Think Again: Obama’s Commie Past Exposed Yet Again

By Eric Alterman, Mickey Ehrlich

Rush Limbaugh felt certain he had the next big Obama story in his lap. He—or somebody on his staff—thought they had discovered a portion of Obama’s Columbia undergraduate thesis on the conservative blog Pajamas Media. The post by Michael Ledeen, a long-time associate of foreign intelligence agencies who left academia under a cloud of plagiarism charges, claimed that Time’s Joe Klein had been granted access to 10 pages of the thesis and that it revealed an antifounder bias on the part of the man who would be president. Ledeen, meanwhile, lifted the story from a blog called Jumping in Pools that had posted a phony report on the thesis back in August.

Ledeen explained later on PJM: “I cam [sic] across it on Twitter, read the blog, found it interesting, and posted on it. I failed to notice that one of the tags was ‘satire.’” Apparently, there was no due diligence other than the fact that Ledeen found the post “interesting.” The blog he was referring to didn’t cite sources or provide links for any of the information.

Right wingers have been on the hunt for Obama's undergraduate thesis since it was referred to in passing in a New York Times article in 2007. A copy of the paper, "Soviet Nuclear Disarmament," has never turned up. The title of that paper was not nearly as sexy as "Aristocracy Reborn,” the title of the fake thesis posted on Jumping in Pools that Ledeen was writing about.

Here is a history from 2008 of the Obama thesis smear. The “Yes We Can” man allegedly complained in an academic paper when he said, “I see poverty in every place I walk. In Los Angeles and New York, the poor reach out to me and all I can do is sigh.”

It’s no wonder Ledeen, a former contributor to The New Republic, was peddling the Jumping in Pools story, and Limbaugh was loving it. The piece had a number of slurs about Barack Obama that have percolated in the right-wing media ever since Obama came into prominence.

During the presidential campaign, writer Jack Cashill speculated at the conservative site American Thinker that ex-terrorist Bill Ayers had ghost written Obama’s celebrated memoir Dreams from my Father. To be fair, Cashill admitted in his post that he would not be able to prove conclusively that Obama did not write this book. Despite the disclaimer, Cashill went on to make one of the weakest cases for phony authorship ever committed to pixels. His “evidence” included Obama’s lack of previously published writing and the number of references to the words “lies” or “lying” in both the Ayers memoir Fugitive Days and Dreams from my Father. It went downhill from there.

After Cashill’s original blog appeared in 2008, Robert Fox, the millionaire brother-in-law of a GOP congressman, tried to prove the connection. He offered $10,000 to Dr. Peter Millican, an Oxford professor who had developed a computer program to make comparisons between texts.

Times of London reported this on November 2, 2008. Millican told Fox that the initial findings made it “highly implausible” that the books shared authors. He also said that if further research was done, then the findings would be made public whether or not Ayers was proven to be the author. Fox withdrew his offer.

Nonetheless, Cashill has beaten this drum at American Thinker as recently as October 25. Again, he compares samples of Dreams to samples of Ayers’s writing. He is also convinced by the “pedestrian” prose of an essay Obama wrote in 1988.

A large part of Cashill’s argument derives from his belief Ayers is the proven prose stylist while Obama is the novice poseur. This is actually nonsense in both respects. It rests on Cashill’s method of lifting Obama’s writings out of context and comparing them to Dreams from my Father.

It would be just as easy to take decontextualized examples from Ayers’s previous writing to show what a bad writer he is. For example, this quotation from one of Ayers’s books on education, To Teach: The Journey of a Teacher, is an overwritten clunker: “We are left to think about what ought to be and what ought not to be; we are left to investigate and inquire into and with our students, and to interrogate the larger contexts of teaching; we are left to choose among conflicting claims, and this requires thinking critically and intensely about possible courses and outcomes.” That’s a tortured mouthful, but by Cashill’s logic this would disqualify Ayers from possessing the ability he shows in Fugitive Days.

Cashill cites Christopher Andersen’s biography of the first couple as further proof that Ayers was Obama’s writing partner. Andersen’s book deploys unnamed sources and wasn’t written with the Obamas’ cooperation. On September 22, Andersen appeared on Sean Hannity’s show on Fox:

Hannity: But Bill Ayers helped him with his book, and you actually pick
up—you found the literary devices and themes bear a jarring similarity to Ayers'
own writings.

Andersen: That's true. And they were good friends. And during the campaign,
of course.

Hannity: They were good friends.

Andersen: Yes, of course, they were.

Hannity: So he denied it.

Andersen: It was kind of—yes, he did. It was like a literary cabal there
that was interesting in Chicago.

Appearing on Fox, Andersen allowed Hannity’s insinuation to stand. On CNN, Howard Kurtz questioned Andersen on the passages about Ayers in the book. Andersen was quick to say to Kurtz, “I definitely do not say that [Ayers] wrote Barack Obama’s book.” Rather than a “literary cabal,” he referred to “a group of Hyde Park writers.”

Naturally, American Thinker also ran with Ledeen’s piece on the “Obama thesis.” Denis Keohane wrote “Michael Ledeen at PJM reports…” But even Ledeen didn’t make claims to reporting—he said that he had “missed [the thesis story] the first time around.” Some reporting is exactly what should have been done.

In Keohane’s article, he took the opportunity to tell a tale of two theses. He compared coverage of the made-up Obama paper to coverage of the paper that was actually written by Robert McDonnell, the Virginia gubernatorial candidate. Keohane complains about the inflation of the significance of the McDonnell paper “across the spectrum of the media,” but he makes no attempt to confirm the validity of the claims about Obama.

Rush spoke as recently as September 30 about the claims made by Cashill on American Thinker. He also cited Andersen’s book as evidence of “the erosion of the myth of Obama.” Limbaugh, who lately has taken to referring to the President of the United States as a "boy" and a "man-child," then proceeded to read Ledeen’s post on the air without qualification.

About an hour later, a researcher slipped him a note. Limbaugh admitted that “we have to hold out the possibility that this is not accurate.” Even as he made this noncorrection, Limbaugh continued to refer to the paper that “Obama wrote.” Later he found out that the site the “thesis” came from was a “satire blog” and he said, “We stand by that fabricated quote because we know he thinks it anyway.”

The Obama thesis was one instance where the mainstream media, excluding the conservative propaganda organization called “Fox News,” did not rise to the right-wing bait. Let’s see if the lesson holds next time this kind of slime rises from the right like a Balloon Boy in the sky from the muck of lies where so much of it originates.

Eric Alterman is a Senior Fellow at the Center for American Progress and a Distinguished Professor of English at Brooklyn College. He is also a Nation columnist and a professor of journalism at the CUNY Graduate School of Journalism. His seventh book, Why We're Liberals: A Handbook for Restoring America's Most Important Ideals, was recently published in paperback. He occasionally blogs at http://www.thenation.com/blogs/altercation and is a regular contributor to The Daily Beast.

Mickey Ehrlich is a freelance writer and an English teacher at Kingsborough Community College.

This article was published by the Center for American Progress.

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President Signs Law Granting Defense Authority To Suppress Torture Photos

President Obama Thursday signed into law a Homeland Security appropriations bill that contains a provision to grant the Department of Defense (DOD) the authority to continue suppressing photos of prisoner abuse.

The amendment, which would allow the DOD to exempt photos from the Freedom Of Information Act (FOIA), is aimed at photos ordered released by a federal appeals court as part of an American Civil Liberties Union FOIA lawsuit for photos and other records related to detainee abuse in U.S. custody overseas, although it would apply to other photos in government custody as well, the ACLU says in a statement. The civil liberties group has long opposed tactics in relation to prisoner abuse among those held during the Bush administration's "war on terror."

Earlier this month, the ACLU sent a letter to Secretary Robert Gates urging him not to exercise the authority to suppress the photos in their case, stating that the photos "are of critical relevance to an ongoing national debate about accountability."

