "the right man for the right position for the right time."
"He believed in the Libyan people," said Aujali, who said Stevens was a personal friend. "He believed that America should support the Libyan people to get their country back. We need to practice democracy like other nations in the world."
Clinton said Smith was a 10-year veteran of the State Department, a husband and a father of two. The two other victims had not been named Wednesday evening as the government worked to contact their families.
Clinton said their deaths are "not easy." But she added, "We must be clear-eyed even in our grief."
"This was an attack by a small and savage group, not the people or government of Libya. Everywhere Chris and his team went in Libya, in a country scarred by war and tyranny, they were hailed as friends and partners. And when the attack came yesterday, Libyans stood and fought to defend our post."
Meanwhile, the protests over the video resumed Wednesday night in Egypt, where several men scaled the walls of the U.S. Embassy and tore down its American flag on Tuesday. Police used tear gas on protesters outside Cairo embassy and in Tahrir Square, the epicenter of the revolt that toppled former President Hosni Mubarak in 2011.
Stevens spoke Arabic and French and was among the first U.S. diplomats sent to Libya in 2007, when Washington and Tripoli resumed ties. He was the sixth U.S. ambassador to be killed in the line of service, while two others have died in plane crashes.
The last time an American ambassador was murdered was in 1979, when the envoy to Afghanistan, Adolph Dubs, was kidnapped and killed during an attempt to rescue him, according to State Department records. ||||| The U.S. Embassy in Algiers is warning Americans in the country to avoid non-essential travel amid calls for protests after an attack on a U.S. consulate in Libya.
The embassy said in an emergency message to U.S. citizens that unspecified groups are using online social networks to organize demonstrations in front of the embassy Wednesday "to protest a range of issues."
It warns Americans to avoid large gatherings and non-essential travel in and around the embassy and other official buildings.
The U.S. Ambassador to Libya and three American members of his staff were killed Tuesday night in an attack on the U.S. consulate in the eastern city of Benghazi by protesters angry over a film they see as ridiculing Islam's Prophet Muhammad. ||||| J. Christopher Stevens, the U.S. ambassador to Libya, was killed Tuesday in the attack on the U.S. consulate in the eastern city of Benghazi by protesters angry over a film that ridiculed Islam's Prophet Muhammad.
According to the State Department Office of the Historian, five U.S. ambassadors have been killed by terrorists:
_Adolph Dubs, in Afghanistan, 1979
_Francis E. Meloy Jr., in Lebanon, 1976
_Rodger P. Davies, in Cyprus, 1974
_Cleo A. Noel Jr., in Sudan, 1973
_John Gordon Mein, in Guatemala, 1968
Two other U.S. ambassadors have died in plane crashes:
_Arnold L. Raphel, in Pakistan, 1988
_Laurence A. Steinhardt, in Canada, 1950 ||||| The U.S. ambassador to Libya and three American members of his staff were killed in the attack on the U.S. consulate in the eastern city of Benghazi by protesters angry over a film that ridiculed Islam's Prophet Muhammad, Libyan officials said Wednesday.
FILE - In this Monday, April 11, 2011 file photo, U.S. envoy Chris Stevens, center, accompanied by British envoy Christopher Prentice, left, speaks to Council member for Misrata Dr. Suleiman Fortia, right,... (Associated Press)
FILE - In this Monday, April 11, 2011 file photo, U.S. envoy Chris Stevens speaks to local media at the Tibesty Hotel where an African Union delegation was meeting with opposition leaders in Benghazi,... (Associated Press)
Protesters destroy an American flag pulled down from the U.S. embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative Islamists, have climbed the walls of the... (Associated Press)
Egyptian protesters climb the walls of the U.S. embassy with Arabic graffiti that reads "any one but you God's prophet" during a protest in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters,... (Associated Press)
Protesters destroy an American flag pulled down from the U.S. embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative Islamists, have climbed the walls of the... (Associated Press)
Egyptian protesters climb the walls of the U.S. embassy with Arabic graffiti that reads "any one but you God's prophet" during protests in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely... (Associated Press)
Protesters destroy an American flag pulled down from the U.S. embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative Islamists, have climbed the walls of the... (Associated Press)
Egyptian protesters standing on the sidewall of the U.S. embassy move down an American flag pulled down from the embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative... (Associated Press)
Egyptian protesters chant anti U.S. slogans in front of the U.S. embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative Islamists, have climbed the walls of... (Associated Press)
Egyptian protesters wearing Guy Fawkes masks pose for a photo graffiti on a wall of the U.S. embassy during a protest in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative... (Associated Press)
Protesters chant slogans amid orange smoke outside the U.S. embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative Islamists, have climbed the walls of the U.S.... (Associated Press)
Protesters chant slogans amid orange smoke outside the U.S. embassy in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative Islamists, have climbed the walls of the U.S.... (Associated Press)
Egyptian protesters climb the walls of the U.S. embassy while others chant anti U.S. slogans during a protest in Cairo, Egypt, Tuesday, Sept. 11, 2012. Egyptian protesters, largely ultra conservative... (Associated Press)
FILE - In this Monday, April 11, 2011 file photo, U.S. envoy Chris Stevens stands in the lobby of the Tibesty Hotel where an African Union delegation was meeting with opposition leaders in Benghazi, Libya.... (Associated Press)
They said Ambassador Chris Stevens was killed Tuesday night when he and a group of embassy employees went to the consulate to try to evacuate staff as the building came under attack by a mob guns and rocket propelled grenades.
The three Libyan officials who confirmed the deaths were deputy interior minister for eastern Libya Wanis al-Sharaf; Benghazi security chief Abdel-Basit Haroun; and Benghazi city council and security official Ahmed Bousinia.
The State Department said Tuesday that one American was killed in the attack. It has not confirmed the other deaths.
The attack on the Benghazi consulate took place as hundreds of protesters in neighboring Egypt scaled the walls of the U.S. Embassy in Cairo and tore down and replaced the American flag with a black Islamic banner.
The attacks in Benghazi and Cairo were the first such assaults on U.S. diplomatic facilities in either country, at a time when both Libya and Egypt are struggling to overcome the turmoil following the ouster of their longtime authoritarian leaders, Moammar Gadhafi and Hosni Mubarak, in uprisings last year.
The protests in both countries were sparked by outrage over a film ridiculing Muhammad produced by an Israeli filmmaker living in California and being promoted by an extreme anti-Muslim Egyptian Christian campaigner in the United States. Excerpts from the film dubbed into Arabic were posted on YouTube.
Stevens, 52, was a career diplomat who spoke Arabic and French and had already served two tours in Libya, including running the office in Benghazi during the revolt against Gadhafi. He was confirmed as ambassador to Libya by the Senate earlier this year.
Before Tuesday, five U.S. ambassadors had been killed in the line of duty, the last being Adolph Dubs in Afghanistan in 1979, according to the State Department historian's office.
___
Michael reported from Cairo. Associated Press writer Matthew Lee in Washington contributed to this report. | The American ambassador to Libya, Chris Stevens, was killed last night in a mob attack on the US consulate in Benghazi. Facing protesters irate over a film that ridiculed the prophet Mohammed, Stevens had gone to the consulate with other employees to evacuate staff, reports the AP. High-ranking Libyan officials confirmed his death, along with the deaths of three other Americans. President Obama immediately denounced the "outrageous" attack, adds CNN, calling Stevens "a courageous and exemplary representative of the United States." Libya's deputy PM called Stevens a "friend of Libya." "I condemn these barbaric acts in the strongest possible terms," he tweeted. "This is an attack on America, Libya, and free people everywhere." The other three victims were reportedly security staff, according to an anonymous contractor on the scene, and the consulate suffered heavy damage at the hands of protesters wielding guns and rocket-propelled grenades. The US embassy in Algiers is warning Americans to avoid non-essential travel. Stevens, 52, had served two tours in Libya and had overseen the Benghazi facility through the fall of Moammar Gadhafi. He had been confirmed as ambassador earlier this year. The last US ambassador killed in the line of duty was Adolph Dubs in Afghanistan in 1979, notes the AP. |
RS21768 -- Satellite Television: Reauthorization of the Satellite Home Viewer Improvement Act (SHVIA) --Background and Key Issues Updated January 5, 2005 The three most common methods by which consumers receive television signals are broadcast, cable, and direct broadcast satellite (DBS). Broadcast television is free to consumers,who receive the signals via over-the-air (rooftop or "rabbit ear") antennas. Cable and DBS compete in theMultichannel Video Programming Distribution (MVPD) marketplace, whereproviders offer packages of video (and sometimes audio) programming for a monthly fee. According to the FederalCommunications Commission (FCC), there are 107 milliontelevision households in the United States. (1) Of those,88% subscribe to an MVPD service. Cable TV serves 75% of MVPD subscribers, while DBS serves 22%. Theremainder useother MVPD services that are described in the FCC report. Cable and satellite offer greater programming choices,and sometimes better signal quality, than broadcast television, but canbe costly. Congress has fostered competition in the MVPD marketplace, partially in an attempt to keep cable TVrates in check. Two major companies offer DBS services today:DirecTV (a subsidiary of News Corp.) and EchoStar, which markets its service as Dish TV. Another company,Rainbow DBS (a subsidiary of Cablevision) offers a comparatively smallnumber of satellite channels through a service called Voom. The Satellite Home Viewer Improvement Act. The 1999 Satellite Home Viewer Improvement Act (SHVIA) (2) extended andexpandedupon provisions of the 1988 Satellite Home Viewer Act (SHVA), as amended in 1994. In passing SHVA andSHVIA (as well as the 1984 and 1992 Cable Acts (3) ), Congress hasattempted to balance the interests of the broadcast, satellite, and cable industries, with the goal of ensuring that asmany households as possible have access to free local televisionprogramming, while expanding consumer choices in programming and service providers. SHVA, enacted in the early days of satellite television, allowed satellite companies to retransmit broadcast network and superstation programming only to households that could notreceive "viewable" signals via over-the-air antennas because they are too distant from the transmitters, or in areaswhere TV signals are blocked by buildings or terrain (formally called"unserved households"). The limitation was designed to protect the nationwide system of broadcast networkaffiliates, which depend on advertising revenue based on their number ofviewers. The goal is to preserve "localism," where consumers can watch local news, weather, andcommunity-oriented programs. The availability of local programming is largelydependent on network affiliates, which in turn are dependent on viewers. Under SHVA, satellite companies couldretransmit broadcast network programming only to unservedhouseholds, so the majority of viewers would watch their local affiliate. But the small percentage of consumers inunserved households could also receive network programs, eventhough they came from an "out-of-market" affiliate. These out-of market signals are called "distant networksignals." SHVA created a five-year "compulsory copyright license" (4) whereby satellite companies may retransmit distant network signals to unserved households withoutpermission from thecopyright owners, and the government sets the price the satellite companies pay as copyright royalties. The satellitecompanies pay the royalties to the Copyright Office of the Library ofCongress, which passes them on to the copyright owners. A similar compulsory copyright license was given tocable companies in 1976, although the cable license is permanent. Thesatellite distant network signal license is codified in �119 of the Copyright Act (Title 17 U.S.C.), and was renewedfor another five years in 1994. It was extended for a further five yearsin SHVIA, and is now set to expire on December 31, 2004. SHVIA also exempts satellite companies from therequirement to obtain retransmission consent from broadcasters torebroadcast distant network signals, and that provision expires on the same date. SHVIA significantly expanded upon SHVA by allowing satellite companies to retransmit local broadcast network programming back into the same market area where it originated --called "local-into-local" service. The law permits, but does not require, satellite companies to offer local-into-localservice. SHVIA created a royalty-free compulsory copyright licensefor local-into-local satellite signals that is codified in �122 of the Copyright Act, and is permanent, like the cablelicense. According to their websites, on November 30, 2004, EchoStaroffered local-into-local in 160 of the 210 Designated Market Areas (DMAs) (5) in the country, and DirecTV offered it in 130 DMAs. Under SHVIA, unservedhouseholds could receivedistant network signals even if local-into-local service is offered in their area. Local versus Distant Network Signals. The distinction between local and distant network signals is important for understandingSHVIA. A local signal is received within a broadcast network television affiliate's local market area. A distantnetwork signal is from elsewhere in the country. For example, if aconsumer lives in Denver and receives a signal from a Denver network affiliate, that is a local signal. If a consumerlives in West Virginia and receives a signal from that Denvernetwork affiliate via satellite, it is a distant network signal. Eligibility for Distant Network Signals -- "White Areas," and "Grade B" Signals. Determining which consumers are eligible toreceive distant network signals via satellite is complicated and is discussed is more detail in CRS Report RS20425 . Generally, only consumers living in unserved households -- wherebroadcast television reception is extremely poor or non-existent -- may receive distant network signals via satellite. Unserved households, colloquially known as "white areas," aredefined based on the FCC's "Grade B" signal intensity standard. Congress mandated in SHVA that the Grade Bstandard be used for this purpose, and, in SHVIA, directed the FCC toreview whether the Grade B standard still should be used. In 2000, the FCC concluded that it should. (6) Computer models are used to mathematically predictwhich households canreceive at least a Grade B signal; if they cannot, they are unserved for purposes of SHVIA. In 1999, the FCCadopted an improved model, called the Individual Location Longely-Rice(ILLR), to predict signal intensity at specific households, instead of in a general area. Some satellite companies transmitted distant network signals to consumers who were not eligible to receive them, leading to court challenges by the networks to try to force the satellitecompanies to obey the law. One landmark case was a 1998 ruling by a Miami judge [ CBS Broadcasting v. Primetime 24 Joint Venture, 48 F. Supp.2d 1342 (S.D.Fla. 1998)]under which over 2 million consumers reportedly had, or were scheduled to have, distant network signals terminatedby their satellite companies. That action was pending whenCongress debated SHVIA. Congress "grandfathered" those consumers who were receiving distant network signalsillegally if they could not receive a Grade A signal. For newsubscribers, the original rules apply. Exceptions were made for recreational vehicles, commercial trucks, andconsumers using "C-band" satellite dishes. (7) Insummary, under SHVIA,the following consumers could receive distant network signals until December 31, 2004: if they do not receive a signal of Grade B intensity from the local affiliate of a particular network; if their satellite dish is installed on an RV or commercial truck, or if they had been receiving distant network signals illegally and those signals were terminated orscheduled to be terminated under the 1998 Miami court ruling, and they do not receive a signal of Grade A intensity from the local affiliate of the network ("grandfatheredsubscribers"). Consumers using C-band dishes are not subject to the five-year limitation. They may receive distant network signals they were receiving before October 31, 1999 indefinitely.Consumers who believe they cannot receive a Grade B signal, despite predictive models showing that they can, mayrequest a waiver (see CRS Report RS20425 for more information onthe waiver process). The issue of who may receive distant network signals via satellite remains controversial even with the advent of local-into-local service. First, distant network signals primarily serveconsumers in the most rural parts of the country who also are likely to be in the DMAs that do not yet receivelocal-into-local service from the DBS providers. Second, some consumerswant distant network signals not because of reception problems with their own local signals, but because they wantgreater programming choices, or to watch network programmingairing at different times in the various U.S. time zones. On November 20, 2004, Congress passed the Satellite Home Viewer Extension and Reauthorization Act (SHVERA), also known as the William J. "Billy" Tauzin Satellite TelevisionAct, as Title IX, Division J, of the FY2005 Consolidated Appropriations Act ( H.R. 4818 , P.L. 108-447 ). Thatfinal version was a compromise between H.R. 4518 , which passed the House on October 6, 2004, and legislation that was pending in the Senate. H.R. 4518 (L. Smith) had been reported from the House JudiciaryCommittee ( H.Rept. 108-660 ) on September 7, 2004. As passed, it incorporated many of the provisions of H.R. 4501 (Upton), which was reported from the House Energyand Commerce Committee on July 22 ( H.Rept. 108-634 ). In the Senate, S. 2013 (Hatch) was reported,amended, from Senate Judiciary (no written report) on June 17, and S. 2644 (Ensign/McCain) was reported, amended, from the Senate Commerce Committee ( S.Rept. 108-427 )on December 7. Neither bill reached the Senate floor. Extension of Compulsory Copyright License. The compulsory copyright license was the chief impetus behind consideration ofSHVERA because it was due to expire on December 31, 2004. (8) Certain satellite subscribers (see bulleted list above) would lose access to distant network signalsif the license was notextended. Copyright owners, often represented by the Motion Picture Association of America (MPAA), object tothe compulsory licenses. They argue that the cable and satellitecompanies should be required to negotiate copyright royalties like everyone else. Prices for the cable and satellitecompulsory licenses are set by different methods and on differentcycles. Prices for the satellite license had last been set in 1997. As required by law, the Copyright Office, througha Copyright Arbitration Royalty Panel (CARP), set a price based on"fair market value": 27 cents per subscriber per year for both distant network and superstation signals. The satellitecompanies objected because the prices were a significant increase,and much higher than what cable companies pay (see CRS Report 98-140(pdf) ). In SHVIA, Congress rolled the ratesback by 45% for distant network signals, and 30% for superstationsignals. The MPAA argued that if the distant network signal license was extended, the royalty rates should be substantially increased and adjusted annually. The Copyright Office wanted paritybetween the cable and satellite licenses and recommended that the satellite distant network signal license be renewedfor five more years while both licenses were reexamined. TheSatellite Broadcasting and Communications Association (SBCA), representing the DBS companies, wanted thedistant network signal license made permanent. The NationalAssociation of Broadcasters (NAB) wanted the distant network signal license extended only for five years, andlimited to areas where local-into-local is not available. The final versionof SHVERA extended the license for another five years, and allowed the parties to reach a voluntary agreement onthe royalty rate. If they cannot reach agreement, the rate is to be set bya CARP process. SHVERA also requires most subscribers to choose between local-into-local service or distantnetwork signals if local-into-local is available in their area. Generally,existing subscribers who are currently receiving distant network signals because they live in white areas (not thosewho were grandfathered in SHVIA) may continue to receive bothdistant and local-into-local signals. Other existing subscribers must choose one or the other. New subscribers maynot receive distant network signals once local-into-local is availablein their area. "Digital White Areas". To date, white areas (or unserved households) have been defined based on the transmission of analogtelevision signals. The broadcast television industry, however, is transitioning from analog to digital signals, andeventually will cease transmitting analog signals (see CRS Report RL31260 ). SBCA and the Digital Transition Coalition (DTC) want "digital white areas" to be defined, similar tothe existing analog white areas, where satellite companies would beallowed to provide distant digital network signals to subscribers unable to receive local network digital signalsterrestrially. SBCA and the DTC argue that allowing satellite TVcompanies to provide digital distant network signals to unserved households would spur the broadcasters to convertto digital more quickly. The NAB called SBCA's proposal "a recipefor mischief," disputing the assessment that broadcasters are moving slowly on digital TV. The final version ofSHVERA contains complex wording about digital white areas, and bothsides declared victory. The details are explained in CRS Report RS21990(pdf) . Essentially, subscribers who areunserved for purposes of analog TV signals, and meet certain conditionsregarding the availability of analog or digital local-into-local service, will also be considered unserved for purposesof digital TV signals and receive distant digital signals. Othersatellite TV subscribers may receive distant digital signals only under very narrow circumstances that appear tominimize the number of eligible households. Local-into-Local Issues: More Consumer Choices (Including "Significantly Viewed" Stations), and EchoStar's "Two-Dish" Policy. As discussed earlier, local-into-local allows satellite companies to retransmit a local station's signal back into theDMA from which it originated. The use of DMAs to define the areasinto which a particular signal can be retransmitted is mandated by SHVIA. However, DMAs often cross stateborders, so a consumer in one state may receive programming from anotherstate when subscribing to local-into-local service. Also, consumers within a state that might have only one networkTV station may not be eligible to receive that station's signalbecause, based on DMA boundaries, it is a distant network signal that the consumer is ineligible to receive (becausethe consumer can receive a Grade B signal from a station in aneighboring state). SHVERA permits additional stations to be retransmitted to subscribers in certain states becauseof such factors. Subscribers in New Hampshire are allowed toreceive via satellite signals from the one network station licensed in that state. Subscribers in Vermont are allowedto receive the signals of any network station licensed in that state. Subscribers in four Oregon counties (Umatilla, Grant, Malheur, and Wallowa) that are in DMAs principallycomposed of counties in a neighboring state are allowed to receive a signalfrom any network station licensed in Oregon. Subscribers in two adjacent Mississippi counties (Wilkinson andAmite) that are in a DMA composed primarily of counties in another stateare allowed to receive any network station from the state capital (Jackson). SHVERA also allows satellitecompanies to retransmit out-of-market " significantly viewed " stations. Asexplained in CRS Report RL32641 (p. 11), to be "significantly viewed," stations must meet threshold viewershiplevels based on the number of over-the-air viewers. For networkstations, a market share of at least 3% of total weekly viewing hours and a net weekly circulation of 25%; forindependent stations, 2% of total weekly viewing hours and a net weeklycirculation of 5%. Another issue was EchoStar's policy that, in some areas, consumers must obtain a second satellite dish to receive all their local programs. That is because EchoStar uses satellites indifferent orbital locations to transmit the programming and separate antennas are needed to point toward thedifferent satellites. The NAB and others complained that the practice isdiscriminatory because the channels for which the second dish is needed are primarily religious or foreign languagestations. EchoStar responded that there is no cost for the second dish,the channels all appear on the TV program guide, and no special steps must be taken by the consumer to access thoseprograms once the second dish is installed. Nonetheless, SHVERArequires satellite companies to offer all local channels on a single dish within 18 months of the law's enactment(except that digital TV service signals and non-digital TV service signalsmay be on separate dishes). | In November 2004, Congress passed the Satellite Home Viewer Extension andReauthorization Act (SHVERA) as part of the FY2005Consolidated Appropriations Act (H.R. 4818, P.L. 108-447). SHVERA extends and expands upon provisionsin the 1999 Satellite Home Viewer Improvement Act(SHVIA) that regulate the satellite television (TV) industry. Among the more controversial provisions wereextension of a copyright law provision that allows TV companies to provide"distant network signals" to subscribers who cannot receive broadcast network television signals via over-the-airtelevision antennas, the creation of analogous "digital white areas" asthe TV industry transitions to digital signals, and whether to require satellite companies to offer all local networkTV stations on a single dish. CRS Report RS21990(pdf) explainsSHVERA's digital white area provisions in more detail. This is the final edition of this report. |
The five major Army inventory control points manage secondary items and repair parts valued at $17 billion. These items are used to support Army track and wheeled vehicles, aircraft, missiles, and communication and electronic systems. The process for identifying the items and the quantity to stock begins with developing the budget request—the key to effective inventory management. If too few or the wrong items are available to support the forces, then readiness suffers and the forces may not be able to perform their assigned military missions. On the other hand, if too many items are acquired, then limited resources are wasted and unnecessary costs are incurred to manage and maintain the items. The Army uses different processes for determining its spare and repair parts budget requests and for determining which parts to buy or repair. The process for determining spare and repair parts budget requests is based on data from the budget stratification reports, which show the dollar value of requirements and inventory available to meet the requirements. When an item’s available inventory is not sufficient to meet the requirements, it is considered to be in a deficit position. The aggregate value of items in a deficit position then becomes the Army’s basis for determining its spare and repair parts needs. As these needs are formulated into a budget request, the end result (budget request) is normally less than the aggregate value of items in a deficit position. This makes it even more important that the true needs be based on accurate data. Otherwise, funds may be allocated to procuring spare and repair parts that should be spent on other priority needs. Using accurate data in the requirements determination process avoids such misallocation of funds. We have previously issued reports pointing out data inaccuracy problems in the Army’s requirements determination process and the effect of these inaccuracies on inventory decisions. See appendix IV. The process for determining which items to buy or repair is based on information in the item’s supply control study, which is automatically prepared when an item reaches a point when insufficient assets are available or due in to meet requirements. When a study is prepared, the item manager validates the requirements and asset information in the study. Based on the results of the validated data, the item manager will decide whether to buy, repair, or not buy the quantity recommended by the study. As of September 30, 1994, we reviewed 258 items from a universe of 8,526 items with a deficit inventory position. The selected items represented 3 percent of the items in a deficit position but accounted for $519 million, or 69 percent, of the $750 million deficit inventory value. We found that 94 of the 258 items, with a reported deficit inventory value of $211 million, had data errors that affected the items’ requirements or inventory available to satisfy the requirements. Table 1 shows the results of our review for the Army’s inventory control points. Overstated requirements and understated inventory levels were the major reasons items were erroneously reported in a deficit position. In addition, some items were incorrectly included in the process for determining funding requirements. If the items’ inventory position had been correctly reported, the true deficit value for the 94 items would have been about $23 million rather than $211 million. Table 2 shows the major reasons why items were incorrectly classified as deficit. When insufficient inventory is on hand and due in to meet an item’s requirements, the budget stratification process will report the item as being deficit. If the item’s deficit position is caused by overstated requirements, this means that resources could be wasted buying unneeded items. As shown in table 2, overstated requirements caused 53 items to be erroneously reported as being in a deficit position. The overstated requirements resulted from inaccurate demand data, inaccurate leadtime data, and lower-than-expected requirements. Table 3 shows the number of instances where these reasons caused the items’ requirements to be overstated. The following examples illustrate the types of inaccurate data that caused overstated requirements: The item manager for an aircraft floor item used on the CH-47 Chinook helicopter said that the database still included demands from Operations Desert Shield and Desert Storm. Including these demands in the requirements determination caused the budget stratification process to erroneously classify the item as having a deficit inventory position of about $500,000. If the outdated demands had been purged from the system, the item would not have been in a deficit position. According to the item manager for the front lens assembly item used on the AN/PVS-7B Night Vision Goggles, the item requirements shown in the budget stratification report did not materialize. She said that the report showed the item as having a deficit inventory position of $2.4 million. However, when it came time to procure the item, the project leader reduced the planned procurement quantity because the field units indicated they did not like the item. The item’s actual deficit position should have been only $18,000. According to the item manager, an angle drive unit used on the M2/M3, M2A1/M3A1 Bradley Fighting Vehicle system had an inflated safety level requirement in the budget stratification report. The report showed a safety level of 6,887 units instead of the correct safety level of 355. As a result, a deficit inventory position of $6.6 million was reported. When a prime stock number has authorized substitute items, the requirements and inventory for the prime and substitute items are supposed to be added and shown as one requirement and one inventory level under the prime number. This did not happen. The requirements for both types of items were shown as one requirement but the inventory was not. As a result, the inventory to meet the overall requirement was understated, and the item was placed in a deficit position. For example, according to the item manager for a night window assembly used on the TOW subsystem for the M2/M3 Bradley Fighting Vehicle, the budget stratification report showed a deficit supply position of $800,000 for the item. This occurred because inventory belonging to a substitute item was not counted toward the prime item’s requirements. The item manager said the true deficit for the assembly was $65,000. There were also requirements problems for items being repaired at maintenance facilities. The requirements system did not accurately track stock in transit between overhaul facilities and the depots. According to item managers at several inventory control points, they had problems either tracking the physical movement of inventory between the depots and repair facilities, or ensuring that all records were processed so the database accurately accounted all applicable assets. These problems could cause items to be erroneously reported as being in a deficit position. Table 4 shows how often these reasons resulted in understated inventory levels. Our review of selected items identified nine items that should have been excluded from the budget stratification process. By including these items, the budget stratification process identified funding needs for the items when, in fact, the funds to procure the items were being provided by another service, a foreign country under a foreign military sales agreement, or another appropriation. Table 5 shows the number of items that were incorrectly included in the budget stratification process. The following examples illustrate the effect of including “excluded” items in the budget stratification process: According to the item manager for a fire control electronic unit used on the M1A2 main battle tank, the Army issued a contract in August 1993 to procure items to meet the Army’s requirements as well as foreign military sales. Because the Army is reimbursed for foreign military sale items, these items should have been excluded from the budget stratification process. However, the items were included in the stratification process and were reported as having a deficit inventory position of $2.3 million. The inventory control point procured a gas-particulate filter unit used in producing modular collective protective equipment. According to the item manager, procurement appropriation funds, provided by the program manager’s office, were used to buy the items. Because the stratification process is only supposed to deal with items procured by the Defense Business Operating Fund, the item should not have been included in the stratification process and a deficit inventory position of about $800,000 should not have been reported. According to the item manager, the Air Force manages and makes all procurements for a panel clock item. The Army’s budget stratification report showed this item had a deficit inventory position of $700,000. However, because the Air Force managed this item, the panel clock should not have been coded as an Army secondary item for inclusion in the budget stratification report. The item manager for an electronic component item said that the item should have been coded as an inventory control point asset rather than a project manager’s office asset. Because project manager items are not available for general issue, these items were not counted against the item’s requirements in the budget stratification report. If these items had been properly coded, the item would not have been reported as having a $700,000-deficit inventory position. According to the item manager, an electronic component item should have been coded as a major end item rather than a secondary item and not included in the budget stratification process. The item was reported as having a deficit inventory position of $500,000. The Army is aware of many of the processing, policy, and data problems affecting the accuracy of the requirements data. Furthermore, the Army has identified 32 change requests to correct problems with the requirements determination and supply management system. According to Army officials, the cost to implement the 32 change requests would be about $660,000, and in their opinion, the benefits would greatly outweigh the added costs. The officials said these changes would correct many of the problems, including some of the ones we identified during our review. Nevertheless, not all of the requests have been approved for funding because the Department of Defense is developing a standard requirements system as part of its Corporate Information Management initiative and does not want to spend resources to upgrade existing systems. As a result, it has limited the changes that the services can make to their existing systems. Army officials said that the standard system is not expected to be implemented for at least 4 years. Furthermore, major parts of the existing system will probably be integrated into the standard system. Therefore, unless the data problems are corrected, they will be integrated into the standard system and the Army will still not have reliable data. Army officials also cited examples where processing change requests are needed to correct other data problems in the requirements determination system. For example, the depots do not always confirm material release orders/disposal release orders received from the inventory control points. As a result, the inventory control points do not know if the depots actually received the orders. They identified numerous instances where the depots put the release orders in suspense because of higher priority workloads. This resulted in the release orders not being processed in a timely manner, processed out of sequence, or lost and not processed at all. Because the inventory control points could not adequately track the release orders, they could have reissued the release orders. The reissuance could have caused duplicate issues or disposals, imbalances in the records between the inventory control points and the depots, and poor supply response to the requesting Army units. A system change request was initiated in November 1994 to address this problem, but the request has not yet received funding approval. Although Army officials could not provide a cost estimate to implement the change request, it could save about $1 million in reduced workload for the inventory control points and depots. According to Army officials, one programming application in the requirements determination system uses reverse logic to calculate the supply positions of serviceable and unserviceable assets. It compares the supply position of all serviceable assets to the funded approved acquisition objective (current operating and war reserve requirements). However, for the same item, the program compares the supply position of all unserviceable assets to the total of the current operating and war reserve requirements, the economic retention quantity, and contingency quantity. The effect of this is that serviceable inventory can be sent to disposal while unserviceable inventory is being returned to the depots. According to Aviation and Troop Command records, the Command disposed of $43.5 million of serviceable assets at the same time that $8.5 million of unserviceable assets, of the same kind, were returned to the depots between March and September 1994. By September 1995, the Command had disposed of $62 million of serviceable assets. Command officials said that a system change request was initiated in November 1994 to correct the programming logic problem. However, the request did not receive funding approval because it violated Department of Army policy, even though the estimated cost to implement the change request would be less than $20,000. Although this change will not reduce the reported deficit quantities, it will allow the commands to keep more serviceable items in lieu of unserviceables, and it will reduce overhaul costs. Furthermore, according to Command records, this policy is causing the disposal of high-dollar, force modernization items that could result in re-procurement and adversely affect stock availability to field units. We recommend that the Secretary of Defense direct the Secretary of the Army to proceed with the pending system change requests to correct the data problems. Doing so could correct many of the problems identified in our report. Furthermore, the corrective actions would improve the overall reliability and usability of information for determining spare and repair parts requirements. The Department of Defense agreed with the report findings and partially agreed with the recommendation. It said that instead of the Secretary of Defense directing the Army to proceed with the system change request, the Army will be requested to present a request for funding for the system changes to the Corporate Configuration Control Board at the Joint Logistics Systems Center. The Board, as part of the Corporate Information Management initiative, was established to consider and resolve funding matters related to changes to existing systems. In our opinion, the action proposed by the Department of Defense achieves the intent of our recommendation, which was for the Army to seek funds to correct the data problems in its requirements determination system. Defense’s comments are presented in their entirety in appendix II. We are sending copies of this report to the Secretary of the Army; the Director, Office of Management and Budget; and the Chairmen, House Committee on Government Reform and Oversight, Senate Committee on Governmental Affairs, the House and Senate Committees on Appropriations, House Committee on National Security, and Senate Committee on Armed Services. Please contact me on (202) 512-5140 if you have any questions concerning this report. Major contributors to this report are listed in appendix III. We held discussions with responsible officials and reviewed Army regulations to determine the process used by the Army to identify its spare and repair parts needs for its budget development process. We focused on the process used to identify items in a deficit position. As part of these discussions, we also studied the budget stratification process, which is the major database input used in the budget development process. To identify the items in a deficit position, we obtained the September 30, 1994, budget stratification data tapes for the five Army inventory control points: Army Munitions and Chemical Command, Aviation and Troop Command, Communications-Electronics Command, Missile Command, and Tank-Automotive Command. From the total universe of 8,526 secondary items with a deficit inventory position valued at $750 million, we selected all items that had a deficit position of $500,000 or more. This resulted in a sample of 258 items with a total inventory deficit position of $519 million, or 69 percent of the total deficit. For each of the 258 selected items, we obtained information from the responsible item manager to determine whether the item was actually in a deficit position as of September 30, 1994. For those items that the budget stratification process had erroneously placed in a deficit position, we determined the reason for its misclassification. We obtained this information by reviewing item manager files and discussing the items with responsible item management personnel. We categorized the reasons for the erroneous classifications to determine frequency distribution for each type of reason. We then determined through discussions with item management officials and review of system change requests what actions were taken or planned to correct the identified problems. We performed our review from October 1994 to July 1995 in accordance with generally accepted government auditing standards. Army Inventory: Growth in Inventories That Exceed Requirements (GAO/NSIAD-90-68, Mar. 22, 1990). Defense Inventory: Shortcomings in Requirements Determination Processes (GAO/NSIAD-91-176, May 10, 1991). Army Inventory: Need to Improve Process for Establishing Economic Retention Requirements (GAO/NSIAD-92-84, Feb. 27, 1992). Army Inventory: More Effective Review of Proposed Inventory Buys Could Reduce Unneeded Procurement (GAO/NSIAD-94-130, June 2, 1994). Defense Inventory: Shortages Are Recurring, But Not a Problem (GAO/NSIAD-95-137, Aug. 7, 1995). The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO reviewed the: (1) accuracy of the databases used to determine Army spare and repair parts requirements and inventory levels for Defense Business Operations Fund budget requests; and (2) actions taken to correct data problems that could affect the reliability of these budget estimates. GAO found that: (1) the Army's 1994 budget report contained numerous inventory data inaccuracies which led to erroneous reports of deficit inventory positions for several items; (2) overstated requirements and understated inventory levels were the major cause of most of the false deficit position reports; (3) the actual deficit position value for 94 items was about ten-fold less than what was reported; (4) some items should have been excluded from the budget stratification process; (5) although the Army is aware of many requirements data problems and has identified several change requests to correct these problems, the Army has not been able to correct these problems because the Department of Defense (DOD) is developing a standard requirements determination system for all the services and has limited how much the services can spend to change their existing systems; (6) the new DOD standard system will not be implemented for 4 years and most of its existing data will be integrated into that system; and (7) the Army cannot ensure that its budget requests represent its actual funding needs for spare and repair parts, that the new system will receive accurate data when it is implemented, or that expensive usable items will not be discarded and reprocured. |
Pursuant to the Clayton Act and the Federal Trade Commission Act (FTC Act), Congress charged the Department of Justice (DOJ) and the Federal Trade Commission (FTC) with reviewing whether proposed mergers comport with federal antitrust laws and preventing anticompetitive mergers. This report discusses statutes governing federal pre-merger review, along with DOJ and FTC guidelines for assessing whether a proposed merger complies with statutory requirements. This report also discusses the DOJ's and FTC's processes for challenging a merger prior to its consummation. While other federal laws, including the Sherman Act, seek to deter anticompetitive harms caused by monopolization and agreements to restrain trade, two federal statutes, the Clayton and the FTC Acts, relate particularly to proposed mergers. Section 7 of the Clayton Act applies to mergers "in any line of commerce" when their effect "may be substantially to lessen competition, or to tend to create a monopoly" unless the merger is statutorily exempt. Section 5 of the FTC Act prohibits unfair methods of competition and includes any activity that violates Section 7 of the Clayton Act. The FTC generally applies standards similar to DOJ's when assessing transactions under Section 7 of the Clayton Act pursuant to Section 5 of the FTC Act. By prohibiting mergers that negatively affect competition, the Clayton and FTC Acts aim to preserv e rather than enhance competition and to protect overall market competition rather than individual competitors. Accordingly, mergers may injure market competitors but not violate antitrust laws. Moreover, because Section 7 of the Clayton Act and Section 5 of the FTC Act aim to prevent anticompetitive harms from occurring, they look to the likelihood of future harm. To violate these statutes, therefore, the transaction must be likely, rather than certain, to have an anticompetitive effect. The Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) requires businesses exceeding certain sizes to report proposed mergers and other transactions valued above specified thresholds to the DOJ and FTC so that the agencies may examine whether those transactions comply with federal antitrust laws. Businesses may only complete the proposed merger once the statutory waiting period has expired (typically 30 days after filing the report, but 15 days in the case of a cash tender offer, or such other time if the agency shortens or extends the waiting period). If the agency determines that the merger would be likely to lessen competition substantially, the agency may either negotiate with the transacting parties to address its concerns or act to block the merger. As part of the notice filed under the HSR Act, the transacting parties must provide certain non-public information to the agencies, including (1) information about themselves, including their balance sheets; (2) information related to the proposed transaction's planning and execution; and (3) information regarding the product, service, and geographic markets in which they operate. Information submitted during the process is exempt from the Freedom of Information Act and the agency cannot make it public except in the course of an administrative or judicial proceeding. Upon reviewing the pre-merger notification, the DOJ or FTC seeks clearance from the other agency to investigate the transaction. When both agencies request clearance, the agency with the most expertise in reviewing transactions in the relevant markets generally conducts the investigation subject to jurisdictional limitations. The agency selected to investigate the proposed merger reviews information provided by the transacting parties and other market participants. Prior to the expiration of the 30-day waiting period, the reviewing agency decides whether (1) to issue a second request for more information or (2) to allow the transaction to complete, either by terminating the waiting period early or by letting the waiting period expire without taking further action. If the parties voluntarily withdraw their filing and subsequently refile, the required waiting period restarts. If, during the initial waiting period, the reviewing agency needs additional information to assess whether the prospective merger complies with antitrust laws, the agency may require the transacting parties to provide further information and documents (commonly referred to as the "Second Request"). The reviewing agency may also gather evidence from entities that are not transacting parties. For example, the agency may interview, either informally or under oath, customers and other market participants or seek information from industry observers and academics. Once the parties have substantially complied with the Second Request, the reviewing agency has 30 days (or 10 days, in the case of a cash tender offer) to review the information and decide how to proceed. If parties fail to comply substantially with the Second Request, the reviewing agency may request a federal district court to order compliance and to extend the waiting period during the time it takes to reach substantial compliance. If the waiting period expires, the parties may complete the transaction. Depending upon the merger's complexity, a significant amount of time might pass between the reviewing agency's issuance of a Second Request and a final decision. A summary of the clearance process is depicted in Figure 1 . The FTC and DOJ employ shared guidelines to assess whether a proposed merger is permissible under the FTC and Clayton Acts. These standards apply to various types of transactions, including mergers between competing entities or potentially competing entities in a relevant market (horizontal mergers) and mergers between non-competing entities that operate within related industries (vertical mergers). Because horizontal and vertical mergers raise somewhat different competitive concerns, they are discussed separately below. The FTC and DOJ use the Horizontal Merger Guidelines ("Guidelines") when reviewing whether a proposed merger between competitors raises anticompetitive concerns under the Clayton and FTC Acts. The Guidelines adopt "a fact-specific process through which the [FTC or DOJ], guided by their extensive experience, apply a range of analytical tools to the reasonably available and reliable evidence to evaluate competitive concerns in a limited period of time." The Guidelines primarily examine whether a proposed merger would unduly enhance the transacting parties' "market power," which is a firm's ability, without causing economic harm to itself, to raise prices, reduce output, reduce innovation, or otherwise harm consumers. The agencies view a proposed merger's probable enhancement of market power as increasing the likelihood that the merger will substantially lessen competition. To identify lines of commerce and geographic areas that the merger may affect and gauge its impact on the transacting parties' market power, a reviewing agency, assessing a horizontal merger under the Clayton or FTC Act, first defines the relevant product and geographic markets. A "product market" consists of "all products 'reasonably interchangeable by consumers for the same purposes.'" To identify product markets that the merger would affect, the reviewing agency generally employs the "Hypothetical Monopolist Test," which examines whether consumers in the market would be able to switch from one product to a close substitute in response to a small but significant price increase or benefit reduction. If consumers could switch products, the agency next considers whether they could do so in sufficient numbers to render any price increase or benefit reduction unprofitable to the responsible party. If a sufficient number of consumers would likely switch from one product to another, the agency might find those products to belong to the same product market. The DOJ's 2016 suit to block Deere and Company's ("John Deere") acquisition of Monsanto, Co.'s Precision Planting ("Precision Planting") subsidiary illustrates how a reviewing agency defines a product market. In this suit, the DOJ defined the relevant product market as high-speed precision planting systems that were factory-installed on new planters or retrofitted on existing planters. The DOJ argued that other types of planting systems were not "effective substitutes" for high-speed systems, making it unlikely that high-speed planting systems users would switch to those alternatives, even if prices for high-speed systems rose significantly. In another recent case, the DOJ sued to block the proposed merger of Aetna, Inc. and Humana, Inc.—two large health insurance companies that offer Medicare Advantage plans, which provide benefits akin to traditional Medicare benefits along with other benefits. The DOJ concluded that the proposed Aetna-Humana merger would affect the market for Medicare Advantage policies. The DOJ found, however, that traditional Medicare was not part of the relevant market because the DOJ believed that, given a small but significant Medicare Advantage plan price increase or benefit reduction, seniors enrolled in those plans would be unlikely to switch to traditional Medicare in sufficient numbers. The district court agreed, finding that Medicare Advantage policies, but not traditional Medicare, constituted the relevant market. With respect to the relevant geographic markets, the Supreme Court has stated: "Congress prescribed a pragmatic, factual approach to the definition of the relevant market and not a formal legalistic one. The geographic area selected must, therefore, both correspond to the commercial realities of the industry and be economically significant." Depending on the products and services at issue, a reviewing agency could identify the geographic market as the entire United States or a smaller region. For instance, when DOJ reviewed John Deere's proposed acquisition of Precision Planting, the agency found the sale of high-speed precision planting systems to be a national market. For the Aetna-Humana merger, DOJ defined the relevant geographic markets as "hundreds of counties across the United States" where Aetna and Humana compete to enroll seniors in Medicare Advantage plans. After defining the relevant market, the reviewing agency identifies the market participants, their market shares, and the level of market concentration. A reviewing agency typically begins a market-power assessment by comparing existing market concentration with the likely concentration following the merger. To measure market concentration, reviewing agencies typically employ the Herfindahl–Hirschman Index (HHI), which is calculated by "summing the squares of individual firms' market shares." Some U.S. courts also rely on HHI calculations to assess whether a transaction would create market power. Under the Merger Guidelines, the DOJ and FTC presumptively deem transactions that increase a market's HHI by 200 or more points and result in the HHI being above 2500 (a highly concentrated market) to lessen competition substantially. However, "[t]he presumption may be rebutted by persuasive evidence" that the transaction likely would not have anticompetitive consequences. In addition to considering market concentration impacts, the FTC and DOJ might consider the market impacts of other factors in the transaction as discussed below. Because mergers reduce the number of market participants, a merged entity, facing less competition, might be more likely to engage in behavior harmful to consumers, such as raising prices. If consumers treat the transacting parties' products as substitutes, a reviewing agency might be concerned that the merged entity could behave anti-competitively. To illustrate, when the DOJ sued to block Anthem, Inc., from acquiring competing health insurance provider, Cigna, Corp, the DOJ argued that the companies competed head-to-head to sell insurance to employers with more than 5,000 employees in the national market and in fourteen state markets, and were often finalists in competitive bidding. The DOJ further contended that the merger, by eliminating competition between the two companies, would encourage the merged entity to raise prices unilaterally above otherwise competitive levels. The reviewing agency might also consider whether, in markets with largely homogenous products, a merged entity would have incentives either to suppress its output by slowing production or to reduce its production capacity in order to elevate prices. For example, a merged entity might reduce the excess capacity of one of its components, which pre-merger had been constraining a rise in market prices. The merger might also provide the merged entity with a larger sales base, increasing the benefits of a price hike caused by reducing output. The Merger Guidelines provide an illustrative example of how a merged entity might reduce product output and thereby increase prices for consumers: Firms A and B both produce an industrial commodity and propose to merge. The demand for this commodity is insensitive to price. Firm A is the market leader. Firm B produces substantial output, but its operating margins are low because it operates high-cost plants. The other suppliers are operating very near capacity. The merged firm has an incentive to reduce output at the high-cost plants, perhaps shutting down some of that capacity, thus driving up the price it receives on the remainder of its output. The merger harms customers, notwithstanding that the merged firm shifts some output from high-cost plants to low-cost plants. A reviewing agency may also consider a merger's potential effects on innovation. It may find that "combining two of a very small number of firms with the strongest capabilities to successfully innovate in a specific direction" hinders innovation in the market. For example, when the DOJ reviewed Dow Chemical's ("Dow") proposed merger with E. I. du Pont de Nemours and Company ("DuPont"), it observed that Dow and DuPont competed head-to-head in producing and selling certain herbicides and that DuPont had recently introduced a new herbicide that competed directly with one marketed by Dow. The agency found that competition between the two companies had "spurred research, development and marketing of new and improved" products and that the merger would eliminate such competition. Ultimately, DuPont agreed to divest its market-leading herbicide to address the DOJ's competition concerns. In another example, the DOJ cited potential negative impacts on innovation when it opposed AT&T, Inc.'s ("AT&T") proposed acquisition of T-Mobile US ("T-Mobile"). Because T-Mobile competed with AT&T in innovation, the DOJ cited T-Mobile's potential loss as a primary reason for seeking an injunction. A reviewing agency may also examine whether a merger would unacceptably magnify market participants' opportunities for coordinated interaction, which is "conduct by multiple firms that is profitable for each of them only as a result of the accommodating reactions of others." One example of coordinated interaction is parallel action, which is when one market participant raises prices (or makes some other change), and other market participants take the same action in lockstep. In considering the risk of coordinated interaction, the FTC and DOJ generally take the view that the fewer participants in a given market, the more likely they are to engage in parallel action following a merger. For example, when the DOJ challenged AT&T's proposed acquisition of T-Mobile, the agency identified the potential for coordinated interaction as a reason to block the transaction. The DOJ claimed that, if AT&T acquired T-Mobile, the number of nationally competitive wireless service providers would decrease from four to three. The DOJ contended that T-Mobile's strategy of positioning its service as a lower-priced alternative to services offered by AT&T and other major service providers constrained AT&T and the other providers from increasing their prices. The DOJ asserted that eliminating T-Mobile as a competitor might lead the remaining competitors to coordinate, resulting in higher prices nationwide for wireless services. Similarly, the FTC was concerned that H.J. Heinz, Co.'s proposed merger with Beech-Nut Nutrition Corp. might lead the remaining major baby food producers to coordinate their behavior and raise prices above competitive levels. In assessing a proposed merger's anticompetitive effect, the reviewing agency may also consider factors that support the transaction. The ability of other competitors to enter the market indicates the degree to which the merged entity could constrain behavior and pricing within that market. Easy market entry suggests that a proposed merger is less likely to reduce market competition, while significant barriers to entry, such as the need to engage in lengthy research and development or obtain regulatory approvals, suggests that a proposed merger would be more likely to reduce market competition. Additionally, the DOJ and FTC recognize that "a primary benefit of mergers to the economy is their potential to generate significant efficiencies and thus enhance the merged firm's ability and incentive to compete[.]" Greater efficiency could provide benefits such as cost-reduction or increased services, potentially offsetting anticompetitive concerns raised by the merger provided, however, that "[t]he greater the potential adverse competitive effect of a merger, the greater must be the cognizable efficiencies, and the more they must be passed through to customers[.]" To support a proposed merger, the potential market efficiencies must be unlikely to be accomplished by a means other than the merger. They must also be reasonably verifiable and cannot "arise from anticompetitive reductions in output or service." The reviewing agency might also consider, among other things, whether one of the parties to a proposed merger has failed or is failing (i.e., whether it would soon exit the relevant markets as a competitor even if it did not merge with a competitor). The DOJ and FTC also may examine a proposed merger's impact on product and geographic markets in which the transacting parties do not compete, if the transaction may nonetheless have a negative effect on competition in those markets. This situation generally arises when a merger would lead to one business entity controlling two or more stages of production and distribution normally done by separate entities—a situation known as vertical integration or a "vertical merger." In part because these transactions do not affect competition between actual or potential competitors and they can create competition-enhancing efficiencies, the agencies tend to view vertical transactions as less likely to be anticompetitive than horizontal transactions. The Horizontal Merger Guidelines, most recently amended in 2010, do not provide guidance on vertical mergers. The 1984 Guidelines were the last version to address vertical mergers directly. Those guidelines took the view that vertical mergers generally posed a less immediate threat to competition than horizontal mergers, in part because vertical integration involved entities that did not compete at the same level in the market and therefore had no impact on market concentration. However, the DOJ and FTC have taken enforcement action against some vertical mergers that the agencies viewed as substantially lessening competition, generally through consent agreements. In such cases, the agencies have considered whether the merged entity would have incentives to foreclose competition in part of the market (e.g., by cutting off an important avenue for distribution of a product or service or by eliminating customer access to a product or service) and whether the transaction would increase incentives for coordinated anticompetitive conduct in affected markets, among other factors. For instance, Comcast Corp.'s ("Comcast") joint venture involving NBC Universal, Inc. ("NBC") and General Electric Co. ("GE") was a high-profile example of vertical integration. In that transaction, Comcast, a powerful distributor of programming content, proposed to engage in a joint venture with GE that would enable Comcast to obtain effective control over NBC, an important programming content provider. The DOJ ultimately permitted the transaction, subject to conditions contained in a consent agreement. For example, because DOJ was concerned that Comcast could restrict competing online video program distributors from providing their customers access to NBC-owned programming, thereby driving consumers to Comcast's cable services, the consent agreement required the joint venture to make its programming available to online video distributers on equivalent terms offered to traditional programming distributors (e.g., other cable providers, satellite providers). Upon completing its review of a proposed merger, the reviewing agency decides whether (1) to permit the merger to consummate; (2) to take any action to block the merger; or (3) to negotiate with the transacting parties to place conditions on the merger's completion that alleviate the agency's anticompetitive concerns. The agencies permit most proposed transactions to complete without conditions. If the reviewing agency seeks to block a merger, the agency may bring an action against the transaction in a judicial and/or administrative proceeding (depending upon whether the DOJ or the FTC is the reviewing agency). In these circumstances, the transacting parties may abandon the deal or contest the government's case before a federal or administrative law judge. The DOJ pursues potential violations of the Clayton Act in federal court. Section 15 of the Clayton Act vests power to prevent and restrain violations of Section 7 in the federal district courts, and grants the DOJ authority to institute such proceedings. The DOJ may initially seek a preliminary injunction to block a merger from proceeding while litigation is ongoing. To shorten the potential duration of litigation, the DOJ and transacting parties often agree to consolidate the motion for a preliminary injunction with a motion for a permanent injunction. To obtain a permanent injunction against a merger, the DOJ must show by a preponderance of the evidence that the proposed transaction would violate the applicable antitrust law —a higher standard than required to obtain a preliminary injunction. In assessing whether a merger violates antitrust laws, the reviewing court is not bound by the DOJ's administrative review determination. If the district court denies the DOJ's request for a permanent injunction, the transacting parties may complete the proposed transaction. If the DOJ obtains a permanent injunction, which the transacting parties do not challenge or which a court upholds on appeal, the merger may not go forward. The DOJ and the transacting parties may also enter into a consent agreement to resolve the dispute. Such agreements might require one or both of the merging parties to divest particular assets or engage in other actions to alleviate potential anticompetitive effects of the transaction. When the DOJ has reached a consent agreement with the transacting parties, it will typically file both (1) a motion for an injunction in federal district court; and (2) a proposed consent agreement for approval by the court, along with other documents, such as a Hold Separate Order. The Hold Separate Order usually outlines the assets that the transacting parties must keep separate from the merged entity, and the parties must typically sell or spin off these assets into independent companies to alleviate the anticompetitive concerns raised by the merger. Once the reviewing court has approved the Hold Separate Order, the transacting parties may generally consummate the merger in accordance with the order's terms. Under the Tunney Act (also known as the Antitrust Procedures and Penalties Act), the DOJ must file consent agreements to resolve antitrust concerns with a federal court and, at the same time, publish the proposed agreement in the Federal Register for public comment prior to the court entering a judgment. The DOJ also must file any written comments related to the proposal with the court and publish them in the Federal Register. At the close of the comment period (typically 60 days), the DOJ must file with the court and publish in the Federal Register a response to the comments. After the agency has addressed the public comments, the reviewing court may enter a final judgment approving the consent order with the agreed-upon conditions, provided that the court finds the consent agreement to be in the public interest. The FTC's process for challenging proposed transactions is different from the DOJ's. Unlike the DOJ, the FTC may use enforcement tools available under the FTC Act in addition to those available under the Clayton Act to challenge proposed mergers. And whereas the DOJ process for blocking mergers under the Clayton Act involves seeking injunctive relief in federal district court, the FTC has several administrative and judicial avenues to prevent mergers that violate antitrust laws. Under Section 11 of the Clayton Act, the FTC can challenge proposed mergers in most areas of commerce, with some exceptions, via an administrative adjudication that can be appealed to a federal court of appeals. The FTC also has administrative processes available to review proposed mergers that may be unfair methods of competition under Section 5(b) of the FTC Act. Section 13(b) of the FTC Act further provides the FTC authority to request a court to enjoin, preliminarily and permanently, activities that would violate the statutes the FTC administers. When the FTC decides to challenge a proposed merger and has not reached a consent agreement with the transacting parties, the agency typically files a motion for a preliminary injunction under Section 13(b) of the FTC Act in federal court alleging that the transaction would violate both Section 7 of the Clayton Act and Section 5 of the FTC Act. Section 13(b) of the FTC Act requires courts to issue preliminary injunctions "[upon] a proper showing that weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest[.]" Around the same time that it files a motion for a preliminary injunction, the FTC will often commence administrative proceedings under the FTC and Clayton Acts by issuing a complaint and beginning proceedings before an FTC administrative law judge (ALJ) to determine whether the proposed transaction would violate federal law and any remedies. If the federal district court grants the preliminary injunction, the transacting parties may not complete the transaction during the administrative proceedings. The FTC has the option to continue administrative review of a merger even if the court denies its motion for a preliminary injunction and the transaction closes. However, if the court denies the FTC's request for a preliminary injunction, FTC rules require the administrative proceedings to be automatically stayed while the FTC determines whether to continue. The Federal Trade Commissioners review all ALJ initial decisions when the agency has also filed a motion for a preliminary injunction in federal court. When reviewing an ALJ's initial decision, the FTC staff and the parties provide briefs to the Commission and the Commission may hear oral arguments before issuing a final decision. If the Commission decides that a transaction would substantially lessen competition, the parties have the option to appeal to a federal appellate court "within whose jurisdiction the respondent resides or carries on business or where the challenged practice was employed." If the parties decide not to appeal, the litigation ends and the parties cannot complete the transaction. In practice, the FTC may use both judicial and administrative processes to challenge proposed transactions, but it typically uses only administrative processes when it enters consent agreements with transacting parties because Congress has granted the Federal Trade Commissioners authority to approve consent agreements. If a consent agreement is reached, the FTC publishes the proposed complaint, the proposed consent agreement, and an analysis of the proposed consent agreement for public comment for a period of 30 days. The Federal Trade Commissioners rule on the consent agreement. Because consent agreements involving mergers may require divestitures, such agreements may involve Hold Separate Orders, requiring the parties to keep certain assets separate after completing their transaction. If the consent agreement involves a Hold Separate Order, the Commission may issue (i.e., vote to approve as opposed to merely publish) the complaint and the Hold Separate Order when it publishes the proposed consent agreement for comment. Following the public comment period and any resulting adjustments to the consent agreement, the final decision and consent agreement may be submitted to the Commission for approval. If the Commission approves, the FTC generally issues a complaint , if it has not already done so, and a Final Decision and Order, which incorporates the consent agreement and ends the proceedings. Federal antitrust law prohibits mergers and acquisitions that may substantially lessen competition. As the primary federal agencies charged with enforcing federal antitrust laws, the DOJ and FTC follow a congressionally mandated process that requires parties exceeding certain sizes to notify the agencies of sizable transactions so that one of the agencies may determine whether the planned transaction would violate antitrust laws. Highly fact-specific, the DOJ and FTC apply Section 7of the Clayton Act and Section 5 of the FTC Act, respectively, by assessing the proposed transaction's likely impact on competition within relevant markets identified by the agencies. After examining any evidence, the agencies may permit the transaction to proceed, negotiate with the parties to reach an agreement that alleviates antitrust concerns, or block the transaction. | Preserving competition is an overarching purpose of federal laws governing business mergers. Though other federal laws, including the Sherman Act, seek to address anticompetitive behavior relating to monopolization, two federal statutes, in particular, address harms that may result from proposed mergers. Section 7 of the Clayton Act prohibits mergers "in any line of commerce or in any activity affecting commerce" that may substantially lessen competition or tend to create a monopoly. Section 5 of the Federal Trade Commission Act (FTC Act) prohibits unfair methods of competition, which includes any activity that violates Section 7 of the Clayton Act. Pursuant to the Clayton and FTC Acts, Congress authorized the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to determine whether a proposed merger would substantially lessen competition or tend to create a monopoly. Title II of the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) requires transacting parties, which exceed certain sizes, to report significant planned mergers and acquisitions to the FTC and DOJ so that the agencies may determine whether the proposed transactions raise anticompetitive concerns. If the FTC or DOJ determines that such concerns exist, the agencies may commence administrative or judicial proceedings to block the proposed transaction. Reviewing courts and administrative law judges consider a variety of factors when determining whether a proposed merged complies with federal antitrust laws. This report examines the primary statutes and processes that govern federal pre-merger review and merger challenges. |
Donald Trump delivered Saturday on his plan to use historic Gettysburg, Pennsylvania, as the setting for a closing argument in his Republican presidential campaign -- but not before lashing out again at familiar targets including rival Hillary Clinton, a “rigged” America and female accusers whom he branded ”liars.”
Trump vowed after the election to sue the nearly one dozen women who have recently gone to the media with allegations about his sexual misconduct, a situation that Trump says has rigged the election against him.
“Every woman lied when they came forward to hurt my campaign -- total fabrication,” Trump told the crowd. The events never happened. Never. All of these liars will be sued after the election is over.”
In what Trump billed as a “Contract with the American Voter,” the first-time candidate vowed to within the first 100 days of office to take six majors steps -- including putting term limits on members of Congress.
“It is a contract between myself and the American voter and begins with restoring honesty, accountability and change to Washington,” Trump said.
As part of the contract, Trump wants to impose the term limits through a Constitutional amendment and have a 5 year-ban on White House and congressional officials becoming lobbyists after they leave government service. And he wants to impose a lifetime ban on White House officials lobbying on behalf of a foreign government;
“I am not a politician,” Trump also said Saturday. “But when I saw the trouble our country was in, I felt I had to act.”
Trump also said that if elected his administration would try to undo an emerging deal in which AT&T will buy Time Warner, which would create a major media conglomerate.
With Election Day now just 17 days away and Trump trailing Clinton in essentially every poll, the GOP nominee is working to assure voters that he is as capable and knowledgeable about policy as he is about rough-and-tumble electoral politics.
"Trump will use the historic setting of Gettysburg where the country was saved,” a senior campaign source told Fox News before the speech. “He will lay out a concise program that he will commit to execute from the first day in office.”
Gettysburg is where Republican President Abraham Lincoln delivered his famous Gettysburg Address in November 1863 in an attempt to unify Americans amid the Civil War.
Clinton has had a clear policy advantage over Trump since Day One of the 2016 White House race, considering she is a former first lady, New York senator and secretary of state.
Throughout the campaign, and particularly in the candidates’ third-and-final debate Wednesday night, Trump has argued that Clinton, in her 30 years in politics, has failed to solve any major domestic or foreign issues for the United States.
On Saturday, Trump again suggested Clinton lied to the FBI and Justice Department in their investigations into her use of a private server system as secretary of state because she said during the probes 36 times that she couldn’t recall what she had done.
Trump is making several stops this weekend in Pennsylvania, one of a handful of battleground states that he must win to become president.
He trails Clinton in Pennsylvania by 6 percent points, according to the RealClearPolitics polls average.
However, Trump appears in the past few days to be cutting into Clinton’s lead, in part with his repeated message that the liberal media has rigged the election.
A Reuters/Ipsos poll released on Friday showed Trump having cut Clinton’s lead in half.
“The media refuses to talk about the three new national polls that have me in first place,” Trump tweeted overnight. “Biggest crowds ever -- watch what happens!” ||||| Democratic vice presidential candidate Sen. Tim Kaine, D-Va., speaks to The Associated Press during an interview in Boston, Saturday, Oct. 22, 2016. (Josh Reynolds/Associated Press)
WASHINGTON — The Latest on the presidential campaign (all times EDT):
2:45 p.m.
Donald Trump’s running mate is getting a warm welcome in small-town Ohio.
Mike Pence delighted thousands Saturday at the Circleville Pumpkin Show. He walked the streets, greeted supporters and climbed atop a flatbed trailer to examine prize-winning 1,500-pound pumpkins.
It was among several unannounced stops for Pence before his evening rally with Trump in Cleveland.
Circleville is reliable Republican territory. Mitt Romney won 58 percent in surrounding Pickaway County four years ago. Trump is trying to maximize his advantage outside Ohio’s largest cities in hopes of flipping a state President Barack Obama won twice.
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2:30 p.m.
Hillary Clinton’s campaign says Donald Trump has given the country an unvarnished look at what a Trump presidency might look like.
Trump’s advisers billed his Saturday speech in Gettysburg, Pennsylvania, as a preview of the agenda for his first 100 days in office. But the GOP nominee went after the women who’ve accused him of sexual assault or other inappropriate behavior. He’s threatening to sue them and he accuses Democrats of orchestrating the allegations.
Clinton spokeswoman Christina Reynolds says Trump’s “new policy was to promise political and legal retribution against the women who have accused him of groping them.”
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2 p.m
Democratic vice presidential nominee Tim Kaine is voicing optimism that a Democratic White House could work with Republicans, despite the divisiveness of the campaign.
He tells The Associated Press that he and Hillary Clinton have not been running a broad-brush race against Republicans, but rather against the nominee, Donald Trump.
He also predicts the Democratic ticket will get a lot of Republican votes, and that will help bring the country together if Clinton becomes president.
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1:45 p.m.
By most accounts, Hillary Clinton bested Donald Trump in three debates. She leads in many preference polls of battleground states across the country.
And barring a significant shift in the next two weeks, she is in a strong position to become the first woman elected president.
But Clinton will probably end the campaign still struggling to change the minds of millions of Americans who don’t think well of her.
While many Americans see her as better prepared to be commander in chief than Trump, she’s consistently viewed unfavorably by more than half of potential voters. Most also consider her dishonest.
Clinton’s advisers spent months trying to overhaul that perception. But as Clinton starts making her closing argument to voters, her advisers appear to have come to terms with that unfulfilled mission.
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1:15 p.m.
Donald Trump is taking a quick tour of the Gettysburg National Military Park after delivering a speech near the historic Civil War site.
Trump was greeted by park visitors and spent time speaking with a park ranger. He was joined by campaign staff as well as former New York City Mayor Rudy Giuliani.
The visit follows Trump’s speech laying out policies he’d seek to enact during his first 100 days as president.
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12:45 p.m.
Donald Trump is laying out a 100-day plan he says will guide him if he makes it to the White House in 2017.
In the symbolic setting of Gettysburg, Pennsylvania, the Republican nominee on Saturday summarized the policy proposals he’s introduced over the course of the campaign.
Trump says he’ll clean up corruption by pushing for new congressional term limits and by increasing restrictions on lobbying by former government officials.
He says that he’ll deport without delay immigrants who are imprisoned for violent crimes. And he says he will cancel visas for countries that refuse to take such people back.
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12:40 p.m.
Democratic vice presidential candidate Tim Kaine has hired a transition director to help him prepare to take office should he and running mate Hillary Clinton win the election.
Kaine tells The Associated Press he’s tasked Wayne Turnage to help with transition planning.
Turnage was Kaine’s chief of staff when Kaine was governor of Virginia. Turnage now is director of the District of Columbia’s Department of Health Care Finance.
Kaine says he asked Turnage to help because in recent weeks, “the prospect of winning is such that we better start doing some thinking about practicalities.”
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12:30 p.m.
Donald Trump is threatening to sue all of the women who have come forward in recent days accusing him of groping and sexual assault.
Trump says in a speech intended to make his closing argument to voters that the women are “liars” attempting to undermine his campaign. And he says all will be sued once the election is over.
Trump spoke in Gettysburg, Pennsylvania, on Saturday to lay out his earliest priorities should he become president.
He’s continuing to make the case that the election is rigged against him, and complains that “corrupt” media are fabricating stories to make him look “as bad and dangerous as possible.”
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Noon
Mike Pence is delivering the hard sell on Donald Trump to conservative Christians in presidential battleground Ohio.
The Republican vice presidential hopeful told a Faith and Freedom Coalition gathering in Circleville that Trump is the right man to pick Supreme Court justices. He emphasized that Trump supports overturning the 1973 Roe v. Wade decision that legalized abortion nationwide.
Pence says Democrat Hillary Clinton would empower more “unelected judges” to use “unaccountable power” to make “unconstitutional decisions.”
The Indiana governor also says Trump would roll back a longstanding federal ban on churches engaging in explicit political activity, including endorsing candidates.
Some polls suggest Trump is falling short of GOP presidential nominees’ usual performance among white evangelicals. Pence told his listeners they would be “the difference makers in Ohio and all across America.”
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11:15 a.m.
Evangelical leader Ralph Reed says the political arm of his Faith and Freedom Coalition is engaged in an unprecedented outreach to conservative Christians in presidential battlegrounds.
Reed told a gathering Saturday at Crossroads Church in Circleville, Ohio, that coalition volunteers already have knocked on 772,000 doors in 10 states. He says a digital campaign has placed 32 million online ads on the devices of voters.
Reed told the audience to pray before the election “like it all depends on God” but “work like it all depends on you.”
Reed was speaking at an event headlined by GOP vice presidential candidate Mike Pence. The Indiana governor is a favorite of evangelicals and sought to reassure them about GOP presidential nominee Donald Trump.
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10:20 a.m.
Early voting is surging less than three weeks before Election Day.
As of Saturday, more than 5.3 million votes have been cast, far ahead of the pace at this time in 2012.
Balloting is underway in 34 out of 37 early-voting states, both in person and by mail.
Hillary Clinton so far appears be showing strength in pivotal states such as North Carolina and Florida. Donald Trump has shown promise in Iowa and Ohio.
In all, more than 46 million people are expected to vote before Election Day — or as much as 40 percent of all votes cast.
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9:50 a.m.
A new GOP ad in the Missouri Senate race acknowledges that Hillary Clinton is likely to be president and warns against sending a Democratic senator to join her.
It’s the latest example of an ad strategy that Republicans have begun employing as Donald Trump’s defeat looks increasingly likely.
Here’s the message: Elect Republicans to be a “check and balance” against Clinton.
The ad backing GOP Sen. Roy Blunt is by from the Senate Leadership Fund. It’s a well-funded Senate campaign committee run by allies of Senate Majority Leader Mitch McConnell of Kentucky.
The ads shows the Democratic candidate in Missouri, Jason Kander, morphing into Clinton and claims the two are identical on issues including immigration and liberal Supreme Court justices.
The narrator says: “One Hillary in Washington would be bad enough, reject Jason Kander.”
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9:35 a.m.
Mike Pence is praising agriculture as an economic and cultural pillar of the United States.
The GOP vice presidential nominee is appearing at the Future Farmers of America convention in Indianapolis.
Pence — Indiana’s governor — was speaking in his official capacity and didn’t mention running mate Donald Trump.
Pence received an enthusiastic ovation from 10,000 high school students when he mentioned “the extraordinary opportunity my little family has today” on “a national ticket.”
Pence noted that U.S. agriculture and related enterprises employ 21 million people.
According to federal data, that includes about 740,000 crop laborers who are immigrants working in the U.S. illegally. Those workers and their employers could be affected by Trump’s immigration proposals.
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9 a.m.
Look for Donald Trump to lay out his to-do list for the first 100 days of a Trump administration.
The Republican presidential nominee is set to give what’s being billed as a major speech on Saturday morning in Gettysburg, Pennsylvania.
Trump is trying to shift attention back to his priorities after weeks of campaign controversy.
Aides say the address is a first glimpse at the closing argument he’ll being making in the final two weeks of the race.
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8:30 a.m.
Hillary Clinton’s campaign says four people have been examined by medical personnel after a white powdery substance arrived in an envelope at a New York campaign office — and no health issues have been reported.
Campaign spokesman Glen Caplin says federal and local officials have determined the substance wasn’t hazardous.
Police say preliminary tests showed the substance found Friday in an envelope at Clinton’s Manhattan office, where mail is received, wasn’t harmful. A police spokesman declined to identify what the substance was.
The envelope arrived late Friday afternoon. It was taken to Clinton’s Brooklyn headquarters and the 11th floor there was evacuated.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. ||||| Gettysburg, Pennsylvania (CNN) Donald Trump on Saturday offered what his senior campaign aides billed as his "closing argument" in the presidential race just 17 days from its conclusion, rehashing his campaign's key policy planks to give voters a sense of his top priorities as president.
Trump began his remarks here near the site of President Abraham Lincoln's "Gettysburg Address" by urging the country to follow Lincoln's example to "heal the divisions" the US now faces. But he quickly slipped into his combative rhetoric, slamming a "totally rigged" system and raging against establishment politicians and the media for seeking to sink his campaign.
He slammed Hillary Clinton as an insider politician and accused her of "running against change" and "all of the American people.
"Hillary Clinton is not running against me, she's running against change. And she's running against all of the American people and all of the American voters," Trump said.
And before getting to what he would seek to accomplish in the first 100 days of his presidency -- which campaign aides said Friday evening would be the focus of his speech -- Trump went on to again attack women who have accused him of sexual assault or misconduct, saying, "every woman lied when they came forward to hurt my campaign" and vowing to sue them after the election is over.
Finally, 15 minutes later, Trump pivoted to his plan for the first 100 days of his presidency should he be elected in terms of "measures," "actions" and legislative bills -- terms that gave his policies a more concrete and realistic flair.
"I am asking the American people to dream big once again. What follows is my 100-day action plan to make America great again," he finally said, calling it "a contract between Donald J. Trump and the American people."
Trump offered no new major policy announcements, instead mostly reiterating key plans of his presidential campaign and offering sparse new details.
He promised to propose a constitutional amendment to impose congressional term limits, vowed again to begin renegotiating the North American Free Trade Agreement of the 90s and announce his intention to withdraw from the Trans-Pacific Partnership and promised to take a tough approach to countries like China that he believes are abusing free trade laws.
He promised to cancel out every "unconstitutional executive action" enacted by President Barack Obama, cut federal funding to "sanctuary cities," begin deporting undocumented immigrants who have committed crimes in the US and "suspend immigration from terror-prone regions where vetting cannot safely occur."
And that litany of proposals -- and several more -- is only what Trump vowed to accomplish on his first day in office, raising questions about the number of executive orders he would need to sign in order to uphold his promises.
Trump said his priorities would be to tackle corruption in Washington, protect American workers through protectionist trade measures and prevent illegal immigration and terrorism. He proposed up to 10 bills addressing those issues that he said he would work to pass in this first 100 days in office.
As he laid out a bill to "end illegal immigration," Trump offered up new details on how he would look to disincentive undocumented immigrants from crossing into the US, calling for a two-year mandatory minimum federal prison sentence for those who illegally re-enter the US and a five-year minimum sentence for those with prior felony convictions, multiple misdemeanors or two or more previous deportations.
Currently, there is no mandatory minimum sentence, but undocumented immigrants who seek to re-enter the US can face up to two years in prison and those with felonies can face up to 10 years in prison.
Trump also called for a hiring freeze on all federal employees -- except military and public health and safety officials -- as part of his "six measures to clean up the corruption and special interest collusion in Washington," though he did not say how long the freeze would last. The Republican nominee has also previously called for a freeze on new federal regulations and repeated Saturday that he would require federal agencies eliminate two federal regulations for every new one.
'A time of division'
While Trump opened his remarks by recognizing a former Republican president Lincoln's leadership "at a time of division like we've never seen before," Trump quickly abandoned that hopeful tone in favor of blistering attacks on the media and establishment politicians in Washington, and once again cast doubt on the US democratic system by arguing that there could be rampant voter fraud on Election Day, despite evidence to the contrary.
Trump accused the FBI and Department of Justice of having "covered up" Clinton's "crimes" given the Justice Department's decision not to pursue criminal charges after investigating Clinton's use of a private email server during her time as secretary of state.
Christina Reynolds, a Clinton campaign spokeswoman, said Trump's speech presented a "troubling view."
"Today, in what was billed as a major closing argument speech, Trump's major new policy was to promise political and legal retribution against the women who have accused him of groping them," Reynolds said in a statement. "Like Trump's campaign, this speech gave us a troubling view as to what a Trump State of the Union would sound like—rambling, unfocused, full of conspiracy theories and attacks on the media, and lacking in any real answers for American families."
Trump also accused the "dishonest mainstream media" of being "a major part of this corruption," accusing the press of fabricating stories to make him look "as bad and even as dangerous as possible," before complaining about the media's insufficient coverage of the crowd sizes at his rallies.
Trump took his complaints further, promising action to prevent AT&T from buying Time Warner, the parent company of CNN, which he argued would concentrate too much power in one company. And he also slammed Comcast's purchase of NBC.
"We'll look at breaking that deal up and other deals like it," he vowed. "They're trying to poison the mind of the American voter."
As he sought to draw a heavy contrast with Clinton, who is leading Trump in most recent national and battleground state polls just over two weeks from the election, the Republican nominee urge voters to "dream big once again" and take a chance on his unconventional -- and controversial -- candidacy.
"I'm asking the American people to rise above the noise and the clutter of our broken politics and to embrace that great faith and optimism that has always been that central ingredient in the American character," he said. ||||| Republican presidential contender Donald Trump laid out a multi-pronged vision for his presidency on Saturday, saying in a speech that he opposed the proposed merger of AT&T and Time Warner while staking out opposition to China, illegal immigration and the current tax code.
In a high stakes speech billed as a "closing argument to voters," Trump used the speech to lay out a plan for his first 100 days in office, if he's elected. It functioned as a substantive laundry list of policies that the Republican vowed to address in the Oval Office, including ethics reform and stemming the flow of undocumented immigrants.
"On November 8, Amereicans will be voting on this 100 day plan to restore prosperity to our country, secure our communities and [restore] honesty to our government," Trump told an audience in Gettysburg, Pennsylvania—an historic site where Abraham Lincoln gave his famous Civil War address.
The GOP nominee struck familiar themes on a broad range of subjects, including tax reform, free trade and regulation that served as red meat to his base and a blueprint for his initial months in office. He also reiterated his support for building a wall on the border of Mexico, vowing that "Mexico would pay for a wall."
Down in most national polls and with his campaign overshadowed by accusations of sexual improprieties, the real estate mogul vowed to take a tough line on trade deals and struck a number of populist themes. He said he would brand China as a currency manipulator and would renegotiate the North American Free Trade Agreement (NAFTA).
In addition, he vowed to repeal and replace Obamacare, which is currently in trouble as premiums soar and insurers bolt the insurance program. Trump also pledged to cancel "unconstitutional" executive orders issued by President Barack Obama, and said he'd find a suitable nominees for the Supreme Court.
On Friday, news broke that the cellular carrier AT&T and entertainment giant Time Warner were nearing agreement on a deal that could be announced this weekend. Trump said under a potential GOP White House, his administration would not approve the deal.
AT&T told CNBC it has no comments on Trump's remarks.
In a shift, Trump mostly refrained from directly attacking his Democratic challenger, Hillary Clinton, but enumerated several policy differences between the two. His Gettysburg appearance came days after the final presidential debate, in which he pointedly lashed out at Clinton as a "nasty woman," reinforcing criticism that he was insensitive to women.
In that vein, Trump also vowed that he would sue the litany of women who have come forward to accuse him of inappropriate behavior after the election, branding them as "liars."
"This is my pledge to you, and if we follow these steps we will once more have a government of, by and for the people, and more importantly we will make America great again," Trump stated.
| With 17 days left before the election, Donald Trump was set to give a "closing argument to voters" near the site of President Lincoln's most famous address at Gettysburg, CNBC reports. Instead, CNN states Trump spent the first 15 minutes of his speech railing against the corrupt media, rigged elections, Hillary Clinton, and every woman who has accused him of sexual assault. And that was after he promised to "heal the divisions" in America. “Every woman lied," Fox News quotes Trump as saying about his nearly dozen accusers. "All of these liars will be sued after the election is over.” He also said Clinton is "running against all of the American people." Trump eventually turned to his plans for his first 100 days in office, listing six major steps he'll take once elected—in addition to suing his accusers, presumably—that he called a "contract between myself and the American voter." Those plans include congressional term limits and more restrictions on government officials becoming lobbyists, the Washington Post reports. Trump said he would immediately deport immigrants in prison for violent crimes and cancel visas for countries that won't take them back. He said his administration wouldn't approve of the AT&T/Time Warner merger announced today. He would also implement a hiring freeze on all federal employees outside public health, safety, and the military. According to CNN, there were few policies or details laid out Saturday that Trump hadn't already discussed elsewhere. |
Kathy Cowley, right, and Michelle Henry comfort each other next to mud-soaked Eduardo Palomares, 17, while they used buckets to remove mud from the basement of Stan McDonald's house in Longmont on Sunday. The home, near the corner of Widgeon and Allen drives, was damaged in the flooding that hit Longmont and other Colorado cities and towns. (Hyoung Chang, The Denver Post)
Colorado towns already crumbling under the weight of historic flooding got pounded again Sunday with sometimes torrential downpours as the flood death toll and the number of people still unaccounted for continued to rise.
Up to 4 inches of rain fell in parts of Larimer County, where authorities said an 80-year-old woman went missing and is presumed dead, bringing the total of people killed to six since flooding began Wednesday evening. The forecast called for more rain Monday.
As flooding along the South Platte River moved downstream into northeast Colorado, communities braced for unprecedented rising water levels.
Emergency management officials said 17,494 homes were damaged, 1,502 homes were destroyed and 11,700 people were ordered evacuated.
As of Sunday, rescuers had evacuated more than 2,100 people and more than 500 pets, most by helicopter.
"The situation has deteriorated," Boulder County Emergency Management spokesman Andrew Barth said Sunday. "There's a heavy, heavy fog, and rain is coming down hard."
The flooding has been catastrophic for dozens of Front Range and Eastern Plains towns and cities.
Hundreds of local and federal rescuers crisscrossed remote slopes on foot and in ATVs trying to find people who have not been heard from in days.
Even as rescuers found stranded people and crossed them off the list of "the unaccounted for," that list continued to grow as more people called police asking for welfare checks on friends and relatives they couldn't reach.
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The list across the state now tallies 1,253 people unaccounted for. The fear is that some of them are dead, Barth said.
On Sunday, federal aid continued flowing into the state.
The Federal Emergency Management Agency deployed two Incident Management Assistance Teams and staff for Colorado emergency operations centers.
Three federal urban search-and-rescue teams — Colorado Task Force 1, Utah Task Force 1 and Nebraska Task Force 1 — also were rescuing people in storm-damaged areas. Two more teams are expected Monday.
FEMA is providing more than 65,000 liters of water and 22,000 meals. A FEMA communications vehicle is assisting in operations in Lyons.
President Barack Obama called Gov. John Hickenlooper on Sunday to reiterate his commitment to providing federal support, according to a White House news release.
Obama declared a major disaster in Colorado on Saturday, authorizing federal funds for flood victims.
FEMA Administrator Craig Fugate will travel to Colorado on Monday to help coordinate the federal response.
Nevertheless, Sunday saw another day of drenching rain and heart-wrenching stories.
In the Cedar Cove area of Big Thompson Canyon, an injured 80-year-old woman could not leave her house, said Larimer County sheriff's spokesman John Schulz. "When people came back to help her, the house was gone," he said.
Water spills over the collapsed eastbound lane of Ninth Avenue near Fordham Street in Longmont on Sunday. (Craig F. Walker, The Denver Post)
It was the second day in a row that a woman was reported missing and presumed dead in the Cedar Cove area. A 60-year-old woman was reported missing Saturday.
Overflowing streams and rivers forced the state Department of Transportation to shut down Interstate 25 from Colorado 7 to Colorado 52 in both directions.
Municipal officials issued new evacuation orders to residents in Longmont, Greeley, Weld County and Estes Park.
Pouring rain west of Longmont triggered re-evacuations of the Greens, Champion Greens and the Valley neighborhoods.
Neighborhoods south of Colorado 119 near I-25 also were ordered to leave as Mountain View Fire and Rescue reported the St. Vrain River was rising 7 inches every 15 minutes Sunday morning.
Flooding has wiped away large sections of roads, making it risky or impossible to reach people in dangerous areas and slowing rescue efforts, Barth said.
Fifteen helicopters in Boulder County that evacuated 1,200 people from Lyons and 295 people from Jamestown were grounded Sunday because of low visibility, Barth said.
Sixteen helicopters in Larimer County were grounded Sunday.
Authorities across the flooded areas warned that it could take many months before infrastructure, including new roads, will be completed.
Xcel Energy officials said Sunday they will have to replace thousands of natural-gas meters and up to 20 miles of natural-gas pipeline. More than 4,000 customers are without gas in Boulder County, according to the utility.
National Guard and Boulder County heavy-equipment operators began to rebuild creek and river banks after floodwaters created new waterways that have swamped several communities.
"We're going to try to divert the St. Vrain River back into its original channel," Barth said.
It could take several months to rebuild the banks so that the river flows down its original channel, Barth said.
Crews also have been repairing and rebuilding roads to reach isolated mountain communities, including Lyons and James-town.
"We did punch a hole getting to Jamestown, but its still pretty slippery," Barth said.
Near Hillrose in northeast Colorado, BNSF Railway workers were dumping loads of gravel in an attempt to reinforce the railroad bed as the South Platte River widened to within 6 feet of the track. The line is used to move coal from Wyoming to a power plant near Brush.
Some residents in the area said the river's surge is bigger than what they saw in 1965, when flooding along the Front Range and Eastern Plains left 21 dead and 250,000 acres inundated.
Flooding in the Denver metro area was severe in 1965. A storm surge destroyed 120 houses and damaged 935 in Littleton, Englewood and Denver. Also, 280 mobile homes were lost, and 16 bridges in Denver were demolished. After the flood, Chatfield and Bear Creek reservoirs were built to control storm waters.
Kirk Mitchell: 303-954-1206, [email protected] or twitter.com/kmitchelldp
Electa Draper, Austin Briggs and Bruce Finley contributed to this report. ||||| 235 unaccounted for as weather slowed search and rescue efforts Sunday
FEMA claims To make a claim with FEMA, call 800-621-3362 or visit disasterassistance.gov.
A major air rescue for the Boulder County foothills devastated by 100-year floodwaters is planned for Monday, with residents asked to use white sheets, reflective mirrors, flares and signal fires to alert helicopter pilots to their locations.
"The pilots are going to go anywhere and everywhere they can," said Gabrielle Boerkircher, a spokeswoman for Boulder County. "People need to be prepared to be evacuated. They need to try to flag down the choppers in any way they can."
She said residents should be ready with a bag of medications, clothes and other important items -- and should wait until they get a signal to approach the helicopter after it lands. She acknowledged that many of those in need of rescue may not have phone or Internet service and won't know the helicopters are on their way, but the county is doing everything it can to get the word out.
A time when the helicopters will start flying hasn't yet been determined, but she said the goal is to take advantage of the clearer weather that's forecast Monday. After a reprieve Saturday from the torrential downpours that had dropped nearly 15 inches of rain on Boulder beginning last Monday evening, Sunday's nearly 2-inch rainfall and low-hanging fog grounded helicopters and complicated rescue efforts.
A National Guard helicopter lands Friday at Boulder Municipal Airport after ferrying supplies and rescue personnel to Boulder County mountain towns that have been cut off by the flooding. ( MARK LEFFINGWELL )
Boulder County was under a flood warning until 9 p.m. Sunday and, in north Boulder, both Twomile and Fourmile creeks were flooding Sunday afternoon, city officials said. But the rain Sunday didn't produce significant flooding within the city or county.
The historic flood has killed at least three and left 235 unaccounted for in Boulder County. The flood also has caused at least $100 million to $150 million in damage to roads, bridges and other structures in the county, according to early estimates from the Boulder Office of Emergency Management.
Given the severity of the damage, President Barack Obama has signed a disaster declaration and ordered federal aid for Boulder County residents.
John Hoffenberg watches the flow of water increase at Seventh and Pleasant as rains get heavier in Boulder, Colorado September 15, 2013. ( MARK LEFFINGWELL )
The action makes federal funding available to those affected by the flood, and Boulder County officials are urging people to make claims -- even if they have flood insurance coverage -- to help gauge the severity of the devastating floodwaters.
The aid can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover.
Boulder County Sheriff Joe Pelle on Sunday said the number of people unaccounted for doesn't necessarily represent people who are definitively missing, but instead is a list of those who have not been in contact with loved ones.
"This information concerns the people who care for someone but can't account for them," Pelle said.
He said two detectives from his department have joined a search and rescue team in Jamestown to attempt to retrieve the body of a man believed to have died when his house collapsed.
But the rescue crew needs heavy equipment to start the recovery process, and Pelle didn't know when his office would be able to get some up the canyon.
Officials estimate 35 bridges need to be repaired and said rushing floodwaters have damaged at least 100 miles of roads. Additionally, flooding has damaged at least 100 minor structures, such as walking bridges near Boulder Creek, said Liz Donaghey, a spokeswoman for emergency operations.
The $150 million damage estimate doesn't include damage to private residences, officials said. Crews don't yet have a damage estimate for city and county buildings.
Walls of water and mudslides have crushed homes in Boulder's mountain towns the hardest, and search and rescue crews Saturday performed what is being called the largest aerial rescue since Hurricane Katrina.
More than 1,200 people have been evacuated so far.
Crews on Saturday were able to send helicopters into the mountain towns of western Boulder County as well as high-clearance trucks into Lyons to evacuate stranded residents, with Pelle calling the operation "an amazing 24 hours of saving lives."
About 500 people were driven out of Lyons, but many of the other rescues Saturday were performed by helicopter as the National Guard staged an air rescue campaign from Boulder Municipal Airport.
Coroner Emma Hall on Saturday evening released the identities of two of the three people killed by the flooding in Boulder County.
Those victims were Wiyanna Nelson and Wesley Quinlan, both 19. Sheriff's officials said the teens died after getting out of the car they were in on Linden Avenue and being swept away by the rushing floodwaters.
Hall has not yet identified the third victim claimed by the storm in Boulder County, but residents of Jamestown have said they believe it was former Jamestown Mercantile owner Joseph Howlett, 72. Neighbors fear Howlett was killed when his house collapsed in a mudslide Wednesday night. ||||| The Big Thompson River overflowing it's banks and causing widespread damage to Colorado U.S. 34 in the Big Thompson Canyon after recent flooding in Larimer County, Colorado Saturday morning. ( | )
FORT COLLINS — Rain aborted even 19th-century methods of reaching Larimer County residents cut off by raging flood waters.
Rist Canyon Volunteer Fire Department Chief Bob Gann said a pack train of horses was organized to take medical and other supplies to people stranded when Buckhorn Road washed out, but rain stopped them Sunday.
"We may do that tomorrow if we still can't fly," Gann said.
Helicopter evacuations had been planned for Sunday, but all the choppers are grounded because of the rain and low clouds.
Multiple sections of Buckhorn Road between Masonville and Stove Prairie school are destroyed. "There's a river there instead of a road," he said.
No homes or lives have been lost, but propane tanks have been carried off by the river. "Partly because of what we went through last year up here with the High Park fire, everyone's pretty prepared," he said.
Larimer County emergency managers worry there may be as many as 1,000 people who still need to be evacuated from the mountains within its 2,634 square miles.
As soon as they can fly, the 16 helicopters currently grounded at Christman Field in Fort Collins will resume the rescue mission, as well as dropping water and MREs to stranded people. Saturday, 475 were evacuated by air and taken to shelters in the county. Two 80-person urban search and rescue teams will arrive Monday and begin house-to-house searches around Estes Park.
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"Mother Nature is not cooperating," said Shane DelGrosso, one of two Type II incident commanders who are assisting the county with coordination of local, state and federal rescue efforts. (Emergency commanders are classified into five types or levels, according to their training in managing complex emergencies.)
Colorado 7 is now open to emergency vehicles in and out of Estes Park, but it is the only passable route.
Eight Safeway semis were able to deliver food to Estes Park Saturday, DelGrosso said.
As for U.S. 36 out of Boulder and U.S. 34 out of Loveland, "it's going to take months to restore those roads to their original condition. A lot of the road bed is gone and it's a stream bed now," he said. "That is part of assessment and evaluation, and we need engineers who are not up there yet."
As of Sunday morning, 643 people were reported unaccounted for, but of that total, 170 were accounted for by 3 p.m. Sunday, leaving 473 to track down.
The county is cross-referencing evacuee counts with reports to the Red Cross Safe and Well website, safeandwell.org and its emergency line, 970-498-5500, and plans to update those figures Sunday evening.
A positive sign: "More people are reporting in and saying 'Here I am' than are reporting someone missing, Larimer County sheriff's spokeswoman Jennifer Hillmann said.
A second Cedar Cove resident, an 80-year-old woman, is missing and presumed dead, said Larimer County sheriff spokesman Nick Christensen Sunday morning.
Other evacuees from the neighborhood near the mouth of Big Thompson Canyon reported that their neighbor was injured and unable to leave her home, and when they went to check on her, the home had been destroyed.
The sheriff received an unconfirmed report of a looter who ran from officials near Glade Road and U.S. 34 and jumped into the river. "We don't know if he got out," said Christensen.
Larimer County has 16 helicopters — three Chinooks, seven Black Hawks, three Lakotas and three civilian craft — available at Christman Field for evacuations but were are grounded as rain continued to fall Sunday.
Sheriff Justin Smith said he had reports of "self-rescues" as people hiked out, rode ATVS and used "any kind of machinery" to get to safety.
The sheriff spent Saturday in Estes Park and toured the devastated areas by air.
"People up here know where the rivers are," he said. But some people were caught by surprise as "rivers developed out of nowhere, eight to 10 feet high, cutting out the mountainside. In St. Malo, a whole forest of timber washed out."
Supplies are getting in to Glen Haven via ATV, and yesterday, a Chinook landed in the narrow canyon to drop off rescuers and supplies. Rescuers out of Estes worked their way toward Drake down U.S. 34 to mile marker 72.
But "Drake is an island," at mile marker 75, Smith said.
Kristen Browning-Blas: [email protected], twitter.com/krisbb or 303-954-1440 ||||| As Colorado mountain towns cut off for days by massive flooding slowly reopened, shopkeepers in this gateway to majestic Rocky Mountain National Park worked to both clean up and remove salvageable goods from ravaged businesses for fear the swollen Big Thompson River would rise again.
A farm house is surrounded by water from flooding on the South Platte River near Greeley, Colo., on Sunday, Sept. 15, 2013. Heavy rains continued on Sunday. Broad swaths of farmland have become lakes,... (Associated Press)
Carlos Duron, 3, and his mother, Vilma Maldonado, are evacuees from Longmont, Colo., staying at Mead High School with the Red Cross on Sunday, Sept. 15, 2013 in Mead, Colo. The National Weather Service... (Associated Press)
Loaders scrape up mud Sunday Sept. 15, 2013, from the flooding that swept through Estes Park, Colo., that swamped the town's main street when the Big Thompson River surged through Estes Park late Thursday... (Associated Press)
As heavy rains return after somewhat abating for two days, a field fills with water from overflowing creeks nearby, outside Longmont, Colo., Sunday Sept. 15, 2013. The National Weather Service says up... (Associated Press)
People rush into LifeBridge Church to escape the rain in Longmont, Colo., on Sunday, Sept. 15, 2013. The National Weather Service says up to 2 inches of rain could fall Sunday, creating a risk of more... (Associated Press)
A building housing farm equipment is underwater from flooding on the South Platte River on a farm near Greeley, Colo., on Sunday, Sept. 15, 2013. Heavy rains continued on Sunday. Broad swaths of farmland... (Associated Press)
Mud from flooding is shown covering the main street Sunday Sept. 15, 2013 in Estes Prk, Colo., after water and debris swamped the town when the Big Thompson River surged through Estes Park late Thursday... (Associated Press)
"We have limited time to get as much out as possible," Aspen Evergreen owner Tamara Jarolimek said as she and her husband, James, worked furiously Sunday.
Outside, crews plowed up to a foot of mud left standing along Main Street after the river late Thursday and early Friday coursed through the heart of town.
"I hope I have enough flood insurance," said Amy Hamrick, who had friends helping her pull up flooring and clear water and mud from the crawl space at her coffee shop. Her inventory, she said, was safely stashed at her home on higher grounds.
Meantime, hundreds of residents and evacuees gathered for updates from the town's administrator, Frank Lancaster, who said "we are all crossing our fingers and praying" that it won't happen again.
Across town, comparisons were repeatedly drawn to two historic and disastrous flash floods: the Big Thompson Canyon Flood of 1976 that killed 145 people, and the Lawn Lake flood of 1982 that killed three.
"Take those times 10, that's what it looks like in the canyon," said Deyn Johnson, owner of the Whispering Pines cottages, three of which floated down the river after massive amounts of water were released from the town's dam. Johnson said the only warning she and her husband had to evacuate their home and their guest cabins came from their cat, Jezebel, who jumped on her sleeping husband at 4:30 a.m., batting at him and yowling.
"I always thought we were safe unless the dam went," she said. "I credit the cat with saving my family and the lives of everyone in the cottages."
From the mountain communities east to the plains city of Fort Morgan, numerous pockets of individuals remained cut off by the flooding. Sunday's rain hampered the helicopter searches, and rescuers trekked by ground up dangerous canyon roads to reach some of those homes isolated since Wednesday.
The surging waters have been deadly, with four people confirmed dead and two more missing and presumed dead after their homes were swept away.
Some 1,500 homes have been destroyed and about 17,500 have been damaged, according to an initial estimate released by the Colorado Office of Emergency Management on its website.
In addition, 11,700 people left their homes, and a total of 1,253 people have not been heard from, state emergency officials said.
With phone service being restored to some of the areas over the weekend, officials hoped that number would drop as they contacted more stranded people.
As many as 1,000 people in Larimer County were awaiting rescue Sunday, but airlifts were grounded because of the rain, Type 2 Rocky Mountain Incident Management Team commander Shane Del Grosso said.
Hundreds more people are unaccounted for to the south in Boulder County and other flood-affected areas.
Air rescue efforts are planned to resume in Boulder County Monday with improving weather.
The Office of Emergency Management is urging people who are cut off by flood waters and need to evacuate but have been unable to communicate by phone or other means to signal helicopters passing overhead with sheets, mirrors, flares or signal fires.
The town of Lyons, about 20 miles from Estes Park, was almost completely abandoned. Emergency crews gave the few remaining residents, mostly wandering aimlessly on Main Street, looking for status updates from each other, a final warning to leave Sunday.
One man, a bluegrass musician, has been visiting his home every day and taking photos. The house has a river running through it and he can't get close.
Most of the town's trailer parks were completely destroyed. One angry man was throwing his possessions one-by-one into the river rushing along one side of his trailer on Sunday, watching the brown water carry them away while drinking a beer.
In Estes Park, Lancaster called the flood a 500-year event. He said it was worse than previous flash floods because of the sustained rains and widespread damage to infrastructure across the Rocky Mountain Foothills. Major road were washed away, small towns like Glen Haven reduced to debris and key infrastructure like gas lines and sewers systems destroyed, meaning hundreds of homes in Estes Park alone could be unreachable and uninhabitable for up to a year.
The good news here in Estes Park and the Estes Valley, Lancaster said, was there appeared to be no loss of life.
Still, hundreds remained stranded in remote areas.
"We know there are a lot of people trapped but they are trapped alive," he told people gathered at Red Cross evacuation shelter Sunday afternoon.
And rescues continued throughout the day Sunday any way possible, including zip lines rigged to hoist people and pets across swollen rivers and creeks.
That's how retirees Jerry Grove and Dorothy Scott-Grove -- and their two golden retrievers -- were finally rescued Friday night from their vacation cabin in Glen Haven. Although they may not be able to get back to their new car for six months to a year, and they were still trying to figure out how to get home, Scott-Grove said they were glad to be alive and were now looking at the experience as a "great adventure."
As many as 1,700 homes in the Estes Park area were under evacuation notice, Lancaster said, but the issue was more about lack of access because of washed out roads and destroyed infrastructure.
Even the town's historic Stanley Hotel, a structure that was the inspiration for Stephen King's "The Shining," suffered damaged, despite its perch on a hilltop overlooking the town and the river. Front desk worker Renee Maher said the ground was so saturated that water was seeping in through the foundation, and had caused one suite's bathtub to pop out "like a keg," Maher said.
Ironically, the massive Estes Ark _ a former toy store two stories high designed to look like Noah's Ark _ was high and dry.
"I don't know if it's open anymore, but soon it's going to be our only way out," joked Carly Blankfein. | Officials are pulling out all the stops to help Coloradans escape continuing floods, but "Mother Nature is not cooperating," says an emergency commander. An air rescue is planned for today, and those stranded in Boulder County have been instructed to "flag down the choppers in any way they can," whether by sending up flares, shining mirrors, or waving white sheets, the Boulder Daily Camera reports. With helicopters grounded in Larimer County, meanwhile, officials there have turned to horses for help. A horse pack train may today carry supplies to some 1,000 people who need evacuation, the Denver Post reports. The paper says six people have now died. Of roads out of Boulder and Loveland, the emergency commander says, "it's going to take months to restore those roads to their original condition. A lot of the road bed is gone and it's a stream bed now." The state has seen 1,500 homes destroyed and 17,500 damaged; 11,700 people have been ordered evacuated, while 1,253 are still unaccounted for, say officials, per the AP. Fortunately, "More people are reporting in and saying 'Here I am' than are reporting someone missing," says the Larimer sheriff's office. Some towns are beginning the cleanup and reopening process, with shopkeepers trying to save what they can, the AP notes. But more rain is expected today. |
During the three decades in which uranium was used in the government’s nuclear weapons and energy programs, for every ounce of uranium that was extracted from ore, 99 ounces of waste were produced in the form of mill tailings—a finely ground, sand-like material. By the time the government’s need for uranium peaked in the late 1960s, tons of mill tailings had been produced at the processing sites. After fulfilling their government contracts, many companies closed down their uranium mills and left large piles of tailings at the mill sites. Because the tailings were not disposed of properly, they were spread by wind, water, and human intervention, thus contaminating properties beyond the mill sites. In some communities, the tailings were used as building materials for homes, schools, office buildings, and roads because at the time the health risks were not commonly known. The tailings and waste liquids from uranium ore processing also contaminated the groundwater. Tailings from the ore processing resulted in radioactive contamination at about 50 sites (located mostly in the southwestern United States) and at 5,276 nearby properties. The most hazardous constituent of uranium mill tailings is radium. Radium produces radon, a radioactive gas whose decay products can cause lung cancer. The amount of radon released from a pile of tailings remains constant for about 80,000 years. Tailings also emit gamma radiation, which can increase the incidence of cancer and genetic risks. Other potentially hazardous substances in the tailings include arsenic, molybdenum, and selenium. DOE’s cleanup authority was established by the Uranium Mill Tailings Radiation Control Act of 1978. Title I of the act governs the cleanup of uranium ore processing sites that were already inactive at the time the legislation was passed. These 24 sites are referred to as Title I sites. Under the act, DOE is to clean up the Title I sites, as well as nearby properties that were contaminated. In doing so, DOE works closely with the affected states and Indian tribes. DOE pays for most of this cleanup, but the affected states contribute 10 percent of the costs for remedial actions. Title II of the act covers the cleanup of sites that were still active when the act was passed. These 26 sites are referred to as Title II sites. Title II sites are cleaned up mostly at the expense of the private companies that own and operate them. They are then turned over to the federal government for long-term custody. Before a Title II site is turned over to the government, NRC works with the sites’ owners/operators to make sure that sufficient funds will be available to cover the costs of long-term monitoring and maintenance. The cleanup of surface contamination consists of four key steps: (1) identifying the type and extent of contamination; (2) obtaining a disposal site; (3) developing an action plan, which describes the cleanup method and specifies the design requirements; and (4) carrying out the cleanup using the selected method. Generally, the primary cleanup method consists of enclosing the tailings in a disposal cell—a containment area that is covered with compacted clay to prevent the release of radon and then topped with rocks or vegetation. Similarly, the cleanup of groundwater contamination consists of identifying the type and extent of contamination, developing an action plan, and carrying out the cleanup using the selected method. According to DOE, depending on the type and extent of contamination, and the possible health risks, the appropriate method may be (1) leaving the groundwater as it is, (2) allowing it to cleanse itself over time (called natural flushing), or (3) using an active cleanup technique such as pumping the water out of the ground and treating it. Mr. Chairman, we now return to the topics discussed in our report: the status and cost of DOE’s surface and groundwater cleanup and the factors that could affect the federal government’s costs in the future. Since our report was issued on December 15, 1995, DOE has made additional progress in cleaning up and licensing Title I sites. As of February 1996, DOE’s surface cleanup was complete at 16 of the 24 Title I sites, under way at 6 additional sites, and on hold at the remaining 2 sites.Of the 16 sites where DOE has completed the cleanup, 4 have been licensed by NARC as meeting the standards of the Environmental Protection Agency (EPA). Ten of the other 12 sites are working on obtaining such a license, and the remaining two sites do not require licensing because the tailings were relocated to other sites. Additionally, DOE has completed the surface cleanup at about 97 percent of the 5,276 nearby properties that were also contaminated. Although DOE expects to complete the surface cleanup of the Title I sites by the beginning of 1997, it does not expect all of Narc activities to be completed until the end of 1998. As for the cleanup of groundwater at the Title I sites, DOE began this task in 1991 and currently estimates completion in about 2014. Since its inception in 1979, DOE’s project for cleaning up the Title I sites has grown in size and in cost. In 1982, DOE estimated that the cleanups would be completed in 7 years and that only one pile of tailings would need to be relocated. By 1992, however, the Department was estimating that the surface cleanup would be completed in 1998 and that 13 piles of tailings would need to be relocated. The project’s expansion was caused by several factors, including the development of EPA’s new groundwater protection standards; the establishment or revision of other federal standards addressing such things as the transport of the tailings and the safety of workers; and the unexpected discovery of additional tailings, both at the processing sites and at newly identified, affected properties nearby. In addition, DOE made changes in its cleanup strategies to respond to state and local concerns. For example, at the Grand Junction, Colorado, site the county’s concern about safety led to the construction of railroad transfer facilities and the use of both rail cars and trucks to transport contaminated materials. The cheaper method of simply trucking the materials would have routed extensive truck traffic through heavily populated areas. Along with the project’s expansion came cost increases. In the early 1980s, DOE estimated that the total cleanup cost—for both the surface and groundwater—would be about $1.7 billion. By November 1995, this estimate had grown to $2.4 billion. DOE spent $2 billion on surface cleanup activities through fiscal year 1994 and expects to spend about $300 million more through 1998. As for groundwater, DOE has not started any cleanup. By June 1995, the Department had spent about $16.7 million on site characterization and various planning activities. To make the cleanup as cost-effective as it can, DOE is proposing to leave the groundwater as it is at 13 sites, allow the groundwater to cleanse itself over time at another 9 sites, and to use an active cleanup method at 2 locations in Monument Valley and Tuba City, Arizona. The final selection of cleanup strategies depends largely on DOE’s reaching agreement with the affected states and tribes. At this point, however, DOE has yet to finalize agreements on any of the groundwater cleanup strategies it is proposing. At the time we issued our report, the cleanups were projected to cost at least another $130 million using the proposed strategies, and perhaps as much as $202 million. More recently, a DOE groundwater official has indicated that the Department could reduce these costs by shifting some of the larger costs to earlier years; reducing the amounts built into the strategies for contingencies, and using newer, performance-based contracting methods. Once all of the sites have been cleaned up, the federal government’s responsibilities, and the costs associated with them, will continue far into the future. What these future costs will amount to is currently unknown and will depend largely on how three issues are resolved. First, because the effort to clean up the groundwater is in its infancy, its final scope and cost will depend largely on the remediation methods chosen and the financial participation of the affected states. It is too early to know whether the affected states or tribes will ultimately persuade DOE to implement more costly remedies than those the Department has proposed or whether any of the technical assumptions underlying DOE’s proposed strategies will prove to be invalid. If either of these outcomes occurs, DOE may implement more costly cleanup strategies than it has proposed, thereby increasing the final cost of the groundwater cleanup. DOE has already identified five sites where it believes it may have to implement more expensive alternatives than the ones it initially proposed. In addition, the final cost of the groundwater cleanup depends on the affected states’ ability and willingness to pay their share of the cleanup costs. According to a DOE official, Pennsylvania, Oregon, and Utah may not have funding for the groundwater cleanup program. DOE believes that it is prohibited from cleaning up the contamination if the states do not pay their share. Accordingly, as we noted in our report, we believe that the Congress may want to consider whether and under what circumstances DOE can complete the cleanup of the sites if the states do not provide financial support. Second, DOE may incur further costs to dispose of uranium mill tailings that are unearthed in the future in the Grand Junction, Colorado, area. DOE has already cleaned up the Grand Junction processing site and over 4,000 nearby properties, at a cost of about $700 million. Nevertheless, in the past, about a million cubic yards of tailings were used in burying utility lines and constructing roads in the area and remain today under the utility corridors and road surfaces. In future years, utility and road repairs will likely unearth these tailings, resulting in a potential public health hazard if the tailings are mishandled. In response to this problem, DOE is working with NRC and Colorado officials to develop a plan for temporarily storing the tailings as they are unearthed and periodically transporting them to a nearby disposal cell—referred to as the Cheney cell, located near the city of Grand Junction—for permanent disposal. Under this plan, the city or county would be responsible for hauling the tailings to the disposal cell, and DOE would be responsible for the cost of placing the tailings in the cell. The plan envisions that a portion of the Cheney disposal cell would remain open, at an annual cost of several hundred thousand dollars. When the cell is full, or after a period of 20 to 25 years, it would be closed. However, DOE does not currently have the authority to implement this plan because the law requires that all disposal cells be closed upon the completion of the surface cleanup. Accordingly, we suggested in our report that the Congress might want to consider whether DOE should be authorized to keep a portion of the Cheney disposal cell open to dispose of tailings that are unearthed in the future in this area. Finally, DOE’s costs for long-term care are still somewhat uncertain. DOE will ultimately be responsible for long-term custody, that is, the surveillance and maintenance, of both Title I and Title II sites, but the Department only bears the financial responsibility for these activities at Title I sites. For Title II sites, the owners/operators are responsible for funding the long-term surveillance and maintenance. Although NRC’s minimum one-time charge to site owners/operators is supposed to be sufficient to cover the cost of long-term custody so that they, not the federal government, bear these costs in full, NRC has not reviewed its estimate of basic surveillance costs since 1980, and DOE is currently estimating that basic monitoring will cost about 3 times more than NRC estimates. Moreover, while DOE maintains that ongoing routine maintenance will be needed at all sites, NRC’s charge does not provide any amount for ongoing maintenance. In light of the consequent potential shortfall in maintenance funds, our report recommended that NRC and DOE work together to update the charge for basic surveillance and determine if routine maintenance will be required at each site. On the basis of our recommendations, NRC officials agreed to reexamine the charge and determine the need for routine maintenance at each site. They also said that they are working with DOE to clarify the Department’s role in determining the funding requirements for long-term custody. Mr. Chairman, this concludes our prepared statement. We will be pleased to answer any questions that you or Members of the Subcommittee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO discussed the status and cost of the Department of Energy's (DOE) uranium mill tailings cleanup program and the factors that could affect future costs. GAO noted that: (1) surface contamination cleanup has been completed at two-thirds of the identified sites and is underway at most of the others; (2) if DOE completes its surface cleanup program in 1998, it will have cost $2.3 billion, taken 8 years longer than expected, and be $261 million over budget; (3) DOE cleanup costs increased because there were more contaminated sites than anticipated, some sites were more contaminated than others, and changes were needed to respond to state and local concerns; (4) the future cost of the uranium mill tailings cleanup will largely depend on the future DOE role in the program, the remediation methods used, and the willingness of states to share final cleanup costs; and (5) the Nuclear Regulatory Commission needs to ensure that enough funds are collected from the responsible parties to protect U.S. taxpayers from future cleanup costs. |
A number of seriously ill patients remain in the seized hospital in Simferopol, reports say
Armed men - said to be Russian troops and local militias - have seized a military hospital in Crimea, as Moscow tightens its grip on Ukraine's region.
The attackers marched into the hospital in the regional capital Simferopol, threatening staff and some 30 patients.
Pro-Russian troops are also blockading Ukrainian troops across Crimea.
The latest moves come ahead of Sunday's secession referendum in the autonomous region. Kiev and the Western nations describe the vote as illegal.
In other developments on Monday:
Russian Foreign Minister Sergei Lavrov says Moscow will send its "counter-proposals" to Washington to try to resolve the Ukraine crisis; the US earlier proposed to set up a contact group, renew direct Kiev-Moscow talks and also urged Russia to pull its troops in Crimea back to their bases
In a phone call, US President Barack Obama and his Chinese counterpart Xi Jinping urge Russia to respect Ukraine's territorial integrity
Russia's former tycoon Mikhail Khodorkovsky, who spent a decade behind bars, tells students in Kiev that Russia has severely violated international law by deploying troops in Crimea
'New directors'
Up to 30 men in military uniforms - some with truncheons - broke into the hospital, where Ukrainian soldiers and veterans were being treated. Some of the patients are reported to be seriously ill.
Armed men continue to blockade Ukrainian troops at their bases in Crimea
Crimea's pro-Russian authorities are urging local residents to "stop fascism" from Ukraine in the referendum - a claim firmly denied by Kiev
The hospital director said he was forced onto a bus and kept there for half-an-hour.
The attackers also herded staff into a reception to apparently meet "the new directors", Ukraine's Interfax-Ukraina news agency reports.
Separately, pro-Russian troops tried to capture a military transport base in Bahkchysarai, a town between Simferopol and Sevastopol.
The gunmen fired warning shots into the air, but Ukrainian soldiers repelled the attack. The negotiations are reportedly still continuing.
Crisis timeline 21 November 2013: President Viktor Yanukovych abandons deal on closer ties with EU in favour of closer co-operation with Russia
President Viktor Yanukovych abandons deal on closer ties with EU in favour of closer co-operation with Russia December 2013: Pro-EU protesters occupy Kiev city hall and Independence Square
Pro-EU protesters occupy Kiev city hall and Independence Square 20 February 2014: At least 88 people killed in 48 hours of bloodshed in Kiev
At least 88 people killed in 48 hours of bloodshed in Kiev 21 February: President Yanukovych signs compromise deal with opposition leaders
President Yanukovych signs compromise deal with opposition leaders 22 February: President Yanukovych flees Kiev. Parliament votes to remove him and sets elections for 25 May
President Yanukovych flees Kiev. Parliament votes to remove him and sets elections for 25 May 27-28 February: Pro-Russian gunmen seize key buildings in Crimean capital Simferopol
Pro-Russian gunmen seize key buildings in Crimean capital Simferopol 1 March: Russian parliament approves President Vladimir Putin's request to use Russian forces in Ukraine
Russian parliament approves President Vladimir Putin's request to use Russian forces in Ukraine 6 March: Crimea's parliament asks to join Russia and sets referendum for 16 March Law and order breakdown in Crimea Is Russian intervention legal?
Step-by-step, and meeting very little resistance, the pro-Russian troops are dismantling Ukraine's ability to resist in Crimea, reports the BBC's Christian Fraser, who is in the region.
Moscow has officially denied that its troops are taking part in the blockades, describing armed men with no insignia as Crimea's "self-defence" forces.
The government in Kiev - as well as the US and EU - accuse Russia of invading Ukraine, in violation of international law.
'Shameful silence'
Earlier on Monday, the Russian foreign ministry condemned "lawlessness" in eastern Ukraine, blaming far-right militants for "conniving" with the Kiev authorities.
In a statement, the ministry said the "well-equipped" gunmen opened fire on "peaceful protesters" in the eastern city of Kharkiv on 8 March.
The city has recently witnessed mass rival rallies, some of which were violent.
However, local Kharkiv police say they are treating the alleged shooting as a minor incident, according to Reuters.
The Russian statement also said the seven Russian journalists had been detained by police in Dnipropetrovsk, also in the east, who accused them of being interested only in "separate provocative stories".
"The Ukrainian authorities, in violation of all existing bilateral treaties, are not letting Russian citizens into the territory of Ukraine," the statement added.
And it also voiced Moscow's surprise over "the shameful silence of our Western partners, human rights groups and foreign media".
Ukraine has in the past firmly denied similar Russian allegations, instead accusing Moscow of distorting facts to justify its continuing military presence in Crimea.
Kiev points out that monitors of the Organization for Security and Co-operation in Europe have recently been prevented by pro-Russian militia groups from entering Crimea and a number of journalists have been beaten up by militias in the autonomous region.
Russian President Vladimir Putin insisted he has the right to protect Russian interests and the rights of ethnic Russians there.
On Sunday, he also defended the moves by Crimea's authorities to stage the referendum on 16 March. Mr Putin said "the steps taken by Crimea's legitimate authorities are based on international law".
However, German Chancellor Angela Merkel told him in a phone call that she considered the vote illegal.
Both EU leaders and the US have warned Moscow they would slap even tougher sanctions if Russian troops remained in Crimea.
Unrest in Ukraine erupted in November after former President Viktor Yanukovych's last-minute rejection of a landmark EU deal in favour of a bailout from Russia.
Mr Yanukovych was ousted last month, and a new government has been voted in by the Ukrainian parliament. ||||| SEVASTOPOL/KIEV (Reuters) - A pro-Russian force opened fire in seizing a Ukrainian military base in Crimea on Monday and NATO announced reconnaissance flights along its eastern frontiers as confrontation around the Black Sea peninsula showed no sign of easing.
Ukrainian activists trying to cross into Crimea to show solidarity with opponents of last week’s Russian military takeover there said they were halted by men in uniforms of the now outlawed riot police. One of these fired at close range, hitting a man in the chest, apparently with rubber bullets.
With diplomacy at a standstill, Russia said the United States had spurned an invitation to hold new talks on resolving the crisis, the worst East-West standoff since the Cold War - though Washington later said a meeting of foreign ministers was possible this week, if Moscow shows it is ready to “engage”.
The U.S.-led NATO defence alliance said AWACS early warning aircraft, once designed to counter feared Soviet nuclear missile strikes, will start reconnaissance flights on Tuesday over Poland and Romania to monitor the situation in Ukraine, flying from bases in Germany and Britain.
British Prime Minister David Cameron told Germany’s Bild newspaper, however, that Western powers were not considering military action and wanted a diplomatic solution. European Union governments are considering sanctions against Russia.
Ukrainian Prime Minister Arseny Yatseniuk, who said he would address the U.N. Security Council on Thursday, blamed the crisis on Russia and accused Moscow of undermining the global security system by taking control of Crimea.
Ukraine’s new justice authorities issued warrants for the arrest of Crimea’s pro-Russia leaders on Monday, six days before a referendum they have called to join the region to Russia.
Russian forces have in little more than a week taken over military installations across Crimea, home to the Russian Black Sea Fleet and Russian territory until Soviet leader Nikita Khrushchev gave it to Ukraine in 1954.
Pro-Russian separatists have taken control of the regional parliament, declared Crimea part of the Russian Federation and announced the referendum for Sunday to confirm this.
President Vladimir Putin says Moscow is acting to protect the rights of ethnic Russians, who make up a majority of Crimea’s population, after Ukraine’s president Viktor Yanukovich was ousted last month in what Russia calls a coup.
BASE TAKEOVER
On Monday, a Ukrainian defence official said a Russian-led military force of about a dozen men fired in the air as they took control of a Ukrainian naval base near the town of Bakhchisaray, though no one was hurt.
The force was accompanied by the base’s Ukrainian commander. He persuaded a number of his men to join the Russian forces while allowing others who refused to leave, the Ukrainian official, Vladislav Seleznyov wrote on Facebook. The Russian force later drove off with nine Ukrainian vehicles.
Yarik Alexandrov, one of the Ukrainian naval personnel who refused to pledge allegiance to Moscow, told Reuters near the base that he and his comrades at first refused to surrender: “Then they started shooting round our feet and we surrendered,” he said. “What could we do? We had no weapons.”
Similar small confrontations have taken place at other Ukrainian bases around Crimea, though shooting has been rare and there has so far been no bloodshed. Russia denies its troops are involved - a stance ridiculed in Kiev and the West.
In a sign of the peninsula’s growing isolation from the Ukrainian mainland, armed men prevented a convoy of cars from a Ukrainian activist group crossing into Crimea.
The group was part of the Maidan movement behind the protests which forced Yanukovich to flee to Russia. Ukrainian television showed men in the uniform of the Berkut riot police, banned by the new authorities for its role in shooting dozens of demonstrators in Kiev last month, blocking the road south.
One was shown firing twice, hitting a man in the chest. His injuries appeared minor, suggesting the use of rubber bullets.
In other armed action, Russian forces took over a military hospital and a missile unit. Reuters correspondents also saw a big Russian convoy on the move just outside the port city of Sevastopol near a Ukrainian air defence base.
It comprised more than 100 vehicles, including around 20 armoured personnel carriers, plus mobile artillery.
CHANCE OF TALKS SPURNED
Putin says Russia is not controlling events in Crimea but denials of Russian involvement are rejected by the United States as the two former Cold War enemies wage a geopolitical battle over the future of Crimea and Ukraine.
Soldiers, believed to be Russian, ride on military armoured personnel carriers on a road near the Crimean port city of Sevastopol March 10, 2014. REUTERS/Baz Ratner
Russian Foreign Minister Sergei Lavrov told Putin that Russia’s position on Ukraine remained at odds with the West, but U.S. Secretary of State John Kerry had declined an invitation to visit Russia on Monday for further talks.
“It is all being formulated as if there was a conflict between Russia and Ukraine ... and our partners suggested using the situation created by a coup as a starting point,” Lavrov told Putin during talks in the Black Sea resort of Sochi.
He did not say why Kerry had postponed the talks.
The State Department said Kerry told Lavrov on Saturday that Washington wanted Moscow to cease its drive to annex Crimea and end “provocative steps”. In a statement, it added: “Kerry made clear to Foreign Minister Lavrov that he would welcome further discussions focused on how to de-escalate the crisis in Ukraine if and when we see concrete evidence that Russia is prepared to engage on these proposals.”
In Kiev, Yatseniuk said he would address the United Nations Security Council during a debate on Ukraine. He is also due to hold talks with the U.S. government which will show Washington’s support of the new Ukrainian leadership.
“Russia’s policy is aimed at undermining the basis of the global security system and revising the outcome of World War Two,” Interfax quoted Yatseniuk as telling reporters.
Western powers have rallied behind Ukraine’s new leaders and on Monday the World Bank said it planned to provide up to $3 billion this year to see Kiev through an economic crisis.
Ukraine’s crisis was triggered in November by Yanukovich’s refusal, under Russian pressure, to sign deals on closer political and trade ties with the European Union.
Although three months of protests against Yanukovich were mostly peaceful, at least 80 demonstrators were killed in clashes after police used force against them, some by sniper fire.
Yanukovich fled Ukraine before a peace deal with the opposition was implemented, and a new national unity government was installed. He is wanted for mass murder in Ukraine and is being sheltered by Russia.
WEST DOES NOT RECOGNISE REFERENDUM
Western countries have denounced the Russian intervention in Crimea and say the borders of Ukraine, a country of 46 million, should remain unchanged. They have said they will not accept the outcome of Sunday’s vote.
Slideshow (15 Images)
“The United States is not prepared to recognise any result of the so-called referendum taking place in six days’ time,” U.S. ambassador Geoffrey Pyatt said in Kiev. “We are committed to Crimea’s status as part of Ukraine. The crisis needs to be solved diplomatically, not militarily.”
In the latest military movements, in Sevastopol, where Russia has its Black Sea Fleet base, Russian forces disarmed servicemen at a Ukrainian army missile base, Seleznyov said.
He told Fifth Channel television that about 200 soldiers aboard 14 trucks moved on the building at about 1.30 a.m and threatened to storm it if the Ukrainian soldiers failed to give up their weapons.
In the eastern city of Luhansk, Ukraine’s security services said they were investigating the takeover on Sunday of the main administrative building. The region’s top official was held captive in a room where he was made to write a letter saying he had resigned but later said he was still performing his duties. ||||| Media playback is unsupported on your device Media caption Mark Lowen went to meet one family fleeing the lawlessness of Crimea
Nato is to deploy reconnaissance planes in Poland and Romania to monitor the Ukrainian crisis.
It gave the go-ahead for the flights on Monday, a Nato spokesman said.
"All Awacs [Airborne Warning and Control System] reconnaissance flights will take place solely over alliance territory," the official said.
It comes as Russia cements its control of Ukraine's Crimea ahead of Sunday's referendum to join Russia. Ukraine and the West say this is illegal.
Analysis The Awacs have some capacity to monitor vehicles on the ground but their chief mission will be reassurance. The flights will be mounted from bases in Germany and the United Kingdom. An Alliance spokesman described the decision as "an appropriate and responsible action in line with Nato's decision to intensify our ongoing assessment of the implications of this crisis for Alliance security". The US has already sought to reassure its allies in Europe by adding six additional F-15 aircraft to the Nato air policing mission over the Baltic Republics and it is also despatching 12 F-16 fighters for a training exercise in Poland.
In the latest move on Monday, armed men - said to be Russian troops and local militias - seized a military hospital in Crimea.
The attackers marched into the hospital in the regional capital Simferopol, threatening staff and some 30 patients.
Pro-Russian troops are also blockading Ukrainian troops across Crimea, which is an autonomous region.
Moscow has officially denied that its troops are taking part in the blockades, describing the armed men with no insignia as Crimea's "self-defence" forces.
The government in Kiev - as well as the US and EU - accuse Russia of invading Ukraine, in violation of international law.
'Enhance awareness'
Nato said the surveillance flights would "enhance the alliance's situational awareness".
Fact box: Awacs Image copyright MOD Airborne warning and control systems, or Awacs, are one of Nato's most sophisticated command and control aircraft
Plane is a modified Boeing 707/320B airliner
Contains a radar system that can detect, identify and track enemy aircraft, and direct fighters to meet them, from the ground up into the stratosphere
Flight crew of four plus mission crew of 13-19
Also used by the US, Britain and France Flying with the E-3D AWACS crew Fact file: E-3 Sentry AWACS
Last week, the organisation said it was reviewing all co-operation with Russia and stepping up its engagement with the government in Kiev.
Nato's announcement on Monday came hours after men in military uniforms broke into the Simferopol hospital, where Ukrainian soldiers and veterans were being treated. Some of the patients were reported to be seriously ill.
The hospital director said he was forced onto a bus and kept there for half-an-hour.
The attackers also herded staff into a reception to apparently meet "the new directors", Ukraine's Interfax-Ukraina news agency reports.
Separately, pro-Russian troops tried to capture a military transport base in Bahkchysarai, a town between Simferopol and the city of Sevastopol.
The gunmen fired warning shots into the air, but Ukrainian soldiers repelled the attack.
Step-by-step, and meeting very little resistance, the pro-Russian troops are dismantling Ukraine's ability to resist in Crimea, says the BBC's Christian Fraser, who is in the region.
Cossacks in Russia Image copyright Getty Images Trace their origin from the steppes areas in the modern-day Ukraine and Russia
Describe themselves as "free men" and famous for rebellious spirit
Have formed "military communities" for centuries
Russian Cossacks took part in many tsarist military campaigns
Gradually settled in border buffer zones as Russian empire expanded
Many fought against Bolsheviks after 1917 revolution and fell out of favour in Soviet era
Since fall of USSR, have taken active part in post-Soviet conflicts, including Crimea crisis
Seen as defenders of conservative traditions
Famous for whips and colourful clothing
On Sunday, tens of thousands of people in Ukraine held rival pro-unity and pro-Russian rallies.
Moscow supporters beat up their opponents in Sevastopol. Some of the attackers were Russian Cossacks with whips.
Pro-Russian activists also seized regional offices in the eastern city of Luhansk, forcing the governor to resign.
Russian President Vladimir Putin earlier defended Crimea's decision to stage a referendum on 16 March. Mr Putin said "the steps taken by Crimea's legitimate authorities are based on international law".
However, German Chancellor Angela Merkel told him in a phone call that she considered the vote illegal.
Both EU leaders and the US have warned Moscow they would slap even tougher sanctions if Russian troops remained in Crimea.
Unrest in Ukraine erupted in November after former President Viktor Yanukovych's last-minute rejection of a landmark EU deal in favour of a bailout from Russia.
Mr Yanukovych was ousted last month, and a new government has been voted in by the Ukrainian parliament which Russia says was a "coup". | As many as 30 armed men said to be Russian soldiers today seized control of a military hospital in Crimea, threatening staff and 30 patients in the regional capital of Simferopol. The men broke into the hospital, which treats soldiers and veterans, some of whom are said to be seriously ill, and brought the staff into a room to meet "the new directors." The hospital director says he was forced onto a bus and held there for 30 minutes, the BBC reports. Meanwhile, about 10 unidentified armed men fired into the air as they attempted to take control of a Ukrainian naval post in Crimea, Reuters reports. The BBC says these were also pro-Russian troops, but that Ukrainian soldiers drove them back. Pro-Russia troops have blockaded Ukrainian troops and taken over military installations elsewhere in Crimea. Crimea votes Sunday whether to secede from Ukraine and join Russia, in a referendum Kiev and Western nations say is illegal. NATO agreed today to deploy jets to monitor the Ukrainian borders. |
Congressional and consumer interest in passenger natural gas vehicles (NGVs) has grown in recent years, especially in response to higher gasoline prices, concerns over the environmental impact of petroleum consumption for transportation, and policy proposals such as the "Pickens Plan." Although natural gas passenger vehicles have been available for years, they have been used mostly in government and private fleets; very few have been purchased and used by consumers. Larger NGVs—mainly transit buses and delivery trucks—also play a role in the transportation sector, especially due to various federal, state, and local incentives for their use. However, high up-front costs for new NGVs, as well as concerns over vehicle performance and limited fuel infrastructure, have led to only marginal penetration of these vehicles into the personal transportation market. The Energy Information Administration (EIA) estimated that there were roughly 114,000 compressed natural gas (CNG) vehicles in the United States in 2009, and roughly 3,000 liquefied natural gas (LNG) vehicles. Roughly two-thirds of NGVs are light-duty (i.e., passenger) vehicles. This compares to roughly 235 million conventional (mostly gasoline) light-duty vehicles. Further, of the roughly 11.6 million new light-duty vehicles sold in 2009, only about 400 (0.004%) were NGVs. For model year (MY) 2012, only two passenger NGVs are available from original equipment manufacturers (OEMs) for purchase by consumers—the CNG-fueled Honda Civic GX and the Vehicle Production Group MV-1 —although some companies convert vehicles to CNG before they are sold (usually as fleet vehicles). While the current purchase prices for NGVs exceed those of conventional vehicles, much of this difference can be made up over the life of the vehicle in fuel cost savings. For example, the incremental price between a conventional Honda Civic EX and a natural gas-powered Honda Civic GX is over $5,000. Through 2010 some of this difference was made up through a tax credit for the purchase of new alternative fuel vehicles, but that tax credit has since expired. It should be noted that with higher production, this incremental cost should decrease, but the likely extent of that decrease is unclear. Since the number of natural gas refueling stations is limited—only about 400 publicly available nationwide, compared to roughly 120,000 retail gasoline stations —the purchaser of a new NGV might also choose to install a home refueling system. According to Consumer Reports and Natural Gas Vehicles for America (NGVAmerica), a FuelMaker Phill system costs between $3,400 and $4,500 plus installation. However, through the end of 2011 a taxpayer could offset $1,000 of this by claiming a tax credit for installing new alternative fuel refueling infrastructure. Offsetting the higher up-front costs are likely annual fuel savings in switching from gasoline to natural gas. Using average retail gasoline and residential natural gas prices from January 2011, annual fuel cost savings could be roughly $600. Assuming a 3% discount rate, the payback period for the CNG vehicle and home refueling system is more than 17 years. Given that this is roughly the median survival age for new passenger vehicles, this payback period may or may not be acceptable to that consumer. Assuming a smaller differential between natural gas and gasoline prices, or other factors (e.g., the expiration of tax incentives), can significantly increase this payback period; assuming a larger difference in fuel prices (as was the case in spring 2011), assuming a smaller discount rate, or assuming incremental natural gas vehicle prices decrease in the future, this payback period could be shorter. In addition to the life-cycle cost difference between CNG and conventional vehicles, there are other costs and benefits associated with NGVs that may not have a defined market price tag. For example, any reduction in petroleum dependence (beyond the per-gallon cost savings) is not represented in the above payback period estimate. Some consumers may place a value on displacing petroleum consumption, and thus imports. Further, NGVs in general have lower pollutant and greenhouse gas emissions than comparable gasoline vehicles, although this may or may not be true for specific vehicles and pollutants. A key potential benefit raised by proponents of NGVs is that while the United States imports the majority of the petroleum it uses, most natural gas is domestically produced. Further, domestic output is higher than once thought, mainly due to recent growth in unconventional natural gas sources (e.g., coal mine methane, shale gas). But there are also several potential and measurable drawbacks to NGVs, many related to vehicle performance and acceptability. For example, CNG engines tend to generate less power for the same size engine than gasoline engines. Thus NGVs tend to have slower acceleration and less power climbing hills. Also, because CNG has a lower energy density than gasoline, CNG vehicles tend to have a shorter range than comparable gasoline vehicles. In addition, for passenger vehicles, the larger natural gas storage tanks often occupy space that would otherwise be used for cargo—generally in the trunk of a sedan and in the bed of a pickup truck. Again, these considerations may or may not play into a individual purchaser's decision, but could affect the overall marketability of the vehicles. A key question raised by those interested in the expansion of natural gas for automobiles is whether existing vehicles can be converted to operate on natural gas. From a technical feasibility standpoint, there are few problems with converting a vehicle to operate on natural gas. Most existing engines can operate on the fuel, and most conversions involve changes to the fuel system, including a new fuel tank, new fuel lines, and modifications to the vehicle's electronic control unit. Until recently, when EPA reduced restrictions, converting an existing vehicle was more problematic from a practical standpoint. In the United States, NGV conversions—or any other fuel conversion—can potentially run afoul of the Clean Air Act (CAA). All new vehicles (gasoline or otherwise) must pass rigorous tests to prove they will meet emissions standards over the life of the vehicle. These tests tend to be very expensive, although the marginal cost spread over a full product run—thousands to hundreds of thousands of vehicles—is minimal. After a vehicle has been certified by the Environmental Protection Agency (EPA), any changes to the exhaust, engine, or fuel systems may be considered tampering under the CAA. Section 203(a)(3)(A) states that it is prohibited for any person to remove or render inoperative any device or element of design installed on or in a motor vehicle or motor vehicle engine in compliance with regulations under this title prior to its sale and delivery to the ultimate purchaser, or for any person knowingly to remove or render inoperative any such device or element of design after such sale and delivery to the ultimate purchaser. EPA generally interprets this to mean that any change to a vehicle's engine or fuel systems that leads to higher pollutant emissions constitutes "tampering" under Section 203. In 1974, EPA issued guidance ("Memorandum 1A") to automaker and auto parts suppliers on what constituted tampering in terms of replacement parts under routine maintenance. The guiding principle EPA has used in enforcing the anti-tampering provisions for alternative fuel conversions is that such changes are allowed as long as the dealer has "reasonable basis" to believe that emissions from the vehicle will not increase after the conversion. Instead of requiring all converted vehicles to undergo testing equivalent to new vehicle testing, EPA allowed vehicle converters flexibility in certifying their emissions. However, in the 1990s, EPA received data from the National Renewable Energy Lab that many vehicles converted to run on natural gas or liquefied petroleum gas (LPG) and certified under the flexibility provisions might be exceeding emissions standards. Therefore, in 1997 EPA issued an addendum to Memorandum 1A tightening the testing standards for these conversions. The original decision required compliance with new testing procedures starting in 1999. Subsequent revisions extended the deadline through March 2002. Under guidance from the 1990s and 2000s, certifying vehicle conversions could be very expensive for small producers, since each vehicle needed to be independently certified. For example, a converter needed to test the emissions of the conversion of specific "engine families" (e.g., MY2008 Ford Vehicles with 4.6L V8 engines). Each different engine/emissions system combination was tested independently (e.g., MY2009 vehicles, or vehicles with different engines). Therefore, the production and use of universal "conversion kits" was effectively prohibited under the EPA enforcement guidance. NGVAmerica estimated that it could cost as much as $200,000 to design, manufacture, and certify a conversion for a single engine family under the then-current guidance. On April 8, 2011, EPA issued final regulations on alternative fuel vehicle conversions. The regulations provide new flexibility for converters to certify that their conversions do not violate the CAA anti-tampering provisions. Most notably, while most requirements for conversions of "new and relatively-new" remain relatively unchanged—these vehicles must still generally go through all new vehicle testing—EPA has relaxed requirements for "intermediate age" vehicles and "outside of useful life" vehicles. EPA estimates that the total certification costs (emissions testing, administrative costs, etc.) will be reduced for all three classes of vehicles. Cost reductions for intermediate age and outside of useful life vehicles could be dramatic. For older vehicles, less detailed testing is required—much of the savings comes from minimal testing of the on-board diagnostic (OBD) system for older vehicles. Another key flexibility for all groups is that while EPA's certification expires after one year, EPA has determined that, assuming conditions do not change significantly (e.g., the conversion kit is not modified after the system is certified), EPA's waiver of the anti-tampering provisions remains in effect. There may be other issues with the expiration of the certification, but conversions would not run afoul of the CAA. Some have questioned whether a vehicle conversion would void the original manufacturer's warranty. However, only those vehicle systems directly modified by the conversion would raise warranty concerns. In those cases, the conversion manufacturer's warranty would cover the modified systems. For systems not affected by the conversion (e.g., suspension, climate control), the original manufacturer's warranty would still apply. Several bills have been introduced in recent years to promote NGVs and NGV infrastructure. Most notably in the 112 th Congress, the New Alternative Transportation to Give Americans Solutions Act (Nat Gas Act) of 2011 ( H.R. 1380 and S. 1863 ) would provide a wide range of incentives. The Nat Gas Act would reinstate the tax credit for the purchase of NGVs (which expired at the end of 2010), significantly expand the tax credit for the installation of natural gas refueling infrastructure, and extend both credits through 2016. The bill would also provide a tax credit to automakers who produce NGVs, and would authorize grants to those automakers to develop natural gas engines. Higher gasoline prices and concerns about U.S. oil dependence have raised interest in NGVs. Energy policy proposals such as the Pickens Plan have further raised interest in these vehicles. However, currently the number of new passenger vehicles capable of operating on natural gas is relatively low, and there are limited opportunities for converting existing gasoline vehicles to run on natural gas. The market for NGVs will likely remain limited unless the differential between natural gas and gasoline prices remains high in order to offset the higher purchase price for a natural gas vehicle or if new incentives are established to decrease the differential in initial vehicle purchase prices. New EPA regulations on NGV conversions could help promote the expansion of NGVs by lowering the cost of entry for conversion companies. | Higher gasoline prices in recent years and concerns over U.S. oil dependence have raised interest in natural gas vehicles (NGVs). Use of NGVs for personal transportation has focused on compressed natural gas (CNG) as an alternative to gasoline. Consumer interest has grown, both for new NGVs as well as for conversions of existing personal vehicles to run on CNG. This report finds that the market for natural gas passenger vehicles will likely remain limited unless the price for natural gas remains substantially lower than gasoline to offset the higher purchase price for an NGV. The Environmental Protection Agency (EPA) promulgated new regulations in April 2011 on alternative fuel vehicle conversions—including natural gas conversions. The new regulations allow greater flexibility for conversion companies to certify that their conversions do not lead to higher emissions—flexibility that could lead to significantly lower compliance costs. This could help spur the proliferation of natural gas conversions, especially for older vehicles. |
RS21288 -- Smallpox: Technical Background on the Disease and Its Potential Role in Terrorism Updated January 10, 2003 Viruses are essentially small pieces of genetic material in a protein coat. They cannot reproduce by themselves. To multiply, a virus must hijack the replicationmachinery in living cells by infecting another organism. Smallpox is caused by the Variola virus, which undernormal circumstances only infects human cells. There are two types of Variola viruses. Variola minor causes a relatively mild disease that has less thana 1% fatality rate. Variola major causes what isgenerally thought of as smallpox, a very severe illness with a fatality rate of approximately 30%. (1) These viruses are part of the Orthopox genus whichalsocontains the viruses responsible for vaccinia, monkeypox, cowpox, camelpox and mousepox. (2) Before the last reported case of smallpox (a result of a laboratory accident in England in 1978), smallpox was considered to be one of the worst scourges inhuman history. Smallpox is estimated to have killed between 300 and 500 million people in the twentieth centuryalone. Once infected, the victim incubates the virus for seven to seventeen days during which the victim feels and appears normal. This stage is followed by one tofour days of high fever, malaise, headache, and muscle ache, often accompanied with nausea and vomiting. Duringthis time the person looks and feels very ill,but is not yet contagious. After this stage, the characteristic sores develop; first in the mouth then over the rest ofthe body. If the victim survives, the soresscab over and turn to scars in three to four weeks. About 30% of unvaccinated victims die (some sources suggestup to 50%). Up to 80% of the survivors aredisfigured by pockmarks or limb deformities. Smallpox is contagious, but the Centers for Disease Control and Prevention (CDC) (3) considers it to spread less widely and less rapidly than chickenpox,measles, whooping cough, or influenza. The victim is most likely to infect other people when the sores in the mouthare most active. This is in the first weekof the rash when virus comes out of the sores and into the saliva where they are easily aerosolized by coughing orsneezing. Although smallpox is usuallytransmitted by face to face contact, it can also be transmitted through the air over dozens of feet and by contaminatedclothing or bedding. The vaccine works by infecting a person with vaccinia virus which is closely related to smallpox virus. (4) The vaccine triggers immunity against all closelyrelated viruses, including smallpox. This immunity decreases over time; however, people who contract smallpoxeven thirty years after vaccination are muchless likely to die than unvaccinated people. (5) Interestingly, the vaccine also helps reduce the severity of the disease if given to victims within a few days aftersmallpox exposure. This is the only known treatment for smallpox, although several antiviral drugs have shownpromise in preliminary laboratory studies. Although the vaccinia vaccine is very effective at preventing smallpox, it is not without risks. Its complication rate is higher than that associated with anyroutinely used vaccine. Based on historical experience, experts estimate that most vaccinees will experience onlymild side effects such as low-grade fever, but1 in 797 people will experience serious side effects. Table 1 describes the historical complicationrates. Table 1. Historical smallpox vaccine complication rates (cases/million vaccinations) Source: CDC, Morbidity and Mortality Weekly Report, June 22, 2001, Vol. 50, No. RR-10, p.8. Inadvertent inoculation is the spread of the usually localized vaccinia infection to other parts of the body, causing sores and scarring most commonly on theface, genitals, and rectum. Generalized vaccinia causes vaccinia sores over the entire body. Eczema vaccinatumis a sometime fatal skin infection in peoplewho have a skin disorder such as eczema or atopic dermatitis. Encephalitis is a very serious and sometimes fatalinflammation of the brain. Progressivevaccinia is an inexorable rotting away of the flesh around the vaccine site that can sometimes also be fatal. As aresult of these complications, experts project1-2 deaths per million vaccinations. Complications are not limited to people who get vaccinated. People who come into contact with those who have been vaccinated within two weeks may also beexposed to the live vaccinia virus and develop complications. Some experts estimate that up to 20% of thecomplications will occur in the unvaccinatedcontacts. Historically, for every million people vaccinated, about 65 people who were not vaccinated becameinfected and developed a serious complicationsimply by coming into contact with a vaccinee. (6) Because of the high rate of vaccine complications, in 1971, U.S. public health authorities rescinded therecommendation for universal domestic smallpox vaccination. It is likely that the numbers in Table 1 underestimate the current and future problem with the vaccine. Since these numbers were last compiled in 1968, thenumber of people predisposed to problems with the vaccine has increased. Some experts estimate that up to 25%of the population now have conditions thatwould make vaccination contraindicated. These conditions include a history of eczema or other exfoliative skindisorder, pregnancy, or any immunodeficiencywhich could be caused by AIDS, chemotherapy or anti-rejection drugs following organ transplant. Because of theserious risk of transferring the virus to ahousehold member, it is recommended that people who live with someone with one of the above conditions notreceive the vaccine. Excluding these people iscomplicated by the large number of people who are unaware that they have a disease that will produce a serious sideeffect. For example, a vaccinee could livewith one of the estimated 300,000 people in the United States that do not know they are HIV positive. The only product proven to counter some of the vaccine complications is vaccinia immunoglobulin (VIG). This is extracted from the blood of peoplevaccinated with the smallpox vaccine. It is only effective for treatment of eczema vaccinatum and certain cases ofprogressive vaccinia. Significantly, VIGprovides no benefit in the treatment of postvaccinial encephalitis. Current civilian supplies of VIG are controlledby the CDC and are estimated to be enough todeal with the complications from about 27 million vaccinations. The CDC is in the process of procuring more VIG. Because the antiviral drug cidofovir hasshown some anti-vaccinia activity in lab animals, it is available for use as an Investigational New Drug when VIGtreatment fails. Although smallpox was officially declared to have been eliminated from the wild in 1980, many countries maintained laboratory stocks of the virus obtainedduring outbreaks. By 1985, these stocks were supposed to have been destroyed or transferred to one of the officialrepositories; one in the Soviet Union and theother in the United States. Russia inherited the smallpox stewardship following the break up of the Soviet Union. Although only the United States and Russia have declared stocks ofsmallpox, some experts have stated that although very unlikely, it is possible that some other countries haveundeclared stocks. Countries that may havedeliberately or inadvertently retained smallpox virus from naturally occurring outbreaks before eradication include:China, Cuba, India, Iran, Iraq, Israel, NorthKorea, Pakistan, and Yugoslavia. (7) A November2002 CIA intelligence review added France to this list and reportedly states a "high, but not very high [levelof] confidence" that Iraq and France have live smallpox samples and a "medium" level of confidence that NorthKorea does. (8) The highest barrier to a non-state sponsored terrorist using smallpox is likely to be the difficulty in obtaining the virus in the first place. Because all countrieshave stopped smallpox vaccination programs, citizens of all countries are equally vulnerable to a spreadingepidemic. Therefore, it is in the best interest of acountry with even an undeclared smallpox stock to keep it very secure. Despite this, some fear that the Russianstocks may not be sufficiently secure due to theeconomic collapse that accompanied the break up of the Soviet Union. Other than from a government controlled stockpile, some have suggested that it may be possible to acquire the virus from the bodies of smallpox victims buriedin the Siberian permafrost in the 1800s. However, this is probably unlikely since Russian experts have been unableto acquire viable virus this way despitemultiple attempts. (9) In 2002, American scientistssuccessfully constructed infectious polio virus from mail-ordered pieces of DNA. (10) However, most expertsclaim that it would be very difficult to construct Variola virus in this manner. For more information on this topic,see CRS Report RS21369(pdf) SyntheticPoliovirus: Bioterrorism and Science Policy Implications . If a terrorist organization were able to obtain a sample of virus, it would also need the advanced technical knowledge, skill and facilities to maintain the viruswithout infecting themselves until the planned dissemination. It is considered to be quite difficult to "weaponize"smallpox. (11) However, in general,weaponization refers to developing advanced delivery systems such as missiles, artillery, or bombs to cause masscasualties. This technological barrier wouldbe much lower for a terrorist. A terrorist, who was not concerned with his own survival could potentially use hisown body as the delivery system, infectingdozens of people before succumbing to the disease. In addition to the threat posed by terrorist groups, it is possible that another nation may choose to use smallpox against the United States. Some experts suggestthat of the countries that might have undeclared stocks of smallpox virus, Iraq may pose the most danger to theUnited States. Some experts believe that it isvery unlikely that Iraq has smallpox since they did not use it during the Gulf War. However, those who feel thatIraq has the smallpox virus counter that itwould not have been used because it is not well suited for battlefield deployment since it is contagious and likelyto infect troops on both sides. Some expertsalso believe that Iraq was dissuaded from using chemical or biological weapons by what could have been interpretedas a thinly veiled threat of nuclearretaliation. (12) In the current situation of risingtensions, some experts have stated that if Iraq has the capability, Saddam Hussein may unleash smallpox as aweapon of last resort, particularly if he can deploy it covertly on United States soil. (13) In December 2002, the Administration reserved the right to use nuclearweapons to respond to the use of weapons of mass destruction against the United States or its allies. (14) Nonetheless, most experts feel that the barriers posed by acquisition and successful deployment of smallpox virus are high enough to make such an attack veryunlikely. Furthermore because of these hurdles, most experts feel that a terrorist organization would require a statesponsor in order to successfully obtain anddeploy smallpox. Although most experts deem the risk of a smallpox attack to be very low, the high consequences of a release have led the President to order the vaccination ofapproximately 500,000 people in the armed forces and to initiate a voluntary program to encourage as many as 10million medical workers and first respondersto be vaccinated. By the middle of 2003, the vaccine will be available on demand to any American adult who is notin a high-risk group for complications. However, the Administration will not recommend vaccination for members of the general public because of the highcomplication rate. (15) Scientific research may be able to further limit the threat posed by smallpox. If a safer smallpox vaccine could be produced, for instance, public health officialswould be less reluctant to recommend mass vaccination. The development of such a vaccine is stymied by severalfactors. One is that it is difficult to predictbefore making a large investment whether a new vaccine will be safer and still effective against smallpox. (16) Another factor is the uncertain market of atherapeutic agent that is designed to protect against what most experts agree is a very unlikely event. Without aguaranteed market, the commercial sector maybe reluctant to make such investments. Some experts suggest that, in general, it may be better to develop treatments rather than relying on prophylactic measures for the many potential biologicalagents that could be used to attack the United States. They suggest that the financial and societal costs of multiplemass vaccination programs may make avaccines-only approach impractical. Some scientists are working on producing antiviral drugs as a cure forsmallpox and several have shown promise inpreliminary studies. (17) However, more work needsto be done to improve animal models of smallpox so that the efficacy of new therapeutics can be tested. (18) Another potential advantage of this approach is that these drugs may be effective against other viruses and thereforemight be marketable as treatments forinfluenza or AIDS. The United States might be better equipped to defend against a smallpox attack if the status of any undeclared smallpox stocks could be determined with greatercertainty. For example, if it could be determined that Iraq does not have any smallpox then focus could be shiftedto preventing terrorist access to other sources. Unfortunately, it is possible that Iraq could successfully hide a smallpox program from any inspection regime. The United States is helping to increase the security of the former Soviet Union's biological weapon stockpiles. By focusing on the physical security of theagents and the economic security of the scientists, these programs simultaneously reduce the threat posed by all ofthe agents in the former Soviet Union'sarsenal. For a comprehensive discussion of these programs, see CRS Report RL31368(pdf) PreventingProliferation of Biological Weapons: U.S. Assistance to theFormer Soviet States . | Smallpox, which kills approximately 30% of its victims, is estimated to have killedbetween 300 and 500 millionpeople in the twentieth century before the World Health Organization's successful eradication program. Thesmallpox vaccine is effective at preventingsmallpox but has a higher complication rate than any other currently used vaccine. The terrorist attacks of 2001have increased fears that smallpox might beused as a weapon of terror. Smallpox has several properties that might make it desirable by terrorists, such ascontagiousness and high lethality. These factorsand its limited availability also make it difficult for a terrorist to use. Most experts agree that it is very unlikely thatsmallpox will be used as a weapon, but thehigh consequences of a successful attack have prompted exploration of methods to counter this threat. Also seeCRS Report RL31694 Smallpox VaccineStockpile and Vaccination Policy and CRS Report RL31368(pdf), Preventing Proliferation of BiologicalWeapons: U.S. Assistance to the Former Soviet States. This report will updated as warranted. |
In the first confirmation that Department of Veterans Affairs administrators manipulated medical waiting lists at one and possibly more hospitals, the department’s inspector general reported on Wednesday that 1,700 patients at the veterans medical center in Phoenix were not placed on the official waiting list for doctors’ appointments and may never have received care.
The scathing report by Richard J. Griffin, the acting inspector general, validates allegations raised by whistle-blowers and others that Veterans Affairs officials in Phoenix employed artifices to cloak long waiting times for veterans seeking medical care. Mr. Griffin said the average waiting time in Phoenix for initial primary care appointments, 115 days, was nearly five times as long as what the hospital’s administrators had reported.
He suggested that the falsified data may have led to more favorable performance reviews for hospital personnel, and he indicated that some instances of potentially manipulated data had been turned over to the Justice Department.
Mr. Griffin said that similar kinds of manipulation to hide long and possibly growing waiting times were “systemic throughout” the sprawling Veterans Affairs health care system, with its 150 medical centers serving eight million veterans each year. The inspector general’s office is reviewing practices at 42 Veterans Affairs medical facilities.
Mr. Griffin’s report brought immediate political consequences. For the first time since the controversy erupted last month, several Senate Democrats, including Mark Udall of Colorado and John Walsh of Montana, demanded that the secretary of veterans affairs, Eric Shinseki, step down, joining Republican lawmakers who have been making that demand for weeks.
Senator John McCain, Republican of Arizona, a former naval aviator who was a prisoner of war during the Vietnam War and is now an influential voice on veterans issues, also called on Wednesday for Mr. Shinseki to resign. Along with several other leading Republican lawmakers who had been withholding judgment, Mr. McCain asked the F.B.I. to investigate the Phoenix hospital. Mr. Griffin previously said that he was working with the Justice Department to examine whether criminal violations had occurred there.
Mr. Shinseki, in a statement, called the findings “reprehensible to me” and ordered the department to “immediately triage each of the 1,700 veterans” and give them timely care. The department suspended two senior officials at the Phoenix medical center shortly after the allegations of falsified waiting lists became public this month.
Jay Carney, the White House press secretary, said President Obama found the report “extremely troubling,” but he did not indicate whether Mr. Shinseki had lost the confidence of the White House.
Mr. Griffin’s interim report — the final version is expected by August — did not address the most explosive allegations made about the Phoenix facility: that as many as 40 veterans who were never put on the official list for doctors’ appointments might have died while awaiting care. He said determinations could be made only after examining autopsy reports and other documents that were still being reviewed. He had previously said that after reviewing 17 of those cases, he had found no indication that any of those deaths were tied to delays.
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But the rest of his report was sweeping in its indictment of the Phoenix hospital, and contained sharp criticism of much of the rest of the veterans health care bureaucracy.
“While our work is not complete, we have substantiated that significant delays in access to care negatively impacted the quality of care at this medical facility,” Mr. Griffin said.
Irregularities in how the 1,700 veterans were handled, he added, mean that “these veterans may never obtain a requested or required clinical appointment.”
Investigators from the inspector general’s office reviewed a sample of 226 patients and found that they waited an average of 115 days for their first primary care appointment at the Phoenix medical center, but their average waiting time was reported to the national Veterans Affairs office as being only 24 days.
The interim report did not dwell on the motivations for falsely reporting waiting times, nor did it single out any employees or hospital administrators by name.
But it stated that a “direct consequence” of the inappropriate waiting lists was that the medical center’s leadership “significantly understated the time new patients waited for their primary care appointment” in its performance appraisal accomplishments for the 2013 fiscal year, which was a factor considered for bonuses and salary increases.
Mr. Griffin also suggested that his team may have already found some indication of criminal wrongdoing. “When sufficient credible evidence is identified supporting a potential violation of criminal and/or civil law, we have contacted and are coordinating our efforts with the Department of Justice,” he wrote.
He said in his report that his investigators had identified several types of improper scheduling practices in Phoenix. They found multiple waiting lists aside from the official electronic waiting list, and said that “these additional lists may be the basis for allegations of creating ‘secret’ wait lists” that have been cited by whistle-blowers.
The allegations identified by investigators were not limited to waiting lists. Mr. Griffin said his office had received “numerous allegations daily of mismanagement, inappropriate hiring decisions, sexual harassment, and bullying behavior by mid- and senior-level managers at this facility.”
Mr. Shinseki, a soft-spoken former four-star Army general and chief of staff, has had support on Capitol Hill from some lawmakers partly because of his long military career.
But the release of the inspector general’s report increased the pressure on him to step down, especially after some Senate Democrats broke with others in the party late in the day to demand his removal.
Mr. Walsh, the Montana senator, said that the report “confirms the worst of the allegations against the V.A.,” and that “it’s time to put the partisanship aside and focus on what’s right for our veterans.”
Representative Jeff Miller, the Florida Republican who is the chairman of the House Veterans Affairs Committee, said the report “confirmed beyond a shadow of a doubt what was becoming more obvious by the day: wait time schemes and data manipulation are systemic throughout V.A. and are putting veterans at risk in Phoenix and across the country.”
Mr. Miller had previously held off on calling for Mr. Shinseki’s resignation, but he did so on Wednesday, saying that the former general “appears completely oblivious to the severity of the health care challenges facing the department.”
Mr. McCain said on CNN that he had intended to wait to comment on Mr. Shinseki’s future until further hearings were held on the issue. But after hearing about the report, he decided to speak out.
“I think it’s reached that point,” he said. “This keeps piling up.” ||||| Story highlights A veterans group demands a criminal investigation of medical center practices
1,700 veterans will be contacted by the end of business Friday, a VA official says
VA Secretary Eric Shinseki is on ''thin ice'' with Obama, a White House official says
The scope widens, with 42 medical centers now under investigation
At least 1,700 military veterans waiting to see a doctor were never scheduled for an appointment and were never placed on a wait list at the Veterans Affairs medical center in Phoenix, raising the question of just how many may have been "forgotten or lost" in the system, according to a preliminary report made public Wednesday.
Describing a "systemic" practice of manipulating appointments and wait lists at the Phoenix Health Care System, the VA's Office of Inspector General called for a nationwide review to determine whether veterans at other locations were falling through the cracks.
It also appears to indicate the scope of the inquiry is rapidly widening, with 42 VA medical centers across the country now under investigation for possible abuse of scheduling practices, according to the report.
JUST WATCHED Scathing report released on VA scandal Replay More Videos ... MUST WATCH Scathing report released on VA scandal 02:57
Among the findings at the Phoenix VA, investigators determined one consequence of manipulating appointments for the veterans was understating patient wait times -- a factor considered for VA employee bonuses and raises, the report said.
The preliminary report sparked outrage from all corners, with Veterans Affairs Secretary Eric Shinseki calling the findings "reprehensible" and ordering the 1,700 veterans be immediately "triaged" for care, while some lawmakers called for the agency's chief to resign.
Shinseki has been on "probation" since President Barack Obama vowed last week to hold accountable those responsible for the delays, and he remains on "thin ice" with the President pending the outcome of the internal investigations, a White House official, speaking on condition of anonymity, told CNN.
The VA is under fire over allegations of alarming shortcomings at its medical facilities. The controversy, as CNN first reported, involves delayed care with potentially fatal consequences in possibly dozens of cases.
CNN has reported that in Phoenix, the VA used fraudulent record-keeping -- including an alleged secret list -- that covered up excessive waiting periods for veterans, some of whom died in the process.
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'Numerous allegations'
The big questions remain under investigation, according to the report: Did the facility's electronic wait list omit the names of veterans waiting for care and, if so, at who's direction?
And were the deaths of any of these veterans related to delays in care?
"To date our work has substantiated serious conditions at the Phoenix facility," said the report, which also found another 1,400 veterans were on the Phoenix VA's formal electronic wait list but did not have a doctor's appointment.
The report also found "numerous allegations" of "daily of mismanagement, inappropriate hiring decisions, sexual harassment, and bullying behavior by mid- and senior-level managers."
Calling the report's initial findings "damning," House Veterans' Affairs Committee Chairman Jeff Miller, R-Florida, said "you can only imagine" what might come out once a fuller investigation is completed.
The investigation is expected to be completed later this summer, with a final report issued by the VA inspector general in August.
The report's findings prompted the American Legion to call for a criminal investigation.
"We want every VA employee who participated in these cover-ups to be investigated and prosecuted to the full extent of the law ..." the veterans group said in a written statement.
The U.S. Department of Justice is reviewing the interim report, Peter Carr, a Justice Department spokesman, said. "We will continue to consult with the inspector general's office regarding their ongoing review," he said.
Calls for Shinseki's resignation
Sen. John McCain, an Arizona Republican, told CNN it was "about time" the Justice Department launched its own investigation.
"I haven't said this before, but I think it's time for Gen. Shinseki to move on," McCain said.
There have been calls from other members of Congress for him to step down over the scandal, but McCain's voice on military matters carries enormous weight considering his experience as a combat veteran, a Vietnam prisoner of war, and his work in the Senate on related issues.
A number of Senate Democrats, all up for re-election this year, also called for Shinseki to leave his post.
Among them was Sen. Mark Udall of Colorado who took to Twitter with his message: "In light of IG report & systemic issues at @DeptVetAffairs, Sec. Shinseki must step down."
Sen. Al Franken of Minnesota said a change in leadership is needed.
"I believe it would be in the best interest of veterans for Secretary Shinseki to step down," he said.
Sen. Jeanne Shaheen of New Hampshire said "fundamental problems plague the agency."
"It's time for a forceful new leader to address the outrageous problems at the VA," she said.
Deputy National Security Adviser Tony Blinken told CNN that President Barack Obama has been briefed on the report, and found it "deeply troubling."
When pressed on whether Obama still supports Shinseki, Blinken said: "We're focused on making sure these veterans who've delivered for this country get the care they need."
IG: 'Take immediate action'
The VA has acknowledged 23 deaths nationwide due to delayed care. The VA's inspector general, Richard Griffin, told a Senate committee in recent weeks that his investigation so far had found a possible 17 deaths of veterans waiting for care in Phoenix, but he added that there was no evidence that excessive waiting was the reason.
Griffin recommended that Shinseki "take immediate action" to "review and provide appropriate health care" to the 1,700 veterans identified in Phoenix as not being on a wait list.
It also recommended that he initiate a nationwide review of waiting lists "to ensure that veterans are seen in an appropriate time, given their clinical condition."
The report came just hours before the start of a combative House committee hearing on the Phoenix VA issues, where Republican and Democratic leaders said they were dissatisfied with the VA's response to their panel's subpoena for documents on shortcomings related at the agency's Phoenix medical center.
"Veterans died. Give us the answers, please," Jeff Miller, a Florida Republican, told one of three senior VA officials called to testify.
The committee's senior Democrat, Michael Michaud of Maine, was equally sharp with the witnesses, who initially sparred with lawmakers over the agency's response for documents before answering questions about Phoenix.
"Let me be clear, I'm not happy. We do expect answers. We'll get to the bottom of this," Michaud said.
Dr. Thomas Lynch, the VA's assistant deputy under secretary for clinical operations, told the committee there are plans in place to contact the 1,700 veterans in Phoenix by the close of business on Friday to assess their needs and get them care.
Lynch, who said he agreed with the interim report's findings, believes that overarching agency goals for reducing wait times for care are flawed.
"What's happened is unacceptable," he said. | At least 1,700 veterans awaiting treatment from the Department of Veteran Affairs' now-infamous Phoenix medical center were kept off of any official waiting list, putting them "at risk of being forgotten or lost," according to a damning initial report from the department's inspector general. What's more, the patients the IG surveyed waited an average 115 days for a first primary care appointment—a far cry from the 24 days the center reported to the VA, the New York Times reports. The investigation also found "numerous allegations" of "mismanagement, inappropriate hiring decisions, sexual harassment, and bullying behavior by mid- and senior-level managers." The report doesn't touch on allegations that as many as 40 deaths were tied to waiting list shenanigans. On CNN, John McCain responded to the report by calling on the Justice Department to launch its own probe. "I haven't said this before, but I think it's time for General Shinseki to move on," he added. (The Army fired the head of the Womack medical facility after the deaths of two patients in their 20s.) |
Image caption Silvio Berlusconi proclaimed his innocence in a video message after the verdict
Italy's highest court has upheld a prison sentence given to former PM Silvio Berlusconi for tax evasion.
The court also ordered a further judicial review on whether he should be banned from holding public office.
In an emotional video statement, Berlusconi denounced the decision as "based on nothing, and which deprives me of my freedom and political rights".
The sentence cannot be appealed against further but Berlusconi, 76, is unlikely to go to jail because of his age.
The ruling by the Court of Cassation in Rome came after a three-day hearing. Berlusconi was not in court.
The former prime minister was sentenced to four years in prison at the conclusion of the trial last October, though this was automatically reduced to a year under a 2006 pardon law.
Berlusconi is likely to serve house arrest or carry out community service.
His lawyers described Thursday's ruling as "unjust".
Analysis The courtroom dramas of Silvio Berlusconi are part of the backdrop to Italian life. The nation has watched around two dozen trials unfold over nearly 20 years. But until now they have never seen Berlusconi definitively convicted. And there can be no appeal. This damning judgement will forever be part of his record - and he will surely see this as one of the darkest moments in his extraordinary political career. But it could have been even worse: the judges did not uphold the order that would have barred Berlusconi from public office. That will be re-examined by a lower court. So Berlusconi is certainly down, but not entirely out. He has been diminished and humiliated, but even now it might be a mistake to bet against him.
They had been hoping to overturn his conviction in a case involving television rights bought by his company Mediaset.
It is the billionaire businessman's first definitive conviction after decades of criminal prosecutions.
In his video message after the court's decision he said: "I never devised any system of fiscal fraud. No false invoice exists in the history of Mediaset."
Berlusconi said he was the victim of "an incredible series of accusations and trials that had nothing to do with reality".
He described the more than 50 court cases he has faced as "genuine judicial harassment that is unmatched in the civilised world".
Still in senate
The review of the lower court's five-year ban on holding public office means Berlusconi can remain as a senator and as leader of his centre-right People of Freedom Party (PDL) for now.
The BBC's Alan Johnston in Rome says the former prime minister will be relieved that judges ordered a review of the political ban.
Berlusconi's political grouping forms part of Italy's coalition government. Prime Minister Enrico Letta needs both the PDL and his own centre-left Democratic Party to govern.
Image caption Opponents of Silvio Berlusconi celebrated Thursday's court ruling
In a statement after the court ruling, Mr Letta urged "a climate of serenity" for the good of the country.
President Giorgio Napolitano also urged the country to stay calm.
"The country needs to rediscover serenity and cohesion on vitally important institutional matters that have for too long seen it divided and unable to enact reforms," he said.
A former minister and ally of Berlusconi, Nitto Palma, told Reuters on leaving a PDL meeting that there was a lot of bitterness about the verdict.
However, the sentence would not affect the Letta government, he said.
Berlusconi's legal team said there were "solid reasons" why their client should have been acquitted, and they would "evaluate and pursue any useful initiative, also in Europe, to make sure that this unjust sentence is radically reformed".
Anti-establishment politician Beppe Grillo welcomed the court ruling, comparing the sentence to the fall of the Berlin Wall.
In a statement on his blog, Mr Grillo said Berlusconi had "polluted, corrupted and paralysed Italian politics for 21 years".
'Vendetta'
Image caption Berlusconi remained at his Rome residence, Palazza Grazioli, while the judges delivered their verdict
The original ruling last October found that Berlusconi's Mediaset media empire had inflated the price it had paid for film distribution rights to avoid paying taxes.
He was labelled the "author of a whole system of tax fraud".
The three-time prime minister has faced a string of trials since leaving office in November 2011.
Appeals are pending in other cases in which he was convicted of having paid for sex with an under-age prostitute, and arranging for a police wiretap to be leaked and published in a newspaper.
Two other cases of alleged tax evasion, one of them involving British lawyer David Mills, expired under the statute of limitations. ||||| ROME Italy's supreme court on Thursday upheld a jail sentence against Silvio Berlusconi for tax fraud in a devastating blow to the four-times prime minister that could throw the country's fragile coalition government into crisis.
The former cruise ship crooner is Italy's most colorful and scandal-prone figure but it was his first definitive conviction in up to 30 court cases on charges ranging from fraud and corruption to having sex with an underage prostitute.
After a three-day hearing, the five judges of the supreme court rejected Berlusconi's final appeal against a verdict handed down by two lower courts which sentenced the media mogul to four years in jail - commuted to one year under an amnesty.
But the top judges ordered a review by a Milan court of the second part of his sentence, a five-year ban from public office. This will enable him to remain a senator and leader of his center-right People of Freedom Party (PDL) for the moment.
In a sober video message after the verdict, Berlusconi proclaimed his total innocence and launched a bitter attack on magistrates he said had hounded him for 20 years and become an undemocratic rival power to the state.
Looking shaken, he vowed to press ahead in politics with the refoundation of his original political party, Forza Italia, through the mobilization of young people, and a reform of the justice system. But he acknowledged that he had "arrived almost at the end of my working life."
Berlusconi, Italy's longest serving premier, had previously said the government must not fall whatever the verdict but he made no mention of this in his video address.
The 76-year-old billionaire who has dominated politics for 20 years and been prime minister four times, was convicted for inflating the price paid for television rights by his Mediaset media empire and skimming off part of the money to create slush funds.
Because of his age he is likely to serve the sentence either through community service or under house arrest.
He accuses leftist magistrates of relentlessly trying to remove him from politics since he stormed onto the scene in 1994 after a corruption scandal wiped out the old order.
The verdict could not only mark the twilight of his long career but destabilize the three-month-old government of Prime Minister Enrico Letta and potentially send tremors across the euro zone.
The bloc's third-largest economy is ruled by a fractious coalition of Letta's center-left Democratic Party (PD) and Berlusconi's PDL.
President Giorgio Napolitano, architect of Letta's coalition after a two month hiatus following inconclusive elections in February, quickly issued a statement urging calm and national cohesion. He called for trust and respect for the judiciary.
Letta echoed his comments, calling for calm and saying the nation's interests must come before those of individuals.
DANGER OF POLITICAL TURMOIL
PDL hawks had called for a mass walkout of its ministers and public protests including blocking motorways if he was convicted.
His supporters demonstrated outside his central Rome home before the verdict, disrupting traffic.
A greater threat to the government could come from the faction-ridden PD, many of whose members are already unhappy with ruling in coalition with Berlusconi's party and could rebel following his first definitive conviction.
A close Berlusconi ally, former Justice Minister Francesco Nitto Palma, said after meeting the former premier that the verdict "will not affect the Letta government, which was created to serve the country."
But comments from other politicians, on the left and right, were less harmonious.
Luca d'Alessandro, head of the PDL parliamentary justice committee said: "This country used to be famous as the cradle of law. Today it has become its tomb, run by a corporation of grave diggers in gowns who have carried out the perfect crime."
The leader of Letta's PD, Guglielmo Epifani said, "The sentence has to be respected and carried out."
Beppe Grillo, leader of the populist 5-Star Movement that stunned mainstream politicians by taking a quarter of the vote in the February election, hailed the sentence on his blog: "The verdict is like the fall of the Berlin Wall in 1989."
Investors have hitherto shown little concern, with the main barometer of market confidence, the spread between Italian 10 year bond yields and their safer German counterparts, at 270 basis points, well below levels seen during earlier crises.
But markets were closed before the verdict came out.
Napolitano and Letta are adamant that Italy cannot afford more instability as it struggles to climb out of its worst postwar recession.
There has been speculation that Berlusconi's oldest daughter, Marina, 46 and chairwoman of his Fininvest holding company, could become the PDL's figurehead if he was convicted.
Both major parties may be reluctant to precipitate an election that might produce an even more chaotic result than the February vote in which Grillo surged to prominence.
But the verdict could add to inertia which has prevented Letta's fractious government from passing urgently needed economic reforms.
The supreme court decision is not Berlusconi's only legal headache. He is also appealing in a lower court against a seven-year jail sentence imposed in June for abuse of office and paying for sex with Moroccan-born nightclub dancer Karima El Mahroug, alias "Ruby the Heartstealer", when she was underage.
(Editing by Robin Pomeroy) ||||| Italy's three-time former Premier Silvio Berlusconi for the first time in two decades of criminal prosecutions related to his media empire was definitively convicted of tax fraud and sentenced to four years in prison Thursday by the nation's highest court.
Italy's highest court President Antonio Esposito arrives to read the sentence confirming a four year term for Italian media Mogul and former Premier Silvio Berlusconi for tax fraud in Rome, Thursday,... (Associated Press)
Francesca Pascale, the girlfriend of Italian former Premier Silvio Berlusconi, waits with bodyguards inside an ice-cream shop, near his residence in Rome, Tuesday, July 30, 2013. Berlusconi is waiting... (Associated Press)
Italy's highest court President Antonio Esposito, third right, read the sentence confirming a four year term for Italian media Mogul and former Premier Silvio Berlusconi for tax fraud in Rome, Thursday,... (Associated Press)
FILE - In this file photo taken June 17, 2003 Silvio Berlusconi shows some files as he addresses the Law court in Milan, Italy. Italy’s top court confirmed Thursday, Aug. 1, 2013 Berlusconi tax fraud... (Associated Press)
News cameramen wait outside Grazioli palace, Silvio Berlusconi's residence in Rome, Thursday, Aug. 1, 2013. Berlusconi's fate is hanging in the balance as Italy's highest court deliberates his appeal... (Associated Press)
FILE - In this file photo taken June 17, 2003 Silvio Berlusconi adjusts his tie before addressing the Law court in Milan, Italy. Italy’s top court confirmed Thursday, Aug. 1, 2013 Berlusconi tax fraud... (Associated Press)
A demonstrator holds a sign reading in Italian "Guilty for the justice, acquitted by the political system" outside Italy’s highest court building where Berlusconi's case on tax fraud will be decided in... (Associated Press)
The tensely awaited decision was described as a historical moment by opposition politicians and puts fresh pressure on Premier Enrico Letta's fragile coalition government. He needs the support of both Berlusconi supporters and his own center-left Democratic Party to push through reforms to get Italy out of recession, and the ruling is likely to have a destabilizing impact.
Judge Antonio Esposito, in reading the court's decision, declared Berlusconi's conviction and prison term were `'irrevocable," though he ordered another court to review the length of a ban on public office.
Lower courts had put it at five years, but a state prosecutor recommended in its arguments this week that it be lowed to three, citing conflicts in the relevant sentencing laws.
How the government is affected by the ruling is likely to emerge in comings days. On the one side, Berlusconi supporters may withdraw support in protest, while center-left lawmakers may find it unpalatable to continue in a coalition with a party whose leader has been convicted of defrauding the state of tax income.
Beppe Grillo, the leader of the anti-establishment 5 Star Movement, declared on his blog: `'Berlusconi is dead." He compared the conviction to the fall of the Berlin Wall in 1989 that helped bring down Soviet communism.
Berlusconi's exit from the political scene he has dominated for two decades is unlikely to be quiet. A Milan appeals court will now have to determine the length of a public office ban. And then, the Senate, where Berlusconi holds a seat, will have to debate and vote on revoking his seat as part of a process that can stretch for months, if not a year. If the Senate opposes it and refuses to formally revoke Berlusconi's seat, the high court could turn to the constitutional court in a bid to resolve the standoff.
Berlusconi is highly unlikely to actually go to prison. Three years will be shaved off as part of a general pardon for crimes committed before 2006 aimed at easing prison crowding, and it is unusual for defendants to serve sentences of just one year for a first offense, particularly at Berlusconi's age, 76. He would likely be given the choice to serve the remaining year under house confinement or opt for social services.
Berlusconi awaited the sentence at his residence in central Rome with his lawyers, deputy party leader Angelino Alfano and his eldest daughter, Marina, all of whom were seen entering the building in the hours leading up to the announcement. He issued no immediate reaction.
___
Barry contributed from Milan. ||||| ROME — For years, former Prime Minister Silvio Berlusconi deftly navigated the labyrinth of Italian justice, always finding an exit — until Thursday, when Italy’s highest court handed him his first definitive sentence, upholding a prison term for tax fraud and sending Italy’s fragile government on the road to crisis.
The court called for a re-examination of a ban on Mr. Berlusconi’s holding public office, but did not reject the ban. This staved off the imminent collapse of the right-left coalition of Prime Minister Enrico Letta, which was formed to tackle Italy’s dire economy — but probably only bought it more time.
Parts of Mr. Letta’s center-left Democratic Party are reluctant to share power with a now-convicted criminal. Meanwhile, the center-right People of Liberty party looked poised to split between Berlusconi loyalists and those seeking more independence from the former prime minister in a future bloc.
“The barometer signals a very strong storm,” said Giovanni Orsina, professor of contemporary history at LUISS Guido Carli and author of “Understanding Berlusconi.” “I expect a lot of quake tremors in the next few days, but I think that the government will survive.”
The Court of Cassation confirmed Mr. Berlusconi’s four-year prison sentence, which had already been reduced to one year under a law aimed at combating prison overcrowding.
Two lower courts had convicted Mr. Berlusconi and other defendants on charges of buying the rights to broadcast American movies on his Mediaset networks through a series of offshore companies and falsely declaring how much they paid to avoid taxes.
In other cases over the past 20 years, Mr. Berlusconi, a three-time prime minister, has been convicted of tax evasion, buying judges and embezzlement, but was either acquitted on appeal or the statute of limitations had run out. (A trial in which Mr. Berlusconi is accused of paying for sex with a minor is continuing.)
Thursday’s ruling, like everything about Mr. Berlusconi, polarized Italy. Some of the former prime minister’s loyalists called it the equivalent of a judicial coup d’état, while his critics called it tantamount to Al Capone being convicted of tax evasion.
After the ruling, a furious, saddened and uncharacteristically unsmiling Mr. Berlusconi took to the airwaves of Rete4, one of the channels in his Mediaset empire, and declared his innocence, attacking the magistrates who he said had tormented him for 20 years and become an antidemocratic force within Italy.
“The sentence is absolutely groundless and violates my personal liberty and my rights,” Mr. Berlusconi said.
The man who once called himself “the politician most persecuted by prosecutors in the entire history of the world throughout the ages,” added that he would once again create Forza Italia, the party he founded in 1994. He had dissolved that party to form People of Liberty with another right-wing party. “Long live Italy, long live Forza Italia,” he concluded.
Mr. Berlusconi is widely seen as wanting to stay in public office in the hope of wielding the political influence he needs to protect his business interests.
Thursday’s ruling did not automatically send Mr. Berlusconi to prison or house arrest. It is up to the same appeals court in Milan that convicted him to formally request his arrest. Mr. Berlusconi’s lawyers can also request a suspended sentence.
Experts said that considering his age, 76, Mr. Berlusconi would more likely face house arrest or community service than prison.
Opposition politicians immediately called for Mr. Berlusconi to resign from Parliament.
Vito Crimi, a member of Parliament from the Five Star Movement of Beppe Grillo, called it “shameful” that Mr. Berlusconi would stay in public office.
In other circumstances, the ruling might have dealt a final blow to Mr. Berlusconi’s role in politics. But today Mr. Berlusconi, who came back from the dead in national elections in February, is an element of stability in the coalition government. | Silvio Berlusconi has had his share of bad days in court in recent years, but none worse than today. Italy's top court upheld his tax-fraud conviction and related one-year jail sentence, and almost every story calls it his "first definitive conviction" or some close variation after all his various charges. (See Reuters, AP, the BBC, and the New York Times.) The verdict could "mark the twilight of his long career," destabilize the 3-month-old government, and "potentially send tremors across the euro zone," adds Reuters. As for Berlusconi himself, don't expect to see him head to jail anytime soon. The AP thinks it's highly unlikely that a court would send a 76-year-old first-time offender to prison, especially for only a one-year sentence. More likely is probation or perhaps house arrest. That decision is back in the hands of the lower court in Milan. The former prime minister might even be able to keep his current seat in the Senate, because the top court today also ordered a review of a five-year ban from public office imposed by the lower court. |
@ericboehlert What heckling are you referring to? There was no heckling. If you can't be truthful you become part of the problem. #Honesty — Connie Brown (@cab1950) January 29, 2013
National and international media are up in arms today over the story of Neil Heslin, father of slain Sandy Hook student Jesse Lewis, being heckled yesterday during a Connecticut legislative meeting. During his testimony, in which he called for stricter gun control measures, Heslin was reportedly interrupted by shouts from Second Amendment activists:
“The Second Amendment!” was shouted a couple of times by as many as a dozen gun enthusiasts in the meeting room as Neil Heslin, holding a photo of his slain 6-year-old son, Jesse Lewis, asked why Bushmaster assault-style weapons are allowed to be sold in the state.
Prominent gun control advocates took to Twitter to draw attention to the incident:
Briefly set aside your stance on gun control. What horrible human being heckles a grieving parent in such a way? thedailybeast.com/articles/2013/… — davidfrum (@davidfrum) January 29, 2013
Father who lost daughter in Newtown school shooting HECKLED by gun activists as he spoke today at hearing for stricter gun control #pathetic — Michael Skolnik (@MichaelSkolnik) January 29, 2013
Civility, decency must return. Per @kendixonct: “Father of Newtown shooting victim heckled by gun enthusiasts at legislative hearing.” — Jim Himes (@jahimes) January 29, 2013
Wow, father of Sandy Hook victim heckled at hearing. ctpost.com/local/article/… — Andrew Kaczynski (@BuzzFeedAndrew) January 29, 2013
Wow. “Father of Newtown victim heckled at hearing.” ctpost.com/local/article/… — Josh Marshall (@joshtpm) January 29, 2013
#awfulpeople; RT @gawkerPro-gun activists heckled the father of a 6-year-old Newtown victim. gaw.kr/DAT8wWf — Eric Boehlert (@EricBoehlert) January 29, 2013
For those who want the link about gunners heckling the father of a boy slaughtered at Sandy Hook. ctpost.com/local/article/… — Kurt Eichenwald (@kurteichenwald) January 29, 2013
Horrific. RT @ericboehlert: gun nuts heckled father of murdered Newtown boy during gun control hearing in CT. bit.ly/Wtxo0Q — Charles Johnson (@Green_Footballs) January 29, 2013
SICKENING: Sandy Hook father Neil Heslin heckled as he pleads for ban on assault weapon that killed his son Jesse: huff.to/116xWJ3 — Piers Morgan (@piersmorgan) January 29, 2013
And liberal social media outlets are just appalled:
Father of Newtown victim heckled by gun advocates at legislative hearing goo.gl/yIVT5 — The Raw Story (@RawStory) January 29, 2013
Pro-gun activists heckled the father of a 6-year-old Newtown victim. gaw.kr/DAT8wWf — Gawker (@Gawker) January 29, 2013
Father of Newtown Victim Heckled thebea.st/119uZw2 #cheatsheet — The Daily Beast (@thedailybeast) January 29, 2013
Father of 6-year-old killed in Newtown heckled by pro-gun activists huff.to/1177Vt0 — Huffington Post (@HuffingtonPost) January 29, 2013
Would The Parents Of Newtown Shooting Victims Just Shut Up Already bit.ly/117WAck — Wonkette (@Wonkette) January 29, 2013
Pro-gun activists shout at father of Newtown school shooting victim – usat.ly/WrPr7o — Matthew Keys (@TheMatthewKeys) January 29, 2013
MSNBC in particular is beside itself with rage:
Gun nuts!
Father of #SandyHook victim is heckled during gun control testimony. Really. : on.msnbc.com/Wz8NVt — msnbc (@msnbc) January 29, 2013
Except no. Not really. MSNBC is propping up its story with a blatantly edited video. In fact, Heslin was not heckled. Gun rights advocates in the audience indeed voiced their support for the Second Amendment — after he asked why anyone would need “assault-style weapons or high-capacity clips.” You’d never know based on the MSNBC version, which completely cut out the footage of Heslin’s question.
Fortunately, Twitchy has obtained the full, unedited video, which you can view for yourself below (relevant portion starts at the 15-minute mark):
Transcript:
“I ask if there’s anybody in this room that can give me one reason or challenge this question … why anybody in this room needs to have one of these assault-style weapons or military weapons or high-capacity clips. [Pause, waiting for response.] Not one person can answer that question.”
Audience members: “[Unintelligible] Second Amendment shall not be infringed”
Public official: “Please no comments while Mr. Heslin is speaking. Or we’ll clear the room. Mr. Heslin please continue.”
