Accountable Strategies blog

A blog about accountability issues in the public, private, and nonprofit sectors

Archive for October, 2007

Whistleblower protection and the presidential candidates

Posted by David Kassel on October 30, 2007

Whistleblowers could be argued to be the first line of defense against corruption in our society.

Why is it that the Democratic candidates for president appear to be more committed to protecting whistleblowers—and even to identifying their positions on the issue—than do the Republican candidates?

First, a bit of background.  Whistleblowing is defined under the Whistleblower Protection Act as disclosing information that an employee reasonably believes is evidence of illegality, gross waste or fraud, gross mismanagement, abuse of power, or substantial or specfic danger to public health or safety. 

Wikipedia includes a long list of famous whistleblowers, among them W. Mark Felt, who has acknowledged to being Deep Throat, the key source for Washington Post reporter Bob Woodward in helping unravel the Watergate scandal; Jeffrey Wygand, who revealed that the executives of big tobacco companies were approving the addition of known carcinogenic ingredients to cigarettes; and Sherron Watkins, who helped expose corporate fraud at Enron. 

Then there’s Daniel Elsberg, who leaked the Pentagon Papers, exposing deceptions of previous administrations about the Vietnam war; Bunnatine Greenhouse, who exposed illegal, no-bid contacts for reconstruction in Iraq to a Halliburton subsidiary; Frank Serpico, who exposed corruption in the New York City Police Department;  Karen Silkwood, who died under mysterious circumstances after disclosing numerous health and safety violations at the Kerr-McGee nuclear plant near Crescent, Oklahoma; and Joseph Wilson, who exposed the Niger yellowcake pretext for the Iraq war, just to name some of the more famous whistleblowers.

Yet, despite the considerable personal risk that these and so many others like them have placed themselves in over the years, legislation to protect them from retaliation by employers and supervisors remains confusing, patchy and ineffective. 

The federal Whistleblower Protection Act of 2007 would provide additional needed protection to whistleblowers, and yet the bill remains stuck in the legislative process.   The measure was proposed in response to recent federal court decisions limiting whistleblower protections.   The bill would give whistleblower protections to federal workers who specialize in national security issues and would specifically protect federal scientists from retaliation for scientific findings that contradict the political spin of higher-ups.

Last spring, the National Whistleblower Center surveyed the candidates for president, with six yes-or-no questions (not a difficult survey to complete).  The questions were (I’m paraphrasing them):

1.  Do you support passage of the federal Whistleblower Protection Act of 2007 (H.R. 985)?

2.  Would you support giving whistleblowers the same protections under the law that are provided by anti-discrimination laws such as the Civil Rights Act of 1964?

3.  Are you committed to appointing persons to head the Office of Special Counsel, which was established to protect whistleblowers, who have expertise in whistleblower laws and are committed to protecting whistleblowers?

4.   Should persons who expose weaknesses in homeland security and the government’s anti-terrorism efforts be given full protections under the whistleblower laws?

5.  Would you expand the statute of limitations applicable to environmental whistleblowers from 30 to 180 days?

6.  Would you support a liaison responsisble for interacting with whistleblower advocates?

Among the candidates who responded fully and positively to all six questions of the survey were Hillary Clinton,  Barack Obama, John Edwards, Chris Dodd, Bill Richardson, Dennis Kucinich, Mike Gravel, Mike Huckabee, and Ron Paul (who responded positively to most of the questions).  That’s seven Democrats, including the frontrunners, and two Republicans, currently minor candidates.

Among those who failed to respond were Mitt Romney, Rudy Giuliani, John McCain, Fred Thompson, and Joe Biden.  That’s four Republicans, including the frontrunners, and one minor Democratic candidate.

It’s unfortunate that the major Republican candidates apparently don’t consider these to be questions even worth answering.  As has pointed out, the Bush administration has cracked down on whistleblowers and has increased the level of threats against federal employees who reveal mismanagement in agencies such as the National Security Agency and the FBI.  It’s important for both Democratic and Republican candidates to speak out against this.


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Media face a tough sell in gaining protection for confidential sources

Posted by David Kassel on October 23, 2007

Why has it been so hard to pass a media shield law at the federal level and in many states? 

A pretty convincing case can be made that the protection of confidential sources is essential in preserving the public’s right to know, as U.S. Rep. Mike Pence, a conservative Indiana Republican who has cosponsored a federal shield bill, put it.  Supporters of the federal shield bill have pointed to press reports on Abu Ghraib, clandestine CIA prisons, and shoddy conditions at Walter Reed Army Medical Center as examples where source confidentiality was essential in getting the stories.