"We are disappointed that the president has signed a law giving the Defense Department the authority to hide evidence of its own misconduct, and we hope the defense secretary will not take advantage of that authority by suppressing photos related to the abuse of prisoners," says Jameel Jaffer, director of the ACLU National Security Project. "Secretary Gates should be guided by the importance of transparency to the democratic process, the extraordinary importance of these photos to the ongoing debate about the treatment of prisoners and the likelihood that the suppression of these photos would ultimately be far more damaging to national security than their disclosure. The last administration's decision to endorse torture undermined the United States' moral authority and compromised its security. A failure to fully confront the abuses of the last administration will only compound these harms."

Another provision contained in the new law allows the transfer of detainees from Guantánamo Bay to the U.S. for prosecution. As one of his first acts after being sworn in, in January, Obama ordered the closure of the Guantanamo prison, which has been a focal point for cases of torture during the Bush administration. Cases of torture have included the use of simulated drowning, called waterboarding, to coerce statements from detainees. Obama's overall plans to close the prison, however, have run into trouble in Congress.

"This law allows the administration to transfer prisoners to the U.S. for criminal trials in the federal courts, and the administration should now do exactly that," says Jaffer. "The military commissions at Guantánamo are not just unlawful but unnecessary. The federal courts are fully capable of prosecuting terrorism suspects while protecting both national security interests and fundamental due process. It's time to shut down Guantánamo, transfer the military commissions trials to federal courts that uphold the rule of law, and transfer prisoners whom the administration does not intend to charge to countries where they won't be in danger of being tortured. Indefinite detention without charge or trial undermines the most basic values of justice and fairness."

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Commentary: Stimulus Aids Strong Economic Rebound

By Christian E. Weller

There is light at the end of the tunnel, and the American Recovery and Reinvestment Act got the economic engine closer to that light. The economy grew at an annual inflation-adjusted rate of 3.5 percent in the third quarter of 2009, the Bureau of Economic Analysis reported this morning. This is the first time that the economy has expanded after five-quarters of declines, and it is the strongest quarterly growth rate since the third quarter of 2007.

This is the clearest sign to date that the economic contraction and the recession ended some time this summer. Public policy has had a strong hand in getting the economy back from the brink of disaster and moving the economy into positive territory. Additional public policy attention is needed, however, to get the labor market unclogged, jobs growing, and the unemployment rate falling in the near future, after large-scale policy efforts did the same for financial markets and economic production.

The consumer is back. Consumption spending increased by 3.4 percent this quarter, its strongest growth since the first quarter of 2007. This was largely due to a 22.3 percent jump in spending on consumer durables, such as cars. Car sales jumped 56.4 percent in the third quarter of 2009 with the help of the additional incentives, known as “Cash for Clunkers.”

Consumer spending on a number of other items also increased at a healthy rate. Spending on recreational goods grew by 13.8 percent, furniture spending by 6.5 percent, and other goods by a respectable 6.2 percent. Food spending, a non-durable goods item, rose by 5.0 percent in the third quarter.

There are encouraging signs, based on one quarter of data, that the housing slump seems to have come to an end. The housing market expanded for the first time in almost four years. Spending on new homes increased by a strong 23.4 percent in the third quarter, the first increase since the fourth quarter of 2005. This is also the largest gain in more than two decades since the second quarter of 1986. The increase in spending on housing was aided by price declines during the previous years and low interest rates and the momentum in the housing market could thus very well last.

Much of the momentum in consumer spending came from increased after-tax income in the prior quarters. Families had received tax cuts, additional Social Security benefits, and more unemployment insurance benefits since early spring. They spent some of this money in the third quarter, thus contributing to strong economic growth. The personal saving rate fell to 3.3 percent in the third quarter of 2009, down from 4.9 percent in the second quarter, and its lowest level since the second quarter of 2008.

The spending increase and the decline in saving are likely a middle class phenomenon. Wages, Social Security, and unemployment insurance increased slightly before adjusting for inflation. On the other hand, capital income, such as interests and dividends, fell even before inflation, which disproportionately affected higher-income families. Other government transfer payments, which include many assistance programs for the poor, also declined. The resulting decline in total inflation-adjusted after-tax income by 3.4 percent is thus not necessarily reflective of the experience of moderate-income and middle-income families, but more an indication of cuts to incomes for higher-income families and the poor.

Now that consumers are back in the game, it is critical that businesses start to invest again, so that a labor market recovery can follow the economic gains. Business investment still shrank by 2.5 percent in the third quarter, less than one-third the decrease of 9.6 percent in the second quarter.

There are signs of a burgeoning investment recovery, however. The most recent drop in total investment is the smallest decline since investment began its slide in the second quarter of 2008. This drop was primarily a result of a continuing slump in commercial construction, which fell by 9.0 percent. What’s more, business investment spending on equipment, such as computers, trucks, and machinery, grew by 1.1 percent, the first increase since the fourth quarter of 2007. And businesses are beginning to restock their shelves. Without inventory rebuilding, the economy would have grown by only 2.6 percent instead of the 3.5 percent that was reported. There is thus hope that business investment will soon gain more momentum as consumers come back, which is also reflected in the fact that industrial production has risen for three months in a row according to the Federal Reserve.

The economy was also aided by growth in government spending in the third quarter. Federal government spending rose by a respectable 7.9 percent. Defense spending increased by 8.4 percent, and non-defense spending by 6.8 percent. These increases were more than enough to offset the decline in state and local government spending of 1.1 percent in the third quarter, which reflects the deteriorating fiscal position of many states.

Not all economic data comes up roses. This is only one-quarter worth of positive economic news and workers who have been waiting for a turnaround in the labor market for the past 21 months need many more quarters like this to see substantial improvements.

And there is enough in today’s data signaling that challenges remain. State and local governments are struggling with a fiscal crisis and will likely continue to do so for a while. The trade deficit also increased again to 2.7 percent of gross domestic product as imports increased faster than exports with 16.4 percent compared to 14.7 percent. And wage growth is meager, reflecting the continued job losses that are only partially offset by small wage increases.

The data show that economic stimulus efforts have helped the economy turn the corner. The policy attention now has to shift to creating a sustained, strong recovery that can bring back millions of jobs that were lost in the past 21 months. In the short-term, state and local government spending and the plight of the long-term unemployed are natural targets for additional public policy attention that can support the goal of a strong and durable economic recovery.

Christian E. Weller is Associate Professor, Department of Public Policy and Public Affairs, University of Massachusetts-Boston, and a Senior Fellow at the Center for American Progress. This article was published by the Center for American Progress.

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President Obama Signs Defense Bill That Further Rolls Back Key Bush-Era Policies

While its hate crimes provision is grabbing most of the headlines, progressives also are cheering other measures contained within a massive defense bill signed into law by President Obama.

The White House itself devoted significant attention to the fact that language within the larger 2010 National Defense Authorization Act adds gays and lesbians for the first time to those covered under federal hate crimes protection.

But the bill Obama signed into law Wednesday also achieve other outstanding goals of progressives. The new law repeals one of the Bush administration's initiatives to weaken union protections among federal workers, and for the first time, establishes in law a withdrawal of U.S. forces from Iraq.

The new law ends the Republican policy known as the National Security Personnel System (NSPS), which took federal personnel out of the traditional General Schedule and created wide inequalities in pay and advancement for non-white personnel, according to an analysis by the publication Federal Times. NSPS removed other worker protections, as well.

"We have known from the very beginning that NSPS could not survive objective scrutiny," says John Gage national president of the American Federation of Government Employees (AFGE), a labor union that has long opposed the NSPS. "We are extremely grateful to President Obama, [Senate Armed Services Committee] Chairman [Carl] Levin, [Senate Homeland Security and Government Oversight Committee] Chairman [Joe] Lieberman, [Senate Homeland Security and Government Oversight] Subcommittee Chairman [Daniel] Akaka, [House Oversight and Government Reform (OGR)] Chairman [Ed] Towns, and [House OGR] Subcommittee Chairman [Stephen] Lynch for recognizing NSPS for the misguided ideological boondoggle that it has been."

The new law will require the transition of NSPS employees, with no loss in pay, to previously existing civilian personnel systems no later than January 1, 2012. "AFGE looks forward to working with the DoD to improve the performance management and hiring systems so that the needs of the taxpayers, war fighters, and employees can all be addressed," says Gage.