Heslin waited for a response. And when he got that response, it wasn’t Heslin who registered outrage — it was the media.
Let’s be clear: this wasn’t about having compassion for a man who tragically lost his son; this was strictly about pushing a political agenda. Out of more than 17 minutes of footage, the kneejerk media focused exclusively on the non-existent “heckling.” Not on Heslin’s plea for a change in gun control policy. Not on his sorrow over never being able to spend another moment with his beloved son and “best friend.” To the media, this was nothing more than a chance to exploit one man’s raw emotions in order to gin up outrage.
And it’s utterly despicable.
Follow @twitchyteam ||||| Not even among parents of the dead was there a consensus Monday on how the General Assembly should respond to the murders of 26 students and staff members last month at Sandy Hook Elementary School.
Among the more than 1,300 people who lined up to testify on gun control, legislators invited three to skip the line: Mark Mattioli, Neil Heslin and Veronique Pozner, each the parent of a first grader killed at the Newtown school.
One saw no need for new laws, while the others said legislators must act to restrict access to weapons like the Bushmaster AR-15, the semiautomatic .223-caliber rifle used by Adam Lanza in his assault on Sandy Hook.
Mattioli said no tougher gun law would have saved his 6-year-old son, James, from Lanza, who shot his way into Sandy Hook with a Bushmaster that belonged to his first victim Dec. 14, his mother, Nancy Lanza.
"I don't care if you named it James' Law. I don't want it," said Mattioli, accompanied by his wife, Cindy. "There are common-sense laws out there. There are breakdowns on how they are being enforced."
Mattioli was in accord with the majority of those at the Legislative Office Building in Hartford, where hundreds wore round yellow stickers that labeled each wearer: "Another responsible gun owner."
One after another, in allotted three-minute increments, they told legislators that bans on semiautomatic rifles or large-capacity magazines would hamper their ability to defend themselves.
"Do not target me as you seek solutions to our violent society," said Michael Leone, a gun owner from Southington, who said "a bad man with a gun can only be stopped by a good man or woman with a gun."
Others said they did not trust government.
M. Peter Kuck, a member of the State Firearms Review Board who has clashed with State Police over gun-permit issues, asked legislators if they were willing to risk a police conflict with gun owners by legislating the seizure of banned magazines or firearms. His question provoked applause from gun owners.
"They don't trust us. We don't trust them," said Kuck, who is suing the State Police over a demand he prove citizenship when he renewed his pistol permit in 2007, a demand he suggested was harassment.
William Kuhns of Prospect, who says he has carried a gun for self-defense since being shot during a gas-station robbery about a decade ago, said legislators could expect to see acts of civil disobedience if the state sought to seize weapons.
His Facebook page promotes OathKeepers.org, whose motto is, "We will NOT obey orders to disarm the American people."
The hearing ran past midnight.
Heslin, the father of 6-year-old Jesse Lewis, who was killed by Lanza, was puzzled by the protests, by the assertions that their families will be unsafe if they are limited to 10-round magazines, as is proposed by one bill. He said the U.S. has the world's strongest military and well-trained police departments.
"We're not living in the Wild West," Heslin said.
Heslin, who grew up hunting, said he was wary about a widespread ban on firearms, but he also said he could imagine no reason why Nancy Lanza or any parent would have owned a weapon like the AR-15, a semiautomatic modeled after the military's fully automatic M-16.
"The sole purpose of those AR-15s or AK-47s is to put a lot of lead out on the battlefield quickly, and that's what they do. And that's what they did at Sandy Hook Elementary School on the 14th," Heslin said.
When he wondered aloud why such guns should be privately owned, someone shouted, "The Second Amendment shall not be infringed!"
Heslin spoke while holding a gilt-framed portrait of him and his son, taken when Jesse was a baby.
Heslin said he brought his boy to school that morning, kissed him good-bye and assured him he would return shortly to help his class make gingerbread houses for the holiday season.
"I just hope some good can come out of this," Heslin said.
Pozner, the mother of 6-year-old Noah Pozner, whose twin and another sister survived the attack, urged legislators to ban weapons like the Bushmaster, which Lanza had equipped with a 30-round magazine.
Police estimated that Lanza, who killed his mother before his assault on Sandy Hook, fired 150 rounds in minutes at the school.
Under state law, some weapons similar to the Bushmaster are defined as assault weapons and banned, but Lanza's rifle was not, mainly because it lacked a bayonet lug, flash suppressor or folding stock.
Pozner said the legislature needs a tighter definition of assault weapons, as well as a ban on high-capacity magazines.
"Possession of any assault weapon, regardless of the date of purchase, ought to be illegal," she said. "Mandatory surrender of these newly illegal firearms, with financial compensation, as was done in Australia, ought to be given serious consideration."
The state assault-weapons law passed in 1993 banned the future sale of such guns, not the ownership of weapons previously purchased.
Pozner placed a photograph of Noah beside her. It was a little blurry, taken with a cellphone the night before his death as he lit a Chanukah candle.
"Noah loved being alive," she said. "He took large, hungry bites out of every day."
The hearing was the second of four scheduled by a bipartisan legislative task force created after Sandy Hook.
Last week, a subcommittee held a hearing on school security; Tuesday, another subcommittee will take testimony on mental health laws. On Wednesday night, the task force will hold a general hearing at Newtown High School.
In a news conference before the hearing and then in testimony, the gun industry asked legislators to move slowly.
Lawrence G. Keane, the senior vice president and general counsel of a trade group, the National Sports Shooting Foundation, said the manufacture and sale of firearms generates $1.75 billion in annual economic activity in Connecticut and is responsible for about 2,900 jobs.
Keane and other industry representatives said they favored measures directed at preventing the unauthorized access of firearms, not restrictions on the manufacturer or sale of guns. They backed stricter background checks on purchasers.
The presence of officials from Colt's Manufacturing of West Hartford, O.F. Mossberg of North Haven, Sturm Ruger of Southport and some smaller gun and accessory makers, including Stag Arms and ASC Ammo Storage, both of New Britain, was a calculated reminder that guns mean jobs.
Jonathan Scalise of ASC, which sells 30-round magazines for the AR-15 for $14, said he and others in the gun industry feel the losses of Newtown as keenly as anyone.
"I'm the father of four, three who are in elementary school," Scalise said. "I live about 25 miles from Sandy Hook."
The industry says that in addition to the 2,900 employed directly by gun manufacturers in the state, another 4,400 jobs are generated by gun-related economic activity.
After she testified, Pozner was asked if she found it difficult to come before so many people opposed to her on gun control.
"It was difficult at first. But then I realized I needed to speak my piece," she said. "I think I've earned the right to do that."
Follow Mark Pazniokas on Twitter @CTMirrorPaz ||||| Father of Newtown victim heckled by gun advocates at legislative hearing
By Eric W. Dolan
Monday, January 28, 2013 20:05 EDT
Neil Heslin, whose six-year-old son was murdered at Sandy Hook Elementary School last month, was heckled by gun advocates during a legislative hearing on Monday.
“Changes have to be made,” he told Connecticut lawmakers in an emotional testimony. “I’ll tell you a little bit about Jesse. He was a boy that loved life, lived it to the fullest. His mother and I are separated. He spent equal time with both of us. He was my son, he my buddy, he was my best friend, and I never thought I would be here speaking like this, asking for changes on my son’s behalf.”
“And I never thought I would be laying him to rest. The happiest day of my life was the day he was born. He is my only son, my only family. The worst day of my life was the day when this happened.”
He said firearms like the popular AR-15/M16 rifle were designed to “put a lot of lead out on the battlefield quickly.” When Heslin asked why anyone should be allowed to own a semi-automatic rifle like the one used to kill 26 people in Newtown last month, angry gun advocates shouted, “the Second Amendment!”
“We’re all entitled to our own opinions and I respect their opinions and their thoughts,” Heslin said. “But I wish they’d respect mine and give it a little bit of thought.”
Helsin said he grew up with guns and doesn’t believe they should be completely prohibited. But he supports the proposed assault weapons ban and restrictions on high-capacity magazines to prevent mass shootings like the one that killed his son.
“That wasn’t just a killing. That was a massacre,” he said. “Those children and those victims were shot apart. And my son was one of them.”
Thousands of people gathered at the Capitol to attend the public hearing of the Bipartisan Task Force on Gun Violence Prevention and Children’s Safety, the second of four the state legislature is holding. While Heslin and other parents affected by the tragic Newtown shooting called for additional gun control measures, other parents said mass shootings couldn’t be prevented by more laws.
“I believe in a few simple gun laws. I think we have more than enough on the books. We should hold people individually accountable for their actions,” said Mark Mattioli, whose six-year-old son was killed at Sandy Hook.
Watch video, uploaded to YouTube, below:
Watch a short clip, uploaded to YouTube by the Associated Press, below:
– –
[Ed. note: Updated after publication to include Heslin's full testimony] | The father of a 6-year-old killed in the Sandy Hook shooting took his case for gun control to authorities in Connecticut last night, asking during a public hearing whether anyone in the room could tell him why private citizens should be allowed to own semi-automatics. Neil Heslin paused for a response, and when none came, he declared, "Not one person can answer the question." At that point, audience members began shouting things like, the "Second Amendment shall not be infringed," and officials running the meeting called for order. The exchange prompted a lot of headlines asserting that the father had gotten "heckled," from the likes of Raw Story, the Huffington Post, New York Daily News, and, yes, Newser. But the right-wing Twitchy thinks the "kneejerk media" distorted what happened—with initial reports glossing over the fact that Heslin asked for a response—to "gin up outrage" against guns. (It released a video of the full exchange, which is in the gallery.) Another Newtown parent, Veronique Pozner, urged an assault weapons ban during the hearing. A third parent, however, disagreed, the Connecticut Mirror reports. "I believe in a few simple gun laws. I think we have more than enough on the books," said Mark Mattioli, father of James, another 6-year-old victim. "I don't care if you named it James' Law. I don't want it." Meanwhile, police discussed their reaction to the shooting. |
So many lies smh Here are some facts 1. Not many people were going to go 2. No one refused to go simply because Trump “insists” folks stand for the anthem 3. The President continues to spread the false narrative that players are anti militarypic.twitter.com/89GUNhJ4eE ||||| FILE - In this Feb. 4, 2018 photo, Philadelphia Eagles quarterback Carson Wentz, right, hands the Vincent Lombardi trophy to Nick Foles after winning the NFL Super Bowl 52 football game against the New... (Associated Press)
FILE - In this Feb. 4, 2018 photo, Philadelphia Eagles quarterback Carson Wentz, right, hands the Vincent Lombardi trophy to Nick Foles after winning the NFL Super Bowl 52 football game against the New England Patriots in Minneapolis. The Eagles won 41-33. President Donald Trump has called off a visit... (Associated Press)
FILE - In this Feb. 4, 2018 photo, Philadelphia Eagles quarterback Carson Wentz, right, hands the Vincent Lombardi trophy to Nick Foles after winning the NFL Super Bowl 52 football game against the New England Patriots in Minneapolis. The Eagles won 41-33. President Donald Trump has called off a visit... (Associated Press) FILE - In this Feb. 4, 2018 photo, Philadelphia Eagles quarterback Carson Wentz, right, hands the Vincent Lombardi trophy to Nick Foles after winning the NFL Super Bowl 52 football game against the New... (Associated Press)
WASHINGTON (AP) — Digging deeper into a culture war that he's repeatedly stoked, President Donald Trump called off a visit to the White House by the Philadelphia Eagles, citing the dispute over whether NFL players protesting racial injustice must stand during the playing of the national anthem.
Trump said in a statement Monday that some members of the Super Bowl championship team "disagree with their President because he insists that they proudly stand for the National Anthem, hand on heart, in honor of the great men and women of our military and the people of our country."
He said the team wanted to send a smaller delegation Tuesday, but "the 1,000 fans planning to attend the event deserve better."
Instead, Trump said he would be hosting "a different type of ceremony," featuring the U.S. Marine Band and the U.S. Army Chorus, that "will honor our great country, pay tribute to the heroes who fight to protect it, and loudly and proudly play the National Anthem."
None of the Eagles took a knee during the anthem in 2017.
One of the people set to attend the ceremony told The Associated Press less than half of the team's 53-man roster planned to go. The person spoke on condition of anonymity due to the sensitive nature of the decision.
Philadelphia Mayor Jim Kenney replied with his own statement, saying that he is "equally proud of the Eagles' activism off the field" and that the players "represent the diversity of our nation — a nation in which we are free to express our opinions."
"Disinviting them from the White House only proves that our President is not a true patriot, but a fragile egomaniac obsessed with crowd size and afraid of the embarrassment of throwing a party to which no one wants to attend," Kenney said.
Last week, Eagles safety Malcolm Jenkins said he would not attend the ceremony because he didn't want to be part of a photo op and wanted "to avoid being used as any kind of pawn." In addition to Jenkins, defensive end Chris Long was the most outspoken player against going. Quarterback Carson Wentz had planned to attend.
It was unclear exactly what prompted the change of plans. The White House did not immediately respond to questions about what had sparked the decision and why the circumstances were different from other events honoring winning teams, which some players have boycotted.
Late Monday, though, Trump wrote on Twitter that "Unfortunately, only a small number of players decided to come, and we canceled the event."
Several players asked about Trump's decision not to host them declined to respond. The Eagles issued a statement without directly addressing the White House cancellation.
"Watching the entire Eagles community come together has been an inspiration," the team statement read. "We are truly grateful for all of the support we have received and we are looking forward to continuing our preparations for the 2018 season."
Wide receiver Torrey Smith, who said previously that he planned to skip the visit, responded with a series of tweets.
"So many lies," he wrote, adding, "Not many people were going to go."
Smith, who played on the Super Bowl-winning Philadelphia team before being traded to the Carolina Panthers in March, added: "No one refused to go simply because Trump 'insists' folks stand for the anthem. ... The President continues to spread the false narrative that players are anti military."
He went on: "There are a lot of people on the team that have plenty of different views. The men and women that wanted to go should've been able to go. It's a cowardly act to cancel the celebration because the majority of the people don't want to see you. To make it about the anthem is foolish."
The announcement was the latest signal that tensions remain high around the NFL protests that began in 2016 when San Francisco 49ers quarterback Colin Kaepernick began silently kneeling on the sidelines while the anthem played. Kaepernick's protest was an effort to raise awareness around systemic racism and, specifically, the killing of black men by police.
He was soon joined by teammate Eric Reid. Both Reid and Kaepernick have filed grievances against the NFL and remain unsigned since their contracts with the 49ers expired.
Last season, Vice President Mike Pence left the 49ers game against the Indianapolis Colts after about a dozen San Francisco players took a knee during the anthem. Pence, who left before kickoff, tweeted soon afterward, "I left today's Colts game becaue @POTUS and I will not dignify any event that disrespects our soldiers, our Flag, or our National Anthem."
Trump has repeatedly decried the players' protest, referring to them as "sons of bitches" who should be fired at a rally for supporters in Alabama last year. Last month, the NFL announced a new policy - praised on Twitter by both Trump and Pence - requiring players to stand for the anthem if they're on the field before a game.
After the New England Patriots won the Super Bowl in 2017, several players declined to attend the White House ceremony honoring their team last August, citing their differences with the president. In February, the Golden State Warriors declined to attend the White House ceremony honoring their 2017 NBA Championship, instead using their trip to Washington to visit the Smithsonian National Museum of African-American History and Culture.
During an interview after the new NFL policy was announced, Trump praised the league for doing "the right thing."
"You have to stand proudly for the national anthem," Trump said. Or "you shouldn't be playing, you shouldn't be there. Maybe they shouldn't be in the country."
Late Monday, Trump added on Twitter: "Staying in the Locker Room for the playing of our National Anthem is as disrespectful to our country as kneeling. Sorry!"
Several members of the Eagles have voiced staunch opposition to the owners' decision.
"This is a fear of the diminished bottom line," Long said last month. "It's also fear of a president turning his base against a corporation. This is not patriotism. Don't get it confused. These owners don't love America more than the players demonstrating and taking real action to improve it."
Jenkins has vowed to carry on the cause.
"I will not let it silence me or stop me from fighting," he said recently. "This has never been about taking a knee, raising a fist or anyone's patriotism, but doing what we can to effect real change for real people."
Sen. Bob Casey, D-Pa., invited the Eagles to come to Capitol Hill.
"I'm proud of what the @Eagles accomplished this year. I'm skipping this political stunt at the White House and just invited the Eagles to Congress. @Eagles How about a tour of the Capitol?" he wrote.
White House legislative director Marc Short said in an appearance on CNN that he didn't know who had canceled on whom, but said, "It's unfortunate when politics gets in the middle of this."
___
Whack reported from Philadelphia. Associated Press Pro Football writer Rob Maaddi contributed to this report. Follow Colvin on Twitter at https://twitter.com/colvinj. Follow Whack on Twitter at https://twitter.com/emarvelous. ||||| Tweet with a location
You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more ||||| (CNN) The Super Bowl champion Philadelphia Eagles' White House visit has been canceled due to the controversy over standing for the National Anthem at NFL games, President Donald Trump announced Monday.
"The Philadelphia Eagles are unable to come to the White House with their full team to be celebrated tomorrow," Trump said in a statement. "They disagree with their President because he insists that they proudly stand for the National Anthem, hand on heart, in honor of the great men and women of our military and the people of our country. The Eagles wanted to send a smaller delegation, but the 1,000 fans planning to attend the event deserve better."
It's an unprecedented move by Trump. The NBA champion Golden State Warriors declined an invitation from the President to visit the White House after winning the 2017 championship, but presidents typically honor their invitations to championship teams. Players also have refused those invitations in the past -- Boston Bruins goaltender Tim Thomas declined to visit the White House in 2012 over disagreements with President Barack Obama's policies.
The President typically invites the champions of major professional and college sports to the White House for a visit as a part of their victory celebrations.
The movement was initially started by Colin Kaepernick, who was formerly with the San Francisco 49ers. He drew national attention for refusing to stand during "The Star-Spangled Banner" prior to kickoff.
"I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color," Kaepernick told NFL Media in August 2016
Trump has r epeatedly criticized players for not standing for the anthem and has gone as far as to say team owners should fire players for doing so.
The new NFL policy gives players the option of remaining in the locker room during the playing of the anthem if they do not wish to comply.
Trump later tweeted, "The Philadelphia Eagles Football Team was invited to the White House. Unfortunately, only a small number of players decided to come, and we canceled the event. Staying in the Locker Room for the playing of our National Anthem is as disrespectful to our country as kneeling. Sorry!" The Eagles have not stayed in the locker room as a means of protesting the anthem.
The Philadelphia Eagles Football Team was invited to the White House. Unfortunately, only a small number of players decided to come, and we canceled the event. Staying in the Locker Room for the playing of our National Anthem is as disrespectful to our country as kneeling. Sorry! — Donald J. Trump (@realDonaldTrump) June 5, 2018
Players on the Eagles are some of the most outspoken social justice activists in the NFL, and multiple players took part in the protests during the anthem over the last two seasons. Many players from the team were not planning on attending the ceremony as a protest of Trump, his policies and his outspoken criticism of players who chose to kneel during the anthem.
The Eagles were originally invited to the White House after their win in February's Super Bowl over the New England Patriots. It was the first Super Bowl championship in franchise history.
In response to Trump's announcement, former Eagles receiver Torrey Smith, who was a member of the championship team and was traded during the off-season, called the move "a cowardly act."
So many lies smh
Here are some facts
1. Not many people were going to go
2. No one refused to go simply because Trump "insists" folks stand for the anthem
3. The President continues to spread the false narrative that players are anti military pic.twitter.com/89GUNhJ4eE — Torrey Smith (@TorreySmithWR) June 4, 2018
There are a lot of people on the team that have plenty of different views. The men and women that wanted to go should've been able to go. It's a cowardly act to cancel the celebration because the majority of the people don't want to see you. To make it about the anthem is foolish — Torrey Smith (@TorreySmithWR) June 4, 2018
"So many lies smh Here are some facts 1. Not many people were going to go 2. No one refused to go simply because Trump 'insists' folks stand for the anthem 3. The President continues to spread the false narrative that players are anti military," he said in one tweet.
Smith continued: "There are a lot of people on the team that have plenty of different views. The men and women that wanted to go should've been able to go. It's a cowardly act to cancel the celebration because the majority of the people don't want to see you. To make it about the anthem is foolish."
One player who spoke to CNN said the team had multiple meetings to discuss the invitation to the White House. Not many players wanted to go, the player said.
"The number was low," he said.
But the issue Trump brought to the fore -- players kneeling during the National Anthem -- was not one of the team's chief concerns. The player said the issue was never mentioned in the meetings.
A separate NFL source said none of the players on the Eagles team that won the Super Bowl took a knee during the anthem during the regular season -- one player took a knee in the preseason but was cut before the regular season began. Safety Malcolm Jenkins raised his fist during the anthem to protest racial injustice before some games, but he stopped when the NFL pledged to make a $100 million donation to various charities in November.
Sen. Bob Casey, a Pennsylvania Democrat, said he's skipping the White House event, and instead invited the team to take a tour of the US Capitol.
"I'm proud of what the @Eagles accomplished this year. I'm skipping this political stunt at the White House and just invited the Eagles to Congress. @Eagles How about a tour of the Capitol?" Casey wrote on Twitter.
I'm proud of what the @Eagles accomplished this year. I'm skipping this political stunt at the White House and just invited the Eagles to Congress. @Eagles How about a tour of the Capitol? https://t.co/niWR7zkSYx — Senator Bob Casey (@SenBobCasey) June 4, 2018
Philadelphia Mayor Jim Kenney released a statement, where he said Trump's decision "proves that our President is not a true patriot."
"The Eagles call the birthplace of our democracy home, so it's no surprise that this team embodies everything that makes our country and our city great. Their athletic accomplishments on the field led to an historic victory this year," Kenney said.
"Disinviting them from the White House only proves that our President is not a true patriot, but a fragile egomaniac obsessed with crowd size and afraid of the embarrassment of throwing a party to which no one wants to attend," he later said in the statement.
"City Hall is always open for a celebration," he added.
Trump said in Monday's statement that the fans are still welcome to come and partake in a "different kind of ceremony."
"One that will honor our great country, pay tribute to the heroes who fight to protect it, and loudly and proudly play the National Anthem," he said.
White House Director of Legislative Affairs Marc Short told CNN's Erin Burnett he was unsure who canceled on whom.
"It's unfortunate when politics gets in the middle of this," Short said.
Trump said he will be at the ceremony alongside the United States Marine Band and the United States Army Chorus at 3 p.m. Tuesday to "celebrate America." | This year's Super Bowl champs will not be visiting the White House as planned on Tuesday—and President Trump says it is because of the NFL national anthem controversy. "The Philadelphia Eagles Football Team was invited to the White House," Trump tweeted on Monday. "Unfortunately, only a small number of players decided to come, and we canceled the event." In a statement, Trump said the Eagles "disagree with their president because he insists that they proudly stand for the national anthem, hand on heart, in honor of the great men and women of our military and the people of our country." White House officials tell the New York Times that fewer than 10 Eagles players had planned to attend. In a Tuesday morning tweet, Trump said "we will proudly be playing the National Anthem and other wonderful music celebrating our Country today at 3 P.M.," adding that there would be "no escaping to the locker rooms," a reference to the NFL's new anthem rule. Former Eagles wide receiver Torrey Smith, a member of the championship team, called Trump's cancellation of the event a "cowardly act," CNN reports. "Here are some facts," he tweeted. "1. Not many people were going to go 2. No one refused to go simply because Trump 'insists' folks stand for the anthem 3. The President continues to spread the false narrative that players are anti military." The AP reports that no Eagles players actually took a knee for the anthem last season. |
The work of the police has come under tremendous scrutiny in the U.S. over the past few years, with the shootings of unarmed black men by cops leading to the birth of the Black Lives Matter movement. Then came the string of killings of police officers this past summer. In an environment where tensions run high, A&E tonight is launching Live PD, a weekly two-hour live documentary series that will show six police departments in action in real time. The network, which has tradition in documentary series, including the long-running Intervention and 2016 Emmy winner Born This Way, is looking to push the genre into new territory with the eight-episode Live PD, in which host Dan Abrams and two Dallas police detectives will comment on the live developments.
A&E’s general manager Rob Sharenow admits it has been hard to get people to understand what the show really is — he calls it “unmediated, live Cops with third-party journalistic context.” In an interview with Deadline, he talks about the challenges (and price tag) of mounting a live production involving police work in multiple locations around the country, whether there will be limits to what they can show, what Live PD means for the evolution of the A&E brand, and what is the future of once-signature reality series Duck Dynasty on the network, which has been going through rough times, trying to make a ratings turnaround.
DEADLINE: What was your first reaction when a live cop show was pitched to you?
SHARENOW: Well, it was brought to us by our production partners Big Fish, and frankly when the idea first surfaced to me, I actually didn’t think it would be possible; I didn’t think it would be logistically possible. I didn’t think any of the police forces around the country would participate in something like this, so I actually thought when we started to develop that I was sending my team and the producers on a fool’s errand. But it turns out, they came back with an overwhelming amount of police departments and municipalities that wanted to participate, which was really fascinating, and I think that was the first hurdle, knowing that it could be done and that we would get willing participation not one, not two, not three, not four, not five, not six, but many more cities around the country that wanted to do this.
DEADLINE: What was the motivation of those police departments that wanted to participate?
SHARENOW: There’s obviously a cultural conversation going on right now about policing in America. On the non-police side, there’s a call for transparency. But interestingly, there’s a call for transparency on the police side. They want the world to see what really goes on, and how they execute their job and what the realities that they’re up against and how they do it. It’s sort of a validating mechanism for them, and they feel that the transparency will really show the heroic duty they’re performing.
DEADLINE: What are some of the cities featured and do they include areas where there has been tension between civilians and police?
SHARENOW: Our goal was to really have geographic diversity, because part of what we were trying to capture is that there’s different challenges depending on where you are in the country. We do have some areas that are troubled by violent crime – Bridgeport, Connecticut; Tulsa, Oklahoma – and then we have some more rural areas – we’re in Utah, Arizona. You’ll see a diversity of crime, a diversity of people and that was important. Policing isn’t a cookie-cutter occupation. There is a lot of local nuance that goes on depending on where you are.
DEADLINE: Will every episode include the same police teams and all six locations?
SHARENOW: There is no set plan. it’s a very unpredictable show, and I think the idea is that we’ll have our crew filming all six for the entire night and that will really follow where the story is. In some instances, we may touch upon all six areas, in some instances we may just focus on one or two for the whole episode depending on what’s going on. I really think it depends on what the police we’re following come up against.
DEADLINE: I’m sure you’re going into it with some trepidation. You are using tape delay. What guidelines do you have about what you can show on TV?
SHARENOW: We did build this production very carefully. We have an incredible all-star team of veteran news and documentary producers making the show who are very used to following live events and know where the line is. We will have a team of legal experts with us as the show is transpiring to make the calls as they happen. But I think our protocols will not wildly diverge from what a new agency or a documentary crew normally does in terms of what’s permissible.
DEADLINE: Could you extend the series by adding extra episodes as it goes?
SHARENOW: Yeah, we certainly have the ability and the opportunity to do that, and on a given night, we could run longer if we chose to. It’s important to note that we’re not building ourselves up as a news agency, that’s not what this is, this is a documentary series that’s giving context and illuminating something right now. Our goal isn’t to become CNN. Our goal is to provide context and exposure to an issue that’s critically affecting the country right now. It’s important to note that there’s a lot of footage out there, and what we’re trying to do is bring journalistic insight to it, this isn’t unmediated footage. I think we built our team very carefully to be able to give viewers insights to exactly what they’re seeing from all sides of it. It will be an enhanced, elevated experience, it won’t be ‘Hey, here’s some footage’, and that is again part of the mission of the show, to have it not just be shown, but explained.
DEADLINE: Do the policemen featured have the right at any point to request that filming stops?
SHARENOW: Yeah, for safety, [if] they’re being endangered or someone’s endangered. But no, not for some random editorial reason. I do want to emphasize something that’s really important: we are filming it independently. This is not police cameras, this is not body cams or cameras that the police own or cameramen who are working for the police. These are independent documentarians and news crews doing this.
DEADLINE: With simultaneous live filming in six locations, what is the budget of Live PD?
SHARENOW: It’s not a cheap show. I can tell you that. But I will tell you — and this gets a little wonky and technical — there was a major technological advancement over the past year that allowed us to produce the show at all. Frankly, there is a new technology that allows us to aggregate these live feeds and edit them in a way that’s much more cost-efficient than what would have been a year ago. I’m not tech savvy to explain it to you, but I think if we had been having this conversation a year ago, we might not be talking about Live PD, because [it would have been] prohibitively expensive, but our producers and our tech team on the network side have embraced a new technology that has allowed something pretty spectacular to be presented at a fairly reasonable price point.
DEADLINE: Reasonable price, but it’s still a high-end non-scripted series, correct?
SHARENOW: It’s on the high-end for non-fiction, I’d say mid- to high-end.
DEADLINE: When you realized that the show is feasible, why did you decide to do it for A&E?
SHARENOW: For me A&E is leading the charge with non-fiction with shows that speak to the cultural zeitgeist in a very elevated way, and I think we’ve seen that with shows like Intervention, Born This Way we just won the Emmy this year; these are shows that dare to go places that haven’t been breached in television in quite the way we do it. I think both in subject matter and form, this [Live PD] is an instance of wow, there is something really critical going on in our country right now, there’s an incredible amount of debate, discussion and disagreement, and this is an opportunity for us to actually step into that conversation, and provide context and provide insight and provide transparency. That’s what gets me excited. To show, to bring to our audience something that is crucially important in their lives right now.
DEADLINE: It seems like A&E is going back to its darker, edgier, early days with shows like Intervention. The network went through a period with lighter fare like Duck Dynasty and Storage Wars. What does Live PD signify about the A&E brand and where you want to take it? Are you done with more comedic reality series?
SHARENOW: I think that A&E first and foremost is about non-fiction leadership, and part of what we are leaning into is that A&E is a fearless brand that is willing to tackle the most difficult subjects. Is there still room for stuff that isn’t super heavy? Of course. And I do think, when I look back on our brand, the hallmark of A&E’s non-fiction has always been a qualitative bar more than anything. When you look back at one of the original shows, Biography, which set the template for a whole genre of shows, there were I think eight imitators of that show. Biography always remained the most Emmy-nominated and -winning, and was the definitive brand, and whatever we do in non-fiction does have a leading edge and is raising the bar in a way that Live PD does.
Live PD is giving viewers the value proposition that they haven’t seen anywhere else. And I do think that Storage Wars, which remains a part of our brand, is very much in keeping with everything I just said. It was a very leading edge concept when we first introduced it. There were score of imitators of course, but it was a very real world thing that was happening and I think the executional excellence of that show explains it’s longevity.
DEADLINE: What is the future of Duck Dynasty?
SHARENOW: We have a new season coming up. We certainly have a very successful relationship with the family and we’re look forward to the upcoming episodes. ||||| TV cop star arrested in domestic dispute
Photo: Ned Gerard Image 1 of / 12 Caption Close Image 1 of 12 Buy photo FILE - Bridgeport Police Sergeant Stacey Lyons stands at attention during the Promotion Ceremony held at Bridgeport City Hall, in Bridgeport on Sept. 4, 2014. FILE - Bridgeport Police Sergeant Stacey Lyons stands at attention during the Promotion Ceremony held at Bridgeport City Hall, in Bridgeport on Sept. 4, 2014. Photo: Ned Gerard Buy this photo Image 2 of 12 Buy photo FILE - Sgt. Stacey Lyons takes her Thanksgiving Day dinner inside police headquarters on Congress Street in Bridgepor on Thursday Nov. 26, 2015. FILE - Sgt. Stacey Lyons takes her Thanksgiving Day dinner inside police headquarters on Congress Street in Bridgepor on Thursday Nov. 26, 2015. Photo: Christian Abraham, Hearst Connecticut Media Buy this photo Image 3 of 12 Buy photo Bridgeport Sgt. Stacey Lyons being sworn in in 2014. Bridgeport Sgt. Stacey Lyons being sworn in in 2014. Photo: Ned Gerard / Hearst Connecticut Media File Photo Buy this photo Image 4 of 12 Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Photo: A&E; Live PD / Screen Grab Image 5 of 12 Bridgeport police Sgt. Stacey Lyons arrests a suspect during A&E;’s “Live PD" on Friday. Bridgeport police Sgt. Stacey Lyons arrests a suspect during A&E;’s “Live PD" on Friday. Photo: A&E; Live PD / Screen Grab Image 6 of 12 Bridgeport police Sgt. Stacey Lyons during her appearance on A&E;’s “Live PD” on Friday night. Bridgeport police Sgt. Stacey Lyons during her appearance on A&E;’s “Live PD” on Friday night. Photo: A&E; Live PD / Screen Grab Image 7 of 12 Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Photo: A&E; Live PD / Screen Grab Image 8 of 12 Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Photo: A&E; Live PD / Screen Grab Image 9 of 12 Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Photo: A&E; Live PD / Screen Grab Image 10 of 12 Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Photo: A&E; Live PD / Screen Grab Image 11 of 12 Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Bridgeport police Sgt. Stacey Lyons was arrested on a disorderly conduct charge just hours after appearing on of A&E;’s "Live PD" cop show Friday night, Oct 28, 2016. Photo: A&E; Live PD / Screen Grab Image 12 of 12 TV cop star arrested in domestic dispute 1 / 12 Back to Gallery
BRIDGEPORT — Perhaps A&E should have kept the cameras rolling.
Because the cable television channel would have caught police Sgt. Stacey Lyons, one of the stars of its inaugural episode of “Live PD,” allegedly breaking into her ex-boyfriend’s home and assaulting him after finding him with another woman.
“Domestics are the most dangerous calls a police officer can go on,” Lyons told a national TV audience Friday night after arresting a local man for allegedly choking his girlfriend.
She is then seen on the program turning to the man who is sitting in the back of her police car, urging him to turn over any guns he has.
“We have rules that are above me,” she tells him as he protests his innocence. “This is a domestic situation and I don’t have a choice.”
Hours later Lyons was in the back of a Trumbull police car after her former boyfriend called police on her.
Police said they later went to Lyons home and seized, under the state’s domestic-violence law, her service weapon and two other guns along with a 15-round magazine.
Lyons, 33 — who received an award for heroism in 2015 — was charged by Trumbull police with disorderly conduct.
Bridgeport Police Chief Armando Perez said Lyons is on administrative status as a result of her arrest and has turned in her service weapon.
“This is really sad because she is a conscientious officer, a very good officer,” Perez said. “But you have to be able to control your actions. Anytime you get into a problem with someone you are involved in a relationship with, you should just leave.”
”Live PD” is a weekly two-hour series that will show six police departments in action in real time, according to A&E, which is owned by Hearst and Disney. It is hosted by attorney and television personality Dan Abrams and two Dallas police detectives who narrate the action.
In the first episode, Lyons is viewed in three segments. In one, she is assisting in the search of three men for drugs. In the second, she and Officer Mark Blackwell search a home after receiving a tip about drugs.
In the third, which appears to have been recorded earlier, she makes the domestic-violence arrest.
Segments from Tulsa, Okla.; Phoenix, Ariz.; Richland County, S.C.; and Walton County, Fla. and the Utah Highway Patrol are part of the program.
Don Sikorski, of Norwalk, executive producer of “Live PD,” said he could not comment on the officer’s arrest until he gets more information.
During the arraignment hearing Monday morning, Lyons showed no emotion as she faced state Superior Court Judge William Holden.
The judge ordered Lyons to have no further contact with her former boyfriend and continued the case to Nov. 16.
Lyons is free on a promise to appear in court. Neither she nor her lawyer, Christian Young, would comment as they left the Golden Hill Street courthouse.
Trumbull police said they received a call about an assault at a Petticoat Lane home in the early morning hours.
Police said the male owner of the home told officers his former girlfriend, Lyons, had entered his home uninvited by using the security code, and then angrily confronted him about having another woman there.
The man said he and Lyons got into a shoving match, and Lyons left when he called police.
Police said the man had a minor abrasion on his right forearm and another on his upper nose. He declined medical treatment and refused to make a written complaint against Lyons, police said.
Police said Lyons denied hitting the man. While he claimed they had broken up two weeks ago, she maintained they were still involved in a relationship, and were to attend a wedding together on Sunday.
Lyon was promoted to sergeant in September 2014 after obtaining the highest score on the promotional examination.
Last year, she received the Bridgeport Police Department’s Police Combat Cross for an act of extraordinary heroism for helping to disarm a man without injury, after he had fired shots at officers outside the German Club.
In January 2014, a local woman claims Lyons and two other officers attacked her in the Barnum Publick House.
The woman is suing Lyons and the other officers for civil rights violations in U.S. District Court. ||||| With the launch of its anticipated docuseries Live PD tonight (Oct. 28), A&E is hoping to lead the cultural conversation on one of the most pressing issues facing America today — policing and, more pointedly, the perceived lack of transparency among the country’s police forces.
The Big Fish Entertainment-made series (8 x 120 minutes) will pull in 30 live feeds from six cities across the country in a bid to offer an unfiltered look into a typical Friday night for men and women in blue. Those feeds will then be transmitted via 4G technology to a New York-based studio where ABC News chief legal analyst Dan Abrams, alongside Dallas Police Department detectives Rich Emberlin and Kevin Jackson (all pictured above), will provide audiences with insight into what they’re viewing in real time, while offering an inside take on each live incident.
In the weeks leading up to showtime, the flagship channel of A+E Networks and Big Fish have been running multiple technical run throughs to safeguard against unforeseen error. The control room has spent hours rehearsing for the real deal by following the action across each city and coaching its in-studio hosts through situations to avoid editorializing or defamation.
“We’re pressure testing some of those sensitive points, like ‘How we back out of something if someone clearly doesn’t want us there?’,” Elaine Frontain Bryant, exec VP head of programming at A&E Television Networks, tells realscreen.
In the early stages of development, Big Fish brought in specialty counsel to advise the firm on how the series could be conducted. As a result, the New York-based prodco is carefully following the guidelines put forth by esteemed news organizations to make certain that the production is “portraying things as they’re alleged,” says Frontain Bryant.
Crews will be embedded with the gang unit in Tulsa, Oklahoma; the Arizona Department of Public Safety, focusing on border patrol and narcotics; the Utah State Highway Patrol, battling a massive drug trafficking corridor; one of America’s most dangerous small cities in Bridgeport, Connecticut; in Walton County, Florida; and in Richland County, South Carolina, home to the South’s second largest sheriffs department that covers a broad range of areas and a diversity of crimes.
“We really wanted to look at a cross section of the country and diversity of location,” says Dan Cesareo, Big Fish president and exec producer. “It’s very easy to go into all large or mid-sized cities or the most dangerous places, but I don’t think that represents the story of policing in America.”
At the discretion of lawyers, A&E and Big Fish have implemented various measurements to ensure the potential of broadcasting intense and disturbing content across live cable television has been minimized. As such, the series will air on a fluctuating yet slight tape delay to avoid graphic or compromising content with the option of cutting to multiple angles of coverage or switching locations also available to the executive producers.
The majority of footage will be recorded through dash cams, fixed rig, handheld, and multiple producer cameras. But production teams are filming pre-recorded packages with law enforcement during the week to further ensure the live series is both entertaining and informative during each two-hour primetime block.
Cesareo, however, says that lack of live activity will not be a problem.
“The question that always came up on the A&E side was ‘What happens when nothing happens?’ and the biggest issue we’ve been wrestling with is keeping up,” he says of the technical dry runs.
The series has been more than one year in the making, with Cesareo spending close to a year figuring out how the program could be created from a technical standpoint before Big Fish settled in on the advancements of 4G tech and its cost-effective benefits.
“A year and a half ago, you could do it but probably not on this scale or with the reliability that we have now,” Cesareo says. “We were testing all sorts of [technological advancements] along the way and trying to find the right solutions, and our back-up plan was always satellite.”
However, employing satellite trucks in a demanding production like Live PD introduces a host of new costs and inefficiencies. For one, satellite trucks need to be situated in fixed locations, rather than trailing squad cars, with a clear signal to transmitting cameras. The solution to that problem lies in the hiring of helicopters, equipped with repeaters, to ensure the clear line of sight is maintained to both camera and satellite alike. But at six locations with a variant of 30 distinct feeds, employing a fleet of helicopters in a cable network environment would have been cost prohibitive, Cesareo says.
As the demand for transparency in law enforcement has come to a boiling point in recent months, both Cesareo and Frontain Bryant are hoping Live PD will further the national discussion about the story of policing in America and the dangers both officers and communities encounter on a nightly basis.
“This is about context and transparency,” Cesareo says. “We have a very serious debate in this country, and no matter where you fall in that debate, this is the most important show happening on TV right now.
“It’s raw, it’s visceral, it’s everything that TV should be and is not.”
Live PD airs Friday nights, beginning Oct. 28, at 9 p.m. ET/PT on A&E. | A police sergeant in Connecticut arrested a man on domestic violence charges in the first episode of a new TV series called Live PD. That same night, she found herself back in a police car—but this time she was the one arrested under the state's domestic violence law, reports the Connecticut Post. The unusual situation involves Bridgeport police Sgt. Stacey Lyons. While being filmed for the new A&E reality series, she arrested a man accused of choking his girlfriend. “Domestics are the most dangerous calls a police officer can go on,” Lyons told the camera. As the man proclaimed his innocence, she told him, "This is a domestic situation and I don't have a choice." Hours after filming the episode, the 33-year-old was charged with disorderly conduct after she allegedly entered an ex-boyfriend's house by punching in his security code and confronted him about another woman. The ex-boyfriend said the pair got into a shoving match, and he called police. The reality show featuring Lyons' arrest aired Friday night. As Deadline explains, the two-hour live show shows officers in six different departments answering calls in real time as host Dan Abrams and two police detectives provide commentary. Think “unmediated, live Cops with third-party journalistic context," as an A&E exec puts it. The idea is to show a typical Friday night for cops on patrol, per RealScreen. (This officer was busted thanks to his own body camera.) |
Apprenticeship is an employee training approach that combines on-the-job training and formal instruction to teach workers the practical and theoretical aspects of a skilled occupation. It is appropriate for many occupations that require at least 1 year of hands-on training and formal instruction. Apprentices work under the auspices of a mentor who is a fully trained worker, often called a journey worker. The content and length of the apprenticeship training and instruction are determined by the needs of the specific occupation. For employers, apprenticeship helps ensure that workers learn consistent skills, practices, and safety procedures. It also can be a way to retain employees because it indicates an employer’s willingness to invest in the worker and ensures regular wage increases if skills are attained. Additionally, employers are permitted to pay apprentices in a registered program less than prevailing wages while they are working on a federal construction project. At least two states and municipalities have similar requirements or mandate that contractors employ apprentices on projects. Employees benefit from registered apprenticeship by advancing their skills and obtaining a credential recognized throughout an industry. Apprenticed occupations have historically been concentrated in the building trades, metalworking trades, and various repair occupations, as we described in an earlier report.Figure 1 shows the apprentices as of September 30, 2000, for 36 states that provided data on apprentices by industry. Construction and manufacturing apprentices continue to make up the vast majority—82 percent—of apprentices. The National Apprenticeship Act of 1937, commonly known as the Fitzgerald Act (29 U.S.C. 50), authorized and directed the Secretary of Labor to formulate and promote labor standards safeguarding the welfare of apprentices and to bring employers and labor together to establish programs of apprenticeship. The Secretary issued regulations implementing the act which provide for registration of apprenticeship programs. In order to be registered, Labor requires that an apprenticeship program be in an apprenticeable occupation as defined in the regulation and meet certain standards. Programs are administered by the Department of Labor Office of Apprenticeship Training, Employer and Labor Services (ATELS) or by State Apprenticeship Agencies or Councils recognized by the Secretary of Labor. The standards prescribed by Labor require that federal registered apprenticeships must include at least 1 year or 2,000 hours of on-the-job training and a recommended 144 hours of formal instruction. In general, most programs last 3 to 4 years. Each program must meet 20 additional requirements, which include a specified minimum age for an apprentice, a specified term of apprenticeship, a progressively increasing wage schedule based on skills acquired, safety training, and a minimum ratio of apprentices to skilled workers. States can impose additional requirements on programs. Program sponsors may also identify additional minimum qualifications that apprentices must possess—for example, a certain level of education or specific physical abilities needed to perform essential functions of the occupation. In addition to meeting the prescribed labor standards, an apprenticeship program must be in an apprenticeable occupation to be eligible for registration. Labor makes this determination based on criteria outlined in the regulations. Labor can make this determination when a program is presented for registration or before apprenticeship programs are developed. In the latter situation, for example, an employer may submit a list of the skills needed to complete various tasks in an occupation and the necessary training to complete these tasks. Typically, Labor then distributes this list to appropriate industry representatives for feedback on the occupation’s apprenticeability. Once Labor has determined that an occupation is apprenticeable, it notifies federal and state apprenticeship representatives who can begin to promote programs within that occupation. If an employer decides to establish an apprenticeship program, he or she can work with an apprenticeship representative, either from Labor or a state council, to ensure that the program complies with Labor’s standards and state laws. Frequently, the apprenticeship representative will help the employer by suggesting various program practices, providing examples of programs that have been successful, or modifying the requirements to meet the needs of individual employers. Employers can sponsor registered apprenticeship programs independently, with a group of employers, or with organized labor. Despite having an important presence in industry, the federally registered apprenticeship program operates using relatively little federal money. In fiscal year 2001, ATELS has an appropriation of about $22 million to administer the program, while state councils run the program with an additional $20 million. The employers and apprentices themselves contribute at least $1 billion for the training. According to Labor, more than 37,000 apprenticeship programs in about 850 occupations employed about 360,500 registered apprentices in fiscal year 2000. Progress in expanding apprenticeships to address skill needs in occupations not traditionally apprenticed has been hampered because Labor’s efforts to identify new apprenticeable occupations are not systematic, nor has Labor been able to alleviate some employers’ apprehension about program requirements. Instead of proactively identifying occupations in which apprenticeship could help provide needed skills, Labor has reacted to employers’ requests to have their occupations recognized as apprenticeable. While some employers take the initiative to make this request, others are deterred from doing so by their apprehension about apprenticeship. Employer concerns that have impeded the establishment of apprenticeship programs ranged from stringent program requirements to the increased government scrutiny they may invite. Apprenticeship representatives working one-on-one with employers try to allay these concerns; however, Labor does not have a centralized effort to reach out to industry representatives and explain how apprenticeship could be implemented in their industry. Further, Labor cannot identify and share its successes because it cannot fully assess its progress in establishing new programs. Its apprenticeship database is incompatible with states’ systems, resulting in data that are incomplete and too general to provide information on specific occupations’ expansion. Labor does not have a formal process to determine how the apprenticeship program could be expanded to meet an increasing demand for skilled labor or to respond to the technological advances of today’s economy. Labor has primarily reacted to employers’ requests for apprenticeships in new occupations and has allowed industry to take the lead in requesting new occupations. Further, Labor has not made a comprehensive effort to locate funding for all new apprenticeable occupations; however, it has recently recognized several occupations that respond to evolving labor market needs. In March 2000, at the request of a union, it approved internetworking technician as an apprenticeable occupation to respond to the increased need for skilled workers to install, maintain, and operate advanced data networks and their components. In October 1999, Labor approved Hotel Associate as an apprenticeable occupation to respond to increased labor needs in the tourism industry and to help retain workers in a competitive labor market. In a few cases, Labor has been proactive in identifying specific occupations, providing funding for their development, and encouraging their implementation. For example, in the late 1990s, Labor initiated (and approved in 2000) the youth development practitioner apprenticeship to provide quality training for workers who deliver comprehensive services to young people and provided grants for its implementation. In the last 5 years, 19 occupations have been recognized by Labor as apprenticeable and a substantial number of these have been in less traditional occupations. Table 1 lists the occupations and approval dates for these occupations. Labor officials recognize the need for Labor to become more proactive in identifying new occupations as apprenticeable and providing funds for the development of new apprenticeship programs but, according to the officials, Labor’s efforts in this area have been hindered by resource limitations. Specifically, Labor officials commented that staff and funding shortages have prevented the agency from fully addressing all its responsibilities, including marketing apprenticeship programs, coordinating with other partners in the job training arena, and providing technical assistance to employers. However, despite their funding limitations, Labor has been able to make some progress in developing and expanding the apprenticeship program. Further, information to help them identify additional occupations in which more skilled workers are needed and apprenticeship can effectively be used to train workers is readily available. Future plans call for taking a more systematic approach, especially in assessing the labor needs of occupations and determining the possibility of apprenticeships helping to address these needs. Some employers’ perceptions and concerns about the apprenticeship program have presented challenges to expanding the program. In our discussions with apprenticeship representatives and employers from the states we visited, we were told that employers were apprehensive about agreeing to a progressive wage schedule for an apprentice without first receiving feedback on how the apprentice was performing both on the job and during formal instruction. Employers were reluctant to commit to a program lasting several years, especially in view of uncertain economic conditions and rapidly changing technology. Employers were concerned with what they considered strict training requirements, such as the 144 hours of formal instruction, recommended by federal regulation but required by some states. Employers were also concerned about getting involved in a program that they thought would lead to increased government oversight or scrutiny of their business. Additionally, employers regarded apprenticeship as a “blue collar” approach to training that is inappropriate to their industry. Employers in some industries, such as high technology and biotechnology, have difficulty envisioning how apprenticeship would benefit them. Apprenticeship officials in several states commented that they have tried to reach out to these industries but have not been successful because employers see difficulty incorporating the apprenticeship structure within their industry. The computer-generated imaging industry in California is an example of an unsuccessful attempt to reach out to an industry by the state apprenticeship representatives. The need for animators to create computer-generated graphics has greatly increased, but is largely project- driven. Workers are needed for a short period of time and then are laid off when the project ends, which is not conducive to long-term apprenticeships. State officials suggested that studios adopt the construction trade model, where workers are essentially pooled and employers draw from the pool as needed. Employer reaction was strongly against this model because the motion picture industry did not want to share workers; the proprietary nature of the work, with companies operating in very competitive fields with new technology, made them uneasy. Labor has efforts under way to reach out to individual employers as well as to inform the general public about apprenticeship. In developing individual apprenticeship programs, Labor deals with employers on a one- on-one basis. Although costly, time-consuming, and labor intensive, Labor officials commented that this approach is very effective at allaying the fears and concerns of employers regarding apprenticeship and was instrumental in gaining their support. Many apprenticeship representatives from Labor are former apprentices who are knowledgeable about the program and can relate to employer concerns. Their approach is to meet with employers to explain the details of the program and resolve any concerns the employer raises. For example, in response to concerns about wage progression, apprenticeship representatives might explain the need to increase workers’ pay over time, noting that this is not automatic but rather based on a demonstrated increase in skills. To allay concerns about the long-term nature of apprenticeship training, they might describe how the program provides flexibility in determining the length of the program. Some programs such as the cable television installer apprenticeship are 1- year programs whereas more complex apprenticeships would be longer, for example, 4 years for a carpenter or electrician apprenticeship. When an employer expresses concern about increased governmental scrutiny, the representative might explain that oversight would not include reviewing other aspects of the operations. Officials commented that once employers fully understand the reasons for apprenticeship requirements, they are often supportive of apprenticeship and can see the benefit to both themselves and the employee. Additionally, Labor has begun an initiative using its current resources to better market apprenticeship. In October 2000 Labor started the Registered Apprenticeship Awareness Initiative, which consisted of a variety of efforts aimed at increasing awareness of and support for registered apprenticeship beyond the employers. For example, Labor produced a compact disc to help spread information about apprenticeships to employers and potential apprentices. It includes information on how to contact apprenticeship representatives, what resources are available to help set up a program, and the benefits of a program. Labor has found this to be a way to conduct outreach, within their present resources, to a broad segment of employers and potential apprentices. The Apprenticeship Information Management System (AIMS), Labor’s current apprenticeship information system, cannot provide a complete, detailed picture of progress in implementing apprenticeships in new fields and cannot be used to assess progress or program development. Apprenticeship officials in 36 states enter data directly into AIMS but the remaining 14 states—which have a labor force of 49 million, or 35 percent of the total U.S. labor force—have chosen not to directly report data to the system, do not have access to it, and in some cases provide only summary data. Detailed information is not included in AIMS for these states, and some information, such as programs being developed, is not included for any states. The system was developed to provide Labor with capabilities to report statistical information and track apprenticeship registration, not to manage the program. Labor hopes that a new system under development will be used by all states so that it can provide information with which to measure progress in expanding apprenticeships to new occupations. Labor has developed specifications for a state-of-the-art AIMS system that can be used by headquarters, regions, and all states. The new system is expected to provide detailed information, such as data on apprentices who start, complete, or leave the program. The new system is expected to be designed by February 2002 and to be operational by June 2002. Labor lacks a mechanism to share information among all states, which could be helpful as Labor tries to expand apprenticeships to less- traditionally apprenticed occupations. Labor does not maintain a national information-sharing system that provides information on lessons learned and experiences with these apprenticeships. This lack precludes states from quickly learning of and benefiting from the experiences of others. For example, two states we visited were each working independently to develop potential apprenticeships within the information technology (IT) industry. They were unaware of similar efforts by the other or by Labor nationally. Both were unable to benefit from the other’s experiences, and neither was successful in getting an IT-related apprenticeship started. Neither could readily access national information on other states’ progress or success at similar efforts. According to Labor officials, such information is not readily available. Labor officials believe that their system should have more capabilities, such as on-line queries, that would enable this information to be obtained readily. The data gaps and insufficient capability of the AIMS system further reduce the value of information that is obtainable on the system. We identified a diverse group of programs for which apprenticeship was chosen as an approach to developing skills needed by an industry. The people involved in establishing these programs overcame difficulties in order to set up apprenticeship programs. While the programs were at various stages of maturity at the time of our study, none had developed quickly; they required much discussion and negotiation among different parties, and in a few cases their development is still under way. Generally, the start-up effort required additional resources, sometimes provided by employers and sometimes by Labor. Program sponsors frequently used innovative practices, such as on-line training, to respond to the special characteristics of individual programs. As shown in table 2, the programs we studied represent a variety of industries and meet particular labor skill needs. Most of these programs were started in the last decade, and a few are still being established. More recent efforts to establish apprenticeships in new occupations have involved reaching out to industries in which apprenticeship is not a familiar concept and developing a comfort level among potential sponsors and apprentices. (See app. II for detailed descriptions of the development and status of each program.) Open communication among employers, employee groups, and the approving agencies has helped speed up and ensure the establishment of these apprenticeship programs. For example, the production technologist apprenticeship was the result of a joint meeting of union and employer representatives. Because the apprenticeship would cross several job classifications, such as engineer, machinist, and electrician, some workers and Labor were not enthusiastic about its potential. This concept was not immediately accepted by some local union workers, who were concerned that allowing these workers to perform tasks that were part of other occupations would jeopardize the other occupations. However, discussions involving all parties allayed their fears. Program planners explained that the quick availability of production technologists who could make small repairs would reduce the production line’s lost time, yet machinists would still be called when more expertise was needed. The youth development practitioner apprenticeship also required good communication. Labor officials worked with staff from its Office of Youth Services to hold several forums across the nation to discuss the apprenticeability of the occupation. The exact nature of the position was defined based on information from these forums. Apprenticeship was initially an unfamiliar concept to the people involved in establishing some of these programs. However, discussion with apprenticeship representatives helped them to understand its value to the employers. The responsibility for educating program sponsors— sometimes one-on-one—typically fell to the Labor or state apprenticeship council representatives who marketed the concept. The expansion of the childcare development apprenticeship from a one-state program to a national one required this type of effort. As part of a national initiative to strengthen childcare workers’ skills, Labor sponsored a nationwide videoconference to discuss the value of childcare worker apprenticeships. Representatives from various state agencies, industry representatives, and apprenticeship representatives participated in the conference, which led to further meetings to discuss the possible implementation of the program in their states. In the three states whose childcare programs we reviewed, training was developed at the state level, which eliminated the need for individual employers to develop their own training plans. Apprenticeship representatives explained the formal training and helped employers understand how it would integrate with the apprenticeship’s structure. Similarly, the pharmacy technician apprenticeship required education outreach. Representatives from the apprenticeship councils in Maine and the District of Columbia contacted hospitals and pharmacies to convince them of the value of apprenticeship, particularly in retaining pharmacy technicians. In Maine, the apprenticeship representative explained how the progressive wage schedule would be helpful in overcoming the problem a hospital was having with retaining workers. Typically, the programs we reviewed required significant resources to develop and deliver formal training. For example, the development of technical courses for the production technologist apprenticeship has cost about $160,000. The employer who provided this money viewed it as an investment in high quality training. For the northern California sound and communication workers, whose apprenticeship training has been provided by a joint employer/union council, two sources have provided funding for training. The employers themselves have contributed $0.30 for each hour that union employees worked, and the state provided more than $4 per hour from a training fund for each apprentice’s classroom time. For some of the programs, particularly those in industries where apprenticeship is not common, government funding was provided to pay for program design, as Labor took on responsibility for helping to identify such funding. Although Labor’s ATELS unit does not have regular appropriations for program design, in some cases Workforce Investment Act discretionary funds have been used. The Congress also appropriated $12 million to bolster Labor’s childcare development worker apprenticeship initiative. To date, 20 states and the District of Columbia have received grants from this appropriation, which they have used for various purposes, including subsidizing formal instruction and funding apprenticeship representatives who “market” apprenticeship to childcare centers and monitor the on-the-job training. Officials we spoke with in three states emphasized the important role that these funds played in marketing and implementing apprenticeship within the industry. For the new youth development practitioner apprenticeships that Labor spearheaded, Labor requested grant proposals in April 2001 from entities that wished to receive funds to establish individual programs. About $1.45 million will be available for local organizations and institutions, national organizations, and an organization that can provide technical assistance as programs develop their procedures and curriculum. In May 2001, Labor provided $550,000 to the Computing Technology Industry Association (CompTIA), an IT trade association, to design an IT technical support specialist apprenticeship program. The association will use the funds to convene industry representatives to identify which jobs and skill sets within the IT career clusters would fit the apprenticeship model. Several sponsors of the apprenticeship programs we studied used innovative approaches to meet apprenticeship requirements while accommodating unique characteristics of the occupation or industry. In four of the programs, distance learning—formal instruction over the Internet or by videoconferencing—was used or is being developed to accommodate workers who could not meet with instructors personally. The production technologist position’s formal instruction, designed and taught by university personnel in Illinois, was provided via videoconferencing to workers at the two participating manufacturing facilities in Shreveport, Louisiana, and Denver, Colorado. New Hampshire sponsored on-line training for the childcare development specialist apprentice mentors (the supervisors of the apprentices) and lent them laptop computers to enable them to participate in the courses and network with others who were mentoring childcare apprentices. Some of the programs adapted their apprenticeships to accommodate unique characteristics of their occupation or industry. For example, the childcare industry typically has low wages relative to other industries. Vermont officials decided to use some of their childcare grant funds to subsidize the wages for apprentices and their mentors, which they believed would raise the status of apprenticeship and attract both apprentices and mentors. In some industries, skill certifications have become key elements of workers’ credentials, and in some of the programs we studied, the certifications were made part of the training. For example, the sound and communication workers in northern California integrate into their apprenticeship program the BICSI training, an industry- recognized certification that some contracts require all workers to have. Similarly, CompTIA, a trade association that develops certifications in many technical aspects of personal computer service, support, and networking, plans to offer certification for IT technical support specialist apprentices who pass the formal instruction. Labor has not led a systematic effort to identify apprenticeable occupations and, therefore, the full potential of apprenticeships may not have been realized. Some industries with shortages of skilled labor have not used apprenticeship to meet those needs. Labor has focused its efforts to expand apprenticeship on a few occupations for which skills need to be improved and shortages exist. Its efforts to identify new occupations for apprenticeship have been largely reactive and, as a result, Labor is not influencing the expansion of apprenticeships to industries in need of skilled training. Instead of being reactive, Labor can take a leadership role in identifying occupations where apprenticeship can contribute to providing needed skills, using available information and staff to better direct the expansion of apprenticeship nationally. In addition, Labor has identified workforce development funds to support some of these efforts, but has not systematically located resources for apprenticeships needing funds for program design, which could help ensure their success. Further, Labor has not done all it could to widely disseminate information about the apprenticeship program, although doing so would result in employers overcoming their concerns and wanting to participate. The agency has not set up a way for program sponsors to share information on lessons learned, such as through online databases that sponsors could query, with other employers interested in establishing apprenticeships. Such an information exchange would help potential program sponsors understand how apprenticeship could be beneficial, overcome difficulties that may arise in their efforts to establish a program, and alleviate concerns they have about apprenticeship requirements. For example, this exchange could allow the classroom training modules and work standards established for programs in one location to inform employers and apprenticeship representatives in other locations. Similarly, a more detailed apprenticeship database could help people who are considering establishing new programs by identifying others who have experience in operating similar programs. Currently, the database’s incompatibility with some state systems hinders networking and sharing of lessons learned among apprenticeship representatives who are working to establish new programs. It also limits Labor’s ability to measure progress on the use of apprenticeship in newly approved occupations. To expand apprenticeship, particularly into occupations not traditionally apprenticed, Labor must take the lead in coordinating and promoting the development of programs. As part of this effort, we recommend that the Secretary of Labor ensure that ATELS Lead a systematic effort to work with state apprenticeship councils and others interested to identify apprenticeable occupations that have shortages of skilled labor and establish plans for promoting apprenticeship programs in these occupations, Work with other federal workforce development programs to identify funding for developing apprenticeships when additional support is needed, Establish a mechanism for sharing among Labor representatives and employers information on apprenticeship programs, particularly those in occupations not traditionally apprenticed, and Ensure that the apprenticeship database contains detailed information on current programs so that accurate and complete information is shared and progress in meeting labor market needs can be evaluated. The Department of Labor commented on a draft of this report, stating that it agrees with all four recommendations and is planning actions to implement them (see app. III). Labor plans to have ATELS take the lead in identifying apprenticeship opportunities for occupations with skilled labor shortages as well as in new and emerging industries. Through enhanced coordination with other federal workforce investment system programs, ATELS will explore additional financial, technical, and communications support for expanding apprenticeship opportunities. To better share information on apprenticeship programs, ATELS has engaged a contractor to manage a major public information initiative, including reaching out to growth industries and high-demand occupations. Further, Labor stated that in redesigning the apprenticeship information management system, it has begun to make necessary improvements, and expects that the final design will provide accurate and complete information throughout the registered apprenticeship system. We are sending copies of this report to the Secretary of Labor and other interested parties. We will also make copies available to others upon request. If you or your staff have any questions about this report, please contact me at (202) 512-7215 or Joan T. Mahagan at (617) 565-7532. Key contacts and staff acknowledgments for this report are listed in app. IV. We took several steps to determine efforts the U. S. Department of Labor has made to expand apprenticeship to new occupations and to understand the impediments to starting apprenticeship programs in fields not traditionally apprenticed. We interviewed Labor officials at the national, regional, and state levels to obtain an understanding of how apprenticeable occupations are identified and how apprenticeship programs are registered. We visited four states to discuss how each state implements and manages the apprenticeship program, particularly how they approve new programs. From those programs registered in recent years, we judgmentally selected 10 programs in each state that addressed labor market needs or were in nontraditional occupations. We collected detailed information on the approval process and any impediments to it from the responsible federal or state apprenticeship representative and from the employers. We also spoke with members of the Federal Committee on Registered Apprenticeship, National Association of State and Territorial Apprenticeship Directors, as well as trade associations, unions, and other knowledgeable individuals to discuss their roles and obtain their views on expanding apprenticeship to respond to labor market needs. In order to describe examples of apprenticeship programs that responded to current labor market needs and how they have done so, we studied in depth several apprenticeship programs that either had been established or were being established in occupations that are not traditionally apprenticed. To identify these, we obtained suggestions from Labor officials, state apprenticeship council officials, and other knowledgeable experts in apprenticeship. Our activities in reviewing these programs included speaking to employers, observing and touring a training facility, and speaking to developers of the formal training. Following are summaries of programs that exemplify efforts to develop new apprenticeships that respond to labor needs. In 1995, high-level representatives of AT&T’s wireless telephone facilities and the union, International Brotherhood of Electrical Workers (IBEW), met to discuss their mutual concerns about the workforce’s capability to meet the company’s needs as manufacturing processes changed. From that meeting, development of a new apprenticeship was undertaken in an occupation called production technologist. Production technologists were to be responsible for both direct production work on products and for indirect work, such as production planning, routine equipment maintenance, and training. Management at the Shreveport, Louisiana, and Denver, Colorado, plants agreed to implement the apprenticeship with the union. One issue needing resolution was concern that the position involved combining the skills of a variety of different workers, such as engineers, electricians, and machinists. Some union members believed it would hurt workers in individual trades if the production technologists worked across trades. However, union management convinced them of the importance of including specific training in the apprenticeship, such as less-complicated machine repairs that could reduce production downtime. Labor approved the occupation as apprenticeable in December 1997. The production technologist apprenticeship was developed as an 8-year program. Under the guidance of the Enhanced Training Opportunity Program, a training program sponsored by both the employer and the union, Northern Illinois University developed many aspects of the position, including the training program. Although workers entering an apprenticeship program at the company would normally have expected to take a pay reduction, IBEW representatives believed that would discourage high-quality workers from applying and negotiated with the employer to pay apprentices their previous salary. To date, many of the courses have been developed and taught, although development of the work process-specific courses has been expensive— totaling about $160,000 so far. The training developers report that the most expensive part of course development is the design of tests that measure the mastery of critical competencies. Videoconference training has been provided to allow workers from the two geographically dispersed sites to “attend” classes at Northern Illinois University, but transitioning to web- based training to reduce telecommunications costs is actively under consideration. Because of technological changes, the training developers anticipate that some of the courses, such as those on semiconductors and industrial controls, will need to be updated before they are presented to another class of apprentices. In total, the apprenticeship will include 17 major courses as well as some additional training. One challenge to the apprenticeship’s continuity is the change of employers during the planning and implementation of the apprenticeship. Initial apprenticeship program discussions were with AT&T, the program was implemented when Lucent owned the production facility, and the division was bought out by Avaya. As of May 2001, Avaya was negotiating the sale of various manufacturing assets and capacity to another company, leaving the future of the apprenticeship program uncertain. As a result, the production technologist apprenticeship program has not expanded since its inception, although it was initially conceived as a program that would train hundreds of apprentices. The training developers report, however, that the eight apprentices in the program have had a major impact on the production process. Some apprentices received corporate recognition for their novel work on improving production-related processes. A trade association of companies and professional members in the computing and communications market—the Computing Technology Industry Association (CompTIA)—has recently obtained a grant from Labor to pursue developing an apprenticeship for workers to provide information technology (IT) technical support. CompTIA representatives had recognized the need for on-the-job experience for these workers. Their research has revealed that companies often must train their IT service and support staff to meet company needs. Further, almost half of companies surveyed would pay a higher salary to an individual who had already completed an industry-sponsored IT service and support a certification program that included hands-on working experience, interaction with customers, and working in teams. CompTIA representatives believe these skills can only be developed on the job; students at the postsecondary level often receive technical instruction and successfully test for an industry certification (some of which CompTIA sponsors), but lack the on-the-job experience, thereby reducing their employability. A representative from CompTIA, aware of the concerns about IT staff needing on-the-job training, heard a Labor Office of Apprenticeship Training, Employer and Labor Services (ATELS) staff member’s presentation on apprenticeships at a conference. He realized that the apprenticeship structure could be used to overcome this skill deficiency but also recognized that the industry had not delineated the occupations within the IT service industry and their skill requirements. CompTIA submitted a proposal to Labor requesting a grant of $550,000 to explore registered apprenticeship as a means of addressing the IT workforce shortage and the lack of on-the-job experience that entry-level IT workers often have. Labor, recognizing that CompTIA was in a unique position to convene a knowledgeable team from industry, decided to fund the grant, using monies that the Workforce Investment Act authorized the Secretary of Labor to set aside for dislocated worker demonstration projects. With the Labor grant of $550,000, CompTIA plans to convene a group from industry to identify IT occupations that are apprenticeable, the skills required, and the related instruction requirements. CompTIA believes that with the 2,000 hours of work experience required under the apprenticeship model, the apprentices would be able to gain the skills necessary to perform many of the entry-level jobs in IT technical support, including customer service technician, help desk specialist, network technician, configuration technician, and web developer. The industry representatives would also develop the work processes and related technical instruction required for the apprenticeship, including certifications identified as necessary. CompTIA plans to enlist pilot sites to test the apprenticeship model(s) that is developed. In about 1987, the National Electrical Contractors Association and the IBEW operating in Northern California realized that more sound and communications installers were needed to meet the growing demand for the installation of low-voltage systems, such as those used in remote controls, burglar and fire alarms, data and telephone lines, and audio and video systems. For example, sound and communications installers working at a grocery store construction site could be installing intercom connections throughout the store, public address systems, alarms at entrances, electronic locks that could be on timers, data lines from the cash registers, and satellite data link systems. A joint apprenticeship and training committee hired a training director to develop the apprenticeship program. The committee identified an existing occupation title that could be used, and modified the work process standards to meet their needs. The training director then developed training for the program and oversaw its implementation. California’s apprenticeship council approved the apprenticeship program in 1987, and the first formal training was started in 1993. Funding for the related instruction is obtained from two sources. California provides funds that cover about 40 to 50 percent of the cost of instructors for training. These funds provide a set amount of money for each hour apprentices spend in the classroom ($4.37 as of our March 2001 visit). In addition, the 135 contractors bound by the bargaining agreement that supports the joint apprenticeship training committee pay $0.30 per hour ($0.60 beginning on September 1, 2001) for each hour worked by individuals they employ who are under the bargaining agreement. The present program requires 6,000 hours of on-the-job training, and 450 hours of related formal instruction provided by the joint apprenticeship training committee in facilities that are also used for other IBEW training programs. Instruction ranges from basic courses, such as “Use and Care of Hand Tools” to more technical courses, such as “Certifying the Fiber-Optic Cabling System,” and includes BICSI training, a certification program on cable installation. Twice a week, apprentices attend night classes taught by instructors from the field who have received training on instructing. As of June 2001, about 650 apprentices had completed the program and about 1,100 were enrolled. Labor has spearheaded a national effort to develop apprenticeships for childcare development specialists—those who provide care directly to young children. Labor wished to provide a credentialed career path for childcare providers through registered apprenticeships that would “reduce turnover, increase wages for providers, provide a more stable environment for children, and overall improve the quality of early childhood programs.”Although childcare apprenticeships had been implemented in West Virginia earlier, this effort was in response to a 1997 White House effort to focus the nation’s attention on the importance of addressing the need for safe, affordable, available, quality childcare. Using funds provided for this purpose in its budget appropriation, Labor made grants totaling $3.4 million in 1999 and $3.3 million in 2000 to states to implement this initiative. Interest was aroused within the states and the childcare industry through a nationally broadcast videoconference hosted by the Secretary of Labor at a cost of $22,000. Although the videoconference created interest, implementing apprenticeship programs in an industry unfamiliar with the concept involved much coordination and communication. We discussed implementation of the program with officials from Indiana, New Hampshire, and Vermont who received first- round grants. In all three states, the next step was to bring together a diverse mix of representatives—from industry, apprenticeship oversight agencies, and state agencies—who had an interest in childcare. The apprenticeship representatives from the states all reported that several meetings were held to reach consensus on what the apprenticeship should entail. One commented that each group had its own jargon, and it took several meetings to develop a common language. Training was provided in a consistent way to all apprentices in each state. Each state developed a common work process that laid out skills that should be addressed in the 2-year on-the-job portion of the apprenticeship. Each state also identified specific courses apprentices could attend—four courses in Indiana, six in Vermont, and six or seven in New Hampshire— and the colleges where they could attend them. In Vermont, the training is free to childcare providers, and is funded with childcare grant funds; in New Hampshire, the first course is free to the apprentice, paid for with a state health and human service block grant, and half of the remaining courses are also free; and in Indiana, some scholarship funds are available from an organization that supports childcare workers. In addition, each state has developed or is developing training specifically for the apprentices’ supervisors. New Hampshire’s program used funds from the Labor grant to develop this training and to buy laptop computers for supervisors to borrow for participating in distance learning courses. Because wage rates within the childcare industry are relatively low, Vermont chose to use part of its Labor grant to subsidize wages for the apprentices and their mentors. Apprentices can earn regular increases that will raise their wages from $0.25 to $2 an hour over the 2-year apprenticeship. Supervisors would also receive wage supplements of $0.50 to $2 an hour. Vermont representatives are planning how to continue this wage subsidy after the grant funding ends. They have written a grant proposal to obtain some state Workforce Investment Act funds and have created an advisory board that is working toward securing long-term funding. Reaching out to childcare centers to encourage them to sponsor apprentices entailed considerable effort in each of the states. New Hampshire used some of its federal grant funds to hire three recruiters who met with childcare center directors, helped them plan the apprenticeships, and continue to monitor them. One center director commented that if she had not had a representative to help develop the apprenticeship program details, she probably would not have pursued the program. Responsibility for marketing apprenticeship to childcare centers in Vermont has primarily belonged to the Agency of Human Service, whose staff members have made many direct contacts with center directors. Information was also provided to the public through an extensive website. Indiana used part of its federal grants to hire a full-time project coordinator for the childcare apprenticeship project who recruits both employers and apprentices. As a result of the implementation of the first round of grant awards to 10 states and the District of Columbia, 251 programs registering 527 apprentices had been established through January 2001. In addition, a second round of grants has been awarded to 10 states. Labor anticipates distributing a third round in 2001. Recipients of grant awards are required to identify ways to sustain the program once federal funding ends. States we contacted are grappling with this condition and are exploring a number of options to ensure their program’s longevity. Indiana plans to reduce the full-time project coordinator position to part-time. Vermont is seeking sources of funds to sustain its wage subsidies for apprentices and supervisors. New Hampshire’s Commissioner of Labor has committed to finding funds to continue to pay for staff to recruit apprenticeship sponsors. Over the last few years, Labor has recognized that an apprenticeship in the youth work field could provide quality training for workers who deliver comprehensive services to young people. Many resources are committed to serving youth as a result of Labor’s youth opportunity grants and increased emphasis on youth services under the Workforce Investment Act. Labor wished to upgrade the field of youth work by developing an occupation targeted to supporting youth, and believed that apprenticeship provided the opportunity to systematically examine and address the needs of the field. Labor itself spearheaded the effort to define the occupation of youth development practitioner and will be supporting its implementation through grants. Early on, Labor drafted on-the-job training requirements and proposed related instruction, and had a focus group comment on them. Labor held forums around the United States to discuss the apprenticeability of this occupation and incorporated those results into the apprenticeship description, receiving enthusiastic support for the apprenticeship. Labor then approved the occupation as apprenticeable and formally established it as an apprenticeship occupation in October 2000. In April 2001, Labor announced the availability of $1.45 million in competitive grants to support the dissemination of information, to publicize the occupation and apprenticeship, and to support interested communities in the implementation of the apprenticeship programs. These funds, whose source is discretionary funding authorized under the Workforce Investment Act, are intended to stimulate and support the broad implementation of the apprenticeship. In July 2001, Labor awarded grants to nine entities at the local community level that can serve as intermediaries to bring together stakeholders to establish and register youth development practitioner apprenticeship programs. In addition, Labor awarded three grants to national organizations that have youth programs employing youth development practitioners. Labor also awarded a grant to the National Council on Employment Policy to establish a clearinghouse of information on practice and curriculum to support local communities in developing and implementing their apprenticeship programs. We discussed the planned implementation of a youth development practitioner apprenticeship program in Alaska with a program representative and the ATELS state director. The Cook Inlet Tribal Council in Alaska recently obtained a Youth Opportunity Program demonstration grant to support about 70 staff members who work directly with youth in 47 locations. Although they have hired staff with available funding, they realize that the level of education and experience among staff members varies widely. Most do not have college degrees, and the employee development director believes the apprenticeship model is a good way to provide the professional development that staff need. She also believes that for rural Alaska, apprenticeship is a useful model because it allows staff to stay in the community to receive the necessary instruction. This helps retain staff who may not return to their communities after locating elsewhere. Because the youth development practitioner occupation was not defined specifically until recently, curriculum needs to be developed for the occupation, which will cost an estimated $75,000. The Council estimates that the development and delivery of training will cost an estimated $300,000 to $400,000. Staff is widely spread throughout the state and instruction will need to be provided over the Internet. However, many staff members are in villages without Internet providers, which necessitates significant spending on long-distance connections. The employee development director expects to seek other state funding, possibly through the Workforce Investment Boards. At the national level, Labor selected 13 entities to receive grants totaling about $1.5 million. Meanwhile, at the local level, the Alaska tribal council’s employee development director noted that interest in the apprenticeship among the council staff was high, and she planned to start the apprenticeships by October 1, 2001. We spoke with apprenticeship officials in Maine and the District of Columbia, who noted that either hiring or retaining pharmacy technicians is difficult for employers in their areas. Apprenticeships for pharmacy technicians are either just recently under way or being developed in each location. Pharmacy technicians serve as aids to pharmacists in store and hospital pharmacies, performing such tasks as keeping records of drugs delivered to the pharmacy, storing incoming merchandise in proper locations, and cleaning equipment. In the District of Columbia, CVS, a pharmacy chain, was operating a training center housed at the District’s Department of Employment Services’ center. An apprenticeship representative from the District apprenticeship council convinced CVS that they should sponsor apprenticeships for pharmacy technicians to help meet their growing need for this staff. The apprenticeship representative explained that the structured on-the-job training and formal instruction would provide the staff with the necessary skills. A 2-year apprenticeship program was established that requires 144 hours of formal instruction each year. Workers are released from work to attend the training, and CVS provides the formal instruction. In Maine, a pharmacy technician apprenticeship program is being established with Maine Medical Center, a large hospital with about 40 staff members in its pharmacy department. The hospital had a high turnover rate for these technicians—42 percent in 2000—who often left after they were trained. After the representative from Maine’s apprenticeship council explained apprenticeship to the pharmacy department, department management became convinced that they needed to increase wages. After an analysis of comparable wages elsewhere, they decided to raise pharmacy technicians’ wages an average of 13 percent, with the entry-level apprenticeship wage rising from $8.53 to $9.99 and the top wage rising from $14.99 to $18.64. Management also established training requirements, one of which is for apprentices to take two courses each semester from a local technical college for which the state will pay $100 per course. The college offers the required courses on-line, allowing other pharmacy technicians located throughout the state to participate if their employers sponsor apprenticeship programs. The courses in the District presently have three apprentices enrolled. In Maine, some apprentices had already started courses but the agreement with the Maine apprenticeship council had not been finalized as of June 2001. A representative from the hospital expected that they would limit the number of apprentices to 10. The apprenticeship representative hopes to now convince other hospitals in Maine to replicate the Maine Medical Center’s program and is reaching out to some pharmacy chains. In addition to those named above, Kevin F. Murphy, Corinna A. Nicolaou, Carol L. Patey, and James P. Wright made key contributions to this report. | Apprenticeship, which combines supervised on-the-job training with formal instruction, benefits both employers and employees by providing the skills and knowledge necessary for a specific job and a credential recognized throughout an industry. The use of apprenticeship is standard practice in some industries, but expansion beyond traditional occupations has been limited. The Department of Labor has not systematically identified new occupations suitable for apprenticeship programs, nor has it successfully alleviated the concerns of some employers about apprenticeship requirements, which has slowed the expansion of apprenticeship to new occupations. Labor has approved 19 new occupations for apprenticeships in the last five years, and many of these have been in less traditional occupations, such as internetworking technicians. Employers are often wary of apprenticeship programs. For example, some employers are reluctant to commit to incremental increases in wages as required by apprenticeship regulations. GAO identified several apprenticeship programs in which apprenticeship training helped to develop workers with sought-after skills. The key to the establishment of the several programs GAO reviewed was the close interaction between employers and federal or state apprenticeship officials to ensure that employers understood the value of apprenticeships. |
Since 1993, DLA has operated with two defense distribution regional headquarters, an eastern headquarters in New Cumberland, Pennsylvania, and a western headquarters in the vicinity of Stockton, California. These regional headquarters provided operational oversight to over 20 geographically dispersed distribution depots. See figure 1 for DLA’s distribution structure prior to the decision to consolidate the regional headquarters. DLA reduced its number of distribution regions from three to two in 1993 and soon thereafter began exploring the potential of having just one. Although a study was initiated, it was not finalized and no proposals or recommendations were approved. During the 1995 base realignment and closure (BRAC) process, DLA examined the military value of the eastern and western regional headquarters and found that they rated nearly equal. At that time, DLA officials concluded that changing the command and control structure would present significant risks in the efficient management of day-to-day operations and the ability to effectively support two major regional conflicts simultaneously. Further, they determined that span of control of future operations and the requirement to continue to accommodate contingency, mobilization, and future total force requirements made two regions essential. Subsequent to BRAC 1995, DLA officials revisited the consolidation issue and began another study. According to DLA headquarters officials, a preliminary assessment was made and the study was terminated before any recommendations were made. Meanwhile, DLA continued to restructure its distribution organization. Then, in February 1997, DLA reinitiated an effort to consolidate the two regions. This was expected to result in the creation of a single distribution command, known as the Defense Distribution Center. Under this plan, the center was to assume the regional distribution functions and manage the two primary distribution sites and all remaining distribution depots. Two steering groups were established to work concurrently on the consolidation effort. A “missions and functions steering group” was established to determine the distribution center staffing requirements and organizational design. A “site selection steering group” (hereafter referred to as the steering group) was established to develop a decision process to determine a recommended site. The Principal Deputy Director of DLA was responsible for selecting the site in consultation with the DLA Director and other senior officials who made up DLA’s executive leadership team. The site selection process included the use of a contractor, KPMG Peat Marwick, LLP to assist the steering group in developing the decision model and identifying the data needed. The contractor and an experienced DLA facilities engineer gathered, validated, and evaluated the data used in the model. The steering group had 12 members, with 6 voting members from various offices within DLA headquarters and the Office of the Secretary of Defense; 2 voting members each from the eastern and western regions; and 2 nonvoting members—the steering group chair (a military colonel) and a Department of Defense (DOD) Inspector General representative, who participated as an advisor. The group developed cost and other site selection criteria that were approved by the selecting official and the executive leadership team. (See table 1.) While costs played a major role in the evaluation, the preferred site did not necessarily have to be the site with the lowest costs. Rather, it was the one with the highest point total. Three sites were initially considered for the new center: DLA headquarters at Fort Belvoir, Virginia, and the existing eastern and western regional headquarters. The Fort Belvoir site dropped out before completion of the first data request due to a lack of available space at the headquarters building. The steering group sponsored two rounds of data requests from officials at the competing sites. According to KPMG, the responses to the first data request were not used because some of the questions were not clear and the respondents did not fully understand them. Thus, a second data request was required. For the second data request, the questions were redefined in an attempt to be clearer and obtain better information. The steering group expected that responses to the second data request would be analyzed using the decision model to identify the preferred site. Analysis of the second data request was completed on August 11, 1997. Although the steering group was not convened to review the results, the steering group chair and KPMG jointly presented the results to the selecting official (DLA’s Principal Deputy Director), who told us that he was dissatisfied with how some aspects of the approved methodology had been implemented and saw the need for additional data. He requested revisions, including having a second facilities engineer, not previously involved in the process, oversee the collection and validation of some new data—essentially a third data request. The steering group was not made aware of the selecting official’s actions, including the third data request, until the group was given both the results of its work on the second data request and the revisions, on September 15, 1997. On the basis of the results of the revised study, the eastern location was selected by the Principal Deputy Director of DLA as the site for the new center also on September 15, 1997. As of October 1, 1997, DLA had officially established its command and control of all distribution functions at New Cumberland, Pennsylvania. As of February 25, 1998, personnel performing distribution headquarters functions at the western location were reporting to management at the eastern location, and DLA was in the process of implementing other aspects of the consolidated operation at that location. The process used by DLA to support the site selection decision for its consolidated distribution headquarters contained several weaknesses, including insufficient data on personnel and facilities requirements, a questionable methodology for evaluating and comparing costs, and subjective responses used by steering group members for two criteria. Subsequent changes to the process, made at the request of the selecting official, did not correct these weaknesses and created concerns about the perception of bias. Also, these actions significantly altered investment and operating cost results between the second and third data requests. (See apps. I and II.) Because information on staff size and functions was being determined concurrently with the site selection process, the steering group was not given complete information on the staffing requirements, organizational design, and facility requirements for the new headquarters. Because these requirements have a substantial impact on space utilization and costs, it is important that they be properly defined in advance of facility space planning. The steering group was initially told by senior DLA management that an estimated 400 persons would be needed to staff the consolidated distribution headquarters. Therefore, the first data request asked officials at the competing sites for facility requirements and costs based on the requirements of 400 staff. Subsequently, the missions and functions steering group provided an estimated personnel strength of 347 persons, which was used in the second data request. In both instances, the competing locations were not given a more detailed breakdown of the operational functions or the number of persons associated with them. Respondents from the regional locations stated that they could only estimate floor plan requirements and then compute associated costs. According to a KPMG official, the floor plans developed by each site contained certain unrealistic aspects and did not present a clear picture of the investment costs that would be required. Although the structure and functions of the new headquarters were determined prior to the third data request by the mission and functions steering group, DLA officials considered the information too sensitive to release to the competing locations because it could lead to speculation about layoffs. For the third data collection effort, requested by the selecting official, a DLA facilities engineer provided the regional respondents with the number of functions and the number of staff per function, but not the identity of the functions. As a result, the third data request also resulted in hypothetical floor plans and associated costs. Officials at the eastern location told us that, after becoming aware of the final plans for staffing, they made some good guesses in identifying some of the functions and could have implemented their floor plan if required to do so. However, they did not believe the floor plan presented the optimal solution. For example, although they knew they needed a law library, they did not know which function it would be associated with; therefore, their floor plan resulted in locating their legal staff offices at one end of one building and the law library at the opposite end of a second building. Although some changes were to be expected, according to regional officials, the lack of definitive information meant that neither site’s floor plan would have been fully implemented if selected. DLA officials are still in the process of finalizing the floor plan for their headquarters location in New Cumberland, but the officials said they do not expect the costs to exceed the estimates provided in the site selection competition. Nevertheless, questions still exist regarding what differences might have existed between the plans and costs initially provided by the two competing locations if they had had a clearer picture of the performing functions and space requirements. Both steering group members and regional respondents said the lack of information on personnel and facilities hampered their ability to perform their tasks. A KPMG official agreed, noting that although he had been involved in numerous site selections, this was the first time he had participated in a selection process in which the functions and related staffing had not been determined before the site selection process began. Analysts often assign varying weights to evaluation criteria in this type of analysis to distinguish the relative importance of individual criteria. This approach is also used to assign different weights between cost and noncost variables to distinguish their relative importance. However, DLA’s site selection steering group assigned different weights to individual cost criteria, which produced a distorted picture of the comparative costs of the two competing locations. For example, a dollar spent on a service order became more significant or of more value than a dollar spent on real property maintenance. The distortion caused by this weighting was so significant for the second data request that, even though the eastern location was $3.8 million more expensive than the western location based on a straight comparison of costs, the assignment of points made it appear that the eastern location had come out ahead in the cost categories. (See app. I for the results of the second data request.) The DOD Inspector General representative who participated in the steering group’s proceedings told us that he had questioned the weighting of individual cost elements and recommended to the group that costs be evaluated on a straight comparison basis between locations. Further, KPMG officials told us that they had also told the group repeatedly that this methodology was not comparing dollars equally. Individual steering group members we spoke with could not recall their rationale for a disproportionate ranking of dollars and did not understand the potential impact of their actions until they saw the results of the second data request. Specific criteria for evaluating work environment and commute time were not established because the steering group could not determine data sources for these two noncost criteria. Thus, steering group members subjectively determined point values for these criteria at each location. For work environment, members told us they considered everything from distance between the parking lot and the office to perceived lifestyles to ongoing working relationships. For commute time, because some members had been to each location only twice, their experience with commute time consisted of traveling between their hotel and the site. Some members argued that commute time was not really a valid criterion, because it was a matter of personal choice. The subjectivity of these responses and the inconsistency in what members considered made the determinations of questionable value. These two criteria represented 100 points, or half the points awarded in the noncost category and 10 percent of the total points. DLA’s site selection decision support model was reviewed and approved by its Principal Deputy Director who served as the selecting official, in consultation with DLA’s executive leadership team, before data collection efforts were initiated to ensure the objectivity of the process. However, after being briefed on the results of the second data request analysis, the selecting official requested changes in the analysis and asked for additional data. He stated that he did this to better ensure the comparability of data between the sites. This produced the requirement for a third data request. The selecting official decided that equal points should be awarded to each site for personnel costs, that real property maintenance costs be reassessed, and that changes should be made to requirements for furniture and space. The selecting official’s actions to negate the impact of one criterion and to have data reassessed after receiving the results of the analysis and without consulting the steering group created concerns among various steering group members about the perception of bias. The selecting official disagreed with the steering group’s use of personnel cost as a criterion. As a result, following a briefing on the second data request analysis, the selecting official, acting independently of the steering group, decided to eliminate personnel costs as a consideration. The selecting official reasoned that the grade structure of the new headquarters should be independent of the chosen site, making personnel costs irrelevant, so he gave equal points to both locations. (See app. II for the results of the third data request.) The steering group, however, had considered personnel cost to be an important criterion and had based it on average grade levels of the current structure at each location. The steering group reasoned that, although the employees of the new site would be downsized, the grade structure at the new headquarters would be similar to that of the region where it was located. DLA headquarters officials told us that in setting up the new distribution headquarters at New Cumberland, they expect to restructure and downgrade positions at that location to meet the requirements for the new organization. To what extent this would lessen the higher personnel costs for the eastern location is unclear given employee bumping rights and save pay provisions that would likely be associated with such restructuring. Also, the importance of personnel costs as a decision factor should not be minimized since savings in this area can mean the potential for significant recurring savings in the long term. The results of the second data request showed that the eastern location had higher average grade levels, resulting in a $3.1 million difference in personnel costs between the two locations over a 5-year period. (See app. I.) The selecting official had the facilities engineer responsible for the third data request reassess real property maintenance costs. The selecting official told us that he did this in the interest of obtaining more realistic data. For the second data request, the steering group used the Navy Public Works Center real property maintenance estimates used in the 1995 BRAC process. These estimates had been reviewed in 1995 by the DOD Inspector General, who found the procedures used to be reasonable and the cost estimates to be consistently generated, generally supported, and reasonably accurate. According to the facilities engineer responsible for the second data request, the data had also been used in DLA’s real property maintenance project development, budgeting, and execution processes. The DLA facilities engineer made minor changes to the Navy Public Works Center data as part of his data validation efforts before approving their use for the second data request analysis. The selecting official told us he believed that the data used in the second data request were not realistic, based on his personal knowledge of the conditions of the two sites, past experience in the distribution area, and knowledge of flaws in repair and maintenance data used for BRAC. He reasoned that the BRAC data were not comparable because the Navy Public Works Center had different people with different perceptions and evaluation criteria assess the individual sites. For example, he said the eastern location’s database included about $47,000 for the cost of painting a building with a dryvit exterior, which, according to the facilities engineer, does not need cyclic painting. However, the facilities engineer had already removed this item from the eastern location’s database during his validation of the second data request. A DLA facilities engineer, not previously involved in the process, reassessed real property maintenance costs for the third data request, producing a significant change in costs between the two locations. The results of the second data request had shown a difference of about $643,000 in the real property maintenance category in favor of the western location. The results of the third data request produced a difference of about $182,000 in favor of the eastern location. For the third data request, the facilities engineer went one step further than the previous engineer and had the sites submit justification for removing additional projects from the Navy Public Works Center database. The projects submitted for removal included some cyclical projects that the respondents did not believe were needed during the 5-year time frame covered by the analysis. The eastern location submitted and received approval for removing about $791,000 worth of projects. According to western location officials, they had one such project, valued at $95,000, but they did not submit it because their efforts to have it removed during the second data request were unsuccessful. Both facilities engineers said that if the western location had resubmitted this project for the third data request it would have been considered and may have been removed. The removal of this item alone would not have significantly impacted the cost or point spread in the final analysis of the third data request. However, the facilities engineers later identified an error of about $210,000 in the western location’s database for costs that KPMG agreed should have been excluded. The correction reducing the western location’s real property maintenance costs was not made in the final analysis because, according to KPMG, it was identified after the third data request analysis was completed. Although these reductions—the possible removal of the $95,000 project and the $210,000 correction—in the western location’s costs would have changed the dollar and point spread advantage for real property maintenance costs from the eastern site to the western site, they would not have been enough alone to effect the overall outcome of the study. (See app. II.) The selecting official requested revisions to the requirements for furniture and space. These changes significantly affected the relative position of the competing locations within the facilities and information technology cost category. The eastern location’s cost advantage in the investment cost category, which includes facilities and information technology costs, went from only about $19,000 in the second data request analysis to about $1.7 million in the third data request analysis. The facilities engineer who developed the third data request told us that the requirements were instituted to ensure a level playing field. However, some steering group members disagreed with the changes and told us that the requirements gave an advantage to the eastern location, which already had modular systems furniture required by the new data request. In developing the second data request, the steering group had voted to disregard the selecting official’s direction for the new headquarters to include modular systems furniture. While DLA officials told us that such furniture was used at two other newly renovated sites, various steering committee members told us they did not believe that an official standard requiring such furniture currently existed within DLA. Nonetheless, this became a requirement under the third data request, consistent with the selecting official’s earlier guidance. The facilities engineer who developed the data request required that the competing regions resubmit floor plans to include the systems furniture and stipulated that its life expectancy not exceed 10 years within the 5-year time frame covered by the analysis. As a result of these new requirements, the western location submitted a cost of about $901,000 for purchasing new systems furniture in the third data request because it could not verify the age of the systems furniture stored in its warehouse. Moreover, in addition to requiring systems furniture, the third data request included other new requirements such as a minimum of 22 meeting rooms and floor-to-ceiling walls for conference rooms and offices to meet what the facilities engineer described as an idealistic view of what DLA offices should look like. The engineer said that he used these requirements to ensure that both proposals would be based on comparable work space. Neither the steering group nor officials from the competing locations agreed with all of these requirements. For example, they protested the need for 22 meeting rooms, calling it excessive and wasteful. Officials at both locations told us that they currently had more people with fewer meeting rooms and had encountered no difficulties in doing their work. The changes made for the third data request analysis had the effect of improving the position of the eastern location, including shifting the cost advantage (on an absolute dollar basis) to the eastern location. However, it should be noted that these costs were largely one-time costs that could easily be offset over time should there be significant recurring savings in another cost area, such as personnel. Steering group members told us they had no role in the third data collection effort. They received the results of the second and third data requests on the same day, September 15, 1997. According to the steering group’s minutes, the group accepted the results of the third data request because the request was at the discretion and authority of the selecting official. However, they cautioned the selecting official that the process of the third data request would appear biased to outside parties, considering they had not been consulted regarding this phase. The results of the third data request analysis showed that the eastern location scored much better in both cost and point totals than the western location—the eastern location was the least costly by about $2.1 million. However, the results of the second data request showed the western location was the least costly by about $3.8 million. Again, because of problems identified in the process, we could not validate either set of data. Allegations had been made that DLA officials had selected the eastern site for the Defense Distribution Center before the site selection study took place. We found no evidence to validate concerns that the site selection decision was predetermined. Previous studies examined the consolidation issue but left the two regions intact. We found no evidence that the prior studies influenced the current site selection process or outcome. DLA officials told us they had considered consolidating their regional distribution headquarters for a number of years and had eliminated one of three regional headquarters in 1993. Subsequently, they had studied options for consolidating the two remaining regional headquarters; however, the study was not finalized and no proposals or recommendations were approved. The issue of consolidating the two regions had also been separately addressed as part of DLA’s BRAC deliberations in 1995. Even though DLA’s BRAC 1995 assessment emphasized the importance of retaining two regions, we learned that following BRAC 1995, DLA officials once again began revisiting the issue and began another study. A DLA official told us that the post-BRAC study was justified because the 1995 BRAC process had produced decisions to close six depots. (See fig. 1.) However, a DLA headquarters official told us that, although a preliminary assessment was made, this study was not completed and no report was issued. We were provided documents that various officials from the western location said raised concerns about whether the decision had been predetermined. However, we found no evidence to support that the information provided in these documents reflected the official position of DLA or influenced the current site selection process. For example, a 1995 briefing document from a previous study indicated a planned future staffing level of 387 at the eastern location and the phaseout of staff at the western location. According to DLA headquarters officials, the briefing document was preliminary and this study was not finalized. The selecting official and DLA officials associated with the most recent consolidation study told us that all the previous studies were outdated, given changes in DLA’s structure. Thus, the selecting official said that he did not consider them in the most recent study effort. Additionally, claims were made by DLA officials at the western location that actions were taken to better position the eastern location in the competition for the consolidated distribution center. These actions included DLA’s moving a general flag officer, its Defense Distribution Systems Center, and the DLA Operations Support Office to the eastern location in 1996. While this may have given the appearance that the eastern site was being preselected, we found no support indicating that this was considered in the site selection process. Moreover, DLA officials told us the flag officer would have moved to the western location if it had been the selected site. DLA’s efforts to establish a steering group and formulate decision-making criteria indicate that DLA recognized the need for a credible process to guide its decision-making. However, the process used by DLA to support the site selection for its consolidated distribution headquarters contained a number of weaknesses, and raised questions about the soundness of the decision-making process. The evaluation was completed without adequate information concerning facility requirements, which forced an assessment based on hypothetical costs; technical weaknesses further skewed the results. Subsequent changes to the process, requested by the selecting official, did not correct these weaknesses and created concerns about the perception of bias. Additionally, an incomplete assessment of personnel costs minimized opportunities to fully assess the potential for long-term recurring savings. Although various officials from the western location raised concerns about whether the decision had been predetermined, we found no evidence to validate that the information they provided to us reflected official DLA positions. Also, we found no evidence that prior studies examining the consolidation issue influenced the current site selection process or outcome. Because of the weaknesses in the process supporting DLA’s site selection decision and subsequent questions raised about the soundness of the decision-making process, we recommend that the Secretary of Defense independently and expeditiously reassess DLA’s site selection decision, taking into consideration issues and questions raised in this report. DOD provided written comments on a draft of this report, and they are included in their entirety in appendix III along with our evaluation of them. DOD nonconcurred with the report’s findings pertaining to (1) insufficient data on personnel and facilities requirements, (2) questionable cost comparison methodology, (3) subjective evaluation of two noncost criteria, and (4) selecting official’s requested changes affecting the analysis. DOD noted that DLA could have made the site selection decision unilaterally but chose to put a process in place that solicited input from the Office of the Secretary of Defense, the DOD Inspector General, DLA headquarters, and DLA regional experts. It further stated that DLA structured the evaluation process based on other successful models (including BRAC) and adjusted it to accommodate the special considerations felt to be important by representatives of the sites most impacted. We agree with DOD that sound and supportable decision-making processes are needed in making consolidation decisions. Our concern is that the process DLA decided to use was not well implemented. In particular, it contained weaknesses in methodology. The cumulative effect of these weaknesses raised questions about the soundness of the site selection process and the ultimate decision. We believe that the majority of issues raised in DOD’s response were already adequately addressed in our report and, accordingly, we made only minor modifications to the report regarding the requirement for systems furniture. DOD partially concurred with our recommendation. While disagreeing with the report’s findings, DOD nonetheless agreed with our recommendation that an expeditious review of the site selection decision should be done, taking into account issues and questions raised in this report. However, DOD did not set a time frame for doing so. Also, DOD did not specifically address that portion of our recommendation that stated that the Secretary of Defense should independently conduct the reassessment. We continue to believe it is important that an independent and expeditious assessment be made by the Secretary. To assess the soundness of the process DLA used to recommend and select a site for the Defense Distribution Center, we reviewed supporting documentation for the criteria, weights, and analysis used in the selection process. We interviewed all participants in the process. Participants included the Site Selection Steering Group—the steering group chair, an Air Force colonel in the DLA Logistics area; a DOD Inspector General representative; four representatives from DLA headquarters offices, four regional headquarters representatives, including two from each region; and two officials from the Office of the Secretary of Defense, including one from the Comptroller and one from the Logistics offices; KPMG Peat Marwick, LLP contractor personnel; DLA facility and installation officials involved in this process; the DLA selecting official, the Principal Deputy Director; the DLA Executive Director, Logistics Management; the Commander and Deputy Commander at Defense Distribution Region West and Defense Distribution Region East, respectively; and DLA officials from both Defense Distribution Region East and Defense Distribution Region West that responded to data requests. We visited both sites evaluated in the analysis and reviewed proposed floor plans. We traced and verified selected data inputs used to support DLA’s analysis to verify the reliability of selected DLA and KPMG data validation. We also reviewed documents from BRAC and other DLA consolidation studies, as available, to compare methodologies used. Documentation associated with studies other than the BRAC process was limited. To address the question of site selection predetermination, we interviewed DLA officials who had participated in or had knowledge of BRAC studies and DLA consolidation studies and reviewed documents relevant to these studies. We also interviewed participants in the Defense Distribution Center site selection process to determine whether they had prior knowledge of these studies. Additionally, to follow up on allegations of predetermination, we spoke to representatives of the DLA Council of American Federation of Government Employees union locals from both the eastern and western regions. Given the sensitive nature of this assignment, we met with senior DLA officials on two separate occasions to brief them on the results of our work and to solicit their comments on preliminary drafts of this report. We incorporated their comments, as appropriate, to enhance the technical accuracy and completeness of our report. We conducted our work from October 1997 to February 1998 in accordance with generally accepted government auditing standards. We are providing copies of this report to the Chairmen and Ranking Minority Members of the Senate Committees on Armed Services and on Appropriations; the House Committees on National Security and on Appropriations; Members of Congress of the affected congressional districts; the Director, Office of Management and Budget; the Secretary of Defense; and the Director, Defense Logistics Agency. We will also make copies available to others upon request. Please contact me at (202) 512-8412 if you or your staff have any questions concerning this report. Major contributors to this report were Barry W. Holman, James R. Reifsnyder, Kathleen M. Monahan, Jacqueline E. Snead, and Gary W. Ulrich. Both sites were given equal points for the cost of living because comparable data were not available, according to the steering group. For the third data request the facilities engineer changed the threshold for service orders to clarify definition problems. He requested that the data request respondents capture the costs only for the maintenance and repair projects greater than $2,000. The selecting official decided to give both sites equal points for personnel costs, because he reasoned that the costs would be identical after formation of the Defense Distribution Center, regardless of the site chosen. Both sites were given equal points for cost of living because comparable data were not available, according to the steering group. The following are GAO’s comments on the Department of Defense’s (DOD) letter dated April 6, 1998. 1. We did not assume that each data request result would be implemented without any changes. Our point is that, while we would not expect the selected site to implement the floor plan exactly as submitted, we do believe the requirements should have been more fully defined and shared with the data request respondents. This was of particular importance in this study because investment costs were a major factor in the site selection criteria. Likewise, better clarity of personnel requirements by function could have led to better estimates of space requirements and cost. 2. We agree that the site selection steering group was given the responsibility to develop the criteria and weights for the decision support model and followed its established process to do so. Although one can assign different weights to costs as compared to a straight cost comparison, it is not a methodology that we have typically seen in such analyses, and as noted in our report, steering group members we spoke with could not recall their rationale for using this approach. Furthermore, both the Defense Logistics Agency’s (DLA) contractor and the DOD Inspector General advised against such a methodology. Varying weights can be assigned to evaluation criteria in this type of analysis to distinguish the relative importance of individual criteria, particularly when distinguishing between cost and noncost variables. However, assigning different weights to individual cost criteria, reduced DLA’s ability to perform the most meaningful comparison of cost. We saw no reason that costs should not have been evaluated on a straight comparison basis to provide a more accurate picture of costs. 3. On the basis of our discussions with steering group members and our review of the site selection backup documentation, we do not believe that the steering group had and used a valid basis for evaluating work environment and commute time. Each steering group member ranked each of the sites between 1 and 10 for quality of work environment and then commute time, with 10 being the most favorable score. Average scores were calculated and the highest average scores received the maximum points in the site selection analysis. The weakness in this method was that the basis for the ranking was not clearly established. Work environment and commute time were not clearly defined; had they been, the steering group might have identified objective measures for assessing these criteria. No data were used, and group members’ knowledge of commute times and working environment was limited. As a result some group members used commutes from nearby hotels and based working environment on personal working relationships. Alternatively, we note that another DLA site selection study, pertaining to the issue of consolidating cataloging functions, used quantitative factors to assess quality of life at work, including factors such as individual office space per person; average commute time measured in average number of miles traveled; availability of public transportation; types and numbers of amenities such as day care, gym, and credit union; parking fees; and distance to the airport. Clearly, the method used in the current study raised questions about the soundness of the method used to evaluate these two criteria. According to steering group meeting minutes, senior DLA leadership expressed concern about the subjective evaluation of these criteria. Additionally, while it is true that these criteria constituted only 10 percent of the total points assigned overall, they constituted 50 percent of the noncost criteria. 4. To what extent time requirements did not allow for consultation with the site selection steering group about the changes requested by the selecting official is unclear. The time constraint—making the site selection decision by the end of the fiscal year—appeared to have been self-imposed. Additionally, we agree that comparable data and information should have been used in the site selection process. However, to avoid questions about the objectivity of the evaluation, standards need to be clearly stated and agreed to up front. The selecting official had approved the site selection decision support model before data collection efforts were initiated to ensure the objectivity of the process. While it is within his authority and discretion to make changes, he did not do so until after he saw the results of the second data request analysis and did so without consulting the steering group. His actions did not correct the weaknesses we identified but resulted in negating personnel costs, reassessing real property, and establishing new facilities standards—the impact of which dramatically altered the resulting costs and point values in the site selection analysis. These actions make it difficult for us to be certain that DLA had the best comparable data it needed for its analysis. 5. We agree that locality pay was not relevant after Fort Belvoir was removed from the site selection process. As DOD stated, the locality pay was the same for both of the remaining sites. However, the steering group was correct in initially identifying personnel costs as an important criterion. The importance of personnel costs should not be minimized since savings in this area can mean the potential for significant recurring savings in the long term. As our report notes, the results of the second data request showed that the eastern location had higher average grade levels, resulting in a $3.1 million difference in personnel costs between the two locations over a 5-year period. While it may be difficult to project bumping rights along with voluntary early retirement and separation incentive pay, it can be done. For example, DLA officials planned to conduct a mock reduction-in-force to determine the effects on personnel, but had not yet done so. It should also be noted that, absent definitive data, DLA and other DOD components previously used standard factors in prior base closure rounds to project some personnel impacts and costs. 6. While we agree that the real property maintenance data should have been comparable, DLA’s site selection backup documentation indicated that the data were reviewed and some modifications were made to it to ensure comparability between the two competing locations before it was used in the second data request analysis. Our concern relates to the decision-making process. The DLA Chief of the Real Property Maintenance Team was approved by the steering group as the facilities engineer responsible for validating the data. He told us that he validated the data as a routine matter of prudent facilities engineering management. During his data validation of the responses to the second data request, he removed the requirement for the eastern site to repaint a nonpaintable exterior surface. Subsequently, the selecting official told us that he based his decision to reassess real property maintenance on his personal knowledge and experience. Having the data reassessed after they had already been validated raised concerns among various steering group members about the perception of bias. 7. DLA officials suggested that not requiring systems furniture and other facilities requirements would result in a substandard work environment and indicated that these requirements were used at two other DLA locations not part of this site selection process. We have modified our report to reflect DLA’s point about these other locations. However, as noted in our report, members of the steering group told us they did not perceive this as an official DLA standard for furniture and workspace. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO reviewed the process used by the Defense Logistics Agency (DLA) to select the site for its new defense distribution center, focusing on whether: (1) the process was sound; and (2) there was any evidence that the site selection had been predetermined. GAO noted that: (1) DLA officials believed that the consolidation of its eastern and western regional distribution headquarters would produce savings; (2) DLA's establishment of a steering group and decisionmaking criteria indicate that DLA recognized the need for a credible process to guide its decisionmaking in selecting a site for its consolidated distribution headquarters; (3) however, the process used by DLA to support the site selection decision contained a number of weaknesses; (4) among the weaknesses in the process were the absence of sufficient information concerning personnel facilities requirements for the new center, unrealistic cost comparisons between the competing sites, and the use of subjective data for two noncost criteria; (5) subsequent changes to the process, made at the request of the selecting official, did not correct these weaknesses and created concerns about the perception of bias; (6) the cumulative effect of these weaknesses raised questions about the soundness of the site selection process and the ultimate decision; (7) although various persons from the western location raised concerns about whether the decision had been predetermined, GAO found no evidence to validate these concerns; and (8) likewise, GAO found no evidence that prior studies examining the consolidation issue influenced the current site selection process or outcome. |
The U.S. Constitution specifies the enumerated powers of the federal government. These powers, however, have been interpreted broadly so as to create a large potential overlap with state authority. States may generally legislate on all matters within their territorial jurisdiction. Indeed, criminal law, family law, property, and contract and tort law, among others, are typical areas of law that are regulated at the state level. Accordingly, states have enacted their own laws regarding the unlawful possession and disposition of firearms, as well as the manner in which firearms may be carried. Congress, too, has enacted legislation related to firearms control. It includes, among others, the National Firearms Act of 1934, the Gun Control Act of 1968, the Firearm Owners' Protection Act of 1986, and the Brady Handgun Violence Prevention Act of 1993. Generally, Congress has relied on its authority under the Commerce Clause to enact such statutes. The Commerce Clause states: "The Congress shall have Power ... To regulate Commerce with foreign Nationals, and among the several States, and with Indian Tribes." Although a plain reading of the text might suggest that Congress has only a limited power to regulate commercial trade between persons in one state and persons of another state, the Clause has not been construed quite so narrowly, particularly in the modern era. Since the 1930s, the U.S. Supreme Court has held that Congress has the ability to protect interstate commerce from burdens and obstructions "no matter what the source of the dangers which threaten it." Over time, the Court concluded that Congress had considerable discretion in determining which commercial activities, including intrastate commercial activities, "affect" interstate commerce, as long as the legislation was "reasonably" related to achieving its goals of regulating interstate commerce. Furthermore, the Court in Wickard v. Filburn also held that an activity, "though it may not be regarded as commerce, it may still, whatever its nature," be regulated by Congress if, in the aggregate, "it exerts a substantial economic effect on interstate commerce." Under this prevailing interpretation of the Commerce Clause, the Supreme Court has upheld a variety of federal laws, including those regulating the production of wheat on farms, racial discrimination by businesses, and loan-sharking. However, in 1995, the Supreme Court revisited the scope of the Commerce Clause in United States v. Lopez . In Lopez , the Supreme Court held that Congress had exceeded its constitutional authority when it passed the Gun-Free School Zones Act of 1990 (School Zones Act). The Court, clarifying the judiciary's traditional approach to Commerce Clause analysis, identified three broad categories of activity that Congress may regulate under its commerce power. These are 1. the channels of commerce; 2. the instrumentalities of commerce in interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities; and 3. activities which "substantially affect" interstate commerce. Under the first two categories, Lopez endorses Congress's "power to regulate all activities, persons or products that cross state boundaries. So long as a federal regulation relates to interstate transactions or interstate transportation, the federal regulation would be justified under the first two branches.... " However, in examining the School Zones Act, the Court concluded that possession of a gun in a school zone was neither a regulation of the channels nor the instrumentalities of interstate commerce. Because the conduct regulated was considered to be a wholly intrastate activity, the Court concluded that Congress could only regulate the activity if it fell within the third category and "substantially affects" interstate commerce. The Court indicated that intrastate activities have been, and could be, regulated by Congress where the activities "arise out of or are connected with a commercial transaction" and which are "part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated." The Court struck down the School Zones Act, declaring that the intrastate activity—possession of a handgun near a school—was not part of a larger economic firearms regulatory scheme. Moreover, the act did not require that interstate commerce be affected, such as by requiring the gun to be transported in interstate commerce. For the same reasons identified in Lopez , the Supreme Court subsequently invalidated a part of the Violence Against Women Act (VAWA) in United States v. Morrison . The Court in Morrison concluded that the activity regulated—a federal civil remedy for gender-motivated crimes—did not fall within the first two commerce categories, or the third category, because it was not an "economic activity"; furthermore, the provision contained no "jurisdictional element establishing that the federal cause of action [was] in pursuance of Congress's power to regulate interstate commerce." In both Lopez and Morrison , the Court rejected the government's reasoning in establishing a connection between the regulated activity and its purported effect on interstate commerce, because the Court would have been required to "pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States." Although finding that Congress had exceeded its authority under the Commerce Clause with respect to the laws in Lopez and Morrison , the Court in Gonzales v. Raich subsequently clarified that Congress still has considerable authority under the "substantially affects" doctrine to regulate activity that is "quintessentially economic" on the intrastate level, even though the activity itself is not a part of interstate commerce. The Court stated it did not need to determine for itself whether the activities, taken in the aggregate, substantially affect interstate commerce or undercut the larger regulatory scheme. Instead, it needed only to determine whether Congress had a rational basis to make such a conclusion. Justice Scalia, in his concurring opinion, also emphasized the role of the Necessary and Proper Clause. He opined that the Clause has been inherently relied on to regulate (1) economic intrastate activities that substantially affect interstate commerce, and (2) noneconomic intrastate activities that do not themselves substantially affect interstate commerce but that are a "necessary part of a more general regulation of interstate commerce." The latter category, however, is limited by Lopez and Morrison , where the Court rejected arguments that "Congress may regulate noneconomic activity based solely on the effect that it may have on interstate commerce through a remote chain of inferences." Although the Commerce Clause gives Congress broad authority to enact laws, there may be other constitutional constraints on its ability to regulate firearms. One constitutional limitation may be the Tenth Amendment to the U.S. Constitution, which provides: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Although the Tenth Amendment may limit the type of legislation Congress can pass, "a valid exercise of Congress' Commerce Clause power is not a violation of the Tenth Amendment." Generally, the Supreme Court has ruled that the federal government's power over interstate commerce does not authorize it to require, or commandeer, state or local governments to take legislative acts or certain executive actions. For example, in New York v. United States , the Supreme Court held that federal legislation cannot require states to develop legislation on how to dispose of all low-level radioactive waste generated within the state, nor can it order states to take title to such waste. Although the Court held that Congress had authority under the Commerce Clause to regulate low-level radioactive waste directly, such power did not authorize them to order states to enact laws. The Court subsequently held in Printz v. United States that Congress cannot commandeer state executive branch officials from carrying out a federal program, as such an act is outside Congress's power and inconsistent with the Tenth Amendment. However, the Court has upheld federal legislation that regulated state activities with respect to information obtained from drivers' license applications, because the law at issue "does not require the states in their sovereign capacity to regulate their own citizens ... [and it] does not require [the state] legislature to enact any laws or regulations, and it does not require state officials to assist in the enforcement of federal statutes regulating private individuals." The Second Amendment to the U.S. Constitution is another constitutional provision that may limit the type of legislation Congress may pass related to firearms. The Second Amendment provides: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." The Supreme Court in District of Columbia v. Heller held that the Second Amendment protects an individual right to keep a firearm, unconnected with service to the militia, and to use that firearm for lawful purposes such as self-defense in the home. Although Congress has the authority to regulate firearms under its commerce authority, it may not do so in a way that infringes upon the right guaranteed by the Second Amendment. Since Heller , several federal firearms laws have been challenged under the Second Amendment, though all have been upheld. For a discussion on how federal firearms laws are evaluated under a Second Amendment analysis, see CRS Report R43031, Second Amendment Challenges to Firearms Regulations Post-Heller , by [author name scrubbed]. In sum, Congress has the general authority to enact regulations under its Commerce Clause authority, so long as the activities or conduct regulated fall within one of the three categories established by Lopez . However, even where Congress may have direct authority to regulate, it cannot do so in a manner that would be inconsistent with other constitutional principles, such as those under the Tenth or Second Amendments to the U.S. Constitution. Federal firearms laws have been challenged periodically on grounds that Congress did not have authority under the Commerce Clause to pass them. This section examines lower courts' decisions regarding the constitutional validity of certain federal firearms laws, particularly the application of these laws to intrastate possession and intrastate transfer of firearms. As described above, Congress's authority under the Commerce Clause extends to regulating items that move through interstate commerce and commercial activities that affect interstate commerce. It is therefore relatively settled that Congress may regulate the manufacture and transfer of firearms. For example, the constitutionality of a federal semiautomatic assault weapons ban, which was in effect for ten years, was challenged under the Commerce Clause. In 1994, Congress passed the Violent Crime Control and Law Enforcement Act, which included a provision making it unlawful to possess, manufacture, or transfer certain types of semiautomatic pistols, rifles, and shotguns (i.e., "assault weapons"). The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), in Navegar, Inc. v. United States , addressed the question of whether the activities regulated under this act fell within one of the three categories of activity identified in Lopez . Like the Court in Lopez , the D.C. Circuit determined that it was not required to analyze the act under the first or second categories because the "[it] readily falls within category 3 as a regulation of activities having a substantial [e]ffect on interstate commerce." The court analyzed individually the act's prohibitions on manufacture, transfer, and possession. Regarding the manufacturing prohibition, the D.C. Circuit declared that "[t]he Supreme Court has repeatedly held that the manufacture of goods which may ultimately never leave the state can still be activity which substantially affects interstate commerce." Regarding the prohibition on transfers, the court similarly remarked that "the Supreme Court precedent makes clear that the transfer of goods, even as part of an intrastate transaction, can be an activity which substantially affects interstate commerce." Based on these maxims, the court held that "it is not even arguable that the manufacture and transfer of 'semiautomatic assault weapons' for a national market cannot be regulated as activity substantially affecting interstate commerce." However, with respect to the possession of a semiautomatic assault weapon, the court in Navegar noted that the Lopez decision raised a question of whether "mere possession" can substantially affect interstate commerce. The court proceeded to analyze the purposes behind the act to determine whether "it was aimed at regulating activities which substantially affect interstate commerce." Analyzing the congressional hearings, the court determined that the ban on possession was "conceived to control and restrict the interstate commerce in 'semiautomatic assault weapons,'" and that the "ban on possession is a measure intended to reduce the demand for such weapons." The D.C. Circuit stated that the ban on possession was "necessary to allow law enforcement to effectively regulate the manufacture and transfers where the product comes to rest, in the possession of the receiver." Based on these factors, the court concluded that the "purpose of the ban on possession has an 'evident commercial nexus.'" Accordingly, the court held that the federal semiautomatic assault weapons ban was valid under Congress's commerce power. The Gun Control Act includes several provisions that criminalize possession of a firearm. For instance, 18 U.S.C. §922(o) makes it unlawful for any person to "possess a machinegun" and 18 U.S.C. §922(g) makes it unlawful for certain categories of persons to "possess in or affecting commerce, any firearm or ammunition," As demonstrated above, however, whether Congress actually has authority to regulate "mere possession" of firearms has been questioned by the courts. In particular, courts have confronted the issue of whether these provisions as applied to intrastate possession are a proper exercise of Congress's power under the Commerce Clause. Analysis regarding the validity of these federal possession provisions has varied slightly, given the development of the Supreme Court's jurisprudence on the Commerce Clause. Prior to and post- Lopez , federal courts generally upheld §922(o) as a valid exercise of Congress's commerce power, despite the absence of jurisdictional language requiring that the machinegun travel in or substantially affect interstate commerce. However, once Lopez was decided, at least one federal court of appeals held §922(o) to be unconstitutional as applied to a defendant who was convicted of possessing machineguns that had been home assembled through parts kits. In United States v. Stewart (Stewart I) , the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) held that there were limits in applying §922(o). The court rejected the argument that the statute was constitutional under either of the first two categories in Lopez , even though some of the parts of the machineguns had, at some point, moved in interstate commerce. It also found that the defendant's simple possession of homemade machineguns did not substantially affect interstate commerce as recognized by Lopez . In particular, the Ninth Circuit determined that possession of a machinegun is not, without more, economic in nature and that nothing in the legislative history indicates that the regulation itself has an economic purpose. Therefore, the court held that, as applied to the defendant's possession of homemade machineguns, §922(o) was an unlawful extension of Congress's commerce power. Stewart I , however, was decided prior to the Supreme Court's decision in Gonzales v. Raich . Upon remand, the Ninth Circuit in Stewart II held that §922(o) can be constitutionally applied to the defendant's possession of homemade machineguns in light of the Supreme Court's analysis in Raich . The statute at issue, as well as the actions and claims of the defendant, were "nearly identical" to the claims and statute at issue in Raich , where the Court rejected the argument that the federal provision criminalizing possession of marijuana could not be applied to the intrastate possession of medical marijuana. As discussed supra , the Court in Raich reaffirmed its prior holdings that Congress may regulate "purely intrastate activity that is not itself 'commercial' ... if it concludes that failure to regulate that activity would undercut the regulation of the interstate market in that commodity." Under this reasoning, the defendant in Raich was not successful in his attempt to carve out a class of intrastate activities as beyond the reach of Congress's commerce power. Relying on this analysis, the Ninth Circuit in Stewart II concluded that, like the regulation on possessing drugs in the Controlled Substances Act, the machinegun possession ban fits within a larger scheme for the regulation of interstate commerce of firearms. The court's new focus under the substantially affects doctrine post- Raich was "not [the defendant] and his homemade machine guns, but all homemade machineguns manufactured intrastate. Moreover, [the court] does not require the government to prove that those activities actually affected interstate commerce; we merely inquire whether Congress had a rational basis for so concluding." Thus, under this lens, machineguns, whether they are homemade or commercially made, are fungible commodities like marijuana, and Congress had a rational basis for concluding that "in the aggregate, possession of homemade machineguns could substantially affect interstate commerce in machineguns." The analysis in Raich , followed by the Ninth Circuit in Stewart II , has been relied upon by other courts in evaluating state legislation that purports to exempt from federal law the intrastate manufacture and sale of firearms, firearms accessories, and ammunition. This type of law is known as a Firearms Freedom Act. The United States District Court for the District of Montana, echoing the concerns in Raich and Stewart II , declared that "Montana's attempt to... excise a discrete local activity from the comprehensive regulatory framework provided by federal firearms laws cannot stand." In upholding the validity of the National Firearms Act and Gun Control Act as applied to the intrastate manufacture and sale of firearms and firearms accessories, the district court stated that Congress had a rational basis, without the need to have particularized findings, to conclude that failure to regulate intrastate manufacture and sale of firearms would leave a "gaping hole" in the federal scheme regulating firearms. Individuals, who have been convicted under §922(g) for being a felon, or other prohibited person, in possession of a firearm, also have challenged whether such a provision is constitutionally valid under Congress's commerce power. For instance, the Ninth Circuit in United States v. Jones addressed the constitutional validity of §922(g)(8), which makes it unlawful for a person who is "subject to a court order that ... [meets specific requirements] ... to ... possess in or affecting commerce, any firearm or ammunition ." The Ninth Circuit distinguished §922(g)(8) from the School Zones Act in Lopez on the basis that this statute contains "a jurisdictional element explicitly requiring a nexus between the possession of firearms and interstate commerce." The court affirmed that this provision constitutes a valid exercise of Congress's power to regulate activity under the second and third categories identified under the Lopez framework. However, the jurisdictional hook—"in or affecting commerce"—relating to possession under §922(g), may not be "a talisman that wards off constitutional challenges." One reason a jurisdictional hook is employed is to make facial constitutional challenges unlikely or impossible, "and to direct litigation toward the statutory question of whether, in the particular case, the regulated conduct possesses the requisite connection to interstate commerce." Notwithstanding the jurisdictional hook that distinguishes it from the School Zones Act in Lopez , an argument could be made that a felon-in-possession statute does not fall within any of the categories identified in Lopez . The U.S. Court of Appeals for the Tenth Circuit (Tenth Circuit) examined this issue in United States v. Patton , within the context of another federal statute similar to the felon-in-possession statute. In Patton , the court analyzed whether Congress had authority to prohibit the intrastate possession by a felon of a bulletproof vest, in the absence of any commercial transaction or evidence of a connection to commercial activity other than the fact that, prior to the defendant's lawful purchase, the vest had been sold across a state line. The Tenth Circuit concluded that such a provision did not fit within any of the three categories of Lopez , as clarified and affirmed by Raich , but the court nonetheless upheld the provision under a pre- Lopez precedent from the Supreme Court. After dismissing the three categories of commerce, the Tenth Circuit turned to the Supreme Court decision Scarborough v. United States , which had analyzed the pre-Gun Control Act felon-in-possession statute. Because "in or affecting commerce" applies to the word "possess," the government, in cases of pure possession, must prove that possession of a firearm has some nexus to commerce in order to validly regulate the activity. Thus, in Scarborough the Court had to determine what proof is necessary for the government to satisfy the nexus between possession and interstate commerce. The court rejected the argument that possession of the gun have some "contemporaneous connection with commerce at the time of the offense." Instead, the Court concluded that the sensible reading, supported by the legislative history, demonstrated that "Congress intended no more than a minimal nexus requirement," which may be satisfied by proving that the firearm possessed had, at some time, traveled in interstate commerce. Applying the principles from Scarborough, the Tenth Circuit in Patton upheld the constitutional validity of the body armor statute as applied to the defendant's intrastate possession, because the item, at some point, had moved across state lines and therefore such activity could be regulated under Congress's commerce power. As discussed above, a firearms possession statute, like §922(g), may be considered a proper exercise of Congress's commerce authority under the Lopez categories. However, a reviewing court that conducts a thorough analysis of §922(g), like the Tenth Circuit in Patton did with similar regulation, could find that mere intrastate possession of a firearm, or any firearms accessory, does not fit under any of the three Lopez categories. If so, Scarborough , which appears to have been left intact by Lopez , seems to be the controlling precedent under which the federal firearms possession statute may be enforced against prohibited intrastate possessors. One court has noted that "nothing in Lopez suggests that the 'minimal nexus' test should be changed." Notably, while courts have continued to follow Scarborough , they have also expressed doubts about its continuing validity. For example, in upholding the validity of §922(g), the United States Court of Appeals for the Fifth Circuit opined: If the matter were res nova, one might well wonder how it could rationally be concluded that mere possession of a firearm in any meaningful way concerns interstate commerce simply because the firearm had, perhaps decades previously before the charged possessor was even born, fortuitously traveled in interstate commerce. It is also difficult to understand how a statute construed never to require any but such a per se nexus could "ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce." [citation omitted] Several federal courts of appeals have noted the tension between Scarborough and the three-category approach later adopted by the Supreme Court. Should the Supreme Court revisit the potential doctrinal inconsistency between Lopez and Scarborough , it is conceivable that regulation of intrastate possession of a firearm or any other firearms accessory may be found to be beyond the reach of Congress. Alternatively, if the jurisdictional hook were interpreted so that the intrastate possession must have some contemporaneous connection with interstate commerce- e.g., the defendant is engaging in commerce at the time of the offense or possessing the gun at an interstate facility, then it would not be beyond Congress's commerce power to regulate some intrastate possession. The consequence of such an interpretation, however, would be that a subset of individuals would not be captured under Congress's commerce power (e.g., those who fall within a prohibited possessor category but who only maintain a firearm at home and never carry or possess it elsewhere). Another option could be to bring the wording of the current felon-in-possession statute in line with §922(o), which lacks a jurisdictional hook. In such case, to the extent that the Supreme Court would agree with the Ninth Circuit's application of Raich in its Stewart II decision, a felon-in-possession statute without a jurisdictional hook could constitutionally apply to intrastate possession, and would appear to remove the burden on the government to satisfy the nexus requirement between possession and interstate commerce. Section 922(d)(1) of title 18 of the U.S. Code makes it unlawful for any person to dispose or transfer a firearm to another individual knowing or having reasonable cause to believe that such person is under indictment for, or has been convicted in any court of, a crime punishable by more than one years' imprisonment. Individuals who have been convicted under this provision for making unlawful transfers intrastate have contended that Congress exceeded its authority under the Commerce Clause by enacting this provision. Such challenges have proven unsuccessful. For instance, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) in United States v. Rose held that this contention "lacks merit inasmuch as the Supreme Court precedent leaves no doubt regarding the constitutionality of §922(d)(1)." The Sixth Circuit analyzed this provision under the third Lopez category—the substantially affects doctrine—and concluded that the Raich analysis leads to the conclusion that §922(d)(1) is proper use of Congress's commerce power. The Sixth Circuit stated that guns, similar to marijuana, are a "fungible commodity" for which there is an established interstate market and that the provision at issue is a part of the larger regulatory framework. The court concluded that the relevant "legislative history supports the logical connection between the intrastate sale and disposition of firearms and interstate market in firearms." As part of the regulatory framework for ensuring that firearms are not transferred to those persons deemed to be prohibited under federal law, Congress passed the Brady Handgun Violence Prevention Act of 1993 (Brady Act), which requires federal firearms licensees (FFLs) to conduct a background check on prospective firearms purchasers through the National Instant Criminal Background Check System (NICS). However, prior to the establishment of NICS, the Brady Act's interim provisions required the chief law enforcement officers within a state to conduct a background check on a prospective firearms purchaser within five business days. This portion of the act was invalidated on Tenth Amendment grounds in Printz v. United States under the theory that Congress was without authority to order or "commandeer" state executive branch officials. The holding in Printz indicates that although the Tenth Amendment limits the way in which Congress can implement background checks, it is not beyond its commerce power to require such checks as part of transferring a firearm. Under the current scheme, FFLs are required to conduct a background check through NICS before transferring a firearm to any non-FFL, including those who reside within the state in which the FFL is located. Currently, Congress is considering legislation that would impose a background check on transactions between non-FFLs that occur within a state. Just as Congress's authority to regulate intrastate transfers has been challenged, one might question whether Congress has the authority to require, or impose a requirement, that FFLs or non-FFLs conduct a background check on intrastate firearms transactions. Based on the Court's holdings in Lopez and Raich , discussed above, it seems that requiring a background check on intrastate firearms transactions is unlike regulating simple possession of firearms in a school zone. Although the act of conducting a background check may not be itself "commercial," it is a condition on the commercial transfer of a firearm. Therefore, if such a measure were enacted, it seems that there would be a substantial basis upon which a court could regard it as a provision supporting the larger regulatory scheme—the Gun Control Act—that Congress enacted to "keep firearms out of the hands of those not legally entitled to possess them because of age, criminal background, or incompetency, and to assist law enforcement authorities in the states and their subdivisions in combating the increasing prevalence of crime in the United States." Congress has broad authority pursuant to the Commerce Clause to enact laws in areas that may overlap with traditional state jurisdiction. As such, Congress has passed complex statutory provisions that regulate the possession, receipt, transfer, and manufacture of firearms and ammunition. Notwithstanding this broad authority, Congress may not exceed other constitutional provisions or doctrines, such as the Tenth or Second Amendments to the U.S. Constitution. Thus, Congress may not pass legislation that infringes on the right guaranteed by the Second Amendment, nor may it pass legislation that orders state legislatures or its officials to implement and perform a federal law or program. Outside these types of limitations, exercise of Congress's commerce power appears to be proper as long as the regulated activity or conduct falls within one of the three categories established by the Supreme Court in United States v. Lopez , that is, (1) the channels of interstate commerce; (2) the instrumentalities of interstate commerce, including persons and things; and (3) activities that substantially affect interstate commerce. As explored in this report, courts have been confronted with the question of whether federal laws can be applied to intrastate possession and intrastate transfers of firearms, or whether such application exceeds the authority of Congress under its commerce power. Generally, the courts have upheld such laws under these as-applied challenges. With respect to intrastate possession, there remains noticeable tension between the Commerce Clause analysis set forth in Lopez and the pre- Lopez Supreme Court precedent that is still relied on by lower courts to uphold regulations on the possession of firearms. It is unclear how Congress's authority to regulate firearms possession would be affected should the Supreme Court resolve any perceived doctrinal inconsistency. Furthermore, the Supreme Court's analysis in Gonzales v. Raich has also buttressed the reasoning by which lower courts have concluded that Congress's authority to regulate firearms extends to intrastate manufacture and intrastate transfers and, as such, states cannot exempt themselves from federal regulation. | Congress has broad authority pursuant to the Commerce Clause to enact laws in areas that may overlap with traditional state jurisdiction. As such, Congress has passed complex statutory provisions that regulate the possession, receipt, transfer, and manufacture of firearms and ammunition. Generally, courts have upheld the validity of firearms laws pursuant to Congress's commerce power. However, courts have been confronted with the question of whether federal laws can be applied to intrastate possession and intrastate transfers of firearms, or whether such application exceeds the authority of Congress. This report explores these cases and how courts have analyzed these as-applied challenges under the Supreme Court's Commerce Clause jurisprudence primarily set forth in United States v. Lopez. |
A Video Discussion by David Sarwer, Ph.D., accompanies this article. Go to PRSJournal.com and click on “Video Discussions” in the “Digital Media” tab to watch.
Supplemental digital content is available for this article. Direct URL citations appear in the text; simply type the URL address into any Web browser to access this content. Clickable links to the material are provided in the HTML text of this article on the Journal’s website ( www.PRSJournal.com ).
Disclosure: The authors have no financial interest to declare in relation to the content of this article. Kirsty Lee and Alexa Guy were supported to undertake this research by a departmental fellowship.
Conclusions: Bullying victimization is related to poor psychological functioning, and both are related to a greater desire for cosmetic surgery in adolescents. Cosmetic surgeons should screen candidates for psychological vulnerability and may want to include a short screening questionnaire for a history of peer victimization.
Results: Adolescents involved in bullying in any role were significantly more interested in cosmetic surgery than uninvolved adolescents. Desire for cosmetic surgery was greatest in adolescents who were bullied (victims and bully-victims) and girls. Desire for cosmetic surgery was highest in girls, but sex did not interact with bullying role. Being victimized by peers resulted in poor psychological functioning, which increased desire for cosmetic surgery. In contrast, desire for cosmetic surgery in bullies was not related to psychological functioning, which was in the normal range.
Methods: A two-stage design was used. In the first stage, 2782 adolescents (aged 11 to 16 years) were screened for bullying involvement using self-reports and peer nominations. In the second stage, 752 adolescents who were bullies, victims, bully-victims, or uninvolved in bullying reported their desire for cosmetic surgery. Psychological functioning was constructed as a composite of self-esteem and emotional problems (assessed at stage 1) and body-esteem scores (assessed at stage 2).
Background: Adolescent bullying may be a key driver of interest in cosmetic surgery. This study examined the extent of such interest and whether any effect was sex-specific, and examined psychological functioning as a potential mechanism through which bullying involvement may lead to a wish for cosmetic surgery.
Between 2014 and 2015, 15.9 million surgical and minimally invasive procedures were performed in the United States; 226,000 of those procedures were performed in 13- to 19-year-olds.1 Rates of cosmetic surgery are similarly increasing in the United Kingdom2 and across the globe.3 As the prevalence of cosmetic procedures has risen, so too has an interest in the drivers that lead people to desire a change in their appearance. Drivers examined so far include individual factors (e.g., sex),4–7 psychological factors (e.g., body image),5,8–17 sociocultural factors (e.g., media influences),5,18–22 and interpersonal factors (e.g., peer influences).11,18,19,23–26 Some21 have found that peers have a strong influence on body image, and several studies have found that a large proportion (approximately 50 percent) of adults seeking cosmetic surgery report a history of teasing or bullying.5,11,24–26 Bullying, defined as an imbalanced relationship characterized by intended and repeated aggression,27 can have a range of adverse effects on children and adolescents.28–32 For bullying victims, the negative effects may be similar to those caused by adult abuse or maltreatment.33
There are several gaps in knowledge regarding the relationship between cosmetic surgery and bullying. First, most studies have used a retrospective design in adult samples. Retrospective studies have generally found that cosmetic patients or candidates report appearance teasing more frequently than controls.11,13,24,26,34 However, retrospective studies are problematic because current or prior psychological problems can lead to biased recall.35,36 In young adults (e.g., undergraduate students), teasing history can uniquely predict interest in cosmetic surgery.5,25 Most bullying occurs during childhood and adolescence,24 but there has been little concurrent investigation of the extent to which adolescents currently involved in bullying desire cosmetic surgery.
Second, it is unknown whether all of those involved in bullying are more likely to desire cosmetic surgery or particularly those who are bullied. Adolescents who are purely bullied (i.e., victims) and those who are bullied but also bully others (i.e., bully-victims) tend to suffer the poorest outcomes.37,38 We might therefore expect that victims and bully-victims will have an increased desire for cosmetic surgery because of poorer psychological functioning (e.g., low self-esteem or body-esteem, or high depressive symptoms). Those who purely perpetrate bullying (i.e., bullies) tend to have good psychological functioning and suffer few negative long-term consequences.37,38 Some suggest that bullies harm others as a means of achieving dominance and social status, which may increase romantic and sexual opportunities.39 We therefore hypothesized that bullies may also have an increased desire for cosmetic surgery as another strategy to achieve their status goals, irrespective of psychological functioning.
Third, the majority of research has focused on female subjects, which is understandable considering that the sex ratio of cosmetic procedures is highly skewed (e.g., over 90 percent of procedures are performed on female patients).1 However, boys, and especially those who have experienced bullying, may want to increase their muscle bulk and appear stronger, through body building or potentially cosmetic surgery.31 In adolescents, bullying and victimization among boys and girls is approximately equal: boys tend to be bullies and bully-victims more often than girls, but there are few sex differences in victimization.40–42
This study addressed the following research questions: (1) Do adolescents in all bullying roles (i.e., bullies, victims, and bully-victims) have a greater desire for cosmetic surgery than adolescents uninvolved in bullying? (2) Are any effects of bullying on desire for cosmetic surgery sex-specific? (3) Is the relationship between bullying role and desire for cosmetic surgery direct or is it mediated by psychological functioning?
PATIENTS AND METHODS
Design and Participants
Approval for the study was obtained from the University of Warwick’s ethical committee. A two-stage sampling process was used. In stage 1, pupils from all year groups (i.e., grades 7 to 11; ages 11 to 16 years) of five secondary schools in the United Kingdom were approached (n = 3883). As shown in the Strengthening the Reporting of Observational Studies in Epidemiology diagram43 (Fig. 1), 2782 (71 percent) agreed to take part and were screened for bullying involvement. All those who screened positive for bullying others (bullies) were invited to take part in stage 2 alongside a sample of adolescents who were identified as victims, bully-victims, or uninvolved. As there were many uninvolved adolescents, a random subgroup of subjects balanced by sex were selected using the random number generator in Microsoft Excel (Microsoft Corp., Redmond, Wash.). In total, 1088 pupils were selected for stage 2. After dropouts and exclusions, data were collected from 752 (69.1 percent). Just over half (53.3 percent) were female, and the mean age was 13.6 ± 1.4 years.
Procedure and Measures
First, school head teachers were approached and were asked to participate in The Bullying, Appearance, Social Information Processing, and Emotions Study (The BASE study). After consent to school participation, written information sheets were sent to pupils and their parents. Passive consent was obtained from parents, and pupils gave their informed consent before any data collection. At both stages, electronic questionnaires were completed in a school classroom on a personal computer, laptop, or tablet, with at least one investigator present. All pupils who completed stages 1 and 2 from each school were entered into a prize draw to win a £50 voucher. Stage 2 was conducted approximately 1 to 2 months after stage 1.
Stage 1 Measures
Individual Characteristics.
Sex, age, ethnicity, and parent education were included as covariates based on previous research indicating an association with cosmetic surgery.6,7,18,23,44,45 Parents’ highest level of education—that is, did not complete school (<11 years), school (11 years), college (1 to 13 years), or university (>13 years)—was used as a proxy for socioeconomic status46 and was dummy coded: 0 = 13 years or less (≤13) and 1 = more than 13 years (>13) of education. As there was a low proportion of adolescents whose ethnicity was not white British (e.g., the next highest prevalence was Asian at 6.1 percent), the ethnicity variable was dummy coded (0 = white British, 1 = other).
Bullying Role.
We used two measures of bullying: self-report and peer nominations. For self-reported bullying, we used the validated Bullying and Friendship Interview schedule.47–49 The schedule included 13 behavioral descriptions that relate to direct, relational, and cyber-victimization (Table 1). The items were repeated with slight wording adaptions to assess bullying perpetration (At no point was the term bullying used.). Adolescents were asked the frequency of each behavior during the past 6 months, and responses of “quite a lot” or “a lot” indicated bullying involvement.48,49
For the peer nominations, adolescents were given a list of names of all peers in their tutor group and asked to nominate up to three pupils (excluding themselves) who perpetrated or were a victim of bullying behaviors (Table 1). Using the total number of nominations received and the total number of peers in the tutor group, z-scores were computed. Adolescents were identified as involved in bullying if their z-score was 1 SD above (>1) the tutor group mean on the bullying items (bullies), victimization items (victims), or both (bully-victims) (Table 2). Adolescents were identified as uninvolved if they received zero nominations.
Psychological Functioning.
We constructed a latent variable of psychological functioning from three scales: self-esteem,50 body-esteem,51 and emotional problems (subscale of the Strengths and Difficulties Questionnaire).52,53 Differences in scale scores for each bullying role are listed in Table 3. Self-esteem and emotional problems were self-reported at stage 1 and body-esteem was self-reported at stage 2. The latent variable measures total psychological functioning: higher scores indicate higher functioning and well-being, and lower scores indicate poorer functioning and distress.
Stage 2 Measure
Desire for Cosmetic Surgery.
We used three items adapted from the Acceptance of Cosmetic Surgery Scale8 to assess desire for cosmetic surgery. These were as follows: (1) “I would like to have cosmetic surgery so that others would find me more attractive”; (2) “I would consider having cosmetic surgery as a way to change my appearance so that I would feel better about myself”; and (3) “If I was offered cosmetic surgery for free, I would consider changing a part of my appearance that I do not like.” Responses were on a five-point scale (1 = not at all, 5 = very much). These items have been used previously to assess overall and current interest in cosmetic surgery in a sample of undergraduate students.25
Statistical Analysis
Between-group comparisons were conducted using chi-square tests, t tests, analysis of variance, and analysis of covariance. The analysis of variance tested the unadjusted associations between bullying roles and desire for cosmetic surgery, and the analysis of covariance adjusted for covariates (age, parent education, and ethnicity) and included sex as a factor. A bullying × sex interaction term was added to the model to test whether any effects were moderated (i.e., sex-specific). These analyses were performed using IBM SPSS Version 22.0 (IBM Corp., Armonk, N.Y.). To examine the potential mechanisms between bullying role and desire for cosmetic surgery, path analyses were performed by means of Mplus Version 7.4 (Muthén & Muthén, Los Angeles, Calif.) using full information maximum likelihood, which can handle missing data.54 We first estimated the psychological functioning variable using the scale scores of self-esteem, body-esteem, and emotional problems (reverse scored). Dummy variables were created (e.g., uninvolved = 0, victim = 1) to examine the direct effect of each bullying role on desire for cosmetic surgery and the indirect (mediated) effect by means of psychological functioning. Paths adjusted for covariates were computed for each bullying role separately. To assess model fit, the root-mean square error of approximation, the Comparative Fit Index, and the Tucker-Lewis index were used. Root-mean square error of approximation values less than 0.06 and Comparative Fit Index and Tucker-Lewis index values greater than 0.90 indicate an acceptable model.55–57 Model results are expressed as standardized regression coefficients (β).
RESULTS
Missing and Descriptive Data
Missing data on desire for cosmetic surgery (2.5 percent) and the covariates (1.1 percent) were low. Missing data were highest on the body-esteem scale (15.4 percent) (Table 3) and were related to age (OR, 0.88; 95 percent CI, 0.79 to 0.99; p = 0.034); the odds of missing data were lower in older adolescents.
Descriptive data for each bullying role are reported in Table 3. The majority of the sample were bully-victims (39.1 percent), and victims were most likely to be girls (67.6 percent). Victims and bully-victims had significantly poorer psychological functioning than bullies and uninvolved adolescents. Victims had the lowest body-esteem and self-esteem and had the highest emotional problem scores. Overall, mean interest in cosmetic surgery was low (mean ± SD, 1.79 ± 1.06; range, 1 to 5).
Do Adolescents in All Bullying Roles Have a Greater Desire for Cosmetic Surgery Than Adolescents Uninvolved in Bullying?
Bullies, victims, and bully-victims were significantly more interested in cosmetic surgery than uninvolved adolescents. In the unadjusted model (analysis of variance), bullying role significantly predicted desire for cosmetic surgery (F 3,748 = 17.57, p < 0.001). Table 3 lists the means and standard errors. In the adjusted model (analysis of covariance), bullying role (F 3,738 = 16.99, p < 0.001), sex (F 1,738 = 28.46, p < 0.001), age (F 1,738 = 16.61, p < 0.001), and parent education (F 1,738 = 3.87, p < 0.049) were significant. Desire for cosmetic surgery was highest in victims (Table 3), in girls (1.98 ± 1.16) compared to boys (1.56 ± 0.89), and increased as age increased (β = 0.11) and as parent education decreased (β = −0.16). When sex was included as a factor, the bullying × sex interaction was not significant (F 3,735 = 1.18, p = 0.32), which means that regardless of whether bullies, victims, and bully-victims were girls or boys, they were more interested in cosmetic surgery than uninvolved peers (Fig. 2).
Is the Relationship between Bullying and Cosmetic Surgery Direct or Mediated by Psychological Functioning?
Psychological Functioning
All possible coefficients were estimated, meaning the model was saturated (root-mean square error of approximation = 0.000, Comparative Fit Index = 1.000, Tucker-Lewis index = 1.000); these fit indices represent neither a perfect nor a problematic model.58 Factor loadings were high for self-esteem (0.885), body-esteem (0.705), and emotional problems (0.702), suggesting they were strong indicators of total psychological functioning.
Mediation Analyses
The model fits for bullies (root-mean square error of approximation = 0.028, Comparative Fit Index = 0.985, Tucker-Lewis index = 0.975), victims (root-mean square error of approximation = 0.057, Comparative Fit Index = 0.973, Tucker-Lewis index = 0.954), and bully-victims (root-mean square error of approximation = 0.045, Comparative Fit Index = 0.978, Tucker-Lewis index = 0.963) were excellent. Figure 3 shows the hypothetical mediation model and Table 4 shows the total, direct, and indirect effect of bullying role on desire for cosmetic surgery. There were both direct and indirect effects in victims and bully-victims; that is, there was a direct relationship between being bullied and a desire for cosmetic surgery, and another part of the relationship was mediated by poorer psychological functioning. In victims, the indirect effect was stronger than the direct effect, suggesting that being victimized resulted in poorer psychological functioning, which was driving their desire for cosmetic surgery. In bullies, desire for cosmetic surgery was direct and not related to psychological functioning. Desire for cosmetic surgery in victims was over double that of bullies (i.e., total effect). Examining the top 25th percentile of desire for cosmetic surgery scores revealed that 6.6 percent (n = 50) of the sample had extreme scores, the majority of which were victims (11.5 percent) and bully-victims (8.8 percent). ||||| According to a study from the University of Warwick , bullies and those that they bully are more likely than anyone else to want plastic surgery. Researchers studied almost 2,800 teens in the U.K., analyzing emotional problems, their levels of self-esteem and body image, as well as their desire to have plastic surgery. The study, published in the journal Plastic and Reconstructive Surgery , found that over 11% of bullying victims and nearly 9% of those who bullied and were bullied had an “extreme desire” to have plastic surgery. ||||| School bullies and their victims are more likely to want plastic surgery than other teens – new University of Warwick research
11.5% of bullying victims have extreme desire to have cosmetic surgery, as well as 3.4% of bullies and 8.8% of teenagers who both bully and are bullied – compared with less than 1% of those who are unaffected by bullying
Bullies want cosmetic surgery because they need people to admire them - victims are affected psychologically by bullying, have low self-esteem and desire to change their body
15.9 million surgical procedures performed in the USA between 2015 & 2016 – almost 230,000 performed on teenagers
Rates of cosmetic surgery are rising around the world
Addressing mental health issues could reduce desire for plastic surgery - and cosmetic surgeons should screen patients for history of bullying, say researchers
School bullies and their victims are more likely to want cosmetic surgery, according to new research by the University of Warwick.
Professor Dieter Wolke - and colleagues in the Department of Psychology and Warwick Medical School - have discovered that teenagers who are affected by bullying in any way have a greater desire than others to change their bodies by going under the knife.
Almost 2800 adolescents - aged 11 to 16 - in UK secondary schools were screened for their involvement in bullying, through self and peer assessment.
A sample group of around 800 adolescents – including bullies, victims, those who both bully and are bullied, and those who are unaffected by bullying - was analysed for emotional problems, levels of self-esteem and body-esteem, and the extent of their desire to have plastic surgery.
They were asked to complete established questionnaires – such as the Strengths and Difficulties Questionnaire and the Acceptance of Cosmetic Surgery Scale.
The results showed that adolescents involved in bullying in any role were more interested in cosmetic surgery, compared to those uninvolved in bullying. Desire for cosmetic surgery was highest in victims of bullying, but was also increased in bullying perpetrators.
11.5% of bullying victims have an extreme desire to have cosmetic surgery, as well as 3.4% of bullies, and 8.8% of teenagers who both bully and are bullied – this is compared with less than 1% of those who are unaffected by bullying.
Girls want to go under the knife more than boys. Of the sample group, 7.3% of girls had an extreme wish to have plastic surgery, compared with 2% of boys.
The researchers state that perpetrators of bullying want to have plastic surgery to improve their appearance and increase their social status. .
Victims of bullying, on the other hand, want to go under the knife because their psychological functioning is affected by being picked on – giving them lower self-esteem, more emotional problems and a desire to change their appearance.
Between 2014 and 2015, 15.9 million surgical and minimally invasive procedures were performed in the United States. Almost 230,000 of those procedures were performed on 13-19 year olds.
Rates of cosmetic surgery are similarly increasing in the United Kingdom and across the world.
Young people could have less of a desire for plastic surgery if mental health issues arising from bullying are addressed, according to the authors.
The researchers suggest that cosmetic surgeons screen potential patients for a history of bullying, and any related psychological issues.
Professor Wolke and his co-authors comment:
"Being victimized by peers resulted in poor psychological functioning, which increased desire for cosmetic surgery. For bullies, cosmetic surgery may simply be another tactic to increase social status [...] to look good and achieve dominance.
"The desire for cosmetic surgery in bullied adolescents is immediate and long-lasting.
“Our results suggest that cosmetic surgeons should screen candidates for psychological vulnerability and history of bullying.”
The research, ‘Adolescent Desire for Cosmetic Surgery: Associations with Bullying and Psychological Functioning’, is published in Plastic and Reconstructive Surgery.
It is co-authored by Kirsty Lee, Ph.D., Alexa Guy, M.Res., Jeremy Dale, Ph.D., M.B.B.S., F.R.C.G.P.
27 April 2017 | There's a link between bullying and plastic surgery, but it's not just among those who've been bullied. Researchers say that the bullies themselves are also more likely to long for cosmetic surgery, reports Refinery29. It's a finding shown among 2,800 adolescents in the UK interviewed by researchers at the University of Warwick on issues ranging from self esteem to desire to change one's appearance. "Being victimized by peers resulted in poor psychological functioning, which increased desire for cosmetic surgery," they write. "For bullies, cosmetic surgery may simply be another tactic to increase social status, to look good and achieve dominance." As the researchers report in the journal Plastic and Reconstructive Surgery, fewer than 1% of teens unaffected by bullying have an "extreme desire" to have cosmetic surgery, but that number jumps to 3.4% of bullies, 8.8% of bullies who've also been bullied, and 11.5% of bullying victims. Their findings play out in a world where cosmetic surgery rates are on the rise, they add, noting that in the US alone, 230,000 of the 16 million surgical procedures that took place between 2014 and 2015 were performed on teens. Says the lead author: "Our main message to plastic surgeons is: If young people present with a desire to have a cosmetic procedure, screen for bullying and mental health. There may be other solutions that help without risk and address the root problem." (In some places, bullying is ticketed.) |
If you watched David Letterman's final Late Show last week, you probably noticed that one of the best segments of the night was the Top Ten list. Mostly because it featured 10 of the show's best friends throughout the years, many of whom laughed hysterically while their colleagues read off the jokes, and mostly because for the first time in a number of times since I've seen the show, I laughed at more than a couple of the lines.
You can credit the writers for crafting some fine jokes for Letterman's final show. And you can credit a 22-year-old intern for writing two of the lines—jokes that now will live forever.
Here's the first joke, via Tina Fey (and her delightful post-gag backward shoulder dance).
(Sorry, this embed was not found.)
And here's the explanation, via this awesomely-fun Tumblr post by Bill Scheft, who's written for Letterman's show for the past 24 years.
[Eight] of the 10 celebrities were happy with the lines we had written for them. Tina Fey and Julia Louis-Dreyfus wanted to consider other takes. Julia settled on a line written by Mike Leech ("Thanks for letting me take part in another hugely disappointing series finale….") which the next day was proclaimed the “winner” of the Top Ten. Tina took something a little more subtle and much more pointed ("Thanks for finally proving men can be funny….") That line, ladies and gentlemen, ladies and ladies, was written by Caroline, whose last name I don’t know. I don’t know because she was the writer’s intern and we never got that formal. But on the last day of the last show, she scored the final two entries on the final Top Ten. Oh yeah, she already had Bill Murray’s line ("Dave, I’ll never have the money I owe you….") We were all genuinely thrilled for her. This 21-year-old [sic] has all the resume she needs going forward. I will be happy to help her in any way I can. But I’ll need her last name. (UPDATE 6:30: My pal Brian Koppleman found her on Twitter. Caroline Schaper @carolimeschaper)
You've already seen the men-can-be-funny joke. Here's the other joke written by Schaper, as performed by Murray.
(Sorry, this embed was not found.)
But since Koppleman found Schaper's Twitter account, let's take a look and see if we can find anything else that makes us chuckle.
A few gems:
Thanks for your kind words but it's time to come clean: I'm actually 22. I hope you all still like me! Your validation is all that matters! — Caroline Schaper (@carolimeschaper) May 26, 2015
Another day, another sleeve of off brand ritz crackers — Caroline Schaper (@carolimeschaper) January 15, 2015
I JUST ACCIDENTALLY SWATTED A SPIDER INTO MY BED SHOULD I BURN MY APARTMENT DOWN JUST TO BE SAFE? — Caroline Schaper (@carolimeschaper) December 8, 2014
And best of all, this is what Schaper tweeted the day before Letterman's last show.
Ack! How can I make Letterman's retirement more about me?????? — Caroline Schaper (@carolimeschaper) May 19, 2015
Obviously, she was joking, but Letterman wasn't the one who gave Schaper some well-deserved credibility. Schaper did that herself.
H/T Uproxx | Photo via Late Show With David Letterman/YouTube ||||| It is Sunday, around 1:30 pm, as I write this. If you must know, my boss of 24 years, Dave Letterman, is where he always is on this day, somewhere on Pit Row at the Indianapolis Motor Speedway. His driver, Graham Rahal, is currently running ninth with 132 laps to go. Maybe by the time I finish this, he’ll be further up on the others. And so will you people….
If you must know, I feel relieved and extremely proud. But that’s all I can give you right now. Mercifully, for the purposes of this exercise, how I feel is not important. You saw it, you know how it made you feel. That’s all that is relevant, practical and real. But I can take you through the last day and maybe they will be something there. Something else. Something else, like that last 78 minutes we all had together.
THE MORNING: I am not a superstitious man, but I do love subtle symbolic gestures. So, I decided to wear the same grey glen plaid suit I had worn to the last show at NBC 22 years ago. I didn’t think of it until Chris Albers posted that photo of me on Twitter at my desk. I knew I still had the suit, and I hoped it still fit. In the spirit of rigorous honesty, I could have worn it as is, all zipped up and buttoned, but I might have passed out somewhere during the Taco Bell remote. So, I had my dry cleaners take out the pants an inch. I got a lot of compliments, and when I would tell people the significance of the suit, they would look skeptically until I produced a photo or two from my pocket.
THE WORK DAY: The final show had been lovingly built brick by brick by Barbara Gaines over the last six months. Her title was Executive Producer. Her everlasting credit will be my best friend. By the time we all turned up for work Wednesday, there’s was almost nothing to do. Almost. The four tape pieces (Kids, Taco Bell, Day In The Life and the final montage) had gone through their last incarnations and had been signed off on by Dave. The guests for the Top Ten had been booked. We knew there may be some final changes to the list, but that wouldn’t happen until rehearsal, which was five hours away….which is like a generation on a strip (nightly) show. So, for most of the morning, everyone was kinda antsy. Antsy like Alan Shepard in the cockpit of Freedom 7 (”Let’s light this candle!”). We just wanted the show to start.
The monologue, my main responsibility (along with Steve Young), had been put together the night before. We never do it this far in advance, but because there were no jokes based on topical material and Dave wanted no distractions on the final day, we compiled it just after the Tuesday night taping and just before a 7 pm technical rehearsal. We settled on 11 straight jokes and five enhancements (one live element – the giant print on the cue card, and four short tape pieces) for 16 total jokes, which is the number we usually shoot for. We knew if we got anything on Wednesday that we really liked, we could slot it and replace what we had. We monkeyed with the order a bit, but the Tonight Show joke (written by Mulholland and Barrie, aka “The Boys” even though they’re Dave’s age) was always going to be first out of the chute. In 24 years, I remember a handful of times when the opening remarks had been set a few hours before the taping (Anniversary shows, the first show at CBS, the first show after his heart surgery), but never the day before.
For those of you who really want the complete monologue deconstruction, we started with 22 jokes under consideration (on cue cards) and we quickly got down to 12, then 10. The last two jokes cut were a mini-run, I now enter a new phase of life: Moping…. I now enter a new phase of life: Shouting out answers while I watch game shows…. They were cut because he had done a joke that day, I now enter a new phase of life: Googling “foods that help your prostate…” which he felt was the best version of that premise and it didn’t make sense to revisit. So, we had 10. We were one short. I pitched a joke to him written by Steve Young that he had passed on: My son is not clear on what’s going on. He keeps asking, “Why does Daddy have to go to prison?” He remembered it and laughed and realized we had nothing in the monologue on his family. So, it went in. Over the years, I have pitched a lot of jokes in the eleventh hour and I would say he’ll take one for every 20 I offer up. It was especially gratifying because it was a Steve Young joke, and it didn’t sound like anything before or after. The final breakdown of jokes was also pleasing in its numerology: 3 for The Boys, 3 from Chris Belair, 2 from me, 2 from Steve Young, and one from Chris Albers, who wrote jokes at the old show when he was Paul’s assistant before moving on to a 18-year career running Conan’s.monologue. Chris was one of a half dozen former writers I invited to contribute to the final opening remarks: Gerard Mulligan, Adam Resnick, Larry Jacobson, Frank Sebastiano and Jeff Stilson. They were all touched and grateful to have the chance, and I loved that one of them scored.
Even though we had a monologue, the main opening remarks writers (me, The Boys and Belair) pretended it was just another day and turned in our submissions at the regular time, along with the freelance guys. Dave considered a couple, but nothing made it through. My last effort looked no different in format than my first, which I typed on an IBM Wheelwriter and turned in Monday, October 21, 1991, except that just under Opening Remarks Scheft 5/20, I wrote the last line of Catullus poem #101 (Atque in perpetuum, frater, ave atque vale.). In the makeup room, he asked me to translate the Latin, and I managed to not choke up when I said, “And into eternity, brother, hail and farewell….”). Truth be told, there was one joke of mine I would have loved him to slot in under the wire: 35 years ago, I stopped drinking. I think that’s long enough, don’t you?
The three of us (Dave, Me and Todd Seda) ran through the cards three times, just like always. We ended up replacing one of the taped elements (”Me in 2 Weeks”) with a Steve Young piece called “Comedy We Would Have Done Tomorrow,” a beautiful last deep wink and nod to the notion that we were cluelessly continuing as if the show was not ending. We kept the hologram of Dave saying goodbye to the staff and the cultural impact moments from “The Simpsons” and “Wheel of Fortune.” For once and at last, everything was in the right order.
Rehearsal, which I only attend if I’m in a sketch, was noteworthy for two moments, neither of which I witnessed. After the Foo Fighters had run through “Everlong” live for the first time to accompany Barbara Gaines’ epic montage, she leaped onto the stage and hugged Dave Grohl.
Six months she had worked on this, her singular swansong after 35 Dave years, with Randi Grossack, Mark Spada and a battalion of self-doubt. Can you blame her for lunging?
The other moment happened during the Top Ten rehearsal. 8 of the 10 celebrities were happy with the lines we had written for them. Tina Fey and Julia Louis-Dreyfus wanted to consider other takes. Julia settled on a line written by Mike Leech (”Thanks for letting me take part in another hugely disappointing series finale….”) which the next day was proclaimed the “winner” of the Top Ten. Tina took something a little more subtle and much more pointed (”Thanks for finally proving men can be funny….”) That line, ladies and gentlemen, ladies and ladies, was written by Caroline, whose last name I don’t know. I don’t know because she was the writer’s intern and we never got that formal. But on the last day of the last show, she scored the final two entries on the final Top Ten. Oh yeah, she already had Bill Murray’s line (”Dave, I’ll never have the money I owe you….”) We were all genuinely thrilled for her. This 21-year-old has all the resume she needs going forward. I will be happy to help her in any way I can. But I’ll need her last name. (UPDATE 6:30: My pal Brian Koppleman found her on Twitter. Caroline Schaper @carolimeschaper)
Our final day together in the dressing room preparing for the taping was remarkably similar to all that preceded it. Dave, Me, Nancy, Barbara, Jude and Matt laughing about something from another show, another year. Jane with the makeup. The only difference was Les Moonves stopping by to say hello, and at 4:26, many people yelling “Biff is coming!!!!” for the last time instead of just wardrobe person Natalie Fowles. Dave walked slowly down the stairs to the stage door, as he always does.
THE AUDIENCE WARMUP: I don’t remember much. I looked out and saw Regina and Harry, both beaming, and I had to look somewhere else. So, I looked to their right and saw Donna Reilly Roboto, who was Dave’s nurse during his heart surgery and then came to visit Adrianne half a million times when she was in the Cornell Weill Cardiac-Thoracic ICU with chemo poisoning, in Sloan-Kettering after successful esophageal cancer surgery and in our living room during the long slow recovery. So, you’ll understand if all I remember was Dave’s very last line: “This is the most important show of my life….”
THE TAPING: You’re gonna have to believe me, there’s nothing to report. Zero. Move along. Nothing to see here. Show’s over… The taping ran 20 minutes long, which means nothing was edited out. Nothing was redone (5/27 UPDATE: Nothing EXCEPT the intro to the Taco Bell remote, when Dave mistakenly said “1976″ instead of “1996,” which is why in the redo it got a knowing inside laugh from the audience). You saw what everyone else saw. So… I’ll leave you with this incredible photo by Pulitzer Prize winner John Filo, snapped seconds before the end of the final commercial break:
It was a long long last break as they set up for the Foo Fighters. The band must have played Ian Hunter’s “Central Park and West,” Dave’s favorite New York City song, for ten minutes. Around minute ten, Paul looked at Nancy Agostini and pointed to his watch. That is where we are here. Nancy is staring at stage manager Eddie Valk, waiting for him to give the 30-second cue. Todd is holding the last cue card, THANK YOU AND GOODNIGHT, which Dave will utter at the end of his final remarks. Me? I’ve already said the last thing I will say to my boss: “You know how to do this….” I cannot tell you exactly what I’m thinking here, except I can see he’s happy. Hell, anyone can. I know he’s okay. I know he’ll be okay. So, if I had to write something in a thought bubble for me, and I’ve made my living with words, the best I could come up with is “What now?”
(Seriously, though, can we give it up for the suit?)
You want to know if I got emotional? Just once. In the middle of the Final Montage, in the middle of that masterpiece, I looked over at the podium just as Nancy Agostini grabbed Barbara Gaines and threw her behind the podium so she could observe what she had so lovingly wrought on the podium monitor. That elegant, beyond affectionate gesture was not lost on me. Three years ago, Gaines had chosen Nancy to replace her after nine years running the show from the floor. In the 33 years between NBC and CBS, Barbara Gaines had been behind the podium longer than anyone. Barry Sand, Robert Morton, Rob Burnett, Jude Brennan and Maria Pope had toiled before her. Then Nancy, the very first writers intern at NBC who I have know since she was 20 and living in an all-women’s hotel, and who, like I have to tell you, is not from this Earth. For Barbara, giving up the tiller was not easy, but necessary and an act of supreme humility. And now, she got one last moment at the podium. The last moments of the last show. That got me. Good Christ, that got me.
Enough. Race is over. Rahal finished 5th. Didn’t get the podium. Thanks for indulging me these last 28 days. As College Boy would say, “Some guys just live right.”
My time is up. You’ve been great. Enjoy The Truants…. | To say Late Show intern Caroline Schaper had a successful final episode of the show would be an understatement. The 22-year-old wrote two of the lines from the final Top 10 list, as the Daily Dot points out, citing a portion of a long Tumblr post about the last episode by longtime Late Show writer Bill Scheft. No. 2 entrant Tina Fey, he explains, wasn't in love with her original line for the "Things I've Always Wanted to Say to Dave" list, and she ended up picking a line from Schaper that was "a little more subtle and much more pointed" than her first option: "Thanks for finally proving men can be funny." And Schaper had already written the No. 1 line read by Bill Murray: "Dave, I'll never have the money I owe you." "We were all genuinely thrilled for her. This 21-year-old [sic] has all the resume she needs going forward. I will be happy to help her in any way I can," Scheft wrote. Schaper's response on Twitter: "Thanks for your kind words but it's time to come clean: I'm actually 22. I hope you all still like me! Your validation is all that matters!" |
iStockphoto/Salon
My interest in the male Brazilian wax began when my girlfriend's Russian wax technician told her not to buy me boots for Christmas. "You buy a man boots, he will walk away from you," Irena said, while applying hot pine wax to Anna's bikini line. This is apparently a well-known Russian proverb, and Russian women will not buy their men boots on its account. "But if you insist on buying him the boots," Irena continued, "ask him for some money in return, even one penny, so it is not a gift, but a trade."
Anna takes Irena's advice seriously. "She's like my therapist," she says. My brother wound up buying me the boots.
Curious to meet Irena, I tagged along to Anna's next wax appointment. Irena had once told Anna to break up with me if I didn't propose to her "within two months," but she greeted me like an old friend, holding my hand and staring deep into my eyes. "You must come see me sometime," she said, meaning for a wax. I said it sounded pretty painful. "It's not so bad," she said. "Here, I show you." She whisked me into the treatment room and asked that I remove my pants. And like that, she waxed an iPod-sized patch of hair off my inner thigh while Anna looked on, wincing. The pain was sharp but tolerable. "Men come to me all the time," Irena said nonchalantly. "At first it was the gays, then the straights, for the chest and the back. But now, many straight men come to me for the full Brazilian."
To discuss male Brazilian waxing today feels like a throwback to the luxurious pre-recession days, when Newsweek claimed to have pounced on the burgeoning trend (not long after, Rebecca Traister wrote a response piece for Salon). The following year -- and one week after Steve Carell's chest-waxing scene in "The 40-Year-Old Virgin" hit theaters -- USA Today announced: "The male resistance to waxing is melting away." Then, in the November 2007 issue of Vanity Fair, Christopher Hitchens offered the coup de grâce, a personal essay about receiving a Brazilian as part of a self-improvement series. It seemed to imply that the straight male version had officially gone mainstream, and that men had become subject to the same exacting beauty standards as women.
But recently, when I asked my male friends if they'd ever gotten a Brazilian, they were, in a word, appalled. They became almost angry at my suggestion that it had ever been a trend. Casual manscaping they understood, but why would any sane bro undergo a "Brozilian"?
I didn't understand it either. So shortly after meeting Irena, I stopped by the J Sisters salon in midtown Manhattan. The J Sisters are famous for bringing the Brazilian -- the removal of hair from the pubic and buttock regions, via the strip wax method -- to the United States in 1992. They are also, allegedly, the first to give a Brazilian wax to a man. "One of my clients asked if I could wax her husband," Janea Padilha, 55, the inventor of the Brazilian and co-author of the recently released book "Brazilian Sexy: Secrets to Living a Gorgeous and Confident Life," recalled. The man had some kind of bacterial infection that needed to be addressed. "At the time we had an all-female clientele. But the guy had a lot of hair down there." Janea leaned in confidentially. "So we sneaked him through the back."
The man was cured. Word spread. Suddenly, Janea's clients reported an interest on behalf of their husbands and boyfriends. In response, the sisters went co-ed. They trained two men -- a cousin, Jonas Padilha, and a friend, both of them licensed aestheticians -- to do male waxing. These men had never actually waxed other men, though. Let alone their genitals. So they recruited another cousin -- John Padilha, a receptionist at J Sisters -- to act as a test subject.
"They waxed my whole body," John, a handsome 29-year-old with an easy smile and perfectly sculpted chin hair, told me. "Each guy took a different leg and arm. It was brutal. But when they got to this area," he said, pointing at his zipper, "they did it too slow or something, and the skin stretched out. I screamed. I was like, 'Oh my God!'"
The men performed the wax on male clients for several months. Soon, however, Janea took over again. "The boys had no finesse," said Jonice, the youngest of the seven J-named sisters at 48, and the most business-minded. "They also overcharged for hairy clients. And it's funny, but women were not comfortable with their husbands and boyfriends getting waxed by other men."
Since then, Jane Padilha, yet another cousin, who goes by J.P. to avoid confusion with Janea, has taken over some of the male waxing load. "My girlfriends say, 'Don't you feel anything, for the men?'" J.P. said, standing in front of a voluptuous mannequin draped in a Brazilian flag near the reception desk. "But I don't get embarrassed. I'm very professional, like a gynecologist for guys." Indeed, J.P. gives her cousin John his Brazilian every four weeks. "I have to grab him by the hair sometimes, just to get him into the room!"
As the J Sisters dissolved in laughter, I reflected on the improbability of American men ever receiving Brazilians from their female cousins.
Getting a Brazilian wax is, after all, an intimidating experience -- especially for men worried they'll become aroused. A reassuring, motherly presence is advised. As Eugenya Freylikhman, a 55-year-old Ukrainian aesthetician at Chelsea's Skintology spa, told me, "We hire only older women for the waxing, like your grandmother. We don't hire the model drop-dead gorgeous girl. Otherwise men become uncomfortable and afraid."
Of course it's not just for the male client's protection that young female waxers are rarely used. Despite the medicalized aura most salons adopt, waxing is a cosmetic procedure. With a clientele of naked straight guys, sex hopelessly intrudes.
"Guys think that since they're naked, you're gonna give them head," Jane Pham, the 35-year-old proprietor of Ted D. Bare Salon in San Jose, Calif., frankly admitted in a phone interview. Pham serves mainly heterosexual men, and specializes in what she calls the "Manzilian." The day she signed on, the head aesthetician quit, fed up with the obscene proposals. Pham, however, now in her tenth year at Ted D. Bare, has learned how to keep guys in line. Brandishing a can of scalding cream wax, she tells newcomers, "She who holds the wax holds the power!" Once, she was forced to taze a guy who wouldn't stop misbehaving. "He got really aggressive and kept insisting that I perform certain favors on him," she said. "So I tazed him in the thigh. He fell right off the table.
Most of the time, Pham says, guys behave. And yet they make a lot of bizarre requests. "Men tend to want the oddest pubic hair shaping," she said. "One guy asked me for a blue whale design. Another wanted me to shave the words 'Campbell Soup' into his pubes, because his girlfriend liked Campbell Soup. I was like, 'No way, dude!'" She continued, "Then there are the guys who come for the pain. The sadists. I mean, to each his own, but the problem is, their hair gradually thins out and they become desensitized, so it starts to hurt less, and they need more."
Pham has been able to go on because, like most aestheticians, she bonds with her clients. Due to the intimacy of the act, personal confessions abound. "It's unfortunate," Pham says, "but I know when a guy is going to leave his wife before she knows. When they're naked in front of you, guys tell you everything." She also enjoys shepherding men though a cosmetic procedure formerly reserved for women. "Most dudes are not OK with getting it at first. But it's like a tattoo: Once they wax one body part, they inevitably wax another. Every guy I see winds up getting the Manzilian. Every single guy."
There are many theories as to why straight men get Brazilians. Dr. William Granzig, head of the clinical sexology program at Maimonides University in Miami, suggests they do it to emulate bodybuilders and pro wrestlers, who go hairless to emphasize muscle definition. "Hair removal has become something macho men do," Granzig says. "It gives guys masculine permission to get waxed."
Gloria Brame, a sex therapist and the author of "Come Hither: A Commonsense Guide to Kinky Sex," points to the ubiquity of hairless male porn stars online. "Stuff like that just drifts from the Web into the general population," she says. "How else would everyone know about anal bleaching, for example?"
Rebecca Herzig, a professor of women's studies at Bates College and author of the forthcoming "Pluck," a history of hair removal, says that the original market for the Brazilian wax (women between 20 and 40) is maturing. "Investors and service providers need to find new markets," she explains. "They've begun to target teenagers and older women with high incomes. But, perhaps most importantly, they've begun to target men."
Female empowerment may even have something to do with it. If men expect young women to get Brazilians, as some recent articles suggest, some women expect the same in return. Martha Frankel, a journalist and Janea's co-author for "Brazilian Sexy," interviewed dozens of men at J Sisters as they waited for Brazilians. "The majority of them were there because their wives and girlfriends demanded it," she said, before adding, "A lot of these guys were pretty hairy."
Celebrity advocacy has probably helped, too. In 2008, London's Daily Mail reported that P. Diddy gets regular Brazilians, and likes to relax beforehand by drinking lemonade and vodka cocktails and listening to James Brown. Afterward, he sprays his own fragrance, Unforgivable Black, on the newly depilated area. "In everything I do," he told reporters, "I visualize myself either putting clothes on or taking them off."
Waxing specialists want you to think the same way. And so they make it almost impossible to ask questions about the Brazilian without receiving one gratis.
I was eventually waxed while researching this story, after declining several offers. It took place at J Sisters, where I'd returned for some follow-up questions, but also because it was so much fun being there, surrounded by a gorgeous extended family of laughing, clapping Brazilians doing one another's hair and nails as they awaited their next celebrity client. ("You can almost hear the waves lapping in that place," Martha Frankel told me. "I used go there just to relax.") This time, Janea saw me coming and immediately summoned me into the waxing room. When she joined me a few minutes later, I was still fully clothed, hunched over my notebook like an avid high school reporter.
"What is this?" she said, blinking in confusion.
"I thought I might ask a few questions first, if you don't -- "
"Strip!" she cried, and flung a small white hand towel onto the bed. She smiled. "Don't worry. I will take care of you."
Spa professionals had assured me that waxing isn't that painful. But men's hair is coarser and thicker than women's, and the follicles deeper, which accounts for the spa legend that men make more noise than women when waxed. What got me, though, was the contrast between Janea's dainty, tender application of the wax and the brute force with which she ripped it off. She threw my leg over her little shoulder, like a sports therapist, and began raining baby powder down on the target areas. The pain was almost unbearable. "Why am I doing this?" I thought, staring at the elaborate, cherub-accented ceiling. Meanwhile, Janea modestly described the emboldening effects her Brazilians and personal advice have had on clients like Vanessa Williams, Naomi Campbell and Gwyneth Paltrow, but also on men like sometime actor and former pro ball player Rick Fox and, yes, Christopher Hitchens.
"What was Christopher Hitchens like?" I asked, trying to distract myself from the pain.
She thought for a moment. "He was ... flexible."
"Physically flexible?"
"Yes, that, but more mental. He is a big, handsome guy, but he has an open mind. When I have his legs in the air, we laugh about it. We talked about sensation. He made a lot of good questions. When he left, I said, 'Janea's waiting for you coming back!'"
At the time, Janea was completing her book "Brazilian Sexy." I asked her what it was all about.
"I don't want to reveal too much," she said, "but it is about how beauty comes from inside, from under the skin." She stirred the wax with her wooden applicator, like a painter mixing colors. "Say you are ugly. Say ... you are like the singer Seal. He has an ugly face, with a scar. But he has the passion!" She threw her arms out dramatically, like Seal in the video for "Kiss From a Rose." "And because of this passion, he is beautiful. And you see who is his wife."
"Did you ever give Seal a Brazilian?"
"No," she said. "He lives in Los Angeles. But I hear he gets them."
Afterward, I took a long walk down Lexington Avenue, clutching the small glass jar of Tranquility Soothing Waxing Cream that Janea had pressed into my hand. I felt shaky and emotional, but invigorated, as if I'd just walked away from a car accident unscathed. Somewhere in the East 70s, I saw an Absolut Vodka billboard that read: "In an Absolut World, the smoother the better."
Maybe that's right, I thought. ||||| This week, Newsweek published an article headlined "Brazilians for the Boys. No, Seriously." In it, writers Holly Peterson and Jenny Hontz uncover a potentially horrifying new craze: Straight guys who get their balls waxed. Sure, some gay men have been pruning the shrubbery for years. But according to this story, heterosexual men from coast to coast are appearing in droves at beauty salons where they pay professional groomers to pour hot wax on their wrinkly little jewels (along with the rest of their genital area), apply strips of cloth, and then let 'er rrrip.
After five years of hearing men extol the virtues of Brazilian bikini waxing -- the process in which women have every hair between their belly button and tailbone tugged violently from its subcutaneous cradle -- are we now entering an age in which they will be forced to down a spoonful of their own medicine? I have to be honest: I am delighted at the very thought.
Part of me always believed that the craze for women's Brazilians was prompted by a cruel practical joker disguised as Gwyneth Paltrow working in cahoots with the J Sisters, the Brazilian women who run the Manhattan torture chamber that introduced follicle-yanking to the masses. But as soon as the first publication printed the first series of interviews with straight boys about how pedophilically, sadistically luscious they found the sight of bald pubes, the porn-star pressure was on and we were all sunk.
The thing to do was find out if the whole Sore Thighs for the Straight Guy thing would provide straight chicks with the same illicit thrill as their male counterparts had gotten from Brazilians. Using a scientifically sound survey method, I called my friends.
"Wait, is this where men get that Brazilian torture thing, too? Good!" said Miranda, 33. There is a reason why we are so close. She gave it some thought and then continued. "I once went to this life drawing class and there was a Middle Eastern male model who had waxed down his entire body and was completely hairless. I couldn't even bear to look at him -- let alone draw him."
The more Miranda considered the procedure, the more repulsed she became: "I would rather have a man who was hairy from the nape of his neck to the bottom of his elbows than have a waxer," she sniffed. "Waxing is emasculating and effete in a way I just can't find sexually attractive, but I could get used to hairiness even if it's not my preference."
"It's foul in every way," said another friend, Heather, 27. "I think the level of pain has to be way beyond the feminine crotch rip because balls are supposed to be vomit-inducing sensitive, which implies a machismo vanity that is more repugnant than spray-on hair."
While I couldn't find any women who had experience with waxed balls, I was surprised that several had slept with guys who have taken a Mach 3 to their johnsons.
When I asked my friend Sara whether she had ever encountered such hairless wonders, she said "Oh totally. Tony." Sara believed that the attention to grooming was "more for their own greater sensation and has absolutely nothing to do with the woman." Though she hasn't handled waxed balls herself, Sara thinks they sound like a good idea since Tony had a little stubble problem.
Annie, 23, said that in her comparatively brief stroll around the sexual block, she has encountered two men who shave the bulk of their genital area. "I'm amazed that I have seen more than one bare set of balls," she said. At least one of those sets had been stripped of its protective fur with an electric razor. Yee-ouch. The first time she encountered these smooth sacks, Annie said, "I knew something was different, but it took me a minute to figure out what it was. But did it turn me on? Not particularly." I asked Annie about Newsweek's claim that the major draw of a hairless scrotum is that it makes the machinery look bigger. "No. It reminded me of a newborn puppy dog," she said. "Puffy and exposed."
Her multiple experiences with nude nuts have led Annie to believe that this whole ball-waxing thing may not be cutting edge. "I don't think this is any kind of new trend," she said. "I think it's just that men have some sort of absurd fascination with their genitals and if there's something that they can groom there, their feeling is, Might as well play! If they made barrettes for the area I'm sure they'd be selling well."
Right. It was time to call an ex-boyfriend.
"I think the thing a man immediately thinks about is the elasticity of the scrotal sack," said Andy, 31. "I mean, I just had this image of the woman doing it having to run all the way across the room to dislodge a piece of wax from the scrotum. Because that skin stretches a lot.
"Any man that takes a woman's pants off and finds her waxed I think assumes that the woman has done it in order to look like a 13-year-old girl, in order to indulge her partner," Andy continued. "I can't think of any adult woman I've ever met who's been into sleeping with 13-year-old boys."
My calls to loved ones eventually turned up a very hetero man who has been shaving his fuzz for the better part of this past year. Milo, 32, explained that he was moved to mow because "it's a nice framing device, very ornamental. It's nice to spruce up the area, give it some nice contrast." I thought it was really sweet that he was talking about his peter as if it were an oak fireplace mantel, until he revealed that he was on a train, nestled between a 3-year-old and an 83-year-old.
Milo, who has a girlfriend, explained that he finds his sleek member's effect on women to be positive. "It's cool. I think some women find it interesting that the guy would take care of himself like that. You know, it's fun and a little playful." The idea of ingrown hairs has so far kept Milo away from the hot wax, but when I suggested that waxing might provide him with stubble-free regrowth, he was intrigued.
Before getting off the train he said, in a strangulated whisper, "The thing is, it feels really good. There is definitely a sensual component. That area is the softest skin on your body!"