Last week, the U.S. House of Representatives achieved a milestone in giving overwhelming support to the shield bill, which would back the right of reporters to protect confidential sources, subject to certain exceptions involving terrorism and national security.   But the measure, which passed by a vote of 398 to 21, faces an uncertain future in the Senate and has already encountered a veto threat from the White House.

The Reporters Committee for Freedom of the Press has noted that the case of Rhode Island television reporter Jim Taricani spurred efforts to enact shield laws in three New England states: Connecticut, Massachusetts and Vermont. Taricani, an investigative television reporter  in Providence, R.I., spent four months confined to his home in 2004 for refusing to disclose the confidential source of a leaked FBI videotape showing a government official taking a cash bribe.  Rhode Island is the only New England state with a shield law; but, according to the Reporters Committee, Taricani’s case arose in federal court, so the Rhode Island shield law did not apply to him.

According to the Reporters Commitee,  32 states and the District of Columbia already have shield laws and an additional 17 states have judicially crafted protections for journalists.  Massachusetts, often a leader in citizens rights legislation, is not among the states with shield laws.  A proposed shield law in Massachusetts appears to have been stuck in the Judiciary Committee since January, where the committee’s co-chairs have expressed skepticism about it.

 Part of the problem may have to do with the public’s growing lack of trust in virtually all  our institutions—not only in government, but in the media as well.  It may be that the public believes that the media have a hidden agenda (and I think this goes beyond suspicions of a liberal or conservative agenda to include a suspicion that the media are often in bed with government or business or both), and that reporters therefore don’t deserve any special protections.   New York Times reporter Judith Miller, for instance, was jailed, not because she was trying to protect the identity of government whistleblowers, but because she refused to identify confidential Bush administration sources who may have outed CIA agent Valerie Plame Wilson to her.  It was hard to work up a lot of sympathy for Miller in that case, even though she may well have been acting from purely journalistic motives in protecting those sources.

The fact is that the press has not covered itself in glory in recent years.  As press ownership becomes more and more monolithic and true competition among media outlets continues to dwindle, the public’s interest in a shield law may only grow dimmer.

Meanwhile, according to The Reporters Committee for Freedom of the Press, the federal shield bill would only protect professional journalists who regularly engage in journalism “for substantial financial gain” or a substantial part of their livelihood.  Under this definition, some, but not all, bloggers would receive protection from federal investigators. 

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How Fannie and Freddie went wrong

Posted by David Kassel on October 17, 2007

Some of the nation’s largest government-sponsored mortgage institutions were nearly toppled internally by poor management, excessive market dominance, and by their improper interference with government regulators.

Now, according to The Economist, two of these government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, are trying to get back on track  and may be poised to play a rescue role in the nation’s subprime mortgage crisis.

But how did the GSEs go wrong in the first place?  An article  in the current (September/October 2007) issue of Public Administration Review provides some useful lessons on the importance of oversight of private entities that have such a large impact on our financial markets, and helps explain how Fannie Mae and Freddie Mac, in particular,  nearly caused an implosion in those markets. 

Fannie Mae and Freddie Mac each fund $1.5 trillion to $2.5 trillion in home mortgages.  Sallie Mae, a smaller GSE, which funds student loans, has also been in the news lately in connection with the student loan scandal, although it has given up its government sponsorship and become a completely private company.

In “The Life Cycle of the Government-Sponsored Enterprise: Lessons for Design and Accountability,” Thomas H. Stanton, explains that due to their government backing, GSEs often grow rapidly into huge institutions that dominate their markets.  They also tend to receive only minimal feedback from the markets; and because of their political power, they often receive only minimal feedback from the political process. 

Stanton notes that the huge size of the GSE mortgage portfolios coupled with the likelihood that the federal government would have to step in and bail them out if they were to fail—similar to the savings and loan debacle—puts the government at substantial risk.  He warns that “the GSEs should be red flags for policy makers,” and notes:

If GSEs are to thrive in the future, they need to be supervised by regulators with the mandate and capacity to provide effective feedback before problems get out of control.

Case of Fannie Mae and Freddie Mac 

Stanton maintains that the combination of government backing and private ownership and control leads to a “concentration of political power that can allow a GSE to obtain a favorable accountability framework and then prevail over its regulator.” 

For instance, in April 2006, Freddie Mac paid a record $3.8 million fine to the Federal Elections Commission to settle charges that it had violated federal law by using company resources to hold $1.7 million in fundraisers, many involving the then chairman of the House Financial Services Committee, Michael G. Oxley, R-Ohio.