Also, significantly, the 2010 National Defense Authorization Act for the first time enshrines in federal law an end to the war in Iraq, a conflict begun in 2003 under President George W. Bush and that became deeply unpopular in subsequent years.

This is the first time since the invasion of Iraq that Congress has passed legislation that affirms that the United States is committed to leaving Iraq by a specific date, two national Quaker organizations, the American Friends Service Committee (AFSC) and the Friends Committee on National Legislation (FCNL) say.

"We congratulate Senate Armed Services Chairman Carl Levin and House Armed Services Chairman Ike Skelton for including this important milestone in the 2010 military authorization bill," says Aura Kanegis, director of public policy for the American Friends Service Committee. "The U.S.-Iraq bilateral agreement is so central to public discourse in Iraq, but too often forgotten in the U.S."

The United States and Iraq signed a bilateral agreement in November 2008 that commits the United States to withdraw all military forces from Iraq by December 31, 2011.

The new legislation signed by Obama requires the Pentagon to report to Congress every three months on progress to withdraw all U.S. troops, withdraw or transfer to Iraqi authorities all military equipment, close down or transfer to Iraqi authorities military bases, and release or transfer to Iraqi authorities all Iraqi detainees before the December 31, 2011 deadline.

"The first congressional effort to signal support for complete withdrawal was the ban on establishing permanent bases in Iraq," says Jim Fine, legislative secretary on foreign policy at the Friends Committee on National Legislation. "Now the Pentagon will issue month by month reports on the progress made to close down bases or transfer them to the Iraqi government, which adds new teeth to this historic provision."

With this law, Congress has established unprecedented oversight of the progress made towards complete withdrawal from Iraq, the Quaker groups say.

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U.N. Can’t Account for Millions Sent to Afghan Election Board

by T. Christian Miller and Dafna Linzer, ProPublica

The United Nations cannot account for tens of millions of dollars provided to the troubled Afghan election commission, according to two confidential U.N. audits and interviews with current and former senior diplomats. (Read both audits.)

As Afghanistan prepares for a second round of national voting, the documents and interviews paint the fullest picture to date of the finances of the election commission, which has been accused of facilitating election fraud and operating ghost polling places. The new disclosures also deepen the questions about the U.N.'s oversight of money provided by the United States and other nations to ensure a fair election in Afghanistan.

"Everybody kept sending money" to the elections commission, said Peter Galbraith, the former deputy chief of the U.N. mission in Afghanistan. "Nobody put the brakes on. U.S. taxpayers spent hundreds of millions of dollars on a fraudulent election." Galbraith, a deputy to the senior U.N. official in Afghanistan, was fired last month after protesting fraud in the elections.

The audits come as President Barack Obama is struggling to craft a war policy for Afghanistan that would establish a stable government in a country with few democratic traditions. Senior aides have made clear that Obama will not commit to sending additional troops until there is a legitimately elected government in Kabul. On Wednesday, insurgents stormed a housing compound primarily occupied by U.N. election officials, killing eight people, including two election workers.

Afghanistan's Independent Election Commission initially reported that President Hamid Karzai had won the majority of votes in the August election. A recount was ordered after another U.N.-backed panel uncovered evidence of widespread fraud. After weeks of prodding from the Obama administration, Karzai agreed last week to a runoff.

The U.N. audit reports, which are near completion but still in draft form, are likely to fuel debate over the Afghanistan election commission's ability to carry out the new round of voting. Karzai's challenger, Abdullah Abdullah, has suggested he may boycott the elections unless Karzai dismisses the chairman and two other commissioners.

In interviews, senior U.S. and U.N. officials said that U.N. leaders had ignored warnings as far back as 2007 that the election commission was a pro-Karzai body with few internal controls.
Another top official in the U.N.'s Afghanistan mission, Robert Watkins, acknowledged in an interview that some commission employees had contributed to the fraud in the first round of voting.

"It's clear that some of the people" working for the commission at the polling centers "were complicit in fraud," Watkins said. "Some of the staff hired were not working in the best interests of impartial elections."

But Watkins said the United Nations is working to improve the commission's performance in the runoff. He said the U.N. planned to slash the number of poll workers and blackball any that may have been implicated in fraud in the August elections.

As of April 2009, the U.N. had spent $72.4 million supporting the commission, with $56.7 million of that coming from the U.S. Agency for International Development, the audit said. Total election costs are now estimated at greater than $300 million, with the U.S. providing a third to half the total funding, according to one senior U.N. official familiar with the elections process.

The draft audit reports indicate that as many as one-third of payroll requests from the Afghan commission to the United Nations included "discrepancies," such as incorrect names or amounts.

In another instance, the U.N. Development Program paid $6.8 million for transportation services in areas where no U.N. officials were present. Auditors found that the development agency had "inadequate controls" over U.S. taxpayer money used to fund the commission.

A UNDP spokesman, Stephane Dujarric, said he could not comment on specific findings in the audits, since they were still in draft form. However, he said the agency strived to rigorously account for spending despite operating in a war zone.

"The insecurity, the lack of infrastructure, the pervasive corruption and harshness of the terrain make the implementation of any project extremely difficult," Dujarric said. "That being said, those challenges in no way absolve us of constantly doing our utmost to ensure that monies given to us by donors are properly spent and accounted for."

Watkins acknowledged that the U.N. had concerns about the commission as elections approached. The development agency works closely with the commission, paying salaries, buying supplies and handling logistical questions.

However, he said no evidence had surfaced that money flowing to the commission had been used to buy votes or bribe officials. "The indications were that (the commission) did not have sufficient controls in place. I can't jump to the conclusion that the money was misappropriated."

Watkins said he was "much more confident" about the commission's spending practices after the U.N. tightened controls this summer. "I think we have a good partner" in the commission, Watkins said.

The U.N., he said, had suggested cutting the number of polling workers from 160,000 to 60,000 employees for the runoff election, in part to ensure better-trained workers. The smaller workforce also reflects an effort by the U.N. to have fewer polling stations and fewer workers per station. He also said the U.N. would blackball at least 200 workers who had been linked to voting centers where fraud was alleged.

In public statements, commission officials have not yet committed to reducing staff or polling stations. A commission spokesman did not return a request for comment.

The confidential reports are being written by two U.N. audit agencies to examine charges that the U.N. had failed to safeguard $263 million in money from the U.S. Agency for International Development that was channeled through the development agency to fund the elections and rebuilding projects. USAID money accounted for about 40 percent of U.N. spending in Afghanistan between 2003 and 2009, the audits said.

Overall, the audits found that U.N. monitoring of U.S. taxpayer funds was "seriously inadequate." Auditors could not find receipts, work plans or documentation to back up costs for projects such as roads and bridges. U.N. officials did not conduct site visits to confirm work and did not prepare financial reports for donor countries like the U.S., the audits found.

The main focus for criticism, however, was U.N. support of the election commission, a seven-member board whose members were appointed by Karzai. Using U.S. money, the U.N. development agency paid for commission salaries, helped contract out services and was supposed to train the commission to carry out its election responsibilities independently.

But the audit found that the development agency project was "not well managed" and contained several "weaknesses."

Auditors found that the U.N. development agency had sent more than $7 million to the elections commission -- including cash payments to temporary staff -- without proof of expenditures.

The commission also failed to send any financial reports to the U.N. between September 2008 and June 2009, despite a requirement for monthly statements. The U.N. sent $9 million in total to the commission without ever receiving a financial report, the audit said.

The auditors made no findings as to whether the money that flowed to the commission was implicated in the fraudulent vote counting. Auditors said that they had hired an outside audit firm to conduct a more detailed review.

Harry Edwards, a spokesman for USAID, said the agency had not seen the audits and could not comment.

Galbraith cautioned against drawing conclusions as to whether U.N. oversight of financial issues played a significant role in the voting fraud. He blamed Kai Eide, the Norwegian diplomat who is the senior U.N. official in Afghanistan and his former boss, as well as himself, for not flagging problems with the commission earlier. Eide has denied any effort to cover up evidence of fraud in the elections process.