I suspected as much. | Jed Lipinksi didn’t realize it at first, but it would prove to be impossible for him to write a story about male waxing without getting waxed himself. After steadfastly declining several offers, Lipinski found himself getting a “Manzilian” from none other than Janea Padilha herself, the inventor of the Brazilian. And “the pain was almost unbearable,” he writes on Salon. “Afterwards, I felt shaky and emotional, but invigorated, as if I’d just walked away from a car accident unscathed.” Along the way, Lipinski gleaned various fun facts about manscaping, which is growing in popularity. Among the more amusing tidbits: Women are “not comfortable with their husbands and boyfriends getting waxed by other men,” Padilha says, but men are concerned about becoming aroused by a female waxer—so, one aesthetician explains, “we hire only older women for the waxing, like your grandmother.” One 35-year-old female waxer explains why: Some men assume “that since they're naked, you're gonna give them head,” she says, recalling a time a client got so aggressive she had to taze him. |
An abusive tax shelter is generally defined as a transaction that technically complies with the Internal Revenue Code but results in unreasonable tax consequences that are not intended under the Code. The economic substance doctrine is one tool that the IRS has for fighting abusive tax shelters. It is a judicially developed doctrine that allows the IRS and courts to disregard transactions that were made for tax-avoidance purposes and lack economic substance. The economic substance doctrine is rooted in several Supreme Court decisions. The first is Gregory v. Helvering , where the Court stated that while "[t]he legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted," a transaction will be disregarded for tax purposes if it was not "the thing which the statute intended." In that case, the Court, looking at whether a stock transfer qualified as a tax-free reorganization, disregarded the transaction because there was no "business or corporate purpose" for the companies involved and "[t]o hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose." In Knetsch v. United States , the Court applied the Gregory analysis in determining whether a taxpayer could deduct interest arising from a transaction in which, among other things, he bought bonds using a promissory note and effectively paid the note's interest due at the beginning of each year with money he borrowed prospectively from the bonds' value at the end of the year. The Court disregarded the transaction because it "did not appreciably affect [the taxpayer's] beneficial interest except to reduce his tax" and refused to believe, without evidence of legislative intent, that Congress intended to provide tax benefits for a sham transaction. The Court in Frank Lyon Co. v. United States further explained that a transaction should be recognized for tax purposes if there is a genuine multiple-party transaction with economic substance which is compelled or encouraged by business or regulatory realities, is imbued with tax-independent considerations, and is not shaped solely by tax-avoidance features that have meaningless labels attached.... In 2006, four important tax shelter cases were decided by U.S. courts of appeals. In all four cases, the economic substance of the transaction was at issue. The next section of this report looks at these cases. Because this report focuses on the economic substance doctrine, the other tax aspects of the cases are not discussed. It is, however, important to note that courts in these cases found that the challenged transactions complied with the relevant statutory requirements in the Internal Revenue Code. It should also be noted that the factual situations are summarized and may not include all parties to or all aspects of the transaction. The transaction at issue in this case involved two Coltec subsidiaries: A and B. A gave a promissory note worth $375 million and property worth $4 million to B in exchange for stock in B and B's assumption of A's future asbestos liabilities. The value of the note was calculated to cover the liabilities. A then sold its stock in B for $500,000. Coltec claimed that A had a $378.5 million loss from the sale of the stock. Coltec asserted that A's basis in the stock was $379 million (the value of the note and property) and did not have to be reduced by the value of the assumed asbestos liabilities under the contingent liability rules in IRC § 358(d)(2). The IRS challenged, among other things, the transaction's economic substance. In 2004, the Court of Federal Claims held that the economic substance doctrine was an unconstitutional violation of the separation of powers doctrine. The court reasoned that because Congress had the authority to write the tax laws, it was unconstitutional for courts to require taxpayers to meet criteria beyond compliance with the congressionally written statutes. The court explained that taxpayers needed to be able to rely on the tax code's statutory language and that it was unfair to apply the economic substance doctrine on top of the statutes because of its unpredictability and ambiguity. The court dismissed the idea that Supreme Court and Federal Circuit decisions had endorsed the use of the economic substance doctrine, finding instead that the holdings in those cases relied on the statutory language and only used the doctrine as support for their conclusions. The court also noted that the doctrine's constitutionality had not previously been challenged and believed that recent case law raised questions about the doctrine's viability. In 2006, the U.S. Court of Appeals for the Federal Circuit reversed and remanded the lower court's decision, describing the holding as "untenable." The appellate court, noting that the economic substance doctrine had been recognized in several Supreme Court and Federal Circuit cases and in tax treatises, found no precedent for holding the doctrine to be unconstitutional. The court explained that the doctrine was similar to other canons of statutory construction, upheld by the Supreme Court as constitutional, that permitted courts to look beyond the statutory language if legislative intent would otherwise be violated. The court then laid out five principles of the doctrine: (1) a transaction without economic substance is disregarded for tax purposes, regardless of the taxpayer's motive for entering into it; (2) the taxpayer has the burden to prove the transaction's economic substance; (3) an objective test is used to determine whether there is economic substance; (4) the transaction that is tested is the one giving rise to the tax benefit; and (5) inter-company transactions that do not affect third-party economic interests deserve close scrutiny. Using these principles, the court determined that the Coltec transaction lacked economic substance because it did not "effect[] any real change in the flow of economic benefits, provide[] any real opportunity to make a profit, or appreciably affect[] Coltec's beneficial interests aside from creating a tax advantage." Black & Decker Corp. (BDC), after realizing $300 million in capital gains from the sale of assets, took part in a transaction seeking to create a capital loss. First, BDC transferred $561 million in cash to a subsidiary in exchange for stock and the subsidiary's assumption of BDC's future health benefits claims, which had an estimated present value of $560 million. One month later, BDC sold the stock for $1 million to an unrelated third-party. The subsidiary then lent $564 million to BDC's parent company, which the parent company repaid in monthly installments designed to furnish the subsidiary with funds to pay the benefit liabilities. BDC claimed a $560 million loss from the sale of stock. BDC asserted that its basis in the stock was $561 million and was not reduced by the value of the assumed liabilities under the contingent liabilities rules in IRC § 358(d)(2). The IRS disallowed the loss. The district court agreed with BDC's characterization of the transaction. The court stated that, under Fourth Circuit precedent, the question was whether "the taxpayer was motivated by no business purpose other than obtaining tax benefits in entering the transaction, and that the transaction has no economic substance because no reasonable possibility of profit exists." The fact that the taxpayer's sole motivation was tax avoidance was undisputed. With respect to the test's objective second prong, the court stated it would be met if the business engaged in "bona fide economically-based business transactions." The court found that the transaction met this standard because it had "very real economic implications" for the health plan participants and the businesses involved in the transaction because the subsidiary had assumed the administration of the benefit plans, was responsible for paying the claims, had proposed cost containment strategies that had been implemented, and had always had salaried employees. Thus, the court found that the transaction had economic substance and granted BDC's motion for summary judgment. The U.S. Court of Appeals for the Fourth Circuit disagreed with the district court. Because BDC had conceded the subjective prong of the test, the court looked only at the objective prong. The appeals court stated that the lower court had misapplied that prong by focusing on the subsidiary's business activities, when the test actually required looking at whether the transaction had a reasonable expectation of profit outside of the tax benefits. The court therefore found that many of the facts upon which the district court had based its decision (e.g., the fact that the subsidiary had salaried employees and paid claims as they came due) were irrelevant. Thus, the court reversed the district court's decision and remanded the case for further proceedings to determine the economic substance issue. Dow entered into a plan under which it bought corporate-owned life insurance (COLI) policies, of which it was the owner and beneficiary, on the lives of more than 21,000 employees. The company paid the premiums by borrowing funds from the insurers using the policies' cash value as collateral and by making partial withdrawals from the policies' cash value. The plan was not expected to generate positive pre-deduction cash flows or earn significant inside build-up (i.e., earn interest on the policies' value) unless Dow made substantial investments of cash into the plan. The plan also limited Dow's potential mortality gain (i.e., its potential to profit by being paid more death benefits than expected because of a high number of deaths). Dow deducted more than $33 million for interest paid on loans used to pay the premiums. The IRS disallowed the deductions, arguing that the transaction lacked economic substance. The district court held that the transaction did not lack economic substance. The court began by stating that the economic substance doctrine required the court to determine whether the transaction "has any practicable economic effects other than the creation of income tax losses," and, if so, whether the "taxpayer had a legitimate profit motive in entering into the transaction." The court, looking at prior cases in which courts had held COLI plans to lack economic substance, determined the test would be met if the transaction generated positive pre-deduction cash flow and it was possible for Dow to profit from both inside build-up and mortality gain. The court determined that these factors were met because the net present value of the policies was positive, the plan allowed for inside build-up, and the plan did not completely eliminate the transfer of risk. The Sixth Circuit Court of Appeals reversed the district court. Although the appellate court found that the lower court had properly framed the inquiry by looking at the plan's key characteristics to determine whether it lacked economic substance, it disagreed with the district court's findings on each factor. Specifically, the appellate court stated the district court erred by not looking at Dow's past conduct in determining the likelihood that Dow would make the significant future investments necessary for the plan to eventually have positive pre-deduction cash flow and generate inside build-up. The court found that Dow's past conduct made such future conduct unlikely. The appellate court also stated that the district court wrongly required that the plan not provide any possibility of mortality gain, and found that while the plan did allow for the possibility of such gain, it was basically designed to make the mortality provisions neutral. Based on these factors, the court held that the plans lacked economic substance and should be disregarded for tax purposes. Dow filed a petition for certiorari with the Supreme Court on October 4, 2006. The taxpayer, which leased airplanes, among other business activities, became concerned during a downturn in the airline industry and entered into a transaction intended to partially monetize the value of its airplanes. The taxpayer formed a limited liability company (LLC) and then transferred airplanes worth $294 million and $246 million in cash to it. Two foreign banks then invested $117.5 million in the LLC. The LLC's operating agreement called for it to distribute most of its income to the banks each year. There was a significant difference between the bank's book income and tax income. This was because the book income had been reduced by expenses that included depreciation. The tax income, on the other hand, was not reduced by depreciation because the airplanes had already been fully depreciated for tax purposes. While the banks received most of the income, the operating agreement granted the taxpayer management control over the LLC. The operating agreement also called for the LLC to annually buy back a percentage of the banks' ownership interest so that the banks would be bought out after eight years. The overall effect of the transaction was that during the eight-year period, the taxpayer was able to partially monetize the airplanes by having access to the funds that the banks invested and the banks received a steady rate of return on their investment. The IRS argued that the transaction should be disregarded. The district court held that the transaction had economic substance. The court explained that the economic substance doctrine requires the court "examine both the subjective business purpose of the taxpayer for engaging in the transaction and the objective economic effect of the transaction." The court stated that the precedential decisions in the Second Circuit were unclear as to whether both prongs of the test had to be met. This was unimportant to the court, however, because it found that the transaction satisfied both tests. The court reasoned that the transaction had economic effect because the banks had invested $117.5 million and received a percentage of the LLC's income in return and that the taxpayer had a subjective business purpose in participating in the transaction because it needed to raise capital. The court then looked at whether the banks were actually partners in the transaction. The court found that they were because there were legitimate business reasons to create the LLC and the banks had an active stake in the LLC because its investment returns depended on the LLC's business performance. In 2006, the U.S. Court of Appeals for the Second Circuit reversed the lower court's decision. The appellate court did not disagree with the lower court that the transaction had economic substance due to the company's non-tax motive to raise equity capital. Instead, the appeals court found that the lower court erred in not looking at whether the banks were truly partners under the test developed in the Supreme Court's decision in Comm ' r v. Culbertson . The court stated that under Culbertson , it had to "determine[] the nature of the interest based on a realistic appraisal of the totality of the circumstances." The court found that the banks did not have any real equity interest because their "interest was in the nature of a secured loan, with an insignificant equity kicker," which meant that "only in a negligible fashion was their well-secured interest intertwined with the fortunes of the business." Thus, the appellate court did not find the Culbertson test to be met and held that the transaction should be disregarded for tax purposes. S. 96 (the Export Products Not Jobs Act) would codify the economic substance doctrine. The bill creates criteria for determining whether a transaction has economic substance, which apply once a court decides that the doctrine is relevant in the case. The bill also creates a new penalty for understatements of tax attributable to transactions lacking economic substance. The penalty equals 40% of the understatement and is reduced to 20% if the transaction was adequately disclosed. The bill also denies a deduction for interest on underpayments attributable to such transactions. | The economic substance doctrine is a judicially developed doctrine that has become one of the IRS's primary tools in fighting abusive tax shelters. The doctrine permits transactions lacking in economic substance to be disregarded for tax purposes. In 2006, four significant decisions dealing with the doctrine were issued by U.S. courts of appeals. In the 110th Congress, S. 96 (Export Products Not Jobs Act) has been introduced to codify the doctrine. This report discusses the doctrine's development and the four cases and summarizes the bill. It will be updated as events warrant. |
As part of its constitutional authority to regulate commerce with foreign nations, Congress has long delegated to the President authority to proclaim reciprocal tariff reductions with U.S. trading partners and has encouraged the President to enter into certain trade agreements that meet congressionally mandated objectives. Congress established the trade advisory committee system in Section 135 of the Trade Act of 1974 as a way to institutionalize domestic input into such U.S. trade negotiations from interested parties outside the federal government. This system was considered necessary because of complaints from some in the business community about their limited and ad hoc role in previous negotiations. The 1974 law created a system of committees through which such advice, along with advice from labor and consumer groups, was to be sought. In practice, USTR has primary responsibility within the executive branch for developing U.S. trade policy, and the President has delegated to USTR the role of leading the trade advisory committee process. Additional players in developing U.S. trade policy include other executive branch agencies, particularly the departments of Commerce and Agriculture; the private sector, including business and nonbusiness groups; and state and local governments. USTR also maintains close consultation with Congress. The advisory committee system is one of several ways that USTR obtains input from the private sector (see fig. 1). In fact, Section 135 of the Trade Act also requires USTR to provide an opportunity to private organizations or groups outside the advisory committee system to present their views on trade issues. The system, created in 1974, was originally intended to provide private sector input to global trade negotiations occurring at that time (the Tokyo Round). Since then, the original legislation has been amended to expand the scope of topics on which the President is required to seek information and advice from “negotiating objectives and bargaining positions before entering into a trade agreement” to the “operation of any trade agreement, once entered into,” and on other matters regarding administration of U.S. trade policy. The legislation has also been amended to include additional interests within the advisory committee structure, such as those represented by the services sector and state and local governments. Finally, the amended legislation requires the executive branch to inform the committees of “significant departures” from their advice. The trade advisory committees are subject to the requirements of the Federal Advisory Committee Act (FACA), with limited exceptions pertaining to holding public meetings and public availability of documents. One of FACA’s requirements is that advisory committees be fairly balanced in terms of points of view represented and the functions the committees perform. FACA covers most federal advisory committees and includes a number of administrative requirements, such as requiring rechartering of committees if they are to continue for more than 2 years. The structure of the trade advisory committee system consists of three tiers, with the top tier directed by law to provide “overall policy advice,” the second tier to provide “general policy advice,” and the third tier to provide “technical advice and information.” However, Section 135 of the Trade Act does not establish any formal relationship among these tiers, nor does it authorize the first tier to exercise any control over the other two. USTR, working jointly with the other relevant executive departments, has the discretion to create, change, and terminate committees in the second and third tiers. The system comprises about 735 advisers spread across 34 committees, with the bulk of the advisers and committees in the third, technical tier. This tier consists of 17 industry sector advisory committees (ISACs), 4 industry functional advisory committees (IFACs), a committee of ISAC and IFAC chairpersons, and 5 agricultural technical advisory committees (ATACs). The second tier currently consists of five policy advisory committees. The first tier consists of just one committee, the Advisory Committee for Trade Policy and Negotiations (ACTPN), whose members are appointed by the President. Figure 2 illustrates the committee structure. The advisory committees are administered by USTR, which assumes a leadership role, along with the departments of Agriculture, Commerce, and Labor. USTR is responsible for administering ACTPN and three of the tier-2 Policy Advisory Committees, and shares responsibility with the other agencies for administering the rest of the committees. The Department of Commerce co-administers the majority of these committees—the ISACs, IFACs, and the Committee of Chairs. The Department of Agriculture (Agriculture) coadministers six others—the ATACs and the tier-2 Agricultural Policy Advisory Committee. The Department of Labor (Labor) is responsible for coadministering a tier-2 Policy Advisory Committee. The Environmental Protection Agency (EPA) plays a supportive role in the activities of the tier-2 Trade and Environment Policy Committee (TEPAC) but does not administer it directly. The advisory committee system’s unique features give it an important role in U.S. trade policy. Many negotiators use the system and report that the committees have made important contributions to successful U.S. trade agreements. Our analysis of documents indicates that committees have been given numerous opportunities to provide formal advice at committee meetings and through informal channels. The advisory committee system is unique in U.S. trade policy because it provides a forum in which business and other interested groups can consult confidentially with and provide advice to the executive branch on trade negotiations, U.S. trade policy, and implementation of trade agreements. The formal nature of advisory meetings helps ensure that representatives of the private sector and other groups have regular access to officials engaged in U.S. trade policy. Further, the system provides government officials with a body of private sector experts with whom they can develop an ongoing dialogue. Since USTR’s administrative procedures for the advisory committees require advisers to obtain security clearances before participating, the committees offer an environment conducive to discussing sensitive negotiating information. Many participants said the advisory committee system serves an important role in U.S. trade policy. A former USTR official and current committee member termed the advisory committee system “one of the great strengths of U.S. trade policy.” Among the comments made by negotiators whom we interviewed and members responding to our survey were that the formal advisory committee system is often preferable to more ad hoc means of obtaining input because it is institutionalized and seeks to be representative. Moreover, they said, the system provides assurance to Congress that domestic interests with a stake in trade matters have a voice when trade policy is formulated and will support the final agreements. It thus helps make the executive branch accountable to Congress and, ultimately, to the American public. According to multiple responses, the system strengthens the U.S. bargaining position by bringing to bear on-the- ground perspective and information from the private sector that the U.S. government lacks; establishing a clear set of U.S. priorities and fuller appreciation of various American interests; and enabling the United States to present a unified front when it faces foreign nations at the negotiating table. Without the system, some participants commented, U.S. negotiators would be operating in a vacuum and businesses would be unable to effectively resolve with foreign governments issues that only the U.S. government can pursue. The bottom line, negotiators and members agree, is that when it works properly, the system results in better trade agreements. Not only does it help the United States achieve commercial benefits, it can help keep the trading system vital and responsive to actual needs. Agency officials also cited the system’s value and contributions to U.S. trade policy. According to USTR, the advisory committee process was extremely successful during negotiations (1) on China’s accession to the WTO; (2) multilateral agreements on information technology, financial services, and basic telecommunications; (3) the Uruguay Round of negotiations that led to establishment of the WTO; (4) as well as regional initiatives such as the North American Free Trade Agreement, the Summit of the Americas, and the Asia-Pacific Economic Cooperation forum. Of the 27 USTR trade negotiators whom we interviewed, 18 indicated that they had obtained useful advice from the system, as did most of the 12 Commerce officials we interviewed. They cited numerous specific situations where advisory committee input had been helpful to negotiations. For example, an Assistant U.S. Trade Representative indicated that the advisory committees are playing a vital role in identifying market-opening priorities for the more than 140 nations currently involved in WTO negotiations. A Department of Commerce official described a committee as instrumental in helping monitor implementation of China’s accession commitments to the WTO. A USDA negotiator said a committee was helpful in setting the tone regarding the language on tariff reductions in the comprehensive U.S. agriculture proposal to the WTO. A USTR negotiator reported that a committee helped develop a position on defining “international standards” in the WTO’s Technical Barriers to Trade Agreement and helped gain the international community’s support for the U.S. proposal, expediting acceptance of U.S. goods in foreign markets. Committee members also value the advisory committee system and devote considerable resources to participating in it on a voluntary basis. Just over one-half of committee members live outside of Washington, D.C., and pay their own travel expenses to attend committee meetings. Further, when the Department of Commerce renewed the charter for the ISACs and IFACs in March 2002, more than 80 percent of those members continued. Members whom we surveyed highlighted numerous benefits of committee membership, including access to USTR and other agency officials, insights into other members’ views, and face-to-face dialogue with all members. Parties outside the system, such as U.S. subsidiaries of foreign-owned businesses and nongovernmental organizations (NGO), have sought representation on the committees, arguing that they should not be excluded from such an influential system. Our analysis of committee documents found ample evidence that USTR and other executive branch agencies are consulting committees on a wide range of trade initiatives at formal committee meetings. For example, agendas for the committee meetings during the 3 years leading up to the 4th WTO Ministerial, held in Doha, Qatar, in November 2001, listed the ministerial 60 times. Twenty of the advisory committees discussed U.S. preparations for the ministerial. Also, during fiscal years 1999 through 2001, different elements of the Free Trade Area of the Americas agreement were listed as items on more than 190 meeting agendas, at meetings of almost every committee. Such scheduled advisory committee meetings, usually held in Washington, D.C., are the formal channels for the executive branch to consult with the private sector advisory committees. In fiscal year 2001 there were approximately 110 formal meetings across the committee system. The number of meetings varied considerably by committee. The meetings generally lasted 3 to 5 hours. According to our analysis, about 80 percent of the meetings for fiscal years 1999 to 2001 were closed to the public. Negotiators and other trade officials attend portions of the meetings, each in turn briefing, discussing, and consulting with the committee. The private sector committee chair and the managing agency’s designated federal official (DFO) generally schedule meetings and select the agenda topics, although occasionally negotiators seek out specific committees to consult on a particular topic. Consultation during meetings is oral, but some committees send their positions in writing to USTR and the corresponding secretary or head of the agency. Many committee chairmen said their committees seek to provide consensus advice, which may include dissenting opinions. For the first- and second-tier committees, only classified transcripts were kept until recently. For the third-tier committees, DFOs prepare classified minutes of closed meetings for internal committee use only, as well as unclassified public summaries. In addition to formal meetings, USTR, Commerce, USDA, and others informally request advice from committee members through faxes, E-mails, ad hoc meetings, and teleconferences when they need a rapid response. However, committee members consulted at ad hoc meetings or through other means may provide advice only as personal opinions because, in keeping with FACA rules, formal committee advice generally can only be provided through formal committee meetings. In some cases, this informal advice is solicited by a request from a negotiator to the coordinating offices at USTR and other agencies, which then transmit the request to all advisers. In other cases, direct contact between negotiators and selected committee members occurs. Regardless of how contact is initiated, members typically provide advice directly to the relevant official and no central record is kept. Nevertheless, our review of existing agency records indicates that such informal consultation is active. In fiscal year 2001, USTR scheduled at least nine ad hoc meetings, mostly teleconferences or in-person meetings, to which trade advisers were invited an average of 2 to 3 days in advance. During this same period, USTR and Commerce faxed or E-mailed approximately 63 requests for advice, usually addressed to the entire advisory system membership or all of the industry sector and functional committees; according to our analysis of available data, the advisers had an average of 7.5 days to respond. Figure 3 shows the different processes for obtaining formal and informal advice from the committees. Most advisory committee members are satisfied with key aspects of the advisory process. However, some would prefer to be included more fully in the deliberations before actual trade policies are made, and many cited several problems with the consultation process that have hindered the system’s effectiveness. In addition, accountability for the use or consideration of advice could be improved. More than 60 percent of the members who responded to our survey reported that they were very satisfied or generally satisfied with 11 of the 16 areas of committee composition, operations, and effectiveness listed in table 1. In addition, about half of the committee members responding to our survey indicated that the system is fulfilling its statutory mandate to a “very great extent” or “a great extent.” The areas with the greatest levels of satisfaction (very or generally satisfied) were the knowledge of government speakers (85 percent), the committee’s opportunity to ask questions of government officials (84 percent), and the opportunity for members with dissenting views to provide input at meetings (79 percent). The areas with the lowest levels of satisfaction (very or generally satisfied) were the executive branch’s response to committee advice (39 percent), the use of technology to facilitate meetings (39 percent), and the time it takes to appoint new committee members (16 percent), which had by far the lowest level of satisfaction. Despite reporting general satisfaction with many aspects of the system, more than a quarter of survey respondents felt that the system has not realized its potential contribution to U.S. trade policy (see app. IV, question 23). Many members responding to our survey supported actions to improve committee operations. Through our survey, member interviews, and document analysis, we identified several problems with the (1) timeliness, (2) quality, and (3) accountability of consultations between the executive branch and the committees. These problems have, at times, limited member input into and influence over trade policy. Some of these problems were particularly acute for specific issues or committees. The timeliness of consultations was a concern to many advisers, who stated that consultations sometimes occur too late to affect policy. Overall, 30 percent of respondents felt that the executive branch scheduled its consultations so that the committees’ advice could be used in trade negotiations to “some or little extent” or “no extent,” while only 25 percent of the respondents believed the consultations were scheduled appropriately to a “very great extent” or “great extent.” Members whom we surveyed as well as interviewees reported that advice is often sought after the executive’s policy direction is already set. Several members reported that, in the past 5 years, the tendency has been for negotiators to come to committee meetings and say, “Here is the agreement, what do you think?” In one case that we documented, the administration did not consult with the President’s overall policy advisory committee—ACTPN—before submitting its proposed international trade agenda to Congress, including the principles to be included in Trade Promotion Authority legislation. The staff liaisons for ACTPN and TEPAC were only briefed on the matter the day after the agenda was submitted. Furthermore, the advisory committees were not consulted before the Clinton administration announced its decision to pursue a Free Trade Agreement with Singapore. The announcement provoked considerable concern across the private sector for a variety of reasons, not least because the original proposed time frame of completing the negotiations within 6 weeks would have allowed little time for advisers to provide input. Another problem with timeliness cited by members is that certain committees meet infrequently. USTR, Commerce, and USDA procedures generally indicate that agency officials are responsible for calling meetings. The problem of meeting frequency is particularly acute for the first- and second-tier committees, which averaged 1.7 and 2.5 meetings each year, compared with the third-tier committees, which met an average of 3.7 times each year. The ACTPN, which consists of CEO-level advisers and is designed to provide overall policy advice, met twice in fiscal years 2000 and 2001. It did not meet for more than 16 months between March 2000 and July 2001. During that period, the Jordan Free Trade Agreement—which broke new ground by including labor and environmental provisions in the text of a U.S. trade agreement for the first time—was finalized without formal executive branch consultation with the ACTPN. Members and negotiators reported that the lack of regular meetings was a barrier to the effective functioning of the committees. Although Section 135 of the Trade Act requires the executive branch to consult with the committees “on a continuing and timely basis” and “to the maximum extent feasible . . . before the commencement of negotiations,” the agencies involved have not adopted guidelines to implement these directives. For example, Commerce’s and USTR’s procedures and rules for managing these committees do not address the principle of timeliness or consulting to the maximum extent feasible. USDA’s procedures also do not refer to these issues, but in practice, the agency has developed a calendar of key negotiation events to use in scheduling advisory committee meetings in an effort to ensure that consultations are timely. Committee members, agency officials, and negotiators reported several problems that sometimes affect the quality and meaningfulness of consultations. These problems included too little time for discussion at meetings, limited access to background documents, insufficient consultation on certain issues, and poor participation by some negotiators. In survey responses and interviews, many committee members said that they did not have enough time to discuss issues or provide advice at committee meetings. While respondents to our survey were broadly satisfied with the amount of time spent on presentations by USTR and the committees’ principal agencies, 42 percent of the respondents reported that not enough time was devoted to providing advice, 43 percent reported that not enough time was spent on members’ discussing trade issues, and 39 percent said that not enough time was devoted to presentations by other executive branch agencies (see table 2). Commerce officials confirmed that they were aware that the amount of time available for discussion is an issue, but explained in agency comments that, because of the costs and travel time associated with ISAC and IFAC meetings and the number of issues to be discussed, meeting agendas are often packed. Negotiators stated that this imposes practical constraints on the time devoted to each agenda item. According to a USDA official, the agency is carefully reviewing the number of items on committee agendas and scheduling full- day meetings for its ATACs to ensure that there is sufficient time for member discussion. Limited access to certain background documents also affects the quality of consultations. USTR often provides national security classified and trade sensitive documents, such as proposed negotiating objectives or text of draft agreements, to committee members for comment. However, access to these documents—which are kept in Washington, D.C., in secured reading rooms—is often not feasible for advisers who live outside of the Washington, D.C., area, and not always convenient for advisers who work in Washington. Numerous survey respondents complained that current arrangements for reviewing such documents are inadequate. Officials and members said that being able to access documents electronically, such as through an encoded Internet site, would improve the quality of committee advice. In agency comments, USTR, Commerce, and USDA indicated they are exploring options for electronic access, but stressed that safeguarding sensitive or classified negotiating material must remain paramount. Taking a detailed look at these documents is important to members because it can materially affect negotiating outcomes. A Commerce official related an example pertaining to the Chile FTA, when ISAC members felt they had not had an opportunity to look at the negotiating text because it was put into the reading room at the last minute before a holiday. A subcommittee of the ISAC (8 to 10 people, mostly lawyers) reviewed the text line by line at the Commerce reading room and provided numerous changes to USTR, which were presented to the Chileans. The Commerce official noted that what happens with the Chile negotiations is considered extremely important because it will set a precedent for future trade agreements. Consultation on certain issues appears to be particularly problematic. First, although Section 135 of the Trade Act requires consultation regarding “the development, implementation, and administration” of U.S. trade policy, 30 percent of respondents reported that they were dissatisfied (“very dissatisfied” or “generally dissatisfied”) with the extent of consultation on implementation of trade agreements, 26 percent were dissatisfied with consultation on bilateral trade negotiations, 25 percent were dissatisfied with consultation on general trade policy issues, and 23 percent were dissatisfied with consultation on multilateral trade negotiations (see table 3). In one case, the administration prepared and issued, without first consulting the top-tier committees, a comprehensive report reviewing the WTO’s operation during its first 5 years, advocating that the United States should continue participation in the WTO. Advisers were only briefed on the 126-page report’s contents 5 days after the date it was signed by the USTR. Second, consultations with the tier-1 and tier-2 policy committees have not been satisfactory, some respondents said.Table 4 illustrates differences in tiers’ satisfaction rates for selected aspects of committee operations for those who responded to our survey. At the tier 1 ACTPN, as discussed above, lack of meetings and timely consultation were additional concerns. Although the tier-2 Labor Advisory Committee’s (LAC) formal steering committee met six times in 1999, six times in 2000, and three times in 2001, the full committee did not meet at all between 1994 and 2002. Steering Committee Members whom we interviewed felt that USTR consulted them more out of obligation rather than to obtain advice. One member added that USTR has treated the committee like a “dissent group” and did not provide the same level of briefings as it did to other advisory committees. Although members singled out a few USTR negotiators for their willingness to listen to the committee’s views, USTR acknowledges that it did not even have an official liaison to the LAC between 1993 and 2001. None of the labor respondents to our survey reported that they were satisfied with the degree of attention the executive branch paid to their committee’s issues or the executive branch’s response to the committee’s advice. Further, members of the tier- 2 Trade and Environment Policy Advisory Committee, comprising business and environmental interests, generally agreed that the committee had not been a successful vehicle for addressing environmental aspects of trade policy. While members and negotiators said that the committee made significant contributions to the development and implementation of President Clinton’s executive order regarding the review of environmental implications of trade agreements, many members cited frustrations over the committee’s inability to provide advice on other environmental policy issues. Few recognized environmental organizations still participate in the committee, and some members reported that the diverse interests represented in the group meant they had difficulty reaching agreement and providing clear advice. Finally, despite USTR’s efforts to convene meetings of the tier-2 committee designed to address the trade issues of concern to state and local governments, the Intergovernmental Policy Advisory Committee met only once in fiscal year 2000 and once in fiscal year 2001, both via telephone conference calls. Both members and negotiators reported that the lack of regular meetings was a barrier to the optimal functioning of the committees. Third, members and negotiators believe the system’s capacity for cross- fertilization among committees should be strengthened. Although functional committees on issues such as customs and standards have been established and are supposed to include representatives from industry committees, participation by such representatives is reported to be limited. Many issues—such as antidumping, biotechnology, and transparency in trade regulation—cut across several committees, but the system’s capacity to handle them is limited. A negotiator for antidumping, for example, generally consults only with the ferrous ores and metals committee (ISAC 7), which includes steel, on such matters. Although FACA and Section 135 of the Trade Act do not preclude agencies from consulting with a cross- section of members on such issues, USTR and Commerce have not generally taken advantage of this opportunity. Consulting with members from different committees on an ad hoc basis also would not produce the formal committee advice negotiators prefer. Some mechanisms for cross- fertilization already exist. A Committee of Chairs of the ISACs and IFACs is empowered to provide collective advice and provide a cross-section of views. Joint meetings of committees have also been convened. For example, members of the labor committee reacted favorably to an initiative by the USTR services negotiator to conduct a joint meeting of the services and labor committees to discuss the issue of temporary entry of foreign workers into the United States. Survey respondents supported additional steps to better address cross-cutting issues, such as sharing meeting agendas and recommendations—an idea that USDA is exploring. Some agency officials and committee members believe that the quality of consultations suffers because USTR is not as engaged as it should be with the advisory process. While 88 percent of the members responding to our survey supported (“strongly support” or “generally support”) actions to ensure that USTR officials attend committee meetings on a regular basis (see app. IV, question 18), we found that some committees have had little or no contact with USTR. For example, although the head of the USTR office that manages the advisory committee system said the office works actively to ensure that USTR’s negotiators consult with the advisory committees, several DFOs told us that arranging for USTR negotiators to meet with their committees is one of their most difficult tasks. In one example, two DFOs said they had never met their USTR liaison, nor had they been able to arrange for the liaison to attend their committees’ meetings. One of these DFOs added that, despite attempts, they have not been able to identify anyone at USTR who covers their issues, and, consequently, no one from USTR has attended the last five committee meetings. Even obtaining negotiating calendars is difficult, another official reported, making it hard to ensure that committee meetings are scheduled to support trade policy demands. Our analysis of documents provided by USTR revealed that USTR negotiators have not been actively working with some committees. Attendance records do not indicate who was present for what portions of committee meetings. As a proxy for this data, we reviewed scheduled speakers at tier-3 committee meetings in fiscal years 1999 to 2001. We found that, on average, USTR negotiators were scheduled to brief committees on 42 percent of the topics raised at the meetings. However, for 10 of the tier-3 committees, the USTR negotiators were scheduled to brief on 32 percent or fewer of the topics discussed. USTR argues that at tier-3 committee meetings the most knowledgeable speaker is often an employee of another agency, not a USTR official, because that agency works most closely with the technical information that is important to the committees. However, a perceived lack of attention by USTR was a source of concern to some members, who believe that the committee system was intended as a mechanism for negotiators to obtain advice on trade policy and agreements. For example, a committee chairman told us that a USTR negotiator had not been meeting with its committee and put forward a tariff proposal in ongoing FTA negotiations that placed the committee’s product in the longest phase-out category. However, because many U.S. producers now import, the committee actually favors lowering tariffs more rapidly. Seven of the 27 USTR negotiators with whom we met stated that they prefer to obtain advice outside the system because advisory committees cannot provide the type or quality of advice that they need. For example, three of the seven negotiators handle bilateral issues with key trading partners and shared this view. One negotiator said that the committees could not provide guidance on cross-cutting regulatory issues, so he speaks to associations or key companies that can provide the necessary advice. The negotiator also said that the committees generally do not provide timely, targeted responses orally or on paper. The second negotiator does not work with the ISACs or IFACs at all and, instead, uses informal contacts to obtain industry input. She explained that the ISACs are too broad to assist with the detailed issues she handles in bilateral trade negotiations. The third negotiator agreed that the ISACs were most useful when dealing with major, comprehensive negotiations like the Uruguay trade round. She had not used the system very much in the past 4 years and stated that, in her opinion, the system was not designed to handle the specific disputes, often involving litigation, that dominate bilateral trade relations. One of the two USTR agriculture negotiators we interviewed said the committees these negotiators work with often fail to advance policy because they do not narrow differences among members’ competing interests. A senior industry negotiator, meanwhile, indicated that the wealth of information she obtains through informal channels is more helpful than advisory committee input. The committee system provides limited accountability to ensure that committee positions on trade negotiating objectives are considered, as called for in Section 135 of the Trade Act. Prior to January 15, 1994, trade advisory committees affected by certain bilateral or multilateral trade negotiations were required to report to the President, Congress, and USTR at the conclusion of negotiations. This requirement was linked to legislation that gave the President the authority to negotiate certain trade agreements and submit them for congressional approval under expedited legislative procedures. The reporting requirement lapsed when the negotiating authority expired in 1994 and was not renewed until the recent passage of the Trade Act of 2002, which granted the President Trade Promotion Authority. According to a former USTR official, this lapsed requirement was an essential element in the trade advisory committee process because it assured Congress that the executive branch had sought and considered private sector advice. Without this reporting requirement, there was limited accountability in the advisory committee system. Moreover, mechanisms for tracking and distributing committee advice to senior agency officials are not routine or reliable. Instead, agency officials report that advice is transmitted through diffuse channels that range from formal to informal. At the formal end of the spectrum, there is no requirement that advisory committee input be sought before USTR officials submit documents on U.S. trade policy for interagency clearance by the Trade Policy Staff Committee. Although such documents sometimes include a section on private sector views, our examination of selected documents drafted by USTR in 2000 to 2002 revealed that many did not acknowledge solicitation or use of advisory committee input. The problems of tracking and distributing committee advice are aggravated bathe predominance of oral, nonconsensus committee advice offered during discussions at meetings. While oral advice from a range of perspectives can be valuable, it does not provide as clear guidance as written, consensus advice, which is easier to track and respond to. Commerce’s training manual for DFOs notes that “advisors should be encouraged to provide advice in writing, as advice imparted at meetings is often not captured for follow-up and is difficult to document. Members often incorrectly assume that resolutions made at meetings are passed to action officials by the DFO or that minutes are widely circulated in a timely manner.” Questions have been raised about how responsive agencies are to written committee advice. A number of chairmen felt such advice received more serious consideration, but several chairmen expressed frustration to us about nonsubstantive or untimely replies to their committees’ letters. One Commerce DFO stated that, at Commerce, committee letters are not always sent to officials responsible for the issues involved and instead go up the administrative chain and end up in a bureaucratic “black hole”; another DFO reported that the letters from the committee on which he serves have not been answered. Commerce denies that this is typical, indicating that committee letters are considered controlled correspondence that involves distribution of the incoming letter and review of the draft reply by responsible officials. Although officials at Commerce told us that it is common to send pro forma, rather than substantive, responses to committee letters, they noted in agency comments that this is generally because final U.S. policy has not been decided. USDA recently initiated a practice of summarizing resolutions made and sensitive issues raised at advisory committee meetings for senior USDA and USTR officials in an effort to improve agency awareness of and accountability for committee advice. Finally, Section 135(i) of the Trade Act requires the executive branch to inform committees of “significant departures” from committee advice. However, 41 percent of survey respondents reported that agency officials informed committees less than half of the time when their agencies pursued strategies that differed from committee input; only 22 percent reported that they were always or almost always informed of significant departures from committee advice (see app. IV, questions 8 and 9). About 86 percent of the respondents reported that they would support obtaining more feedback from USTR (see app. IV, question 18). Mismatches between the advisory committee system and the U.S. economy and trade policy issues suggest that the system is not positioned to provide the executive branch with all the advice it needs or to assure Congress that negotiated agreements are fully in U.S. interests. While most U.S. agricultural and industry sectors are represented in the committee structure, the composition of the system does not proportionally match each sector’s economic significance. Also, some specific industry committees have gaps in coverage. The structure of the system has not evolved fully to address new trade policy issues and stakeholders, and incorporating nonbusiness groups has been difficult. In the 28 years since the advisory system’s creation, the U.S. economy and trade have shifted toward services and high-technology industries (see fig. 4). However, membership composition and the number of committees that comprise the system’s structure are still heavily weighted toward the agriculture and manufacturing sectors (see fig. 5). In 1974, the committee structure was largely designed to enable the private sector to provide input on tariff negotiations, the principal issue in multilateral trade negotiations at that time. To determine whether the advisory committee system’s structure and composition reflect the current U.S. economy, we examined calendar year 2000 U.S. industry sector trade and output data and compared these with the corresponding membership data from the tier-3 industry sector advisory committees and agricultural technical advisory committees. We found the following: The services sector accounts for the largest share of U.S. output (more than 50 percent) and a sizable share of U.S. exports (almost 30 percent); these shares both increased sharply since 1974. Yet the committee system’s structure has only two services sector committees (the same number it had 20 years ago), and its composition includes fewer than 50 members from services. The number of committees in the system’s structure is heavily weighted toward manufacturing, which has 15 of the 33 committees. This appears to be consistent with manufacturing’s large share of U.S. goods exports. However, within manufacturing, some sectors such as textiles and apparel, nonferrous ores, and lumber and wood appear to be overrepresented in the committee system’s membership compared with their shares of U.S. trade, while large, exporting sectors such as electronics (18.3 percent of U.S. exports) are underrepresented (see fig. 6). Committee member composition is heavily focused on agriculture, even though agriculture accounts for less than 1.5 percent of U.S. output and 2.7 percent of exports. In 2001, USDA boosted the number of agricultural technical advisory committee members from 111 to 180. As a result, 222 of the 745 members in the entire system during fiscal year 2001 represented agricultural interests. This is not to suggest that there should be an automatic and linear relationship between trade levels and committee membership. In a few cases, other factors, such as policy considerations, might justify the imbalances between economic importance and committee representation. For example, sizable agriculture committees may be appropriate, since exports represent 40 percent of agricultural output and trade barriers are high. In services, the main services committee has been meeting monthly to keep up with comprehensive negotiations to improve the WTO General Agreement on Trade in Services. The government services negotiators we spoke with believed that the committee represents the sector well, and 70 percent of services committee respondents to our survey reported satisfaction with their sector’s representation in the system. Certain manufacturing sectors such as textiles are recognized as import sensitive. Nevertheless, such reasons may not apply to the remaining committees. Indeed, according to Commerce and USDA officials, in most cases, current committee membership levels are functions of private sector interest in participating, rather than a deliberate effort by the agencies to determine appropriate levels of representation. Membership in the system is also not fully aligned with the economy because of gaps in industry representation that occur for at least two reasons. First, there are gaps based on whether companies choose to join the system or not, resulting in a lack of balance needed by negotiators to cover all the industry-specific issues they must address in trade negotiations. For example, according to one USTR negotiator, a major telecommunications services provider opted not to participate because it had access to USTR through other venues. The electronics committee does not yet have a representative from the software industry, and the intellectual property rights committee does not have a representative from the generic drug or noncontent producing copyright industry. Second, major foreign companies, such as DaimlerChrysler, cannot participate because foreign-owned companies are generally prohibited from membership on committees under USTR and Commerce procedures and rules. In commenting on a draft of this report, Commerce stated that the rationale for this long-standing policy is the sensitivity of the subject matter considered by the committees and possible conflicts that might be experienced by U.S. firms that have foreign owners. U.S. subsidiaries of foreign-owned firms accounted for more than 5 percent of U.S. employment and more than 20 percent of U.S. goods exports in 1999; such foreign ownership has grown with globalization and is particularly high in certain manufacturing sectors, such as transportation equipment and chemicals. These gaps in industry representation have encouraged negotiators to seek advice outside the advisory committee system, including from foreign-owned firms or trade associations that include such firms. Committee membership is significantly below the levels authorized in committee charters, averaging 49 percent of authorized capacity (see fig. 7) in 2001 and 48 percent of authorized capacity as of August 2002. The low membership rates can at times severely limit the availability of advice for negotiators from certain committees, particularly since just over half of the members attend meetings, on average, according to the attendance records made available to us. One negotiator with overall responsibility for a major bilateral FTA said he had hoped to rely on the committee system exclusively for advice, but had concerns that certain committees were not sufficiently filled to provide a meaningful cross-section of industry views. In addition, some meeting records we reviewed indicated that more government officials were in attendance than committee members. On the other hand, the fact that some committees are far below authorized membership levels means agencies have opportunities to fill gaps in industry representation. Officials at USTR, Commerce, and USDA acknowledge the need for increased outreach to fill gaps in membership and have recently taken steps toward this end. In the past, agencies primarily relied on recruitment through Federal Register notices to attract new members, rather than targeting specific needs or groups. Furthermore, negotiators were not always actively involved in identifying candidates to fill gaps in composition or representation. However, Commerce has stepped up its outreach by encouraging current members to recruit applicants, directly soliciting applicants at trade shows, holding meetings outside of Washington, and speaking before trade associations and outside groups. In addition, USDA solicited applications through different means, including widely disseminating notices to state departments of agriculture and other farm groups. Some USTR negotiators reported urging industry contacts and experts to become involved, but USTR reports that a key obstacle to filling vacancies is the difficulty in identifying qualified individuals in the private sector who are willing to join the advisory committees, due to the significant amount of time and resources required to serve. With little restructuring to mirror emerging trade policy issues and new stakeholders, the committee system is unable to provide some negotiators with all of the advice necessary to support trade policy development. New trade issues and stakeholders have emerged since 1974, as trade negotiations expanded beyond tariffs to include nontariff barriers to trade and other complex trade-related issues, such as intellectual property rights and health and safety. Moreover, the WTO negotiations launched in November 2001 cover topics such as the relationship between WTO rules and multilateral environmental agreements, and negotiations on a free trade agreement with Chile cover investment and competition (antitrust) policy. These issues require functional expertise and expand the number of U.S. interests concerned with and affected by trade agreements. Trade negotiators with whom we spoke stated that there are gaps in the committee system structure regarding functional issues such as investment and government procurement and in representation of stakeholders in such areas as public health. There have been few changes in the committee system’s structure to address these new issues and avoid gaps in coverage. Section 135 of the Trade Act gives USTR flexibility to restructure the committee system to reflect changes in U.S. international trade interests. However, in the past decade, only 3 committees—the Trade and Environmental Policy Advisory Committee, the Trade Advisory Committee for Africa, and the Industry Functional Advisory Committee on Electronic Commerce—have been added to the 34-committee structure. Most of the remaining committees have existed for more than 20 years (see fig. 8). USTR officials acknowledge the need to update the committee system to reflect the current economy and new trade issues, but add that the agency would need external guidance to support any sensitive decisions affecting existing committees. According to a former USTR official, a USTR effort to review the committee system in 2000 did not even address the question of how well the system was meeting USTR needs, because the agency did not have the time to ask negotiators what they wanted from industry advisers. In some cases, agencies forego addressing some recognized needs for advice on new issues because of the time and effort required to create and amend committees. For example, two USTR and Commerce negotiators, who are in charge of their offices and oversee other negotiators, told us that current ad hoc methods for obtaining advice on investment policy are inadequate and that they believe a separate committee on investment would be desirable. However, they expressed reservations about undertaking the considerable effort involved to form one. (Commerce spent more than a year establishing the E-commerce advisory committee.) Although many new trade issues impinge upon domestic regulatory areas that are of concern to nonbusiness groups, USTR and the other managing agencies have had difficulty incorporating nonbusiness stakeholders into the committees. Some nonbusiness interests from the labor, environment, and consumer communities participate in the committee system but stated that they feel marginalized within it. Most nonbusiness members currently participating in the system are placed on a few committees in the second tier, where committees are less active and productive than in the third tier, as shown in figures 9 and 10. New stakeholders in the trade process, such as public health, development, and gender advocates, have limited or no participation in the formal committee system, even though topics such as intellectual property are of interest to them. Some negotiators on this topic and on services believe that nonbusiness stakeholders’ perspective is useful and necessary in formulating U.S. trade policy. However, the extent of participation by nonbusiness members on tier-3 committees is still an unresolved legal issue. Nonbusiness participants with whom we spoke also feel marginalized because they have difficulty ensuring their views get serious consideration. For example, the ACTPN is meant to provide overall policy advice and is required to be broadly representative of key sectors and groups affected by trade. Six of the 33 current members represent nonbusiness interests. In 2000, the three labor representatives temporarily resigned from this presidential committee because the chair said the committee would only meet once and its sole focus would be the granting of Permanent Normal Trade Relations to China. The labor representatives felt that their issues were not being addressed and in their resignation letter said that the advisory process “relegates minority views to a marginalized dissent.” Most of the 22 committees administered by Commerce do not routinely allow representation from nonbusiness interests. As a result of legal challenges to the business-only composition of several of the Commerce committees, two of these committees (lumber and paper products) now have environmental representatives and are reported to be functioning productively. A third committee, chemicals, represents the second-leading manufacturing export sector but still lacks a permanent environmental representative as called for by a settlement order, resulting in the committee’s operations being interrupted for the second time in 2 years. Outside of these three committees, the extent to which nonbusiness interests, including environmental interests, can be represented on tier-2 and tier-3 committees has not been completely resolved. Neither Section 135 of the Trade Act nor its legislative history is clear about how that statute relates to the Federal Advisory Committee Act’s “fair balance” requirement or about how to apply “fair balance” in the context of a trade advisory committee system largely composed of discrete interests (see app. II). Recently, the Commerce Department published a notice indicating that except for environmental representation in the three committees where representation has been successfully challenged, “non-government organizations and academic institutions do not qualify for representation on a committee.” Nevertheless, without further clarification by U.S. appellate courts or amendments to the current legislation about what fair balance means for trade advisory committees, some ambiguity about this issue will remain. Negotiators, agency officials, and committee members have suggested the need for Congress to clarify its intent for representation in the committee system. The current legal uncertainty also raises several practical issues. First, the lack of clarity in what fair balance means for these committees makes the system more vulnerable to court challenges. Second, our interviews with agency officials suggest that these uncertainties may make it difficult for agencies to consider revisions in the committee structure to better address functional issues such as investment and public health, which are of interest to business and nonbusiness groups. The appointment of environmental representatives to tier-3 committees has generated concerns among some current committee members. For example, the committee of ISAC/IFAC chairmen wrote to USTR expressing concern that having nontraditional members on their industry sector and functional committees would make the committees less productive in performing their primary mission of ensuring that U.S. negotiators were aware of industry interests and positions. One committee chair said that business members would be less forthcoming about discussing trade issues because of concern that nonbusiness representatives might release sensitive information to the public, thus undermining candor and confidence. More than 60 percent of respondents to our survey opposed adding more nonbusiness interests to their committees (see app. IV, question 18). These concerns were echoed many times in our interviews with members who feared they would lose their voice in trade policy or said that they would be unwilling to participate if the committees become unproductive “debating clubs.” As an alternative, the ISAC/IFAC chairmen recommended “the establishment of a functional committee or committees to serve as parallel and equal fora for involvement by non-traditional groups.” Our interviews and review of agency documents found that USTR has been making efforts to provide information to, and obtain input from, various nongovernmental organizations outside the formal advisory committee process. We contacted several such organizations that had demonstrated an interest in U.S. trade policy by submitting formal comments in response to USTR Federal Register notices or attending USTR public briefings. While these groups welcomed increased outreach by USTR, most felt that having a role in the formal advisory committee system was still desirable, saying it would enhance accountability and add balance to U.S. trade policy. However, several feared that creating NGO-only committees would “ghettoize” them within the system and fail to ensure equal access to information and decision makers. These NGOs favor a broader overhaul of the system but acknowledge that NGOs often do not have the requisite resources or desire to participate. Despite relatively high rates of member satisfaction with the support by USTR and other agencies such as Commerce and USDA, we found in our review that lack of policy direction and weak system administration at executive branch agencies are limiting the advisory committee system’s capacity to accomplish its statutory mission and contribute to U.S. trade policy. USTR, as the lead agency, has not provided clear policy direction. Execution of administrative tasks needed to keep advisory committees operating and relevant has been slow. The limited resources USTR and the other key agencies devote to managing the advisory committee system have not been sufficient to position them to maximize input from the committees. Several experts and committee members stressed the importance of organizational leadership from the top in creating an environment for vital and effective advisory committee input into U.S. trade policy. However, USTR has taken a decentralized and delegated approach to obtaining private sector advice and has not demonstrated a commitment to assume a leadership role in the advisory committee system. Through interviews with USTR negotiators and other officials, we learned that the agency’s overall policy of consulting with the private sector generally has not ensured that the formal statutory advisory committees are systematically consulted. Agency officials explained that negotiators are encouraged to consult with the private sector but that they exercise individual discretion over whether to consult with the advisory committees. As noted earlier, some negotiators whom we interviewed reported using the committee system to obtain advice, while others consult the committees only on a pro forma basis or do not consult them at all. This unevenness has economic consequences: In one example, USTR did not inform a committee that a general effort to reduce discriminatory tariffs against U.S. goods in central and eastern Europe was under way, and as a result, its industry sector was not included in the final package of agreed tariff cuts. Our examination of USTR and Commerce procedures found that they do not provide broad guidance to USTR officials and other negotiators on their obligation to consult with advisory committees or on when, how, and with whom to consult. Instead, they are largely aimed at committee members and agency administrators and focus on committee operations. A USTR negotiator and committee members have suggested that clearer expectations for the consultation process need to be developed for both negotiators and advisers. Without them, misunderstandings do occur. For example, one committee chairman, who is generally satisfied with USTR’s use of advisory committees, was outraged when USTR neglected to consult his committee on an issue of long-standing interest and, instead, sent a position paper in a broadcast E-mail to all advisers in the system with a 2- day deadline and then presented the proposal to other nations. Although, at the time, a USTR administering official said the broadcast E-mail was typical, the negotiator responsible later acknowledged that USTR mishandled the process for seek advice in this instance. Slow and cumbersome administrative and security processes have also hindered committee operations. Under FACA, Section 135 of the Trade Act and implementing guidance and procedures, USTR and other federal agencies are responsible for placing new members on committees, rechartering committees, and creating new committees. These are important functions that keep the advisory committee system operating and relevant. However, our work at three key administering agencies— USTR, Commerce, and USDA—suggests that present methods for accomplishing these responsibilities do not ensure that the system functions reliably. Turnover of membership occurs regularly given the pace of global business, industry consolidation, and distress in certain segments of the U.S. economy. Yet, applications for prospective members spend months in the approval pipeline before the members can participate (see app. III). For example, USTR submitted a list of candidates for appointment to the White House for a presidential appointment to the Advisory Committee for Trade Policy and Negotiations in mid-February 2002, which, as of early September 2002 had not yet been cleared by the White House. Agency officials acknowledged that these delays are frustrating for potential members and can be a disincentive to joining the system. Indeed, 40 percent of our survey respondents were dissatisfied with the time it takes to appoint new members to committees and 35 percent said the time to appoint new members has deteriorated (see app. IV, questions 17 and 22). Our analysis of agency documents indicates that the full appointment process, which includes the time for members to complete the application materials and the time for a required security clearance, regularly takes 6 months or longer. Some time-consuming elements of the clearance process are beyond the trade agencies' control. However, all three agencies now pay for the expedited security investigation offered by the Office of Personnel Management. Some agencies have taken other streamlining steps, such as providing interim security clearances. According to DFOs and other agency officials, applying these reforms more widely could alleviate this major irritant. FACA’s requirement that committees continued beyond 2 years must be rechartered has been disruptive for the trade advisory committee system, posing a particular burden for new administrations until their key policymaking vacancies are filled. In several cases during our audit period, committees ceased to meet and thus could not provide advice, because the agencies had not adopted new charters and appointed members. For example, the agriculture advisory committees did not meet between April and October 2001 while USDA went through the process of appointing members for its six committees. The committee charters and rosters expired before the United States was able to vet its market access proposal for the Chile FTA negotiations, and as a result, a lead USDA negotiator reported that he was not able to use the committees to obtain input on the proposal. The Labor Advisory Committee’s charter expired in July 2001 and was not renewed until February 2002. As a result, the LAC Steering Committee could no longer meet or provide formal committee advice as efforts to launch new WTO negotiations at the Doha Ministerial in Qatar were under way. (Only one of the LAC respondents to our survey reported that the system was fulfilling its statutory role in U.S. trade policy.) Commerce successfully avoided disruptions in its most recent rechartering by starting the process for the 22 committees it manages well before their charters expired. However, the effort to appoint new members and obtain security clearances required the full-time attention of two of the three Commerce employees responsible for managing the committees and took 7 months to complete. Commerce, USDA, and USTR officials said the tasks associated with the rechartering process—such as preparing new charters, analyzing the attendance records of members up for reappointment, and reviewing member application information—places a significant burden on their ability to manage the committee system and detracts from their ability to support committee operations. The resources USTR and the other agencies devote to managing the advisory committee system do not match the tasks that must be accomplished to keep the system running reliably and well. (We recently testified on human capital shortages at trade agencies, including USTR and Commerce.) According to annual reports that the agencies prepare for the General Services Administration, federal staff time allocated to managing all the committees totaled 15.60 full-time equivalent (FTE) positions in fiscal year 2001 and averaged 0.47 FTEs per committee. USTR officials said the current staffing levels in the office responsible—three positions with multiple responsibilities besides the committee system—do not allow them time to proactively manage committee operations. The recent head of the office said that simply restarting all the lapsed committees and keeping the rest of the system operating were occupying much of the time she could devote to the system. Commerce and USDA manage more committees and face similar challenges. Commerce officials responsible for managing the Commerce committees reported that they must focus their limited staff on the rechartering and appointment processes, which has not allowed them to meet their responsibilities to attend all the committee meetings. However, some improvement may be forthcoming: In its official comments on our draft report, Commerce stated that it will shortly hire two new full-time staff to support administration of the committee system. Meanwhile, a USDA official in the office responsible for managing Agriculture’s committees—which has one professional position devoted to advisory committee work and two other positions with multiple responsibilities in addition to managing the committees—said the reappointment process in 2001 took more than 85 percent of her time and prevented her from fulfilling other key job responsibilities, such as legislative liaison. Resource limitations also affect the use of technology. Although committee members supported the use of technology to improve committee operations (79 percent strongly or generally supported increased technology to inform members and 60 percent supported the use of videoconferencing technology to enable greater participation in meetings), the cost of new technology is a significant determining factor in its adoption and use. Commerce is examining options to expand the use of its Web site for committee members, but the cost of options at the high end of estimates ($200,000)—which include the security safeguards needed for improved member access to sensitive documents—far exceeds available funding. Finally, a USTR official reported that the agency’s live Web casts from the WTO Doha Ministerial were very costly (estimated at $50,000) and cannot be done on a routine basis. However, USTR plans to examine less expensive technological options, such as taped presentations through its Web site. Despite several weaknesses we identified, negotiators, agency officials, and members told us that the advisory committee system Congress created 28 years ago still provides value to U.S. trade policy. Many negotiators report that input from the system has helped the United States achieve more beneficial trade agreements. Members devote time and contribute much to the process and report generally high satisfaction with many aspects of committee operations and effectiveness. Nevertheless, our work suggests that the committee system is not being used to full advantage and has lost some of its vitality in providing useful advice on trade policy matters. Consultations are not always timely or meaningful, and when advice is provided, there is little assurance that executive branch officials are held accountable for considering it. Furthermore, the committee structure has not evolved fully to reflect today’s economy. Some key trade interests that have recently surfaced—industries, issues, and stakeholders—are missing or poorly represented in the system. Conflicts over interpreting how FACA’s fair balance requirement applies to the advisory committees have complicated the task of incorporating nonbusiness stakeholders. Low membership rosters for most existing committees further reduce the opportunity for negotiators to obtain a full range of private sector views. Finally, USTR’s decentralized management of the committees has left the system without sufficient direction or support. With limited resources devoted to the system’s functioning, agencies are struggling with administrative tasks such as security clearances associated with appointments and 2-year rechartering requirements. To perform the unique role in U.S. trade policy Congress has given it, the advisory committee system’s capacity to provide frank and representative advice needs strengthening. Because important multilateral, regional, and bilateral negotiations are currently under way for which ongoing advisory committee input is expected and desirable, improvements should be made to the existing system, particularly with regard to the timeliness and quality of consultations, gaps in representation, and committee administration. However, given the issues we identify, improving the system’s readiness to play its envisaged role in U.S. trade policy will also require more fundamental reform. As Congress seeks to provide new direction to the President on U.S. trade policy, we recommend that the U.S. Trade Representative, as the lead agency for the committee system, work with the Secretaries of Agriculture, Commerce, and Labor and the EPA Administrator to make the existing system’s consultation process more meaningful and reliable. 1. Specifically, we recommend that the agencies adopt or amend guidelines and procedures to ensure that advisory committee input is sought on a continual and timely basis, consultations are meaningful, committee advice is considered and committees receive substantive feedback on how agencies respond to their advice; 2. continue to increase outreach efforts to fill gaps in committee composition and revitalize membership; 3. streamline the nomination and appointment process for committee members and prevent disruptions in committee activity due to lapses in charters; and 4. provide sufficient technological and human resources to support meaningful consultations and ensure effective functioning of the system. In addition, we recommend that the U.S. Trade Representative work with the Secretaries of Agriculture, Commerce, and Labor and the EPA Administrator to conduct an assessment of the entire system and update it to make it more relevant to the current U.S. economy and trade policy needs. In conducting this assessment and updating the system, USTR, in conjunction with the other agencies, should seek to 1. more closely align the system’s structure and composition with the 2. better incorporate new trade issues and interests, 3. more reliably meet negotiator needs, and 4. better match agency resources to the tasks associated with managing the system. To assist the U.S. Trade Representative and the other agencies in updating the system and improving advisory committee operations, Congress may wish to consider 1. clarifying its intent regarding how to apply the FACA fair balance requirement to the trade policy advisory committee system, and 2. providing an exception to FACA administrative requirements by extending the charter period for the trade policy advisory committees beyond 2 years. We provided draft copies of this report to the following agencies for review: the Office of the U.S. Trade Representative, the Department of Agriculture, the Department of Commerce, the Department of Defense, the Department of Labor, and the Environmental Protection Agency. We received formal comments from USTR, Agriculture, and Commerce (see apps. VI through VIII). The three agencies, as well as Labor and EPA, also provided technical comments, which we incorporated in the report as appropriate. The Department of Defense reviewed the report but did not provide formal comments. USTR and USDA agreed with our overall findings and reported on initial steps they are taking to implement our recommendations. Commerce characterized the report as thorough and fair, but urged us to make a number of modifications. In general, Commerce believes that we underplay member satisfaction with the system. Commerce also took issue with our conclusions on apparent mismatches between the committee structure and the current U.S. economy and agencies’ administrative capacity. Some of Commerce’s comments contain new information or useful clarifications that we have added to the reportfor example, language about the agency’s concerns over security breaches and additional details about outreach efforts. However, as explained in appendix VIII, we do not agree with Commerce’s changes related to members’ concerns about the timeliness and quality of consultations, accountability for seeking and responding to committee advice, and the need to update the system’s structure. We believe that the recent passage of Trade Promotion Authority and the ambitious negotiating plans that have since been announced only heighten the urgency of taking steps to ensure that U.S. negotiators have timely, meaningful, and representative input from the private sector on U.S. trade policy. As agreed with your office, we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies to appropriate congressional committees and to the U.S. Trade Representative, the Secretary of Agriculture, the Secretary of Commerce, the Secretary of Defense, the Secretary of Labor, and the Administrator of the Environmental Protection Agency. Copies will also be made available to others upon request. In addition, this report is also available on GAO’s Web site for no charge at http://www.gao.gov. If you or your staff has any questions about this report, please contact me on (202) 512-4128. Other GAO contacts and staff acknowledgments are listed in appendix IX. This appendix discusses the scope and methodology for our work. We have included a separate segment at the end of appendix IV providing technical information on our methodology for the survey of committee members. The scope of our review included analysis of 34 private sector advisory committees on all aspects of committee activities, as well as the 4 agencies that currently administer them: the Departments of Commerce, Labor, and Agriculture and the Office of the United States Trade Representative (USTR). The time period covered by our review was generally fiscal years 1999 to 2001. At the time we initiated our review, three policy advisory committees in the second tier were in uncertain stages of activity. The charters for the Labor Advisory Committee and the Defense Policy Advisory Committee on Trade had expired in 2001, but Labor and Defense officials indicated that their agencies were rechartering the committees. A third policy advisory committee dealing with trade with Africa has a charter and seven members, but the committee had not met during our review period. Our survey of members, which focused on committee operations, was under way when these uncertainties existed. Defense and Labor committee members were included in our survey, but the Africa committee’s members were not. Ultimately, the Department of Labor rechartered its committee in February 2002. However, in January 2002, Defense officials informed us that the Department of Defense did not intend to reconstitute its committee, which had 10 members on its latest roster, as part of a departmental effort to reduce the number of advisory committees. Regarding the Africa committee, USTR informed us in March 2002 that it had rechartered the committee and was seeking to appoint more members to it. As a result, the Labor and Africa committees are included in our discussion of the committee’s current structure and count of committees and members, but the Defense committee is not. For our first and second objectives--determining the advisory system’s value to U.S. trade policy and which aspects of the consultation process participants indicate are and are not satisfied--we used three methods of inquiry: interviews, a survey, and document analysis. Regarding interviews, in initial meetings with agency officials and other trade experts involved in the committee process, we were told that the best way to obtain information on how well the trade advisory committee system functions is to interview the key participants. These officials and experts stated that the available documentation on committee activities would not provide as comprehensive a picture as interviews. We therefore first conducted 168 interviews with every type of participant in the process, including 25 executive branch negotiators, 40 other agency officials, 30 committee chairmen, 50 committee members, and 15 trade experts. To gain the perspectives of organizations that do not currently participate in the advisory committee system, we interviewed selected representatives of nonbusiness non-governmental organizations (NGOs) having a demonstrated interest in trade policy. Interest was evidenced by submitting formal comments in response to USTR Federal Register notices or attendance at USTR public briefings. In addition to interviews, we conducted a Web-based survey of 720 committee members and staff liaisons between January and March 2002 to obtain views on matters such as overall satisfaction with committee operations and effectiveness. We surveyed all the members and staff liaisons whose names appeared on lists obtained from the Departments of Agriculture, Commerce, Defense, Labor, and USTR. We developed our questionnaire in November and December, 2001. We put the instrument on a special Web site on the GAO server, activated it on January 17, 2002, and kept it open until March 15, 2002. In all, we received a total of 515 usable responses to our survey, for an overall adjusted response rate of 72 percent. The response rate varied considerably by committee and by tier. For example, seventy-eight (78) percent of tier-3 members responded to the questionnaire, compared with 55 percent of tier-2 members and 57 percent of tier-1 members. Consequently, while we present the aggregated responses for all committee members who responded, we are not generalizing to the universe of all committee members. The survey also allowed for some open-ended responses. Members provided considerable commentary, which is reflected in the body of the report but is not summarized statistically. The survey results and a technical description of the survey methodology are in appendix V. Third, we collected and analyzed documents from four agencies that currently administer committees. Documentation generally covered fiscal years 1999 through 2001. Specifically, we collected and reviewed applicable laws, legislative history, and implementing rules; committee charters and rosters; agency operating procedures and other guidance; meeting notices, agendas, summaries, minutes, and transcripts; interagency decision memos; formal committee reports; and agency correspondence with advisory committees. We also reviewed written responses to an April 2000 Federal Register notice requesting suggestions to improve the advisory committee system. To investigate whether the system matches the current U.S. economy and supports U.S. trade policy needs, we obtained and analyzed U.S. trade data and committee membership rosters, as well as information obtained during our interviews and Web-based survey. Specifically, we examined data on annual industry sector contributions to U.S. gross domestic product from 1974 to June 2000 and determined commodity shares of U.S. imports and exports using data collected by Commerce, the U.S. International Trade Commission, and the Department of Treasury. We defined commodity groups using Commerce’s 4-digit Standard Industrial Classification level codes, and we used Commerce’s determination of how best to match each advisory committee to a commodity group. We determined which industries are over- and under-represented in the committee system with respect to their U.S. import and export contributions by comparing this data with lists showing annual numbers of members on each committee in fiscal years 1999 through 2001. We also discussed the adequacy of coverage of industry sectors with agency and industry officials. We identified trade issues and associated stakeholders that have emerged since 1974 by reviewing academic and agency literature. We discussed the system’s coverage of these issues and stakeholders in interviews with agency officials and selected business and nonbusiness organizations. To examine how well USTR and the other agencies are managing the advisory committee system, we collected and examined available data from USTR, USDA, and Commerce about the time involved in the appointment process for new members. We also interviewed agency officials, negotiators, and committee members about agency practices and other factors that affect the extent of consultation with the advisory committees and the capability of the managing agencies to maintain full and active committees. Finally, for information about agency resources devoted to the committee system we obtained and reviewed the annual reports for each advisory committee for 1999 to 2001 from the General Services Administration (GSA) and conducted interviews with agency officials. We conducted our work from August 2001 through May 2002 in accordance with generally accepted government auditing standards. The Federal Advisory Committee Act (FACA) includes a fair balance requirement that applies to each advisory committee covered by the act. In this regard, the legislative history of FACA shows that the focus of committee membership should be on the groups directly affected by the work of a committee, rather than whether these groups represent business or nonbusiness interests. The broad language of section 135 of the Trade Act of 1974 making FACA generally applicable to the trade advisory committees indicates that the fair balance requirement applies to them. Nevertheless, there is still some legal ambiguity about what this means within the context of the trade advisory committee structure. Aside from lack of clarity in the legislation, at this point, there appear to be too few decided court cases to show any trend in fair balance challenges by nonbusiness groups to the composition of trade advisory committees. FACA, passed in 1972, sets forth certain requirements for Congress to follow in creating federal advisory committees. One such requirement states that any legislation establishing an advisory committee shall require that the membership of the committee be fairly balanced in terms of points of view represented and the functions the committee performs. GSA guidelines implementing FACA indicate that to attain a fair balance of membership on an advisory committee, agencies should ensure that they consider a cross-section of those directly affected, interested, and qualified, as appropriate to the nature and functions of the committee. The legislative history of FACA shows that the fair balance requirement was intended to ensure that persons or groups directly affected by the work of a particular advisory committee would have some representation on the committee. In this regard, the House Report on FACA criticized the composition of an advisory council for only having industry representatives. The report suggested that representatives of conservation, environment, clean water, consumer or other public interest groups should have been present at meetings with government officials to consider a proposed questionnaire regarding national industrial wastes inventory. The Trade Act of 1974, which mandated creation of advisory committees on trade policy, was enacted 2 years after FACA was passed. Section 135(f) of the Trade Act states that the provisions of FACA do apply to the trade advisory committees, with limited exceptions relating to open meetings and public availability of documents. As the fair balance requirement is not one of the excepted FACA provisions, the requirement and the implementing GSA guidance would apply to the trade advisory committees established under section 135 of the Trade Act. This was one of the findings made by one of the two United States courts that have considered application of the FACA fair balance requirement to section 135. Although the language of FACA indicates that the fair balance requirement applies to each advisory committee, there is some ambiguity about what this means within the context of the trade advisory committee structure. Section 135 of the Trade Act called for formation of three different kinds of trade advisory committees for the purpose of creating an institutional framework to ensure that representative elements from the private sector have the opportunity to present their views to U.S. negotiators. The three- tier structure established by section 135, as amended,(1) requires establishment of an Advisory Committee for Trade Policy and Negotiations (ACTPN) whose function is to provide overall trade policy advice (tier 1); (2) authorizes establishment of general policy advisory committees whose function is to provide general policy advice (tier 2); and (3) requires establishment of industry sector and functional advisory committees, as may be appropriate, whose functions are to provide technical advice and information about negotiations over particular products and other factors relevant to positions of the United States in trade negotiations (tier 3). The language of section 135(b), as amended, does show that ACTPN, the tier-1 committee, is to include both business and nonbusiness interests. Specifically, ACTPN is to be broadly representative of the key sectors and groups of the economy affected by trade and “shall include representatives of non-federal governments, labor, industry, agriculture, service industries, retailers, non-governmental environmental and conservation organizations, and consumer interests.” However, section 135 of the 1974 Trade Act and its legislative history do not specifically discuss how the fair balance requirement of FACA was intended to apply to the tier-2 and tier-3 committees. With regard to the general policy advisory committees of tier 2, section 135 authorizes, but does not require, the President to establish such committees for industry, labor, agriculture, services, investment, defense, and other interests, as appropriate. Section 135 states that these committees, to the extent practicable, are to be representative of all industry, labor, agricultural, service, investment, defense, and other interests, including small business interests. Regarding the industry sector and functional advisory committees of tier 3, the President is directed to establish them as appropriate, and similar to the tier-2 committees, to the extent practicable each tier-3 committee is to be representative of all industry, labor, agriculture, or service interests, including small business interests in the sector or functional areas concerned. The language of section 135 suggests that each of the tier-2 and tier-3 committees is to be composed of members involved in the particular sector, and does not indicate any intention to expand these committees to include other interests. The legislative history of the 1974 act, which shows that Congress was concerned that in prior trade negotiations there had not been adequate input from U.S. producers, would appear to support this view. In this regard, the Senate report stated that the purpose of the procedures in section 135 were to “strengthen the hand of U.S. negotiators by improving their knowledge and familiarity with the problems domestic producers face in obtaining access to foreign markets.” Similarly, the House report stated that in past trade negotiations “there has not been adequate input from U.S. producers who are in the best position to assess the effects of removing U.S. and foreign trade barriers on their particular products.” Nevertheless, the legislative history of the 1979 amendments to section 135 indicates congressional interest in broadening representation of the tier-2 and tier-3 committees to include other interests. In this regard, the Senate report states that in establishing the membership of the policy, sector, or functional advisory committees, it was expected that each of these committees “will fully represent the interests of the Government, small business, retailers, wholesalers, distributors, consumers and the general public, as well as labor, industry, agriculture and services, as the case may be.” The House report has similar language and also stated that “ll major recognized organizations, regardless of their point of view, should be invited to participate in appropriate advisory groups.” These statements are consistent with the legislative history of FACA, which shows that the focus of committee membership was intended to be on the groups directly affected by the work of a committee, rather than whether those groups represent business or nonbusiness interests. An additional problem in applying the FACA fair balance requirement to the trade advisory committees concerns the relatively small number of court decisions that have considered the issue. Although several U.S. Courts of Appeal had rejected challenges under FACA to the composition of other federal advisory committees, until 1999 no case had involved a civil- society, fair-balance challenge to membership on a trade advisory committee. Since then, two rulings have been issued, and a settlement agreement has been reached in another case. These dispositions have affected three tier- 3 advisory committees. In November 1999, several environmental organizations brought an action in the Federal District Court for the Western District of Washington, Northwest Ecosystem Alliance v. USTR, challenging the composition of two tier-3 industry advisory committees that deal with forest products. The district court found that fair balance meant balanced representation within each trade advisory committee, not among all advisory committees, and ruled that the two committees should include environmental representatives. Two of the factors the court relied on in making its ruling were that (1) the forest product committees routinely advised the government on trade issues that affected the environment, both nationally and internationally, and (2) the positions supported by the committees were directly contrary to those supported by the environmental organizations challenging their fair balance. Importantly, the court also rejected USTR’s position that fair balance is fulfilled if the membership of an industry sector advisory committee is broadly representative of the industry sector for which the committee was established. The court found that this position contradicted one of the primary purposes of FACA, which was to end industry domination of advisory bodies. To implement its holding, the court ordered USTR to make a good faith effort to expedite the appointment of at least one properly qualified environmental representative to each of the two committees. USTR and Commerce appealed the case to the U.S. Court of Appeals for the Ninth Circuit, and the United States filed a brief in support of the appeal. Nevertheless, the United States later dropped the appeal, and environmental representatives were appointed to the two forest product advisory committees. After the decision in Northwest Ecosystem Alliance, various public interest groups filed a lawsuit in the same federal district court, Washington Toxics Coalition v. USTR, asking the court to require USTR and Commerce to appoint one or more environmental representatives to the chemical and allied products industry sector advisory committee. In March 2001, the parties entered into a settlement agreement in which USTR and Commerce agreed to make a good faith effort to expedite the appointment of one or more qualified environmental representatives to this committee. In response to the Washington Toxics Coalition case, in early 2001, several members of the chemical and allied products advisory committee brought an action before the U.S. District Court for the District of Columbia, Gamble v. Zoellick,asking the court to preclude environmental representatives from becoming members of their committee. The court rejected this position and held that the committee members lacked standing to challenge the appointment of an environmental representative to their committee. In support of its ruling, the court also found that there was nothing in the Trade Act of 1974 that prohibited USTR and Commerce from appointing an environmental representative. The court noted that the appointment of other members was not precluded by the mandatory language of section 135 requiring that the industry sector advisory committees be representative of all industry, labor, agricultural, or service interests in the sector concerned. In this regard, the court endorsed the U.S. government’s position that the language of section 135 gave the government considerable discretion in making appointments to the chemical and applied products committee beyond those required. To date, there have been no further court challenges by environmental or other civil society groups to the composition of trade advisory committees. Without further clarification by U.S. appellate courts or the Congress about how to apply the FACA fair balance requirement to the trade advisory committee system, some ambiguity about this issue will remain. Current executive branch policy is that tier-3 committees are generally not open to nonbusiness groups. A March 20, 2002, Federal Register notice issued by the U.S. Department of Commerce states that with the exception of the 3 committees affected by fair balance challenges—ISAC 3 (chemicals), ISAC 10 (lumber and wood products) and ISAC 12 (paper and paper products)—“non-government organizations do not qualify for representation on a committee.” Regarding to the Washington Toxics Coalition case, the settlement agreement provided that until an environmental representative was appointed, USTR and Commerce could call meetings of the chemical and applied products advisory committee but had to make a good-faith effort to include an interim qualified environmental representative at any such meetings. An interim environmental representative has attended all but one of the nine committee meetings held since the settlement, but he declined to continue to serve beyond the renewal of the committee's charter in March, 2002. The committee--which represents the second-leading manufacturing export sector--has not met since March 13, 2002. One potential environmental representative has applied to serve as environmental representative on the committee, and the application is being considered. To date no appointment has been made. Commerce, USDA, and USTR follow slightly different procedures in screening applicants for advisory committees and in obtaining security clearances. Generally, the vetting process for new members includes an internal agency review and a security clearance investigation performed by the Office of Personnel Management (OPM). This appendix provides information on the nomination and security process, based on data provided by the three agencies. Agencies begin a review process after they receive a nomination or a letter of interest from a prospective member. Figure 11 illustrates the screening process by each agency and the approximate time for applicants to move through different stages of the process toward committee membership. For example, the initial review process averages 70 days at the Department of Agriculture, while the Department of Commerce conducts an initial, 5-day review and then saves time by continuing the review concurrently with the security clearance process. Figure 11 does not include the time spent by committee members in completing the application materials and assembling the documents required for the security clearance because agency data on this part of the process is not systematic or complete. Based on our review of available agency data and interviews with agency officials about their typical experience, we found that the appointment process can regularly take 6 months or longer to complete, if additional time for completing application materials is added. The security clearance process can take about 3 months, according to agency officials and data. Although we found an average waiting time for clearances at USTR of 227 days for the period fiscal years 1999 to 2001, the average wait time for a clearance fell to 84 days when USTR began using the OPM to perform its security clearances in 2000. Department of Agriculture officials said the process of obtaining a clearance takes about 3 months once the completed paperwork is submitted. Security clearance data provided by the Department of Commerce show that the process takes an average of approximately 105 days. All members receive a secret-level national security clearance, following a background investigation from the OPM. The clearance is valid for 10 years. Section I: Committee Activities and Advice Q2) In general, do you feel that too much, too little, or about the right amount of time was devoted to the following activities at your committee meetings? n=480 (number of responses to question) Q3) How satisfied or dissatisfied are you with the extent to which the Executive Branch sought your advice on the following matters during the last 3 years? Members of the ACTPN, TEPAC, and IGPAC are permitted to appoint one or more staff liaisons to help them prepare for and participate in committee deliberations. These liaisons have clearances and meet on their own; some also participate in member meetings. Q4) How satisfied or dissatisfied are you with the opportunities your committee had to provide advice for the following trade agreements/ negotiations? Section III: Committee Composition and Membership Q13) In your opinion, do the current members of your committee generally have similar, different or mixed views on trade policy? ❒ 9HU\VLPLODU 6RPHZKDWVLPLODU ❒ 0L[HGYLHZV ❒ 6RPHZKDWGLIIHUHQW ❒ ❒ Q14) In your opinion, did the dissimilarity of views on your committee make it easier or more difficult for your committee to provide advice to the executive branch? ❒ ❒ ❒ ❒ ❒ Q15) During the past 3 years, how often has your committee provided written or oral advice to the executive branch that reflected a consensus position? Q17) Overall, how satisfied or dissatisfied are you with the following aspects of your committee? Q19) In your opinion, what effect have the following recent actions had on the effectiveness of your committee operations? Section VI: Benefits of Committee Membership Q20) In your opinion, to what extent do you obtain the following benefits as a result of being a committee member? To examine how well the committee structure reflects the current economy, we identified the range of goods or services represented by individual third tier committees and the export and import shares of those goods and services in total U.S. exports and imports. We then compared this data to membership data for each committee obtained from the GSA, which maintains annual reports covering each fiscal year covered by our review. Based on these calculations, table 5 shows the export and import shares as well as the relative percentage of membership for each committee in 2000. The following is GAO’s comment on the Department of Agriculture letter dated August 5, 2002. 1. Regarding our findings that the nomination and appointment process is slow and cumbersome, USDA indicated that it took steps to streamline the process during the most recent rechartering period. We appreciate that the rechartering was completed within 4 months of being started. However, we note that it did not begin until May 2001---more than a month after the APAC and ATAC charters had expired in March 2001. As a result, as our report indicates, none of the six agricultural advisory committees met during the April to October 2001 period. Moreover, we note that USDA indicated in a July 2002 meeting with us that many advisers appointed to the current charter term have yet to receive final security clearances. The following are GAO’s comments on the Department of Commerce’s letter dated August 5, 2002. 1. The Department of Commerce stated that our draft report understated member satisfaction with the timeliness of consultations, arguing that 62 percent of the respondents to our survey reported that consultations were held on a timely basis to a moderate or great extent. We do not agree with this characterization of our survey data. In our survey, we asked to what extent the executive branch timed requests so that committee input could be used in trade negotiations. Respondents answered this question according to a five-point extent scale that ranged from “No extent” through “Very great extent.” Only 25 percent of respondents checked the top two categories, “Great extent” and “Very great extent.” As the Department of Commerce notes, another 37 percent of respondents checked the middle category on the scale, which was “Moderate extent.” If all three of these categories are added together, they total 62 percent of respondents. However, we do not agree that all three categories should be added together. Our report includes the full range of responses to the question, adding together only the top two (very great and great extent) and bottom two (some or little and no extent) categories, and reporting those who checked “to a moderate extent” separately. As the report already notes, 37 percent of respondents reported that they were satisfied to a moderate extent, the third point on a five-point scale. Furthermore, 30 percent checked the final two points on the scale, “Some or little extent” and “No extent.” Consequently, we believe our finding that “onsultations were not always timely enough to have an impact on U.S. policy . . .” is justified. Finally, we are accurately reporting member statements in both the survey and interviews that there were instances when advice was sought after the fact or not sought at all. 2. We agree that the frequency of meetings varies considerably across committees, and we have added language to this report to that effect. With respect to scheduling meetings on a timely basis, we recognize that there is a tension between scheduling meetings far enough in advance and scheduling additional meetings as needed. However, it is clearly important to have timely consultations. 3. We recognize that Commerce, USTR, and USDA have made extensive use of electronic transmissions to provide information to and seek input from committee members. To capture the extent of such communication, we reported on our analysis of such transmissions during fiscal year 2001. Specifically, we calculated the number of times during fiscal year 2001 that USTR officials used electronic means to request comment from advisers, including when USTR sent requests for comment to Commerce’s Industry Consultations Program (ICP) office, which relayed them to advisers electronically. Our analysis yielded a result of 63 requests for comments, rather than the 84 suggested by Commerce in its agency comments. Commerce may have additional information not made available to GAO about the content of each communication that could account for the discrepancy between our counts of agency requests for comment in fiscal year 2001. However, because GAO and Commerce are analyzing the same data for the same period, the number of requests for comment is certainly not 63 plus 84, as Commerce’s comments imply. We welcome the fact that use of electronic means to communicate with advisers is continuing in fiscal year 2002, a period that was outside the scope of our document review. 4. Commerce reports that USTR has been responsive to ICP requests to extend deadlines for ISAC and IFAC members to provide comments on fast-moving issues. However, we note that in earlier interviews ICP officials told us that the reason they have requested extensions from USTR was because members complained that the given deadlines were too short to provide meaningful input. 5. We believe that, if implemented, the technological improvements Commerce and USTR are pursuing to allow sensitive documents to be viewed on a secure interactive Web site could help remedy member concerns over access to key documents required for meaningful and timely advisory committee input. 6. Regarding agency procedures, Commerce does not disagree with our statement that Commerce’s and USTR’s procedures and rules “do not address the principle of timeliness or consulting to the maximum extent feasible.” However, it requests a clarification in the report to the effect that these rules and procedures only apply to the ISACs and IFACs operating at the third, technical tier of the advisory committee system. But in reaching the conclusion that Commerce’s and USTR’s procedures and rules do not address the principle of timeliness and consulting to the maximum extent feasible, we examined procedures that apply to all three tiers of the advisory process, including the first- and second-tier committees having the most severe scheduling problems. Specifically, we examined the procedures for the USTR-only, Commerce-USTR, and USDA-USTR committees. The procedures for USTR-only committees pertain to the first- and second-tier committees having the most acute meeting scheduling problems. The Commerce- USTR procedures pertain to 22 of the third-tier committees. Neither the USTR-only nor the Commerce-USTR procedures address the principle of timeliness or consulting to the maximum extent feasible. The USDA procedures—which apply to six committees at the second and third tier also do not address these issues. Although we recognize that the procedures are based on the legal framework created by Section 135 of the Trade Act as well as other laws and orders, Section 135 (i) states that it shall be the responsibility of the United States Trade Representative, in conjunction with the Secretary of Commerce and other executive departments, “to adopt procedures for consultation with and obtaining information and advice from the advisory committees” on “a continuing and timely basis.” 7. Commerce recognizes that committee meetings frequently include a very full agenda, but stresses that this reflects efforts to balance a variety of factors, including cost, members’ time, and the number of issues to be addressed. We have added language to the report to this effect, but we note that many survey respondents expressed a desire for more time for committees to discuss issues and formulate advice. Survey respondents and interviewees also indicated that the format of meetings is sometimes not conducive to the two-way dialogue that would characterize quality consultations. Formulation of advice is the fundamental purpose of the advisory committees, and we urge Commerce to consider time available for committee deliberations as it seeks to structure meetings to make best use of members’ time. 8. We have added language to the report noting Commerce and USTR’s concerns over safeguarding classified information. 9. We have added language to the report noting that Commerce and USTR already have some mechanisms to bring to the table crosscutting issues including the Committee of the Chairs of the ISACs and IFACs. We note that according to documents we obtained from Commerce, that committee met three times in fiscal year 1999, twice in fiscal year 2000, and twice in fiscal year 2001. 10. Commerce notes that the statute places limits on sharing of advice and information across advisory committees that could inhibit the trade advisory committee system’s capacity for cross-fertilization. Although we agree that Section 135 places some limitations on the disclosure of trade secrets and confidential information, it does not appear to preclude provision of confidential information to designated advisory committee members who possess the requisite security clearances. 11. Commerce asserted that significant departures from committee advice are rare, and that in those infrequent instances committee members are appropriately informed. This point of view is supported by the GAO survey, in Commerce’s opinion. In our survey, we asked committee members how often the executive branch had pursued negotiating strategies that significantly differed from the committee advice. One hundred twenty committee members responding to our survey reported that the executive branch significantly departed from their committees’ advice about half of the time, or more frequently. These 120 members constitute 25 percent of all respondents to our survey, and about one-third of those who provided an answer to this question. While they, by no means, constitute a majority of respondents, they do represent a sizable minority. In any case, significant departures from committee advice do not seem to be a rare event, as Commerce suggests. Our survey then asked a follow-on question for respondents who indicated that there had been significant departures from committee advice. Thirty percent of those answering this question indicated that they had rarely or never been informed of these significant departures. Another 21 percent of those who answered this question indicated that they had been informed of significant departures about or less than half of the time. As a result, we do not agree with Commerce’s statement that committee members are appropriately informed when there are significant departures from advice. Section 135(i) clearly states that USTR “shall inform the advisory committees of significant departures” from committee advice or recommendations. 12. We have updated this report with the information Commerce provided about its practices for handling formal letters from advisory committees. We note that chairmen and members with whom we spoke expressed some frustration about lack of feedback from the government as to how it intends to use or respond to committee advice—a sentiment not inconsistent with Commerce’s practice of providing pro forma responses to committee advice unless it has already made a final decision on policy. Moreover, 21.9 percent of committee chairmen responding to our survey reported that their committees written advice was not acknowledged most of the time (see Q25). In general, the members told us they want to have an opportunity to influence policy before it is finalized and expressed dissatisfaction when feedback on committee input was not substantive or timely in nature. 13. Regarding changes to sectoral and functional committee, our report already notes that only three committees have been created in the past decade to respond to emerging needs. We believe that continued efforts by Commerce and USTR to reevaluate the sectoral and functional advisory committee alignments with the economy and trade policy needs are warranted. 14. Commerce’s position on the services committee is consistent with the statements in this report that certain services negotiators and 70 percent of ISAC 13’s members said that the services sector is well represented in the system. However, we note that some negotiators with whom GAO spoke made a point of saying that the services sector is a large share of U.S. output and trade and that it is only represented in 2 of the 17 industry sector advisory committees; in the scheme of the whole committee system, therefore, they stated that services is underrepresented relative to manufacturing. This report has been updated to note that Commerce has efforts under way to fill the gap in representation of the software industry. 15. Commerce asks us to “note and explain” USTR’s long-standing policy against including foreign-owned or –controlled firms among committee membership. Commerce indicates that this policy is based on the sensitivity of the matters considered by the committees and the possible conflicts that would be experienced by U.S. firms that have foreign owners, and we have added language to this report to that effect. However, we note that first, the U.S. government does not have a uniform policy against inclusion of foreign-owned firms on the trade advisory committees. USDA stated in its technical comments on our draft report that it does not preclude foreign-owned firms from participating in its trade advisory committees. Indeed, USDA indicates that at least one foreign-owned or -controlled firm already participates. USDA officials indicate that although foreign ownership can be considered in the nomination review process, in practice, it was not actually considered during the 2001 rechartering of the six USDA trade advisory committees. Second, as to the rationale for the USTR/Commerce exclusion, we note that there does not appear to be any bar in Section 135, FACA, and GSA implementing regulations specifically precluding participation by foreign-owned or -controlled firms from having representatives on trade advisory committees. The legislative history of Section 135 does not deal directly with this issue, and in their comments, neither USTR nor Commerce bases its long- standing policy on a legal prohibition. Third, while we recognize Commerce’s and USTR’s concerns about the sensitivity of the subject matters considered by the committees, we note that neither Commerce nor USTR has provided us with requested explanations of why the requirements that advisory committee members obtain security clearances and sign a legally binding nondisclosure agreement to protect classified information, along with giving members procedural guidance on safeguarding trade sensitive information, are not sufficient to address these concerns. Fourth, we acknowledge that a majority of our survey respondents expressed reservations about inclusion of foreign-owned firms in the system. However, several members and negotiators still suggested that the long-standing policy barring foreign- owned firms from membership altogether should be revisited, in part because of the contribution to U.S. employment and production that some of these firms provide. Indeed, several U.S. negotiators reported to GAO that they already actively work with foreign-owned firms on an informal basis during trade negotiations, many of which are already members of key trade associations. 16. Regarding participation levels and outreach, Commerce took issue with our position that the number of members specified in each committee’s charter represents a proper level of membership. We note Commerce’s assertion that the “authorized capacity” numbers specified in each committee’s charter are “somewhat arbitrary,” but we hold that they do provide useful guidance regarding committee size. Each committee charter specifies that it “consists of approximately X members,” and each committee’s charter specifies a distinct membership number, ranging from 30 to 50 members. For example, the charter for the Small and Minority Businesses Committee states that it “consists of approximately 35 members,” while the charter for the Chemicals and Allied Products Committee specifies approximately 50 members. Further, while for some trade advisory committees managed by other agencies the charter states that these numbers represent a maximum, this is not the case for the committees that Commerce administers. Even if the numbers specified in the charters do not represent an absolute ideal, our conclusion that the trade advisory committees were at 49 percent of their authorized capacity in fiscal year 2001 highlights the ample room available on the committees that could be used to fill gaps in representation. 17. We appreciate that Commerce provided us with current membership numbers as of August 2002, although the scope of our document review was through fiscal year 2001 (September 30, 2001). We note that according to these current membership numbers, at 48.3 percent of charter levels, the committees administered by Commerce remain just below half of their authorized capacity, and well below the 55 percent of capacity they had reached in fiscal 2000. 18. We recognize Commerce’s efforts to recruit new members and have updated the report to reflect them more fully. These efforts may alleviate the difficulties of maintaining robust and representative membership, concerns that both Commerce and USTR officials expressed during our review. 19. Commerce believes that the draft report’s treatment of the issue of nonbusiness participation may be somewhat misleading and states that the report should contain a more detailed and specific discussion of the congressional delegation in Section 135 of the Trade Act of 1974, particularly in distinguishing the functions and makeup of each of the three “tiers” of committees. We believe this report’s treatment of the nonbusiness issue is fair and accurate and note that appendix II of our draft report contains a detailed discussion of the functions and committee structure for each tier. 20. We recognize that many members expressed satisfaction with the support provided to committees by USTR and other managing agencies, including Commerce and USDA, and we have added language to this report to that effect. However, certain members also expressed concerns about overall leadership of the system and stated that delays or disruptions associated with agency execution of administrative tasks such as rechartering and new appointments were hindering the system’s ability to fulfill its statutory purpose. Our report already notes that unlike USTR, USDA, and Labor Commerce’s ICP successfully avoided disruptions in committee operations typically associated with rechartering. This report has been updated to note that Commerce is taking steps to fill administrative support needs by hiring additional staff. With the renewal of trade promotion authority on August 6, 2002, the U.S. negotiating agenda and resulting demands on the committee system are likely to increase. In addition to the person named above, Dennis Richards, Venecia Rojas Kenah, Kay Halpern, Jon Rose, Janet Lewis, Sharla Draemel, Martin De Alteriis, Richard Seldin, and Janey Cohen made key contributions to this report. The General Accounting Office, the investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. The fastest and easiest way to obtain copies of GAO documents at no cost is through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full- text files of current reports and testimony and an expanding archive of older products. The Web site features a search engine to help you locate documents using key words and phrases. You can print these documents in their entirety, including charts and other graphics. Each day, GAO issues a list of newly released reports, testimony, and correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site daily. The list contains links to the full-text document files. To have GAO e-mail this list to you every afternoon, go to www.gao.gov and select “Subscribe to daily E-mail alert for newly released products” under the GAO Reports heading. | In 1974, Congress mandated creation of a private sector advisory system to ensure that representatives from private business and other groups with a stake in trade policy could provide input as negotiations unfolded. The hope was that such involvement would result in trade agreements that Congress could approve with confidence. The law established a three-tier structure of committees to advise the President on overall U.S. trade policy, general policy area, and technical aspects of trade agreements. Four agencies, led by the Office of the U.S. Trade Representative (USTR), currently administer the committee system. According to many negotiators, agency officials, and committee members, the trade policy advisory committee system plays an important role in U.S. trade policy and has made valuable contributions to U.S. trade agreements. Although GAO's survey of committee members found high levels of satisfaction with many aspects of committee operations and effectiveness, more than a quarter of respondents indicated that the system has not realized its potential to contribute to U.S. trade policy. GAO found that consultations could be more timely and meaningful and that the consultation process needs greater accountability. The structure and composition of the committee system have not been fully updated to reflect changes in the U.S. economy and U.S. trade policy. In general, the system's committee structure is largely the same as it was in 1980, even though the focus of U.S. trade policy has shifted from border taxes toward other complex trade issues, such as protection of intellectual property rights and food safety requirements. Leadership direction and administrative support by USTR and the other managing agencies have not been sufficient to ensure that the advisory committee system works reliably. GAO found that negotiators have used inconsistent approaches to solicit committee member views, with some negotiators not consulting with committees at all. |
On October 25, 1995, Americans were reminded of the dangers that drivers/passengers often face when they travel over railroad crossings in the United States. On that day, in Fox River Grove, Illinois, seven high school students were killed when a commuter train hit a school bus. The potential for tragedies like the one at Fox River Grove is significant—the United States has over 168,000 public highway-railroad intersections. The types of warning for motorists at these crossings range from no visible devices to active devices, such as lights and gates. About 60 percent of all public crossings in the United States have only passive warning devices—typically, highway signs known as crossbucks. In 1994, this exposure resulted in motor vehicle accidents at crossings that killed 501 people and injured 1,764 others. Many of these deaths should have been avoided, since nearly one-half occurred at crossings where flashing lights and descended gates had warned motorists of the approaching danger. In August 1995, we issued a comprehensive report on safety at railroad crossings. We reported that the federal investment in improving railroad crossing safety had noticeably reduced the number of deaths and injuries. Since the Rail-Highway Crossing Program—also known as the section 130 program—was established in 1974, the federal government has distributed about $5.5 billion (in 1996 constant dollars) to the states for railroad crossing improvements. This two-decade investment, combined with a reduction in the total number of crossings since 1974, has significantly lowered the accident and fatality rates—by 61 percent and 34 percent, respectively. However, most of this progress occurred during the first decade, and since 1985, the number of deaths has fluctuated between 466 and 682 each year (see app. 1). Since 1977, the federal funding for railroad crossing improvements has also declined in real terms. Consequently, the question for future railroad crossing safety initiatives will be how best to target available resources to the most cost-effective approaches. Our report discussed several strategies for targeting limited resources to address railroad crossing safety problems. The first strategy is to review DOT’s current method of apportioning section 130 funds to the states. Our analysis of the 1995 section 130 apportionments found anomalies among the states in terms of how much funding they received in proportion to three key risk factors: accidents, fatalities, and total crossings. For example, California received 6.9 percent of the section 130 funds in 1995, but it had only 4.8 percent of the nation’s railroad crossings, 5.3 percent of the fatalities, and 3.9 percent of the accidents. Senators Lugar and Coats have proposed legislation to change the formula for allocating section 130 funds by linking the amounts of funding directly to the numbers of railroad crossings, fatalities, and accidents. Currently, section 130 funds are apportioned to each state as a 10-percent set-aside of its Surface Transportation Program funds. The second means of targeting railroad crossing safety resources is to focus the available dollars on the strategies that have proved most effective in preventing accidents. These strategies include closing more crossings, using innovative technologies at dangerous crossings, and emphasizing education and enforcement. Clearly, the most effective way to improve railroad crossing safety is to close more crossings. The Secretary of Transportation has restated FRA’s goal of closing 25 percent of the nation’s railroad crossings, since many are unnecessary or redundant. For example, in 1994, the American Association of State Highway and Transportation Officials found that the nation had two railroad crossings for every mile of track and that in heavily congested areas, the average approached 10 crossings for every mile. However, local opposition and localities’ unwillingness to provide a required 10-percent match in funds have made it difficult for the states to close as many crossings as they would like. When closing is not possible, the next alternative is to install traditional lights and gates. However, lights and gates provide only a warning, not positive protection at a crossing. Hence, new technologies such as four-quadrant gates with vehicle detectors, although costing about $1 million per crossing, may be justified when accidents persist at signalled crossings. The Congress has funded research to develop innovative technologies for improving railroad crossing safety. Although installing lights and gates can help to prevent accidents and fatalities, it will not preclude motorists from disregarding warning signals and driving around descended gates. Many states, particularly those with many railroad crossings, face a dilemma. While 35 percent of the railroad crossings in the United States have active warning devices, 50 percent of all crossing fatalities occurred at these locations. To modify drivers’ behavior, DOT and the states are developing education and enforcement strategies. For example, Ohio—a state with an active education and enforcement program—cut the number of accidents at crossings with active warning devices from 377 in 1978 to 93 in 1993—a 75-percent reduction. Ohio has used mock train crashes as educational tools and has aggressively issued tickets to motorists going around descended crossing gates. In addition, DOT has inaugurated a safety campaign entitled “Always Expect a Train,” while Operation Lifesaver, Inc., provides support and referral services for state safety programs. DOT’s educational initiatives are part of a larger plan to improve railroad crossing safety. In June 1994, DOT issued a Grade Crossing Action Plan, and in October 1995, it established a Grade Crossing Safety Task Force. The action plan set a national goal of reducing the number of accidents and fatalities by 50 percent from 1994 to 2004. As we noted in our report, whether DOT attains the plan’s goal will depend, in large part, on how well it coordinates the efforts of the states and railroads, whose contributions to implementing many of the proposals are critical. DOT does not have the authority to direct the states to implement many of the plan’s proposals, regardless of how important they are to achieving DOT’s goal. Therefore, DOT must rely on either persuading the states that implementation is in their best interests or providing them with incentives for implementation. In addition, the success of five of the plan’s proposals depends on whether DOT can obtain the required congressional approval to use existing funds in ways that are not allowable under current law. The five proposals would (1) change the method used to apportion section 130 funds to the states, (2) use Surface Transportation Program funds to pay local governments a bonus to close crossings, (3) eliminate the requirement for localities to match a portion of the costs associated with closing crossings, (4) establish a $15 million program to encourage the states to improve rail corridors, and (5) use Surface Transportation Program funds to increase federal funding for Operation Lifesaver. Finally, the action plan’s proposals will cost more money. Secretary Pena has announced a long-term goal of eliminating 2,250 crossings where the National Highway System intersects Principal Rail Lines. Both systems are vital to the nation’s interstate commerce, and closing these crossings is generally not feasible. The alternative is to construct a grade separation—an overpass or underpass. This initiative alone could cost between $4.5 billion and $11.3 billion—a major infrastructure investment. DOT established the Grade Crossing Safety Task Force in the aftermath of the Fox River Grove accident, intending to conduct a comprehensive national review of highway-railroad crossing design and construction measures. On March 1, 1996, the task force reported to the Secretary that “improved highway-rail grade crossing safety depends upon better cooperation, communication, and education among responsible parties if accidents and fatalities are to be reduced significantly.” The report provided 24 proposals for five problem areas it reviewed: (1) highway traffic signals that are supposed to be triggered by oncoming trains; (2) roadways where insufficient space is allotted for vehicles to stop between a road intersection and nearby railroad tracks; (3) junctions where railroad tracks are elevated above the surface of the roadway, exposing vehicles to the risk of getting hung on the tracks; (4) light rail transit crossings without standards for their design, warning devices, or traffic control measures; and (5) intersections where slowly moving vehicles, such as farm equipment, frequently cross the tracks. Under the Federal Railroad Safety Act of 1970, as amended, FRA is responsible for regulating all aspects of railroad safety. FRA’s safety mission includes 1) establishing federal rail safety rules and standards; 2) inspecting railroads’ track, signals, equipment, and operating practices; and 3) enforcing federal safety rules and standards. The railroads are primarily responsible for inspecting their own equipment and facilities to ensure compliance with federal safety regulations, while FRA monitors the railroads’ actions. We have issued many reports identifying weaknesses in FRA’s railroad safety inspection and enforcement programs. For example, in July 1990, we reported on FRA’s progress in meeting the requirements, set forth in the Federal Railroad Safety Authorization Act of 1980, that FRA submit to the Congress a system safety plan to carry out railroad safety laws. The act directed FRA to (1) develop an inspection methodology that considered carriers’ safety records, the location of population centers, and the volume and type of traffic using the track and (2) give priority to inspections of track and equipment used to transport passengers and hazardous materials. The House report accompanying the 1980 act stated that FRA should target safety inspections to high-risk track—track with a high incidence of accidents and injuries, located in populous urban areas, carrying passengers, or transporting hazardous materials. In our 1990 report, we found that the inspection plan that FRA had developed did not include data on passenger and hazardous materials routes—two important risk factors. In an earlier report, issued in April 1989, we noted problems with another risk factor—accidents and injuries. We found that the railroads had substantially underreported and inaccurately reported the number of accidents and injuries and their associated costs. As a result, FRA could not integrate inspection, accident, and injury data in its inspection plan to target high-risk locations. In our 1994 report on FRA’s track safety inspection program, we found that FRA had improved its track inspection program and that its strategy for correcting the weaknesses we had previously identified was sound. However, we pointed out that FRA still faced challenges stemming from these weaknesses. First, it had not obtained and incorporated into its inspection plan site-specific data on two critical risk factors—the volume of passenger and hazardous materials traffic. Second, it had not improved the reliability of another critical risk factor—the rail carriers’ reporting of accidents and injuries nationwide. FRA published a notice of proposed rulemaking in August 1994 on methods to improve rail carriers’ reporting. In February 1996, FRA reported that it intended to issue a final rule in June 1996. To overcome these problems, we recommended that FRA focus on improving and gathering reliable data to establish rail safety goals. We specifically recommended that FRA establish a pilot program in one FRA region to gather data on the volume of passenger and hazardous materials traffic and correct the deficiencies in its accident/injury database. We recommended a pilot program in one FRA region, rather than a nationwide program, because FRA had expressed concern that a nationwide program would be too expensive. The House and Senate Appropriations Conference Committee echoed our concerns in its fiscal year 1995 report and directed the agency to report to the Committees by March 1995 on how it intended to implement our recommendations. In its August 1995 response to the Committees, FRA indicated that the pilot program was not necessary, but it was taking actions to correct the deficiencies in the railroad accident/injury database. For example, FRA had allowed the railroads to update the database using magnetic media and audited the reporting procedures of all the large railroads. We also identified in our 1994 report an emerging traffic safety problem—the industry’s excessive labeling of track as exempt from federal safety standards. Since 1982, federal track safety standards have not applied to about 12,000 miles of track designated by the industry as “excepted;” travel on such track is limited to 10 miles per hour, no passenger service is allowed, and no train may carry more than five cars containing hazardous materials. We found in our 1994 report that the number of accidents on excepted track had increased from 22 in 1988 to 65 in 1992—a 195-percent increase. Similarly, the number of track defects cited in FRA inspections increased from 3,229 in 1988 to 6,057 in 1992. However, with few exceptions, FRA cannot compel railroads to correct these defects. According to FRA, the railroads have applied the excepted track provision far more extensively than envisioned. For example, railroads have transported hazardous materials through residential areas on excepted track or intentionally designated track as excepted to avoid having to comply with minimum safety regulations. In November 1992, FRA announced a review of the excepted track provision with the intent of making changes. FRA viewed the regulations as inadequate because its inspectors could not write violations for excepted track and railroads were not required to correct defects on excepted track. FRA stated that changes to the excepted track provision would occur as part of its rulemaking revising all track safety standards. In February 1996, FRA reported that the task of revising track safety regulations would be taken up by FRA’s Railroad Safety Advisory Committee. FRA noted that this committee would begin its work in April 1996 but did not specify a date for completing the final rulemaking. The Congress had originally directed FRA to complete its rulemaking revising track safety standards by September 1994. In September 1993, we issued a report examining whether Amtrak had effective procedures for inspecting, repairing, and maintaining its passenger cars to ensure their safe operation and whether FRA had provided adequate oversight to ensure the safety of passenger cars. We found that Amtrak had not consistently implemented its inspection and preventive maintenance programs and did not have clear criteria for determining when a passenger car should be removed from service for safety reasons. In addition, we found that Amtrak had disregarded some standards when parts were not available or there was insufficient time for repairs. For example, we observed that cars were routinely released for service without emergency equipment, such as fire extinguishers. As we recommended, Amtrak established a safety standard that identified a minimum threshold below which a passenger car may not be operated, and it implemented procedures to ensure that a car will not be operated unless it meets this safety standard. In reviewing FRA’s oversight of passenger car safety (for both Amtrak and commuter rail), we found that FRA had established few applicable regulations. As a result, its inspectors provided little oversight in this important safety area. For more than 20 years, the National Transportation Safety Board has recommended on numerous occasions that FRA expand its regulations for passenger cars, but FRA has not done so. As far back as 1984, FRA told the Congress that it planned to study the need for standards governing the condition of safety-critical passenger car components. Between 1990 and 1994, train accidents on passenger rail lines ranged between 127 and 179 accidents each year (see app. 2). In our 1993 report, we maintained that FRA’s approach to overseeing passenger car safety was not adequate to ensure the safety of the over 330 million passengers who ride commuter railroads annually. We recommended that the Secretary of Transportation direct the FRA Administrator to study the need for establishing minimum criteria for the condition of safety-critical components on passenger cars. We noted that the Secretary should direct the FRA Administrator to establish any regulations for passenger car components that the study shows to be advisable, taking into account any internal safety standards developed by Amtrak or others that pertain to passenger car components. However, FRA officials told us at the time that the agency could not initiate the study because of limited resources. Subsequently, the Swift Rail Development Act of 1994 required FRA to issue initial passenger safety standards within 3 years of the act’s enactment and complete standards within 5 years. In 1995, FRA referred the issue to its Passenger Equipment Safety Working Group consisting of representatives from passenger railroads, operating employee organizations, mechanical employee organizations, and rail passengers. The working group held its first meeting in June 1995. An advance notice of proposed rulemaking is expected in early 1996, and final regulations are to be issued in November 1999. Given the recent rail accidents, FRA could consider developing standards for such safety-critical components as emergency windows and doors and safety belts as well as the overall crashworthiness of passenger cars. In conclusion, safety at highway-railroad crossings, the adequacy of track safety inspections and enforcement, and the safety of passenger cars operated by commuter railroads and Amtrak will remain important issues for Congress, FRA, the states, and the industry to address as the nation continues its efforts to prevent rail-related accidents and fatalities. Note 1: Analysis includes data from Amtrak, Long Island Rail Road, Metra (Chicago), Metro-North (New York), Metrolink (Los Angeles), New Jersey Transit, Northern Indiana, Port Authority Trans-Hudson (New York), Southeastern Pennsylvania Transportation Authority and Tri-Rail (Florida). Note 2: Data for Amtrak include statistics from several commuter railroads, including Caltrain (California), Conn DOT, Maryland Area Rail Commuter (excluding those operated by CSX), Massachusetts Bay Transportation Authority, and Virginia Railway Express. Railroad Safety: FRA Needs to Correct Deficiencies in Reporting Injuries and Accidents (GAO/RCED-89-109, Apr.5,1989). Railroad Safety: DOT Should Better Manage Its Hazardous Materials Inspection Program (GAO/RCED-90-43, Nov.17, 1989). Railroad Safety: More FRA Oversight Needed to Ensure Rail Safety in Region 2 (GAO/RCED-90-140, Apr. 27, 1990). Railroad Safety: New Approach Needed for Effective FRA Safety Inspection Program (GAO/RCED-90-194, July 31, 1990). Financial Management: Internal Control Weaknesses in FRA’s Civil Penalty Program (GAO/RCED-91-47, Dec.26, 1990). Railroad Safety: Weaknesses Exist in FRA’s Enforcement Program (GAO/RCED-91-72, Mar.22, 1991). Railroad Safety: Weaknesses in FRA’s Safety Program (GAO/T-RCED-91-32, Apr. 11, 1991). Hazardous Materials: Chemical Spill in the Sacramento River (GAO/T-RCED-91-87, July 31, 1991). Railroad Competitiveness: Federal Laws and Policies Affect Railroad Competitiveness (GAO/RCED-92-16, Nov. 5, 1991) Railroad Safety: Accident Trends and FRA Safety Programs (GAO/T-RCED-92-23, Jan.13, 1992). Railroad Safety: Engineer Work Shift Length and Schedule Variability (GAO/RCED-92-133, Apr. 20, 1992). Amtrak Training: Improvements Needed for Employees Who Inspect and Maintain Rail Equipment (GAO/RCED-93-68, Dec.8, 1992). Amtrak Safety: Amtrak Should Implement Minimum Safety Standards for Passenger Cars (GAO/RCED-93-196, Sep.22, 1993). Railroad Safety: Continued Emphasis Needed for an Effective Track Safety Inspection Program (GAO/RCED-94-56, Apr.22, 1994). Amtrak’s Northeast Corridor: Information on the Status and Cost of Needed Improvements (GAO/RCED-95-151BR, Apr. 13, 1995). Railroad Safety: Status of Efforts to Improve Railroad Crossing Safety (GAO/RCED-95-191, Aug. 3, 1995). The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | GAO provided information on the safety of highway railroad crossings, commuter passenger rails and adequacy of track safety inspections. GAO found that: (1) the leading cause of death associated with the railroad industry involved railroad crossing accidents; (2) about half of rail-related deaths occur because of collisions between trains and vehicles at public railroad crossings; (3) in 1994, 501 people were killed and 1,764 injured in railroad crossing accidents; (4) to improve the safety of railroad crossings, the Department of Transportation (DOT) must better target funds to high-risk areas, close more railroad crossings, install new technologies, and develop educational programs to increase the public's awareness of railroad crossings; (5) DOT plans are costly and will require congressional approval; (6) the Federal Railroad Administration (FRA) is unable to adequately inspect and enforce truck safety standards or direct transportation officials to the routes with the highest accident potential because its database contains inaccurate information; and (7) Congress has directed FRA to establish sufficient passenger car safety standards by 1999. |
Sole proprietors are to file Form 1040, Individual Income Tax Return, and attach to it Schedule C, Profit or Loss From Business (Sole Proprietorship), or Schedule F, Profit or Loss From Farming. IRS requires most sole proprietors to write their SSN on Form 1040 and to write both their SSN and EIN on Schedules C and F. However, not all sole proprietors are required to have and use EINs. IRS requires only those sole proprietors who also file employment, pension, or excise tax returns to have and use EINs. IRS received about 15 million 1040 returns from sole proprietors for tax year 1991, and about 2.2 million included an EIN on a Schedule C. The Internal Revenue Code requires taxpayers to include taxpayer identification numbers on tax returns and gives IRS the authority to decide what identification system will be used. The Social Security Administration issues SSNs to individuals. IRS issues EINs to businesses, which must apply to IRS to obtain an EIN. IRS has two master files containing the tax accounts of individuals and businesses. Data from Form 1040 returns, including Schedules C and F, are posted to the Individual Master File using the primary SSN as the primary account number. Data from employment and excise tax returns filed by sole proprietors are posted to the Business Master File using the EIN as the primary account number. If a sole proprietor has an account on each file, IRS can connect them by cross-referencing account numbers. The proprietor’s SSN is recorded in the Business Master File account, and the EIN is recorded in the proprietor’s Individual Master File account. IRS records sole proprietor information on a third file, the Cross-Reference Entity File (CREF). IRS created CREF in response to a recommendation we made in 1987. We reported then that IRS could make better use of information returns in determining whether businesses filed returns and fully reported their income. Information returns are the documents that third-party payers, such as employers, corporations, and financial institutions, send to taxpayers and IRS to report such payments as wages, dividends, interest, and other types of income. In addition to listing the taxpayer’s name, information returns identify taxpayers by either SSN or EIN. IRS created CREF so that it could consolidate information returns filed under a sole proprietor’s SSN with those filed under its EIN. By computer matching these consolidated data with income tax return data, IRS can determine whether sole proprietors filed tax returns and reported all income shown on information returns. As agreed with the Joint Committee, our objectives were to determine whether IRS (1) accurately cross-references sole proprietor identification numbers on the Individual Master File, Business Master File, and CREF and (2) needs to take any actions to improve the accuracy of its cross-reference files. To accomplish these objectives, we reviewed IRS’ procedures for (1) issuing EINs, (2) processing sole proprietor tax returns, and (3) entering SSNs and EINs on the two master files. We interviewed various IRS officials who were responsible for (1) updating Individual and Business Master File records, (2) creating and updating CREF, and (3) managing and operating the information-returns-based programs for identifying taxpayers who may have failed to file returns or report all income. In addition, we reviewed samples of sole proprietor accounts to determine the accuracy of SSNs and EINs posted to them. To help us obtain samples, IRS gave us a computer file of the 1.8 million tax year 1991 Schedule Cs filed with the Fresno Service Center in calendar year 1992, the most recent year for which complete data were available when we began our work. We picked the Fresno Service Center because it was a logistically and geographically convenient location in which to do our work. According to IRS officials, we could expect to find similar conditions at all IRS service centers. We analyzed the file to identify Schedule Cs that were filed with an EIN; 243,289 Schedule Cs included a unique EIN and a primary SSN or secondary SSN that was not duplicated. We matched these 243,289 EINs against EINs listed on the tax year 1991 CREF, which we had obtained from IRS. This match showed that 217,279 of these Schedule C EINs were on CREF and 26,010 were not. From the 217,279 EINs that matched, we selected a random sample of 250 accounts to determine whether the identification numbers on CREF, the Individual Master File, and the Business Master File were accurate. For each account, we reviewed the Individual and Business Master File entity and tax year 1991 records. We judged the information on the files to be accurate when the EIN and SSN on CREF matched those on the Individual and Business Master File records. From the 26,010 Schedule C EINs that were not on CREF, we randomly selected 250 to determine whether there were valid reasons for their absence from CREF. We made this determination by searching IRS master file and tax return records for EINs in our random sample and analyzing the records when a match occurred. We also reviewed and evaluated IRS’ procedures for excluding records from CREF. Our sampling methodology, which is described in more detail in appendix I, allowed us to project the results of our samples to 217,279 of the 243,289 tax year 1991 Schedule Cs that contained EINs and were filed with the Fresno Service Center. We also reviewed the legislative history of the Code provision that authorizes the use of taxpayer identification numbers on tax returns. In addition, we discussed the need for both numbers with IRS and Social Security Administration officials. We did our work from January 1994 to March 1995 at IRS’ National Office in Washington, D.C., and its Fresno Service Center in accordance with generally accepted government auditing standards. We requested comments on a draft of this report from the Commissioner of Internal Revenue. On June 13, 1995, IRS officials provided us IRS’ comments. IRS representatives at that meeting included the National Director of Submission Processing and representatives of the Assistant Commissioners for Taxpayer Services and Collections. Their comments are summarized on pages 14-17 and incorporated in this report where appropriate. Sole proprietors are the only type of business entity that has one identification number for income tax purposes and another for business tax purposes. Other business taxpayers, such as corporations, use their EINs for all tax purposes. Sole proprietors report tax information that other individual taxpayers report, such as filing status, number of exemptions claimed, alimony paid, medical and dental expenses, interest paid on home mortgages, and taxable income. They also report tax information about their businesses, such as the accounting method used to keep the business’ books, business expenses (e.g., advertising, utilities, employee wages), and cost of goods sold. They report the business information on Schedule C or F and carry to Form 1040 the net profit or loss from the sole proprietorship. IRS records the tax information sole proprietors report on two different master files. It records the individual tax information, including Schedule C and F data, on the Individual Master File and the business tax information, such as data from employment and excise tax returns, on the Business Master File. As their names suggest, the Individual Master File holds the tax information of persons who file individual income tax returns, and the Business Master File holds the tax information submitted by sole proprietors, corporations, partnerships, and other businesses. IRS requires sole proprietors to use two different identification numbers because each master file will accept only one type of identification number as the primary account number. The Individual Master File will accept only SSNs as the primary number for Form 1040. The Business Master File will only accept EINs as the primary account number for Form 941 employment tax returns and other business returns. Therefore, in order to record tax information about them on the two files, IRS requires sole proprietors to file Form 1040 with an SSN and employment and excise tax returns with an EIN. IRS cross-references the SSN and EIN that a sole proprietor reports. However, we found that the cross-references were not always correct. Better validation of sole proprietor SSNs and EINs by IRS when processing returns could mitigate the problem but would not eliminate it. As previously mentioned, we sampled 250 of the 217,279 tax year 1991 Schedule Cs filed at the Fresno Service Center in 1992 and listed on CREF and 250 of the 26,010 returns that were not on CREF. We reviewed these cases to determine whether EINs on the Schedule Cs belonged to the taxpayers who entered them. On the basis of our sample results, we estimate that 48,608, or 20 percent, of the 243,289 EINs posted to Individual Master File tax year 1991 records as cross-references to the Business Master File were erroneous. That is, the EIN would not serve as a bridge to the sole proprietor’s account on the Business Master File. Before posting, IRS did not screen EINs to detect those incorrectly reported on Schedule C. As table 1 shows, in filing Schedule Cs, sole proprietors used EINs that either belonged to another business, did not exist on the Business Master File, or were the same as the sole proprietor’s SSN. Cases involving an EIN belonging to another taxpayer included those where sole proprietors received an information return for services provided to another business and then used the EIN of that business as shown on the information return. Cases involving an EIN not on the Business Master File included those in which sole proprietors transposed digits of their EINs or otherwise entered numbers that did not reflect valid EINs. IRS transcribed EINs from Schedule Cs but did not perform validity checks to determine whether EINs belonged to the sole proprietors who used them. As the returns are filed, they are received at service centers and go through various processing steps. As part of processing, data from the returns, including SSNs and EINs, are put into computer form. Once the data are in computer form, IRS makes certain computerized validity checks to ensure that the data are accurate. IRS checks SSNs against its computer file of valid SSNs to determine whether they are valid and attempts to correct those that are invalid before they are posted to the Individual Master File. However, the Fresno Service Center’s computers were not programmed to check EINs on Schedule Cs against a computer file of valid EINs to identify those that were invalid. In 1987, IRS began entering sole proprietors’ SSNs on the Business Master File as accounts were established. In 1992, IRS added sole proprietors’ SSNs to accounts that were established before 1987. To add SSNs to pre-1987 accounts, IRS matched EINs from Schedules C and F to EINs on the Business Master File. When they matched, IRS added the sole proprietor’s SSN to the account. More specifically, SSNs were added when the EINs matched; the Business Master File account did not contain an SSN; and the account holder was not a corporate, partnership, or tax-exempt return filer. The SSNs that were added were reported by sole proprietors on Schedules C and F for tax years 1987 through 1990. IRS did not validate the Schedule C and F EINs before matching them with EINs on the Business Master File. As noted earlier, it is not uncommon for sole proprietors to use EINs that are assigned to other taxpayers. Therefore, some EINs that matched may have belonged to different taxpayers. In such instances, the SSN that was added to the account would not have been the account holder’s SSN. On the basis of our two samples of 250 EINs, we estimated that about 6,360, or 3 percent, of the 243,289 tax year 1991 Schedule Cs with EINs on Business Master File accounts that were filed with the Fresno Service Center contained inappropriate SSNs. The types of Business Master File accounts with inappropriate SSNs included the following: Corporation and partnership accounts that were inactive and for which returns were no longer required to be filed: SSNs were posted to these accounts because the unverified EIN on the sole proprietor’s Schedule C matched the account EIN. Governmental agencies and churches: The match criteria did not include a routine to screen out these entities when a Schedule C EIN matched. Spousal accounts of primary taxpayers: In this case, SSNs of primary taxpayers—that is, taxpayers that appeared first on the name line of the Form 1040 for married couples filing joint returns—were affixed to the Business Master File records of their spouses. CREF reflects those taxpayer identification numbers cross-referenced on the Individual and Business Master Files. Erroneous cross-references present on the two master files can appear on CREF as well. IRS’ computer screening process prevented certain erroneous identification numbers from being posted to CREF. Even so, for the records we reviewed, CREF frequently contained EIN-SSN cross-references that were incorrect. As reported in a previous section, we estimated that 48,608 of the EINs reported on 1991 Schedule Cs filed with the Fresno Service Center were in error (e.g., because the EIN the sole proprietor reported belonged to another taxpayer). Before data are posted to CREF, IRS subjects them to certain computerized tests to screen out “bad” data. IRS’ screening process prevented 26,010 of the 48,608 errors from being posted to CREF. The screening process searched for EINs that belonged to businesses that were not sole proprietorships and EINs that matched a sole proprietor’s SSN. However, on the basis of our sample of 250 EINs for the 217,279 CREF records, we estimated that 22,598 of the 48,608 erroneous EINs were posted to CREF. The screening process was not designed to catch the types of errors that the 22,598 EINs represented; namely: EINs affixed to Business Master File accounts of corporations and partnerships no longer required to file returns. In these situations, the computer could not determine that the account holder was not a sole proprietor because there were no active filing requirements. EINs from Schedule Cs that were not on the Business Master File. The estimated 22,598 erroneous EINs represented about 10 percent of the 217,279 CREF accounts related to tax year 1991 Schedule Cs filed with the Fresno Service Center. IRS collects tax information by taxpayer identification number and decides whether to contact a taxpayer for potentially underreporting income on the basis of the information collected. When taxpayer identification numbers are erroneously cross-referenced, the information generated for a taxpayer may be inaccurate and thus provide IRS examiners with false leads to pursue. IRS examiners have been instructed to screen the information manually to detect inaccuracies so that taxpayers will not be inappropriately contacted. The problem associated with erroneous cross-referencing is highlighted by the underreporter leads that CREF generates. For tax year 1991, IRS received about 5.9 million information returns with EINs for about 1.1 million sole proprietors. Using CREF data, IRS developed a nationwide list of about 28,400 sole proprietors who may have underreported their income for tax year 1991. About 4,700 of these cases were handled by the Fresno Service Center. These potential underreporter cases were created because the sole proprietor’s tax return appeared not to have reported all of the income shown in information returns. (IRS computers match the tax return and information return data to produce the potential underreporter list.) However, Fresno Service Center examiners manually screening these 4,700 cases found that for 1,582, or 34 percent, either the income had been reported on the return or the information returns were wrong. For example, the sole proprietor may have reported interest income on the state income tax refund line of the Form 1040, or the name on the information return may not have been that of the sole proprietor. According to Fresno Service Center officials, 10, or 0.6 percent, of the 1,582 cases screened out before taxpayer contact were caused by erroneous cross-referencing of taxpayer identification numbers. IRS had no data on how many potential underreporting cases were generated nationwide through erroneous cross-referencing of taxpayer identification numbers. IRS has no information on whether any underreporting case generated by erroneous cross-referencing slipped through the manual screening process, resulting in taxpayer contact. As shown by our tests, the Individual Master File, the Business Master File, and CREF all contain inappropriate cross-references of SSNs and EINs. IRS is faced with the problem of locating and removing erroneous cross-references already on the files and preventing cross-referencing errors in the future. As discussed below, some aspects of the problem may be more readily correctable than others. Having accurate taxpayer records is extremely important as IRS moves forward with its multibillion-dollar Tax Systems Modernization (TSM) efforts. IRS envisions that under TSM it will have an integrated case processing system in place by the year 2001, and that this system will allow all compliance issues for a taxpayer to be identified and investigated at the same time. However, IRS needs valid cross-referenced taxpayer identification numbers to properly integrate its various taxpayer records. Without accurate cross-referencing, IRS could create false noncompliance leads and have a less effective integrated case processing system than envisioned. There are several validity checks that IRS could run to help prevent certain types of erroneous EINs from being added to sole proprietor records on the Individual Master File and CREF. One check would involve programming service center computers to identify instances where the EIN listed on Schedule C or F is the same as the sole proprietor’s SSN. When the two are identical, the EIN would not be added to the Individual Master File. The first two digits of an EIN represent an IRS district. The second validity check would involve programming service center computers to identify EINs that are invalid because the first two digits are not an IRS district code. Our analysis of the tax year 1991 CREF showed that almost 1 percent of the 4.3 million EINs on CREF had invalid district office codes. The third validity check would involve validating EINs in a way similar to that used by IRS to validate SSNs. IRS could computer match EINs against its file of valid EINs to identify those that are invalid. And, where appropriate, procedures could be developed to notify taxpayers that the EIN they used was invalid or wrong and to obtain the correct EIN from them. We discussed the technical possibility and usefulness of creating these computerized screens with officials of the Fresno Service Center. They believed that there were no technical barriers to creating the screens, although there would be some cost involved in creating and testing them. They believed as well that the screens would be useful for creating accurate files. The officials did not know what the cost of creating the screens would be nor whether the screens would save examiners time in reviewing potential underreporter cases. The erroneous cross-referenced SSNs that were incorrectly added to Business Master File records of governmental agencies and other non-income tax paying entities in 1992 are readily identifiable by computer. A computer program could be written to remove the erroneous cross-referenced SSNs from these records. However, other types of errors may not be readily identifiable by computer because they contain SSNs that were attached to Business Master File records of inactive businesses, such as defunct corporations. Therefore, IRS may have to effect these removals on a case-by-case basis, such as when underreporter examiners detect cases with erroneous cross-reference data. IRS does not currently have procedures that instruct examiners to initiate action to correct erroneous cross-references on the master files or CREF. IRS’ difficulties with regard to cross-referencing a sole proprietor’s two identification numbers could be eliminated if sole proprietors used a single identification number for all tax information. In addition to aiding IRS, the use of a single identification number would lessen the compliance burden that sole proprietors shoulder, which would be in keeping with IRS’ long-range business plan and Congress’ intent when it gave IRS the authority to require taxpayer identification numbers. The Social Security Administration uses EINs to track employers’ contributions to the Social Security trust funds. Therefore, any change in EIN structure or use affects the Social Security Administration and its records. Social Security Administration officials with whom we talked saw no major technical obstacles for their agency if IRS eliminated the EIN requirement for sole proprietors. However, the officials said that, without further study, they could not determine whether it would be cost-effective or operationally feasible to use SSNs in place of EINs on agency computer files. Having sole proprietors use only their SSNs for all tax purposes would be in keeping with the legislative history behind the taxpayer identification system and with the concept of the sole proprietor. Section 6109 of the Internal Revenue Code requires that taxpayer identification numbers be included on tax information and gives IRS the authority to decide what identification system will be used. Section 6109 further provides that, except as otherwise specified by regulation, the Social Security account number shall be used as the identifying number for individuals. The legislative history of section 6109 includes a request to IRS to work out an identification system that would involve the least possible burden to taxpayers. Sole proprietors differ from other business entities in that the business does not exist separately from the owner. The sole proprietor accepts the risks of business, including tax obligations, to the extent of all of his or her assets, whether used in the business or personally. For that reason, it appears unnecessary to treat sole proprietors as two separate entities, requiring two identification numbers, for tax purposes. IRS officials said that, although sole proprietors are different from other business entities, eliminating their EIN requirement would require computer programming and possible reconfiguration changes to be made to the Business Master File. The officials did not know how much these changes would cost or whether the changes would be operationally feasible. Under certain conditions, sole proprietors are required to file tax returns using two different identification numbers, a filing requirement not extended to other business taxpayers. However, sole proprietors frequently report the wrong identification number, especially in the case of the EINs that must be obtained from IRS. For its part, IRS has not screened out all erroneous identification numbers, which means that the numbers posted to sole proprietors’ records as cross-references may identify someone other than the intended taxpayer. No data are available to discern the total effects of such mispostings; however, several false underreporter cases conducted by the Fresno Service Center were created because of erroneous cross-references. More screening is also needed if IRS is to properly integrate a taxpayer’s various records under TSM. The problems of cross-referencing identification numbers could be avoided entirely if sole proprietors could use their SSNs for all tax information. However, IRS would have to evaluate the feasibility of eliminating the EIN requirement for sole proprietors before such a change could be made. We recommend that the Commissioner of Internal Revenue establish returns-processing and compliance-screening procedures to help remove erroneous cross-referenced taxpayer identification numbers from sole proprietors’ tax records, and evaluate the feasibility of eliminating the requirement that sole proprietors use EINs for filing business returns. We requested comments on a draft of this report from the Commissioner of Internal Revenue. Responsible IRS officials, including the National Director of Submission Processing and representatives of the Assistant Commissioners for Collections and Taxpayer Services provided IRS’ comments in a meeting on June 13, 1995. IRS’ Chief Compliance Officer also provided us with comments on our draft report on July 5, 1995. These officials generally agreed that data on CREF should be perfected and said that IRS will begin evaluating how to do this. They also said that a single taxpayer identification number would facilitate reporting compliance by sole proprietors. However, they said that, due to major obstacles to implementing such a change, IRS does not agree with our recommendation to evaluate the feasibility of having sole proprietors use their SSNs instead of EINs on business returns. A more detailed discussion of IRS’ comments follows. The officials said that while IRS’ goal is to ensure accurate taxpayer account information, the cost of implementing the recommendation to clean up taxpayer records must be weighed against other competing resource demands. They said IRS must first determine the scope and impact of the problem before any decision can be made about correcting the records. IRS plans to begin evaluating the extent of the problem and to decide by May 1996 on how to address the errors in CREF. We recognize that IRS has limited resources and needs to use those resources judiciously. At the same time, we also recognize that accurate taxpayer identification numbers are vital for an effective and efficient tax administration system. Therefore, although we are encouraged that IRS plans to clean up its taxpayer records, we do not believe that IRS has to wait until May 1996 before starting to do so. For example, IRS could begin now to institute some procedures to clean up the records. As one approach, it could have examiners who work underreporter cases correct erroneous cross-reference data when they are detected. IRS officials stated that our suggestions to establish EIN validity checks that would identify erroneous EINs may not work. They said that, prior to 1985, taxpayers could request a specific EIN from IRS and that many taxpayers chose to use their SSNs as their EINs. They also said that, prior to 1985, if taxpayers filed business returns under their SSNs—and if there were no EINs with the same sequence of digits, and the taxpayers did not already have EINs—then IRS would assign the SSNs as EINs and process the business returns. Therefore, in the view of these officials, if IRS were to adopt our validity-check suggestions, it would potentially remove valid EINs from its records. We believe that these problems could be overcome by validating EINs in a way similar to that used to validate SSNs. IRS does this by computer matching reported SSNs against a computer file of valid SSNs. It seems that IRS could computer match EINs against its file of valid EINs to identify those that are invalid. The officials said that relieving sole proprietors of the requirement of using EINs, and permitting them to use their SSNs for all tax reporting purposes, might reduce reporting errors to some extent. However, IRS officials said that IRS will not pursue such a change due to major implementation obstacles, including the necessity of extensively reprogramming IRS, Social Security Administration, and private massively reconfiguring the Business and Information Returns Master allocating significant IRS resources to educate taxpayers in the new requirement; imposing the added burden on the majority of sole proprietors who now report correctly of changing their reporting responsibilities; and finally, requiring sole proprietors to disclose their SSNs on Forms W-2, which raises privacy concerns. Our draft report had already noted that computer programs and computer files would have to be changed. We did not know how extensive the changes would have to be, which is why we are recommending that IRS make an evaluation rather than recommending the actual changes. Also, we agree with IRS that taxpayers would need to be educated in the new requirement and to change their reporting responsibilities. We assumed that these factors and their costs would be part of IRS’ evaluation. With regard to having sole proprietors disclose their SSNs on Forms W-2, sole proprietors who do not have EINs currently submit information returns under their SSNs. IRS noted another obstacle concerning the use of SSNs and, in doing so, provided us with information that we were not aware of when we did our work. The officials stated that there are about 23 million pairs of EINs and SSNs on the Individual and Business Master Files that share the same sequence of digits. They said that, while some of these pairs may be due to error, others may be valid. In our view, the problem of having EINs and SSNs with the same sequence of digits could be overcome without causing major complications. IRS currently receives information returns in which the EIN of one taxpayer has the same sequence of digits as the SSN of another taxpayer. In these situations, IRS has computer checks that allow it to associate these information returns with the proper taxpayer. Similar computer checks could be developed for business returns. The feasibility and costs of this solution to the problem of having matching EINs and SSNs could be part of IRS’ evaluation. Although IRS is opposed to our recommendation, we still believe that eliminating the EIN requirement for sole proprietors is worthy of further evaluation before a decision is made on its feasibility and cost-effectiveness, especially since in the past IRS allowed sole proprietors to use their SSNs as EINs. A similar policy for those cases where IRS has not assigned an EIN with the same digits as the sole proprietor’s SSN should not involve major Business Master File reprogramming and reconfiguration. As previously discussed, IRS is proposing to do a study on the extent of the problems with CREF and ways to address them. This study could also include an evaluation of the feasibility of sole proprietors using their SSN rather than an EIN. Thus, we encourage IRS, as it proceeds with its modernization and simplification efforts, to include in its study a reconsideration of its position not to undertake an evaluation of the sole proprietor EIN requirement. As agreed with Committee staff, we will send copies of this report to the Ranking Minority Members of the House Committee on Ways and Means and the Senate Committee on Finance, the Secretary of the Treasury, the Commissioner of Internal Revenue, and other interested parties. We will also make copies available to others upon request. Major contributors to the report are listed in appendix II. If you have any questions, please contact me at (202) 512-8633. This appendix describes our sampling approach for selecting sole proprietors with EINs to achieve a 95-percent confidence level for our estimates. Statistical sampling enables us to make estimates and draw conclusions about the universe on the basis of information in a sample of that universe. Our samples were of sole proprietors who reported EINs on tax year 1991 returns filed with the Fresno Service Center. We obtained from IRS a computer file of the 1.8 million tax year 1991 Schedule Cs filed with the Fresno Service Center in calendar year 1992. Our analysis of the file identified 266,872 Schedule Cs that were filed with an EIN. Further analysis showed that there were 23,583 Schedule Cs in which more than one taxpayer used the same EIN. There were 7,423 unique EINs associated with the 23,583 Schedule Cs. We matched the remaining 243,289 EINs against EINs on the tax year 1991 CREF, which we had obtained from IRS and which contained about 4.3 million records (i.e., EIN/SSN combinations). This match showed that, of the 243,289 Schedule Cs with EINs, 217,279 of these EINs were on CREF and 26,010 were not. From the 217,279 EINs that matched, we selected a random sample of 250 accounts to determine whether the information on CREF, the Individual Master File, and the Business Master File was accurate. For each account, we reviewed the Individual and Business Master File entity record and tax return data. We determined that the information on the files was accurate when the EIN and SSN on CREF were the same as those on the Individual and Business Master File entity records. Table I.1 shows the point estimates and the statistical confidence intervals at the 95-percent level of our case analysis by types of erroneous EINs listed on the Schedule Cs found on CREF. From the 26,010 Schedule C EINs not on CREF, we randomly selected 250 to determine whether there were valid reasons for their omission from CREF. We made this determination by searching IRS master file and tax return records for EINs in our random sample and analyzing the records when a match occurred. Table I.2 shows the point estimates and the statistical confidence intervals at the 95-percent level of our analysis of cases not on CREF. Table I.3 shows the overall results of our analysis of EINs on tax year 1991 Schedule Cs filed at the Fresno Service Center. Arthur L.Davis, Evaluator-in-Charge Sam Scrutchins, Technical Advisor Hans Bredfeldt, Statistician The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (301) 258-4097 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO reviewed whether the Internal Revenue Service (IRS): (1) accurately cross references the two identification numbers that self-employed individuals report on their tax returns; and (2) needs to take any actions to improve the accuracy of its cross-reference files. GAO found that IRS: (1) uses information from different computer files to identify sole proprietors that may have tax compliance problems; (2) requires certain taxpayers to have a valid social security number (SSN) and employer identification number (EIN) so that it can cross-reference the taxpayers' accounts from one file to another; and (3) records a sole proprietor's identification numbers on three computer files and uses the SSN to establish an account on the Individual Master File. In addition, GAO found that: (1) the identification numbers that IRS records for cross-referencing purposes are not always reliable and cause IRS to generate false underreporter leads; (2) the IRS computerized screening process limits the number of false underreporter leads created by the Cross-Reference Entity File; and (3) if IRS and the Social Security Administration eliminate sole proprietors' EIN, they will have to modify their computer programs to accept SSN instead of EIN. |
Kings of Leon Turned Down 'Glee'
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Kings of Leon bassist Jared Followill says his stadium-packing rock band turned down a request for their music to appear on FOX's mega-hit 'Glee.'
In an interview with British music magazine
Song by massive acts ranging from Lady Gaga and Journey to Madonna and The Beatles have appeared on the FOX show. An episode focusing on Britney Spears' catalog was Kings of Leon bassist Jared Followill says his stadium-packing rock band turned down a request for their music to appear on FOX's mega-hit 'Glee.'In an interview with British music magazine NME , vocalist Caleb Followill adds he's never seen 'Glee,' but "apparently everybody loves it."Song by massive acts ranging from Lady Gaga and Journey to Madonna and The Beatles have appeared on the FOX show. An episode focusing on Britney Spears' catalog was recently confirmed . But none of that matters to Kings of Leon. "We could have sold out so much more. We turn stuff down constantly."
http://xml.channel.aol.com/xmlpublisher/fetch.v2.xml?option=expand_relative_urls&dataUrlNodes=uiConfig,feedConfig,entry&id=691977&pid=691976&uts=1273167996 http://www.popeater.com/mm_track/popeater/music/?s_channel=us.musicpop&s_account=aolpopeater,aolsvc&omni=1&ke=1 http://cdn.channel.aol.com/cs_feed_v1_6/csfeedwrapper.swf PopScene: Week's Hottest Pics Gabourey Sidibe attends The American Cancer Society's Choose You luncheon on May 5th in New York City. Amy Sussman, Getty Images Amy Sussman, Getty Images PopScene: Weeks Hottest Pics
One particular Grammy-winning Kings of Leon hit was a sought-after property for a film in the past. "We had some people call us up wanting to know if we'd allow 'Use Somebody' to appear," Caleb Followill says. "Next day, they called back and tried to put us through to the star of the movie -- I won't name names, but he's an incredibly famous actor -- to let him try and convince us to agree to do it. I was like, 'Man, don't even waste your energy.'"Kings of Leon also turned down an offer from 'Ugly Betty.' "They wanted us to play ourselves. We were supposed to come in and help with some problem or other," says Jared Followill. ||||| 'Glee' Creator Ryan Murphy Says 'F**k You' to Kings of Leon, Discusses Show's Future
Email This When 'Glee' returns Feb. 6 to Fox, it does so following television's biggest lead-in, the Super Bowl.
Murphy gets almost all credit for the show's music choices. He says his only formula for considering the three to five songs that might appear in an episode is that they have to "offer something for everybody." The show pays a fee to the artist's label for the use of their song, although some, such as Eminem's 'Lose Yourself,' are too "jaw-droppingly expensive" to use.
The band's frontman Caleb Followill told THR, "This whole 'Glee' thing is a shock to us. It's gotten out of hand. At the time of the request, we hadn't even seen the show. ... This was never meant as a slap in the face to 'Glee' or to music education or to fans of the show. We're not sure where the anger is coming from." When 'Glee' returns Feb. 6 to Fox, it does so following television's biggest lead-in, the Super Bowl. The Hollywood Reporter spoke with 'Glee' creator Ryan Murphy, who says the upcoming episode's tagline -- "A big night of passes, fumbles and personal fouls" -- is appreciated by both "adults and children: subversive but where the double entendres go over the heads of 8-year-olds."Murphy gets almost all credit for the show's music choices. He says his only formula for considering the three to five songs that might appear in an episode is that they have to "offer something for everybody." The show pays a fee to the artist's label for the use of their song, although some, such as Eminem's 'Lose Yourself,' are too "jaw-droppingly expensive" to use. Kings of Leon turned down an offer from 'Glee' , and refused to license their music to the hit musical show. "F**k you, Kings of Leon," Murphy said heatedly. "They're self-centered a**holes, and they missed the big picture. They missed that a 7-year-old kid can see someone close to their age singing a Kings of Leon song, which will maybe make them want to join a glee club or pick up a musical instrument. It's like, OK, hate on arts education. You can make fun of 'Glee' all you want, but at its heart, what we really do is turn kids on to music."The band's frontman Caleb Followill told THR, "This whole 'Glee' thing is a shock to us. It's gotten out of hand. At the time of the request, we hadn't even seen the show. ... This was never meant as a slap in the face to 'Glee' or to music education or to fans of the show. We're not sure where the anger is coming from."
http://xml.channel.aol.com/xmlpublisher/fetch.v2.xml?option=expand_relative_urls&dataUrlNodes=uiConfig,feedConfig,entry&id=691977&pid=691976&uts=1294158078 http://www.popeater.com/mm_track/popeater/music/?s_channel=us.musicpop&s_account=aolpopeater,aolsvc&omni=1&ke=1 http://cdn.channel.aol.com/cs_feed_v1_6/csfeedwrapper.swf PopScene: Week's Hottest Pics Reese Witherspoon keeps her hands in her pockets as she tries to stay warm while out in New York City on January 3rd. X17online X17online
Murphy admitted the show hasn't been without controversy, and addressed the racy GQ magazine spread that raised a lot of eyebrows. "I must be so liberal and out of touch because when I first saw that cover, I said to Gwyneth Paltrow , who was with me on set , 'Oh, Lea looks so pretty.' She said something like, 'Get ready.' It didn't cross my mind there would be this big controversy. ... But I never judge the actors because I know they all felt bad about it," he said. "And I think all parties involved learned a lesson about how parents look to the show as something inspirational and aspirational. We all realized that we have to be a little more careful when it comes to sexuality."With Murphy's contract up at the end of season five and the McKinley High School students due to graduate at some point, there is an end in sight to 'Glee' as we now know it. But Murphy is working to ensure 'Glee's' longevity by constantly introducing new characters and plot twists."Chord Overstreet was new and really caught on this season," Murphy said. "And Darren Criss has become one of our biggest recording stars ever. Next year, we'll add two to four new people and every year as the show continues. I won't be doing it forever -- or past my agreement. Then it will become somebody else's dilemma." ||||| The new Hollywood Reporter goes deep inside the war room with cast and execs to look at the forces that have made Fox’s hit show a half-billion-dollar franchise, as they also open up about looming cast salary negotiations, that Kings of Leon snub (everyone's mad!) and an eventual future without creator Ryan Murphy.
The following story appears in the current issue of The Hollywood Reporter available on newsstands Thursday.
The note was practically a high "A-sharp"; the cacophony of voices blended perfectly to form an instantly recognizable tone, striking the right balance of volume and shrill while conveying contagious enthusiasm. There were big smiles, hearty applause and a collective pat on the back. Only this chorus wasn’t singing on the set of Glee; it was 16 cheering department heads seated around a conference table at the Los Angeles offices of 20th Century Fox Television, the studio that produces the hit Fox show. Piped in via video: another eight team members from Columbia Records in New York.
Welcome to the “Gleekly meeting,” a pep rally during which the many tentacles that tend to the nearly half-billion-dollar brand convene to discuss the latest strategies for what has become the network’s No. 2 priority. Averaging 14 million viewers this season, Glee still trails American Idol by a good 10 million, but it’s inching closer to the juggernaut with each passing day. To wit: By the next morning, Jan. 20, hours after Idol’s premiere ratings would show a season-over-season 13 percent decline, the most prominent ad on the Fox lot facing busy Pico Boulevard suddenly had been switched from Ryan Seacrest and company to the Glee gang. GALLERY: Go behind the scenes of Glee.
In some ways, it was a symbolic shift -- if not exactly in ratings supremacy, then in television momentum. And not just any momentum, but the big-network water-cooler kind that’s hard to come by in a world where small cable gets the buzz, even if their shows don’t always get the numbers. If Idol feels like a slightly worn Vegas act that could use new lipstick, Glee still has the freshness of a Year 2 show whose ratings -- and business -- are on the upswing while its audience (average age: 34) remains enviably young.
Just one look around the table at the Gleekly meeting reveals the scope of how mammoth, complicated and promising the show is. In fact, to call it a mere show seems a misnomer. For Glee, gone is the old TV model of making money only off ads (nearly $300,000 per 30-second spot and rising) and syndication. Glee is a brand that, through its inventive packaging of music and the mall-ready charisma of its stars, has redefined how big a TV business can be. Among the participants at the table: the head of consumer products, playing show and tell with the new line of Glee-branded Sephora nail polish; a representative from home entertainment, passing around a Target circular featuring the Season 2, Vol. 1 DVD (the chain accounts for 25% of Glee’s entertainment sales); and vps from publicity, digital (Glee has the No. 1 iPad app) and international, touting the latest numbers out of the U.K., which make Glee the country’s most-watched U.S. series, outperforming Desperate Housewives, Lost and CSI (good news, considering the Glee tour is headed to London’s O2 arena in the summer and promoter Live Nation anticipates successive sellouts). Also on tap: a June reality show on Oxygen awarding a Glee guest role.
Although one gets the feeling that, like their Glee club stars, spontaneous eruptions of claps and “yaaaays” are de rigueur among this ensemble, on this particular Wednesday afternoon, there was even more to cheer about than usual. The show had just won three Golden Globe awards (best television series, comedy or musical, and best supporting actor and actress for Chris Colfer, who plays gay teen Kurt, and Jane Lynch, the school’s acerbic Cheerios coach), was named the No. 1 TV-franchise DVD for 2010 and had recently come off of its biggest music sales month ever, moving 6 million tracks and 1.7 million albums, including a Christmas compilation that went platinum almost overnight. All this while the show was in reruns. RELATED: Ryan Murphy's reluctant participation in The Glee Project.
When Glee returns Feb. 6, it does so in a huge way: with television’s biggest lead-in, the Super Bowl and its 100 million-plus viewers, and the promise of a spectacle on the McKinley High football field: zombies, pyrotechnics, people being shot out of cannons, unexpected kisses and a re-enactment of Michael Jackson’s "Thriller." The episode’s tagline says it all: "A big night of passes, fumbles and personal fouls." The message is classic Glee in that you can read it two ways: signature sports-speak or suggestive, hypersexual innuendo. If it works on both fronts, then it’s true to creator Ryan Murphy’s vision for the show, inspired by the movie Election. In his own words, "I wanted it to be for adults and children: subversive but where the double entendres go over the heads of 8-year-olds."
An hour later, on the fifth floor, 20th TV chairmen Dana Walden and Gary Newman are familiarizing themselves with the concert industry as they’re debriefed on the summer tour by Azoff, Geary, Paul Management partner Jared Paul, 20th TV senior vp brand management Mark Pearson and head of music Geoff Bywater. It will be the second outing for the ensemble cast, 14 of whom are contractually bound to participate, after a four-city experiment last year that proved a runaway success. Key among them: stars Lea Michele, Cory Monteith, Amber Riley and Colfer, who’s not exactly stoked about the physical demands. "My reaction was less enthusiastic than most of the kids because I never had any aspiration to be part of the music world," he says. "It’s also very exhausting, and last time I tore through a ligament in my right leg. But getting that immediate feedback from the fans is an adrenaline high that you can’t really describe."
On this trek, the Gleeks graduate from theaters to arenas, with plans to hit most major U.S. markets, the U.K. and Ireland from May to July. But of all the talk of unfinished work — from merchandising decisions (one of the first items to sell out on Glee’s 2010 summer tour: a $200 replica of the McKinley varsity jacket) to VIP package strategies to scheduling rehearsals around the network upfronts in May -- No. 1 on the agenda was a break for the young stars: three solid Glee-free weeks. "It’s man-da-to-ry," Walden says with den-mother authority.
She has reason to be concerned: Long days and nights are the likely cause for a recent spate of illnesses, passed on from one cast member to the next, throwing off the already tight schedule. "That choir room is like a petri dish these days," Lynch says. "We’ve been dropping like flies the last couple weeks."
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Glee is already on a 24/7 cycle and has been for months. In addition to the crew’s 16-hour days, songs are being produced relay-race-style on two continents so that the music never stops. Before producer Adam Anders goes to sleep in Los Angeles, he hands off the work to Peer Astrom, his partner in Sweden, who passes it back at the end of his day. Once a track is finished, it’s approved by Murphy, after which it can be recorded, choreographed, rehearsed and finally shot. Each step of the production process — and, in fact, everything Glee-related, down to the image of Lynch’s Sue Sylvester on a keychain that reads, "Face it, you want to be me" — requires Murphy’s signoff. Operating all these moving parts costs anywhere from $3.2 million to $3.8 million per episode, a 20 percent budget increase from Season 1, which in Walden and Newman’s eyes is worth every penny.
"Glee is a big commitment at Fox, and Ryan is our most important creator," Newman says. "He combines incredible intelligence with a commercial instinct and truly impeccable taste. Frequently those things don’t go together that well, but he really is an unusual combination of talents." Glee co-star Matthew Morrison sums up Murphy this way: "Brilliantly demented. He’s got a sick brain: sick in a good way, sick in a bad way, just sick."
Indeed, Murphy’s first series for Fox, Nip/Tuck — which aired on FX for six seasons and has been described as "twisted" — was what got Walden’s attention. "It was appointment viewing in my house," she says. "Luckily, through Ryan’s relationship with FX, we were introduced in 2006 just as he was about to make a deal away from Warner Bros." At the time, Murphy says, he was itching for a change: "I thought, ‘I don’t want to do another dark show about death and destruction and pain; I want something that makes me feel good, that gives me hope.' " Then Murphy got hold of a film script by Ian Brennan about a fledgling glee club and saw potential for a series offering an idyllic view of high school told through song. Or, as he likes to call it, "musical vitamins for kids."
Newman wasn’t sold. "Ryan is an unbelievable storyteller — he pitches without notes but with incredible detail and paints really full characters," Newman says. "I thought: ‘Oh God, he’s talking about a high school musical show. This is a disaster; it will never work.' But while part of my brain is screaming that, the rest was totally engaged. It was so compelling, a fully fleshed-out world, and by the end of his pitch, it was impossible not to get on board."
Sony Music also saw the light, not to mention dollar signs, at the potential yield of the musical component. After viewing a five-minute clip of the pilot episode, Columbia-Epic Records Label Group chairman Rob Stringer says he became "evangelical" about acquiring music rights to the Glee franchise. According to a source, three other labels had also met with the Glee team, including Universal’s Interscope Records, which passed on the project when it was deemed too costly. "I thought it was the best thing I had seen since I’d been in America," the British Stringer says. "Nothing in my mind thought it was a gamble."
His instincts were spot-on. Glee’s take on modern hits and show-tune standards, classic songs by the likes of the Beatles and Rolling Stones and mash-ups of old and new (Rihanna’s “Umbrella” with “Singin’ in the Rain”) have made the show one of the hottest music properties in the world, with 9 million albums and 21 million downloads sold. Glee even bested the Beatles for the most songs on the Billboard Hot 100 simultaneously, and its version of Journey’s “Don’t Stop Believin’ ” just passed the million mark in digital sales. “The cast of Glee has truly reinvented our song for their generation," says Journey's Jonathan Cain, who co-wrote “Don’t Stop Believin’. "It is rare when a song that is over two decades old can be a new sensation again. We are honored.”
Considering the music business is one of diminishing returns, the 50-50 partnership has turned into a financial windfall for Columbia to the tune of about $100 million. Stringer won’t confirm a number but says: “It’s a very healthy addition to our bottom line. I don’t know any artist that can do 9 million albums in 15 months. That’s basically Lady Gaga territory.”
With four volumes of Glee soundtracks in the marketplace — plus the Christmas collection and an EP of Madonna songs — the label is planning for two more this year, one in March and another in May. Add a limitless supply of cover songs, and future release possibilities are virtually endless. “It’s not like people are saying this is crap,” Stringer says. “We’re getting really good reviews for these records."
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Credit for the show’s music choices belongs almost entirely to Glee’s resident music nerd: Murphy himself. He says his only formula for considering the three to five songs that might appear in an episode is that they “offer something for everybody.” Murphy tends to favor show tunes and standards because, he says, “a lot of that stuff isn’t taught or the young audience is not exposed to it.” He first noticed a reaction from the show’s predominantly teen audience when Michele sang the Broadway showstopper “Don’t Rain on My Parade.” “It hit the Top 5 of iTunes, and I could see the Funny Girl original soundtrack rise through the ranks,” Murphy recalls of the December 2009 Season 1 finale. “That was pretty amazing, to reinterpret something that I have great fondness for and give it a whole new audience.”
Artists are seeing a ripple effect, too. While synch rates are down — the price tag for a hit song is in the vicinity of $25,000 (a fee the songwriter splits with his or her music publisher) — exposure through Glee often results in a dramatic jump in catalog sales. After September’s Britney Spears episode, the pop star sold 35,000 incremental units among five songs, one of which, “Stronger,” saw a spike of 1,160 percent, according to David Bakula, senior vp analytics at Nielsen Entertainment, who recently submitted a 70-page report titled “The Power of Glee” to Sony Music for analysis. Spears’ 2004 greatest-hits album also saw increased sales of 413 percent. “The halo effect is pretty significant,” Bakula says. “It isn’t all about tracks. Our research found that it was more about the artist as a whole.”
Still, even with Glee’s undeniable popularity and selling power, certain artists demand a premium for their songs. “We went after Eminem’s ‘Lose Yourself,’ and it was jaw-droppingly expensive,” Murphy says. “Around $200,000. We couldn’t do it because the episode would’ve been so over budget.” Then there are artists whose catalogs are off-limits. Glee’s best-known rejection: Kings of Leon, who rarely license their music. Murphy’s message to nonbelievers the Followill brothers? “F--- you, Kings of Leon,” he says, raising the volume of his monotonal interview voice ever so lightly. “They’re self-centered assholes, and they missed the big picture. They missed that a 7-year-old kid can see someone close to their age singing a Kings of Leon song, which will maybe make them want to join a glee club or pick up a musical instrument. It’s like, OK, hate on arts education. You can make fun of Glee all you want, but at its heart, what we really do is turn kids on to music.”
Kings of Leon frontman Caleb Followill tells THR: “This whole Glee thing is a shock to us. It’s gotten out of hand. At the time of the request, we hadn’t even seen the show. It came at the end of that record cycle, and we were over promoting [“Use Somebody”]. This was never meant as a slap in the face to Glee or to music education or to fans of the show. We’re not sure where the anger is coming from.”
Another rock star on Murphy’s black list? Former Guns N’ Roses guitarist Slash, who recently revealed that he draws the licensing line at Glee. “Glee is worse than Grease, and Grease is bad enough,” he said in an interview. Murphy’s response: “Usually I find that people who make those comments, their careers are over; they’re uneducated and quite stupid.” Worth noting: GNR allowed a hokey Glee-like arrangement of “Sweet Child O’ Mine” to be used in the 2008 Will Ferrell comedy Step Brothers.
Besides, Murphy adds, tons of top-notch talent are clamoring to get on Glee. The latest to approach him for guest spots: Stevie Nicks and Jennifer Lopez, both of whom he’s trying to write in, and Anne Hathaway was recently announced (she plays Kurt’s lesbian aunt). Even former Idol judge Simon Cowell requested a sit-down with Murphy. "I went to his house, and the meeting was simply: How did you come up with this, and why didn’t I think of it?"
In a way, Glee has out-Idol’d Idol. It gets its music to market faster, and those songs are burning up the charts. It’s the sort of forward momentum few Idol alums get, and as Idol struggles to regain its credibility, it could look to its former follower for direction. Murphy insists he never saw it as competition. "We couldn’t touch Idol’s numbers," he says. "People are unnecessarily harsh on that show. I bow down to it."
Perhaps in a nod to Idol’s impact, Murphy is organizing a charity effort called Glee Gives Back. “We just got approved for a million dollars over the next three months to fund arts-education organizations,” he says. “It’ll also include proceeds from DVD sales. It’s very important to me and to Fox that we establish scholarships in schools.”
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Even though one of the main criticisms of Glee is that its portrayal of high school is unrealistic, in looking back at Murphy’s experience in Indianapolis, where he was "out" during his teens, it plays like a signature script. Take Murphy’s first concert: Hall and Oates in 1981. “I put eyeliner on to go to the show, and my mother hit the roof,” he recalls. “My parents were very Midwestern Catholic, so to be doing a pop star new-romantic look? Altar boys don’t do that. But I said, ‘No, I’m not changing how I look,’ and I got in a lot of trouble.” Once he arrived at the venue, Murphy found a community of like-minded people and "had a ball" in one of the first times it felt normal to be different.
"I don’t think Glee reflects the real world all the time; it reflects the world I wish it would be," he says. "Within that utopia, I want every episode to end with the viewer uplifted." For Murphy, that means rewriting the Beverly Hills, 90210 rulebook. At Ohio’s McKinley High, the kid in the wheelchair (Artie, played by Kevin McHale) can dance, the girl with Down syndrome (Becky, played by Lauren Potter) is a cheerleader, and the outcasts are popular. Even the jocks, led by sweetheart quarterback Finn (Monteith), steer clear of stereotypes, prompting us to wonder, what was Murphy’s relationship like with the football players at his school? "I dated them," he says with a laugh. "I was popular because I was really confident. The jocks were my allies. And I had quiet little relationships with a couple of them."
The football fetish — which started with Episode 4 in which Colfer re-enacts Beyonce’s "Single Ladies" dance with the rest of the football team as a field-goal try — continues with the Super Bowl special. Initially, the idea was for Murphy to do a supersized episode, with Fox and NFL sponsor GM kicking in an additional $2 million. But though the sky was the limit and the network was clearly putting its faith and muscle behind his high school musical, Murphy resisted.
"We’ve taken a lot of criticism for doing tributes to Madonna, Britney Spears and Rocky Horror Picture Show … and everyone thought we were gonna try and out-top ourselves," he says. "But no matter how big you get, you’re not gonna please everybody, so the consensus was, let’s not do a big episode of Glee, let’s do a really good episode of Glee.
"We’re editing now, and it feels similar to the pilot: a lot of heart. It’s important in that it deals with the gay bullying theme, and it’s about music bringing disparate people together. It’s quite a beautiful little fable."
For all its warm and fuzzy intentions, Glee is not without its controversy. Murphy constantly pushes the envelope with racy scenes and she-didn’t-just-say-that zingers like the time cheerleader Santana (Naya Rivera) coos “You can drill me anytime” to a dentist played by John Stamos. “There is a line, and Ryan has upon occasion stepped over it,” Walden admits. “And when he does, he is told so by his viewers. But no risk, no reward. They don’t know where the line is unless they are pushing up against it. My kids are 7 and 10, and they aren’t allowed to watch every episode. This is a show about high school students, and the appropriate audience starts in high school, as far as I am concerned.”
Singer-songwriter Melissa Etheridge is a fan of the show and says her 13-year-old daughter “lives and breathes Glee, Lord have mercy!” Yet Etheridge, a major advocate of gay rights, admits to finding some of the subject matter a bit risque: “The teenage sex and the pregnancy, these are at the forefront of a mother’s mind.” Still, Glee advocates like Rock of Ages executive producer Janet Billig, a music industry veteran and a mother of two, say that, at the very least, racy story lines “start a conversation. I let my 8-year-old watch Glee, and we’re able to talk about relationships, being dumped by friends and boys and Kurt being gay.”
It’s a responsibility Colfer, who’s often described as the heart and soul of Glee, appreciates; his Globes acceptance speech pretty much said it all. "I get hundreds of e-mails every day from kids all around the world,”"he says. "One 7-year-old wrote me that watching Kurt makes him feel like he’s not alone; others say: ‘This story line saved my life. … I felt worthless until Kurt stood up for himself.’ It means the world to them, and that makes my job so gratifying. It’s a great gig."
One of the show’s rare missteps was the steamy October cover of GQ featuring Michele and Dianna Agron half-dressed in schoolgirl outfits and suggestive positions. “We really didn’t get a chance to handle it; it was an after-the-fact thing,” Newman says. “If we had our choice, we would have liked to have avoided it; it wasn’t great for the brand.”
For his part, Murphy was blissfully oblivious at first. “I must be so liberal and out of touch because when I first saw that cover, I said to Gwyneth Paltrow, who was with me on set, ‘Oh, Lea looks so pretty,’ ” he recalls. But even Paltrow could see the storm clouds coming. “She said something like, ‘Get ready.’ It didn’t cross my mind there would be this big controversy. … But I never judge the actors because I know they all felt bad about it. And I think all parties involved learned a lesson about how parents look to the show as something inspirational and aspirational. We all realized that we have to be a little more careful when it comes to sexuality.”
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That means the Finn masturbation scene that somehow got past broadcast standards earlier this season won’t fly, either. “I personally did not think it was too much, but I immediately heard from parents and even my gay friends who were like, ‘I wasn’t comfortable knowing that my 8-year-old niece in Maryland was watching that,’ ” Murphy says. “From now on, I will sweat every single word and how we’re presenting it.”
Ask what Murphy is like to work with, and you’ll hear an array of adjectives ranging from “challenging” to “professional” to “no-nonsense” to “mercurial.” He sees himself as “hard and encouraging” but also giving. “It’s very important to me to bring people up, to get more women and minorities Directors Guild cards,” he says. “When I started, it was all straight white men. It’s not that way anymore. I’ve been so lucky, but if you don’t give back, you’re just an asshole.”
And there’s one unspoken modifier, too: Murphy is vital. He plays an integral role in nearly every phase of production but especially in setting Glee’s tone. For that, he’s given a far longer leash than most showrunners. Still, there was a moment when it almost snapped.
It was August 2009, and Murphy, who had directed the 2006 film Running With Scissors, received the offer of his dreams: the movie Eat Pray Love, with Julia Roberts in the starring role. Just one problem: He and Glee co-writers Brad Falchuk and Brennan were only a few episodes into Season 1, and the trio was committed for 13. To do Love would require three months of shooting on three continents, not to mention the consent of his studio bosses, who were getting ready to launch his new show on the back of Idol.
“It was tense,” Murphy says. “It was a very weird period in my life. Everything happened at once. I was finishing Nip/Tuck, Glee was greenlit and in production against all odds, and Julia Roberts — the most famous, highest-grossing female movie star in the history of the planet — said yes to the movie that I believed in. I wanted to do it, and it was very difficult because they never said no to me. Fox, Amy Pascal at Sony, Dana — none of them wanted to take someone’s dream away, so I really had to make some promises.”
The decision to let Murphy embark on his Love adventure was “highly unusual,” Walden recalls. “It involved a huge leap of faith on our part and a huge degree of trust in Ryan. To say no would have been the end of our relationship with him and the wrong decision in a partnership.”
As Glee legend goes, Falchuk and Brennan flew around the world to write with Murphy whenever he could spare the time. The Madonna episode, in fact, was conceived beachside in Bali on a 110-degree day. “I really did admire how everybody handled it,” Murphy says. “I feel very loyal to that group of people now because they believed in me.”
It does, however, point to an uncertain future. With Murphy’s Glee contract up at the end of Season 5 and the cast due to graduate at some point (“just because they leave this school doesn’t mean they can’t go to another one,” he hints), can the show continue to churn out stars, ratings, quality music and good stories without him? As much as he can, Murphy is working to ensure Glee’s longevity by setting up story lines and the constant introduction of new characters.
“Chord Overstreet was new and really caught on this season, and Darren Criss has become one of our biggest recording stars ever,” Murphy says. “Next year, we’ll add two to four new people and every year as the show continues. I won’t be doing it forever -- or past my agreement. Then it will become somebody else’s dilemma.”
With that admission, the Fox credo of gleeful optimism fades as Walden contemplates life without her friend and collaborator. “The pop culture magic that surrounds this show, Ryan brings,” she says. “The character development, the story lines — Ian and Brad can do those parts ultimately if they had to. But I don’t think I would want to do Glee without Ryan altogether. I’d hope he’d have some minimal involvement.”
Adds Newman: “I think a creator like him has to be handled really carefully by a studio. But, the last thing we’re worrying about is some post-Ryan era.” Murphy shares that sentiment: “I’m just trying to get past the Super Bowl,” he says.
Besides, Fox might have a bigger Glee headache to deal with: the imminent salary renegotiation with members of its ensemble cast. “With a series that’s this successful, it’s not unusual that people would have to renegotiate contracts,” Newman says. “My guess is over the course of the next year, we’ll be having those conversations with representatives of the cast and hope that we can find areas of agreement to increase their compensation and get what we need in terms of additional services.”
Those services include participation in the tour, recording obligations, options for three movies at Fox, promotional appearances, press, attendance at Fox events, charitable endeavors and, of course, all that merchandising. On the actors’ side, several are juggling solo music careers and movie offers. To shoot Garry Marshall’s New Year’s Eve, co-starring Michelle Pfeiffer, Halle Berry and Ashton Kutcher, Murphy is writing Michele out for several days in February and March, “so she can go back and forth and do the movie,” he says. “We’re doing that with Darren, too, who has an existing movie career. In success, you should have more success.”
At the same time, they’re mindful of not hijacking their actors’ time so much that they make a Friends-like pact and revolt. But if it happens, that’s cool, too, Murphy says. “I expect and encourage it. I think everybody should do whatever they can so they feel happy and taken care of. I don’t want anybody to come to work feeling like: ‘F--- you. You don’t care about me.’ For the first 13 episodes, all of us were like, ‘whatever it takes,’ including those kids. Then we got successful, and they were like, ‘OK, a little less what it takes, a little more, ‘We wanna go home and have a life.’ A lot of companies might be like: ‘Go screw yourself.’ We realize that it’s a little different now, and we’re starting to reach out to different actors and representatives and come up with pay raises and movie outs.”
Whether those pay bumps end up on the level of The Big Bang Theory will depend largely on Season 2’s numbers, which should get a substantial Super Bowl spike, but one thing’s for sure: It will be an awfully long way to come in a short amount of time for such Broadway stars as Morrison and Michele, who both earned union pay of $1,800 a week, by Billig’s estimation, while they starred in Tony-nominated shows. “The jump from stage to TV is astronomical,” she says.
Glee has yet to hit its peak, and the frenzy will only intensify during the coming months. “I think these kids have handled fame very, very well, but it’s hard for a lot of them,” Murphy says. “Like Chris Colfer. I’ve seen it where he’s at a party and every gay person within a three-mile radius is suddenly up in his face. … At the same time, I tell them: ‘This will not last forever. You will not be on TV forever. You will not have the opportunity to perform in the 02 Arena forever. You will not be going to the Golden Globes forever. Try to enjoy it.’”
It’s advice the poker-faced Murphy might want to take himself and smile every so often. He’s earned it.
