Freesteel Blog » Obama’s laws and financial transparency

Obama’s laws and financial transparency

Monday, February 2nd, 2009 at 9:58 pm Written by:

It’s all about the money from beginning to the sustainable end of it. Ideology runs out of steam eventually when the damage it does to public policy takes away the energy and challenges the rightfulness of the beliefs. But when the successful pursuit of profit and money are the cause of the damage, it’s unstoppable. The ill-gotten gains get reinvested in things like:

I always need to point out that the money involved and what is wasted is not as important as the long term losses to public policy and justice caused by these selfish acts.

Complaining about the size of the bribe is like complaining about the cost of the broken window when your house has been burgled. The less it is, the more offended you should be. If the thief didn’t even have to cut themselves on glass, it’s humiliating. The reporter Greg Palast demonstrated that the UK government practically left the door on the latch in the early years of the Blair administration.

What’s a greater loss yet, beyond the size of the bribe and what it enabled to bribe-giver to steal, is the violation of trust. Burglaries don’t usually amount to that much trouble unless there is long term damage, psychologically (if the people lose all confidence that their government is not corrupt), and systemically (the theives leave the skylight unlocked and are able to come and go as they please for the next 30 years — did someone say PFI?)

While the corruption is hard to see, like drug deals, the effects have got to be visible in terms of public money draining out in large quantities into the pockets of dishonest people who give nothing in return (except bribes and lies). With this in mind, the politician Barack Obama brought in the Federal Funding Accountability and Transparency Act of 2006 to make it visible. On the first full day of his presidency he issued two memoranda:

Transparency and Open Government: My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government.


Freedom of Information Act: The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails. The Government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears. Nondisclosure should never be based on an effort to protect the personal interests of Government officials at the expense of those they are supposed to serve.

In the summer of 2008, he sponsored: Strengthening Transparency and Accountability in Federal Spending Act of 2008 which would have amended the act to say:

The information on each domestic assistance program shall include a description of:

  • objectives of the program;
  • types of activities financed under the program;
  • eligibility requirements;
  • types of assistance;
  • uses, and restrictions on the use, of assistance;
  • duties of recipients under the program.
  • a unique award identifier that identifies each individual award vehicle;
  • the date that the financial award was made;
  • the date that the financial award requirements began;
  • the date that the financial obligations are dispersed to the recipient;
  • to the extent possible, the agency and department as well as subagencies and suboffices that have authorized the Federal award;
  • in negotiated procurements, the highest, lowest, and median offered price among all technically acceptable proposals or bids;

and also:

After January 1, 2010, for all contracts, subcontracts, purchase orders, task orders, lease agreements and assignments, and delivery orders–

  • both a copy in a format that reproduces the original image of each page and a copy in searchable text format of the request for proposals, the announcement of the award, the contract, and the scope of work to be performed;
  • a product or service code that identifies the general category of product or service procured under the transaction;
  • information about the extent of competition in making the award, including the number of qualified bids or proposals during the competitive process, and if the award was not competed, the legal authority and specific rationale for making the award without full and open competition;
  • the full amount of money that is awarded under a contract or, in the case of lease agreements or assignments, the amount paid to the Government, and the full amount of any options to expand or extend under a contract;
  • the amount and nature of the profit incentive offered to contractors for achieving or exceeding specified goals such as fixed price, cost plus pricing, labor hour contracts, and time and materials contracts;
  • an indication if the contract is the result of legislative mandates, set-asides, preference program requirements, or other criteria, and whether the contract is multiyear, consolidated, or performance based;
  • socioeconomic characteristics of the entity that receives an award including its size, industrial classification (NAICS code), and whether the entity is owned by minority individuals, women, veterans, or other special categories;


The website shall present information about Federal awards and recipients of Federal awards in ways that meet the needs of users with different levels of understanding about government spending and abilities using searching websites by–

  • providing search results for novices displayed in summary form and with top level information such as amount of money received in a fiscal year, basic information about the recipient, purpose of the Federal award, what Federal agencies are providing the money, where the work is performed, and extent of competition, if applicable; and
  • providing more detailed information for more sophisticated users,

Oh, and also:

A simple method for the public to report errors is available on the website created by this Act which should–

  • allow the public to report errors on single records as well as problems affecting multiple records;
  • allow the public to provide contact information, including e-mail address, mail address, or telephone number, to be used for informing the reporter of the outcome of the records review;
  • send copies of the error report to both an official responsible for the data quality at the agency that generated the data and to the Office of Management and Budget;
  • if reported errors are deemed to be nonfrivolous, place an indicator on the records on the website that informs users that the accuracy of the record has been brought into question, until the information is either confirmed as correct or updated to be correct; and
  • maintain a public record organized by agency of the total number of records which have had nonfrivolous reports of errors, the number of records which have been corrected, and number of records for which error reports remain unresolved.

And so on, in perfection.

What other legislation did Barack Obama sponsor in his brief time in the Senate?

That is, after all, one of the core jobs of a Senator.

He seemed to favour very short no-nonsense ones:

As should be obvious, while financial accountability in America is decades ahead of what it is here in the UK (though it doesn’t stop the amazing levels of military-industrial political corruption), their environmental accountability is shambolic. We have been getting all our environmental legislation from the EU where, I suspect, there is a great enough diversity of sovereign environmental agencies to make it less easy to corrupt and hide the data than it does in America where serious toxins are allowed to get into the food supply year after year, and reporters can be sued for investigating it.