Stanton notes that after Freddie Mac announced in 2003 that it had misstated its earnings going back as far as 2000, the Office of Federal Housing Enterprise Oversight (OFHEO) issued a report on the GSE, which found numerous accounting and financial irregulaties.  Among the findings were that the company had constrained resources for accounting and internal controls.  In April 2006, Freddie Mac settled lawsuits with shareholders for $410 million, stemming from internal control failures and accounting misstatements.  Since 2004, the company has replaced virtually all of its senior managers. 

Fannie Mae has had a similar history.  In September 2004, an OFHEO interim report led to a review by former U.S. Sen. Warren Rudman.   According to Stanton,  Rudman and his law firm reported that Fannie Mae had a “culture of arrogance”  and that “management (had) created an environment that was not conducive to open discussion and exchange of views.”  There were similar findings about accounting violations and compensation tied to earnings. 

But Fannie Mae may have gone even further than Freddie Mac.  Stanton notes that Fannie Mae had continually tried to thwart OFHEO and lobbied for congressional requests for federal investigations of OFHEO.  Fannie Mae also convinced the Senate Appropriations subcommittee to try to withhold $10 million from OFHEO until a new director could be appointed.  Like Freddie Mac, Fannie Mae had imposed constraints on internal auditing, accounting and other staff, despite net income in 2003 of $7.9 billion.

The Economist has reported, however, in “Fannie and Freddie Ride Again,” that both organizations have spent billions of dollars on new systems and controls and that they are trying to regain their credibility as buyers of last resort in the subprime market.  They have pledged to buy tens of billions of dollars of new subprime mortgages, and are working on products to alleviate the plight of the worst-hit borrowers.

But The Economist also notes that Fannie Mae and Freddie Mac hold large amounts of bonds linked to subprime mortgages.  It’s not inconceivable, the magazine suggests, that a continuing rise in subprime delinquencies could result in losses of billions of dollars for the two GSEs.   

That ties in with Stanton’s recommendation of the insertion of a sunset provision into the initial design of a GSE.  He notes that “the fundamental lesson” of the life cycle of the GSEs he reviewed:

is that the GSE does not offer a free lunch.  In creating a GSE, or in permitting it to expand its scale and scope, policy makers make a trade-off.  They receive access to an off-budget vehicle that can help funnel government subsidies to preferred purposes.  In return, the government takes on risk—in some cases, substantial risk.

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Governmental efficiency and the fate of the Fernald Center

Posted by David Kassel on October 11, 2007

In an article in the current (September/October) issue of Public Administration Review, Hindy Lauer Schachter argues that governmental efficency is a political concept.  

Efficiency inolves getting the biggest bang for the taxpayer’s buck–“maximizing the ratio of outputs to inputs” in public administration jargon.  Everyone is in favor of it, and virtually every governmental reform effort has put efficiency at the top of its list.

But Schachter notes that in the public realm:

…political decisions undergird which numbers count, which data constitute benefits, and which are costs.  Governmental efficiency exists in a specific political context.

Reading the article brought to mind a political debate that has been ongoing in Massachusetts over continuing attempts by the then Romney and now Patrick administrations to shut the Fernald Developmental Center in Waltham, MA, the nation’s oldest state-run facility for people with mental retardation.  (By way of disclosure, I have been doing consulting work for the Fernald League, a nonprofit organization of parents and relatives of the Fernald residents, which is fighting to keep the facility open.)

The Patrick administration has put forth an efficiency argument in favor of closing Fernald and ultimately transferring the remaining 180 residents to privately provided, community-based care.  A statement issued in September by the Executive Office of Health and Human Services maintained that Fernald was the most expensive state facility in Massachusetts, with an operating cost in excess of $239,000 per resident, compared with a cost-per-resident of “comparable” community-based care of $102,000.

The EOHHS statement was issued in conjunction with the Patrick administration’s decision in September to appeal a U.S. District Court judge’s ruling that Fernald must remain open to its current residents.

Uising that high comparison cost figure for Fernald may well be a politically effective strategy, given that we are a society in which, as Schachter notes, efficency is a treasured value.  The use of comparison costs appears, on the surface, to take politics out of the discussion.   Whether or not you agree with the political arguments for or against privatization, you can’t argue with the numbers when they’re put before you so starkly.

But do those numbers have any basis in reality?  The EOHHS statement contained no backup or indication as to how the $239,000 and $102,000 amounts were derived.  And yet, the figures were uncritically cited the next day by news media outlets throughout the state.