"The flaw was not a management flaw," Galbraith said. "It was a political flaw to put all this money into an institution that was not as advertised. It was a political judgment not to say, 'if you want us to pay for these elections, then we insist you do them in this way.'"

One former U.N. official with knowledge of the elections process said that the allegations of financial mismanagement were not surprising. The official, who did not want to be named because of the sensitivity of the topic, said that neither the U.N. nor the elections commission had a well-developed accounting program.

The commission "had no control over their financial management side," the U.N. official said. "It was chaotic. There was no outside oversight."

Instead, this official said that senior U.N. and U.S. diplomats pushed for the U.N. development agency to "deliver" the election by working with the elections commission -- despite warnings that the commission was not truly independent.

"Nobody was paying attention. Nobody wanted to do anything about" the problems at the election commission, the official said.

The draft audits are the latest sign of problems with U.N. oversight of U.S. money in Afghanistan. Last year, the USAID Inspector General issued a report charging that the U.N. had failed to complete U.S.-funded rebuilding projects and stonewalled an investigation into the $25.6 million program. USAID's inspector general continues to investigate Gary K. Helseth, who headed the U.N. Office for Project Services between 2003 and 2006, in connection with the rebuilding program, a spokeswoman said. Helseth's attorney did not return a request for comment.

The U.N. audits, however, also criticized the work of USAID's inspector general. The USAID report, for instance, contained allegations that Mark Oviatt, the senior UNOPS official who replaced Helseth, had used USAID money to renovate a guest house for himself. Instead, the audit found that the U.N. had paid $35,000 out of its own pocket to conduct the renovation. Oviatt declined comment.

The U.N. audits also chastised the inspector general's report for attempting to shirk USAID's responsibility for problems with the development projects.

Donna Dinkler, a spokeswoman for USAID's inspector general, said, "They can say what they want, but we stand by our findings."

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Grading the Public Options That Already Exist

by Sabrina Shankman, ProPublica

Pundits and politicians from both sides of the fence have been hollering themselves blue about a potential public health care option. Instead of relying on private insurers, the government would insure people itself. The idea is that if a government-run option were offered to compete with private insurers, it could help keep pricing in check and ensure quality.

Two of the three health care reform bills in Congress have a public option. What might a public option look like in practice? One way to find out is to look at what’s already out there. About a third of Americans already get health care from a publicly administered program. From celebrated programs like the VA’s or the military’s, to the troubled ones like the Indian Health Services, here’s a snapshot of how they actually work:

TRICARE

The good: TRICARE isn’t an insurance program—it’s considered a government benefit for active members of the military, retirees and their families. This means that if you qualify, you’re automatically covered, regardless of pre-existing conditions. And if you use TRICARE Prime, which operates like an HMO and is the most popular option, there are no out-of-pocket fees so long as you go to a Military Treatment Facility.

The bad: If you enroll in TRICARE Prime, which charges non-active-duty members $230 a year, there are just nominal out-of-pocket expenses to visit non-military providers. But if you only have the default coverage, TRICARE Standard, the fees can be steep. Inpatient costs for civilian facilities under the Standard plan, for instance, are $535 a day.

The ugly: Walter Reed.

Veterans Health Administration

The good: Like TRICARE, it’s a government benefit, so if you qualify, you’re in. In many cases, that means you’re exempt from co-pays and deductibles. If not, costs are comparable to Medicare’s. And unlike veterans of previous wars, if you served in Iraq or Afghanistan, the VA will cover you even if you were not injured, because it now recognizes that it can take a few years for symptoms of post-traumatic stress disorder to show. What’s more, you can’t knock the product—the VA is known for its high standard of care.

The bad: If you don’t sign up within five years of discharge, you’re out of luck.

The ugly: Enrollment has boomed in recent years, because of an influx of vets from Iraq and Afghanistan. But the budget hasn’t kept pace. In the last 10 years, the VA’s medical spending per veteran increased 23 percent, from $4,374 to $5,390. But health care costs have inflated by 50 percent. Taking that into account, the VA is actually spending $1,184 less on each veteran now.

Indian Health Service

The good: If you’re a member of one of the country’s 564 American Indian and Alaska Native tribes—or a descendant—you are automatically enrolled (although no dice for tribes that aren’t federally recognized). To receive services, you have to live on or next to a reservation, and you can visit, for free, any of the IHS or tribal-run hospitals or clinics.

The bad: The coverage is better than nothing ... but just barely. Each year IHS receives about $600 million for Contract Health Services, which covers any services outside the IHS system. In places where IHS already has a hospital, this might pay for visits to a specialist. In locations that just have clinics, the funds have to cover more. But the problem is, the money runs out every year. So if you need to see your cardiologist, get a mammogram or get a colonoscopy, you’d better ask for it in January. Because by March, funds for these will start running low. By June, they will have run dry. (This was explained to us by Elmer Brewster of IHS, who also explained it to Slate.)

The ugly: Let’s look at the numbers—American Indians’ life expectancy is 2.4 years less than the overall average, and their infant mortality rate is 8.5 per 1,000 live births, as opposed to 6.8 for the entire country. They are six times as likely to die from tuberculosis, and nearly twice as likely to die from diabetes. Of course, there are multiple factors explaining why Native Americans have more health problems, but health care coverage is likely one of them: While the average health care expenditure in the U.S. is about $6,000 per person, IHS shells out just $2,100.

Healthcare Group of Arizona

The good: The state of Arizona started this program in the 1980s to offer more affordable health insurance to businesses with between two and 50 employees, allowing them to choose from three managed-care options.

The bad: The program operated in the red from 2004 to 2007. While it’s back in the black, that is in part because the plans with the lowest deductibles were eliminated. So, where there used to be zero and $500 deductibles, now most are close to $2,000.

The ugly: Even the administrator of the program admits that it might not be the most affordable option. For a small business with a young, healthy staff, you’ll do much better on the private market, the administrator, Monica Coury, told us.

Medicare

The good: Taking Part D (the confusing prescription drug program that’s administered by private programs) out of the picture, people are basically happy with Medicare. The fees are pretty low, and you can go to any health provider that accepts Medicare—which means most providers. And studies show that Medicare’s administrative costs are low compared with those of privately run programs.

The bad: There’s a lot of evidence of wasteful care. The program spends about $10 billion annually in payments to suppliers of medical equipment, but an inspector general for the program estimated last year that as much as $2.8 billion of that was waste. Meanwhile, take a look at the discrepancies in how much patients cost the system. In 2006 in Des Moines, Iowa, Medicare doled out an average of $6,335 in reimbursements per enrollee. The same year in Miami, that average was $16,351.

The ugly: It’s really, really expensive. In 2008, Medicare funding accounted for more than 13 percent of the federal budget, coming in at a whopping $391 billion. (For the sake of comparison, 2 percent of the budget was spent on education). Because it’s an entitlement program, there’s no way to limit the number of people who qualify, so as baby boomers age into the system, expect to see that budget balloon even more.

Medicaid

The good: More than 50 million low-income people who might otherwise go without insurance have it because of this program. It’s state-administered, meaning eligibility can differ, but typically, if you’re low-income, have children, or are disabled, you qualify.

The bad: Because states decide eligibility, you may qualify in one state, but not in others. For instance, in New York, someone making less than $706 a month qualifies. In Georgia, the bar is set at $235. Of course, cost of living varies geographically too, but eligibility differences go beyond just income. In some states, if you don’t have children, or aren’t pregnant, you may not qualify at all. One reason for this is a Medicaid waiver program that started during the Bush administration, which allowed states to skirt federal guidelines in order to cut costs and, in theory, better serve the states’ Medicaid population. (You can check out waivers in your state here.)

The ugly: As the economy has tanked, more people have joined Medicaid, which has squeezed already tight budgets. Many states have used stimulus funds to supplement their budgets. But when the funds run out, it’s unclear what will happen to the program, which accounts for more than one-fifth of total state spending.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Watchdog Says Its Online 'Hall Of Shame' Focuses On Copyright Law Gone Wrong

A prominent Internet watchdog group has posted what it calls its "Takedown Hall of Shame" to call attention to what it calls the misuse of the Digital Millenium Copyright Act (DMCA).