Environmental catastrophes cannot be hidden forever or covered up with a quick financial bail-out. People get sick and die from them. Perhaps the difference in Europe is that the national governments can regulate toxins within their own borders, and the EU sets the minimum standards. If the positive effects of stronger environmental standards in the neighbouring nation are visible, and the hypothetical negative effects haven’t occurred (eg their industrial base hasn’t shut down), then there’ll be little scope for the corporate liars to work against it.

In America there is a more perfect union between the states (where the environmental destruction is felt), but the federal government (which is well-insulated from reality) generally asserts absolute authority over environmental standards. This gives an easy one-stop-shop for the lobbyists to enable the continual and unnecessary corporate massacre of their fellow human beings (for financial expediency) in all corners of the land.

One of the new Barack Obama memoranda alludes to this in relation to motor vehicle efficiency standards through CO2 regulations which the Environmental Protection Agency asserts its monopoly authority over (with the intention of doing nothing — as Myron Ebell intends), but which was so politically problematic that they had to grant an annual waiver to California to set better standards — except last year when the Bush administration finally got this waiver withdrawn. Obama has asked the EPA to reconsider this decision.

What’s the lesson?

The lesson is that there are accidental structures of power that have self-reinforcing consequences, some good, some bad. The business lobbyists all know exactly what they are, and will recommend one kind or another kind to the political class in order to maneuver the system into a place where it is more easily corrupted.

A wise politician would listen very carefully to all the advice given by the corporations, and then do exactly the opposite.

I wonder what they think of financial transparency and clarity? Not very much, on the evidence, and given the dispicable state of education and public involvement in these matters.

Wirral Library Closures

Meanwhile, across the Mersey, there is a big upset over the planned closures of a dozen public buildings (aka libraries and leisure centres) to save £4million, and the proposed replacement of them with a brand new complex of buildings costing £20million.

Somehow, even though what they’re doing appears to cost more money, the council leader argues for this unpopular policy on the basis that it would otherwise have to put up local taxes:

WIRRAL’S closure-threatened libraries and leisure centres can only be saved by the imposition of a 4% “cultural levy”, over and above council tax, says Wirral council leader Steve Foulkes.

Cllr Foulkes told the News residents should “keep in the back of their mind” that if £3.8m savings are not made as proposed, the council would look elsewhere.

Education is ring-fenced, children and adult social services remain a statutory duty, “which leaves highways and culture”, the council leader said.

Now, you would think that out of all the campaigning groups and newshounds and general angry people out there, someone would take the time to comb through the council’s accounts and argue against this properly, but no one does.

The clue is in that statement where the council leader is suggesting that discussion about the education budget is off the table. Maybe that’s what people should talk about? Have the costs of that part of the council budget drastically risen? I don’t know. The accounts are as clear as mud. The 2004 and 2005 accounts (unlike the later ones) give a pie chart showing that education is half the budget (about £200m). They also show that the council has got deep into the PFI regime for schools.

PFI, for those who don’t know it, is our very own government imposed sub-prime loan scam waged on local authorities, with predictable consequences.

The deals were rotten and heavily subsidized in the early years with “PFI credits” that were offered as top-up for deliberate cuts in the central government grant.

The long-term financial implications of the scheme were kept “commercially confidential” and the assurances given probably looked serious enough to bamboozle cool-headed council leaders who took the advice of well-dressed serious people seriously. Sometimes disturbing clues leak out, such as the fact that the Wirral council’s PFI deal results in the highest cost for fitting an electrical socket in the country (£302):

The National Audit Office said that very often officials had not checked out the best deal for the taxpayer.

Mr Leigh said: “Public sector contract managers must be a lot more street-wise.

“For all changes, they must be eagle-eyed that the contractor is not charging inappropriately high fees.”

He added: “The public sector has allowed itself to be taken for a ride.

“Public sector contract managers for PFI deals have insufficient commercial expertise to negotiate with and develop effective relationships with their private sector counterparts.”

That’s the official spokesman talking. What he says. Not me just ranting.

But it’s a bit late now, isn’t it, when the contracts are to run for 30 years each.

Can you think of any other cases where there are 30 year irreversible contracts signed between sharp businessmen and relatively novice individuals who have one chance in their lifetime to get it right, with utterly predictable results?

You don’t say.

Like that, and this PFI sham, the ultimate bad guys who have found this amazing way to con the system by luring people into unnecessary financial games which they will inevitably lose, are the banks. Whom we have nationalized.

Maybe if we could track all the money at the transaction level, and down the chain of bogus Special Purpose Vehicles, through all the layers where it mysteriously gets skimmed off by hidden consultants as if from an international bank transfer, the money is returning straight back to the government.

Well, why not close the circle and nationalize all the PFI assets, now that we have nationalized the banks, and we can keep our libraries then.

But it’s not going to happen until people start following the money and working out who and how someone with the power to make bad things happen gets a profit from doing something no one wants them to do.

The trail of money should be obvious and totally visible. It isn’t. And we are screwed.

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