It’s quite difficult, however, to determine the true cost-per-resident at a complex facility such as Fernald, and potentially even more difficult to determine that type of cost in a sprawling community-based system of services.  For instance, at Fernald, you can’t just take the total facility budget and divide it by the total number of residents to arrive at a true cost per resident.  The reason is that the Fernald budget covers a number of costs that don’t directly or exclusively benefit the residents.  (By the way, the Massachusetts Coalition of Families and Advocates for the Retarded, Inc. (COFAR) filed numerous Public Records Law requests over a period of several months last year in order to get even rudimentary budgetary figures for Fernald from the Department of Mental Retardation.)

Take the skilled nursing facility on the Fernald campus, for example.  The cost of operating the nursing facility, which serves 25 patients, appears to fall under the Fernald budget (although even that is unclear, based on the DMR information that was provided to COFAR).  Yet, the nursing facility is open to all clients of the DMR system, not just the residents at Fernald.  Those 25 patients aren’t even counted among the 180 remaining residents at Fernald.

A couple of other facts to consider, based on an an analysis earlier this year by COFAR of the DMR cost information: Fernald residents share the use of at least 12 buildings on the campus with community-based clients and derive no apparent benefit from eight other buildings.  In addition, nearly 30 buildings on the campus are unoccupied.  Yet virtually all the buildings on the campus are connected to the campus heating and electricity infrastructure.  Those costs are part of the Fernald budget, but should they all be attributed soley to the residents?  COFAR also found out that the $91,900 salary of the director of the Hogan Regional Development Center in Danvers, MA, was inexplicably listed on the payroll of the Fernald Center (See May 2007 COFAR Voice, p. 5).

Then, there’s the whole thorny question of how the administration came up with the $102,000 per-resident for care in the community.  Despite the apparent specificity of that and the Fernald cost number, there is no way anyone can proclaim them as absolutely truthful or even as reliable.  

The Fernald situation demonstrates that it’s impossible to remove politics from cost/benefit analyses of public functions.   Given that reality, Schachter maintains that it’s important to engage citizens and:

…make them more visible and connected to the way political officials and administrators define costs and benefits…Citizen involvement is a prerequisite to meaningful cost-benefit calculations.

I would suggest that at a minimum, citizens need to be informed about the complexities of governmental policies, such as the decision to privatize services for the mentally retarded.  The problem is that when the public administrators justify their actions with simplistic explanations and the press accepts those explanations uncritically, the citizens don’t have much of a chance.

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Should there be a place for bloggers at this “Summit?”

Posted by David Kassel on October 9, 2007

An important discussion is set to take place in Boston’s historic Faneuil Hall next month, and I was thinking about attending and blogging about it.

“It’s billed as “The Summit on the Future of the Corporation,”  and it promises, over a two-day span on November 13 and 14, to be more than just a business story.  It promises, in fact, to raise key issues about the changing relationships between business, government, and the citizenry on solving our most pressing global problems.

The Summit’s website bills the event as marking:

an historical moment for considering how the most influential social institution of our time (business) can serve the broader public interest essential to its own long-term prosperity…

The only problem is that you have to register to attend, and you have three choices.  You can register as a corporate participant for $1,000; as a member of a nonprofit, academic, or government organization for $500; or as a student for $250.   I’m personally disappointed that there isn’t a choice here to attend as a member of the blogging media.  As a blogger, I consider myself a member of the media, which reports to the citizenry.  I was told, however, that the only provision that could be made for me was to allow me to register and attend as a student. (I’m not sure if general press passes are available or not.)

Allen White, one of the organizers of the Summit,  has written an engaging paper on the need at this time in history to “rewrite the social contract” between business, government, and the citizenry.  The reason is that our problems, from global warming to the rising cost of health care, are so complex and pressing that neither one of these institutions can go it alone.  All sectors of society need to come together in rethinking the contract, he writes.

I’m sure the entire event next month will be filled with high-minded discussions along the lines White has laid out.   It seems a shame that a place hasn’t been set aside for modern-day representatives of the citizenry to report about them.

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The continuing attack on bureaucracy

Posted by David Kassel on October 3, 2007

Kennedy School of Government Lecturer Elaine Kamarck has just published a book called “The End of Government…as we know it,” in which she argues that traditional forms of bureaucratic government are giving way to “reinvented,” privatized and “marketized” forms, and that this is largely a good thing.

Kamarck was in charge of the “reinventing government” effort in the Clinton-Gore administration, and she naturally argues that reinvention is one of the key characteristics of the “post bureaucratic” state.  “Reinvented government” is government that acts more like business.  In reinvented government, performance is more important than process, burdensome budget and procurement rules are lifted to allow managers flexibility to get results, and citizens are treated as “customers,” among other innovations.