-- Additional reporting by Marisa Guthrie | Safe to say Glee creator Ryan Murphy is no longer a Kings of Leon fan. The band wouldn’t let its music be used on the show, and Murphy shared his reaction with the Hollywood Reporter: “F*** you, Kings of Leon. They're self-centered a**holes, and they missed the big picture. They missed that a 7-year-old kid can see someone close to their age singing a Kings of Leon song, which will maybe make them want to join a glee club or pick up a musical instrument.” “It's like, OK, hate on arts education,” he continued. “You can make fun of Glee all you want, but at its heart, what we really do is turn kids on to music." The band’s frontman, however, is confused by the controversy. “It’s gotten out of hand,” Caleb Followill says. “At the time of the request, we hadn't even seen the show. ... This was never meant as a slap in the face to Glee or to music education or to fans of the show. We're not sure where the anger is coming from." Click for more from the interview, including Murphy’s surprise at the brouhaha over Glee’s racy GQ photo spread. |
S tatements of Administration Policy, or SAPs, are one of the President's communication tools designed to communicate the Administration's position on legislation coming up on the House and Senate floor. Issued by the Office of Management and Budget (OMB) on behalf of the Executive Office of the President (EOP), SAPs provide the Administration's position on pending legislation. These statements can supply guideposts to Congress regarding the Administration's legislative approach to the passage and execution of a bill. A collection of all SAPs from the current presidential Administration is located at the White House OMB website. SAPs by design always include policy position language and are often the first formal written document indicating the President's intent to sign or veto a legislative measure. Beyond the intent to sign or veto a bill, SAPs also indicate varying levels of support or opposition to the bill in question. This report discusses the creation and use of SAPs, but does not discuss OMB's related interagency clearance procedures at length. This report is divided into five sections. The report discusses structural components of SAPs, the development of SAPs from the Ronald Reagan Administration to the present, the coordination of executive branch actors involved in issuing SAPs, the receipt of SAPs and their impact on government institutions, and possible reactions to SAPs when they are released publicly. SAPs are written statements of the Administration's policy position towards a particular piece of legislation. While other avenues and forms of communication exist between Congress and the executive branch, SAPs serve as a contained summation of the Administration's positions regarding a specific bill. This section describes a SAP's structure, key components, position statements, and veto threats that may be found in SAPs. The report includes an example SAP in the Appendix . In recent years, SAPs have generally adhered to the same structure from Administration to Administration. Underneath the bill title, sponsor, and number of cosponsors, the Administration will lay out its views on the bill. The George W. Bush and William J. Clinton Administrations typically addressed their position on the passage of the bill in the first paragraph of the SAP. In contrast, the Barack H. Obama Administration often has its bill position in the middle or at the very end of a SAP. The key operative clause in all SAPs across presidencies is an expression of the Administration's opposition to or support for passage of the bill. For example, the Obama Administration writes in the included SAP in the Appendix , "Accordingly, the Administration strongly opposes House passage of H.R. 3010 , the Regulatory Accountability Act." SAPs may also point to specific provisions within the bill text if they meet the Administration's threshold of significance. If such provisions are included, the Administration wants the items to be noticed by Members of Congress and likely also the public. SAPs will sometimes offer further revisions for these provisions or call for amendments, in addition to critiques of the existing bill text. SAP position statements cover the spectrum from strong support of a bill, to strong opposition to bill passage, a threat to veto a bill, and all positions in between. SAPs may even include criticisms or praise of particular bill provisions. This section provides examples of the gradations of position statements contained in SAPs. An Administration may choose to support the passage of a bill, as was the case in the Obama Administration's SAP on S. 1793 , the Ryan White HIV/AIDS Treatment Extension Act of 2009. The SAP reads, "The Administration strongly supports Senate passage" of S. 1793 , and later identifies that the Obama Administration, in particular, "supports the provision in the legislation revising the threshold of unobligated balances that triggers penalties ... " and "strongly supports the inclusion of a provision to offset unobligated balances from subsequent grant awards rather than cancellation of unobligated amounts." For this particular bill, the SAP starts with a statement of strong support of bill passage and includes suggestions for bill provisions that the Obama Administration would strongly support. Similarly, a SAP that voices opposition to a bill's passage contains a position statement and possible consequences if the bill is passed. The Obama Administration wrote, "The Administration strongly opposes House passage of H.R. 3463 .... " Furthermore, the Obama Administration says, "H.R. 3463 would terminate the Election Assistance Commission (EAC), which was established after the 2000 Presidential election to improve the administration of elections. The EAC continues to perform crucial statutory responsibilities by serving as a national clearing house of information for election officials and the public." As in most SAPs, the initial position statement is supported in the body text by specific statements on the bill's projected effect. While SAPs allow for the Administration to assert varying levels of support for or opposition to a bill, perhaps the most noticeable statement in a SAP is whether the Administration intends to veto the bill. Some Members of Congress have characterized SAPs as forerunner indicators of a veto. Members may pay particular attention to a SAP when a veto threat is being made. Two types of veto threats appear in SAPs: a statement indicating that the President will veto the bill, or a statement that agencies or senior advisors would recommend that the President veto the bill. Beginning in the 108 th Congress, SAPs containing veto threats have underlined the veto threat itself. For example, the Obama Administration issued a SAP on H.R. 2 – Repealing the Affordable Care Act. The Obama Administration wrote, "If the President were presented with H.R. 2 , he would veto it." In contrast, the Obama Administration's SAP on H.R. 3010 – Regulatory Accountability Act of 2011 said, "If the President were presented with the Regulatory Accountability Act, his senior advisors would recommend that he veto the bill." A SAP indicating that the President will veto the bill, rather than indicating that the President's senior advisors will recommend a veto, may give the President less negotiation room after it is issued. For example, in the same Obama Administration SAP provided in the Appendix , the Administration makes its opposition to H.R. 3010 more specific by including a veto threat at the conclusion of the SAP; however, the Administration's negative position was previously indicated. Generally, SAPs are released concurrent with action in the House Rules Committee, or on the floor of the House or Senate. Releasing a SAP at such a point in the legislative process may serve to maximize the Administration's influence. Frequently, one SAP is issued per bill. Some Administrations have preferred to issue multiple SAPs per bill throughout the legislative process as the bill text changes, while some issued the same SAP to both chambers. Some Administrations limited their use of SAPs only to bills they deemed of particular importance. SAPs can be an important vehicle for the Administration to support or oppose particular provisions of a bill as it makes its way through the legislative process in the House and Senate. OMB wrote in a document from 2000 that, "As a general rule, only items of significant funding or policy importance are included in OMB letters and SAPs. From one perspective, complaining about a large number of minor items would tend to dilute the arguments put forward for major items of importance to the Administration." As described in the U.S. Constitution under Article II, Section 3, the President shall recommend for Congress's consideration "such Measures as he shall judge necessary and expedient.... " The Recommendations Clause, as this is known, has been viewed as the President's basis to make or respond to legislative proposals, and as the President's basis to refuse to do so even when Congress asks for such proposals. When Congress considers legislation, the executive branch conducts a parallel process to consider the legislation, make recommendations, and state the Administration's views. The Office of Management and Budget (OMB), in addition to assisting with the formulation of the President's budget, assists the President in creating the Administration's recommendations and comments on Congress's legislative proposals. Since its inception, OMB has been a source of institutional memory for executive branch operations, attempting to unify the branch both in directing its policy agenda and its program execution. By virtue of being comprised of over 90% career civil servants that may stay beyond an individual Administration, OMB is situated to remember processes and procedures extending across many Administrations. Accordingly, some of OMB's processes have been developed for internal management, rather than individual Administration needs, over time. This section briefly discusses OMB's role in supervising the creation of legislative recommendations and the historical creation of SAPs. OMB writes that its core mission is "to serve the President of the United States in implementing his vision across the Executive Branch. ... It reports directly to the President and helps a wide range of executive departments and agencies across the Federal Government to implement the commitments and priorities of the President." OMB provides a means for interagency consultation with the objective of forming an Administration position rather than having Congress faced with multiple agency views. Importantly, implementing the President's priorities includes tracking bill progress through the congressional chambers and drafting Administration proposals or criticisms in response to legislative action. This process occurs within individual executive branch agencies, however the central legislative clearance process described by Circular A-19 situates OMB in a supervisory position for the Administration. Bill tracking informs the central legislative clearance process, while SAPs and any other activity where an executive branch actor takes a position on proposed legislation are the product of the central legislative clearance process. SAPs were an outgrowth of OMB's efforts to monitor appropriations legislation and develop the President's budget. As part of its responsibilities described in Circular A-11, the Budget Review Division (BRD) within OMB analyzes appropriations bills "for changes from previous configurations of the President's original budget proposals in their respective account areas and determine[s] how these squared with presidential policy." This analysis promotes consistency in an Administration's policy agenda. BRD is responsible for tracking the legislative progress of appropriations bills. Bill tracking expanded during the Reagan Administration to include the formulation of statements on the Administration's position regarding individual appropriations bills. The bill tracking process served as the template for the SAP development process . During the Reagan Administration, demand from the OMB Director for more sophisticated bill statements grew, resulting in statements that were prepared by various divisions within OMB at every stage of the appropriations process . These documents, produced by OMB's program examiners in conjunction with the OMB Director, eventually became Statements of Administration Policy. These early iterations of SAPs were "sent to the chairs and ranking members of the full appropriations committees and subcommittees, and sometimes to the Senate leadership." During this period, SAPs were intended for a select audience. In contrast, modern SAPs are made available online to the public and all Members of Congress upon their release. SAPs are a formal vehicle through which the President and the President's Administration comment on legislation pending before Congress. The process of solicitation and coordination of the executive branch's legislative position is governed by OMB Circular A-19. This section details the Administration's institutional uses for SAPs, discusses key provisions in Circular A-19, and describes the OMB and agency actors involved. The section concludes with strategic considerations regarding the timing of a SAP's public release. The process for creating SAPs is not established in statute. Consequently, implementation practices may evolve over time and may differ from one Administration to another. As mentioned previously, the earliest iterations of SAPs were internal documents released only to a select audience of those involved with the passage of specific legislation. Samuel Kernell writes that, "SAPs are, after all, fashioned for a sophisticated audience interested in discerning the gradations of objection to various provisions cover[ed] in a threat. Even slight variations in the wording of these SAPs may influence legislators' responses.... " In recent Administrations, SAPs are released to both legislators and the public. SAPs are created through consultation among the executive agencies, the White House Office of Legislative Affairs (WHLA), and divisions within OMB. The decision whether or not to issue a SAP ultimately rests with the White House. Although SAPs address administrative aspects of how legislation would be implemented if enacted, the Administration takes political considerations into account during the creation of SAPs. SAPs are drafted by career civil servants in conjunction with political appointees. The issuing of SAPs, therefore, is best understood as a collaborative process between political goals and administrative execution of policy and not as either a strictly political or an exclusively administrative process. SAPs may offer the Administration certain advantages. SAPs allow the Administration to provide language that the President's party and the President's allies in Congress can use when negotiating policies. SAPs allow the Administration to go on record with its reasons for opposing and potentially vetoing legislation. SAPs also enable the Administration to identify key provisions of the legislation that it objects to or finds particularly favorable. SAP language can identify specific provisions of the legislation that the Administration finds problematic. In contrast to the President's oral statements which are often intended for audiences outside of the executive branch, SAPs also allow the Administration to describe its views on bill implementation in finer detail for an executive branch audience. These details can include whether or not provisions of legislation have been identified as areas that would be difficult to execute, either for political or managerial reasons. These details may also prove useful in Congress's efforts to understand possible obstacles involved in implementing the law. Because presidents use SAPs to signal opposition to parts of a bill or to an entire bill, or to comment on implementation challenges, Congress may find these statements informative when considering the likelihood of a bill obtaining the President's signature. Last revised in 1979, Circular No. A-19 describes the procedures for legislative coordination and clearance through OMB. Circular No. A-19 describes the process behind agency recommendations on proposed, pending, and enrolled legislation. As a result, this circular is integral to understanding the executive branch coordination efforts required to issue SAPs. Circular No. A-19 states, "OMB performs legislative coordination and clearance functions to (a) assist the President in developing a position on legislation, (b) make known the Administration's position on legislation for the guidance of the agencies and information of Congress, (c) assure appropriate consideration of the views of all affected agencies, and (d) assist the President with respect to action on enrolled bills." This extends to not only SAPs, but also draft legislation, agency testimony, and agency reports. OMB collects views in advance of clearing proposed legislation, reports, or testimony on behalf of the Administration. Agency views indicate support, opposition, or no objections to the materials proposed for legislative clearance. Positions expressed by agencies may be later used in the creation of SAPs for the President. The Resource Management Offices (RMOs) of OMB consult with relevant agencies that would be affected by pending legislation, if enacted. Within OMB, RMOs are divided by policy area and department. Agency views are consulted throughout the SAP creation process, mainly by RMO proxy, but agency legislative affairs offices are also directly involved in SAP creation. As an internal OMB document from 2000 explains, "In executing its responsibilities for appropriations bill tracking, BRB works closely with the RMOs of OMB. The RMOs, in turn, work closely with the agencies represented in a given bill to obtain their views and, as appropriate, incorporate agency views into letters and SAPs." Though the extent to which agency views are incorporated into executive documents can vary, the SAP creation process structurally allows for agency input. The decision of which agencies' views to include in a SAP is made by OMB and not by the agencies. In making this decision, OMB determines whether an agency's views are critical to the creation of the Administration's position. As discussed in Circular A-19, OMB sifts through agency legislative programs to recommend provisions for inclusion in the President's program. Circular A-19 states that submitting agency legislative programs helps, (1) to assist planning for legislative objectives; (2) to help agencies coordinate their legislative program with the preparation of their annual budget submissions to OMB; (3) to give agencies an opportunity to recommend specific proposals for Presidential endorsement; and (4) to aid OMB and other staff of the Executive Office of the President in developing the President's legislative program, budget, and annual and special messages. Here, OMB emphasizes that agencies have the opportunity for their concerns and suggestions to be expressed in the Executive Office of the President (EOP) via this coordinating function. This coordination process also holds true for the creation of SAPs. As a practical matter not all agency positions will be included in official messaging outside of the executive branch. In an internal guidance document, OMB explained, Given the number of Executive Branch organizations and interests represented in a particular appropriations bill, it is frequently difficult to satisfy everyone's views concerning what items should be discussed in an Administration letter or SAP as well as the priority given to write-ups that are included. Ultimately, this is a judgment call made by OMB policy officials and the White House. For agencies, OMB emphasizes the relationship between agencies and their assigned RMOs as the proper means for agencies to voice their opinions on pending legislation. This is a function of OMB's institutional desire to preserve the executive branch's ability to speak with one voice; however in practice, agencies may reach out to Members of Congress or committee staff. The extent to which agencies engage in this practice highlights another difficulty the President faces in unifying the executive Administration's position. It may be argued that multiple opinions in the Administration allows for the voicing of policy alternatives that may lead to better governance. Others argue that the Administration is most effective when executive agency opinions are coordinated into one Administration position. SAPs acknowledge these two views by processing disparate agency opinions on policy and eventually presenting a unified policy document intended to speak for the entire executive branch. In order to have influence during the legislative process, OMB's internal guidance from 2000 said that SAPs must be strategically released at a time where such statements could have a maximum impact in the legislative negotiation process. This may impart an implicit value to SAPs, OMB noted, "in the sense of the desirability of making the Administration's position on a given issue known as early on as possible in House and Senate consideration, i.e., before the bill reaches the floor." By conveying the Administration's opinion early on in the process, the President may stand to gain a more favorable bill before the legislative process concludes. While the exact timing of SAP release varies by Administration, in practice, SAPs are generally released as a bill is set for House Rules, House, or Senate floor action. Since the release of particular SAPs varies, OMB appears to adjust its guidance based on Administration preferences or in response to the anticipated movement of particular bills once introduced. From an Administration's perspective, SAPs are intended to influence congressional behavior and public opinion. As a result, the Administration views the timing of SAP release to be a critical component of presidential strategy. In the interest of balancing Administrative unity and the Administration's congressional relevance, OMB stated in 2000 that SAP creation "cannot be delayed for receipt of comments from an agency. It is better that a letter or SAP be sent with available comments on time than that a comprehensive letter or SAP be sent too late to influence congressional action." Acknowledging that not all opinions can be included in SAPs either due to delays in receiving agency comments or shifting legislative priorities, OMB stated that such agency comments can be included in future SAPs or letters as the legislative situation develops. SAPs are strategically distributed to legislators in Congress, to executive branch agency officials whose duties may be affected by the pending legislation, and others who may assist in bringing about the President's legislative program. This section describes the evolution of SAP transmittals, the managerial implications of SAPs on the executive branch, and theoretical frameworks for understanding SAPs as one of the President's persuasion tools. In their earliest iterations, SAPs were shared with ranking Members, relevant committee and subcommittee members, and other allies of the Reagan Administration on the legislation in question. Designed to bring about legislative change, the Reagan Administration saw value in giving SAPs to those it deemed best positioned to make alterations favorable to the Administration. Before SAPs were disseminated widely, Reagan Administration SAPs were prepared "for transmission to the appropriations committees and for [OMB Director] Stockman ... to use as ammunition in congressional negotiation sessions." SAPs served then as now as a quick, shorthand statement for the EOP to rely on in trying to bring about the President's agenda. In the Internet age, SAPs are primarily transmitted to the public via the White House website under the OMB page for "Legislative Affairs" information. Like other presidential documents, SAPs on this page are only those issued by the current Administration. SAPs are divided on the site by session, by appropriation or policy bills, and appropriations by subcommittee. It is unknown if involved Members receive SAPs directly, however previously, select Members and staffers were allowed to view SAPs before their official transmittal. Starting in 2012, the White House has used its @OMBPress Twitter account to broadcast the transmittal of SAPs, with hyperlinks redirecting users to the main White House SAP website. These tweets include a further condensation of the Administration's position so that it satisfies Twitter's 140-character limit, providing an additional opportunity for the Administration to express its views to the public in a concise and shareable format. For example, the @OMBPress Twitter account wrote: "#SAP44: Sr Adv Wld Rec Veto of H.R. 5 to Repeal IPAB; Admin Opposes Leg. That Attempts to Erode Key #ACA Provisions Http://t.co/LlW442gA ," conveying the veto threat in the hyperlinked SAP for H.R. 5 . Beyond these Internet forms of transmittal and possible physical distribution to a select audience, a Member of Congress may choose to reference part of a SAP or an entire SAP, thus making it part of the Congressional Record. Two of many theories describing executive branch operations can be applied to SAPs in this context of administrative tools. These two theories illustrate many moving parts within the executive branch and the challenges involved in creating SAPs. The Richard Neustadt model of presidential persuasion suggests that the President's effectiveness rests solely within his or her ability to generate buy-in from other government actors—be they executive agencies, Congress, members of the public, etc. SAPs as viewed through the persuasion model can be understood as a written attempt to generate support for the President's policy agenda by making the President's position known. In this sense, too, SAPs can assuage uncertainties regarding the Administration's intent in executing the presented legislation, should it later become law. The persuasion model incorporates the idea of bargaining on legislation and highlights a SAP's capacity to serve as a starting point for legislative negotiations. In the "going public" model of the institutional presidency, as postulated by Samuel Kernell, the President can gain support for the presidential program by appealing to the American public at large. In this model, public statements by the President regarding the Administration's legislative program may help to generate pressure on Congress by informing and involving the public in the Administration's policy agenda. SAPs in this model, due to their nature as public statements, may inform the citizenry of the Administration's policy intentions and allow the American public to adopt the Administration's views when communicating with their congressional representatives. In 2012, the Obama Administration began tweeting SAPs via its @OMBPress account, indicating that the Administration perceived value in publicizing the information broadly to the public via social media. SAPs summarize the Administration's position towards legislation at a fixed point in time. SAPs can supply guideposts to Congress regarding the Administration's legislative approach to the passage and execution of a bill. SAPs give the Administration the ability to point to particular amendments or clauses within the bill text if they meet a threshold of significance. The combination of these bill execution guideposts and areas highlighted as significant to the Administration may be useful to Congress in crafting their own legislative strategies. As SAPs are released publicly via the White House website, SAPs may be analyzed in relation to three general audiences. This section details the possible implications that a SAP's release may have on congressional, public, and executive branch action. The intended audience of SAPs is primarily Congress. SAPs are released concurrent with floor action by the congressional chambers or the House Rules Committee and are designed to inform Congress of the Administration's position towards pending legislation. However, SAPs are not released in a vacuum; the confluence of public reaction and congressional reaction to the Administration's position may create new effects and pressures on the legislative and executive relationship in their negotiation efforts. Because SAPs are the primary written vehicle for veto threats, Congress may find these statements particularly useful for the record they provide of Presidential positions towards legislation over time. SAPs, like veto threats, can constrain the President's and the Administration's future ability to negotiate. SAPs by design highlight specific provisions that are objectionable or viewed favorably by the Administration. By making a public statement in favor or in opposition to legislation, the President risks limiting the Administration's options later on in the negotiation process. Conversely, SAPs may confer an advantage to Congress by giving Members a simple method to assess Presidential attitudes towards legislation. In 1954, Richard Neustadt recognized the need for a concise method to convey the President's position: On the bulk of this business, overburdened legislators, in committee and out, need a handy criterion for choice of measures to take up, especially when faced with technical alternatives in which they have but little vested interest. They need, as well, an inkling of Administration attitude toward the outcome: how much, if at all, does the President care? This criterion may come in the form of first, whether or not a SAP has been issued on a particular bill, and second, what the statement contained in the SAP indicates about the level of importance the President has given to pending legislation. Samuel Kernell writes, "A closer inspection of the details of the threats finds that the great majority involves the President couching his threat in a proposed compromise. Typically, the threat identifies those provisions that the President objects to and suggests that their removal or alteration along specified lines would lead to his signature." SAPs may help Congress find areas of disagreement and possible suggestions for improvement on the bill that would garner the Administration's support of the bill. By issuing a SAP, the Administration publicly announces its expectations for the bill. Specificity and definitiveness may serve to instill credibility in the Administration's position, while at the same time limiting the Administration's options. Should the Administration deviate from the stated position, the Administration could damage its credibility with the public and its leverage with Congress. Samuel Kernell notes, "For some legislation, Presidents sense they can score points in public opinion by vowing publicly to veto some unpopular bill in Congress." On the other hand, Presidents can lose public or congressional support should they later choose to sign legislation they previously said they would oppose or veto, or vice versa. Furthermore, "Legislators observe the President's action and conclude that he can ill afford politically to sign a bill that fails to give him what he has demanded, or at least something pretty close." A President's reputation is at stake if the Administration fails to make the legislation conform to the Administration's requirements laid out in a SAP. Lending this predictability to the process early on allows for all actors involved to set expectations for legislative outcomes and possible areas of compromise throughout the process. As previously discussed, many parts of the Administration are involved in the SAP creation process via Circular A-19. In an effort to coordinate the executive branch on behalf of the President, OMB consults with executive branch agencies regarding agency priorities and the President's priorities. From the OMB and EOP perspective, this is done to ensure consistency and continuity throughout the Administration. From an agency's perspective, this allows the agency an opportunity to advocate for measures on the agency's behalf. Remarking on the structure of the executive branch in 1951, observer David B. Truman wrote that the executive branch is " ... a protean agglomeration of feudalities that overlap and crisscross in an almost continual succession of changes. Some of the lines of control ... terminate in the Presidency, some in ... the legislature and some ... 'outside' the government.... " In an attempt to maintain consistent views throughout the Administration and the executive agencies, SAPs offer the President a process and policy documents to coordinate views as soon as legislation becomes pending. SAPs represent OMB's role in putting forth a unified Administration position on pending bills. This is because of the coordination process involved in SAP creation and in OMB's attempts to unify disparate agency opinions into one Administration position. Although their value to Congress regarding pending legislation is apparent in SAP statements regarding bill passage, SAP insights may also prove useful in Congress's efforts to understand executive branch operations and possible implementation of the law. | Presidents communicate their views on pending legislation in a variety of ways. The Office of Management and Budget (OMB) formally communicates the Administration's views by way of Statements of Administration Policy. Statements of Administration Policy, or SAPs, are designed to signal the Administration's position on legislation scheduled on the House and Senate floor. SAPs are often the first public document outlining the Administration's views on pending legislation and allow for the Administration to assert varying levels of support for or opposition to a bill. While Administrations vary as to how frequently and how many SAPs are released, a SAP's value comes in its ability to speak for the coordinated executive Administration as a whole. SAPs grant the Administration the opportunity to go on record with its reasons for opposing and potentially vetoing legislation. SAPs also enable the Administration to identify key provisions of the legislation that it objects to or finds particularly favorable. SAPs may also provide Congress insights into the Administration's position towards possible bill implementation. When a SAP indicates that the Administration may veto a bill, it appears in one of two ways: (1) a statement indicating that the President intends to veto the bill, or (2) a statement that agencies or senior advisors would recommend that the President veto the bill. These two types indicate degrees of veto threat certainty. Statements of Administration Policy have generally adhered to the same structure from Administration to Administration. SAPs are released concurrent with action in the House Rules Committee, or on the floor of the House or the Senate. A SAP is released at such a time in the legislative process so as to maximize the Administration's influence in the policy outcome. |
In our reviews of embassy staffing issues during the 1990s, we found that the Department of State and some other agencies operating overseas lacked clear criteria for staffing overseas embassies. Other reviews reached similar conclusions. In early 1999, the Accountability Review Boards that investigated the bombings of two U.S. embassies in East Africa concluded that the United States should consider adjusting the size of its embassies and consulates to reduce security vulnerabilities. Later that year, the Overseas Presence Advisory Panel (OPAP) recommended that rightsizing be a key strategy to improve security and reduce operating costs. In August 2001, President Bush announced that achieving a rightsized overseas presence was one of his 14 management priorities. The September 2001 terrorist attacks on the United States added impetus for this initiative. In May 2002, we testified before the Subcommittee on National Security, Veterans Affairs, and International Relations, House Committee on Government Reform, on a proposed framework for determining the appropriate number of staff to be assigned to a U.S. embassy. To further assess the applicability of GAO’s rightsizing framework, we selected the embassies in Dakar, Senegal; Banjul, The Gambia; and Nouakchott, Mauritania. We selected these embassies based on OMB’s questions about whether our framework can be uniformly applied at all posts, and because experts suggest that rightsizing in Africa is a significant challenge. The embassy in Dakar is a medium-sized post that provides regional support to several embassies including Cape Verde, Guinea, The Gambia, Mali, Mauritania, and Sierra Leone. Embassy Dakar has about 90 direct-hire Americans and 350 local hires working in seven U.S. agencies. Embassy Banjul is a special embassy program post with 7 American direct hires and about 65 local hires. Embassy Nouakchott is also a special embassy program post with 14 American direct hires and about 42 local hires. Our work at the three posts in West Africa further demonstrated that our framework and corresponding questions can provide a systematic approach for assessing overseas workforce size and identifying options for rightsizing in developing countries. We identified examples of the specific security, mission, and cost issues at each post, which, when considered collectively, highlighted staffing issues and rightsizing options to consider. (See app. I for more details on our findings at each of the embassies.) The ability to protect personnel should be a critical factor in determining embassy staffing levels. Recurring security threats to embassies and consulates further highlight the importance of rightsizing as a tool to minimize the number of embassy employees at risk. Our security questions address a broad range of issues, including the security of embassy buildings, the use of existing secure space, and the vulnerabilities of staff to terrorist attack. Officials at the embassies in Dakar, Banjul, and Nouakchott agreed that security vulnerability should be a key concern in determining the size and composition of staffing levels at the posts and should be addressed in conjunction with the other rightsizing elements of mission and cost. Each post has undergone security upgrades since the 1998 embassy bombings to address deficiencies and ensure better security. However, until facilities are replaced as part of the long-term construction plan, most will not meet security standards. For example, many buildings at overseas posts do not meet the security setback requirement. At the Dakar post, responses to the framework’s security questions identified significant limitations in facility security and office space that likely limit the number of additional staff that could be adequately protected in the embassy compound. This is a significant issue for the embassy in Dakar given its expanding regional role and projected increases in staffing to accommodate visa workload and increasing personnel at non-State agencies, as well as because planned construction of a new secure embassy compound will not be completed until at least 2007. In contrast, Embassy Banjul has unused office space that could accommodate additional staff within the embassy compound. Although U.S. interests are limited in The Gambia, a staff increase could be accommodated if decision makers determine that additional staff are needed as a result of answering the framework’s questions. In Nouakchott, existing space is limited but adequate. However, officials raised concerns about the security risks associated with the expected increase in personnel on the compound. The placement and composition of staff overseas must reflect the highest priority goals of U.S. foreign policy. Questions in this section of our framework include assessing the overall justification of agency staffing levels in relation to embassy priorities and the extent to which it is necessary for each agency to maintain or change its presence in a country, given the scope of its responsibilities and its mission. Related questions include asking if each agency’s mission reinforces embassy priorities and if an agency’s mission could be pursued in other ways. Responses to the questions showed that there are key management systems for controlling and planning staffing levels currently in use at overseas posts, but they are not designed or used to systematically address these staffing, priority, and mission issues. One such management system is the National Security Decision Directive- 38 (NSDD-38). NSDD-38 is a long-standing directive that requires non-State agencies to seek approval by chiefs of missions on any proposed changes in staff. NSDD-38 does not, however, direct the Chief of Mission to initiate an assessment of an agency’s overall presence. The Overseas Presence Advisory Panel reported that the directive is not designed to enable ambassadors to make decisions on each new agency position in a coordinated, interagency plan for U.S. operations at a post. Post officials agreed that the NSDD-38 system has only limited usefulness for controlling staffing levels and achieving rightsizing objectives. Another management system is the Department of State’s Mission Performance Plan (MPP). The MPP is the primary planning document for each overseas post. State’s MPP process has been strengthened significantly to require each embassy to set its top priorities and link staffing and workload requirements to those priorities. However, the MPP does not address rightsizing as a management issue or provide full guidance to posts for assessing overall staffing levels, by agency, in relation to a post’s mission. At the three posts we visited, staffing requests were addressed in the MPPs in the context of each post’s mission performance goals; however, these documents did not address the security and cost trade-offs associated with making such staffing changes. In addition, Embassy Dakar has an increasing regional role, which is not sufficiently addressed in the MPP. Finally, the Department of State’s Overseas Staffing Model provides guidance for State in assigning its full-time American direct hire staff to posts, but it does not include comprehensive guidance on linking staffing levels to security, workload requirements, cost, and other elements of rightsizing. It also does not provide guidance on staffing levels for foreign service nationals or for other agencies at a post. Using various methods for addressing staffing and other key resource requirements is not effective in planning for or controlling growth. The Deputy Chief of Mission at Embassy Dakar agreed, as this has resulted in growth beyond the post’s capacity. Specifically, The Department of State has added at least seven American direct-hire positions to the post, and non-State agencies operating in Dakar have added another six positions over the last year. In addition, post officials project more increases in personnel by fiscal year 2004 to accommodate other agencies interested in working out of Dakar. Post officials agreed that a more systematic and comprehensive approach might improve the post’s ability to plan for and control growth. Responses to the framework’s questions by Banjul and Dakar consular officers also indicated that they could further explore processing all nonimmigrant visas from the Dakar post, particularly since Dakar has done so in the past on a temporary basis. Neither post’s MPP discussed the possibility of covering these functions on a regional basis from Dakar, yet doing so would relieve Banjul’s consular officer from processing nonimmigrant visas, thereby allowing more time for political and economic reporting. Thus, the post might not need to request a junior officer to handle such reporting. However, Banjul post officials said this arrangement would not be feasible for a variety of reasons. Nevertheless, their assessment illustrates the importance of weighing the benefits and trade-offs of exercising rightsizing options. Officials at both posts also agreed that applying the rightsizing questions, as part of the post’s annual MPP process, would result in an improved and more systematic approach for addressing rightsizing issues. The cost section of our framework includes questions that involve developing and consolidating cost information from all agencies at a particular embassy to permit cost-based decision-making. Without comprehensive cost data, decision makers cannot determine the correlation between costs and the work being performed, nor can they assess the short- and long-term costs associated with feasible business alternatives. At all of the posts, we found there was no mechanism to provide the ambassador or other decision makers with comprehensive data on State’s and other agencies’ cost of operations. For example, complete budget data that reflect the cost of employee salaries and benefits and certain information management expenses for each agency at post were not available. Further, we found that embassy profile reports maintained by State’s Bureau of Administration contained incomplete and inaccurate information for each embassy’s funding levels and sources. Officials at each post agreed that it is difficult to discern overall costs because data are incomplete and fragmented across funding sources, thereby making it difficult for decision makers to justify staffing levels in relation to overall post costs. In view of Embassy Dakar’s plans to expand its regional responsibilities, embassy officials said it would be beneficial to document and justify the cost effectiveness of providing support to posts in the region. The type of support can be substantial and can have significant implications for planning future staffing and other resource requirements. For example, Embassy Nouakchott relies heavily on Embassy Dakar for budget and fiscal support, security engineering, public affairs, medical/medevac services, and procurement/purchasing, in addition to temporary warehousing for certain goods. OMB and the Department of State recognize that lack of cost-based decision-making is a long-standing problem. As part of the President’s Management Agenda, they are working to better identify the full operating costs at individual posts and improve cost accounting mechanisms for overseas presence. Our work demonstrates that responses to our questions could be used to identify and exercise rightsizing actions and options, such as adjusting staffing requirements, competitively sourcing certain commercial goods and services, and streamlining warehousing operations. Examples of identifying and exercising rightsizing options include the following: Embassy space and security limitations in Dakar suggest that planned increases in staff levels may not be feasible. If Embassy Dakar used our framework to complete a full and comprehensive analysis of its regional capabilities, in conjunction with analyses of mission priorities and requirements of other embassies in West Africa, then staffing levels could be adjusted at some of the posts in the region. One rightsizing option includes having Embassy Banjul’s visa services handled from Dakar. The general services officers at the Dakar and Banjul posts agreed that our framework could be used to identify competitive sourcing opportunities in their locations. One rightsizing option includes assessing the feasibility of competitively sourcing the work of currently employed painters, upholsterers, electricians, and others to yield cost savings and reduce staff requirements. This could have a particularly significant impact at the Dakar post, which employs more than 70 staff who are working in these types of positions. The Dakar and Banjul embassies operate substantial warehousing and maintenance complexes. Post officials said that operations and staffing requirements at these government-owned facilities could be potentially streamlined in a number of areas. The Department of State and other agencies maintain separate nonexpendable properties, such as furniture and appliances in Dakar, while the Department of State and Peace Corps maintain their own warehouses in the same compound in Banjul. Department of State logistics managers and post general services personnel agree that pooling such items could potentially reduce overall inventories, costs, and staffing requirements. Relocating staff, competitively sourcing goods and services, and other rightsizing options should be based on a full feasibility and cost analysis, and thus we are not recommending them in this report. However, such rightsizing options deserve consideration, particularly in view of Embassy Dakar’s concerns about how to manage anticipated increasing regionalization, the general security threats to embassies around the world, and the President’s Management Agenda’s emphasis on reducing costs of overseas operations. The need for a systematic approach to rightsizing the U.S. overseas presence has been a recurring theme in developing our framework. We have noted that the criteria for assigning staff to individual overseas posts vary significantly by agency and that agencies do not fully and collectively consider embassy security, mission priorities, and workload requirements. At the three embassies we visited in West Africa, we found that rightsizing issues have not been systematically assessed as part of the embassy management and planning process. However, The Department of State has taken several steps that help lay the groundwork for such a process by refining its overseas post MPP guidance. That guidance, applicable to posts in all countries, was recently strengthened and now directs each embassy to set five top priorities and link staffing and workload requirements to fulfilling those priorities. Chiefs of Mission also certify that the performance goals in their MPPs accurately reflect the highest priorities of their embassies. This is consistent with questions in our framework addressing program priorities. The guidance does not, however, identify rightsizing as a management goal or explicitly discuss how rightsizing issues of security, mission, cost, and options should be addressed. For example, it does not ask embassies to formally consider the extent to which it is necessary for each agency to maintain its current presence in country, or to consider relocation to the United States or regional centers, given the scope of each embassies’ responsibilities and missions. Officials at the posts in West Africa generally agreed that applying the framework and corresponding questions could result in an improved and more systematic approach to rightsizing. They agreed that the framework can be adjusted to consider emerging rightsizing issues and staffing conditions. For example, at Embassy Dakar, the regional security officer suggested including a question addressing the capacity of the host country police, military, and intelligence services as part of the physical and technical security section. Other officials suggested including a question regarding the extent to which health conditions in the host country might limit the number of employees that should be assigned to a post. Officials in the Department of State’s Bureau of African Affairs generally agreed that applying our questions provides a logical basis for systematically addressing rightsizing issues. They agreed it is important that the Department of State and other agencies consider staffing issues based on a common set of criteria, for both existing embassies and future facilities. Officials in the Department of State’s Bureau of East Asian and Pacific Affairs and the Bureau of Near Eastern Affairs also agreed that the security, mission, cost, and option elements of the framework provide a logical basis for planning and making rightsizing decisions. They also believed that rightsizing analyses would be most effective if the framework were adopted as a part of the Department of State’s MPP process. Our rightsizing framework and its corresponding questions can be applied to embassies in developing countries and help decision makers collectively focus on security, mission, and cost trade-offs associated with staffing levels and rightsizing options. The rightsizing questions systematically provide embassy and agency decision makers a common set of criteria and a logical approach for coordinating and determining staffing levels at U.S. diplomatic posts. We recognize that the framework and its questions are a starting point and that modification of the questions may be considered in future planning, as appropriate. The Department of State’s MPP process has been strengthened and addresses some of the rightsizing questions in our framework. In particular, it better addresses embassy priorities, a key factor in our rightsizing framework. However, the mission planning process neither specifically addresses embassy rightsizing as a policy or critical management issue nor calls for assessments of related security and cost issues affecting all agencies operating at overseas posts. In keeping with the administration’s rightsizing initiative, we are recommending that the Director of OMB, in coordination with the Secretary of State, ensure that application of our framework be expanded as a basis for assessing staffing levels at embassies and consulates worldwide; and the Secretary of State adopt the framework as part of the embassy Mission Performance Planning process to ensure participation of all agencies at posts and the use of comparable criteria to address security, mission, cost issues, and rightsizing options. OMB and The Department of State provided written comments on a draft of this report (see apps. III and IV). OMB said that it agrees with our findings and recommendations and stated that our framework may serve as a valuable base for the development of a broader methodology that can be applied worldwide. OMB agreed that security, mission, and cost are key elements to consider in making rightsizing decisions. In addition, OMB noted that workload requirements, options for information technology, regionalization possibilities, and competitive sourcing opportunities should be considered in order to adapt the methodology to fit each post. The Department of State generally agreed with our recommendations and said that it welcomed GAO’s work on developing a rightsizing framework. The Department of State said that the rightsizing questions provide a good foundation for it to proceed in working with OMB and other agencies to improve the process for determining overseas staffing levels. The Department of State noted that some elements of the framework are already being undertaken and that it plans to incorporate additional elements of our rightsizing questions into its future planning processes, including the MPP. Department of State comments are reprinted in appendix IV. The Department of State also provided technical comments, which we have incorporated into the report where appropriate. To determine the extent to which our framework’s questions are applicable in developing regions, we visited three West African embassies—Dakar, Senegal; Banjul, The Gambia; and Nouakchott, Mauritania. At all posts, we spoke with regional security officers, in addition to ambassadors and other post officials, regarding the security status of their embassies and related security concerns. At all locations, we reviewed the applicability of the mission priorities and requirements section of the framework by asking the ambassadors, deputy chiefs of mission, administrative officers, consular officers, and general services officers to answer key questions in that section. To assess the usefulness of the cost section, we spoke with the same officers, in addition to Embassy Dakar’s financial management officer who provides regional support to both Banjul and Nouakchott. We also discussed with key officials whether opportunities exist to exercise certain rightsizing options such as competitively sourcing post goods and services or streamlining embassy functions that are commercial in nature. In addition, we interviewed Bureau of African Affairs executive officers, officials in the Bureau of Diplomatic Security in Washington, D.C., and the heads of key agencies operating in each country. Specifically, in Dakar we interviewed the Director and Deputy Director of the U.S. Agency for International Development (USAID) and the U.S. Treasury representative. In Banjul and Nouakchott, we interviewed the Directors of Peace Corps. We also met with officials in the executive offices of the Department of State’s Bureau of East Asian and Pacific Affairs and the Bureau of Near Eastern Affairs to determine the applicability of the framework in those regions. We conducted our work from October 2002 through January 2003 in accordance with generally accepted government auditing standards. We are sending copies of this report to other interested members of Congress. We are also sending copies of this report to the Director of OMB and the Secretary of State. We also will make copies available to others upon request. In addition, the report will also be available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me on (202) 512-4128 or John Brummet on (202) 512-5260. In addition to the persons named above, Janey Cohen, Lynn Moore, Ann M. Ulrich, and Joseph Zamoyta made key contributions to this report. This appendix provides detailed information on the responses to the rightsizing questions in our framework at the embassies in Dakar, Senegal; Banjul, The Gambia; and Nouakchott, Mauritania. Specific rightsizing issues, actions, and options for consideration are highlighted. Prior to the 1998 embassy bombings in East Africa, U.S. diplomatic facilities in Dakar had serious physical security vulnerabilities, including insufficient setbacks at most office buildings, including the chancery. Since 1998, many steps have been taken to ensure better security throughout the post. Important steps included (1) the relocation of the U.S. Agency for International Development (USAID) to a more secure location, (2) host-country cooperation for embassy-only traffic on the four streets surrounding the embassy’s main building, (3) the renovation and expansion of a more secure “waiting facility” for the consular affairs section, and (4) an increase in surveillance and detection units for the entire compound and employee residences. Although security at the Dakar post is now characterized as “good” for the current number of personnel, embassy officials cautioned that actions by Senegalese authorities to close off streets adjacent to the embassy are temporary measures that could be reversed at any time. In addition, the office space in the chancery can only accommodate a slight increase in personnel. Officials said that adding personnel to the post would aggravate certain security concerns. Embassy Dakar increasingly has more regional responsibilities and there are significant pressures to assign more personnel to Dakar—a situation that has been exacerbated as a result of the recently ordered departure status at the U.S. embassy in Abidjan, Cote d’Ivoire. The Dakar post now has about 90 American direct-hire personnel and 350 local hires. Staff projections over the next two fiscal years indicate an increase in staffing at the embassy for additional agencies, such as the Centers for Disease Control and Prevention and the Departments of Agriculture and Homeland Security, and the possible transfer of Foreign Commercial Service employees from the embassy in Abidjan. In addition, the Dakar consular section will be increasing its consular officers for visa purposes from two to four and may need additional staff in the future. As a result of increasing regional responsibilities and more personnel, Embassy Dakar may require additional Department of State support personnel as well. In spite of Dakar’s increasing regional role and responsibilities, the post has difficulty attracting and retaining experienced foreign service officers. Embassy officials indicated that senior foreign service officers perceive the post as having a relatively high cost of living, a low pay differential, and no available consumables. Hence, many key positions are filled with inexperienced junior staff, placing constraints on some offices in carrying out their mission. Comprehensive information was not available to identify the total annual operating costs for Embassy Dakar or for each agency at the post. Cost data were incomplete and fragmented. For example, embassy budget personnel estimated operating costs of at least $7.7 million, not including American employee salaries or allowances. Available Bureau of African Affairs budget data for the post estimated fiscal year 2003 operating costs of at least $6 million, including State’s public diplomacy costs, post administered costs, and International Cooperative Administrative Support Services expenses, but these costs did not reflect the salaries and benefits of Department of State and other U.S. agency American employees and the State bureau allotments, such as for diplomatic security. If all costs were included in a comprehensive budget, the total annual operating costs at the post would be significantly higher than both estimates. Post and Bureau officials agreed that fragmented and incomplete cost data make it difficult for them to systematically and collectively approach rightsizing initiatives and consider the relative cost-effectiveness of rightsizing options. Responses to the framework’s questions regarding rightsizing actions and other options at Embassy Dakar highlighted the impact of security conditions on anticipated staffing increases and the need to define and document the embassy’s growing regional responsibilities as part of the MPP process. They also highlighted potential opportunities for competitively sourcing certain embassy services to the private sector, as well as opportunities for streamlining warehouse operations. Embassy officials are reluctant to purchase commercial goods and services from the local economy due to quality and reliability concerns, and thus they employ a large number of direct-hire personnel to maintain and provide all post goods and services. If goods and services were competitively sourced to the local economy, the number of direct hires and costs could possibly be reduced. Opportunities also exist for streamlining Embassy Dakar’s warehousing operations, which could yield cost savings. The left box of figure 1 summarizes the main rightsizing issues that were raised at Embassy Dakar in response to the framework’s questions. The box on the right side identifies possible corresponding rightsizing actions and other options post decision makers could consider when collectively assessing their rightsizing issues. Officials at the post in Banjul characterized the compound as having good physical security and enough office space to accommodate additional staff. The post chancery compound is a “lock-and-leave” facility, as it does not have the 24-hour presence of U.S. government personnel. There are two leased vacant residential houses located directly behind the chancery building but separated from the chancery by a dividing wall. Embassy officials in Banjul have proposed buying the houses but explained that it is difficult to justify the cost because the purchase would put the embassy over its allotted number of homes (i.e., giving it nine homes for seven personnel). Some officials have suggested that the houses could be used for temporary duty personnel working at the post. During our work, visiting officials from the Immigration and Naturalization Service were using one of the houses to conduct political asylum visa interviews. Usually, however, the houses are vacant. According to the ambassador and the regional security officer, if the vacant houses were to be leased by nonembassy tenants, the chancery’s physical security would be seriously compromised. In addition, the regional security officer expressed concerns regarding the training and quality of the security contractor, particularly because the post does not have a Marine detachment to back up the security guards. Much of Embassy Banjul’s resources are devoted to supporting internal post operations instead of focusing on external goals, such as political reporting and public diplomacy. For example, more than 60 local hires carry out facilities maintenance and other post support functions while only 3 of the 7 American direct-hire personnel address the post’s 3 main program goals in The Gambia—namely, reinforcing democracy, increasing economic prosperity, and improving the population’s health. Since the consular officer is also responsible for political and economic reporting, the post recently requested one junior officer rotational position to help balance the duties in all three areas. Over the past 2 years the number of nonimmigrant visa applications in Banjul more than doubled—from 1,712 applications in March 2000 to 4,635 applications in September 2002—while the percentage of refused applications decreased from a high of 65 percent in September 2000 to a low of 38 percent in September 2002. Post officials said that the lack of a full-time consular officer may impede the post’s ability to focus on preventing fraudulent visa applications. The post has also requested one dual-purpose local employee to back up its growing public diplomacy and security assistance portfolios. Banjul’s primary post planning document, the MPP, did not include comprehensive data on the total cost of operations. The Bureau of African Affairs’ budget for the post estimated total costs of at least $1.7 million for fiscal year 2003. However, these estimates did not include American salaries and other expenses, such as State Bureau allotments. The left box of figure 2 summarizes the main rightsizing issues that were raised at Embassy Banjul in response to the framework’s questions. The box on the right identifies corresponding rightsizing actions and other options post decision makers could consider when collectively assessing their rightsizing issues. Embassy Nouakchott officials characterize the post compound as having good physical security, which has been upgraded since 1998. However, the chancery does not meet security setback requirements, and compound facilities have security deficiencies. Answering the framework’s questions regarding physical security did not indicate a need to change the number of staff based on existing security conditions at the embassy office buildings. However, embassy officials said that the questions helped highlight the need to consider the security risks and trade-offs associated with expected increases in the number of personnel at post. When asked specific questions regarding mission priorities and requirements, Embassy Nouakchott officials told us that the post has an adequate number of personnel to meet current mission requirements and priorities but that there are generally few bidders for positions at the post. The Ambassador and Deputy Chief of Mission emphasized that an increase or decrease of one employee greatly affects how the post accomplishes its mission—more so than at a larger post, such as Dakar. For example, the Regional Security Officer position is vacant and is being covered on a temporary duty basis by Dakar’s Assistant Regional Security Officer. Also, the post currently has no positions for political and public diplomacy officers. One officer may be assigned to multiple positions owing to limited demand for certain services. For example, the Consular Officer at Embassy Nouakchott is also responsible for the duties of a commercial/economic officer. However, the post hopes to add one full- time officer for political and human rights reporting, according to the post’s MPP. Operating costs for the Nouakchott post are not fully documented in the MPP or used to justify staffing levels. Embassy Nouakchott officials roughly estimated total operating costs of about $4 million for fiscal year 2003. The Bureau of African Affairs’ budget for the post estimated partial operating costs of only $2.1 million annually, but the estimate did not include American salaries, diplomatic security, and other costs. The left box of figure 3 summarizes the main rightsizing issues that were raised at Embassy Nouakchott in response to the framework’s questions. The box on the right side identifies corresponding rightsizing actions and other options post decision makers could consider when collectively assessing their rightsizing issues. Is existing space being optimally utilized? Have all practical options for improving the security of facilities been considered? Do issues involving facility security put the staff at an unacceptable level of risk or limit mission accomplishment? What is the capacity level of the host country police, military, and intelligence services? Do security vulnerabilities suggest the need to reduce or relocate staff? Do health conditions in the host country pose personal security concerns that limit the number of employees that should be Mission priorities and requirements What are the staffing levels and mission of each agency? How do agencies determine embassy staffing levels? Is there an adequate justification for the number of employees at each agency compared with the agency’s mission? Is there adequate justification for the number of direct hire personnel devoted to support and administrative operations? What are the priorities of the embassy? Does each agency’s mission reinforce embassy priorities? To what extent are mission priorities not being sufficiently addressed due to staffing limitations or other impediments? To what extent are workload requirements validated and prioritized and is the embassy able to balance them with core functions? Do the activities of any agencies overlap? Given embassy priorities and the staffing profile, are increases in the number of existing staff or additional agency representation To what extent is it necessary for each agency to maintain its current presence in country, given the scope of its responsibilities Could an agency’s mission be pursued in other ways? Does an agency have regional responsibilities or is its mission entirely focused on the host country? Cost of operations What is the embassy’s total annual operating cost? What are the operating costs for each agency at the embassy? To what extent are agencies considering the full cost of operations in making staffing decisions? To what extent are costs commensurate with overall embassy strategic importance, with agency programs, and with specific Consideration of rightsizing options What are the security, mission, and cost implications of relocating certain functions to the United States, regional centers, or to other locations, such as commercial space or host country counterpart agencies? To what extent could agency program and/or routine administrative functions (procurement, logistics, and financial management functions) be handled from a regional center or other locations? Do new technologies and transportation links offer greater opportunities for operational support from other locations? Do the host country and regional environments suggest there are options for doing business differently, that is, are there adequate transportation and communications links and a vibrant private sector? To what extent is it practical to purchase embassy services from the private sector? Does the ratio of support staff to program staff at the embassy suggest opportunities for streamlining? Can functions be reengineered to provide greater efficiencies and reduce requirements for personnel? Are there best practices of other bilateral embassies or private corporations that could be adapted by the U.S. embassy? To what extent are there U.S. or host country legal, policy, or procedural obstacles that may impact the feasibility of rightsizing options? We added this question based on the suggestion of officials at the Office of Management and Budget. The following are GAO’s comments on the Department of State’s letter dated February 25, 2003. 1. We did not set priorities for the elements in the framework that appear in this report. Moreover, we believe that decision makers need to consider security, mission, and cost collectively in order to weigh the trade-offs associated with staffing levels and rightsizing options. 2. We did not imply that there is a problem of exploding growth in overseas staffing levels that needs to be reined in. Our statement that there is a need for a systematic process to determine overseas staffing levels (i.e., rightsizing) was made on the basis that the elements of security, mission, cost, and other rightsizing options are not collectively addressed in a formal process to determine staffing levels at overseas posts. On page 1 of the report, we state that rightsizing may result in the addition, reduction, or change in the mix of staff. 3. We modified our report on page 7 to discuss the Overseas Staffing Model. 4. We modified our report on pages 6-7 to more accurately describe the National Security Decision Directive-38. 5. International Cooperative Administrative Support Services (ICASS) is only one component of a post’s total overseas costs and include the costs of common administrative support, such as motor pool operations, vehicle maintenance, travel services, mail and messenger services, building operations, information management, and other administrative services. However, this component does not cover all employee salaries and benefits, all housing, office furnishings and equipment, diplomatic security, representation, miscellaneous expenses, and other costs for all agencies operating at a post. Total costs associated with each post need to be considered when overseas staffing decisions are made. | Since the mid-1990s, GAO has highlighted the need for the Department of State and other agencies to establish a systematic process for determining their overseas staffing levels. To support this long-standing need and in support of the President's Management Agenda, GAO developed a framework for assessing overseas workforce size and identified options for rightsizing. Because the framework was largely based on work at the U.S. embassy in Paris, GAO was asked to determine whether the rightsizing framework is applicable at U.S. embassies in developing countries. To accomplish this objective, we visited three U.S. embassies in West Africa--a medium-sized post in Dakar, Senegal; and two small embassies in Banjul, The Gambia; and Nouakchott, Mauritania--and applied the framework and its corresponding questions there. GAO's rightsizing framework can be applied at U.S. embassies in developing countries. Officials from the Bureau of African Affairs, and U.S. embassy officials in Dakar, Senegal; Banjul, The Gambia; and Nouakchott, Mauritania, said that the framework's questions highlighted specific issues at each post that should be considered in determining staffing levels. Officials in other State bureaus also believed that the security, mission, cost, and option components of the framework provided a logical basis for planning and making rightsizing decisions. At each of the posts GAO visited, application of the framework and corresponding questions generally highlighted (1) physical and technical security deficiencies that needed to be weighed against proposed staff increases; (2) mission priorities and requirements that are not fully documented or justified in the posts' Mission Performance Plans; (3) cost of operations data that were unavailable, incomplete, or fragmented across funding sources; and (4) rightsizing actions and other options that post managers should consider for adjusting the number of personnel. |
Chuck Todd is set to replace David Gregory as the host of "Meet The Press," Politico's Mike Allen reported on Monday.
Todd, NBC's political director and chief White House correspondent, has been viewed as the favorite to succeed Gregory, whose tenure has seen the venerable Sunday show sink to third place in the ratings.
Allen said Gregory, who has hosted "MTP" since 2008, is likely to leave NBC.
Gregory's term at the helm of the program has not been a happy one. He followed the legendary Tim Russert, whose shoes he was deemed never to have filled. Worse still, he has presided over the most dire ratings for "Meet The Press" in decades, as rivals "Face The Nation" and "This Week" surged ahead of him.
The past few months have seen an avalanche of rumors about Gregory, all with the same conclusion: his time as host is quickly coming to an end.
NBC has repeatedly claimed that Gregory is safe, even telling HuffPost's Michael Calderone it was "doubling down" on the host. It would appear that things have changed.
The move would be a big boost for Todd, who is seen as a more devoted political junkie and who has embraced the social media age with more fervor than Gregory. ||||| Chuck Todd, the NBC News chief White House correspondent and political director, will replace David Gregory as moderator of "Meet the Press," network sources confirmed early Thursday afternoon in the wake of a CNN report.
Todd's promotion, which the network could announce as early as Thursday, is an effort by NBC News to reassert itself as the dominant Sunday show after falling to third place in the ratings under Gregory. The news confirms a previous report from POLITICO's Mike Allen that Todd was the likely successor to the throne.
In Todd, NBC News is hoping it can restore the show with the passion and insider credibility it had under Tim Russert, Gregory's predecessor and Todd's mentor. Todd, who rose to fame as editor in chief of The Hotline, is a political obsessive and extremely knowledgeable about all manner of politics and policy matters.
(VIDEO: Top Chuck Todd moments)
Gregory, by contrast, did not seem very engaged with politics and policy, the bread and butter of Sunday public affairs programming. He was also widely disliked within the organization, and his ambition and vanity rubbed important colleagues at NBC the wrong way. Under his watch, NBC’s once-dominant Sunday show fell to the bottom of the ratings race.
"Meet the Press" first aired in 1947 and is the longest-running show on television. Todd will be its 12th moderator. He also hosts MSNBC's "The Daily Rundown" on weekday mornings at 9 a.m. ET.
UPDATE (4:22 p.m.): Gregory announced Thursday afternoon that he would be leaving NBC.
Follow @politico ||||| SIREN: Chuck Todd, a political obsessive and rabid sports fan, is the likely successor to David Gregory as moderator of “Meet the Press,” with the change expected to be announced in coming weeks, according to top political sources. The move is an effort by NBC News President Deborah Turness to restore passion and insider cred to a network treasure that has been adrift since the death in 2008 of the irreplaceable Tim Russert. Although Todd is not a classic television performer guaranteed to wow focus groups, his NBC bosses have been impressed by his love of the game, which brings with it authenticity, sources, and a loyal following among newsmakers and political junkies.
Gregory’s next move is unknown, but he’s unlikely to remain at the network – a stunning turn for a quick-rising star with a broadcasting polish and on-air versatility that once made him a natural candidate to be a future “Today” show host. It’s unclear whether Gregory or Todd knows about the big move, likely to be in place before year’s end.
The sources caution that nothing is definite or decided. “Meet” once dominated Sunday mornings, but ABC’s “This Week” – with 31-year-old Jonathan Greenberger as executive producer -- has scored ratings wins with an increasingly eclectic lineup that emphasizes zippy packages over long interviews. CBS’s “Face the Nation,” with down-homey Bob Schieffer anchoring, has also scored ratings wins as “Meet” struggled.
Chuck, 42, now wears three hats for NBC: chief White House correspondent; host of “The Daily Rundown,” at 9 a.m. weekdays on MSNBC; and political director. The Miami native, an alumnus of George Washington University, was editor in chief of The Hotline when it was the mustest read for political insiders, and is as passionate about Miami Hurricanes college football as he is about campaign dynamics.
@ChuckTodd Twitter bio: “Political junkie; @NBCNews reporter & analyst; @msnbc @dailyrundown host; Covering politics since '92; And, yes, I tweet about sports too.”
BACKSTORY on Jeffrey Goldberg interview of HRC, per Maggie Haberman: According to “a source familiar with the Clinton interview,” the interview was not aimed at moving in a calculated fashion away from Obama: “Goldberg was on the list of interviews the same as Charlie Rose, Fareed, Colbert, Diane Sawyer. … It was scheduled two weeks ago to happen early last week before anything was happening in Iraq in terms of possible US involvement. One week ago today, nobody would have thought we'd be returning to military action in Iraq. … Beyond some good old fashioned book promotion, there's no master plan, no strategy, we're not making any point.”
--MAGGIE’S TAKE: “Team Clinton certainly knew the power this interview would have -- witness the heads-up given to the White House. That having been said, … she has always been more hawkish than Obama, more of a believer in a muscular foreign policy than the president, and she's stating views she's long been known to have. At other points in the interview, she offered strong praise of Obama.”
--CLINTONS IN THE HAMPTONS – N.Y. Post’s Page Six: “Bill Clinton emphasized his family’s ability to get things done at a fund-raiser to kick off his and Hillary’s Hamptons vacation. … Saturday’s fund-raiser, at the Water Mill home of jewelry designer Joan Hornig and her investment banker husband, George, was for the Clinton Foundation and no mention of Hillary’s political aspirations was made … Bill described the foundation as ‘the “How Organization” — we get things done.’” http://pge.sx/1mBXloS
ENGAGED -- Ready for Hillary Co-Founder and Executive Director Adam Parkhomenko and Ready for Hillary Deputy Operations Director Kirby Hoag were engaged over the weekend in Jamaica. Pic of the couple and ring: http://bit.ly/1rgfRX2
SCOOP DU JOUR – The ‘Super PAC to End Super PACs’ Backs 3 New Candidates," by TIME's Denver Nicks: “Mayday PAC, the political action committee determined to spearhead a revolution in the way elections are funded in America, announces Monday three [more] candidates it’s supporting … incumbents Rep. Walter Jones (R-N.C.) and Rep. Carol Shea-Porter (D-N.H.), and Ruben Gallego, a Democrat running for his party’s nomination in Arizona’s 7th congressional district. … ‘The picture of diversity we saw when we put these three together was cutting across the spectrum,’ Mayday PAC co-founder Lawrence Lessig [said] …
“Mayday PAC earlier announced support for Republican Jim Rubens in his New Hampshire GOP primary contest against former Massachusetts Senator Scott Brown, and Staci Appel, a pro-campaign finance reform Democrat in a tight race with Republican David Young, a former aide to the outgoing seat holder Sen. Chuck Grassley. Mayday PAC will start running its first radio ads in New Hampshire in the coming days. … In addition to the five candidates the group has announced to date, Mayday PAC told TIME the group plans to support three additional candidates.” http://ti.me/Vc76TP
NYC PITCHES DNC ON 2016 CONVENTION TODAY – EXCLUSIVE: City to announce $100 million in host-committee commitments -- “NYC’s all-star convention roster,” by Maggie Haberman: The city “has put together a sweeping list of more than [70] people — ranging from Napster founder Sean Parker to Goldman Sachs Chairman Lloyd Blankfein to designer Diane von Furstenberg to union leaders — committed to raising the money to host the Democratic National Convention in Brooklyn in 2016. … [O]ne of the most surprising names is Parker — who has made moves to become a political force this cycle and who has ties to Deputy Mayor Peter Ragone.
“There are entertainment industry figures, like actress Cynthia Nixon, hiphop producer Russell Simmons and HBO chief Richard Plepler. There are donors with long ties to Bill and Hillary Clinton, like Alan Patricof and Ron Perelman, but also those now known primarily from the Barack Obama orbit, like financiers Robert Wolf, Mark Gallogly, Blair Effron and public-relations executive Michael Kempner. There are other Wall Street titans, like JPMorgan Chase’s Jamie Dimon and American Express’s Kenneth Chenault.” http://politi.co/XW4tHf
--AZI PAYBARAH of Capital New York emails his take on Bill de Blasio’s big day: “The Mayor’s effort to lure the 2016 Democratic convention helps him fulfill one of his top long-term objectives: showing the USA what progressive government looks like. From business (a jolt to the economy) to transportation (shuttling conventioneers) to security (managing protests), the convention could instantly validate de Blasio’s administration as a progressive operation that can get things done. The Republicans’ selection of Cleveland is a helpful foil. De Blasio aide Rebecca Katz tweeted: ‘I cannot believe the Cleveland Indians still have their logo. In 2014.’”
WEEKEND WEDDING: George Holman, senior policy adviser to Majority Harry Reid, married Liz Kennedy, director of the RIAA's Gold & Platinum (she gets to give plaques to artists), on a beautiful Saturday evening in Newport, R.I., with sailboats and the Claiborne Pell bridge in the background. SPOTTED: Kendra Barkoff, Vice President Biden's Press Secretary, Jonathan Lamy, RIAA’s EVP, communications; Todd Flournoy with SAG-AFTRA; Courtney Lee-Ashley OF DCCC.
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BIG FOOT – ADAM NAGOURNEY in Vegas, on N.Y. Times A1, “Midterms Give Parties Chance for Sweeping Control of States” (part of “One-Party Rule” series): “Republicans are looking to take over senates in Colorado, Iowa, Oregon, Maine and Nevada, and houses in Kentucky, New Hampshire and West Virginia. Republicans could emerge with complete control of the legislatures in New Hampshire and Kentucky, though both of those states have Democratic governors.” http://nyti.ms/Vc8Hch
CAPTAIN OBVIOUS AWARD: USA Today 1A, “WHY DEMOCRATS WON’T TAKE BACK THE HOUSE: GOP has built-in advantages in November elections.”
PRINT-EDITION LEADS: NYT (1 col.), “KURDS CAPITALIZE ON U.S. BOMBING, RETAKING TOWNS: GAINING IN IRAQ’S NORTH -- Doubts Rise in Baghdad as Maliki Demands New Term” … WSJ (2 cols.), “Kurds Repel Insurgents in Nothern Iraq” … WashPost (1 col.), “Defiant Maliki clings to power: TROOPS SURROUND GREEN ZONE” … USA Today, “ISRAEL, HAMAS TO TRY AGAIN: New 72-hour pause begins in attempt to restart talks.”
DRIVING THE CONVERSATION -- WSJ A1, “U.S. Underestimated Urgency of Threat,” by Siobhan Gorman and Julian E. Barnes: “The inability of U.S. spy agencies to provide details about the timing of Islamic State offensives or their likelihood of success has touched off debate among U.S. national-security officials about whether intelligence on the group has been adequate. … A decline in U.S. spy resources after the U.S. military pulled out of Iraq in 2011 has limited American intelligence capability in the region. In some cases, intelligence officials have been frustrated by the Obama administration's reluctance to get more involved in Iraq and Syria …
“There have been indications along the way that Islamic State militants would move to control swaths of Iraq. But intelligence officers and policy makers have been slow to conclude the group would realize those ambitions—and quickly.” http://on.wsj.com/1stBqaJ
IF YOU WATCH ONLY ONE THING: “The Islamic State (Part 1)”: “VICE News reporter Medyan Dairieh spent three weeks embedded with the Islamic State, gaining unprecedented access to the group in Iraq and Syria as the first and only journalist to document its inner workings. In part one, Dairieh heads to the frontline in Raqqa, where Islamic State fighters are laying siege to the Syrian Army’s division 17 base.” Unbelievable video: http://bit.ly/1r41DZ3 (h/t Daniel Lippman)
HAPPENING TONIGHT: At Politics and Prose at 7 p.m., Marc Dunkelman, research fellow at both Brown’s Taubman Center for Public Policy and American Institutions and at the Clinton Foundation, speaks about his new book "The Vanishing Neighbor: The Transformation of American Community.” Amazon, $17.68 http://amzn.to/1xAqAO6
--From the book: "The American system of government doesn’t contain some secret sauce cooked up to guarantee growth and social harmony. The architecture of our constitutional system didn’t, by itself, propel the United States from a ragtag set of colonies into the most powerful nation on earth. Rather, the structure of our national charter fundamentally complemented the architecture of colonial American community. It marked a rare case in human history when a country’s governing apparatus was almost perfectly calibrated to the society beneath.
“But now that balance has come undone. Institutions so pervasive that they’ve faded into the background of our collective consciousness—the nature of our social safety net, the structure of our educational system, the core contract between employer and employee, and so on—were all erected atop a community architecture that, while not obsolete, no longer coincides with reality. The calibration that kept America humming for more than two centuries is suddenly out of whack. Our society is coming face to face with an epic mismatch: the institutions that frame American society no longer line up with the routines of our daily lives."
MORE WEEKEND WEDDINGS -- “Emma Fulkerson and Alejandro Rodriguez,” N.Y. Times: “Emma Liberty Fulkerson and Alejandro Ricardo Rodriguez were married Saturday by the Rev. Victoria Warren, an Episcopal priest, at St. John’s in the Wilderness Church in Glenbrook, Nev. The bride graduated from Whitman College in Walla Walla, Wash., and is pursuing a master’s degree in public policy from Georgetown. … Mrs. Rodriguez, 28, is a leadership adviser to Senator Patty Murray, Democrat of Washington. … Mr. Rodriguez, 32, is the chief of staff to Bruce H. Andrews, the deputy secretary of commerce in Washington. The groom graduated from Harvard”. With picture: http://nyti.ms/1oB5auP
--“Julie Siegel, Jordan Grossman,” N.Y. Times: “Julie Brinn Siegel and Jordan Mitchell Grossman … [were] married Sunday by Rabbi Jonathan Z. Maltzman at the National Museum of Women in the Arts in Washington. The bride, 26, is to start her third year next month at Harvard Law School. She graduated magna cum laude from the University of Pennsylvania. From 2011 to 2012 she was a special assistant to William M. Daley, who was the White House chief of staff at that time. … The groom, 28, is a law clerk to Judge Christopher R. Cooper of the Federal District Court for the District of Columbia. Mr. Grossman graduated summa cum laude from Penn and received a law degree cum laude from Harvard. From 2009 to 2011 he was a special adviser to Janet Napolitano, who was the secretary of Homeland Security at the time.” http://nyti.ms/1B5U4Il
BIRTHWEEK (was yesterday): BPC's Olivia Weiss is 3-0 (h/t Greg Pugh) ... Andrew Zucker, deputy campaign manager for Jeff Merkley (h/t Justin Barasky)
BIRTHDAYS: Alli Adams! … Chadwick VonLuehrte, Romney alumnus and now partner at Harbinger (h/t Deck) ... Rob O'Donnell, celebrating on Nantucket h/t Caitria Mahoney) ... Sam Myers Jr. is 41. He and Jen are heading to Korean BBQ tonight (sans kids) to celebrate ... Ilana Drimmer (h/t Betsy) ... Chris Lisi of Lisi Communications, celebrating with Vince, Willa and Auggie ... Lauren Maddox, principal at the Podesta Group ... Jackie Norris, getting reading for her next big adventure (h/ts Jon Haber) ... Rachel Smolkin … CNN’s Waffa Munayyer … Greg Michaelidis, cybersecurity communicator and former Janet Napolitano speechwriter … Apple co-founder Steve Wozniak is 64. Wrestler-actor Hulk Hogan is 61 (h/ts AP)
** A message from Chevron: More than 500 influential voices in energy. One platform. Chevron is proud to be the originating sponsor of the #EnergyInsider TweetHub. Visit the Tweet Hub now to get the latest insights on energy http://bit.ly/1zYjMwJ ** ||||| NBC named Chuck Todd the new host of "Meet the Press" on Thursday afternoon, beginning a revamp by network news managers who say they want the iconic program to be the "beating heart of politics."
The announcement confirmed widespread speculation that David Gregory, the moderator of the Sunday morning public affairs program for the past six years, would be replaced by Todd, the NBC News political director.
Not only is Gregory leaving "Meet the Press," he is also leaving the network. His next career move is not yet known.
"The next-generation 'Meet the Press,' led by Chuck Todd, is certain to be the must-watch political destination on Sundays and beyond," NBC News president Deborah Turness said in an internal memorandum that doubled as the network's announcement.
Todd's first day on "Meet the Press" will be September 7. Veteran NBC correspondent and MSNBC anchor Andrea Mitchell will fill in this weekend. In other words, last week was Gregory's last edition of "Meet the Press" -- though the viewers didn't know that at the time.
Gregory confirmed his departure in a series of Twitter messages on Thursday afternoon, hours after CNNMoney reported that the "Meet the Press" moderator change was imminent.
"I leave NBC as I came -- humbled and grateful," he wrote. "I love journalism and serving as moderator of MTP was the highest honor there is."
He added, "I have great respect for my colleagues at NBC News and wish them all well. To the viewers, I say thank you."
Todd, for whom the term "political junkie" seems invented, will remain the political director for the network news division, but will give up his mid-morning MSNBC newscast "The Daily Rundown."
Todd will be the twelfth moderator in "Meet the Press" history. Born on radio in 1945 and reborn for television in 1947, "Meet the Press" is the longest-running show on TV.
Within NBC, it is a cherished brand, but it's also one that has fallen on hard times. With Todd in the anchor chair, NBC hopes to reinvigorate the program and its weekly ratings.
Related: Future of media
Turness said, "we have some exciting plans to evolve and update the broadcast under Chuck's leadership that we will be sharing with you shortly."
The announcement about Todd's promotion ends an ugly period of public conjecture about Gregory's fate, made worse by the network's tepid statement of support for him earlier this summer.
When the New York Post's Page Six column said in July that Gregory could be replaced "soon after the November midterm elections," a network representative was quoted as saying, "We heard the same false rumors and suggest you take them with a grain of salt, as we did."
Tepid support, indeed.
Mike Allen of Politico reported earlier this week that Todd was the "likely successor" to Gregory and that the change was "expected to be announced in coming weeks."
That report seemed to accelerate the network's timetable. On Thursday, when NBC's announcement was made, Gregory was in New Hampshire, far from his Washington, D.C., office. Turness, meanwhile, was in New York, having canceled a long-planned trip to London to oversee the "Meet the Press" transition.
Questions about Gregory's future on "Meet the Press" surfaced shortly after Turness took over the news division in the summer of 2013.
She has discussed any number of changes to the program, including, at one point, the possibility of a studio audience. Her memo on Thursday reflected enthusiasm for change.
The best-known "Meet the Press" moderator is Tim Russert, who was appointed to the job in 1991 and died suddenly in June 2008 while preparing for an edition of the program. Under Russert, "Meet the Press" was solidly No. 1 in the ratings race among the broadcast networks.
After Russert's death, Tom Brokaw filled in until December 2008, when Gregory took over. The program now routinely ranks No. 3 behind "Face the Nation" on CBS and "This Week" on ABC.
"This Week" moderator George Stephanopoulos wrote on Twitter after the announcement, "Congrats Chuck Todd. Welcome to Sunday AM fray. Best wishes David Gregory."
And at the end of the day, Todd made his first comments. He wrote on Twitter that he was "honored and humbled to be in the company of great MTP moderators, including David, Tom and of course Tim. All three taught me so much." | Rumors have been swirling about David Gregory's future at NBC for a while now, and today the man himself confirmed: He's leaving the network, including his hosting gig at Meet the Press. "I leave NBC as I came—humbled and grateful," he tweeted. "I love journalism and serving as moderator of MTP was the highest honor there is." NBC hasn't announced his replacement, which seems to be the worst-kept secret in TV: It will be Chuck Todd, report multiple sources, including Mike Allen of Politico and CNN Money. Media writer Dylan Byers of Politico explains the pick thusly: "In Todd, NBC News is hoping it can restore the show with the passion and insider credibility it had under Tim Russert, Gregory's predecessor and Todd's mentor. Todd, who rose to fame as editor in chief of The Hotline, is a political obsessive and extremely knowledgable about all manner of politics and policy matters." Gregory has hosted Meet the Press since 2008, but ratings have been shaky of late, reports the Huffington Post. Todd is NBC's political director and currently hosts the Daily Rundown at MSNBC. The shift could happen as soon as this weekend, writes Brian Stelter at CNN. (One of Gregory's most memorable moments involved a gun magazine.) |
WASHINGTON |
WASHINGTON (Reuters) - Jobs growth likely cooled in August with the elevated unemployment rate remaining stuck as businesses worried over an uncertain economic outlook, an outcome that could potentially seal the case for a further easing of monetary policy.
Employers are expected to have increased payrolls by 125,000 workers last month, according to a Reuters survey of economists, a step down from July's 163,000-job gain. The unemployment rate is seen holding steady at 8.3 percent.
The fresh U.S. jobs tally will be released on Friday at 8:30 a.m. (1230 GMT), a week after Federal Reserve Chairman Ben Bernanke left the door wide open to more monetary stimulus and described the labor market's stagnation as a "grave concern."
Bernanke's comments raised expectations among economists that the U.S. central bank would decide to pump more money into the sluggish economy at its September 12-13 meeting through a third round of bond purchases.
"The report would probably have to be very strong to dissuade the Fed from acting, with payrolls coming in well north of 150,000 and the unemployment rate dipping," said Jeremy Lawson, a senior economist at BNP Paribas in New York.
"And even then policymakers could take the view that healthy employment growth is unlikely given the current outlook for (economic) growth."
While the economy has experienced three years of growth since the 2007-09 recession, the expansion has not been vigorous and the jobless rate has held above 8 percent for more than three years -- the longest stretch since the Great Depression.
The economy grew at an average annual pace of 1.8 percent over the first half of 2012. A sustained growth rate of about 2.5 percent or higher for several quarters would be required to significantly reduce unemployment.
The unemployment rate peaked at 10 percent in October 2009, but progress reducing it stalled this year, which could spell trouble for President Barack Obama when Americans go to the polls in November.
Obama and his Republican challenger Mitt Romney are in a dead heat in the race for the White House, according to a Reuters/Ipsos poll published on Sunday.
"You are not going to get a strong enough payroll clip to meaningfully move the unemployment rate," said Brian Levitt, an economist at OppenheimerFunds in New York. "You would need to have far greater than 100,000 jobs to have a meaningful impact."
FISCAL CLIFF, EUROPE BLAMED
Hiring has cooled significantly to an average of 105,000 per month over the last three months from 226,000 in the January-March period. Economists blame fears of the so-called U.S. fiscal cliff -- the $500 billion or so in expiring tax cuts and government spending reductions scheduled to take hold at the start of next year -- and Europe's long-running debt problems.
Harm Bandholz, chief U.S. economist at UniCredit Research in New York, said those factors have led businesses to postpone investment decisions and were likely weighing on hiring as well.
"Companies are delaying all that stuff given the uncertainty about the fiscal cliff and the global economy. They don't want to add too much to their books, neither capital nor workers," he said.
First-time applications for jobless benefits were mostly elevated in August and a gauge of factory employment fell to its lowest level since November 2009, signs the labor market continues to struggle.
Economists expect manufacturing payrolls to show only a modest gain in August, arguing that factory jobs in July were inflated because automobile manufacturers kept plants running when they would normally shut them for retooling.
Little improvement is expected in construction employment, where homebuilders have been breaking ground on new projects at a slightly faster clip this year.
Elsewhere, a slowdown in temporary hiring in July could have translated into softer professional and business services hiring in August. But utilities payrolls should see a snap back after being depressed by the strike of about 9,000 workers in July.
Government payrolls are a wild card. Economists at JPMorgan predict education employment will show a softer increase in August after rising 18,000 in July. They viewed the increase in July as payback from a weak June number and expect government payrolls contracted 10,000 last month.
But Moody's Analytics believes government employment rose by 5,000 in August, which would be only the third monthly gain since 2011. They noted both that government payrolls tend to rise in August and that there were five weeks between the July and August employment report survey periods, which could introduce an upward bias.
Average hourly earnings are expected to have risen 0.2 percent last month after a 0.1 percent gain in July. The average work week is seen steady at 34.5 hours. The average work week has hovered around 34.5 hours this year and hours in most industries are back to pre-recession levels.
(Reporting by Lucia Mutikani; Editing by Tim Ahmann and Chizu Nomiyama) ||||| Friday's unemployment report will be crucial for both presidential candidates. If the rate of unemployment drops, President Obama’s claim that we’re on the right track gains credibility. But if these numbers are moving in the wrong direction, Romney’s claim that the nation needs a new start may gain traction.
The biggest political news this week won’t be the Democratic convention. It will be Friday’s unemployment report.
If the trend is good — if the rate of unemployment drops and the number of payroll jobs is as good if not better than it was in July — President Obama’s claim we’re on the right track gains crucial credibility. But if these numbers are moving in the wrong direction, Romney’s claim the nation needs a new start may appear more credible.
I don’t recall a time when these jobs numbers, compiled monthly by the Bureau of Labor Statistics (a highly professional group whose findings are completely insulated from politics), were as politically significant as they’ll be this Friday, and the first Fridays in October and November.
Yet these numbers are really crude approximations. They’re adjusted for seasonal variations — based on historical data that may have less significance today, when the economy is still struggling to emerge from the worst downturn since the Great Depression. The numbers are also subject to corrections and revisions later, as more data come in.
But perhaps the biggest flaw — and irony — is that when and if jobs really do start to return, many of the people who had been too discouraged to look for work start looking again. And when more people are looking, the rate of unemployment rises — because that rate is based on the percent of Americans actively looking for work. Those who have stopped looking aren’t counted. ||||| Trump/Xi could do a small deal
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TRUMP/XI MAY DO SMALL DEAL — As we suggested was the most likely outcome earlier this week, reports are emerging that President Trump and Chinese President Xi Jinping could agree at the G20 in Buenos Aires to set up further talks in December and early next year on addressing major issues on intellectual property theft, joint venture rules, corporate ownership and forced technology transfers. In return for the agreement to address big issues, the White House would hold off for now on pressing forward with the next round of tariffs on an additional $267 billion in Chinese exports.
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Trump himself before taking off for Argentina suggested a deal was very possible though he would not commit to it: “I think we're very close to doing something with China, but I don't know that I want to do it because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes. So I really don't know. But I will tell you that I think China wants to make a deal. I'm open to making a deal. But, frankly, I like the deal we have right now.”
Interestingly Trump, who often tweets about how much tariffs are bringing in, referred to them as what they are – taxes – in this statement. He often seems to suggest it is China paying the taxes, when it is actually American producers and consumers. But the very reference to tariffs as taxes jumped off the page to MM when we read the transcript.
Here’s how WSJ’s Bob Davis and Lingling Wei described potential terms of a deal: “It isn’t clear what specifics the U.S. is asking for—or what Beijing is willing to entertain. One offer, according to Chinese officials: in return for the suspension of U.S. tariffs, Beijing would agree to lift restrictions on China’s purchases of U.S. farm and energy products.
“Such a deal would follow the model of partial agreements the U.S. has cut in recent months with the European Union and Japan, U.S. officials said. In those deals, the U.S. agreed not to levy more tariffs—in those cases, tariffs on automobiles—while the two sides negotiated over specific areas.”
In their write-up, Bloomberg’s Jennifer Jacobs, Shawn Donnan and Jenny Leonard report that Chinese Vice Premier Liu He could come to DC for further talks next month: “The two sides have also been eyeing a possible mid-December trip to … by Liu He, Xi’s top economic adviser … But whether that visit actually takes place would depend on a positive outcome in Buenos Aires.” Read more.
POSSIBLY SOURING THE MOOD — Just before leaving, Trump had to confront another guilty plea from his former lawyer/fixer Michael Cohen, this time to Robert Mueller’s prosecutors in the Southern District of New York. Trump tried to shake it off as not a threat. But one big concern among free-traders was that Trump would sour on any deals with China and want to look tough in Buenos Aires if he faced negative Mueller news. And that’s exactly what he got.
Our Andrew Restuccia and Gabby Orr: “White House aides had hoped that the G-20 summit would be an opportunity for … Trump to showcase his deal-making skills. Now, they’re worried that special counsel Robert Mueller’s latest bombshell could overshadow his latest tour on the world stage. And some think that’s just the way Mueller wanted it.
“In a Thursday statement, Trump’s lawyer, Rudy Giuliani, called it ‘hardly coincidental’ that Mueller made a dramatic legal move ‘just as the President is leaving for a meeting with world leaders,’ adding that the chief Russia investigator ‘did the very same thing as the President was leaving for a world summit in Helsinki.’ … There’s no evidence that Mueller sought, in either case, to overshadow Trump’s travel.”
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HOW A DEAL COULD DIE — China hawk Peter Navarro is now back on the list for the Saturday night dinner along with USTR Robert Lighthizer who also favors a tough line with the Chinese. So they will potentially offset the influence of Treasury Secretary Steven Mnuchin and NEC Director Larry Kudlow, who both favor a deal. Secretary of State Mike Pompeo and hawkish National Security Adviser John Bolton are also on the list. Everything will come down to Trump but the numbers are not stacked in the free-traders favor.
GET SMART QUICK ON THE COHEN PLEA — Our Theodoric Meyer has a primer on who Cohen is, what he pleaded to and what it could mean for Trump: “Cohen … pleaded guilty on Thursday to lying to Congress about his role in negotiating a failed deal to build at Trump Tower in Moscow during the 2016 presidential campaign. …
“Cohen pleaded guilty to misleading Congress to ‘minimize links between the Moscow Project’ and Trump — identified as ‘Individual 1’ in the court filing — and make it seem like the project had ended before the Iowa caucus ‘in hopes of limiting the ongoing Russia investigations.’”
WHY TRUMP SHOULD WORRY — Noah Feldman on Bloomberg Opinion: “The key revelation … is this: … Mueller is one step closer to showing links between … Trump’s business interests in Russia and his conduct as a candidate for president.
The criminal information … states that in a period that lasted until the middle of June 2016, Cohen asked the press secretary to Russian President Vladimir Putin for a meeting with Putin in Russia as part of a deal that would have led to a Trump Tower being built in Moscow. …
“Until now, many have speculated that there must be some link between Trump’s business interests in Russia and his campaign conduct. The Cohen plea provides more concrete evidence of such a link.” Read more.
A PENTHOUSE FOR PUTIN — BuzzFeed’s Anthony Cormier and Jason Leopold: “Trump’s company planned to give a $50 million penthouse at Trump Tower Moscow to Russian President Vladimir Putin as the company negotiated the luxury real estate development during the 2016 campaign, according to four people, one of them the originator of the plan.
“Two US law enforcement officials told BuzzFeed News that Michael Cohen, Trump’s personal lawyer at the time, discussed the idea with a representative of Dmitry Peskov, Putin’s press secretary. … The revelation that representatives of the Trump Organization planned to forge direct financial links with the leader of a hostile nation at the height of the campaign raises fresh questions about … Trump's relationship with the Kremlin.” Read more.
SHUTDOWN FIGHT HEATS UP — Our Marianne LeVine and Sarah Ferris:
“Senate Minority Leader Chuck Schumer (D-N.Y.) slammed … Trump Thursday for holding up spending talks and offered his own hard line as a fight over Trump’s border wall heats up. Schumer said Trump could either accept a bipartisan bill to fund the Department of Homeland Security or simply extend existing funding levels for one more year, a disappointment for a president who wants to increase border security spending. …
“Congress has until Dec. 7 to avoid a partial government shutdown, with funding for Trump’s border wall the biggest issue. … In his speech, Schumer blasted the Trump administration for not spending the $1.3 billion Congress already allocated for border security and accused the president of “trying to manufacture a shutdown to fire up his own base.”
KRANINGER MOVES AHEAD — Our Zachary Warmbrodt: “The nomination of Kathy Kraninger to head the CFPB advanced in the Senate .. in a party-line vote. The Senate agreed to move forward with her confirmation in a 50-49 vote. Once she receives a final vote next week, Kraninger will replace acting director Mick Mulvaney, who took the helm of the agency a year ago.
“Republicans and Democrats had expected the confirmation vote to be partisan, and that's what happened … Liberal and moderate Democrats have criticized Kraninger's nomination, arguing that the Office of Management and Budget official lacks experience. Democrats have also linked her to other Trump administration controversies, including the family separation policy along the U.S.-Mexico border.” Read more.
A COUNTER TO THE SLOW-DOWN NARRATIVE — Via Brown Brothers Harriman Chief Investment Strategist Scott Clemons: “Rumors of the demise of the US economic cycle are greatly exaggerated. There is no question that the pace of US economic activity is slowing down, but from lofty levels … We expect a moderation in economic activity, but no recession. …
“The fundamental supports of economic activity remain healthy. The housing market is beginning to feel some pressure from higher mortgage rates, but prices are strong. Housing prices nationwide are up around 5% year over year. … The labor market is providing similar economic support … and workers are finally seeing a slight acceleration in wages”
HAPPENING MONDAY: CANADIAN FINANCE MINISTER EVENT — Our POLITICO Pro Canada’s Luiza Savage and Alex Panetta will interview Canada’s Finance Minister Bill Morneau in NYC Monday morning. Details here.
GOOD FRIDAY MORNING — Happy weekend, everyone! Email me at [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at [email protected] and follow her on Twitter @AubreeEWeaver.
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SUMMERS ON TRUMP VS THE FED — Larry Summers in a Fox Business interview on the debut Friday of “WSJ at Large with Gerry Baker”: “I think we’re also in a more dangerous monetary environment because we’ve got a president sounding off about the Fed. That’s just got to increase uncertainty premiums everywhere, make it harder for the Fed to do its job, and I think that kind of political rhetoric about monetary policy is really quite dangerous. …
“[T]he ways in which the president spoke in, I don’t think any thoughtful economist would agree with. But I do think that there are more risks of over-tightening than there are of under-tightening right now.”
HANDICAPPING TRUMP/XI — Mohamed A. El-Erian on Bloomberg Opinion: “If it were only about economics, the outcome of the meeting between … Trump and Xi Jinping on the sideline of the G-20 Summit in Argentina on Saturday would be a lot easier to predict: an immediate easing of trade tensions as a step toward reaching concrete agreements down the road. …
“The economist in me says the U.S. and Chinese leaders will strike a constructive tone that defuses tensions … But this isn't just about economics. Both countries are also dealing with broader issues.” Read more.
WARREN LAYS ON FOREIGN POLICY/TRADE POSITIONS — Our Nahal Toosi: “Sen. Elizabeth Warren [called] on Thursday for a U.S. foreign policy that ‘works for all Americans,’ not just wealthy capitalists, and helps block the rise of authoritarianism. In a speech at American University, the likely 2020 White House contender also [announced] her opposition … Trump’s newly renegotiated trade deal with Canada and Mexico, while calling for a smaller defense budget, a pullout of U.S. troops from Afghanistan and a ‘no first use’ nuclear weapons policy.” Read more.
NO BIG TAX BILL COMING — Our Brian Faler: “Some top tax aides in Congress … cast doubt on the prospect of lawmakers agreeing to a big tax bill released this week by House Republicans. Lawmakers are more focused right now on heading off a government shutdown, said Aruna Kalyanam, staff director for Ways and Means Democrats. ‘This is kind of a sideshow — there is a [government] funding fight that still needs to be resolved’ and ‘my understanding is that they are not close — that there are a lot of problems there,’ she said. ...
“Senate aides, meanwhile, noted it would take lawmakers in that chamber a while to come to an agreement. ‘We need member feedback and that includes on-committee members, that includes off-committee members, that includes Republican members and Democrat members,’ said Jennifer Acuña, Republicans' chief tax counsel on the Finance Committee. ‘Building consensus is the name of the game.’” Read more.
RYAN BUDGET PANEL CRASHES — Our Sarah Ferris: “A special panel dreamed up by Speaker Paul Ryan to end the constant cycle of government shutdowns crashed and burned on Thursday. The special panel tasked with recommending budget fixes overwhelmingly rejected its own set of proposals, even after lawmakers admitted the package included only modest changes to the way Congress approves budgets and funds the government.
“The failed vote follows months of amicable work toward a bipartisan deal. In recent weeks, however, partisan feuding divided the group as members from each side of the aisle began accusing the other party's leaders of dooming approval in the Senate. ‘We got gamed here,” said Sen. David Perdue (R-Ga.), who, at one point, banged his fist on the table as he bemoaned the panel’s failure. ‘By leadership — House, Senate, Republican, Democrat.’ Perdue's long-time ally on budget issues, Sen. Sheldon Whitehouse (D-R.I.), agreed: ‘On both sides, there is no interest in going forward in this Congress.’” Read more.
FLY AROUND
HOW POWELL REACTS TO TRUMP — WSJ’s Nick Timiraos: “Some wondered, with no evidence, if Mr. Trump’s attacks were starting to sway the Fed leader. Mr. Powell’s conduct so far suggests that is unfounded, and people close to him strongly dispute that notion.
“Mr. Powell has told others that he knows the president’s criticism could make his life unpleasant, but that he wouldn’t respond to political pressure. People close to Mr. Powell said he understood that history would judge him on policy decisions made over his four-year term.” Read more.
SANDBERG SOUGHT INFO ON SOROS — NYT’s Nicholas Confessore and Matthew Rosenberg: “Sheryl Sandberg asked Facebook’s communications staff to research George Soros’s financial interests in the wake of his high-profile attacks on tech companies, according to three people with knowledge of her request, indicating that Facebook’s second in command was directly involved in the social network’s response to the liberal billionaire.
“Ms. Sandberg, Facebook’s chief operating officer, asked for the information in an email in January to senior communications and policy executives. The email came within days of a blistering speech Mr. Soros delivered that month at the World Economic Forum, attacking Facebook and Google as a ‘menace’ to society and calling for the companies to be regulated.” Read more.
MORE TRUMP/XI DETAILS — FT’s Tom Mitchell and James Politi: “Chinese and US officials have discussed holding a further round of trade talks in Washington in December if Xi Jinping and Donald Trump agree to a trade war truce in Buenos Aires this weekend, according to three people familiar with the preparations.
“The people said that if Mr Xi and Mr Trump can reach a truce, Beijing’s lead trade negotiator, vice-premier Liu He, would lead a delegation of 30 Chinese officials to the US capital on a mission tentatively scheduled for December 12-15. The two sides remain far apart on a number of critical issues … According to the people briefed on the preparations, Mr Liu’s December trip would go ahead if Mr Trump agreed to a pause in any further tariff measures in return for the Chinese government’s willingness to negotiate possible changes to its industrial policies” Read more.
GM WORKERS DON’T BLAME TRUMP — WP’s Jenna Johnson: “Eight miles northwest of the General Motors assembly plant expected to close next year, two workers and a customer at an auto-parts store pointed fingers: Americans just don’t want to drive small cars like those produced at the plant. Gas prices are low, making big vehicles even more attractive. And GM can get cheaper labor elsewhere.
“But none of the three men pointed a finger at … Trump, who had promised residents here and throughout the industrial Midwest that he would stop the closure of factories. At one political rally in the area last year, he even urged residents to stay put and not sell their homes. … And even a customer who would like to see Trump impeached said he doesn’t fully fault the president.” Read more.
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The extent of foodborne illness in the United States and its associated costs are significant. CDC estimates that unsafe foods cause as many as 76 million illnesses, 325,000 hospitalizations, and 5,000 deaths annually. In terms of medical costs and productivity losses, foodborne illnesses associated with seven major pathogens cost the nation between $7 billion and $37 billion annually, according to USDA’s estimates. The National School Lunch Program and the School Breakfast Program share the goals of improving children’s nutrition, increasing lower-income children’s access to nutritious meals, and supporting the agricultural economy. The school lunch program is available in almost all public schools and in many private schools. About 70 percent of those schools also participate in the breakfast program. Schools participating in the school lunch or breakfast programs receive a per-meal federal cash reimbursement for all meals they serve to children, as long as the meals meet federal nutrition standards. In fiscal year 2001, school meal programs provided lunch, breakfast, and snacks to over 27 million school children daily. At the federal level, FNS administers the school meal programs. At the state level, the program is usually administered by state education agencies, which operate them through agreements with local school food authorities. Overall, USDA donates about 17 percent of the dollar value of food that goes on the table in school lunch programs through its Food Distribution Program. USDA purchases and distributes commodities to remove surpluses from the marketplace and to provide nutritious foods to the nation’s children. Schools purchase the remaining 83 percent of the dollar value of food served using USDA’s cash reimbursement and their own funds. In fiscal year 2001, the total cost of the school meal programs—including cash reimbursements to schools, USDA purchases of donated foods, and program administration—was nearly $8 billion. By far the largest component of the school meal programs is the school lunch program. In fiscal year 2001, the school lunch program cost about $5.7 billion. The procurement process for foods served in school lunch program differs depending on whether federal or state/local food authorities procure the foods (see figure 1). USDA’s Agricultural Marketing Service (AMS) and Farm Service Agency (FSA) are responsible for procuring USDA-donated foods. The Agricultural Marketing Service purchases meat, poultry, fish, and fruits and vegetables for donation; the Farm Service Agency purchases grains, oils, peanut products, dairy products, and other foods. USDA contracts for the purchase of these products with manufacturers that are selected through a formally advertised competitive bidding process. FNS, through its Food Distribution Division, provides the donated foods to state agencies for distribution to schools. Schools then purchase the remainder of food for school meals independently using their own procurement practices, either purchasing foods directly from manufacturers or distributors, or contracting with food service management companies that procure the foods for them. USDA provides little guidance to promote safety in school food procurements. FNS’ guidance to schools emphasizes safe food handling because, according to USDA officials, most cases of foodborne illness at schools are due to poor food storage, handling, and serving practices. Therefore, the priority is on guidance to ensure food safety through proper handling and preparation of foods at schools. For example, manuals are provided that address appropriate temperatures for reheating ready-to-eat foods and for hot-holding potentially hazardous foods. Similarly, FNS provides information on employee personal hygiene and how it relates to cross-contamination of foods. CDC’s outbreak data shows an increase in the number of school-related outbreaks since 1990. Between 1990 and 1999 (the most recent year for which complete outbreak data is available from CDC), 292 school-related outbreaks were reported to CDC, averaging 17 outbreaks in the first 4 years of the decade, 28 in the next 4 years, and 57 in the final 2 years (see table 1). In total, approximately 16,000 individuals, mostly children, were affected. For those outbreaks with a known cause, the most commonly identified cause of the illnesses were foods contaminated with salmonella or Norwalk-like viruses. According to CDC officials, some unknown portion of the increase in reported outbreaks extends from CDC’s transition from a completely passive surveillance data collection method to a more active surveillance methodology in early 1998. In effect, CDC went from accepting data from the states to actively soliciting states for more comprehensive information and having the states verify the information that they submit. As a result, states began to report more of all types of foodborne outbreaks, including school outbreaks, to CDC beginning in 1998. Moreover, CDC suggests that increased resources for outbreak investigations and greater awareness among the general public about foodborne disease might also account for the increased number of reported outbreaks. To evaluate the trend in the number of school outbreaks, and in their number relative to non-school outbreaks, we compared the observed numbers to the estimated numbers of school and non-school outbreaks.This analysis shows that there is an upward trend in foodborne illness outbreaks reported in schools between 1990 and 1999 and that not all of this increasing trend is attributable to changes that took place when CDC began a more active data collection effort. Outbreaks in the general population have increased by a comparable amount over the same period; therefore, there is no statistically significant difference between increased outbreaks in schools and increased outbreaks in general. As figure 2 shows, our analysis of CDC’s data indicates that, even after adjusting for CDC’s improved data collection, the number of school-related foodborne outbreaks increased, on average, about 10 percent per year between 1990 and 1999. We also analyzed trends in participation in the school meal programs over this same time period and found that the changes in school outbreaks reported did not simply mirror changes in the number of students participating in the school meal programs. While the number of reported school outbreaks doubled over the decade, and generally increased by an average of about 10 percent from one year to the next, the number of school lunch participants increased by only 12 percent over the entire decade, or by just over 1 percent per year. Thus, the increase in school outbreaks reported is not explained by the increase in children’s participation in the school meal programs. One should exercise caution, however, when analyzing school outbreak data. CDC’s data must be supplemented with more detailed state or local information to determine the extent of foodborne illness outbreaks actually associated with the school meal programs in any given year. We gathered additional state and local health department information for the 20 largest school outbreaks in CDC’s database for 1998 and 1999, each of which resulted in 100 or more illnesses. We determined that 13 of the 20 outbreaks (65 percent) were associated with foods served in the school meal programs. Three of the 13 outbreaks were linked to tainted burritos that were distributed to schools nationwide and are thought to have caused approximately 1,700 illnesses. The other 7 outbreaks were not linked to foods served in the school meal programs, but with foods brought to schools from home or other sources. Therefore, data limitations make it difficult to assert with complete certainty to what extent the foods served in the school meal programs are the cause of the reported outbreaks from 1990 to 1999. USDA has, for the most part, been responsive to the two recommendations we made in our February 2000 report. First, we recommended that USDA develop a database to track the actions it takes to hold or recall donated foods when safety concerns arise regarding foods donated to the school meal programs. Second, we recommended that the agency revise its school food service manual to include guidance regarding food safety procurement contract provisions, which could be used by state and local school authorities. We made our first recommendation because, without comprehensive records of such safety actions, USDA had no reliable basis for identifying problematic foods or suppliers, or for documenting the agency’s responsiveness to concerns over the safety of USDA-donated foods. In response to our February 2000 recommendation, USDA implemented its food safety action database in April 2000. The database identifies and tracks key hold and recall information starting in October 1998. As of April 2002, the database lists 11 food safety actions, including, for example, the recall of 114,000 pounds of chicken that was contaminated with listeria in February 2000. Because of the limited number of actions recorded thus far, USDA has not conducted any analysis of the information contained in the database, but plans to continue maintaining it for future use. We made our second recommendation because, although USDA has established procurement policies and procedures to ensure the safety of foods donated to schools, these policies and procedures do not apply to foods purchased independently by schools. For example, contracts for donated foods may specify pathogen testing for every lot of certain products that are highly susceptible to contamination, or may contain contract provisions that establish specific temperature requirements for chilled and frozen products during processing and storage at the plant, transportation between processing plants, upon shipment from the plant, and upon arrival at final destination. However, there is no requirement that state and local authorities include similar food safety provisions in their procurement contracts. According to USDA’s regulations for schools participating in the school meal programs, the responsible school food authority may use its own procurement procedures, which reflect applicable state and local laws and regulations. Therefore, the extent to which schools address safety in their food procurement contracts may vary depending on state and local laws and procurement guidance that is available to them. To assist state and local authorities, we recommended that USDA provide them guidance on food safety provisions that could be included in their procurement contracts. USDA officials told us that they plan to address our recommendation by revising the school procurement guidance to include an example that addresses safety concerns. We believe, however, that USDA should include more information that would be useful to schools. Specifically, providing a list of the specific food safety provisions found in USDA- donated food contracts would help schools in preparing their own food procurement contracts. While USDA officials contend that local school districts have little negotiating power to require safety provisions because their purchases are mainly low-volume from commercial sources, USDA’s own data indicates that in the 1996-1997 school year, the latest year for which this data was available, 37 percent of school food authorities participated in cooperative arrangements that purchase in larger volume. Therefore, we believe that more detailed information on contract safety provisions could enhance the safety of foods purchased directly by schools. In particular, since local school authorities purchase 83 percent of the dollar value of school meals, it is important that they receive guidance from FNS on how best to achieve a comparable level of safety precautions through their procurement process. Based on limited work conducted in preparation for this testimony, we offer two additional observations that, if validated by further study, may contribute to greater safety for school children at minimal cost. First, USDA’s procurement officials told us that they have routine access to federal inspection and compliance records of potential suppliers and that they consider this information when they review bids before contracting. However, there is currently no established mechanism for state and local authorities in charge of purchasing food for schools to easily and routinely access such information. It may be desirable for USDA to consider whether it should provide state and local school officials with access to information collected through FDA’s and USDA’s inspections of school lunch food suppliers, potentially enabling them to make more informed purchasing decisions. USDA officials stated that this idea would have to be explored further to address potential legal impediments to such information sharing. FDA officials commented that this idea is worth considering. Second, FNS has developed a process for holding foods suspected of contamination that applies exclusively to food commodities that USDA purchases for donation to schools. The hold allows time for additional testing and inspection prior to asking for a recall of donated foods when safety concerns arise. Because FNS is the single common point of contact for all schools participating in the school meal programs, and because it does provide guidance to the schools on food nutrition and quality, an extension of FNS’ hold and recall procedures to include non-donated (school-purchased) foods would seem logical. USDA officials agreed with this concept and indicated that they intend to share the hold and recall procedures with schools in fiscal year 2003. USDA and FDA have not developed any specific security provisions to help protect food served through the school meal programs from potential deliberate contamination. But, according to USDA and FDA officials, actions designed to enhance the security of the federal food safety system as a whole would also enhance the security of meals served at schools. As we testified in October 2001, however, recent events have raised the specter of bioterrorism as an emerging risk factor for our food safety system.. We further stated that under the current structure, there are questions about the system’s ability to detect and quickly respond to any such event. Since our October 2001 testimony, both FDA and USDA have stated that they are better prepared to detect and respond to such an event. Both agencies are in the process of conducting risk assessments to determine where in the farm-to-table food continuum there is a critical need to provide additional resources. In addition, FDA staffing has already increased inspections of imported foods, added more inspections of domestic producers, and more laboratory testing of food products. Further, FDA has issued voluntary security guidelines to the sector of the food industry that it regulates on the need to (1) ensure physical security of processing and storage facilities, (2) ensure that chemical and biological agents that may be kept in their facilities or at in-house laboratories are under appropriate controls, and (3) verify the background of plant employees. Currently, the agency is receiving public comments and expects to revise the guidelines. USDA is also working on a similar set of guidelines that meat, poultry, and egg products processors could voluntarily adopt. Finally, agency officials told us that they have generally asked their field personnel to be on heightened alert for potential security concerns. We are initiating a review to determine how these guidelines are being implemented and how federal agencies plan to monitor their implementation. As we reported in February 2000, while no federal agency monitors the safety of school meals, USDA’s Food Safety and Inspection Service (FSIS) and FDA are responsible for enforcing regulations that ensure the safety of the nation’s food supply. FSIS is responsible for the safety of meat, poultry, and some eggs and egg products, while the FDA is responsible for all other foods, including fish, fruit, vegetables, milk, and grain products. However, as we stated most recently in our October 2001 testimony, the existing food safety system is a patchwork structure that hampers efforts to adequately address existing and emerging food safety risks whether those risks involve inadvertent or deliberate contamination. The food safety system is also affected by other overarching problems, such as the challenge of effectively coordinating the food safety activities of multiple agencies including coordinating multi-state outbreaks. For example, the current organizational and legal structure of our federal food safety system has given responsibility for specific food commodities to different agencies and provided them with significantly different regulatory authorities and responsibilities. As a result, we have inefficient use of resources and inconsistencies in oversight and enforcement. USDA and FDA oversee recalls when the foods they regulate are contaminated or adulterated. If a USDA-regulated company does not voluntarily conduct the recall, USDA can detain the product for up to 20 days. On the other hand, FDA, which currently does not have administrative detention authority for food under the Federal Food, Drug, and Cosmetic Act, must seek a court order to seize the food. Moreover, as we reported in August 2000, neither USDA nor FDA had provided guidance to industry on how to quickly initiate and carry out food recalls that involve potentially serious adverse health risk. We recommended that such guidelines instruct companies on time frames for quickly initiating and carrying out recalls, including procedures that expeditiously notify distribution chains and alert the public. USDA has revised its guidelines, and FDA is in the process of revising its guidance and expects to reissue the guidance in September 2002. Finally, Mr. Chairmen, in working on food safety issues over the past decade, we have reviewed USDA’s and FDA’s inspection systems and identified weaknesses in both. The agencies agreed with most of our recommendations and have either taken steps or are taking steps to improve inspections. We have also focused on specific products, many of which are included in school meals. For example, because of concerns about the risk of salmonella in eggs, we reviewed the adequacy of the federal system for ensuring egg safety. Our work shows that the current regulatory and organizational framework for egg safety makes it difficult to ensure that resources are directed to areas of highest risk. Similarly, we evaluated the seafood and shellfish safety program and determined that theses programs do not sufficiently protect consumers because of weaknesses in FDA’s implementation of the new science-based inspection system. FDA agreed with most of our recommendations. We also reviewed USDA’s oversight of meat and poultry products and concluded that, in order to better ensure safety, USDA needed to ensure that inspectors are properly trained on the new science-based system. USDA agreed with our recommendation and is providing enhanced training. In January 2002, our report on mad cow disease concluded that, although bovine spongiform encephalopathy (BSE) has not been found in the United States, federal actions do not sufficiently ensure that all BSE-infected animals or products are kept out of the country or that if BSE were found, it would be detected promptly and not spread. FDA, USDA, and Customs generally agreed with the report’s recommendations. | The national school lunch and breakfast programs provide inexpensive or free meals to more than 27 million children each day. During the 1990s, nearly 300 outbreaks of foodborne illness at the nation's schools sickened 16,000 students. The rise in the number of school outbreaks mirrors a rise in the number of outbreaks in the overall population, according to the Centers for Disease Control and Prevention (CDC). Because the CDC data include outbreaks attributable to food brought from home or other sources, GAO could not determine the extent to which food served in the school meal programs caused reported outbreaks. Data from 1998 and 1999 do show, however, that most of the outbreaks during those years were caused by foods served through the school meal program. Foods contaminated with salmonella and Norwalk-like viruses were the most common causes of outbreaks. GAO found that the Department of Agriculture has not developed security measures to protect foods served at schools from deliberate contamination. The existing food safety system is a patchwork of protections that fall short in addressing existing and emerging food safety threats. |
Prime Minister Tony Abbott, facing growing pressure to call early elections, is expected to take a far more cautious tack in the conservative government's second budget on Tuesday after a politically disastrous plan last year. Abbott and Treasurer Joe Hockey were savaged in 2014 for handing down a budget that aimed to slash spending on social welfare programs in order to reign in spiraling deficits. Both have promised that Tuesday's budget will be "boring" in comparison, favoring tax breaks for small business owners and new family benefits over big-ticket structural items to address a collapse in revenue as a decade-long mining boom winds down.
Australian Conservatives Readying for DO OR DIE Second Budget
Two and a half years after a video of a band of Louisville teens posted an all-percussion version of Ozzy Osbourne 's "Crazy Train" on YouTube – racking up over 800,000 views in the process – the Black Sabbath singer has finally gotten around to watching the video. Osbourne was so moved by the performance that instead of simply hitting "like" on the unique version of his Blizzard of Ozz single, the Courier-Journal reports he sent a $10,000 check to support the Louisville Leopard Percussionists.
You'll Never Guess What This Youtube Video Inspires Ozzy Osbourne to Do!
When Philip Astley started the first circus in England in 1768 , he used the ring to exhibit his horse tricks, with a few jugglers, acrobats and clowns on the side. Circuses grew from a small traveling show to a three ring affair in 1881, when P. T. Barnum debuted P.T. Barnum's Museum, Menagerie & Circus, which featured many different acts and the world's largest elephant.
Kanye West made a surprise on-court appearance at Chicago's United Center during his hometown Bulls' Game Four matchup versus the Cleveland Cavaliers. After the rapper announced the contest's starting lineup prior to tip-off, Bleacher Reports writes West staged an impromptu performance of his latest single "All Day" at center court during a timeout with 3:23 remaining in the first quarter. West, a huge basketball fan, was also shown sitting next to Bulls great Scottie Pippen during the game.
You'll Never Guess What Kayne Did at Sundays Chicago Bulls Game
Hope Solo' s husband Jerramy Stevens caught a huge break Sunday getting released from jail. JUST 3 Days after surrendering for a 30 day sentence for his Team USA soccer van DUI. Stevens was arrested in Manhattan Beach, CA in January while driving a team USA soccer van with his wife Hope Solo in the vehicle. Stevens is now on 4 years probation and must complete a 2-year outpatient alcohol treatment program in Washington.
British Prime Minister David Cameron on Sunday ruled out giving Scotland another independence referendum despite spectacular gains by Scottish nationalists in a UK-wide election, saying Scots had "emphatically" rejected a breakaway only last year. Cameron, who was re-elected with a surprise outright majority last week, said he would ensure that further powers would be granted to Scotland according to an existing plan. "There isn't going to be another referendum," he said, saying the pro-independence Scottish National Party, which won 56 of 59 parliamentary seats in Scotland last week, had made clear that election was not about securing another vote.
Film and theater director Mike Leigh's operatic debut with Gilbert and Sullivan's "The Pirates of Penzance" immerses us in a world of innocent fun where the morals of Britain's Victorian era are gently lampooned while avoiding tiresome moralizing. The comic opera features tender-hearted pirates who will not attack anyone who claims to be an orphan while our hero Frederic joined their ranks as a small boy after his hard-of-hearing nursery maid was told to have him apprenticed as a pilot.
Like mother, like daughter! Beyoncé was one of many celebrities to share heartfelt messages and family pictures on Mother's Day Sunday afternoon. But being the Queen Bey that she is, the "Crazy in Love" singer decided to step it up in her own unique way. On the left side of her split photo just posted, Beyoncé worked pigtails at a very young age while standing next to mom Tina Knowles. Fast-forward decades later and Mrs. Jay Z shared the same pose with her daughter Blue Ivy Carter.
Beyoncé and Blue Ivy Look Like Twins in Mother's Day Throwback Post.
Tom Brady is finally getting some support from an NFL player who's NOT his teammate -- with Jacksonville Jaguars star Marcedes Lewis saying he hopes the league goes easy on him because he's "America's Child." The Wells report was released last week implicating Brady as a main culprit in the DeflateGate scandal which came to light before the Super Bowl this past season.
A powerful typhoon is heading toward Tokyo after lashing southern Japan, where it killed at least one U.S. airman on Okinawa island and left two others missing. The Meteorological Agency said Typhoon Phanfone was off the coast of Shikoku in southwestern Japan on Sunday night, local time, packing winds of up to 90 miles per hour, after hitting the southern regions of Okinawa and Kyushu. Reuters reported the typhoon was downgraded from the status of super typhoon. Air Force members were washed away by high waves Sunday, with one found dead and the other two still missing.
Strong typhoon Phanfone slammed into Japan Monday, packing gusting winds and huge waves that swept three US military officials out to sea in another stark reminder of the country's vulnerability to nature.
Just over a week after a volcano killed dozens of hikers when it erupted without warning, winds of up to 180 kilometres (112 miles) per hour whipped ashore, bringing heavy rain and travel chaos throughout a swathe of the archipelago.
The storm whirled over Tokyo at around 11:00 am (0200 GMT) and then headed northeast, dumping rain further up the coast of Honshu while its eye moved out over the Pacific Ocean.
Seven people were left dead or missing, including the three US military officials who had been photographing the storm, Japanese police and coast guards said.
Typhoon Phanfone grounded more than 600 flights, and caused the cancellation of dozens of bullet train services, leaving travellers stranded in stations.
The leading edge of the storm brought a nasty commute to Tokyo's morning rush hour, with hundreds of thousands of office workers caught up in the driving rain that lashed the streets.
Localised flooding was reported while television footage showed around 15 of the 20-metre (66-foot) high poles holding up the netting at a golf driving range had collapsed, crashing into houses in Chiba, east of Tokyo.
The storm also battered Japan's auto industries.
Toyota Motor temporarily suspended operations at its 12 factories in Aichi, central Japan, due to the impact of the typhoon on its parts supplies, a company spokeswoman said, adding that production lines reopened by Monday evening.
View gallery Vehicles advance through a flooded street in Chiba, near Tokyo, Monday, Oct. 6, 2014. A powerful typ …
- Risk of further flooding -
The weather agency warned that even as the storm passed out to sea landslides and floods were still a risk in a country where a relatively wet summer brought numerous landslides, including in Hiroshima where more than 70 people died.
In the central Japanese prefecture of Shizuoka, more than 50,000 people were ordered to evacuate their homes, while around 1.7 million others were advised to take refuge, local authorities said.
Three US military officials were engulfed by high waves triggered by the storm on the southern island of Okinawa.
"Three officials were taking pictures with high waves whipped up by the typhoon in the background," a local police spokesman said.
"One has been found dead, with the two others still missing," he said early Monday.
A 21-year-old surfer was also missing in the Pacific off Fujisawa, southwest of Tokyo, a coast guard spokesman said.
And rescuers were searching through the mess left by two separate landslides in Yokohama, southwest of Tokyo, where two people were missing.
A junior high school boy had also disappeared after being swamped by high waves on the coast at Yokosuka, south of Tokyo, a city official said.
About 57 people were injured across the country in storm-related accidents, public broadcaster NHK said.
Tokyo Electric Power Co., the operator of the tsunami-crippled Fukushima Daiichi nuclear power plant on the northeastern Pacific coast, said it had halted ground and sea operations, and bundled away cables and hoses.
"We are also patrolling and checking where water may flow in," a company spokesman said.
In the mountainous centre of the country, the typhoon meant the suspension of the search for the bodies of at least 12 hikers believed to be lying on the still-smouldering Mount Ontake. The mountain has already yielded 51.
The volcano was packed with walkers when it burst angrily to life on September 27, with many there to witness the spectacular colours of the countryside as summer turned to autumn.
The eruption was Japan's deadliest in almost 90 years and nearly 1,000 troops, firefighters and police have participated in a search made treacherous by the gases still rising from the peak, as well as a knee-deep layer of sticky ash.
"We want to resume operations as soon as possible when weather permits," said an official of the crisis management office of Nagano, where the volcano sits. ||||| Strong typhoon Phanfone made landfall in central Japan on Monday, slamming into the archipelago with winds of 180 kilometres (112 miles) per hour and making a beeline for Tokyo, the country's meteorological agency said.
The storm has already left four people dead or missing, including three US military officials, according to Japanese police and coast guards.
"Typhoon No 18 made landfall near Hamamatsu City" and was heading towards the Tokyo metropolitan area, an agency official told AFP by telephone.
Typhoon Phanfone has also grounded more than 600 flights and forced Japanese authorities to suspend a search for the bodies of those still missing more than a week after a volcano erupted, claiming dozens of lives.
The leading edge of the typhoon was whipping rain and strong winds through Tokyo's morning rush hour.
The storm system was estimated to be 200 kilometres (124 miles) southwest of the capital at 8:00 am (2300 GMT on Sunday) and moving northeast at 45 kilometres per hour, the weather agency said.
The agency warned that landslides, floods, high waves and heavy rains could hit a large swathe of the archipelago, where a relatively wet summer brought numerous landslides, including in Hiroshima where at least 70 people died.
Local governments in many areas issued evacuation advisories to more than 300,000 residents, according to public broadcaster NHK said.
The first fatalities of Phanfone had already been recorded.
Three US military officials were engulfed by high waves triggered by the storm on the southern island of Okinawa.
"Three officials were taking pictures with high waves whipped up by the typhoon in the background," a spokesman at local police said.
"One has been found dead, with the two others still missing," he said early Monday.
A 21-year-old surfer was also missing in the Pacific off Fujisawa, southwest of Tokyo, a coast guard spokesman said.
About 10 people were injured across the nation in storm-related accidents, NHK said.
At least 608 flights were grounded on Monday because of the winds after 216 flights were cancelled on Sunday, the network said.
Meanwhile, the search was suspended for the bodies of at least 12 hikers believed to be lying on the still-smouldering Mount Ontake, from where 51 have already been retrieved.
The volcano was packed with walkers when it burst angrily to life on September 27, with many there to witness the spectacular colours of the countryside at the arrival of autumn.
The eruption is Japan's deadliest in almost 90 years and nearly 1,000 troops, firefighters and police have participated in a search made treacherous by the gases still rising from the peak, as well as a knee-deep layer of sticky ash.
"We want to resume operations as soon as possible when weather permits," said an official of the crisis management office of Nagano, where the volcano sits.
si-mis/hg/st ||||| Story highlights More than 1.2 million people were advised to evacuate to shelters, officials say
Two U.S. airmen missing, one dead after they were swept from beach on Okinawa
A Japanese surfer is also missing after disappearing in waves near Tokyo suburb
Typhoon Phanfone hit central Japan on Monday, disrupting air and train travel
Two U.S. airmen and a Japanese surfer remained missing Monday after a powerful typhoon swept past the southern part of the country.
The two airmen were among four who were washed out to sea as a group of them took photos of big waves on a beach on the island of Okinawa on Sunday afternoon, according to the Japanese Coast Guard.
One airman managed to make it back to the beach, but another was found in the water and confirmed dead later Sunday, the coast guard said.
The search for the two missing men was hampered by rough seas, said Kadena Air Base, the U.S. military installation where they were serving.
Just Watched Typhoon Phanfone makes landfall in Japan replay More Videos ... Typhoon Phanfone makes landfall in Japan 03:36 PLAY VIDEO
All three names are being withheld until the Air Force can notify next of kin.
Surfer goes missing near Tokyo
The seas were churned up by Typhoon Phanfone, which made landfall in central Japan early Monday. It packed sustained winds as strong as 130 kph (81 mph) when it hit land near the city of Hamamatsu, after having moved up the country's southeastern coastline.
A 21-year-old university student went missing at lunchtime Sunday while surfing off the coast of Fujisawa, a beach suburb of Tokyo, the coast guard said.
Unleashing fierce winds and torrential rain, the typhoon brought widespread disruption to Tokyo and other areas near its path. Thirty-nine people have been injured, authorities said.
Hundreds of flights canceled
More than 1.2 million people throughout a wide area of central and eastern Japan have been advised to evacuate to shelters, Japanese fire and rescue officials said Monday. More than 7,000 others have been ordered to relocate.
Air transport was paralyzed, with more than 400 domestic flights canceled, affecting more than 50,000 people. Bullet trains between Tokyo and Osaka, Japan's second biggest city, were also disrupted.
Elementary and junior high schools in large areas of central Japan were closed to avoid the heavy rain and strong winds.
The storm had moved out into the Pacific Ocean by Monday afternoon, and meteorologists said conditions should improve by nightfall.
Risk of mudslides
But the typhoon left behind the danger of mudslides and flooding in mountainous areas.
Officials have expressed particular concern about the situation at Mount Ontake, a volcano that suddenly erupted last weekend, killing dozens of hikers.
The typhoon has caused search efforts to be suspended for about a dozen people who remain missing on the volcano, the Japanese news agency Kyodo reported.
The high accumulation of volcanic ash on the mountain, combined with the forecast of heavy rain, increases the danger of mudslides. | The story of the three American airmen swept out to sea as Typhoon Phanfone pummeled Okinawa yesterday carries this coda: They "were taking pictures with high waves whipped up by the typhoon in the background," a local police rep tells AFP. They were apparently part of a group taking pictures, adds CNN; a total of four airmen were actually washed out to sea, but one managed to make his way back to shore. One was confirmed dead yesterday, while the other two remain missing. A 21-year-old surfer and a junior high schooler are also missing, as are two people lost in mudslides; some 57 people have been injured due to the storm, and more than 600 flights have been grounded, Yahoo reports. |
Fires burn in the National Democratic Party ruling party headquarters, after it was set alight by anti-government protesters, in downtown Cairo, Egypt, Friday, Jan. 28, 2011. (AP Photo/Ben Curtis) (Associated Press)
An Egyptian protester flashes the V-sign as riot police use water canon against protesters in Cairo, Egypt, Friday, Jan. 28, 2011. Egyptian anti-government activists clashed with police for a second day... (Associated Press)
An Egyptian anti-government activist kisses a riot police officer following clashes in Cairo, Egypt, Friday, Jan. 28, 2011. Tens of thousands of anti-government protesters poured into the streets of... (Associated Press)
Anti-government protestors gather outside the ruling National Democratic Party headquarters, as it is engulfed by flames in Cairo, Egypt, Friday, Jan. 28, 2011. Tens of thousands of anti-government protesters... (Associated Press)
An Egyptian Army soldier riding in an armored personnel carrier is surrounded by anti-government protesters near Tahrir square in Cairo, Egypt, Friday, Jan. 28, 2011. (AP Photo/Ben Curtis) (Associated Press)
An anti-government protester is backdropped by a fire set up by protesters near the Tahrir Square, in downtown Cairo, Egypt, Friday, Jan. 28, 2011. Egyptian activists protested for a fourth day as social... (Associated Press)
Egyptian anti-government activists run for a cover from the tear gaz during clashes with the riot- police in Cairo, Egypt, Friday, Jan. 28, 2011. Egyptian activists protested for a fourth day as social... (Associated Press)
Police and unidentified people are seen in the streets during a demonstration in Suez, Egypt, Friday, Jan. 28, 2011. Tens of thousands of anti-government protesters poured into the streets of Egypt Friday,... (Associated Press)
An anti-government protester burns furniture outside of a looted building, near Tahrir Square, in Cairo, Egypt, Friday, Jan. 28, 2011. Egyptian activists protested for a fourth day as social networking... (Associated Press) ||||| Whatever the fallout from the protests — be it change that comes suddenly or unfolds over years — the upheaval at the heart of the Arab world has vast repercussions for the status quo in the region, including tolerance for secular dictators by a new generation of frustrated youth, the viability of opposition that had been kept mute or locked up for years and the orientation of regional governments toward the United States and Israel , which had long counted Egypt as its most important friend in the region.
Many regional experts were still predicting that the wily Mr. Mubarak, who has outmaneuvered domestic political rivals and Egypt’s Islamic movement, the Muslim Brotherhood, for decades, would find a way to suppress dissent and restore control. But the apparently spontaneous, nonideological and youthful protesters also posed a new kind of challenge to a state security system focused on more traditional threats from organized religious groups and terrorists.
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Friday’s protests were the largest and most diverse yet, including young and old, women with Louis Vuitton bags and men in galabeyas, factory workers and film stars. All came surging out of mosques after midday prayers headed for Tahrir Square, and their clashes with the police left clouds of tear gas wafting through empty streets.
For the first time since the 1980s, Mr. Mubarak felt compelled to call the military into the streets of the major cities to restore order and enforce a national 6 p.m. curfew. He also ordered that Egypt be essentially severed from the global Internet and telecommunications systems. Even so, videos from Cairo and other major cities showed protesters openly defying the curfew and few efforts being made to enforce it.
Street battles unfolded throughout the day Friday, as hundreds of thousands of people streamed out of mosques after noon prayers on Friday in Cairo, Alexandria, Suez and other cities around the country.
By nightfall, the protesters had burned down the ruling party’s headquarters in Cairo, and looters marched away with computers, briefcases and other equipment emblazoned with the party’s logo. Other groups assaulted the Interior Ministry and the state television headquarters, until after dark when the military occupied both buildings and regained control. At one point, the American Embassy came under attack.
Six Cairo police stations and several police cars were in flames, and stations in Suez and other cities were burning as well. Office equipment and police vehicles burned, and the police seemed to have retreated from Cairo’s main streets. Brigades of riot police officers deployed at mosques, bridges and intersections, and they battered the protesters with tear gas, water, rubber-coated bullets and, by day’s end, live ammunition.
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With the help of five armored trucks and at least two fire trucks, more than a thousand riot police officers fought most of the day to hold the central Kasr al-Nil bridge. But, after hours of advances and retreats, by nightfall a crowd of at least twice as many protesters broke through. The Interior Ministry said nearly 900 were injured there and in the neighboring Giza area, with more than 400 hospitalized with critical injuries. State television said 13 were killed in Suez and 75 injured; a total of at least six were dead in Cairo and Giza.
The uprising here was also the biggest outbreak yet in a wave of youth-led revolts around the region since the Jan. 14 ouster of President Zine el-Abidine Ben Ali of Tunisia — a country with just half Cairo’s population of 20 million. “Tunis, Tunis, Tunis,” protesters chanted outside the Tunisian Embassy here.
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“Egyptians right now are not afraid at all,” said Walid Rachid, a student taking refuge from tear gas inside a Giza mosque. “It may take time, but our goal will come, an end to this regime. I want to say to this regime: 30 years is more than enough. Our country is going down and down because of your policies.”
Mr. Mubarak, in his televised address, said he was working to open up democracy and to fight “corruption,” and he said he understood the hardships facing the Egyptian people. But, he said, “a very thin line separates freedom from chaos.”
His offer to replace his cabinet is unlikely to be viewed as a major concession; Mr. Mubarak often changes ministers without undertaking fundamental reforms.
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A crowd of young men who had gathered around car radios on a bridge in downtown Cairo to listen to the speech said they were enraged by it, saying that they had heard it before and wanted him to go. “Leave, leave,” they chanted, vowing to return to the streets the next day. “Down, down with Mubarak.”
A bonfire of office furniture from the ruling party headquarters was burning nearby, and the carcasses of police vehicles were still smoldering. The police appeared to have retreated from large parts of the city.
Protesters throughout the day spoke of the military’s eventual deployment as a foregone conclusion, given the scale of the uprising and Egyptian history. The military remains one of Egypt’s most esteemed institutions, a source of nationalist pride.
It was military officers who led the coup that toppled the British-backed monarch here in 1952, and all three Egypt’s presidents, including Mr. Mubarak, a former air force commander, have risen to power through the ranks of the military. It has historically been a decisive factor in Egyptian politics and has become a major player — a business owner — in the economy as well.
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Some protesters seemed to welcome the soldiers, even expressing hopes that the military would somehow take over and potentially oust Mr. Mubarak. Others said they despaired that, unlike the relatively small and apolitical army in Tunisia, the Egyptian military was loyal first of all to its own institutions and alumni, including Mr. Mubarak.
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“Will they stage a coup?” asked Hosam Sowilan, a retired general and a former director of a military research center here. “This will never happen.” He added: “The army in Tunisia put pressure on Ben Ali to leave. We are not going to do that here. The army here is loyal to this country and to the regime.”
One of the protesters leaving a mosque near Cairo was Mohamed ElBaradei , an Egyptian who won the Nobel Peace Prize for his work with the International Atomic Energy Agency and has since emerged as a leading critic of the government.
“This is the work of a barbaric regime that is in my view doomed,” he said after being sprayed by a water cannon.
Now, he said, “it is the people versus the thugs.”
The Muslim Brotherhood, for decades Egypt’s only viable opposition movement, had taken a backseat to the youth protest on Tuesday. But, perhaps stunned at the scale of that uprising, it called its supporters to the streets in full force on Friday.
Many protesters shouted religious slogans that were absent on Tuesday, though not the Brotherhood’s trademark “Islam is the solution.” Instead, the crowds seemed so large and diverse that it was impossible to gauge what proportion might have subscribed to the Brotherhood’s Islamist ideology.
“We decided to participate in full force today because we felt that the people were starting to respond,” said Gamal Tag Eddin, a middle-aged lawyer and a member of the Brotherhood. “We could not participate alone because the government uses us to scare people here and abroad. Now that the people have moved, the Brotherhood are in with all their members in order to bring down this oppressive regime.”
Several others said they felt shame that their homeland — the cradle of civilization and a onetime leader of the Arab world — had slipped toward backwardness and irrelevance, eclipsed by the rise of the Persian Gulf states. Some said they felt outdone by tiny Tunisia. ||||| Read full coverage of the unrest in Egypt updated continually by CNN reporters worldwide.
Thousands of demonstrators took to the streets of Egypt's major cities on Friday, prompting the government to deploy the army to keep the peace for the first time since unrest began Tuesday. Protesters are demanding an end to President Hosni Mubarak's 30-year-rule. Here are the latest developments as confirmed by CNN.
[Updated 7:40 p.m. (0240 in Egypt)] A senior U.S. State Department official said Egyptian President Hosni Mubarak "was not particularly forthcoming" in his speech early Saturday. "Our initial impression is that he emphasized security far more than reform," said the official, who wasn't authorized to speak on the record.
A senior Muslim Brotherhood leader echoed those sentiments in an interview with Al Jazeera Arabic, saying that Mubarak has to step down and the military should intervene, according to Al Jazeera.
[Updated 6:40 p.m. (0140 in Egypt)] U.S. President Barack Obama called on Egyptian authorities Friday to refrain from violence and to reverse any actions they have taken to limit access to the internet in the wake of protests there.
Obama said he spoke to the Egyptian president after he announced plans to dissolve his government and take steps with a new cabinet to implement reforms that will revitalize the economy and create more jobs.
"I told him he has a responsibility to give meaning to those words, to take concrete steps and actions that deliver on that promise."
[Updated 6:15 p.m. (0115 in Egypt)] President Mubarak's announcement that he was going to dissolve the government Saturday did not sit well with some protesters.
"Mubarak just blamed the government. We will continue our demonstrations until we get our full demands. We want him to leave. His time is over," said Ahmed, a 19-year-old law student demonstrator in Central Alexandria's Raml Square.
"We are one of the richest Arab countries and we want to live. Let a new government form but if we don't get what we ask for, we will go back to the streets again and again," said Mohammed, a 20- year-old student.
[Updated 5:45 p.m. (0045 in Egypt)] Protesters in the streets of Cairo are calling for Egyptian President Hosni Mubarak to leave, chanting in unison "we don't want him." The people in the streets represent all walks of life, from young people to families with children, CNN's Frederik Pleitgen reports.
[Updated 5:31 p.m. (0031 in Egypt)] Egyptian President Hosni Mubarak says he has asked the government to resign so he can appoint a new government Saturday. He gave no indication that he would step down or leave the country.
[Updated 5:27 p.m. (0027 in Egypt)] President Hosni Mubarak said he is "on the side of the people" and vowed to take steps to guarantee the rights and freedom of Egyptians, develop job opportunities and to "stand by the poor."
He said early Saturday he sees a fine line "between freedom and chaos" and that he would work to secure both freedom and security in Egypt.
I assure you that I'm working for the people and giving freedoms of opinion as long as you are respecting the law, there is a very little line between freedom and chaos," he said.
"I am absolutely on the side of the freedom of each citizen and at the same time I am on the side of the security of Egypt, and I would not let anything dangerous happen that would threaten the peace and the law and the future of the country."
[Updated 5:16 p.m. (0016 in Egypt)] President Hosni Mubarak is expected to speak soon, state-run Nile TV reports. Mubarak has not made any public appearances today.
[Updated 5:09 p.m. (0009 in Egypt)] It's just after midnight in Egypt and people are still milling about the streets in defiance of a government curfew, but activity has calmed, CNN's Frederik Pleitgen reports. Riot police appear to have withdrawn from the streets of Cairo and Alexandria after several hours of confrontation with protesters, and in their place the Egyptian Army has taken up presence, guarding government buildings.
State-run media reports that an "important statement" will be given later Friday in Egypt.
[Updated 4:58 p.m. (2358 in Egypt)] Thirteen people have died and 75 were injured in Suez, Egypt, Nile TV reported Friday, citing medical sources.
[Updated 4:51 p.m. (2351 in Egypt)] U.S. stocks plunged Friday - with the Dow industrial average falling 166 points, its largest loss since November, and the Nasdaq exchange losing 3% of its value - as investors grew nervous about political unrest in Egypt.
[Updated 4:35 p.m. (2335 in Egypt)] As public protests against the Mubarak regime spread from Cairo to New York City, Egyptian-American activists on Friday called on the Obama adminstration to back the "Lotus Revolution" to oust the authoritarian ruler. They also called on President Hosni Mubarak's government to end its purported practices of detentions, torture and "extrajudicial killings."
[Updated 4:00 p.m. (2300 in Egypt)] An iReporter visiting Egypt shot this video from his hotel room of demonstrators swarming three Army vehicles as they drove down the street.
[Updated 3:52 p.m. (2252 in Egypt)] The United States will review its aid to Egypt based on what is happening there now, White House Press Secretary Robert Gibbs said Friday.
[Updated 3:31 p.m. (2231 in Egypt)] Egyptian military officials have cut short their talks at the Pentagon to head back to northern Africa, according to Gen. James Cartwright, vice chairman of the U.S. joint chiefs of staff. Their meetings with their U.S. military counterparts had been scheduled to continue through Wednesday.
[Updated 3:20 p.m. (2222 in Egypt)] The White House has been in touch with the Egyptian government but U.S. President Barack Obama has not spoken with Egyptian President Hosni Mubarak, White House spokesman Robert Gibbs said in a briefing.
"We are deeply concerned about the images and events we see in Egypt today. We monitor those events closely; the security personnel need to refrain from violence, protesters should refrain from violence," he said.
"The legitimate grievances that have festered for quite some time in Egypt have to be addressed by the Egyptian government immediately, and violence is not the response. Space has to be created for meaningful dialogue that addresses those very legitimate grievances."
[Updated 2:56 p.m. (2156 in Egypt)] The building housing the offices of the National Democratic Party, Egypt's ruling party, was burned and ransacked by demonstrators in Cairo on Friday, Nile TV is reporting. A CNN source saw the building burning.
[Updated 2:52 p.m. (2152 in Egypt)] CNN's Steve Kastenbaum spoke with a former U.S. ambassador to Morocco and a Mideast adviser to several presidential administrations about the conditions that led to these demonstrations and where they might spread. Click on the icon to listen: http://podcasts.cnn.net/cnn/services/podcasting/audio/cnnradioreports/cnnradioreportsa0128.mp3
[Updated 2:41 p.m. (2141 in Egypt)] A reporter for the BBC was bloodied but returned to the air, bandage in place. Watch:
[Updated 2:25 p.m. (2125 in Egypt)] Delta Airlines tells CNN it will have a flight departing Cairo on Saturday and then suspend service to the Egyptian capital indefinitely as a result of the civil unrest.
[Updated 2:21 p.m. (2121 in Egypt)] Alexis Madrigal, a senior editor at The Atlantic, published late Thursday what is purported to be a guide to Egyptians on how to protest on Friday. The pamphlet includes strategies for taking over government buildings and diagrams showing how to fend off riot police. Read Madrigal's report and see how the pamphlet looks here.
[Updated 2:03 p.m. (2103 in Egypt)] The U.S. State Department has issued a travel alert regarding the unrest in Egypt. It cites disrupted travel between cities and the government's interruption of internet and cell phone service. "Given this situation, the Department of State urges U.S. citizens to defer non-essential travel to Egypt at this time and advises U.S. citizens currently in Egypt to defer non-essential movement and to exercise caution," the alert states.
[Updated 1:39 p.m. (2039 in Egypt)] Several high-ranking Egyptian military officials were in the Pentagon on Friday for a previously scheduled visit, CNN's Chris Lawrence reports. They're attending the annual U.S.-Egypt Military Cooperation Committee meetings to discuss military training, security assistance and defense industrial cooperation.
[Updated 1:33 p.m. (2033 in Egypt)] A pair of CNN iReporters sent impressive video of demonstrators forcing riot police to retreat across the Kasr Al Nile Bridge.
[Updated 1:25 p.m. (2025 in Egypt)] The Egyptian government has ordered cell phone companies to shut down service in selected areas, Vodafone says, adding that it is obliged by law to comply with the order.
[Updated 1:19 p.m. (2047 in Egypt)] Demonstrators in Cairo surrounded a military vehicle, but they were cheering the army, a respected institution in Egypt.
[Updated 12:47 p.m. (1947 in Egypt)] Protesters at the Information Ministry in Cairo are chanting, "The people and the army, we are one," CNN's Fred Pleitgen reports.
[Updated 12:44 p.m. (1944 in Egypt)] Armored personnel carriers are pulling into Alexandria. Protesters are embracing the military presence, CNN's Nic Robertson reports.
[Updated 12:42 p.m. (1942 in Egypt)] Egyptian TV is reporting that the curfew has been extended to all provinces in Egypt.
[Updated 12:37 p.m. (1937 in Egypt)] The Dow Jones Industrial Average is down 140 points at midday in New York because of the unrest in Egypt. The price of oil has soared $3.70 a barrel and gold has rallied by more than $22 an ounce.
[Updated 12:21 p.m. (1921 in Egypt)] Demonstrators are attacking a police station in Cairo housing officers who protect the state Information Ministry, CNN's Ben Wedeman reports. Live gunfire can be heard, he says.
[Updated 12:10 p.m. (1910 in Egypt)] Secretary of State Hillary Clinton called on the Egyptian government to exercise restraint in dealing with protests and to respect citizens' human rights. She also cautioned demonstrators to refrain from violence. Clinton asked the government "to allow peaceful protests and reverse the unprecedented steps it has taken to cut off communications." "We are deeply concerned about the use of violence by Egyptian police and security forces against protesters and we call on the Egyptian government to do everything within its power to restrain its security forces," Clinton said. "At the same time, protesters should also refrain from violence and express themselves peacefully." Clinton was speaking to reporters at the State Department after a meeting with Colombia's vice president.
[Updated 11:58 a.m. (1858 in Egypt)] Protesters are trying to make their way into the center of Cairo despite the government's imposition of an overnight curfew, CNN's Ben Wedeman reports. Egyptian army personnel are not confronting them, and the protesters are treating the soldiers with respect, he says.
[Updated 11:50 a.m. (1850 in Egypt)] Fires can be seen in front of the Egyptian ruling party headquarters in Cairo, state-run Nile TV said Friday night. A Nile TV anchor said "criminals" are setting the blazes.
[Updated 11:34 a.m. (1834 in Egypt)] A protester in Cairo appears to be shot when he picks up a rock to throw at riot police; witnesses and a security source say the man died.
[Updated 11:18 a.m. (1818 in Egypt)] People continue to travel the streets after dark on foot and in vehicles despite the commencement of a government-imposed curfew, live video from Al-Jazeera shows.
[Updated 11:05 a.m. (1805 in Egypt)] Egyptian security forces were shutting the Cairo office of Arabic-language news network Al-Jazeera with force on Friday, according to Mohasad Nanabhay, head of new media for the network.
[Updated 10:51 a.m. (1751 in Egypt)] Egyptian President Hosni Mubarak is expected to make a speech this evening to address the unrest.
[Updated 10:37 a.m. (1737 in Egypt)] CNN's Nic Roberston reports a police station is among buildings on fire in downtown Alexandria.
[Updated 10:33 a.m. (1730)] The Egyptian government has imposed a curfew in Cairo, Suez and Alexandria, effective less than 30 minutes from now (11 a.m. ET, 1800 in Egypt), according to Egyptian state TV.
[Updated 10:24 a.m. (1724 in Egypt)] See photos taken by a CNN iReporter from a hotel window in Cairo.
[Updated 10:21 a.m. (1721 in Egypt)] Police reportedly are confiscating cameras from guests, including tourists, at the Hilton Hotel in Cairo.
[Updated 10:13 a.m. (1713 in Egypt)] Egyptian opposition leader Mohamed ElBaradei has been placed under house arrest, a high-level security source told CNN Friday.
[Updated 10:04 a.m. (1704 in Egypt)] CNN's Ben Wedeman reports his first sighting of Egyptian army troops getting involved in the unrest in Cairo.
Two armored personnel carriers arrived near a bridge to cries of "Allahu akhbar" from protesters, who apparently believe the army will show more restraint than riot police have, Wedeman reported.
[Updated 9:57 a.m. (1657 in Egypt)] U.N. High Commissioner for Human Rights Navi Pillay on Friday called on Egypt's government "to exercise restraint and protect the rights of its citizens to freedom of expression, information and assembly.
"I call on the government to take concrete measures to guarantee the rights to freedom of peaceful assembly and expression, including by restoring free use of mobile phones and social networks," she said in a statement.
[Updated 9:49 a.m. (1649 in Egypt)] One woman killed in clashes in Cairo, Al-Masry Al-Youm newspaper reports via Twitter.
[Updated 9:45 a.m. ET (1645 in Egypt) Unrest apparently is worsening in central Alexandria on Friday afternoon, with thick heavy smoke billowing through the streets, eruptions of automatic and single-shot gunfire, and an apparent blaze near the city's Manshia Square, CNN's Nic Robertson reports.
[Updated 9:39 a.m. ET] Tweets from CNN iReporters in the past hour:
Salma Al-Hussaini - Says she's an 18-year-old in Dubai: I heard from my cousins. Apparently only landlines are working. & things are frightening, people must stay indoor to stay safe.
Cyberela: Unable to reach my cousin in Heliupolis #Cairo, international mobile phone is dead.😦
Baby B.: I wish I heard from my family in Egypt but I can't thru on their house phone and other means of communication are down.
[Updated 9:30 a.m.] U.S. President Barack Obama is requesting daily "multiple briefings" on the crisis in Egypt, White House spokesman Tommy Vietor said Friday.
Obama received a memo from National Security Adviser Tom Donilon on Friday and will get another update during the president's daily briefing on intelligence matters.
[Updated 9:09 a.m.] Al-Masry Al-Youm, Egypt's independent daily newspaper, tweets: Protesters storm Misr Helwan Street headed to Downtown, chanting, "people want the regime to fall". #25Jan
[Updated 9:06 a.m.] Protesters on a pedestrian bridge throw rocks at police vehicles passing below.
[Updated 9:02 a.m.] Fresh tweets getting through from CNN's Ben Wedeman:
Massive cloud of tear gas at Zamalek end of 6 October Bridge..into the Nile. Protesters continue to chant "Down Down Mubarak. #Jan25 #Egypt
Egypt TV: Police have established complete control in all areas...over pictures of tear gas, burning car, protesters. #Jan25 #Egypt
Madness in central Cairo. Tear gas everywhere police truck drives on 6 October Bridge randomly firing tear gas at point blank range #Jan25
[Updated 8:56 a.m.] iReporters have sent images, videos and descriptions of the unrest in Egypt.
[Updated 8:44 a.m.] Riot police are using tear gas to disperse tens of thousand of protesters on the streets of the Egyptian city of Suez, state TV in Egypt reported Friday. The protests have been violent and about 15,000 riot police have been deployed there, state TV reported.
[Updated 8:34 a.m.] Internet shut down across Egypt, interrupting Twitter and text communication among protest groups.
[Updated 8:29 a.m.] CNN's Nic Robertson tweets from Alexandria that older men are calming younger protesters and talking to police in tear gas-filled streets. Police are falling back in response, calming a volatile situation.
[Updated 7:40 a.m.] A major Egyptian protest group says the government crackdown on demonstrators is occurring across the nation on Friday. Along with Cairo and Alexandria, riot police are cracking down on protesters in Suez, Ismailia, Fayoum, and Shbin Elkoum, according to a message from Egyptian Liberation.
Four French journalists have been arrested in Cairo, said Bernard Valero, a spokesman for the French Foreign Ministry.
[Posted 7:25 a.m.] Clashes have erupted in the Egyptian city of Cairo on Friday, according to CNN reporters at the scene.
Protesters have taken to the street and tear gas was being fired. Plainclothes and riot police have stepped in to confront the protesters.
Police have told Egyptian opposition leader Mohamed ElBaradei not to leave a mosque near downtown Cairo, a security source told CNN.
A CNN crew working to cover the clashes felt the wrath of Egypt's police on Friday.
CNN Senior International Correspondent Ben Wedeman said police grabbed a camera from network photojournalist Mary Rogers, cracked its viewfinder, and took the camera away.
Wedeman, who gave the account on CNN television, urged police to give back the camera to show that Egypt indeed does believe in freedom of the press.
But, he said, the forces wouldn't agree.
Wedeman and CNN Correspondent Fred Pleitgen said the incident is apparently not isolated since camera crews from other networks have had similar experiences.
| President Hosni Mubarak finally addressed his nation after four days of unprecedented demonstrations—but he's not resigning as protesters have demanded. Instead, he's ordered his Cabinet to quit so he can appoint new ministers, reports AP. It's a safe bet that will not satisfy protesters who continue to defy a government-imposed curfew across Egypt. "Mubarak just blamed the government," one protester told CNN after the speech. "We will continue our demonstrations until we get our full demands. We want him to leave. His time is over." In his televised address, Mubarak defended his security forces' armed response to the demonstrations, saying that while he's "on the side of freedom," he could not let chaos descend, reports the New York Times. "I take responsibility for the safety of this country and the citizens," he said. "I will protect Egypt." Mubarak also promised to push ahead with political and economic reforms and said he would give his new government "very specific goals" to improve citizens' lives. |
Human foibles, in major and minor keys, are the chords that Woody Allen has been pounding for roughly 45 years. So it should come as no surprise that in his new frothy and fitful romantic black comedy, "You Will Meet a Tall Dark Stranger," everyone must take a spin around the dance floor with the disillusionments, deceptions and dissatisfactions of life.Allen has put his latest morality and mortality tale in the hands of his usual complement of fine actors, who play interlocking couples each fraught in their own way. It starts with the dizzy delight of Gemma Jones as Helena, the matriarch in the meddling middle of it all. By the time we meet her, she's attempted suicide after being divorced by her wayward husband, Alfie (Anthony Hopkins), who like his cinematic namesake hit midlife wondering "What's it all about?" and it wasn't about Helena.Now Helena is settled into a needy depression helped by copious amounts of alcohol that's put her daughter Sally (Naomi Watts) on edge and sent her son-in-law Roy (Josh Brolin) over it. But then they are barely treading their own troubled waters with Sally ready to trade career for a child and Roy desperate to resurrect his as a novelist with one long-ago success followed by a string of failures.Another strain teasing out the tension is that most human of all foibles and one of the filmmaker's favorites — a belief in true romance that he loves to systematically destroy. Thus the necessary complications for our couples come in fetching forms: Roy's is Dia (Frieda Pinto), a beautiful enigma he spies from his window; Alfie's is a brassy blond named Charmaine (a very funny Lucy Punch ); Sally's is her elegant art-gallery boss, Greg ( Antonio Banderas ). And Helena's is that stranger on the horizon.Giving the film its name and its tone is a clever psychic con named Cristal, played with a calculating empathy by Pauline Collins , whom you may remember from her Oscar-nominated turn as a 40ish woman on the verge in 1989's "Shirley Valentine." Here her timing is as spot-on as Cristal's predictions for Helena, which is to say she keeps everything merry and moving.The story is set in current-day London, Allen's movie home away from home in recent years. Leaving the safety of Manhattan at first proved invigorating in 2005's "Match Point" but less so for "Scoop" and "Cassandra's Dream," which followed. A brief sojourn through Spain for 2008's "Vicky Cristina Barcelona" came with a fresh life. "Whatever Works," back in Manhattan in 2009, didn't. "Tall Dark Stranger" is somewhere in between.The film is Allen's third and best collaboration with director of photography Vilmos Zsigmond, a legend in his own right with such iconic classics as "The Deer Hunter" and an Oscar for "Close Encounters of the Third Kind." In "Tall Dark Stranger," the slices of life cut between the tradition-bound Brit — housewife Helena in her dowdy flower-prints and dated hats — and the contemporary most pointedly in Alfie's blindingly white penthouse styled for his new Viagra-infused life. Yet for the most part Zsigmond creates a faded wallpaper softness to the look that gives the film an almost ethereal charm.That same softness extends to other parts of the production in ways not as satisfying. Where once Allen's players would have drawn blood, sometimes quite literally given the filmmaker's affection for killing off inconvenient characters ("Crimes and Misdemeanors" among them), here they pull their punches. The dialogue drifts into the petulance of bickering children rather than the biting brilliance that marks the best of his work.In using a lighter touch, he's made it harder to root for — or against — anyone in particular with the exception of Jones, a veteran British character actor probably best known in the U.S. as Bridget Jones' flighty mum who blows into each of her scenes like a blithe spirit. Brolin, always better with a sharp edge, suffers, and Hopkins nearly fades away.Thematically, Allen moves his unhappy troupe through life's ups and downs in ways that will feel familiar to anyone who's followed his work — perhaps the curse of such a long career. This kinder, gentler Allen is still clever, still amusing, and the film itself is a confection tempting enough to consider a taste. Yet there is that empty-calorie letdown after it's over. Maybe it's time to book another trip to Spain. ||||| Life According to Woody Allen Grinds on through You Will Meet a Tall Dark Stranger
Kept afloat by a great cast, Woody Allens latest foray into the perverse follies of mankind begins with a statutory quote from Macbeth about the futility of it all. But like so much of Allens work over the past decade, You Will Meet a Tall Dark Stranger is more Bergman-lite than Shakespearean tragedy. Not that theres anything intrinsically wrong with tilling the same patch of existential soil over and over, if something fresh or wise or even visually arresting comes out of it.
Notwithstanding the occasional contrarian blogger who insists that Allens genius remains undiluted, the rap is that as he coasts toward 80, he has exhausted his capacity for self-renewal. And it's true: The years have brought self-indulgent repetition, not to mention a sloppy carelessness with plot and structurethe price, perhaps, of sustaining hectic productivity into old age (nearly a movie a year since the late '60s) without much change to his routine beyond the escape from New York to photogenic European capitals. This time, the action, however circular and self-defeating, unfolds in a handsomely shot (by Vilmos Zsigmond) Central London whose touristy, Hollywood-inspired Englishness may in part account for the snippy local reviews that greeted Allens other movies on English soilMatch Point, Scoop, and Cassandras Dream.
As always, desire and illusion and their collateral emotional wreckage fuel this paper-thin tale of two couples, each in their age-appropriate way hell-bent on burning every domestic bridge before they cross it. Alfie (Anthony Hopkins), an affluent older Englishman who never got the son he wanted, tries to beat the mortality odds by dumping Helena (Gemma Jones), his wife of many years, forwhaddayaknowa bimbo hooker named Charmaine (Lucy Punch). Helenas daughter, Sally (Naomi Watts), grows a crush on her art-gallery boss (Antonio Banderas), while her American husband, Roy (Josh Brolin), a novelist, whiles away his writers block by spying on nubile neighbor Dia (Slumdog Millionaires Freida Pinto) as she undresses in front of her window. The lust piles up, complicated by an act of intellectual property theft so clumsy it invites a puerile snicker.
Details You Will Meet a Tall Dark Stranger
Directed by Woody Allen
Sony Pictures Classics
Opens September 22
Even as Allens star wanes, no movie of his gets released without gushing encomia from actors frothing about how getting his call was the high point of their careers. Truth to tell, though, its Allen who is routinely rescued by his ensembles these days, and Tall Dark Stranger is no exception. Brolins brutal looks may remind you of a miniaturized King Kong, but hes one of the smartest, most elastic actors in American cinema. He wisely underplays Roys efforts to sidestep the growing likelihood that he may be nothing more than a flash in the literary pan, thus earning for the lousy cad a touch more sympathy than he deserves. Clever Gemma Jones, doing a slightly more downbeat version of Bridget Joness dizzy mom, can carry almost any line, however crude. (Though not even she can pull off Dont get a crush on your bossthat way lies total madness without sounding like Carrie Bradshaw.)
That You Will Meet a Tall Dark Stranger is not more dull is due in large part to the adorably flamboyant Punch (late of Dinner for Schmucks and Hot Fuzz), drawing on ancient British vaudeville traditions as the prostitute whose instinctive carnality makes Alfie feel first young again, then totally tapped out. The peculiar male fantasy that those who are paid for sex really enjoy it makes this airhead the only guilt-free, and therefore truly likable, libertine among this neurotically self-flagellating crew. Charmaine may amount to little more than a slightly shrewder version of Mira Sorvinos delightful bubblehead in Mighty Aphrodite, but Punch's giddy Cockney charm and sinuous ease in her own skin steals the movie from under the rest of the cast, all cranking their way gamely through a script dripping with lazy clichés.
For a committed nihilist, Allen always comes saddled with an oddly biblical sense of retributive justice. Just about every player in this mildly entertaining but heavily trodden comedy reaps what they sow in nasty, unintended consequences. For some, the payback arrives with the realization that another tall, dark stranger, the one with the scythe and the big hoodie, is coming for them whether theyve been good, bad or ugly. A royal flogging is visited on all who transgress, except perhaps the one truly deluded loon who believes in psychics and reincarnation. At almost 75 years old, Woody Allen still believes we need "the eggs"the buzz of relationship however crazy or forbidden. So we do, but what a pity that lately, from him, they come parboiled. ||||| In Woody Allen’s perverse and fascinating “You Will Meet a Tall Dark Stranger,” set in London, Alfie (Anthony Hopkins), a grizzled and barrel-chested plutocrat, perhaps seventy years old, leaves his wife of forty years, Helena (Gemma Jones), and marries what used to be called a floozy—the fun-loving, alarmingly mobile hooker Charmaine (Lucy Punch), who quickly restores Alfie’s sex life and empties his bank account. After a strenuous whirl of several months, the two of them stare blankly at each other in their barely furnished white-on-white apartment. The place has a nice view of the Thames but resembles nothing so much as a new hospital wing. The rejected Helena, meanwhile, sipping Scotch, sherry, and whatever else is handy as she goes about London, falls under the sway of a fortune-teller, who informs her that she is receiving enormous waves of positive energy. Not only that: Helena will soon meet someone swell. Alfie’s and Helena’s daffy, all-too-human attempts at therapy and renewal establish the framework of stupid behavior and adultery that follows: their unhappily married daughter, Sally (Naomi Watts), delicately flirts with her married boss, a debonair art-gallery owner named Greg (Antonio Banderas), while her surly husband, Roy (Josh Brolin), once a promising novelist, suffers the rejection of his new novel and starts an affair with a young woman (Freida Pinto) he sees in a window across the street. In this movie, no one is satisfied with what he or she has; everyone attempts to get more and, with one ironic exception, winds up with less. In the past, Allen made movies that echo Chekhov and Bergman, and this is a pass at Balzac: the world is ruled by egocentricity and meanness, and much of what we do approaches grubby comedy.
The picture moves swiftly and surely, with people arguing, seducing, complaining, separating, reuniting. At times, we seem to be watching the many limbs of a single organism, all of them in continuous movement. Allen hasn’t gathered together so many disgruntled people in years. Much of the writing is good, and the acting is superb, but the constant wrangling wore me out at times. I missed the physical beauty—the amber glow and the sweet sexiness—of “Vicky Cristina Barcelona.” In this movie, as in “Match Point” and “Cassandra’s Dream,” a certain London sourness and irritability takes over. Crabby as “Tall Dark Stranger” is, however, it’s admirably staged and edited, with several sequences that are breathtaking, especially a prolonged shot in which Naomi Watts, Josh Brolin, and Gemma Jones tear at one another, passing in and out of a living room, their voices interwoven like the phrases of an agitated piece of music. The shot has the sustained intensity and the compositional intricacy of Robert Altman’s best work.
The men come off far worse than the women. In order to play the loutish Roy, who becomes increasingly crass and duplicitous as the movie goes on, Brolin sports what is possibly the worst haircut since Javier Bardem’s pageboy in “No Country for Old Men.” Brolin, with his bulky, rectangular face, and his hair both hanging over his forehead and standing straight up (you’ve got to see it to believe it), looks like a clumsy overgrown boy. He gives a brave performance, as does Anthony Hopkins, who has played tough men and monsters but never a woman-dazzled sap like Alfie. Hopkins’s obvious intelligence makes Alfie’s last grasp at sexual happiness pitiable and touching—even a man this shrewd, we think, is capable of falling for a woman a third his age. As it turns out, shrill, dopey Charmaine isn’t entirely cynical; she’s rather sweet, and the lanky Lucy Punch lets her big body collapse in dismay when Charmaine thinks that she has let Alfie down. Allen the moral rationalist can’t help pointing out that there isn’t any connection between virtue and happiness, intelligence and satisfaction: Watts’s Sally, the smartest and most decent of the characters, constantly runs into trouble, while her suggestible, alcoholic mother floats through disasters like a butterfly in an earthquake. Jones, one of the greats of the English stage and still a vibrant beauty, gives the batty Helena a soft face and a rude directness that startles us with its aggression. In touch with spiritualism’s promise of a future life, she moves through this one with the maddening euphoria of those on whom nothing registers but their own happiness. Allen almost overuses Jones’s quivering brilliance. He brings her back again and again. He can’t get over his bitter amazement that such a person as Helena could not only exist in a difficult world but, swathed in idiocy, flourish.
“Never Let Me Go,” an adaptation of Kazuo Ishiguro’s much loved 2005 novel, is, I’m afraid, a stiff. Alex Garland, the English novelist who did the screenplay, and Mark Romanek, the American director, are clearly trying for an analogue to Ishiguro’s celebrated poise—the calmly meditative style in which intimations of the sinister slowly but surely creep like hemlock into the reader’s imagination. Ishiguro, in his gentle way, gives you the willies. As in the book, Kathy (Carey Mulligan) narrates. She’s a professional “carer,” and it takes us a while to register what that means. She leads us into a long flashback set in her co-ed boarding school in the country, Hailsham, which seems a brusquely cheery place, though slightly more constraining than other schools: the children are isolated from the outside world; they all sing and applaud in perfect unison. It gradually becomes clear that the kids, including Kathy, are clones, specially cultivated as perfect English youth (pale and beautiful) so that their vital organs, after they have fully developed, can be harvested, one organ at a time, to aid the elderly and the sick. | Woody Allen is back exploring familiar ground with another stellar cast (Anthony Hopkins, Naomi Watts, Josh Brolin, etc.). The result? Critics were amused but don't think it ranks high in the Woody pantheon. Betsy Sharkey, Los Angeles Times: "This kinder, gentler Allen is still clever, still amusing, and the film itself is a confection tempting enough to consider a taste. Yet there is that empty-calorie letdown after it's over." Ella Taylor, Village Voice: A "mildly entertaining but heavily trodden comedy" that "is more Bergman-lite than Shakespearean tragedy." A great cast keeps it going. David Denby, New Yorker: "The picture moves swiftly and surely, with people arguing, seducing, complaining, separating, reuniting. ... Much of the writing is good, and the acting is superb, but the constant wrangling wore me out at times." Michelle Orange, MovieLine: It's a "minor" entry to the Allen canon, but it's still "fascinating" to watch him wrestle "with his pet themes of mortality, identity, and moral relativism." |
RS21820 -- Iraq: Transition to Sovereignty Updated July 21, 2004 The Bush Administration had initially made the end of the U.S. occupation contingent on the completion of a new constitution andthe holding of national elections for a new government, tasks to be completed by 2005. However, politicalinfighting among Iraq'svarious ethnic and political factions, coupled with a persistent insurgency, slowed progress on setting up an electedpoliticalstructure. The U.S. administrator in Iraq, L. Paul Bremer (head of the U.S.-led occupation authority, the CoalitionProvisionalAuthority or CPA), in consultation with Iraqis appointed to a 25-seat "Iraq Governing Council (IGC)," agreed toa plan that wouldlead to sovereignty for Iraq by June 30, 2004. Under the plan, announced November 15, 2003, a TransitionalAdministrative Law(TAL) -- a provisional constitution -- was to be signed by February 29, 2004, followed by the holding of local"caucuses" in eachprovince to select a national assembly (by May 31, 2004). The assembly was to choose an executive leadership. The agreementencountered opposition from the revered Shiite Muslim leader Grand Ayatollah Ali Sistani, who called for earlydirect elections; hisviews prompted the CPA to ask the United Nations to assess the feasibility of holding elections for an interimgovernment. A U.N.team led by U.N. envoy Lakhdar Brahimi concluded in February 2004 that national elections could not be heldearlier than late 2004or early 2005. Sistani accepted that time frame. Much of the Brahimi findings were incorporated into the TAL, which the IGC formally signed on March 8, 2004. (1) Its key pointsare as follows: A "transition government" is to be formed, chosen by a 250-seat National Assembly elected in a vote no laterthan January 31, 2005. The Assembly is to choose a "presidency council" (a president and two deputy presidents). It is expectedthat the president would be a Shiite, and the two deputies a Sunni Arab and a Kurd. The presidency council is tooperate byconsensus, including in naming a Prime Minister. The election law for the transition government "shall aim to achieve the goal of having women constitute noless than one-quarter of the members of the National Assembly." The Kurds maintain their autonomous "Kurdistan Regional Government," but they were not given control ofthe city of Kirkuk and they received some powers to contradict or alter the application of Iraqi law in the Kurdishprovinces. TheKurdish militias (" peshmerga ") are allowed to continue to operate. The transition government (post-January 31, 2005) is to draft a constitution (by August 15, 2005) and put it to anational vote (by October 15, 2005). A provision, which Sistani and the Shiite Islamists oppose, allows two-thirdsof the voters anythree Iraqi provinces to veto the constitution, giving the Kurds (who control the three northern provinces of Dohuk,Irbil, andSulaymaniyah) essentially a veto. If the constitution is approved in the national referendum, elections to a new government are to take place byDecember 15, 2005, and the government is to take office by December 31, 2005. If the constitution is notapproved, it is to beredrafted and submitted again for approval, and if approved, elections are to take place in 2006. The TAL states that Islam is the official religion of Iraq and is to be considered "a source," but not the onlysource, or the primary source, of legislation. It adds that no law can be passed that contradicts the agreed tenets ofIslam, but neithercan any law contradict the fundamental rights provided for in the TAL. Those rights include peaceful assembly;free expression;equality of men and women before the law; and the right to strike and demonstrate. Interim (Post-June 30) Government. The TAL did not address how an interimgovernment -- which will be in office from July 1, 2004 until January 31, 2005 -- would be chosen. Some optionsfor selecting theinterim government were considered, including holding a traditional assembly along the lines of Afghanistan's loya jirga; holding asmaller "roundtable" of Iraqi notables; or transforming the existing or an expanded IGC into the interim government. Continuing violence in Iraq contributed to the U.S. decision to give U.N. envoy Brahimi substantial responsibility for selectingthe interimgovernment. (2) Brahimi said he envisioned an interimgovernment of technocrats, who presumably would not seek to use theirofficial positions to further their chances in January 2005 national elections. However, maneuvering by IGC andcabinet membersled to inclusion of many of them -- or their political allies -- in the interim government named on June 1, 2004. Afew of thecabinet positions are held by relatively non-political personalities. The interim government began workingimmediately. Brahimihas said publicly that pressure by U.S. and Iraqi politicians to complete the interim government on time caused himto acquiesce tomany of the appointments. The composition and powers of the interim government are addressed in an addendum to the TAL, signed by the IGC on June 1,2004, just before the IGC dissolved itself. The interim government has a "presidency" composed of a largelyceremonial president(former IGC member and Shammar tribal elder Ghazi al-Yawar) and two deputy presidents (Ibrahim al-Jafari ofthe Da'wa Partyand Kurdistan Democratic Party activist Dr. Rowsch Shaways). There is a prime minister (Iraq National Accordleader Iyadal-Allawi), a deputy prime minister, 26 ministers, two ministers of state with portfolio, and three ministers of statewithout portfolio. The prime minister has executive power. Six members of the interim government are women. Some of theministers were held overfrom the occupation period -- Hoshyar Zebari, a top KDP official, remained Foreign Minister; Dr. Mehdi al-Hafidh,an independentShiite, remained Minister of Planning; Patriotic Union of Kurdistan (PUK) official Dr. Abdul Latif Rashid stayed Minister of WaterResources; and Ms. Nasreen Berwari, a Kurd affiliated with the KDP, stayed Minister of Public Works. Resolution 1546. Many of the powers and responsibilities of the interim government are spelled out in U.N. Security Council Resolution 1546, adopted unanimously on June 8, 2004, whichendorsed thehandover of sovereignty. Its major provisions are the following: After the handover, U.S. officials no longer have final authority on non-security related issues. The UnitedStates and United Nations intend that the interim government not make any long-term laws or decisions -- itsprimary function is torun the ministries and prepare for national elections. The Kurds fear that the interim government will repeal aspectsof the TAL thatthe Kurds view as protecting them from the Arab majority, (3) a fear that was heightened by the omission from Resolution 1546 of anymention of the TAL. That omission was reportedly at the behest of pressure from Sistani and his Shiite allies whowant to removefrom the TAL limitations on majority rule. Prime Minister Allawi has tried to defuse this dispute by promising thatthe interimgovernment would not undo the relevant provisions of the TAL. According to the resolution and the addendum to the TAL, later in July a conference of over 1,000 Iraqis (the1,000 will be chosen by a 60-member commission of Iraqis) is to be held, and it is to choose a 100-seat advisorycouncil ("InterimNational Council") to the interim government. This body will not have legislative authority but, according to theaddendum to theTAL, it will be able to veto decisions by the executive branch with a two-thirds majority. Members of the IGC whoare not in theinterim government are to be included in the Council. One of the major debates in the adoption of Resolution 1546 was on security issues, particularly the relationship between coalition forces and the Iraqi interim government. The operational relationship -- to be oneof coordinationand partnership -- is outlined in an exchange of letters between Secretary of State Powell and Prime Minister Allawiannexed to theresolution. The resolution says that the coalition's mandate would be reviewed "at the request of the Governmentof Iraq or twelvemonths from the date of this resolution," that the mandate would expire when a permanent government is sworn inat the end of2005, and that the mandate could be terminated at any time if the interim government so requests. The Iraqigovernment was notgiven a veto over specific coalition operations, and the coalition retains the ability to take prisoners. Resolution 1546 gives the interim government control over Iraq's oil revenues and the Development Fund forIraq (DFI), subject to monitoring for at least one year by the U.N.-mandated International Advisory and MonitoringBoard. Theinterim government also is given responsibility for final close-out of the U.N.-run "Oil-for-Foodprogram." Other Preparations for Handover. The following additional decisions or eventswere part of the handover: (4) Bremer departed Iraq on June 28, 2004, right after the handover, and the CPA ceased to exist. A large U.S.embassy opened on June 30, 2004, headed by Ambassador John Negroponte, and it is being staffed with about1,000 U.S. personnel,including about 160 U.S. officials and representatives that will serve as advisers to the interim government. SomeCPA functions,such as the advising of local Iraqi governments, local Iraqi governing councils, and U.S. military units, were retainedat the U.S.embassy in the form of an "Iraq Reconstruction and Management Office (IRMO)." About 150 U.S. personnel willserve at severalcenters around Iraq to advise local Iraqi governments. U.S. military headquarters in Baghdad (Combined Joint Task Force-7, CJTF-7) became a multinational headquarters (Multinational Force-Iraq, MNF-I). U.S. four-star Gen. George Casey assumed command. (5) U.S. officials say that,largely because of ongoing violence, U.S. forces will number about 140,000 into 2005 and possibly beyond. U.S.and coalitionforces continue to build Iraq's security institutions, but U.S. officials say the Iraqi forces are not able to maintainsecurity on theirown. The Program Management Office (PMO), which reports to the Department of Defense and administers someU.S. funds for Iraq, will be replaced by a "Project and Contracting Office." The upsurge of violence since earlyApril 2004 hasreportedly slowed obligation of reconstruction funds; as of July 2004, about $8 billion of $23 billion in appropriatedreconstructionfunds had been obligated. A number of legal issues are likely to arise. The actual extent of the interim government's sovereignty -- or its lawful control overits own territory to the general exclusion of other states -- is unclear, as are the continuing coalition responsibilities. Laws andagreements put in place during the occupation may be challenged, placing the validity of legal contracts andproperty interests,public or private, in some doubt. The status of coalition forces remaining in Iraq has changed somewhat, asdiscussed below. Interpreting Resolutions 1483, 1511 and 1546. Two sources of international lawhave governed the occupation of Iraq: U.N. Security Council resolutions (in particular Resolution 1483 of May 22,and Resolution1511 of October 16, 2003) and international treaties such as the Hague Regulations of 1907 and the Fourth GenevaConvention of1949. Under these treaties and other sources forming the international law of belligerent occupation, an occupyingpower mustmaintain existing laws and governmental structure unless absolutely prevented by the exigencies of occupation, andany suchchanges are temporary. On the other hand, U.N. Resolution 1483 appears to contemplate an overhaul of Iraqiinstitutions, even as itreiterates the applicability of international occupation law. Resolution 1483 may be read to provide certaincarve-outs from that law,allowing initiatives that might otherwise exceed the authority of an occupying power. Resolution 1546 recognizes that the interim government has only temporary and limited power, noting that even as the interimgovernment "assumes full responsibility ... for governing Iraq" it is to "refrain ... from taking any actions affectingIraq's destinybeyond the limited interim period until an elected Transitional Government of Iraq assumes office." In effect,Resolution 1546appears to substitute the Iraqi interim government for the CPA as temporary governing authority until an"internationally recognized,representative government is established ... ," but it appears that some of the CPA's obligations and authority do notpass to theinterim government, and will remain instead with the United States as head of the MNF. Obligations that weremade under explicitUN approval, such as the Oil-for-Food program or the DFI, are expressly made binding on the interim government. If Iraq exercisesfull sovereignty, as that concept is ordinarily understood, the interim government could conceivably revoke oramend the TAL,notwithstanding a provision in the TAL that allows only limited amendment during the second phase of thetransition. Despitelanguage in Resolution 1511 recognizing limited and temporary sovereignty in the CPA and the IGC, both entitiesarguably lackedthe clear authority to bind Iraq to any agreements outlasting the formal occupation of Iraq. CPA Laws. Laws put in place by the CPA are to remain in force duringthetransitional period, unless rescinded or amended during the second phase of the transition. The United States doesnot, however,retain any authority to interpret and enforce those laws. Although Resolution 1546 admonishes the interimgovernment to refrainfrom any actions that would affect Iraq's post-interim period destiny, it is not clear whether temporary laws put inplace by the CPAare automatically protected. The interim government could conceivably choose to rescind such laws or agreementsand decline tohonor or enforce any obligations created pursuant to them. For example, if CPA orders authorizing foreigninvestment in Iraq wereto be rescinded or modified, the interests of foreign investors could be adversely affected. Status of Military Forces. It appears that the MNF is operating under a U.N.mandate, with the consent of the Iraqi government, rather than as "occupying forces." Resolution 1546 reaffirms,at the request ofthe interim government, the authorization for the MNF to "take all necessary measures to contribute to themaintenance of securityand stability in Iraq ... including by preventing and deterring terrorism ..." until elections can be held. Under theletter from SecretaryPowell annexed to Resolution 1546, these measures include combat operations against insurgents, internment where"necessary forimperative reasons of security," and the continued search for weapons that threaten Iraq's security. Notably, themandate is to beended at the request of the Iraqi government. Although Res. 1546 recognizes the end of the occupation of Iraq, it nonetheless notes that the MNF is committed to promotingsecurity and stability "in accordance with international law, including obligations under international humanitarianlaw." Ordinarily,international humanitarian law would no longer apply at the end of a military occupation. The UN resolutions leaveambiguouswhich of the responsibilities of an occupying power under the laws of war were to apply both during the occupationand afterward. Some observers have suggested that Iraq remains under a de facto occupation and that all relevant internationalcontinues to apply. A status of forces agreement will not be possible until the second phase of the transition because only the Iraqi TransitionalGovernment will have the authority to bind Iraq to treaties. At present, coalition forces in Iraq are immune fromIraqi legal processunder CPA Order No. 17, which has been extended for the duration of the MNF's presence. However, a sovereignIraq, even underan interim government, could assert the authority to revoke the immunity. | Amid ongoing insurgency, the United States handed sovereignty to an Iraqi interimgovernment on June 28. The Bush Administration maintains that the handover was a success and will begin atransition todemocracy and stability. Critics assert that the handover does not appear to have diminished the anti-U.S.insurgency, threateningthe transition roadmap developed by the United States and United Nations. Legal issues may arise regarding thevalidity of lawsissued during the occupation, as well as the status of U.S. troops in Iraq. See CRS Report RL31339, Iraq:U.S. Regime ChangeEfforts and Post-Saddam Governance. |
Legendary Photographer Peter Lik Shatters World Record With $6.5 Million Sale Of "Phantom"
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SOURCE LIK USA
Award-Winning Photographer Now Holds Four of the Top 20 Most Expensive Photographs Ever Sold
LAS VEGAS, Dec. 9, 2014 /PRNewswire/ -- Today, LIK USA™ announced the sale of the most expensive photograph in history by world-renowned fine art photographer, Peter Lik. "Phantom" sold to a private collector for an unprecedented $6.5 million. The purchase also included Lik's masterworks "Illusion" for $2.4 million and "Eternal Moods" for $1.1 million. With this $10 million sale, Lik now holds four of the top 20 spots for most expensive photographs ever sold. He already has a position in the ranking with a previous $1 million sale of famed image, "One."
"The purpose of all my photos is to capture the power of nature and convey it in a way that inspires someone to feel passionate and connected to the image," said award-winning fine art photographer Peter Lik.
"Phantom" and "Eternal Moods" are black and white representations of Lik's iconic images "Ghost" and "Eternal Beauty." Lik is known for his artistic approach to landscape photography and capturing Mother Nature's vibrant colors. His use of black and white imagery is a rare and compelling departure from his normal style.
"Certain textures and contours found in nature lend themselves beautifully to black and white photography," said Lik. "The intensity of contrasting light and dark spaces was surprising, but made for some of the most powerful images I've ever created."
The private buyer is represented by Joshua Roth of the Glaser Weil Fink Howard Avchen & Shapiro, LLP firm, 10250 Constellation Blvd., 19th Floor, Los Angeles, Calif. 90067, who indicated his client preferred not to be publicly identified for security and privacy reasons. Peter Lik and LIK USA™ are represented by their attorney, Mark G. Tratos of Greenberg Traurig, LLP.
"It is noteworthy that the sales of these photographic works denote another milestone in the development of fine art photography, as well as a new benchmark for the value of Peter Lik works," said Tratos.
These sales may be confirmed through the buyer's counsel, Joshua Roth.
"Our client is a long-time collector of Lik's works and is delighted to add these one-of-a-kind photographs to his impressive collection," said Roth.
About Peter Lik
Peter Lik began capturing the wonders of nature as a young boy in his native Australia and never stopped. In 1984, Lik migrated to the U.S. and discovered his passion for panoramic photography. One of Lik's most notable projects, "Spirit of America," is a 50-state landscape exploration of perilous deserts, ethereal mountain peaks, lush fields and glimmering cityscapes. Peter Lik's love for America and its landscapes led him to become a naturalized citizen in 2013. Over the years, Lik's career has been marked with award wins as a Master Photographer from both the Australian Institute of Professional Photography (AIPP) and the Professional Photographers of America (PPA). He has also been awarded fellowships from the British Institute of Professional Photographers (BIPP) and The Royal Photographic Society (RPS). In 2011, Peter jumped into mainstream culture by starring in the NBC-produced TV series, "From the Edge with Peter Lik." With 14 galleries around the United States, Peter Lik counts presidents and celebrities among his collectors. Lik's masterworks "Ghost" and "Inner Peace" have been included in an exhibition of Nature's Best Photography at the Smithsonian National Museum of Natural History in Washington D.C.
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||||| CLOSE Arizona Republic columnist Ed Montini and reporter Richard Ruelas discuss the Antelope Canyon photo that sold for a record price.
Peter Lik's "Phantom" was sold for $6.5 million. (Photo: PRNewsFoto/LIK USA)
The world's most expensive photo depicts Arizona's Antelope Canyon, near Page on the Navajo Reservation.
Landscape Photographer Peter Lik sold his print, titled "Phantom," for $6.5 million to a private collector in November.
The black-and-white photo depicts an underground cavern inside Arizona's Antelope Canyon, a slot canyon formed as rainwater eroded the stone into narrow passageways.
BUY PHOTOS: How to get a photo of Antelope Canyon for $6.95
The canyon, first opened to the public in 1997, attracts photographers and sightseers to marvel at its uniquely smooth, flowing corridors and arches, Navajo Nation parks officials said.
MORE PHOTOS OF ANTELOPE CANYON
"Certain textures and contours found in nature lend themselves beautifully to black and white photography," Lik said in a press release. "The intensity of contrasting light and dark spaces was surprising, but made for some of the most powerful images I've ever created."
Guardian columnist Jonathon Jones was quick to call the photo "derivative, sentimental in its studied romanticism, and consequently in very poor taste."
Jones said the photo is beautiful in a "slick way" that is a better fit for a "posh hotel" than the annals of art history.
But Lik and his "Phantom" will continue to haunt art history for some time seeing as how Lik now holds four of the top 20 spots for most expensive photographs ever sold, according to Lik's website.
Lik sold "Phantom" along with two other prints, "Illusion" for $2.4 million and "Eternal Moods" for 1.1 million.
Read or Share this story: http://azc.cc/1DcafXX ||||| Peter Lik’s “Phantom” was sold for an unprecedented $6.5 million, the most expensive photograph in history. (PRNewsFoto/LIK USA)
Australian photographer Peter Lik will rarely pass up an opportunity to show his biceps. There he was, wearing a cowboy hat, trekking up a snowy mountainside, arms bare. There he was, behind the wheel of a green truck, flexing. And there he was, straddling an arid dune, triceps sunburned.
Photographer Peter Lik in 2011 (Frederick M. Brown/Getty Images)
Lik is even less shy about his accomplishments. He describes himself both as the “world’s most influential fine art photographer” as well as “one of the most important artists of the 21st century.” It’s obvious promotional hype, but Lik does indeed now command worldwide distinction.
This week, he sold a photograph named “Phantom,” showing a shaft of light cutting through a monochromatic Arizona landscape. The price: $6.5 million. That’s reportedly the most ever paid for a photograph. (The identity of the buyer wasn’t disclosed, but his lawyer, Joshua Roth of Los Angeles, vouched for him in a press release.)
The sale was only the latest big-time score for the Australian photographer, who has made a career out of shooting landscapes and wearing cowboy hats. Despite Lik’s “dismissal by art critics,” as one paper put it, his shtick nonetheless has great resonance among buyers — to the consternation of staid art experts.
“In 2014, Peter shattered all world records by selling the most expensive photograph in history,” his Web site said. “… To accompany this sale, Peter’s images ‘Illusion’ and ‘Eternal Moods’ were also acquired for $2.4 million and $1.1 million, respectively. Along with his sale of ‘One’ for $1 million in 2010, Peter now holds four spots out of the top 20 most expensive photographs ever sold.”
The list he joins includes some of the world’s most-established photographers, including Andreas Gursky, Cindy Sherman and Jeff Wall. They’re all considered artists of the highest order who broadened the conceptual limits of photography and held exhibitions in some of the world’s most prestigious galleries. Most of their priciest work sold at auction houses. And now, there’s Lik, whose $6.5 million photograph sold privately. How has this relatively unknown outsider done it?
This 1999 Andreas Gursky photograph provided by Chrisitie’s shows the Rhine River. Titled “Rhein II,” the chromogenic color print face-mounted to acrylic glass was sold for $4.3 million in 2011. (AP Photo/Christie’s, Andreas Gursky)
It begins with a level of salesmanship unusual for an artist: Lik did a short-lived reality TV show called “From the Edge,” for example. He also advertised on the Jumbotron in Times Square.
But to Guardian Art Critic Jonathan Jones, Lik’s “Phantom” says more about the growing role of technology in photography than it does art — a label he doesn’t think Lik’s work warrants. “Phantom is a black-and-white shot taken in Antelope Canyon, Arizona,” he wrote. “The fact that it is in black and white should give us pause. Today, this deliberate use of an outmoded style can only be nostalgic and affected, an ‘arty’ special effect. We’ve all got that option in our photography software. Yeah, my pics of the Parthenon this summer looked really awesome in monochrome. Lik’s photograph is of course beautiful in a slick way, but beauty is cheap if you point a camera at a grand phenomenon of nature.”
But that’s pretty much all Lik does. He describes himself as “synonymous” with “pristine images” of nature, which he pursues with the restless ebullience of the Crocodile Hunter. “The quality of production and [his] imagery is great,” Megan Dick, the director of Australia’s MiCK gallery, told the Sydney Morning Herald. “The quality of art is not.” She said art was driven by ideas — not documentation. “Being such a literal interpretation of the subject, landscape photography is more in the realm of documentary rather than art.”
Some art experts haven’t been able to figure out how, then, his artwork has sold for so much. They’re pretty, no doubt, in the way that your desktop background and screensaver are pretty. But with millions of dollars at stake, does prettiness cut it? “These prices are very high and certainly, in terms of other successful photographic artists, seem somewhat bizarre,” the Herald quoted art consultant David Hulme saying. Commenting on one of Lik’s pieces that went for $1 million, he added: “I don’t fancy the owner’s chances of recouping anywhere near what he paid for this one.”
That assessment hasn’t stopped Lik from selling. Take it from photographer Scott Reither, who also sells pictures and once worked as one of Lik’s salesmen. He wrote a lengthy blog post on his travails in which he spoke of hustling photographs like a used car salesman and pushing fine art on a Las Vegas clientele caught up in “impulsive behavior while visiting Sin City.” Reither said he sold $700,000 worth of Lik’s photography in seven months and quit, unable to “stomach it any further.”
“I felt like I had to feed people a bunch of lies,” he wrote, questioning the “absurd pricing structure for the not-very limited editions of 950″ prints: “I know the subject of art and value is a touchy and sensitive subject, and I know there’s plenty of foolish people that will pay a ridiculous amount of money for something solely because it’s priced at a ridiculous amount of money … the discussion with prospective buyers had to become about value, [and] I was done because I did not believe in the value of the product.”
The Guardian’s Jonathan Jones likewise questions the value of the $6.5 million “Phantom.” He said Lik merely took an already stunning view and “added nothing of value to what was already there. … Someone has been very foolish with their money, mistaking the picturesque for high art.” ||||| “Phantom” Sells for an Astounding $6.5 Million
Peter Lik has officially made art history by selling the most expensive photograph ever – setting a world record. An official press release was issued today, outlining details on the $6.5 million sale of masterwork, “Phantom.”
One of Peter’s all-time, favorite places to shoot lies in the Southwestern region of the United States, where he is continually drawn to Arizona’s Antelope Canyon – a slot canyon carved out by natural flowing water over the course of millions of years. It is here, in a subterranean cavern, that Peter captured “Phantom” – a stunning, black & white depiction of a ghostlike figure.
The private collector, who purchased the $6.5 million “Phantom” in November 2014, also acquired Lik’s masterworks “Illusion” for $2.4 million and “Eternal Moods” for $1.1 million. With this incredible $10 million sale, Lik now holds four of the top 20 spots for most expensive photographs ever sold. He already has a position in the ranking with a previous $1 million sale of famed image, “One.”
For over 30 years, Peter has followed a calling to capture and share the most beautiful places on earth. A myriad of awards and accolades mark the career of a dedicated and talented artist – a man who came from humble beginnings in his native Australia. This historic moment only further proves that Peter Lik is undoubtedly a true leader in the world of fine art.
Congratulations Pete!
/ Click here to read the press release. ||||| Photography is not an art. It is a technology. We have no excuse to ignore this obvious fact in the age of digital cameras, when the most beguiling high-definition images and effects are available to millions. My iPad can take panoramic views that are gorgeous to look at. Does that make me an artist? No, it just makes my tablet one hell of a device.
The news that landscape photographer Peter Lik has sold his picture Phantom for $6.5m (£4.1m), setting a new record for the most expensive photograph of all time, will be widely taken as proof to the contrary. In our world where money talks, the absurd inflated price that has been paid by some fool for this “fine art photograph” will be hailed as proof that photography has arrived as art.
Yet a closer look at Phantom reveals exactly the opposite. This record-setting picture typifies everything that goes wrong when photographers think they are artists. It is derivative, sentimental in its studied romanticism, and consequently in very poor taste. It looks like a posh poster you might find framed in a pretentious hotel room.
Phantom is a black-and-white shot taken in Antelope Canyon, Arizona. The fact that it is in black and white should give us pause. Today, this deliberate use of an outmoded style can only be nostalgic and affected, an “arty” special effect. We’ve all got that option in our photography software. Yeah, my pics of the Parthenon this summer looked really awesome in monochrome.
Lik’s photograph is of course beautiful in a slick way, but beauty is cheap if you point a camera at a grand phenomenon of nature. The monochrome detailing of the canyon is sculptural enough, and a shaft of sunlight penetrating its depths becomes the phantom of the title. Yet, in fact, this downward stream of light is simply a natural aspect of Antelope Canyon. Look it up online and you will find a vast range of photographs that all show the same feature. They are all just as striking as Phantom. The photographer has added nothing of any value to what was there already. Google is full of “great” pictures of this awe-inspiring natural feature.
Someone has been very foolish with their money, mistaking the picturesque for high art.
As a colour picture without any arty claims, this would be a valuable record of nature. Instead, it claims to be more than that; it aspires to be “art”. It is this ostentatious artfulness that pushes it into the realm of the false. For the artistic ambition of this picture is so very derivative from paintings that were created more than a century ago. Just like the very first “art” photographers in the Victorian age, Lik apes the classics in order to seem classic.
Phantom aims for the sublime, that sense of awe in front of nature that was described by Edmund Burke in the 18th century and taken to lavish heights by painters in the 19th. American painters especially, such as Frederic Edwin Church and Albert Bierstadt, used a heightened romantic style to express the grandeur and amazement of the American landscape. Later, Georgia O’Keeffe added a surreal dreaminess to the west’s iconography. Film-makers, above all John Ford, were influenced by the American landscape painters when they put the west on screen.
Phantom comes along in the wake of all these representations of the American landscape in art – and lazily emulates them. It is a cliche: easy on the eye, easy on the brain, hackneyed and third-hand.
If this is the most valuable “fine art photograph” in history, God help fine art photography. For this hollow and overblown creation exposes the illusion that lures us all, when we’re having a good day with a good camera – the fantasy that taking a picture is the same thing as making a work of art. | Sorry, Andreas Gursky. A private buyer has set "a new benchmark for the value of Peter Lik works" with the purchase of a single photograph—for $6.5 million. "Phantom" is a black-and-white version of the Australian photographer's "Ghost," which for a time sat in a nature photography exhibit at the Smithsonian. The Arizona Republic reports the photo shows a shaft of light penetrating an underground cavern in Arizona's Antelope Canyon. "Phantom" sold alongside photographs "Illusion" for $2.4 million and "Eternal Moods" for $1.1 million, which, according to a press release, means Lik has now sold four of the top 20 most expensive photographs ever—a fact that seems to amaze art critics, who have never been particularly taken with Lik's work. "If this is the most valuable 'fine art photograph' in history, God help fine art photography," Jonathan Jones writes at the Guardian, arguing the photo "typifies everything that goes wrong when photographers think they are artists." A lawyer for the buyer says his client has chosen to remain anonymous, but "someone has been very foolish with their money," Jones says. Given such criticism, it's perhaps surprising that the Washington Post reports Lik isn't one to be modest. His website describes "Phantom" as a "masterwork" and Lik himself as "a true leader in the world of fine art." Still, Lik's unusual salesmanship—he's been featured on a Jumbotron ad in Times Square, for example—has made him a hit with the public, the Post reports. |
WASHINGTON — During a lengthy and at times emotionally wrenching news conference, Senator Dianne Feinstein of California on Thursday announced legislation that would ban the sale and manufacture of 157 types of semiautomatic weapons, as well as magazines holding more than 10 rounds of ammunition.
The bill, which Ms. Feinstein introduced in the Senate later in the afternoon, would exempt firearms used for hunting and would grandfather in certain guns and magazines. The goal of the bill, she said, is “to dry up the supply of these weapons over time.”
Surrounded by victims of gun violence, colleagues in the Senate and House and several law enforcement officials, and standing near pegboards with several large guns attached, Ms. Feinstein acknowledged the difficulty in pursuing such legislation, even when harnessing the shock and grief over the shooting of 20 schoolchildren in Newtown, Conn., last month. “This is really an uphill road,” Ms. Feinstein said.
Since the expiration of a ban on assault weapons in 2004, lawmakers have been deeply reluctant to revisit the issue. They cite both a lack of evidence that the ban was effective and a fear of the gun lobby, which has made significant inroads at the state and federal levels over the past decade in increasing gun rights.
Senator Harry Reid of Nevada, the majority leader, recently said that he was skeptical about the bill. Ms. Feinstein immediately called him to express her displeasure with his remarks.
Many lawmakers, including some Democrats, prefer more modest measures to curb gun violence, like enhanced background checks of gun buyers or better enforcement of existing laws.
One such measure has been introduced by Senator Patrick J. Leahy, Democrat of Vermont and chairman of the Senate Judiciary Committee, who will begin hearings next week on gun violence. Among the witnesses will be Wayne LaPierre, the chief executive of the National Rifle Association.
“Senator Feinstein has been trying to ban guns from law-abiding citizens for decades,” said Andrew Arulanandam, a spokesman for Mr. LaPierre. “It’s disappointing but not surprising that she is once again focused on curtailing the Constitution instead of prosecuting criminals or fixing our broken mental health system.”
More legislation is expected to arise over the next week or two, and some of it will have bipartisan support. Senator Kirsten E. Gillibrand, Democrat of New York, and Senator Mark Kirk, Republican of Illinois, have agreed to work together on gun trafficking legislation that would seek to crack down on illegal guns. Currently, federal law does not define gun trafficking as a crime.
Mr. Kirk is also working on a background check proposal with Senator Joe Manchin III, Democrat of West Virginia, who is considered somewhat of a bellwether among Democrats with strong gun-rights records.
Mr. Leahy’s bill would give law enforcement officials more tools to investigate so-called straw purchasing of guns, in which people buy a firearm for others who are prohibited from obtaining one on their own.
Ms. Feinstein was joined on Thursday by several other lawmakers, including Representative Carolyn McCarthy of New York, who will introduce companion legislation in the House, and Senator Richard Blumenthal of Connecticut, who emotionally recalled the day when the children and adults were gunned down in Newtown. “I will never forget the sight and the sounds of parents that day,” he said. Several gun violence victims, relatives of those killed and others gave brief statements of support for the bill.
Ms. Feinstein’s bill — which, unlike the 1994 assault weapons ban, would not expire after being enacted — would also ban certain characteristics of guns that make them more lethal. More than 900 models of guns would be exempt for hunting and sporting.
Such a measure is vehemently opposed by the N.R.A. and many Republican lawmakers, as well as some Democrats. “I don’t think you should have restrictions on clips,” said Senator Tom Coburn of Oklahoma, who has said he welcomes a Senate debate on guns. “The Second Amendment wasn’t written so you can go hunting, it was to create a force to balance a tyrannical force here.”
Proponents of the ban argue that in spite of claims to the contrary, the 1994 measure, of which Ms. Feinstein was a chief sponsor, helped curb gun violence. “The original bill, though flawed, had a definite impact on the number of these weapons faced by the police on streets and used in crimes,” said Adam Eisgrau, who helped write the 1994 ban while serving as Judiciary Committee counsel to Ms. Feinstein. The new bill, with more explicit language on the types of features on banned weapons, “is far more respectful of firearms for recreation uses,” he said.
Bans on assault weapons and high-capacity magazines were among the proposals unveiled by President Obama and Vice President Joseph R. Biden Jr. last week. Mr. Biden took the campaign for tougher gun laws to the Internet on Thursday in an online video chat that was part of an effort by the White House to build public support for its guns package. Mr. Biden, who developed the plans embraced by Mr. Obama, will host a round-table event in Richmond, Va., on Friday, and officials have said that Mr. Obama will travel at some point to promote the package. ||||| California Sen. Dianne Feinstein with a display of assault weapons during Thursday's news conference on Capitol Hill. Feinstein announced that she will introduce a bill to ban assault weapons and high-capacity magazines capable of holding more than 10 rounds to help to stop gun violence (Alex Wong/Getty Images / )
WASHINGTON -- The struggle that Sen. Dianne Feinstein (D-Calif.) faces in winning approval for a new assault weapons ban was apparent Thursday as soon as she walked into a room to unveil her bill.
No Republican lawmaker was there. Nor was a red-state Democrat.
Her new measure, which goes further than the now-lapsed 1994 law she authored, would prohibit the sale, import and manufacture of more than 150 weapons – including the make of Bushmaster rifle used in the Connecticut school shootings – and ammunition magazines that can accept more than 10 rounds.
Those who legally own assault weapons would be allowed to keep them. Buyers of currently owned assault weapons would be subject to criminal background checks.
"We have tried to recognize the right of a citizen to legally possess a weapon,’’ Feinstein said at a Capitol Hill press conference, standing alongside a display of assault weapons, including models similar to those used in mass shootings. "No weapon is taken from anyone. The purpose is to dry up the supply of these weapons over time.’’
Although Feinstein dropped the idea of requiring owners of assault weapons to register their firearms, her proposal quickly drew criticism from the National Rifle Assn.and its allies in Congress.
"Sen. Feinstein has been trying to ban guns from law-abiding citizens for decades,’’ the NRA said in a statement. "It's disappointing but not surprising that she is once again focused on curtailing the Constitution instead of prosecuting criminals or fixing our broken mental health system. The American people know gun bans do not work and we are confident Congress will reject Sen. Feinstein's wrongheaded approach."
Feinstein launched her drive standing alongside gun violence victims and law enforcement officials who will be crucial to her efforts to round up votes for the measure.
"I don’t think people really understand the firepower that’s out there on the streets,’’ Philadelphia Police Commissioner Charles Ramsey said. "We’re not trying to seize everybody’s guns. But we need reasonable gun control in this country or, guess what, it will happen again,’’ he added, referring to mass shootings.
President Obama has called for reinstating the federal ban. White House spokesman Jay Carney said the president was working with Feinstein and would use "the power of his office’’ to advance the ban and other measures to reduce gun violence.