The Electronic Frontier Foundation (EFF) posted its website in the wake of lawyers for the powerful business lobby U.S. Chamber of Commerce invoked the DMCA to pressure to silence a parody website that was posted in support of an embarrassing prank poking fun at the Chamber's stance on climate change legislation.

The "hall of shame" highlights "the amazing online videos and other creative works that someone doesn't want you to see," EFF says in a statement.

Attorneys for the Chamber sent a DMCA takedown notice to the site's upstream provider, Hurricane Electric Internet Services, claiming that the site constituted copyright infringement and demanding that the site be shut down immediately and that the creator's service be canceled.

Under the DMCA, which Congress passed in 1998 to update copyright law in an age of digital content, claimants can demand that material be removed immediately without providing any proof of infringement. Service providers, fearful of monetary damages and legal hassles, often comply with these requests without double-checking them, despite the cost to free speech and individual rights, according to EFF.

"The DMCA encourages a 'take down first, ask questions later' approach, creating an unfair hurdle to free speech," says EFF activist Richard Esguerra. "People who abuse this law to silence critics should be shamed publicly, and that's what we're aiming to do."

In a letter sent to the Chamber's attorneys, EFF says that it demands that the Chamber's claims be withdrawn immediately.

"We are very disappointed the Chamber of Commerce decided to respond to political criticism with legal threats," said EFF Staff Attorney Corynne McSherry. "The site is obviously intended to highlight and parody the Chamber's controversial views, which have sparked political debate and led high-profile members to withdraw their support from the Chamber."

The Chamber has come under growing criticism as many large member companies have withdrawn from the organization due to its hardline position on climate change. It has been aggressively lobbying against much of President Obama and congressional Democrats' agenda, including also financial consumer protection legislation.

Pranksters known as the Yes Men made international news when they put out a press release and held a spoof news conference, claiming that the Chamber of Commerce had reversed its position and would stop lobbying against a climate bill currently in the Senate. Several news outlets reported the story before determining it was a prank.

"Parody is a well-established right, protected under copyright law and the First Amendment," says EFF senior staff attorney Matt Zimmerman. "Hopefully, the Chamber will reconsider its position and realize that such strong-arm tactics are inappropriate and counter-productive."

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Democratic Whip Clyburn: The Public Option Clawed Its Way From Being Politically Dead

Considered politically dead just weeks ago, the inclusion of a public option in comprehensive health reform clawed its way back to life bit by bit, and inch by inch, according to the House Democrats' top vote counter.

"Way back when we first started to seriously consider this health care reform legislation — if you recall we went out of here for the August break and we had some very contentious town hall meetings around the country," says House Majority Whip James Clyburn of South Carolina, referring to the angry conservative protests against health reform that took off nationwide, in which lawmakers were occasionally threatened, and even hanged in effigy over the issue.

The public option, in particular, became a lightning rod for opposition on the right, who complained about it being a "government takeover" of U.S. healthcare.

"When we got back here, after Labor Day, I remember the headlines: 'Health Care Reform Dead.' All over we got those headlines. About two weeks later, the headlines shifted a little bit. We may get health care reform in some form, but there won’t be a public option. That is — and this is an exact quote: 'Off the table' — a public option off the table. Kind of interesting," Clyburn adds.

Despite what just weeks ago seemed to be Senate rejection of a public option when such a federally run health plan was defeated not once, but twice, in a key Senate committee vote, the public option is back, Clyburn notes.

"Today, we’re now having our efforts evaluated as to whether or not we will get this form of a public option, or that form of a public option. From day one, we have had three or four different kinds of public options under discussion," he says.

Senate Majority Leader Harry Reid (D-Nev.) surprised many observers this week by deciding to add a public option into the final Senate healthcare bill. The public option Reid unveiled would enable states to opt out of offering a public option.

Previously, Reid had been fairly quiet about the public option, as oppsed to House Speaker Nancy Pelosi who became a vocal supporter of inclusion of a public option.

"It’s kind of interesting, while all of this has been going on, the Senate has gone all the way from absolute no chance of a public option passing the Senate, to now they are saying a form of public option, will in all probability, pass in the Senate," Clyburn observes.

The opt-out provision in the Senate didn't appear to bother Clyburn, however.

"I suspect that what we are doing is trying, as we said, we are trying to get competition into the market. I can’t imagine any state saying to its citizens: we are going to expose you to less competition or no competition," he says.

"And so, I suspect that when you get to a conference you see exactly what it is that you are trying to negotiate," Clyburn adds, referring to an eventual House-Senate conference committee that would craft a single, final health reform bill for President Obama to sign.

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Commentary: Farmers and Congress Shouldn’t Fall for this Hat Trick

By Tom Kenworthy

Just as they did in the weeks leading up to House passage of the American Clean Energy and Security Act, H.R. 2454, in June, big agricultural lobbyists are again trying to derail passing legislation to cut global warming pollution. This time their focus is the Clean Energy Jobs and American Power Act of 2009, S. 1733.

The American Farm Bureau, which touts itself as the voice of agriculture, recently launched another effort to convince senators that legislation to reverse the growth of global warming pollution and set the nation on a low-carbon energy course will deal a devastating economic blow to farmers and consumers.

“The consequences of climate legislation far outweigh the benefits and aren’t worth capping America’s future,” wrote Farm Bureau President Bob Stallman in urging farmers to join a “Don’t Cap Our Future” campaign by sending farm caps with that message to legislators.

Rather than engaging in a cheap hat trick, farmers and those purporting to advocate on their behalf should look at three key issues regarding energy and climate legislation: the cost of doing nothing, the modest cost of doing something, and the very real economic benefits the Senate and House legislation can bring to farmers and rural America.

In a warming world, American farmers will increasingly have to deal with severe weather events including droughts, heavy downpours and flooding, and high temperatures that often reduce crop yields, according to “Global Climate Change Impacts in the United States,” the authoritative report issued earlier this year by the U.S. Global Change Research Program. Warming will also accelerate crop and rangeland damage from weeds, plant diseases, and insects, the report predicts.

“[U]nder higher heat-trapping gas emissions scenarios, the projected climate changes are likely to increasingly challenge U.S. capacity to as efficiently produce food, feed, fuel, and livestock products,” concludes the report.

Several other research efforts have come to the same conclusion. According to research published in August in the Proceedings of the National Academy of Sciences, three of the nation’s most important crops—corn, soybeans, and cotton—are likely to show yield declines of 30 percent to 46 percent over the next century under the most optimistic warming scenarios.

Under the most rapid warming scenarios crop yields would fall by 63 percent to 82 percent.

If those threats seem like they’re in the distant future, consider this: Worldwide, farmers have already paid a heavy price for climate change, according to a 2007 study that looked at crop losses due to warming between 1981 and 2002. The researchers concluded that crop losses for maize, wheat, and barley totaled $5 billion a year during that period.

As National Farmers Union President Roger Johnson told the Senate Agriculture Committee in July: “To state it simply, the cost of no action must become a central part of the ongoing climate change debate. Models of climate change scenarios demonstrate increased frequency of heat stress, droughts, and flooding events that will reduce crop yield and livestock productivity.”

Taking action to cut warming pollution won’t be free, of course, but it will be far less expensive than many alarmist opponents claim.

For starters, even though agriculture contributes about 6 percent of the nation’s output of carbon pollution, farmers are completely exempt from the mandatory limits on emissions that will apply to many large industrial sources under the House and Senate bills.

“If the United States adopts a cap-and-trade policy to combat climate change,” concludes Bruce A. Babcock, director of the Center for Agricultural Rural Development at Iowa State University, “the negative impacts on agriculture will likely be relatively small, particularly if agricultural emissions remain uncapped.”

Babcock reaches that conclusion after figuring out what Iowa’s corn and soybean farmers will pay in additional fuel and fertilizer costs under a carbon pollution policy such as that proposed in the House and Senate bills that results in a $20 per ton cost for carbon, and what they can expect to earn by selling carbon allowances to help polluters more cheaply reduce their pollution.

Farmers can create offsets by storing carbon in the earth via farming practices such as no-till farming, capturing methane from animal manure, using less fertilizer, and planting trees.