I focused on Chapter 3 of Kamarck’s book, titled “Democratic Accountability,”  in which she lays out the basis of her argument that traditional bureaucracies have depended on adherence to rules and process to the detriment of performance and innovation in government.  It’s a seductive argument because it beats up on a target that we all like to beat up on–the hapless, mindless, rules-following bureaucrat. 

In fact, Kamarck’s argument follows a tradition in recent years of attacking government bureaucracy–a tradition that she herself traces back to Michael Barzelay’s 1992 book, Breaking Through Bureaucracy.  Most, if not all, of the attacks that have been levied from Barzelay on have focused largely on  bureaucrats and the bureaucratic rules they follow as they bog government down and prevent it from getting necessary things done.

The problem is that these broad attacks on bureaucrats and rules often lead to contradictions in the arguments put forth by the “government reinventers.”  After all, aside from out-and-out anarchists, most sane people would agree that at least some rules are neccesary to allow our government and society to function with any degree of normalcy.   They also help preserve basic rights for citizens in their dealings with government, through such things as the Freedom of Information Law and the other laws and rules that allow people to sue government when rights are taken away.  “Process” actually doesn’t sound so bad when the word “due” is put in front of it.

Yet, in her enthusiasm for the reinvention ideology, Kamarck makes a number of broad and sometimes unsubstantiated attacks on rules and traditional bureaucracy.  In Chapter 3, she charges, for instance, that inspectors general in the federal govenment support a “rule-based culture” that has “added to (government) waste instead of subtracting from it.”  By way of disclosure, I used to work for the Massachusetts Inspector General’s Office, so it comes as a bit of a painful surprise to learn that I’ve been part of a culture that has added to government waste.

Yet, still continuing her attack, Kamarck goes on a few pages later to praise a federal IG.  She describes a situation in which Clark Ervin Kent, the first IG of the Department of Homeland Security, was removed from his job by the White House after he exposed weaknesses in the nation’s airport security system.  Kent’s investigators had been able to sneak weapons and explosives past screeners at 15 U.S. airports in 2003.  The White House was not happy about Kent’s expose of DHS ineptitude. 

Kamarck argues that Kent was forced out because he had “sought to focus on (governmental) outcomes [which are good things to focus on]  and not process [which is a bad thing to focus on].”  But, in fact, Kent’s investigation of the airport security system really focused on both outcomes and process.  He was forced out because he exposed weaknesses in both. 

 Sure, Kent had uncovered major lapses in governmental outcomes or performance in airport security.  But these lapses were no doubt due, at least in part, to failures in processes and in following rules involving such things as proper training and deployment of security personnel. 

The problem with these types of attacks on rules and bureaucracy is that the logical implication is that if we would only let managers do their thing freely—such as allow airport security managers to ignore written rules and procedures in order to devise their own security innovations—we’d all be safer.   Somehow, I can’t believe Kamarck really believes that.

Kamarck’s reinvention ideology also leads her to praise a move by the Bush administration to exempt the Department of Homeland Security from civil service rules.  She writes:

…when the Bush administration set out to create the Department of Homeland Security it tried to incorporate many of the management flexibilities that are core concepts in reinvented public-sector organizations, including some modest authority to reprogram funds without prior congressional approval and substantial flexibilities in procurement and civil service laws.

What Kamarck doesn’t say here, though, is that while the Bush administration was successful in creating a new personnel system at DHS, it doesn’t appear to have helped the agency’s performance.  Ironically, one of the many failures in that performance has been the continuing inability at DHS to identify counterfeit drivers’ licenses and other forged documents in screening people trying to enter the U.S.  The Governmental Accountability Office, carrying on in Clark Ervin Kent’s tradition, has repeatedly been able to sneak agents with fictitious documents through DHS border security.

Kamarck actually seemed more critical of the supplanting of traditional government bureaucracy by privatization, if not reinvention,  during a discussion on her book at the Kennedy School earlier this week.  Nevertheless, it was disappointing to me that in her chapter on democratic accountability, in particular, Kamarck has largely framed the accountability issue in terms of governmental performance.   She contends that accountability is lessened when government is privatized because no one is adequately measuring performance.   

That is certainly true; but accountability in privatized government is also lessened because, among other things, bugetary and other information is less accessible to the public in privatized functions than in public functions.  As Gilmour and Jensen have pointed out, laws such as the Administrative Procedure Act, which opened the federal bureaucracy to public scrutiny, and the Freedom of Information Act, don’t apply as consistently in privatized situations as they do in purely public transactions.  And those types of things just happen to be process issues.

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