The bill is among a spate of measures introduced since last month's shooting of 20 first-graders at Sandy Hook Elementary School in Newtown. The measures include expanding background checks to all gun purchases and requiring bulk purchases of ammunition to be reported to authorities.
Reinstating the assault weapons ban is considered to face longer odds than a number of other proposals, especially in the Republican-controlled House. The bill’s introduction comes as the Senate Judiciary Committee prepares to hold a hearing next Wednesday on gun violence.
In 1994, Feinstein overcame the opposition of the National Rifle Assn. to win passage of a landmark weapons ban -- as an amendment to an anti-crime bill -- only to see it expire a decade later. When she sought to renew it in 2004, she ran into opposition not only from Republicans but also from a number of fellow Democrats fearful of angering rural voters. But gun control advocates said they believe the Sandy Hook shootings will represent a turning point in the debate.
"Newtown made a difference,’’ said Rep. Carolyn McCarthy (D-N.Y.), sponsor of a House bill to ban assault weapons. "People of America said: 'How could this happen? How could this happen to our children?'’’
McCarthy, whose husband was killed and son wounded by a gunman on a Long Island train in 1993, joined Feinstein on Capitol Hill, along with Democratic Sens. Richard Blumenthal and Chris Murphy of Connecticut, Chuck Schumer of New York and Dick Durbin of Illinois. Other sponsors of the House bill are: Democratic Reps. Ed Perlmutter, whose district includes the Aurora, Colo., movie theater where a gunman killed 12 people and injured dozens more in July, and Elizabeth Esty, who represents Newtown.
Under Feinstein’s proposal, the manufacture, sale and importation of weapons that accept a detachable magazine and include one or more military-style characteristics – such as a pistol grip or a folding stock – would be banned.
Gun control advocates complained that loopholes in the 1994 ban were so great that small modifications in banned weapons made them legal.
The new bill is modeled after California’s tough assault weapons ban, but would close a loophole in the state law. It would ban assault weapons that have a device – such as a so-called bullet button – that can be used to swiftly reload the weapons with multiple rounds of ammunition. Legislation also has been introduced in Sacramento to close the loophole.
Gun control has long been a personal priority for Feinstein, who, when challenged by then-Sen. Larry Craig (R-Idaho), an NRA ally, about her knowledge of firearms during the 1993 debate, said, "Senator, I know something about what firearms can do." She became San Francisco mayor in 1978 after Mayor George Moscone and Supervisor Harvey Milk were shot to death in City Hall. Shortly after she arrived in the Senate, she took up the issue after a 1993 shooting rampage in a San Francisco office building that left eight people dead and six wounded.
Feinstein said that the bill’s fate will rest heavily on public pressure.
“If people care enough to call every member of the House and every member of the Senate and say, we have had enough, these weapons do not belong on the streets of our towns, our cities, in our schools, in our malls, in our workplaces, in our movie theaters, enough is enough, we can win this. But it depends on America and it depends on the courage of Americans.’’
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Sen. Dianne Feinstein (D-Calif.) stands next to a display of assault weapons during a news conference Thursday on Capitol Hill in Washington, DC. (Alex Wong/Getty Images)
Democratic lawmakers formally reintroduced a bill Thursday that would ban military-style assault weapons and high-capacity ammunition magazines, the most ambitious — and politically risky — element of proposals unveiled by President Obama to limit gun violence.
The "Assault Weapons Ban of 2013" is a much more far-reaching proposal than the federal ban that expired in 2004. The proposal would ban the sale, transfer, manufacturing or importation of more than 150 specific firearms, including semiautomatic rifles or pistols that can be used with a detachable or fixed ammunition magazines that hold more than 10 rounds and have specific military-style features, including pistol grips, grenade launchers or rocket launchers.
It excludes more than 2,250 firearms used for hunting or other sport, and assault weapons lawfully owned before the law's enactment. But it would require background checks for the sale or transfer of grandfathered weapons and would bar the sale or transfer of large-capacity feeding devices owned before the bill's enactment. Current assault weapon owners also would need to safely store their firearms. Unlike the original federal ban passed in 1994, the new ban would be permanent.
The measure was unveiled Thursday morning by a slate of Democratic co-sponsors, led by longtime gun control advocates Sen. Dianne Feinstein (Calif.) and Rep. Carolyn McCarthy (N.Y.), who have pushed for the ban before in part because of their personal histories with gun violence.
"This is a tough battle," Feinstein said at the start of an elaborately-staged event on Capitol Hill to unveil the bill.
Feinstein and McCarthy were joined at the event by House and Senate Democrats cosponsoring the measure, representatives of gun control groups, survivors of mass shootings in Arizona, Colorado and at Virginia Tech, Philadelphia Mayor Michael Nutter and Charles H. Ramsey, Philadelphia Police Commissioner.
Ramsey, the former police chief of Washington, D.C., also discussed the details of 10 assault weapons displayed at the event, similar to those used in some of the most recent mass shootings.
"If the slaughter of 20 babies does not capture and hold your attention, then I give up, because I don't know what else will," Ramsey told the crowd. "We have to pass legislation, we can't allow the legislation to get so watered down and filled with loopholes that it is meaningless and won't do anything."
Then, turning to the weapons, Ramsey said: "Look at this and tell me why any of this needs to be on the streets of our cities. ... How are you going to go hunting with something like that? If you kill something, there’s nothing left to eat."
Feinstein later explained that the weapons displayed were in the lawful possession of unnamed law enforcement agencies as evidence.
Supporters face an uphill climb in a Congress filled with Republicans and moderate Democrats who support Second Amendment rights and rely on political support from the National Rifle Association and other gun groups to win reelection.
The NRA responded with a statement:
Senator Feinstein has been trying to ban guns from law-abiding citizens for decades. It's disappointing but not surprising that she is once again focused on curtailing the Constitution instead of prosecuting criminals or fixing our broken mental health system. The American people know gun bans do not work and we are confident Congress will reject Senator Feinstein's wrong-headed approach.
Regardless, Feinstein and McCarthy plan to press ahead.
Most Americans support tough new measures to counter gun violence, including banning assault weapons, according to the latest Washington Post-ABC News poll. In the poll, 58 percent of Americans support the ban, which expired in 2004 after 10 years; 39 percent oppose it. Some 45 percent of gun-owning households also support the ban.
McCarthy, whose husband was killed and son wounded in the 1993 Long Island Railroad shooting, has reintroduced the weapons ban every year since it expired. She said her office has received much more support for her efforts since the deadly shooting in Newtown.
“The American people are on our side this time, and we do outnumber some of the people who are fighting against us this time,” McCarthy said Wednesday, citing new support from parents, medical professionals and labor unions that she declined to name.
"This is different this time, people are more open to it," she added. "What we keep hearing [from voters] is [go for] the assault weapons ban, so we’ll go for it.”
Feinstein, who became San Francisco mayor in 1978 after the assassinations of Mayor George Moscone and Supervisor Harvey Milk, said she has voiced her displeasure with Senate Majority Leader Harry M. Reid (D-Nev.) after he recently told a Nevada television station that, given the current political environment, it might be futile to move an assault weapons ban through Congress.
Since then, Reid has sounded more open to gun control measures. “This is an issue that we’re not going to run from,” he told reporters Tuesday. “It’s an issue we need to talk about. . . . It may not be everything everyone wants. But I hope it has some stuff in there that’s really important.”
House Republican leaders say they won't consider any gun-related legislation until the Senate takes action. This week, Sens. Patrick J. Leahy (D-Vt.) and Kirsten Gillibrand (D-N.Y.) unveiled plans to make gun trafficking and straw purchases a federal crime, and Sen. Frank Lautenberg (D-N.J.) relaunched plans to close a loophole in federal law that permits gun buyers to purchase weapons without a federal background check from private gun dealers and to ban high-capacity magazines holding more than 10 rounds of ammunition.
The proposals will be considered next Wednesday at a Senate Judiciary Committee hearing on gun control. Leahy, who chairs the panel, has said he's eager to consider a wide range of proposals before moving legislation through the Senate.
The last time Congress approved the federal ban on assault weapons was 1994, when Feinstein faced her toughest reelection race and McCarthy was a nurse — and registered Republican — grieving the death of her husband and helping her son recover from his wounds.
In addition to growing support for stricter gun laws, McCarthy noted that President Obama's campaign operation, recently renamed Organizing for Action, is planning to help mobilize supporters.
“I would love his e-mail list," McCarthy said of Obama's support network.
“Each of us can work as hard as we can, but unless [Obama is] out there selling it," the bill won't advance, McCarthy said. "Hopefully they learned their lessons from the health-care bill.”
Scott Clement contributed to this report.
Follow Ed O'Keefe on Twitter: @edatpost | Democrats led by Dianne Feinstein unveiled new legislation to rein in assault weapons today, reports the Washington Post. A few key points: It would ban 157 types of semiautomatic weapons, including the Bushmaster variety used in the Sandy Hook rampage. It would ban ammunition magazines that hold more than 10 rounds. Current owners of such weapons can keep them, but if they sell them, the prospective buyer must undergo a criminal background check. The legislation would be permanent, unlike the 1994 ban that expired 10 years later. This year's bill is more comprehensive than the old one. The Assault Weapons Ban of 2013 faces an "uphill road" to passage, acknowledged Feinstein, who added that the goal is to "dry up the supply of these weapons over time," reports the New York Times. And the Los Angeles Times illustrates just how uphill that road will be: It notes high in its coverage that when Feinstein started her news conference, "no Republican lawmaker was there. Nor was a red-state Democrat." |
President Bush and Moroccan King Mohammed VI announced at a meeting in Washington, D.C. on April 23, 2002, that the two countries would seek to negotiate a free trade agreement. On October 1, 2002, U.S. Trade Representative Robert Zoellick sent Congress formal notification of the Administration's intention to begin FTA talks with Morocco. In his notification letter, Zoellick stated that the completion of an FTA with Morocco would "support this Administration's commitment to promote more tolerant, open and prosperous Muslim societies." Negotiations for the FTA were launched on January 21, 2003, in Washington. After a total of eight negotiating rounds, U.S. Trade Representative Robert Zoellick and Moroccan Minister Taib Fassi-Fihri reached agreement on March 2, 2004 on a comprehensive FTA. After the required 90-day congressional notification period expired, the two sides signed the agreement on June 15, 2004. Both the Senate and House approved implementing legislation in July 2004, and President Bush signed the legislation into law ( P.L. 108-302 ) on August 3, 2004. The Moroccan Parliament ratified the agreement on January 18, 2005, but subsequently had to legislate changes in the country's intellectual property laws to implement its FTA obligations. According to the Office of the U.S. Trade Representative, Morocco was chosen as an FTA partner for multiple reasons. First, USTR officials stated that a trade agreement with Morocco would further the executive branch's goal of promoting openness, tolerance, and economic growth across the Muslim world. Second, Morocco has been a strong ally in the war against terrorism. Third, the FTA would ensure stronger Moroccan support for U.S. positions in WTO negotiations. Fourth, USTR officials maintained that an FTA would help Morocco strengthen its economic and political reforms. Fifth, the agreement is expected to provide U.S. exporters and investors with increased market access. The Moroccan trade pact is now the fourth FTA (after Israel, Jordan, and Bahrain) the United States has in force with a Middle Eastern country. An agreement with Oman has been signed, but not yet considered by Congress. Each agreement is intended to be an integral part of President Bush's strategy to create a Middle East Free Trade Area by 2013. Morocco is a moderate Arab state which maintains close relations with Europe and the United States. Situated in North Africa on a land mass slightly larger than California, Morocco borders the North Atlantic ocean and Mediterranean Sea between Algeria and Western Sahara. Approximately 99% of its 30 million people are Muslim. The government of Morocco today is a constitutional monarchy. King Mohammed VI, who assumed the throne in July 1999, is the head of state. The constitution grants the King extensive powers, including the authority to appoint the prime minister and several key ministers individually, and approve the Council of Ministers, the power to dismiss the government, the power to dissolve the parliament, and the power to rule by decree. The King also serves as the supreme commander of the armed forces and serves as Morocco's religious leader or "Commander of the Faithful." The King, and not the Prime Minister, also defines the policy directions and priorities of the government. On the one hand, there have been some calls from elements of the Moroccan press for reform of the constitution to reduce the powers of the King, while enhancing the powers of the Parliament. On the other hand, many analysts believe that King Mohammed VI is dedicated to addressing Morocco's underlying social problems, while gradually liberalizing the political system further. Following September 2002 parliamentary elections, King Mohammed named Driss Jettou as Prime Minister and head a six-party center-left coalition government. Mr. Jettou is often described as a forceful technocratic leader. Yet Morocco's over 20 political parties create a fragmented political system, making it difficult for the government to reach consensus on how best to address its many social and economic problems. Critically, high unemployment that averages over 20% in urban areas, increasing income inequality, and widespread poverty provide fertile ground for increasing support for a fundamentalist Islamist movement, al-Adl wal-Ihsane (Justice and Charity). With a per capita income of about $2,000 (2002), Morocco also faces challenges typical of many poor developing countries. These include preparing the economy for freer trade, reducing public sector wage rates and bloated ministries, increasing labor market flexibility and skills, restoring a crumbling infrastructure, and reducing dependence on imported energy. Morocco's economy is based on mining, agriculture, fishing, tourism, a growing manufacturing sector, and a deregulated telecommunications sector. Morocco has the world's largest phosphate reserves, and exports of phosphates from state-owned companies account for about 17% of Morocco's total exports. Agriculture accounts for between 15-20% of GDP and employs between 40-45% of its workforce (services employs around 35% and industry around 15%). Morocco is a net exporter of fruits and vegetables and a net importer of cereals, oilseeds, and sugar. Severe droughts often hurt Morocco's farm production, thereby serving as a drag on economic growth. The Moroccan economy also depends heavily on the inflow of funds from Moroccans working abroad. The illegal production and export of cannabis also plays a role in the economy, particularly in the north. The European Union is its primary trading partner, accounting for nearly 67% of its exports and 55% of its imports in 2002. France is Morocco's single largest trading partner by a wide margin. The United States is a relatively small trading partner, accounting for about 5% of Morocco's total trade. The Bush Administration's decision to negotiate a FTA with Morocco was a surprise to a number of observers. A U.S. Chamber of Commerce official, for example, questioned the decision on the grounds that the United States does not do a lot of business with Morocco and that other Middle Eastern countries, such as Egypt and Turkey, would be more suitable partners. The Bush Administration, backed by a coalition of U.S. companies that support the negotiation, responded that both U.S. economic and political interests (see below) will be well served by the proposed FTA. Before the FTA, U.S. exports to Morocco faced an average tariff of 20% versus a 4% average tariff that Moroccan exports face in the U.S. market. By moving towards duty-free treatment, two-way trade flows should expand beyond the current small $ 854 million level (comprising U.S. exports of $469 million and imports of $385 million in 2003). In addition to the current leading U.S. exports to Morocco (aircraft, corn, and machinery), U.S. exports of products such as wheat, soybeans and feed grains, beef and poultry are expected to increase under the FTA. New commercial opportunities for U.S. exporters may also be derived by offsetting current tariff preferences as embodied in the European Union-Morocco Association Agreement, which became effective on March 1, 2000. This agreement provides preferential tariff treatment for most EU industrial goods, but largely excludes agriculture. Because agriculture will be included in the U.S.-Moroccan FTA, many U.S. agricultural interests believe they can enhance their position vis-a-vis European producers. The U.S.-Moroccan Business coalition also argues that the FTA will increase the access American firms have to Morocco's service sector. Besides telecommunications and tourism, the coalition maintains that new opportunities for U.S. firms in the banking, energy, audio-visual, telecommunications, finance, and insurance sectors are likely to be opened up as a result of Moroccan economic reforms. In addition, the FTA could support the Bush Administration's trade strategy of "competitive liberalization." By helping a developing country that recognizes the importance of trade liberalization as a key ingredient of development, the Moroccan FTA could demonstrate to other developing countries the benefits of economic reform and trade liberalization, including the WTO round of multilateral negotiations - the Doha Development Agenda. As a Chair of the G-77 and Africa Group within the WTO, the Bush Administration maintains that Morocco is in a leading position to promote the benefits of the Doha Round to other developing countries. Similar to the Jordan-U.S. FTA, the FTA with Morocco is viewed by the Administration as a tool to support a moderate Muslim state in the region. By contributing to increased development and prosperity in Morocco, the FTA is intended to contribute to the stability of the region and send a concrete signal to countries in the Middle East about the benefits of closer economic and political ties with the United States. The FTA is also a mechanism for advancing the overall U.S.-Moroccan relationship. As Morocco is one of the strongest U.S. allies in the war on terrorism in the Middle East, the FTA is intended as a reward for its support, as well as send a signal to the rest of the Arab world that the United States wants closer ties. At a time many voices in the Arab and Muslim world are calling for boycotts against the United States, Morocco is seeking a closer economic relationship. The agreement provides that more than 95% of bilateral trade in consumer and industrial products will become duty-free immediately, and all other remaining tariffs will be eliminated within nine years. U.S. export sectors such as information technology products, construction equipment, and chemical stand to benefit. For the import-sensitive textile and apparel sector, trade will be duty-free if imports meet the Agreement's rules of origin. The Agreement requires qualifying apparel to contain either U.S. or Moroccan yarn and fabric and a limited amount of third country content. On agriculture, U.S. poultry, beef, and wheat exports will benefit from liberalization of Morocco's tariff-rate quotas. Morocco will also provide immediate duty-free access on products such as pecans, frozen potatoes, and breakfast cereals and more graduated duty-free access on other products such as soybeans, sorghum, and grapes. For its part, the United States will phase-out all agricultural tariffs, most in fifteen years. Morocco will provide U.S. service providers such as audiovisual, express delivery, telecommunications, computer and related services, construction, and engineering with enhanced access to its market. U.S. banks and insurance companies will have the right to establish subsidiaries and joint ventures in Morocco, as well as the right to establish branches, subject to a four year phase-in for most insurance providers. Protections and non-discriminatory treatment are provided for digital products such as U.S. software, music, text, and videos. Protections for U.S. patents, trademarks, and copyrights parallel and in some cases deepen the standards of other U.S. FTAs. In the area of telecommunications, each government commits to that users of the telecom network will have reasonable and non-discriminatory access to the network. U.S. phone companies will have the right to interconnect with former monopoly networks in Morocco at non-discriminatory, cost-based rates. The agreement provides for anti-corruption measures in government contracting. U.S. companies are provided access to bidding on a range of Moroccan government contracts and procurement. Both countries also commit to enforce their domestic labor and environmental laws, and the agreement includes a cooperative mechanism in both labor and environmental areas. Agricultural producers in the United States welcome the tariff reductions that will be phased in as a result of the FTA. In particular, the American Soybean Association said that the duty on soybeans for processing will be eliminated immediately, and soybeans imported for other uses and processed soy products will be reduced by 50% in the first year of the agreement and phased out over the next five years. Previous import duties in Morocco were 2.5% on soybeans for processing, 25% on soybean meal, and 75.5% for soy products that are used in human food. The National Cattlemen's Beef Association looks forward to increased market access to Morocco's hotel and restaurant industry as Morocco opens its market to U.S. beef with a low in-quota tariff that goes to zero quickly. According the U.S. Trade Representative's Office, producers of poultry, wheat, corn, and sorghum will also gain from the agreement. Most U.S. trade advisory committees endorsed the agreement. The most senior committee, the Advisory Committee for Trade Policy and Negotiations, found the agreement "to be strongly in the U.S. interest and to be an incentive for additional bilateral and regional agreements." Advisory committees on services, goods, and intellectual property also expressed broad support. However, the Labor Advisory Committee expressed concerns that were echoed by several Ways and Means Committee Democrats at the July 7, 2004 hearing. These concerns were basically whether the trade agreement goes far enough in encouraging Morocco to meet basic international labor standards. However, the accord generally is credited with influencing significant labor reforms in Morocco. For example, a new labor law that went into effect on June 8, 2004 (1) raises the minimum employment age from 12 to 15 to combat child labor; (2) reduces the work week from 48 to 44 hours with overtime rates payable for additional hours; (3) calls for periodic review of the Moroccan minimum wage; and (4) guarantees rights of association and collective bargaining and prohibits workers from taking actions against workers because they are union members. The U.S. Department of Labor, meanwhile, has created an assistance program with a budget of nearly $9.5 million to improve industrial relations and child labor standards in Morocco, and the Moroccan government has ratified seven of the eight core International Labor (ILO) conventions. | The United States and Morocco reached agreement on March 2, 2004 to create a free trade agreement (FTA). The Senate approved implementing legislation ( S. 2677 ) on July 2, 2004 by a vote of 85-13 and the House approved identical legislation ( H.R. 4842 ) on July 22, 2004 by a vote of 323-99. The next day, the Senate passed House approved H.R. 4842 without amendment by unanimous consent. The legislation was signed by President Bush into law ( P.L. 108-302 ) on August 3, 2004. The agreement entered into force on January 1, 2006, a year later than planned due to the need for Morocco's Parliament to pass amendments to its intellectual property laws. The FTA is intended to strengthen bilateral ties, boost trade and investment flows, and bolster Morocco's position as a moderate Arab state. More than 95% of bilateral trade in consumer and industrial products became duty-free upon entry into force, while most other remaining barriers are to be phased out over a number of years. This report will be updated later this year. |
Almost all borrowing by the federal government is conducted by the Treasury Department, within the restrictions established by a single, statutory limit (ceiling) on the total amount of debt that may be outstanding at any time. By law, the Treasury cannot exceed federal debt limits, so the Treasury periodically has had to ask Congress to enact new debt limits so it can fulfill its financial commitments. Since 1978, 58 measures adjusting or suspending the statutory debt limit either as stand-alone legislation or as part of legislation dealing with other matters have been enacted into law. During the 115 th Congress, on March 15, 2017, a previously enacted debt limit suspension period expired. On March 16, 2017, the Treasury Department reset the debt limit at $19,809 billion, and Treasury Secretary Steven Mnuchin notified Congress that the Treasury Department would use extraordinary measures to temporarily prevent the United States from defaulting on its obligations. These measures were in use until September 8, 2017, when President Trump signed P.L. 115-56 , a measure that included a debt limit suspension through December 8, 2017, and reset the debt limit at $20,456 billion. On December 8, 2017, the Treasury Department again implemented extraordinary measures, which estimates suggested would prevent the United States from defaulting on its obligations until early March of 2018. On February 9, 2018, a continuing appropriations measure, P.L. 115-123 , was enacted that included the Bipartisan Budget Act of 2018, and, in §30301, a suspension of the federal debt through March 1, 2019. This report provides tallies of votes on final passage for each enacted measure that adjusted or suspended the statutory debt limit from 1978 to present. Note that because the process for congressional consideration of bills can be complex, attempting to interpret the intent of votes prior to the final vote on passage of a measure may yield various, and sometimes conflicting, interpretations. For the sake of clarity, this report only provides vote information on the final passage of each measure. In addition to information on debt limit legislation and votes on final passage in the House and Senate, other data elements identified in the tables below include bill numbers; roll call votes, voice votes, or passage by unanimous consent; dates of final passage and vote tally information; dates of enactment and public law numbers for the enacted laws; and brief background information on whether the measures were considered as stand-alone measures (i.e., dealing entirely with just a change to the federal debt limit and not including provisions on other matters). Table 1 provides information on all enacted measures to adjust or suspend the federal debt limit from 1978 to 2018, including data on the specific changes to the federal debt limit set at the time of enactment. The bill number and public law columns of the table provide links to Congress.gov bill summary and status information for each measure. Roll call votes on final enactment can be extracted through the actions tab for each measure within Congress.gov back to 1993. Table 1 also contains cross-references to the notes columns in Table 2 and Table 3 . The notes columns in those tables provide additional details on how each measure was considered. Table 2 identifies stand-alone measures from the period. Table 3 identifies bills considered as other than stand-alone measures and provides brief background information on the nature of each measure and by what means the measures were considered. CRS Report R44874, The Budget Control Act: Frequently Asked Questions , by [author name scrubbed] and [author name scrubbed]. CRS Report RL31967, The Debt Limit: History and Recent Increases , by [author name scrubbed]. CRS Report R43389, The Debt Limit Since 2011 , by [author name scrubbed]. CRS Report RS21519, Legislative Procedures for Adjusting the Public Debt Limit: A Brief Overview , by [author name scrubbed] | Almost all borrowing by the federal government is conducted by the Treasury Department, within the restrictions established by a single, statutory limit (ceiling) on the total amount of debt that may be outstanding at any time. By law, the Treasury cannot exceed federal debt limits, so the Treasury periodically has had to ask Congress to enact new debt limits so it can fulfill its financial commitments. Since 1978, 58 measures adjusting or suspending the statutory debt limit either as stand-alone legislation or as part of legislation dealing with other matters have been enacted into law. This report provides roll call vote data identified by the Congressional Research Service for measures to adjust the statutory debt limit. This report will be updated as events warrant. |
"The grand jury [has] a unique role in our criminal justice system." It was born of a desire to identify more criminals for prosecution and thereby to increase the King's revenues. But the exclusive power to accuse is also the power not to accuse and early on the grand jury became both the "sword and the shield of justice." This dual character marks the federal grand jury to this day. As the sword of justice, it enjoys virtually unfettered power to secretly investigate the mere possibility that federal laws may have been broken. Yet it remains a potential shield for it must give its approval before anyone may be brought to trial for a serious federal crime. What follows is a brief general description of the federal grand jury, with particular emphasis on its more controversial aspects—relationship of the prosecutor and the grand jury, the rights of grand jury witnesses, grand jury secrecy, and rights of targets of a grand jury investigation. The grand jury is an institution of antiquity. When William the Conqueror sought to compile the Domesday Book, he called upon the most respected men of each community. Their reports were collected to form an inventory of England's property, real and personal, and served as the foundation of the Crown's tax rolls. Almost a century later in the Assize of Clarendon, the ancestor of the modern grand jury, Henry II used the same approach to unearth reports of crime, and thereby increase the flow of fines and forfeitures into his treasury. From the power to accuse, the power to refuse to accuse eventually developed. By the American colonial period, the grand jury had become both an accuser and a protector. It was the protector the Founders saw when they enshrined the grand jury within the Bill of Rights and the reason it has been afforded extraordinary inquisitorial powers and exceptional deference. The Fifth Amendment right to grand jury indictment is only constitutionally required in federal cases. In a majority of the states, prosecution may begin either with an indictment or with an information or complaint filed by the prosecutor. Although abolition of the right to indictment in the states and abolition of the grand jury itself in England were primarily matters of judicial efficiency, most of the more contemporary proposals to change the federal grand jury system are the product of concern for the fairness of the process or for perceived excesses caused by prosecutorial exuberance. The authority of a federal grand jury is sweeping, but it is limited to the investigation of possible violations of federal criminal law triable in the district in which it is sitting. This does not include the power to investigate conduct known to have no connection to the court's jurisdiction, but does encompass the authority to inquire whether such a connection may exist. The grand jury may begin its examination even in the absence of probable cause or any other level of suspicion that a crime has been committed within its reach. In the exercise of its jurisdiction, the grand jury may "investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not," and its inquiries "may be triggered by tips, rumors, evidence proffered by the prosecutor, or the personal knowledge of the grand jurors." Unrestrained "by questions of propriety or forecasts of the probable result of the investigation or by doubts whether any particular individual will be found properly subject to an accusation," its "investigation is not fully carried out until every available clue has been run down and all witnesses examined in every proper way to find if a crime has been committed." Federal law requires the various United States District Courts to order one or more grand juries to be summoned when the public interest requires. In addition, the Attorney General may request the District Court to summon a special grand jury in any of the larger districts or when he or she believes the level of criminal activity in the district warrants it. Historically, the sheriff selected the members of the grand jury. The practice of having the sheriff of the county select the members of the grand jury continued for some time in England and in colonial America, although grand jurors were elected in some colonies. At one time, federal law addressed matters governing the selection, qualifications and exemptions of federal grand jurors largely by reference to the law of the state in which the grand jury was to be convened. These matters are now the responsibility of the court, governed by the Jury Selection and Service Act of 1968, and the selection plan established for the district in which the grand jury is to be convened. Federal grand jurors must be citizens of the United States, 18 years of age or older and residents of the judicial district for at least a year, be able to read, write and understand English with sufficient proficiency to complete the juror qualification form, be able to speak English, and be mentally and physically able to serve; those facing pending felony charges and those convicted of a felony (if their civil rights have not been restored) are ineligible. Discrimination in selection on the basis of race, color, religion, sex, national origin, or economic status is prohibited. Grand jurors must be "selected at random from a fair cross section of the community in the district or division wherein the court convenes." Either a defendant, an attorney for the government, or a member of an improperly excluded group may challenge the selection of a grand jury panel contrary to these requirements. Since the grand jury began with indictments based upon the personal knowledge of the members of the panel, there is some historical justification for the position that bias or want of impartiality should not disqualify a potential grand juror. The drafters of the Federal Rules of Criminal Procedure seemed to confirm this view when they rejected proposed language permitting a challenge of the grand jury based on "bias or prejudice." One commentator points out, however, that language in several Supreme Court cases has led some lower courts to assert that grand juries must be unbiased, or at least they must not be exposed to improper influences that would create bias. The case law also seems to focus on any contamination of the panel as a whole and to rely upon each grand juror's faithfulness to his or her oath to avoid the adverse consequences of individual bias. Grand jury panels consist of 16 to 23 members, 16 of whom must be present for a quorum, and 12 of whom must concur to indict. The size of grand jury panels is a remnant of the common law, but the common law treatises and the cases provide little indication of why those particular numbers were chosen. Of course, when the grand jury's accusations were based primarily upon the prior knowledge of the panel's members, larger panels were more understandable. The movement, which led to abolition of the right to indictment in many of the states, also resulted in a reduction in the size of most state grand jury panels. Perhaps because of a reluctance to dilute the federal constitutional right to indictment, there have been few suggestions for a comparable reduction in the size of the federal grand jury. The selection of 23 members for a panel which requires only the presence of 16 to conduct its business would seem to obviate the need for alternate grand jurors. This is not the case, however, and the rules permit the court to direct the selection of alternate grand jurors at the same time and in the same manner as other members of the panel are selected. After selection, the court swears in members of the grand jury; names a "foreperson and deputy foreperson" and instructs the panel. Federal grand juries sit until discharged by the court, but generally for no longer than 18 months, with the possibility of one six month extension. Special grand juries convened in large districts or in districts with severe crime problems also serve until discharged or up to 18 months, but may be extended up to 36 months and in some cases beyond. The grand jury does not conduct its business in open court nor does a federal judge preside over its proceedings. The grand jury meets behind closed doors with only the jurors, attorney for the government, witnesses, someone to record testimony, and possibly an interpreter present. In many cases, the government will have already conducted an investigation and the attorney for the government will present evidence to the panel. In other cases, the investigation will be incomplete and the grand jury, either on its own initiative or at the suggestion of the attorney for the government, will investigate. Originally, the grand jury brought criminal accusations based exclusively on the prior knowledge of its members. Today, the grand jury acts on the basis of evidence presented by witnesses called for that purpose and only rarely on the personal knowledge of individual jurors. The attorney for the government will ordinarily arrange for the appearance of witnesses before the grand jury, will suggest the order in which they should be called, and will take part in questioning them. The grand jury most often turns to prosecutor legal advice and to draft most of the indictments, which the grand jury returns. Grand jury witnesses usually appear before the grand jury under subpoena. The rule calls for subpoenas to be available in blank for the "parties" to proceedings before the court, but "no one is meaningfully a party in a grand jury proceeding." Nevertheless, there seems little question that subpoenas may be issued and served at the request of the panel itself, although the attorney for the government usually "fills in the blanks" on a grand jury subpoena and arranges the case to be presented to the grand jury. Unjustified failure to comply with a grand jury subpoena may result in a witness being held in civil contempt, convicted for criminal contempt, or both. A witness who lies to a grand jury may be prosecuted for perjury, or for making false declarations before the grand jury. Conversely, others with information they wish to provide it to the grand jury are prohibited from doing so except through the court or the attorney for the government. Consequently, neither a potential defendant nor a grand jury target nor any of their counsel has any right to appear before the grand jury unless invited or subpoenaed. Nor does a potential defendant nor a grand jury target nor their counsel have any right to present exculpatory evidence to the grand jury nor substantive objection. Grand jury appearances, however, are more likely to be fought than sought. Resistance is futile most often. Absent self-incrimination or some other privilege, the law expects citizens to cooperate with efforts to investigate crime. In the name of this expectation, a witness may be arrested, held for bail, and under some circumstances incarcerated. Even when armed with an applicable privilege, a witness' compliance with a grand jury subpoena is only likely to be excused with respect to matters protected by the privilege. A witness subpoenaed to testify rather than merely produce documents may be compelled to appear before the grand jury and claim the privilege with respect to any questions to which it applies. Witnesses also enjoy the benefit of fewer checks on the grand jury's exercise of investigative power than might be the case if the inquisitor were a government official rather than a group of randomly selected members of the community. Thus as a rule, the grand jury is entitled to every individual's evidence even though testimony may prove burdensome, embarrassing, or socially or economically injurious for the witness. A grand jury subpoena may even "trump" a pre-existing protective court order under some circumstances. This is not to say that the grand jury's authority is without limit, or that excessive prosecutorial zeal before the grand jury is unknown, or that there is never any just cause for a witness's refusal to answer a question or provide a document, but simply that the restraints on the grand jury's authority have been narrowly drawn and applied. Grand jury subpoenas are subject to the maxim that, "the grand jury ... may not itself violate a valid privilege, whether established by the Constitution, statutes, or the common law." In the context of grand jury subpoenas, as in most others, federal evidentiary privileges are governed by the Federal Rules of Evidence. The Rules do not articulate specific privileges. Instead, they declare that federal law concerning privileges is "governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." Although the standard is clearly evolutionary, present federal law seems to reflect three levels of privilege recognition. Some privileges like doctor-patient, have been refused recognition at least for the time being, some like journalist-source have been recognized for limited purposes that may or may not provide the basis for a motion to quash a grand jury subpoena, and some like clergy-communicant have been recognized as evidentiary privileges for grand jury purposes. Thus, the federal courts have said that for purposes of federal law no evidentiary privilege exists in cases of: physician-patient; accountant-client; researcher-source; parent-child; employer-stenographer; banker-depositor; draft counselor-client; police observation post location; probation officer-probationer; insurance company-client; academic peer review; medical peer review; unwaivable confidentiality of child abuse and juvenile records; agricultural loan mediation; union officials-union members; Secret Service protective function; litigation settlement negotiations; private investigator-client. A second group consists of recognized or developing but qualified privileges, whose effectiveness against a grand jury subpoena may be uncertain at best. Members of the group include privileges for: critical self-evaluation; journalists (not generally recognized for grand jury purposes); presidential communications; state legislators; federal statutory privileges; state secret/national security; bank examiners; state recognized privileges; state tax returns; intra-agency, government deliberative process; and ombudsman. The handful of privileges that provide the grounds for quashing a grand jury subpoena include: attorney-client; attorney work product; clergyman-communicant; informer identity; spousal immunity; spousal communications; and psychotherapist-patient. Perhaps the two most commonly cited privileges in motions to quash grand jury subpoenas are the attorney-client privilege and the closely related attorney work product privilege. The attorney-client privilege covers "[c]onfidential disclosures by a client to an attorney made in order to obtain legal assistance." The privilege does not foreclose grand jury inquiry into attorney-client communications which are themselves criminal or are in furtherance of some future criminal activity. Nor, as a general rule, does the privilege cover the identity of the client nor details concerning payment of the attorney's fee, and thus the privilege will usually not constitute grounds to quash a grand jury subpoena directed to secure that information. This last general rule may be subject to any of three exceptions. The privilege may extend to information concerning the identity of the client or the particulars of the fee arrangement when (1) "disclosure would implicate the client in the very criminal activity for which legal advice was sought; ... [(2)] disclosure of the client's identity by his attorney would have supplied the last link in an existing chain of incriminating evidence likely to lead to the client's indictment; ... [or (3)] the payment of the fee itself is unlawful ... [or] the fee contract contain[s] any confidential communication." The attorney "work product privilege protects any material obtained or prepared by a lawyer in the course of his legal duties, provided that the work was done with an eye toward litigation." Like the attorney-client privilege, it is subject to a crime/fraud exception. Unlike that privilege, however, "the work product privilege belongs to both the client and the attorney, either one of whom may claim it. An innocent attorney may claim the privilege even if a prima facie case of fraud or criminal activity has been made as to the client." The cases which give rise to attorney-client and attorney work product claims not infrequently include Sixth Amendment invocations as well. At first blush, the Sixth Amendment right to the assistance of counsel might be thought to afford but scant ground upon which to base a motion to quash a grand jury subpoena since the right does not ordinarily attach until an individual has been accused of a crime, e.g., after indictment. This is in fact a very real limitation, but one which admits to exception where either the client has already been indicted or arrested or where the vitality of the right requires pre-attachment recognition. As a general rule, a grand jury subpoena will only be quashed on the basis of Sixth Amendment considerations on those rare instances where it is shown to have been motivated solely by an intent to harass, where compliance would unnecessarily result in an actual conflict of interest between the attorney and his or her client, or where compliance would unnecessarily tend to undermine the attorney-client relationship. The Sixth Amendment, however, does not assure a grand jury witness of the right to have an attorney present when the witness testifies before the grand jury. A successful refusal to appear or testify before the grand jury, based upon the First Amendment guarantees of the freedoms of the press, association, or expression, is even more rare. Under extreme circumstances, it will provide the grounds to avoid a contempt citation or to quash a federal grand jury subpoena. Generally it will not. The Fourth Amendment prohibits unreasonable governmental searches and seizures. What might be unreasonable under other circumstances, may well be considered reasonable in a grand jury environment. For example, grand jury subpoenas are not considered per se unreasonable simply because they require neither probable cause nor the filter of an approving neutral magistrate. The opportunity to be heard on a motion to quash before complying makes the grand jury subpoena in many respects less intrusive than the warrant. Even "forthwith" subpoenas, where the opportunity to quash may be minimized, have generally been thought to pass constitutional muster, either because the party to whom they were address complied, i.e., consented, or because the circumstances presented exigencies similar to those to which Fourth Amendment demands have traditionally yielded. The shadow of the Fourth Amendment is visible in Rule 17(c) of the Federal Rules of Criminal Procedure, which supplies the grounds most often successfully employed to quash a grand jury subpoena: A subpoena may also command the person to whom it is directed to produce the books, papers, documents or other objects designated therein. The court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or oppressive. However, a "'grand jury proceeding is accorded a presumption of regularity, which generally may be dispelled only upon particularized proof of irregularities in the grand jury process.' Consequently, a grand jury subpoena issued through normal channels is presumed to be reasonable." A subpoena is "unreasonable or oppressive" if (1) it commands the production of things clearly irrelevant to the investigation being pursued; (2) it fails to specify the things to be produced with reasonable particularity; or (3) it is unreasonable in terms of the relative extent of the effort required to comply. It is not unreasonable under the Fourth Amendment nor contrary to the Fifth Amendment privilege against self-incrimination to subpoena a witness to appear before the grand jury in order to furnish a voice exemplar, a handwriting exemplar, to sign a consent form authorizing the disclosure of bank records, or for juveniles to produce a DNA sample and a complete set of fingerprints. Consequently, the courts will not quash an otherwise valid subpoena issued for any those purposes. Although the Fifth Amendment privilege against self-incrimination precludes requiring a witness to testify at his or her criminal trial, it does not "confer an absolute right to decline to respond in a grand jury inquiry." Once before the grand jury, a witness may decline to present self-incriminating testimony. The right does not include the option to protect pre-existing, voluntarily prepared personal papers on the ground that they are self-incriminatory, but a witness may refused to produce that documents where the act of production (rather than the mere content of the documents) would itself be incriminating. The privilege, nevertheless, is a personal one, and as a result provides no basis to quash a grand jury subpoena duces tecum for the records of corporate or other legal entities rather than of individuals. The Fifth Amendment due process clause, with and like the unreasonable or oppressive standard of Rule 17, supplement other grounds for a motion to quash grand jury subpoenas when confronted with potential abuse of the grand jury process or practices that are fundamentally unfair. Thus, a grand jury subpoena is subject to a motion to quash if issued for the sole or dominant purpose of preparing the government's case against a previously indicted target, but not if there is a possible valid purpose for the subpoena. Nor may the grand jury subpoena be used as a discovery device for civil cases in which the government has an interest. Finally, the Constitution provides that "for any speech or debate in either House, they [the members of Congress] shall not be questioned in any other place." The privilege precludes questioning before the grand jury of a Member's legislative acts. Federal law prohibits the use of evidence tainted by illegal wiretapping. The prohibition provides just cause for the refusal of a grand jury witness to respond to inquiries based on illegal wiretapping information. Similarly, a grand jury subpoena directed towards earlier testimony secured under a promise of immunity from prosecution may be quashed if sought solely for the purpose of indicting the witness. There is some limited support for the proposition that a claim of foreign sovereign immunity may not be interposed to avoid compliance with a grand jury subpoena. The courts are divided over the question of whether a statute that classifies information as confidential thereby takes the information beyond the reach of a federal grand jury subpoena, or otherwise confines its authority. The vitality of regulatory limitations upon the grand jury subpoena power are equally unclear. The courts have consistently held that the government's failure to comply with the guidelines in the United States Attorneys' Manual concerning grand jury subpoenas does not constitute valid ground upon which to quash or modify a grand jury subpoena, but implications of ethical rules purporting to proscribe the manner in which government attorneys may act with respect grand jury subpoenas and other matters arising out of their duties are less clear. Federal grand juries conduct their business in a secrecy defined by rules which limit who may attend, and the circumstances under which matters involving the conduct of their business may be disclosed. Grand jury secrecy predates the arrival of the grand jury in this country and the Supreme Court has said that "the proper functioning of our grand jury system depends upon" it. On the other hand, it has always been freely acknowledged that there are circumstances when, in balancing the interests of justice, the interests to be served by disclosure will outweigh the interests in secrecy. The cloak surrounding the grand jury's business serves several interests: (1) to prevent the escape of those whose indictment may be contemplated; (2) to insure the utmost freedom to the grand jury in its deliberations, and to prevent persons subject to indictment or their friends from importuning the grand jurors; (3) to prevent subornation of perjury or tampering with the witness who may testify before [the] grand jury and later appear at the trial of those indicted by it; (4) to encourage free and untrammeled disclosures by persons who have information with respect to the commission of crimes; (5) to protect [the] innocent accused who is exonerated from disclosure of the fact that he has been under investigation and from the expense of standing trial where there was no probability of guilt. Conversely, circumstances may exist under which evidence of what occurred before the grand jury could prevent a miscarriage of justice or serve some other public interest. These conditions may develop in any environment in which evidence unearthed by the grand jury might be relevant. They can arise in the federal criminal trials which often follow from a grand jury investigation, in state criminal investigations and proceedings, in civil litigation, and in administrative and legislative proceedings. The boundaries of grand jury secrecy have been defined by balancing the public interest in the confidentiality of grand jury proceedings against the public interest in disclosure in a particular context. In some cases such as disclosure to a second grand jury, the rule permits disclosure without court approval; in other cases such as disclosure to a civil litigant, the rule requires court approval after balancing the conflicting interests represented in a particular request for disclosure. Rule 6 expressly declares that "[n]o obligation of secrecy may be imposed on any person except in accordance with" its provisions, and only proscribes disclosures by members of the grand jury, its court reporters and interpreters, the attorney for the government, and any personnel to whom grand jury matters are disclosed so that they may assist the attorney for the government. Thus, a grand jury witness may usually disclose his or her grand jury testimony, and those not listed in Rule 6 generally need not keep the grand jury's secrets even if they learned of the matter from someone bound by the rule of secrecy. Nevertheless, at least one court appears to believe that the Stored Communications Act operates as a sub silentio exception, permitting the imposition of nondisclosure orders upon communications service providers with respect to grand jury subpoenas they receive for customer communications content and records. Grand jury secrecy shrouds "matter[s] occurring before the grand jury." In most instances, it does not bar disclosure of information because the information might be presented to the grand jury at some time in the future. The rule protects the workings of the grand jury not the grist for its mill. The fact of disclosure to the grand jury, rather than the information disclosed, is the object of protection, but the two are not always easily separated. Clearly, grand jury secrecy does not bar disclosure of information previously presented to a grand jury but sought for an unrelated purpose by a requester unaware of its earlier presentation. On the other hand, it does cover instances where information is sought because it has been presented to the grand jury. In between, the distinctions become more difficult and the cases do not reflect a single approach. Rule 6(e) also shields ancillary proceedings and records to avoid frustration of its purpose during the course of litigation concerning the proper scope of the rule. The rule does not preclude disclosure of matters occurring before the grand jury under a number of circumstances. Some require court approval; others do not. The areas beyond the cloak of grand jury secrecy may include instances where: (1) the individual with the information is not bound to maintain the grand jury's secrets; (2) disclosure does not constitute disclosure of "matters occurring before the grand jury;" (3) subsequent use of the information presented to the grand jury is not "disclosure;" (4) the disclosure is to an attorney for the government or a government employee for use in the performance of the attorney's duties; (5) disclosure is "directed by the court preliminary to or in connection with a judicial proceeding;" (6) a defendant seeks to dismiss an indictment because of grand jury irregularities; (7) an attorney for the government discloses the information to another grand jury; (8) disclosed to state officials for purposes of enforcing state law; (9) disclosure is expressly permitted by statute; and (10) continued secrecy would be inconsistent with history of the grand jury's relationship with the court and of the common law origins of the rule. Government attorneys and other employees may benefit from access to matters occurring before the grand jury in a number of instances. For example, grand jury secrecy does not prevent a government attorney (who acquired information and prepared documents while assisting a grand jury) from reviewing and using the information and documents, without disclosing them to anyone else, in preparation for civil litigation. Moreover, disclosure to government attorneys and employees assisting the grand jury without court approval is likewise possible under 6(e)(3)(A). The Supreme Court has made it clear that such disclosures are limited to attorneys and employees assisting in the criminal process which is the focus of the grand jury's inquiry. Grand jury material may be disclosed without court approval under (3)(A) to enable state police officers to assist a federal grand jury investigation, but apparently not private contractors. The rule, however, permits disclosure of grand jury evidence of certain foreign and terrorist criminal activities to various law enforcement officials without prior judicial approval. More specifically, rule 6(e)(3)(D) authorizes disclosure of grand jury information concerning foreign nations, their agents and activities to federal, state, local, tribal and foreign officials without court approval, although the court must be notified after the fact. Rule 6(e)(3)(E)(i) permits court approved disclosure of grand jury matters "preliminarily to or in connection with a judicial proceeding." Historically, the courts concluded, with some dissent, that the exception applied not only to the trial which followed the grand jury's investigation but to a variety of proceedings range from state bar and police disciplinary investigations, to parole hearings, state criminal investigations, Congressional inquiries, federal administrative proceedings, civil litigation, and other grand jury investigations. In United States v. Baggot , however, the Supreme Court provide guidance as to when disclosure might be considered "preliminarily to or in connection with" an appropriate proceeding and some indication of what kinds of proceedings might be considered "judicial": [T]he term "in connection with," in (C)(i) ... refer[s] to a judicial proceeding already pending, while "preliminary to" refers to one not yet initiated.... The "judicial proceeding" language ... reflects a judgment that not every beneficial purpose, or even every valid governmental purpose, is an appropriate reason for breaching grand jury secrecy. Rather, the rule contemplates only uses related fairly directly to some identifiable litigation, pending or anticipated. Thus, it is not enough to show that some litigation may emerge form the matter in which the material is to be used, or even that litigation is factually likely to emerge. The focus is on the actual use to be made of the material. If the primary purpose of disclosure is not to assist in preparation or conduct of a judicial proceeding, disclosure under (C)(i) is not permitted. Using this criterion, Baggot concluded that disclosure of grand jury matter to the government for purposes of a tax audit, after which any tax liability could be enforced nonjudicially, could not be considered "preliminary to or in connection with a judicial proceeding" and thus could not be permitted under (C)(i). Baggot found it unnecessary to address "the knotty question of what, if any, sorts of proceedings other than the garden-variety civil actions or criminal prosecutions might qualify as judicial proceedings under (C)(i)." The case's description of disclosures in an administrative context, however, hardly supports the notion that "judicial proceedings" include those before administrative tribunals. Court approved disclosures generally require "a strong showing of particularized need." Petitioners seeking disclosure "must show that the material they seek is needed to avoid a possible injustice in another judicial proceeding, that the need for disclosure is greater than the need for continued secrecy, and that their request is structured to cover only material so needed." Since any examination begins with a preference for preservation of the grand jury's secrets, the particularized need requirement cannot be satisfied simply by demonstrating that the information sought would be relevant or useful or that acquiring it from the grand jury rather than from some other available source would be more convenient. While the test remains the same whether the government or a private party seeks disclosure, "the concerns that underlie the policy of grand jury secrecy are implicated to a much lesser extent when the disclosure merely involves government attorneys." In the balance to be struck in the process of determining whether "the need for disclosure is greater than the need for continued secrecy," the district court enjoys discretion to judge each case on its own facts, but some general trends seem to have developed. The need to shield the grand jury's activities from public display is less compelling once it has completed its inquiries and been discharged, especially if the resulting criminal proceedings have also been concluded. Of course, there must still be a counterbalancing demonstration of need, a requirement that becomes more difficult if the grand jury witnesses whose testimony is be disclosed still run the risk of retaliation. "Courts have consistently distinguished the requests for documents generated independent of the grand jury investigation from the request for grand jury minutes or witness transcripts reasoning that the degree of exposure of the grand jury process inherent in the revelation of subpoenaed documents is lesser than the degree of disclosure attributable to publication of witness transcripts." Moreover, the courts seem responsive to requests to disclose matters occurring before the grand jury in order to resolve some specific inconsistency in the testimony of a witness or to refresh a witness's collection during the course of a trial. In the same vein, they are more disposed to the interests supporting disclosure if the petitioner's opponent already enjoys the benefit of the information sought. Rule 6(e)(3)(E)(ii) permits court approved disclosure upon a defendant's request "showing grounds may exist for a motion to dismiss the indictment because of matters occurring before the grand jury," and upon a showing of particularized need. Grand jury matters may be disclosed to another federal grand jury without court approval under Rule 6(e)(3)(C). Prior to enactment of this part of the Rule, disclosure to another federal grand jury was possible upon a showing of particularized need "preliminary to or in connection with a judicial proceeding" under (E)(i). Neither particularized need nor court approval are apparently any longer required and disclosure is permitted whether the two panels are sitting within the same district or not. Where the grand jury matters may show evidence of a violation of state law, the attorney for the government may petition the court for disclosure to state, military, or foreign enforcement authorities under Rule 6(e)(3)(E)(iii), (iv), (v). A criminal defendant is entitled to inspect and copy that portion of the transcript of his or her own testimony before a grand jury which relates to a crime with which he or she has been charged. And, under the Jencks Act, after a witness has testified against a defendant at trial, the defendant is entitled to request and receive a copy of the witness' relevant grand jury testimony. Congress has expressly authorized the disclosure of grand jury matters in connection with enforcement of some of the banking laws. In the case of civil penalties for bank fraud, false statements and embezzlement and civil forfeiture for money laundering, the attorney for the government may receive information concerning grand jury matters from the attorney who assisted the grand jury or any of his or her assistants. Bank regulatory agency personnel may receive grand jury information concerning such misconduct upon a motion by the government showing substantial need. But Congress's intent to breach the general rule of secrecy must be clear. Thus the disclosure of grand jury matters is not authorized by those provisions of the Clayton Act which in certain antitrust instances compel the U.S. Attorney General to provide state Attorneys General with "any investigative files or other materials which are or may be relevant or material" to a cause action under the act. Several courts, conscious of a responsibility over the grand jury subpoenas and indictments and of the common law origins of Rule 6(e), have permitted or asserted that under the proper circumstances they would permit disclosure without reference to any particular express exception within Rule 6(e) or elsewhere. Others, for much the same reasons, have noted that under the appropriate circumstances, a court might restrict disclosure of grand jury matters even in instances where Rule 6(e) would ordinarily permit disclosure. "A knowing violation of Rule 6 ... may be punished as a contempt of court." Since the Rule speaks of punishment, it might be fair to assume that it contemplates criminal contempt. And it does, but the courts have also held that violations of grand jury secrecy may subject offenders to civil contempt and to the injunctive power of the court. Government employees and members of the bar who improperly disclose the grand jury's secrets may be subject to disciplinary proceedings. Under some circumstances, improper disclosure of grand jury matters may also violate the obstruction of justice provisions of 18 U.S.C. 1503 (corruptly impeding or endeavoring to impede the administration of justice in connection with a judicial proceeding). There are four possible outcomes of convening a grand jury—(1) indictment, (2) a vote not to indict, to find "no bill" or "no true bill," or to endorse the indictment "ignoramus," (3) discharge or expiration without any action, (4) submission of a report to the court. In an indictment the grand jury accuses a designated person with a specific crime. It contains a "plain, concise and definite written statement of the essential facts constituting the offense charged" and bears the signature of the attorney for the government, and of the grand jury foreperson. The "constitution requirements for an indictment [are], first, that it contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and second, that it enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." Every defendant to be tried for a federal capital or "otherwise infamous crime" has a constitutional right to demand that the process begin only after the concurrence of 12 of his or her fellow citizens reflected in an indictment. It is a right, however, which the defendant may waive in noncapital cases and be charged under an information filed by the prosecutor without grand jury involvement. Misdemeanors may, but need not, be tried by indictment. The grand jury may indict only upon the vote of 12 of its members, and upon its conclusion that there is probable cause to believe that the accused committed the crime charged. The decision to indict rests with the grand jury. It may indict in the face of probable cause, but it need not; it cannot be required to indict nor punished for failing to do so. On the other hand, the prosecution is free to resubmit a matter for reconsideration by the same grand jury or by a subsequent panel and a grand jury panel is free to reexamine a matter notwithstanding the prior results of its own deliberations or those of another panel. Moreover, the defendant will not be heard to complain that the panel was not informed of its prerogative to decline to indict even if presented with probable cause. The law regarding the last alternative available to the grand jury, the authority to send forward "reports" or "presentments," is somewhat obscure. At common law "indictments" were returned by the grand jury based upon evidence presented to the grand jury, while "presentments" were "the notice taken by the grand jury of any offense from their own knowledge or observation, without any bill of indictment laid before them at the suit of the king." It is clear that in the limited case of the special grand juries convened under 18 U.S.C. 3331-3334, the grand jury has statutory authority to report on organized crime. Most federal grand jury panels, however, have no express authority to issue reports. They nevertheless appear to have common law authority to prepare reports, at least under some circumstances. The district court which empanels the grand jury receives such communications and enjoys the discretion to determine the extent to which the reports should be sealed, expunged or disclosed. Some of the factors considered in making that determination include "whether the report describes general community conditions or whether it refers to identifiable individuals; whether the individuals are mentioned in public or private capacities; the public interest in the contents of the report balanced against the harm to the individuals named; the availability and efficacy of remedies; whether the conduct described is indictable;" and whether the report intrudes upon the prerogatives of state and local governments. The court has the power to discharge a grand jury panel at any time within its term for any reason it sees fit. The court's authority to discharge a panel, quash its subpoenas, seal or expunge its reports or dismiss its indictments affords a check on "runaway" grand jury panels. Defendants have urged dismissal of their indictments based upon a wide array of alleged grand jury irregularities. They are rarely successful, if the indictment is valid on its face. The courts will dismiss an indictment which fails to charge a federal crime, as for instance, when it fails to include an essential element of the crime it purports to charge. Otherwise, the irregularities which warrant dismissal are few and the obstacles which must be overcome to establish them substantial. The courts are most hospitable to dismissal motions predicated upon constitutional violations. Thus, indictments returned by grand jury panels whose selection has been tainted by racial or sexual discrimination will be dismissed. The courts will likewise dismiss indictments which charge a defendant on basis of his or her immunized testimony taken pursuant to an order entered in lieu of his or her Fifth Amendment self-incrimination privilege; which are tainted by violations of the Speech or Debate privilege, or of the right of the accused to counsel of his choice; which are based solely on evidence secured in violation of the Fourth Amendment; which the government knowingly secured through the presentation of false or perjured testimony; or which are returned after a witness is called before the grand jury for the sole purpose of building perjury prosecution against the witness; or which charge violation of a statute that is unconstitutional on its face. Courts will also dismiss a grand jury indictment in the name of due process for government misconduct unrelated to grand jury irregularities, for instance, where the prosecution sought indictment selectively for constitutionally impermissible reasons; or for reasons of vindictive retaliation; where the prosecution has secured the indictment through outrageous conduct which shocks the conscience of the court; or where the prosecution has unjustifiably delayed seeking an indictment to the detriment of the defendant. In the absence of one of these rarely found causes for constitutional challenge, a facially valid indictment returned by a legally constituted grand jury is almost uniformly immune from dismissal. " Bank of Nova Scotia v. United States , [however,] makes it clear that the supervisory power can be used to dismiss an indictment because of misconduct before the grand jury, at least where the misconduct amounts to a violation of one of those few, clear rules which were carefully drafted and approved by this Court and by Congress to ensure the integrity of the grand jury functions." Bank of Nova Scotia also makes it clear, nevertheless, that such supervisory authority to dismiss an indictment is only appropriately exercised where "'it is established that the violations substantially influenced the grand jury's decision to indict' or if there is 'grave doubt' that the decision was free from such substantial influence." If the error is harmless the indictment may not be dismissed; "a district court may not dismiss an indictment for errors in grand jury proceedings unless such errors prejudiced the defendants." Timing is also important. After a trial jury has found sufficient evidence to convict a defendant, a claim of prejudice based on grand jury irregularities may lose most of its force. Finally, the supervisory power to dismiss an indictment beyond those areas where it is reinforced by the Constitution, statute, or rule is exceptionally limited. As a consequence of these limitations, usually indictments will not be dismissed simply because: the prosecutor failed to present evidence favorable to the defendant; the prosecutor failed to properly instruct the panel on applicable law; the prosecutor failed to advise the witness that he was a target of the investigation contrary to a suggestion in United States Attorney's Manual; the accused was called to testify before the grand jury when the prosecutor was aware the witness would invoke his privilege against self-incrimination; the prosecutor presented the grand jury with a signed indictment for its consideration and approval or rejection; of inflammatory press coverage proximate to the grand jury's inquiry; of a breached grand jury secrecy; of the presence of unauthorized individuals while the grand jury conducted its business; of the presentation of hearsay evidence; of the presentation of inaccurate, unreliable, misleading, or false evidence; of the presentation of illegal obtained evidence; of the presentation of evidence secured in violation of the Fourth Amendment; of the presentation of evidence secured by intrusion into the attorney-client relationship; of the presentation of evidence secured in violation of the Constitution's speech and debate clause; an erroneous charge to the grand jury; or no 12 grand jurors heard all the evidence upon which the indictment was based. In addition to dismissal of the indictment at the request of the accused, the government may move for dismissal of the indictment under Rule 48(a). Although the rule requires "leave of court," prosecutorial discretion is vested in the executive and the court cannot effectively compel prosecution. The authority of the courts to deny dismissal is therefore limited to instances where dismissal would be "clearly contrary to manifest public interest." In most instances, dismissal at the government's behest is without prejudice, and the prosecutor may seek to reindict for the same offense as long as neither speedy trial, the double jeopardy clause, or due process pose a bar. | The federal grand jury exists to investigate crimes against the United States and to secure the constitutional right of grand jury indictment. Its responsibilities require broad powers. As an arm of the U.S. District Court which summons it, upon whose process it relies, and which will receive any indictments it returns, the grand jury's subject matter and geographical jurisdiction is that of the court to which it is attached. As a general rule, the law is entitled to everyone's evidence. Witnesses subpoenaed to appear before the grand jury, therefore, will find little to excuse their appearance. Once before the panel, however, they are entitled to benefit of various constitutional, common law and statutory privileges including the right to withhold self-incriminating testimony and the security of confidentiality of their attorney-client communications. They are not, however, entitled to have an attorney with them in the grand jury room when they testify. The grand jury conducts its business in secret. Those who attend its sessions other than witnesses may disclose its secrets only when the interests of justice permit. Unless the independence of the grand jury is overborne, irregularities in the grand jury process ordinarily will not result in dismissal of an indictment, particularly where dismissal is sought after conviction. The concurrence of the attorney for the government is required for the trial of any indictment voted by the grand jury. In the absence of such an endorsement or when a panel seeks to report, the court enjoys narrowly exercised discretion to dictate expungement or permit distribution of the report. This report is available in an abridged form—without footnotes or citations to authority—as CRS Report RS20214, Federal Grand Juries: The Law in a Nutshell. |
Under the Clean Water Act (CWA), an applicant for a federal license or permit to conduct any activity that may result in a discharge to waters of the United States must provide the federal agency with a Section 401 certification. The certification, made by the state in which the discharge originates, declares that the discharge will comply with applicable provisions of the act, including water quality standards. A state's water quality standards specify the designated use of a stream or lake (e.g., for water supply or recreation), pollutant limits necessary to protect the designated use (in the form of numeric or narrative criteria), and policies to ensure that existing water uses will not be degraded by pollutant discharges. Section 401 provides states with two distinct powers: one, the power indirectly to deny federal permits or licenses by withholding certification; and two, the power to impose conditions upon federal permits by placing limitations on certification. Generally, Section 401 certification has been applied to hydropower projects seeking a license from the Federal Energy Regulatory Commission (FERC) and to dredge-and-fill activities in wetlands and other waters that require permits from the U.S. Army Corps of Engineers (CWA Section 404 and Sections 9 and 10 of the Rivers and Harbors Act). It also is applied to permit requirements for industrial and municipal point source dischargers (CWA Section 402). In addition, it has the potential to be applied to a range of other activities that could affect water quality, a point that has increasingly become an issue. Because participation by states in Section 401 certification is optional (they may waive the authority if they choose to do so), state implementation has varied. In recent years, however, many states have come to view Section 401 as an important tool in their overall programs to protect the physical and biological, in addition to the chemical, integrity of their waters. Some have begun using Section 401 to address a wide range of impacts to the quality of their waters, including impacts to aquatic habitat such as wetlands where issues of non-chemical impacts arise. Through Section 401, some states have addressed impacts of a project such as inadequate river flow, inundation of habitat, dissolved oxygen levels, and impacts on fish and other wildlife. This expanded use of Section 401 has, in turn, led to tensions between state and federal agencies (especially FERC) and regulated entities over the scope of the states' Section 401 authority, particularly the extent to which states can legally address water flow requirements in water quality standards. Some state courts have placed limitations on the use of Section 401 (at least for hydropower projects) to address only chemical impacts of projects (such as dissolved oxygen or numeric chemical criteria) and not physical impacts (filling of aquatic habitat in a streambed as a result of the project) or biological impacts (effects on fish migration, for example). Other courts have adopted a broader view and allowed states to condition certification on compliance with all applicable water quality-related laws. A 1990 Supreme Court case addressed the issue of whether hydropower projects must comply with any aspect of state water use law. The Court held that, with regard to federally licensed hydropower facilities, the Federal Power Act preempts state water use law, including states' comprehensive arrangements for allocating water among competing uses. For the most part, the debate over the Section 401 certification issue has centered on states and hydropower interests. Many states have long favored clarifying the CWA to confirm their broad authority to impose conditions on federally permitted activities. This position was described in testimony at a 1991 Senate subcommittee hearing. [A]n overly narrow reading of section 401 would deprive the States of the ability to maintain the very beneficial uses that the Clean Water Act was designed to protect. Federal agencies could permit activities that would undermine a State's investment in pollution control efforts and impose a double standard for different activities affecting the same in-stream values. It makes no sense to authorize States to implement Clean Water Act programs designed to protect beneficial uses and yet leave them powerless to prevent a federally permitted activity from impairing those values. The comprehensive nature of State management of water quality and water quantity means that the States are best situated to determine whether a federally permitted activity will fully protect beneficial uses. The States have lead responsibility for protecting water quality under the Clean Water Act and for administering laws governing allocation of water quantity. Water quality and quantity are inextricably linked; both are essential to maintaining the integrity of the nation's waters. Hydropower interests favor allowing federal agencies such as FERC to determine what conditions on a project are necessary for protection of water quality or to satisfy other criteria, in light of the important purposes directed by Congress in other laws, specifically the Federal Power Act. The current limitation on the role of the States in the [federal hydropower] licensing process is that ultimately the FERC must make the decision balancing the multitude of resource interests affected by the project. The expansive reading of Section 401 water quality certification being used in some States crosses this barrier, using this mandatory water quality review to effectively take control of all aspects of the project. ... Expansion of 401 certification places authority for an energy resource in the effective control of a State water quality agency, that is not responsible for utility rate stabilization, assuring adequate water supplies, promoting clean air technology, or controlling floods. The Supreme Court again considered the Section 401 issue in 1994. In Public Utility District (PUD) No. 1 of Jefferson County and City of Tacoma v. Washington Department of Ecology , the Court held that a state may impose minimum stream flow requirements as a condition in a Section 401 certification for a proposed hydropower facility because the CWA allows states to condition certification upon any effluent limitation or other appropriate state law requirement, to ensure that the facility will not violate state water quality standards. Imposition of the condition as part of the Section 401 certification does not conflict with FERC's authority to issue a license under the Federal Power Act, the Court said. The ruling said that states may regulate the impacts of a project as a whole, so long as there is a discharge involved. Thus, the conditions a state may require are not confined to the discharge itself but can address a range of conditions as part of their certifications, such as the impacts of a dam's removal of water from a river. Further, federal agencies must include state-imposed conditions in the license or permit. This decision pleased states, which had sought confirmation of their power to impose minimum stream flow and other requirements of state water quality standards. Environmentalists, who have supported states' use of Section 401 to address aquatic habitat alteration and biological diversity of the nation's waters, were similarly pleased. Development and hydropower interests, on the other hand, said that it would make licensing of hydropower facilities more difficult and costly. The utility industry was concerned that state water quality agencies reflect a narrow viewpoint under their mandates and could bias licensing policies by not adequately addressing power needs. The Supreme Court revisited these issues in 2006 in a case brought by the owner of several hydropower dams in Maine who had challenged the state's 401 certification for renewal of its FERC licenses for the dams, arguing that the dams did not produce the requisite "discharge" under the CWA. The Court unanimously held that states, through Section 401 certification, can impose conditions on FERC licensing or relicensing of hydropower facilities that states find necessary to prevent adverse alteration of water quality. States and environmental groups applauded the ruling, as many had feared that an adverse decision would hinder the ability of states to require measures to ameliorate the effects of hydropower dams on water quality and aquatic life. In 1996, a federal district court in Oregon ruled that Section 401 "applies to all federally permitted activities that may result in a discharge, including discharges from nonpoint sources." The case sought to have the U.S. Forest Service obtain state Section 401 certification that cattle grazing under a Forest Service permit would not violate water quality standards. The Forest Service argued that, under the CWA, only discharges from a point source or nonpoint source with a conveyance (i.e., a pipe or channel outlet) are regulated and, while cattle grazing may cause water pollution, it is not a regulated discharge under the act. However, in its ruling, the district court distinguished the definition of "discharge" from "discharge of a pollutant" from a point source and said that "pollution caused by cattle grazing constitutes a discharge into navigable waters within the meaning of section 401 of the Clean Water Act. Therefore, state certification under section 401 was required before the U.S. Forest Service issued a cattle grazing permit." Supporters said that the ruling gave states new regulatory power over federal licenses or permits that affect water quality by clarifying that Section 401 applies to nonpoint source discharges of water pollution, in addition to point source discharges. Point sources are discrete conveyances, such as pipes or ditches, from which pollutants are discharged. Nonpoint source pollution is rainfall and snowmelt runoff from farmlands, ranches, city streets, and similar areas. The ruling had the potential to give states a stronger hand in determining how federal lands should be managed. If so, the impact on states could be significant, since cattle grazing is a common activity on millions of acres of western lands managed by the Forest Service and the U.S. Bureau of Land Management, and states could face a substantial workload in processing Section 401 certifications for hundreds of grazing permits annually. Additional impacts could occur if Section 401 were held to apply to other types of federally permitted activities generally categorized as nonpoint sources, such as timber harvesting or logging. Federal agencies disagreed over how to respond to the Oregon district court's ruling. EPA favored letting the decision stand, on the basis that nonpoint source pollution is the most significant contributor to water pollution in many states, and the decision would give states more power to manage it. The Agriculture Department (parent of the Forest Service), on the other hand, urged the Department of Justice to support an industry group's appeal of the case, and ultimately the government did join in appealing the decision. In 1998, a federal court of appeals reversed the district court's ruling, finding that cattle grazing on federal lands does not fall within the type of pollution covered by Section 401. The court found that Congress intended to permit direct federal regulation of effluent flowing from point sources, but to regulate nonpoint source pollution only through federal grants, not through Section 401 water quality certification. The Supreme Court declined to review the case. The state of Oregon had responded to the 1996 district court decision by adopting rules establishing a certification process for livestock grazing permits on federal lands in Oregon. However, after the court of appeals reversed that ruling and the Supreme Court declined to review it, the state withdrew the rules. Groups representing ranchers, farmers, and similar interests were pleased that the district court's ruling was overturned, believing that Congress did not intend Section 401 to apply to nonpoint source pollution. Other CWA programs and tools such as financial incentives are better means of addressing nonpoint source pollution problems, some say. Environmentalists disagreed with the appeals court's conclusion and the legal outcome of the case, and many continue to argue that Section 401 generally supports a reading that includes nonpoint source discharges. In a broader context, some observers had viewed the district court's ruling as giving a boost to ongoing activities in states to develop total maximum daily load (TMDL) allocations on pollution-impaired water bodies. Efforts to carry out this Clean Water Act requirement have been prompted by lawsuits in more than three dozen states, claiming that EPA and states have failed to fulfill mandates in the law. In many cases, TMDLs are being developed that result in imposition of pollution control requirements and other measures affecting nonpoint sources as well as point sources in order to improve water quality and attain water quality standards. While the 9 th Circuit's 1998 ruling did not directly affect the TMDL process, some persons saw the reversal of the lower court's ruling as removing one possible argument for ensuring that nonpoint sources are addressed in TMDL plans and processes. Following the Supreme Court's 2006 ruling in the S.D. Warren case (discussed above), environmental advocates renewed legal challenge of grazing permits, arguing that the Court's ruling in that case that 401 certification applies to dam discharges could also be applied to agricultural runoff. The environmental group had challenged the failure of the Forest Service to require a company that sought a cattle grazing permit on Forest Service land to obtain a 401 certificate from the state of Oregon. However, the same federal court rejected the challenge, concluding that the facts in the more recent Oregon case differed from those in the S.D. Warren case, thus supporting its 1998 ruling that the CWA only allows states to address point source discharges under Section 401. Since the mid-1990s, Congress has shown interest in these issues in proposals reflecting varying perspectives, but no legislation that would modify Section 401 has been enacted. In the 103 rd Congress, interest in clarifying the scope of Section 401 certification authority led to several proposals. The Senate Environment and Public Works Committee included one such provision in S. 2093 , a CWA reauthorization bill. It would have strengthened Section 401 by clarifying that applicants for a federal license or permit, including applicants for a FERC license to operate hydropower facilities, must obtain state certification that the project will comply with water quality standards and will allow for attainment and maintenance of designated uses included in the state's standards. The Senate did not act on S. 2093 . Following the Supreme Court's 1994 PUD No. 1 decision, disputes over Section 401 became an issue in the Congress. At the end of the 103 rd Congress, legislation was introduced to amend the Clean Water Act and overturn the decision ( S. 2566 ). The sponsor of the bill, Senator Wallop, said that the Court's decision threatened state water law (by limiting the amount of water that could be used for the project in question and, thus, interfering with state water rights systems) and the integrity of the FERC hydropower licensing process. The Senate did not act on this bill. The 104 th Congress addressed the issue in H.R. 961 , a CWA reauthorization bill passed by the House in 1995. Section 507 would have made Section 401 inapplicable to hydropower projects if FERC were to determine that the state's certification is inconsistent with the Federal Power Act. The bill also would have set up a mechanism, to be administered by FERC, to resolve differences arising between the state and FERC on questions relating to the consistency of the 401 certification to a hydropower project. That is, in the event of a dispute between FERC and a state over 401 certification of a hydropower project, FERC would be authorized to resolve the dispute between itself and the state. This provision in H.R. 961 was one of several proposed to address the issue. Some Members favored simply exempting hydropower projects from Clean Water Act regulation, arguing that FERC project review is intended to consider inputs of state and federal agencies, Indian tribes, and the public in connection with licensing and relicensing decisions. Others argued that states should continue to have authority to regulate matters related to water quality concerns. Section 507 attempted to balance those concerns. However, no further action occurred on H.R. 961 during the 104 th Congress, and similar legislation has not been proposed subsequently. Legislative interest in Section 401 also occurred in connection with recommendations on national energy policy by Vice President Cheney's National Energy Policy Development Group in 2001. It recommended that the hydropower licensing process administered by FERC undergo administrative and legislative reform so that hydropower can contribute to meeting the nation's energy needs. At the same time, a 2001 FERC report concluded that the most common cause of delayed hydropower licensing proceedings is untimely receipt of state water quality certification under the Clean Water Act. Responding to these concerns, legislation was proposed that would give applicants for hydropower licenses increased flexibility in complying with conditions imposed by federal agencies such as the Department of the Interior concerning, for example, the need for passageways through which fish can travel around a dam—another issue raised in the FERC report. The 109 th Congress enacted the Energy Policy Act of 2005 ( P.L. 109-58 ) with a provision (Section 241) requiring federal agencies to consider alternative license conditions proposed by the license applicant. While this provision only addressed the roles of federal agencies in hydropower licensing, not state certification under CWA Section 401, these water quality issues remain of interest to some stakeholders. In the 112 th Congress, the House passed legislation that would in part modify Section 401. The bill, H.R. 2018 , the Clean Water Cooperative Federalism Act of 2011, would have amended several CWA provisions to restrict EPA's authority to provide oversight of states' implementation of aspects of the statute. The legislation was seen as a response to concerns that EPA has over-reached in its statutory oversight of state actions on permitting and standard setting. Section 2(b) of the bill would have modified Section 401 to prohibit EPA from taking "any action to supersede the determination" of a state that a particular discharge will comply with applicable provisions of the CWA, including water quality standards. While under current law EPA has no explicit role or conditioning authority over a state's 401 certification, this provision of H.R. 2018 was apparently intended to deter EPA from overriding state determinations. In comments on the legislation, EPA officials questioned the intent of the provision, saying that the agency has not taken formal action to supersede a state's certification, making the practical effect of the provision unclear, in EPA's view. Bills with provisions similar to Section 2(b) of H.R. 2018 also were introduced in the 113 th Congress ( H.R. 1829 and H.R. 1948 ). In the 114 th Congress, the Senate and House are considering comprehensive energy policy proposals, including legislation that some states believe could impinge on states' authority under CWA Section 401 concerning hydropower projects. The proposals include provisions intended to streamline review and approval of hydropower licensing projects. In the Senate, S. 2012 , the Energy Policy Modernization Act, includes provisions in Title III, Part I, that would designate FERC as the lead agency for coordinating all authorizations required under federal law—including 401 certification or other approvals required by federal and state agencies under federal law—and authorize FERC to establish schedules for issuance of all such authorizations. Under these provisions, federal or state agencies responsible for such authorizations would be required to report annually to congressional committees on any of the agency's activities affecting a FERC proceeding, including a demonstration that the agency's actions meet policies established in the Federal Power Act. The federal or state resource agency would be required to maintain a publicly available website that tracks all information required in the annual report. The House has passed related energy legislation, H.R. 8 , the North American Energy Security and Infrastructure Act of 2015. Like the Senate measure, provisions of this bill would designate FERC as the lead agency for coordinating all federal and state authorizations required under federal law. Section 1203 of the bill would require any federal or state agency, local government, or Indian tribe that may consider an aspect of an application for an authorization required under federal law to comply with deadlines established by FERC. The House passed H.R. 8 on December 7, 2015. Several state agencies have raised concerns about aspects of these proposals. Oregon officials said in a letter to House Energy and Commerce Committee leaders that they believe that the House bill would "effectively strip the state's authority to protect its fish, wildlife, and water resources." Washington state officials said in a letter to House Commerce Committee leaders that they oppose the bill because "states' and tribes' authority to issue CWA 401 water quality certifications would be impacted or revoked." State environmental agencies expressed concerns about the bill in a letter to the Speaker of the House, saying, "States also are concerned that provisions of H.R. 8 could eliminate responsiveness to environmental concerns and slow the process of scheduling and licensing." In a Statement of Administration Policy, the Office of Management and Budget said that the Administration strongly opposes H.R. 8 , based in part on the hydropower provisions: "Among the ways that H.R. 8 would undermine [the current hydropower licensing regulatory process] would be by creating a new exemption from licensing that would undercut bedrock environmental statutes, including the Clean Water Act, the National Environmental Policy Act, and the Endangered Species Act." Similarly, in a letter to Senate Energy and Natural Resources Committee leaders, Maryland officials noted objections to S. 1236 , a separate bill that was incorporated in S. 2012 , saying, "In removing or impairing the states' primary role and responsibility under Section 401 to fashion conditions in FERC licenses, S. 1236 relegate[s] the states—the entities with the greatest interest and expertise in protecting water quality—to bystander or second-class status." Press reports indicate that House and Senate committee leaders believe that CWA authority would not be affected by the bills in question. | Section 401 of the Clean Water Act (CWA) requires that an applicant for a federal license or permit provide a certification that any discharges from the facility will comply with the act, including state-established water quality standard requirements. Disputes have arisen over the states' exercise of this authority in protecting water quality. For the most part, the debate over the Section 401 certification issue has been between states and hydropower interests. A 1994 Supreme Court decision, which upheld the states' authority in this area, dismayed development and hydropower interest groups. The Court revisited these issues in a 2006 ruling that unanimously upheld the authority of states to condition hydropower licenses by exercising Section 401. The dispute between states and industry groups about Section 401 authority has been a legislative issue on several occasions, but Congress has not modified the provision's scope since it was enacted in 1972. In the 114th Congress, the Senate and House are considering comprehensive energy policy proposals (H.R. 8 and S. 2012) with provisions that some states believe could impinge on states' authority under CWA Section 401 concerning hydropower projects. In addition, there has been interest in clarifying whether Section 401 certification applies to nonpoint source discharges, such as rainfall runoff, as well as point source discharges from pipes or ditches. This question was raised in lawsuits in Oregon, where a federal court twice ruled that Section 401 does not apply to nonpoint source discharges. Still, some interests continue to favor a broad reading of 401 that would apply to both nonpoint and point sources of pollutant discharges. |
Under Article III of the U.S. Constitution, the jurisdiction of federal courts is limited to actual, ongoing cases and controversies. From this constitutional requirement comes several "justiciability" doctrines that may be invoked in federal court actions that could prevent plaintiffs from maintaining a legal claim against defendants. The four justiciability doctrines are standing, ripeness, political question, and mootness. These doctrines will render a controversy "nonjusticiable" if a court decides that any one of them applies. Standing addresses whether the plaintiff is the proper party to assert a claim in federal court. Ripeness considers whether a party has brought an action too early for adjudication. The political question doctrine makes nonjusticiable controversies that involve an issue constitutionally committed to the political branches of government. There are two types of mootness: Article III mootness and prudential mootness. As the name implies, the former is derived from the constitutional requirement that judicial power be exercised only in "cases" or "controversies." The latter concerns a federal court's discretion to withhold use of judicial power in suits thatâwhile not actually mootâshould be treated as moot for "prudential" reasons. Usually, a case or controversy must exist throughout all stages of federal judicial proceedings, and not just when the lawsuit is filed or when review is granted by an appellate court. The dispute must concern "live" issues, and generally, the plaintiffs must have a personal interest in the outcome of the case. The Supreme Court has described mootness as follows: The "personal stake" aspect of mootness doctrine ... serves primarily the purpose of assuring that federal courts are presented with disputes they are capable of resolving. One commentator has defined mootness as "the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)." When a legal claim becomes moot while awaiting appellate review, the established practice is for the federal appeals court to reverse or vacate the judgment below and to remand the case to the district court with an instruction to dismiss the action. That consequence is because a moot case does not qualify as a "case or controversy" under Article III; due to the lack of jurisdiction, federal courts have no power to consider the merits of a constitutionally moot case. Cases may be rendered moot because of a change in the status of the parties or in the law, or because of an act of one of the parties that dissolves the controversy. The following paragraphs provide examples of these scenarios. When a white law school applicant challenged the constitutionality of a public law school's affirmative action admissions policy, he was admitted to the school pursuant to a trial court ruling that found in his favor. During his second year of law school, the state's supreme court reversed the lower court's decision. By the time the Supreme Court granted certiorari to hear the case, the student was in his final school term. The Court dismissed the case as moot because "the petitioner will complete his law school studies at the end of the term for which he has now registered regardless of any decision this Court might reach on the merits of this litigation...." A lawsuit was filed claiming that the suspension and termination of disability benefit payments under the Social Security Act violated the procedural due process rights of the recipients. Before oral argument before the Supreme Court, the Secretary of Health, Education, and Welfare adopted new regulations governing the procedures to be followed by the Social Security Administration in determining whether to suspend or terminate disability benefits. In light of this development, the Court held "that the appropriate course is to withhold judicial action pending reprocessing, under the new regulations, of the determinations here in dispute. If that process results in a determination of entitlement to disability benefits, there will be no need to consider the constitutional claim that claimants are entitled to an opportunity to make an oral presentation." A prison inmate was transferred by corrections authorities, without notice or an opportunity for a hearing, from a medium security prison to a maximum security prison. The inmate filed a lawsuit alleging a violation of his due process rights under the Fourteenth Amendment of the U.S. Constitution; however, while his appeal was pending, he was transferred twice, first back to the medium security facility and thereafter to a minimum security institution. The Supreme Court held that the suit no longer presented a case or controversy, and thus dismissed the case as moot. Equitable, or prudential mootness, has been referred to as the "cousin of the mootness doctrine" and described as relating to the court's discretion in matters of remedy and judicial administration. Unlike Article III mootness, [it] address[es] not the power to grant relief but the court's discretion in the exercise of that power. In some circumstances, a controversy, not actually moot, is so attenuated that considerations of prudence and comity for coordinate branches of government counsel the court to stay its hand, and to withhold relief it has the power to grant. Thus, while a case may not be moot for failure to meet Article III's requirements, a court may nevertheless "treat [the case] as moot for prudential reasons" and decline to exercise judicial power in the case. The doctrine of prudential mootness is often applied in cases where the federal court declines to grant the plaintiff's request for declaratory judgment or injunctive relief because the defendant "has already changed or is in the process of changing its policies or where it appears that any repeat of the actions in question is otherwise highly unlikely." The Supreme Court has explained that the burden on the party asking the court to dismiss a case on prudential mootness grounds is a "heavy one," as the movant (usually the defendant) must "demonstrate that there is no reasonable expectation that the wrong will be repeated." The Supreme Court has recognized several exceptions to the mootness doctrine that, if found to apply to a case, would permit federal court adjudication of the dispute. In Sibron v. New York , an individual convicted of unlawful possession of heroin had completed service of his prison sentence prior to Supreme Court review of the case. The Court explained that the case was not moot: Although the term has been served, the results of the conviction may persist. Subsequent convictions may carry heavier penalties, civil rights may be affected. As the power to remedy an invalid sentence exists, we think, respondent is entitled to an opportunity to attempt to show that this conviction was invalid. This exception to the mootness doctrine thus applies in the criminal context, when there is a "possibility that any collateral legal consequences will be imposed on the basis of the challenged conviction." Even a "remote" possibility of such consequences is enough to save a criminal case from becoming moot. Some disputes or injuries may arise in the short-term and have the potential for recurrence, but always fail to last long enough to permit federal judicial review. In such a situation, federal courts have justified an exception to the mootness doctrine. A classic example is the landmark abortion case, Roe v. Wade. The Supreme Court explained why the exception should be invoked in this instance: [W]hen, as here, pregnancy is a significant fact in the litigation, the normal 266-day human gestation period is so short that the pregnancy will come to term before the usual appellate process is complete. If that termination makes a case moot, pregnancy litigation seldom will survive much beyond the trial stage, and appellate review will be effectively denied. Our law should not be that rigid. Pregnancy often comes more than once to the same woman, and in the general population, if man is to survive, it will always be with us. However, the Court has held that this exception applies only in "exceptional situations," where the plaintiff "can make a reasonable showing that he will again be subjected to the alleged illegality." If a defendant voluntarily terminates the allegedly unlawful conduct after the lawsuit has been filed but retains the power to resume the practice at any time, a federal court may deem the case nonmoot. The "heavy burden" of persuading the court that a case has been mooted by the defendant's voluntary actions lies with the party asserting mootness, and the standard for such a determination is a "stringent" one: "if subsequent events ma[ke] it absolutely clear that the allegedly wrongful behavior [can] not reasonably be expected to recur." This exception is supported by the Supreme Court because, in addition to ensuring that the defendant is not "free to return to his old ways," there is "a public interest in having the legality of the practices settled." For example, an environmental group had filed a citizen suit under the Clean Water Act against Laidlaw, a company that operated a wastewater treatment plant, alleging that the plant had discharged far more toxic pollutants into a river than it was allowed under terms of a government-issued permit. However, after the lawsuit began, Laidlaw began to comply with the discharge limit. The Supreme Court held that this case was not moot because it was a "disputed factual matter" whether the company's substantial compliance with its permit requirements, or its closure of the facility in question (which had occurred after the court of appeals had issued its decision), would make "it absolutely clear that Laidlaw's permit violations could not reasonably be expected to recur." When the claim of the named plaintiff in a certified class action becomes moot, the class action will not be dismissed so long as a member of the class continues to have a sufficiently adversarial relationship to constitute a live controversy. For example, a plaintiff brought a class action to challenge a one-year residency requirement in a state divorce statute, on the ground that it violated the U.S. Constitution. By the time her case reached the Supreme Court, she had long since satisfied the state's durational residency requirement, a development that, had she filed the suit only on her own behalf, would have made the case moot because she no longer retained a personal stake in the outcome. However, the Court noted the significant fact that she had brought the lawsuit as a class action in a representative capacity, which affected the mootness determination: "When the District Court certified the propriety of the class action, the class of unnamed persons described in the certification acquired a legal status separate from the interest asserted by [the named representative]," and therefore the Article III "cases or controversies" requirement was satisfied. | A case pending before a federal court may at some point in the litigation process lose an element of justiciability and become "moot." Mootness may occur when a controversy initially existing at the time the lawsuit was filed is no longer "live" due to a change in the law or in the status of the parties involved, or due to an act of one of the parties that dissolves the dispute. When a federal court deems a case to be moot, the court no longer has the power to entertain the legal claims and must dismiss the complaint. However, the U.S. Supreme Court over time has developed several exceptions to the mootness doctrine. This report provides a general overview of the doctrine of "mootness," as the principle is understood and used by federal courts to decide whether to dismiss certain actions for lack of jurisdiction. |
Federal debt represents, in large measure, the accumulated balance of federal borrowing of the U.S. government. The portion of gross federal debt held by the public consists primarily of investment in marketable U.S. Treasury securities. Investors in the United States and abroad include official institutions, such as the U.S. Federal Reserve; financial institutions, such as public banks; and private individual investors. Table 1 provides December 2015 data, available as of March 2016, on estimated ownership of U.S. Treasury securities by type of investment and the percentage of that investment attributable to foreign investors. The table shows that from December 2011 to December 2015, foreign holdings of debt increased by $1.1 trillion to approximately $6.1 trillion. During the same period, total publicly held debt increased by approximately $3.5 trillion to $15.1 trillion. Because the total debt has increased at about the same pace as the debt held by foreigners, the share of federal debt held by foreigners has been relatively steady. In December 2015, foreigners held 40% of the publicly held debt. Interest on the debt paid to foreigners in 2015 was $94.9 billion. Although 2015 was the first time in the past 10 years that foreign holdings declined, it is too soon to say whether this is a turning point in the heretofore upward trend. Data on major foreign holders of federal debt by country are provided in Table 2 . According to the data, the top three estimated foreign holders of federal debt by country, ranked in descending order as of December 2015, are China ($1,246.1 billion), Japan ($1,122.6 billion), and Caribbean Banking Centers ($351.7 billion). Based on these estimates, China holds approximately 20.3% of all foreign investment in U.S. privately held federal debt; Japan holds approximately 18.3%; and Caribbean Banking Centers holds approximately 5.7%. Foreign holdings as estimated by the Treasury Department can be divided into official (governmental investment) and private sources. Figure 1 provides data on the current breakdown of estimated foreign holdings in U.S. federal debt. As the figure shows, 66.6% ($4,094.6 billion) of foreign holdings in U.S. federal debt are held by governmental sources. Private investors hold the other 33.4% ($2,053.5 billion). After increasing for several years, overall foreign holdings have been relatively flat since 2013. From an economic perspective, foreign holdings of federal debt can be viewed in the broader context of U.S. savings, investment, and borrowing from abroad. For decades, the United States has saved less than it invests. Domestic saving is composed of saving by U.S. households, businesses, and governments; by accounting identity, when government runs budget deficits, it reduces domestic saving. By the same accounting identity, the shortfall between U.S. saving and physical investment is met by borrowing from abroad. When the deficit rises (i.e., public saving falls), U.S. investment must fall (referred to as the deficit "crowding out" investment) or borrowing from abroad must rise. If capital were fully mobile and unlimited, a larger deficit would be fully matched by greater borrowing from abroad, and there would be no crowding out of domestic investment. To be a net borrower from abroad, the United States must run a trade deficit (it must buy more imports from foreigners than it sells in exports to foreigners). Since 2000, U.S. borrowing from abroad and the trade deficit each have exceeded $300 billion each year. Borrowing from abroad peaked at $800 billion in 2006 and was $484 billion in 2015. Borrowing from abroad has occurred through foreign purchases of both U.S. government and U.S. private securities and other assets. As a result of foreign purchases of Treasury securities, the federal government must send U.S. income abroad to foreigners. If the overall economy is larger as a result of federal borrowing (because the borrowing stimulated economic recovery or was used to productively add to the U.S. capital stock, for example), then this outcome may leave the United States better off overall on net despite the transfer of income abroad. In other words, without foreign borrowing, U.S. income would be lower than it currently is net of foreign interest payments in this scenario. From 2008 to 2014, the output gap (the difference between actual gross domestic product [GDP] and potential GDP) was large, meaning the economy had significant idle capital and labor resources. In the presence of a large output gap, government budget deficits have a greater potential than usual to stimulate the economy and increase total income. As the economy gets closer to full employment, the scope for deficits to stimulate the economy diminishes. Because the federal government has run deficits almost every year since the 1960s, the mainstream economic view is that these budget deficits have not led to a larger economy on net over the long run for two reasons. First, the government has run deficits in many years when the economy was near or at full employment, precluding the role of deficit stimulus. Second, federal spending on capital is small relative to the overall budget. It can be argued that the underlying long-term economic problem is the budget deficit itself, and not that the deficit is financed in part by foreigners. This can be illustrated by the counterfactual—assume the same budget deficits and U.S. saving rates without the possibility of foreign borrowing. In this case, budget deficits would have had a much greater "crowding out" effect on U.S. private investment, because only domestic saving would have been available to finance both. The pressures the deficit has placed on domestic saving would have pushed up interest rates throughout the economy and caused fewer private investment projects to be profitably undertaken. With fewer private investment projects, overall GDP would have been lower over time relative to what it would have been. The ability to borrow from foreigners avoids the deleterious effects on U.S. interest rates, private investment, and GDP, to an extent, even if it means that the returns on some of this investment now flow to foreigners instead of Americans. In other words, all else equal, foreign purchases of Treasury securities reduce the federal government's borrowing costs and reduce the costs the deficit imposes on the broader economy. The burden of a foreign-financed deficit is borne by exporters and import-competing businesses, because borrowing from abroad necessitates a trade deficit. It is also borne by future generations, because future interest payments will require income transfers to foreigners. To the extent that the deficit crowds out private investment rather than is financed through foreign borrowing, its burden is also borne by future generations through an otherwise smaller GDP. Because interest rates are at historically low levels, this burden has not grown significantly given the increase in borrowing. Were rates to rise, however, the burden would rise with some lag as new borrowing was made at the new higher rates and old borrowing matured and "rolled over" into new debt instruments with higher rates. Thus far, this report has considered the impact of the government's budget deficit and the low U.S. saving rate on U.S. Treasury yields, but not investor demand. Since interest rates fell to historic lows at a time when the supply of Treasury securities rose to historic heights, it follows that Treasury rates have been driven mainly by increased investor demand in recent years. In the wake of the 2008 financial crisis, investor demand for Treasury securities increased as investors undertook a "flight to safety." Treasury securities are perceived as a "safe haven" compared with other assets because of low perceived default risk and greater liquidity (i.e., the ability to sell quickly and at low cost) than virtually any alternative asset. For foreign investors, their behavior also implies that they view the risk from exchange rate changes of holding dollar-denominated assets to be lower than alternative assets denominated in other currencies. The reasons for this flight to safety are varied. For example, investors who had previously held more risky assets may now be more averse to risk and are seeking to minimize their loss exposure; investors may not currently see profitable private investment opportunities and are holding their wealth in Treasury securities as a "store of value" until those opportunities arise; or investors may now need Treasury securities to post as collateral for certain types of transactions (such as repurchase agreements) where previously other types of collateral could be used (or used at low cost). Flight-to-safety considerations are likely to subside if economic conditions continue to normalize, reducing the incentive for foreigners to buy Treasuries and raising their yields, all else equal. More normal economic conditions would also be expected to increase domestic investment demand, which would either push up domestic interest rates or lead to more foreign borrowing. Recently, relatively stronger economic growth in the United States compared with other advanced economies has led U.S. interest rates to begin to rise relative to foreign rates. This relative movement in rates could attract additional foreign capital inflows. Finally, any discussion of foreign holdings of Treasuries would be incomplete without a discussion of the large holdings of foreign governments (referred to as "foreign official holdings" in Figure 1 ). Foreign official holdings are motivated primarily by a desire for a liquid and stable store of value for foreign reserves; relatively few assets besides U.S. Treasury securities fill this role well. Depending on the country, foreign reserves may be accumulated as a result of a country's exchange rate policy, the desire to reinvest export proceeds, or the desire to build a "war chest" to fend off speculation against the country's exchange rate and securities. If motivated by any of these factors, rate of return may be a lesser consideration for foreign governments than it is for a private investor. Although large, foreign official holdings have not been significantly increasing since 2013, after more than a decade of rapid growth before then. Since 1986, the United States has had a net foreign debt, and that debt grew to $7 trillion in 2014. The growth in net foreign debt is unsustainable in the long run, meaning that it cannot continuously grow faster than GDP, as it has generally done in recent decades. This net foreign debt has not imposed any burden on Americans thus far, however, because the United States has consistently earned more income on its foreign assets than it has paid on its foreign debt, even though foreigners owned more U.S. assets than Americans owned foreign assets. Although it is likely that the United States would begin to make net debt payments to foreigners at some point if the net foreign debt were to continue to grow, it has not been a cause for concern yet. To date, the primary drawback is the risk that its unsustainable growth poses, albeit slight in the short run. Unsustainable growth in the net foreign debt could lead to foreigners at some point reevaluating and reducing their U.S. asset holdings. If this happened suddenly, it could lead to financial instability and a sharp decline in the value of the dollar. Alternatively, were the growth in the debt to decline gradually, it is unlikely to be destabilizing. A related concern is whether the major role of foreigners in Treasury markets adds more risk to financial stability. In other words, would financial stability be less at risk if the United States borrowed the same amount from foreigners, but foreigners invested exclusively in private securities instead of U.S. Treasury securities? Empirical evidence does not shed much light on this question, although the fact that some foreign crisis countries, such as Ireland, had accumulated mainly private, not government, debt might suggest that avoiding foreign ownership of government debt is not a panacea. Although countries like Greece with large foreign holdings of government debt have experienced financing problems, a large share of Italy's large government debt was held domestically, and it has nevertheless faced financing problems. The major role of foreign governments as holders of U.S. Treasuries could reduce financial instability if foreign governments are less motivated by rate of return concerns because that implies they would be less likely to sell their holdings if prices started to fall. Finally, foreign official holdings of U.S. debt may have foreign policy (as opposed to economic) implications that are beyond the scope of this report. What policy options exist if policymakers decided foreign ownership of federal debt was undesirable? Absent strict capital controls, it is unlikely that foreigners could effectively be prevented from buying Treasury securities. After Treasury securities are initially auctioned by Treasury, they are traded on diffused and international secondary markets, and turnover is much higher on secondary markets than initial auctions. A foreign ban on secondary markets would be hard to enforce because secondary market activity could shift overseas, and even if it could be enforced, the U.S. saving-investment imbalance would likely shift foreign investment into other U.S. securities—perhaps even newly created financial products that allowed foreigners to indirectly invest in Treasury securities. Thus, a ban would not address the underlying economic factors driving foreign purchases. Economically, the only way government could reduce its reliance on foreign borrowing is by raising the U.S. saving rate, which could be done most directly by reducing budget deficits. | This report presents current data on estimated ownership of U.S. Treasury securities and major holders of federal debt by country. Federal debt represents the accumulated balance of borrowing by the federal government. To finance federal borrowing, U.S. Treasury securities are sold to investors. Treasury securities may be purchased directly from the Treasury or on the secondary market by individual private investors, financial institutions in the United States or overseas, and foreign, state, or local governments. Foreign investors have held slightly less than half of the publicly held federal debt in recent years, prompting questions on the location of the foreign holders and how much debt they hold. This report will be updated annually or as events warrant. |
The growth of China and India as large consumers of energy, coupled with an inability to develop reliable and affordable alternatives to oil and natural gas, has led to the belief that the power to ensure access to international energy resources has shifted from energy consumers to energy producers. Since 2005 Russia has several times drastically raised the price of its natural gas supplies to European countries as a means to squeeze them economically and politically. These actions also underscored the shift towards the ability of energy producers to exert pressure on countries dependent upon them for supplies. The United States and its European allies are discussing the appropriate institutions and policies for ensuring energy security. The Bush Administration introduced a discussion of energy security at NATO in February 2006, with the support of key allies. At the same time, EU governments view energy security in a broad manner, and most believe that political and economic measures are the first steps to ensure access to energy resources. Most EU members are also members of NATO, and the two organizations may handle energy security in a complementary manner. Most European countries are heavily reliant upon imported energy. Today, EU countries as a whole import 50% of their energy needs, a figure expected to rise to 70% by 2030. Russia is a key supplier of oil and natural gas. Germany imports 32% of its energy from Russia. Poland imports two-thirds of its natural gas needs from Russia, and 97% of its oil. As a whole, EU countries import 25% of their energy needs from Russia. In one estimate, by 2030 EU countries will import 40% of their gas needs from Russia, and 45% of their oil from the Middle East. In addition, oil in particular is found largely in unstable areas of the world such as the Middle East, a factor in U.S. and European concerns over energy security. European governments view energy security primarily in an economic and political context. The EU floated a proposal meant to build interdependence between EU members and Russia to secure reliable energy supplies from Russia. The EU has discussed with Russia a structured arrangement in which Russia would sell energy not only to its principal customers in central and eastern Europe, but to more distant customers in western Europe. In return, the EU is asking Moscow to allow European companies to develop Russian energy reserves. But Russia has rejected key elements of this proposal. Moscow for the most part has not allowed foreign ownership of its pipelines, and has squeezed out some foreign companies that were developing its energy reserves. At the same time, it has secured access to some European markets, for example, through agreements to sell gas to Hungary and France. Russia has taken steps to build its leverage in European energy markets. In December 2007, Russia, Turkmenistan, and Kazakhstan signed an agreement to build a new gas pipeline around the Caspian Sea. The new pipeline would send Central Asian natural gas to the Russian energy grid; Russia has repriced such gas, from another pipeline, twofold before selling it to European customers. The United States and some EU governments have sought instead a trans-Caspian Sea pipeline that would bypass the Russian grid, and provide natural gas more cheaply to Europe, thereby diminishing as well greater potential Russian leverage tied to the supply of energy. Russia has also discussed linking its natural gas supply grid to that of Algeria, which also supplies gas to Europe. EU energy commissioner Andris Piebalgs has charged that the two governments may be planning to develop an energy cartel that would further weaken competitive pricing. To prevent impediments to competition and to improve energy security, the EU Commission is urging new infrastructure, including terminals to receive liquified natural gas; construction of new pipelines from the Caspian region and North Africa; and single European energy grids for continental electricity and natural gas markets to challenge the grip of national energy firms on their national markets. The Commission has also recommended that companies producing raw energy not be allowed to own distribution networks, a step intended to encourage competition. Some EU governments, such as France, have large public entities that own both the sources of energy and the distribution network, and oppose this proposal. Should the EU eventually adopt the Commission's proposal, Russian efforts to buy parts of the European energy grid might be set back. Few observers believe that Moscow's pricing agreements for its gas exports to its neighbors indicate that the market process is working successfully. Some EU officials contend that Russia needs European (and other) firms' good will and continued investment in its decaying energy infrastructure to maintain existing production and develop its oil and gas reserves to sell energy products abroad. Some European and U.S. officials believe that Germany may become too reliant on Russian energy supplies and move away from its EU partners and the United States. East European states in particular, once in Moscow's sphere, believe that they could find themselves unable to ensure reliable and affordable energy supplies from Gazprom, the powerful state-controlled Russian energy company. They point to the former Schroeder government's deal with Gazprom to involve German companies in the development of a Russian-German gas pipeline under the Baltic Sea as a special arrangement that appears to promise a supply to Germany that other states might not enjoy. Some governments believe that Russia has little interest in market forces in the energy sector. In this view, Russia seeks high energy prices to maximize profits. These governments note that the Russian government has a prevailing control over Gazprom, hardly a model of capitalist entrepreneurship, and that Gazprom was behaving like a monopoly in ratcheting up the price of natural gas to its neighbors. Knowing that Ukraine, for example, had no reliable alternatives for gas supply, Gazprom raised prices threefold and threatened a sixfold rise. Gazprom also controls the transit of non-Russian energy supplies to Ukraine, and threatened rapid rises in transit fees as well. Russia has temporarily followed similar policies towards Georgia, Lithuania, and Belarus. Political motives seem apparent in such policies. In 2003, Putin himself said that Gazprom is a "powerful political and economic lever of influence over the rest of the world." In December 2007, Putin designated Dimitri Medvedev, the president of Gazprom, as his successor as Russian president, a move that could signal continuation of Russia's aggressive energy policy. Some U.S. officials believe that NATO could play a role in building international political solidarity in the event of a deliberate disruption of energy flows. NATO's military capability could be severely limited should Russia or other suppliers cut European energy supplies in a crisis. To counter such a move, NATO might coordinate policies among member states and with non-member partner governments to share resources and to bring an end to an energy disruption. NATO might also provide security for infrastructure in energy-producing states facing unrest. Iran has threatened to use its energy reserves to attain political objectives. In response to possible sanctions due to its refusal to comply with requirements by the International Atomic Energy Agency on its nuclear program, Iran has threatened to cut off or limit its energy supplies to buyers. Beyond deliberate policies affecting energy security, there are many countries in Central Asia and the Middle East that are unstable, have a need for new energy infrastructure investment, and have insecure transportation systems due to political unrest. Some of these countries are in NATO's Partnership for Peace program, or desire a closer association with NATO. NATO member states increasingly believe that the alliance must be a global player with global partners. This trend is evident in Afghanistan, for example, where Australia and New Zealand are expending resources to bring stability through NATO's International Security Assistance Force, even though the two countries are not NATO members. NATO's role in energy security could be complementary to the EU's effort to strengthen market forces and interdependence in the international energy sector. U.S. officials agree with their EU counterparts that market forces can lead to greater energy security. Diversification of supply, for example, through building more pipelines that are secure, is one course of action. Turkey could play a major role, as key pipelines under discussion originating in the Caspian region may cross its territory, thereby avoiding the Russian energy grid. Joint investment efforts to build such pipelines in and with energy producers such as Kazakhstan and Azerbaijan could be an important step in this direction. Both countries are members of NATO's Partnership for Peace program, and are seeking closer relations with the United States and its allies. Development of more liquified natural gas (LNG) transport and reception facilities from distant suppliers, such as Nigeria, into Europe could be another course of action. Coupled with the development of new oil and gas pipelines could be an offer from NATO (and/or EU) members to provide security for energy infrastructure in periods of unrest or conflict in supplier and transit countries. NATO governments (although not NATO as a whole) have already been involved in military efforts to secure energy resources. The first Gulf War, while not a NATO operation, involved key member states such as the United States, France, Britain, and Italy that sought not only to liberate Kuwait but also to ensure that Iraq did not control Kuwaiti oil and threaten Saudi Arabia and other Gulf producers. NATO governments also took part in a military operation in the 1980s explicitly designed to secure the supply of oil. Operation Earnest Will was an effort, primarily by NATO states, to protect tanker traffic in the Gulf during the Iran-Iraq War (1980-1988). Beginning in 1984, Iran first, and then Iraq, attacked neutral oil tankers to cut off the other's means of financial support. Iran attacked Kuwaiti and Saudi tankers in those two countries' own waters to ensure that all Gulf states understood that none was secure. The Soviet Union, followed shortly thereafter by the United States, made offers to the Kuwaitis, who lost the most tankers, to reflag their vessels under the USSR and the U.S. flags, an offer that was accepted. After Iraqi aircraft attacked the USS Stark in 1987, killing 37 sailors, the Reagan Administration formed a coalition of like-minded states, above all from NATO, to protect tanker traffic in the Gulf. Britain, France, and the Netherlands were important participants in Operation Earnest Will . The allies captured Iranian vessels mining shipping lanes in the Gulf, and engaged in firefights with Iranian troops using oil platforms to fire on ships. In February 2006, NATO governments discussed a range of potential actions in the event of future disruption of oil supplies caused by military action. Some member states reportedly raised the possibility of protecting tanker traffic and oil platforms in periods of conflict, and using satellites to monitor developments in areas where energy resources come under threat. The 110 th Congress has shown strong interest in energy security. Congress passed the Energy Independence and Security Act of 2007 ( P.L. 110-140 ), which will raise vehicle fuel efficiency standards and require increased use of alternative fuels, both means to ensure greater energy security. In November 2006 Senator Lugar gave a speech in which he urged that energy security be raised to an Article V, or mutual security, issue. House and Senate committees are expected to hold hearings on energy security, with attention to NATO's possible role, in the second session of the 110 th Congress. NATO is attempting to become a global security organization, concentrating on protection of the interests of the United States and its Canadian and European partners, but also engaging non-member states as global partners. NATO's role in energy security remains uncertain, however, as some individual members may prefer a greater role for the EU. A political role in energy security for NATO seems most likely in the near future. Under NATO's Istanbul Cooperation Initiative of 2004, the allies have begun discussions with Bahrain, Qatar, Kuwait, and the United Arab Emirates to build practical cooperation in the security field, including the fight against terrorism. Some Middle Eastern governments are concerned about terrorist attacks on their oil facilities, but it is not publicly known whether NATO has discussed this issue with the four governments. Partnership for Peace countries, such as Kazakhstan and Azerbaijan, that are important energy producers often seek ways to associate themselves more closely with NATO, in part to diminish Russian influence on their soil, in part to develop reliable partners in an unstable region. It is possible that NATO will seek ways to provide security for the energy infrastructure of such countries. At the same time, the EU may encourage its member states to invest more heavily in that infrastructure. There is division in the EU over management of the Union's growing dependence on Russian oil and gas. Several states, led by Poland, wish to engage NATO more fully in ensuring energy security in this relationship. While in the early stages of discussion, Poland is exploring a role for NATO and the United States, perhaps only diplomatically, in which U.S. leverage on Moscow could be an element for encouraging responsible Russian behavior and deflecting any Russian attempt to divide the Europeans. Most EU governments clearly prefer that market forces secure access to energy. A well-structured commercial partnership with Russia might be one mark of such a policy. Another would be the effort of the EU3 (Germany, France, and Britain) and the United States to curtail Iran's nuclear program. The EU3 desire completion of that effort in the UN before there is any discussion of a military organization like NATO assuming responsibility for a broader policy of energy security. In addition, some NATO partner governments in Central Asia and the Middle East might be reluctant to accept allied assistance in securing the resource that is central to their survival. The belief is widespread in the Middle East that the United States invaded Iraq in part to secure access to its oil. There might be popular opposition to any NATO effort to secure energy infrastructure in some of these countries. Moreover, the United States has been unable to provide full security to pipelines in Iraq, and NATO might have similar difficulties in partnership countries. Russia is also a factor. Turkmenistan and Kazakhstan depend upon Russia as a transit country for their pipeline shipments to the west, and could be subject to Moscow's pressure to spurn NATO proposals of assistance. | Energy security is of increasing importance to the United States and its European allies, as some energy producers are using oil and gas for political leverage. Although most European allies believe that a market solution exists to ensure security of energy supplies, NATO has begun to discuss the issue as an allied concern. This report will be updated periodically. See also CRS Report RL33636, The European Union ' s Energy Security Challenges , by [author name scrubbed]. (Note: this study was originally a memorandum for Senator Richard Lugar and is printed as a CRS report with his permission.) |
A new hospital building is under construction in Joplin, Mo., which was devastated by a tornado in May 2011. The United Arab Emirates has donated $5 million to Mercy Hospital to develop a neonatal intensive care unit.
Feb. 4, 2013 A new hospital building is under construction in Joplin, Mo., which was devastated by a tornado in May 2011. The United Arab Emirates has donated $5 million to Mercy Hospital to develop a neonatal intensive care unit. Julie Denesha/For The Washington Post
Two weeks after a mile-wide tornado tore through this city, killing 161 people and rendering a landscape of apocalyptic devastation, the public school system here received a telephone call from a man working for the United Arab Emirates Embassy in Washington.
“Tell me what you need,” the embassy staffer said.
Six schools, including the city’s sole high school, were destroyed in the May 2011 disaster. Insurance would cover the construction of new buildings, but administrators were scrambling to replace all of the books that had blown away.
Instead of focusing on books, the staffer wanted “to think big.” So the school system’s development director pitched the most ambitious plan that came to mind, a proposal to obviate the need for high school textbooks that had been shelved two years earlier because nobody — not the cash-strapped school system, not the state of Missouri, not even local charities — had the money for it: Give every student a computer.
Today, the nearly 2,200 high school students in Joplin each have their own UAE-funded MacBook laptop, which they use to absorb lessons, perform homework and take tests. Across the city, the UAE is spending $5 million to build a neonatal intensive-care unit at Mercy Hospital, which also was ripped apart by the tornado.
The gifts are part of an ambitious campaign by the UAE government to assist needy communities in the United States. Motivated by the same principal reasons that the U.S. government distributes foreign assistance — to help those less fortunate and to influence perceptions among the recipients — the handouts mark a small but remarkable shift in global economic power.
For decades, the United States has been the world’s largest provider of foreign aid, paying for the construction of schools, health clinics and vaccine programs in impoverished countries. It still is, but the level of donations has been increasing among nations with new financial clout, including China, India and oil-rich Persian Gulf states. And at least one of them now sees poor parts of the United States as worthy recipients for that same sort of assistance.
“We spot needs and we try to help,” said Yousef al Otaiba, the UAE ambassador to the United States.
During the past two years, the UAE government has paid for the construction of all-weather artificial turf soccer fields in low-income parts of New York, Los Angeles, Miami and Chicago. The embassy wants to build three more fields this year. Otaiba hopes to break ground on the first of them this spring in the Washington area, although the embassy is still in discussions with potential partners and has not settled on a location.
Otaiba said he also has promised New York Gov. Andrew M. Cuomo (D) and New Jersey Gov. Chris Christie (R) about $5 million apiece to help rebuild their jurisdictions in the wake of Hurricane Sandy.
Although U.S. hospitals and universities have long been recipients of Persian Gulf philanthropy, most of those gifts have come from the personal funds of royal family members, often to express gratitude for the education or medical care they received. Natural disasters also have prompted contributions: The UAE and Qatar, a fellow petro-wealthy Persian Gulf nation, both wrote $100 million checks to the State Department in 2005 to help with the reconstruction of the U.S. Gulf Coast after Hurricane Katrina.
Many other nations also spend money in the United States, but much of it is devoted to promoting their respective languages, traditions and national interests through educational grants, study-abroad programs and cultural centers, such as Germany’s Goethe-Institut and France’s Alliance Francaise.
Courting public opinion
The UAE’s unusual approach has its roots in the 2006 controversy that erupted when a firm based in Dubai, one of the seven emirates that make up the UAE, sought to take over the management of six U.S. ports. Intense congressional opposition, some of it resulting from misperceptions about the UAE’s relationship with the United States, scuttled the deal.
Afterward, the embassy commissioned a survey of American attitudes toward the UAE. Although 30 percent of respondents had an unfavorable view, 70 percent said they had no opinion. When Otaiba became ambassador in Washington in July 2008, the survey results provided him with a critical mission: to persuade Americans, particularly those with no opinion of his country, to develop a favorable view of the UAE.
Home to about 8 million people, the desert nation is among the world’s richest countries — and Dubai, with its gleaming skyline, has emerged as a global hub of trade and finance. The UAE is also a key Western ally in the region. Still, most Americans were unfamiliar with it.
“We had a responsibility to educate Americans about who we are,” he said. “We have been in Afghanistan with you. We went into Libya. We’re the largest export market for the U.S. in the [Middle East] region.”
Part of Otaiba’s response was to do what ambassadors have long done: He traveled the United States, giving speeches promoting his nation, explaining how his government has been a loyal partner in the fight against terrorism and how his leaders share U.S. concern about Iran’s nuclear program. The dapper, smooth-headed 40-year-old, whose English has only a hint of an Arabic accent, won over audiences.
But Otaiba, who received a master’s degree in international relations from Georgetown University and has a nuanced understanding of American politics, figured he needed to do more than just talk. In 2009, he helped facilitate a $150 million gift from the government of Abu Dhabi, the largest emirate, to Children’s National Medical Center in Washington to establish a new research center to develop innovations in pediatric surgery.
The UAE made large gifts to other hospitals, including Johns Hopkins and the Cleveland Clinic, but the ambassador also began branching into new areas — a Baltimore food bank, the New York Police Foundation and a nonprofit group that helps Washington high schoolers pay for university tuition.
In the case of Joplin, Otaiba said the decision to help started with a phone call from the crown prince of Abu Dhabi, Mohamed bin Zayed al Nahyan, who saw images of the devastation on CNN. A week later, an embassy staffer was in Missouri, looking for ways to assist.
Beyond a basic rebuild
Joplin, home to about 60,000 people, is a former mining town on the far southwestern edge of the state, near the border with Kansas and Oklahoma. Parts of the main drag have been rebuilt since the tornado, with the construction of modern strip malls and shiny fast-food restaurants. But the new structures, much of them funded by large companies, belie deeper economic troubles in the city, where many residents are dependent on low-paying service-sector jobs. Sixty-two percent of children in the school system live in families whose household incomes are below the federal poverty line.
The UAE did not want to just hand over money as it had done after Katrina, risking involvement in programs that might be plagued with waste and mismanagement, and it didn’t want to simply rebuild what had been damaged by the tornado. “We asked ourselves, ‘What can we bring to Joplin that probably won’t be forthcoming from anywhere else?’ ” Otaiba said. “We wanted to bring them something they didn’t have before.”
Otaiba’s staff member in Joplin quickly discovered that Mercy Hospital was one of the city’s principal economic engines. Not only was it among the largest employers, it drew residents from surrounding communities, generating business for restaurants and hotels. The hospital had not been equipped with a neonatal intensive-care unit, forcing some parents to travel hours by roads to hospitals in St. Louis or Springfield, Mo.
To Otaiba, the decision was simple: Give the hospital $5 million to build a 12-bed NICU.
“It was a huge shot in the arm,” said Gary Pulsipher, the hospital’s chief executive. “Their message to us — ‘Even though you’ve been through this awful event, we want to encourage you to come back stronger’ — was so inspiring.”
Because the rebuilt hospital will not open until 2015, the embassy also sought out a project that would yield a more immediate impact. The school system was an obvious target. If temporary schools did not open by the end of summer — in just three months — city officials worried that many families would move away. School administrators assumed they would be able to find interim structures in time, but they weren’t sure what to do about textbooks.
Then the embassy called.
When development director Kimberly Vann told her boss, Superintendent C.J. Huff, that the UAE government was willing to donate $1 million for laptops, he thought it was a joke.
“Back then, we were getting a lot of calls from people willing to help — but nothing like this,” Huff recalled. “I thought somebody was pranking us.”
The UAE gift came in two parts: $500,000 upfront and another $500,000 as a matching grant. If the school system could raise an additional $500,000, it would have a total of $1.5 million, bringing it very close to the price tag for 2,200 laptops, the attendant software and other equipment required to manage the project.
In the end, Huff’s staff did not have to pound the streets for money to meet the UAE’s challenge. Checks started arriving at his office, from companies and organizations with no connection to Joplin, sparked by news of the UAE matching grant.
The decision to accept the UAE money prompted an angry response from a few residents, and it sparked rants from some conservative radio commentators — one of them, Debbie Schlussel, accused the school system of taking “Islamic blood money” — but Huff stood firm. “I can live with the hate mail,” he said. “It’s the right thing for the kids.”
The laptops have transformed high school. Instead of sitting in rows of front-facing desks, listening to teachers present lessons, students spend their classes clustered together in groups, usually of five or six, their eyes fixed on the screens of their white laptops. Much of their instruction comes from viewing videos and interactive presentations copied from the Internet and stored on the school’s data server.
On a recent morning in an 11th-grade social studies class, the day’s lesson — about World War II — involved students watching a lecture that a high school teacher from another state had recorded and posted to YouTube. The teacher, Amber Travis, who lost six years of lesson plans in the tornado, said she learned about the YouTube video after posting a query to other teachers on Twitter.
In hallway conversations, students said they are happy to have the computers, but many of them did not know who provided the money to buy them. Unlike donations to other nations from the U.S. Agency for International Development, which often are emblazoned with stickers, there is nothing on the laptops that mentions the UAE.
But city leaders know. So do state officials and Missouri’s congressional delegation. Sen. Roy Blunt (R), who had opposed the Dubai firm’s ports deal in 2006, joined Otaiba on a trip to Joplin last May and expressed appreciation for the UAE’s financial contributions.
Huff said he sees no shame in accepting foreign aid to help his students. “Part of being a good neighbor is not just knowing how to give, but also how to receive,” he said. “It would be great if we had the money to pay for the laptops ourselves. But we didn’t. Sometimes you have to be willing to put pride in your pocket and accept gifts.” ||||| For generations the residents of Breezy Point, Queens, have clung to their emerald roots. The gated community they called the Irish Riviera — or to those who prefer the language of the Old World, “cois farraige,” Gaelic for “beside the sea” — has remained one of the most proudly Irish communities in America.
So when Hurricane Sandy tore through the coastal enclave, sparking one of the most destructive residential fires in New York City’s history and leaving behind hundreds of charred or flooded houses, all that love for the homeland was suddenly reciprocated, roaring back from across the Atlantic.
Breezy Point has become something of a popular cause in Ireland, its plight an urgent topic in newspaper headlines and radio dispatches more than three months after the storm. Gaelic rock stars threw fund-raisers, Irish companies sent money and other donations, the country’s consulate bused thousands of volunteers through Breezy Point’s gates for “Irish Days of Action” and pop stars made pilgrimages, including the Irish Tenors, who serenaded local residents over a Christmas lunch and bade them “the luck of the Irish.”
“It has become a huge Irish-American issue,” said Aine Sheridan, 53, the executive producer of the Adrian Flannelly show on the Irish Radio Network USA, which has covered the recovery of Breezy Point and the city’s Irish nonstop since October. “It’s another county of Ireland.”
New York has always been dotted with a changing mix of ethnic enclaves. And while it is common for the diaspora to come to the aid of the motherland during hard times, the events playing out in Breezy Point remind that on rare occasions the roles are switched: the homeland will come to the aid of its diaspora.
But complicating the current embrace from abroad is the gated community’s extreme insularity. Breezy Point is the whitest neighborhood in the city, a demographic makeup that critics say illustrates the enclave’s entrenched xenophobia, a dark flip side, perhaps, to all that ethnic pride. The consul general of Ireland, Noel Kilkenny, said he and others had made special efforts to avoid the impression of “the Irish looking after their own.”
The government has pledged a total of $320,000 in aid to places across the region that were hit by the storm, which included other neighborhoods known for their large concentration of people of Irish heritage, like Belle Harbor, just down the peninsula.
“The Irish connection is so strong, it’s totally appropriate,” said Brian Hayes, a minister of state in Ireland’s government, while touring burnt-out sections of Breezy Point in early February. “This isn’t a hard sell at home.”
Mr. Hayes was accompanied that day by a convoy of only-in-Ireland sports stars — strapping present and former players in the country’s beloved Gaelic Games, which include native sports like hurling, a high-speed precursor to field hockey. With them came a giant championship chalice called the Sam Maguire — which many local residents recognized on sight. The 18 athletes spent several days sawing joists in the damaged Catholic Club and sleeping on cots in the Rockaway Point Volunteer Fire Department’s firehouse.
In a ceremony heralded by bagpipers of the Breezy Point Catholic Club Pipes and Drums in spats and tufted beanies and covered by a gaggle of Irish reporters, the area’s athletic center, the St. Thomas More Parish Center, which had been destroyed by the storm, was officially reopened. The basketball court, paid for in part by a $50,000 gift from the Irish government, is emblazoned with a giant shamrock.
“It makes you feel very wanted,” said Tim Devlin, 50, a contractor and former Gaelic Games athlete who lives in Breezy Point and organized the players’ trip. “We don’t feel so alone after the storm.”
The population of the Republic of Ireland and Northern Ireland combined is just over six million. In America over 34 million people boast Irish ancestry. And while the nucleus of American Irishness is a tossup between Boston and New York, the towns of the Rockaway Peninsula have long been seen as jewels in the crown of the Irish abroad. There were even songs written about the Irish experience of “Old Rockaway.”
Over 63 percent of the 4,381 people in Breezy Point and nearby Roxbury are of Irish descent, including a large number of police officers and firefighters who live in bungalows and one-bedroom homes. That connection became well known in Ireland after Sept. 11, 2001, when the community lost dozens of residents in the attack.
“After 9/11, we became very aware of where the Irish were living,” said Anthony Kearns, a member of the Irish Tenors who sang at the Christmas luncheon. “After Hurricane Sandy it became highlighted even more.”
Its ethnic and racial makeup has also been a source of controversy. It was once called an “an apartheid village” by the Rev. Al Sharpton during a protest. Steve Greenberg, the former chairman of the Breezy Point cooperative’s board, said that to his knowledge, no black family had ever held a share in the private community. Even in the days after the storm, volunteer firefighters in the community repeatedly told a visitor as she left to beware of the residents of Far Rockaway, the predominantly black neighborhood at the other end of the peninsula.
Concerns over the community’s insularity have been privately broached by the Irish coming to the aid of Breezy Point.
Participants were conscious of this issue at storm-relief planning meetings at the Consulate General of Ireland in Midtown Manhattan in November, said Owen Rodgers, the secretary of the Emerald Guild Society, an organization of Irish and Irish-American building managers. He said he felt it was important that any help go beyond just Breezy Point and into the wider community hit by the storm. Organizations like the Aisling Irish Community Center in Yonkers, which was one recipient of the Irish government’s donation, have aided relief efforts in a variety of places.
Mr. Rodgers compared it to his own history growing up in Northern Ireland, which weathered a bitter era of sectarian strife. “I was vocal in saying we have to help everybody in the community,” he said. “I understand the issues of discrimination, because I myself was discriminated against.”
Mr. Kilkenny, the consul general, said the government also chose groups that aided diverse communities to receive most of its donation, and the 1,500 volunteers for the “Irish Days of Action” after the storm were purposefully fanned out to areas like Far Rockaway. “New York has been good to the Irish,” said Mr. Kilkenny, explaining the move. “The Irish are giving back to New York.”
Even as the Irish have responded in droves to a crisis they view in many ways as their own, so, too, have people with no connection at all. Thousands from New York and beyond have showed up to help the gated community, which usually has its private security force keep out strangers.
Somewhere in that outpouring of support, said the Rev. Michael Gribbon, associate pastor at the Blessed Trinity Parish in Breezy Point, was a lesson. “People from every race have helped out,” he said. “The diversity has been a blessing.” | When tornado-ravaged Joplin, Missouri, needed laptops for its 2,200 high school students and a rebuilt neonatal ICU, in stepped ... the United Arab Emirates? Yep. In a strange turn of events, the UAE has been stepping up foreign aid to the US. The campaign, which gave millions to Joplin, has also built soccer fields in low-income neighborhoods in cities like Chicago and LA; helped other hospitals as well as food banks and other nonprofits; and will give $5 million each to New York and New Jersey to help with Sandy relief. It's all part of an attempt by the UAE, a key American ally, to sway public opinion in the US, the Washington Post reports. It came about after the embassy found that while 30% of Americans had a negative view of the country in 2006, 70% had no opinion. Yousef al Otaiba, UAE ambassador to the US, made it his mission to bring that 70% over to his side—and perhaps sway some of the 30%, too. "We had a responsibility to educate Americans about who we are," Otaiba explains. "We have been in Afghanistan with you. We went into Libya." And the UAE isn't alone: A Queens community devastated by Sandy is getting help from Ireland. Breezy Point has a proud Irish heritage, so Ireland took up the cause, the New York Times reports. Irish celebrities including the Irish Tenors have hosted fundraisers, and corporate donations, consular volunteers, and government aid have poured in. “It’s another county of Ireland," says an Irish radio producer. |
The International Monetary Fund is a cooperative, intergovernmental, monetary and financial institution, and as of November 2000, it had 182 members. As part of the Fund’s mission to promote financial cooperation among its members, the Fund may provide financial assistance to countries facing actual or potential balance-of-payments difficulties that request such assistance. The Fund’s approach for providing financial assistance to its members has two main components—financing and conditionality—that are intended to address both the immediate crises as well as the underlying factors that contributed to the difficulties. The access to and disbursement of Fund financial assistance are conditioned upon the adoption and pursuit of economic and structural policy measures the Fund and recipient countries negotiate. This Fund “conditionality,” usually in the form of performance criteria and policy benchmarks, aims to alleviate the underlying economic difficulty that led to the country’s balance-of-payments problem and ensure repayment to the Fund. The Fund’s general framework for establishing a financial assistance arrangement is applied on a case-by-case basis that considers each country’s individual circumstances. The Fund and the recipient countries negotiate conditions for receiving Fund assistance that include a variety of changes in a country’s fiscal, monetary, and structural policies. Over the course of the arrangement, Fund staff and country officials periodically review the program’s status, and Fund staff determine whether or not the country has made satisfactory progress with respect to meeting the program’s conditions. In addition to providing financial assistance, the Fund conducts surveillance and provides policy advice regarding members’ economic policies as they relate to their overall external payments position. Article IV of the Fund’s charter provides that all members undergo a consultation process with the Fund as part of the surveillance effort; these reviews are usually conducted on an annual basis. The Treasury has instituted a systematic process for applying legislative mandates concerning the Fund to individual countries, based on their economic circumstances. This process, adopted in 1999, uses a task force to facilitate coordination between Treasury and the U.S. Executive Director and to identify early opportunities to influence decisions regarding Fund members’ programs and economic reviews. Generally, Treasury and the U.S. Executive Director’s office pursue the mandates that are most relevant to the particular circumstances of a given country, because they believe that this is where they can have the greatest impact and success in influencing Fund members. Our case study analyses show that Treasury and the U.S. Executive Director have actively promoted U.S. policies related to sound banking principles, labor issues, and audits of military expenditures as required by the applicable legislative mandates, through their discussions with Fund and member country officials and formal statements to the Fund’s Executive Board. In response to the growing number and complexity of legislative mandates concerning the Fund, Treasury has created a formal process to advance U.S. objectives at the Fund. Specifically, in March 1999 Treasury set up the Task Force on Implementation of U.S. Policy and Reforms in the International Monetary Fund. The task force was designed in part to increase awareness among Treasury officials of the importance of the mandates and identify opportunities to provide early input to the U.S. Executive Director to advance U.S. objectives toward the Fund. Treasury recognized the need to strengthen its efforts to routinely review and coordinate how mandates may apply to countries, because previously it had used an ad hoc approach of addressing mandates that relied heavily on Treasury officials’ own initiative to be cognizant of mandates. Under its new process, Treasury disseminates information on the mandates to all officials working on Fund matters and also makes reference material on the mandates easily accessible electronically. In addition, representatives from Treasury offices who work on Fund matters, and a representative from the U.S. Executive Director’s office, meet every 2 weeks as the task force to discuss how Treasury and the U.S. Executive Director can best apply mandates, given countries’ economic circumstances. In between these meetings, Treasury and U.S. Executive Director officials also coordinate to formulate and implement U.S. objectives at the Fund. (A detailed description of Treasury’s process for pursuing legislative mandates concerning the Fund is provided in app. II.) Treasury and U.S. Executive Director officials use a variety of means to pursue legislative mandates as part of their efforts to achieve U.S. policy objectives within the Fund. For example, on a regular basis the U.S. Executive Director makes oral and written statements to the Fund’s Executive Board to make Board members aware of U.S. policy objectives regarding requests from countries for new programs, Fund reviews of existing programs, and regular Fund reviews of all members’ economic policies. In addition, to build support for U.S. policy goals, U.S. officials also discuss U.S. policy objectives informally with other executive directors, Fund management and staff, and occasionally country authorities, particularly when the Fund is involved in negotiating with countries about financial arrangements. U.S. officials also attempt to build support within the broader political arena to achieve U.S. objectives at the Fund. According to the U.S. Executive Director, a large part of advancing any policy issue is to reach a “critical mass” of support among other countries for a particular policy. Therefore, for some policies the dialogue necessary to reach an international political consensus also takes place outside of the Fund in other international forums. Since the legislative provisions direct Treasury to instruct the U.S. Executive Director to promote specific policies at the Fund, these policies are often referred to as “mandates.” However, to varying degrees U.S. officials have flexibility in determining how best to promote particular policies at the Fund. This flexibility generally allows Treasury and the U.S. Executive Director to take into account the individual circumstances of each country when promoting specific policies. This is especially true of mandates that do not involve directed votes, as is the case for most of the legislative mandates that concern the Fund. Treasury officials told us they promote such mandates for each country on a case-by-case basis, using their knowledge and judgment to decide whether an individual mandate is most relevant for a country and, moreover, whether a particular time is appropriate for advancing a mandate given a country’s economic circumstances. Countries that approach the Fund for financial assistance often face multiple economic problems, and Treasury prioritizes how best to address these problems. According to Treasury and U.S. Executive Director officials, the U.S. message can be made more compelling and effective when priorities are set based on country circumstances, taking into consideration the range of problems that can be manageably addressed at one time. However, some legislative mandates that pertain to the Fund are more prescriptive in nature. According to Treasury’s Office of the General Counsel, Treasury and the U.S. Executive Director are more constrained in the degree of flexibility they have to implement these mandates because they usually direct the U.S. Executive Director to oppose (which in practice means to vote against or abstain from voting on) a financial arrangement or Fund disbursement when a country meets or does not meet certain criteria. Examples include when a country has what is considered excessive external debt service payments or has been determined by the President to violate religious freedom. The directed nature of these mandates compels Treasury and the Executive Director to promote them regardless of whether they believe it is an appropriate time to do so given a country’s overall circumstances. From 1998 through 2000, Treasury and U.S. Executive Director officials actively promoted the policies we reviewed in our case studies—sound banking principles, labor standards, and audits of military expenditures— as required by the applicable legislative mandates, by identifying opportunities to influence Fund members’ program and economic reviews. For each policy, Treasury and U.S. Executive Director staff worked together to prioritize the issues that should be raised for each country. They then promoted those policies that they viewed as most relevant for the countries we reviewed, given the country’s economic and political circumstances. For example, in a 1999 statement to the Fund’s Executive Board in support of a new program for Kazakhstan, the U.S. Executive Director urged Kazakhstan both to ensure that any reforms to its labor code be consistent with internationally recognized labor standards and to consult with the International Labor Organization on this matter. Also, for a country that did not have a financial arrangement with the Fund, such as India, but where Treasury had prominent banking sector concerns, the U.S. Executive Director repeatedly highlighted U.S. concerns in statements to the Board during the Fund’s regular reviews of India’s economic policies. If Treasury determines through its analysis that a policy is not a major concern relative to other priorities for an individual country, it is not pursued at that time, unless it is a directed vote mandate. For example, until recently, Treasury determined that adherence to labor standards was not a major concern in Ghana relative to other problems Ghana faces as a poor country. According to a Treasury official, developing countries like Ghana typically lack an industrial base large enough for the protection of workers’ rights to be a major issue. In poor countries, labor issues, such as abusive child labor, are more likely to reflect human rights concerns than economic ones and thus are more difficult for the Fund to address. Our case study analysis indicates that while Treasury and the U.S. Executive Director have had some influence over Fund policies, it is difficult to attribute the adoption of a policy within the Fund solely to the influence and efforts of any one member, because the Fund generally operates on a consensus decision-making basis. Furthermore, the Fund’s willingness to adopt policy positions that are consistent with U.S. legislatively mandated policies is affected by whether a majority of Fund members perceive a given policy to be part of the Fund’s core mission to promote monetary cooperation and currency exchange rate stability and to provide resources to Fund members experiencing balance-of-payments problems. Moreover, mandated policies that constrain the U.S. Executive Director’s discretion may increase pressure on countries to implement specific U.S.-promoted reforms but may have a negative impact on the broader U.S. influence at the Fund by limiting the ability of U.S. policymakers to consider the overall circumstances confronting countries. While Treasury and the U.S. Executive Director have actively promoted sound banking principles at the Fund, it is difficult to discern the unique influence of the United States because of the general agreement within the Fund that strengthening members’ banking sectors is part of the Fund’s core mission. Moreover, since the Fund’s Executive Board generally operates on a consensus basis in making decisions, it is hard to distinguish the U.S.’ influence within the Fund from that of other members. In recent years, partly in response to economic crises faced by Mexico in 1994-95 and several Asian countries in 1997-98, the Fund increased its emphasis on strengthening banking and banking supervision as part of members’ programs. Fund members now see a close interrelationship between weaknesses in a country’s banking system and the susceptibility of that country to financial shocks. Moreover, the Fund now realizes that encouraging countries to have a strong framework of financial regulatory policies and institutions is key to maintaining macroeconomic stability, according to Fund officials we interviewed. As a result, according to Treasury and Fund officials, strengthening a country’s banking sector has been promoted irrespective of any U.S. legislative mandate because it is now considered an important part of both Treasury and the Fund’s ongoing work. Treasury and the U.S. Executive Director have generally been in agreement with the Fund’s approach for pursuing these reforms, and the U.S. Executive Director has been viewed by Fund officials as a strong advocate among many supporters for the Fund’s involvement in this area. (For more information about Treasury and U.S. Executive Director efforts to promote sound banking principles with the Fund, see app. III.) The challenge to Treasury and the U.S. Executive Director, amid widespread member support for sound banking principles, has been in deciding how to influence what the Fund emphasizes within a country’s overall banking reform agenda. Given the complexity of banking issues and the difficulty in addressing banking reforms, especially reforms that require legal changes, there may occasionally be disagreement among the Board members on the pace of reform of the banking sector in a particular country, according to some executive directors. Nevertheless, we did not identify evidence of disagreement on the importance of pursuing sound banking policies for the five countries we reviewed, making it difficult to distinguish the U.S. Executive Director’s overall influence from those of other members in this area. In contrast, Treasury and the U.S. Executive Director have found it more difficult to advance some mandated policies, such as those promoting the adherence to the five internationally recognized core labor standards or the adoption of environmental protection policies, because, according to Treasury and Fund officials, these policies do not directly relate to the Fund’s traditional mission. For example, some Fund officials believe that in individual country circumstances, core labor standards issues are not central to the economic problems causing the countries’ macroeconomic difficulties. Instead, the Fund views these policies as more closely related to the work of the International Labor Organization or the missions of other international financial institutions, such as the World Bank. The Fund views the mission of these institutions to be more focused on problems stemming from microeconomic, sector-specific concerns within countries. According to a labor policy specialist at Treasury, the Fund’s reluctance to consider labor standards within the scope of its work is due in part to conflicting academic literature on whether certain labor standards have beneficial or detrimental effects on economic growth. Conventional economic theory treats certain social policies, such as labor and environmental standards, as government interventions that can inhibit the efficient operation of the markets and, in turn, overall economic growth. According to this Treasury official, since most Fund staff and country representatives are trained as economists, they are reluctant to pursue policies that their training tells them could be counter to the Fund’s goal of encouraging economic growth. As one Executive Director at the Fund expressed, the implication of promoting stronger social standards in a country is higher unemployment. If the choice is between workers being employed under less than ideal labor conditions or not having them work at all, the Executive Director favored having the workers be employed and earning income. While Treasury and the U.S. Executive Director have made special efforts to advance U.S. policy on core labor standards at the Fund, they have found it challenging to convince other members that consideration of labor standards fits within the Fund’s work. Despite the resistance at the Fund to the labor standards policy, the U.S. Executive Director has tried to build support for this policy by discussing it with individual executive directors who may be receptive to including this issue in Fund programs. In addition, the U.S. Executive Director has noted in statements to the Executive Board the importance of labor concerns in particular countries. For example, on several occasions the U.S. Executive Director has expressed concern over inadequate attention given to protecting labor standards in reviews of Mexico’s Fund program. Specifically, these statements noted the need to protect the freedom of workers to associate and bargain collectively and to prevent gender discrimination while Mexico was undertaking reforms to modernize its labor market. Likewise, in commenting on Thailand’s program at the Executive Board, the U.S. Executive Director urged Thai authorities to bring their labor laws into compliance with international standards and address complaints concerning legal restrictions on the rights to unionize and bargain collectively for employees of state enterprises. Despite these and other statements by the U.S. Executive Director in support of labor standards, we did not find evidence that the Fund has sought to have the adherence of labor standards specifically incorporated as a structural benchmark or performance criterion within a program. (The Treasury’s and the U.S. Executive Director’s efforts to promote labor policies at the Fund are described in more detail in app. IV.) In certain circumstances, Treasury and the U.S. Executive Director have had difficulty reaching consensus on how adherence to core labor standards best fits into the Fund’s work and how to effectively advance U.S. policy on labor issues at the Fund. For example, in March 2000, a Treasury official recommended that the U.S. Executive Director ask the Fund to report on the state of collective bargaining, union organization, and labor and management relations in Argentina, especially in the context of the U.S. Executive Director’s and the Fund’s recommended labor reforms in that country. However, the U.S. Executive Director did not raise this point because concerns were advanced that such a review of the Argentine labor market was beyond the Fund’s expertise. To help address these ongoing challenges, Treasury has developed two documents since April 2000. One is a reference document outlining economic arguments for the relevance of labor standards to the Fund’s work for use by U.S. officials in their discussions with Fund members. The other is a document that sets out guidelines on how Treasury should advance U.S. policy on labor standards at the Fund through the U.S. Executive Director’s office. Treasury adopted these guidelines in November 2000, after several months of internal debate during which senior Treasury policy officials were consulted to settle differences of view among staff-level officials. According to Treasury officials, the guidelines clarify U.S. policy objectives and legislative obligations concerning labor standards to facilitate Treasury’s efforts to provide the U.S. Executive Director with timely and effective input. The impact of directed vote mandates on U.S. influence at the Fund is uncertain. By limiting the discretion of the U.S. Executive Director, such mandates may increase pressure for countries to implement U.S.-promoted reforms but may have had a negative impact on the broader U.S. influence at the Fund by limiting the ability of U.S. policymakers to consider the overall circumstances confronting countries. This tradeoff is demonstrated by the audits of military expenditures mandate. Specifically, this mandate directs the U.S. Executive Director to oppose (which in practice means to vote against or abstain from voting on) any loan or utilization of funds for countries that do not have a functioning system for conducting an audit of military spending and reporting the results to a civilian authority. On the one hand, U.S. efforts to advance the mandate have successfully increased pressure on countries to make their military audit systems conform to the mandate’s requirements. On the other hand, the constraints the mandate places on U.S. officials may negatively affect U.S. credibility at the Fund, according to Treasury, U.S. Executive Director, and Fund officials. For example, the mandate has required Treasury and U.S. Executive Director officials to raise military audit concerns when they otherwise may not have chosen to do so because of the overall circumstances confronting the country. As a result, other Board members expressed the view that the United States may at times promote the issue primarily because it is a legislative requirement and not because it is the most appropriate for the borrowing country at that time. U.S. efforts to promote audits of military expenditures and influence the Fund have met with some success. Several countries we examined improved their military audit systems, partly in response to the threat of U.S. opposition to their Fund programs. All of these countries had a financial arrangement with the Fund where the U.S. directed vote could be applied. Although U.S. opposition to a Fund arrangement does not, on its own, prevent a country from having access to Fund resources, countries strive to avoid having the Fund’s largest member register such opposition, according to an official in the U.S. Executive Director’s office. For example, following the threat of U.S. opposition to their receipt of resources under their Fund arrangement, both Burkina Faso and Rwanda took steps to improve their military audit processes or accelerated efforts to conform to the U.S. mandate. U.S. efforts to advance the mandate have been successful in four of the five countries we reviewed in part because the Fund has agreed that military audits are important for countries where military spending is not transparent or where there is suspicion that the country may have high levels of hidden, off-budget spending for the military. Prior to Treasury’s implementation of the mandate in 1999, the Fund already viewed excessive and unproductive spending by the military as having an adverse impact on individual countries’ overall macroeconomic stability. Generally, the Fund does not require countries to perform annual audits of military spending. Fund members we spoke with generally agreed that the auditing and transparency mechanisms promoted by the mandate could potentially bring important information regarding military spending to the attention of donors. The Fund’s agreement on the importance of audits of military expenditures is part of a broader campaign to improve the transparency and management of public finances. This has made it easier for the U.S. Executive Director to promote this mandate than, for example, the core labor standards mandate. Treasury and U.S. Executive Director officials are pleased with the progress that has been made in bringing several countries that are under a financial arrangement with the Fund into compliance with the mandate’s requirements. However, at the same time, several of these officials are concerned that the lack of discretion that the mandate gives the U.S. Executive Director can have negative consequences. For example, the mandate required Treasury and U.S. Executive Director officials to raise audits of military expenditures concerns with Indonesia, when they otherwise might not have chosen to do so, given the overall circumstances confronting the country. In their view, the economic and political turmoil that the country has faced in recent years has presented more pressing reform priorities than the improvement of the audit of its military expenditures. Nevertheless, Treasury and the U.S. Executive Director were compelled by the directive nature of the mandate to make this a high priority issue with the country. This lack of discretion could also result in U.S. opposition to a program that it believes should be endorsed. For example, the U.S. Executive Director was compelled to abstain from voting to make a financial disbursement for Rwanda’s program because Rwanda was not yet in full compliance with the standards set forth in the military audit mandate. This occurred despite Treasury’s knowledge that Rwanda would become compliant with the mandate shortly, and, in Treasury’s judgment, was making satisfactory progress in implementing economic reforms and improving fiscal transparency. Other Fund Board members questioned whether the U.S. Executive Director pursued military audit concerns because of the legislative requirements and not necessarily because it was most appropriate for these countries at the time. These Board members noted that limitations on an executive director’s discretion run counter to the consensus decision-making approach of the Fund. Therefore, while Treasury and U.S. Executive Director officials agree with the intent of the mandate, they see a risk to U.S. credibility when Treasury and the U.S. Executive Director must emphasize an issue over other pressing matters that a borrowing country may be confronting. (See also app. V for more information on Treasury and U.S. Executive Director officials’ efforts to advance this mandate.) We received written comments on a draft of this report from the Department of Treasury, which are reprinted in appendix VII. Treasury’s comments characterized the report as a thorough and balanced appraisal of the administration’s efforts to advance in the Fund policies set out in U.S. legislative mandates. Treasury said that the report helps illustrate the risk that legislative mandates can at times weaken its ability to promote in the Fund the very objectives that the mandates aim to achieve. Treasury also states that the continued expansion of legislative mandates by Congress, without consolidating the provisions already in effect, risks overloading and thereby weakening its policy message and influence at the Fund. Treasury and the International Monetary Fund separately provided technical comments that GAO discussed with relevant officials and included in the text of the report, where appropriate. We are sending copies of this report to other interested committees; the Honorable Paul H. O’Neill, Secretary of the Treasury; the Honorable Horst Köhler, Managing Director of the International Monetary Fund; and other interested parties. Copies will also be made available to others upon request. Please contact me at (202) 512-4128 if you or your staff have any questions concerning this report. Another GAO contact and staff acknowledgments are listed in appendix VIII. We identified 60 legislative mandates concerning U.S. policy objectives toward the International Monetary Fund (IMF) as of November 2000 through our own legal analysis supplemented with documentation obtained from the Department of the Treasury. We used two criteria as the basis for identifying the relevant laws for this review. These criteria were defined as (1) any current law that explicitly directs the U.S. Executive Director to the IMF to use its vote at the IMF to achieve a policy goal and (2) any current law that seeks to have the U.S. Executive Director use its voice at the IMF to promote a U.S. policy or make a policy change. Table 1 identifies the mandates and includes a brief description of the broad policy objective they address, as well as some of the actions they require on the part of the U.S. Treasury and the U.S. Executive Director. The mandates span more than 50 years, dating from as early as 1945 to as recently as 2000, with the majority being enacted in the last decade. Many mandates address multiple policy issues, sometimes overlapping with one another. Table 2 identifies some policies that are addressed in multiple laws. Many of the mandates direct the Secretary of the Treasury to instruct the U.S. Executive Director to use its “voice” and “vote” at the IMF to pursue certain policies. Other mandates are even more directive in that they require Treasury to instruct the U.S. Executive Director in certain circumstances to oppose a decision regarding a country’s use of IMF resources. (In practice, “oppose” means to vote against or abstain from voting.) We identified 21 such mandates that address a variety of issues, including combating terrorism, nuclear and chemical nonproliferation, religious persecution, and human rights abuses in other countries. Several of the directed vote mandates have primarily applied to countries that borrow from the World Bank, and the United States has implemented them there. The Department of the Treasury uses a systematic process to discuss and formulate a strategy for pursuing U.S. policies toward the IMF, including policies set forth in legislative mandates. Treasury has the lead role within the executive branch for formulating U.S. policy toward the IMF, while the U.S. Executive Director represents the United States at the IMF and pursues U.S. policy objectives through its membership on the IMF’s Executive Board. In March 1999, Treasury created the Task Force on Implementation of U.S. Policy and Reforms in the IMF with the broad purpose of strengthening the process by which the United States pursues its objectives in the IMF. In particular, the task force was designed to improve the implementation of U.S. policy and reforms called for in legislative mandates by increasing awareness among Treasury staff about the mandates and identifying early opportunities to provide input to the U.S. Executive Director to influence decisions regarding IMF members’ programs and economic reviews. Treasury’s Office of International Affairs along with the Office of the U.S. Executive Director of the IMF formulate, evaluate, and implement Treasury policy concerning U.S. participation in the IMF, including policies set forth in 60 legislative mandates (for more information on these mandates, see app. I). The Office of International Affairs has regional and functional offices staffed with country officers and policy specialists who monitor developments in individual countries and various policy matters. Over time, Treasury has hired or created specialist positions to monitor country developments concerning policies for which Treasury traditionally did not have expertise. For example, according to Treasury officials, Treasury began covering environmental issues in the late 1980s and began hiring environmental specialists in the early 1990s. In 1996, Treasury created a military audit specialist position to follow issues related to military audit concerns, and in 1998, Treasury created a similar position to monitor country developments concerning labor practices. According to Treasury officials, the environmental and military audit specialists initially focused primarily on pursuing U.S. policy and legislative mandates concerning the multilateral development banks. Beginning in 1998, these specialists also focused on IMF practices. The U.S. Executive Director, who represents the United States on the IMF’s Executive Board, pursues U.S. objectives, including legislative mandates, through various channels at the IMF. For example, on a regular basis the U.S. Executive Director makes oral or written statements to the Board to make Board members aware of U.S. policy objectives regarding requests from countries for new programs, Fund reviews of existing programs, and regular Fund reviews of all members’ economic policies. The U.S. Executive Director prefers to make oral statements but does provide written statements when the United States has a major policy pronouncement to make or when the topic being discussed is contentious. Written statements allow IMF staff and Board members to become familiar with the U.S. position prior to the Board’s discussion and serve as a reference point for the discussion. To build support for U.S. policy goals, the U.S. Executive Director also discusses U.S. policy objectives with IMF staff and management and other Board executive directors, outside Executive Board meetings. Treasury country officers, policy specialists, and U.S. Executive Director staff share the responsibility for applying to countries the standards set forth in the mandates, although their roles differ somewhat. Treasury country officers are responsible for being broadly aware of U.S. policy and legislative mandates and the topics these mandates cover; policy specialists are responsible for tracking specific U.S. policies. Country officers generally consult the policy specialists first when evaluating whether a mandate applies to a country’s circumstances. Like Treasury country officials, U.S. Executive Director staff must be mindful of legislative mandates as they monitor the status of the countries they cover. They are also responsible for assisting Treasury staff in the development of the U.S. policy position for IMF member countries. Specifically, they are tasked with (1) providing additional perspectives about country circumstances and whether mandates apply, (2) helping craft input to the U.S. Executive Director, (3) alerting Treasury officials about upcoming opportunities to pursue legislative mandates, and (4) sharing information about discussions among Executive Board members and IMF staff. U.S. Executive Director staff are in regular contact with Treasury staff about specific country matters. The ongoing collaborative approach Treasury and U.S. Executive Director officials use to formulate and implement U.S. objectives at the IMF, including legislative mandates, is illustrated in figure 1. It starts with Treasury and U.S. Executive Director officials identifying and sharing information with one another on upcoming opportunities to influence the Fund concerning U.S. objectives. According to Treasury officials, on a daily basis Treasury and U.S. Executive Director officials consult about when countries are coming before the IMF Executive Board for a program or economic review or when IMF missions to a country are planned as part of these reviews. Working together, Treasury and U.S. Executive Director staff determine whether legislative mandates are relevant to these countries and jointly develop input to the U.S. Executive Director on U.S. objectives to be used in oral or written statements to the Executive Board or other discussions with IMF officials. In addition to this ongoing contact, Treasury’s task force is used to coordinate and collaborate on developing and implementing the U.S. policy position toward IMF members. Treasury’s task force is composed of staff-level representatives from the regional and functional offices within Treasury’s Office of International Affairs, Treasury’s Office of General Counsel and the U.S. Executive Director’s office and meets every 2 weeks to discuss how Treasury and the U.S. Executive Director can best apply legislative mandates given a country’s economic circumstances. Task force members seek to provide early input to the U.S. Executive Director as opportunities arise to influence the IMF, in part because Treasury and U.S. Executive Director officials believe the United States can have the most impact if it engages early with IMF officials prior to decisions regarding program and economic reviews. Task force meetings are conducted informally and are designed to address several goals: Ensure that Treasury staff are aware, as early as possible, of upcoming opportunities to provide input to the U.S. Executive Director, especially with respect to requests by IMF members for new programs, IMF reviews of existing programs, periodic IMF reviews of members’ economic policies, and general policy discussions. Exchange views at an early stage regarding which policy goals and legislative mandates are especially important for particular upcoming events. As needed, seek to resolve issues concerning particular policy goals or mandates. Encourage consistency of purpose across and coordinate U.S. strategy among the international financial institutions. According to Treasury officials, the task force serves an important role as a mechanism to systematically remind Treasury officials of the need to address legislative mandates. As shown in figure 1, prior to each task force meeting, a tentative schedule of the IMF Executive Board meetings for upcoming weeks is circulated to task force members. Also before the meeting, task force members review the schedule to keep abreast of what countries will be discussed by the Board and when Treasury should be ready to provide input to the U.S. Executive Director staff for the Board discussions. In addition, Treasury officials, through their ongoing contacts with U.S. Executive Director staff, may identify and come prepared to share information on other opportunities to attempt to influence the IMF, such as through discussions with Fund officials when an IMF mission is planned to a given country as part of negotiations for a new or existing program or an economic review. At their meetings, task force members informally discuss both what opportunities exist to implement mandates and whether there are mandates that may be potentially relevant for a given country. According to the Treasury official who generally chairs these meetings, the aim of the discussion is to identify the best opportunities to make a credible and convincing case for pursuing a mandate at a given time. If possible, members try to reach agreement in the meeting on two questions: (1) whether there are relevant mandates for the countries discussed and (2) whether the opportunity available is an appropriate one to pursue the mandate. According to Treasury officials, some mandates that are directive in nature must be applied in all cases, regardless of country circumstances. Once agreement is reached on whether to pursue a mandate, Treasury country officers collaborate with U.S. Executive Director staff and functional specialists where appropriate on drafting a policy position for the U.S. Executive Director. This can be in the form of input for a written statement or talking points for an oral statement to the Executive Board. The policy position may undergo several revisions until country officers, functional specialists, and U.S. Executive Director staff reach agreement. Although the task force helps facilitate coordination among Treasury officials and with the U.S. Executive Director, it is not the final arbiter for determining the U.S. policy position toward the IMF on any given issue. The task force is not a review or approval mechanism to give Treasury’s sanction to pursue individual mandates. Instead, it is a forum to discuss and debate the merits of how mandates fit into the macroeconomic focus of the IMF, whether certain mandates apply to individual countries, and what the best opportunities are to pursue various mandates. When members disagree on the best approach for pursuing a mandate and are not able to reach agreement in discussions that continue after a task force meeting, the matter is forwarded to Treasury’s senior management for a policy decision. In 1998, Congress passed legislation that encourages the U.S. Executive Director at the IMF to work to strengthen the financial systems of IMF member countries and encourage them to adopt sound banking principles and practices. Over the last 5 years, the promotion of sound banking practices have come to be regarded as a core mission of the IMF. As a result, there is general agreement in the IMF that it is appropriate for the IMF to advance sound banking policies and practices in member countries. In addition, IMF members generally agree on the steps that need to be taken to implement banking reform in member countries. For example, executive directors generally agree on the details of how to strengthen members’ banking systems when countries have financial arrangements with the IMF. They also agree on the need for members that do not have financial arrangements to adhere to international banking standards. The U.S. Executive Director has been a strong advocate of encouraging the IMF to increase its emphasis on the stability of the banking sector and pushing banking reforms in member countries. However, the general support of other IMF members for sound banking principles makes it hard to discern the U.S.’ unique influence within the IMF. The U.S. policy concerning sound banking principles and practices toward the IMF, as laid out in federal law, requires that Treasury instruct the U.S. Executive Director to vigorously promote policies to increase the effectiveness of the IMF in strengthening financial systems in developing countries and encouraging the adoption of sound banking principles and practices. This requirement includes encouraging the development of laws and regulations that will help to ensure that domestic financial institutions meet strong standards regarding capital reserves, regulatory oversight, and transparency. To assess whether Treasury and the U.S. Executive Director have been able to influence IMF operations and other members’ policy positions regarding the adoption of sound banking principles and practices, we reviewed the financial assistance arrangements and economic program reviews for five countries: India, Mexico, Romania, South Africa, and Thailand. We selected these countries, in part because of banking sector issues, geographic location, and type of IMF arrangement, where applicable. Before the mandate was implemented, the international financial institutions, particularly the IMF, had already begun to focus their attention on what constitutes sound banking practices and how sound banking practices could be put in place in the banking systems of member countries. Focusing on sound banking systems has become more important in recent years because many financial crises in emerging markets have either been precipitated or exacerbated by problems in banking systems. The financial crises of the 1990s, specifically the 1994-95 Mexico and the 1997 Asia crises, led the IMF to intensify its focus on members’ banking sectors. In early 1996, the Executive Board of the IMF began to examine the relationship between banking system soundness and macroeconomic and structural policies, as well as the ways in which issues of bank soundness could be incorporated into the IMF’s periodic economic reviews, financial assistance programs, and technical assistance. The IMF’s efforts were focused on where there was a possibility that financial system problems could have systemic implications, not only domestically, but also by affecting the financial systems of other countries. According to Treasury and IMF officials, by the time the U.S. mandate was implemented, sound banking had come to be considered a core mission of the IMF. As such, the IMF’s and the U.S. Executive Director’s efforts to strengthen member countries’ banking systems and promote sound banking practices would have been pursued by the IMF irrespective of whether the U.S. sound banking mandate had come into being. IMF members and staff had already realized the importance of countries having and maintaining sound financial systems and had begun to increase their emphasis on the stability of members’ banking systems. As an accepted part of the IMF’s core mission, the IMF pursued sound banking practices and policies in both its financial assistance arrangements and its periodic economic reviews. Generally, the executive directors agree on the steps that countries need to take in order to make necessary reforms in their banking sectors. Executive directors told us that directors may disagree over the pace for implementing reforms, mostly due to concerns about countries’ abilities to implement reforms quickly. However, executive directors said that within the IMF’s Board there is general agreement on the content of a country’s financial arrangement regarding banking reform, including the diagnosis of the problem facing a country and the reforms needed to fix the problems. The same is generally true for suggestions the IMF Executive Board makes to member countries during the periodic economic review. In reviewing IMF financial assistance arrangements, executive directors focus on the specific banking situation of each country seeking financial assistance from the IMF. For example, when Thailand sought financial assistance from the IMF during its financial crisis in 1997, there were numerous banking sector problems that had to be addressed, such as weak licensing requirements, lax banking supervision, and no formal deposit insurance. The IMF’s financial assistance to Thailand was conditioned upon Thailand’s undertaking a set of actions that would address those and other issues that were specific to Thailand’s banking sector. The IMF has also sought ways to focus on sound banking practices in its economic reviews. The IMF holds annual consultations with most member countries as a part of its economic reviews to discuss, among other things, the country’s banking sector practices and policies. During the last few years, the IMF has implemented a number of voluntary assessments that member countries can undertake to help the IMF assess the stability of members’ financial systems and encourage members to implement internationally accepted banking standards. For example, IMF members can volunteer to participate in the Financial Sector Assessment Program. This joint World Bank-Fund program provides a diagnosis of financial sector vulnerabilities and development needs. It is used by the IMF as a basis for its Financial System Stability Assessments, which focus on examining the soundness and operation of a country’s financial sector and its link to the country’s macroeconomic performance. The IMF staff prepares Financial System Stability Assessment reports during the periodic economic review process, and these reports become a part of the IMF staff papers presented to the IMF Executive Board. In addition to the Financial System Stability Assessment program, the IMF, in cooperation with the Basel Committee on Banking Supervision, has been undertaking assessments of countries’ compliance with the Basel Core Principles for Effective Banking Supervision. In many instances, these assessments are published as Reports on the Observance of Standards and Codes modules. The IMF has used the Basel core principles assessments to identify specific gaps in a country’s regulatory or supervisory framework and to develop an appropriate focus for reforms. Similar to the Financial System Stability Assessments, the Basel core principle assessments are also to be included in the IMF’s economic reviews. We reviewed how the IMF and the U.S. Executive Director worked together in promoting sound banking principles in five countries—India, Mexico, Romania, South Africa, and Thailand (see table 3 for examples of IMF and U.S. Executive Director proposed banking reforms in these five countries). The U.S. Executive Director generally agreed with the focus of the IMF Executive Board in the three countries that had an IMF arrangement (Mexico, Romania, and Thailand) and in the two countries that were not under an IMF arrangement (India and South Africa). Table 3 provides an analysis of examples of reforms promoted by the U.S. Executive Director and the IMF in the five countries we reviewed. The U.S. Executive Director told us that the United States was already promoting the importance of the IMF’s focus on banking sector reform, prior to the implementation of the banking mandate. The U.S. Executive Director’s emphasis has been on two factors that the IMF should be concerned with regarding sound banking and financial system stability. The first factor was to determine the vulnerability of countries’ financial systems in order to prevent a financial crisis. The second factor was to focus greater attention on establishing efficient financial intermediation— the process of transferring funds from savers to borrowers. According to the U.S. Executive Director, the most critical piece in determining the vulnerability of members’ financial systems was assessing the health of each member’s banking system. In addition, the U.S. Executive Director stated that the IMF’s main role in the financial sector agenda was surveillance—the job of alerting members to the weaknesses in their banking systems and supervisory regimes, and monitoring a member’s progress to that end. Over the last 3 years, the U.S. Executive Director has supported the IMF’s efforts to incorporate Financial System Stability Assessment reports into the IMF’s surveillance efforts and has actively supported the adoption and monitoring of the Basel core principles by member countries and assessments of countries’ progress. Other executive directors have said that the U.S. Executive Director was a driving force in focusing the IMF’s attention on sound banking practices. However, it is difficult to discern the extent of the U.S. Executive Director’s influence in relation to other executive directors in promoting sound banking practices in member countries, because the IMF generally operates on a consensus decision-making basis. In addition, there is broad agreement among IMF members that pursuing sound banking principles and policies in member countries is an important part of the IMF’s work. Since 1994, Congress has enacted two provisions of law that set forth U.S. policy on internationally recognized core labor standards and worker rights in the context of International Monetary Fund programs. However, the predominant view at the IMF is that a country’s adherence to those standards is usually not relevant to its macroeconomic condition and thus not directly relevant to the IMF’s mission. Therefore, although U.S. officials have taken several different approaches to actively promote U.S. policy on core labor standards in an effort to garner support for the inclusion of this policy within the IMF’s dialogue with borrowing countries, they have not had much success in influencing the IMF on this issue. Under U.S. mandates concerning labor issues at the IMF, the Secretary of the Treasury must instruct the U.S. Executive Director to urge the IMF, as an institution, to encourage countries to guarantee internationally recognized core labor standards and worker rights. The five internationally recognized core labor standards advanced by Treasury and the U.S. Executive Director are the freedom of workers to associate with one another, the right to organize and bargain collectively, the prohibition of exploitative child labor, the prohibition of forced or compulsory labor, and the prohibition against employment discrimination. Through the International Labor Organization (ILO), the international community has codified these core labor standards in eight international treaties, or conventions. At the ILO’s 1998 conference, ILO members adopted the “ILO Declaration on Fundamental Principles and Rights at Work,” which renewed all ILO members’ commitment to respect, promote, and realize these core labor standards. The Department of the Treasury and the U.S. Executive Director collaborate to formulate and actively advance their objectives concerning labor policies at the IMF. To advance U.S. policy on core labor standards, the U.S. Executive Director urges the IMF to consider the implications of its programs on borrowing countries’ adherence to these standards. To illustrate the influence that Treasury and the U.S. Executive Director have had on IMF policies and practices with respect to labor issues, we reviewed their efforts to affect IMF programs for Argentina, Ghana, Kazakhstan, Mexico, and Thailand. We selected these countries, in part, because of the range of labor issues in each country, especially as they related to the economic challenges the countries have faced. General information on the countries and a summary of our findings are presented in table 4. The IMF does not regularly pursue adherence to core labor standards with borrowing countries. According to IMF officials, while the IMF supports core labor standards in principle, the IMF has not found that the degree to which a country has adhered to core labor standards is directly related to the country’s macroeconomic difficulties. Therefore, IMF members and staff do not consider the issue to be within the IMF’s core mandate and have not addressed this issue in the IMF’s country programs. Also, the IMF’s staff lacks expertise in this complex and sensitive policy area. Our analysis of five borrowing countries found no evidence that IMF staff had incorporated the countries’ adherence to core labor standards issues into the countries’ performance criteria or structural benchmarks. According to Treasury officials, the IMF’s reluctance to consider core labor standards within the scope of its work is due in part to conflicting academic literature on whether certain labor standards have beneficial or detrimental effects on economic growth. Conventional economic theory treats certain social policies, such as labor and environmental standards, as government interventions that can inhibit the efficient operation of markets and, in turn, overall economic growth. According to Treasury officials, since most IMF staff and country representatives are trained as economists, they are reluctant to pursue policies that their training tells them could be counter to the IMF’s goal of encouraging economic growth. As one Executive Director at the IMF expressed, the implication of promoting stronger social standards in a country is higher unemployment. If the choice is between workers being employed under less than ideal labor conditions or not having them work at all, this Executive Director favored having the workers be employed and earning income. Other IMF members are also reluctant to have the IMF include consideration of these standards because it is a policy area where the IMF does not currently have expertise or institutional knowledge. Some executive directors with whom we spoke noted that other institutions, particularly the ILO, are better placed to address labor standards. In addition, some executive directors noted that the World Bank also has some expertise and institutional knowledge to help countries address core labor standards. Executive directors also noted that they would be agreeable to IMF staff consulting with the ILO or the World Bank on labor issues in borrowing countries if the staff found that labor issues were relevant to the country’s program. Furthermore, one Executive Director noted that there is concern that a country’s adherence to core labor standards is primarily a political issue, and as such the IMF is prohibited from addressing them by its charter. As another Executive Director noted, the issues embodied in the core labor standards are complex and must be handled with careful regard for various cultural and political factors facing borrowing countries. Since other IMF members and IMF staff have not widely embraced U.S. policy on the relevance of core labor standards to the IMF’s work, Treasury and the U.S. Executive Director have made special efforts to advance this policy at the IMF. Nevertheless, they have not had much success in influencing the IMF to consider core labor standards in its programs. In certain circumstances, Treasury and the U.S. Executive Director’s staff have had difficulty reaching consensus on how adherence to core labor standards best fits into the IMF’s work and how to effectively advance U.S. policy on labor issues at the Fund. As part of its efforts to reach consensus, Treasury, with input from the U.S. Executive Director, has completed two documents since April 2000. The first document circulated within Treasury presents economic arguments for the relevance of core labor standards to the macroeconomic focus of the IMF’s work. The second document, which was finalized in November 2000, sets out guidelines for Treasury officials as they pursue U.S. objectives on core labor standards and try to build support for U.S. policy among other IMF members. These guidelines clarify U.S. policy objectives and legislative obligations concerning labor standards to facilitate Treasury’s efforts to provide the U.S. Executive Director with timely and effective input. Treasury and the U.S. Executive Director are simultaneously following two approaches to change the thinking of other IMF members, IMF staff, and IMF management on this issue. The first approach is to engage other executive directors and IMF staff on the relevance of core labor standards to the IMF’s mission. Treasury and the U.S. Executive Director have argued that the IMF should not develop programs that may negatively impact countries’ adherence to core labor standards without taking those impacts into consideration. Treasury officials have also taken advantage of other forums to promote U.S. policy on the relevance of core labor standards to the IMF’s mission. For example, Treasury officials have promoted U.S. policy at meetings with government officials of the Group of Eight, through personal contact with other countries’ officials, and at IMF annual meetings. In addition, Treasury and the U.S. Executive Director organized a seminar on core labor standards for the IMF and the World Bank’s 1999 annual meeting in cooperation with the IMF, the World Bank, and the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO). Senior officials from these institutions, as well as a Minister of Finance from Chile and a noted academic, presented their views on the role of core labor standards at the IMF and the World Bank. Treasury and the U.S. Executive Director’s second approach has been to pursue the best examples of countries where they believe that adherence to core labor standards is deficient and that the IMF should consider core labor standards as relevant to their macroeconomic stability. Treasury and the U.S. Executive Director can then use these examples as successful precedents to urge the IMF to advance core labor standards in other countries and at the broader level. According to Treasury officials, countries that make the best cases are those where the conditions of its IMF program will clearly have implications for the labor market. For example, the IMF and the Argentine government agreed that to stimulate economic growth, Argentina would need to increase labor market flexibility through various reforms, including legally decentralizing union collective bargaining. While Treasury and the U.S. Executive Director agreed with Argentina’s need to increase labor market flexibility, they also recognized that some of the reforms discussed would have implications for Argentina’s adherence to the core labor standard concerning collective bargaining. Therefore, they monitored the progress of these reforms and asked IMF staff to clarify whether the reform proposed to decentralize union collective bargaining would be consistent with the ILO Right to Organize and Collective Bargaining Convention (no. 98). The U.S. Executive Director also tries to set precedents by pursuing labor policy with IMF management and staff in advance of an IMF mission to a member country as part of a program or general economic review. For example, Treasury and the U.S. Executive Director became aware that the IMF and the Mexican government were exploring a possible financial arrangement at the end of 1998. Officials from Treasury and the U.S. Executive Director’s office collaborated to determine whether the U.S. labor mandates were relevant to the proposed IMF program in Mexico. Based on their analysis, they became concerned that reforms the Mexican government was proposing to increase labor market flexibility and modernize the labor relations system could have negative implications for the rights of workers to organize and bargain collectively. The U.S. Executive Director therefore sent a memo to the Managing Director of the IMF, urging the IMF’s mission team to, among other things, (1) incorporate the discussion of core labor standards into their policy dialogue with Mexican authorities in the context of any discussion of broader labor market reforms and (2) survey labor market policies and practices in Mexico and recommend policy initiatives that will help ensure the maintenance or improvement of core labor standards. As part of another means for establishing precedents, the U.S. Executive Director encourages IMF staff and borrowing country governments to consult with the ILO when labor issues come up in a country or when a country’s program may have implications for the country’s adherence to core labor standards. For example, in commenting on Kazakhstan’s 1999 request for a new arrangement at an Executive Board meeting, the U.S. Executive Director encouraged the Kazakhstani government to consult with the ILO concerning proposed reforms to Kazakhstan’s labor code. In doing so, Kazahstan could ensure that these reforms were not only better suited to the market economy that it is trying to develop, but also consistent with core labor standards. Officials at Treasury and U.S. Executive Director’s office do not often advance core labor standards with two groups of countries—advanced industrial economies and the poorest countries—because they believe that these countries do not make good precedents. According to Treasury officials, they do not pursue these issues with advanced industrial economies, such as France, Germany, or Japan, because their adherence to core labor standards is generally high. In reviewing the poorest countries, Treasury officials have found that they also do not generally make good cases because they do not have a sufficiently large industrial base for the core labor standards of freedom of association and freedom to organize and bargain collectively to be important issues relative to the other challenges facing these countries. Moreover, although child labor can be a concern in these countries, Treasury officials noted that the root of the problem is in the high level of poverty, cultural and societal norms, and lack of opportunities for the children. In addition, concerns that Treasury might have about forced labor or gender inequality in these countries are more closely related to human rights issues than to core labor standards. Therefore, according to Treasury officials, they address these issues in that context. For example, according to Treasury officials, Ghana’s adherence to each of the core labor standards could be improved, but since Ghana has a pressing need to address poverty, and most of its labor force is engaged in agriculture, Treasury did not urge the U.S. Executive Director to comment on core labor standards in Ghana until recently. To enhance Treasury’s and the U.S. Executive Director’s efforts to advance U.S. policy on core labor standards, Treasury hired a labor policy specialist in 1998 to provide background information and policy guidance on core labor standards issues to other Treasury officials and the U.S. Executive Director. The labor specialist is responsible for reviewing the labor situation in each IMF member country as it comes before the IMF’s Executive Board as part of a program request, a review of an existing program, or the IMF’s periodic reviews of the country’s economic conditions. For each country, the specialist determines whether there are concerns for that country’s adherence to core labor standards and coordinates with Treasury’s country desk officers to provide the U.S. Executive Director with input for an oral or written statement to the IMF’s Executive Board. Although U.S. officials have been targeting their efforts to pursue core labor standards, two executive directors noted that some developing countries do not support U.S. policy on core labor standards because these countries do not believe that U.S. motives are altruistic. Rather, they view U.S. promotion of core labor standards as a trade protectionist measure meant to increase labor costs in developing countries, thereby potentially averting the relocation of U.S. firms and the loss of U.S. jobs. Despite this resistance, officials at Treasury and the U.S. Executive Director’s office note that they have seen signs that their efforts to advance U.S. policy are being heard. For example, in response to U.S. interest on labor issues in Mexico, IMF staff included an appendix concerning Mexico’s efforts to modernize labor markets and improve their efficiency in their 1999 report on Mexico’s request for an arrangement. In addition, during visits to Argentina to discuss its ongoing arrangement, IMF staff consulted with union officials on a variety of labor issues related to the flexibility of its labor markets. In 1996, Congress enacted the audits of military expenditures legislation, which includes a specific directed voting provision that requires the U.S. executive directors at international financial institutions to oppose nonbasic human needs assistance to countries that do not conduct and report regular audits of their military spending to civilian authorities. In the five cases we reviewed, we determined that the United States has achieved some success in advancing this mandate at the IMF and in convincing some borrowing countries to conduct audits of military spending. The U.S. Executive Director’s effectiveness in advancing this particular mandate at the IMF is due in part to a widespread view in the international community that good governance, transparency of budgets, unproductive spending, and military spending are economic issues that could impact the effectiveness of a country’s macroeconomic reform effort. Nevertheless, the pursuit of this mandate has had an uncertain impact on the broader U.S. influence at the IMF. While there is strong IMF support for the intent of the legislation, U.S. and IMF officials emphasized that the military audit mandate sometimes competes with countries’ priorities and that U.S. officials have limited discretion on when to advance the mandate for countries deemed out of compliance. As a result, U.S. and IMF officials believe that the limited discretion that U.S. officials have in advancing this mandate runs counter to the consensus decision-making approach of the Fund and could negatively impact U.S. influence at the IMF. Congress has been concerned that military expenditures by some developing countries are excessive and an unproductive drain on their limited resources. Congress was also concerned that public information on military expenditures for some countries is generally characterized by incompleteness, lack of transparency, and inaccuracy. Partly in response to these concerns, in 1996 Congress passed the audits of military expenditures legislation. The legislation states that the U.S. Executive Director is to use its voice and vote to oppose the use of funds, other than those to address basic human needs, for any government that does not have in place a functioning system for reporting audits of military expenditures to civilian authorities or has not provided such information to any institution that requests it. The U.S. Treasury was given a 3-year window to develop an implementation approach, with the voting requirement taking effect on October 1, 1999. After that date, the U.S. Executive Director was instructed to oppose approval of IMF arrangements for countries deemed not in compliance with the standards set forth in the mandate. On October 18, 1999, 22 countries were deemed noncompliant with the standards of the mandate, but by November 9, 2000, this number had declined to 17 countries. In 1999, Treasury formed an Interagency Policy Group to assess countries’ compliance with the military audit legislation. The group is comprised of the Treasury, the Department of State, the Department of Defense, the U.S. Agency for International Development, the National Security Council, and the Office of Management and Budget. The Policy Group developed the following interpretation and definitional guidance for the legislation: A country must be routinely conducting a post-expenditure examination, verification of accuracy, and reconciliation of irregularities of receipts that fund the military (annually, though a 2-year completion lag is acceptable). Results of the audit must be reported to a nonmilitary entity. Significant off-budget or commercial revenue (defined as greater than 5 percent of the total defense budget) that funds the military must also be audited and reported to a civilian authority. Treasury has taken several steps to advance the military audit mandate at the IMF, including working with the State Department to inform IMF member countries of the legislation through U.S. embassies and providing information to the U.S. Executive Director on the countries that are noncompliant with the mandate. The U.S. Executive Director’s office also informed IMF management and staff of the importance it attached to the mandate and the compliance requirements. When a country is found to be not in compliance by the Policy Group, the U.S. Executive Director is directed to oppose the use of IMF resources. The process for registering opposition to the use of IMF resources is as follows: The Policy Group recommends to the Secretary of the Treasury that the U.S. Executive Director oppose the use of Fund resources to that country. The Secretary of the Treasury then instructs the U.S. Executive Director to oppose the use of Fund resources to that country. The U.S. Executive Director then states in an oral or written statement to the Executive Board that the United States wants to record its opposition to that country’s program. The Secretary of the IMF’s Executive Board records U.S. opposition in the Board minutes. The Policy Group has determined that the reference in the legislation for the U.S. Executive Director to “oppose” provides flexibility to either abstain or vote no. The use of a “no” vote versus “abstain” would be the Secretary’s determination, based on interagency consultation on a case-by-case basis. The Policy Group has also determined that in cases where the only reason for opposing the use of IMF resources is a lack of compliance with the military audit legislation, the U.S. Executive Director should abstain. In addition, in cases where countries are actively engaged in making necessary changes to become compliant, the U.S. Executive Director would include strongly supportive comments in Board statements accompanying the directed vote. The U.S. Executive Director has never voted no under the military audit mandate but has abstained 3 times, as of September 30, 2000. Regardless of whether the United States chooses to abstain or vote no, its actions alone are not sufficient to veto a country’s access to IMF resources because approval of a country’s arrangement requires support from a majority of the Executive Board. Although the United States has the largest voting share of any member (17 percent), this is insufficient to unilaterally block access to IMF resources. The decision by the United States to record its opposition to a country’s program is considered by the Secretary to the Board to be a vote (and recorded as such in the minutes). However, other members do not have to formally vote in response. Formal votes are rarely taken at IMF Board meetings, but any executive director may require a formal vote to be held. According to an IMF official, Board decisions are expected to reflect the consensus of Board members, with the views expressed as part of the overall discussion. Over the course of the meeting, the Secretary keeps track of each executive director’s position. While directors in almost all cases support IMF programs on the whole, they may express differences of views with programmatic details or broader issues regarding the quality of the program. However, if there is evidence of widespread opposition, the Chairman or an individual member may request a poll of members’ views. Such a poll is not considered a “vote” by the Board but a tool for accurately gauging the views of Board members. An analysis of the U.S. Executive Director’s voting record for the period of October 1997 through September 2000, shows that the U.S. Executive Director voted against or abstained from voting a total of 21 times. Of these 21 votes, 3 were related to abstentions under the military audit mandate. The United States has been actively advancing the military audit mandate and has been successful in the majority of the cases we analyzed. The U.S. Executive Director has emphasized issues of fiscal controls and budget transparency in U.S. country statements to the Board, in attempting to integrate the military audit mandate within the IMF’s own operating guidelines and institutional processes. According to the U.S. Executive Director, the military audit mandate is easier to advance than, for example, the labor mandate, because it fits well within the Fund’s efforts to promote good governance, fiscal transparency, and the control of unproductive spending. While the IMF does not generally require audits of military spending as a condition for the use of its resources, the IMF has asserted that its staff may need information about the level of and trend in military expenditures and related transactions in order to permit a full and internally consistent assessment of the member’s economic position and policies. In addition, IMF members we spoke with generally agreed that the auditing and transparency mechanisms promoted by the mandate could potentially bring important information regarding military spending to the attention of donors. We reviewed five countries that were included on the October 1999 list of 22 noncompliant countries established by the U.S. Treasury (Burkina Faso, Guinea-Bissau, Indonesia, Kazakhstan, and Rwanda). Of these five countries, as of November 9, 2000, only Guinea-Bissau is not in compliance with the military audit mandate (see table 5). According to the U.S. Executive Director, U.S. success in advancing the audits of military expenditures mandate was aided by two factors: acceptance by the IMF of the merits of the issue, and the possibility that the United States would oppose a country’s use of IMF resources. There is a widespread view in the international community, including at the IMF, that good governance, transparency of budgets, unproductive spending, and military spending are economic issues that could impact the effectiveness of a country’s macroeconomic reform effort. Therefore, IMF staff consider it appropriate to raise concerns about military expenditures in the context of their efforts to assist countries. As shown in table 5, IMF staff encouraged the countries’ authorities to audit government accounts, including military receipts and expenditures. In the case of Kazakhstan, IMF support was unnecessary because the country was already compliant. In these cases, the changes encouraged by the IMF also helped the country in its efforts to comply with the U.S. mandate. For example, in the case of Indonesia, IMF staff strongly encouraged Indonesian officials to include a commitment to audit off-budget military expenditures as part of its Letter of Intent to the IMF. The inclusion of this commitment within the Indonesian Letter of Intent was a contributing factor in the U.S. decision to remove Indonesia from the list of noncompliant countries. Based on our review of country documents and discussions with Treasury, U.S. Executive Director, and IMF officials, we have determined that the success of the mandate was also aided by countries’ desire to avoid having the United States oppose their receipt of resources under their IMF arrangements. As our military audit mandate case study revealed, certain countries have agreed to undertake military audits as a response to U.S. pressure. According to Treasury and U.S. Executive Director’s officials, because of the key role of the U.S. government in the IMF and the donor community, recipient countries do not like having the United States oppose their IMF program. Although U.S. opposition is not sufficient to veto a country’s access to IMF resources, according to U.S. and country officials, the U.S. position raised the priority of this issue and motivated some of the countries on the noncompliant list to become compliant more rapidly. For example, according to Treasury, because the United States was threatening to oppose debt relief to Burkina Faso, the authorities agreed to initiate an audit of military spending earlier than they otherwise would have. In the case of Guinea-Bissau and Rwanda, despite their efforts to become compliant with the audits of military expenditures mandate, the U.S. Executive Director opposed their receipt of IMF resources because at the time of the review of their IMF arrangement, they were not compliant with the criteria established by the Policy Group. Both countries continued to address U.S. concerns following their reviews; Rwanda became compliant in September 2000, and Treasury believes the government of Guinea-Bissau is beginning to take steps to audit government expenditures, including the military. According to a Treasury representative, the Treasury is working with U.S. embassy representatives to ensure that Guinea-Bissau understands U.S. legislative criteria requiring the reporting of its military audit to civilian authority. The impact of pursuing the military audit mandate on the broader U.S. influence on IMF policy is uncertain. Based on our discussions with U.S. and IMF officials, we have determined that the directed nature of the mandate has worked to advance U.S. policy goals; nevertheless, it may also limit U.S. credibility with other IMF members. There is widespread support by IMF members with the intent of the legislation, meaning that countries should strive to control their level of military spending and have in place a system that provides accurate and reliable information to the public. As our military audit mandate case study revealed, certain countries have agreed to undertake military audits in response to U.S. pressure. However, other IMF members we spoke with questioned whether the United States may have promoted the military audit issue in certain countries simply because it is a legislatively mandated directed vote and not necessarily because it was in the best interest of the country at the time. Therefore, while U.S. officials are pleased with the progress realized through their pursuit of the mandate, they see a risk to U.S. credibility when they must emphasize one issue over other more pressing matters that a country may be confronting. The mandate does not give the U.S. Executive Director the discretion to determine when to pursue the military audit issue. As a result, the U.S. Executive Director is compelled to advance the mandate with country authorities and with IMF staff regardless of whether the U.S. Executive Director believes it is an appropriate time to pursue the mandate with a given country. Treasury staff and all of the executive directors we interviewed at the IMF expressed concern with the inflexibility of the law. The executive directors believe that the U.S. Executive Director has been very effective in advancing the military audit mandate but, due to the inflexibility of the mandate, has at times been too aggressive in this pursuit. The constraints imposed by the directed nature of the military audit mandate were evident in our case study analyses. For example, as a result of a severe economic crisis and the subsequent collapse of 30 years of military dictatorship, Indonesia has been faced with many competing priorities. Numerous Treasury and IMF documents and Board meeting agendas over the past 3 years indicate that the major priorities of the IMF Board for Indonesia centered on issues such as banking and corporate restructuring, bankruptcy law, and social safety net issues. Annual audits of off-budget revenues that fund the military were not one of these major priorities. According to IMF staff, while the new democratic government of Indonesia is receptive to the military audit mandate, discussions with authorities on this issue were highly complex. For example, according to IMF staff, the auditing capacity in Indonesia is limited, and it has been a challenge getting the overall fiscal accounts under control, especially when it requires the cooperation of the military. In addition, according to IMF staff, the time frame needed to achieve transparency in military expenditures is quite burdensome, and there are many immediate, more urgent issues to address. IMF staff also believe that the Letter of Intent commitment to audit off-budget sources that fund the military was ambitious and should be recognized as such. IMF staff expressed concern about having U.S. officials overemphasize this issue at this point. Similarly, Rwanda, as a post-conflict country, has several major priorities, including government and macroeconomic stability, building administrative capacity, and satisfying the requirements of the Heavily Indebted Poor Countries Initiative. Based on issues before the IMF Board, an audit of its military spending was only one of a large number of important priorities. According to the U.S. Executive Director, as of July 2000 Rwanda continued to face very difficult humanitarian and economic problems that require the utmost resolve and determination to effectively address. In addition, according to the U.S. Executive Director’s representative, when the United States abstained from voting on Rwanda’s program in July 2000, it required the U.S. Executive Director to raise as the first priority an issue that was just one of the necessary steps to address the country’s many problems. The U.S. Executive Director was compelled to abstain from voting to make a financial disbursement for Rwanda’s program because Rwanda was not yet in full compliance with the military audit mandate’s requirements. This occurred despite the administration’s knowledge that Rwanda would become compliant with the mandate shortly and, in its judgment, was making good progress in implementing economic reforms and improving fiscal transparency. IMF Board members understand that in certain cases the U.S. Executive Director advanced military audit concerns because of the legislative requirements and not necessarily because a focus on military audits was among the most important issues confronting that country. These Board members noted that the Executive Board generally makes decisions on a consensus basis and that limitations on an executive director’s discretion runs counter to this practice. Therefore, while U.S. officials agree with the intent of the mandate, they believe that there is a risk to U.S. credibility at the IMF when the U.S. Executive Director must emphasize an issue over other, more pressing priorities for a borrowing country. The Consolidated Appropriations Act for Fiscal Year 2000 (P.L. 106-113 sec. 504 (e)) requires GAO to report on the extent to which Fund practices are consistent with U.S. policies set forth in federal law. In order to address this requirement, we (1) identified how the U.S. Treasury and the U.S. Executive Director promote U.S. policies mandated by Congress for the Fund and (2) assessed whether Treasury and the Executive Director have been able to influence Fund operations and other members’ policy positions in a direction that would be consistent with U.S. policy as set forth in law. To help answer these objectives, we analyzed the process by which Treasury pursues its legislative mandates and conducted case studies of specific U.S. policies and Treasury’s efforts to promote them for individual countries’ Fund arrangements from 1998 through 2000. To identify how the U.S. Treasury and the U.S. Executive Director of the International Monetary Fund promote U.S. policies mandated by Congress for the Fund, we analyzed the process by which Treasury pursues legislative mandates. Specifically, we reviewed Treasury documents, including internal correspondence, concerning the creation in 1999 of Treasury’s Task Force on Implementation of U.S. Policy and Reforms in the International Monetary Fund, its operations, and the challenges that Treasury has faced in implementing its process for addressing legislative mandates. We also reviewed examples of Treasury officials’ draft policy position input to the U.S. Executive Director for oral and written statements to the Executive Board. In addition, we interviewed officials within all 10 Treasury offices who are responsible for developing the U.S. policy position toward the Fund, including members’ Fund arrangements. Further, in July 2000 we attended one task force meeting to observe Treasury’s efforts to address legislative mandates. We also reviewed U.S. statements to the Executive Board and internal U.S. Executive Director documents from 1998 to 2000 regarding U.S. Executive Director efforts to pursue legislative mandates. Finally, we interviewed the U.S. Executive Director and all of the staff in that office who monitor country and policy developments concerning the Fund, as well as numerous Fund staff and other Executive Board members. To assess whether Treasury and the U.S. Executive Director have been able to influence Fund operations and other members’ policy positions in a direction that would be consistent with U.S. policy as set forth in law, we conducted case studies of specific U.S. policies and Treasury’s efforts to pursue them for individual countries’ Fund arrangements. To select these case studies, we identified legislative mandates concerning U.S. policy objectives with respect to the Fund, using our own legal analysis supplemented with documentation obtained from Treasury. We used two criteria as the basis for identifying the relevant laws for this review. We defined these criteria as (1) any current law that explicitly directs the U.S. Executive Director to use the U.S. vote at the Fund to achieve a policy goal and (2) any current law that seeks to have the U.S. Executive Director use the U.S. voice at the Fund to promote a U.S. policy or make a policy change. We selected sound banking principles, labor policies, and audits of military expenditures as the U.S. policy focus for our case studies. We chose these policies because they represent a range of types of legislative provisions, or mandates, that are set forth in federal law, including both voice and directed vote provisions. We also chose these policies on the basis of our preliminary analysis, which suggested that the U.S.’ ability to impact Fund practice was related to whether policies encompassed issues that were viewed as central to the traditional focus of the Fund’s mission. For each policy issue, we reviewed Fund practices with respect to five member countries that we selected based on a number of factors, including geographic diversity, level of economic development, type of Fund arrangement, and range of issues connected to the policy concern. For the labor policies and audits of military expenditures case studies, we selected only countries that have a financial arrangement with the Fund because the language in their corresponding mandates is expressly directed at those countries. Specifically, we selected the following countries for each case study: (1) for sound banking principles, India, Mexico, Romania, South Africa, and Thailand; (2) for labor policies, Argentina, Ghana, Kazakhstan, Mexico, and Thailand; and (3) for audits of military expenditures, Burkina Faso, Guinea-Bissau, Indonesia, Kazakhstan, and Rwanda. We limited our review to the activities of the Treasury, the U.S. Executive Director, and the Fund for the last 3 years; that is, the period from January 1998 through November 2000. Since we focused primarily on the Fund rather than on country practices, we did not travel to any of these countries as part of this review. However, we interviewed Fund officials who monitor developments in these countries as well as seven other executive directors of the Fund’s Executive Board in Washington, D.C. Our basis for selecting these executive directors to speak with is discussed below. We reviewed numerous internal Treasury and U.S. Executive Director documents dating from 1998 to 2000 to answer our second objective. These documents included internal correspondence among officials within Treasury and the U.S. Executive Director’s office concerning their deliberations to develop U.S. policy positions with respect to both general mandate issues as well as the case study policies. We also reviewed Treasury’s policy position input to the U.S. Executive Director and all U.S. statements to the Fund’s Executive Board for each country covered for our case studies. In addition, we interviewed Treasury and U.S. Executive Director officials who monitor sound banking, labor, and military audit issues as well as those who monitor the country developments and are charged with formulating and implementing the U.S. policy position for each country with respect to the Fund. We also reviewed all Fund staff documents provided to the Executive Board concerning these countries for their program and economic policy reviews. These included Fund staff reports concerning countries’ requests for arrangements, reviews of ongoing arrangements, and countries’ periodic economic reviews, as well as staff summaries of Executive Board meetings. In addition, we interviewed numerous officials at the Fund to answer our second objective. Specifically, we interviewed staff at the Fund who monitor each of the countries under our review, except for Fund staff who monitor developments in Burkina Faso, who were not available to meet with us. For the other countries, we discussed with Fund staff how they set priorities in negotiating arrangements with these countries and how our case study policies fit into these priorities. We also met with officials from the Fund’s Policy Development and Review Department to discuss how the Fund pursues labor and military audit issues and we met with the Fund’s Monetary and Exchange Affairs Department to discuss how the Fund pursues strengthening sound banking principles in countries. In addition, we met with 7 of the 23 non-U.S. Executive Board directors and discussed their views of these policies and the impact of U.S. influence at the Fund. Specifically, we met with the appointed executive directors of France, Germany, Japan, and the United Kingdom, and the elected representative executive directors from Gabon, Mexico, and Thailand. We selected these executive directors to speak with because (1) they represent the largest donor countries and a mix of borrower countries at the Fund and (2) the elected executive directors represent several of the countries we reviewed in our case studies. Finally, we also interviewed the Assistant Secretary of the Fund’s Executive Board and the Deputy General Counsel of the Fund to obtain information on the Board’s process for voting and how often voting occurs. For comparison purposes, we interviewed an official within the U.S. Executive Director’s office at the World Bank about the voting process in that institution as well. We conducted our work from March through November 2000 in accordance with generally accepted government auditing standards. In addition to the person named above, Carolyn Black-Bagdoyan, Tamara Cross, Barbara Shields, Valérie Leman Nowak, Rona Mendelsohn, Mark Speight, Mary Moutsos, and Mark Dowling made key contributions to this report. The first copy of each GAO report is free. Additional copies of reports are $2 each. A check or money order should be made out to the Superintendent of Documents. VISA and MasterCard credit cards are accepted, also. 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The mortgage assignment program was created in 1959 by section 230 of the National Housing Act. However, HUD only began operating the program in 1976 in settlement of a lawsuit. The program, intended to help mortgagors who have defaulted on HUD-insured loans to avoid foreclosure and retain their homes, provides mortgagors with financial relief by reducing or suspending their mortgage payments for up to 36 months until they can resume making regular payments. To enter the program, a mortgagor must apply and meet certain criteria, including that the default must have been caused by circumstances beyond the mortgagor’s control, such as the loss of employment or serious illness. However, after the 36-month period, a mortgagor’s delinquencies are not required to be eliminated or reduced by a specified time other than over the remaining term of the loan, which HUD can extend for up to 10 years. Most of the mortgages assigned under the program are insured by FHA under its Mutual Mortgage Insurance Fund (Fund). For these mortgages, the cost of the assignment program is financed by the Fund, which insures private lenders against losses on mortgages that finance purchases of one to four housing units. To cover losses, FHA deposits borrowers’ insurance premiums in the Fund. Historically, the Fund has been financially self-sufficient. However, if it were to become exhausted, the U.S. Treasury would have to directly cover lenders’ claims and administrative costs. We based our analysis of whether the assignment program helps borrowers avoid foreclosure and reduces FHA’s foreclosure losses primarily on data from two of HUD’s national information systems—the Single-Family Mortgage Notes Servicing System and the Single Family Insurance System—as of September 30, 1994. We used these data to analyze foreclosures and delinquencies and forecast the foreclosure rates of the 68,695 mortgages assigned since fiscal year 1989. We also built a cash flow model and prepared analysis to estimate the financial loss to FHA’s Fund from these loans by estimating the revenue and expense flows for these loans over their life. Our data reflect nationwide mortgage assignment statistics on single-family loans that were entered in HUD’s two national data systems as the Fund’s mortgage defaults that were assigned to avoid foreclosure—71,500 mortgage loans as of September 30, 1994. Loans assigned to HUD for other reasons were not included in our analyses. To determine how to improve the program and reduce its losses, we obtained information from four other mortgage assistance institutions that provide foreclosure relief to borrowers in default on single-family housing loans—the Department of Veterans Affairs (VA), Rural Housing and Community Development Service (RHCDS), Federal National Mortgage Association (Fannie Mae), and Federal Home Loan Mortgage Corporation (Freddie Mac). (See app. I for additional details on the scope and methodology of our work.) To improve the administration of the program, HUD recently has initiated changes to the program. These include selling its currently assigned loans; implementing Activity Tracking, an automated collection computer subsystem; studying the costs and benefits of alternatives to foreclosure; permitting lenders to provide relief to borrowers, such as suspending or reducing mortgage payments, without prior approval from HUD; implementing a “compromise offer” program under which borrowers’ loans are considered to be paid off for less than the amount owed; and implementing for a limited period of time a program for reducing interest rates on certain program loans. HUD has also proposed contracting for loan servicing. The Office of Management and Budget (OMB) considers FHA’s mortgage assignment program to be a high-risk area because controls do not protect the financial interests and resources of the government. In the President’s fiscal year 1996 budget, OMB stated that the servicing of assigned loans was expensive, inefficient, and labor-intensive. Also, OMB noted that there is little evidence that the program achieves its goal of giving homeowners a chance to keep their homes during a temporary interruption of income. According to OMB, legislative changes should be considered to reduce or eliminate the assignment of loans in the future by greater reliance on the private sector as well as legislation to reduce the program’s forbearance period from 3 years to 1 year. To reduce the number of assigned loans and the required servicing of loans, OMB recommended that HUD continue to sell its assigned loans. We forecast, on the basis of historical data on the disposition of program loans, that about 35,400 (52 percent) of the 68,695 borrowers accepted into the program since fiscal year 1989 will eventually lose their homes through foreclosure. For the remaining loans (48 percent), we forecast that borrowers will pay off the loans and avoid foreclosure by either selling their homes or refinancing their mortgages, often after remaining in the program for a lengthy period of time. Some of these borrowers who eventually pay off their loans may have, under the compromise program, paid HUD an amount less than the total amount owed. (A detailed discussion of our methodology for forecasting the program’s foreclosure rates appears in app. II.) Figure 1 shows our estimates of conditional foreclosure rates based on loans that remained active until a given year and were assigned during a 17-year period (fiscal years 1977 through 1994). We estimate that conditional foreclosure rates will increase sharply over the first 7 years after a loan is accepted into the program, peaking at about 13 percent. The program’s conditional foreclosure rates substantially exceed those experienced on FHA’s nonassigned single-family loans during the same 17-year period. HUD’s records show that since fiscal year 1977, at least 96,500 borrowers have been accepted into the assignment program. About 71,500 of these borrowers were still assigned to HUD as of September 30, 1994. A large portion of them—39,603, or 55 percent—have been in the program fewer than 3 years (see fig. 2). As shown in figure 3, of the approximately 71,500 borrowers in the program as of September 30, 1994, 59 percent were current with forbearance agreements or current with their original mortgage payments. The remaining 41 percent were delinquent or pending foreclosure. Only 5 percent of the program’s borrowers were making full mortgage payments. When borrowers remained in the program beyond the 3-year relief period and therefore were required to make full mortgage payments, the proportion of borrowers current with repayment agreements dropped and the proportion of borrowers in foreclosure increased. Similarly, the average amount of delinquencies owed by borrowers increased. (See app. III for detailed information on borrowers’ compliance with repayment agreements.) Most of the 25,041 borrowers who left the program for whom records are available did so following foreclosure, while other borrowers paid off their loans and at times eliminated delinquencies. Of the 25,041 borrowers, HUD foreclosed on 14,707 borrowers (59 percent), while 10,334 borrowers (41 percent) paid off their loans. An example of a borrower who left the program through foreclosure is a Chicago mortgagor who was accepted into the program in November 1990 and was $9,495 behind in payments at that time. The loan’s outstanding principal balance at that time was $34,862. Although HUD determined that the mortgagor’s income was sufficient for him to make more than full mortgage payments, the mortgagor made only five payments over the next 3-1/2 years. By September 1994, when HUD began foreclosure, the borrower was over $25,000 behind in payments. Borrowers who paid their loans generally did so following the sale of their homes at a price that, in most cases, allowed them to repay the outstanding mortgage and the delinquent amount. For example, a Seattle, Washington, mortgagor defaulted on an $89,890 loan 15 months after obtaining it. The mortgagor found a new job after experiencing a salary cut on his previous job. When the mortgage was assigned in November 1990, the mortgagor was already $6,333 behind in payments. Initially, the mortgagor was allowed to make reduced payments of $400 per month, about half the full payment. After 2 years, the mortgagor was unable to pay off the delinquent amount, which had grown to $19,229 when he sold the house in April 1993. However, the sale proceeds enabled the mortgagor to fully satisfy his obligation to HUD. (See app. IV for cases in which some borrowers paid off mortgages and others did not.) Given the lower income of FHA borrowers, which can make them financially vulnerable, the assignment program’s operating procedures do not provide assurance that delinquent amounts will be repaid and that borrowers will succeed in avoiding foreclosure. These procedures include (1) accepting borrowers into the program after they have accumulated substantial loan delinquencies and therefore have an uncertain repayment ability and (2) a 36-month relief period when payments can be reduced or suspended, which permits outstanding delinquencies to grow even if borrowers are current with repayment agreements. Most FHA home loans are for moderate-income individuals. These individuals are likely to be more financially vulnerable than other mortgagors who are able to obtain home loans without FHA’s assistance. Under the assignment program, a borrower must miss at least three mortgage payments before submitting an application to enter the program. During the acceptance process, additional payments may be missed, and substantial delinquencies may accumulate over a period of 6 months or more. We randomly selected, as case studies, 136 loans from four loan categories—paid-off, current with payments, foreclosed on, and delinquent—from files at four HUD field offices—Boston, Chicago, Ft. Worth, and Spokane—to illustrate, among other things, the amount of delinquencies that borrowers had accumulated when they entered the program. Our review of these loans showed that borrowers were, on average, 8 months behind in mortgage payments of $4,014 on their loans at the time they were accepted into the program. These loans had an average outstanding principal balance of $39,886 at that time. These figures, and others reported later that are based on these case studies, are not projectable to the universe of assigned loans. The program also allows 3 years of reduced or suspended mortgage payments. For borrowers who qualify for this program feature, delinquencies for unpaid interest and other expenses continue to grow. As shown in figure 4, as of the end of fiscal year 1994, all borrowers in the program for more than 1 year but fewer than 3 years experienced, on average, an increase in delinquent amounts from about $7,000 to $15,000. On average, after 9 years in the program, delinquencies for all borrowers continued to grow, peaking at about $22,000. Similarly, delinquencies for borrowers current with forbearance agreements also grew at about the same rate as those of all borrowers during the first 3 years but began to decline after the borrowers had been in the program for 3 years. Once the 36-month relief period is completed, borrowers are expected to resume full mortgage payments and, if possible, increase payments to reduce accumulated delinquent amounts. If borrowers cannot make full payments, HUD may initiate foreclosure action. There is no requirement, however, that borrowers pay off their delinquent amounts or leave the program in a specified time period, other than over the remaining term of the loan, which HUD can extend for up to 10 years. About 31,900 (45 percent) of the borrowers in the program as of September 30, 1994, had been in the program for more than 3 years. About 1,000 borrowers had been in the program for over 15 years. In assessing the cost to FHA of operating the program, we (1) forecasted the foreclosure and payoff rates for loans assigned since fiscal year 1989 and (2) estimated the expenditure and revenue flows for these loans over their expected life. Using historical data on the performance of individual loans in the assignment program, we developed estimates of loan-servicing costs, acquisition costs, and other costs for all surviving loans over their anticipated life. In addition, we estimated revenues received from loan payoffs, mortgage payments, and the sale of properties after foreclosure. In order to estimate the program’s net loss to FHA, we compared the resulting cost per assigned loan to the average loss that FHA would have experienced on these loans had they gone directly to foreclosure rather than to the assignment program. Our analysis showed that losses on the 68,695 loans assigned to HUD since fiscal year 1989 will be an estimated average of about $49,000 each. We subtracted from the estimated average loss of $49,000 the estimated $27,000 loss that FHA would have experienced had the loans not entered the assignment program, leaving an estimated net loss to FHA of about $22,000 per assigned loan. On the basis of this analysis, we estimate that FHA’s Fund will experience additional losses of about $1.5 billion over what it would have incurred if the loans entering the assignment program since fiscal year 1989 had immediately gone to foreclosure instead. Table 1 summarizes our estimates of the expenses and income associated with the program’s 68,695 loans over their life. The additional costs incurred by FHA are primarily attributable to the partial payments it received on mortgage loans; delays in receiving funds from the sale of the assignment program’s properties that are eventually foreclosed; administrative costs; and advances made by HUD for taxes, insurance, and other expenses. FHA borrowers’ premiums pay for these losses, not the U.S. Treasury. To cover losses, FHA deposits borrowers’ insurance premiums in the Fund. According to 12 U.S.C. 1711, the Fund must meet or endeavor to meet statutory capital ratio requirements designed to achieve actuarial soundness; that is, it must contain sufficient reserves and funding to cover estimated future losses resulting from the payment of claims on defaulted mortgages and administrative costs. To offset substantial losses to the Fund that were incurred in the 1980s, FHA borrowers were required to pay higher insurance premiums beginning in July 1991. In our recent report and testimony on the actuarial soundness of the Fund, we reported that the economic value of FHA’s Fund clearly has improved significantly in recent years but that the Fund as of the end of fiscal year 1993 had not yet accumulated sufficient capital reserves to cover losses during periods of adverse economic conditions as defined by the law. Options are available to the Congress to change the assignment program that would reduce the losses incurred by the program. These options include directing HUD to shorten the 36-month relief period, set a time limit on eliminating delinquencies, and accept into the program only those borrowers who can afford half or more of their mortgage payments. Information provided by officials from four mortgage lending or purchasing institutions indicates that these institutions provide borowers in default a shorter time period to begin full mortgage payments under the original loan or a modified loan and to repay delinquent amounts. They also use techniques different from HUD’s that could improve the effectiveness and reduce the cost of the program. VA usually capitalizes the delinquency and reamortizes the new loan balance (i.e. extends the time period for payment of the loan principal) as soon as it acquires the loan. In addition, VA will reduce the interest rate on the reamortized loan to as low as 3 percent below the current market rate if a reduction is necessary to bring the veteran’s payments to an affordable level. VA may also acquire loans for borrowers who are not able to resume payments immediately if they show the ability to be able to do so in a reasonable period of time. VA field stations have significant discretion in deciding what constitutes a reasonable period; however, it is usually not extended beyond the point at which the loans reach a full year’s delinquency. During this period, VA may provide relief by agreeing to accept payments of less than a full installment or by extending complete forbearance. Fannie Mae and Freddie Mac provide relief for up to 18 months. They may extend this period longer under certain circumstances, but during the relief period, the borrower must eliminate the delinquency. Although RHCDS does not have a specified relief period, an RHCDS official told us that its county supervisors provide short-term relief on a case-by-case basis. Another option for reducing the program’s losses would require borrowers to pay half or more in monthly mortgage payments. We estimate that if all 68,695 borrowers who have entered the program since fiscal year 1989 had paid and continue to pay 50 percent of their original mortgage payments, the program would lose about $433 million more than what would have occurred if the loans had gone immediately to foreclosure, or substantially less than our estimated loss of $1.5 billion. The mortgage payments being made by borrowers as of September 30, 1994, averaged about a third of the original mortgage payments. These borrowers would have to pay 67 percent of their original mortgage payments for the program to break even. In addition to a shorter period of relief, other mortgage assistance institutions stress resolving the delinquency by the end of the relief period. In contrast, the mortgage assignment program gives borrowers many years beyond the relief period to repay a delinquency, as evidenced by some borrowers who have been in the program for 15 years. If the borrower is unable to pay the delinquency within the 3-year relief period, HUD’s regulations require that the borrower must repay the delinquency on or before the mortgage maturity date, but the borrower may be given up to 10 years beyond the maturity date. Freddie Mac, Fannie Mae, and VA also work closely with borrowers to provide long-term solutions, such as modifying the structure of a loan to resolve delinquencies. Officials from these organizations told us that they believe techniques such as refinancing and reducing interest rates to reduce monthly mortgage payments are successful alternatives to costly foreclosure. However, HUD seldom uses its authority to modify borrowers’ mortgage loans. Rather, HUD uses repayment agreements both before and after the 36-month relief period to secure repayment of outstanding delinquencies. These are generally 1-year term agreements based on the borrowers’ estimated income and expenses to repay a debt. HUD field office officials told us that the preparation and monitoring of these agreements requires extensive staff resources. According to HUD’s Director, Single-Family Servicing Division, the primary strategy HUD plans to follow to reduce the program’s losses is to sell its assigned loans and thereby reduce the number of loans it holds and services. In June 1994, HUD sold at auction about 15,000 performing and nonperforming (loans in compliance with repayment agreements and those not in compliance) single-family loans that were not in default when assigned, including 357 loans that were facing foreclosure. FHA received about $12.6 million from the sale of the 357 loans, which represents about 70 percent of the unpaid principal balance on these loans. FHA officials consider these results encouraging and believe that future sales will provide significant relief to field offices that have a large number of assigned loans. FHA plans to sell an additional 15,000 loans in calendar year 1995 and most of the remaining assigned loans over the next 2 years. By fiscal year 1997, HUD expects its inventory to consist only of newly accepted assigned loans that would be held by HUD for a short time before being sold. The purchasers of these loans would be required to comply with HUD’s assignment program’s servicing standards, including permitting 3 years of reduced or suspended mortgage payments. The assignment program operates at a high cost to FHA’s Fund and has not been very successful helping borrowers avoid foreclosure in the long run. The program helps about half of the financially troubled homeowners to avoid foreclosure permanently. However, the costs incurred by HUD to achieve this result exceed the costs that would have been incurred if all assigned loans had gone immediately to foreclosure without assignment. While FHA borrowers’ premiums pay these costs, not the U.S. Treasury, the program’s costs lessen the Fund’s ability to build reserves. Options are available to the Congress to make changes to the program to reduce its losses. The options, such as requiring borrowers to pay more in monthly mortgage payments, would reduce but not eliminate the program’s additional losses. The assignment program would have to require borrowers to begin full mortgage payments within a few months after entering the program in order to nearly eliminate the additional losses incurred by the program. All of these options pose the trade-off of preventing some individuals and families from entering the program who would eventually bring their loans current and/or avoid foreclosure. However, unless changes are made to the present assignment program, its costs will continue to make it more difficult for the Fund to maintain financial self-sufficiency. If the Congress believes that the additional losses incurred by the assignment program are excessive in relation to the number of borrowers that avoid foreclosure, it could consider eliminating the program. However, since some borrowers who default on their FHA mortgages can avoid foreclosure with some assistance, the Congress could consider establishing a short-term, temporary relief program of a few months for such borrowers to replace the mortgage assignment program. If, however, the Congress believes that the borrowers served by FHA’s single-family program are at high risk and therefore in need of additional assistance in the form of forbearance, changes to the program should be considered that would reduce but not eliminate additional future losses. The following are options that the Congress could consider: Require borrowers to (1) resume full mortgage payments within a shorter time period than the 36 months currently allowed and/or (2) eliminate outstanding delinquency amounts within a specified period. For example, the Congress may wish to require that borrowers resume full mortgage payments within 1 year of entering the program and eliminate outstanding delinquencies within 2 years. If borrowers are unable to bring their loan payments current and/or eliminate delinquencies within the specified time, the Congress may wish to consider requiring that HUD foreclose. Require that only borrowers who can pay half their original mortgage amount or more be assigned to the program. We provided a draft of this report to HUD, VA, RHCDS, Fannie Mae, and Freddie Mac officials to obtain their comments. We met with HUD and VA officials and obtained their comments. In a meeting with a HUD Special Assistant to the Assistant Secretary for Housing-Federal Housing Commissioner, HUD’s Director of the Single-Family Servicing Division, and officials from HUD’s Offices of General Counsel and Policy Development and Research, we obtained HUD’s comments. The comments focused on (1) the effects of past litigation efforts on HUD’s management of its mortgage assignment program and (2) alternatives available to prevent foreclosure other than the options we suggest for changing forbearance relief (reducing or suspending monthly mortgage payments for a certain period of time) provided through the assignment program. Specifically, HUD commented that litigation has affected the evolution and operation of the assignment program. According to HUD officials, a consent decree, which the Department entered into in 1979, and litigation preceding and subsequent to entering the consent decree known collectively as the Ferrell v. Pierce litigation have limited HUD’s options to modify the assignment program. The Department believes the Congress needs to understand these limitations when it considers changing the program. Under the consent decree, HUD agreed to, among other things, (1) operate the assignment program for 5 years in compliance with its January 1979 handbook without any modification that would curtail the rights of the mortgagors under the program and (2) after the 5-year period, operate either the present assignment program or an equivalent substitute to help mortgagors avoid foreclosure during periods of temporary financial distress. A series of lawsuits concerning HUD’s implementation of the consent decree followed. We agree that the consent decree and the Ferrell v. Pierce litigation have limited HUD’s options to change the program. It is because of this limitation that the forbearance relief options we present were addressed to the Congress and not to the Secretary of HUD. So that the Congress has a full understanding of the litigation’s effects when considering options to forbearance relief provided through the mortgage assignment program, HUD’s description of the current operation of the assignment program and the effect of past litigation on that program is provided in appendix V. HUD also commented that if the Congress were to consider alternative relief measures for borrowers, there are methods widely used to prevent foreclosure by the private sector that are not discussed in our report. The alternatives to forbearance relief cited by HUD included (1) “modifying defaulted borrowers’ mortgage loans by reducing interest rates, (2) extending the remaining period of the loans, and/or (3) paying partial claims to remedy default with a new obligation from the borrower to repay FHA the amount of the claim.” HUD noted that while our report discusses some relief options used with other federally related mortgages, the options we present to the Congress for change do not include such options. HUD also commented that pursuant to section 918 of the Housing and Community Development Act of 1992, it is studying the adequacy of existing programs authorized to help FHA borrowers avoid foreclosure and alternatives to foreclosure being used with other federally related mortgages. HUD expects to issue this study shortly. We agree that there are alternatives to foreclosure other than the forbearance relief measure provided through HUD’s assignment program. In fact, our report points out that Freddie Mac, Fannie Mae, and VA provide borrowers long-term solutions, such as modifying the structure of their loans to resolve delinquencies. Officials from these organizations told us that they believe techniques such as refinancing and reducing interest rates to reduce monthly mortgage payments are successful alternatives to costly foreclosure. However, this report did not seek to analyze all possible alternatives to the mortgage assignment program because of the focus of our work and our desire not to duplicate HUD’s efforts in studying such alternatives. However, it should be noted that HUD has seldom made use of modified mortgage loans. Consequently, assessing the merits of modifying financially troubled FHA loans to single-family borrowers in lieu of the forbearance that HUD currently provides is difficult. In addition, no matter how successful other alternatives are in avoiding foreclosure, not all borrowers will be able to resume mortgage payments immediately, which is required under such options as refinancing, reducing interest rates, and extending the period of the loan. We recognize, however, that to the extent that such alternatives are effective in helping borrowers retain their homes without entering HUD’s assignment program, they could be a more effective way to avoid costly foreclosure than the current assignment program. HUD’s study on alternatives to foreclosure should be helpful to the Congress in assessing these alternatives. Our report should be helpful to the Congress in assessing changes needed to HUD’s mortgage assignment program to reduce losses on those mortgages that enter the program, regardless of other alternatives that may be used to prevent assignment. While HUD officials agreed that the program’s losses have exceeded those that would have been incurred if loans had gone immediately to foreclosure without assignment, they did not agree with the magnitude of our estimate of the additional cost that FHA incurs. We received no official estimate from HUD of the additional cost, although one HUD analyst said that he believes the additional cost is about one-third of our estimate. HUD currently has a contracted study under way that will produce an estimate of the additional cost to FHA of the program. HUD also provided clarifying information and technical and editorial comments for our consideration in completing our report, which we incorporated where appropriate. VA’s Assistant Director for Loan Management, Loan Guaranty Service, generally agreed with the factual information presented in this report on that agency. We incorporated suggestions by VA to further clarify our report as appropriate. In telephone conversations with RHCDS, Fannie Mae, and Freddie Mac officials, they told us that they agreed with the factual information presented in this report on their organizations and had no further comments. We conducted our work between October 1993 and October 1995 in accordance with generally accepted government auditing standards. Unless you announce its contents earlier, we plan no further distribution of this report until 10 days from the date of this letter. At that time, we will send copies to interested congressional committees; the Secretary of HUD; the Director, Office of Management and Budget; and other interested parties. We will also make copies available to others on request. Please call me at (202) 512-7631 if you or your staff have further questions. Major contributors to this report are listed in appendix VI. Concerned about the rising number of loans assigned to the Department of Housing and Urban Development (HUD) and their financial impact, the Chairman, Subcommittee on Housing and Community Opportunity, House Committee on Banking and Financial Services, asked us to determine whether the mortgage assignment program (1) helps borrowers avoid foreclosure, (2) reduces the Federal Housing Administration’s (FHA) losses, and (3) can be improved to reduce losses. To determine whether the program helps borrowers avoid foreclosures, we analyzed information on foreclosures, delinquencies, and borrowers’ compliance with repayment agreements contained in two of HUD’s national information systems—the Single-Family Mortgage Notes Servicing System and the Single Family Insurance System—as of September 30, 1994. Our data reflect nationwide mortgage assignment statistics on single-family loans that entered these systems as section 203(b) mortgage defaults to avoid foreclosure. Loans assigned to HUD for other reasons were not included in our analyses. We did not perform a reliability assessment of controls over the data in the systems; however, we checked our data results through discussions with HUD personnel, making comparisons to related automated accounting and financial reports and reviewing sampled mortgagors’ repayment files. We randomly selected and examined 136 case example assigned loans from four loan categories—paid-off, current with payments, foreclosed on, and delinquent—from files at four HUD field offices—Boston, Chicago, Ft. Worth, and Spokane—to illustrate, among other things, cases in which some borrowers were able to and chose to pay off their mortgages or become current with their payments and others did not. We selected these field offices to obtain geographic diversity to recognize differences in real estate markets. To determine whether the program reduces losses, we used the data systems mentioned above as well as HUD’s Single-Family Accounting and Management System to estimate the foreclosure rates of mortgages assigned since 1989 and revenue and expense flows for these loans over their life. We used this historical mortgage data to estimate loan servicing, acquisition, and other costs of surviving mortgages. We also assessed revenues received from early loan payoffs, mortgage payments, and sales of properties following foreclosure. We further compared the cost per assigned mortgage loan to the average loss experienced by FHA on mortgages that went directly to foreclosure rather than being accepted into the program. A detailed discussion of our methodology for forecasting program foreclosure rates and estimating program costs appears in appendix II. To determine how to improve the program and reduce program losses, we obtained records, reports, and studies from HUD, the Department of Veterans Affairs (VA), Rural Housing and Community Development Service (RHCDS), Federal National Mortgage Association (Fannie Mae), and Federal Home Loan Mortgage Corporation (Freddie Mac) and analyzed appropriate loan servicing guidelines and foreclosure prevention options. We also interviewed HUD (including HUD’s Office of the Inspector General), VA, RHCDS, Fannie Mae, and Freddie Mac officials at their headquarters locations in Washington, D.C., and local HUD officials in Boston, Chicago, Dallas, and Spokane. We also interviewed officials of five organizations concerned with defaulted loans—the Mortgage Bankers’ Association in Washington, D.C., Legal Assistance Foundation, Public Action Housing Policy Center, Community and Economic Development Corporation of Cook County, Inc., and the Spanish Coalition for Housing. This appendix describes the cash flow model we built and the analysis we conducted to estimate the financial loss to FHA’s Fund for program loans assigned during fiscal years 1989 through 1994. We estimated the loss the Fund will incur on the 68,695 loans that entered the program during this period on the basis of assumptions stated in this appendix. To do so, we (1) estimated the costs that FHA has incurred on and revenues it has received from these loans as of September 30, 1994, and (2) forecasted future costs and revenues during the remaining life of these loans. We converted all cash flow estimates to 1994 present values using an annual discount rate of 7 percent. The largest element of cost to the Fund is the cost associated with settling the lender’s claim on the mortgage, a cost that FHA must pay whether or not the foreclosure occurs immediately or the mortgage enters the assignment program. FHA incurs additional costs while loans are in the program, including the administrative costs to operate the program. Revenues received by FHA, including proceeds from the sale of properties following foreclosure and borrowers’ loan payments, partially offset program costs. The following sections of this appendix contain a detailed description of the data we used and how we estimated the costs and revenues associated with the program. In our analysis, we used three of HUD’s computerized databases—the F-60 database that provides current and historical information on all mortgage loans that HUD services under the assignment program, the A-43 database that provides historical information on mortgages insured under the Fund before assignment, and the Single-Family Accounting and Management System (SAMS) database that tracks properties held and eventually sold by HUD following foreclosure. From these databases, we obtained information on the initial characteristics of each loan, such as the year the loan was assigned, the initial unpaid principal and delinquency amount, and the loan interest rate and term. We also obtained information on the current status of each loan, such as the current unpaid balance, the last payment date, and the delinquency status. We categorized the loans as either foreclosed, prepaid, or active as of the end of fiscal year 1994. We estimated the financial losses for program loans by examining all loans by the year assigned. Costs and revenues were computed for each year’s group of assigned loans over the life of the loans in the program. Cash flows out of the Fund when FHA pays (1) lenders’ mortgage claims, (2) taxes and insurance on properties, and (3) salaries and other administrative costs. Cash flows into the Fund when FHA collects revenues from (1) the sale of properties following foreclosure, (2) the early payoff of loans, and (3) payments made by mortgagors (borrowers). All cash flows are discounted at 7 percent to a 1994 base year. We assumed that the net cost to the Fund was partially a function of foreclosure and payoff rates. Other factors that affected costs included the percentages of unpaid principal to original loan amount, receivables due FHA to original loan amount, advances to original loan amount, and the policy year of the loans. In addition, we assumed that FHA would continue to receive partial and delayed payments for some mortgages assigned and that both foreclosure and prepayment behavior will remain the same in future years as it has been in the past. This is a critical assumption because of data limitations. As a result, our analysis does not take into account that the loans assigned from fiscal years 1989 through 1994 may differ from earlier loans in ways that affect their prepayment and foreclosure probabilities beyond 6 years from the date of assignment. Given these assumptions, we projected future loan activity for foreclosures, prepayments, and surviving loans. Because of inadequate historical data, it was not possible to rigorously estimate foreclosure and prepayment probabilities incorporating economic indicators, such as unemployment rates, payment-to-income ratios, current interest rate, and house price appreciation rates. The Fund incurs a number of costs associated with operating the program, including the costs to acquire loans following default, to administer the program, and for property expenses. The largest cost relates to the acquisition of loans before they enter the program. Acquisition costs were compiled for each year’s book of business. The total acquisition costs for all 68,695 loans is about $4.9 billion, about 89 percent of the total cost of $5.5 billion incurred by FHA’s Fund on these loans. Administrative costs include staff salaries for those servicing program loans and other costs related to the program’s application approval process and the processing of defaulted loans for foreclosure. Administrative costs used in our estimates were those developed by the Congressional Budget Office (CBO). CBO estimated the assignment program’s administrative costs and staffing needs—full-time equivalents (FTE)—for each phase of the loan assignment process: assignment requests, endorsements, servicing, and defaulting mortgages. First we used CBO’s estimates for the costs of each administrative function in 1994 to estimate the cost per loan for each function. We then applied this figure to each year’s loan activity to estimate the costs incurred in that year for each function. Next, we used a real discount rate of 3.5 percent per year to convert the estimates to 1994 present values. CBO’s FTE estimates and GAO’s cost per loan and total cost estimates are shown in table II.1, which illustrates that the administrative cost for the 68,695 loans assigned between fiscal year 1989 and the end of fiscal year 1994 totals about $451 million over the life of these loans, about 8 percent of the costs incurred by FHA’s Fund. Total cost (in millions over the life of the loan) Salary costs, which averaged $48,017 per FTE in fiscal year 1994, are used for all FTEs listed. Assignment request costs were allocated to all program loans, although the majority of these costs were for processing loans that were not accepted into the program. Endorsement costs were computed for all 68,695 loans. Servicing costs were applied every year for as long as the loan remained in the program. Default costs were computed for foreclosed loans by year of default. When borrowers are not current on their mortgages, additional costs are often incurred by FHA, including advances for property taxes, insurance, and other costs. HUD makes these payments to ensure clear title to the property and to protect its investment in case of fire. These costs totaled about $100 million, about 2 percent of the costs incurred by the Fund on these loans, and at times are not recovered from the borrower. To estimate the program’s revenues, we recorded the characteristics and status of loans for each year’s book of business. These data were used to estimate ultimate foreclosure and prepayment probabilities of 52 percent and 48 percent, respectively. The conditional foreclosure and prepayment probabilities for each year were based on the actual number of loans that were foreclosed on and paid off between fiscal year 1989 and the end of fiscal year 1994. We estimated these conditional probabilities using data for the 6-year period ended September 30, 1994. These probabilities were for loans entering the program during a 17-year period (fiscal years 1977 through 1994) and represented loan years 1 through 17. We assumed that the conditional foreclosure and prepayment rates for years beyond 1994 (18-30) were the same as for loan year 17. Figures II.1 and II.2 illustrate the estimated conditional foreclosure and prepayment probability rates by loan year. Revenue estimates were based on the percentage of loans in five loan status categories—current, current with forbearance, delinquent with forbearance, delinquent with no forbearance, and pending foreclosure—and their expected performance in the future. For each year’s book of business, we analyzed the unpaid balance to loan amount, the amount of receivables outstanding, the amortized payment amounts, and the actual payments made for each loan category. We also included the amount of advances owed and original loan amounts in the estimates. To estimate foreclosure revenues, an average recovery rate for loans foreclosed and sold was obtained from the SAMS data on 203b loans foreclosed during fiscal years 1983-94. Recovery rates ranged between 43 and 67 percent of acquisition costs each year, averaging 59 percent. The average recovery rate of 59 percent was applied to the acquisition costs of all foreclosed loans. Average acquisition costs were used in estimating foreclosure revenues. Specifically, the average acquisition costs for each year times the recovery rate for each foreclosed loan results in the estimated total foreclosure revenue of about $1 billion, about 48 percent of the $2.1 billion in revenues to be obtained by FHA’s Fund on these mortgages. Prepayment revenues are based on data for all loans. Using the number of loans that paid off and those forecasted to be paid off, the unpaid principal balance at the time of payoff was estimated and summed for all loans, totaling about $955 million, about 45 percent of the revenues to be obtained by FHA. In estimating the unpaid principal balance, we used the ratio of unpaid balance to original loan amount for each year. Using the average loan amount, year in program, and the number of expected prepayments, we estimated prepayment revenues for each year. For years 19 through 30, we assumed that the unpaid balance to original loan amount will continue to decrease at an accelerated rate. To determine the unpaid balance for years 19 through 30, a simple regression was applied to the unpaid balance to original loan amount ratio for years 1-18, in which each year’s ratio is dependent on the previous year’s ratio. The resulting parameters were used to estimate the unpaid balance to loan amount schedule for years 19-30. We forecasted loan payment revenues using the estimated number of loans remaining in the program and the actual and scheduled payments made for each loan category. Actual loan payments averaged about 34 percent of scheduled payments. It was assumed that the assigned loans will have the same distribution over the loan categories that they did in fiscal year 1994 but that the length of time in the program varies. Actual to scheduled payment ratios were also assumed to vary by time in program. As loans age, payment ratios rise, indicating that older loans are paying a higher percentage of scheduled payments. Mortgagors’ total payments for each year through the year 2023 for each year’s book of business were summed to obtain the estimated total payment revenue of about $152 million, about 7 percent of the revenues obtained by FHA’s Fund for loans assigned since the beginning of fiscal year 1989. Approximately 39,600 (55 percent) of the 71,500 borrowers in the program as of September 30, 1994, had been in the program 3 years or fewer. HUD’s records show that of the 39,600 borrowers, 26,000 (66 percent) are current with repayment agreements while the remaining 34 percent are not current. Of the 26,000 borrowers who are current with repayment agreements, 36 percent are current with original mortgage payments. The remaining borrowers (64 percent) are current with repayment agreements that call for reduced or suspended payments. When borrowers remain in the program beyond the 3-year relief period and therefore are required to make full mortgage payments, the proportion of borrowers current with repayment agreements drops and the proportion of borrowers in foreclosure increases. Similarly, the average amount of delinquencies owed by borrowers increases (see figs. III.1 and III.2). Of the approximately 31,900 borrowers who have been in the program more than 3 years and are required to make full mortgage payments, 38 percent are current on their repayment agreements. People buy homes for shelter and investment purposes. Normally, they do not plan to default on a loan. However, conditions that lead to defaults occur. Defaults may be triggered by a number of events: unemployment, divorce, death, etc. These events are not likely to trigger foreclosure if the home can be sold for more than the mortgage balance and selling expenses. However, if the property is worth less than the mortgage, these events may trigger a foreclosure. Prepayments may be triggered by other events such as declining interest rates or rising house prices, which in turn may result in the refinancing or sale of a residence. To illustrate that some borrowers were able to and chose to pay their mortgages while others did not, we randomly selected 136 case example loans from four loan categories—paid-off, current with payments, foreclosed on, and delinquent—from files at four HUD field offices—Boston, Chicago, Ft. Worth, and Spokane. Of the 136 borrowers, 78 had paid off their loans, 34 were current with their mortgages, and 24 had either been foreclosed on, provided HUD with a deed in lieu of foreclosure, or were delinquent on their loans. Borrowers who had been foreclosed on, had given FHA a deed in lieu of foreclosure, or had experienced growing delinquencies were generally unable to resume full payments, and they experienced additional problems after assignment that intensified their financial difficulties. These borrowers generally encountered one or more of the following situations after assignment: (1) intermittent job loss with a reduction in income, (2) reduction in income due to divorce, (3) one or more serious illnesses or injuries, (4) loss of a high paying job and reduced income from a new job, and/or (5) unanticipated housing repairs. Only a few borrowers did not make their mortgage payments because they had high installment debt. While FHA does not keep track of borrowers after foreclosure, FHA loan servicers familiar with foreclosures told us that after foreclosure, borrowers generally either rent an apartment or are able to stay with relatives. Furthermore, program borrowers who experience foreclosures have experiences that are similar to those of FHA borrowers who experience foreclosures immediately without assignment, according to the servicers. However, officials from two housing counseling agencies told us that some borrowers could become homeless after foreclosure. In contrast, the 34 borrowers who were able to become current with their loans generally did not experience such a litany of problems. Although their incomes also declined, they either still had jobs, found new jobs by the time HUD accepted their loans for assignment, or were able to obtain second jobs to supplement their incomes. As a result, 25 (about 73 percent) of the borrowers who became current were able to resume full or increased mortgage payments immediately upon entering the program. Of the 34 borrowers who became current on their loans, 13 cured their delinquencies in less than 2 years. However, the remaining 21 borrowers took 92 months on average to cure their delinquencies. Seven borrowers took over 10 years to become current with their original mortgage payments. Almost all of the 78 borrowers included in our case studies who had already paid their mortgages did so by selling their homes or refinancing their mortgages. Of the 78 borrowers, 71 sold or refinanced their homes, 4 paid mortgages from insurance settlement payments, and 3 paid through regular or increased payments. Borrowers who sold their homes were, on average, 8 months behind in mortgage payments of $4,169 at the time their loans were assigned, which increased to $6,088 when they sold or refinanced their homes. However, the proceeds from the sales were generally sufficient for these borrowers to pay off their original notes and the delinquencies. Generally, these borrowers had either held the properties for more than 10 years or lived in areas where housing had significantly appreciated in value since the homes were purchased. For example, according to a HUD field office official, housing in Spokane has almost doubled in value since 1985. In contrast, the value of homes in the Fort Worth area did not significantly appreciate during this period. Thus, mortgagors in areas where housing had significantly appreciated in value who sold their homes had equity in their homes when they defaulted on their mortgages. Almost half of the 78 borrowers who paid off their mortgages did so within 2 years of assignment, and almost two-thirds did so within 3 years of assignment. Sally S. Leon-Guerrero, Staff Evaluator The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO reviewed whether the Housing and Urban Development's (HUD) mortgage assignment program: (1) helps borrowers avoid foreclosure; (2) reduces the Federal Housing Administration's (FHA) foreclosure losses; and (3) can be improved to reduce such losses. GAO found that: (1) HUD mortgage assignment program helps borrowers avoid immediate foreclosure, but is not successful in helping borrowers avoid foreclosure or retain their homes on a long-term basis; (2) about 52 percent of the 68,700 borrowers in the mortgage program will lose their homes through foreclosure, and the remaining borrowers will pay off their loans after the sale or refinancing of their homes; (3) the mortgage assignment program has not reduced FHA foreclosure losses, since FHA incurs additional costs under the program which more than offset the costs from saving some loans from foreclosure; (4) FHA will incur losses of more than $1.5 billion for those borrowers accepted into the mortgage program since fiscal year 1989; (5) although FHA borrowers' premiums pay for these additional losses, it is more difficult for the single-family insurance program to remain self-sufficient; (6) options that would reduce additional program losses include reducing the 3-year relief period provided to borrowers, setting a time limit on eliminating delinquencies, and accepting borrowers that can pay half or more of their mortgage payment; and (7) FHA would have to require borrowers to begin full mortgage payments within a few months after entering the program to eliminate additional program losses. |
Legendary legal eagle Alan Dershowitz says he was stunned that George Zimmerman's defense lawyer told a "knock-knock joke" during his opening statement to the jury in the Trayvon Martin case.