The added fuel and fertilizer costs for those Iowa farmers, wrote Babcock, totals $4.52 per acre, about a 1.5 percent hike. By switching to no-till farming they can earn $8 an acre by selling that pollution offset.

And there’s even more potential for farmers to profit from offsets. Looking at both the agriculture and forestry sectors, the Pew Center on Global Climate Change estimates based on EPA models that offsets for sequestering carbon could be worth up to $22 billion a year by 2020 if the price of carbon reaches $30 per ton.

Taking the long-term view that includes the damage global warming will do to farming, Babcock concludes that “any disruptive change in climate will have a far greater impact on livelihoods than will the price of carbon.”

Agriculture Secretary Tom Vilsack repeatedly said that climate legislation would be a net plus for agriculture as he traveled through farm country in the summer, not just because farmers will be able to sell pollution allowances but because under the clean-energy incentives in the legislation rural areas that have wind, biomass, and solar resources will see a surge in economic development.

“This is the first time I’ve seen the opportunity created for rural America to actually benefit from potential manufacturing opportunities and job growth because the solar panels, the windmills are most likely going to be constructed, maintained, and installed in rural areas,” Vilsack told farm broadcasters in August.

The Agricultural Carbon Market Working Group also predicts a more profitable future for agriculture under a policy that reduces global warming pollution. “Analysis indicates the increase in farming income from offsets, biofuels, and commodity prices resulting from a cap-and-trade system more than offsets any potential increase in the price of fuel, fertilizer, or other inputs for the agricultural sector,” the organization has reported.

The U.S. Department of Agriculture was also upbeat in its economic analysis of the House legislation. Short term, USDA predicts less than a penny on the dollar decrease in net farm income, and that cut could be covered by the sales of offsets. In the medium and long term, USDA concludes, “benefits to agriculture from an offsets market rise over time and will likely overtake costs.”

In a September paper, the Nicholas Institute for Environmental Policy Solutions at Duke University looked at the net effects of low-carbon policies on farm income and concluded that “the U.S. agricultural sector would benefit from a U.S. climate policy.” The researchers noted that producers can pass on some of their higher production costs to consumers, can earn additional revenue from advanced biofuels, and can profit in the offsets market.

“[P]olicies that support bioenergy and terrestrial greenhouse gas mitigation efforts could stimulate agricultural income significantly despite higher input costs and could lead to a net welfare increase for the agricultural sector as a whole,” the Duke study authors concluded.

Instead of sending a cap with a wrongheaded message to Congress, American farmers should be working to put a lid on climate change—and the American Farm Bureau—which are the real threats to their future.

Tom Kenworthy is a Senior Fellow at the Center for American Progress. This article was published by the Center for American Progress.

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Progressives Give Reid Rare Pat On The Back

If you weren't sure what that sound was, it was progressives on the left applauding Senate Majority Leader Harry Reid.

Reid won the praise today for backing inclusion of a public option in the Senate's final version of comprehensive healthcare reform.

"We applaud Senator Reid for his leadership in advancing the landmark debate over how to achieve quality, affordable health care for all Americans," says Alan Charney, program director of USAction, an advocacy group that supports a "robust" public option. "We call on all senators to vote for the motion to begin this debate on the floor of the Senate and to do so without delay. For millions of Americans struggling to pay their bills, health care can't wait."

Specifically, Reid says that the Senate health care bill will include a public option with an opt-out provision for states. Under this concept, states will be able to determine whether the public option works for them and will have the ability to opt-out, according to an online announcement from Senate Democrats.

It was up to Reid to craft a single Senate bill out of two separate pieces of legislation, one that included a federally run healthcare option and one that didn't. That Reid chose to include a public option is notable given that even some moderate and conservative Democrats -- including Senate Finance Chairman Max Baucus of Montana -- didn't think the votes were there to pass a public option in the Senate. Baucus voted against a public option twice as his panel marked up its healthcare bill.

The praise that a progressive group like USAction would shower on Reid, a Nevada Democrat, is also notable given that Reid is seen as a mild-mannered moderate, and is rarely seen as a hero of the left. Reid, too, hasn't been a vocal champion of the public option in the way House Speaker Nancy Pelosi has been for weeks. If anything, Reid often finds himself as a target of progressives for not delivering the Senate strong enough on legislative priorities, given the Democrats' historically large 60-seat majority.

USAction's Charney says that when health care reform legislation reaches the floor of the House and Senate, it will mark the closest the Unted States has ever been to passing quality, affordable health care reform with a public health insurance option. "Senator Reid, Speaker Pelosi and many of their colleagues in the House and Senate leadership have bought us within reach," Charney says. "They have done so despite withering pressure from the insurance industry, wealthy CEOs and literally thousands of insurance industry lobbyists. We commend and thank them for their leadership in putting consumers first."

USAction says it supports comprehensive health care reform that includes a robust public option. President Obama has long supported inclusion of a public option as a means to keep private insurers "honest." Obama defended the public option in his speech before a joint session of Congress in September.

Republicans and other opponents of a public healthcare option deride it as a "government takeover of healthcare."

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Stimulus Contracts Go to Companies Under Criminal Investigation

by Michael Grabell, ProPublica

The Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.
According to Air Force documents, the companies claimed to be small, minority-owned businesses, which allowed them to gain special preference in bidding for government contracts.

But investigators found that they were all part of a larger minority-owned enterprise in Southern California, making them ineligible for the contracts.

The Air Force and the Army awarded the companies 112 stimulus projects at U.S. military bases, federal contracting records show (27MB Microsoft Excel File). It wasn’t until Sept. 23 – more than a year after the criminal investigation started – that the Air Force suspended the firms from receiving new government contracts.

Federal rules allow agencies to terminate contracts when it’s in the government’s interest. But neither military branch plans to terminate the stimulus contracts awarded to the suspended companies as long as they are performing satisfactorily, said Air Force spokeswoman Lt. Col. Ann Stefanek and Army spokesman Maj. Jimmie Cummings.

According to the Air Force, the companies were controlled by Craig Jackson, an African-American businessman whose firm, Sanders Engineering, has won awards from the Small Business Administration.

Jackson did not return calls seeking comment. But an attorney for his firm, Tony Franco, said the company would “vigorously contest” the suspension. He said Jackson has been praised as “someone who has helped small businesses and we believe the facts will bear out that he continues doing so.”

Allegations about one of the firms, APM LLC, became public a year ago, when an SBA audit led to the firm’s suspension from the small-business program and prompted the Defense Department’s criminal probe. That such a warning could go unheeded exposes a gap in the government’s contracting process, said Scott Amey, general counsel for the nonprofit Project on Government Oversight, which tracks contractor misconduct.

“The big problem I have – was there any disclosure of the contractors’ missteps prior to them receiving the stimulus money?” said Amey, when told of the suspended companies. “That’s the type of information you would hope government officials would have in front of them when making responsibility determinations.”

Stefanek said the projects were awarded independently by contracting officers at military bases who wouldn’t have spotted problems unless the contractors were suspended or debarred. The Air Force didn’t suspend the firms until Sept. 23 because it wasn’t officially notified by the Defense Criminal Investigative Service, which is conducting the investigation, until late August.
Gary Comerford, spokesman for the investigative service, said a criminal investigation isn’t enough to suspend a firm “because there is a presumption of innocence until proven guilty.”

Records show that on Sept. 24, a day after the Air Force suspensions, Scott Air Force Base in Illinois awarded two more projects worth $423,000 to APM. Stefanek said the contracting officer at Scott didn’t notice the suspension and that the awards have been rescinded.

To spend the stimulus money quickly, many of the projects to improve military facilities were added to existing contracts. Although those contracts had been competitively bid in the past, none of the new stimulus work the companies received was open to competition.

In addition to APM, based in Yorba Linda, Calif., the suspended contractors that won stimulus projects include 1CI Inc., of Gaithersburg, Md.; All Cities Enterprises of Ontario, Calif; Cherokee Chainlink and Construction of Hemet, Calif.; Chung and Associates of Anaheim, Calif.; and Coleman Construction in Los Angeles.

John Brewer, president of Cherokee Chainlink, said Jackson had no control over his company.

“I’m just a client,” Brewer said. “His company does my accounting. He doesn’t run my company and never has.” Brewer called the contracting suspension unfair, saying federal officials “just threw out a big net and grabbed everybody up.”

Managers of the other firms did not return calls or declined to comment.

The suspensions are temporary pending completion of the DOD criminal investigation, and none of the companies has been charged with a crime.

The stimulus projects assigned to the suspended companies include repairing hangars and installing energy-efficient windows at Andrews Air Force Base in Maryland; replacing fencing and renovating the dining hall at Wright-Patterson Air Force Base in Ohio; renovating a child-development center in Fort Knox, Ky.; repairing the airfield electrical system at Moody Air Force Base in Georgia; and stabilizing a landslide area in Colorado Springs, Colo.

$700 million in contested contracts

Small businesses and minority contracting have gained new attention under the $787 billion economic stimulus. Noting the role of small businesses in creating jobs, the White House directed agencies to take advantage of small-business set-asides even if they conflict with another stimulus goal, open competition.

So far, small businesses have won 26 percent of the $16 billion in federal stimulus contracts, and minority contractors have won 15 percent, contract data shows. Most of the minority contracting money has gone to firms owned by Native Americans. African-American-owned firms received 2 percent of contracts and Hispanic firms 3 percent.

The allegations against Jackson involve the SBA 8(a) program, which was created to help small businesses owned by African Americans, Hispanics, Asian Americans and Native Americans win government contracts by providing several years of mentoring, training and financial assistance. Such firms can also get a leg up with contracts that only small, minority-owned companies can bid on.

According to the Air Force, Jackson established various small businesses owned by friends and family – but in reality managed and controlled by him or his companies.

After winning contracts set aside for small, minority businesses, the companies diverted a significant portion of their earnings back to Jackson or one of his companies, the Air Force said.
Jackson and his family conspired to hide the connections between the businesses by making false statements and falsifying records, the suspension order alleged.

Over the years, 19 companies controlled by Jackson – including the six that won stimulus contracts – “received more than $700 million in government contracts to which they may not have been legally entitled,” according to the order.

In 2008 the SBA’s internal watchdog audited one of those firms—APM—after concerns arose that some businesses owned by Alaska Native Corporations might be serving as conduits for larger firms.

APM is owned by Cape Fox Corporation, formed under a 1970s federal law to create business opportunities for Alaska natives who had long subsisted on hunting and fishing. Such Alaska Native Corporations have used contract preferences to expand into tourism, logging and reconstruction in Iraq.

Although the workers are not usually Alaskan natives, a portion of the companies’ earnings goes to shareholders in remote Alaskan villages. Shareholders of Cape Fox are Tlingit natives in Saxman, Alaska – a village of 370 people outside Ketchikan, on the southern tip of Alaska.

Cape Fox was among five owners of APM when APM was accepted into the small business program in 2003, according to the SBA audit. Jackson, identified in the audit as “Mr. A,” negotiated a management services agreement between APM and Sanders Engineering in exchange for 2.75 percent of APM’s contract billings.

Jackson bought out the four other APM owners, and his brother replaced him as manager in December 2004, the audit says. Jackson then sold his interest to Cape Fox in January 2005, but the relationship didn’t end: The native corporation entered into multiple agreements that entitled other firms owned by Jackson up to 7.5 percent of APM’s billings, plus 45 percent of APM’s future net income.

Because Sanders Engineering also graduated from the SBA program, Jackson is prohibited from owning more than 20 percent of any other company in the program.

In a formal response Friday to the suspension, Sanders Engineering attorney Franco said the Air Force had misunderstood SBA rules. He said the SBA has always known of the relationships and encouraged Sanders Engineering to share its administrative expertise with other small businesses.

Once an SBA success story

The scrutiny of Jackson and Sanders Engineering marks a turnabout from 2001, when Jackson was named second runner-up for SBA’s minority small business graduate of the year. That same year, he also won the Entrepreneurial Success Award for the region.

The SBA news release on the award said he transformed Sanders Engineering from a company of five employees and annual revenues of $300,000 into one with 200 employees and $36 million in revenue. Jackson won recognition for mentoring other small businesses in accounting and human resources.

Robert McDonald, executive director of the Black Chamber of Commerce of Orange County, described Jackson as a hero to other black entrepreneurs, not only for his success, but for his generosity.

On the wall of McDonald’s office hangs a photograph of himself with Jackson and civil rights icon Rosa Parks, who came for an inspirational visit at Jackson’s behest.

“That’s the kind of individual I know,” McDonald said.

According to a 2001 profile in The Orange County Register, Sanders Engineering was at the time the largest African-American-owned mechanical contractor in the United States. The article noted Jackson’s careful selection process and hands-on approach to mentoring minority-owned firms.

“If they don’t want to grow, they’re not a candidate for our program,” Jackson told the Register. “It’s like a marriage; we want the relationship to be seamless so clients can’t tell where [the protégé] ends and we begin.”

The Recovery Accountability and Transparency Board, which is charged with stimulus oversight, regularly reviews contracts for waste, fraud and abuse.

“We are aware of these issues and have taken the appropriate action,” said Ed Pound, the board’s spokesman. “We have no further comment except to say that debarred or suspended companies are a primary focus of our efforts.”

Adam Hughes, director of federal fiscal policy for OMB Watch, a nonprofit that has been monitoring the stimulus, said canceling the contracts now could backfire.

“The problem with that,” he said, “is that it may end up costing the government more money.”

Senior reporter Robin Fields and director of computer-assisted reporting Jennifer LaFleur contributed to this report.

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Congressmen Urge President Obama to Lead on 350 Climate Goal In Copenhagen

Two Democratic House members are drumming up support among their colleagues to urge President Obama to go to Copenhagen to seek agreement with other global leaders on the need to reduce the level of carbon-dioxide in the Earth's atmosphere to the key level of 350 parts per million (ppm).

International negotiators will converge in Copenhagen in December to seek a new global agreement to reduce the carbon emissions blamed for climate change. A new agreement is needed to follow the Kyoto Protocol which expires in 2012. The United States never ratified the current Kyoto Protocol.

Reps. Bob Filner of California and Dennis Kucinich of Ohio will circulate a letter in the House of Representatives next week calling upon Obama to lead other nations toward acceptance of the 350 ppm target.

Filner told hundreds of environmental activists Saturday about the letter, according to a statement by the advocacy group Citizens Climate Lobby. Filner spoke by teleconference to members and guests of Citizens Climate Lobby who were participating in events marking the International Day of Climate Action. The CCL gatherings were among more than 4,000 events held throughout the world Saturday that called upon policymakers to target 350 ppm as the limit of carbon dioxide necessary to keep global temperatures from rising to catastrophic levels. The events were organized by the climate action group 350.org.

The concentration of carbon dioxide in the atmosphere now stands at 389 ppm and is climbing two parts a year. Leading climate scientist James Hansen says that the level of CO2 must be brought down to 350 ppm or lower "if humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted," according to the Citizens Climate Lobby statement.

"By agreeing to the goal of 350 ppm," Filner says in the letter, "nations will craft the policies and solutions to meet this challenge, just as America once met the challenge of sending a human being to the moon. And by meeting this challenge we will allow our children and grandchildren to inherit the kind of world that we ourselves have been so blessed to enjoy."

Some news outlets are reporting now that Obama will not go to Copenhagen personally to seek a new climate agreement. If Obama were not to go, the United States would be represented by U.S. climate envoy Todd Stern, although Vice President Joe Biden or Secretary of State Hillary Clinton could do so, as well. Obama has called the issue of climate change one of his top agenda items and has repeatedly sought to take a direction on the issue different from that pursued by the Bush administration.

Marshall Saunders, founder and president of Citizens Climate Lobby, urged those taking part in climate action events to contact their members of Congress and ask them to sign on to Filner's letter.

"The goal of averting the devastating effects of climate change has a number associated with it," says Saunders, "a number we ignore at our own peril: 350. Global leaders can negotiate with one another, but humanity cannot negotiate with the earth's climate. It will not compromise. We must yield or face the wrath of nature."