The Harvard law professor, who was unavailable for comment early Tuesday, told “The Steve Malzberg Show” on Newsmax TV that he found the incident to be inappropriate for a murder trial.
"This is a murder case,” Dershowitz said. “The victim's family is sitting in the courtroom with tears in their eyes and he's telling a knock-knock joke? I just don’t get it.”
Dershowitz, well-known in legal circles for winning an acquittal of Claus von Bulow in the case that inspired the film “Reversal of Fortune,” even recommended that attorney Don West consider a new line of work.
"If a student ever did that in a mock court in my class, I would … ask him are you in the right school? Maybe you want to be a stand-up comedian or an entertainer,” he continued. “And, by the way, if you do, come up with better jokes."
Dershowitz also told CNN that Zimmerman should consider filing a motion requesting a mistrial due to West’s remarks.
“I would be furious at my lawyer unless the lawyer told him he was going to open with that joke,” Dershowitz told Piers Morgan on Monday. “In fact, I would ask my other lawyer to make a motion for a mistrial to start all over again.”
During opening statements on Monday, State Attorney John Guy repeated obscenities Zimmerman, 29, said to a police dispatcher just before the deadly confrontation with the 17-year-old Martin. He quoted Zimmerman as saying that Martin was one of the "f------ punks" who "always get away."
West, meanwhile, opened with a knock-knock joke in reference to the difficulty of selecting a jury for such a widely publicized case.
"Knock. Knock," West said.
"Who is there?"
"George Zimmerman."
"George Zimmerman who?"
"All right, good. You're on the jury."
Dershowitz said the “only saving grace” to the joke was that apparently no one laughed.
"It wasn’t very funny," Dershowitz told Newsmax TV. "But I don’t get that. This is such a serious case … You have to be so dead serious. You're the defense lawyer. You're standing between yourself and the defendant and if the jury doesn’t like you, the jury's not going to like the defendant.
"And everything in this case comes down to George Zimmerman's credibility."
Zimmerman faces life in prison if convicted of second-degree murder for fatally shooting Martin on Feb. 26, 2012, as the black teenager walked from a convenience store through the gated townhouse community where he was staying in Sanford, Fla.
The Associated Press contributed to this report. ||||| Story highlights Defense lawyer apologizes for telling joke during opening statements
Father of Trayvon Martin cries in courtroom; George Zimmerman shows no emotion
Did Zimmerman commit 2nd degree murder when he killed Martin? Or was it self-defense?
62% in a CNN poll say the charges against Zimmerman are "probably" or "definitely" true
A prosecuting attorney greeted the jury in the George Zimmerman trial Monday with a quote full of expletives, while his adversary decided it was appropriate to tell jurors a knock-knock joke.
And that was just the beginning of opening statements in Zimmerman's long-anticipated murder trial.
In a case that has ignited national debate about gun laws and race relations, Zimmerman, a neighborhood watch captain, is accused of second-degree murder in the fatal shooting of 17-year-old Trayvon Martin in February 2012 in Sanford, Florida.
Prosecutor John Guy's first words to the six-woman jury may have raised a few eyebrows.
"Good morning. 'F*****g punks, these a******s all get away,'" Guy quoted Zimmerman. "These were the words in this grown man's mouth as he followed this boy that he didn't know. Those were his words, not mine."
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Zimmerman, Guy said, "got out of his car with a pistol and two flashlights to follow Trayvon Benjamin Martin, who was walking home from a 7-Eleven, armed" with a fruit drink and a bag of candy. Eventually the two became entangled on the ground in a fight. A witness has said Martin was on top of Zimmerman, Guy said.
"The defendant claims that while Trayvon Martin was on top of him, he said, 'you are going to die tonight,'" said Guy. "Nobody heard that."
Guy told jurors that no witnesses saw what happened the night of the shooting from beginning to end. Witnesses only saw "slices" of what happened, he said.
"We are confident that at the end of this trial you will know in your head, in your heart, in your stomach that George Zimmerman did not shoot Trayvon Martin because he had to," Guy said. "He shot him for the worst of all reasons, because he wanted to."
Fast facts: Trayvon Martin shooting
In the first day of testimony, jurors heard witnesses recount Martin's trip to the convenience store, Zimmerman's call complaining about a suspicious person walking through his neighborhood before Martin's killing, and a call from the previous August, in which Zimmerman reported an alleged burglary to police.
Proceedings ended for the day when defense attorney Mark O'Mara objected to the earlier call, which prosecutors argued was necessary to explain Zimmerman's remark about burglars who "get away."
The Martin family sat watching the proceedings behind State Attorney Angela Corey. Before witness testimony began, Judge Debra Nelson denied a defense request that Martin's father, Tracy Martin, leave the courtroom.
Tracy Martin is a potential witness, and potential witnesses can be forced to sit outside of the courtroom to keep their testimony from being tainted by other witnesses. But the next-of-kin of victims are allowed to remain in court even if they're expected to testify.
O'Mara also accused Tracy Martin of using an obscenity toward a friend of Zimmerman's while holding the door for him during a hearing two weeks ago. The friend, Timothy Tucholski, testified that he hadn't wanted to make an issue of it before.
"I wasn't planning on coming up here. I don't want to be sitting here," he said.
Photos: Trayvon Martin evidence 10 photos Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – A photo posted online Monday, December 3, shows George Zimmerman with blood on his nose and lips. His attorneys say it was taken the night unarmed teen Trayvon Martin was killed in Sanford, Florida. Zimmerman, 28, faces second-degree murder charges in the death of Martin in Sanford, Florida, on February 26, 2012. Other evidence photos were released earlier this year: Hide Caption 1 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – Zimmerman says he shot Martin in self-defense. Martin's attorneys say he was shot and killed "in cold blood." Hide Caption 2 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – Zimmerman said that before he shot the teenager, he was "assaulted (by Martin) and his head was struck on the pavement," according to a police report. Hide Caption 3 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – According to a fire department report, Zimmerman had "abrasions to his forehead," "bleeding/tenderness to his nose" and a "small laceration to the back of his head" when he was treated at the scene. Hide Caption 4 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – In a photo released by the Sanford Police Department, Zimmerman's hands appear to be unmarked. Hide Caption 5 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – Prosecutors allege Zimmerman unjustly killed Martin, an unarmed teenager, after profiling him. Zimmerman has pleaded not guilty and claims self-defense. Hide Caption 6 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – Zimmerman's gun is displayed. The shooting raised questions about gun laws, as well as the merit of the "stand your ground" law in Florida and similar laws in other states. Hide Caption 7 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – Crime scene photos released by the Sanford Police Department show Trayvon Martin's cell phone at the scene of the shooting. Hide Caption 8 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – Evidence marker 2 shows a plastic sack found at the crime scene. Hide Caption 9 of 10 Photos: Trayvon Martin evidence 10 photos Trayvon Martin evidence – A can of Arizona iced tea was found on the ground at the Martin crime scene. Hide Caption 10 of 10 EXPAND GALLERY
Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – Memorials to Trayvon Martin grow daily outside The Retreat at Twin Lakes, the gated Sanford, Florida, community where neighborhood watchman George Zimmerman shot and killed the unarmed teen February 26. The death has sparked protests across the country and brought unwanted attention to Sanford, a town north of Orlando. Hide Caption 1 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – Sanford's main roads are dotted with mini strip malls in between patches of what remains of central Florida's agricultural history. Views about the Martin case depend on which streets you stand on in Sanford. Hide Caption 2 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – "I don't see Sanford as being a prejudiced town by any means," said Michelle Simoneaux, left, manager of downtown's Colonial Room Restaurant and Fountain. "This could happen anywhere, but it doesn't happen every day. " Hide Caption 3 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – A neighborhood watch sign marks the gated community where Martin died. Zimmerman has said he killed the teen in self-defense, police said. Hide Caption 4 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – Members of the Goldsboro community play a game under an oak tree. Goldsboro was one of Florida's earliest towns incorporated by African-Americans before Sanford absorbed it and took over in 1911. Residents speak of frequent police patrols in the area and other cases similar to Martin's. Hide Caption 5 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – A protest sign painted on the window of a car at a housing project calls for Zimmerman's arrest. For some, the Martin case has become a rallying cry, a chance to air what they believe are years of grievances. Hide Caption 6 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – The Martin killing has been the subject of intense coverage in local newspapers as well as the national media. Hide Caption 7 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – Longtime resident Myranette Boynton, 58, says she thinks the attention to Sanford will make a difference. "This occasion has happened too many times, and enough is enough," Boynton says from the banks of Lake Monroe. "Trayvon is not the only one, but Trayvon should be the last one." Hide Caption 8 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – A handwritten card lies among the memorial gifts outside the neighborhood where the high schooler died. Hide Caption 9 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – A woman strolls through the downtown area. Many residents say they wonder whether Sanford will forever be known as the place where an unarmed black teen was killed while heading home from the store. Hide Caption 10 of 11 Stigma for town in Trayvon Martin killing 11 photos Stigma for town in Trayvon Martin killing – Signs about the shooting have been posted throughout the Florida city, and the message is clear: People want answers. Hide Caption 11 of 11 EXPAND GALLERY
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'Million Hoodie March' 9 photos 'Million Hoodie March' 9 photos 'Million Hoodie March' – Supporters of Trayvon Martin rally in New York's Union Square during a "Million Hoodie March" on Wednesday, March 21. Trayvon, 17, was shot to death February 26 while walking in a gated community in Sanford, Florida. George Zimmerman, a neighborhood watch leader, said he shot the teen in self-defense. Hide Caption 1 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Trayvon Martin supporters block traffic as they march through Union Square on Wednesday. Many of the demonstrators wore hoodies and carried Skittles, the candy Martin left his father's fiancee' house to buy the night he was killed. Zimmerman has not been arrested. A police report describes him as a white male; his family says he is Hispanic. Hide Caption 2 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Sybrina Fulton, Trayvon's mother, hugs a supporter at the March. "Our son is your son," Fulton, told the crowd. "This is not about a black-and-white thing. This is about a right-and-wrong thing. Justice for Trayvon!" Hide Caption 3 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Demonstrators of all races crowded into Union Square for the Million Hoodie March. Hide Caption 4 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Hundreds of demonstrators marched in Union Square. Protests are also scheduled for Thursday in Sanford, Florida. Hide Caption 5 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Demonstrators chant at the Million Hoodie March in New York. Hide Caption 6 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – The shooting and police response in Trayvon's case is fueling outrage that has reached well beyond Sanford, a racially mixed community 16 miles northeast of Orlando. Hide Caption 7 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Protestors flood the streets and block traffic as they march on W. 14th Street. Hide Caption 8 of 9 'Million Hoodie March' 9 photos 'Million Hoodie March' – Passengers on a bus take photos of the demonstrators. Hide Caption 9 of 9 EXPAND GALLERY
But Nelson denied the request, and Martin remained in court -- but Zimmerman's parents were covered by the rule regarding potential witnesses and had to sit outside, as did Benjamin Crump, the lawyer for Martin's parents.
At one point, Martin's father began crying as Guy detailed how officers tried to save his son's life. Zimmerman has mostly stared straight ahead without any signs of emotion.
Following Guy's statement, defense attorney Don West came forward to woo the jury. As he began, he told a knock-knock joke. But it failed to win a laugh. "Knock knock. Who's there? George Zimmerman. George Zimmerman who? Good, you're on the jury," he said. Later, West apologized. "No more bad jokes, I promise that," he told jurors. "I was convinced it was the delivery."
West quickly got on with the business of making his case: that Zimmerman was forced to act in self-defense to save his own life.
"The evidence will show this is a sad case; no monsters here. ... George Zimmerman is not guilty of murder. He shot Trayvon Martin after he was viciously attacked."
With the help of PowerPoint visuals, West spent hours hammering home his argument.
He broke down Zimmerman's 911 call in which he first reported seeing Martin and told about following him.
"Little did George Zimmerman know at the time in less than 10 minutes from him first seeing Travyon Martin that he, George Zimmerman, would be suckered punched in the face, have his head pounded on concrete and wind up shooting and tragically killing Trayvon Martin," West told jurors.
West also deconstructed a 911 call a neighbor made, in which it is possible to hear screams and a shot in the background that West said was the sound of the fatal bullet.
As the dramatic recording audio filled the courtroom, Zimmerman showed no emotion. Martin's mother left the courtroom.
"At the moment this actually became physical was that Trayvon Martin -- I will use my words -- that Trayvon Martin decided to confront George Zimmerman," West said. "That instead of going home. He had plenty of time. This is, what, 60 or 70 yards. Plenty of time. He could've gone back and forth four or five times."
West quoted a witness named John Good who described the fight. "He called it a 'ground and pound' by Martin, who he said was on top of Zimmerman, beating him."
"He saw enough that this was serious," West said. Zimmerman cried out for help, looked at Good and said, "help me." But the beating continued while Good went inside his home to call 911, West said.
There was a shot. Shortly afterward, according to West, Zimmerman said Martin "was beating me up, and I shot him."
West also disputed the prosecution's claim that Martin was unarmed.
"Travyon Martin armed himself with the concrete sidewalk and used it to smash George Zimmerman's head," said West. "No different than if he picked up a brick or smashed his head against a wall. That is a deadly weapon."
West showed jurors photos taken of Zimmerman after the fight. "What you can really see in these pictures that you will have in evidence are the lumps," West said. "The big knots on each side of his head. Consistent with having his head slammed into concrete."
All-female jury to try Zimmerman
Among the first prosecution witnessed called was the 911 dispatcher who took Zimmerman's call before the shooting. Seat Noffke testified that he was trained to give general commands instead of direct orders to people.
When Zimmerman said he was following Martin, Noffke told him, "Okay we don't need you to do that." Noffke told the prosecutor he's liable for any direct orders he gives someone.
On cross-examination, defense attorney O'Mara pointed out that Noffke asked Zimmerman, "Which way is he running?"
"If you tell somebody twice to let you know if the person that they're concerned about is doing anything else -- do you think they're going to keep their eye on them?" asked O'Mara.
"I can't answer that," said Noffke.
"You did tell him twice to let you know if that guy did anything else," said O'Mara.
"Yes sir," said Noffke.
Noffke went on to say he only wanted a location of the suspect for officers and that he never told Zimmerman to follow or keep his eye on Martin.
Shortly before court got under way, Martin's mother, Sybrina Fulton, spoke to reporters, asking people to "pray for me and my family because I don't want any other mother to experience what I'm going through now."
Judge: No state expert testimony on 911 calls
Martin was black, and Zimmerman identifies himself as Hispanic.
In a CNN poll released Monday morning, 62% of respondents say the charges against Zimmerman are probably or definitely true. | George Zimmerman's attorney wasn't going to let the prosecutor have all the fun with his profanity-laced opening statement yesterday. Don West decided to make a splash in his opening as well—with the world's most awful knock-knock joke. After urging the jury to hold the joke against him rather than Zimmerman, he said. "Knock knock. Who's there? George Zimmerman. George Zimmerman who? All right, good, you're on the jury!" The response: crickets. West later apologized, CNN reports. "No more bad jokes, I promise that," he said. "I was convinced it was the delivery." But the moment of attempted humor could be a big deal; Harvard law professor Alan Dershowitz thinks Zimmerman could use it as grounds to request a mistrial. "The victim's family is sitting in the courtroom with tears in their eyes and he's telling a knock-knock joke?" Dershowitz told NewsMax TV, according to Fox News. "If a student ever did that in a mock court in my class, I would … ask him are you in the right school? Maybe you want to be a stand-up comedian. ... And, by the way, if you do, come up with better jokes." |
Much is written on this topic, and this CRS report directs the reader to authoritative sources that address many of the most prominent issues. The annotated descriptions of these sources are listed in reverse chronological order, with an emphasis on material published in the past several years. This report includes resources and studies from government agencies (federal, state, local, and international), think tanks, academic institutions, news organizations, and other sources: Table 1 —cybersecurity overview Table 2 —congressional and government resources Table 3 —international organizations resources Table 4 —news resources Source: Highlights compiled by CRS from the sources. Table 5 —other associations and institutions resources | Much is written on the topic of cybersecurity. This CRS report and those listed below direct the reader to authoritative sources that address many of the most prominent issues. Included in the reports are resources and studies from government agencies (federal, state, local, and international), think tanks, academic institutions, news organizations, and other sources. This report is intended to serve as a starting point for congressional staff assigned to cover cybersecurity issues. It includes annotated descriptions of reports, websites, or external resources: Table 1—cybersecurity overview Table 2—congressional and government resources Table 3—international organizations resources Table 4—news resources Source: Highlights compiled by CRS from the sources. Table 5—other associations and institutions resources The following CRS reports comprise a series that compiles authoritative reports and resources on these cybersecurity topics: CRS Report R44406, Cybersecurity: Education, Training, and R&D Authoritative Reports and Resources, by Rita Tehan CRS Report R44408, Cybersecurity: Cybercrime and National Security Authoritative Reports and Resources, by Rita Tehan CRS Report R44410, Cybersecurity: Critical Infrastructure Authoritative Reports and Resources, by Rita Tehan CRS Report R44417, Cybersecurity: State, Local, and International Authoritative Reports and Resources, by Rita Tehan CRS Report R44427, Cybersecurity: Federal Government Authoritative Reports and Resources, by Rita Tehan CRS Report R43317, Cybersecurity: Legislation, Hearings, and Executive Branch Documents, by Rita Tehan CRS Report R43310, Cybersecurity: Data, Statistics, and Glossaries, by Rita Tehan |
One of the gunmen authorities say opened fire Sunday outside an exhibition of cartoons depicting the prophet Muhammad had previously been suspected of trying to fly overseas and wage violent jihad, according to court records.
He was identified as Elton Simpson, 30, of Phoenix, according to a U.S. law enforcement official. Law enforcement officials said Monday afternoon that the second shooter in the Texas attack was Nadir Soofi, 34, Simpson’s roommate.
FBI agents searched a Phoenix apartment Monday as part of the investigation into the shooting, which occurred Sunday evening in Garland, a city near Dallas.
The FBI had begun monitoring Simpson again recently. Authorities said Monday that they were still working to determine details about the two men and who may have instigated the plan. The FBI does not believe the shooting was directed by an international terrorist group, but is still investigating.
Police say the two gunmen drove up to the Curtis Culwell Center during a controversial art exhibition and, at around 6:50 p.m., opened fire with assault rifles, striking a security guard in the leg.
An officer who normally works on traffic was there as part of a heavy security detail for the event, and this officer shot and killed both gunmen using his duty pistol, said Joe Harn, a spokesman for the Garland police.
“Both those men died there on the street next to their car,” Harn said during a news conference Monday morning.
The mother of one of the gunmen in Sunday's Mohammad cartoon attack says her son was not a violent person. Sharon Soofi said she doesn't blame police for shooting Nadir but is left feeling "empty." (Reuters)
The gunmen had additional ammunition as well as suitcases in their vehicle, but no bombs or explosives were found, Harn said. They were also wearing some form of protective gear, he said.
While Harn would not say if police believed the shooting was directly connected with the event, he said the two gunmen intended to get inside the center and shoot people.
“We were able to stop those men before they were able to penetrate the area and attempt to shoot anyone else,” Harn said.
The guns recovered by authorities in Garland were being traced Monday by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Police planned security for months before a Texas event showing cartoons of the prophet Muhammad, a police spokesperson said. (Reuters)
City officials said that Bruce Joiner was the Garland Independent School District security officer who was shot at by the two gunmen. Joiner was treated for an ankle wound and released, the city said in a statement.
The inflammatory event was hosted by a New York group that had promised $10,000 for the best cartoon depicting Muhammad. Drawing or otherwise depicting Muhammad is largely forbidden under Islam.
Authorities said there was considerable discussion on social media in the days leading up to the cartoon event, which prompted authorities to deploy heavy security. One tweet sent out on Sunday referred to taking a pledge of allegiance and referred to a #texasattack, but it was unclear whether the account belonged to either of the men involved.
Simpson was born in Illinois and converted to Islam at a young age, court documents show. The government began investigating him in 2006, recording conversations between him and a paid informant.
In May 2009, according a federal court document, Simpson told an FBI informant: “It’s time to go to Somalia, brother.” He added: “It’s time. I’m tellin’ you man. We gonna make it to the battlefield…it’s time to roll.”
Simpson was arrested by the FBI in January 2010 after a lengthy investigation. He was charged with lying to agents in connection with terrorism. Authorities suspected he was trying to fly to Somalia, but Simpson claimed at the time he had intended to travel to South Africa to go to school and study Islam there.
Following a bench trial, a judge dropped the terrorism enhancement, citing insufficient evidence. The judge, Mary H. Murguia, said in March 2011 that the government had failed to prove that Simpson intended to wage violent jihad in Somalia. Murguia reduced the charge to making a false statement to federal officials and sentenced Simpson to three years of probation. Authorities also returned his passport, which they had confiscated after his arrest.
Simpson’s lawyer described him as a very religious man who had converted to Islam.
“He didn’t seem to me to be any threat to anybody,” Kristina Sitton, Simpson’s lawyer, said in a telephone interview Monday. “He seemed to be very kind but entrenched in Islam. He wouldn’t shake my hand.”
She said that after he was sentenced to probation, Simpson called her saying that he had tried to board a domestic flight and was told he could not fly. Sitton said she believed he was on the no-fly list.
Soofi was a pre-med student at the University of Utah from 1998 to 2003, according to a spokeswoman for the school. He left the school in the summer of 2003 without having earned a degree, she said.
Sari Horwitz contributed to this report.
[This post has been updated. First published: 10:49 a.m.] ||||| Add a location to your Tweets
When you tweet with a location, Twitter stores that location. You can switch location on/off before each Tweet and always have the option to delete your location history. Learn more ||||| (CNN) They wore body armor. They carried assault rifles. And one had declared loyalty to ISIS.
A day after police killed two gunmen who tried to ambush a Garland, Texas, event featuring controversial cartoons of the Muslim Prophet Mohammed, details began to emerge about the shooters.
One suspect, identified as Elton Simpson by a federal law enforcement source, linked himself to ISIS in a tweet posted just before the attack.
He also was no stranger to federal investigators. In 2011, he was convicted of making a false statement involving international and domestic terrorism.
The other suspect, identified as Nadir Soofi by two federal law enforcement officials, was Simpson's roommate in a Phoenix apartment.
He wasn't well-known to federal law enforcement and was not on the FBI's radar, one of the officials said. Investigators were combing through evidence retrieved from the shooters' Arizona home to help piece together a timeline of how their plot came together, the official said.
Authorities are still trying to determine the suspects' motives, U.S. Secretary of Homeland Security Jeh Johnson said Monday. At this point, he said, one thing appears clear: A quick-thinking police officer "likely saved a number of innocent lives."
Simpson and Soofi never made it inside the Curtis Culwell Center in Garland, where in addition to the cartoon contest, a right-wing Dutch politician who's on an al Qaeda hit list was speaking Sunday evening.
A traffic officer working after-hours as security for the event and armed only with a service pistol killed both men, who were wearing body armor and carrying assault rifles, Garland Police Department spokesman Joe Harn told reporters Monday.
"We think their strategy was to get into the event center, and they were not able to get past our perimeter that we had set up," Harn said.
In addition to the officer, who used a .45 caliber Glock, four SWAT team members with high-powered rifles also fired at the suspects, according to a source familiar with the officers involved in the shooting.
"They faced death head-on and, with incredible skill and bravery, were able to save a lot of people," said Zach Horn, an attorney for the officers.
An unarmed security officer working with the patrol officer was shot in the ankle, police said. None of the approximately 200 people attending the event was hurt.
Harn declined to call the incident a terror attack, saying the motive was still under investigation.
"We don't know their intent, other than that they were willing to pull up and shoot police," Harn said.
JUST WATCHED Gunmen open fire at Mohammed cartoon event Replay More Videos ... MUST WATCH Gunmen open fire at Mohammed cartoon event 02:07
Links to ISIS?
Investigators haven't revealed what they found in the suspects' apartment, but Simpson's social media footprint reveals one possible motive; he linked himself to ISIS in a tweet posted just before the attack.
"May Allah accept us as mujahideen," the tweet said, adding that Simpson and his fellow attacker had pledged loyalty to "Amirul Mu'mineen" (the leader of the faithful) -- a description that CNN terrorism analyst Paul Cruickshank said likely refers to ISIS leader Abu Bakr al Baghdadi.
After the shooting, an ISIS propagandist that Simpson had earlier asked his readers to follow tweeted, "Allahu Akbar!!!! 2 of our brothers just opened fire" at the Texas event.
"If there is no check on the freedom of your speech, then let your hearts be open to the freedom of our actions," tweeted the propagandist, who was identified by two American groups that monitor jihadi websites as Junaid Hussain, a British ISIS fighter in Syria who goes by the name Abu Hussein al Britani.
JUST WATCHED Gunmen killed at Mohammed cartoon event Replay More Videos ... MUST WATCH Gunmen killed at Mohammed cartoon event 01:54
In 2011, Simpson was sentenced to three years of probation after his conviction on the terror-related charge, court records show. Prosecutors said he told FBI agents that he had not discussed traveling to Somalia to engage in "violent jihad" when, in fact, he had, according to an indictment reviewed by CNN.
U.S. authorities are investigating whether Sunday's shooting has any link to international terrorism. Simpson's tweet could indicate the attack was inspired by ISIS, but not necessarily orchestrated by the group, sources said.
Similarities to attacks in Denmark, France
The incident bears similarities to attacks this year on events in France and Denmark featuring images of Mohammed, which some Muslims believe is blasphemous.
The Sunday night event in Garland invited cartoonists to send in caricatures of Mohammed. It was organized by the American Freedom Defense Initiative -- considered an anti-Muslim group by the Southern Poverty Law Center , which tracks hate groups.
The keynote speaker was right-wing Dutch politician Geert Wilders, who's on an al Qaeda hit list.
Organizers said they received more than 350 submissions for the event.
The winning entry won $12,500. The black and white drawing shows a cartoonist's hands sketching a sword-wielding Mohammed, who is shouting, "You can't draw me!"
A speech bubble coming from the hands depicts the cartoonist's response: "That's why I draw you."
"The Islamic jihadis are determined to suppress our freedom of speech violently." Pamela Geller, president of the American Freedom Defense Initiative, told CNN. "They struck in Paris and Copenhagen recently, and now in Texas."
Responding Monday to criticisms of her group as anti-Islamic, she said, "There is a problem in Islam , as illustrated last night, and anyone that addresses it gets attacked in this same way."
Venue hosted anti-Islamaphobia event
The American Freedom Defense Initiative said it specifically picked the venue for Sunday's event, a school district-owned facility, because it had hosted an event denouncing Islamophobia in January.
SoundVision, the organizers of the January "Stand with the Prophet" event, denounced Sunday's attackers and also criticized Geller's organization for "hate mongering."
"Unfortunately, some insane persons, however, decided to give hate-mongers the attention they desired with their violent act. ... Once again, a bad name for the community," SoundVision said on its website . "We, the people of faith, must counter the war-terror-hate cycle with peace-love-respect."
Shortly after the Sunday night shooting, a prominent Muslim leader in Dallas tweeted about it.
"The community stayed away from event," Imam Zia Sheikh wrote. "Seems like a lone wolf type of attack. Just what we didn't want."
Shots fired at Pamela Geller event. The community stayed away from event. Seems like a lone wolf type of attack. Just what we didn't want. — Imam Zia Sheikh (@ImamZia) May 4, 2015
'A gentle person'
JUST WATCHED Mosque president 'shocked' by Garland shooting Replay More Videos ... MUST WATCH Mosque president 'shocked' by Garland shooting 01:53
Members of a mosque the suspects attended, the Islamic Community Center of Phoenix, are in shock about what happened, said its president, Usama Shami.
Simpson was a regular worshiper at the mosque until around 2010 or 2011, about the time the FBI arrested him on the false statement charges.
During that time, he offered no signal that he held radical views, Shami said.
"He was a gentle person," Shami said of Simpson. "He always had a good attitude, a good demeanor."
Soofi came to the mosque less frequently, Shami said. He owned a local pizza shop and would show up at the mosque with his young son.
"They didn't show any signs of radicalization or any signs of even thinking about those things in that manner. So when that happens it just shocks you," Shami said. "How good did you know these people, that's the question that people ask themselves."
In the 1990s, Soofi spent a few years in Islamabad, Pakistan, where he lived with his father and stepmother and attended a prestigious private school, a source with knowledge of the family said.
His father was Pakistani, the source said, and his mother was American.
'Freedom of speech is under violent assault'
Wilders, the Dutch politician who was the keynote speaker at the Garland event, is controversial for his anti-Islam views. He was placed on the al Qaeda hit list for his film "Fitna."
The film, which Wilders released online in March 2008 to international outcry, features disturbing images of terrorist acts superimposed over verses from the Quran in an apparent attempt to paint Islam as a threat to Western society.
In 2011, Wilders was cleared of charges of inciting discrimination and hatred with the movie.
"The day we give away humor and freedom of speech is the day that we cease to exist as a free and independent people," he told the attendees at the Garland event Sunday night.
Picture taken just before #garlandshooting . Thank God the heroes of SWAT-team prevented the worst. pic.twitter.com/BBaQNJir9b — Geert Wilders (@geertwilderspvv) May 4, 2015
The American Freedom Defense Initiative is also known for its anti-Muslim stance, with the Southern Poverty Law Center describing Geller as "the anti-Muslim movement's most visible and flamboyant figurehead," a description that she disputes.
Geller said Sunday's attack showed how necessary the event was, adding that she plans to hold similar events in the future.
"The freedom of speech is under violent assault here in our nation," she said. "The question now before us: Will we stand and defend it or bow to violence, thuggery and savagery?" ||||| Multiple news outlets are reporting the name of the second shooter in Garland, Texas yesterday, identifying him as Nadir Soofi. Soofi and previously-identified shooter Elton Simpson were roommates, according to reports.
Simpson had been under FBI surveillance following a 2010 conviction on a terror-related charge, but as CNN reported earlier, Soofi was not, and law enforcement was reportedly not even that aware of him.
A reporter for NBCDFW tweeted this photo of Soofi:
NEW: 2nd gunman in Garland ID'd as Nadir Soofi of Phoenix, roommate of other shooter @NBCDFW http://t.co/ZxnIzPLTVd pic.twitter.com/QYXGGdsYzP — ScottGordonNBC5 (@ScottGordonNBC5) May 4, 2015
You can watch CNN’s report below:
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[image via screengrab]
— —
Follow Josh Feldman on Twitter: @feldmaniac | Law enforcement officials have identified the second shooter at the "Draw Muhammad" cartoon contest in Garland, Texas, yesterday but say they don't know too much about him, CNN reports. Unlike the first identified shooter—30-year-old Elton Simpson—Nadir Soofi, 34, hadn't already attracted the FBI's attention. Soofi was Simpson's roommate in a Phoenix, Ariz., apartment, and had studied pre-med from 1998 to 2003 at the University of Utah, but the school says he left without earning a degree, the Washington Post reports. Mediate reports that a journalist tweeted this photo of Soofi. Both gunmen were shot dead after they allegedly opened fire at the Curtis Culwell Center, where the event was taking place; neither got any further than the parking lot. |
SEC introduced its ARP program in 1989 because of capacity and other problems in the exchanges’ and clearing organizations’ information systems. The program resulted from SEC’s November 1989 policy statement that noted that many exchanges and other organizations experienced problems in their systems during the high trading volumes that occurred in October 1987 and again in October 1989. This policy statement also cited disasters, such as fires or earthquakes, that required exchanges to implement their contingency planning procedures. Since the ARP program was created, exchanges, clearing organizations, and the systems that link the stock and options markets have continued to periodically experience capacity-related problems or other disruptions. Under the ARP program, SEC called on the SROs to ensure that the information technology systems they use to conduct market operations have adequate processing capacity for current and future estimated trading volumes. In addition, SEC sought assurances that SROs were taking steps to assess the risk to their operations from internal and external threats, such as unauthorized use, computer vandalism, or computer viruses. The first ARP policy statement called on the SROs to establish capacity planning procedures to estimate current and future information system capacity needs and to periodically conduct capacity stress tests. In addition, the statement recommended that the SROs have assessments performed of their systems capacity and their vulnerability to physical threat. In a second policy statement issued in May 1991, SEC provided more specific guidelines to the SROS that identified five primary areas it expected the SROs to have reviewed, including the general controls and security relating to computer operations and facilities, telecommunications, systems development, capacity planning and testing, and contingency planning. The ARP program is administered by staff in SEC’s Office of Technology and Enforcement within the Division of Market Regulation. To determine the adequacy and completeness of the criteria SEC uses to conduct capacity and security oversight, we compared the criteria with guidance issued by other financial regulators and organizations that have developed standards for auditing information systems, including the information security manual we developed for use by federal agencies.We also used a list of criteria we developed based on the procedures recommended in a publication written by experts in the field of capacity planning for information systems and on the findings from our prior reports or testimonies that address automation issues in the securities markets. In addition, we reviewed SEC inspection work plans that the ARP staff uses to conduct on-site inspections and held discussions with SEC staff on the criteria that they use to conduct their oversight. To determine the scope and frequency of the ARP on-site inspections, we obtained from SEC a list of on-site inspections conducted between 1995 and June 2001 of 27 SROs and electronic communication networks (ECN). We reviewed a total of 11 SEC ARP inspection reports that addressed capacity planning or security-related issues, including the written reports and supporting work papers on ARP inspections of 7 SROs which included the most active exchanges as well as some of the smaller exchanges, and just the written reports for 4 other SROs. We discussed our observations of these reviews with ARP staff. To determine the scope and frequency of the independent reviews, we examined certain recent audit reports and a summary of audit reports prepared by SEC ARP staff. We also discussed the results of our assessment of these reports with SEC staff. Specifically, we reviewed copies or summaries of 37 reviews done by SRO internal audit staff for the 3 largest SROs in 2000. In addition, we examined seven independent reviews of five SROs performed by external organizations that were included in the supporting work papers of the SEC inspections we reviewed. To address how the voluntary nature of the ARP programs affects SEC oversight capabilities, we reviewed various documents prepared by the ARP staff. The documents included analyses of SRO systems, on-site inspection reports, a printout of SEC staff’s database of the status of recommendations made during inspections, and oversight work plans. We conducted this work in Washington, D.C., from November 2000 to June 2001 in accordance with generally accepted government auditing standards. To plan and conduct inspections and other oversight activities, the ARP program uses criteria from a variety of sources that address aspects of capacity planning, security, and other information system issues. The second ARP policy statement discussed five primary areas that SEC expected that SROs would address regarding their information systems. Using these areas, the ARP staff work with SROs to develop a checklist as an initial guide for use by SEC staff in conducting their on-site inspections. This checklist was also provided to the SROs in 1991 for use as part of the independent reviews of their systems. The ARP program staff told us that they regularly update the inspection checklist by consulting professional standards and guidance relating to information systems established by other regulatory, audit, or industry bodies. Figure 1 shows how SEC staff and the SROs use the various sets of guidance. In our review of SEC on-site inspection work papers, we observed instances in which ARP staff used the steps from this checklist to plan certain segments of work they would perform at individual SROs. SEC officials said they also expect the areas examined during inspections of SRO systems to be based on the ARP policy statements as well as on industry standards for conducting systems audits and the reviewers’ professional judgment. In the work papers we reviewed, we found examples of individualized checklists that ARP staff had created that incorporated steps from the 1991 checklist and other sources for use in particular inspections of SROs. SEC staff said that checklists created for past inspections are also used to plan subsequent inspections. ARP staff also described performing frequent Internet searches to monitor the latest information on standards and issues from various auditing and information system organizations, such as the Information Systems Audit and Control Association. At a minimum, SEC officials said that they expect their staff to perform these searches before each inspection. In their view, these additional information sources provide up-to-date, comprehensive criteria for assessing capacity planning, security, and other relevant systems issues. ARP program staff also explained that they use their own knowledge and experience to plan the inspections and the ongoing monitoring they conduct. They said that they also added review steps to their inspections to address any current challenges facing the SROs that would affect information systems. For example, they added steps to inspections recently to address the industry’s transition to decimal pricing as well as for the Year 2000 date change. They also added steps to inspections of individual SROs when new systems are being implemented or outages occur. Because of continuous change in technology, SEC staff need to refer to up- to-date criteria and standards to conduct their oversight. However, they lack a consolidated guide for their staff. The 1991 inspection checklist that the ARP staff continuously updates to serve as criteria for their inspections does not address some developments in the markets and advances in information technology. For example, SEC’s checklist addresses some security issues but does not include steps relating to intrusion detection. The 1991 checklist also does not address the increased risk of unauthorized access faced by SROs with information systems connected to the Internet. Although SEC officials explained that the SROs do not generally operate critical systems that use the Internet, some are using it to transmit information for less important systems, and others are considering or are already developing Internet-based systems. SEC’s 1991 inspection checklist is also missing some elements relating to capacity planning. For example, the checklist did not specifically address certain issues relating to volume forecasts used in capacity planning in which some SROs have had problems. In 2000, the National Association of Securities Dealers’ (NASD) transition to decimal pricing was delayed because the system NASD planned to use for decimal trading lacked sufficient capacity. A review by an external organization later found that NASD’s volume forecasts had not adequately accounted for the increasing volatility in its trading and processing volumes. Although SEC ARP staff had identified deficiencies and made recommendations to NASD to improve its capacity planning processes, we did not find volatility of trading volumes specifically addressed in SEC’s 1991 checklist or the other work plans that SEC staff prepared for the inspections we reviewed. Because the ARP program does not have a consolidated guide for its staff, the burden of maintaining consistent quality in ARP oversight falls primarily on the most experienced ARP staff. Both SEC and other regulators frequently use comprehensive guides to ensure that the rule- compliance reviews their staff perform are consistent. For example, staff in SEC’s Office of Compliance Inspections and Examinations use examination modules that consolidate the procedures for the reviews they expect their staff to perform consistently at the broker-dealers and other entities they review. However, without a similar consolidated guide, the ARP program staff must make continual efforts to consult numerous sources to supplement the areas not contained in SEC’s 1991 ARP materials. Conducting quality reviews of the various SROs also requires ARP program staff to have broad knowledge of relevant issues and to be aware of how market developments could affect the systems at each SRO. We found that the various work plans, risk analyses, and other documents prepared by the ARP program staff were generally thorough and addressed issues adequately. However, the level of detail and extent of documentation varied across staff members. Although the quality of SEC’s oversight depends heavily on individual staff, the ARP program has experienced considerable staff turnover. SEC officials said that the ARP program staff has experienced turnover rates of almost 30 to 40 percent in some years. The officials said that finding replacements is always difficult, as the salaries SEC offers for people with information system skills are not competitive with the private sector. As of June 15, 2001, 4 of the 10 ARP program staff had 2 years or less of experience, including 2 staff who had just joined the program. SEC officials said that only experienced staff prepare updated workplans and lead on-site inspections. However, the lack of a consolidated written guide could lead to inconsistency in planning and conducting inspections, given the high turnover rate of ARP staff. We found that, for the most part, SEC’s on-site inspections addressed key capacity and security issues. However, resource limitations have prevented SEC from conducting inspections as frequently as their staff would prefer. During an on-site inspection, the ARP staff usually review SRO procedures, examine supporting documents, and hold discussions with SRO staff over the course of 4 to 5 days. During each inspection, ARP staff focus on the information system issues from the ARP guidance that are most relevant to the particular SRO. Although SEC staff do not conduct detailed steps to review all ARP issues during each inspection, most inspections begin with a presentation by the SRO, which the ARP staff told us covers all ARP issues. SEC staff also reported conducting some 1-day on-site inspections that focused on more limited issues. ARP staff then prepared a report that was later provided to the SROs’ management. Our review of the ARP on-site inspection reports and the supporting work papers addressing capacity and security issues indicated that, for the most part, these inspections addressed the key issues relating the SROs’ procedures. We reviewed reports and supporting work papers for the most recent on-site inspections done at seven SROs and four additional inspection reports prepared between 1996 and 2000. In these documents, we found examples of detailed audit work plans that were specifically designed to address the objectives of each ARP inspection. The work papers also included documents prepared by the SROs, including their formal capacity plans and trading volume and processing load projections, which SEC staff had asked to review as part of the inspections. We also found that SEC staff had collected documents the SROs had prepared on vulnerability assessments, as well as summaries of security staff meetings. In addition, we observed instances in which SEC staff documented their reviews of the security-related steps from the review checklist. The reports ARP staff prepared after conducting on-site inspections frequently contained numerous substantive recommendations to the SROs that addressed capacity planning, security, and other issues. For example, in an inspection done at one SRO, ARP staff made seven recommendations, including that the SRO increase the capacity of its systems, improve the security procedures for two major systems, and increase the frequency of disaster recovery testing. Although SEC officials told us that the ARP program has no formal goal for the frequency of inspections, ARP staff said that they would prefer conducting on-site inspections every 12 to 18 months. However, limited staff and the need to monitor industrywide information technology initiatives have prevented them from conducting examinations this frequently. According to the information SEC provided us, SEC staff conducted 41 on-site inspections of exchange or clearing organization SROs from 1995 through June 2000. During this 6-year period, ARP staff inspected most SROs once every 2 to 3 years and addressed capacity and security issues in most of these inspections. However, at least eight of these inspections lasted only 1 day. Furthermore, over this 6-year period the total number of days that ARP staff were actually on each SRO’s premises was very limited. According to the data SEC provided us, we calculated that the number of days that ARP staff were on site averaged a total of 7 days at each SRO during this 6-year period, with ARP staff being on site at the least visited SRO for a total of only 4 days and at the most visited SRO for a total of 19 days. ARP program officials explained that because of their small staff they conduct only seven or eight inspections per year. Although the ARP program had a staff of 10 as of June 15, 2001, it has had as few as 4 during some years because of generally high turnover. The staff also explained that they had spent a considerable amount of time addressing major industrywide initiatives, some of which spanned several years. These initiatives included preparations for the Year 2000 date change and the transition to trading using decimal instead of fractional prices. SEC officials told us that they take other steps to ensure that the SROs are adequately addressing information system issues. SEC staff meet annually with the SRO officials responsible for information systems. During these day-long annual report meetings, the SRO staff provide presentations on prior and upcoming changes to their systems and on activities relating to market events that could affect system capacities, such as decimal trading and other initiatives. SEC staff told us that these meetings allow them to question the SROs and obtain copies of relevant materials. When an SRO is subject to an on-site inspection, the officials explained that the first day is usually a presentation of the SRO staff’s annual report. Although SEC originally envisioned that SRO systems would also be reviewed under the ARP program by independent external organizations, SRO internal auditors now perform the majority of these reviews. The reviews now address the key areas of ARP cyclically based upon an annual risk analysis, but we were unable to determine whether all the issues are being addressed with sufficient frequency. In addition, SEC has requested reviews by external organizations when internal audits have been insufficient or when deficiencies existed in SRO systems and procedures. In the 1989 policy statement announcing the ARP program, SEC called for annual independent reviews of SROs that would cover capacity planning, security, and other areas. SEC staff told us that at that time, SEC proposed that external organizations perform these independent reviews. However, ARP staff said that the SROs later raised concerns about the costs of implementing such reviews and the potential overlap with the SROs’ own internal audit processes. ARP staff told us that they had also identified a need to modify the independent review guidance to ensure that the reviews were of sufficient depth. As a result, SEC issued the second ARP policy statement in 1991. In addition to expanding the areas that should be reviewed at the SROs, this statement also clarified that SROs could use their internal auditors to perform the independent reviews. However, the statement noted that, if internal auditors were to be used, they should adhere to the standards set by various groups, such as the Institute of Internal Auditors and the Information Systems Audit and Control Association. In addition, SEC asked that an external organization periodically assess the SRO internal auditors’ independence, competency, and work performance. Since this change, the majority of the independent reviews are now done by the SROs’ internal audit processes, rather than by external organizations. SEC and the SROs have also agreed to a change in the type and frequency of the independent reviews. In December 1993, SEC and the SROs agreed that SRO staff would plan the independent reviews addressing the key areas identified in the ARP guidance, using a risk-based approach. Using this approach, the SROs’ internal auditors are to determine which areas should be examined by conducting a yearly risk analysis of the SRO’s information systems. This risk analysis allows the internal audit staff to develop an audit plan that identifies the critical areas that need to be reviewed that year and less urgent issues that can be deferred until a later date. Although the SROs evaluate the risks in their systems against all of the ARP areas under this approach annually, the SEC officials explained that the SROs are not expected to review all of the key areas of the ARP guidance each year. As discussed in our Federal Information Systems Audit Control Manual (GAO/AIMD-12.19.6, January 1999), and elsewhere, such an approach is considered appropriate for reviews of this type. Although SEC staff said that they were generally satisfied with the quality and scope of the reviews the SROs’ internal auditors had performed, we could not determine from the documents SEC staff prepared whether these reviews were addressing all the areas contained in the ARP guidance with sufficient frequency. To verify the adequacy of the SROs’ efforts, ARP staff said that they also perform their own risk analyses for the SROs each year. They then are to review the SROs’ risk analyses, audit plans, and past audit results to assess whether the SROs’ independent reviews are addressing the ARP guidelines appropriately. When an SRO has not addressed an issue warranting attention, SEC requests a review of that area. The ARP program staff said they were also satisfied with the internal audits because many include testing of controls and compliance with procedures. In addition, the ARP staff told us that the SROs have increased the number of internal audit staff that review information system issues and that the quality of these audits has improved over time. When the ARP program first began, some of the SROs did not have internal auditors who could review information systems, and ARP staff said that their oversight efforts have resulted in increased internal audit staffing at the SROs. According to SEC staff, in the mid-1990s two major SROs had only one internal auditor specializing in information systems issues. As a result of SEC staff efforts, one of these SROs gradually increased the number of information systems auditors it employs to five. Nevertheless, from our review of the SROs’ internal audits conducted during 2000, we were unable to determine whether these reviews were addressing all of the important areas in the ARP policy statements with sufficient frequency. In one analysis we reviewed, ARP staff noted that the internal audit staff at one major SRO had not reviewed at least two of the five areas specified in the ARP policy statements since 1992 and did not state when reviews had last been conducted for the other three areas. ARP staff told us that in this case, auditors for the SRO’s service vendor had reviewed at least one of the areas and information had been provided to SEC about the other area periodically. At another SRO, the SEC staff’s inspection report noted that the internal auditors had not conducted an independent review of the SRO’s capacity planning process in 8 years. ARP staff told us that they had performed reviews of this area at least twice during this period. With the pace of technological change and developments in the markets, it is unclear whether this level of attention to SRO capacity planning is sufficiently frequent or appropriate. ARP staff told us that when SRO internal auditors do not address all the issues addressed in the ARP policy statements, the ARP staff take steps to see that they do. If their analysis indicates that internal audits have not reviewed particular issues, ARP staff said that they would consider the areas not addressed as high risk for the SROs and they would try to include them in their next on-site inspection. In some cases, ARP staff request that the SROs obtain independent reviews by an external organization when internal audits have not sufficiently addressed systems issues or because of recurring systems problems at some SROs. We found that SEC staff had recommended in at least five recent on-site inspection reports that the SROs contract with external organizations to perform reviews of SROs’ capacity planning processes. For example, ARP staff requested an external review of NASD’s overall capacity planning process before that market announced that the system it intended to use to transmit price quotations did not have sufficient capacity to allow it to implement decimal trading by the date SEC had set for the securities markets. In a July 2000 inspection report, the ARP program staff requested that another SRO obtain a review of all aspects of its capacity planning process because that SRO’s trading volume had grown dramatically and its internal auditors had not recently addressed this process. And in 1997, after the two systems that transmit information between the stock and options markets experienced numerous delays or queues in their transmissions, ARP staff requested an external review be done of the organization that operates these systems. In March 2000, an official whose exchange relies on price data transmitted by the intermarket system for stocks told us that systems problems had caused considerable financial losses to members until its capacity was upgraded. In addition, the options exchanges and the Options Price Reporting Authority, which administers the intermarket system for options, are under an SEC order that requires them to limit the data they transmit across this system because their systems capacity is insufficient. From a review of internal audits done at three SROs during 2000, we found that the internal audits varied in both scope and depth. We reviewed 29 internal audit reports conducted at two SROs during 2000 and a summary prepared by SEC staff of eight audits done in 2000 at another SRO that uses an external organization to conduct its internal audits. In some cases, the audits appeared to address an important ARP area thoroughly and contained substantive recommendations, including one report that identified numerous deficiencies in an SRO’s contingency planning procedures. Some of the reports also indicated that the internal auditors had taken steps to test relevant controls over systems. In general, most of the internal audit reports for the three SROs that we reviewed were limited in scope, covered only one SRO system, or made minor recommendations, such as asking that one SRO obtain the most recent version of a capacity planning software program or recommending that the staff at one SRO use only one entrance to its data center. Most of the reports we reviewed addressed security or other information system issues—such as change management processes—rather than capacity planning issues. Our review of seven reports addressing capacity and security issues that external organizations had prepared for five SROs showed that these reports generally had identified substantial deficiencies. For the most part, the SROs had obtained these reviews in response to requests by ARP staff. In one review, the external organization identified seven problems relating to an SRO’s capacity planning procedures, including finding that the SRO had not collected all the data needed for its capacity planning process, identified the applications that were generating increases in processing demand, or used a standardized forecasting approach for all systems. In addition, external audit reports recommended that SROs create formal capacity planning processes and security procedures for systems that currently lack them. Because the ARP program was not established under SEC’s rulemaking authority, it lacks specific rules that SEC can use to sanction SROs for not complying. Although SEC staff reported that the SROs generally comply with the ARP program, we found that in some cases SROs had not implemented ARP staff recommendations and had not always created the requested notices and reports sought under ARP. When establishing the ARP program, SEC left open the possibility of making the program mandatory but did not establish criteria to assess the level of cooperation under the voluntary program. The policy statements issued when SEC began the ARP program established voluntary guidelines for the SROs to follow regarding the capacity and security of their information systems. These guidelines called for the SROs to have independent reviews performed on their systems and to make various reports and notices to SEC. However, the program was not established under SEC’s rule making process. SEC officials explained that the view of the staff at the time was that any specific standards relating to information systems included in such a rule could become obsolete in a short period of time. SEC staff would then be required to seek amendments to the rule, which would also likely take considerable time and effort to complete. In their view, voluntary guidelines afford SEC staff greater flexibility. However, by issuing only voluntary guidelines, SEC staff have no specific rules to require SROs to implement key ARP recommendations or create the reports or notices called for in the policy statements and cannot sanction SROs under the ARP program for failing to do so. SEC officials said that they believed they could bring an official action against SROs whose failure to follow ARP was serious enough to represent a violation of the general requirement that exchanges maintain the ability to operate. They said, however, that SEC rarely uses such authority. ARP staff acknowledged that SROs have not addressed several significant capacity and security recommendations or concerns raised in ARP inspections. For example, we previously reported that in 1996, ARP staff recommended that NASD establish capacity alternatives to meet unexpected system demand. However, NASD has continued to experience capacity-related problems with several of its systems, disrupting the markets. For example, insufficient capacity in NASD’s price- quotation system delayed the start of decimal trading by all securities markets for 3 months and prevented NASD from fully trading in decimals for an additional 7 months. As a result, investor benefits from the reduced spreads that have resulted from decimal trading on the Nasdaq market were delayed by an additional 10 months. In addition, NASD has experienced capacity-related delays in a system that transmits orders to buy or sell shares in response to displayed price quotations. Officials from a major ECN told us in 2000 that they have experienced losses of up to $1.5 million a day because they are obligated to honor orders that arrive late through this system for shares that have already been sold to their own customers. Honoring these delayed orders can produce losses because the ECN sometimes has to execute new orders at disadvantageous prices if the price of the security has changed since the original transaction. Finally, NASD experienced trading disruptions on June 28, 2001 because the number of market participants given access to one of its systems exceeded the number of market participants that system had been programmed to handle. NASD officials said that the system was set up to handle about 90 users at once; however, by that date the number of users exceeded this figure by about 30 percent, and the system software had not been modified to account for this growth. Other important ARP recommendations and concerns that were not being implemented or addressed dealt with SROs’ security procedures, including their contingency plans for addressing physical threats or damage. In 2000, ARP staff recommended that one SRO develop and publish security policy and procedures and enforce them through a central authority, in accordance with basic industry standards. The SRO disagreed with the ARP recommendations, preferring to leave its security procedures decentralized. Another ARP staff recommendation that one SRO develop a recovery plan for trading facilities used for two of its most actively traded securities has been outstanding since at least 1995. Although this SRO has discussed various alternatives during this period for continuing operations in the event that its trading floor becomes unavailable, as of July 2001, its staff had still not implemented an alternative approach. In addition, although ARP program staff considered the lack of backup facilities to be a major deficiency, ARP program staff have recommended in other cases that SROs perform studies rather than take actions to resolve the deficiencies. In at least three cases, ARP staff recommended that SROs study the feasibility of establishing such facilities to avoid potentially lengthy shutdowns should their trading locations became unusable. One SRO disagreed with the recommendation, citing the costliness of maintaining such facilities, and the other SROs performed or are performing the studies. However, none has taken steps that fully address the ARP staff concerns that major physical damage to the trading floors could render these SROs unable to operate for an extended period. Although the ARP program calls for the SROs to create certain reports to SEC when outages or other disruptions occur that affects their systems, these reports were not always being made. As stated in the second ARP policy statement, the SROs are to report immediately to SEC systems outages that are expected to last longer than 30 minutes and report shorter outages after systems have been repaired. In addition, the second ARP statement recommended that SROs provide SEC with notices of significant system modifications. According to ARP staff, approximately 100 system outages were reported in fiscal year 2000, and for more than half of these, SEC officials said that they asked the SROs to provide analyses or other documentation of the event. SEC staff said that most SROs provide notices of outages or system modifications, but that some important outages or changes have not been reported. According to the findings from an SEC on-site inspection, one SRO lacked procedures for ensuring that notices of system modifications would be created and provided to SEC. In response, this SRO agreed to implement appropriate procedures. Another ARP inspection found that one SRO had failed to report at least six system outages during 2000. If SROs were required by SEC rule to provide SEC with notifications of significant changes to their automated systems, then the failure to have procedures in place for ensuring that notices of systems modifications are provided to SEC would likely demonstrate a weakness in the SRO’s internal controls. If the deficiency was severe enough, SEC could initiate an enforcement proceeding. In some cases, SEC staff became aware of anticipated SRO system changes from press or trade publications. For example, ARP staff learned of the proposed 1998 sale of one SRO’s options trading operations to another in a newspaper report. Although some of these instances involved proposed system changes that had not been finalized by the SROs, not knowing the most current configuration for the SROs systems could make planning inspections and other oversight activities more difficult for SEC staff. SEC stated in its initial ARP release that it would consider making the ARP program mandatory if SROs did not cooperate fully. However, SEC has yet to develop formal criteria and perform an assessment of SRO cooperation. In 1998, SEC’s Office of Inspector General reported that SEC had not indicated how it would assess compliance with the ARP program.Because of the increased importance of information technology to the functioning of the securities markets, the Inspector General’s report recommended that the agency consider making the ARP program mandatory. In response to this recommendation, ARP program staff said that they had considered the issue and determined that ARP should remain voluntary. SEC staff said that a substantial lack of cooperation with ARP would be inconsistent with an SRO’s general obligations, but they were satisfied with the extent to which SROs cooperate. The use of information technology is pervasive in the securities industry, and the quality of the SROs’ systems is vital to the functioning of the markets. Based on our review, the ARP program provides SEC staff with some assurance that SROs are addressing capacity planning, security, and other information system issues. In addition, the ARP staff performed comprehensive and in-depth inspections of SRO systems, and were actively involved in the industry’s recent completion of efforts to ready systems for the Year 2000 date change and the transition to decimal trading. Various aspects of the ARP program highlight areas in which SEC’s oversight could be strengthened to better assure that the SROs manage their critical information systems sufficiently to prevent major disruptions in the markets. Although SEC staff consulted an extensive array of standards and guidance to ensure that their oversight addresses relevant issues, the lack of a consolidated inspection guide for their staff means that the consistency and quality of SEC’s oversight is heavily dependent on the efforts of the individual ARP staff. A consolidated inspection guide could take the existing five ARP areas and provide additional topics that the SEC staff find are most relevant given the current state of technology in the markets. Rather than duplicating external guidance that SEC staff already use, a consolidated inspection guide could enumerate these other sources and incorporate, by reference, the specific areas that the SEC staff have found relevant to their work. Having a consolidated inspection guide for its staff would better ensure that SEC’s ARP program oversight is conducted thoroughly and consistently across its staff. This is particularly important because the program has high turnover that results in significant portions of its staff having little or no experience. SEC’s ability to oversee information system issues is also hampered by the limited resources available to the ARP program, which constrains its staffs’ ability to inspect the SROs more frequently. SEC now relies largely on the SROs’ own internal auditors to review systems in detail instead of more routinely using external organizations as an independent check on the activities of the SROs, as was originally envisioned under the ARP program. In cases in which the internal audits had not sufficiently addressed issues or when SROs had deficiencies in their information system procedures, SEC staff have called for SROs to obtain external reviews of their systems. When combined with the reliance on internal audits, the ARP program’s voluntary nature raised concerns that SEC’s oversight efforts are not as effective as they could be. SRO cooperation in implementing significant SEC recommendations has been uneven. The SROs’ unwillingness to make recommended improvements may have adversely affected the markets, for example, when capacity problems at one market delayed full implementation of decimal trading for all securities markets. Because some SROs have not addressed ARP staff concerns over the lack of backup trading facilities, securities trading in the United States could be severely limited if a terrorist attack or a natural disaster damaged one of these exchange’s trading floor. When SROs are not implementing significant recommendations or taking steps to remedy identified capacity and security weaknesses, SEC’s Chairman and Commissioners could focus additional SRO attention on the need to take actions to improve their systems. SEC’s ARP policy statements left open the possibility of having a rule- based program if compliance was not adequate. Developing formal criteria and performing an assessment of SROs’ compliance with the ARP program would allow SEC to determine whether a rule-based program would be warranted. Such an assessment also could weigh the advantages and disadvantages of the current voluntary program and whether it provides SEC with sufficient authority to optimally ensure that SROs’ systems are sound. Criteria and an assessment could allow SEC to determine whether failure to implement recommendations risked material disruption in the markets. Making the ARP program mandatory could give SEC the authority it needs to better assure that SROs take cost-effective steps to improve their systems and procedures and reduce the risk of systems- related problems disrupting the markets. On the other hand, if the program were to be made mandatory, SEC would need to build adequate flexibility into the governing rule to deal with technological change. Because of the importance of the proper functioning of the SROs’ information systems, we recommend that the Acting Chairman, SEC, take the following actions: ensure that the ARP program develops a consolidated inspection guide for the ARP staff that is updated on a periodic basis, ensure that significant ARP program recommendations and concerns that have not been addressed by the SROs are brought to the attention of the Chairman and the Commissioners, and develop formal criteria for assessing the SROs’ cooperation with the ARP program and perform an assessment to determine whether the voluntary status of the ARP program is appropriate. We obtained comments on a draft of this report from SEC, which are presented in appendix I. In its letter, SEC commented that the draft report was based on an inaccurate view of the ARP program, and that it did not reflect the development of the program since SEC issued its two ARP policy statements in 1989 and 1991. SEC provided an extensive discussion of the ARP program’s evolution over time. In response, we have made language changes where appropriate and believe that our report fairly presents the evolution of the ARP program over time. However, although the ARP program has achieved some important goals, we think that it could be more efficient and effective if our recommendations were adopted. SEC generally disagreed with our recommendations, noting that activities they already perform satisfy the intent of the recommendations. Specifically, SEC did not see a need to develop a consolidated inspection guide because it would quickly become outdated and the ARP staff’s approach to developing work plans for individual inspection results in oversight that addresses key capacity and security issues. The ARP staff’s approach has, to date, generally resulted in oversight that addresses key issues. However, given the high staff turnover and the relative inexperience of many staff, we are recommending that ARP develop a guide that will assure continued consistency. Moreover, we believe that such standard guides are a good business practice and a sound internal control. The type of guide that we recommend would also require minimal effort to update because it would largely incorporate by reference standards and criteria developed by other organizations, which would likely be updated by those organizations regularly. With respect to our recommendation that SEC develop a process to bring significant unimplemented ARP recommendations and outstanding concerns to the attention of the Chairman and the Commissioners, SEC commented it had a process that satisfied the recommendation. In its letter, SEC noted that it already reviews the status of all ARP recommendations. SEC also stated that where an SRO’s response to ARP recommendations is unsatisfactory, SEC has a procedure to bring the matter to the attention of the Division Director and, if necessary, to the Chairman and Commissioners. SEC commented that, based on discussions with us, the staff was enhancing its process for reviewing the status of ARP recommendations and updating the recommendations database. We note, however, that according to SEC officials, no unimplemented ARP recommendations or concerns have been escalated beyond the Division Director level. We believe that some significant unimplemented ARP recommendations and concerns regarding capacity and security weaknesses at the exchanges and clearing organizations warrant attention at the highest levels of the Commission. Involvement at this level would increase the likelihood that SROs would take meaningful action in response to such recommendations and concerns. Therefore, we reaffirm our recommendation. SEC also disagreed with our recommendation that it develop formal criteria for assessing SRO compliance with the ARP program. SEC commented that the risk assessment process the ARP program staff conducts annually for each SRO represents their assessment of the SRO’s compliance with the ARP policy statements and that when SROs do not implement ARP recommendations or remedy concerns, they call for additional inspections and reviews. Although we agree that the ARP staff’s efforts have resulted in some improvements in the SROs’ information systems, we remain concerned that some recommendations that SROs have not fully addressed pose a greater risk of further market disruptions. Moreover, seeking to address noncompliance with the ARP program by performing additional inspections would likely result in ARP staff identifying many of the same discrepancies over time. For example, ARP staff found capacity-related problems over several years at NASD and have had long-standing concerns about contingency planning alternatives at some SROs. SEC’s risk assessment process, although allowing it to adequately plan its oversight, does not constitute or supplant the type of assessment of overall program compliance that we recommend. Instead, by developing formal criteria and assessing the overall level of compliance with the ARP program, SEC would have a sound basis for evaluating the nature of the program. Even if no change in its status were made after such an assessment, periodically reapplying the criteria would allow SEC to assess the pattern of compliance by SROs over time to ensure that the program’s status is not hampering the effectiveness of SEC’s oversight of the SRO information systems that are critical for continued market functioning. SEC also commented that neither GAO nor SEC itself has any basis to believe that the voluntary nature of the program is problematic. However, we did identify various instances in which SROs were not addressing recommendations or taking actions in response to ARP staff concerns or were not making the reports that SEC has requested. Furthermore, we are not recommending that SEC make the ARP program mandatory, but instead have recommended that SEC develop formal criteria to assess whether the program is working as it is currently structured. SEC also provided technical comments that we incorporated as appropriate, including refining our presentation of the extent to which ARP program recommendations have not been implemented. In addition, we revised the language of the report and our recommendation to clarify that the SEC Chairman and Commissioners should be advised when significant recommendations to SROs are not implemented or SRO actions do not address ARP staff concerns. As agreed with you, unless you publicly release its contents earlier, we plan no further distribution of this letter until 30 days from its issuance date. At that time, we will send copies to the Chairman and Ranking Minority Member, Senate Committee on Banking, Housing, and Urban Affairs; the Chairman and Ranking Minority Member, House Committee on Financial Services; the Chairman, House Committee on Energy and Commerce; and the Acting Chairman, SEC. We will also make copies available to others upon request. If you have any further questions, please call me at (202) 512-8678 or Cody J. Goebel, Assistant Director, at (202) 512-7329. The following are GAO’s comments on the Securities and Exchange Commission’s letter dated July 18, 2001. 1. SEC’s letter states that our report overlooks the important distinction between a program that is tasked with overseeing information technology, in which no single set of standards exists, and other programs based on assessing compliance with rules that lend themselves to bright-line tests. However, we believe that our report acknowledges the evolving nature of information systems and the lack of one source for standards, but also offers suggestions to improve SEC’s oversight of this area. For this reason, we recommended that SEC create a consolidated guide for its staff of the most up-to-date and authoritative sources for criteria for planning their oversight activities. We also believe that rules can be drafted to allow sufficient flexibility for information technology advances. Furthermore, many examination programs assess compliance using professional judgment against criteria even when bright lines do not exist. 2. SEC’s letter states that our report assumes that its 1991 checklist is the principal tool used by SEC staff to conduct inspections. However, our report describes the process SEC staff uses to plan inspections, including drawing on external criteria and using work plans and checklists from more recent inspections. However, we did observe instances in which the staff continued to use the 1991 checklist, but had to supplement the areas that it does not address with all the other sources. In addition to those named above, Ronald W. Beers, Emily R. Chalmers, Heather T. Dignan, William Lew, and Jean-Paul Reveyoso made key contributions to this report. Securities Pricing: Trading Volumes and NASD System Limitations Led to Decimal-Trading Delay, GAO/GGD/AIMD-00-319, Sep. 20, 2000. Securities Pricing: Progress and Challenges in Coverting to Decimals, GAO/T-GGD-00-96, Mar. 1, 2000. Securities Pricing: Actions Needed for Conversion to Decimals, GAO/T- GGD-98-121, May 8, 1998. Financial Markets: Stronger System Controls and Oversight Needed to Prevent NASD Computer Outages, GAO/AIMD-95-22, Dec. 21, 1994. Financial Markets: Computer Security Controls at Five Stock Exchanges Need Strengthening, GAO/IMTEC-91-56, Aug. 28, 1991. Financial Markets: Active Oversight of Market Automation by SEC and CFTC Needed, GAO/IMTEC-91-21, May 10, 1991. Stock Market Automation: Exchanges Have Increased Systems’ Capacities Since the 1987 Market Crash, GAO/IMTEC-91-37, May 10, 1991. | Capacity problems and other disruptions at the securities and options exchanges have caused processing delays within the U.S. securities markets in recent years. These exchanges and clearing organizations have also been concerned about unwarranted access by hackers and other unauthorized users. To address these issues, the securities and Exchange Commission (SEC) created its automation review policy program in 1989. The program calls for the exchanges and clearing organizations that act as self-regulatory organizations to voluntarily follow SEC guidance and submit to oversight of their information systems. The program includes two key policy statements that provide voluntary guidelines to these organizations, periodic on-site inspections by SEC staff, and independent reviews of systems by internal auditors or external organizations. In addition, self-regulatory organizations are expected to provide SEC with reports of system outages and notices of system modifications. This report reviews SEC's effectiveness in its oversight roles. GAO found that the program reasonably ensures that self-regulatory organizations address capacity, security, and other information systems issues. However, SEC could improve its program oversight by consolidating criteria used by program staff into a comprehensive guide. Overall, SEC's inspections addressed the key areas of program guidance and often contained substantive recommendations designed to improve the organizations' procedures. |
In 1969, the federal government officially adopted a measure to ascertain how many people across the country had incomes that were inadequate to meet expenses for basic needs. This poverty measure was based on the finding of the U.S. Department of Agriculture’s (USDA) 1955 Survey of Food Consumption that, on average, families of three or more persons spent one-third of their income on food. Poverty for a family of three was computed as three times the cost of the economy food plan, the least costly food plan designed by USDA. The poverty measure has been updated annually with a COL index to adjust for the change in prices nationwide, but the poverty measure has not been adjusted for differences in prices by geographic area. Thus, in 1993, a family of three with a cash income of less than $11,522 was considered to be living in poverty, regardless of place of residence. The concept of geographic COL adjustments of poverty measurement has been seen as problematic. A 1976 report to Congress on the measurement of poverty stated that “one of the most troublesome concepts of poverty measurement” was making adjustments for geographic differences in COL.It ultimately concluded that unresolved conceptual issues, such as the development of generally accepted market baskets of goods and services representative of the needs of the poor in various geographic areas, and data limitations precluded satisfactory geographic adjustments. More recently, in a 1992 report, we noted that there was insufficient data on which to base geographic adjustments to the measure of poverty. Some economists contend that adjusting the poverty measure for geographic differences in COL would be inappropriate, irrespective of the methodology used. They say that any such adjustment to reflect regional differences in market baskets would fail to recognize other regional differences that are relevant to a definition of poverty or the needs of the poor. For example, a COL index probably would not reflect differences among geographic areas in the level of support or assistance available to low-income families. To address our first two objectives, describing the function of a market basket and identifying potential methods for calculating a COL adjustment, we reviewed the relevant literature on measuring poverty and on geographic adjustment for COL and discussed these issues with specialists. These specialists included individuals associated with poverty measurement or COL data at the Bureau of Labor Statistics (BLS) and the Bureau of the Census, as well as private organizations and academic institutions. On the basis of these reviews and discussions, we identified 12 methodologies that might have potential for adjusting poverty measures to reflect geographic differences in COL. We consider these 12 methodologies to be illustrative for a wide range of potential approaches to determine geographic COL differences, but recognize that the list is not, and cannot be, exhaustive. (A more detailed account of our scope and methodology is contained in app. I.) To meet our third objective of obtaining expert opinion on the ability of the methodologies to adjust the poverty measure for geographic differences in COL, we identified experts and asked them to review the methodologies. From our list of more than 40 potential experts compiled during our literature review and initial discussions with specialists, we selected 15 experts to review the methodologies. (See app. II for a list of the selected experts.) We sent a questionnaire to these experts in which we described each methodology briefly. We asked the experts to review each of the 12 methodologies and to categorize the methodology’s potential for use in adjusting the poverty measurement for geographic difference in COL. Additionally, we asked them to discuss the strengths and weaknesses of each methodology. (See app. III for a copy of the information and questionnaire sent to each expert.) All 15 experts responded and we tabulated their ratings for each methodology to determine the ones the experts considered most and least promising. We also analyzed the written responses on strengths and weaknesses. We did our work in Washington, D.C., between September 1994 and January 1995 in accordance with generally accepted government auditing standards. Because we did not evaluate the policies or operations of any federal agency to develop the information presented in this report, we did not seek comments from any agency. Market baskets of goods and services form the basis for determining a COL index. Of the methodologies we examined that calculate a COL index, none uses a uniform national market basket in which the same quantities of identical goods and services are used in all locations. In fact, these methodologies all used market baskets that have different measures for at least one component—for example, transportation or housing. Several of the experts, in their comments on COL methodologies, said that market baskets for COL indexes should vary to reflect differences in local standards of living. Market baskets of goods and services provide the foundation for determining COL. The composition of the market baskets, such as the items included or the quantity of one item included in relation to other items, affects the dollar values that are determined to represent COL. Conceptually, market baskets for a COL index would accurately reflect differences in tastes, as well as needs, such that an individual would derive equal satisfaction from the various market baskets priced in different geographic locations. For example, food preferences in southeastern states for low-cost cereals, such as rice and corn, lowers COL in these areas, while climatic differences necessitates the expenditures for heating a home and warm clothing and increases the COL in northern states. Obtaining a consensus on what should go into a COL index’s market baskets and on how to update them would be difficult. The method generally preferred by the experts we contacted to determine the items to include in market baskets is to use expert judgment to specify the requirements for physical health and social well-being. But standards have not been identified for the majority of components of a COL index’s market baskets. Even if consensus were obtained on the specific items and their quantities to include in a COL index’s market baskets, another problem would be how to keep the market baskets up to date to reflect a constant standard of living. Of the methodologies we examined that calculate a COL index, all used market baskets that reflected regional differences in standards of needs and/or actual consumption patterns. Most notably, these methodologies varied in how they determined the housing and transportation components of the market baskets by adjusting for regional variation. We received numerous comments about market baskets for a COL index from the experts from whom we solicited assessments of the methodologies. Several experts noted the need to adjust the composition of the market baskets for differences in local standards of living among geographic areas. One expert commented that it is nearly impossible to obtain reliable evidence or credible expert judgments about the composition of market baskets to reflect specific local standards of living. This expert suggested that market baskets should be changed as acceptable standards are developed. The problem of keeping market baskets up to date was noted by other experts in their comments about the use of outdated data and concepts. For example, one expert specifically wanted a child care component to be included in the market baskets. We identified 12 generic methodologies that, in some part, could contribute to the development of a COL index that potentially could be used to adjust the poverty measurement for geographic differences. Four methodologies identified baseline data, or developed a market basket that could be the basis for constructing a COL index by geographic area. Six methodologies calculated a COL index from existing cost data or a previously defined market basket. Two methodologies developed an original market basket, collected data, and calculated a COL index with those data. Table 1 provides descriptions of the 12 methodologies. (Detailed descriptions of these methodologies are found in app. III.) A few of the methodologies are now used as COL indexes, but most have not been. For example, the norms, local indexes, and economic modeling methodologies are used in the private sector as COL indexes to make geographic COL adjustments for pay and relocation decisions. Until their discontinuance in 1981, estimates from the family budgets methodology had been used by policymakers to set income eligibility criteria for employment programs and to geographically adjust wages and salaries. Several of the methodologies that identify baseline data are used in ways other than to show differences in COL. For example, USDA uses the consumption data methodology to estimate expenditures on a child, which then are used to determine payments for the support of children in foster families. Many of the methodologies were developed by researchers to develop indexes to reflect COL differences, such as those categorized under the estimation models, interarea price index, and the consumer price index methodologies; but none of these are used to make geographic COL adjustments. (See app. III for detailed descriptions of how the data and indexes from the 12 methodologies are used.) We identified two additional methodologies but could not locate research that delineated how the methodologies could be implemented to develop a COL index. For example, administrative data from public assistance programs, such as the food stamp program, have been proposed as baseline data for developing a COL adjustment that would indicate the incidence of need within a geographic location. However, in our review of the relevant literature and discussions with specialists, we did not locate appropriate data that could be translated into an index to demonstrate geographic variation. Another approach to identify baseline data for a COL index would be to use information obtained from grocery stores’ universal product code scanners. As in the case of administrative program data, we could not locate information that indicated how the product code data could be used to develop a geographic index or ratio. During the process of obtaining experts’ ratings of promise for the 12 generic methodologies we identified, some experts indicated that we had not identified and presented all possible methodologies to make such a COL adjustment. A number of the experts suggested using a combination of several attributes from the methodologies that they reviewed. In addition, they identified four other methodologies that could be considered for doing geographic COL adjustments. One was a modification of the local indexes methodology, and another was a modeling technique to develop regional variables to obtain baseline data. The other two focused on ways to revise the current poverty measurement. One methodology included the most basic levels of shelter and food as the basis for measuring poverty. The other methodology, according to an expert, is what the National Academy of Sciences panel is expected to recommend in its forthcoming report. None of these methodologies was identified by more than one of the experts, however. We recognize that our list of 12 methodologies is not exhaustive, but consider it to provide a fair overview of the wide range of alternatives. The fact that the experts suggested further methodologies, and that no alternative was proposed by more than one expert, suggests that no agreement now exists among experts as to the best way to adjust the measurement of poverty for geographic differences in COL. This is discussed in the next section. The observation in a 1976 report to Congress that “although there may be geographic differences in the cost of living, there is no known way to make satisfactory geographic adjustments to the poverty cutoffs,” still seems valid. The experts who we asked to assess the methodologies differed about how best to make adjustments because of numerous data and conceptual problems that they identified. Overall, the experts’ ratings of each methodology’s promise for geographically adjusting COL were mixed, and our content analysis of the experts’ comments about each methodology’s strengths and weaknesses yielded diverse and sometimes conflicting perspectives. Overall, the experts’ ratings of methodologies were mixed. Although the majority of experts rated certain methodologies as showing little or no promise for adjusting the poverty measurement for geographic differences in COL, no clear consensus was observed overall in the ratings the experts gave regarding the methodologies’ promise for making adjustments. A majority of the experts regarded local indexes, polling, family budgets, consumption data, and the consumer price index methodologies as showing little or no promise for making adjustments. The comparable pay methodology was found by more than two-thirds of the experts to be not promising at all. (See table 2 for experts’ ratings of methodologies.) No methodology was rated by the majority of experts as showing great or very great promise to adjust the poverty measurement for geographic differences in COL. However, three methodologies—budgets, norms, and housing data—received a rating of at least moderate promise by a majority of the experts. The budgets methodology appeared to have the most promise, but less than half of the experts rated it as having great or very great promise. Our content analysis of the experts’ comments on each methodology’s strengths and weaknesses showed that the experts shared few common views on any specific methodology. When three or more experts did express a similar comment, it most often concerned a weakness rather than a strength of the methodology being rated. Some experts identified an attribute but expressed different perspectives as to whether it constituted a strength or weakness. Examples of mixed responses included one expert indicating that a strength of a particular methodology was its adaptability for use by government, while another expert characterized the same methodology as not being adaptable for use by government. In some instances, experts agreed about a methodology’s attribute—e.g., its emphasis on children—but differed as to whether the presence of this attribute should be viewed as a strength or weakness. (See figure 1 for strengths and weaknesses of the methodologies.) Our content analysis of the experts’ comments on the strengths and weaknesses of the three methodologies that received a rating of at least moderate promise by the majority of experts illustrates both the diverse and occasionally contradictory comments of the experts. The strengths of the budgets methodology lie in its representation of low-income families and its use of health and social well-being standards in the determination of the market basket. However, its eclectic approach of using these standards from various sources, which makes it difficult to explain to laypersons, was viewed as a weakness. Another weakness of the budgets methodology cited by the experts is that it fails to make adjustments for regional differences in transportation and some of the other market basket components. The experts who commented about its use of expenditure data were evenly split between those who viewed this as a strength and those who said it was a weakness. This methodology was viewed as capturing both contemporary and outdated concepts of consumption needs. For example, one expert cited the use of current standards as a strength, whereas other experts cited the use of 1981-based data to determine the importance given to items in the market basket as a weakness. The norms methodology was generally rated as promising because the COL index was frequently updated. The experts, however, differed in their comments about the methodology. For example, more than one-half of the experts said that the lowest income level for which the index was provided was well above poverty and was therefore unrepresentative of low-income families. Conversely, one expert, noting the degree of variation in income levels provided in the index, described it as “more relevant to the poor than other available sources.” Mixed responses of both strengths and weaknesses were indicated for the (1) appropriateness of the items in the market basket, (2) degree of geographic variation shown in the index, (3) ability of the methodology to be adapted and implemented by the government, and (4) cost associated with such implementation. The housing data methodology was regarded as strong in its focus on what the experts considered the major source of variation in COL. The fact that housing was the only cost measured was also cited as this methodology’s major weakness. As shown in table 3, the experts had mixed views about the representation in the baseline data of families living in poverty. The experts also lacked agreement on whether the housing concepts were appropriate. For example, one expert said the methodology had the “merit of focusing on rents for a specified type of apartment,” while another said that “decent, safe, and sanitary” qualities of housing should be controlled in the measure to prevent downward bias in low-income areas. A content analysis of the experts’ comments revealed that the local indexes methodology had many weaknesses resulting from its price data collection methods, which involve volunteers from chambers of commerce collecting and averaging prices that are representative of purchases of middle-management households in their local areas. This methodology was viewed to be an unsuitable representation of the consumption needs of the poor. Another weakness of the local indexes methodology was its exclusion of nonmetropolitan and rural areas. The polling methodology was regarded by several experts as a means to validate the measurement of poverty, rather than as an approach to make geographic COL adjustments. These experts said that this methodology provided insight into the relationship between an absolute measure of poverty, such as the current official measure, and a measure that is relative—that is, a measure that changes with growth in the economy or according to society’s perception of an adequate level of income. According to the experts’ comments, the main weakness of polling was in the quality of the data obtained through a public opinion survey. It was thought that the respondents would be biased in providing their estimates. For example, one expert wrote: “If respondents knew the survey results would be used to adjust poverty thresholds with implications for program expenditures and income taxes, then some may intentionally deflate or inflate their response, in their own self-interest.” The experts had mixed views about the costs associated with this method; some experts said it would be cost effective, while others said it would be costly. According to the experts’ comments, the main weakness of the comparable pay methodology was its reliance on employers’ labor costs. Many experts said that such a measure included influences other than COL and that as a consequence it was inappropriate and an unsuitable substitute for COL, especially as a representation of the needs of the poor. For example, one expert said, “Geographic variations in quality of life affect the relationship between wages/salaries and living costs. Use of employer costs as a measure of living costs would introduce significant regional bias.” Many weaknesses, as well as several mixed responses, were noted for the remaining three methodologies—consumption data, family budgets, and consumer price index. The concept of adjusting the measurement of poverty for geographic differences in COL has been seen as problematic, and remains so. We asked recognized experts to review 12 methodologies that illustrate the range of alternative approaches to adjust poverty measurement for geographic COL differences, and there was no consensus among these experts that any one methodology was the most promising for making such an adjustment. The fact that several of these experts suggested additional methodologies, but that no additional methodology was suggested by more than one of the experts, suggests to us that a consensus on any one approach does not exist. Where there does appear to be agreement, however, is that several of the methodologies offer little or no promise of appropriately adjusting the measurement of poverty for geographic COL differences. Further, obtaining a consensus on what items should go into a COL index’s market baskets to reflect regional differences in consumption would be difficult. As arranged with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 20 days after its issue date. At that time, we will send copies of the report to the Secretary of Commerce, the Secretary of Labor, the Director of the Office of Management and Budget, and other interested parties. We will also make copies available to others on request. If you have any questions concerning this report, please call me on (202) 512-8676. Major contributors to the report are listed in appendix IV. To address the first two objectives of this job—describing the function of a market basket in determining a COL index, and identifying potential methods for calculating a COL adjustment—we first reviewed the relevant literature and held discussions with specialists in the field. These specialists included individuals associated with poverty measurement or COL data at the Bureau of Labor Statistics (BLS) and the Bureau of the Census, as well as private organizations and academic institutions. We also included individuals who did not support geographic adjustment of the poverty measurement, as well as those who have proposed methodologies to achieve this objective. On the basis of our literature review and preliminary discussions with specialists, we described the function of a market basket and identified an initial set of methodologies that might have potential for adjusting poverty measurement for geographic differences in the COL. We grouped similar methodologies into 12 categories and gave a generic name to each. We excluded potential methodologies if they did not identify existing data that could be turned into a geographically adjusted index. Two methods, one based on use of data from administrative records and one relying on data scanning of uniform product codes, were eliminated because they did not meet this criterion. To meet our third objective of obtaining expert opinion on the ability of these methodologies to adjust the poverty measure for geographic differences in COL, we selected a panel of 15 experts and surveyed them using a data collection instrument that contained brief descriptions of each of the 12 generic methodologies we identified. We asked the panel to review each description and rate each methodology in terms of its promise for use in adjusting the poverty measurement for geographic differences in COL. The description of each methodology identified data sources, discussed the cost and time needed to develop an index with the methodology, and provided an example of how the calculations would be made and the index could be used. We asked the developer or someone very familiar with each methodology to review our brief description to ensure that it accurately conveyed the essence of the methodology. We asked the selected experts to rate each methodology on a five-point scale that ranged from “not promising at all” to “shows very great promise,” and then briefly discuss the strengths and weaknesses of the methodology. The experts were also asked to identify any additional methodology we may have overlooked and provide their views on the major challenges and costs associated with developing COL data that could be used to geographically adjust the poverty measure. We randomly chose 15 individuals to serve as experts from a candidate list of more than 40 names. To obtain a diverse candidate pool reflective of the different interests involved, we asked for nominations of potential experts from those specialists in the field and representatives of major statistical agencies that we met with during our initial discussions and literature review. To avoid potential conflicts of interest, we excluded individuals from the list who are currently serving on the National Academy of Sciences’ Panel on Poverty and Family Assistance or who are political appointees. We recognize that the responses we received reflect only the views of the experts included. Several of the experts initially selected were unable to participate. We replaced these individuals with alternates from the remaining pool of candidates. (See app. II for a list of the participating experts.) Before contacting our initial selections, we asked congressional staff and officials from Census, BLS, and the Office of Management and Budget to review the list for balance and to identify any additional experts they believed should be included. No additions were suggested. The selected experts received a package containing a letter of introduction, an instruction sheet, descriptions of all the methodologies, and response sheets (see app. III). The package was sent on November 14, 1994. Responses were received from all 15 experts by January 6, 1995. We tabulated the ratings for each methodology to obtain an overall assessment of the experts’ opinions of how promising each methodology was for use in adjusting the poverty threshold for geographic differences in COL. We also did a content analysis of the experts’ responses to the strengths and weaknesses question for each methodology. From an initial reading of the responses, we developed a list of cited strengths and weaknesses. We used this list to code the responses of all experts for each methodology. The coding of the responses was verified by a second coder, and a third person checked coding reliability. As a method of focusing our analysis on the recurring comments made by the experts in their discussions of each methodology’s strengths and weaknesses, we adopted a decision rule to report only those comments made by three or more experts for a particular methodology’s attribute. Experts’ comments on market baskets were identified separately and were used in our description of the function of the market basket. Additionally, we used experts’ general comments on major challenges and costs associated with geographically adjusting poverty measures to illustrate our results. Mark C. Berger University of Kentucky Dixie Blackley Le Moyne College Tom Carlin Department of Agriculture Lawrence Gibson Eric Marder Associates, Inc. This appendix contains copies of the cover letter, instruction sheet, answer sheets, and brief descriptions of the 12 methodologies that we sent to the 15 experts we selected to review the methodologies. Federal Aid: Revising Poverty Statistics Affects Fairness of Allocation Formulas (GAO/HEHS-94-165, May 20, 1994). Poverty Trends, 1980-88: Changes in Family Composition and Income Sources Among the Poor (GAO/PEMD-92-34, Sept. 10, 1992). The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (301) 258-4097 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO provided information on the statistical data requirements for constructing a cost-of-living (COL) index that could be used, at the federal level, to adjust for geographic differences in living costs. GAO found that: (1) the current measurement to determine poverty levels does not account for geographic COL differences; (2) market baskets, a measure used to evaluate relative economic standing, would provide the foundation for any measure of living costs; (3) obtaining a consensus on what should go into a market basket for a COL index would be difficult; (4) there are 12 methodologies that could be used to contribute to an index to adjust the poverty measurement to reflect geographic differences; (5) the methodologies include budgeting for representative market baskets, measuring consumer spending norms, examining housing data, family budgets, or consumption data, developing various geographically specific price indexes, polling, calculating the relative amounts of time worked for each of the components of compensation, and estimating or modelling; and (6) experts' opinions about the methodologies' strengths and weaknesses were diverse and sometimes conflicting. |
This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2004-2011. It provides the total dollar values of U.S. arms agreements with its top five purchasers in five specific regions of the world for the periods 2004-2007, 2008-2011, and for 2011. It also reports the total dollar values of U.S. arms deliveries to its top five purchasers in five specific regions for those same years. In addition, the report provides a listing of the total dollar values of U.S. arms agreements with and deliveries to its top 10 purchasers for the periods 2004-2007, 2008-2011, and for 2011. The data are official, unclassified, United States Defense Department figures compiled by the Defense Security Cooperation Agency (DSCA), unless otherwise indicated. The data have been restructured for this report by DSCA from a fiscal year format to a calendar year format. Thus a year in this report covers the period from January 1 to December 31, and not the fiscal year period from October 1 to September 30. The following regional tables ( Tables 1-5 ) provide the total dollar values of all U.S. defense articles and defense services sold to the top five purchasers in each region indicated for the calendar year(s) noted. These values represent the total value of all government-to-government agreements actually concluded between the United States and the foreign purchaser under the Foreign Military Sales (FMS) program during the calendar year(s) indicated. In Table 6 , the total dollar values of all U.S. defense articles and defense services sold to the top 10 purchasers worldwide are provided for the calendar year period noted. All totals are expressed as current U.S. dollars. The following regional tables ( Tables 7-11 ) provide the total dollar values of all U.S. defense articles and defense services delivered to the top five purchasers in each region indicated for the calendar year(s) noted for all deliveries under the U.S. Foreign Military Sales (FMS) program. These values represent the total value of all government-to-government deliveries actually concluded between the United States and the foreign purchaser under the FMS program during the calendar year(s) indicated. Commercial licensed deliveries totals are excluded, due to concerns regarding the accuracy of existing data. In Table 12 , the total dollar values of all U.S. defense articles and defense services actually delivered to the top 10 purchasers worldwide is provided. The delivery totals are for FMS deliveries concluded for the calendar year(s) noted. | This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2004-2011, made through the U.S. Foreign Military Sales (FMS) program. In a series of data tables, it lists the total dollar values of U.S. government-to-government arms sales agreements with its top five purchasers, and the total dollar values of U.S. arms deliveries to those purchasers, in five specific regions of the world for three specific periods: 2004-2007, 2008-2011, and 2011 alone. In addition, the report provides data tables listing the total dollar values of U.S. government-to-government arms agreements with and deliveries to its top 10 purchasers worldwide for the periods 2004-2007, 2008-2011, and for 2011 alone. This report is prepared in conjunction with CRS Report R42678, Conventional Arms Transfers to Developing Nations, 2004-2011, by [author name scrubbed] and [author name scrubbed]. That annual report details both U.S. and foreign arms transfer activities globally and provides analysis of arms trade trends. The intent here is to complement that elaborate worldwide treatment of the international arms trade by focusing exclusively on U.S. arms sales and deliveries, and providing the names of the major U.S. arms customers, by region, together with the total dollar values of their arms purchases or deliveries for the calendar years 2004-2007, 2008-2011, and 2011. |
First up in the realm of unfathomable embarrassment, Starbucks CEO Howard Schultz has rolled out an immediately self-parodic corporate initiative called "Race Together," in which—according to Fortune—"Starbucks baristas will have the option as they serve customers to hand cups on which they've handwritten the words 'Race Together' and start a discussion about race."
It sounds like a joke, but the sincere-looking and distinctively pale hands holding "Race Together" cups on the Starbucks press rollout seem very serious, and apparently this horrible idea pops off at 12,000 locations starting this week.
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Here's how the company explains the origin of Race Together:
As racially-charged tragedies unfolded in communities across the country, the chairman and ceo of Starbucks didn't remain a silent bystander. Howard Schultz voiced his concerns with partners (employees) in the company's Seattle headquarters and started a discussion about race in America.
Dang. That's brave.
Despite raw emotion around racial unrest from Ferguson, Missouri to New York City to Oakland, "we at Starbucks should be willing to talk about these issues in America," Schultz said. "Not to point fingers or to place blame, and not because we have answers, but because staying silent is not who we are."
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Really, how might they imagine this going down? "Crazy about all that racism out there," the barista will say to the customer. No matter what the customer replies, it'll be fucking horrible.
First, ordering coffee from a chain store is an act that necessarily takes place under conditions—quick, perfunctory, corporately polite—that are exactly oppositional to the conditions necessary to talk about race. Second, if you're gonna allude to Mike Brown and Eric Garner in the press release, it's an interesting move to paint race in America as some sort of confusing, nebulous issue in which one must just wade in gently without pointing fingers. Ferguson, for one, is an American story with both blame and answers at the ready. What Schultz euphemistically calls "these issues in America" is the racial climate inevitable in a country that was founded on white supremacy, sustained by white supremacy, and is still dramatically marked by it today.
But just as race manages to continue disguising itself as an issue with "no easy answers," self-righteousness will continue to look like discourse—and, of course, those baristas are making $10 an hour, which seems ample for being encouraged to essentially live inside the real-life equivalent of an internet comments section, i.e. "talk to complete strangers about race at Starbucks." It's actually not a bad idea! I personally feel extremely grateful to Howard Schultz for finally saying what no one is bold enough to—what's up with all this race stuff lately, guys?
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As a starting point to encourage all Jezebel readers to take part in racial dialogue at Starbucks, I'd like to suggest that we, as customers, bring it up first. Don't wait for that scribbled little "Race Together" wink on your cup, or that USA Today supplement that'll ask you whether or not you even have any black friends. Go ahead and signify to your barista that you're "down," but like, not in a way that suggests you are trying to appropriate African-American culture, just like, down to chat, down to say is it racist that I kinda want cornrows OR hey, I see your name is Priya, that means dot Indian instead of feather Indian, right, just kidding I am aping the language of the oppressor rather than replicating it; it's subversive OR hi Beau, am I correct that the Confederacy is heritage and not discrimination OR it's a shame that people who look like the two of us are concentrated in low-wage occupations OR damn so crazy about all those unarmed black people that keep getting killed!
My prayers are with all the Starbucks employees who are going to be united across their own racial rainbow with the extreme discomfort of dealing with this Race Together campaign. On that note, here are some ideas for how you can order your coffee now.
• "Room for cream, please. But there's no room for 'cream,' so to speak, in my pussy. I am opposed to having intercourse with white men. Haven't they benefited enough?"
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• "Black is fine. For my tall drip coffee, at least. Black people in America have faced hundreds of years of social and legal barriers that have left lingering, painful wounds."
• "Light roast with a little half-and-half. If you can't tell, I'm 'half-and-half' myself, although both the one-drop rule and the popular imagination label me as black. It is what it is—although I can say the N-word and you probably can't."
• "I'll have three quad espressos—one shot for each factor by which white household net worth in America outpaces black net worth. Sorry, is this awkward? I thought Carl would be working this morning. I actually don't know the stats for Asians. But you look well-educated—those cultures really value hard work."
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• "Caramel macchiato. By the way, I'd never refer to your beautiful skin as 'caramel,' even though it does look good enough to eat. Racists are horrible, am I right?"
• "Flat white, like the general demographics in Scandinavia. You know that's the only reason they're able to sustain the economics of a social safety net, because they don't have to deal with the complicating factors of diversity like we do in America. Diversity is good, don't get me wrong, but it's resulting in white people being the most hated group in America."
• *writes Class Together on $5 bill* "It's more class than race, anyway."
Further suggestions welcome. ||||| It began with one voice
As racially-charged tragedies unfolded in communities across the country, the chairman and ceo of Starbucks didn’t remain a silent bystander. Howard Schultz voiced his concerns with partners (employees) in the company’s Seattle headquarters and started a discussion about race in America.
Despite raw emotion around racial unrest from Ferguson, Missouri to New York City to Oakland, “we at Starbucks should be willing to talk about these issues in America," Schultz said. "Not to point fingers or to place blame, and not because we have answers, but because staying silent is not who we are."
Partners were not silent. For more than an hour, at an all-hands meeting at the Starbucks Support Center, partners representing various ages, races and ethnicities passed a microphone and shared personal stories.
“The current state of racism in our country is almost like humidity at times. You can’t see it, but you feel it,” said one partner.
Thousands more voices continue the conversation
Over the past three months, more than 2,000 Starbucks partners have discussed racial issues at open forums in Oakland, Los Angeles, St. Louis, New York and Chicago.
In the midst of a conversation with partners in St. Louis, a soft spoken young man shared that he was proud to have reached the age of 20.
“The magnitude of that statement might have been lost on many in the room, but for me, it brought to light a deeply troubling situation. For some young people in our country, just staying alive is their biggest and most important accomplishment,” said Kelly Sheppard, a Starbucks 15-year partner who attended two of the forums. “How could that be in 21st century America with all of the promise and opportunity our nation provides?”
In each forum, partners demonstrated vulnerability and courage as they shared personal stories. It was clear to those who attended, the gatherings highlighted the mission and values of Starbucks, and the partners’ desire to do more.
Starbucks customers are invited to join the discussion
Baristas in cities where the forums were held said they wanted to do something tangible to encourage greater understanding, empathy and compassion toward one another. Given their willingness to discuss race relations, many partners wanted to begin conversations with their customers too. Partners in New York, Chicago, St. Louis, Oakland and Los Angeles have voluntarily begun writing “Race Together” on Starbucks cups. Partners in all Starbucks stores in the U.S. will join them today. Partners in Starbucks® stores may also engage customers in conversation through Race Together stickers available in select stores, and a special USA Today newspaper section arriving in stores later this week.
In addition, full-page ads in The New York Times and USA Today support the Race Together initiative, which will be further outlined during Starbucks 2015 Annual Meeting of Shareholders in Seattle on Wednesday.
Race Together is not a solution, Schultz acknowledged, “but it is an opportunity to begin to re-examine how we can create a more empathetic and inclusive society – one conversation at a time.”
Watch the video message Howard Schultz shared with Starbucks partners throughout the U.S. last week
New York Times full-page advertisement from Sunday, March 15, 2015
USA Today full-page advertisement from Monday, March 16, 2015
Join the conversation on social media through the hashtag #racetogether. Starbucks partners and customers can also share their experiences by emailing the Starbucks Newsroom.
For more information on this story, contact us |||||
They held the key all along! (Lucy Nicholson/Reuters)
The good news, I guess, is that Starbucks chief executive Howard Schultz realizes that racism is a problem. The bad news is that he thinks he has figured out what step to take next: He will urge baristas to write “race together” on your $5 coffee, and then they will explain to you about the need for compassion and about how we, as a nation, are better than that.
I wish I were making this up. I am not.
“I’m asking you to perform that small gesture of writing ‘Race Together’ on a cup,” Schultz urges Starbucks employees, in a video. “And if a customer asks you what this is, try and engage in a discussion, that we have problems in this country with regard to race and racial inequality, and we believe we’re better than this, and we believe the country’s better than this. And if this makes you have a conversation with a customer about the need for compassion, the need for empathy, the need for love towards others, if you can do that with one customer one day, then you’re making a significant difference as we go forward.”
“I think this is really important,” Schultz concluded, “not so much for the company, but for the country.”
The idea — that the revolutionary action needed in our nation’s continued entanglement with racism is writing a phrase on a Starbucks cup — is a frothy combination of one pump hubris, three pumps privilege and four shots of I-can’t-even.
Sure. That was what we were missing. Nailed it, Howard.
Again, it’s great that the chief executive of a major corporation is aware that this is a problem. I guess? But he must be pretty well cocooned from reality if this is the action he thinks is called for. This is so far from a good next step that a carrier pigeon flying from this to a good next step would die of old age. Does Schultz have any reason to think this is not going to go over like a lead balloon covered in “Serena” DVDs?
“I know! I’ll tell my employees to explain racism to our customers!” is one of the most tone-deaf things I have heard all week, and I spent much of last night playing the accordion.
Starbucks customers are snippy, bordering on insufferable, at the best of times. I know. I’m one myself. I cannot imagine trying to tell them about “compassion, the need for empathy, the need for love towards others” BEFORE they have gotten access to caffeine.
How does Schultz picture this going, exactly? I assume what he pictures is something like this, because he lives in cloudcuckooland where writing “come together” on coffee cups was Really What Turned The Tide in Congress.
Starbucks Customer: One flat white, please.
Barista: Name?
Starbucks Customer: A. Terrible Racist. That is my name, but it also describes me. I am a terrible racist.
Barista: (smiling, writes “Race Together” on cup next to impeccably spelled name)
Starbucks Customer: “Race together”? What’s this?
Barista: (smiling more broadly) I’m so glad you asked. We have problems in this country with regard to race and racial inequality.
Starbucks Customer: What? No!
Barista: But I believe we’re better than this, and I believe the country’s better than this. And that’s why there’s need for compassion, and need for empathy, and need for love towards others.
Starbucks Customer: Wow. You’re so right. I never saw that before, but wow. I have a lot of people to apologize to, and I’m going to go pay this forward, you ever bet! I’m telephoning all my uncles immediately to explain why they are wrong!
Barista: Great. Can I help whoever’s next, please?
If you have ever been to a Starbucks, or spoken to a human being, ever, about race or even a less sensitive subject such as whether the Colts are likely to win, you will know that this is not how it is likely to go. If a single conversation goes like that, I will eat my hat from a unicorn horn, garnished with hen’s teeth.
What will happen instead is that a lot of people will become upset and confused as to why they are getting words with their coffee. Some people will not be able to read what it says on the cup and will bellow, angrily, “My name isn’t Rack Steghter! What are you trying to pull?” and — the cause of conversation seems almost excruciatingly unlikely to advance.
But maybe I’m wrong. Maybe people have been exaggerating the difficulty all this time, saying there were centuries upon centuries of history to take into account, that we still had a ways to go. That we had a lot of heavy lifting and serious talking and thinking and listening to do about whether the playing field was as level as we imagined, and what to do next. That we needed to puzzle over the legacy of redlining and the culture of our police forces and the facts of disproportionate incarceration, and that this would only be the beginning.
Maybe, all along, what needed to happen was for Howard Schultz to urge Starbucks baristas to write “Race Together” on our cups and offer to engage us in a discussion about race. (Also, “Race Together”? What does that even mean? Does he want us to … run somewhere?)
Not that a conversation wouldn’t be useful. Not that we don’t need to talk about this. We do. And the kind of people with the discretionary income to drink at Starbucks need to listen, especially. But — you have to be pretty far up your own percolator to think this is the way of going about it.
Twitter has, of course, mashed this idea into a nice fine hash, with hashtags for #NewStarbucksDrinks and reasonable criticisms of the plan. “So Starbucks both starts to serve alcohol and encourage their baristas to discuss race relations. Nothing about this seems like a bad idea,” tweeted @daniecal.
“If Schultz wants Starbucks workers to perform racial reconciliation for him, he sure as [bleep] better pay more than $10/hour,” tweeted Julia Carrie Wong.
“The only folks happy about Starbucks baristas discussing race with customers are the suits who run it. Feel-good liberalism at its worst,” tweeted TNR’s Jamil Smith.
“I am 100% interested in engaging with Starbucks employees in a conversation about race. Let’s start with anyone _but_ the baristas. VPs! HR!” suggested ThinkUp co-founder Anil Dash.
At the beginning of the video, Schultz anticipates the criticism. “Howard,” he says people told him, “this is not a subject we should touch.”
“I reject that,” he said. “I reject that completely. We can’t leave this for someone else.”
You should have listened to people, Howard. | Starbucks CEO Howard Schultz is on another mission: race relations. Under a new company initiative, baristas are being encouraged to write the phrase "Race Together" on customers' cups in the hope of starting a conversation about race, reports Fortune. "It is so vitally important to the country," Schultz explained in a video to employees, rejecting the idea that the topic is too volatile. Starbucks is teaming with USA Today on the project, which has plenty of critics snarking about it online. "The idea—that the revolutionary action needed in our nation’s continued entanglement with racism is writing a phrase on a Starbucks cup—is a frothy combination of one pump hubris, three pumps privilege, and four shots of I-can’t-even," writes Alexandra Petri at the Washington Post, in a typical sentiment. Jezebel, meanwhile, offers a guide for customers, including this suggestion on what to say: "Caramel macchiato. By the way, I'd never refer to your beautiful skin as 'caramel,' even though it does look good enough to eat. Racists are horrible, am I right?" Schultz is no stranger to criticism of his social stands, though. In fact, he seems to relish it. |
Exercise increased caution in Mexico due to crime. Some areas have increased risk. Read the entire Travel Advisory.
Violent crime, such as homicide, kidnapping, carjacking, and robbery, is widespread.
The U.S. government has limited ability to provide emergency services to U.S. citizens in many areas of Mexico as travel by U.S. government employees to these areas is prohibited or significantly restricted.
U.S. government employees may not travel between cities after dark, may not hail taxis on the street, and must rely on dispatched vehicles, including from app-based services like Uber, or those from regulated taxi stands. U.S. government employees may not drive from the U.S.-Mexico border to or from the interior parts of Mexico with the exception of daytime travel within Baja California, and between Nogales and Hermosillo on Mexican Federal Highway 15D.
Read the Safety and Security section on the country information page.
Do not travel to:
Colima state due to crime .
. Guerrero state due to crime.
Michoacán state due to crime.
Sinaloa state due to crime.
Tamaulipas state due to crime.
For detailed information on all states in Mexico, please see below.
If you decide to travel to Mexico:
Use toll roads when possible and avoid driving alone or at night. In many states, police presence and emergency services are extremely limited outside the state capital or major cities.
Exercise increased caution when visiting local bars, nightclubs, and casinos.
Do not display signs of wealth, such as wearing expensive watches or jewelry.
Be extra vigilant when visiting banks or ATMs.
Enroll in the Smart Traveler Enrollment Program (STEP) to receive Alerts and make it easier to locate you in an emergency.
Follow the Department of State on Facebook and Twitter.
Review the Crime and Safety Reports for Mexico.
U.S. citizens who travel abroad should always have a contingency plan for emergency situations. Review the Traveler’s Checklist.
Aguascalientes state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees.
Baja California state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
Criminal activity and violence, including homicide, remain a primary concern throughout the state. While most of these homicides appeared to be targeted, criminal organization assassinations and turf battles between criminal groups have resulted in violent crime in areas frequented by U.S. citizens. Bystanders have been injured or killed in shooting incidents.
Due to poor cellular service and hazardous road conditions, U.S. government employees may only travel on Highway 2D between Mexicali and Tijuana via “La Rumorosa” during daylight hours.
There are no restrictions on travel for U.S. government employees in Baja California, which includes tourist areas in: Ensenada, Rosarito, and Tijuana.
Baja California Sur state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
Criminal activity and violence, including homicide, remain a primary concern throughout the state. While most homicides appeared to be targeted, criminal organization assassinations and turf battles between criminal groups have resulted in violent crime in areas frequented by U.S. citizens. Bystanders have been injured or killed in shooting incidents.
There are no restrictions on travel for U.S. government employees in Baja California Sur, which includes tourist areas in: Cabo San Lucas, San Jose del Cabo, and La Paz.
Campeche state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees.
Chiapas state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees in Chiapas state, which includes tourist areas in: Palenque, San Cristobal de las Casas, and Tuxtla Gutierrez.
Chihuahua state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are widespread. While most homicides appeared to be targeted, criminal organization assassinations and turf battles between criminal groups have resulted in violent crime in areas frequented by U.S. citizens. Bystanders have been injured or killed in shooting incidents.
Travel for U.S. government employees is limited to the following areas with the noted restrictions:
Ciudad Juarez: U.S. government employees require prior approval to travel to the downtown area (i.e., the area south of Calle Malecon, west of Calle 5 de Mayo, north of Calle 18 de Marzo, and east of Avenida Francisco Villa). They may access the Paso del Norte (Santa Fe) Bridge, the Bridge of the Americas, and the Stanton Street Bridge via the border highways only. They must access the San Geronimo Port of Entry through the United States or the Anapra-San Geronimo Highway in Mexico. U.S. government employees require prior approval to travel after dark to areas east of Bulevar Independencia. They must travel to and from the airport after dark via Mexico Highway 45, using the most direct route north of Bulevar Zaragoza to access the highway.
U.S. government employees require prior approval to travel to the downtown area (i.e., the area south of Calle Malecon, west of Calle 5 de Mayo, north of Calle 18 de Marzo, and east of Avenida Francisco Villa). They may access the Paso del Norte (Santa Fe) Bridge, the Bridge of the Americas, and the Stanton Street Bridge via the border highways only. They must access the San Geronimo Port of Entry through the United States or the Anapra-San Geronimo Highway in Mexico. U.S. government employees require prior approval to travel after dark to areas east of Bulevar Independencia. They must travel to and from the airport after dark via Mexico Highway 45, using the most direct route north of Bulevar Zaragoza to access the highway. Chihuahua City: U.S. government employees must travel from Ciudad Juarez to Chihuahua City during daylight hours via Highway 45, stopping only at the shops at Highway 45/Miguel Ahumada in the town of Villa Ahumada. They may not travel to the Morelos, Villa, and Zapata districts of Chihuahua.
U.S. government employees must travel from Ciudad Juarez to Chihuahua City during daylight hours via Highway 45, stopping only at the shops at Highway 45/Miguel Ahumada in the town of Villa Ahumada. They may not travel to the Morelos, Villa, and Zapata districts of Chihuahua. Nuevo Casas Grandes Area (including Nuevo Casas Grandes, Casas Grades, Mata Ortiz, Colonia Juarez, Colonia LeBaron, and Paquime): U.S. government employees must travel to the Nuevo Casas Grandes area during daylight hours through the United States. U.S. government employees should enter Mexico at the Palomas Port of Entry on New Mexico Route 11 before connecting to Mexico Highway 2 to Nuevo Casas Grandes.
U.S. government employees must travel to the Nuevo Casas Grandes area during daylight hours through the United States. U.S. government employees should enter Mexico at the Palomas Port of Entry on New Mexico Route 11 before connecting to Mexico Highway 2 to Nuevo Casas Grandes. Ojinaga: U.S. government employees must travel to Ojinaga via U.S. Highway 67 through the Presidio, Texas Port of Entry. U.S. government employees may visit the city during daylight hours only.
U.S. government employees must travel to Ojinaga via U.S. Highway 67 through the Presidio, Texas Port of Entry. U.S. government employees may visit the city during daylight hours only. Palomas: U.S. government employees must travel to Palomas via U.S. highways through the Palomas Port of Entry in Columbus, New Mexico.
Visit our website for Travel to High-Risk Areas.
Coahuila state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Coahuila state.
Travel for U.S. government employees is limited to the following areas with the noted restrictions:
Piedras Negras and Ciudad Acuña: U.S. government employees must travel directly from the United States and observe a midnight to 6:00 a.m. curfew in both cities.
U.S. government employees must travel directly from the United States and observe a midnight to 6:00 a.m. curfew in both cities. Highway 40 and areas south
Visit our website for Travel to High-Risk Areas.
Colima state – Level 4: Do Not Travel
Do not travel due to crime.
Violent crime and gang activity are widespread.
Travel for U.S. government employees is limited to the following areas with the noted restrictions:
Colima City: U.S. government employees must travel on toll road 54D to reach Colima City from Guadalajara.
U.S. government employees must travel on toll road 54D to reach Colima City from Guadalajara. Manzanillo: U.S. government employees may travel by air or on route 200 from the Jalisco border. U.S. government employees are limited to the tourist and port areas between Marina Puerto Santiago and Playa las Brisas.
Visit our website for Travel to High-Risk Areas.
Durango state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Durango state.
U.S. government employees may not travel to the area west and south of Highway 45 and the city of Gomez Palacio.
There are no additional restrictions on travel for U.S. government employees.
Visit our website for Travel to High-Risk Areas.
Estado de Mexico state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Both violent and non-violent crime is prevalent in the Estado de Mexico. Mexican government statistics indicate criminal incidents in the Estado de Mexico occur at a significantly higher rate than much of the rest of Mexico. Pay particular caution to areas outside of the frequented tourist areas, although petty crime occurs frequently in tourist areas as well.
There are no restrictions on travel for U.S government employees.
Visit our website for Travel to High-Risk Areas.
Guanajuato state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
The majority of gang-related violence occurs in the south of the state, near the border with Michoacán, and is often linked to the widespread theft of petroleum and natural gas from the state oil company and other suppliers.
There are no restrictions on travel for U.S. government employees.
Guerrero state – Level 4: Do Not Travel
Do not travel due to crime.
Armed groups operate independently of the government in many areas of Guerrero. Members of these groups frequently maintain roadblocks and may use violence towards travelers. U.S. government employees may not travel to the entire state of Guerrero, including Acapulco, Zihuatanejo, Ixtapa, and Taxco.
Visit our website for Travel to High-Risk Areas.
Hidalgo state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees.
Jalisco state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Jalisco state. In metropolitan Guadalajara, turf battles between criminal groups are taking place in areas frequented by U.S. citizens. Shooting incidents between criminal groups have injured or killed innocent bystanders.
U.S. government employees may not travel to:
Within 20 km (12 miles) of the Jalisco/Michoacán border, south of Route 120
Highway 80 south of Cocula
Highway 544 from Mascota to San Sebastian del Oeste
There are no restrictions on travel for U.S government employees to: Guadalajara Metropolitan Area, Riviera Nayarit (including Puerto Vallarta), Chapala, and Ajijic.
Visit our website for Travel to High-Risk Areas.
Mexico City – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
Both violent and non-violent crime is prevalent in Mexico City. Mexican government statistics indicate criminal incidents in the capital city occur at a significantly higher rate than much of the rest of Mexico. Pay particular caution to areas outside of the frequented tourist areas, although petty crime occurs frequently in tourist areas as well. Neighborhoods such as Tepito and Guerrero warrant additional vigilance, especially at night.
There are no restrictions on travel for U.S. government employees.
Michoacán state – Level 4: Do Not Travel
Do not travel due to crime.
Travel for U.S. government employees is limited to the following areas with the noted restrictions:
Highway 15D: U.S. government employees may travel on federal toll road (cuota) Highway 15D and to those parts of Michoacán north of Highway 15D and can utilize Highway 15D to transit between Mexico City and Guadalajara.
U.S. government employees may travel on federal toll road (cuota) Highway 15D and to those parts of Michoacán north of Highway 15D and can utilize Highway 15D to transit between Mexico City and Guadalajara. Lazaro Cardenas: U.S. government employees must travel by air only and limit activities to the city center or port areas.
U.S. government employees must travel by air only and limit activities to the city center or port areas. Morelia: U.S. government employees may travel by air and by land using Highway 15D to Highway 45D that leads directly to Morelia.
Visit our website for Travel to High-Risk Areas.
Morelos state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Morelos state.
There are no restrictions on travel for U.S. government employees.
Visit our website for Travel to High-Risk Areas.
Nayarit state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Nayarit state. U.S. government employees may not travel to:
Tepic
San Blas
There are no restrictions on travel for U.S government employees to: Riviera Nayarit (including Nuevo Vallarta and Bahia de Banderas) and Santa Maria del Oro.
Visit our website for Travel to High-Risk Areas.
Nuevo Leon state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Nuevo Leon state.
U.S. government employees in Monterrey must stay within the San Pedro Garza Garcia municipality, south of the Santa Catarina River, between 1:00 a.m. and 6:00 a.m., except for direct travel to and from the airport.
There are no additional restrictions on travel for U.S. government employees.
Visit our website for Travel to High-Risk Areas.
Oaxaca state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
U.S. government employees may not travel to:
Isthmus region of Oaxaca, defined by Highway 185D to the west, Highway 190 to the north, and the Oaxaca/ Chiapas border to the east. This includes the towns of Juchitan de Zaragoza, Salina Cruz, and San Blas Atempa.
Highway 200 northwest of Pinotepa.
There are no restrictions on travel for U.S. government employees to other parts of Oaxaca state, which include tourist areas in: Oaxaca City, Monte Alban, Puerto Escondido, and Huatulco.
Puebla state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
Gang-related violence is often linked to the widespread theft of petroleum and natural gas from the state oil company and other suppliers.
There are no restrictions on travel for U.S. government employees.
Queretaro state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees.
Quintana Roo state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
Criminal activity and violence, including homicide, remain a primary concern throughout the state. While most of these homicides appeared to be targeted, criminal organization assassinations and turf battles between criminal groups have resulted in violent crime in areas frequented by U.S. citizens. Bystanders have been injured or killed in shooting incidents.
There are no restrictions on travel for U.S. government employees in Quintana Roo state, which include tourist areas in: Cancun, Cozumel, Playa del Carmen, Tulum, and the Riviera Maya.
San Luis Potosi state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of San Luis Potosi state.
There are no restrictions on travel for U.S. government employees.
Visit our website for Travel to High-Risk Areas.
Sinaloa state – Level 4: Do Not Travel
Do not travel due to crime.
Violent crime is widespread. Criminal organizations are based and operating in Sinaloa state.
Travel for U.S. government employees is limited to the following areas with the noted restrictions:
Mazatlan: U.S. government employees may travel by air or sea only. U.S. government employees are limited to the Zona Dorada and historic town center, and must use direct routes when traveling to and from those locations and the airport and cruise terminals.
U.S. government employees may travel by air or sea only. U.S. government employees are limited to the Zona Dorada and historic town center, and must use direct routes when traveling to and from those locations and the airport and cruise terminals. Los Mochis and Topolobampo: U.S. government employees may travel by air or sea only. U.S. government employees are restricted to the city and the port, and must use direct routes when traveling between these locations and to and from the airport.
Visit our website for Travel to High-Risk Areas.
Sonora state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Sonora is a key location used by the international drug trade and human trafficking networks. However, northern Sonora experiences much lower levels of crime than cities closer to Sinaloa and other parts of Mexico.
U.S. government employees may not travel to:
The triangular region west of the Mariposa Port of Entry, east of Sonoyta, and north of Altar.
The district within Nogales that lies to the north of Avenida Instituto Tecnologico and between Periferico (Bulevar Luis Donaldo Colosio) and Corredor Fiscal (Federal Highway 15D), and the residential areas to the east of Plutarco Elias Calles.
The eastern edge of the state of Sonora, which borders the state of Chihuahua: all points along that border east of Federal Highway 17, the road between Moctezuma and Sahuaripa, and State Highway 20 between Sahuaripa and the intersection with Federal Highway 16.
All points south of Federal Highway 16 and east of Highway 15 (below Hermosillo), and all points south of Empalme.
In addition, U.S. government employees may not use taxi services in Nogales.
U.S. government employees may travel between the Nogales border crossing points of DeConcini and Mariposa in Nogales to and from Hermosillo during the day only on Highway 15D. U.S. government employees may stop in the towns of Santa Ana and Imuris and at restaurant/restroom facilities located along the highway.
U.S. government employees may travel to Puerto Peñasco via the Lukeville/Sonoyta crossing during daylight hours on Federal Highway 8, or by using Federal Highway 15 south from Nogales and east via Federal Highway 2 and State Highway 37 through Caborca during daylight hours. U.S. government employees may also travel directly from the nearest U.S. Ports of Entry to San Luis Rio Colorado, Cananea, and Agua Prieta, but may not go beyond the city limits.
Visit our website for Travel to High-Risk Areas.
Tabasco state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no travel restrictions on travel for U.S. government employees.
Tamaulipas state – Level 4: Do Not Travel
Do not travel due to crime.
Violent crime, such as murder, armed robbery, carjacking, kidnapping, extortion, and sexual assault, is common. Gang activity, including gun battles and blockades, is widespread. Armed criminal groups target public and private passenger buses as well as private automobiles traveling through Tamaulipas, often taking passengers hostage and demanding ransom payments. Federal and state security forces have limited capability to respond to violence in many parts of the state.
U.S. government employees may only travel within a limited radius between the U.S. Consulates in Nuevo Laredo and Matamoros and their respective U.S. Ports of Entry. U.S. government employees may not travel between cities in Tamaulipas using interior Mexican highways and they must observe a curfew between midnight and 6:00 a.m. in the cities of Matamoros and Nuevo Laredo.
Visit our website for Travel to High-Risk Areas.
Tlaxcala state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no travel restrictions on travel for U.S. government employees.
Veracruz state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees.
Yucatan state – Level 2: Exercise Increased Caution
Exercise increased caution due to crime.
There are no restrictions on travel for U.S. government employees in Yucatan state, which includes tourist areas in: Chichen Itza, Merida, Uxmal, and Valladolid.
Zacatecas state – Level 3: Reconsider Travel
Reconsider travel due to crime.
Violent crime and gang activity are common in parts of Zacatecas state.
There are no restrictions on travel for U.S. government employees.
Visit our website for Travel to High-Risk Areas. ||||| The U.S. has issued a travel advisory for Mexico after authorities found eight bodies in Cancún this week.
Travelers to Mexico are advised to “exercise increased caution,” according to the State Department advisory, which notes that “violent crime, such as homicide, kidnapping, carjacking, and robbery, is widespread.”
While initial reports suggested the travel advisory was issued because of the apparent murders in Cancún, a State Department spokesperson said Thursday that the advisory was updated in relation to a security alert by the U.S. Consulate in Ciudad Juárez. Quintana Roo, where Cancún is located, is under the Level 2 travel advisory that warns people in the area to travel with increased caution.
The Associated Press reports that the eight bodies were found in the Cancún area on Tuesday. Two of the victims were found in an abandoned taxi, while two others were found dismembered in plastic bags at another location, according to the AP. A fifth man was discovered bound and fatally shot on Tuesday, while another was found dead in a hammock. The seventh victim was shot to death and discovered in a plastic bag.
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Officials did not immediately reveal details about the eighth body.
The spree of apparent murders comes amid an uptick in homicides in the state Quintana Roo. According to the State Department, Quintana Roo is seeing an increase in homicide rates when compared to the same time period in 2016.
“While most of these homicides appeared to be targeted, criminal organization assassinations, turf battles between criminal groups have resulted in violent crime in areas frequented by U.S. citizens,” the State Department said in the advisory.
Earlier this year, Mexican authorities found the bodies of five men stuffed into a car in Cancún.
Write to Mahita Gajanan at [email protected]. ||||| CLOSE Planning on traveling to Cancun? You might want to reconsider. The State Department just issued a level 2 “exercise increased caution” travel advisory for Mexico. Buzz60
No. 6: Cancun, Mexico (96.8%) (Photo: Getty Images/iStockphoto)
Corrections & Clarifications: An earlier version incorrectly identified the area of Mexico the travel advisory was issued.
The State Department issued a travel advisory Wednesday warning American citizens headed to Mexico to use caution in several states.
The advisory comes the same week eight bodies were discovered in Cancun, a tourist hub, but the travel warning does not refer to the Quintana Roo/Cancun area.
Mexican prosecutors say they have found a total of eight dead people on Cancun with two bodies dumped in two spots and four others individually found shot to death. None of the killings occurred in the city’s beachside hotel zone.
► Aug. 8: Family of woman who drowned at resort gathers for her 22nd birthday
► Aug. 3: Airlines trim flights to Mexican resorts after reports of tourist blackouts
► June 27: Terrifying stories from tourists continue year after mysterious drowning
"Violent crime, such as homicide, kidnapping, carjacking, and robbery, is widespread," the travel advisory notes, referring to activity in the Mexican states Colima, Guerreo, Michoacán, Sinaloa and Tamaulipas and warning Americans to stay away.
The department also advised travelers to use toll roads, avoid driving at night, use caution when taking money out of banks or ATMs and be alert at local bars, nightclubs and casinos. It also advised not to display signs of wealth.
The U.S. government has limited ability to intervene in emergencies that citizens may face in Mexico, and government employees cannot travel to certain areas, the State Department said. That restriction does not include Quintana Roo state, where Cancun, Cozumel and Playa del Carmen are located.
► April 11: Travel agents, websites didn't share risks with tourists to Mexico resorts
► April 5: Inside the Mexican vacation complex where an Iowa family died
"The State Department travel advisory for Mexico does not include any tourist or beach areas and reaffirms that all major tourist destinations in Mexico are safe," a spokesperson for the Quintana Roo Tourism Board said in a statement.
A previous State Department security alert issued March 2, 2017, for Playa del Carmen was lifted about two weeks later.
The State Department warning amplifies recent alarms about travel to Mexico. An investigation from the Milwaukee Journal Sentinel, which is part of the USA TODAY Network, found that more than 170 travelers have become sick, seriously injured — and in some cases have died — after drinking small and moderate amounts of alcohol at all-inclusive resorts throughout the country.
► March 9: Should I cancel trip to Playa del Carmen after U.S. warning?
► March 8: USA issues travel warning for Mexican resort town
Travelers reported being sexually assaulted, beaten, robbed, taken to jail and mistreated at local hospitals. The Journal Sentinel investigation exposed how travelers encounter indifferent — at times hostile — resort workers, police and hospital staff.
While the State Department, Democratic and Republican members of Congress, travel websites and Mexican authorities vow they are making changes and doing what they can to ensure the safety of travelers, their slow, bureaucratic efforts have yet to prevent the harms, the Journal Sentinelfound. Reporters received information from tourists who had traveled as recently as July.
On Tuesday, the bodies of a man and a woman were found stuffed in the trunk of a taxi early Tuesday in the Paseos del Mar neighborhood of Cancun, local newspaper Riviera Maya News reported. The bodies have not yet been identified.
► Feb. 23: Mexico police shut down second black market tequila still
► Feb. 21: 'There is more to this deeper, darker story than we know'
Authorities discovered dismembered bodies of two men in multiple plastic bags at another location later that day.Another man was discovered bound and fatally shot. The prosecutors’ office for the state of Quintana Roo said another man was killed while lying in a hammock while another was found shot and covered in a plastic bag.
Authorities found the eighth victim decapitated in the neighborhood of Tres Reyes, more than a dozen miles from the hotels, according to Newsweek, citing local reports.
Contributing: The Associated Press. Follow Lilly Price on Twitter: @lillianmprice
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► The investigation: Tainted alcohol at Mexico resorts opens tourists to dangers
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► Dec. 15: State Department says it now tracks Mexico alcohol-related blackouts
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► Nov. 21: FTC reviews TripAdvisor as travelers say their warnings were blocked
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► August 2017: Mexican authorities seize illicit alcohol in crackdown at resorts
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► July 2017: Tourists to Mexico inclusive resorts suspect they got tainted alcohol
► July 2017: A Mexican vacation, a mysterious death, and now endless questions
Read or Share this story: https://usat.ly/2o3Tqv1 | The US State Department has issued a travel advisory for Mexico, saying that travelers to the country should "exercise increased caution" in general and avoid several states altogether. "Violent crime, such as homicide, kidnapping, carjacking, and robbery, are widespread, according to the advisory issued Wednesday. Among the states listed as "do not travel" are Colima, Guerrero, Michoacán, Sinaloa, and Tamaulipas. "The US government has limited ability to provide emergency services to US citizens in many areas of Mexico as US government employees are prohibited from travel to these areas," the advisory says. The updated travel advisory was prompted by a security alert by the US Consulate in Ciudad Juarez, per a State Department spokesperson, Time reports. Also this week, Mexican authorities found eight dead bodies in Cancun, which is in the state of Quintana Roo, USA Today reports. Among the grisly discoveries, according to reports, were the dismembered bodies of two men, a man found dead in a hammock, the bodies of a man and woman in the trunk of a taxi, two men shot to death, and a body that had been decapitated. None of the killings took place in Cancun's beachside resort area, according to reports. Quintana Roo is under a Level 2 advisory, "exercise increased caution." |
(CNN) Kim Jong Un is sending his younger sister to South Korea for the Winter Olympics, the first time any member of the Kim dynasty has visited the country.
South Korea's Unification Ministry said in a statement that Kim Yo Jong will be joining North Korea's high-level delegation to the South, headed by Kim Yong Nam , president of North Korea's parliament.
The 30-year-old, who has seen her profile rise steadily since 2014, was last year promoted to North Korea's Politburo. She and Kim Jong Un were born to the same mother, Ko Yong Hui.
Kim Yo Jong, right, sister of North Korean leader Kim Jong Un, at the official opening of the Ryomyong residential area, April 13, 2017.
Kim Yo Jong's inclusion in the North Korean delegation is likely to irritate the United States, which has sent its own delegation led by Vice President Mike Pence to counter North Korea's charm offensive.
Last year, the US Treasury Department included Kim Yo Jong on its list of blacklisted officials . As the vice director of the Workers' Party Propaganda and Agitation Department, she has been targeted by US sanctions.
On a refueling stop on his way to Asia, Pence said the aim of his trip was to show American "resolve" in rallying the international community against the Kim regime.
"We're traveling to the Olympics to make sure that North Korea doesn't use the powerful symbolism and the backdrop of the Winter Olympics to paper over the truth about their regime," Pence said.
JUST WATCHED Pence keeps door open for NK discussions Replay More Videos ... MUST WATCH Pence keeps door open for NK discussions 01:27
But South Korea welcomed the announcement, saying it was "significant that Kim had included his sister in the delegation.
"We believe that the North's announcement of the delegation shows its willingness to ease tensions on the Korean peninsula along with a message of celebration for the PyeongChang Olympic Winter Games," it said in a statement. "It is significant that the delegation also includes Kim Yo Jong, who is Chairman Kim Jong Un's sister and holds an important position in the Workers' Party of Korea."
Shadowy figure
Like most members of the Kim clan, little is known about Kim Yo Jong beyond her official rank. According to NK Leadership Watch, she is a close aide of her brother's "and since his accession manages his public events, itineraries and logistical needs, among other tasks."
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She was promoted to the country's Politburo as an alternate member in October.
Born September 26, 1987, Kim Yo Jong studied in Switzerland like her brother and is believed to have attended Kim Il Sung University and a western European school for her higher education.
Her position is such that, according to a Seoul-based think tank run by North Korean defectors, Kim Yo Jong briefly took charge of the country while her brother was reportedly ill with gout or diabetes in late 2014.
Hopes for a breakthrough
Kim's presence, alongside Kim Yong Nam (no relation), the 90-year-old ceremonial head of state in North Korea, will raise hopes for a potential breakthrough in relations with the US.
This week, Pence suggested he would be open to meeting North Korean politicians on the sidelines of the Olympics, saying President Donald Trump "always believes in talking."
"North Korea can have a better future than the militaristic path, the path of provocation and confrontation that it's on. Better for its own people, better for the region, and better for peace," Pence said.
However on Wednesday he also warned the US was about to impose the "toughest and most aggressive round of economic sanctions on North Korea ever."
"We will continue to isolate North Korea until it abandons its nuclear and ballistic missile programs once and for all," he said.
The Vice President's delegation includes the father of the late Otto Warmbier, an American student who died shortly after being released from North Korean custody.
Fred Warmbier and his wife Cindy were in the audience during US President Donald Trump's State of the Union address last month.
They looked on tearfully as the President cited their son's treatment as a example of the "menace that threatens our world."
The US delegation will be joined by the President's daughter and senior advisor Ivanka Trump , who will attend the closing ceremony on February 25, a White House official said Monday.
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Hundreds of North Koreans have arrived in South Korea ahead of the Opening Ceremony on Friday.
Though only 22 athletes will compete in events, the North's delegation will be among the largest at the Games.
It includes an 114-strong art troupe and 96-crew who arrived at South Korea's Mukho port on Wednesday aboard the Mangyongbong 92 cargo-passenger ferry.
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Kim's delegation includes Hyon Song Wol, the lead singer of Kim Jong Un's favorite girl band, whose every move was followed by a insatiable South Korean press during a pre-Games tour last month.
Hyon's the closest thing North Korea has to a celebrity and her presence in Pyeongchang is an indication of how seriously North Korea is taking its Olympic diplomatic mission.
Kim Jong Un's Olympic plans also include a massive military parade on Thursday through the streets of the North Korean capital Pyongyang. The display would be an attempt "to scare the hell out of the Americans," a diplomatic source told CNN last month. ||||| Image copyright KCNA Image caption Kim Yo-jong in a 2015 picture of her brother touring a military unit
The influential sister of North Korean leader Kim Jong-un is to attend the Winter Olympic Games which open in Pyeongchang in the South on Friday, ministers in Seoul say.
Kim Yo-jong, a senior Workers' Party official promoted to the politburo last year, will be the first immediate Kim family member to cross the border.
Both Koreas will march under one flag at the opening ceremony.
The North's participation has been seen as a thawing of bilateral ties.
However, the US, Japan and others have accused the North of using the Games for propaganda purposes.
Who is Kim Yo-jong?
Believed to have been born in 1987, she is the youngest daughter of late leader Kim Jong-il and is Kim Jong-un's full sister. She is about four years younger than her brother and is said to be very close to him.
She is reportedly married to the son of Choe Ryong-hae, the powerful party secretary.
Image copyright Reuters Image caption Kim Yo-jong at the opening of a residential complex in Pyongyang in 2017
Kim Yo-jong has been in the spotlight sporadically in recent years, with her main job being to protect her brother's image via her role in the party's propaganda department.
She remains blacklisted by the US over alleged links to human rights abuses in North Korea.
A message from her brother?
Analysis: BBC's Laura Bicker in Seoul
This is a huge surprise. There had been speculation Kim Yo-jong might be part of the delegation but few thought it would actually happen. It is being seen as a sign that Kim Jong-un is serious about improving ties with South Korea.
Kim Yo-jong is one of Kim Jong-un's closest aides and some are speculating that she might be bringing a message from her brother.
But there could be a number of obstacles to overcome if she is to make it to Pyeongchang. She is targeted by US sanctions for alleged human rights abuses, although she is not on the UN Security Council travel blacklist.
There is also the question of how she will get to the Games. Seoul has had to request special permission from the US and others in the international community to allow North Korean athletes and performers to travel south by bus and ferry. They may have to do so again and this time it will be for a member of Kim Jong-un's own family.
How rare is this visit?
It would be the first by a direct member of the Kim dynasty.
Chang Song-thaek, Kim Jong-un's uncle and brother in law of Kim Jong-il, did travel to the South but did not belong to the Baekdu blood line, which is considered significant.
There is speculation in the South that this is part of Kim Yo-jong's grooming for greater power, and that she could be bringing a letter from her brother to South Korean President Moon Jae-in, who she is likely to meet.