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Bank Failure Century Mark Overshadowed By Six More

by Jake Bernstein, ProPublica

The Office of Thrift Supervision was the first regulator to break the news of the 100th bank failure for the year. Yesterday, shortly after 5:00 p.m. EST, the OTS sent out an email announcing the closure of Florida’s Partners Bank. It was the seventh failure in Florida, a state hard hit by a speculative real estate bubble and now stagnant growth. In 2009, Florida experienced its first drop in population since the end of World War II.

On September 8, the OTS had issued a Prompt Corrective Action Directive telling Naples-based Partners Bank to prepare for sale or merger since it had failed to raise sufficient capital to cover bad loans (see ProPublica’s failed bank list). Partners didn’t get to wallow in its newfound infamy as number 100 for very long. By the time the emails had stopped flying Friday evening, seven banks had failed, including two more in Florida. The total for the year now stands at 106. That’s the highest number of bank closings since 1992, when 181 banks failed.

Lest there be panic in the streets, Sheila Bair, chairman of the FDIC taped a statement and had it put on the front page of FDIC.gov. Her last line of the almost four minute statement contained the takeaway line: “Our resources are strong and your insured deposits are absolutely safe.”

Yet even as she stressed that for depositors, bank failures should be viewed as “a nonevent,” Bair also acknowledged reality. “Until the [economic] healing process is complete, there will be more bank failures,” she said. Some analysts estimate as many as 1,000 over the next few years. The FDIC’s problem bank list only contains 416 institutions, none of which are named by the agency.

Bair explained that the FDIC had sufficient resources, citing new efforts to raise money from member banks and the backstop of the federal government. The estimated costs to the agency’s deposit fund from the seven failures is $356.6 million, according to the FDIC.

Bair said that at the end of the second quarter, the agency had $42 billion in its reserve fund. Armed with a novel strategy of having the banks prepay three years of fees into the fund, she expected to raise another $45 billion by the end of the year. “Our current projections indicate that this will be more than ample to cover the costs of expected failures,” she said.

In addition to Partners, the two other Florida banks to fail were Hillcrest Bank Florida, also of Naples, and Bradenton-based Flagship National Bank. Partners was picked up by Stonegate Bank of Fort Lauderdale, which also took the assets and deposits of Hillcrest. Flagship’s deposits went to Lake City-based First Federal Bank of Florida.

Joining the Florida trio were Georgia-based American United Bank, Illinois-based First DuPage Bank, Minnesota-based Riverview Community Bank, and Racine, Wisconsin-based Bank of Elmwood. The FDIC entered into purchase and assumption agreements with Ameris Bank of Moultrie, Georgia, First Midwest Bank of Itasca, Illinois, Central Bank of Stillwater, Minnesota and Tri City National Bank of Oak Creek, Wisconsin respectively to take all the deposits of the failed banks.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Good Cop, Bad Cop On Hate Crimes Bill: AG Holder Hails Milestone, While Reid Lashes GOP

The nation's top law enforcement officer is trumpeting the "milestone" that Senate passage of hate crimes legislation represents, while the Senate's top Democrat lashes out at Republicans for their opposition.

Senators yesterday approved the National Defense Authorization Act for Fiscal Year 2010, which includes in its provisions federal hate crime legislation. The House passed its hate crime bill earlier, sending the measure to President Obama's desk to be signed into law.

Obama's attorney general, Eric Holder, highly praised the hate crimes bill, noting that 80,000 hate crime incidents have been reported to the FBI since Holder first testified before Congress in support of a hate crimes bill 11 years ago during the Clinton administration.

"The legislation is named after Matthew Shepard and James Byrd, Jr., both of whom were murdered in two of the most infamous examples of bias-motivated acts of violence, but recent tragedies like the shooting at the Holocaust Museum demonstrate that there are still those for whom prejudice can translate into violence," Holder says. "The passage of this legislation will give the Justice Department and our state and local law enforcement partners the tools we need to deter and prosecute these acts of violence.

"Since returning to the Justice Department, it has been one of my highest personal priorities to ensure that this legislation finally becomes law, and I applaud the Senate for joining the House in its vote today," Holder adds.

The hate crimes legislation would broaden federal hate crimes law to include crimes based on gender, sexual orientation, gender identity or disability.

Meanwhile, Senate Majority Leader Harry Reid (D-Nev.) admonished Republicans for their strong opposition to the hate crime provisions. Conservative activists had vigorously worked against the hate crimes provisions. The Bush administration had opposed the legislation.

Sen. Patrick Leahy (D-Vt.), offered the Matthew Shepard Hate Crimes Prevention Act as an amendment to the National Defense Authorization Act in July. The larger defense bill provides for national security programs for the fiscal year that began Oct. 1.

“I am pleased that today we were able to move the conference report for the National Defense Authorization Act for Fiscal Year 2010 a step closer to passage this afternoon. But I’m disappointed that Senate Republicans have decided that defeating hate crimes legislation takes precedent over supporting our troops," Reid says.

“It is outrageous and unacceptable that Senate Republicans would vote against pay raises for our troops, battlefield equipment upgrades and increased funding for veterans’ health care as we continue to fight two wars," Reid adds. "And they decided to do this all for the sake of stopping passage of landmark legislation that will bring justice to those who commit violent crimes based on bigotry and prejudice. What message does that send to our country and, more importantly, to our troops?”

Sen. Ted Kennedy (D-Mass.) provided key leadership for the hate crimes bill prior to his death this summer, Leahy says.

"This historic hate crimes provision will improve existing law by making it easier for Federal authorities to investigate and prosecute crimes of racial, ethnic, or religious violence,” says Leahy. “Senator Kennedy provided steadfast leadership on this issue for more than a decade, and the Senate’s action today is a testament to his dedication to enacting hate crimes legislation.”
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UPDATE: Lawmakers Approve Consumer Agency, But Exclude Auto Dealers From Oversight

The House Financial Services Committee took a key step toward creating a new consumer protection agency. But in doing so, lawmakers approved a measure to hold auto dealers beyond the oversight of the proposed agency.

As called for by President Obama, the Consumer Financial Protection Agency (CFPA) represents one of the most significant efforts by Congress to bring about long overdue financial reform to protect consumers from deceptive financial products -– such as predatory mortgages and hidden credit card fees –- that not only damage the livelihoods of American families, but can destabilize the entire economy.

“We need a brand new agency with consumer protection as its sole mission. A Consumer Financial Protection Agency that looks after the interests of consumers will also benefit responsible lenders and safeguard the safety and soundness of our financial system,” says Rep. Keith Ellison (D-Minn.).

Currently, consumer protection rule-making and authority is spread across several different agencies, all of which have failed repeatedly to use the tools provided by Congress to protect Americans. H.R. 3126 addresses this situation by transferring consumer protection authority from the Federal Reserve and other banking regulators to the CFPA. The consolidation of these powers at the CFPA also ensures that financial firms will no longer be able to shop around for the weakest regulator to supervise their products, according to a statement from the House Financial Services Committee.

As outlined in H.R. 3126, the agency’s mission will be to promote a fair and transparent marketplace for financial products and to safeguard the American public from abusive industry tactics. The bill also extends federal supervision to a host of financial industries, such as payday lenders and mortgage originators, which have long escaped oversight.

A summary of the bill, which was approved by a vote of 39-29, can be viewed here.

Auto dealers, however, will continue to escape agency oversight as the House panel approved an amendment offered by Rep. John Campbell (R-Calif.) to exclude auto dealers from CFPA jurisdiction. Watchdog groups called out Campbell on his amendment as a conflict of interest because of campaign contributions he's taken from the auto dealer industry. The National Automobile Dealers Association (NADA) cheered approval of the Campbell amendment.

The bill to create the CFPA still has a number of other hurdles before reaching the White House for final approval. The House Energy and Commerce Committee, which also has partial jurisdiction over the new agency, will have an opportunity to consider the bill before a House vote. The Senate will have to go through a similar process. The NADA says it will continue to push the Campbell amendment provision through the remainder of the legislative process.

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