It is unclear whether Kim Yo-jong will be at the opening ceremony on Friday.
Who else is in the delegation?
Politically, four figures, including Kim Yo-jong, are key. The others are:
Kim Yong-nam . North Korea's ceremonial head of state, the president of its parliament. The diplomatically sure-footed 90-year-old has seen the rule of all three North Korean leaders and has travelled overseas before
. North Korea's ceremonial head of state, the president of its parliament. The diplomatically sure-footed 90-year-old has seen the rule of all three North Korean leaders and has travelled overseas before Ri Son-gwon . The head of the North Korean state agency in charge of inter-Korean affairs. A veteran negotiator, he was North Korea's chief delegate at the rare inter-Korean talks held in January
. The head of the North Korean state agency in charge of inter-Korean affairs. A veteran negotiator, he was North Korea's chief delegate at the rare inter-Korean talks held in January Choe Hwi. Vice-chairman of the Central Committee of the Workers' Party and chairman of the National Sports Guidance Committee. Under US state department sanctions
And the rest of the North Korean team?
It's a 280-strong delegation, most of whom arrived in the South on Wednesday.
Led by North Korean Sports Minister Kim Il-guk, it includes 229 cheerleaders, four officials from the National Olympic Committee, 26 taekwondo demonstrators and 21 journalists.
Media playback is unsupported on your device Media caption North Korean cheerleaders arrive in the South for the Games
The team arrived via a western border at 09:28 local time (00:26 GMT), the Yonhap news agency reported.
Only 10 athletes will compete for the North at the Games, along with another 12 as part of a unified Korean women's ice hockey team.
Drip, drip, drip of PR
Michael Madden, North Korea leadership expert
In announcing its delegates both to the 2018 Winter Olympics and the inter-Korean culture events on the sidelines, Pyongyang let out the information in a slow drip.
Part of this is Pyongyang maximising the positive PR effects. The announcement of the full delegation came following the arrival of its athletes to the Games late last week, and one day after 10 musicians arrived in South Korea.
So now North Korea has earned itself a third day of positive media coverage about its participation in the Olympics.
How have others reacted?
The US is scornful of the North's motives over the Olympics and is sending Vice-President Mike Pence to the opening ceremony in Pyeongchang to counter what it terms propaganda.
Image copyright Reuters Image caption Both the US and Japan have been critical of the North's Olympics policy
"We're travelling to the Olympics to make sure that North Korea doesn't use the powerful symbolism in the backdrop of the Winter Olympics to paper over the truth about their regime," he said.
He was in Tokyo on Wednesday and maintained the pressure, announcing that "the United States will soon unveil the toughest and most aggressive round of economic sanctions on North Korea".
Japan has been equally sceptical. Chief Cabinet Secretary Yoshihide Suga said: "We must not be fooled by North Korea's 'smile diplomacy'."
Where are we on North-South ties?
North Korea currently faces growing international pressure and sanctions over its nuclear and missile programmes.
Its latest ballistic missile test, on 28 November, sparked a new series of measures from the UN, targeting petrol shipments and travel for North Koreans, and a war of words between the North and US President Donald Trump.
Kim Jong-un then extended a New Year's olive branch to the South over participation in the Olympics, which run from 9 to 25 February.
The perceived warming of ties has not been without difficulties, not least the North's decision to move a military parade in Pyongyang from April to the day before the opening of the Games. ||||| FILE - This 2015, file photo provided by the North Korean government shows North Korean leader Kim Jong Un and his sister Kim Yo Jong, left, during their visit to a military unit in North Korea. South... (Associated Press)
FILE - This 2015, file photo provided by the North Korean government shows North Korean leader Kim Jong Un and his sister Kim Yo Jong, left, during their visit to a military unit in North Korea. South Korea’s Unification Ministry said North Korea informed Wednesday, Feb. 7, 2018, that Kim Yo Jong would... (Associated Press)
FILE - This 2015, file photo provided by the North Korean government shows North Korean leader Kim Jong Un and his sister Kim Yo Jong, left, during their visit to a military unit in North Korea. South Korea’s Unification Ministry said North Korea informed Wednesday, Feb. 7, 2018, that Kim Yo Jong would... (Associated Press) FILE - This 2015, file photo provided by the North Korean government shows North Korean leader Kim Jong Un and his sister Kim Yo Jong, left, during their visit to a military unit in North Korea. South... (Associated Press)
SEOUL, South Korea (AP) — North Korean leader Kim Jong Un's sister, an increasingly prominent figure in the country's leadership, will be part of the North's delegation to the South Korean Winter Olympics, officials said Wednesday.
Kim Yo Jong, believed to be around 30, will be the first member of North Korea's ruling family to visit South Korea since the end of the 1950-53 Korean War. Analysts say her inclusion in the Olympic delegation shows North Korea's ambition to use the Olympics to break out from diplomatic isolation by improving relations with the South, which it could use as a bridge for approaching the United States.
By sending a youthful, photogenic person who will undoubtedly attract international attention during the Olympics, North Korea is also trying to construct a fresher and warmer public image and defuse potential U.S. efforts to use the Pyeongchang Games to highlight the North's brutal human rights record, experts say.
Kim Jong Un might also have seen that U.S. President Donald Trump was sending his daughter, Ivanka, to the Olympics ceremony and decided to match the move by sending his sister, said Hong Min, an analyst at Seoul's Korea Institute for National Unification.
By sending a relative, "Kim Jong Un may be trying to present himself as an equal to Donald Trump," Hong said.
South Korea's Unification Ministry said North Korea informed it that Kim Yo Jong, first vice director of the Central Committee of North Korea's ruling Workers' Party, would be part of the delegation led by the country's nominal head of state, Kim Yong Nam.
The ministry said Kim Yo Jong's schedule in the South has yet to be determined, and it wasn't immediately clear whether she will meet with President Moon Jae-in, a liberal who has expressed a desire to reach out to the North.
Moon's office welcomed the decision to send Kim Yo Jong, which it said showed the North's willingness to cooperate in efforts to ease tensions in the Korean Peninsula.
"First Vice Director Kim Yo Jong is Chairman Kim Jong Un's sister who has an important role in the Workers' Party, (so her visit) is that much more meaningful," presidential spokesman Kim Eui-kyeom said in a statement read on television.
Koh Yu-hwan, a North Korea expert at Seoul's Dongguk University, said Kim Yo Jong, as Kim Jong Un's relative and apparently one of the few people who has earned his absolute trust, carries more weight as a dialogue partner for the South than any other official the North could send.
It's unclear whether any member of the North Korean government delegation will hold talks with U.S. officials during the Olympics. But Kim Yo Jong's presence would give North Korea a better opportunity to win South Korean help in reaching out to the United States, Hong said. He also said Washington may see Kim Yo Jong as an avenue to deliver messages to Kim Jong Un.
"With any other North Korean official, even the so-called No. 2 Choe Ryong Hae, you are getting a person who's just parroting orders given by Kim Jong Un," Hong said. "But with Kim Yo Jong, you are getting a person who's chiefly involved in designing Kim Jong Un's rule, a person whom the leader actually listens to."
North Korea said the delegation will also include Choe Hwi, chairman of the country's National Sports Guidance Committee, and Ri Son Gwon, chairman of the North's agency that deals with inter-Korean affairs.
Seoul previously said the delegation would arrive Friday, but Wednesday's statement was the first confirmation that a member of the North's ruling family will be included.
Kim Yo Jong and Kim Jong Un were born to the same mother, Ko Yong Hui. They had a half brother, Kim Jong Nam, who was murdered last year at a Malaysian airport.
Kim Yo Jong was promoted by her brother last year to be an alternate member of the decision-making political bureau of the ruling party's central committee, which analysts said showed that her activities are more substantive than previously thought.
The war-separated Koreas are cooperating on a series of conciliatory measures during the Olympics, which the South sees as an opportunity to ease tensions with the North following an extended period of animosity over its nuclear weapon and missile programs. Skeptics think North Korea is trying to use the Olympics to weaken U.S.-led sanctions and pressure against it and buy time to advance its weapons programs.
North Korea has 22 athletes competing in the Winter Olympics but also has sent performing artists and a large cheering group.
A decision by North Korea to send the artists by sea has triggered debate in the South, where conservatives see the move as a clear indication the North is trying to use the Olympics to ease sanctions against it.
South Korea is deciding whether to accept North Korea's request that it provide fuel for the ferry that transported the artists. Seoul exempted the ferry from sanctions to allow it in South Korean waters.
"We will closely discuss with the United States and other related nations the matter of providing convenience to the Mangyongbong ferry so that no problem regarding sanctions would occur," said Seoul's Unification Ministry spokesman, Baik Tae-hyun. | In a move seen as a sign that North Korea is serious about improving relations with the South—and about thumbing its nose at the US—Kim Jong Un's powerful younger sister will be visiting South Korea as part of the North's high-level Olympic delegation. Kim Yo Jong, who is a full sibling of the North Korean leader and is believed to be around 30 years old, will be the first "direct member" of the Kim dynasty to visit the South, the BBC reports. South Korean officials welcomed the surprise announcement, saying it is "significant that the delegation also includes Kim Yo Jong, who is Chairman Kim Jong Un's sister and holds an important position in the Workers' Party of Korea." Analysts say Kim Jong Un appears to be trying to present a warmer image of North Korea. By sending his sister when President Trump is sending daughter Ivanka, Kim "may be trying to present himself as an equal to Donald Trump," Hong Min at Seoul's Korea Institute for National Unification tells the AP. Mike Pence, meanwhile, is on a visit to Asia aimed at counteracting Pyongyang's "charm offensive," as CNN puts it. He told reporters Wednesday that the US is about to impose the "toughest and most aggressive round of economic sanctions on North Korea ever." Kim Yo Jong was in January 2017 placed on the US Treasury Department's sanctions list over the country's human rights record, Reuters reported at the time; here's what else we know about her. |
The Trump administration plans to offer up to $12 billion in aid to farmers hit by tariffs on their goods, an emergency bailout intended to ease the pain caused by Trump's escalating trade war in key electoral states, Secretary of Agriculture Sonny Perdue told reporters Tuesday.
"President Trump has promised since day one that he had the back of every farmer and rancher," Perdue said. He said the assistance was a short-term solution, but that it would offer "Trump and his administration time to work on long-term trade deals."
The announcement came Tuesday afternoon, hours after the president proclaimed on Twitter that "Tariffs are the greatest!" The aid will be facilitated by the Commodity Credit Corp, an agency set up during the Great Depression, and will not require congressional approval.
Read more: Trump's tariffs take a toll on farmers in Pennsylvania ahead of midterms
The aid will come from a mix of programs overseen by the USDA, including direct payments to producers of some goods, including soybeans, as well as distribution assistance for producers of goods that can be easily provided to food banks, such as fruits, nuts, rice, legumes, and some meats. A third program, looking to build international markets, is open to producers of all commodities.
Shares of Deere & Company, the Illinois-based tractor maker that owns the brand John Deere, were up more than 3 percent after news of the bailout plan was reported earlier Tuesday.
President Donald Trump has hit several of America's major trading partners with tariffs on billions of dollars' worth of goods, and has shown few signs of slowing. Earlier this month, 25 percent tariffs on $34 billion of Chinese imports of machinery and electronics went into effect, prompting Beijing to respond with dollar-for-dollar tariffs on American exports of soybeans and other goods.
Trump has threatened to impose broader tariffs on as much as $500 billion of Chinese goods, which has alarmed economists as well as farming groups. The administration released a list of $200 billion in Chinese goods that would receive a 10 percent tariff on July 10.
Casey Guernsey, whose family has been farming in Missouri since the 1840s, said the Trump administration's plan was not sustainable. Guernsey, a spokesperson for Americans for Farmers and Families, told CNBC Tuesday that the plan could heighten uncertainty in what's already a down market.
"You only have so many calves that are born every year, and there’s only one time to harvest a crop, so you really have to make the best decision you can on any given day for the upcoming year," Guernsey said. "We don’t want to pin our hopes on a check from the government every month."
A group representing soybean farmers also came out against the administration's plan, and pushed for the elimination of tariffs.
"While soybean growers appreciate the Administration’s recognition that tariffs have caused reduced exports and lower prices, the announced plan provides only short-term assistance," the American Soybean Association said in a statement. "ASA continues to call for a longer-term strategy to alleviate mounting soybean surpluses and continued low prices, including a plan to remove the harmful tariffs." ||||| WASHINGTON—The Trump administration said Tuesday it would extend $12 billion in emergency aid to farmers amid signs the U.S. agricultural sector is beginning to feel the impact of President Donald Trump’s escalating trade disputes with major U.S. trading partners.
Agriculture Secretary Sonny Perdue said the U.S. government would provide incremental payments to support prices of some of the hardest-hit commodities, including soybeans, sorghum, cotton, corn, wheat and pork.
“This is a short-term solution that will give President Trump and his administration time to work on long-term trade deals,�? Mr. Perdue told reporters. Agriculture Department officials said the aid wouldn’t need congressional approval.
Mr. Perdue said the move, tentatively planned for the coming months, was in response to what he called U.S. trading partners’ “illegal retaliation�? to the policies of Mr. Trump, who has ordered tariffs on imports ranging from metals to materials to clothing to electronic parts. Those tariffs apply to goods from a broad range of countries, including China and those of the European Union.
U.S. trading partners are retaliating, with ominous implications for the American Farm Belt. China, a huge market for U.S. agricultural exports, has applied tariffs on $34 billion worth of U.S. goods, including soybeans and pork. Other places applying retaliatory tariffs include allies such as Canada, Mexico and the EU.
European Commission President Jean-Claude Juncker is scheduled to meet with Mr. Trump at the White House on Wednesday, and trade is expected to be high on the agenda. Mr. Juncker is expected to try to dissuade Mr. Trump from further escalation of trade fights, particularly over automobile imports to the U.S.
Congressional lawmakers, with few exceptions, expressed skepticism about the administration’s aid plan. Farmers, the critics said, need certainty on trade, not a bailout from the government. Even GOP senators who usually defend Mr. Trump expressed worry that aid might have to be extended to other sectors if he continues his trade fights on various fronts.
“What’s the strategy, what’s the end game here? At what point do we start seeing things move out of the chaotic state they are in now and to where we actually see new trade agreements?�? asked Sen. Mike Rounds (R., S.D.).
Sen. Heidi Heitkamp (D., N.D.) said more aid might be needed if Mr. Trump continues imposing tariffs and other countries retaliate. “Twelve billion sounds like a lot of money, but we’re going to be losing literally hundreds of millions of dollars in every state�? due to the trade disputes, she said.
Republican lawmakers from farm states said they expect to meet Wednesday afternoon with Mr. Trump, following his meetings with European officials. U.S. trading partners have targeted retaliatory tariffs on U.S. exports from rural communities, areas that supported Mr. Trump and Republicans in the 2016 election.
Polls suggest farming communities remain supportive of Mr. Trump. Victor Miller, who raises soybeans, corn and hogs near Oelwein, Iowa, said the Trump administration had recognized the financial strain some farmers face due to declining livestock and crop prices. “Yeah, there’s going to be some pain immediately,�? Mr. Miller said. “But that pain, endured, will lead to a much better future for all of us,�? he predicted.
Related Video WSJ's Gerald F. Seib looks at the trade deal between Japan and the EU, and explains how President Trump’s trade policy might drive other countries to form their own agreements. Photo: Martin Bureau/Press Pool
Farmers are beginning to feel the pain of Mr. Trump’s brinkmanship on trade. Soybean futures prices this month hit their lowest point in nearly a decade. They have fallen by 16% since the end of May, as agricultural traders weighed the potential impact of tariffs levied by China this month.
China, the world’s largest soybean consumer, last year bought $14 billion worth of the oilseeds from the U.S., but the Department of Agriculture this month projected that the tariffs would erode U.S. exports—and help push domestic soybean stockpiles for the coming crop year to a record 580 million bushels.
Corn and wheat prices also have been weighed down by tariff concerns, with China placing duties on those U.S. crops this month.
Hog farmers and pork processors are dealing with a 62% tariff on pork shipped to China and a 20% duty in Mexico, after both countries increased tariffs in early July. Mexico and China both rank among the top buyers of U.S. pork, and lean hog futures have dropped about 13% in the past two months.
Trump administration officials have acknowledged the financial hardship farmers could face as major trading partners retaliate against food commodities, but say farmers will share in the benefit of new trade policies that the administration says will be fairer to U.S. interests.
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Mr. Trump, addressing a gathering of veterans groups on Tuesday, urged patience on trade, despite concerns raised by critics: “Just stick with us,�? he said. “It’s all working out.�?
The plan announced by Mr. Perdue also includes purchases of surplus agricultural commodities for distribution to food banks. And the government will fund trade promotion to find new export markets for U.S. agricultural products.
Asked if he would support the aid to farmers, Sen. Thom Tillis (R., N.C.) said, “I don’t generally like federal bailouts, but if we’re going to have these uncertainties in the agricultural industry…we just have to look at it.�?
Earlier this year, the Trump administration imposed tariffs of 10% on aluminum imports and 25% on steel imports from Canada, Mexico and the EU. The president has also levied tariffs on $34 billion in imports of electronic goods, machinery and other products from China, with another $16 billion expected in the next few weeks.
Mr. Trump has also asked his team to study applying tariffs to all vehicles entering the U.S., and said his administration would assess tariffs on a further $200 billion of a range of consumer products.
—Natalie Andrews and Siobhan Hughes contributed to this article.
Corrections & Amplifications
Republican lawmakers from farm states said they expect to meet with President Trump following his meetings with European officials. An earlier version of this article incorrectly stated that the lawmakers expect to meet with Mr. Trump ahead of his meetings with European officials. (July 24, 2018)
Write to Jacob Bunge at [email protected] ||||| President Donald Trump in April directed Agriculture Secretary Sonny Perdue to devise a plan to mitigate any financial damage to U.S. agricultural producers’ bottom lines. | Nicholas Kamm/Getty Images Trump to offer farmers $12B in trade aid
Agriculture Secretary Sonny Perdue on Tuesday unveiled a three-part, $12 billion plan to ease the sting of retaliatory tariffs on U.S. farmers through a mix of payments, purchases and trade promotion efforts.
The plan seeks to ensure that U.S. farmers and ranchers — a key constituency for President Donald Trump and Republicans — don’t bear the brunt of an escalating trade fight as the administration pursues an aggressive course to rebalance America's trade relationships.
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Trump's moves to slap tariffs on imports from some of America‘s largest foreign buyers have prompted retaliation against U.S. farm goods like pork, beef, soybeans, sorghum and a range of fruits.
The administration's trade aid plan, first reported by POLITICO, is also a bid to shore up support among a slice of the rural electorate ahead of the midterm elections. But the tariffs and subsequent gluts for various farm products have wreaked havoc on farming economies.
“This is obviously a short-term solution that will give President Trump time to work on a long-term trade policy and deal to benefit agriculture as well as all sectors of the American economy,” Perdue said during a call with reporters.
Perdue said the amount is in line with the roughly $11 billion in negative effects that USDA has calculated agricultural producers have suffered as a result of “illegal” retaliatory tariffs imposed by China, Canada, Mexico, the European Union and other major economies.
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“The programs we are announcing today are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in,” Perdue said.
However, it is unclear whether the aid will cover many of the price losses that various agriculture sectors are experiencing. For instance, U.S. Meat Export Federation say that the tariffs from Mexico — just one of the nations in the trade war — will lead to more than $835 million in annualized losses for the pork industry.
The aid also doesn’t address other sectors of the economy that have been hurt by retaliatory tariffs by U.S.’ largest trading partners, such as manufacturers, consumers and other industries.
“It can’t just be about agriculture," Sen. Thom Tillis (R-N.C.) said Tuesday, adding that he is waiting for the administration to provide more information on how its plan affects other industries that rely on trade.
In the first part of the aid plan, the government will provide direct payments to growers and producers of soybeans, sorghum, corn, wheat, cotton, pork and dairy. The second part, a “food purchase and distribution program,” would use authority under USDA’s Agricultural Marketing Service to purchase fruit, nuts, rice, beef, pork and dairy products from U.S. producers for redistribution to federal nutrition assistance programs.
The plan's third element would put resources toward finding new markets for U.S. farmers to sell their products abroad.
Perdue said all of the programs are authorized under the Commodity Credit Corporation Charter Act, a Depression-era funding program that doesn’t require approval from Congress.
The specifics of the aid plan will be subject to a federal rulemaking process, and USDA is expected to make a determination around Labor Day as to when the aid will kick in.
Trump this week is touring Midwestern farm states like Missouri, Illinois and Iowa, where he will likely get inundated with questions about his trade agenda.
The president’s interest in reassuring an anxious farm sector was evident on Monday when he gave a shout-out to farmers during an event at the White House while unveiling new campaign-style hats that say, “Make Our Farmers Great Again.”
“Make our farmers great again. That’s what’s happening,” Trump said, as he showed off one of the green hats with yellow lettering — a color scheme resembling that used by tractor maker John Deere. Trump said he just had the new hats made.
Sen. Ben Sasse (R-Neb.), a vocal critic of Trump on trade, blasted the tariff aid as a way of giving farmers "gold crutches" and warned that the current direction of U.S. trade policy could lead to economic circumstances similar to the Smoot-Hawley tariffs that have been partly blamed for straining the economy during the Great Depression.
“America’s farmers don’t want to be paid to lose — they want to win by feeding the world,” Sasse said in a statement. “This administration’s tariffs and bailouts aren’t going to make America great again — they’re just going to make it 1929 again,” he added.
Other GOP members from farming states also spoke out strongly against the tariffs.
“This is becoming more and more like a Soviet-type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” said Sen. Ron Johnson (R-Wis.). “I’m very exasperated. This is serious.”
In April, Trump directed Perdue to devise a plan to mitigate any financial damage to U.S. agricultural producers’ bottom lines that could result from ongoing trade battles. Until now, the administration has offered few details on the amount of aid that would be provided and how it would be distributed.
As recently as last month, Perdue said it was premature to determine whether his agency needed to provide farmers with subsidies to offset trade losses because it was too soon to gauge the effects of retaliatory tariffs on farmers.
Farmers and the majority of farm-state lawmakers have previously appeared to be lukewarm on the idea of the government doling out aid to offset losses due to tariffs and drops in the market. Many have told POLITICO they would prefer the Trump administration to expand access to foreign markets, rather than start spats with trading partners that lead them to erect barriers on U.S. exports, restrict access and seek out other sources of supply.
"The best relief for the president’s trade war would be ending the trade war," Brian Kuehl, executive director of the advocacy group Farmers for Free Trade, said in a statement Tuesday. He said farmers need trade policies that promote stability and allow them to plan for the future.
"This proposed action would only be a short-term attempt at masking the long-term damage caused by tariffs," Kuehl added.
Farmers for Free Trade is funded by the American Farm Bureau Federation — the nation's largest farm group — and other industry trade associations, like the National Pork Producers Council and National Corn Growers Association.
Senate Agriculture Chairman Pat Roberts told POLITICO recently that tariff retaliation could have long-term effects on access to foreign markets.
“I think the question in farm country that is equal to what’s happening now is: What is our future down the road? How do we put these trade agreements back together? Once you lose a market, you lose it,” he said. “We are trying to make the point that we don’t want aid, we want trade.”
USDA has already used its authority to buy up excess supply in recent months, announcing in May that it would purchase excess cheddar cheese and distribute the product to federal nutrition assistance programs. The dairy industry has suffered in recent years as prices have been driven down by a glut of product on the market.
Sen. John Hoeven, a North Dakota Republican who serves on the Senate Agriculture Committee, said Tuesday he believes the administration is looking to deliver aid in the short term in hopes that trade tensions will be ironed out before long.
“He’s trying to get us better trade deals,” Hoeven said, referring to the president. “The objective is not to have a long-term relief program. The objective is to get access to the markets on a fair basis for our farmers and ranchers.”
Burgess Everett contributed to this report. | President Trump showed off a new campaign hat on Monday—it's green with yellow letters, reminiscent of the John Deere logo, and it reads "Make Our Farmers Great Again," notes Politico. (See Agriculture Secretary Sonny Perdue sporting one here.) The message is a calculated one as the White House seeks to ease farmers' concerns that a US trade war will hit them hard. On Tuesday, the White House put the word out that its efforts will go well beyond hats, however—it's rolling out $12 billion in emergency aid to farmers, especially those dealing with dairy, pork, and soybeans, reports CNBC. Details: The money: It will come partly from a program set up in the Depression to help farmers called the Commodity Credit Corporation, reports the Washington Post. Because it's an existing program, congressional approval isn't necessary. Trump had asked Perdue to explore options months ago, and more details are still to be released. Short-term: Perdue said the "one-time" program would help farmers dealing with "illegal retaliation" to US tariffs, reports the Wall Street Journal. “This is a short-term solution that will give President Trump and his administration time to work on long-term trade deals." |
The House and Senate have not reached agreement on a traditional budget resolution since agreeing to the FY2010 budget resolution in 2009. Although there are prior examples of delayed agreement or the absence of agreement on a budget resolution, the sustained lack of agreement in recent years has caused some to argue that the budget process is broken. Various budget process reforms have been proposed in response to the perceived problem of a broken budget process. For example, in recent years, members of the House Budget Committee have introduced legislation that would alter the process associated with the budget resolution. Such reform proposals have included replacing the concurrent resolution on the budget with a joint resolution that would require the President's signature. In addition, the committee has reported legislation replacing the requirement for annual action on a budget resolution with a requirement for biennial action. Others have pointed out that while Congress has not agreed on a budget resolution since 2009, it has agreed to budgetary parameters and constraints in other forms. For example, Congress agreed to legislation establishing budgetary constraints in the Budget Control Act of 2011 ( P.L. 112-25 ; BCA) as well as the Bipartisan Budget Act of 2013 ( P.L. 113-67 ; BBA). These statutes have included language to provide for enforceable budgetary parameters in the absence of a traditional budget resolution, and in the case of the BBA, these provisions are explicitly labeled as "Establishing a Congressional Budget." While these provisions function as an alternative to a traditional budget resolution, it is important to recognize how such provisions are constructed, and how they are similar to, or different from, the way in which a traditional budget resolution is constructed. This report provides an explanation of the provisions of The Bipartisan Budget Act of 2013 ( P.L. 113-67 ) included as Title I, Subtitle B, a section titled, "Establishing a Congressional Budget" designed to serve as a substitute for a traditional congressional budget resolution for FY2014 and potentially for FY2015. The report also highlights how those provisions compare with a traditional budget resolution and places them within the context of the budget process for FY2014 and FY2015. The Bipartisan Budget Act of 2013, enacted December 26, 2013, resulted from negotiations between the Chairs of the House and Senate Budget Committees in association with the conference committee on the FY2014 budget resolution. Previously, on March 21, 2013, the House agreed to an FY2014 budget resolution ( H.Con.Res. 25 ) by a vote of 221-207. On March 23, 2014, the Senate agreed to its own FY2014 budget resolution ( S.Con.Res. 8 ) by a vote of 50-49. The two chambers, however, did not agree to convene a conference committee at that time. On October 16, 2013, the House requested, and the Senate agreed to, a conference on S.Con.Res. 8 to attempt to resolve their differences on an FY2014 budget plan, as part of the deal forged by House and Senate leadership to end the government shutdown. While the conference committee did not report, on December 10, the chairs of the House and Senate Budget Committees, Representative Paul Ryan and Senator Patty Murray "announced that they had reached a two-year budget agreement." On December 11, the House Rules Committee reported a special rule ( H.Res. 438 ) providing for the consideration of what was being referred to as the "Ryan-Murray agreement." The special rule specified that the legislative vehicle for the agreement would be H.J.Res. 59 . This measure had previously included language to provide continuing appropriations, but had been superseded by other congressional action and had not been enacted. The special rule made in order House consideration of the two-year budget agreement, titled the Bipartisan Budget Agreement (BBA), modified by a further amendment provided in the Rules Committee report that consisted primarily of the "Pathway for SGR Reform Act," also known as the "doc fix." As specified in the special rule, upon the House's adoption of H.Res. 438 , Representative Paul Ryan was permitted to make a motion that resulted in the House voting to send the legislative text consisting of the BBA and the "doc fix" to the Senate as a further House amendment to H.J.Res. 59 . The House agreed to the motion on December 12, 2013, by a vote of 332-94. On December 15, the Senate agreed by unanimous consent to consider the House's amendment to H.J.Res. 59 , and Majority Leader Harry Reid moved that the Senate concur in the House amendment and filed cloture on the motion. Two days later, on December 17, the Senate voted to invoke cloture on the motion by a vote of 67-33 and the following day, December 18, the Senate agreed to the motion to concur in the House amendment by a vote of 64-46. The legislation was then sent to the President and was signed into law on December 26, 2013 ( P.L. 113-67 ). In addition to modifying the discretionary spending caps and extending the mandatory spending sequester related to the Budget Control Act of 2011 (BCA), the BBA included various other provisions, titled "Establishing a Congressional Budget," related to congressional budget resolutions for FY2014 and FY2015. As described below, the provisions labeled "budget resolution" in the BBA differ from a traditional budget resolution, although they allow Congress to function largely in the same manner as it would under a budget resolution. The Congressional Budget Act of 1974 (the Budget Act) provides for the annual adoption of a budget resolution with the objective of forging an agreement between the House and Senate that establishes parameters within which Congress will consider subsequent budgetary legislation for the upcoming fiscal year. These parameters are enforced by points of order. Specifically, provisions in the Budget Act allow any Member in either chamber to raise a point of order against the consideration of legislation that would violate budget limits once agreed to. In particular, budgetary levels are enforced though Sections 311 and 302 of the Budget Act, which deal with the enforcement of spending and revenue aggregates, and committee spending allocations, respectively. Section 311(a) generally prohibits the consideration of (1) any spending measure that would violate the aggregate budget authority and outlay levels for the first fiscal year covered by the budget resolution and (2) any revenue measure that would violate the aggregate revenue levels for the first fiscal year or the sum of all fiscal years covered by the budget resolution. Section 302(a) of the Budget Act generally requires that the aggregate amounts of spending recommended in the annual budget resolution be allocated by committee. Once allocated, these levels are enforced by generally prohibiting the consideration of legislation that would violate the committee allocation (under Section 302(f) of the Budget Act). The Budget Act requires that the House and Senate Appropriations Committees receive an allocation for only one fiscal year, but the remaining House and Senate committees receive allocations for the entire period covered by the budget resolution. As a result, the spending levels are enforceable for one year in the case of the Appropriations Committees, but are enforceable for a multi-year period in the case of the other House and Senate Committees. Section 302(b) of the Budget Act requires that the House and Senate Appropriations Committees subdivide their allocations by subcommittee. Section 302(f) also generally bars the consideration of any spending measures that would cause the Appropriations Committees' suballocations of spending made under Section 302(b) to be breached. When the House and Senate do not reach final agreement on a budget resolution in a timely manner (or fail to reach agreement altogether), budget enforcement for the upcoming fiscal year is complicated. The multi-year budget levels in the prior year's budget resolution remain in effect and may provide some basis for enforcing points of order with respect to revenue and mandatory spending legislation. Changing economic conditions and technical factors, however, may have rendered the prior budget levels out of date, thereby undermining their value as a realistic basis for enforcement of current policies. Furthermore, since a committee allocation to the Appropriations Committee is only for one year, the House and Senate cannot rely on a prior year's budget resolution. If a budget resolution is not adopted for a fiscal year, there is no allocation of spending made to the Appropriations Committees under Section 302(a) and no basis for them to make the required spending suballocations under Section 302(b). In such situations, the House and Senate may employ a variety of mechanisms to establish a basis for updated enforcement. Often, the House and Senate use simple resolutions to establish budgetary levels that are then enforceable in that respective chamber, as if they had been included in a budget resolution agreed upon by both the House and Senate. These are often referred to as "deeming resolutions." However, the term deeming resolution is not officially defined, nor is there any specific statute or rule authorizing such legislation or prescribing its content. Instead, the use of a deeming resolution simply represents the House and Senate, often separately, employing legislative procedures to deal with enforcement issues on an ad hoc basic. Recently, updated budgetary enforcement has been provided for in statutory budget control legislation. In such cases, the budgetary control legislation has included language stating that, in the absence of a budget resolution, the chair of the Budget Committee may file a statement of budgetary levels, which would have effect in the respective chamber. For example, Section 106 of the BCA ( P.L. 112-25 ) established enforceable budgetary levels in the Senate for FY2012 and FY2013 if Congress did not adopt a budget resolution for that fiscal year. It required that the Senate Budget Committee chair file a statement of levels of various budgetary amounts, consistent with the statutory limits established in the act. Similarly, Section 111(a) of the BBA specifically provides that For the purpose of enforcing the Congressional Budget Act of 1974 for fiscal year 2014, and enforcing, in the Senate, budgetary points of order in prior concurrent resolutions on the budget, the allocations, aggregates, and levels provided for in subsection (b) shall apply in the same manner as for a concurrent resolution on the budget for fiscal year 2014 with appropriate budgetary levels for fiscal year 2014 and for fiscal years 2015 through 2023. In addition, Section 115 and Section 116 include similar provisions for FY2015 for the House and Senate respectively. One question that has arisen is whether the use of an alternative legislative vehicle has any impact on the enforceability of the budgetary levels and other provisions in the BBA. Article I of the Constitution, however, gives Congress the broad authority to determine its rules of procedure. This constitutional authority allows Congress to include rule-making provisions, such as enforceable budgetary levels, in any legislative vehicle it desires, whether it is in chamber rules, a concurrent resolution, or a statute. In each case, the rule-making provisions have equal standing and effect. Further, under this rule-making principle, Congress has the authority to take parliamentary action that waives its rules in certain circumstances if it sees fit. This power is not compromised by the fact that the rule-making provision may be established in statute. In short, the levels referenced in the BBA's budget resolution provisions are not any more, or less, enforceable than a traditional budget resolution because they originate in statute. The Budget Act entails that the budget resolution "shall set forth" budgetary levels. Traditionally, budget resolutions have always included explicit budgetary totals in the form of dollar amounts The FY2014 "budget resolution" included in the Bipartisan Budget Act, however, does not include specific dollar amounts. Instead, it states that the Chairs of the House and Senate Budget Committees shall subsequently file in the Congressional Record budgetary totals consistent with the amended discretionary spending caps and the May 2013 baseline adjusted for specified budgetary effects. Once those budgetary totals are filed, they are enforceable as if they had been included in a budget resolution. This means that when Members agreed to the FY2014 "budget resolution" within the BBA, they did so without language providing explicit dollar amounts or reference to priorities in the form of functional categories. The fact that the exact dollar amounts were not specified, however, does not change enforceability of the levels once they are filed as specified. This provision is similar to the one that appeared in the BCA which instructed, for purposes of Senate budget enforcement, the Senate Budget chair to file in the Congressional Record certain budgetary levels for the purposes of enforcement, which specified that the levels be consistent with the statutory limits in the act. Once filed in March 2012, these levels were often referred to as a "deeming resolution." The Budget Act requires the inclusion of certain budgetary levels in the text of the budget resolution, as well as the accompanying report. Of these required budgetary levels, only some are subsequently enforceable, while others appear only for informational purposes, such as functional categories. The levels specified in the Bipartisan Budget Act that were directed to be filed in the Congressional Record did not include all of the levels required to be in a budget resolution by the Budget Act. For example, it did not include the corresponding deficit level or the public debt. It did, however, include the levels enforced by points of order that are required by the Budget Act such as overall spending, overall revenue and the spending allocations for each committee. Although the budgetary levels enacted in the BBA are enforceable, one unconventional aspect of how the BBA functions in place of a traditional budget resolution are the provisions that specifically refer to the relationship of the BBA to previous actions concerning a budget resolution. The most salient language with regard to this appears in Section 113, which provides that In the House of Representatives, for the remainder of the 113 th Congress, the provisions of H.Con.Res. 25 (113 th Congress), as deemed in force by H.Res. 243 (113 th Congress), shall remain in force to the extent its budgetary levels are not superseded by this subtitle or by further action of the House of Representatives. As a consequence of this language, those provisions adopted as part of the deeming resolution for FY2014 previously agreed to by the House and not addressed in Title I, Subtitle B of P.L. 113-67 would continue to have force and effect. Similarly, deficit-neutral reserve funds adopted by the Senate in S.Con.Res. 8 (113 th Congress), and enumerated in Section 114(d), are also deemed to have force and effect. As a consequence of these provisions, although the budgetary levels required to be filed for FY2014 under Section 111(b) by the chairs of the Budget Committees of the House of Representatives and the Senate are enforceable, the provisions enacted in the BBA and styled as the budget resolution for FY2014 cannot be read in isolation from previous budgetary actions. Another feature of P.L. 113-67 functioning as a budget resolution for FY2015 that contrasts with more traditional budget resolutions is the language that addresses the specific possibility that it can be supplanted by future action. The authority for the provisions of the BBA to act in place of a budget resolution for FY2015 in the House is established in Section 115. Similar authority with respect to the Senate is established in Section 116. Sections 115(f) and 116(e) (along with Sections 112(b) and 114(e)), however, explicitly state that this authority shall expire if a concurrent resolution on the budget for FY2015 is agreed to by the Senate and House of Representatives. Similar language appeared in Section 106(e) of the BCA in 2011. As applied in that case, the language was interpreted to mean that although the allocations required to be filed under the act could function as the equivalent of a budget resolution for purposes of Senate enforcement, the BCA did not preclude the later adoption of a budget resolution, and did not preclude the consideration of a concurrent resolution under the privileged and expedited procedures provided under the Budget Act. As stated above, these variations in content, format, and structure are not necessarily significant for the purpose of House and Senate enforcement of budgetary levels. Such variations, however, could potentially affect the privileged nature of a measure intended to be considered as a budget resolution on the House and Senate floor. The Budget Act allows that the budget resolution be considered under expedited procedures, but only if the measure meets the qualifications to be a budget resolution as specified by the Budget Act. The option to use such special procedures may be compromised if the measure includes the variations described above, because these would not fulfill the requirements in the Budget Act. This was not an issue for the budget resolution provisions included in the BBA, as the measure was not considered under such special procedures. Although the BBA provisions in Section 111, styled as a budget resolution for FY2014, are not traditional in nature, they nonetheless established certain parameters for subsequent budgetary legislation. General information on those budgetary levels is provided below. Discretionary Spending The BBA increased both the defense discretionary and nondefense discretionary statutory spending caps (associated with the BCA) to $520 billion and $492 billion in new budget authority, respectively, for F2014. The BBA then states that those levels be incorporated into the FY2014 "budget resolution." Specifically, the BBA states that the chairs of the House and Senate Budget Committees shall submit a statement for publication in the Congressional Record that includes committee spending levels (302(a) allocations) for the House and Senate Appropriations Committees for FY2014 "consistent with the discretionary spending limits set forth in this Act." These levels were submitted on January 14 and January15, 2014, in the House and Senate, respectively. Once filed, these levels became enforceable on the House and Senate floor. FY2014 appropriations were enacted on January 17, 2014, adhering to these levels. Mandatory Spending and Revenue Section 111 also specifies various levels associated with mandatory spending and revenue; these generally keep mandatory spending and revenue levels at current law levels. Specifically, the act states that the chairs of the House and Senate Budget Committees shall submit a statement for publication in the Congressional Record that includes levels related to mandatory spending and revenue. In each case, such levels are to be "consistent with the May 2013 baseline of the Congressional Budget Office adjusted to account for the budgetary effects of this Act and legislation enacted prior to this Act but not included in the May 2013 baseline of the Congressional Budget Office." The levels were submitted in the House and Senate on January 27 and January 15, respectively. Once filed, these levels became enforceable on the House and Senate floor. As with typical budget resolutions, the BBA budget resolution included various procedural provisions such as points of order. For example, a point of order against advance appropriations in the Senate was included in Section 112. In addition, the BBA includes dozens of provisions referred to as "adjustments" and "reserve funds." Some of these incorporate by reference the provisions in versions of the budget resolutions separately agreed to by the House and Senate in March of 2013 ( H.Con.Res. 25 and S.Con.Res. 8 ). Congress frequently includes "reserve funds" and "adjustments" in the annual budget resolution. These provisions provide the chairs of the House or Senate Budget Committees the authority to adjust the budgetary allocations, aggregates, and levels in the future if certain conditions are met. Typically these conditions consist of legislation dealing with a particular policy being reported by the appropriate committee or an amendment dealing with that policy being offered on the floor. If the specified condition is met, the Budget Committee chairman submits the revised levels to her or his respective chamber. Generally, the goal of such a reserve fund or adjustment is to allow certain policies to be considered on the floor without triggering a point of order for violating levels in the budget resolution. Adjustments and reserve funds frequently require that the net budgetary impact of the specified legislation not increase the deficit, and are referred to as "deficit neutral" adjustments or reserve funds. Such deficit-neutral provisions provide that legislation may violate the levels or allocations in the budget resolution, but require the excess amounts, if they would increase the deficit, be "offset" by equivalent amounts. The Budget Committee chair may then revise budgetary levels to prevent a point of order from being offered against the legislation. Reserve funds are not always required to be deficit-neutral. They may, instead, allow the levels of spending or revenue set forth in the budget resolution to be breached, as long as the policy legislation meets the requirements specified in the reserve fund. An example of a reserve fund in action is as follows: Section 114(d) incorporated by reference (to S.Con.Res. 8 ) the following deficit-neutral reserve fund for the Senate. SEC. 313. DEFICIT-NEUTRAL RESERVE FUND FOR A FARM BILL. The Chairman of the Committee on the Budget of the Senate may revise the allocations of a committee or committees, aggregates, and other appropriate levels in this resolution for one or more bills, joint resolutions, amendments, motions, or conference reports that provide for the reauthorization of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ; 122 Stat. 1651) or prior Acts, authorize similar or related programs, provide for revenue changes, or any combination of the purposes under this section, by the amounts provided in such legislation for those purposes, provided that such legislation would not increase the deficit over either the period of the total of fiscal years 2013 through 2018 or the period of the total of fiscal years 2013 through 2023. After enactment of P.L. 113-67 , the House and Senate considered the Agricultural Act of 2014, also known as the "Farm bill." On January 30, 2014, the Senate began consideration of the Farm bill conference report, and Senate Budget Committee Chair, Senator Patty Murray, revised budgetary levels of the FY2014 budget resolution pursuant to the reserve fund. An excerpt from the Congressional Record shows the following: Mrs. MURRAY. Madam President, section 114(d) of H.J.Res. 59 , the Bipartisan Budget Act of 2013, allows the chairman of the Senate Budget Committee to revise the allocations, aggregates, and levels filed on January 14, 2014, pursuant to section 111 of H.J.Res. 59 , for a number of deficit-neutral reserve funds. These reserve funds were incorporated into the Bipartisan Budget Act by reference to sections of S.Con.Res. 8 , the Senate-passed budget resolution for 2014. Among these sections is a reference to section 313 of S.Con.Res. 8 , which establishes a deficit-neutral reserve fund for a farm bill. The authority to adjust enforceable levels in the Senate for a farm bill is contingent on that legislation not increasing the deficit over either the period of the total of fiscal years 2013 through 2018 or the period of the total of fiscal years 2013 through 2023. I find that the conference agreement on H.R. 2642, the Agricultural Act of 2014, as reported on January 27, 2014, fulfills the conditions of the deficit-neutral reserve fund for a farm bill. Therefore, pursuant to section 114(d) of H.J.Res. 59 , I am adjusting the budgetary aggregates, as well as the allocation to the Committee on Agriculture, Nutrition, and Forestry. Below this statement, revised budgetary tables were inserted. The conference report on the Farm bill passed the Senate several days later. Senators have expressed concern regarding reserve fund or adjustment provisions and whether their presence would result in a situation in which legislative questions, which would otherwise have required a three-fifths threshold in the Senate, could be agreed to with only a simple majority. Such questions may have arisen because adjustment provisions give authority, under specified circumstances, to the Budget Committee chair to revise budgetary levels to possibly prevent a point of order from being offered against the legislation-a point of order which otherwise would have required three-fifths of the Senate to waive. Such a reserve fund or adjustment provision, however, would only have an impact on whether a budgetary point of order could be made. But it would not affect the Senate's other rules and procedural requirements, such as the cloture process, and the possibility that the measure would need three-fifths of the Senate to agree to end debate on a legislative question, such as final passage. The BBA includes provisions for FY2015 related to a budget resolution, similar to those for FY2014, described above. If by April 15, 2014, the House and Senate have not agreed on a budget resolution for FY2015, then the House and Senate Budget Committee chairs are required to submit, by May 15, to the Congressional Record , allocations, aggregates, and levels that would become enforceable in the same manner as a concurrent budget resolution for FY2015. General information on those budgetary levels is provided below. Discretionary Spending The BBA increased both the defense discretionary and nondefense discretionary statutory spending caps (associated with the BCA) for FY2015 to $521 and $492 billion respectively. The BBA states that in the event that a budget resolution has not been agreed to by April 15, 2014, the chairs of the House and Senate Budget Committees shall submit a statement for publication in the Congressional Record that includes committee spending levels (302(a) allocations) for the House and Senate Appropriations Committees for FY2015 consistent with the discretionary spending caps. Mandatory Spending and Revenue The BBA's FY2015 budget resolution provision also specifies various levels associated with mandatory spending and revenue in the absence of agreement on a concurrent resolution on the budget for FY2015. These generally keep mandatory spending and revenue levels at current law levels. Specifically, the act states that the chairs of the House and Senate Budget Committees shall submit a statement for publication in the Congressional Record that includes levels related to mandatory spending and revenue. In each case, such levels are to be "consistent with the most recent baseline of the Congressional Budget Office." While the BBA was referred to as a two-year budget agreement, and does establish certain enforceable budgetary levels for FY2015, nothing precludes Congress from acting on a budget resolution for FY2015, either before or after these levels have been filed. On April 4, 2014, the House Budget Committee reported a budget resolution for FY2015 ( H.Con.Res. 96 ), which was agreed to by the House on April 10. Nonetheless, on April 29, the chair of the House Budget Committee, Representative Paul Ryan, filed in the Congressional Record , levels as provided for in the BBA. Those were immediately enforceable on the House floor. The Senate Budget Chair, Senator Patty Murray, has indicated that the Senate Budget Committee will not report an FY2015 budget resolution, and on May 5, filed in the Congressional Record , levels as provided for in the BBA. This, however, does not necessarily preclude the Senate from considering a budget resolution. Under Senate precedent, if the Senate Budget Committee has not reported a budget resolution by April 1, the Budget Committee is discharged from further consideration of any budget resolution that has been referred. As a consequence, the Senate Budget Committee was discharged of the House-passed budget resolution for FY2015 ( H.Con.Res. 96 ), which was received in the Senate and referred to the Senate Budget Committee on April 11. Under Senate precedent, any Senator can make a non-debatable motion to proceed to the consideration of any such budget resolution. | The Bipartisan Budget Act of 2013 (P.L. 113-67) included as Title I, Subtitle B, a section titled, "Establishing a Congressional Budget" designed to serve as a substitute for a traditional congressional budget resolution for FY2014 and potentially for FY2015. This report provides an explanation of such provisions, highlights how those provisions compare with a traditional budget resolution, and places them within the context of the budget process for FY2014 and FY2015.This report assumes a general understanding of the congressional budget process. For more information on the budget resolution and the congressional budget process generally, see CRS Report 98-721, Introduction to the Federal Budget Process, coordinated by [author name scrubbed] |
Under the pilot program, a SIB serves essentially as an umbrella under which a variety of innovative finance techniques can be implemented. Much like a bank, a SIB would need equity capital to get started; and equity capital could be provided at least in part through federal highway funds. Once capitalized, the SIB could offer a range of loans and credit options, such as low-interest loans, loan guarantees, or loans requiring repayment of interest-only in early years and delayed repayment of the loan’s principal. For example, through a revolving fund, states could lend money to public or private sponsors of transportation projects; project-based or general revenues (such as tolls or dedicated taxes) could be used to repay loans with interest; and the repayments would replenish the fund so that new loans could be supported. Alternatively, states could use federal capital as a reserve, or as collateral against which to borrow additional funds, usually by issuing bonds. Pilot states can capitalize a SIB in part by depositing in the bank a maximum of 10 percent of most of their federal highway funds for fiscal years 1996-97. States not participating in the pilot program differ in their interest in SIBs and in their willingness and/or ability to use the full range of SIB financing techniques. Eleven of the 15 states we surveyed indicated that they were definitely or probably interested in participating in the SIB Pilot Program. However, only 9 of the 15 states submitted SIB applications to DOT. Four of the states—Arkansas, Louisiana, Montana, and New York—indicated that they were probably or definitely not interested in participating in the pilot program. Because we primarily targeted states that had expressed an interest in innovative financing to DOT, survey respondents indicated a higher interest than would be expected nationwide. Nationwide, only 15 states submitted applications to DOT to take part in the pilot program. While six other states expressed interest in the program to DOT, they did not submit an application. On April 4, 1996, DOT announced that Arizona, Florida, Ohio, Oklahoma, Oregon, South Carolina, Texas, and Virginia had been selected to participate in the pilot program. On June 21, 1996, DOT added California and Missouri. Figure 1 shows the applicant states and those selected to participate in the pilot program. DOT will assess how state SIBs are operating under the pilot program. Specifically, the legislation establishing the pilot program directs DOT to report on the financial condition of each infrastructure bank established under the pilot program. This report is to be transmitted to the Congress by March 1, 1997. Appendix III provides you with information on projects that the pilot participants are considering for financial assistance from SIBs. According to the Federal Highway Administration (FHWA) official responsible for the pilot program, the states are in the process of establishing and capitalizing their SIBs; thus, they have not yet decided on the projects that the SIBs will finance. As figure 1 indicates, more than half of the SIB Pilot Program applicants are southern and western coastal states with large and/or growing populations that necessitate additional highway construction. States with large land areas that have comparatively small populations and most northeastern states generally elected not to apply for a variety of reasons. These reasons might include the states’ and regions’ fiscal capacity, the public’s unwillingness to incur debt to finance highways, and the availability and cost of rights-of-way for start-up projects. In connection with DOT’s fiscal year 1997 appropriation, the administration proposed expanding the SIB Pilot Program to include additional states and to provide $250 million in highway trust fund revenue for capitalizing the banks. The House of Representatives rejected the administration’s proposal on the grounds that the pilot program is still in its very beginning stages and that any further expansion of the program should be considered in the context of the reauthorization of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). The Senate provided $250 million for the SIB Pilot Program and allowed the Secretary of Transportation to distribute SIB funds to more than 10 states on the grounds that SIBs are a promising way of facilitating needed infrastructure investment, especially when all levels of government are facing constrained resources. The conferees agreed to provide $150 million for the SIB Pilot Program, which is to remain available until expended, out of the general fund rather than the Highway Trust Fund. In addition, no distribution of funds is to be made until 180 days from the date of enactment. The conferees also agreed to permit the Secretary of Transportation to approve SIBs for more than 10 states. The President signed the legislation on September 30, 1996. Ten surveyed states provided us with estimates of the extent that their needs may be served by a SIB. Eight states indicated that they would use SIBs to help fund less than 10 percent of their transportation projects. Two of the states indicated a higher expected use of SIBs: Ohio estimated 10 to 25 percent of its projects could be financed through a SIB, and Michigan estimated that 25 to 50 percent of its projects could be financed through a SIB. Seven surveyed states expressing interest in creating a SIB indicated that they would probably use the funding for direct loans. Six states indicated that they would probably use the funding for reserves for bonds or loans. The states’ responses are shown in figure 2. In discussing their views, the 11 responding states seemed open to using a variety of financing tools as part of their SIB. For example, 6 of the 11 states that answered this question told us that their SIB would probably use more than one financing tool, and only 2 states said that they probably would not use a particular tool. Michigan and California, for example, said that they would probably use some combination of all the tools. Furthermore, Michigan and Ohio indicated that their SIBs would probably use other finance tools, such as letters of credit, in addition to those listed in figure 2. The SIB concept is intended to complement traditional funding programs and provide states with increased flexibility to offer many types of financial assistance tailored to fit a project’s specific needs. As a result, projects could be completed more quickly, some projects could be built that would otherwise be delayed or infeasible if conventional federal grants were used, and private investment in transportation could be increased. Furthermore, a longer-term anticipated benefit is that repaid SIB loans can be “recycled” as a source of funds for future transportation projects. Thus projects with potential revenue streams will be needed to make a SIB viable. Yet this could also serve as a drawback, and some state and industry officials question whether a sufficient number of revenue-generating projects can sustain a SIB and whether debt financing will prove acceptable to state and local politicians as well as the general public. Traditional federal transportation funding programs generally consist of grants, where the federal share of a project’s cost is set, usually at 80 percent, and the state pays the remaining 20 percent. Until recently, states have generally not been able to tailor federal funding to a form other than a grant. Under the pilot program, a SIB is essentially an umbrella under which a variety of innovative financing techniques could be implemented. Much like a bank, a SIB would need equity capital to get started. This capital could come partially from federal funds. Once capitalized, the SIB could offer a range of loans and credit options. For example, through a revolving fund, states could lend money to public or private sponsors of transportation projects. Although new for federal transportation projects, revolving funds have been used for other infrastructure investment, such as wastewater treatment facilities required by the Environmental Protection Agency (EPA). EPA’s state revolving funds are structured in two different ways and can be used to illustrate how a transportation SIB might be set up. The first model is a basic revolving loan fund. Under this model, a state SIB would lend capital directly to projects; project-based revenues (such as tolls or dedicated taxes) would be used to repay loans with interest. The repayments would replenish the fund so that a new generation of loans could be made. The second model is a leveraged revolving fund. In this instance, states would use federal capital as reserves or collateral against which to borrow additional funds, usually by issuing bonds. The SIB would pay interest on the bonds but would in turn lend out the bond proceeds to individual projects. With this type of model, leveraging would increase the pool of capital available to support project loans. Furthermore, like the basic revolving fund, repayment of project loans plus interest would support the SIB’s repayment of its bonds as well as provide funds for the SIB to loan to future projects. For example, Ohio plans to initially capitalize a SIB with $65.5 million, and issue $87 million in revenue bonds. As a result, the SIB could loan out a total of $152 million to projects. SIB funds could also be used to provide credit enhancements for transportation projects. Credit enhancements, such as loan guarantees or bond insurance, provide additional security to commercial lenders or private investors who may be providing funds as part of an overall financing package. Credit enhancements can also result in lower interest costs or greater borrowing power for a project. Some states view SIBs as complementary to their existing innovative financing efforts. For instance, Ohio’s SIB application notes that as a result of numerous funding requests coming from the state transportation department’s long-range multimodal transportation program, state law was modified to allow the state’s Director of Transportation to make loans to agencies, organizations, and persons to acquire, develop, and/or construct transportation facilities. The law also authorized the director to deposit payments from such loans into a revolving fund for subsequent loans. While this fund is not identified as a SIB, Ohio’s SIB application notes that essentially it is one, because the ability to make loans and receive payments is the basic underlying tenet of a SIB. Similarly, Arizona’s SIB application notes that one of the state’s key fiscal strategies has been to accelerate highway construction through the issuance of $3.1 billion in state transportation bonds. Arizona’s SIB application stated that the SIB will build on the state agencies’ recognized strengths in the bond-financing area, where there is a proven track record in accessing capital markets and maintaining high credit quality for bonds issued. As shown in figure 3, officials from eight states we contacted said that the most important benefit of SIBs over the next 5 years is the expedited completion of the projects. By drawing on diverse sources for funds, more capital can be amassed, thus enabling a project to get started and completed sooner than otherwise possible. For instance, Arizona’s SIB application listed five potential projects for SIB financing. With SIB financing, the state estimated that four of the projects could get under way in fiscal year 1997, rather than fiscal years 1999 through 2004 and that the fifth potential project, although not scheduled, may be able to get under way in fiscal year 1997 with SIB assistance. Some states also told us that in addition to completing individual projects faster, a SIB may provide the flexibility to complete a financial package for worthwhile projects that may be lower on the state’s priority list because of their cost, demographic reasons, or political changes in priorities. For example, a major new road may simply be too costly to build, given that many small competing projects could be built with the same state funding. But if the project is financed in part from other sources, such as a local community and private investors, less state funds are needed, which in turn, may permit a state to fund more roads on its priority list. As the Texas SIB application notes, over the next 5 years, the state will be able to finance less than half of its identified transportation needs with currently available funding. The availability of SIB financial assistance will allow local communities to provide assistance and help bridge the funding gap. Communities that are willing to dedicate local revenue sources to complete particular projects but do not have well-established credit ratings or lack experience in capital financing will be aided by financial assistance from SIBs and associated technical assistance. Ohio plans to foster increased local contributions. Specifically, Ohio notes that its SIB will be reinforced by a project-rating system that identifies priorities for the selection of projects. Under this rating system, local communities can receive bonus points that upgrade the priority of their projects if they provide a significant portion of the project’s funding. Ten of the states we surveyed viewed SIBs’ ability to attract private funds as providing some or great benefit. Private investment has not traditionally been involved in transportation projects because of the general lack of authority under federal law and because of some states’ legislative and constitutional restrictions on giving or lending state funds to private entities to build and operate roads. A SIB may increase private investment by reducing the risk to the private investors. Credit enhancements, such as a loan guarantee, would help to ensure that federal and/or state funds committed to the project will be there when the bills come due. Members of the infrastructure finance community told us that one common fear among investors is that the political commitment and funds planned for a given project will not materialize because of competing state priorities. Even a relatively small government investment could increase the private sector’s confidence. For example, California officials believe that state SIB investments of only 10 percent equity in some projects will give private lenders and investors the confidence to participate in funding the remaining 90 percent of the cost. Private investment can help close the gap for transportation needs that may otherwise go unmet or be forestalled for years. For instance, Oklahoma’s SIB application explained that there are a number of growth industries in the state, all of which require enhanced transportation. For example, the southeast quadrant, the state’s poorest quadrant, supports a growing food-processing industry and is experiencing an influx of hog farms, feed plants, and poultry-processing facilities. But further industry development depends on substantial improvements to the rural transportation network. State officials view a SIB as a vehicle to help facilitate private investment from businesses that would benefit from an improved transportation network. Looking toward the future, states that create revolving funds want the SIBs to be self-sustaining, and if the funds are leveraged, they would want the pool of resources available for loans to grow. However, this growth may take many years. Whether and when a SIB achieves growth depends on a number of factors, including (1) the degree to which loan interest rates are lower than market rates, (2) loan repayment periods, (3) the reliability of forecasted revenue streams, and (4) the amount of leverage employed. And not all SIBs will leverage funds. Only 18 states have leveraged funds under EPA’s State Revolving Fund Program. In the State Revolving Fund context, leveraging means that states have the discretion to use the federal capital grants, as well as their matching shares, as collateral to borrow in the public bond market to increase the pool of available loan funds for projects. According to the Council of Infrastructure Financing Authorities, leveraging the State Revolving Fund has substantially increased the funds available for lending. The Council reported in August 1994 that close to $4 billion has been added to the loan pool by the 18 states that have leveraged their funds—half as much as the nearly $8 billion provided in federal capital grants thus far. Furthermore, when assessing the future growth for those funds that are leveraged, the Council assumes conservatively that $1 for the State Revolving Fund program will generate an additional $2 in investments. Arizona’s plans are an example of how a SIB could grow. The state plans to capitalize an initial SIB at $71.5 million, representing $64 million in federal funds and $7.5 million in state and/or local funds. The state plans to use that investment as a base for issuing bonds and make $20 million in initial loans to transportation projects with the bond proceeds. In approximately 20 years (by 2017), the state anticipates that loan repayments plus interest on the loans will increase its initial $71.5 million investment to $260 million in SIB loans. This amount in turn could be the basis for supporting an even larger bond issuance if the state decided to leverage its funds again. DOT estimated that $2 billion in federal capital provided through SIBs could be expected to attract an additional $4 billion for transportation investments, thus achieving a leverage ratio of 2 to 1. FHWA officials told us that this estimate is conservative and is based on EPA’s State Revolving Fund program. FHWA officials said that SIBs could achieve a leverage ratio as high as 4 to 1. But as Washington State officials point out, FHWA’s assertion is too general to prove or disprove. The return depends heavily upon individual projects and how “leverage” is defined. Some state officials and industry experts remain skeptical that SIBs will produce the expected benefits. Some of the barriers cited include the following: (1) there are no additional federal funds to support SIB capitalization, (2) there are not enough revenue producing projects to sustain a SIB, and (3) there may be legal or constitutional state problems, such as prohibitions against the private sector’s profiting from using government funds channeled through a SIB. Figure 4 shows states’ responses to possible barriers to their participation in the pilot program. As figure 4 shows, states considered the lack of additional federal funds as the primary barrier to participating in the program. However, very few states considered their insufficient knowledge of SIBs or lack of expertise to start a SIB as barriers to participating in the SIB Pilot Program. States selected to participate in the pilot program are permitted to use a maximum of 10 percent of most of their federal highway grant funds for fiscal years 1996-97 to capitalize a SIB. Funding SIBs from existing funds, however, can act as a disincentive for states participating in the SIB Pilot Program. As figure 4 showed, 8 of the 15 states cited the absence of additional federal funds to capitalize a SIB as a factor that definitely diminished their likelihood of participating in the SIB Pilot Program. For instance, New York transportation officials told us that all their available federal and state funds are fully committed to planned highway and transit projects; thus, no funds are available to capitalize a SIB. Of the 11 states we surveyed that indicated interest in participating in the SIB Pilot Program, 9 provided us with estimates of the percentage of their available federal highway funds they expected to use to capitalize a SIB. Six of these states indicated that for fiscal years 1996 and 1997, they expected to use less than half of the federal highway funds allowed to capitalize a SIB. Some of the states’ decisions reflect the fact that federal funds are already fully committed to planned projects, often for the next 3 to 5 years. Therefore, state officials do not expect to be able to rechannel funds for an alternative use, particularly in the early start-up years. According to a Texas transportation official, capitalizing a SIB within the next 5 years would mean diverting funds from planned projects with existing constituencies. This official was more optimistic that with the passage of time, rechanneling federal funds to a SIB would become easier as projects that could be supported through a SIB developed their own constituencies. To help with capitalization for SIBs in a constrained budget environment, some projects already planned with established financing may be brought under the SIB financing umbrella. Thereby, the SIB will be able to capture future project loan repayments. For instance, one of four potential projects identified in South Carolina’s SIB application will receive financing through a planned issue of up to $60 million in state highway bonds. The proceeds of this bond issue will be loaned to the state turnpike authority to complete construction of a four-lane highway that will bypass the overcrowded main artery on Hilton Head Island. Under the terms of a loan agreement, tolls collected by the turnpike authority from the project will be used to repay the state DOT. It is the intention of the state DOT to move this transaction under the SIB. Similarly, one of the projects identified in the Texas SIB application already has financing, but the Texas DOT indicated its intent to bring the project under the institutional framework of the SIB, thus allowing loan repayments to be used for future SIB-assisted projects. If this is the only source of the SIB’s capitalization, however, the operation of the Texas SIB will be delayed because repayment of the $135 million loan does not begin until 2004 and is spread over 25 years. A provision in DOT’s fiscal year 1997 appropriation should also help with capitalization for SIBs. As previously mentioned, the appropriation provides $150 million for the SIB Pilot Program. The funding is to be made available until expended. DOT will need to decide how the funds will be allocated. DOT will have various options for allocating the funds, including (1) a proportional distribution based on states’ historical share of federal highway funds for those states participating in the pilot program, (2) an equal distribution of the funds to all participating states, (3) an incentive to induce states to participate in the SIB pilot, or (4) a performance award to encourage certain actions or projects, such as fund leverage or particularly innovative project financing. While these are just some of the various ways that funds could be distributed, information on how the funds will be distributed will likely prove to be a critical factor in the number of additional states that choose to participate in the pilot program. According to an official in FHWA’s Office of Policy, a significant barrier to viable, thriving SIBs is the low number of projects that could generate revenue and thus repay loans made by SIBs. In turn, the states’ and regions’ population density and fiscal capacity, the acceptance of tolls by the public and legislators, and the availability and cost of the rights-of-way for start-up projects are factors in how much demand there will be for SIB-financed projects. Six of the states that we surveyed told us that an insufficient number of projects with a potential revenue stream would diminish the prospects that their state would participate in the SIB Pilot Program. Repayments for highway projects’ debt could be derived through a number of ways; principal ones would include (1) vehicle tolls; (2) other project revenues, such as air or other rights of way, and revenues from commercial rest stops; (3) dedicated public revenues linked to the project, such as revenue districts or special benefit taxes, and general public revenues, such as development or sales taxes. Figure 5 shows the types of revenues that states indicated they would likely use to repay SIB loans. Ten of 11 states said they are considering tolls. However, state officials commented that they expected tolls would generate considerable negative reaction from political officials and the general public. This concern has been highlighted by a recent experience in Washington State, where four of five planned toll projects have been indefinitely suspended because of public and political opposition. In addition, of the four states we surveyed that were not interested in participating in the SIB Pilot Program, three states cited the need to repay SIB debt, specifically, an aversion to tolls, as a reason for not wanting to participate. As Arkansas officials noted, the public aversion to debt financing for highways was recently expressed when a state bond referendum lost heavily; 87 percent voted against it. Some states also expressed uncertainties regarding their legal or constitutional authority to establish a SIB in their state or use some financing options that would involve the private sector. Michigan, for instance, said that it does not currently have the constitutional authority to lend money to the private sector. While Minnesota does have the authority to lend money to the private sector, state officials noted that they would need legislative changes, because their authority is currently restricted to lending funds interest-free to private firms to build toll roads. Thus, the state would need the legislative authority to charge interest on loans to the private sector. In addition, Minnesota officials stated that the SIB would need authority to reloan the money because any repayment of a transportation loan must currently be deposited into the state’s general fund. Texas officials noted that participation in the SIB Pilot Program would be based on a two-phased approach. In the first phase of implementation (1996-97), the Texas SIB would use existing statutory and constitutional authority to provide financial assistance for highway toll projects. In January 1997, legislative changes would be sought to enable the Texas SIB to begin the second phase of the program’s implementation and expand the types of recipients and projects eligible for assistance. Another impediment can arise if the SIB exposes the state to debt. Backing SIB financial assistance with the full faith and credit of the state is not legally permitted in some states. Without the guarantee of the full faith and credit of the state, the SIBs will have to rely on the strength of their project portfolio and initial capitalization as the basis for borrowing. For instance, South Carolina officials noted that the state constitution prohibits the outright guarantee of the full faith and credit of the state for the indebtedness of a private party. In addition, South Carolina officials note that any security or debt financing instrument or guarantee issued by their state SIB is not and should not be construed to be backed by the full faith and credit of the state of South Carolina or its agencies and does not constitute a commitment, guarantee, or obligation of the state. However, these officials do not believe that this prohibition will significantly affect the operations of a SIB because proposed legislation will limit the SIB’s obligations to exclude the full faith and credit of the state. Similarly, Oregon’s Department of Justice advised that Oregon’s constitution prohibits lending the credit of the state. Therefore, SIB agreements will be structured to protect the state from assuming any prohibited obligations. Finally, some infrastructure finance experts question SIBs’ prospects for attracting private sector involvement—one of the program’s primary goals. One principal barrier to attracting private capital is the fact that the Internal Revenue Code restricts private involvement in tax-exempt debt. In the case of state and local bonds, bondholders’ interest earnings are exempt from federal taxes. However, the tax exemption does not apply to a bond issue if (1) the private sector uses more than 10 percent of the proceeds and finances more than 10 percent of the debt or (2) more than 5 percent of the proceeds or $5 million (whichever is less) is used to make loans to the private sector. Exempt facility bonds that meet volume and other statutory requirements are not subject to this rule. Exempt facility bonds are bonds for which 95 percent or more of the issue’s net proceeds are to be used to provide specified facilities, including airports, docks and wharves, and mass-transit facilities. A number of infrastructure finance experts told us that states that choose to leverage their infrastructure banks will likely do so with tax-exempt debt because bondholders are willing to accept lower interest rates in exchange for the bonds’ tax-exempt status. Restrictions on private involvement in tax-exempt debt are not unique to infrastructure banks. However, as a result of the restrictions, private participation in projects financed by leveraged banks could be inhibited under the terms of existing tax law. SIBs offer the promise of helping to close the gap between transportation needs and available resources by helping to attract other revenue sources. However, some state officials expressed an aversion to debt financing and concern about whether there are enough revenue-generating projects to sustain a SIB. Because of its newness, the pilot program will need time to develop and mature, and a comprehensive assessment of SIBs’ impact on meeting transportation needs can probably only be assessed over the long term. The legislation authorizing the SIB Pilot Program provides that DOT submit a report to the Congress on the financial condition of each infrastructure bank established under the pilot program. This report is to be submitted to the Congress by March 1, 1997. However, because of the start-up time involved in establishing and funding SIBs, the information available on the financial condition of SIBs may be limited at that time. Furthermore, because the Congress only recently approved expanding the SIB Pilot Program to more than 10 states, along with an additional $150 million, it may be too early to comprehensively evaluate the results of the program. Once SIBs begin operating, disseminating information on states’ successes and failures with various financing options as the pilot program progresses could help other states use their SIB more effectively and educate other states on the benefits and uses of a SIB. One of the early benefits in certain pilot states is planned action to remove legislative barriers to private financial involvement in transportation projects. The Congress may wish to consider postponing the due date for DOT’s report on the financial condition of the SIBs in the pilot program to a date later than March 1, 1997. We provided DOT with draft copies of this report for DOT’s review and comment. We met with DOT officials—including representatives from FHWA’s Office of Chief Counsel and Office of Fiscal Services, the Federal Transit Administration’s Office of Budget and Policy, and the Office of the Secretary Office of Economics—who agreed with the information presented throughout the report and considered it a well-prepared, balanced report. DOT agreed with our matter for congressional consideration and thought that a postponement of DOT’s due date for reporting on the financial condition of SIBs to a date later than March 1, 1997, would allow the program time to develop and enable DOT to provide a more useful, substantive report. Regarding legal barriers to SIBs, officials from FHWA observed that states may be able to create SIBs under existing law. However, some states may have to overcome specific legal restrictions for their SIBs to engage in the full array of financing activities that can be used to address transportation needs. We performed our review from August 1995 through September 1996 in accordance with generally accepted government auditing standards. Please call me at (202) 512-2834 if you or your staff have any questions. Major contributors to this report are listed in appendix IV. The National Highway System Designation Act of 1995, which includes the authorization for a State Infrastructure Bank (SIB) Pilot Program, also gives states additional flexibility to use innovative finance tools for highways outside the SIB Pilot Program. This legislation as well as other statutes contain provisions related to the following: Advance Construction: Allows a state to begin a federal-aid eligible project in its transportation plan with its own funds before accumulating the full federal funds. Use of Federal Funds to Finance Bond and Other Debt Instruments: The Secretary of Transportation may reimburse a state for expenses and costs incurred for interest payments, the retirement of principal, the cost of issuance, or other costs of issuing bonds to finance highways. Loans of Federal Highway Funds to a Public or Private Entity With a Federal Share Increased for Toll Roads: The federal share payable for construction of a toll road is increased from 50 to 80 percent. Increased Flexibility Provided for State Match: States may apply the value of donated funds, materials, or services to eligible projects against the state match. In a survey, we asked 15 states how much use, if any, their state would likely make of the above financing tools in the next 5 years. As figure I.1 shows, advance construction was the finance tool that most states (8 of 15) believed they would make great use of in the next 5 years. The second favored tool was the flexibility to meet state matching requirements by applying the value of donated funds, materials, or services to eligible projects. In considering what role SIBs may play in helping states to expand their ability to finance highways, the objectives of our review were to (1) identify the extent of states’ interest in the pilot program and how states might use SIBs and (2) identify the benefits and barriers to states’ using SIBs. At the request of the Senate Committee on Environment and Public Works and the Chairman of that Committee’s Subcommittee on Transportation and Infrastructure, we also briefly summarize information on states’ interest in using other innovative financing mechanisms that are contained primarily in the National Highway System Designation Act of 1995 in appendix I. To attain these objectives, we reviewed relevant sections of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), the National Highway System (NHS) Designation Act of 1995, and the Department of Transportation’s (DOT) Test and Evaluation Pilot Project. We reviewed the notice inviting states to apply for the pilot program, the application instructions, and application material submitted by individual states. We selected states for interviews prior to learning whether they applied and were selected to participate in the program. We were interested in obtaining the views of states that wanted to apply for participation in the pilot program as well as states that were not interested. We contacted transportation officials from 16 states and were able to obtain information from 15 states on their views, expectations, and plans (if any) to use SIBs, as well as their expectations on using certain other innovative finance tools. We conducted a telephone survey with the selected states and collected documentation from the surveyed states and from the Federal Highway Administration (FHWA) about states’ SIB plans. The 15 states that provided us with information were Arkansas, California, Florida, Louisiana, Maryland, Michigan, Minnesota, Montana, New Jersey, New York, Ohio, South Carolina, Texas, Virginia, and Washington. These states were judgmentally selected to include states with interest in innovative finance tools and geographical balance. Of the 15 states, 6 applied and were selected, 6 did not apply, and 3 applied for but were not selected to participate in the SIB Pilot Program. We reviewed states’ SIB documents and analyzed the results of surveys and interviews with state DOTs to identify common problems with current loan provisions, potential problems with the SIB concept, and states’ interest in and uses for SIBs. Furthermore, we identified major barriers that may prevent SIB benefits from being realized. We also conducted telephone interviews and follow-up interviews with state DOTs’ planning, policy, and finance officials; FHWA officials responsible for innovative finance initiatives; representatives from finance and construction firms; experts from academia, consulting firms, and debt-rating services; and representatives of national policy and labor organizations. We conducted our review from August 1995 through September 1996 in accordance with generally accepted government auditing standards. $ 2.2 million Loan amount to be determined. Alternatives are under consideration. Design and right-of-way acquisition are under way, and environmental impact statement is approved. Mid-1997 (without SIB assistance 2004). $16.0 million Loan amount to be determined. Alternatives are under consideration. Environmental assessment and preliminary design under way. Mid-1997 (without SIB assistance 1998). $21.9 million Loan amount to be determined. Alternatives are under consideration. Environmental assessment is under way; design 30- percent complete. Late 1997 (without SIB assistance). $14.9 million Loan amount to be determined. Alternatives are under consideration. Environmental assessment is almost complete; final plans expected before 1997. 1997 (without SIB assistance, 1998). $12.0 million Loan: $6 million. Most likely revenue stream: surcharge on raceway admission. Environmental assessment and design are complete. 1997 (without SIB, currently not scheduled). enhancement to support privately issued revenue bonds. Debt service on SIB-supported bonds to be paid through cargo fees to shippers. Resolution of the final environmental impact statement expected in 1996. Not determined. short-term commercial loan. Preferred alternative selected in 1995. Target completion date: 2000 $713.0 million $25 million line of credit to replace existing contingency fund. If accessed, the line of credit would be repaid through excess toll revenues. Portions of project are now under construction. Target completion date of some parts: 1999. (continued) Conceptual design and engineering are in progress. enhancements to assist private developer secure a $25 million to $35 million commercial loan. Operating income to repay SIB-supported loans. Fees on loans and guarantee to be repaid by ground lease and parking revenues. $746.0 million Loan: $15 million. SIB loan to be repaid from bond issue. Segments are under construction; environmental impact statement in progress for remainder of project. Partial completion dates: 1999 and beyond. Costs to vary by site. Credit enhancements and loan guarantees to assist private developers to secure financing. Profits earned by private developers. Initiative is in conceptual stages. Not determined. Not determined. Not determined. support financing are the most likely forms of assistance. Not determined; economic feasibility study completed in March 1996. $30.0 million for new project (total project costs of $817.0 million). Credit enhancements to support an additional bond issue. Debt service on new bond issue to be repaid with excess toll revenues or other funds. Construction began in 1993. Target completion date, 1997 $210.0 million If pursued as public-private partnership, credit enhancement to assist private consortium in obtaining financing. If pursued as a public-private partnership, tolls could be used to repay loans and fees for loan guarantees. Initial feasibility study has been completed; further progress dependent on funding. Not determined. (continued) Credit enhancement to support privately issued debt. Tolls are the most likely revenue source. Draft environmental impact statement submitted in 1996. $22.0 million Loan: $7 million. Revenue from a mix of project and systemwide toll receipts and state transportation funds. Preliminary design and environmental study complete. October 1998. Mid-1998. million. Revenue from a mix of project and systemwide toll receipts and state transportation funds. Final engineering is nearly complete. $210.0 million plus. Not determined. Not determined. Not determined. Not determined. Not determined. to public agency; loan to private sector partner not determined. Most likely source of revenue: Local tax revenues and parking fees. Preliminary design and feasibility analysis completed. Not determined. airport parking fees, concession fees, and public-private joint development projects. Feasibility study is under way; state plans to solicit proposals in 1996 for private equity partners. Not determined. Not determined. enhancement to support bonds issued by the city or county. Final environmental impact statement completed in 1996. Not determined. million. Local transportation sales tax revenues. Purchase commitment to follow financial plan. (continued) Not determined. enhancement to support bonds issued by Bi-State Development Authority. Sales taxes and parking fees would support the bond issue. First $1 million phase of project is under way; second $8 million phase is awaiting SIB funding. $23.3 million Support for pooled bond issuance for all five projects. Most likely revenue source: Local tax revenues. Progress depends on identifying funding source. Not determined. $38.6 million plus Not determined. Most likely revenue source: Taxes from a new transportation development district. Project is in preliminary stages. Not determined. Not determined. Not determined. taxes paid to the tax increment financing district. $19.5 million Loan: $7.5 million. Revenues from fees collected at an amusement park parking lot and a 1-percent hotel/motel tax. Environmental impact statement is nearly complete. $118.9 million Loan: $30 million. Loan to be paid by revenue bond issue backed by toll receipts. Environmental and design work to be done from 1996 to 1998. Not determined. $156.2 million Loan: $7 million. Loan to be paid by revenue bond issue in 2003 and backed by the city’s income tax. Design engineering is nearly complete. $3.2 million Loan: $3.2 million. Loan to be paid from a future federal fund allocation. Preliminary engineering and design are in progress. (continued) $7.3 million construction loan. Loan: $7.3 million. $4 million of $7.3 million loan repaid through private loan; $3.3 million balance converted to permanent financing, subordinate to a private loan. Environmental clearance granted; design engineering complete. $7.2 million Loan: $7.2 million. Loan repaid from fees charged to users of intermodal facility. Environmental analysis has begun. $12.0 million construction loan. Loan: $12 million. $9 million of loan repaid through private loan; $3 million balance converted to permanent financing, subordinate to private mortgages on platform and facilities. Feasibility analysis has begun. $10.0 million permanent loan. Loan: $10 million. Likely revenue source: Lease payments from short line railroad. Environmental analysis to be conducted in mid-1996. $10.0 million permanent loan. Loan: $10 million. Loan repaid from building rents and state general funds. Project design is under way. $196.0 million Loan: $30 million for preconstruction costs. Preconstruction loan repayment with proceeds from revenue bonds, with debt service from federal and state funded lease payments. Fallback revenue: State fuel tax or tolls. Environmental analysis complete; project awaits final financing plan. (continued) No data. Not determined. Not determined. Not determined. Not determined. Bond issue will repay short-term loan. Likely source to repay SIB assistance: Tolls. Preliminary engineering, environmental studies, and final design by end of 1997. Bond issue will repay short-term loan. Likely source to repay SIB assistance: Tolls. Preliminary engineering, environmental studies, and final design by end of 1997. Project has been designed and is ready to start. repaid from local improvement district funds. $15.1 million Loan: $2.4 million. SIB loan to be repaid by city’s share of state Transportation Equity Account or other local funds. Most parts of the project have completed final design. SIB loan to be repaid by county road funds. Project ready for final design. enhancement for issuance of $3.6 million in revenue bonds. Principal and interest on the bonds to be paid from county gas tax and the county’s share of state motor vehicle fund revenues. Financing is dependent on vote for local tax to support bond issue. (continued) $160.0 million Loan: Not determined. Loan to be repaid with letter of credit backed by toll receipts. Request for proposals issued in August 1995; agreement expected in 1996. $120.0 million Loan: Not determined. Loan to be repaid with project toll receipts. Request for proposals issued in August 1995. $15.0 million Loan: Not determined. Potential revenue source: Admission tax at Fantasy Harbor entertainment complex. Negotiate a design/build contract in fall 1996. $81.0 million Loan: Not determined. Loan to be repaid from toll receipts. Construction under way. $696.0 million Loan: $135 million loan has already been made. Likely revenue source: Toll receipts. In final stages of preconstruction. Not determined. unspecified amount for feasibility study; future amounts not determined. Feasibility study is under way. Not determined. unspecified amount for feasibility study; future amounts not determined. Feasibility and investment study to begin soon. Not determined. Not determined. Original environmental impact statement completed in 1984; design is under way. Not determined. not determined. (continued) Not determined. not determined. Likely revenue source: Toll receipts. Original environmental impact statement completed in 1989. Not determined. City is evaluating private proposals to build, operate, and finance the project. Not determined. Not determined. Request for proposal is being drafted for private entities to design, construct, operate, and maintain. Not determined. Not determined. Project is receiving $2 million in Federal Transit Administration grants; future funding is uncertain. Not determined. not determined. Jonathan T. Bachman Matthew W. Byer Helen T. Desaulniers David G. Ehrlich Gary L. Jones Yvonne C. Pufahl Miriam A. Roskin Phyllis F. Scheinberg The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. | Pursuant to a congressional request, GAO reviewed states' interest in establishing state infrastructure banks (SIB), focusing on the: (1) extent of states' interest in the SIB pilot program and how states might use SIB; and (2) benefits and barriers to states using SIB. GAO found that: (1) 15 states applied for the 10 slots in the SIB pilot program; (2) these states generally have large and growing populations that need additional highway construction; (3) most of the states surveyed indicated that SIB would probably be used to help fund less than 10 percent of their state transportation projects in the next 5 years; (4) officials from 8 states believe that the most important benefit of using SIB over the next 5 years would be the expedited completion of state transportation projects; (5) 8 states believe that the absence of new federal funds to capitalize SIB diminished the likelihood that they would participate in the SIB pilot program; (6) the fiscal year 1997 Department of Transportation (DOT) appropriation provided $150 million for SIB, and how the funding is allocated could affect the number of states applying for the pilot program; (7) although a primary SIB benefit is that financing will be repaid and can be recycled to future transportation projects, some states are averse to debt financing and concerned about whether there are enough revenue-generating projects to sustain SIB; (8) some infrastructure financing experts question SIB prospects for attracting private-sector involvement; and (9) states expressed varying degrees of interest in other financing mechanisms provided for primarily in the National Highway System Designation Act of 1995. |
Hillary Clinton campaigns in Queens on April 18, 2016. (Photo: Seth Wenig, AP)
Hillary Clinton is hoping Tuesday’s New York primary will accomplish what she’s failed to do so far: deliver a crippling blow to Bernie Sanders.
The Empire State has 247 pledged delegates at stake, a haul second only to California, and she’s hoping a victory in the state she once represented in the U.S. Senate will create momentum that sweeps through the next wave of primaries concentrated along the Northeastern seaboard.
Despite trailing in the delegate math needed to win the nomination, Sanders, a Vermont senator, is still drawing huge crowds and has won seven of the last eight state contests. On Sunday, he attracted what he described as a record audience of nearly 29,000 in his boyhood borough of Brooklyn.
However, Clinton leads Sanders in New York by double digits, according to most polls.
“For Clinton, anything less than a double-digit margin would be a minor embarrassment. A loss would be a major embarrassment,” said David Wasserman, an elections analyst with the nonpartisan Cook Political Report in Washington.
The reality, he said, is that Sanders “hasn’t had a realistic path to victory in the delegate count for over a month.” The New York primary “looks likely to push Sanders even further into the symbolic/cathartic realm.”
Sanders has said, no matter what, he’ll take the Democratic nomination fight all the way to the convention in Philadelphia in July. On Tuesday night, he’s moving on to campaign in Pennsylvania, which votes April 26. Clinton now has 1,289 pledged delegates to Sanders' 1,045, according to the Associated Press.
When including superdelegates, who are elected officials and party leaders who can back any candidate, Clinton's lead is 1,758 to Sanders' 1,076. It takes 2,383 to win.
Despite her lead, Clinton is leaving nothing to chance.
She’s betting on a large African-American turnout to buffer her lead in Manhattan and surrounding areas, while attempting to neutralize Sanders' appeal in the whiter upstate region by emphasizing her efforts as a U.S. senator on jobs and economic development.
“I’m always nervous before every election,” Clinton told 77 WABC radio. “I hope to do really well here in New York.”
Sanders had wanted a real showdown in New York — even predicting, after winning in Wisconsin, that he could also win New York, a state Clinton represented for eight years in the Senate.
Unlike in Michigan, where Sanders caught Clinton off guard amid polls showing her in the lead, New York is a closed primary. That means the independent voters who’ve carried Sanders in other contests cannot participate. In 2008, Clinton beat then-senator Barack Obama by 17 points in New York.
Clinton and Sanders have ratcheted up their rhetoric in recent days.
Sanders has hit Clinton on her on paid speeches to firms on Wall Street, including Goldman Sachs, and super PAC fundraising. "She is out there raising money from the wealthy and the powerful, and I think you can judge a candidate based on how you raise money and who you ultimately become dependent upon," he said Sunday on CBS' Face the Nation.
Sanders is also criticizing Clinton for her support of fracking in other countries while secretary of State and for backing free trade agreements — two issues that resonate in manufacturing-heavy upstate New York.
Sen. Bernie Sanders greets a supporter while taking a walk in midtown Manhattan on April 18, 2016. (Photo: Mary Altaffer, AP)
Sanders is running an ad calling for a nationwide ban on fracking that features actress Susan Sarandon. It accuses Clinton of taking a "shifting" position on the issue.
Clinton has also hit Sanders hard for not being tough enough on the gun industry. Ten mothers who lost children to gun violence hit the road for her over the weekend, and Clinton was joined by prominent surrogates Mark Kelly, a retired astronaut, and his wife, Gabby Giffords, the former congresswoman from Arizona who was shot in the head during a mass shooting.
Clinton's also continuing to cast Sanders’ as lacking fully formed policy proposals.
In a radio interview, Clinton said he is over-promising. She cited last week's debate in Brooklyn and a recent interview with the New York Daily News editorial board, where Sanders was asked how he would break up big banks. “They asked him questions about his key issues,” she said on the New York City radio show, "The Breakfast Club."
“He couldn’t answer the questions,” she said.
She’s also looking ahead to the general election. Asked about Republican Donald Trump, she said on the same program: “He does scare me."
“He’s setting people against each other and inciting violence” that “in so many ways plays to the worst instincts of people,” said Clinton.
Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: US Needs 'Renaissance in Manufacturing' | 1:43 Democratic presidential candidate Hillary Clinton on Tuesday toured a factory in Hammond, Indiana while voting was taking place during a series of contests in northeastern states. Indiana's primary will take place on May 3. (April 26) AP 1 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Slams GOP Ahead of Tuesday Primaries | 1:49 Hillary Clinton took aim at Donald Trump and Ted Cruz during a rally in Philadelphia Monday night saying she has the experience to build a coalition to fight the Islamic State group. (April 25) AP 2 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton to Trump: 'Come Out of Those Towers' | 1:27 Campaigning ahead of the Delaware primary, Hillary Clinton attacked Donald Trump as being out of touch with voters, saying he should "come out of those towers" named after him and speak with Americans. Delaware holds its primary on Tuesday. (April 2 AP 3 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL In Conn., Clinton Vows Changes to Gun Culture | 1:45 Former Secretary of State Hillary Clinton says the bipartisan gun control legislation passed in Connecticut following the 2012 mass killing at Sandy Hook Elementary School "needs to be a model" for the nation. (April 21) AP 4 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Critiques GOP Language on Muslims | 1:58 Democratic presidential front-runner Hillary Clinton campaigned in Philadelphia on Wednesday, critiquing her Republican rivals and telling the audience the next president needs to be able to coalesce with "Muslim-majority nations." (April 20) AP 5 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: 'We Have Just too Many Guns' in US | 1:53 Saying no American community is immune, Democratic presidential candidate Hillary Clinton took up the issue of gun violence Wednesday at a campaign stop in Philadelphia. Clinton said the nation has 'got to do more to save more lives.' (April 20) AP 6 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Supporters Call for Unity | 1:16 Supporters of Hillary Clinton are calling for Bernie Sanders backers to unite behind the Democratic Presidential front-runner and get ready to defeat the Republicans. Clinton won a resounding victory in New York's Presidential primary. (April 20) AP 7 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hillary Clinton Wins New York Primary | 2:20 Hillary Clinton has won the Democratic presidential primary in New York, which she represented in the U.S. Senate for eight years. (April 19) AP 8 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton in New York: There's no place like home! | 0:52 Hillary Clinton won the Democratic presidential primary in New York on Tuesday. Speaking at a rally in New York after the win was announced Clinton said "there's no place like home". (April 19) AP 9 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Appeals to Organized Labor in DC Speech | 1:30 Democratic presidential frontrunner Hillary Clinton touted her plans for an infrastructure bank and a new federal tax credit to support apprenticeships in a speech to building trades workers in Washington on Tuesday. (April 19) AP 10 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Delegates up for grabs on Primary Day in New York | 1:09 USA TODAY's Paul Singer breaks down the possible outcomes from today's presidential primaries in New York. New York's presidential primary could play a significant role in determining the presidential nominees for the first time in decades. USA TODAY 11 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Raw: Hillary Clinton Votes in New York Primary | 1:52 Democratic presidential candidate Hillary Clinton and her husband, former President Bill Clinton, voted in the New York primary on Tuesday. (April 19) AP 12 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL New York Democrats Voice Opinions Before Primary | 1:32 Bernie Sanders and Hillary Clinton supporters are expressing optimism and confidence ahead of Tuesday's New York Presidential primary. (April 19) AP 13 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Hits Sanders on Sandy Hook Statements | 0:54 Democratic presidential candidate Hillary Clinton says she couldn't believe that her opponent Sen. Bernie Sanders did not support the lawsuit against gun makers that parents of victims in the Sandy Hook Elementary School shooting are taking to court AP 14 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Slams Trump, Cruz Ahead of NY Primary | 1:08 Democratic presidential candidate Hillary Clinton gave her Republican opponents one last jab ahead of New York's presidential primary election on Tuesday. (April 18) AP 15 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: 'I Have No Time' for Partisanship | 1:16 Democratic presidential candidate Hillary Clinton campaigned in Staten Island on Sunday, two days ahead of the New York primary on April 19. (April 17) AP 16 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Pushes Affordable Housing in Harlem | 1:45 Democratic presidential candidate Hillary Clinton says she will push to make housing more affordable as she visited a senior center in Harlem ahead of the New York primary. (April 15) AP 17 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton, Sanders Clash Over Judgment in Debate | 2:55 Days before the critical New York primary, Hillary Clinton and Bernie Sanders squared off in a Brooklyn debate, aggressively challenging each other's judgment to be president and wrangling over Wall Street banks, minimum wage and gun control. (April AP 18 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton apologized for crime bill, but Sanders also supported it | 1:19 During Thursday night's Democratic debate, Hillary Clinton and Bernie Sanders talked incarceration rates, and the 1994 crime bill's influence on prison populations. Newslook 19 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Things got heated during 9th Democratic debate | 2:28 The debate heated up between Hillary Clinton and Bernie Sanders as they questioned each other's personal record on several hot topics during the Democratic debate in Brooklyn, New York. VPC 20 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hillary Clinton Addresses White 'Privilege' | 1:14 Appearing at the annual National Action Network convention in New York, US presidential candidate Hillary Clinton slammed Donald Trump and addressed white 'privilege' in America. (April 13) AP 21 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton on pay gap: No discounts for being women | 1:35 Democratic presidential candidate Hillary Clinton marked Equal Pay Day while campaigning in New York by pushing for more transparency on the issue of pay gaps between male and female workers. (April 12) AP 22 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton, de Blasio Perform Controversial Skit | 1:01 Democratic presidential front-runner Hillary Clinton and New York City Mayor Bill de Blasio are being criticized over a comedy skit that some people say was racially insensitive. (April 12) AP 23 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Punchlines: How many ways can Bill ruin things for Hill? | 4:36 The late-night comics take a look at Hillary Clinton's campaign and her husband's knack for tanking it. Take a look at our favorite jokes, then vote for yours at opinion.usatoday.com. Eileen Rivers 24 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: Trump and Cruz 'Offensive, Dangerous' | 1:19 Democratic Presidential candidate Hillary Clinton blasted Republicans Donald Trump and Senator Ted Cruz while in Long Island, New York. Clinton said Cruz and Trump's statements about Muslims are "not only offensive, they're dangerous." (April 12) AP 25 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton hits Sanders on gun control record | 1:45 Democratic Presidential Candidate Hillary Clinton slammed Bernie Sanders on his gun control voting record during a round-table discussion in New York Monday. She says he's failed to take a strong stand against stopping the spread of firearms. AP 26 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Maryland Rep. Cummings Endorses Hillary Clinton | 2:03 Democratic presidential candidate Hillary Clinton picked up the endorsement of Rep. Elijah Cummings, who had remained neutral for months because of his role as top Democrat on the House Committee overseeing the Benghazi investigation. (April 10) AP 27 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: 'We Are a Nation of Immigrants' | 1:30 At a rally in Brooklyn, New York, Democratic Presidential Candidate Hillary Clinton championed equal pay for women and denounced anti-immigration stances she said have become the 'core' of the republican presidential candidates' campaigns. (April 9) AP 28 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Says Debate Over Qualification Silly | 1:06 Hillary Clinton spoke at a rally in Buffalo, New York where she's been heavily emphasizing the work she did in the region as state senator. She said that while she's been called a lot of things over the years, "unqualified is not one of them." (Apri AP 29 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton, Sanders Clash as Campaigns Shift to NY | 1:12 The race for the Democratic nomination took a negative turn, with front-runner Hillary Clinton and Bernie Sanders exchanging criticism over each other's qualifications for the presidency. (April 7) AP 30 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton questions Sanders' effectiveness | 1:34 Hillary Clinton is questioning Bernie Sanders' ability to get things done. The Democratic presidential candidate's comments came after a drubbing by Sanders in Wisconsin on Tuesday. (April 6) AP 31 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Talks Womens' Issues As Wisconsin Votes | 0:59 Hillary Clinton is stressing her fight for more rights for women, including equal pay, during a New York City campaign stop. (April 5) AP 32 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: Differences Between Parties are 'Stark' | 1:43 Democratic presidential candidate Hillary Clinton campaigned in upstate New York Monday night, less than two weeks before the state's April 19 primary. (April 4) AP 33 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton to Wisc. Voters: 'Many Feeling Left Out' | 1:37 Democratic presidential candidate Hillary Clinton told supporters in Wisconsin that she recognizes many voters are angry this year, and 'feeling left out.' Both parties hold their primaries in the Badger State on Tuesday. (April 2) AP 34 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hillary Clinton unveiling $10 billion plan | 1:46 Hillary Clinton is releasing a $10 billion plan aimed at revitalizing manufacturing in Syracuse, part of an effort to highlight her work as a senator from New York ahead of that state's primary later this month. (April 1) AP 35 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hillary Clinton Weighs In On Final Four, Kind Of | 0:43 US presidential candidate Hillary Clinton put her support behind the "home team" during a campaign stop in Syracuse on Friday. (April 1) AP 36 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton loses her cool, 'sick' of Sanders' lying about her | 0:17 In a heated moment after a campaign event Thursday, Democratic presidential candidate Hillary Clinton had a fiery exchange with a Greenpeace activist, saying she is "sick of the Sanders campaign" lying about donations from fossil fuel companies. (Ap AP 37 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Pledges to Fight Gun Violence in Milwaukee | 0:33 At gathering focused on gun control and police brutality, Democratic frontrunner is joined by ‘mothers of movement', including Sandra Bland's Hillary Clinton promised to continue to fight for tougher gun control on Tuesday during a campaign event th Wochit 38 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hawaii Democrats Caucus for Clinton, Sanders | 1:21 Hawaii Democrats went to the polls Saturday to vote in the state party's caucus vote. The vote was more like a primary, where those attending mark a ballot. The two main candidates vying for votes were Hillary Clinton and Bernie Sanders. (March 26) AP 39 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: 'US Can't Give Into Panic, Fear' | 2:45 Democratic presidential candidate Hillary Clinton says in the wake of the most recent attacks in Brussels, the US cannot give into panic and fear and that doing so plays into the hands of terrorists. (March 24) AP 40 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Slams GOP Rivals on Brussels Response | 1:32 Democratic presidential candidate Hillary Clinton addressed counter-terrorism efforts following Tuesday's attacks in Brussels, highlighting the severity of the threat of ISIS. She slammed her GOP rivals for their responses to the attacks. (March 23) AP 41 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hillary Clinton in Washington after Arizona Victory | 1:01 Democratic Presidential candidate Hillary Clinton spoke in Seattle on Tuesday, after winning the Arizona primary. She referred to the terror attacks in Belgium and called ideas from Republicans Donald Trump Ted Cruz wrong and dangerous. (March 22) AP 42 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Trump, Clinton victorious in Arizona primaries | 0:42 Donald Trump and Hillary Clinton are the projected winners of the Arizona Republican and Democratic primaries, respectively. 43 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Hillary Clinton addresses AIPAC lobby annual meeting | 1:11 Democratic presidential contender Hillary Clinton spoke at the powerful Jewish lobby AIPAC annual meeting on Monday.Video provided by AFP Newslook 44 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton: Can't be neutral about defending Israel | 2:37 Addressing the annual AIPAC meeting in Washington, Hillary Clinton told delegates that the US - Israel relationship is not negotiable and she will insist on making that bond stronger with each generation. (March 21) AP 45 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Analyst: Hillary Clinton Will Be The Nominee | 1:20 Hillary Clinton will win the Democratic nomination, according to Bill Galston of the Brookings Institution. Galston said Clinton must now unify her party between now and the Democratic Convention. (March 16) AP 46 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton's 'Scandal' Visit | 1:07 Actress Kerry Washington recalls when U.S. presidential candidate Hillary Clinton visited the set of her show, 'Scandal.' (March 16) AP 47 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton Wins Big on Primary Night | 2:34 Democratic presidential candidate Hillary Clinton in commanding position after Tuesday primary races, poised to become the first woman in U.S. history to win a major party nomination. (March 16) AP 48 of 49 Skip Ad Ad Loading... x Embed x Share HILLARY CLINTON ON THE CAMPAIGN TRAIL Clinton defeats Sanders in Ohio, N.C. and Florida | 1:23 Hillary Clinton defeated Bernie Sanders in Florida, North Carolina and Ohio on Tuesday and pushed for wins in two other Midwest primaries, aiming to lay the groundwork for a potential fall showdown against Republican Donald Trump. (March 15) AP 49 of 49 Last VideoNext Video Clinton: US Needs 'Renaissance in Manufacturing'
Clinton Slams GOP Ahead of Tuesday Primaries
Clinton to Trump: 'Come Out of Those Towers'
In Conn., Clinton Vows Changes to Gun Culture
Clinton Critiques GOP Language on Muslims
Clinton: 'We Have Just too Many Guns' in US
Clinton Supporters Call for Unity
Hillary Clinton Wins New York Primary
Clinton in New York: There's no place like home!
Clinton Appeals to Organized Labor in DC Speech
Delegates up for grabs on Primary Day in New York
Raw: Hillary Clinton Votes in New York Primary
New York Democrats Voice Opinions Before Primary
Clinton Hits Sanders on Sandy Hook Statements
Clinton Slams Trump, Cruz Ahead of NY Primary
Clinton: 'I Have No Time' for Partisanship
Clinton Pushes Affordable Housing in Harlem
Clinton, Sanders Clash Over Judgment in Debate
Clinton apologized for crime bill, but Sanders also supported it
Things got heated during 9th Democratic debate
Hillary Clinton Addresses White 'Privilege'
Clinton on pay gap: No discounts for being women
Clinton, de Blasio Perform Controversial Skit
Punchlines: How many ways can Bill ruin things for Hill?
Clinton: Trump and Cruz 'Offensive, Dangerous'
Clinton hits Sanders on gun control record
Maryland Rep. Cummings Endorses Hillary Clinton
Clinton: 'We Are a Nation of Immigrants'
Clinton Says Debate Over Qualification Silly
Clinton, Sanders Clash as Campaigns Shift to NY
Clinton questions Sanders' effectiveness
Clinton Talks Womens' Issues As Wisconsin Votes
Clinton: Differences Between Parties are 'Stark'
Clinton to Wisc. Voters: 'Many Feeling Left Out'
Hillary Clinton unveiling $10 billion plan
Hillary Clinton Weighs In On Final Four, Kind Of
Clinton loses her cool, 'sick' of Sanders' lying about her
Clinton Pledges to Fight Gun Violence in Milwaukee
Hawaii Democrats Caucus for Clinton, Sanders
Clinton: 'US Can't Give Into Panic, Fear'
Clinton Slams GOP Rivals on Brussels Response
Hillary Clinton in Washington after Arizona Victory
Trump, Clinton victorious in Arizona primaries
Hillary Clinton addresses AIPAC lobby annual meeting
Clinton: Can't be neutral about defending Israel
Analyst: Hillary Clinton Will Be The Nominee
Clinton's 'Scandal' Visit
Clinton Wins Big on Primary Night
Clinton defeats Sanders in Ohio, N.C. and Florida
Read or Share this story: http://usat.ly/1SnG0Cc ||||| Democratic presidential candidate Hillary Clinton points to members in the audience after speaking at the 2016 Legislative Conference of North America's Building Trades Unions in Washington, Tuesday,... (Associated Press)
Democratic presidential candidate Hillary Clinton points to members in the audience after speaking at the 2016 Legislative Conference of North America's Building Trades Unions in Washington, Tuesday, April 19, 2016. (AP Photo/Pablo Martinez Monsivais) (Associated Press)
NEW YORK (AP) — Front-runners Donald Trump and Hillary Clinton swept to resounding victories in Tuesday's New York primary, with Trump bouncing back from a difficult stretch in his Republican campaign and Clinton pushing tantalizingly close to locking up the Democratic nomination.
"The race for the nomination is in the home stretch, and victory is in sight," Clinton declared to cheering supporters.
Trump captured more than 50 percent of the vote in New York and was headed toward a big delegate haul in his home state, a commanding showing that keeps him on a path to the GOP nomination if he continues to win. He claimed at least half of the 95 delegates at stake Tuesday, and was likely to add to his tally in individual congressional districts.
A confident Trump insisted it was "impossible" for his rivals to catch him.
"We don't have much of a race anymore," he said during a victory rally in the lobby of the Manhattan tower bearing his name. He peppered his brash remarks with more references to the economy and other policy proposals than normal, reflecting the influence of a new team of advisers seeking to professionalize his campaign.
Clinton's triumph padded her delegate lead over rival Bernie Sanders and strengthened her claim to the Democratic nomination that eluded her eight years ago. In a shift toward the general election, she made a direct appeal to Sanders' loyal supporters, telling them she believes "there is more that unites us than divides us."
With 247 delegates at stake, Clinton picked up at least 104 while Sanders gained at least 85. Many remained to be allocated, pending final vote tallies
Sanders energized young people and liberals in New York, as he has across the country, but it wasn't enough to pull off the upset victory he desperately needed to change the trajectory of the Democratic race. Still, the Vermont senator vowed to keep competing.
"We've got a shot to victory," Sanders said in an interview with The Associated Press. "We have come a very long way in the last 11 months, and we are going to fight this out until the end of the process."
The fight for New York's delegate haul consumed the presidential contenders for two weeks, an eternity in the fast-moving White House race. Candidates blanketed every corner of New York, bidding for votes from Manhattan and the surrounding boroughs to the working class cities and rural enclaves that dot the rest of the state.
The nominating contests will stay centered in the Northeast in the coming days, with Connecticut, Delaware, Maryland and Pennsylvania all holding contests next week. Sanders spent Tuesday in Pennsylvania, as did Republican Sen. Ted Cruz, Trump's closest rival.
Cruz panned Trump's win as little more than "a politician winning his home state," then implored Republicans to unite around his candidacy.
"We must unite the Republican Party because doing so is the first step in uniting all Americans," Cruz said in remarks read off a teleprompter.
Trump needed a strong showing to keep alive his chances of clinching the GOP nomination before the party's July convention — and to quiet critics who say the long primary season has exposed big deficiencies in his campaign effort.
Having spent months relying on a slim staff, Trump has started hiring more seasoned campaign veterans. He's acknowledged that bringing new people into his orbit may cause some strife, but says the moves were necessary at this stage of the race.
Cruz is trying to stay close enough in the delegate count to push the GOP race to a contested convention. His campaign feels confident that it's mastered the complicated process of lining up individual delegates who could shift their support to the Texas senator after a first round of convention balloting.
Ohio Gov. John Kasich, the only other Republican left in the race, sought to add to his scant delegate total in New York and keep up his bid to play a long-shot spoiler at the convention. He bested Cruz on Tuesday and is refusing to end his campaign despite winning only his home state.
Trump's political strength, though he boasts of drawing new members to the party, has left some Republicans concerned that his nomination could splinter the GOP. Among Republican voters in New York, nearly 6 in 10 said the nominating contest is dividing the party, according to exit polls.
The surveys were conducted by Edison Research for The Associated Press and television networks.
Trump leads the GOP race with 756 delegates, ahead of Cruz with 559 and Kasich with 144. Securing the GOP nomination requires 1,237.
Among Democrats, Clinton now has 1,862 delegates to Sanders' 1,161. Those totals include both pledged delegates from primaries and caucuses and superdelegates, the party insiders who can back the candidate of their choice regardless of how their state votes. It takes 2,383 to win the Democratic nomination.
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AP writers Lisa Lerer, Julie Bykowicz, Emily Swanson and Steve Peoples contributed to this report.
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Follow Julie Pace at http://twitter.com/jpaceDC and Jonathan Lemire at http://twitter.com/JonLemire | Bernie Sanders had taken seven of the last eight states to vote prior to Tuesday, but Hillary Clinton pressed the reset button on Tuesday night: With more than 95% of the vote in, she has around 58% to 42%, giving her what the New York Times calls an "unexpectedly strong win" that deals a tough blow to Sanders. In terms of pledged delegates, USA Today reports that the 247 up for grabs is "a haul second only to California." Clinton will now take at least 135 of those delegates, with 104 for Sanders and the remainder still to be decided. "The race for the nomination is in the home stretch, and victory is in sight," Clinton told supporters. But Sanders, who hopes to win states such as Pennsylvania and Connecticut next week, has vowed to stay in the race. "We've got a shot to victory," he tells the AP. "We have come a very long way in the last 11 months, and we are going to fight this out until the end of the process." According to exit polls, Clinton performed strongly among women and black voters, as she had done in other states, while white men and voters under 45 favored Sanders. |
Since 1998 VA and DOD have been trying to achieve the capability to share patient health care data electronically. The original effort—the government computer-based patient record (GCPR) project—included the Indian Health Service (IHS) and was envisioned as an electronic interface that would allow physicians and other authorized users at VA, DOD, and IHS health facilities to access data from any of the other agencies’ health information systems. The interface was expected to compile requested patient information in a virtual record that could be displayed on a user’s computer screen. Our prior reviews of the GCPR project determined that the lack of a lead entity, clear mission, and detailed planning to achieve that mission made it difficult to monitor progress, identify project risks, and develop appropriate contingency plans. Accordingly, reporting on this project in April 2001 and again in June 2002, we made several recommendations to help strengthen the management and oversight of GCPR. Specifically, in 2001 we recommended that the participating agencies (1) designate a lead entity with final decision-making authority and establish a clear line of authority for the GCPR project, and (2) create comprehensive and coordinated plans that included an agreed-upon mission and clear goals, objectives, and performance measures, to ensure that the agencies could share comprehensive, meaningful, accurate, and secure patient health care data. In 2002, we recommended that the participating agencies revise the original goals and objectives of the project to align with their current strategy, commit the executive support necessary to adequately manage the project, and ensure that it followed sound project management principles. VA and DOD took specific measures in response to our recommendations for enhancing overall management and accountability of the project. By July 2002, VA and DOD had revised their strategy and had made some progress toward electronically sharing patient health data. The two departments had renamed the project the Federal Health Information Exchange (FHIE) program and, consistent with our prior recommendation, had finalized a memorandum of agreement designating VA as the lead entity for implementing the program. This agreement also established FHIE as a joint effort that would allow the exchange of health care information in two phases. The first phase, completed in mid-July 2002, enabled the one-way transfer of data from DOD’s existing health information system to a separate database that VA clinicians could access. A second phase, finalized this past March, completed VA’s and DOD’s efforts to add to the base of patient health information available to VA clinicians via this one-way sharing capability. The departments reported total GCPR/FHIE costs of about $85 million through fiscal year 2003. The revised strategy also envisioned the pursuit of a longer term, two-way exchange of health information between DOD and VA. Known as HealthePeople (Federal), this initiative is premised upon the departments’ development of a common health information architecture comprising standardized data, communications, security, and high-performance health information systems. The joint effort is expected to result in the secured sharing of health data required by VA’s and DOD’s health care providers between systems that each department is currently developing—DOD’s Composite Health Care System (CHCS) II and VA’s HealtheVet VistA. DOD began developing CHCS II in 1997 and has completed the development of its associated clinical data repository—a key component for the planned electronic interface. The department expects to complete deployment of all of its major system capabilities by September 2008. It reported expenditures of about $464 million for the system through fiscal year 2003. VA began work on HealtheVet VistA and its associated health data repository in 2001, and expects to complete all six initiatives comprising this system in 2012. VA reported spending about $120 million on HealtheVet VistA through fiscal year 2003. Under the HealthePeople (Federal) initiative, VA and DOD envision that, upon entering military service, a health record for the service member will be created and stored in DOD’s CHCS II clinical data repository. The record will be updated as the service member receives medical care. When the individual separates from active duty and, if eligible, seeks medical care at a VA facility, VA will then create a medical record for the individual, which will be stored in its health data repository. Upon viewing the medical record, the VA clinician would be alerted and provided access to the individual’s clinical information residing in DOD’s repository. In the same manner, when a veteran seeks medical care at a military treatment facility, the attending DOD clinician would be alerted and provided with access to the health information in VA’s repository. According to the departments, this planned approach would make virtual medical records displaying all available patient health information from the two repositories accessible to both departments’ clinicians. VA officials have stated that they anticipate being able to exchange some degree of health information through an interface of their health data repository with DOD’s clinical data repository by the end of calendar year 2005. While VA and DOD are making progress in agreeing to and adopting standards for clinical data, they continue to face significant challenges in providing a virtual medical record based on the two-way exchange of data as part of their HealthePeople (Federal) initiative. Specifically, VA and DOD do not have an explicit architecture that provides details on what specific technologies they will use to achieve the exchange capability; a fully established project management structure that will ensure the necessary day-to-day guidance of and accountability for the departments’ investment in and implementation of the exchange; and a project management plan describing the specific responsibilities of each department in developing, testing, and deploying the interface and addressing security requirements. VA’s and DOD’s ability to exchange data between their separate health information systems is crucial to achieving the goals of HealthePeople (Federal). Yet, successfully sharing health data between the departments via a secure electronic interface between each of their data repositories can be complex and challenging, and depends significantly on the departments’ having a clearly articulated architecture, or blueprint, defining how specific technologies will be used to achieve the interface. Developing, maintaining, and using an architecture is a best practice in engineering information systems and other technological solutions. An architecture would articulate, for example, the system requirements and design specifications, database descriptions, and software descriptions that define the manner in which the departments will electronically store, update, and transmit their data. VA and DOD lack an explicit architecture that provides details on what specific technologies they will use to achieve the exchange capability, or just what they will be able to exchange by the end of 2005—their projected date for having this capability operational. While VA officials stated that they recognize the importance of a clearly defined architecture, they acknowledged that the departments’ actions were continuing to be driven by the less specific, high-level strategy that has been in place since September 2002. Officials in both departments stated that a planned pharmacy prototype initiative, begun this past March in response to requirements of the National Defense Authorization Act of 2003, would assist them in defining the electronic interface technology needed to exchange patient health information. The act mandated that VA and DOD develop a real-time interface, data exchange, and capability to check prescription drug data for outpatients by October 1, 2004. In late February, VA hired a contractor to develop the planned prototype but the departments had not yet fully determined the approach or requirements for it. DOD officials stated that the contractor was expected to more fully define the technical requirements for the prototype. In late April, the departments reported approval of the contractor’s requirements and technical design for the prototype. While the pharmacy prototype may help define a technical solution for the two-way exchange of health information between the two departments’ existing systems, there is no assurance that this same solution can be used to interface the new systems under development. Because the departments’ new health information systems—major components of HealthePeople (Federal)—are scheduled for completion over the next 4 to 9 years, the prototype may only test the ability to exchange data in VA’s and DOD’s existing health systems. Thus, given the uncertainties regarding what capabilities the pharmacy prototype will demonstrate, it is difficult to predict how or whether the prototype initiative will contribute to defining the architecture and technological solution for the two-way exchange of patient health information for the HealthePeople (Federal) initiative. Industry best practices and information technology project management principles stress the importance of accountability and sound planning for any project, particularly an interagency effort of the magnitude and complexity of HealthePeople (Federal). Based on our past work, we have found that a project management structure should establish relationships between managing entities with each entity’s roles and responsibilities clearly articulated. Further, it is important to establish final decision- making authority with one entity. However, VA and DOD have not fully established a project management structure that will ensure the necessary day-to-day guidance of and accountability for the departments’ investment in and implementation of the two-way capability. According to officials in both departments a joint working group and oversight by the Joint Executive Council and VA/DOD Health Executive Council has provided the collaboration necessary for HealthePeople (Federal). However, this oversight by the executive councils is at a very high level, occurs either bimonthly or quarterly, and encompasses all of the joint coordination and sharing efforts for health services and resources. Since a lead entity has not been designated, neither department has had the authority to make final project decisions binding on the other. Further, the roles and responsibilities for each department have not been clearly articulated. Without a clearly defined project management structure, accountability and a means to monitor progress are difficult to establish. In early March, VA officials stated that the departments had designated a program manager for the planned pharmacy prototype and were establishing roles and responsibilities for managing the joint initiative to develop an electronic interface. Just this month, officials from both departments told us that this individual would be the program manager for the electronic interface. However, they had not yet designated a lead entity or provided documentation for the project management structure or their roles and responsibilities for the HealthePeople (Federal) initiative. An equally important component necessary for guiding the development of the electronic interface is a project management plan. Information technology project management principles and industry best practices emphasize that a project management plan is needed to define the technical and managerial processes necessary to satisfy project requirements. Specifically, the plan should include, among other things, the authority and responsibility of each organizational unit; a work breakdown structure for all of the tasks to be performed in developing, testing, and deploying the software, along with schedules associated with the tasks; and a security policy. However, the departments are currently operating without a project management plan for HealthePeople (Federal) that describes the specific responsibilities of each department in developing, testing, and deploying the interface and addressing security requirements. This month, officials from both departments stated that a pharmacy prototype project management plan that includes a work breakdown structure and schedule was developed in mid-March. They further stated that a work group that reports to the integrated project team has been given responsibility for the development of security and information assurance provisions. While these actions should prove useful in guiding the development of the prototype, they do not address the larger issue of how the departments will develop and implement an interface to exchange health care information between their systems by 2005. Without a project management plan, VA and DOD lack assurance that they can successfully develop and implement an electronic interface and the associated capability for exchanging health information within the time frames that they have established. VA and DOD officials stated that they have begun discussions to establish an overall project plan. Achieving an electronic interface that will enable VA and DOD to exchange patient medical records is an important goal, with substantial implications for improving the quality of health care and disability claims processing for the nation’s military members and veterans. In seeking a virtual medical record based on the two-way exchange of data between their separate health information systems, VA and DOD have chosen a complex and challenging approach that necessitates the highest levels of project discipline, including a well-defined architecture for describing the interface for a common health information exchange; an established project management structure to guide the investment in and implementation of this electronic capability; and a project management plan that defines the technical and managerial processes necessary to satisfy project requirements. These critical components are currently lacking; thus, the departments risk investing in a capability that could fall short of expectations. The continued absence of these components elevates concerns about exactly what capabilities VA and DOD will achieve—and when. To encourage significant progress on achieving the two-way exchange of health information, we recommend that the Secretaries of Veterans Affairs and Defense instruct the Acting Chief Information Officer for Health and the Chief Information Officer for the Military Health System, respectively, to develop an architecture for the electronic interface between their health systems that includes system requirements, design specifications, and software descriptions; select a lead entity with final decision-making authority for the initiative; establish a project management structure to provide day-to-day guidance of and accountability for their investments in and implementation of the interface capability; and create and implement a comprehensive and coordinated project management plan for the electronic interface that defines the technical and managerial processes necessary to satisfy project requirements and includes (1) the authority and responsibility of each organizational unit; (2) a work breakdown structure for all of the tasks to be performed in developing, testing, and implementing the software, along with schedules associated with the tasks; and (3) a security policy. The Secretary of Veterans Affairs provided written comments on a draft of this report and we received comments via e-mail from DOD’s Interagency Program Integration and External Liaison for Health Affairs; both concurred with the recommendations. Each department’s comments are reprinted in their entirety as appendixes I and II, respectively. In their comments, the officials also provided information on actions taken or underway that, in their view, address our recommendations. We are sending copies of this report to the Secretaries of Veterans Affairs and Defense and to the Director, Office of Management and Budget. Copies will also be available at no charge on GAO’s Web site at www.gao.gov. Should you have any question on matters contained in this report, please contact me at (202) 512-6240, or Barbara Oliver, Assistant Director, at (202) 512-9396. We can also be reached by e-mail at [email protected] and [email protected], respectively. Other key contributors to this report were Michael P. Fruitman, Valerie C. Melvin, J. Michael Resser, and Eric L. Trout. | A critical element of the Department of Veterans Affairs' (VA) information technology program is its continuing work with the Department of Defense (DOD) to achieve the ability to exchange patient health care information and create electronic medical records for use by veterans, active-duty military personnel, and their health care providers. While VA and DOD continue to move forward in agreeing to and adopting standards for clinical data, they have made little progress since last winter toward defining how they intend to achieve an electronic medical record based on the two-way exchange of patient health data. The departments continue to face significant challenges in achieving this capability. VA and DOD lack an explicit architecture--a blueprint--that provides details on what specific technologies will be used to achieve the electronic medical record by the end of 2005. The departments have not fully implemented a project management structure that establishes lead decision-making authority and ensures the necessary day-to-day guidance of and accountability for their investment in and implementation of this project. They are operating without a project management plan describing the specific responsibilities of each department in developing, testing, and deploying the electronic interface. In seeking to provide a two-way exchange of health information between their separate health information systems, VA and DOD have chosen a complex and challenging approach--one that necessitates the highest levels of project discipline. Yet critical project components are currently lacking. As such, the departments risk investing in a capability that could fall short of what is expected and what is needed. Until a clear approach and sound planning are made integral parts of this initiative, concerns about exactly what capabilities VA and DOD will achieve--and when--will remain. |
The standard of living of the elderly depends on total retirement income,which includes Social Security, pensions, income from assets, and earnings from employment. In addition, benefits from public assistance programs, such as Supplemental Security Income (SSI), and health insurance programs, such as Medicare, may also be relevant in assessing the standard of living of the elderly. Pensions generally supplement Social Security, which has a progressive benefit structure that provides higher relative benefits to lower earners. As a result, although private pensions account for only about one-tenth of the aggregate income of the elderly, they are an important source of retirement income for many households, particularly those in the middle to higher ranges of the income distribution. Recent research suggests that about two-thirds of households nearing retirement have rights to some pension income, but these amounts can vary widely. The ability to earn and receive retirement income under a voluntary, private pension system is the result of decisions made by both the employer and the worker within a legal and regulatory framework that has developed over time. The Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) of 1974, as amended, are the basis of pension law today. Employers make the decision to sponsor a plan and choose the features that it will include, taking into account that workers may have different preferences for pensions in comparison with other forms of compensation such as cash wages and health insurance. Workers also make numerous employment-related decisions over the course of their career, such as where to work, how much to work, and whether to change jobs, that can affect their ability to earn pension income. They also make decisions about how much to save for retirement and whether to preserve funds distributed from their plans. The result of employer and worker interactions in the marketplace is that not all workers will earn pension income and receive it in retirement. Among the most important reasons that employers sponsor pensions are the need to attract and retain a productive workforce and the tax advantages associated with pensions. Pensions can be a means of providing deferred compensation that may encourage workers to make a long-term commitment to the employer, thus reducing turnover and making for a more stable, productive workforce. But in deciding whether to offer a pension, companies must assess the nature of their particular workforce to determine if offering pensions is a necessary employment inducement. For example, some workers may view pensions as less important than cash wages or other benefits, particularly health insurance. For such workers, the employer may have little incentive to offer a pension. Employers also choose to sponsor pension plans because of the favorable federal tax treatment of pension contributions and investment returns. This tax treatment, particularly the deferral of taxation on invested income, is especially attractive to those facing higher marginal tax rates, such as some business owners and higher-paid employees, and can be an important incentive to sponsor a plan. Employers also consider the benefits of offering a pension plan in comparison with its overall cost. The major cost of the pension to the employer will depend on the contributions necessary to finance or fund the pension. Other costs involve the administration of the plan, such as record keeping, calculation of benefits, outside administrative help and advisers, communication with employees, investment management fees, and compliance with government rules and regulations. The result of weighing the benefits and costs of offering a plan is that not all employers will find it desirable to sponsor a pension plan. For example, compared with medium and large employers, small employers are less likely to sponsor a pension plan. Small businesses may face greater uncertainty, especially with regard to profitability, and may face cost pressures that can affect their ability to offer compensation packages that compare favorably with those offered by larger, more stable firms. While small businesses often cite the cost of pensions as an obstacle to sponsorship, surveys suggest that the firm’s lack of profitability and employee preferences are also important obstacles. An employer has discretion to determine which workers will be covered by its pension plan, and the employer’s plan design decision may result in certain types of workers’ not having the opportunity to participate. In designing the plan, the employer may cover employee groups on the basis of objective business criteria, such as pay (hourly or salaried), job location, or job categories. An employer may have one plan to cover a wide range of categories of workers, or it may have separate plans for different groups depending on business objectives. The employer is also bound by a federal rule on eligibility that covers all pension plans. Under this rule, a pension plan may exclude employees younger than age 21 or those who have less than one year of service from participating in the plan. Plans that seek tax-qualified status must also satisfy a set of “nondiscrimination” rules that seek to ensure that the plan design does not exceed certain limits in the extent to which it favors highly compensated employees in participation and benefits. Even so, in addition to age and service requirements, the nondiscrimination rules may permit a firm to exclude between 30 to 80 percent of the non–highly compensated workers from the plan. A worker can be offered either a defined benefit plan or a defined contribution plan. Some workers may participate in both types of plans if their employer offers more than one type of plan. Figure 1 shows that defined contribution plans account for most of the growth in pension plan participation since the mid-1970s. Under the typical formula used for defined benefit plans, the annual (or periodic) increment in benefits earned (benefit accrual) tends to increase over the worker’s career with the employer, which makes this type of plan advantageous for workers who stay with one employer over their working careers. Under a defined contribution plan, the benefit accumulation each period may fluctuate over the course of the worker’s career; frequently, however, such accounts are depicted in terms of an average or steady return over the worker’s tenure with the employer, making the accumulation pattern more even in comparison with a defined benefit plan. This means that younger or shorter-tenured workers may have higher benefit accumulations compared with the benefits they would accrue under a traditional defined benefit plan. Employers make other decisions about how pension benefits will accrue and be distributed. These decisions are subject to legal requirements. ERISA sets limits on annual contributions and benefits that qualified retirement plans may provide for each participant. These requirements are generally intended to limit the tax benefits provided through pensions, particularly to highly compensated individuals. Separate limits exist for defined benefit and defined contribution plans. In addition, employers must ensure that their plans comply with nondiscrimination rules that seek to balance benefit accruals of highly paid participants with those of non–highly paid participants by specifying the extent to which the benefit accruals of, or contributions made for, highly paid workers can exceed those of non–highly paid workers. Vesting provisions specify when workers acquire the irrevocable right to pension benefits. ERISA requires a plan to adopt vesting standards at least as liberal as one of the following schedules: full (or “cliff”) vesting after five years or gradual vesting over seven years, except that matching contributions must fully vest within three years or gradually vest over five years. These rules affect how and when pension benefits will be paid out to workers. Pension plans provide for distribution of accrued benefits in the event of the worker’s retirement, death, disability, or other severance of employment. Present law limits the circumstances under which plan participants may obtain preretirement distributions. Defined benefit plans typically provide benefits in the form of an annuity, which provides benefits throughout the period of retirement, and generally have age and service provisions that determine when an employee becomes eligible for receipt of benefits. Employers may also allow their workers to elect to receive pension payments as a lump sum. Because defined contribution plans are not required to offer annuities, lump sum distributions are typical and raise concerns about whether pension benefits will be preserved throughout retirement. The decisions that workers make also play an important role in determining how much pension income they will earn and receive in retirement. When a worker accepts employment, he or she accepts a compensation package that may or may not include a pension. Many workers may prefer cash wages or other benefits, such as health insurance, to pension benefits. The extent to which the worker values the pension component of compensation depends on many individual factors, including how aware he or she is about the need for future retirement income. Some workers also decide how long to remain employed by the plan’s sponsor, and this decision determines whether they will earn pension income. Workers who stay with a plan sponsor for a number of years are more likely to meet the vesting requirements and to accrue benefits. For some plans, such as 401(k) plans, workers must also decide to participate, how much to contribute, and how to invest the assets in the plan.Workers who exhibit less attachment to the workforce may be less likely to become covered and participate in the plan. Even if a worker earns pension benefits, he or she must make decisions that determine whether these savings will contribute to their standard of living in retirement. When workers become eligible to receive distributions from a plan—either preretirement or upon retirement—they are faced with a choice of whether to preserve the distribution in a form that could provide income over their remaining lifetime, such as by transferring the funds to an Individual Retirement Arrangement (IRA) or choosing an annuity. The option of cashing out a lump sum distribution from a pension plan without rollover to an IRA raises concerns about future retirement income. Lump sum distributions can have advantages, because they allow flexibility for workers who have high-priority needs such as medical treatment, purchasing a home, or investing in a business. Lump sums distributions may also make sense when the amount is small and can be invested more profitably elsewhere. The potential disadvantage of lump sums distributions is that the assets may not be preserved for retirement income, as would be the case with a rollover to an IRA or purchase of an annuity. However, the importance of the lump sum issue to retirement income adequacy is the subject of debate and continuing research. Some see a problem given the number of workers taking preretirement lump sums without rollover to an IRA. However, some research has concluded that the impact of this practice on retirement income is very small, since these workers tend to have small account balances. Other research shows that larger sums generally are preserved through rollover into an investment account and that the proportion of workers cashing out lump sums is declining. Under a voluntary private pension system, the linkage between work, pension coverage, and the receipt and level of pension income in retirement is complex and depends on an array of factors, such as employer plan sponsorship and plan design, the framework of government rules, and worker decisions and choices over a lifetime. The result of employer and worker interactions in the marketplace is that not all workers will earn and receive pension income in retirement. Research suggests that some of the demographic characteristics of those who lack pension income in retirement are similar to the characteristics of workers who lack pension coverage during their working years. For example, those without pension income in retirement are more likely to be single, to be women, and to have low levels of education. But data on pension coverage are only a partial indicator of future pension receipt. The receipt of pension income involves factors that span a worker’s career, and it is difficult to predict whether any particular worker currently in the labor force will ultimately receive a pension benefit. However, available research suggests that those who accumulate no pension income, or relatively low pension income, are more likely to include the following: Workers employed by small firms. Compared with medium and large employers, small employers are less likely to sponsor a pension plan. As table 1 shows, the pension sponsorship rate drops dramatically as firm size gets smaller—86 percent of firms employing more than 1000 workers offer pensions, while only 13 percent of firms with fewer than 10 employees offer pensions. Figure 2 illustrates that worker participation in pension plans is lower for those employed by small firms. Workers employed part time or part year. Employers are less likely to provide pension coverage to part-time, seasonal, and contingent workers. For example, recent data show that about 60 percent of workers employed full time and year round have some form of pension coverage, but only 21 percent of part-time workers have pension coverage. Workers with low earnings. Low earners are less likely than middle and high earners to be offered a pension plan and participate when a plan is offered. As figure 3 shows, pension participation varies by earnings levels ranging from over 70 percent participation for the top earning group to about 30 percent for the lowest earners. For those who are participants, some plans that are integrated with Social Security permit a reduction in pension benefits for the lowest earners to offset their proportionally higher Social Security benefits. Workers who frequently change jobs over the course of a career. Even “covered” workers who frequently change jobs can fail to accrue pension wealth for a significant fraction of their working lives owing to eligibility rules or to vesting rules and the resulting forfeiture of nonvested contributions or accruals. In addition, under defined benefit plans, the annual benefit accrual may be small relative to that for longer-service workers because of the age- and service-weighted features used in these plans. Finally, many plans provide for lump sum cash-outs of accounts or accruals, which often are not rolled into other retirement savings vehicles. Workers who place little value on saving. Some workers, either by preference or from lack of knowledge, may not be predisposed to saving or to committing to saving over the long term for retirement. The determinants of saving behavior are not completely understood, but it appears that inadequate retirement saving occurs at all income levels (see app. 2). Concerns remain about the ability of workers with these characteristics to earn pension income and receive it in retirement. The federal government has several policy tools to provide incentives for expanding pension coverage, and various reforms to pension rules have been enacted with the aim of protecting and improving pension benefits for workers. Efforts to further improve coverage and benefits generally involve incremental reforms within the existing framework of the voluntary pension system. Traditional reforms to the voluntary, single-employer-based pension system may have limited potential to significantly expand pension coverage and improve benefits for workers who traditionally lack pensions. Reforms aimed at encouraging plan sponsorship have focused on improving tax incentives and reducing the burden of pension regulation on small employers, but the effect of reforms aimed at increasing pension sponsorship and coverage may be offset by other policy actions. Also, numerous proposals attempt to directly affect pension coverage and benefits by revising the framework of rules governing pensions. Past reforms to these rules, such as improved vesting, and trends in plan design, such as the enhanced portability and accrual patterns associated with defined contribution plans, suggest that more workers and their spouses could receive pension income in the future. But the responses of employers and workers to further rule revisions may offset some of the revisions’ intended effect. Some analysts question whether additional reforms to the voluntary, employer-based pension system can significantly expand pension sponsorship and increase coverage for workers traditionally lacking pensions and improve benefits for workers with pensions. Much of the pension policy debate is concerned with the issue of how to increase pension plan sponsorship, particularly among small employers, as a basis for fostering increases in worker coverage and participation and for providing opportunities to earn pension benefits. The major policy tools to encourage pension sponsorship include increasing the tax preferences for pensions and simplifying pension regulations, and these tools are aimed at making it easier for employers to decide to sponsor plans. Tax incentives are an important tool to encourage employers to provide pensions. The success of tax incentives to encourage pension sponsorship has been questioned, however, in part because data show that only about half of the workforce is covered by a pension. At least two important factors may limit the effect that tax incentives provide for pension sponsorship. First, tax regulations limit employers’ ability to direct tax preferences to the higher-paid employees who likely most value pensions. As a result, recent pension reform efforts typically have been aimed at relaxing these limits on pension tax preferences. Second, marginal tax rates have been lower in recent decades, which may have reduced the value of pensions to workers and thus the incentive for employers to sponsor or expand pensions. The progressive structure of income tax rates, that is, levying higher marginal tax rates as income increases, makes the benefits of the tax preference for pensions relatively greater for higher-income workers who pay higher marginal tax rates than for lower-income workers. Thus, this tax preference provides an incentive for owners and officers of firms to sponsor a pension plan for themselves and their higher-income employees. In turn, because sponsors may also want to provide pension benefits for other workers in the firm, and because pension law encourages plan sponsors to extend pensions broadly to their work force, these tax incentives may result in increased worker coverage. Some pension regulations, such as contribution limits and nondiscrimination rules, are designed to limit the use of tax preferences and to ensure that they do not benefit specific groups of workers, typically the higher paid, disproportionately; however, these regulations may reduce the incentive for employers to offer pensions. As these pension rules are made more stringent, the incentive may be further reduced. Relaxing limits and nondiscrimination rules is viewed by many employers as improving incentives to sponsor and expand plans. While such changes may lead to increased retirement savings by some workers, it is not clear whether they can significantly improve pension coverage and benefits for workers who traditionally lack pensions. Workers advocates may also view such changes as reducing the equity with which pension benefits are provided among workers. In addition, during the last two decades, marginal income tax rates have been lowered, which may have reduced the tax incentive to sponsor pensions. Reagan and Turner studied the pattern of marginal rates during the 1980s to determine whether decreases in marginal tax rates have reduced pension coverage. They found that, on average, a decrease of one percentage point in the marginal tax rate is consistent with a decline of 0.4 percentage points in the worker coverage rate. Thus, they conclude that declines in marginal tax rates appear to have lessened the incentives for plan sponsorship. Some reforms have sought to simplify the regulations imposed on qualified pension plans, so that business owners will be more likely to sponsor plans. Government involvement in pensions generally seeks to promote protection of employee benefit rights. Over time, however, with the enactment of new legislation and subsequent regulations, pensions have become more complex and costly to administer. Employers often argue that the burden of complying with pension regulations is excessive to the point of discouraging plan sponsorship, thus limiting the opportunity to increase coverage. The cost of sponsoring a pension plan can be an important deterrent to sponsorship in the small business sector. As a result, there have been calls for “pension simplification” to reduce the administrative complexity and cost of pensions while retaining the flexibility to design pensions that meet employers’ needs. Proposed solutions generally involve reducing or eliminating various requirements with which sponsors must comply.Worker and public policy advocates, however, seek plan designs that improve worker coverage and benefits. Policymakers have sought to balance these competing demands by adopting reforms that reduce the legal and regulatory requirements on plan sponsors if they adopt specific plan designs that expand coverage to more workers and specify employer contributions. Two examples of pension simplification reforms are the creation of the Simplified Employee Pension (SEP) and the Savings Incentive Match Plan for Employees (SIMPLE). Created in 1978, a SEP is essentially an IRA that an employer provides to each eligible employee. The employer is subject to minimal reporting requirements and is not subject to nondiscrimination rules. Although employers are not required to contribute to an employee’s SEP, when employer contributions are made they must be distributed as a uniform percentage of pay to all employees. In 1996, Congress also instituted a new plan design, SIMPLE, that allows workers to defer a portion of their salary. While SIMPLEs are also exempt from certain nondiscrimination rules and reporting requirements, the employer must match the employee’s elective contributions according to a specified formula or provide a 2 percent contribution for all eligible employees. Although plan designs such as SEP and SIMPLE offer some potential for increasing small business plan sponsorship, it is not clear that this general approach to pension simplification can make significant strides toward increasing plan sponsorship further among small employers or increasing worker coverage in that sector. Surveys indicate that some small employers remain unfamiliar with the availability of simplified plan designs. Moreover, the relief from many requirements and the benefits offered by such alternatives may not be sufficient to offset the cost or burden of offering them, and small employers may still be unwilling to sponsor plans given business conditions or worker preferences. In addition to reforms aimed at increasing pension plan sponsorship, various reforms attempt to improve pension coverage and benefits by modifying the framework of rules governing pensions and the process that workers must navigate in earning pension income. Past and proposed reforms to eligibility, coverage, and participation provisions attempt to increase the number of workers who have the opportunity to participate in a pension plan, particularly workers who tend to have lower earnings. Reforms to vesting provisions could provide another means of helping workers gain the opportunity to earn pension income and possibly increase the total amounts that they accrue. Similarly, reforms to the regulatory provisions that set conditions on plan benefit designs, such as limits and nondiscrimination rules, as well as more direct specification of allowable plan designs, could affect how much workers accrue through their pension plans. Reform proposals that affect the distribution of accrued pension benefits tend to revolve around the issue of preretirement lump sums and whether they will contribute to workers’ retirement income. Another issue arising from the trend toward defined contribution plans concerns the choices that workers will make regarding their investments and whether they will preserve their accumulations to provide lifetime income in retirement. But it is not clear whether most of these reforms can significantly affect coverage or benefits because of offsetting factors associated with employer or worker behavior. Plan eligibility provisions allow the employer to limit participation among younger workers or among those who do not work full time; further restrictions on these provisions could provide these workers with the opportunity to participate in a plan. However, employers may have little incentive to extend eligibility to workers with generally higher turnover, and changing these provisions could raise compensation costs or conflict with worker preferences in compensation. Because pension plans are defined for specific employee groups, job locations, or job categories, requiring employers to expand coverage and give greater numbers of workers the opportunity to participate in a plan may be difficult. As a result, direct efforts to improve coverage may focus on the level of a worker’s compensation by requiring that plans cover more workers who are not highly compensated. This is typically accomplished by modifying nondiscrimination rules (minimum coverage rules) or nondiscrimination testing rules. But improving coverage in this manner could conflict with the desire of the employer to design its plan to meet business needs and to direct compensation to its most valued employees. Participation reforms seek to ensure that workers who historically have had low participation rates, such as low-income workers, participate in pension plans. Some proposals to encourage participation in 401(k) plans would automatically enroll workers at the time of employment and would require them to choose to opt out of the plan if they so desire. Some plans have instituted such provisions, and research suggests that automatic enrollment does increase participation. Research has also shown that individuals enrolled in this way tend to exhibit inertia with regard to the amounts that they contribute, staying with the default contribution rates and, in their investment choices, staying with conservative investments such as money market funds. One automatic enrollment plan design, where workers agree to save a portion of their future salary increases, has shown promising results. Vesting reforms seek to give workers rights to their pension accruals more quickly by making vesting periods shorter or even immediate. Previous reforms to vesting requirements appear to have substantially improved the percentage of plan participants who are vested. Also, the movement toward 401(k) plans, which have immediate vesting of employee contributions, helps address concerns about younger and higher-turnover workers. Also, EGTRRA provides for faster vesting of matching employer contributions. From an employer’s perspective, shorter or immediate vesting can increase the cost of providing pensions. As a result, the scope for further improvements in vesting may be limited, because employers might prefer to retain or simplify the existing rules and the flexibility that these rules provide to design pensions to meet business objectives and limit compensation costs. Some workers, such as those with lower earnings or who change jobs frequently, are less likely to earn pension benefit accruals. Improving accruals for mobile workers generally means smoothing out the accrual pattern across the factors that are important in a defined benefit plan, namely, age, length of service, and salary. For example, granting higher accruals for early years of service and smaller accruals for higher tenure could foster the goal of providing higher accruals to the lower-paid, shorter-service workers. To some degree, the movement toward defined contribution and cash balance plans has alleviated concerns about greater accruals for these types of workers. Other means of inducing more even accrual patterns could include strengthening nondiscrimination rules by altering the tests to encourage greater accruals for individuals who are not highly compensated. Consistent with the theme of pension simplification, some reformers suggest that the pension system should allow fewer plan designs. However, the goal of providing more even accruals for all workers can conflict with the desire of employers for flexibility in benefit design and their ability to direct compensation to their most valued employees. Preservation reforms address the issues of preretirement lump sum distributions and spousal rights in defined contribution plans. Workers who roll over a lump sum distribution into an IRA or another defined contribution plan can preserve the funds in a tax-deferred arrangement; this may provide more assurance that the pension saving will be preserved for retirement. As a result of concerns that lump sums may be consumed rather than saved, proposals have been made to place more restrictions on them. One option is to increase the penalty for not rolling the funds over into an IRA or another qualified retirement plan. Another option is simply to require that the funds be rolled over. EGTRRA generally requires a rollover to be automatic unless a participant elects a lump sum. This provision will go into effect when regulations are finalized by the Department of Labor. Such measures could improve benefit preservation, but some research suggests that greater restrictions on the use of lump sums may decrease workers’ willingness to participate in 401(k) plans. Another important issue concerns the rights of spouses regarding distribution from defined contribution plans. While defined benefit plans are required to offer an annuity with a provision that the spouse be able to approve the form of distribution, defined contribution plans are not generally required to offer an annuity option. Providing such an option could affect the cost of administering the defined contribution plan. Key factors that affect workers’ benefit security during the preretirement period involve the prudent investment of pension assets and workers’ decisions about distributions from their plans. Pension plans are protected by ERISA fiduciary rules, and most defined benefit plan participants’ benefits are protected by PBGC pension insurance. Although defined benefit plans are subject to a rule that no more than 10 percent of plan assets can be invested in the securities of the employer, this rule does not apply generally to defined contribution plans. In the past and more recently, proposals have been made to apply restrictions on employer stock to all defined contribution plans or specifically to 401(k) plans, with the aim of reducing the risk that participants may bear. However, restrictions on investment in employer securities could reduce opportunities for workers to earn retirement income and make it less attractive for employers to contribute matching funds to 401(k)s. The trend toward defined contribution plans and increasing individual responsibility for retirement raises a general concern with regard to whether workers have sufficient knowledge and information regarding retirement planning and such matters as the investment of plan assets, preserving distributions prior to retirement, and assuring that income will be available throughout the retirement period. Some proposals would allow employers to provide plan participants with investment advice regarding the participant-directed assets in their 401(k) plans from financial service firms that administer such plans. However, concerns have been raised that such proposals would not adequately protect plan participants from potential conflicts of interest by investment advisors who also provide other services to their plan. Some pension plans are already acting to ensure that their participants have access to necessary information. The growth of 401(k) plans, increased amounts of information provided through financial and insurance entities, and general economic and social trends may be encouraging workers to increase their knowledge about saving, investment, and retirement. Also, new strategies for improving worker knowledge about retirement planning are being examined. Although a variety of reforms attempt to encourage plan sponsorship and improve pension coverage and benefits, several analysts note that the ability of the voluntary, employer-based pension system to significantly expand pension sponsorship and extend coverage to workers may be limited. In particular, one study concluded that, at best, legislative changes are capable of extending coverage to a quarter to a third of uncovered workers, with actual results likely to be considerably lower.Consistent with such results, some question whether additional reforms will have significant results for workers who traditionally lack pensions, particularly those with low incomes, since these reforms offer only incremental changes to the voluntary, single-employer pension system. As a result, some reformers suggest proposals that move beyond the voluntary, single-employer private pension system. Three broad categories of reform approaches outside the single-employer, voluntary pension system have been advanced to improve worker coverage and retirement income. These categories are (1) pooled employer reforms, (2) universal access reforms, and (3) universal participation reforms. Pooled employer reforms focus on increasing the number of firms offering pension coverage through centralized third-party administration. Pooled employer plans aim to increase worker coverage and improve pension portability, but there are limits to the receptiveness of employers to pooled employer plans given the employer’s loss of control of plan design and concern with cost and administrative requirements. Universal access reforms attempt to increase retirement savings by making payroll retirement saving accounts available to all workers without mandating an employer contribution. However, these reforms raise concerns about the administrative burden placed on employers and, because the reforms rely on employee contributions, about the difficulty faced by workers, particularly low-income workers, in setting aside money for retirement. Universal participation reforms are intended to ensure coverage and retirement income for all workers by mandating pension availability and participation, similar to the existing Social Security system. Reforms based on universal participation raise concerns about increases in employer administrative burden and because of their broad potential economic effects on labor cost. Table 2 provides examples of these three approaches. Existing pooled employer plans, which include multiemployer and multiple-employer plans, cover about 12 percent of all pension plan participants. Proposals advancing the pooled employer model promote establishing these plans in more industries and encourage small employer membership. Advocates of pooled employer plans maintain that the advantages of the plans’ portability, their industry or trade focus, and their low administrative cost make them a viable approach for increasing pension coverage, particularly to employees of small businesses. Others contend that little incentive exists for employers to join a pooled employer plan, as they must sacrifice control of plan design and costs. In the view of these critics, existing alternatives such as 401(k) plans offer portability and low administrative cost and are even easier to administer. Collectively bargained pooled employer plans exist already in many industries and trades. These multiemployer plans, in which participants can negotiate the plan characteristics, must be jointly governed by management and labor representatives. Since their inception in 1929, these plans have been advanced by labor unions and have developed a variety of benefit structures. Usually, multiemployer plans provide pension coverage to labor union workers from the same industry or trade. Although most are defined benefit plans, multiemployer defined-contribution plans do exist, and hybrid models have developed where the employer’s contribution and the worker’s benefit are both specified. Non-collectively-bargained pooled employer plans, or multiple-employer plans, also exist and are normally administered by a professional or trade association. For example, the Teachers Insurance Annuity Association and College Retirement Equities Fund (TIAA-CREF) offers a multiple- employer plan organized around education and research professions. Employers, such as member colleges and universities, make contributions for their employees. TIAA-CREF offers a defined contribution plan, in which contributions are accumulated over a career and paid out at retirement, often as an annuity. Proposals advancing pooled employer plans would include both proposals that would facilitate collectively bargained plans and proposals that would advance development of professional and trade association plans. One proposal would create a model small-employer group pension plan with minimal administrative responsibilities. Other proposals would provide tax incentives to employers to encourage participation in pooled employer arrangements. Another proposal would make changes in income tax law to allow professional and trade associations to be treated as employers for purposes of sponsoring pooled employer pensions or health plans for their members. Advocates of pooled employer plans reason that both employers and employees benefit from the portability and trade focus of this arrangement. The portability of the plans improves worker pension receipt by allowing short-service workers to accumulate pension benefits with different employers. This portability diminishes the effects on pension accruals of company ownership changes and failures, because workers can continue to participate with new or reorganized employers. The trade focus enhances the advantages of portability, because even though workers may change employers, many stay in the same industry or trade. Similarly, employers benefit by having a pool of workers with previous work and training in their industry or trade, and pooled employer plans are likely to have pension features, such as early retirement provisions, to meet the needs of a common industry or trade. Advocates also note that workers in small business, in particular, could benefit from the pooled employer model because small employers generally have high rates of employee turnover and high business termination rates. By lowering the cost of administering a pension plan, pooled employer plans also offer employers a more cost-effective way of providing pensions to their employees. Because they provide economies of scale and reduce employer costs, such plans are easier for some employers to offer. Advocates note that pension administrative costs per employee are normally higher for small employers who have smaller numbers of workers over which to spread implementation and administrative costs. Pooled employer pension plans spread these costs over a larger number of workers. Despite these possible benefits, some pension experts have expressed doubt that pooled employer models can be widely expanded beyond current levels, because pooled employer plans are still dependent on voluntary employer action. They note that pooled employer plans have been available for many years, yet small businesses have shown little interest in them. Employers may be less likely to adopt pooled employer plans, because they have little control over plan design and are less able to assure that the plan meets their needs. Further, little evidence exists that proposals such as employer tax credits will lead to adoption of pooled employer plans by businesses without pension plans. Moreover, employers may have little incentive to choose a pooled-employer defined-benefit plan instead of a single-employer 401(k) plan, which also is portable and offers low administrative costs. Recognizing that many employers do not provide pension plans to workers and that some employees with coverage need additional retirement savings, some analysts and policymakers embrace reforms to assure universal access to tax-favored retirement savings accounts such as IRAs.Although legislation has created different IRA types and provisions, workers generally establish IRAs outside the workplace. Proposals that would expand universal access accounts beyond IRAs vary in coverage and in incentive features such as tax credits to encourage employer or employee participation. Many of these proposals seek to provide employees with a payroll-based opportunity for retirement saving. Some form of IRA is currently available to all workers. ERISA introduced the IRA in 1974 as a means of promoting retirement savings for workers without employer-sponsored pensions. Since then, legislation has modified provisions and created new types of tax-advantaged IRAs. Today, traditional IRAs can be purchased with pretax dollars if a person is not covered by a pension plan or if his or her income is less than specified amounts. IRAs can also be purchased with after-tax dollars, regardless of income. For these traditional IRAs, earnings are taxed as income at retirement. Reforms advancing universal access accounts aim to facilitate increased retirement saving. To increase the likelihood of worker participation, most proposals call for payroll-based accounts. Some would offer universal access accounts to employees regardless of other pension coverage; others would apply only to employees without pension coverage. Some proposals would require employers to establish the accounts, while other proposals would make the accounts available at an employer’s or employee’s election. Also included in proposals is the option of a government-managed payroll account as an alternative for employers, particularly small employers, who want to minimize their administrative involvement with employee accounts. To encourage employee saving, some proposals include incentives such as tax credits and matching of employer contributions. Advocates of universal access accounts reason that requiring such accounts would facilitate employee and employer contributions even without a required employer contribution. They reason that workers are more likely to routinely set aside retirement savings when they have a payroll deduction account and when they receive employer contributions to that account. Further, employers may be more likely to make contributions when there is an existing account. IRA experience may be useful in predicting the effects of universal access accounts. Although an estimated 42 percent of households owned some type of IRA as of May 2001, evidence suggests that IRAs serve more as a parking place for distributions from other tax-qualified retirement savings plans than as accounts for active retirement saving. Rollover contributions from other tax-qualified retirement accounts are estimated to represent more than 90 percent of current IRA contributions. A study of a large sample of individual tax returns found that only about 5 percent of individuals reporting income made a contribution to an IRA in 1995. Studies show that low-income workers have the lowest rate of IRA saving and that the rate of contributions to IRA accounts rises as incomes rise.In 1995, only one percent of those with income of less than $10,000, compared with 17 percent of those with income more than $100,000, contributed to an IRA. Observers note that the low rate of IRA saving by low-income workers is not surprising in that low-income workers have the smallest amount of disposable income for saving. Further, low-income workers obtain the least tax savings from tax-deferred treatment, because they pay the lowest marginal tax rates. However, universal access account proposals that include tax credits or matches by the government or employer, based on the contributions of the worker, attempt to improve saving incentives for lower earners. Critics of universal access reform proposals argue that universal access accounts are not the best way of increasing retirement saving. They suggest that such proposals may increase the administrative burden on employers, particularly small employers, and create numerous small accounts with relatively high administrative expenses. Experts disagree about whether 401(k) plan accounts or IRA accounts have increased personal saving. They note that lower-income workers face lower tax rates and therefore benefit less from the tax-deferred nature of the accounts. In addition, these critics note that such plans shift investment risk to the individual and that lower-income workers have little investment management experience. Some are concerned that individual accounts could supplant existing private pensions, resulting in employers’ feeling less need to offer traditional pension benefits and leading to a possible drop in national saving. The proposals also entail substantial design challenges to ensure that universal accounts are effectively implemented and administered. These challenges include determining how records would be kept, what investment options and controls would be offered, and when workers would gain access to savings in the accounts. Although reforms requiring universal participation in a pension system are aimed at improving workers’ retirement income, concerns exist about the broad economic effects of such reforms. Three primary types of reform employ universal participation: (1) reforms mandating private pension coverage in addition to Social Security, (2) reforms increasing base-level Social Security benefits, and (3) reforms establishing mandatory Social Security individual savings accounts. Mandatory pension proposals differ in specific provisions but generally require pension coverage and employer contributions for all employees. Under mandatory pension proposals, employers would be required to establish pension accounts and make contributions for workers. Proponents of these reforms suggest that mandatory pensions would increase private retirement saving, particularly for low-income workers, and would take advantage of the existing private pension infrastructure. Proposals mandating employer pensions aim to provide retirement income as a second tier to Social Security, but critics suggest that if these proposals are implemented, they may have adverse impacts on the national economy because of the increased cost of labor and potentially increased layoffs. Several mandatory pension proposals have been suggested. For example, the 1981 report from the President’s Commission on Pension Policy recommended an advance-funded minimum universal pension system (MUPS). The commission recommended that employers establish pension accounts for all employees and contribute a minimum of 3 percent of pay annually. The MUPS proposal required immediate vesting and prohibited integration with Social Security. Under MUPS and other mandatory pension proposals, employers would be required to establish pension accounts and make contributions for workers. Another, more recent proposal required employers to provide uniform pension coverage for all employees in a given line of business but allowed for workers with income below a certain threshold to be excluded from employer-sponsored coverage and to instead receive their retirement income from the government. To help ensure employer participation, this proposal offered increased employer flexibility in benefit and contribution limits. Proponents of a mandatory pension system reason that mandatory pensions can take advantage of the existing private pension infrastructure and increase national saving by providing a retirement saving mechanism to more workers. Low- and moderate-income workers represent a disproportionate share of those without pensions, so mandating pension coverage would increase the retirement incomes of these workers, who generally lack retirement income other than Social Security. Because of the low rate of retirement and other savings, particularly for lower-income workers, some proponents of a mandatory pension system believe that mandating pensions would increase personal retirement savings. Mandating pensions would increase pension coverage provided by small employers, where it has been difficult to increase coverage. In addition, a mandatory pension system could take advantage of the existing private sector pension system infrastructure. However, critics of mandatory universal pension proposals suggest that such plans may adversely affect both employees and employers. Mandatory pensions may require workers to receive compensation in the form of pension benefits when they might prefer cash wages, which may be a particular concern of low-income workers. Mandatory pensions would reduce workers’ ability to allocate earnings to other valuable uses, such as health insurance, housing, and education. Employees with current pension coverage could be adversely affected if employers chose to reduce benefits to the mandatory minimum. In addition, mandatory pensions could have negative consequences for employers, increasing employers’ costs for pension implementation, administration, and contributions. Mandatory pensions could also restrict employers’ ability to design pensions to meet their business objectives. Such reforms raise concerns about the increase in employers’ administrative burden, as well as potential adjustments to other forms of compensation to offset higher pension costs. Some analysts acknowledge that extending pension coverage and benefits to workers by making the voluntary system mandatory is a difficult option and that it may make more sense to simply modify the existing mandatory Social Security system. One proposed reform involves raising the base level of Social Security retirement benefits. Such a proposal attempts to increase Social Security benefits for low-earning workers, recognizing that they generally lack pension income, have very little retirement savings, and are therefore dependent on Social Security. Proponents of such a proposal cite the simplicity and low administrative cost of increasing the base level benefits, but concerns remain about the potential impact of this approach when a Social Security financing shortfall already exists. Proposals to raise the base level of Social Security benefits try to offset the effect on retirement income of low wage, part-time, or seasonal employment as well as periods of unemployment. These proposals would raise Social Security benefits so that low earners would receive higher replacement of preretirement income. Proposals have different ways of providing the higher benefits for low earners. One option is to revise Social Security’s minimum benefit provision. Other options would change the benefit formula for specific workers, and others would count unemployment insurance payments and the Earned Income Tax Credit (EITC) as earnings in computing Social Security benefits. Proponents of increasing base-level Social Security benefits cite the simplicity of using the existing, relatively efficient Social Security system to compensate for the lack of pensions and retirement savings of many low earners. They reason that the workers who would benefit most from this change are those with the least retirement savings and the greatest dependence on Social Security. Critics of these proposals suggest that raising the base benefit level may detract from Social Security’s financial integrity and popular support. Increasing Social Security benefits, even for a limited segment of retirees, would further compound the existing shortfall in Social Security financing. Restoring solvency in light of these benefit increases may require reducing benefits to workers with higher earnings or increasing worker and employer contributions. Some fear that such adjustments might cost the program the support of these higher-income workers, if Social Security came to be viewed as a welfare program. Moreover, increasing Social Security benefits may have implications for private pensions, making employers less likely to want to provide pension benefits for their lower- earning workers. Some current efforts to reform Social Security financing call for the establishment of individual Social Security savings accounts. These proposals seek to partially replace the current pay-as-you-go financing of Social Security in which current contributions are generally used to pay current retiree benefits. Advocates of these proposals suggest that such accounts would increase overall worker retirement income with higher market investment returns and would provide greater worker control of retirement savings. However, critics question whether individual accounts can increase retirement income, and they counter that low-income workers would benefit the least from such accounts because they have relatively little to contribute and modest investment experience. Individual account reform proposals vary, but they generally allow workers to own and, to varying degrees, manage their own accounts. The proposals would create individual accounts in different ways. Some would finance individual accounts with new contributions, while others would allocate some portion of the current Social Security taxes to fund the accounts. Still others would allow supplementary voluntary contributions to mandatory individual accounts or be based completely on voluntary contributions. Most proposals retain some features of the current Social Security system. One hybrid proposal would completely redesign the Social Security program into a two-tier program, with the second tier consisting of an individual account. Proponents of Social Security individual accounts maintain that such accounts allow workers to invest a portion of their contributions and, with the returns, to fund future retirement benefits. Advocates of Social Security individual accounts point to the potential for increased returns for participants that could result from allowing investment in stocks and bonds. Some advocates indicate that in addition to offsetting the need to raise payroll taxes or cut benefits to restore financial solvency to Social Security, individual accounts could eventually increase the overall retirement income of future retirees. Furthermore, Social Security individual accounts could provide an administrative infrastructure for other retirement savings plans, such as plans based solely on employee payroll deductions. Workers might also become more inclined to contribute an increased portion of their wages to retirement savings if such plans were available. Advocates therefore reason that Social Security individual accounts could increase private and national saving and lead to more capital formation. Individual Social Security accounts also have critics. Critics of individual accounts point out that investing in stocks and bonds introduces investment risk that could, in certain cases, result in lower retirement income. Moreover, they argue that individual accounts are unlikely to restore Social Security’s solvency without the need for additional financing through tax revenues, benefit reductions, or government borrowing. Concerns have also been raised about the impact on benefits, in that lower-income workers would have fewer funds going to their individual accounts and would have the least investment experience. Finally, concerns have been raised that employers may redesign their pensions or drop pension coverage if they feel that Social Security individual accounts allow workers to accumulate adequate retirement income. The concern about the low rate of private pension coverage among certain segments of the workforce and the desire to improve pension and retirement income, particularly for lower earners, has led to various proposals to reform the existing voluntary employer-based system, as well as some proposals that move outside that system. However, each type of reform introduces issues that make the likely effects of reform difficult to determine. For example, under the existing system, the effect of policies aimed at improving incentives for plan sponsorship through the tax system or by simplifying pension rules may be limited by other policy actions. The intended effects of changing pension rules may be counteracted by the responses of employers and workers. As a result, additional reforms to the voluntary, single-employer-based system have only a limited ability to significantly expand pension sponsorship and extend coverage and benefits to workers who traditionally lack pensions. In considering proposals that move outside the voluntary, single-employer system, employers may find long-standing proposals, such as those that would expand pooled employer arrangements and mandate private pensions, unattractive in part because they may increase compensation costs. While raising the base level of Social Security benefits might be an effective means of addressing some of the concerns about lower-earning workers, such a reform would need to be considered as part of the broader Social Security financing reform discussion. Several pension- related proposals aimed at improving the availability and level of retirement income for lower-earning workers are similar in many respects to current proposals to introduce an individual account-based option into Social Security. The infrastructures of private pensions or Social Security could be modified to provide a universal, payroll-based opportunity to save for retirement. While many lower-earning workers may have difficulty saving out of current income, supplementing a worker’s account through tax credits and contribution matches might increase saving incentives among those with low levels of income and retirement wealth. Such approaches entail cost and design challenges, but it is important to recognize the relationship between concerns about private pension coverage and benefits, and the Social Security policy debate, in any retirement policy reforms that emerge. The outcome of reform efforts will define a new balance between voluntary and mandatory approaches to providing retirement income. We provided draft copies of this report to the Department of Labor and the Department of the Treasury for their review. The Department of Labor had no comment on the report. The Department of the Treasury provided us with technical comments, which we incorporated as appropriate. We are providing copies of this report to Secretary of Labor Elaine L. Chao, Secretary of the Treasury Paul H. O’Neill, and appropriate congressional committees. We will make copies available to others on request. The report is also available on GAO’s home page at http://www.gao.gov. Please call me on (202) 512-7215 or George A. Scott on (202) 512-5932 if you or your staff have questions. Other major contributors to this report include Kenneth J. Bombara, Timothy Fairbanks, Edward Nannenhorn, Corinna Nicolaou, Roger J. Thomas, and Charles Walter III. The purpose of this appendix is to show (1) how the tax treatment of saving through a qualified pension plan differs from the tax treatment of saving in a regular bank savings account, (2) how the magnitude of the difference depends on the tax rates individuals face, and (3) that the tax treatment of pension saving can be equivalent to exempting the earnings on pension contributions. If a person’s employment compensation is paid as wages, those wages would be taxable income. If he or she then saves some of these wages in a regular bank savings account, the income earned in the account would be taxable each year as it is earned. When funds are withdrawn from the account, no further tax would be owed. If the same employee receives compensation in the form of a contribution to a qualified pension plan, that pension contribution would not be counted as income to the employee at the time of the contribution. In addition, earnings on the contribution would accumulate tax deferred. When the contributions and earnings are withdrawn or distributed, they would be subject to tax at the regular income tax rates applicable at that time. Table 3 shows a hypothetical example of how the tax treatment afforded to pensions can benefit savers. It also shows how the tax benefit from saving in a pension depends on a person’s income tax rate. The example in this table supposes that two people are subject to different tax rates, one to a 15-percent tax rate and the other to a 28-percent rate, throughout their lives. Both receive a higher after-tax return from saving through a pension than they would have received in a regular taxable account. In both cases, the value of their pension accounts at retirement is greater than the value of their regular savings account at the time funds are withdrawn. This reflects the effect of taxes not paid at the time of the initial deposit in the pension account and taxes not paid on the earnings in the pension account over time. Despite the fact that both individuals have to pay tax on the value of the pension account when the funds are distributed, while no additional tax is owed on the funds in the regular saving account, both individuals gain by saving through the pension instead of the regular account. Table 3 also shows that the person with the higher, 28-percent tax rate benefits more from saving through a pension, compared with a regular savings account, than the person with the lower, 15-percent rate. The example in table 3 assumed that the lifetime tax rate—when contributions are made, as earnings accrue, and when funds are withdrawn or distributed—remains constant. When tax rates vary over time, the tax benefits from saving through a pension are greater if the rates that are applicable when contributions are made and as earnings accrue exceed the rates applicable when the funds are withdrawn. In other words, if the tax rate during a person’s working life is higher than the tax rate during retirement, the tax benefits from pension saving will be greater. Conversely, if tax rates are higher during retirement than during a person’s working life, the relative tax benefits are smaller. When tax rates are low during a person’s working life and much higher during retirement, the person might be better off saving in a regular taxable account. Another way to look at the tax treatment of pension savings is to compare it with that of an account in which contributions are taxable but no further tax is owed on earnings. In a Roth IRA, for example, wages are subject to tax when they are earned, but any account earnings can be permanently exempt from tax. Table 4 shows that if tax rates remain constant over time as in the example underlying table 3, the after-tax return from saving through a pension can be equivalent to saving through a Roth IRA. Currently, an active research debate is addressing the questions of whether workers and households will achieve adequate retirement income and the role that pensions play in retirement income. Data are generated for the current retired population, and estimates are made for those who will retire in the future. The current status of retirees is typically examined through comparisons with the poverty line or with replacement rates, which relate actual or expected retirement income to the income level at a period of time during the worker’s career. The status of future retirees also can be assessed through estimates of such measures but is increasingly examined in the context of whether workers are accumulating sufficient assets while working (i.e., saving) to assure themselves of a stream of retirement income adequate to meet certain standards or targets. Data on existing retirees recently presented by GAO suggests that those without pension income in retirement are more likely to be in poverty. In 1998, about 4.2 million of 36.6 million retired persons, or 11.5 percent, had total retirement incomes below the poverty line. In addition, about half of those retired (17.6 of 36.6 million) reported that they did not receive income from a pension of their own or from that of a spouse. Of those not receiving pension income, about 21 percent had retirement incomes below the federal poverty line; of those who did receive some pension income, only 3 percent had incomes below the poverty line. Furthermore, the study noted that some of the characteristics of those who lack pension income in retirement are similar to the characteristics of workers who lack pension coverage during their working years. For example, those without pension income in retirement are more likely to be single, to be women, and to have low levels of education. However, it is not possible to predict whether any particular worker currently in the labor force will ultimately receive a pension benefit. That is, the linkage between work, pension coverage, and the receipt and level of pension income in retirement is complex and depends on an array of factors, such as employer plan sponsorship and benefit design, the framework of government rules, and worker decisions and choices over a lifetime. Data on the status of current retirees also focuses on the replacement rates that are provided via Social Security and pensions. Typically, pension professionals suggest that a worker or family needs approximately 65 to 85 percent of preretirement income to maintain the preretirement living standard. The achievement of this level of income replacement depends significantly on Social Security and pension income and may require income from other sources, such as earnings from employment, home equity, and nonpension saving. Studies show that many workers need to save for retirement beyond the income they can expect from Social Security and pensions. Owing to the tilt of Social Security benefits toward lower earners, it follows that those in lower earnings categories generally need to save proportionately less than those in higher earnings groups to reach an adequate replacement rate. At the same time, workers in lower earnings categories are less likely than higher earners to have pension income in retirement. Research has also focused on the question of whether future retirees will have adequate retirement income. In the early to mid-1990s, a number of research studies engaged the retirement income adequacy question and reached different conclusions. Studies by Andrews and the Congressional Budget Office (CBO) reached generally positive conclusions concerning the retirement income status of future retirees. Research by Bernheim reached less optimistic conclusions, finding that a broader range of workers were not saving sufficiently more than the amounts they could receive from Social Security and pensions to assure themselves of an adequate retirement income. More recently, data from the Health and Retirement Study (HRS) has been applied in several studies of retirement income adequacy. In general, the adequacy debate continues, with researchers interpreting the data in different ways. These studies tend to focus on measuring asset (wealth) accumulation in a present value context in which retirement income sources such as Social Security and pensions are represented as asset values. The studies estimate the likely total asset accumulation at retirement by workers in their sample, and some studies may incorporate a target saving rate approach that is analogous to the replacement rate concept. Using HRS data, Gustman and Steinmeier reached positive conclusions about the retirement saving of future retirees and found pensions to be widely distributed among households. However, Mitchell and Moore, also using HRS data, concluded that the majority of households nearing retirement age will not be able to maintain current levels of consumption in retirement without additional saving. They found considerable variation in wealth across the income distribution but also wide variation in wealth among households within a given earnings level. They also found a rather low correlation of wealth to earnings. This means that low retirement saving is not strictly a low earnings phenomenon: there are high earners with low retirement wealth and low earners with relatively high retirement wealth. Mitchell and Moore’s results also suggest that although the need to save increases with higher earnings, when households are arrayed according to retirement wealth, those with the lowest wealth face significant risk of inadequate retirement income.Recent research by Engen, Gale, and Uccello provides a different interpretation of Mitchell and Moore’s results, but their findings are consistent with the conclusion that there appear to be different preferences or propensities in the population for accumulating retirement wealth and that inadequate retirement income appears to be associated with low retirement saving by a segment of the workforce.. Private Pensions: Key Issues to Consider Following the Enron Collapse, GAO-02-480T. Washington, D.C.: February 27, 2002. Social Security: Program’s Role in Helping Ensure Income Adequacy. GAO-02-62. Washington, D.C.: Nov. 30, 2001. Private Pensions: Issues of Coverage and Increasing Contribution Limits for Defined Contribution Plans. GAO-01-846. Washington, D.C.: Sept. 17, 2001. Retirement Savings: Opportunities to Improve DOL’s SAVER Act Campaign. GAO-01-634. Washington, D.C.: June 26, 2001. National Saving: Answers to Key Questions. GAO-01-591SP. Washington, D.C.: June 1, 2001. Cash Balance Plans: Implications for Retirement Income. GAO/HEHS-00- 207. Washington, D.C.: Sept. 29, 2000. Private Pensions: Implications of Conversions to Cash Balance Plans. GAO/HEHS-00-185. Washington, D.C.: Sept. 29, 2000. Social Security Reform: Implications for Private Pensions. GAO/HEHS- 00-187. Washington, D.C.: Sept. 14, 2000. Private Pensions: “Top-Heavy” Rules for Owner-Dominated Plans. GAO/HEHS-00-141. Washington, D.C.: Aug. 31, 2000. Pension Plans: Characteristics of Persons in the Labor Force Without Pension Coverage. GAO/HEHS-00-131. Washington, D.C.: Aug. 22, 2000. Social Security: Evaluating Reform Proposals. GAO/AIMD/HEHS-00-29. Washington, D.C.: Nov. 4, 1999. Integrating Pensions and Social Security: Trends Since 1986 Tax Law Changes. GAO/HEHS-98-191R. Washington, D.C.: July 6, 1998. Social Security: Different Approaches for Addressing Program Solvency. GAO/HEHS-98-33. Washington, D.C.: July 22, 1998. 401(k) Pension Plans: Loan Provisions Enhance Participation But May Affect Income Security for Some. GAO/HEHS-98-5. Washington, D.C.: Oct. 1, 1997. Retirement Income: Implications of Demographic Trends for Social Security and Pension Reform. GAO/HEHS-97-81. Washington, D.C.: July 11, 1997. | Although pensions are an important source of income for many retirees, millions of workers lack individual pension coverage. Only half of the nation's workers have been covered by private employer-sponsored pensions since the 1970s. Traditional reforms to the voluntary, single-employer-based pension system have limited potential to expand pension coverage and improve worker benefits. These pension reforms have concentrated mainly on improving tax incentives and reducing the regulatory burden on small employers. Furthermore, efforts to increase retirement savings by restricting the use of lump-sum distributions could limit worker participation in and contributions to pension plans. Three categories of reform--pooled employer reforms, universal access reforms, and universal participation reforms--go beyond the voluntary, single-employer private pension system. Pooled employer reforms seek to increase the number of firms offering pension coverage by creating centralized third-party administration and increasing pension plan portability. Universal access reforms seek to boost savings by offering payroll-based accounts, albeit without mandating employer contributions. Universal participation reforms would mandate pension availability and participation for all workers, similar to the existing Social Security system. |
BENGHAZI, Libya - French fighter jets fired the first shots at Moammar Gadhafi's troops on Saturday, launching the broadest international military effort since the Iraq war in support of an uprising that had seemed on the verge of defeat.
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In the hours before the no-fly zone over Libya went into effect, Gadhafi sent warplanes, tanks and troops into Benghazi, the rebel capital and first city to fall to the rebellion that began Feb. 15. Then the government attacks appeared to go silent.
French President Nicolas Sarkozy said after an emergency summit in Paris that French jets were already targeting Gadhafi's forces. The 22 participants in Saturday's summit agreed to do everything necessary to make Gadhafi respect a U.N. Security Council resolution Thursday demanding a cease-fire, Sarkozy said.
"Our consensus was strong, and our resolve is clear. The people of Libya must be protected, and in the absence of an immediate end to the violence against civilians our coalition is prepared to act, and to act with urgency," President Barack Obama said in Brasilia, Brazil, on the first day of a three-country Latin American tour.
The rebels, who have seen their advances into western Libya turn into a series of defeats, said they had hoped for more, sooner from the international community, after a day when crashing shells shook the buildings of Benghazi and Gadhafi's tanks rumbled through the university campus.
"People are disappointed, they haven't seen any action yet. The leadership understands some of the difficulties with procedures but when it comes to procedures versus human lives the choice is clear," said Mustafa Gheriani, a spokesman for the opposition. "People on the streets are saying where are the international forces? Is the international community waiting for the same crimes to be perpetrated on Benghazi has have been done by Gadhafi in the other cities?"
A doctor said 27 bodies had reached hospitals by midday. As night fell, though, the streets were quiet.
Libyan state television showed Gadhafi supporters converging on the international airport and a military garrison in Tripoli, and the airport in Gadhafi's hometown of Sirte, in an apparent attempt to deter bombing.
In an open letter, Gadhafi warned: "You will regret it if you dare to intervene in our country."
In Paris, U.S. Secretary of State Hillary Rodham Clinton said Gadhafi's government had lost all legitimacy and lied about the cease-fire.
"We have every reason to fear that left unchecked, Gadhafi will commit unspeakable atrocities," she said.
Saturday's emergency meeting involved 22 leaders and top officials, including Arab League Secretary-General Amr Moussa and U.N. Secretary-General Ban Ki-Moon and the foreign ministers of Jordan, Morocco and the United Arab Emirates. It was the largest international military action since the beginning of the Iraq war, launched almost exactly eight years ago.
Earlier Saturday, a plane was shot down over the outskirts of Benghazi, sending up a massive black cloud of smoke. An Associated Press reporter saw the plane go down in flames and heard the sound of artillery and crackling gunfire.
Before the plane went down, journalists heard what appeared to be airstrikes from it. Rebels cheered and celebrated at the crash, though the government denied a plane had gone down -- or that any towns were shelled on Saturday.
The fighting galvanized the people of Benghazi, with young men collecting bottles to make gasoline bombs. Some residents dragged bed frames and metal scraps into the streets to make roadblocks.
"This city is a symbol of the revolution, it's where it started and where it will end if this city falls," said Gheriani.
But at Jalaa hospital, where the tile floors and walls were stained with blood, the toll was clear.
"There are more dead than injured," said Dr. Ahmed Radwan, an Egyptian who had been there helping for three weeks.
Jalaa's Dr. Gebreil Hewadi, a member of the rebel health committee, said city hospitals had received 27 bodies.
At a news conference in the capital, Tripoli, the government spokesman read letters from Gadhafi to Obama and others involved in the international effort.
"Libya is not yours. Libya is for the Libyans. The Security Council resolution is invalid," he said in the letter to Sarkozy, British Prime Minister David Cameron, and U.N. Secretary-General Ban Ki-Moon.
To Obama, the Libyan leader was slightly more conciliatory: "If you had found them taking over American cities with armed force, tell me what you would do."
In a joint statement to Gadhafi late Friday, the United States, Britain and France -- backed by unspecified Arab countries -- called on Gadhafi to end his troops' advance toward Benghazi and pull them out of the cities of Misrata, Ajdabiya and Zawiya. It also called for the restoration of water, electricity and gas services in all areas. It said Libyans must be able to receive humanitarian aid or the "international community will make him suffer the consequences" with military action.
Foreign Minister Moussa Koussa said that Libyan officials had informed the U.N. and the Security Council that the government was holding to the cease-fire it had announced Friday and called for a team of foreign observers to verify that.
"The nation is respecting all the commitments put on it by the international community," he said, leaving the podium before answering any questions about Benghazi.
In the course of the rebellion, Libya has gone from a once-promising economy with the largest proven oil reserves in Africa to a country in turmoil. The foreign workers that underpinned the oil industry have fled; production and exports have all but ground to a halt; and its currency is down 30 percent in just two weeks.
The oil minister, Shukri Ghanem, held a news conference calling on foreign oil companies to send back their workers. He said the government would honor all its contracts.
"It is not our intention to violate any of these agreements and we hope that from their part they will honor this agreement and they will send back their work forces," he said.
Italy, which had been the main buyer for Libyan oil, offered the use of seven air and navy bases already housing U.S., NATO and Italian forces to enforce the no-fly zone over Libya.
Italy's defense minister, Ignazio La Russa, said Saturday that Italy wasn't just "renting out" its bases for others to use but was prepared to offer "moderate but determined" military support.
A French fighter jet fired Saturday on a Libyan military vehicle, the first reported offensive action in the international military operation against Gadhafi's forces, French Defense Ministry spokesman Thierry Burkhard said.
Warplanes from the United States, Canada, Denmark arrived at Italian air bases Saturday as part of an international military buildup. Germany backed the operation but isn't offering its own forces.
British Prime Minister David Cameron said after the summit: "The time for action has come, it needs to be urgent."
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Al-Shalchi contributed from Tripoli, Libya. Associated Press writers Ben Hubbard in Cairo; Nicole Winfield in Rome; and Jamey Keaten in Paris also contributed to this report. ||||| More than 112 Tomahawk cruise missiles struck over 20 targets inside Libya today in the opening phase of an international military operation the Pentagon said was aimed at stopping attacks led by Libyan leader Moammar Gadhafi and enforcing a U.N.-backed no-fly zone.
President Obama, speaking from Brazil shortly after he authorized the missile attacks, said they were part of a "limited military action" to protect the Libyan people.
"I want the American people to know that the use of force is not our first choice and it's not a choice I make lightly," Obama said. "But we cannot stand idly by when a tyrant tells his people that there will be no mercy."
The first air strikes, in what is being called Operation Odyssey Dawn, were launched from a mix of U.S. surface ships and one British submarine in the Mediterranean Sea at 2 p.m. ET, Vice Adm. William E. Gortney told reporters at a Pentagon briefing.
They targeted Libyan air defense missile sites, early warning radar and key communications facilities around Tripoli, Misratah, and Surt, but no areas east of that or near Benghazi. Because of darkness over Libya, Gortney said it was too early to determine the strikes' effectiveness.
Gortney said no U.S. troops were on the ground in Libya and that no U.S. aircraft participated in the initial attacks.
Libyan television reported that 48 people were killed and more than 150 wounded in the barrage, but there was no independent confirmation of the numbers.
Earlier today, as pro-Gadhafi forces battled towards the rebel stronghold of Benghazi, 20 French warplanes flew over the region in a show of force. And one jet fired on and destroyed an unidentified Libyan military vehicle, French Defense officials said.
At one point a fighter jet resembling a Libyan MiG 27 was shot down over the city, according to news reports from inside Libya.
Meanwhile, world leaders met in Paris to discuss the nature and scope of the international military intervention to make Gadhafi respect a U.N. Security Council resolution that authorized "all necessary measures" to protect Libyan civilians.
"We have every reason to fear that left unchecked, Gadhafi would commit unspeakable atrocities," Secretary of State Hillary Clinton told reporters following the meeting in Paris. "Further delay will only put more civilians at risk. So let me be very clear on the position of the United States: We will support an international coalition as it takes all necessary measures to enforce" the U.N. resolution.
But Pentagon officials cautioned that despite the initial military actions, an enforced no-fly zone over Libya was not yet in effect and will take time to establish.
"At this point we are creating the conditions to be able to set up a no fly zone, and once we have established and confirmed that the conditions are right then we will move forward into one of the next phases of the campaign," Gortney told reporters.
No U.S. aircraft will be involved in air strikes over Libya tonight, he said. "Our mission right now is to shape the battle space in such a way that our partners may take the lead in…execution."
As the campaign evolves, officials said, U.S. support aircraft would provide airborne surveillance, refueling and radar-jamming capabilities, and several F-16s may participate in patrols over no-fly zones above Tripoli and Benghazi.
Gadhafi Defiant
In an audio statement broadcast on Libyan state TV, Gadhafi called the attacks a "crusade" against the Libyan people and called on Arab countries and African allies to come to his government's aid.
"We ask others to stand by us," he said, according to a translation of his remarks heard on Al Jazeera. "We must now open the weapons depot and arms to all Libyans."
Gadhafi warned the international coalition Friday not to interfere in Libyan affairs, calling the U.N. resolution "invalid" and appealing directly to world leaders, including President Obama, in a letter.
"Libya is not yours. Libya is for the Libyans," he said in the letter. "If you had found them taking over American cities with armed force, tell me what you would do."
Libya Action Follows Failed Diplomacy
Military action in Libya follows weeks of intensive, international diplomatic pressure on Gadhafi to cease the violence and pull back from rebel-held cities.
The Security Council approved a resolution late Thursday authorizing the international community to take "all necessary measures," short of sending in ground troops, to protect civilians in Libya, and to impose a no-fly zone. The resolution does not authorize taking out Gadhafi or regime change.
"The [U.N.] resolution that passed lays out very clear conditions that must be met," Obama said Friday.
"These terms are not subject to negotiation. If Gadhafi does not comply with the resolution, the international community will impose consequences and the resolution will be enforced through military action," he said.
Exactly what role the U.S. military would play in enforcement of the resolution remains unclear.
"We will support an international coalition as it takes all necessary measures to enforce the terms of resolution 1973," Secretary of State Clinton said today in Paris.
But Clinton declined to detail U.S. responsibilities in a supporting an attack, other than to say that the United States would offer "unique capabilities." She emphasized that the United States will not deploy ground troops in Libya.
During a meeting with a bipartisan group of members of Congress Friday, Obama said he expects active U.S. involvement in any military action would last just "days, not weeks," sources told ABC News.
Decision to Use Force Came Tuesday
Sources told ABC News that Obama's decision to support the use of force came Tuesday, following several days of internal administration deliberations and the realization that diplomatic efforts to stop the brutality of Gadhafi's regime weren't working.
Presented with intelligence about the push of the Gadhafi regime to the rebel stronghold of Benghazi, the president told his national security team, "What we're doing isn't stopping him."
Some in his administration, such as Clinton, had been pushing for stronger action, but it wasn't until Tuesday, administration sources tell ABC News, that the president became convinced sanctions and the threat of a no-fly zone wouldn't be enough.
"We are not going to use force to go beyond a well-defined goal, specifically the protection of civilians in Libya," Obama said Friday.
While the United States has been leading the charge behind the scenes, officials say, the administration deferred public action to the State Department and the United Nations in an effort to emphasize that the mission reflects a broad, international coalition, including support from Arab allies.
World Preparing for Military Action Against Libya
Gadhafi's son, Saif, told ABC News via a phone interview that the U.N. resolution is a "big mistake" and that if the United States wants to help, they should in fact help the government.
"We want to live in peace, so we want even Americans to help us get rid of the remnants of those people and to have a peaceful country, more democratic," he said. "If you want to help us, help us to, you know, to be democracy, more freedom, peaceful, not to threaten us with air strikes. We will not be afraid. Come on!"
U.S. Air Force Chief of Staff Gen. Norman Schwartz said Thursday it could take upwards of a week to fully establish a no-fly zone and that public comments by some that it could be done in a few days are "overly optimistic."
He acknowledged there are limited Air Force assets because most of them are in Iraq and Afghanistan, especially transport aircraft.
Last week, Department of National Intelligence director James Clapper said the Libyan air force was large in raw numbers, but only a small number of aircraft were actually flying.
A Pentagon analysis of Libya's air capabilities shows the overall readiness of Libyan aircraft is poor by Western standards and most aircraft are now dated or obsolete in terms of avionics or upgrades. Eighty percent of the air force is judged to be "non-operational and "overhaul and combat repair capability is also limited."
ABC News' Martha Raddatz, Huma Khan, Jake Tapper, Kirit Radia, and Luis Martinez contributed to this report. ||||| Tripoli, Libya (CNN) -- Explosions and anti-aircraft fire thundered in the skies above Tripoli early Sunday, but it was not clear whether they resulted from another round of cruise missile attacks by allies determined to stop Moammar Gadhafi's offensive against Libyan opposition forces.
CNN's Nic Robertson witnessed the development a few hours after nearly 1,000 people gathered at Gadhafi's palace in the capital. The crowd chanted, waved flags and shot off fireworks in support of the government.
A defiant Gadhafi said Libya will fight back against undeserved "naked aggression." His military claimed nearly 50 people, including, women, children and clerics, were killed in Saturday evening's attacks. There was no independent confirmation of that statement.
American, French and British military forces, convinced that Gadhafi was not adhering to a United Nations-mandated cease-fire, hammered Libyan military positions with missiles and fighter jets in the first phase of an operation that will include enforcement of a no-fly zone.
An eyewitness in Tripoli reported seeing signs of gunfire rising Sunday morning from the direction of nearby Mitiga Airport. The anti-Gadhafi activist said she heard "continuous gunshots" and at least two loud explosions. It was not clear if the airport was also being used as a military installation.
The eyewitness, who was not identified for security reasons, said she did not hear the sound of flying aircraft.
More than 110 Tomahawk missiles fired from American and British ships and submarines hit about 20 Libyan air and missile defense targets in western portions of the country, U.S. Vice Adm. William Gortney said at a Pentagon briefing.
The U.S. will conduct a damage assessment of the sites, which include SA-5 missiles and communications facilities. A senior U.S. military official, who was not authorized to speak on the record, said the cruise missiles, which fly close to the ground or sea at about 550 miles per hour, landed near Misrata and Tripoli.
The salvo, in an operation dubbed "Odyssey Dawn," was meant "to deny the Libyan regime from using force against its own people," said Gortney.
U.S. Navy photos showed flashes of light and smoke funnels as missiles soared from a destroyer into the night sky.
Earlier, French fighter jets deployed over Libya fired at a military vehicle Saturday, the first strike against Gadhafi's military forces, which earlier attacked the rebel stronghold of Benghazi.
Prime Minister David Cameron said late Saturday that British forces also are in action over Libya. "What we are doing is necessary, it is legal and it is right," he said. "I believe we should not stand aside while this dictator murders his own people."
British Defense Secretary Liam Fox said the Royal Air Force deployed Tornado GR4 fast jets, which flew 3,000 miles from the United Kingdom and back, "making this the longest-range bombing mission conducted by the RAF since the (1982) Falklands conflict."
While there were no U.S. warplanes flying over Libya late Saturday, the coalition was softening Libyan positions before enforcing a no-fly zone, Gortney said.
The Libyan military, in a statement broadcast on state TV, said, "An enemy attacked the state on March 19th with rockets ... Those enemies killed 48 martyrs -- mostly women, children, and religious clerics. They left more than 150 injured. The majority of these attacks were on public areas, hospitals and schools. They frightened the children and women near those areas that were subject to this aggression."
Gadhafi, speaking early Sunday on Libyan state TV, said the U.N. charter provides for Libya's right to defend itself in a "war zone." Weapons depots will be opened, he said.
"All you people of the Islamic nations and Africa, and Latin America and Asia, stand with the Libyan people in its fight against this aggression," Gadhafi said.
Air attacks on several locations in Tripoli and Misrata have caused "real harm" to civilians, a Libyan government spokesman said.
An eyewitness in Misrata said Gadhafi's forces are targeting fuel and power stations in an effort to make citizens believe the damage is being done by coalition forces. The eyewitness, who was not identified for security reasons, said people celebrated allied airstrikes on loyalist positions in the city. CNN could not verify the account.
Shortly after the first missile attacks, U.S. President Barack Obama informed the American people of the efforts by a "broad coalition."
"The use of force is not our first choice," the president said from Brasilia, Brazil. "It is not a choice I make lightly. But we cannot stand idly by when a tyrant tells his own people that there will be no mercy."
Obama is planning for the U.S. portion of the military action in Libya to only last for a few days, according to a senior administration official, who was not authorized to speak about sensitive military matters.
"After that we'll take more of a supporting role," the senior official said.
Obama authorized U.S. military force from Brazil on what happened to be the eighth anniversary of the start of the war in Iraq.
Coalition partners say Gadhafi has failed to adhere to a United Nations resolution that imposed the no-fly zone and ordered him to stop attacks on civilians.
"He's clearly been on the offensive," the senior U.S. military official said of Gadhafi. "He said that he was going to do a cease-fire and he continued to move his forces into Benghazi."
Earlier Saturday, Gadhafi issued defiant messages to international powers.
"I have all the Libyan people with me and I'm prepared to die. And they are prepared to die for me. Men, women and even children," Gadhafi said in a letter addressed to Obama and read to reporters by a government spokesman in Tripoli.
Obama, Secretary of State Hillary Clinton and Gortney used the term "unique capabilities" to describe the U.S. part of the effort. Officials have said American military forces are meant to augment Arab, European and other Western troops.
In the next few days, U.S. military officials expect to hand over control to a coalition commander. Canada and Italy also are part of the coalition.
"Our air force will oppose any aggression by Colonel Gadhafi against the population of Benghazi," said French President Nicolas Sarkozy, speaking after a top-level meeting in Paris over the Libyan crisis.
The international meeting -- which included Western and Arab partners -- focused on how to take on a Libyan government bent on destroying the fledgling opposition movement under the U.N. resolution authorizing force to protect civilians against the Gadhafi government.
Rebel forces in Benghazi used a captured army tank as a victory symbol, CNN's Arwa Damon reported.
Earlier Saturday, incoming artillery rounds landed inside Benghazi, and pro-Gadhafi tanks rolled into the town firing rounds, witnesses said.
A flaming fighter jet plummeted from the sky, nose-diving to the ground. Khaled el-Sayeh, the opposition military spokesman, said the plane was an old MiG-23 that belonged to the rebels.
As night fell over Benghazi on Saturday, the city became quiet and calm. While plumes of smoke could be spotted, the pro-Gadhafi tanks seen earlier were not in sight. El-Sayeh told CNN that "tens" had been killed in Benghazi on Saturday.
He said Gadhafi forces had withdrawn from the city and that they were positioned 50 kilometers (31 miles) outside Benghazi. CNN could not independently verify those details.
Gadhafi -- in a separate letter addressed to Sarkozy, Cameron and U.N. Secretary-General Ban Ki-moon -- called the U.N. moves "invalid" because the resolution does not permit intervention in the internal affairs of other countries.
Violence has raged in Libya following protests calling for democracy and freedom and demanding an end to Gadhafi's almost 42-year-long rule. It's a conflict spurred by anti-government protest and resulting regime violence against civilians -- which the U.N. resolution cites as "outrageous" and Sarkozy calls "murderous madness."
CNN's Arwa Damon, Chris Lawrence, Jill Dougherty, Elise Labott, Ed Henry, Jim Bittermann, Paula Newton, Richard Roth and Nic Robertson contributed to this report | The US has joined the fight in Libya: American ships (and one British submarine) fired more than 110 Tomahawk missiles at 20 radar and communication sites inside the country, reports ABC. It's the first phase of what's being called Operation Odyssey Dawn, with the current focus on taking out Moammar Gadhafi's air defenses. Earlier, a French fighter jet made the first strike against pro-Gadhafi forces by destroying a military vehicle—probably a tank—near Benghazi. American planes are expected to get involved eventually, but not US ground troops. Hillary Clinton emphasized that this is "a broad international effort," notes CNN. "Now America has unique capabilities, and we will bring them to bear to help our European and Canadian allies and Arab partners to stop further violence against civilians." The military action comes after Gadhafi told the US and other nations today in letters—he referred to Obama as "our son"—that he would not abide by the UN resolution to cease attacks on rebels. Click for the Huffington Post's live blog on updates. |
The CG(X) cruiser is the Navy's planned replacement for its 22 existing Ticonderoga (CG-47) class Aegis-equipped cruisers, which are projected to reach retirement age between 2021 and 2029. The CG-47s are multimission ships with an emphasis on air defense. The Navy wants the CG(X) to be a multimission ship with an emphasis on air defense and ballistic missile defense (BMD). The Navy plans to equip the CG(X) with a large and powerful new radar capable of supporting BMD operations. The CG(X) may also have more missile-launch tubes than are on the DDG-1000, and one 155mm Advanced Gun System (AGS), or none, as opposed to two AGSs on the DDG-1000. The Navy's planned 313-ship fleet calls for a total of 19 CG(X)s. The FY2008-FY2013 Future Years Defense Plan (FYDP) calls for procuring the first CG(X) in FY2011 and the second in FY2013. The Navy's 30-year (FY2008-FY2037) shipbuilding plan calls for building 17 more CG(X)s between FY2014 and FY2023, including two CG(X)s per year for the seven-year period FY2015-FY2021. The Navy is currently assessing CG(X) design options in a study called the CG(X) Analysis of Alternatives (AOA), known more formally as the Maritime Air and Missile Defense of Joint Forces (MAMDJF) AOA. The Navy initiated this AOA in the second quarter of FY2006 and plans to complete it by mid-September 2007. Navy plans call for Milestone A review of the CG(X) program in the first quarter of FY2008, preliminary design review (PDR) in the third quarter of FY2010, critical design review (CDR) in the third quarter of FY2011, and Milestone B review in the fourth quarter of FY2011. Although the CG(X) AOA is examining a wide range of design options for the CG(X), the Navy has publicly stated on several occasions that would like to use the design of its new DDG-1000 destroyer as the basis for the CG(X). (The potential for using the DDG-1000 design for the CG(X) was one of the Navy's arguments for moving ahead with the DDG-1000 program.) At an April 5, 2006, hearing, for example, a Navy admiral then in charge of shipbuilding programs, when asked what percentage of the CG(X) design would be common to that of the DDG-1000 (previously called the DD(X)), stated the following: [W]e haven't defined CG(X) in a way to give you a crisp answer to that question, because there are variations in weapons systems and sensors to go with that. But we're operating under the belief that the hull will fundamentally be—the hull mechanical and electrical piece of CG(X) will be the same, identical as DD(X). So the infrastructure that supports radar and communications gear into the integrated deckhouse would be the same fundamental structure and layout. I believe to accommodate the kinds of technologies CG(X) is thinking about arraying, you'd probably get 60 to 70 percent of the DD(X) hull and integrated (inaudible) common between DD(X) and CG(X), with the variation being in that last 35 percent for weapons and that sort of [thing].... The big difference [between CG(X) and DDG-1000] will likely [be] the size of the arrays for the radars; the numbers of communication apertures in the integrated deckhouse; a little bit of variation in the CIC [Combat Information Center—in other words, the] command and control center; [and] likely some variation in how many launchers of missiles you have versus the guns. If the CG(X) is based on the DDG-1000 design, its unit procurement cost might be comparable to that of the DDG-1000. The FY2008-FY2013 FYDP includes notional "placeholder" figures of about $3.2 billion in FY2011 to procure the first CG(X) and about $3.1 billion in FY2013 to procure the second CG(X). This compares with about $3.2 billion to procure each of the first two DDG-1000s in FY2007-FY2008. Early Navy plans called for procuring two DDG-1000s per year, and a total of 16, 24, or 32 ships. In large part for affordability considerations, planned DDG-1000 procurement was reduced to one ship per year, and a total of 7 ships. If affordability considerations similarly limit CG(X) procurement to one ship per year, total CG(X) procurement might be reduced from 19 ships to perhaps no more than 12 ships, and possibly as few as eight. Some observers, including the Congressional Budget Office (CBO), have expressed concern about the prospective affordability and executibility of the Navy's long-range shipbuilding plan. Some Members of Congress, particularly Representatives Gene Taylor and Roscoe Bartlett, the chairman and ranking member, respectively, of the Seapower and Expeditionary Forces subcommittee of the House Armed Services Committee, strongly support expanding the use of nuclear propulsion to a wider array of Navy surface ships, beginning with the CG(X). Nuclear propulsion is an option being studied in the CG(X) AOA. If the CG(X) is to be a multimission ship for replacing the CG-47s, basic design options for the CG(X) include (but are not limited to) the following: a conventionally powered ship based on the hull design of the 9,200-ton Arleigh Burke (DDG-51) class Aegis destroyer, or on a variation of that hull design; a conventionally powered ship based on a new-design hull that is smaller than the DDG-1000 hull; a conventionally powered ship based on the DDG-1000 hull design or on a variation of that hull design (the Navy's stated preferred approach); a conventionally powered ship based on a new-design hull that is larger than the DDG-1000 hull; and nuclear-powered versions of each of these four ships. Basing the CG(X) on the current DDG-51 hull could produce a CG(X) design displacing roughly 9,000 tons. Lengthening the DDG-51 hull with a mid-hull plug might produce a CG(X) design displacing roughly 11,000 tons, which would be about 24% smaller than the 14,500-ton DDG-1000, and roughly as large as the six California (CGN-36) and Virginia (CGN-38) class nuclear-powered cruisers that were procured for the Navy in the 1960s and 1970s. The deck house and lower decks of the DDG-51 hull would need to be redesigned to accommodate a radar capable of supporting BMD operations, an integrated electric-drive propulsion system, other new technologies from the DDG-1000, and (if desired) missile-launch tubes large enough to accommodate a BMD interceptor now in development called the Kinetic Energy Interceptor (BMD). Since the DDG-51 hull design was originally developed in the 1980s, it may include hard-to-change features that prevent it from fully accommodating certain DDG-1000 new technologies, such as, perhaps, those permitting the ship to be operated by a substantially smaller crew. For ships of a similar type and level of complexity, relative size can be rough proxy for relative unit procurement cost. A 9,000- to 11,000-ton CG(X) would be 62% to 76% as large as a 14,500-ton DDG-1000-based CG(X). However, some shipbuilding costs, such as shipyard fixed overhead costs, do not go down proportionately with ship size. A DDG-51-based CG(X) consequently might cost more than 62% to 76% of what a 14,500-ton CG(X) would cost to procure—perhaps something more like 72% to 86%. Production of a DDG-51-based CG(X) might benefit from residual learning-curve effects of prior production of DDG-51s, the last of which was procured in FY2005. Any limitations in incorporating DDG-1000 technologies for reducing crew size could result in a ship with a larger crew than that of the DDG-1000, and thus higher crew-related life-cycle O&S costs than a DDG-1000-based CG(X). The DDG-51 hull is a conventional flared hull that slopes outward as it rises up from the waterline. A CG(X) based on the DDG-51 hull consequently would be more detectible by radar than a ship using a tumblehome (inwardly sloping) hull, like that of the DDG-1000. In addition, as ship size grows, so does the size of the ship's weapon and sensor payload. Consequently, larger ships generally have more capability than smaller ones. Indeed, due to certain economies of scale that occur in naval architecture, larger ships can have proportionately larger payloads than smaller ones. Thus, a DDG-51-based CG(X) might be less than 62% to 76% as capable as a 14,500-ton CG(X). Due to the space, weight, and energy requirements of the large and powerful BMD-capable radar to be carried by the CG(X), accommodating such a radar in a DDG-51-based CG(X) design might require steep reductions in other ship capabilities. A ship using a new-design hull smaller than the DDG-1000 hull might similarly displace roughly 9,000 to 11,000 tons. (A new-design hull larger than about 11,000 tons might be too close in size to the DDG-1000 hull to produce savings that are worthwhile compared to the option of simply reusing the DDG-1000 hull.) The unit procurement cost of such a ship might be about equal to that of a DDG-51-based design, or perhaps somewhat less, if the new-design hull incorporates producibility features (i.e., features for ease of manufacturing, such as straighter-running pipeline arrangements) that are more advanced than those of the DDG-51 hull. A new-design hull might be able to take more complete advantage of DDG-1000 technologies than a DDG-51-based design, possibly giving the ship a smaller crew and thus lower personnel-related O&S costs. The new-design hull could be a conventional flared hull, like that of the DDG-51, or a reduced-size version of the DDG-1000's tumblehome hull. The latter option could produce a ship as stealthy as (or perhaps slightly stealthier than) the DDG-1000. Due to the potential greater ability to take advantage of DDG-1000 technologies or other new technologies, a 9,000- to 11,000-ton ship based on a new-design hull might be somewhat more capable than a DDG-51-based design. A 9,000- to 11,000-ton design would still, however, be substantially less capable than a DDG-1000-based design, and perhaps proportionately less capable. As with the previous option, due to the space, weight, and energy requirements of the large and powerful BMD-capable radar to be carried by the CG(X), accommodating such a radar in a 9,000- to 11,000-ton CG(X) based on a new-design hull design might require steep reductions in other ship capabilities. This option, which is the Navy's stated preferred approach, could produce a ship about as large as the 14,500-ton DDG-1000, or (if the DDG-1000's hull is expanded) somewhat larger than the DDG-1000 (i.e., upwards of 20,000 tons). The unit procurement cost of this option would be substantially greater than those of the previous two options, but perhaps less so than a simple size comparison would suggest, due to shipbuilding costs that are fixed or relatively insensitive to ship size. Production of the ship would benefit from learning-curve effects of producing DDG-1000s. Hull-design and system-integration costs would be minimized through reuse of the DDG-1000 hull and elements of the DDG-1000 combat system, and could be substantially lower than those of the previous two options. The ship would be substantially more capable than the previous two options, and perhaps proportionately more capable, due to economies of scale in naval architecture. Thus, although this ship would be substantially more expensive to procure, it would likely offer more capability per dollar than the previous two designs. This option could produce a ship of more than 20,000 tons. In at least some respects, this option would be more capable than the previous option, and perhaps proportionately more capable. The unit procurement cost of this option would be greater than that of the previous option, but perhaps less so than a simple size comparison would suggest. Production might benefit less than would the previous option from the DDG-1000 learning curve, and hull-design and system-integration costs might be higher than those of the previous option due to less reuse of DDG-1000 hull design features and the DDG-1000 combat system. A Navy report submitted to Congress in January 2007 suggests that adding a nuclear propulsion plant to a to any of the above four options would likely increase its unit procurement cost by $600 million to $700 million in constant FY2007 dollars. If oil prices in coming years are high, much or all of the increase in unit procurement cost could be offset over the ship's service life by avoided fossil-fuel costs. Due to its larger size, the fourth option above would most easily accommodate a modified version of one-half of the new nuclear propulsion plant that has been developed and designed for the Navy's new Gerald R. Ford (CVN-78) class aircraft carriers. The third option above might also accommodate a modified version of one-half of a Ford-class propulsion plant, but perhaps less easily and with more modifications. The first two options above would likely require the design of a new nuclear propulsion plant. Designing a new nuclear propulsion plant would likely cost hundreds of millions of dollars; modifying the Ford-class plant would cost substantially less. A nuclear-powered ship would be more capable than a corresponding conventionally powered version because of the mobility advantages of nuclear propulsion, which include, for example, the ability to make long-distance transits at high speeds in response to distant contingencies without need for refueling. Building the CG(X) as a nuclear-powered ship might mean that at least part of the ship would not be built at two shipyards that have built the Navy's cruisers and destroyers in recent years, because neither of these yards are certified to build nuclear-powered ships. The basic CG(X) design options presented above can be assessed in terms of development cost and risk, unit procurement cost, annual O&S cost, and unit capability, all in the context of operational requirements or desires, the potential operational risks of not fulfilling those requirements or desires due to insufficient unit capability or insufficient ship quantities, and potential implications for the shipbuilding industrial base. The question of whether to procure a potentially smaller number of individually more expensive and more capable ships, or a potentially larger number of individually less expensive and less capable ships, is a classic ship-design and force-planning issue that the Navy, the Department of Defense, and Congress have faced many times in the past. The advantage that larger ships have in terms of unit capability and capability per dollar is one reason why the Navy has often preferred larger and more capable designs in recent decades. This advantage has been counterbalanced by the issue of unit procurement affordability, because procuring an insufficient quantity raises the risk of not having a ship in service in the right location when it is needed. Potential oversight questions for Congress include the following: How much consideration is the Navy giving in the CG(X) AOA to design options other than those based on the DDG-1000? Are other basic options being treated in the AOA simply as straw men? What are the relative costs and capabilities of the options discussed above? What is the potential tradeoff between unit capability (and unit procurement cost) on the one hand, and potential numbers procured on the other? In assessing basic CG(X) design options, is the Navy assigning too much value, not enough value, or about the right amount of value to the sunk costs of designing the DDG-1000 hull and to CG(X) production economies that can result from the DDG-1000 learning curve? Section 1012 of the House-reported version of the FY2008 defense authorization bill ( H.R. 1585 ) would make it U.S. policy to build cruisers and certain other large Navy ships with nuclear power unless the Secretary of Defense notifies Congress that nuclear power for a given class of ship would not be in the national interest. The provision is discussed on page 387 of the House Armed Services Committee's report on H.R. 1585 ( H.Rept. 110-146 of May 11, 2007). | The Navy has stated that it would like to use the design of its new DDG-1000 destroyer as the basis for its planned CG(X) cruiser. Ships based on other hull designs are possible. Nuclear propulsion is an option being studied for the CG(X). For a more general discussion of both the CG(X) and DDG-1000, see CRS Report RL32109, Navy DDG-1000 and DDG-51 Destroyer Programs: Background, Oversight Issues, and Options for Congress, by [author name scrubbed]. This report on basic CG(X) design options will be updated as events warrant. |
The outlook for Venezuela appears to be dimming every day, and it's not just because of the country's daily four-hour mandatory blackouts.
The oil-exporting South American country is caught in a perfect storm of droughts, food and power shortages, and devastating inflation and recession caused by plummeting crude prices.
"We're not at war and we're living worse than in a war situation," Becky Jordan, a private school teacher in Caracas, told CBC's The Current. "I really have no idea how much longer people can take this."
President Nicolas Maduro, who took over following the death of longtime leader Hugo Chavez in 2013, faces mounting criticism and opposition as he tries, sometimes rather unconventionally, to find a solution.
Energy crisis and economic woes
Venezuela, an OPEC nation, relies heavily on oil for export earnings, and plummeting world prices have helped push its state-led economy into a deep recession.
"Since Venezuela is about 96 per cent dependent on oil, we're only receiving about a third of the hard currency we were receiving as recently as a couple of years ago," Phil Gunson, senior analyst with International Crisis Group, told The Current.
Polls show 70 per cent of Venezuelans now want to see President Nicolas Maduro ousted. (Spencer Platt/Getty Images)
The country also has the highest inflation in the world.
Maduro announced earlier this year the strongest of the country's official exchange rates, used for essential goods like food and medicine, would be changing from 6.30 bolivars to the U.S. dollar to 10 bolivars to the dollar. But on the black market, a U.S. dollar is worth about 1,000 bolivars.
Along with the currency devaluation, Maduro raised premium gasoline prices — for the first time in 20 years — from 0.1 bolivar a litre to six bolivars per litre, and regular gasoline will jump from 0.07 bolivar to one bolivar per litre. In Canadian terms, that's about $1.29 per litre for premium, and 22 cents a litre for regular.
While Maduro has blamed the downturn on an "economic war" he claims is being waged against his government by the political opposition, the private sector and Washington, his critics have slammed the president for sticking to Chavez's socialist blueprint instead of embracing free-market reforms.
"Within 2½ years, Maduro has taken an unsustainable [economic] model and just ridden it right off a cliff," David Smilde, a senior fellow and Venezuela expert with the Washington Office on Latin America, previously told CBC News.
"People are having a very difficult time."
Water and power shortages
Venezuela's economic woes are exacerbated by water and electricity shortages.
The Guri Dam in the southeastern state of Bolivar, one of the world's largest, has seen unprecedented low levels of water, hitting a record low 243 metres in April.
The Guri Dam in the southeastern state of Bolivar supplies up to 70 per cent of the nation's 16,000 megawatt power demand. (Carlow Garcia Rawlins/Reuters)
The reservoir supplies up to 70 per cent of the nation's 16,000 megawatt power demand, and the government has begun rationing.
Maduro blames the drought on the El Nino weather phenomenon, but his critics say rationing could have been prevented had the government invested in maintenance and in the construction of thermoelectric plants — power stations that generate electricity with heat energy.
Maduro has tried to reduce the country's consumption by cutting back the work week to just two days for 2.5 million public sector employees, instituting four-hour-long daily blackouts across the country, reducing hours in over 100 shopping malls and urging women to stop blow-drying their hair.
"I always think a woman looks better when she just runs her fingers through her hair and lets it dry naturally," Maduro said in April. "It's just an idea I have."
Lack of food and necessities
The floundering economy has resulted in a shortage of basic supplies like food and medicine.
Teacher Becky Jordan says you have to wait in line for hours for a loaf of bread, and live without essentials like soap and toothpaste.
"Daily life has become increasingly challenging, difficult, frustrating, even humiliating," Jordan said.
The government only allows people to shop one day a week at state-run supermarkets, with the day pre-determined by ID number.
All the food available in the house of one family in Caracas. (Carlos Garcia/Reuters)
Food shortages have also contributed to a decline in the education system.
According to the Venezuela Teacher's Federation, children have missed an average of 40 per cent of class time because a third of teachers skip work on any given day to wait in food lines.
Helena Porras, a school director in Caracas, has asked nearby supermarkets to let teachers cut in line and has disciplined staff for selling students passing grades in exchange for scarce goods like milk and flour.
Until recently, Venezuela's schools were among the best in South America, and the late Chavez made education a centrepiece of his socialist revolution.
But now teachers are fleeing the country, the annual dropout rate has doubled and more than a quarter of teenagers are not enrolled in school.
A student sits on a teacher's desk inside what was once a classroom, where doors lay on the urine-covered floor of a public high school in Caracas. Teachers are fleeing the country and the annual dropout rate has doubled. (Ariana Cubillos/Associated Press)
Maria Alejandra Torres, a hematologist-oncologist in Venezuela, told The Current that the country's health-care practitioners lack basic drugs and hospital supplies, which has resulted in the death of patients with treatable conditions.
"We are losing many patients," Torres said. "We don't know how to help them. We don't have a way to help them."
Political and social unrest
Beyond the opposition's formal protest campaign, spontaneous street protests and looting are becoming more common.
Some demonstrations have turned violent with National Guard soldiers and police officers using tear gas to counter rock-throwing protesters.
Maduro, a 53-year-old former bus driver who narrowly won election to replace the late Chavez in 2013, accuses Henrique Capriles and other opposition leaders of seeking a coup with the help of the U.S.
A man who was waiting in line at a grocery store argues with a Bolivarian National Police officer as people continue to wait for food, sold at regulated prices, to arrive to the store in Caracas. (Fernando Llano/Associated Press)
The opposition coalition won control of the National Assembly in December elections, but all the legislature's measures have been shot down by the Supreme Court.
The opposition wants a recall referendum against Maduro later this year in order to force a new presidential election.
To force a referendum, the opposition would need to gather nearly four million signatures. And if a referendum was held, the president would be removed only if the number of anti-Maduro votes exceeded the number of votes he received in the 2013 election.
Officials from the ruling Socialist Party have said there is no time to organize such a vote this year and the election board is dragging its feet over the complicated procedure, which the opposition have denounced as a delaying tactic.
With polls indicating 70 per cent of Venezuelans want him out, the odds would be against Maduro in a recall. But if the vote were delayed until next year and he were to lose, he would be replaced by his hand-picked vice-president and the Socialist Party would keep power until the 2019 election. ||||| CARACAS/WASHINGTON (Reuters) - The U.S. government sent veteran diplomat Tom Shannon to Venezuela on Tuesday to meet senior opposition and government figures amid a brutal economic crisis and political impasse in the South American OPEC nation.
Venezuela's President Nicolas Maduro (C) holds a whip during a rally with supporters of African descent at Miraflores Palace in Caracas, Venezuela June 21, 2016. REUTERS/Carlos Garcia Rawlins
Socialist-run Venezuela has for years had tumultuous relations with Washington, and a similar rapprochement led by Shannon stalled last year over the jailing of opposition leader Leopoldo Lopez.
Despite a harsh exchange of words at a summit in the Dominican Republic last week, U.S. Secretary of State John Kerry and Venezuelan Foreign Minister Delcy Rodriguez agreed to re-start talks in an effort to reduce tensions.
In a visit lasting less than 24 hours, Shannon, a veteran of U.S. diplomacy in the region who is an under secretary in the State Department, was to meet first with opposition leaders. These included congress head Henry Ramos and two-time presidential candidate Henrique Capriles, according to opposition sources.
He was then hoping to meet President Nicolas Maduro, the former bus driver who is half-way through a six-year term after winning election in 2013 to succeed his mentor Hugo Chavez.
“The main purpose is to have a series of discussions about the social, economic and political challenges in Venezuela and to try to help foster constructive, meaningful dialogue toward solutions with a variety of groups in the government and outside,” said U.S. State Department spokesman John Kirby.
Washington may be hoping a rapprochement undermines Maduro’s constant blaming of his “imperialist” foes for Venezuela’s economic demise and alleged coup plans against him.
TIME-WASTING?
Shannon is likely, analysts and diplomats said, to press for the release of jailed opponents including Lopez, and he has also publicly backed the opposition’s push for a referendum to try and recall Maduro this year.
“The United States understands that for a recall referendum to take place, international engagement is necessary,” said Venezuela expert David Smilde, of Tulane University.
In a speech on Tuesday, Maduro welcomed Shannon and also repeated his calls for talks with his domestic foes.
“I think it’s very good the right steps are taken to rebuild relations with the United States,” he said. “And I would equally want processes of dialogue ... with Venezuela’s opposition.”
Both Ramos and Capriles have said dialogue is a time-wasting tactic employed by Maduro in the past, and the only solution for Venezuela now is a referendum. The government has said there is no time to organize a referendum this year, and the national election board has been dragging its feet over the process.
The timing is crucial because if Maduro loses a referendum this year, there would be a new presidential election which polls indicate he would likely lose. Losing a referendum after January means he would be replaced by his vice president, effectively leaving the Socialist Party in power.
Though he benefited from Chavez’s popularity and generous welfare programs to win narrowly in 2013, Maduro’s popularity has plummeted amid recession, the highest inflation in the world, shortages and now daily lootings and food riots.
The opposition won control of the National Assembly in December due to public ire over the economy, but a conflict of powers has ensued and a government-leaning Supreme Court has overturned most of the legislature’s measures.
Since Chavez began office in 1999, Venezuela and the United States have gone through cycles of diplomatic fighting followed by generally short-lived eras of reconciliation.
They have been without ambassadors since 2010.
Through it all, Venezuela has kept oil flowing north uninterrupted, and is the third biggest U.S. supplier after Saudi Arabia and Canada, according to latest U.S. data. ||||| CUMANÁ, Venezuela — With delivery trucks under constant attack, the nation’s food is now transported under armed guard. Soldiers stand watch over bakeries. The police fire rubber bullets at desperate mobs storming grocery stores, pharmacies and butcher shops. A 4-year-old girl was shot to death as street gangs fought over food.
Venezuela is convulsing from hunger.
Hundreds of people here in the city of Cumaná, home to one of the region’s independence heroes, marched on a supermarket in recent days, screaming for food. They forced open a large metal gate and poured inside. They snatched water, flour, cornmeal, salt, sugar, potatoes, anything they could find, leaving behind only broken freezers and overturned shelves.
And they showed that even in a country with the largest oil reserves in the world, it is possible for people to riot because there is not enough food.
In the last two weeks alone, more than 50 food riots, protests and mass looting have erupted around the country. Scores of businesses have been stripped bare or destroyed. At least five people have been killed. ||||| Starting in 1996, Alexa Internet has been donating their crawl data to the Internet Archive. Flowing in every day, these data are added to the Wayback Machine after an embargo period. ||||| Media playback is unsupported on your device Media caption The BBC's Juan Paullier is following the validation process in Caracas
The process of validating signatures on a petition calling for a referendum to remove Venezuelan President Nicolas Maduro from office is proceeding apace, an opposition leader says.
Henrique Capriles said 37% of the 195,000 signatures needed to trigger the next phase of the recall referendum were collected on the first day.
Those who endorsed the petition have until Friday to have their identity checked.
Mr Maduro's term runs until 2019.
But the opposition wants to oust President Maduro, whom they blame for Venezuela's economic problems, before the end of his term.
'Warning for Maduro'
Venezuela is in the midst of an economic crisis which has brought the South American country to the brink of collapse.
What has gone wrong in Venezuela?
Chavez backer decries anarchy
It has the world's highest inflation rate and chronic shortages of basic food and medicine.
Mr Capriles said the massive presence of voters on the first day of the validation process was a clear sign that Venezuelans wanted a change of government.
Steps towards the recall referendum
Image copyright AP Image caption Venezuelans have been queuing to get their signatures on a recall referendum validated
1% of voters on the electoral roll have to sign a petition within 30 days to kick-start the process
Signatures have to be validated
20% of voters (almost four million) have to sign a second petition in order to trigger the referendum
For the referendum to be successful, an equal or greater number of voters than those who elected Mr Maduro would have to cast their vote in favour of the recall - he won the 2013 election with 7,587,579 votes
"What we saw today were queues across the country," said Mr Capriles on Monday night. "That's a warning for Maduro."
Those who endorsed the petition will have until Friday to have their identity cards and fingerprints checked at centres set up by the National Electoral Council (CNE).
The petition had almost two million signatures but election officials said 600,000 of those were fraudulent.
Only 1% of the electorate, or 194,729 voters, however, need to endorse the referendum in this first phase.
Mr Capriles said 71,557 signatures had been authenticated on Monday alone.
Image copyright EPA Image caption Henrique Capriles says Venezuelans want President Maduro out
But the opposition still has to overcome a number of hurdles before a recall referendum can be held.
If enough signatures on this initial petition are validated, opposition leaders will have to hand in a second petition signed by almost four million people.
Only when the electoral authorities have established that the requirements have been met on that second petition will the recall referendum be held. ||||| Today in Venezuela, families can wait in lines at the supermarket for 18 hours at a time to get the right to purchase small quantities of oil, rice or pasta, according to Foreign Policy. Violent crime, meanwhile, is on the rise, with the country's capital, Caracas, recently overtaking Honduras' San Pedro Sula to become the most violent city in the world, according to the Citizen's Council for Public Security and Criminal Justice.
Problems with starvation and malnutrition are worsening, and major Venezuelan companies, like Empresas Polar, the country's largest producer of beer, are shuttering their doors. Moody's, an American credit agency, said Monday that the country is "highly unlikely" to have enough currency to available to make its debt payments this year.
The political circumstances leading up to economic collapse in Venezuela have been happening for over a decade now, according to Dany Bahar, a fellow at the Brookings Institution and an associate at the Harvard Center for International Development, but the situation has greatly deteriorated in recent years because of plummeting crude prices, environmental factors and the failures of President Nicolas Maduro's government to address the country's woes.
Bahar told ABC News that he believes Venezuela will need "significant foreign intervention" from the International Monetary Fund (IMF) or other organizations in order to begin to surface from its current economic state.
AFP/Getty Images
Falling Crude Prices, Drought and Blackouts
Venezuela, which is sometimes described as a "petrostate," or a nation that derives its wealth largely from oil, is a founding member of the Organization of the Petroleum Exporting Countries (OPEC) and one of the world's largest exporters of oil.
Oil has been a critical component of the country's economy since it was discovered in the early part of the 20th century and particularly since the industry was nationalized in 1976. Today, oil accounts for 95 percent of the country's export earnings, according to OPEC, and the oil and gas industry account for 25 percent of its GDP.
Oil prices have fallen sharply in recent years across the world, and Venezuela's dependence on it as an export has exacerbated preexisting economic conditions that were in place before Maduro took office in 2013, such as debt and currency devaluation, according to the International Crisis Group, a transnational non-profit, non-governmental organization that carries out field research on violent conflict.
Andrea de Silva/EPA
Bahar, who was born in Caracas, said that an economic collapse of this magnitude "should not [have] happen[ed]" to such an oil-rich country like Venezuela and that he believes that poor economic decisions made by its socialist government since former President Hugo Chavez rose to power are to blame.
From 2006 to 2012, Venezuela increased its foreign debt, multiplying it by a factor of five, according to a report co-authored by Bahar, but the move has proved unsustainable.
Venezuela still imports much of what it consumes, according to Bahar, and the decline in value of its primary export, combined with its swelling debt, creates intrinsic challenges for the country's economy.
Improving self-sufficiency in terms of food production has also been limited by environmental factors. Drought has affected Venezuela's water supply, which has hampered farming and also created a need for power cuts in order to conserve energy, NPR reported. The power cuts, which Electricity Minister Luis Motta Dominguez called a "necessary sacrifice" in a televised address this year, last roughly four hours per day, further hindering the ability of the country to produce from within.
Rising temperatures also play a role in the worsening conditions of Venezuela's environmental landscape. The country's amphibian population, considered by scientists to be a bellwether of the ecosystem's overall health, is facing extinction, Reuters reported last year.
Despite these environmental factors, Bahar says that Maduro, Chavez's successor, is "unwilling and unable" to restore balance to Venezuela's economy, which is creating a growing movement of political opposition.
AFP/Getty Images
Crisis of Leadership
Bahar told ABC News that Chavez, who took power in 2002 and served as president until his death in 2013, created a "dependency" among the public that is haunting them today. He described the conditions that paved the way to Chavez's rise as being a perception of corruption among Venezuela's elite and widening inequality. Maduro's governance is often considered an extension of Chavez's.
Public trust in Maduro, who served as vice president under Chavez, has plummeted as the country's economic crisis has deepened. A referendum to remove him from power received 37 percent of the 195,000 signatures required to trigger the next phase in his recall on the first day of its availability to the public, according to a report by the BBC today.
His term, barring recall, will run until 2019.
The timing of mounting a recall is critical, according to Bahar. According to law, Maduro would be replaced by his vice president if a recall is held after the midpoint of his term, which will occur in January 2017. Maduro's political opposition is pushing for the recall to take place before that time, according to Bahar, and Maduro is trying to prevent it.
According to the International Crisis Group, Venezuela's poor have taken the brunt of the country's decline after making modest gains during Chavez's socialist regime. Maduro, who is also a socialist, has confounded Venezuelans with his sometimes impractical suggestions to resolve the crisis.
AFP/Getty Images
For example, he advised residents this year to cultivate “urban farms” to produce their own food. The ability to produce food at home, however, has been rendered next to impossible by a shortage of seeds, as well as the medicine required to vaccinate farm animals, according to a report by NPR.
The U.S. has been critical of Maduro and has had a tense relationship with the Venezuelan government for many years.
U.S. Secretary of State John Kerry said last week that he hoped to go beyond the "old rhetoric" that divided the two nations along ideological lines in announcing talks aimed to bridge the gap between Maduro and opposition leaders who want to see him removed.
Bahar told ABC News that the economic crisis has made it "hard to go back" for logistical reasons. Among the many scarcities the country is facing are flights to and from the country. | A shortage of beer and Coke is the least of concerns in Venezuela, where residents are facing hunger, drought, power shortages, and the world's highest inflation rate at 480% amid a worsening economic crisis brought about by plummeting oil prices. The latest: The New York Times explains 87% of the population can't afford to buy food. It's no surprise, then, that more than 100 food stores were looted last week alone, per Quartz. At least five people were killed. ABC News provides the basics on how the nation got to this point. "We're living worse than in a war situation," a woman in Caracas tells the CBC, adding people wait hours in line at supermarkets for a loaf of bread and go without soap and toothpaste. The US sent a top diplomat to Venezuela on Tuesday. Reuters explains what he'll try to accomplish. A process is underway to validate some 2 million signatures on a petition calling for a referendum to oust Venezuelan President Nicolas Maduro. The BBC explains the next steps, while Telesur TV notes the date of a referendum would be crucial. Daniel Lansberg-Rodríguez at Foreign Policy tells how his friend, an opposition activist helping verify signatures, was detained on Monday and hasn't been heard from since. Kenneth Rapoza at Forbes explains why Venezuela is a "failed state" and can't afford to pay its short-term debt. Meanwhile, the political left blames America. |
This still image taken from video posted Saturday, May 21, 2016, on the official Facebook page of the Egyptian Armed Forces spokesman shows a piece of carpet from the wreckage of EgyptAir flight 804.... (Associated Press)
This still image taken from video posted Saturday, May 21, 2016, on the official Facebook page of the Egyptian Armed Forces spokesman shows a piece of carpet from the wreckage of EgyptAir flight 804. Smoke was detected in multiple places on EgyptAir flight 804 moments before it plummeted into the Mediterranean,... (Associated Press)
CAIRO (AP) — Egypt's president said on Sunday a submarine belonging to his country's Oil Ministry was headed to the site of the crash of EgyptAir Flight-804 in the eastern Mediterranean to join the search for the cockpit voice and flight data recorders, commonly known as black boxes.
President Abdel-Fattah el-Sissi also said Egypt was jointly investigating the Thursday crash with the French government. "It is very, very important to us to establish the circumstances that led to the crash of that aircraft," he said in comments broadcast live on Egyptian TV channels.
He said the submarine, which has the capacity to operate at a depth of 3,000 meters (9842 feet) below the surface, left for the site Sunday. He gave no further details.
Making his first public comments since the crash of the Airbus A320 while en route from Paris to Cairo, el-Sissi says it "will take time" to determine the exact cause of the crash, which killed all 66 people on board.
He thanked the nations that have joined Egyptian navy ships and aircraft in the search for the wreckage and started his comments with a minute of silence in remembrance of the victims.
El-Sissi also cautioned the media against premature speculation on the cause of the crash.
"There is not one scenario that we can exclusively subscribe to ... all scenarios are possible," he said.
El-Sissi spoke a day after the leak of flight data showing trouble in the cockpit and smoke in a plane lavatory aboard the doomed aircraft, bringing into focus the chaotic final moments of the flight, including a three-minute period before contact was lost as alarms on the plane screeched one after another.
Officials have been cautioning that it was still too early to say what happened to the aircraft, but mounting evidence points to a sudden, dramatic catastrophe that led to the crash.
Egypt's military on Saturday released the first images of aircraft debris plucked from the sea, including personal items and damaged seats. Egypt is leading a multi-nation effort to search for the plane's black boxes and other clues that could help explain its sudden plunge into the sea.
"If they lost the aircraft within three minutes that's very, very quick," said aviation security expert Philip Baum. "They were dealing with an extremely serious incident."
Authorities say the plane lurched left, then right, spun all the way around and plummeted 38,000 feet (11,582 meters) into the sea — never issuing a distress call.
Investigators have been poring over the plane's passenger list and questioning ground crew at Paris' Charles de Gaulle airport, where the airplane took off. Beside Egypt, ships and planes from Britain, Cyprus, France, Greece and the United States are taking part searching a wide area of sea 180 miles (290 kilometers) north of the Egyptian port city of Alexandria.
The EgyptAir tragedy deepens the country's struggle to revive its battered economy. While it may not reflect directly on security at Egypt's airports — which has been under international scrutiny since a Russian airliner crashed in the Sinai Peninsula in October after taking off from an Egyptian resort — the country's association with yet another air disaster will further damage its vital but currently depressed tourism industry. ||||| Police officers patrol at Charles de Gaulle airport, outside of Paris, Thursday, May 19, 2016. An EgyptAir flight from Paris to Cairo with 66 passengers and crew on board crashed into the Mediterranean... (Associated Press)
Police officers patrol at Charles de Gaulle airport, outside of Paris, Thursday, May 19, 2016. An EgyptAir flight from Paris to Cairo with 66 passengers and crew on board crashed into the Mediterranean Sea off the Greek island of Crete early Thursday morning, Egyptian and Greek officials said. (AP Photo/Christophe... (Associated Press)
PARIS (AP) — Explosives in the form of paper, or concealed in a medicine-sized bottle and looking like salt. Tiny electric detonators. Security agents at the main airport in Paris are trained to detect all manner of increasingly sophisticated devices that could doom a flight.
But the chilling reality is that security is ultimately fallible.
"The infinitely perfect does not exist," said Sylvain Prevost, who trains airport personnel seeking the coveted red badge that allows them access to the airport's restricted areas.
That is especially true when 85,000 people at Charles de Gaulle airport hold red badges, which are good for three years, and many of them work for a host of private companies. Add to the mix, concern over religious extremism in an age of increasing radicalization that can transform people within months.
Airport authorities in France and elsewhere are painfully aware of the risks, but hesitant to speculate as to whether an airport security lapse could have contributed to Thursday's crash of EgyptAir Flight 804. The Airbus A320 took off from Charles de Gaulle with 66 people on board before lurching wildly to the left and right, spinning around and crashing into the eastern Mediterranean Sea, according to officials.
The cause of the crash remains unclear.
France has been in a state of emergency since Nov. 13 Paris attacks that killed 130, after two deadly attacks earlier in 2015, all with links to the Islamic State group. Security is being further reinforced ahead of the French Open tennis tournament, which starts Sunday, and the Euro 2016 soccer championships, a monthlong tournament that begins June 10.
The March 22 attacks that killed 32 people in Brussels, at the airport and in a metro station, add to the sense that public places like airports are vulnerable.
"It's possible to get any kind of dangerous object through every airport in the world due to the contradiction between time and security," said noted criminologist Alain Bauer. "Everybody wants to get in the plane fast .... so everybody compromises on time and security."
French investigators are doing background checks and interviewing ground staff at Charles de Gaulle who had a direct or indirect link to Flight 804, from baggage handlers to gate agents, a judicial official said, speaking on condition of anonymity because he was not authorized to speak publicly on the probe.
Since the January 2015 Charlie Hebdo newsroom massacre in Paris, French authorities withdrew or refused 85 red badges, according to Paris Aeroports, nearly 70 of them taken away within a month after last November's attacks.
Most were for the "phenomenon of radicalization," Augustin de Romanet, the chief of Paris Aeroports said on Europe 1 radio. Badges can also be removed for other reasons like when someone gets a police record. A long absence could also spur an investigation.
One of two suicide bombers in the Brussels airport attack, Najim Laachraoui, had once been a Brussels airport employee himself, and Sami Amimour, one of the terrorists that attacked Paris' Bataclan concert hall in November, had once worked for France's RATP transport authority.
After the November attacks, "we re-examined the situation of the entire (airport) staff and as soon as there was a question, not even a suspicion but a question, these badges were withdrawn," Transport Minister Alain Vidalies said Friday.
As many as 4,000 private lockers at Charles de Gaulle were searched after the Paris attacks said Serge Nybelen, secretary general of the powerful CGT union chapter at the airport. He said investigators found nothing incriminating.
"There can be little groups" of the same ethnic origin "but I have no knowledge of people who radicalize," Nybelen said.
People with red security badges are expected to watch for suspicious behavior around them, according to Paris airport chief de Romanet and others.
The badges are awarded by the deputy prefect for airports, a state representative, after a training course and an exam, plus security checks by police.
A decade ago, officials cracked down on what they said was infiltration of Islamists at Charles de Gaulle and Orly, the second Paris airport, closing down some 15 clandestine prayer rooms at the two airports. Security clearances were withdrawn from 72 people, some for issues identified in letters seen by The Associated Press as "behavior" and "attitude." Employees who lost their clearance said at the time they were questioned about their religious practice and whether, for instance, they had traveled to Mecca, Islam's holy site.
"It's not a problem of religion. It's a problem of the person," said Prevost, with the Aviation Security Training Center.
Weapons of destruction have evolved along with radicalization, he noted.
"Today, the system of airport security as we knew it has been redefined," Prevost said. "Here you see an explosive in the form of paper ... which can be hidden in a portable computer or in a small tablet."
Speaking at his training center, Prevost showed the barely detectable element on a screen — which was made clearly visible only when a special filter was applied. Sharp objects like knives made with polymer, an extremely hard plastic, can also escape a metal detector, he said.
"The real challenge today is the radioscopic analysis," he said, referring to X-Rays to detect such objects bundled deeply into luggage.
Prevost suggested that complicity between an airport employee and an outsider would be the most likely way to sabotage an aircraft, because the airport "is a bubble." However, he said "the threat is everywhere and changing."
___
Chris Den Hond, Sylvie Corbet and Philippe Sotto in Paris contributed.
___
This story corrects that Nybelen heads local union chapter at Charles de Gaulle airport, not overall union. ||||| But they cautioned that the signals, sent by a monitoring system on board the Airbus A320 jetliner, did not offer enough information to conclude what had caused the crash.
“These are not messages that enable us to interpret anything,” said Sébastien Barthe, a spokesman for France’s Bureau of Investigations and Analysis. “If there is smoke, it means that there is potentially a fire somewhere, but it doesn’t tell us where the fire is, and it doesn’t help us establish whether it is something malevolent or something technical.”
In an audio message released Saturday, Abu Muhammad al-Adnani, the official spokesman of the Islamic State and the head of a unit dedicated to external attacks, denounced the American-led military campaign against the group but did not mention the EgyptAir crash.
EgyptAir’s security procedures last came under scrutiny in March when a passenger on a domestic flight pretended to be wearing an explosive vest and forced the plane to land in Cyprus. The crisis was resolved within hours when the man, later determined to be psychologically troubled, surrendered. The Egyptian authorities were quick to post surveillance videos that they said showed he had been searched before boarding the flight.
Among the 66 people on Thursday’s flight from Charles de Gaulle Airport in Paris were three EgyptAir in-flight security personnel — one more than the normal team of two for reasons that were not entirely clear.
Photo
EgyptAir security guards differ in several respects from the undercover air marshals who travel on American airlines. The Egyptian guards are unarmed and wear an understated uniform consisting of a dark blazer and a white shirt. When called on, they help crew members deal with unruly passengers. They come from a wide variety of backgrounds and earn a moderate wage of about $400 a month.
Normally, one security officer sits in the first economy row, behind business class, and the other is at the rear of the aircraft, two members of an EgyptAir crew said. During stopovers at foreign airports, the security officers are usually responsible for searching the workers who clean the plane and checking the credentials of all crew members or employees who board. They do not monitor the baggage handlers who load the plane’s hold.
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Security officials said those procedures would have applied to the EgyptAir plane during short layovers it made at two African airports — in Tunis and the Eritrean capital, Asmara — in the days before the crash. But the procedure is different in Paris because European airports do not permit EgyptAir security officials to search local cleaning workers, a source of disgruntlement among Egyptian officials who feel they are being discriminated against.
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Colleagues described the security guards who died in Thursday’s crash — Walid Ouda, Mohammed Farag and Mahmoud el Sayed — as professionals who had exhibited no signs of unusual behavior. They described Mr. Farag as a lighthearted man who was often teased by friends for not having married, while Mr. Ouda cut a more taciturn figure and was polite to a fault.
Friends and relatives also presented a uniformly untroubled picture of the pilot, Capt. Mohamed Shoukair, 36, and his co-pilot, Mohamed Mamdouh Assem, 24. An EgyptAir pilot, who spoke on the condition of anonymity because he was not authorized to speak to the news media, said he had worked with both and described them as professional aviators who had not exhibited any mental or social problems. At 24 years old, Mr. Assem was the average age of many co-pilots at the airline, he said.
EgyptAir crew members have been subjected to much stricter security measures since the crash of the Russian jetliner in October, said the pilot, who described the procedures before that crash as lax. The new procedures include personal searches that have prevented crew members from smuggling cigarettes or currency, he said.
The graffiti about Mr. Sisi occurred several times for about two years after Mr. Morsi, of the Muslim Brotherhood, was removed as president in July 2013. At the time, it was taken as a sign of the country’s bitter political divide rather than a directed threat against the plane.
Nonetheless, over that period, EgyptAir fired a number of employees, mostly members of the ground staff, who were presumed to be sympathizers of the Muslim Brotherhood, security officials said. Similar purges took place in other companies in Egypt at the time.
More recently, fears of terrorism have tightened security at regional airports, including Tunis, where the Airbus A320 had traveled just before its trip to Paris, the pilot said. Foreign flight crews face new restrictions on their movement and are now prevented, for example, from leaving the plane to buy items in the duty-free shop, he said.
EgyptAir flights headed to Europe also face added scrutiny under a European Union program known as SAFA, or Safety Assessment of Foreign Aircraft, which allows for spot inspections of airplanes at European airports and penalties for violations.
Although Egyptian society has been divided in the turmoil that followed the ouster of President Hosni Mubarak in 2011, there has been a tangible sense of national solidarity since Thursday’s crash. Images of grieving relatives have dominated news coverage. As the official crash investigation starts, many Egyptians have reacted furiously to any suggestion that the airline crew bore any responsibility.
Ezzat Shoukair, a cousin of the captain, said he was distressed by some of the coverage.
“Don’t listen to the lies people have been saying since the crash,” he said, starting to weep as he spoke. “We just want to know where his body is. Otherwise, where will those who miss him go when they want to visit him?” | Egyptian President Abdel-Fatah El-Sissi says a submarine is en route to the crash site of EgyptAir Flight 804 to search for the black boxes, but the New York Times reports that the airline had long suffered from security threats stemming from Egypt's political turmoil—including, ominously, a graffitied threat referring to Sissi himself on the very aircraft that went down Thursday in the Mediterranean. "We will bring this plane down," read the threat, which the Times calls an "eerie coincidence," but which also referenced the last two letters of the plane's registration number, SU-GCC, as a phonetic play on Sissi's last name. Someone also scrawled "traitor" and "murderer" in the incident two years ago; the graffiti was blamed on workers at Cairo's airport and the nation's unrest, rather than a specific terrorist threat. Threat or not, EgyptAir was among many of the nation's businesses forced to clean house of employees with extremist viewpoints and implement new security measures, especially, the Times notes, after a Russian plane crashed late last year. Among those measures were crew searches and adding security guards to flights; three such guards were aboard the downed flight, raising the possibility that those measures may not have been sufficient. The AP notes that security at Paris' main airport, where Flight 804 originated, is tight, but, as one expert puts it, " the infinitely perfect does not exist." Egypt and France are investigating the crash jointly. |
The Americans with Disabilities Act (ADA) is a broad civil rights act prohibiting discrimination against individuals with disabilities. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. Several Supreme Court decisions have interpreted the definition of disability, generally limiting its application. Since these Supreme Court interpretations, lower court decisions also interpreted the definition of disability strictly. Congress responded to these decisions by enacting the ADA Amendments Act, P.L. 110-325 , which rejects the Supreme Court and lower court interpretations and amends the ADA to provide broader coverage. Two of the major changes made by the ADA Amendments Act are to expand the current interpretation of when an impairment substantially limits a major life activity (rejecting the Supreme Court's interpretation in Toyota) , and to require that the determination of whether an impairment substantially limits a major life activity must be made without regard to the use of mitigating measures (rejecting the Supreme Court's decisions in Sutton, Murphy, and Kirkingburg) . On September 23, 2009, the Equal Employment Opportunity Commission (EEOC) issued proposed regulations under the ADA Amendments Act. Comment on the proposed regulations must be submitted on or before November 23, 2009. The original ADA definition of disability was based on the definition of disability used for Section 504 of the Rehabilitation Act of 1973. The term disability with respect to an individual was defined as "(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment." The ADA Amendments Act essentially keeps the same language but rejects the interpretation given to the language by the Supreme Court. Three Supreme Court decisions in 1999 addressed the definition of disability, and specifically discussed the concept of mitigating measures. Sutton v. United Air Lines involved sisters who were rejected from employment as pilots with United Air Lines because they wore eyeglasses. The Supreme Court in Sutton examined the definition of disability used in the original ADA and found that the determination of whether an individual has a disability should be made with reference to measures that mitigate the individual's impairment. The Sutton Court stated, "'a disability' exists only where an impairment 'substantially limits' a major life activity, not where it 'might,' 'could,' or 'would' be substantially limiting if mitigating measures were not taken." The Court also emphasized that the statement of findings in the ADA that some 43 million Americans have one or more physical or mental disabilities "requires the conclusion that Congress did not intend to bring under the statute's protection all those whose uncorrected conditions amount to disabilities." Similarly, in Murphy v. United Parcel Service, Inc ., the Court held that the fact that an individual with high blood pressure was unable to meet the Department of Transportation (DOT) safety standards was not sufficient to create an issue of fact regarding whether an individual is regarded as unable to utilize a class of jobs. The Court in Murphy found that an employee is regarded as having a disability if the covered entity mistakenly believes that the employee's actual, nonlimiting impairment substantially limits one or more major life activities. And in the last of this trilogy of 1999 cases, the Court in Kirkingburg v. Albertsons held that a trucker with monocular vision who was able to compensate for this impairment was not a person with a disability. In the 2002 case of Toyota Motor Manufacturing v. Williams, the meaning of "substantially limits" was examined, and Justice O'Connor, writing for the unanimous Court, determined that the word substantial "clearly precluded impairments that interfere in only a minor way with the performance of manual tasks." The Court also found that the term "major life activity" "refers to those activities that are of central importance to daily life." Finding that these terms are to be "interpreted strictly," the Court held that "to be substantially limited in performing manual tasks, an individual must have an impairment that prevents or severely restricts the individual from doing activities that are of central importance to most people's daily lives." Since these Supreme Court decisions, lower courts applied these holdings in various factual situations. For example, in Orr v. Wal-Mart Stores, Inc ., the Eighth Circuit found that a pharmacist with diabetes who takes insulin and eats a special diet was not an individual with a disability because, with the medication and diet, the diabetes did not substantially affect a major life activity. Similarly, in McClure v. General Motors Corp., the Fifth Circuit found that an electrician with muscular dystrophy who could lift his arms only to shoulder level did not have a disability. The Eleventh Circuit examined what are major life activities in Littleton v. Wal-Mart. The plaintiff, a 29-year-old man who was diagnosed with mental retardation as a child, was not hired for a position as a cart-push associate with Wal-Mart. The court found that "[i]t was unclear whether thinking, communicating and social interaction are 'major life activities' under the ADA" and noted that even if thinking, communicating, and social interaction were found to be major life activities, the plaintiff did not show that he was substantially limited in these activities. On July 26, 2007, the 17 th anniversary of the enactment of the ADA, bills were introduced in both the House and Senate to amend the ADA to broaden the definition of disability. S. 1881 , introduced by Senator Harkin, was referred to the Senate Health, Education, Labor, and Pensions Committee and hearings were held on November 15, 2007. H.R. 3195 , introduced by Representative Hoyer, was referred to the House Committee on Education and Labor, as well as the House Committees on Judiciary, Transportation and Infrastructure, and Energy and Commerce for a period to be determined by the Speaker. Hearings were held by the Subcommittee on the Constitution, Civil Rights, and Civil Liberties of the House Judiciary Committee on October 4, 2007, and on January 29, 2008, by the House Education and Labor Committee. On June 18, 2008, both the House Judiciary Committee and the House Education and Labor Committee reported out H.R. 3195 , now renamed the ADA Amendments Act of 2008. H.R. 3195 as reported out of committee was significantly different from H.R. 3195 and S. 1881 as introduced. Those bills would have eliminated the phrase "substantially limits" from the definition thereby broadening the definition of disability to cover the majority of the population. The House passed H.R. 3195 on June 25, 2008, by a vote of 402 to 17. The House-passed bill would have kept the term "substantially limits" and defined it as "materially restricts." The Senate Health, Education, Labor and Pensions Committee held a hearing on July 15, 2008, where testimony was heard on several issues, including the impact of the ADA Amendments Act on education. On July 31, 2008, Senator Harkin with 55 original cosponsors introduced S. 3406 , the ADA Amendments Act of 2008, which tracked much of the House-passed language but made several significant changes, including deleting the House definition of "substantially limits" as "materially restricts." S. 3406 passed the Senate by unanimous consent on September 11, 2008, and passed the House September 17, 2008. P.L. 110-325 was signed into law on September 25, 2008. The ADA Amendments Act (ADAAA) defines the term disability with respect to an individual as "(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment (as described in paragraph (3))." Although this is essentially the same statutory language as was in the original ADA, P.L. 110-325 contains new rules of construction regarding the definition of disability, which provide that the definition of disability shall be construed in favor of broad coverage to the maximum extent permitted by the terms of the act; the term "substantially limits" shall be interpreted consistently with the findings and purposes of the ADA Amendments Act; an impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability; an impairment that is episodic or in remission is a disability if it would have substantially limited a major life activity when active; and the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, except that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered. The findings of the ADA Amendments Act include statements indicating that the Supreme Court decisions in Sutton and Toyota as well as lower court cases have narrowed and limited the ADA from what was intended by Congress. P.L. 110-325 specifically states that the then-current Equal Employment Opportunity Commission (EEOC) regulations defining the term "substantially limits" as "significantly restricted" are "inconsistent with congressional intent, by expressing too high a standard." The codified findings in the original ADA are also amended to delete the finding that "43,000,000 Americans have one or more physical or mental disabilities." This finding was used in Sutton to support limiting the reach of the definition of disability. The ADA Amendments Act states that the purposes of the legislation are to carry out the ADA's objectives of the elimination of discrimination and the provision of "'clear, strong, consistent, enforceable standards addressing discrimination' by reinstating a broad scope of protection available under the ADA." P.L. 110-325 rejected the Supreme Court's holdings that mitigating measures are to be used in making a determination of whether an impairment substantially limits a major life activity as well as holdings defining the "substantially limits" requirements. The substantially limits requirements of Toyota as well as the EEOC regulations defining substantially limits as "significantly restricted" are specifically rejected in the new law. The proposed EEOC regulations state that "[a]n impairment need not prevent, or significantly or severely restrict, the individual from performing a major life activity in order to be considered a disability." The Senate Statement of Managers notes that the courts had not interpreted the term "substantially limits" in the manner Congress had intended and discussed the methods Congress had considered in order to express its intent. The House of Representatives had defined the term "substantially limits" as "materially restricts" in order "to convey that Congress intended to depart from the strict and demanding standard applied by the Supreme Court in Sutton and Toyota ." However, the Senate rejected the use of the term "materially restricts," concluding that "adopting a new, undefined term that is subject to widely disparate meanings is not the best way to achieve the goal of ensuring consistent and appropriately broad coverage under this Act." In passing the Senate bill, House debate indicated that although the term "materially restricts" was not ultimately adopted, the intent was the same as that of the Senate language. Thus, House debate stated that the descriptions of the changes intended by the term "materially restricts" in the House Committee Reports should be read as what is intended by the language of P.L. 110-325 . The ADA Amendments Act specifically lists examples of major life activities including caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working. The act also states that a major life activity includes the operation of a major bodily function. The House Judiciary Committee report indicates that "this clarification was needed to ensure that the impact of an impairment on the operation of major bodily functions is not overlooked or wrongly dismissed as falling outside the definition of 'major life activities' under the ADA." There had been judicial decisions which found that certain bodily functions had not been covered by the definition of disability. For example, in Furnish v. SVI Sys., Inc. the Seventh Circuit held that an individual with cirrhosis of the liver due to infection with Hepatitis B was not an individual with a disability because liver function was not "integral to one's daily existence." The House debate contains a colloquy between Representatives Pete Stark and George Miller on the subject of the meaning of "substantially limits" in the context of learning, reading, writing, thinking, or speaking. The colloquy finds that an individual who has performed well academically may still be considered an individual with a disability. Representative Stark stated the following: Specific learning disabilities, such as dyslexia, are neurologically based impairments that substantially limit the way these individuals perform major life activities, like reading or learning, or the time it takes to perform such activities often referred to as the condition, manner, or duration. This legislation will reestablish coverage for these individuals by ensuring that the definition of this ability is broadly construed and the determination does not consider the use of mitigating measures. The EEOC's proposed regulations echo this colloquy, specifically stating that An individual with a learning disability who is substantially limited in reading, learning, thinking, or concentrating compared to most people, as indicated by the speed or ease with which he can read, the time and effort required for him to learn, or the difficulty he experiences in concentrating or thinking, is an individual with a disability, even if he has achieved a high level of academic success, such as graduating from college. The determination of whether an individual has a disability does not depend on what an individual is able to do in spite of an impairment. What it means to be substantially limited in working was also addressed by the EEOC proposed regulations. The EEOC noted that usually an individual with a disability will be substantially limited in another major life activity so that it would be unnecessary to determine whether the individual was substantially limited regarding working. However, where that is not the case, the EEOC proposed that "[a]n impairment substantially limits the major life activity of working if it substantially limits an individual's ability to perform, or to meet the qualifications for, the type of work at issue." The EEOC also stated that this interpretation is to be construed broadly and should "not demand extensive analysis." The third prong of the definition of disability covers individuals who are "regarded as having such an impairment (as described in paragraph (3))." Paragraph 3 states that "[a]n individual meets the requirement of 'being regarded as having such an impairment' if the individual establishes that he or she has been subjected to an action prohibited under this Act because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity." However, impairments that are transitory and minor are specifically excluded from the regarded prong. A transitory impairment is one with an actual or expected duration of six months or less. The ADA Amendments Act also provides in a rule of construction in Title V of the ADA that a covered entity under Title I, a public entity under Title II, or a person who operates a place of public accommodation under Title III, need not provide a reasonable accommodation or a reasonable modification to policies, practices, or procedures to an individual who meets the definition of disability solely under the "regarded as" prong of the definition. The Senate Statement of Managers notes that there were some reservations about this change but that it was included "given our strong expectation that ... individuals [who had been given reasonable accommodations under the 'regarded as' prong by courts] would now be covered under the first prong of the definition, properly applied." The House debate echoed the Senate interpretation and expanded on congressional intent, stating the following: We, and the Senate, expressed our confidence that individuals who need accommodations will receive them because, with reduction in the burden of showing a "substantial limitation," those individuals also qualify for coverage under prongs 1 or 2 (where accommodation still is required). Of course, our clarification here does not shield qualification standards, tests, or other selection criteria from challenge by an individual who is disqualified based on such standard, test, or criteria. As is currently required under the ADA, any standard, test, or other selection criteria that results in disqualification of an individual because of an impairment can be challenged by that individual and must be shown to be job-related and consistent with business necessity for necessary for the program or service in question. The ADA Amendments Act amended Section 102 of the ADA to "mirror the structure of [the] nondiscrimination protection provision in Title VII of the Civil Rights Act of 1964." The act strikes the prohibition of discrimination against a qualified individual with a disability because of the disability of such individual and substitutes the prohibition of discrimination against a qualified individual "on the basis of disability." The Senate Managers' Statement noted that this change "ensures that the emphasis in questions of disability discrimination is properly on the critical inquiry of whether a qualified person has been discriminated against on the basis of disability, and not unduly focused on the preliminary question of whether a particular person is a 'person with a disability.'" P.L. 110-325 also provides that covered entities may not use qualification standards based on an individual's uncorrected vision unless the standard is shown to be job related and consistent with business necessity. The ADA Amendments Act makes several additions to Title V of the ADA. The act states that the ADA does not alter eligibility standards for benefits under state workers' compensation laws or under state or federal disability benefit programs. P.L. 110-325 also states that nothing in the act alters the provision of Section 302(b)(2)(A)(ii), specifying that reasonable modifications in policies, practices, or procedures shall be required, unless an entity can demonstrate that making such modifications in policies, practices, or procedures, including academic requirements in postsecondary education, would fundamentally alter the nature of the goods, services, facilities, privileges, advantages, or accommodations involved. The Senate Statement of Managers notes that this provision was added at the request of the higher education community and "is included solely to provide assurances that the bill does not alter current law with regard to the obligations of academic institutions under the ADA, which we believe is already demonstrated in case law on this topic." The Managers' Statement also noted that this provision "is unrelated to the purpose of this legislation and should be given no meaning in interpreting the definition of disability." The ADA Amendments Act specifically prohibits reverse discrimination claims and states that nothing in the act shall provide the basis for a claim by a person without a disability that he or she was subject to discrimination because of a lack of a disability. The Senate Statement of Managers observes that the intent of this provision is "to clarify that a person without a disability does not have the right under the Act to bring an action against an entity on the grounds that he or she was discriminated against 'on the basis of disability.'" As was discussed previously, the rules of construction provide that a covered entity under Title I, a public entity under Title II, or a person who operates a place of public accommodation under Title III, need not provide a reasonable accommodation or a reasonable modification to policies, practices, or procedures to an individual who meets the definition of disability solely under the "regarded as" prong of the definition. The Supreme Court in Sutton questioned the authority of regulatory agencies to promulgate regulations for the definition of disability in the ADA. The definition of disability is contained in Section 3 of the ADA, and the ADA does not specifically give any agency the authority to interpret the definitions in Section 3, including the definition of disability. The Supreme Court declined to address this issue since, as both parties to Sutton accepted the regulation as valid, "we have no occasion to consider what deference they are due, if any." The ADA Amendments Act specifically grants regulatory authority and states that "[t]he authority to issue regulations granted to the Equal Employment Opportunity Commission, the Attorney General, and the Secretary of Transportation under this Act, includes the authority to issue regulations implementing the definitions contained in sections 3 and 4." The Rehabilitation Act is amended by the ADA Amendments Act to reference the definition of disability in the ADA. The Senate Statement of Managers noted the importance of maintaining uniform definitions in the two statutes so covered entities "will generally operate under one consistent standard, and the civil rights of individuals with disabilities will be protected in all settings." The Senate Statement of Managers also stated the following: We expect that the Secretary of Education will promulgate new regulations related to the definition of disability to be consistent with those issued by the Attorney General under this Act. We believe that other current regulations issued by the Department of Education Office of Civil Rights under Section 504 of the Rehabilitation Act are currently harmonious with Congressional intent under both the ADA and the Rehabilitation Act. The effective date of the ADA Amendments Act is January 1, 2009. Since the ADA Amendments Act became effective January 1, 2009, there have been a number of judicial decisions which have sought to allege violations of the ADA as it is amended by the ADAAA. These cases usually have involved fact patterns that took place prior to the ADAAA's effective date, and courts have followed the general rule that, absent clear congressional intent, a statute enacted after the events at issue in a suit does not apply. However, in Jenkins v. National Board of Medical Examiners, the plaintiff sought accommodations on the U.S. Medical Licensing Examination and the Sixth Circuit found that the ADAAA did apply. The court reasoned that since the plaintiff was seeking prospective relief (i.e., accommodations for an examination in the future), there was no injustice to the defendant. The case was remanded for consideration and provides no guidance on the substantive interpretation of the ADAAA. Although the vast majority of ADA Amendments Act cases still turn on the issue of retroactivity, there are a few district court cases addressing the merits of an ADA Amendments Act issue. In Hoffman v. Carefirst of Fort Wayne, Inc. , the district court stated that it had "tried in vain" to find relevant case law, noting that this was one of the first cases of its kind. The central issue in Hoffman was whether an individual whose cancer is in remission is an individual with a disability under the ADA as amended. Finding that the plaintiff was an individual with a disability, the court observed that the ADA's amended language specifically provides that an impairment that is in remission is a disability if it would substantially limit a major life activity when active and that the question of whether an individual has a disability "should not demand extensive analysis." Interestingly, the court found this conclusion further bolstered by the EEOC's proposed regulations which provide that cancer is an example of an impairment that will consistently meet the definition of disability and that cancer is an example of an impairment that can be in remission. There will undoubtedly be more cases involving the ADA Amendments Act. The EEOC announced on September 9, 2010, that it was filing suit in three cases using the new definition of disability. These cases involved individuals with diabetes, cancer, and severe arthritis. | The Americans with Disabilities Act (ADA) is a broad civil rights act prohibiting discrimination against individuals with disabilities. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. Several Supreme Court decisions, including those in Sutton v. United Air Lines, Inc., 527 U.S. 471 (1999), and Toyota Motor Manufacturing v. Williams, 534 U.S. 184 (2004), have interpreted the definition of disability, generally limiting its application. Since these Supreme Court interpretations, lower court decisions also interpreted the definition of disability strictly. Congress responded to these decisions by enacting the ADA Amendments Act, P.L. 110-325, which rejects the Supreme Court and lower court interpretations and amends the ADA to provide broader coverage. On September 23, 2009, the Equal Employment Opportunity Commission (EEOC) issued proposed regulations under the ADA Amendments Act. |
The Federal Aviation Administration (FAA) is responsible for developing, administering, enforcing, and revising an effective, enforceable set of aviation safety regulations that enhance aviation safety and security and promote the efficient use of airspace. Generally, a regulation is an agency statement that is designed to implement, interpret, or prescribe law or policy or to describe procedural requirements. The process by which FAA and other federal agencies develop regulations is called rulemaking. FAA’s rulemaking activities encompass all of the agency’s areas of responsibility, including air traffic control, aviation security, and commercial space transportation. FAA must address both long-standing and emerging issues in its rulemaking efforts. For example, questions about the safety of aging aircraft and the adequacy of flight duty rest requirements for airline pilots have been debated for decades. In contrast, the issues of fire safety standards for cargo compartments and the transport of oxygen generators emerged after the Valujet crash outside of Miami in May 1996. Rulemaking can be a complex and time-consuming process, and the Congress expressed its concerns about the speed of FAA’s rulemaking in 1996, when it enacted legislation that established time frames for steps in the process. While some rules may need to be developed quickly to address safety issues or guide the use of new technologies, rules must be carefully considered before being finalized because they can have a significant impact on individuals, industries, the economy, and the environment. Figure 4 provides a case study of FAA’s efforts to address a complex, long- standing aviation safety issue by creating a rule to regulate flight duty and rest requirements for flight crew members. Rulemaking involves three stages of agency activity. First, an agency identifies a need for rulemaking. Second, it initiates the rulemaking process, develops a proposed rule, and publishes it for public comment. After a public comment period, the agency finalizes the rule by considering the comments received and drafting and publishing the final rule. Figure 5 provides an overview of the process as it applies to FAA. A rulemaking issue may be identified internally or externally. For example, FAA staff may find that changes in aviation technology or operations or the emergence of a safety problem warrant rulemaking. Alternatively, the public or the aviation industry may petition the agency to develop a new rule or provide an exemption from existing rules. At the beginning of fiscal year 2001, FAA was responding to 57 petitions for rulemaking and 415 petitions for exemptions while reviewing 84 recommendations by its advisory committee—the Aviation Rulemaking Advisory Committee (ARAC). In addition, the Congress, the President, or the Secretary of the Department of Transportation (DOT) may direct FAA to develop a rule, or the National Transportation Safety Board (NTSB) may issue a safety recommendation. After a rulemaking issue is identified, an agency must consider the issue in light of its resources and other rulemaking issues that may be equally compelling. Some rulemaking issues may require study and analysis before an agency’s management can decide whether to initiate the rulemaking process and devote resources to developing a proposed rule. Once an agency has decided to initiate rulemaking, the basic process for developing and issuing regulations is spelled out in section 553 of the Administrative Procedure Act of 1946 (APA). Most federal agencies, including FAA, use notice and comment rulemaking. Once rulemaking is initiated, agencies generally must develop and publish a proposed rule or “notice of proposed rulemaking” in the Federal Register. A public comment period follows, during which interested persons have the opportunity to provide “written data, views, or arguments.” After the comment period ends, the agency finalizes the rule by reviewing the comments, revising the rule as necessary, and publishing the final rule in the Federal Register at least 30 days before it becomes effective. Most rules are later incorporated into the Code of Federal Regulations (CFR). For the remainder of this report, we will use the term “rulemaking” to refer to the notice and comment process by which FAA’s rules are developed and codified in the CFR. Rules vary in importance, complexity, and impact. Under Executive Order 12866, federal agencies and the Office of Management and Budget (OMB) categorize proposed and final rules in terms of their potential impact on the economy and the industry affected. Executive Order 12866 defines a regulatory action as “significant” if it has an annual impact on the economy of $100 million or more; adversely affects the economy in a material way (in terms of productivity, competition, jobs, environment, public health or safety, or state, local, or tribal governments or communities); creates a serious inconsistency or interferes with another agency’s materially changes the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or raises novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the order. Since 1996, significant rulemaking entries have constituted about half of all of FAA’s rulemaking entries in the Unified Agenda, a semiannual report of federal regulatory activities. Figure 6 shows the total number of FAA’s rulemaking entries and the number of significant rulemaking entries listed in the October Unified Agendas from 1995 through 2000. Significant rules often take longer to issue than nonsignificant rules. They may require extensive regulatory analyses of the potential economic, social, and environmental impacts of one or more alternatives. These analyses may take months to complete and are needed to ensure that the projected economic impact has been correctly quantified and that the costs the rule will impose on the affected industry and individuals are justified. Significant rules typically require more levels of review than nonsignificant rules. Executive Order 12866 requires that OMB review agencies’ proposed and final significant rules before they are published in the Federal Register. Moreover, clearances for proposed and final rules may be required at the departmental level for those agencies that are part of a cabinet-level department. To reduce this burden, the Federal Aviation Reauthorization Act of 1996 grants rulemaking authority directly to the Administrator, except that the Administrator may not issue a proposed or final rule without obtaining the Secretary’s approval if that rule is significant as defined by statute. The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century narrowed the scope of rules that would be considered to be significant, setting the threshold for economic significance to $250,000,000 and eliminating inconsistency and interference with other agencies’ actions and material changes to budgetary impact of entitlements, grants, user fees, or loan programs and recipients’ rights and obligations as criteria. Nevertheless, agencies that report to the Office of the Secretary of Transportation (OST), including FAA, have also been required by the Secretary to submit for review all rules deemed significant under the executive order as well as rules that OST has indicated are to be considered to be “significant” under supplemental guidelines. These additional criteria increase the number of rules for which agencies within DOT are expected to complete regulatory analyses. For example, FAA published a significant rule in April 2000 that limited the number of commercial air tours permitted in the Grand Canyon. While the rule was not considered a significant regulatory action under Executive Order 12866, and would not have been significant under the statute, it was considered significant under the Department’s supplemental guidelines because the rulemaking had a potentially substantial economic impact on Native American tribes. Specifically, the rule was expected to have a significantly adverse impact on the Hualapai Tribe’s economic development and self-sufficiency, since the trive relied on income from air tour operations and tourist dollars brought to the reservation by the air tours. The additional analyses and reviews required for significant rules are incorporated into the basic process that all federal agencies use for rulemaking: developing a proposed rule, releasing the proposed rule for public comment, and developing a final rule. Various offices within FAA conduct the required analyses and reviews of rulemaking documents, as shown in table 1. In the early stages of rulemaking, each rule is the responsibility of a program office with technical expertise in a specific area. This office develops the initial rulemaking documents, as indicated in table 1. Depending on the content of the rule, the program office may be a staff office, like the Office of Chief Counsel, that also has the additional responsibility of reviewing all significant rules. Alternatively, it may be an office with responsibility for a technical area, such as the Office of Civil Aviation Security Policy and Planning. Each of these offices has managers who can become involved in the rulemaking process by reviewing the work of its representatives on a rulemaking team. Generally, FAA’s rulemaking teams consist of representatives from the program office, the Office of Rulemaking, the Office of Aviation Policy and Plans, and the Office of the Chief Counsel. In addition to significant and nonsignificant rulemaking, the staff in these offices also work on other projects, including airworthiness directives, airspace actions, and responses to petitions and exemptions. The ultimate goal of the federal rulemaking process is to develop and issue a quality rule in a timely and efficient manner. Time is of particular importance when safety is at stake or when the pace of technological development exceeds the pace of rulemaking. Many of the problems federal agencies face in developing and publishing rules are long-standing and similar across agencies, and they have been cited in studies and discussions of the process since at least the 1970s. For example, a Senate study in July 1977 cited deficiencies in decisionmaking, planning, and priority-setting by top management as causes of delay in federal rulemaking. In July 2000, DOT’s Office of the Inspector General (OIG) reviewed the Department’s rulemaking process and found that the Department had taken as long as 12 years to issue significant rules. The OIG attributed the lack of timeliness of the Department’s rulemaking partly to a lack of timely decisionmaking and prioritization. Studies specifically targeting the efficiency of FAA’s rulemaking process over almost 40 years have also identified similar problems. Figure 7 provides a list of key studies on FAA’s rulemaking process. The central findings of the most recent study of FAA’s rulemaking process, published in 1997, echoed the findings of past studies. For this report, we grouped the problems identified by the 1997 study into three areas: management involvement, administration of the rulemaking process, and human capital. In terms of management involvement, FAA’s 1997 study of its rulemaking process found that problems related to shifting priorities, the timing of management involvement, and the willingness of management to delegate authority all caused delays. Inconsistent and changing priorities among FAA offices caused false starts, delays in the process, and wasted resources. Inadequate or ill-timed involvement by FAA’s senior management hindered the agency’s ability to make timely decisions. As a result, rule drafters frequently worked without adequate direction or buy-in from policymakers, causing extensive queuing, delays, and rework. The reluctance of FAA’s rulemaking management to delegate authority caused problems in internal coordination and accountability and created extensive layers of review that delayed the rulemaking process. Rulemaking projects were also often delayed because no one was held accountable for keeping projects on schedule. The lack of coordination resulted in “finger-pointing” as to why problems remained unsolved. FAA’s 1997 study identified similar concerns with the timeliness of rulemaking efforts by FAA’s industry advisory committee. For example, the committee had too many projects, some of which were duplicative or overlapping. A lack of coordination and accountability between FAA and the committee also impaired the effectiveness of the advisory committee. In terms of process administration, FAA’s 1997 study found that confusion concerning the roles and responsibilities of rulemaking participants at FAA created difficulties in determining who had responsibility for what actions, led to breakdowns in coordination and communication, and resulted in inadequate supervision. Multiple information systems also hampered coordination and led to inaccurate tracking records and databases, as well as to information that was hard to access (e.g., archives of decisions made). Without reliable records, FAA often could not pinpoint where problems and backlogs occurred. Moreover, even when it did identify weaknesses, it lacked systems with which to evaluate and improve the process. In terms of human capital management, the 1997 study found that FAA had not established systems for selecting and training personnel involved in rulemaking. Rulemaking teams at FAA typically did not observe project schedules, which they regarded as unrealistically optimistic. Measures of timeliness were not consistently used to measure and evaluate the performance of rulemaking participants. FAA’s rulemaking process lacked a system for consistently tying incentives and rewards to specific measures of performance. Responding to concerns about the efficiency of FAA’s rulemaking process and in particular the time required for departmental review by OST, the Congress enacted legislation in 1996 designed to speed FAA’s efforts to develop and publish final rules. The Federal Aviation Reauthorization Act of 1996 amended section 106 of title 49 U.S.C. to establish a 16-month time limit for FAA’s finalization of rules after the close of the public comment period and a 45-day requirement for OST’s review of FAA’s significant proposed and final rules (see ch. 2). (The act also established a 24-month time limit for finalization of rules after publication of an advanced notice of proposed rulemaking, a request for information that FAA may issue in developing a proposed rule. Because this notice is not always issued, we did not use it as a measure in our analysis.) In response, FAA reviewed its rulemaking process, established its own suggested time frames for completing steps in the process (see ch. 3), and identified potential improvements to its process in the general areas of management involvement, process administration, and human capital management. These improvements are discussed in chapter 3. The Chairman of the Subcommittee on Aviation, House Committee on Transportation and Infrastructure, asked us to review FAA’s rulemaking process to determine whether FAA could improve the efficiency of its rulemaking process. Specifically, we addressed three main questions in our review: What are the time frames for FAA’s rulemaking, including the time FAA took to initiate the rulemaking process in response to statutory requirements and safety recommendations and, once begun, to develop and publish significant rules? What were the effects of FAA’s 1998 reforms on its process and on its time frames for completing rulemaking? How effective were FAA’s reform efforts in addressing the factors that affect the pace of the rulemaking process? To determine the time frames for FAA’s rulemaking, we created a database of proposed and final rules that constituted the agency’s significant rulemaking workload from fiscal year 1995 through fiscal year 2000. We focused our analysis on 76 significant rulemaking actions identified by FAA in the semiannual editions of the Unified Agenda or identified in our search of the Federal Register. This consisted of rulemaking actions that had either been published for public comment or were initiated but had not yet been published for public comment. The initiation dates and dates of published actions for the 76 rules are provided in appendix I. These rules constituted most (about 83 percent) of FAA’s significant rule workload and were more likely to be complex and/or the subject of controversy and potential delay. Our database contained data obtained from FAA’s Integrated Rulemaking Management Information System and from our review of proposed and final rules published in the Federal Register. In creating our database, to determine the dates that rulemaking projects were initiated, we used the dates recorded in FAA’s information system. For the dates of the publication of proposed and final rules, we used the dates of publication in the Federal Register. To determine the extent to which FAA’s rulemaking met statutory time frames, we compiled information from our database of rulemaking actions and applied standards established by the Congress in 1996. To determine the effects of FAA’s 1998 reforms on the agency’s rulemaking process, we reviewed the 1997 report on FAA’s rulemaking process and discussed the 1998 reforms with FAA staff and management from the working team that participated in the study. We discussed rulemaking reforms with rulemaking officials from several other federal regulatory agencies the Animal and Plant Health Inspection Service (APHIS), the Environmental Protection Agency (EPA), the Federal Highway Administration (FHWA), the Federal Motor Carrier Safety Administration (FMCSA), the Food and Drug Administration (FDA), the National Highway Transportation Safety Administration (NHTSA), and the Nuclear Regulatory Commission (NRC) to identify what steps they had taken to improve their rulemaking processes and to discuss their efforts to improve rulemaking. We selected these agencies because they had developed significant rules that were potentially technically complex and have an impact on public safety (e.g., regulation of nuclear power, environmental concerns, and food safety). We also compared FAA’s time frames for responding to public comment and finalizing significant rules with that of other federal regulatory agencies by collecting data from the Federal Register on the time spent processing significant rules by APHIS, EPA, FDA, and NHTSA. To determine the extent to which FAA’s rulemaking met FAA’s suggested time frames for steps in the process before and after the reforms, we compiled information from our database of rulemaking actions and applied it to the time frames suggested in FAA’s rulemaking guidance. We also reviewed the number of significant rules FAA published before and after implementing its reforms as a measure of improvement in the rulemaking process. To determine the effectiveness of FAA’s reform efforts in addressing the factors that affect the pace of the rulemaking process management involvement, process administration, and human capital management we considered case studies of specific rules, as well as the views of rulemaking officials and other stakeholders in the rulemaking process, including representatives of NTSB, OST, and OMB . We also surveyed 134 FAA employees who had served as rulemaking team members on significant rules listed in FAA’s Unified Agendas since the beginning of fiscal year 1994. We chose these employees for our survey because these staff had recent experience and were likely to be familiar with changes in the reformed process. We mailed a survey to rulemaking staff to obtain their views on the status of the rulemaking process and the impact of rulemaking reforms. We received 109 responses (a response rate of about 81 percent). A copy of the survey instrument that summarizes the responses we received is provided in appendix II. We supplemented our survey results with semistructured interviews of rulemaking team members involved in four rulemaking projects. For our semistructured interviews, we asked a series of questions designed to elicit staff members’ views on the results of the reform efforts and suggestions for improving the process. We conducted our work from April 2000 through March 2001 in accordance with generally accepted government auditing standards. The time FAA took to formally initiate rulemaking in response to a congressional mandate or a recommendation by the National Transportation Safety Board (NTSB) varied widely. Between fiscal year 1995 and fiscal year 2000, FAA initiated most rulemaking efforts in response to mandates and safety recommendations within 2 years, but some were initiated many years later. Once FAA formally initiates rulemaking, the time it takes to complete the process depends on many factors, including the complexity of the issue. FAA finalized and published in the Federal Register 29 significant rules over the 6-year period from fiscal year 1995 through fiscal year 2000. It took a median of about 2 ½ years to proceed from formal initiation through publication of the final rule, ranging from less than 1 year to almost 15 years. Twenty percent of these final rules took 10 years or more to complete. During this same time period, departmental review, one step in the process for both proposed and final rules, took a median time of about 4 months. FAA’s median pace for finalizing a rule after the close of the public comment period about 15 months was comparable to that of four other federal agencies. However, FAA met the 16-month statutory requirement for finalizing a rule after the close of the public comment period in less than half of the cases since the legislation was passed and other mandated time limits in only 2 of 7 cases. FAA initiated most rulemaking actions in response to safety recommendations from the NTSB and mandates from the Congress within 2 years. Of the 76 significant rulemaking actions we reviewed, 32 rulemaking actions (or about 42 percent) were the subject of a congressional mandate or recommendation by the NTSB. While congressional mandates may require that FAA take rulemaking actions, NTSB’s recommendations do not. However, FAA is required to respond formally to the recommendation and specify what action is or is not being taken and why. As shown in figure 8, FAA formally initiated about 60 percent of mandated rulemaking actions and about one-third of NTSB’s recommendations within 6 months. However, FAA sometimes took many years to respond to a mandate or recommendation. For example, figure 8 also shows that in one-fourth of the mandated cases and one-third of the recommendations we examined, FAA took more than 5 years to initiate rulemaking. Figure 9 provides a case study of a rulemaking issue with safety implications aviation child safety seats—in which more than 7 years passed between NTSB’s recommendation and FAA’s initiation of the rulemaking process. In this case, the delay occurred because of policy-related disagreements between FAA and NTSB. After receiving NTSB’s recommendation to require child safety seats on aircraft, FAA studied the issue. It issued a related technical order and rule but decided not to pursue rulemaking to require child safety seats on aircraft. In part, its decision was based on a study it presented to the Congress that concluded that if child safety seats were required on aircraft, passenger diversion to other transportation modes could cause a net increase in fatalities. FAA eventually changed its policy position and initiated rulemaking after the White House Commission on Aviation Safety recommended that FAA make child-restraint systems mandatory on aircraft. In contrast to the lengthy period of time that sometimes occurs between NTSB’s recommendations and FAA’s initiation of rulemaking, FAA responded within 1 month to an NTSB recommendation in 1999 to require flight data recorders on Boeing 737 aircraft. Figure 10 provides a case study of this rulemaking effort. For significant rules published during the 6-year period from fiscal year 1995 through fiscal year 2000, FAA took a median time of about 2 ½ years to proceed from the formal initiation of the rulemaking process to the publication of the final rule in the Federal Register. This time period ranged from less than 1 year to almost 15 years. Six of the 29 final rules (or 20 percent) took 10 years or more to complete. FAA took a median time of about 20 months to proceed from initiating the process to proposing the rule for public comment. It took a median time of about 15 months to finalize the rule after the close of the public comment period. The time taken for one step of the rulemaking process that occurs in FAA’s development of both proposed and final rules departmental review and approval—has been of particular concern to the Congress. In the Federal Aviation Reauthorization Act of 1996, the Congress addressed its concern by establishing a time frame for this step. The act requires the Secretary of DOT to review proposed and final significant rules and respond to FAA, either by approving them or by returning them to FAA with comments, within 45 days after receiving them. While FAA’s information system tracked the date of OST’s approval of some significant rules, it did not track the date of OST’s response to FAA’s transmittals of significant rules when it sent them back to FAA with comments rather than approving them. We were therefore unable to measure the extent to which the Department had met the 45-day requirement set forth in the 1996 act. FAA rulemaking officials said that they did manually track this information for individual rules and planned to incorporate this capability into the next upgrade of the information system. FAA’s information system did contain the dates that some rules were submitted by FAA to OST and the dates of OST’s final approval. We used these dates to measure the time it took for OST to approve FAA’s significant proposed and final rules from fiscal year 1997, when the legislation went into effect, through fiscal year 2000. Overall, for both proposed and final rules, the median time OST took to approve the rules (including review, comment, and FAA’s response, if any) was 4.1 months (124 days). Measuring proposed and final rules separately, we found that the median time OST took to approve proposed rules was 4.7 months (140 days), while the median time OST took to approve final rules was 2.3 months (69 days). In chapter 4, we discuss the views of departmental and FAA staff on issues that impact the time required for departmental approval. In a more recent effort to reduce delays related to OST’s review, on April 5, 2000, the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century amended title 106 of 49 U.S.C. by raising the dollar threshold required for secretarial approval and eliminating several criteria that triggered departmental review of significant rules. The Congress included this language to, among other things, streamline FAA’s rulemaking process by reducing the number of significant rules that had to be submitted for departmental review and approval. Because the legislation preempts DOT’s Order 2100.5 (which defines what rules FAA and other DOT modal administrations are to submit to OST for review, as discussed in ch. 1), FAA is required to submit to OST only those significant rules that meet the criteria defined in the act. At the time of our review, FAA and OST had not yet implemented the provisions of the act. As a result, the number of FAA’s significant rules that met the criteria for OST review had not been reduced. Although we did not compare the time frame of FAA’s entire rulemaking process to that of other agencies, we did find that the time FAA took to finalize rules after the close of the public comment period was comparable to that of four other federal agencies. We selected four regulatory agencies—APHIS, EPA, FDA, and NHTSA and compared the time they took to finalize rules from fiscal year 1995 through fiscal year 2000. The results are presented in figure 11. The figure shows that, except for APHIS, which finalized all of its significant rules within 2 years of the close of the public comment period, agencies generally finalized between two-thirds and three-fourths of their significant rules within 24 months of the close of the public comment period. The Federal Aviation Reauthorization Act of 1996 established a 16-month time frame for FAA’s finalization of rules after the close of the public comment period. From October 1996 through March 2001, FAA met this deadline in 7 of 18 cases by either publishing a final rule in the Federal Register or taking other final action within 16 months of the close of the public comment period. Figure 12 provides a case study of FAA’s rulemaking to prohibit the transportation of discharged or unfilled oxygen generators in aircraft. This effort exceeded the congressional time frame by about 11 months. (See app. III for a complete list of rules subject to the act’s time frames.) The Congress has also mandated time frames for steps in FAA’s rulemaking on specific issues. The agency did not meet many of these legislated time frames. Specifically, of the 20 congressionally mandated rules that were part of FAA’s workload between fiscal year 1995 and fiscal year 2000, 7 included a time frame for agency action. FAA met the time frame in only 2 cases, both of which called for initiating the rulemaking process by a certain date. Appendix IV provides additional information regarding the current status of the seven rules with congressionally mandated time frames. Figure 13 provides a case study of FAA’s proposed rule to revise procedures for aircraft registry to assist drug enforcement efforts that exceeded a specific legislative mandate by more than 10 years. To respond to congressional concerns about the timeliness of its rulemaking process and address long-standing problems (see ch. 1), FAA began implementing reform initiatives in January 1998 to improve the process in two of the three central areas we have identified: management involvement and process administration. FAA considered but did not implement most initiatives to improve human capital management. Other agencies have also implemented reforms to address similar types of problems. FAA’s median times to proceed from initiation of rulemaking through the release of the proposed rule for public comment and to finalize the rule after the close of the public comment period did not improve after FAA implemented its 1998 reforms. Despite FAA’s reforms, the time taken for departmental review and approval of FAA’s significant rules was not reduced. In addition, fewer rules were published while proposed and final rules remained in the rulemaking process for longer periods of time. FAA began implementing reform initiatives in January 1998 to improve its rulemaking process in two of the three central areas we have identified: management involvement and process administration. FAA considered but did not implement most initiatives to improve human capital management. “With the direct involvement of senior-level management in the rulemaking process, I anticipate a dynamic rulemaking program that more directly meets the safety and technology challenges of a rapidly evolving aviation industry.” In particular, to address long-standing concerns about delays that occurred during departmental review and approval of its significant rules (see ch. 2), FAA included a representative from OST on its rulemaking steering committee and management council, hoping that improved coordination would reduce the time taken for OST’s review. Table 2 shows the members and duties of FAA’s steering committee and management council. To formalize the new process and provide consistent and comprehensive guidance to rulemaking staff and management, FAA also developed a new rulemaking manual. Among other things, this manual suggested time frames for steps in the rulemaking process and established a system for the steering committee to follow in prioritizing rulemaking projects, as shown in table 3. Finally, to maximize the efficient use of employees’ and management’s time, FAA planned to limit reviews to those that added value and to delegate more responsibility for rulemaking decisions to rulemaking teams. Prior to the reforms, both nonsignificant and significant rules went through multiple layers of internal review. This practice stemmed more from agency protocol than from necessary oversight. For example, a team member’s decision could pass through sequential reviews by his or her immediate managers, office directors, associate administrators, and the Office of the Administrator. FAA proposed eliminating intermediate manager and director-level review and approval for both nonsignificant and significant rules so that rules could pass directly from teams to associate administrators. In doing so, FAA hoped to use available resources more efficiently, improve team members’ morale, and reduce delays. However, the agency stopped short of eliminating review and approval of significant rules by associate administrators, as was recommended in studies of FAA’s rulemaking in 1988, 1996, and 1997. According to officials from the Office of Rulemaking, the revised process was designed to enable the management council to delegate coordination and approval of nonsignificant rules to managers below the associate administrator level and the reform was intended to allow teams to act with the full knowledge of their respective associate administrator’s position on important issues. To address problems in administering the rulemaking process, FAA implemented a series of reforms. These reforms were primarily designed to clarify the extent and limitations of each team member’s roles and responsibilities, to improve the monitoring of rules and the management of rulemaking documents throughout the process, and to ensure ongoing evaluation of the process. Given the potential complexity of rulemaking issues, inconsistent and unclear lines of responsibility between policy, technical, legal, and economic reviews have historically slowed the rulemaking process. In its reform, FAA documented in the rulemaking manual the roles and responsibilities for each member of the rulemaking team. Specific appendixes in this manual detail the purpose, intent, and limitations of legal and economic reviews. FAA also created a new system for monitoring rule status and document management, the Integrated Rulemaking Management Information System, which was designed to increase the use of automation in the rulemaking process. According to FAA’s Office of Rulemaking, its new system consolidated the functions of the existing rulemaking tracking and document management systems. The new system was designed to also provide access to a regulatory guidance library and the DOT’s Docket Management System. Finally, FAA developed rulemaking quality standards and established a continuous improvement team and a quality team to ensure ongoing evaluation of the rulemaking process, monitor the quality of rulemaking documents, and provide recommendations on potential improvements to the process. FAA’s rulemaking quality standards are documented in an appendix to its rulemaking manual, Rulemaking Quality Standard and Guide. The guide offers practical tips, provides techniques, and suggests references and examples for rulemaking writers. FAA’s continuous improvement team—envisioned as a staff-level team—was established to review the evaluations from rulemaking teams in order to provide recommendations to the rulemaking management council on improvements to the process to be incorporated into the rulemaking manual. Similarly, the role of the rulemaking quality team—envisioned as a management-level team— was to continually monitor and improve the quality of rulemaking documents and provide recommendations to the rulemaking management council on improvements to the process. These two teams were consolidated in 1999 because FAA management concluded that the two functions were difficult to separate and that both functions would benefit from both staff- and management-level participation. To promote accountability in the rulemaking process, the working team for the 1997 study recommended a number of human capital management strategies to improve the training, evaluation, and rewarding of rulemaking staff. The team recommended that FAA provide orientation training on the new rulemaking process to all staff involved in rulemaking efforts. It also recommended skills assessment and additional ongoing training on functional skill development, conflict resolution, facilitation and consensus-based decisionmaking, project management, and team leader training. To measure efficiency and reward performance more consistently, the team recommended that FAA establish performance measures in the areas of rule-processing times, rule quality, and rulemaking productivity, as well as systems for performance evaluation. It also recommended that FAA develop a guide to clarify to supervisors the conditions to consider when granting rewards for good performance in rulemaking and to specify possible rewards. As discussed in chapter 4, FAA considered but did not take steps to formally implement these recommendations related to performance evaluation and rewards. According to the Office of Rulemaking, the staff resources needed to develop and implement these initiatives were not available because rulemaking staff and management were fully occupied with the day-to-day management of the rulemaking process. As a result, FAA relied on existing training and rewards systems. During our investigation, we also discussed rulemaking reform with rulemaking officials from several other federal regulatory agencies whose rules involved public safety to identify what steps they had taken to improve their rulemaking processes. Although an evaluation of the effectiveness of the reforms undertaken by other regulatory agencies was beyond the scope of this review, the results of our discussions with the other rulemaking officials showed that the reforms other agencies have proposed or implemented are in some cases similar to those proposed by FAA, and they generally address the same types of problems faced by FAA. For example, officials at several agencies we talked with considered management involvement a crucial element of an efficient rulemaking process. They used a variety of ways to improve management involvement, including the use of senior management councils and rulemaking coordinators. For example, EPA told us they established a regulatory policy council of senior management, as well as regulatory coordinators across EPA to manage priorities and resources. Other approaches cited by regulatory agencies we contacted included the use of agency ombudsmen and “senior champions.” Officials at the FMCSA said a regulatory ombudsman outside of agency program offices is responsible for moving rules through the process and tracking rules against established milestones. According to FMCSA officials, the ombudsman has the authority to resolve disagreements affecting timely processing; ensure sufficient staffing to meet statutory and internal deadlines; and represent FMCSA in discussions about individual rulemakings with other organizations, including OST, OMB, and other federal agencies. Rulemaking officials at FDA told us they assign a “senior champion” from the agency’s program offices to be responsible for scheduling rulemaking actions and ensuring that timely actions are taken. FDA officials said that the senior champion concept improves accountability by establishing a single point of responsibility. To reduce layers of internal review, other federal agencies have taken steps to delegate authority by limiting the amount of sequential review that takes place. For example, FDA officials said they limit a program office’s concurrence procedures and sign-off requirements to include only necessary staff. Rulemaking officials of the APHIS said that, in April 1999, they began limiting all staff organizations’ reviews of regulatory packages to 2 weeks. Finally, senior managers at the EPA said they provide flexibility to associate and regional administrators to determine what procedures to follow on a rule-by-rule basis, allowing managers more autonomy to tailor procedures to fit different needs. To better administer the rulemaking process, other federal agencies have developed automated tracking systems to monitor the progress of regulations under development, established evaluation systems for learning about delays in the process, and initiated appropriate actions to overcome internal delays. For example, FDA uses a tracking system to monitor the progress of all regulatory documents, which helps expedite the internal clearance process for regulations under development. FDA officials said that the tracking system has saved FDA time in processing regulations but had not estimated the amount of time saved. In the area of human capital management, other federal agencies cited a number of initiatives for training and performance measurement and evaluation. For example, to provide regulation writers with the training necessary to adequately prepare draft regulations, officials from APHIS encourage rulemaking staff to attend available courses and conferences or advisory committee meetings on the relevant subjects. The officials also encourage staff to seek technical support in drafting regulations and said that agencies could encourage, through incentives, technical staff to provide technical assistance to regulation writers. In addition, FDA officials suggested using a mentor program for new staff or existing staff to encourage them to consult with experienced regulation writers. Other agencies have established quality standards for their rulemaking to measure the performance of their rulemaking processes. For example, EPA measures the quality of regulatory documents and holds senior managers accountable for ensuring that regulatory actions meet the definition of a quality action. When program offices at EPA are unable to demonstrate that they can develop quality actions, fewer rulemaking actions will be assigned to them. According to EPA regulatory officials, this is an incentive for senior managers to develop quality rules. At FMCSA, officials said they had a formal structure of accountability of rulemaking products and dates in performance agreements that involve the head of the agency down to division directors. These performance agreements have specific rulemakings that include dates for which the staff is held accountable. In addition, FMCSA has a supplemental statement to the performance agreement for every staff member for rulemaking work products and dates. The median time FAA took to proceed from formal initiation of rulemaking through publication of the final rule increased from about 30 months in the 3-year period prior to the reform (fiscal years 1995 to 1997) to 38 months in the 3-year period following the reform (fiscal years 1998 to 2000). FAA’s median times for proceeding from initiation through release of the proposed rule for public comment and for proceeding from the close of the public comment period through publication of the final rule both increased by more than 3 months after the reforms. Specifically, the median time FAA took to proceed from initiation through the release of the proposed rule for public comment increased from 16.5 months in the 3-year period prior to the reforms to 20.4 months in the 3-year period following the reforms. The median time FAA took to finalize the rule after the close of the public comment period increased from 14 months to 16.3 months during the same time periods, as shown in figure 14. The time OST took to review and approve rules did not improve after FAA reformed its rulemaking process in 1998. Overall, for both proposed and final rules, the median time OST took to approve rules (including review, comment, and FAA’s response, if any) increased from about 125 days before FAA’s reforms to about 130 days after the reforms, an increase of about 5 days after the reforms. Measuring the proposed and final rules separately, we found that the median time taken for OST’s approval of proposed rules increased by 2 days, while the median time taken for OST’s approval of final rules decreased by 1 day, as shown in figure 15. Since 1998, FAA has published fewer rules. As shown in figure 14, FAA finalized 18 significant final rules in the 3-year period prior to implementing its reform. In the 3-year period following the reform, FAA finalized only 11 significant final rules. FAA rulemaking officials attributed the change in productivity of significant rules to the agency’s efforts to classify more rulemakings as nonsignificant and, thus, to decrease levels of evaluation and review within FAA, as well as to eliminate review by the Department and OMB. However, the number of nonsignificant rules the agency published from 1995 to 2000 do not reflect this. For example, FAA published almost 50 nonsignificant proposed and final rules each year in 1995 and 1996, as compared to less than 30 nonsignificant proposed and final rules each year in 1999 and 2000. In the years since FAA’s reforms, the median time that initiated significant rulemaking projects had remained in the process without being released for public comment (the proposed rule stage) increased by more than 4 years from the end of fiscal year 1997 to the end of the fiscal year 2000. At the same time, the median time that FAA’s unpublished significant final rulemaking projects remained in the process after going through the public comment period also increased, by about 5 months. This is shown in figure 16. As part of its rulemaking reform in January 1998, FAA established its own time frames for developing and publishing proposed and final rules, as shown in figure 17. Although these time frames were established as a part of FAA’s reforms and were, thus, not an applicable standard for rulemaking efforts prior to the reforms, we compared processing times for the 3-year period preceding FAA’s reforms to processing times for the 3-year period following FAA’s reforms to measure the extent of the change. The percentage of FAA’s proposed rules that proceeded from initiation through release for public comment within FAA’s suggested time frames dropped from 47 percent prior to the reforms to 19 percent after the reforms. The percentage of rules that proceeded from the close of the public comment period to publication as a final rule within FAA’s suggested time frames dropped from 39 percent to 36 percent in the same time periods. Overall, FAA did not meet time frames suggested in its rule making guidance for more than half of its proposed and final rules published, as shown in figure 18. Despite the reforms FAA made to its rulemaking process, many of the problems that have historically impeded the efficiency of rulemaking at FAA continued. Our survey of FAA rulemaking staff showed that less than 20 percent agreed that FAA has made the changes necessary to improve the rulemaking process. In addition, only about 20 percent of the staff surveyed agreed that the rulemaking process has become more efficient and effective in the last 2 years. (A copy of the survey is provided in app. II.) Our interviews with FAA rulemaking staff and management and our observations of specific rulemaking projects supported the staff's perception and confirmed that problems in the three central areas of management involvement, the administration of the rulemaking process (process administration), and human capital continued to slow the process. Problems related to three general areas of management involvement continued to slow the process. Multiple, shifting priorities made it difficult to allocate resources effectively and often disrupted the timing of the rulemaking process. Too often, policy issues were not resolved in a timely manner. Finally, multiple layers of review continued to contribute to delays. An excessive number of rulemaking priorities continued to impair the efficiency of the process. The number of projects on FAA's top priority list grew from 35 in February 1998, when FAA established the priority list after implementing its reforms, to 46 in April 2000. At that time, the Associate Administrator for Regulation and Certification said it was critical to shorten that list to a more manageable number. However, the number of top rulemaking priorities continued to increase, to 49 rules by March 2001. According to the Director of the Office of Rulemaking, the maximum number of rulemaking projects that can be effectively managed is about 30 to 35 projects. Rulemaking officials cited external and internal pressures to add rules to its priority list, noting that the agency's priorities change due to external influences such as accidents, NTSB recommendations and congressional actions and mandates. Internally, they attributed the growth in the number of priority rulemaking projects in part to a lack of commitment to the reformed process of some participants and to what they described as “parochial” views of priorities that resulted in efforts to circumvent the decisions of the rulemaking steering committee. For example, officials said that some program offices circumvented the approval process for adding rulemaking projects to the top priority list by adding projects to their own short-term incentive plans, creating pressure on the steering committee to add the rules to the top priority list. Our survey of rulemaking staff showed that less than one-third (29 percent) of the staff agreed that senior managers supported the steering committee's decisions regarding priorities. Not only were too many rules given top priority, but changes in the relative ranking of “top” priorities created problems in managing staffing resources, thereby increasing the processing time for significant rules. Eighty-three percent of the survey respondents agreed that changing priorities in the rulemaking process caused delays in the process. Team members said they were frequently pulled off of top-priority rules to work on other projects that their management considered higher priority. They noted that these disruptions created delays. It is important to note that, while some of the causes of shifting priorities stem from the current rulemaking process and can be changed, others relate to events that FAA cannot control. For example, new safety issues may emerge whenever there is an aviation accident. In addition, rulemaking efforts in progress that are related to issues such as safety threats can be overtaken by new events that then drive the agency's priorities. While the agency can monitor the effects of outside situations, there is little it can do to control them. Figure 19 provides an illustration of the impact of events on FAA's development of a proposed rule on aviation security. Although FAA cannot prevent unexpected events from influencing its rulemaking priorities, FAA's system for prioritizing rules established as part of its 1998 reform lacks explicit criteria to guide rulemaking management in establishing and ranking the priority of projects and assigning available resources. While FAA's rulemaking manual describes factors that must be considered in prioritizing rulemaking projects—such as the legislative time frames established by the Congress and projects initiated in response to special commissions and the NTSB—the policy does not define how these criteria should be ranked in order of importance. Identifying and ranking the agency's top rulemaking priorities is important because FAA's “A” list includes the Administrator's priorities as well as other top priority rules sponsored by different offices. The FAA Administrator's set of rulemaking priorities constitute about half of the “A” list of projects that are actively worked on. For example, in July 2000, 21 of the agency's 45 top priority rules were on the Administrator's list. Yet FAA's policy for determining rulemaking priorities does not establish the relative importance of the different factors that rulemaking managers must consider in determining the priority of rules within the “A” list of top priority projects. Without clear criteria for determining the rules' relative ranking and consensus among all offices involved in rulemaking, rulemaking managers may have difficulty in objectively determining, for example, whether legislated time frames take precedence over the Administrator's priorities or the safety recommendations of the NTSB. Thus, a final ranking is de facto left to the steering committee, which is made up of managers whose priorities are tied to the functions of their individual offices. One result is that managers from different offices may be more likely to allocate their staff resources on an ad-hoc, short-term basis, rather than in a strategic fashion to complete the agency's highest priority rules. During our review, the Office of Rulemaking suggested that one way of allocating staff resources to ensure that top priority rules are completed is to “dedicate” team members to work on rules until they are completed. This approach was recommended in previous reviews of FAA's rulemaking process and is used in FAA's acquisitions of air traffic control equipment. According to the Office of Rulemaking, if this approach was put into place, managers of offices involved in rulemaking activities, including the offices involved in legal, technical, and economic analyses as well as the Office of Rulemaking, would ensure that rulemaking team members worked only on the highest priority rule by dedicating their staffs to that project. FAA successfully used this approach to develop its “commuter rule” in 1995, as shown in figure 20. The Office of Rulemaking, which also cited changing priorities as an ongoing problem, noted that a continuing lack of realism in prioritizing fostered a sense of overload on the part of rulemaking staff. Our survey of rulemaking staff showed that only about 17 percent agreed that the amount of work was reasonable, allowing team members to produce high-quality products and services. Furthermore, less than one-third (about 30 percent) agreed that management from their office provided sufficient staff and resources to support and promote improvement in the rulemaking process. On some rulemaking projects, the time FAA management took to resolve complex policy issues added years to the overall time taken to complete the rule. Based on findings that sequential review and decisionmaking by management late in the process had previously caused problems such as extensive backlogs, rework, and delays, FAA intended in its reform to promote a proactive management approach in which policy decisions would be made early in the process. However, only about 28 percent of the rulemaking staff we surveyed agreed that senior management focused on the prevention of problems rather than on the correction of problems, and only 11 percent of the staff surveyed agreed that sequential processing does not impact the timeliness of the rulemaking process. Figure 21 provides a case study of a rulemaking effort related to Flight Operational Quality Assurance (FOQA) Programs in which management's inability to resolve difficult policy issues early in the process contributed significantly to the overall time the rule has been in the process. This rule has taken years to develop because of complex policy issues that at the time of our review still had not been resolved. The policy issues concern the waiving of enforcement actions for violations discovered through FOQA data voluntarily provided by airlines. Agency officials said that the reason this issue has been so difficult to resolve is that the rule could set a precedent that would affect other regulatory agencies' enforcement efforts, and it therefore has ramifications beyond the Department's efforts to improve aviation safety. As a result, they considered their rulemaking efforts to be a management success. Delays in the process caused by multiple layers of review within the agency continued despite FAA's reform efforts because the reduction in layers of review and the level of employee empowerment envisioned in FAA's reform did not materialize. In reviewing approved project records, we found that delegation of authority beyond the director's office had not been achieved in spite of FAA's plans to do so. (FAA's plans are detailed in ch. 3.) For example, in reviewing projects approved since the reform was implemented in January 1998, we found that in five of six projects not only did the directors of team members' offices review and approve team members' decisions, but so did their immediate managers and other managers. In 1997, FAA had concluded that multiple layers of review fostered a lack of accountability in the rulemaking process and that this, in turn, led to milestones that were unrealistic or not observed because final responsibility for the project was unclear. Our survey of rulemaking team members showed that few (4 percent) agreed that layers of review did not interfere with the timely processing of rules. As noted above, only 11 percent agreed that sequential processing does not impact the time required to complete the rulemaking process. Finally, a minority of the respondents agreed they had the ability to establish realistic schedules; 36 percent of the survey respondents agreed that rulemaking teams set realistic schedules, and 19 percent of rulemaking staff agreed that rulemaking teams have sufficient control over the rulemaking process to set realistic milestones. Senior rulemaking managers at FAA said that there was a fine line between employee empowerment and the need for adequate oversight, particularly for rules that were likely to have a significant economic or other impact on the aviation industry. They said that FAA's reform was not intended to eliminate managers from decisionmaking in the rulemaking process or give rulemaking teams total independence, noting that the primary focus of the rulemaking reform effort was to reduce the levels of review for nonsignificant rules. According to officials from the Office of Rulemaking, review and approval of certain nonsignificant rules that would harmonize certification requirements for passenger aircraft established by the Joint Aviation Authorities (FAA's European counterpart) have already been delegated below the level of associate administrators. Our discussions with rulemaking staff revealed a variety of reasons why they strongly disagreed that rulemaking teams had enough control over the process to set realistic milestones. Staff noted that internal management decisions to change rulemaking priorities before a project was completed and external reviews by OST caused process delays and were beyond their control. Less than 2 percent of the rulemaking team members agreed that departmental reviews improved the timeliness of the rulemaking process, and less than 15 percent agreed that departmental reviews improved the quality of rulemaking. Figure 22 shows the impact of coordination with OST on FAA's time frames in its rulemaking efforts to revise regulations governing the standards for aircraft repair stations. FAA's internal review process reflects the lack of empowerment as well. Officials from OST and the Office of Rulemaking said that the requirement for numerous layers of review reflects FAA's hierarchical management structure and that the lack of empowerment is embodied in FAA's “grid sheet” for signing off on a proposed rule. The grid sheet can involve 20 different signatures, each indicating a different layer of review. Moreover, they said that these extensive reviews can reduce accountability, noting that, because FAA requires a lot of signatures, rulemaking documents are sometimes passed through the process without FAA officials reading them. Figure 23 illustrates the multiple layers of review that occurred in reaching team concurrence for a proposed rule to require that emergency medical equipment be carried aboard certain passenger aircraft. DOT officials said that the time needed for their review and approval of FAA's significant rules can be lengthy if FAA's position is not thoroughly evaluated in terms of departmental policy early in the rulemaking process. DOT officials also cited lack of coordination among FAA's program offices and a lack of empowerment and accountability of rulemaking teams as problems that continued to contribute to delays in the process. They said that departmental review served a valuable role in ensuring that OMB's concerns were adequately addressed and noted, for example, that OST's efforts to coordinate proposed changes were hindered when FAA staff did not have the authority to make the suggested changes. Problems in three central areas related to the administration of the rulemaking process continued to contribute to delays. Significant confusion persisted regarding the roles and responsibilities of rulemaking team members. Information systems lacked complete, accurate, or current data and were inconsistently used. Finally, key elements of a continuous improvement program to identify and correct problems in the process were not in place. Although FAA attempted to address confusion over roles and responsibilities in its reforms, our survey indicated that only about 40 percent of the individuals we surveyed agreed that the “roles and responsibilities are clearly understood.” In addition, less than half (47 percent) of the survey respondents agreed that “roles and responsibilities are clearly established.” The effort by the Office of Rulemaking to define roles and responsibilities for rulemaking participants in its rulemaking manual did not appear to have eliminated confusion. As we indicated in chapter 3, the manual describes the specific roles of legal and economic reviewers. According to FAA's guidance, legal reviews should focus on the legal authority for the action proposed, compliance of the proposal with applicable laws, and whether the requirements being imposed are stated with sufficient clarity and justification to be enforced and defended in court, if need be. Economic reviews should estimate the costs and benefits of a proposed or final rulemaking. However, rulemaking management said that legal reviews continued, in some cases, to focus on nonlegal issues and that the scope of economic reviews could potentially be reduced. Senior legal staff involved in the rulemaking process noted that FAA's Chief Counsel is a political appointee whose role as advisor to the Administrator can result in the office's involvement in policy issues, as well as assessments of the quality of analyses conducted to support rules. In September 2000, we reported on the importance of information technology resources for federal agencies to gather and share information, and FAA officials cited the development of a rulemaking management information system as a major element of its rulemaking reforms. According to FAA's Office of Rulemaking, its new automated system consolidated the functions of the existing project-tracking and document- management systems. FAA's tracking of its 24 “A” list significant rules on this system has established data on rulemaking times for specific steps that should help it to monitor the rulemaking process. However, the small number of rules that it consistently tracks and a lack of agencywide implementation has made the system less useful than it could potentially be. Because FAA used the project-tracking portion of the automated system only for its “A” list of priority projects, including 24 significant rules, the system was missing complete and accurate data for many of the remainder of FAA's significant rulemaking projects. FAA rulemaking officials said that they did not have the resources available to complete, correct, or update records of rules that were not being actively worked on from the agency's “A” list of rules, citing resource limitations. However, since previously initiated rulemaking projects may be shifted onto the “A” list, historical data could be useful for measuring the performance of the rulemaking process over time. FAA rulemaking officials also noted that FAA's rulemaking policy allows teams to select milestones on a case-by-case basis. However, continuing to consider some milestones in the system voluntary may result in a lack of consistent and comparable information on rules. Without complete, accurate, and consistent data on all FAA's rulemaking projects, FAA managers will not be able to use the information system to its fullest capacity—to measure the time elapsed between specific steps in the process to identify where and to what extent delays occur over time. Since the rulemaking process can take years to complete, a longer-term management perspective on the performance of the process is essential. FAA agreed that additional performance and statistical measures should be incorporated into the reporting system to enhance its ability to manage the process and said it had begun making changes to the system. The document management portion of the automated system was limited in its usefulness because it had not been fully implemented across all offices involved in rulemaking. FAA's technology plan called for an “automation champion” to lead the initiative across all of the affected offices. However, according to the Office of Rulemaking, FAA had not designated a champion or developed a plan or goals for an integrated system outside the Office of Rulemaking. As a result, offices outside of the Office of Rulemaking had not fully implemented the new system. Although all rulemaking team members received initial training on the new system, only 26 percent of the respondents to our survey agreed that rulemaking team members were provided with training when new technologies and tools were introduced. After the initial training, we found that the system was not effectively implemented outside of the Office of Rulemaking. We reviewed the rulemaking documents in the system for four significant safety-related rules and found that since FAA's reforms in 1998, only 1 of 27 rulemaking staff outside of the Office of Rulemaking on the 4 rulemaking teams had used the automated system. This staff person used the system only twice, on the same day in February 1998. Although officials from the Office of Rulemaking said that the new system was available to all rulemaking staff, only about 23 percent of the survey respondents agreed that their coworkers used FAA's automated capabilities to record rulemaking actions. Individuals from the Office of the Chief Counsel said that they either did not have access to the automated system or that their computers were not capable of using the rulemaking software. While economists in the Office of Policy and Plans with whom we spoke had access to the system, they said that the software was too cumbersome. One economist said that he preferred to develop rulemaking documents that were inaccessible to change by other team members in order to maintain the integrity of his work product. Despite explicit efforts in the rulemaking reform to establish systems to evaluate the new process and establish quality standards and guidance, FAA had not fully implemented a continuous improvement or quality review program. The concept of continuous improvement is embodied in quality management principles as well as the Government Performance and Results Act. Continuous improvement efforts are essential for identifying problems in the rulemaking process. However, continuous improvement and quality management teams established in FAA's reforms reported problems in attempting to implement review systems. In the fall of 1999, members of the continuous improvement team expressed concerns about the purpose and authority of the team related to management's participation in establishing and supporting the evaluation function. To improve the effectiveness of the system, FAA combined the teams to include both staff and management. Despite the reorganization, little substantive work had been done in the area of process improvement at the time of our review. For example, project teams are to complete a “lessons learned” evaluation after publication of a proposed rule to document practices and procedures that worked well, identify problem areas, and determine opportunities to improve the entire rulemaking process. However, since the process was reformed in January 1998 through fiscal year 1999, we found that FAA had not documented any evaluations. The quality and continuous improvement teams were also expected to review sample rulemaking documents during the progress of a selected project, perform periodic quality assurance reviews with selected rulemaking teams, and make recommendations to the management council regarding their findings. However, none of these quality review functions had been accomplished. No evaluations or recommendations had been documented, and the rulemaking manual had not been updated since its publication in December 1998. In discussing the issue at a steering committee meeting, members of the management council attributed the lack of implementation of process improvement efforts to an inadequate level of organizational commitment to the reformed process. Rulemaking officials said that, although the continuous improvement team met on a regular basis to discuss lessons learned, the team had not documented the results of their discussions. They said they planned to incorporate the ability to document lessons learned in the next version of the management information system and that they were updating the rulemaking manual. They also said that another team, made up of managers from key offices, has met monthly and sometimes weekly to implement and improve the reformed process. Human capital management initiatives focusing on training, performance measurement and evaluation, and rewards for rulemaking efficiency and quality work were generally not implemented at the time of our review. According to the National Performance Review, which made recommendations regarding federal agencies' rulemaking processes in 1993, proper training, performance measurement, and performance incentives are needed to ensure that the agency officials involved in regulatory activities work as effectively as possible. We reported on the importance of training, performance measures, and performance incentives as key elements of an effective human capital strategy in September 2000. In preparing its 1997 report, FAA's working team recommended a series of human capital management initiatives to help rulemaking participants adjust to the revised process and foster change throughout FAA. These areas included training and skills assessment as well as performance measurement, evaluation, and rewards for rulemaking participants. Although FAA's reform plan called for orientation training on the new rulemaking process and ongoing training in a wide range of areas for all staff involved in rulemaking, rulemaking participants outside the Office of Rulemaking generally received training only on the information system software and an introduction to the new process. A formal program for continuing the training of all rulemaking team members in the areas of functional skill development, conflict resolution, facilitation of and consensus-based decisionmaking, project management, and team-leader training was not implemented. About 50 percent of the staff surveyed agreed that they received the training they needed to perform their jobs. Similarly, although FAA's reforms called for the analysis of the skills needed to function in the revised rulemaking process and to establish a mentoring program, the Office of Rulemaking had not conducted a formal analysis, and we found no evidence of such an analysis in the other offices involved in rulemaking. Only the Office of Rulemaking had established a mentoring program. Representatives from the Office of Policy and Plans and the Office of the Chief Counsel said that they had recurring training programs, but they agreed that these programs did not include a formal segment devoted to training to support the rulemaking process, as envisioned by the reform. As we reported in January 2000, a key element of human capital management is the use of performance management systems, including pay and other incentives, to link performance to results. However, in the area of rulemaking, FAA has not consistently done so for rulemaking staff and management. Although FAA's reform effort included recommendations to measure and evaluate team and individual team member performance and to develop an associated rewards system, these human capital management efforts were not implemented on a consistent, agencywide basis. According to rulemaking officials, the staff resources needed to develop and implement these initiatives were not available because rulemaking staff and management were fully occupied with the day-to-day management of the rulemaking process. As noted above, we found evidence that some individual senior managers' performance evaluations included rulemaking projects specific to their program areas. The Government Performance and Results Act of 1993 requires agencies to pursue performance-based management including results-oriented goal setting and performance measurement. Although the act gives agencies the impetus for tailoring their human capital systems to their specific missions and objectives, it is up to agencies, like FAA, to follow through on the opportunity. FAA implemented an agencywide effort to link performance with rewards in April 2000. FAA's new core compensation plan provides for pay increases tied to performance and individual contributions. Despite the opportunities provided by the new compensation system, as well as personnel reforms enacted in 1996 to provide FAA with greater flexibility in human capital management, FAA management has not established systems to measure and reward performance in rulemaking based on the quality or timeliness of the process. One measure of rulemaking performance is the time taken to complete steps in the process to develop and issue a rule. To implement rulemaking reforms, senior managers involved in FAA's rulemaking agreed that process milestones were appropriate measures of rulemaking performance. However, results from our survey of rulemaking staff indicate that, while slightly more than one-half (51 percent) agreed that milestones are used to assess the overall performance of teams, team members did not believe that using milestones is an accepted or acceptable means of measuring performance. For example, less than one half of the respondents (about 48 percent) agreed that senior management holds team members accountable when teams do not meet milestones. Only 20 percent agreed that senior management is held accountable when teams do not meet milestones. Less than 20 percent agreed that rulemaking teams have sufficient control over the rulemaking process to set realistic milestones. Only 36 percent of the staff agreed that teams set realistic schedules. Only 8 percent agreed that their offices provide incentives based on the milestones of the rulemaking process. Officials in the Office of Rulemaking suggested that one method to provide agencywide incentives for timely rulemaking would be to include a goal for the agency's timely rulemaking in the short-term incentive plans for all senior managers involved in rulemaking. The Office of Rulemaking did not develop a separate rulemaking award system as recommended by the working team. They said rulemaking awards were given based on the preexisting agency award system in which individuals and teams are recognized for outstanding performance on various projects. Although about 70 percent of the staff surveyed agreed that management from their offices provides an environment that “supports my involvement, contributions, and teamwork on the rulemaking team,” few rulemaking staff that responded to our survey agreed that teamwork is rewarded. Specifically, only 28 percent of rulemaking staff agreed with the statement “I am appropriately rewarded for teamwork in the rulemaking process (e.g., performance ratings, cash awards, certificates, or public recognition).” FAA's reforms of its rulemaking process have not fully addressed the long- standing problems that can lead to unnecessary delays because the initiatives have either not been fully implemented or their implementation has been impaired by a lack of management commitment and support. Management's attention to factors critical to achieving desired results— establishing baseline data, priorities, a plan for addressing root causes, and an evaluation system to measure the agency's progress—would facilitate effective implementation of the reform initiatives begun in 1998. FAA's management committees that were established as a part of the reform are a step in the right direction in FAA's efforts to improve management involvement, encourage timely resolution of policy issues, and reduce layers of review. Clarifying staff and management's roles in the process and including performance expectations, measures, evaluations, and rewards based on these roles is an essential step in establishing a performance system for rulemaking that emphasizes accountability and results. The system must hold staff and managers accountable for producing timely, quality rules that are needed to improve aviation safety and security. Equally essential are automated information systems to monitor the performance of the individuals and offices in the process and provide information to continually evaluate and improve rulemaking. A performance management system is a key element of an effective human capital strategy that is the best, and perhaps the only, means of obtaining the needed level of commitment and support from FAA management and staff. FAA's new Core Compensation Plan that provides for pay increases tied to performance and individual contributions offers the agency an opportunity to establish new systems for performance measurement, evaluation, and rewards based on timeliness and quality in rulemaking for all offices involved in the process. Finally, the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century provides an as yet unrealized opportunity for FAA to reduce the number of rules that must go through one of the levels of review—the review by the Office of the Secretary of Transportation. Adhering to the provisions of the act could reduce the processing time for selected significant rules that meet the criteria established in the act. To improve the efficiency of its rulemaking process and reap the maximum benefits from its rulemaking reform efforts, we recommend that the Secretary of Transportation direct the FAA Administrator to take steps to improve management involvement in the rulemaking process by reducing the number of top-priority projects to a manageable number over time by limiting the number of projects added until existing projects are completed and establishing criteria for ranking the highest priority rules so that the lowest ranked of these priority rules may be tabled if necessary to allow sufficient resources to be applied to emerging, higher-priority projects; providing resources sufficient for rulemaking teams to meet the agency's suggested time frames. One approach, suggested by the Office of Rulemaking, is to prototype the use of dedicated rulemaking teams by assigning staff for the duration of rulemaking projects. This approach would give the teams the ability to focus their efforts and manage projects to completion; holding managers at the director and associate administrator level accountable for making and supporting policy decisions as early as possible in the rulemaking process; and empowering team members by giving them the authority to coordinate with their associate administrators so that they can represent the associate administrator's policies, thus eliminating the need for the separate step of associate administrator's review and approval; empowering team members by permitting them to set their own schedules and deadlines; and holding staff and management accountable for ensuring that schedules are realistic. In addition, the Secretary of Transportation should direct the FAA Administrator to take steps to improve administration of the rulemaking process by clearly communicating the roles and responsibilities of program and support staff on rulemaking teams and holding team members and their managers accountable for limiting their reviews to established criteria; ensuring that information systems used for rulemaking tracking and coordination contain current, complete, and accurate data on the status of all significant rulemaking projects, including the time elapsed between FAA's transmission of rules to OST and the receipt of OST's comments or approval; and implementing elements of its proposed continuous improvement program and using the resulting information to identify problems in the process and potential solutions. Finally, the Secretary of Transportation should direct the FAA Administrator to take steps to improve human capital management of the rulemaking process by establishing a human capital management strategy for offices involved in rulemaking that includes providing training and support to all participants that promotes use of the agency's automated information system and collaborative, team- based decisionmaking skills, and assessing the skills of rulemaking staff and developing targeted training to better enable them to fulfill their rulemaking roles; and establishing and implementing performance measures based on expectations, evaluations, and incentives that promote timely, quality rules. One approach suggested by the Office of Rulemaking would be to include a goal for the agency's timely rulemaking in the short-term incentive plans for all senior managers involved in rulemaking. In addition, we recommend that the Secretary revise departmental policies to make them consistent with the provisions of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century and reduce the number of FAA's significant rules subject to its review. We provided a draft of this report to the Office of the Secretary of the Department of Transportation and FAA for their review and comment. In following discussions, departmental and FAA officials indicated that they agreed with a number of the draft report's recommendations. For example, they said that FAA will take steps to ensure that the rulemaking tracking system is completely accurate and up-to-date, and includes all appropriate tracking milestones. Furthermore, they agreed that FAA will use its continuous improvement program to identify potential process improvements and will hold senior management accountable for providing policy input as early as possible in the rulemaking process. These officials also indicated that some of the draft report's recommendations will require further consideration, and that a specific response to each of the report's recommendations will be provided in the Department's response to the final report. FAA officials provided technical comments, which we incorporated into the report. The Department also provided written comments on the report, which discussed four main points about the results of the review. The full text of FAA's written comments is provided in appendix V, along with our detailed response to these comments. | The Federal Aviation Administration (FAA) issues regulations to strengthen aviation safety and security and to promote the efficient use of airspace. FAA's rulemaking is a complicated process intended to ensure that all aspects of any regulatory change are fully analyzed before any change goes into effect. During the last 40 years, many reports have documented problems in FAA's rulemaking efforts that have delayed the formulation and finalization of its rules. This report reviews FAA's rulemaking process. GAO reviewed 76 significant rules and found that FAA's rulemaking process varied widely. These rules constituted the majority of FAA's workload of significant rules from fiscal year 1995 through fiscal year 2000. GAO found that FAA had begun about 60 percent of the rulemaking projects by Congress and about a third of the rulemaking projects recommended by the National Transportation Safety Board within six months. For one-fourth of the mandates and one-third of the recommendations however, at least five years passed before FAA began the process. Once the rule was formally initiated, FAA took a median time of two and a half years to proceed from formal initiation of the rulemaking process through publication of the final rule. In 1998, FAA improved the rulemaking process and shortened the time frames for finalizing rules. These reforms included establishing a steering committee and a rulemaking management council to improve management involvement in setting priorities and resolving policy issues. GAO found that after the reforms were implemented, the median time for reviewing and finalizing a rule increased. This suggests that the productivity of FAA's rulemaking process for significant rules decreased after FAA's reforms. |
Today, optical physicist Donna Strickland received the Nobel Prize for her work on ultrashort lasers.
When her name was announced, a search for Strickland’s name on Wikipedia would have turned up nothing. As recently as May, Wikipedia editors weren’t convinced that Strickland’s work was significantly covered enough to merit an article on the site.
Strickland is an associate professor of physics at the University of Waterloo in Canada—a title that, as many observers have noticed, does not seem to reflect the significance of her work.
Strickland and colleague Gérard Mourou shared half of the 2018 prize, which was also awarded to scientist Arthur Ashkin. Strickland is now currently the only living female Nobel laureate in physics, joining Marie Curie and the theoretical physicist Maria Goeppert-Mayer as the only women of the award’s 209 recipients.
Prior to winning the Nobel Prize, Strickland’s only previous mention on Wikipedia was in an article about Mourou, her male co-inventor. On May 23, a Wikipedia editor rejected a draft of an article about Strickland, claiming that it failed to “show significant coverage (not just passing mentions) about the subject.” The rejected draft noted that she was at that time the associate chair of the physics department at Waterloo, and a past president of the Optical Society.
A revised draft including her Nobel win went live about 90 minutes after the prize was announced. Only 17% of the current biographical entries on Wikipedia are about women, and the site is particularly thin on women in science. ||||| This undated photo made available by Trinity College shows Gregory Winter of the MRC molecular biology lab in Cambridge, England. Frances Arnold of the California Institute of Technology, George Smith... (Associated Press)
This undated photo made available by Trinity College shows Gregory Winter of the MRC molecular biology lab in Cambridge, England. Frances Arnold of the California Institute of Technology, George Smith of the University of Missouri and Gregory Winter of the MRC molecular biology lab in Cambridge, England... (Associated Press)
STOCKHOLM (AP) — The Latest on the awarding of the Nobel Prizes (all times local):
6:45 p.m.
Nobel chemistry winner Frances Arnold says she expects to see an increasing number of female Nobel chemistry laureates in the coming years.
"There are a lot of beautiful, elegant women in chemistry, and I predict we will see many more Nobel chemistry prizes for women," said Arnold, 62, who is only the fifth woman ever to win the Nobel chemistry prize.
Arnold learned she'd won when was "unceremoniously woken up" at 4 a.m. Wednesday in her hotel room in Dallas. "I was certain it was one of my kids or some emergency, but it wasn't. First I was stunned, like somebody hit me over the head with something, and then I started to wake up."
"I managed to pull a couple of neurons together, and now I'm processing it," she told The Associated Press.
Arnold had planned to deliver a lecture Wednesday at the University of Texas Southwestern, but says she will now return to Pasadena, California, "to celebrate with my students" at the California Institute of Technology.
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5:55 p.m.
Cambridge University scientist Greg Winter says he was staring at his computer wondering how he would ever finish multiple projects when the phone rang.
He was "a bit rocky" early Wednesday after a feast the night before at Trinity College and was having coffee and aspirin when a caller from Sweden told him to expect a "very important announcement." Winter says the line went dead and he thought it was the bank "ringing up and telling me I had some dodgy transaction."
In fact, he shared the 2018 Nobel Prize for chemistry for his work on the directed evolution of antibodies along with Frances Arnold of the California Institute of Technology and George Smith of the University of Missouri.
There will be another party shortly in Cambridge. Lab colleagues told Winter that 2,793 pounds ($3,636) worth of Champagne have been ordered before asking "can we have your credit card please?"
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4:55 p.m.
Dr. Wayne Marasco of the Dana-Farber Cancer Institute in Boston said the lab technique developed by the new Nobel laureates George Smith and Gregory Winter was "revolutionary ... and it's used today, every day."
Marasco said he uses it daily in his own research on developing therapies that use antibodies, which are disease-fighting proteins in the blood.
The two prizewinners harnessed viruses called phages that infect bacteria.
Smith, of the University of Missouri in Columbia, showed that inserting DNA into these viruses would make them display proteins linked to that DNA on their surfaces. Winter, of the MRC Laboratory of Molecular Biology in Cambridge, England, adapted the approach to create antibodies that target disease-related targets. In a process mimicking evolution, Winter introduced mutations to make antibodies progressively better at binding to their targets.
Marasco said the technique lets scientists screen millions or even billions of antibodies for their ability to grab onto a target like a protein on the surface of a cancer cell. It makes such screening far faster and more efficient.
Frances Arnold of the California Institute of Technology shared the Nobel Prize in chemistry on Wednesday along with Smith and Winter.
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4:15 p.m.
Greg Winter, a British scientist who shared the 2018 Nobel Prize for chemistry, says an encounter with a cancer patient made him realize the importance of his work.
Speaking to reporters Wednesday, the 67-year-old Winter recalled a moment early in his career when he visited a woman who was receiving his then-experimental antibody treatment. Even though Winter didn't know whether the treatment would work, the patient was grateful for whatever more time it would allow her to spend with her husband, who was also sick.
Winter, who shared the prize with two other scientists for his work on the directed evolution of antibodies, says he realized afterward there was a "moral imperative" to ensure "what was produced could be used for public benefit."
The patient responded to the therapy but died when there wasn't enough to continue her treatment.
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3:15 p.m.
Frances Arnold of the California Institute of Technology is only the fifth woman to be awarded a Nobel Prize in chemistry since the prizes were first handed out in 1901.
The first winner was Marie Curie, who was honored in 1911 for the discovery of radium and polonium. Twenty-four years later, Curie's daughter, Irene Joliot-Curie, was recognized, alongside her husband Frederic Joliot, for the synthesis of radioactive elements.
British scientist Dorothy Hodgkin was the next winner, in 1964.
After a 45-year gap, Israel's Ada Yonath was one of three winners in 2009.
On Tuesday, Canadian Donna Strickland became the third female physics laureate and the first in 55 years.
There have been several female winners in the areas of medicine, literature and peace, but only one woman —the American Elinor Ostrom in 2009— has been awarded the Nobel Memorial Prize in economics.
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2:45 p.m.
One chemical expert says the research of new Nobel laureate Frances Arnold "has really enabled lots of different chemists to think about how we can make proteins and design proteins to do some fascinating chemistry."
Matt Hartings, an associate professor of chemistry at American University in Washington, D.C., says "her work is incredible."
Arnold of the California Institute of Technology was awarded half of the 9-million-kronor ($1.01 million) prize Wednesday, while the other half will be shared by George Smith of the University of Missouri and Gregory Winter of the MRC molecular biology lab in Cambridge, England.
Hartings says the proteins that Arnold designed "do these really off-the-wall chemical things in record time." He says her directed evolution approach has greatly helped chemists make enzymes do jobs that nature never intended, such as for industrial purposes.
Hartings said her recent development of an enzyme that can promote chemical reactions involving silicon was a startling accomplishment, "completely bonkers."
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1:10 p.m.
Scientists have been applauding the winners of the Nobel chemistry prize, saying that it highlights the practical role chemistry plays in our daily lives.
Carol Robinson, president of Britain's Royal Society of Chemistry, says the prize shows how chemistry contributes "to many areas of our lives including pharmaceuticals, detergents, green catalysis and biofuels."
Robinson said Wednesday that directed evolution of enzymes and antibody technology "are now transforming medicine."
Douglas Kell, a professor of bioanalytical science at the University of Manchester, says the prize is "fantastic news. Really well deserved. Nobels commonly go to folk who develop methods that revolutionize practice or understanding. These methods are entirely general and have done both."
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12:30 p.m.
Nobel chemistry laureate George Smith, reached at his home in Columbia, Missouri, was quick to credit the work of others in his prize.
"Pretty much every Nobel laureate understands that what he's getting the prize for is built on many precedents, a great number of ideas and research that he is exploiting because he is at the right place at the right time," he told The Associated Press.
"Very few research breakthroughs are novel. Virtually all of them build on what went on before. It's happenstance. That was certainly the case with my work. Mine was an idea in a line of research that built very naturally on the lines of research that went before."
Smith said he learned of the prize in a pre-dawn phone call from Stockholm. "It's a standard joke that someone with a Swedish accent calls and says you won! But there was so much static on the line, I knew it wasn't any of my friends," he said.
He said he has "no idea" what he'll do with the prize money. "We're going to give it away, I think. But we'll think hard how we'll do it. It's not just the money, it has a meaning well beyond the money."
Smith, 77, was a professor for 40 years at the University of Missouri at the Division of Biological Sciences.
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12:20 p.m.
The Royal Swedish Academy of Sciences says the three researchers who were awarded this year's Nobel Prize in chemistry "harnessed the power of evolution" to develop enzymes and antibodies that have led to new pharmaceuticals and biofuels.
Frances Arnold of the California Institute of Technology was awarded half the prize for conducting the first directed evolution of enzymes, leading to more environmentally friendly manufacturing of chemicals, including drugs, and in the production of renewable fuels.
George Smith of the University of Missouri and Gregory Winter of the MRC Laboratory of Molecular Biology in Cambridge, England, share the other half of the prize. Smith developed a new way to evolve proteins and Winter used the method for evolving antibodies with the aim of producing new drugs.
The first drug based on this work is used against rheumatoid arthritis, psoriasis and inflammatory bowel disease, the academy said.
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11:45 a.m.
The Nobel Prize in chemistry has been awarded to two researchers in the United States and one in Britain.
Half of the 9-million-kronor ($1.01 million) prize was designated for Frances Arnold of Caltech in Pasadena for work that has led to the development of new biofuels and pharmaceuticals.
The other half of the prize will be shared by George Smith of the University of Missouri and Gregory Winter of the MRC Laboratory in Cambridge. They were honored for "phage display of peptides and antibodies."
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6 a.m.
The Nobel Prize in chemistry, which honors researchers for advances in studying how molecules combine and interact, is being announced Wednesday by the Royal Swedish Academy of Sciences.
The 9-million-kronor ($1.01 million) chemistry prize is the last of this year's scientific Nobel Prizes.
Last year's prize went to researchers in the United States, Switzerland and Britain who developed a microscope technique that lets scientists see details of the molecules that drive life.
The winner of the Nobel Peace Prize is to be announced Friday. No literature prize will be awarded this year. The Nobel Memorial Prize in Economic Sciences, honoring the man who endowed the five Nobel Prizes, will be revealed Monday.
The medicine prize was awarded Monday to American and Japanese researchers. Scientists from the United States, Canada and France shared the physics prize Tuesday.
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Follow the AP's coverage as the 2018 Nobel Prizes are awarded at https://apnews.com/tag/NobelPrizes ||||| On Tuesday at 6:14 am, Wikipedia contributors created the very first entry for Donna Strickland, the University of Waterloo laser physicist who, just minutes earlier, was awarded the Nobel Prize in physics. With that announcement, she became just the third woman in history to have won the physics award. It honors work that appeared in her very first published scientific paper, from 1985 — the academic version of a hole-in-one.
Strickland and Gérard Mourou were awarded half the $1 million prize for their discovery of a novel way to amplify the power of laser beams in short bursts. This technology, for instance, is used in laser eye surgery. It’s a major contribution to science that helped move laser technology from its infancy to its myriad applications (cutting, drilling, manufacturing, data storage, surgical work, you name it) today. Mourou and Strickland were co-authors on the work. Though Mourou was Strickland’s PhD advisor at the time, they are co-credited with the discovery.
Mourou has had a Wikipedia page since at least 2005. But there was no entry on Strickland’s accomplishments until today.
A Twitter user pointed out to me that articles on Strickland had been drafted on the online encyclopedia before in May 2018 — but the draft was rejected by moderators. “This submission’s references do not show that the subject qualifies for a Wikipedia article,” the moderators wrote, despite the fact that the original author linked to a page that showed Strickland was once president of the Optical Society, a major physics professional organization and publisher of some of the field’s top journals.
You may think: what’s the big deal?
Why does it matter that an obscure laser physicist didn’t have a Wikipedia entry until she won science’s greatest prize?
It matters because women’s visibility in science matters. It matters because far too many women aren’t encouraged to, or don’t feel welcome to, pursue careers in science.
One thing that would help is a better understanding that women have made important, inspiring contributions to science. “When you think about what a scientist means, you probably think of an Einstein figure — a man in a lab or at a chalkboard with fuzzy, unkempt hair,” my colleague Julia Belluz has written. “When you think of a scientist’s voice, you might conjure Neil deGrasse Tyson or Carl Sagan. With these voices and images so pervasive in our culture, it’s easier to associate �?scientist’ with �?man’ — and in particular, �?white man.’”
Women scientists like Vera Rubin, Nettie Stevens, Henrietta Leavitt, Rosalind Franklin, and so many others ought to be just as famous.
And Wikipedia, for all its faults, is the most prominent place where current human history is being told, searched for, and shared. That’s why the new Strickland Wikipedia entry is still important — if belated. A Nobel Prize winner ought to be visible to the young girls and aspiring scientists who may be Googling her name today.
Women still face a lot of discrimination in science
Historically, science and engineering has been a white men’s club. And it shows in the workforce to this day.
In January, the Pew Research Center published a report that found 50 percent of women working in STEM (science, technology, engineering, and math) have experienced gender discrimination on the job, and 36 percent say sexual harassment is a problem in their workplace.
Women represent only 30 percent of the STEM workforce, and see a significant pay gap compared with men’s salaries. Women are often underrepresented at the top levels of academic hierarchies. And problems with discrimination appear to be worse when women work in male-dominated offices, according to Pew.
There are so many ways women scientists — and minority scientists — have been erased from history or not written into it. It’s often hard to find photographs of historic female scientists (particularly nonwhite female scientists), and many more Wikipedia pages of women scientists still need to be written.
“It’s pretty easy to find inspiring stories and role models who look like you, whose lives mirror parts of your own, if you’re a white man,” Hilda Bastian, a scientist who has worked to raise the visibility of women scientists online, told Belluz. “But it’s hard to find people you identify with if you’re not.”
Of course, there’s also a long history of men taking credit for women’s accomplishments. And the Nobel Committee has skipped plenty of opportunities to award important discoveries made by women scientists.
Sexism lingers in science. Just this week, a CERN (European Organization for Nuclear Research) scientist made headlines when he declared that “physics was invented and built by men, it’s not by invitation” at a scientific conference.
Strickland expressed surprise this morning when a journalist reminded her that she is just the third woman to win the Nobel Prize in physics. “Is that all, really?” she said.
More women need to be recognized for their contributions to science, both by the Nobel Committee and in the pages of Wikipedia. | The Canadian scientist who became the first female Nobel Laureate for Physics since 1963 didn't have a Wikipedia page until after winning the prize Tuesday. Per Quartz, University of Waterloo professor Donna Strickland's groundbreaking work in the field of laser technology, which won her the prize, wasn't deemed significant enough to merit her own page. That all changed with the announcement of her win, 90 minutes after which her new page emerged as one among the just 17% of biographical Wikipedia entries that are about women. Meanwhile, Vox notes that one of Strickland's co-winners, French scientist Gérard Mourou, has had an entry since as far back as 2005. Further fueling speculation that Strickland's gender had a little or a lot to do with her lack of prior recognition, Fortune notes another point of contention that grabbed the attention of the social media commentariat: her academic title. Though the work she co-authored with Mourou helped revolutionize laser technology, Strickland currently holds the relatively lowly title of associate professor. Unwilling to enter the fray, however, was Strickland herself. She told the BBC she's always been treated as an equal to her male counterparts and that she has just never applied to become a full professor. (One of this year's winners of the prize in chemistry told the AP he's confident more women will receive the honor in his field in years to come.) |
DOD is subject to various environmental laws and regulations that govern restoration (cleanup) of contamination from past operations and control of hazardous waste related to active facilities (ongoing operations). DOD must also follow federal accounting standards and its own Financial Management Regulation (FMR) to ensure complete recognition and financial reporting of the associated liabilities. DOD has taken incremental steps in recent years to report a more complete picture of its environmental liabilities, but substantial issues remain in certain areas, including accounting for and reporting estimated cleanup costs for all ongoing and inactive/closed operations. The Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980 to provide a framework for cleanup of the nation’s worst hazardous waste sites. CERCLA focuses on the cleanup of inactive/closed hazardous waste sites and on making the parties responsible for generating and handling hazardous substances at these sites responsible for cleanup costs. In 1986, the Congress passed the Superfund Amendments and Reauthorization Act (SARA) which, among other things, established the DERP to implement DOD’s environmental cleanup activities. Through the DERP, a $2 billion per year program managed by the Deputy Under Secretary of Defense for Environmental Security (DUSD(ES)), DOD is cleaning up contamination at active military installations and former defense properties throughout the United States and restoring the land for new uses. DOD reports annually to the Congress on the status of DERP cleanup efforts and future funding requirements, largely based on data input from installations across the military services. DOD also uses installation DERP data to compile a significant portion of its environmental liabilities for financial statement reporting purposes. For fiscal year 2000, DOD reported approximately $18 billion on its financial statements for liabilities associated with DERP cleanup on active installations and formerly used defense sites. Subtitle C of the Resource Conservation and Recovery Act (RCRA) of 1976, as amended, provides hazardous waste management requirements for generators and transporters of waste and owners and operators of treatment, storage, and disposal facilities. Hazardous waste has properties that make it dangerous or capable of having a harmful effect on human health or the environment. Some types of hazardous waste are identified by their source, that is, by the specific industrial processes that produce the waste, such as electroplating, which generates sludge from the wastewater treatment. Other types are defined by certain characteristics that make the waste hazardous, such as whether it is flammable, corrosive, reactive, or toxic. Examples of related operations include hazardous waste landfills and incinerators, open burn/open detonation sites, and hazardous waste storage facilities. RCRA also regulates the operation and closure of underground storage tanks containing petroleum or hazardous substances and governs the cleanup of tank releases. Under RCRA, operators of facilities that treat, store, or dispose of hazardous waste must typically obtain an operating permit subject to regulatory oversight and periodic renewal. Figures 1 and 2 show examples of a hazardous waste storage bunker and underground storage tank regulated under RCRA. Two federal accounting standards, Statement of Federal Financial Accounting Standards (SFFAS) Nos. 5 and 6, establish the criteria for recognizing and reporting environmental liabilities. SFFAS No. 5, Accounting for Liabilities of the Federal Government, effective beginning in fiscal year 1997, defines a liability as a probable future outflow of resources due to a past government transaction or event. SFFAS No. 5 further states that recognition of a liability in the financial statements is required if it is both probable and measurable. SFFAS No. 6, Accounting for Property, Plant, and Equipment, supplements the requirements of SFFAS No. 5 with regard to PP&E cleanup costs, most notably those associated with general PP&E (e.g., landfills). Cleanup costs are defined as costs for removing, containing, and/or disposing of hazardous wastes or materials that, because of quantity, concentration, or physical or chemical characteristics, may pose a substantial present or potential hazard to human health or the environment. SFFAS No. 6, effective beginning in fiscal year 1998, requires that cleanup costs for general PP&E be allocated to operating periods in a “systematic and rational manner” based on use of the physical capacity of the associated PP&E (e.g., expected usable landfill area) whenever possible. If physical capacity is not applicable or estimable, cleanup costs may be accrued over the useful life of the associated PP&E. Regardless of allocation method, this accounting treatment should result in the accumulation of the total cleanup cost liability at the time when the PP&E ceases operation. The Office of the Under Secretary of Defense (Comptroller) issues the FMR, which contains DOD’s financial management policies and procedures. DOD FMR Volume 4, Chapter 13, Accrued Environmental and Nonenvironmental Disposal Cost Liabilities, prescribes the accounting policy for estimating and recognizing liabilities associated with the disposition of property, structures, equipment, munitions, and weapons. DOD FMR Volume 4, Chapter 14, Accrued Environmental Restoration (Cleanup) Liabilities, prescribes the accounting policy for estimating and recognizing liabilities associated with the containment, treatment, or removal of contamination. Chapter 14 specifies that cost estimates reported by installations to DUSD(ES) for preparation of budgetary requests and the DERP Annual Report to Congress shall be used by DOD components as the baseline for liability measurement for financial statement purposes. DOD’s financial statements should provide a comprehensive reporting of its environmental liabilities since, unlike the DERP Annual Report to Congress, the ultimate source of funding does not impact financial reporting requirements. DOD reported approximately $63 billion in environmental liabilities in its fiscal year 2000 financial statements, which was comprised of cost estimates for: (1) cleanup of nontraining range sites—$23 billion, (2) chemical weapons disposal—$15 billion, (3) training range cleanup—$14 billion, and (4) disposal of nuclear-powered aircraft carriers/submarines— $11 billion. Included in the $23 billion component were $18 billion for DERP-funded cleanup, as well as $1.4 billion and $175 million disclosed separately by the Army and Air Force, respectively, for non-DERP cleanup on active installations. Army disclosed that of its reported $1.4 billion, approximately $500 million related to ongoing operations, including closure of open burn/open detonation sites. Army reported that the other $900 million related to elements that include RCRA corrective action/closure plans and underground storage tanks. Deficiencies in DOD’s reporting of environmental liabilities continue to be a major contributing factor to our inability to express an opinion on the federal government’s consolidated financial statements. For fiscal year 2000, we reported that DOD did not maintain adequate systems or have sufficient information to develop an accurate estimate of key components of its environmental and disposal liabilities. We found that the scope and magnitude of unreported cleanup costs for ongoing and inactive/closed operations were significant at the six installations we visited. Although the installations have a process in place to accumulate the data needed for DERP reporting, this process does not encompass all operations with probable and reasonably estimable cleanup costs. Working largely with personnel already responsible for DERP reporting, we identified over 200 sites with estimated cleanup costs in excess of $250 million, most of which had not been previously reported. The 6 installations we visited had a total of 221 ongoing and inactive/closed sites requiring cleanup. We identified the sites by using environmental site records maintained at the installations, which we substantiated through a combination of regulatory agency record review, visual inspection, and interviews with personnel from the respective regulatory agencies and installation environmental offices. At our request, the installation environmental offices readily prepared or provided cleanup cost estimates totaling approximately $259 million for all 221 sites. We found some sites at each installation already in various stages of cleanup, and some of these sites were being funded through the department’s environmental restoration accounts. Sites funded through these accounts are to be included in the DERP Annual Report to Congress and in DOD’s environmental liabilities reported in its financial statements. We confirmed that 45 of the 221 sites, with estimated cleanup costs of $61 million, were included in DERP reporting by the installations. The remaining 176 sites were not included in DERP reporting, and of the $259 million in estimated cleanup costs, $198 million, or 76 percent, was not reported through DERP and therefore likely not reported in DOD’s financial statements. Of the 176 unreported sites, 149 involved ongoing operations with total estimated cleanup costs of $91 million. The remaining 27 unreported sites were inactive and/or closed operations with total estimated cleanup costs of $107 million. Tables 1 and 2 provide additional details on the number/types of sites at the six installations, corresponding cleanup cost estimates, and reporting status. Appendix IV provides these data by installation. Based on our analysis of six installations, the amount of unreported environmental liabilities associated with ongoing and inactive/closed operations is significant. DOD stated in its fiscal year 1999 DERP Annual Report to Congress that it has over 1,500 funded active installations with approximately 6,000 sites in some stage of cleanup. We believe that other installations may have the same issues we found at the six we visited. In addition, given the deficiencies discussed later in this report regarding the real property records that we used to select the six installations we visited, some of the other installations could have even more significant cleanup costs than we identified. DOD issued accounting guidance for environmental liabilities in 1999 by adding new chapters to the FMR. However, neither of the separate chapters issued for asset disposal and restoration/cleanup liabilities adequately addresses the types of unreported liabilities that we identified. Volume 4, Chapter 13, of the FMR applies to costs associated with asset disposal. Many of the cases that we identified do not involve the actual disposal of assets, but rather closure of an operation and, where necessary, cleanup of the site for future use. Landfills are a good example of this scenario—rather than selling the property when landfill operations cease, DOD usually caps or covers the facility for closure and conducts postclosure monitoring of the site consistent with regulatory requirements, usually for a period of at least 30 years. We did not find the guidance needed to report the liability for landfills in Chapter 13. SFFAS No. 6 specifically states that cleanup includes closure and postclosure costs. Therefore, Volume 4, Chapter 14, of the FMR, which applies to restoration (cleanup) liabilities, should encompass the types of operations that we identified. However, as currently written, this chapter does not clearly indicate that closure and postclosure activities are elements of cleanup. Chapter 14 defines cleanup as “…the containment, treatment, or removal of contamination that could pose a threat to public health and the environment.” As a result, this definition does not adequately address the types of operations that we identified, such as landfills, open burn/open detonation sites, and underground storage tanks. While Chapter 14 contains specific guidance on DERP cleanup and specifically references the site inventory and cost estimating guidance contained in the “DERP Management Guidance” document issued by DUSD(ES), it does not have equivalent guidance for non-DERP cleanup. As discussed previously, however, 176 (80 percent) of the 221 sites that we identified at the 6 installations, and 76 percent of the $259 million in estimated costs that we obtained for all sites, were not included in DERP reporting. Consequently, Chapter 14 would be further strengthened by specifically addressing non-DERP cleanup. Installation environmental offices at the six installations we visited maintain comprehensive records for their own sites and operations subject to cleanup requirements for regulatory purposes and have demonstrated that cleanup costs for ongoing and inactive/closed operations can be estimated. However, we found that corresponding real property records are not reliable and cost estimating methodologies are not standardized. Further, we found that DOD does not have the policies and formalized processes in place to systematically accumulate, maintain, and report site and cost data at a departmentwide level, as well as to ensure that these data are complete. As a result, DOD’s financial statements likely do not present an accurate, comprehensive report of its environmental liabilities as required by federal accounting standards. The installation environmental offices that we visited had extensive records that identify cleanup sites by size and type. We found that the initial identification of sites by each of the six installations was the result of extensive investigations conducted pursuant to federal, state, and/or local laws. For example, as part of the RCRA permitting process, installations perform a comprehensive environmental assessment of all operations to identify actual and potential cleanup sites. This process results in a RCRA Facility Assessment Report (RFA), which documents the results of the assessment and includes a detailed list of identified sites. Figures 3 and 4 show two examples of the types of sites identified in the RFA: an open burn/open detonation site and a landfill operation. The environmental offices at all six installations had extensive knowledge of the sites listed in their own RFA and periodically updated the data, as required by the permitting process, to reflect newly discovered sites and the current cleanup status of all sites. Underground storage tanks, which represented over half of the 221 sites, are registered through state and local regulatory agencies and installation environmental offices have records to identify them. Thus, these offices maintain detailed environmental site records related to the RFA, updated permitting data, and underground storage tanks. According to DOD, real property records should be a comprehensive source of data for all installation land, buildings, and related structures, regardless of whether or not cleanup requirements apply. As such, if properly maintained, they should contain information needed to ensure the accuracy of environmental site records, including data on site descriptions, in-service dates, and useful lives. Since both real property records and environmental office site records provide information needed to prepare DOD’s financial statements and are therefore subject to audit, periodic reconciliations between the two sets of records would help ensure their accuracy. However, we determined that the records maintained by each installation’s real property office were not being reconciled and did not agree with the environmental office site records that we had substantiated through review of regulatory agency records, visual inspection, and interviews. We investigated the differences and found significant errors in the real property records. These errors related to sites that were not properly added to or deleted from the real property records, as well as sites incorrectly categorized in the real property records. We found a total of 237 errors in the real property records related to operations with hazardous waste. As table 3 shows, 206 of the 237 errors, or 87 percent, resulted from additions and deletions that were not made. The 206 were comprised of 182 adjustments to add property that existed but was not recorded, and another 24 to delete property that was recorded but no longer existed at the installations. The remaining 31 errors related to property that had been incorrectly categorized in the real property records. For example, we found both underground and aboveground storage tanks categorized together, even though different cleanup and closure requirements apply to each type of tank. Appendix IV provides these data by installation. Because we used the installations’ real property records, which we have since found to be unreliable, as the basis for our selection of the six installations for this review, we may not have chosen installations from among those with the most significant cleanup costs as we intended. We found cases of significant numbers of additions and deletions not being made at some installations. For example, at Camp Pendleton Marine Corps Base, California, we identified 52 underground storage tanks that were not recorded in the real property records. At Fort Polk, Louisiana, the real property records showed 48 underground storage tanks, while the environmental site records showed only 16 in existence. Several real property office personnel cited problems in receiving the proper documentation from the base engineer or other installation personnel to prompt an adjustment to the real property records. We identified these significant errors despite existing requirements that installations perform periodic inventories of real property assets. We also found that policies regarding the recording of land-related assets were not consistently applied by the installations. For example, at two of the installations visited—Fort Carson, Colorado, and Cherry Point Marine Corps Air Station, North Carolina—we found that the installations’ real property offices did not always record assets related to land (e.g., landfills, open burn/open detonation sites, and fire training pits) in their records as required. For these two installations, we identified 33 additions that should have been made. However, we noted that the Fort Polk and Camp Pendleton real property offices did record landfills and other land-related assets. We found other inconsistencies in the recording of active and inactive/closed facilities in the real property records. For example, at several installations, active facilities were included in the records but inactive/closed facilities still incurring closure and postclosure costs were not included. Additionally, we noted instances where several real property assets located in the same vicinity were recorded as one asset. For example, at Fort Polk, the real property records showed one 160,000-gallon underground storage tank. After further review and inquiry, we determined that there were actually four separate 40,000-gallon tanks at that location. The remaining 31 errors that we found involved assets being incorrectly categorized in the real property records. For example, at Fort Polk, we identified 20 aboveground storage tanks that were categorized as underground storage tanks. Because different cleanup and closure requirements apply to each type of tank, the installations’ real property records must categorize these assets separately to support the environmental site records. The errors that we identified are symptoms of a lack of formal communication between the real property and environmental offices at some installations. Proper coordination between the property management and environmental management communities is critical to ensuring consistent and reliable tracking and reporting for financial management, regulatory compliance, and other purposes. The environmental offices at the 6 installations that we visited were able to provide us with estimates of future cleanup costs for all 221 sites. However, DOD does not have standardized and validated methodologies for developing cleanup cost estimates and installation personnel used a variety of methods to develop those estimates. The methods used by the installation environmental offices included: (1) applying different costing models, including Remedial Action Cost Engineering and Requirements (RACER) and Means Cost Estimating, (2) tailoring cost estimates from prior closures to the specific characteristics (e.g., location, technology, type of waste, capacity) of the new site and adjusting for inflation, (3) relying on staff expertise and experience in cleanup cost estimating, and (4) using an average of prior actual costs. The installations’ use of various costing methods resulted in significant variances in cleanup cost estimates for operations with similar cleanup requirements. For example, Fort Polk adjusted a recent removal contract and estimated the cost to remove a 5,000-gallon underground storage tank at approximately $43,000, while Camp Pendleton estimated the cost to remove a 20,000-gallon underground tank at only $13,000 by using an average of past removal costs. Based on inquiries of installation personnel responsible for the separate cost estimates, we could not identify a reason for the significant variance other than the different estimation methods that were used. Until DOD develops and validates standard methodologies for estimating cleanup costs, there is no assurance that these cost estimates will be comparable and reliable for decisionmaking and budget planning. DOD already has guidance in effect (DOD Instruction 5000.61; DOD Modeling and Simulation Verification, Validation, and Accreditation) which requires that cost models be validated to ensure that the results produced can be relied upon. DOD lacks leadership to ensure comprehensive reporting of the cleanup costs for ongoing operations and certain inactive/closed operations on active installations. While the Office of the Deputy Under Secretary of Defense (Environmental Security) was created in 1993 as the office responsible for environmental cleanup within DOD, its primary focus has been on the cleanup of operations covered and reported by the DERP. Although the requirements for reporting liabilities for non-DERP cleanup have existed for years, DOD has not established adequate or consistent policies to reliably develop the required cleanup cost estimates or to ensure those estimates are maintained, accumulated, and reported in its financial statements. DOD also lacks procedures for periodic communication between environmental, real property, and accounting personnel to ensure that site and cost information is accurate and complete. We made this same observation in our recent report on cleanup cost estimates for DOD training ranges. Although detailed information exists to identify operations requiring cleanup and to estimate the related cleanup costs at the six installations we visited, DOD does not have a comprehensive, controlled process to capture, summarize, maintain, and report this data for all operations. DOD currently has a structured process in place to compile and report site and cost data for DERP cleanups; however, the department is not using this process for all cleanup costs associated with ongoing and inactive/closed operations. Since many of the same installation personnel manage DERP and non-DERP cleanups, the current framework could be expanded to encompass both. In addition, DOD is not routinely coordinating between installation property management and environmental management personnel. Consequently, DOD is not properly maintaining its real property records or reconciling them with environmental site records. These issues exist primarily because DOD does not have adequate guidance and leadership to ensure that: (1) all future cleanup costs are identified and reported as part of an overall approach to managing all of its environmental liabilities, and (2) real property records are properly maintained and coordinated with environmental site records. As our work reveals, the guidance and procedures must be developed and implemented with effective coordination across the environmental, property management, and accounting communities. Until DOD addresses the issues discussed in this report, particularly in the areas of guidance and leadership, we cannot assure the Congress that DOD’s reported environmental liabilities can be relied on for long-range budget planning decisions. We recommend that the Secretary of Defense designate a focal point with the appropriate authority to oversee and manage the reporting of DOD’s liability for the cleanup of all ongoing and inactive/closed operations. We recommend that the Secretary of Defense require the DOD Comptroller to revise the FMR to include: (1) an expanded definition of cleanup, consistent with SFFAS No. 6, that includes closure/postclosure activities, and (2) guidance that addresses all restoration/cleanup liabilities, regardless of funding source or type of operation, in accordance with federal accounting standards. We recommend that the Secretary of Defense require the Deputy Under Secretary of Defense (Installations and Environment) to ensure that (1) existing errors in real property records are corrected, and (2) real property and environmental site records are periodically reconciled. We also recommend that the Secretary of Defense require the designated focal point to work with the appropriate DOD organizations to develop guidance and procedures to implement the revised FMR requirements, to include the following: (1) standardized and validated methodologies for estimating cleanup costs, and (2) a comprehensive, controlled process to systematically capture, summarize, maintain, and report the cleanup sites and costs resulting from all operations known to result in hazardous waste. On October 11, 2001, we received DOD’s comments, dated August 29, 2001, which addressed a draft of this report. In commenting on the draft, DOD concurred with the overall intent of our recommendations and fully concurred with our specific recommendation to designate a focal point to oversee and manage the reporting of DOD’s liability for the cleanup of all ongoing and inactive/closed operations. DOD partially concurred with the remaining three recommendations. Our response to DOD’s partial concurrences is included in appendix III. In addition, DOD expressed concern that some aspects of the report were misleading due to its interpretation of certain terms used in the report. Specifically, DOD objected to the use of the term “cleanup” and instead preferred what it stated were the more precise terms of “environmental restoration” and “accrued environmental disposal cost.” However, the term “cleanup,” as used in this report (see footnote 1), is defined by federal accounting standards to include specific activities and costs encompassing more than just environmental restoration and/or disposal costs. To limit a discussion of cleanup costs to only those related to restoration and disposal inappropriately narrows the applicability of the accounting standard. In accordance with the definition of cleanup and the scope of the accounting standard, the estimated cost to clean up the 221 ongoing and inactive/closed sites identified in the report are for those actions required by federal, state, and/or local statutes to remove, contain, and/or dispose of (1) hazardous waste from property, or (2) material and/or property that consists of hazardous waste at permanent or temporary closure or shutdown of associated PP&E. If the required action—which in accordance with the accounting standard may include, but is not limited to, decontamination, decommissioning, site restoration, site monitoring, closure, and postclosure costs—has not been accomplished, the liability for the future costs still remains. Therefore, the liability for the estimated future costs to clean up the 221 sites in the report includes future closure and postclosure costs based on requirements in current operating permits, as well as liabilities for the remaining closure and postclosure costs of inactive/closed operations, and closure costs for underground storage tanks. Included also are liabilities for remaining costs of decontamination and/or site restoration required by corrective actions for previous contamination of inactive/closed operations. DOD acknowledged that it did not fully estimate all of its environmental cleanup costs, but believes our report overstates the extent of the underestimation. However, our report focuses only on the results of our reviews conducted at six specific DOD installations and the extent of likely understatement by those installations. As discussed in the body of this report, 76 percent of the total estimated cleanup for the six installations, or $198 million, was not included in DERP reporting and therefore, likely not reported in financial statements. In addition, DOD stated that our report did not acknowledge a liability of $1.5 billion reported in its fiscal year 2000 financial statements for the types of activities covered by the report. We disagree. Our draft report clearly stated that the Army disclosed $1.4 billion for non-DERP cleanup on active installations. Although we continue to believe that we appropriately concluded that the Air Force’s disclosure of $175 million in non-DERP cleanup was not significant to its financial statements, we have modified our report to specifically identify this amount. Further, DOD stated that many of the statements made in this report were speculative and lacked supporting evidence. We disagree and have addressed DOD’s specific concerns in appendix III. Overall, we reiterate our position that our findings and conclusions are well-supported by our results at the six installations we visited, as well as the systemic weaknesses we identified in the areas of DOD-wide reporting systems, record-keeping coordination and maintenance, guidance in reporting environmental cleanup liabilities, and leadership and focus. Further, as explained in the introduction to the report and in appendix I, we intended to use a representative sample to respond to our requester’s question regarding the magnitude of cleanup costs associated with DOD’s ongoing operations. However, because DOD did not have a comprehensive system for identifying, summarizing, maintaining, and reporting cleanup costs for ongoing operations, DOD was unable to provide us with a reliable population from which to select a representative sample. Instead, we selected two installations from each of the three military services as examples and our conclusions about the magnitude of unreported liabilities relate only to those six installations. We are sending copies of this report to the Ranking Minority Member, House Committee on the Budget, and to other interested congressional committees. We are also sending copies to the Secretary of Defense; the Under Secretary of Defense for Acquisition, Technology, and Logistics; the Under Secretary of Defense (Comptroller); the Deputy Under Secretary of Defense for Installations and Environment; and the Director of the Office of Management and Budget. Copies will be made available to others upon request. Please contact me at (202) 512-9095 if you or your staff have any questions about this report. Other GAO contacts and key contributors to this report are listed in appendix V. Our objectives were to determine: (1) the scope of ongoing DOD operations with potentially significant cleanup costs, (2) the potential magnitude of costs to clean up and dispose of the hazardous waste resulting from those operations, and (3) the availability of data for developing cleanup cost estimates. Our review, with the exception of training ranges and weapons systems (national defense PP&E), included all ongoing and inactive/closed operations on six active installations known to result in hazardous waste and subject to federal, state, and/or local laws or regulations requiring removal, containment, or disposal of that waste. Compliance with federal accounting standards requires the recognition of a liability if a future outlay of resources is both probable and reasonably estimable. To determine if a cleanup liability was probable, we reviewed federal financial accounting standards, environmental laws and regulations, and DOD accounting guidance that address environmental cleanup requirements. We also interviewed DOD officials responsible for financial reporting and environmental program management and regional Environmental Protection Agency (EPA) officials responsible for overseeing the administration of federal environmental laws and regulations applicable to DOD operations. To determine if a cleanup liability was reasonably estimable, we interviewed state regulatory agency personnel responsible for administering federal, state, and local environmental laws and regulations that regulate DOD activities and similar commercial waste management operations. We obtained information on plans for cleanup, closure, and postclosure monitoring required as part of the permitting of waste management operations for both DOD and similar commercial activities. We also obtained information on cost estimates to accomplish those plans for commercial activities. To determine the potential scope of DOD operations requiring environmental cleanup, we obtained the real property databases of each military service and extracted the assets whose category descriptions (e.g., hazardous waste storage facility) indicated an association with a hazardous or solid waste management or underground storage tank operation. Because DOD did not have a centralized or comprehensive system for identifying, summarizing, maintaining, and reporting the cleanup costs associated with all of its ongoing operations, we could not use representative sampling techniques to determine the full scope and magnitude of its related liability. Therefore, as agreed with our requester, we selected 6 of the more than 1,500 active installations reported by DOD to use as examples. To make preliminary planning decisions about the potential magnitude of the DOD-wide estimated future cleanup costs for the operations indicated by the real property extracts, we conducted a telephone survey of the regulatory officials from 13 states to determine an average estimated cleanup cost for similar commercial waste management operations. We applied the average commercial costs, making assumptions about operational status and remaining useful lives, to the extracted real property assets, and ranked individual installations in order of the resulting potential total cleanup costs. We then selected six DOD installations, two from each military service, to conduct on-site reviews of the actual scope and magnitude of the estimated future cleanup costs of their operations known to result in hazardous waste. With one exception, which was selected for its geographical location, the remaining five installations were selected from the top five in each service with what appeared to be the highest potential cleanup costs. Appendix II lists the primary locations where we performed our review. To determine the scope and related future cleanup cost estimates of waste management operations and underground storage tanks for the six individual DOD installations selected, we conducted on-site reviews at the state regulatory agencies having jurisdiction over each installation, and at each selected DOD installation. Our objective at each state regulatory agency was to obtain an understanding of the nature, scope, and cleanup requirements of the waste management activities at each selected DOD installation. To accomplish this, we: (1) interviewed relevant state regulatory agency officials, (2) reviewed oversight, permitting, and compliance documents for the DOD installations, and (3) if available, obtained and reviewed documentation of cleanup cost estimates for similar commercial operations. Our objectives at each of the six DOD installations visited were to: substantiate and supplement the information and insight gained at the determine the scope of ongoing and inactive/closed operations requiring cleanup at each installation, determine the estimated cleanup costs for these operations, and determine the extent to which these cleanup costs are currently being reported for budgetary planning and financial statement purposes. To accomplish our objectives, we: (1) interviewed installation environmental officials and reviewed supporting documentation evidencing operations and their status, (2) reconciled listings of operations and/or related assets and their status, obtained from the regulator, to installation environmental office records, (3) physically observed the existence and status of selected operations and the related PP&E, (4) obtained future cleanup cost estimates prepared by the environmental office, (5) compared our findings to installation reporting for DERP purposes, and (6) reconciled our PP&E extracts from the military service real property databases, and supplemental information provided by installation real property office records, to environmental office records of operations requiring cleanup. We summarized the data obtained and analyzed the results of our review by individual installation and environmental category (see appendix IV). We did not independently verify the reliability of the cleanup cost estimates, nor did we verify the existence or cleanup status of all relevant operations at each installation visited. Except as noted above, our work was conducted in accordance with generally accepted government auditing standards from August 2000 through May 2001. On October 11, 2001, we received DOD’s comments, dated August 29, 2001, which addressed a draft of this report. DOD’s comments are discussed in the “Agency Comments and Our Evaluation” section and are reprinted in appendix III, which also includes our detailed response to DOD’s specific comments. Other individuals were contacted via telephone and electronic mail. The following are GAO’s comments on the letter dated August 29, 2001 (received October 11, 2001), from the Department of Defense. 1. See the “Agency Comments and Our Evaluation” section of this report. 2. Chapter 14 of DOD’s FMR, “Accrued Environmental Restoration (Cleanup) Liabilities,” is intended to provide guidance in accounting for and accruing a liability for the costs associated with the containment, treatment, or removal of contamination that could cause a threat to public health and the environment. However, the included guidance centers around environmental cleanup primarily relating to restoration activities and costs. Chapter 13 of DOD’s FMR, “Accrued Environmental And Non-environmental Disposal Cost Liabilities,” provides guidance in accounting for and accruing a liability for the costs associated with the disposal of property, structures, equipment, munitions, and weapons. As stated in the “Agency Comments and Our Evaluation” section, the federal accounting standard requirement to account for environmental cleanup cost encompasses more than the restoration and disposal costs guidance currently provided by the FMR. Regardless of the terminology used, we continue to recommend that the FMR address the broad range of activities included in the scope of the federal accounting standard, such as closure and postclosure monitoring costs. 3. On May 15, 2001, DOD created the new position referred to in its comment letter, the Deputy Under Secretary of Defense (Installations and Environment), within the Acquisition, Technology and Logistics office. Because DOD has combined responsibility for both real property and environmental issues in this position, we modified our recommendation to require the Deputy Under Secretary of Defense (Installations and Environment) to correct errors in real property records and to reconcile those records with environmental site records. 4. We have modified the report to clarify the definition of “standard” as used in this report and to change the word “methodology” to “methodologies.” The underground storage tank example in our report illustrates how the use of nonstandard methodologies can result in inconsistent and incomparable cost estimates. 5. We disagree that the report’s conclusions about the significance of DOD’s unreported liabilities are not supported. As discussed in the body of our report and in the “Agency Comments and Our Evaluation” section, the unreported environmental cleanup liability for the six installations visited was 76 percent of the total estimated cleanup costs for these locations. The report’s “Conclusions” section points out the lack of and/or weaknesses in DOD-wide reporting systems, record- keeping coordination and maintenance, and leadership and guidance in reporting environmental cleanup liabilities. When considered in light of these DOD-wide weaknesses, we believe the unreported cleanup liabilities found at the visited installations are more than adequate support for our conclusion. Nevertheless, in response to DOD’s concern, we have modified our report to state that until DOD addresses the issues discussed in this report, particularly in the areas of guidance and leadership, we cannot assure the Congress that DOD’s reported environmental liabilities can be relied on for long-range budget planning decisions. Further, as stated in footnote 12 to our report, federal accounting standards do not require DOD to record the entire cleanup cost of ongoing operations as a liability on its current financial statements. However, those same accounting standards (SFFAS No. 6, par. 109) would require disclosure of the unrecognized portion of estimated total cleanup costs. In other words, DOD would be required to disclose in the footnotes to its financial statements that portion of the estimated total liability of $91 million for environmental cleanup of ongoing operations not reported as a liability on its financial statements. 6. We agree that the scope of our work did not include an audit of all the real property records at the installations visited and have clarified the wording of our report to address only the relevant real property records. 7. DOD is correct in observing that we were purposely trying to survey the installations with the highest potential costs. In lieu of using a representative sample (which was not possible due to problems in identifying a reliable population from DOD’s records, as discussed in comment 8), we selected, with one exception, two installations in each service from the top five having the highest potential environmental cleanup cost. This was an attempt to obtain as complete an understanding as possible of the broad range of cleanup activities that may be associated with DOD’s ongoing operations. Further details on our methodology are disclosed in appendix I, “Objectives, Scope, and Methodology.” Our assessment of potential environmental cleanup costs for individual installations was based on data obtained from DOD’s real property records. Review of this data during our installation visits disclosed significant errors in the relevant real property records, which in turn caused the initial determinations of potential cleanup costs to be unreliable. Thus, we could no longer be certain whether other DOD installations would have had higher potential cleanup costs than those selected. 8. We disagree with DOD that our methodology deviated from standard governmental auditing procedures. Audit sampling is applicable only when the auditor expects to draw a conclusion about a population. Because DOD did not have a comprehensive system for identifying, summarizing, maintaining, and reporting cleanup cost for ongoing operations, DOD could not provide a reliable population from which to select a representative sample. Instead, as stated in the body of our report and more fully disclosed in appendix I, “Objectives, Scope, and Methodology,” we selected two installations from each of the three military services as examples, and reached conclusions about the magnitude of unreported liabilities for only those six installations. Our selection was not intended to be a representative sample of DOD installations and we drew no conclusions about any population based solely on the results of our review of the six installations. 9. We have modified the report to disclose the amount actually reported by the Air Force. 10. Because DOD could not provide us with detailed lists of all the costs that comprise its reported liability, we have modified the report to indicate that estimated cleanup costs not reported through DERP were “not likely” to have been reported in DOD’s financial statements. We also clarified our support for this issue in footnote 13. Staff making key contributions to this report were Fannie Bivins, Francine DelVecchio, Steve Lipscomb, David Merrill, Sheila Miller, Octavia Parks, Lisa Powell, Ben Severson, and Patrick Tobo. The General Accounting Office, the investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. The fastest and easiest way to obtain copies of GAO documents is through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-text files of current reports and testimony and an expanding archive of older products. The Web site features a search engine to help you locate documents using key words and phrases. You can print these documents in their entirety, including charts and other graphics. Each day, GAO issues a list of newly released reports, testimony, and correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site daily. The list contains links to the full-text document files. To have GAO E-mail this list to you every afternoon, go to our home page and complete the easy-to-use electronic order form found under “To Order GAO Products.” Web site: www.gao.gov/fraudnet/fraudnet.htm, E-mail: [email protected], or 1-800-424-5454 (automated answering system). | GAO examined the environmental cleanup costs of ongoing operations of the Department of Defense (DOD). These include general property, plant, and equipment facilities or other assets that are being operated or are in use at DOD installations. GAO found that DOD has not developed policies, procedures, and methodologies to ensure that cleanup costs required for all of its ongoing and inactive or closed operations are identified, consistently estimated, and appropriately reported. As a result, DOD's financial statements and environmental reports continue to underreport environmental liabilities and related long-term budgetary needs. The military installations GAO visited had a total of 221 sites with estimated cleanup costs of $259 million. Of these, only 45 sites with estimated cleanup costs of $61 million were being reported for the Defense Environmental Restoration Program Annual Report to Congress, and only that amount was likely included in DOD's financial statements. GAO found DOD was not reporting 149 sites related to ongoing operations with estimated cleanup costs of $91 million and 27 inactive and closed operations with estimated cleanup costs of $107 million. The environmental offices at the six installations GAO visited had comprehensive records for the installation sites subject to cleanup requirements. Although these records were reasonably accurate, the records used to maintain accountability over related land, buildings, and structures were significantly flawed. If properly maintained, the real property records should play a significant role in ensuring the accuracy of environmental site records. |
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