Real Clear Policy: #WasteOfTheDay Week 128 95_WOTD_wk_128

July 24, 2023 12:50 PM



New York City’s Gateway Tunnel Gets Record Breaking $6.9 Billion

July 24, 2023


The federal government is awarding a record breaking $6.9 billion to build a second train tunnel under the Hudson River, connecting Newark, New Jersey to New York City, The New York Post reported.

Sen. Chuck Schumer, the powerful Democratic Senate Majority Leader from Brooklyn, announced the funding as part of the Gateway rail investment program to expand rail networks in New York and New Jersey.

The $6.9 billion in funding comes from the Federal Transit Administration’s Capital Investment Grants program, and is the most ever awarded to a mass transit project. It was approximately $200 million more than the Gateway program had initially requested last October, which Schumer attributed to rising construction costs.

This may not be the end of funding, either, with The New York Times reporting the “Gateway’s planners still hope to receive more funding from other federal programs to raise Washington’s share of the total cost to at least half” of the remaining $16 billion it will take to complete the project.

Proponents say the new tunnel and its two tracks are needed to provide more reliable service for commuters and travelers, especially since the existing tunnel needs to close for renovations after flooding from Hurricane Sandy.

Already, cost projections have increased about $200 million since the grant application was submitted only nine months ago, per Schumer, raising concerns about more cost overruns this time around.

Major infrastructure projects like Gateway are notorious for coming in behind schedule and over budget, and any further federal funding should carefully consider whether this massive investment has been put to good use.



ATF Misclassified Workers, Costing $9.7 Million

July 25, 2023


The Bureau of Alcohol, Tobacco, Firearms and Explosives wasted $9.7 million by intentionally misclassifying administrators and bureaucrats as law enforcement officers, according to a letter from the Department of Justice and U.S. Office of Special Counsel.

An investigation was opened after two whistleblowers alleged the ATF was “systematically and intentionally misclassifying upper‐level non‐law‐enforcement jobs as law‐enforcement positions and recruiting and filling these coveted, primarily supervisory jobs with only special agents or Industry Operations Investigators.”

Because of this, the whistleblowers alleged, those that were misclassified were eligible for additional benefits, including enhanced retirement benefits and law enforcement availability pay, perks only available to law enforcement.

After conducting the investigation, the Special Counsel substantiated the whistleblowers’ allegations. While the practice cost at least $9.7 million over five years, the Special Counsel noted that the true costs could be as high as $19.7 million, depending on the total number of people that were misclassified.

Senator Joni Ernst (R-Iowa) wrote a letter to Inspector General Michael Horowitz to request further investigation into this scheme. She writes that, “It is incumbent upon all public servants to act with the utmost levels of professionalism but when bureaucrats abuse the public trust it is the responsibility of watchdogs to hold the bad actors accountable for their malfeasance.”

It’s bad enough when massive agencies make honest mistakes with your tax dollars, but organized schemes to defraud taxpayers and enrich bureaucrats substantially harm public trust in institutions. After this investigation concludes, lawmakers need to seriously consider legislation to increase oversight to ensure schemes like this never happen again.



U.S. to Spend $2 Million on Efficient Fertilizer in Pakistan

July 26, 2023


The U.S. Department of Agriculture will spend $2 million on “bolstering fertilizer use efficiency in Pakistan.”

The funding is part of the Global Fertilizer Challenge, an initiative the White House announced in June of 2022 to respond to a global fertilizer crisis.

According to the grant notice, fertilizer prices worldwide have increased sharply in recent years, which has led to insufficient access to fertilizer in low-income countries. To help mitigate the price spike, the U.S. Department of Agriculture has announced the “Fertilize Right” program to help those in developing countries improve their utilization of fertilizer.

Domestic and international agricultural organizations in Pakistan can apply for the funding, which starts at $2 million, but could reach a total of $5 million over the next four years. The program’s goal is to “address issues caused by the global fertilizer crisis and mitigate the release of (GHG) nitrous oxide (N2O) attributed to nitrogen fertilizer overuse.”

The grant will fund a project that will “increase fertilizer-use efficiency … enhance fertilizer effectiveness … and develop alternatives to traditional manufactured chemical fertilizers to improve soil health and soil fertility.”

While these may be worthwhile goals, the Pakistani government is more than capable of funding necessary projects to help its citizens. Additionally, this might make sense if the U.S. imported a substantial amount of agriculture from Pakistan, but Pakistan isn’t even in the top 15 importers of agricultural good to the U.S., according to the U.S. International Trade Commission.

While farmers are struggling in the U.S., our country can’t afford to send tax dollars halfway around the world to improve fertilizer efficiency for a non-critical agricultural partner.



Throwback Thursday: Social Security Trust Fund Lost $2 Billion

July 27, 2023


Throwback Thursday! 

In 1981, Treasury Department managers of the Social Security Trust Fund lost $2 billion dollars — worth $6.7 billion in 2023 dollars — thanks to nonsensical investment policies.

Sen. William Proxmire, a Democrat from Wisconsin, awarded the Treasury his Golden Fleece Award for this enormous loss.

Proxmire credits the loss to confusing and conflicting investment policies that limited what types of investments managers could make, generally only allowing the purchase of government or government-backed securities.

Returns were so bad, that while private investors investing in similar assets were seeing returns of 13%, Treasury managers were only able to get 8.3%. That difference amounted to a loss of $2 billion, even though both private and government managers were investing in the same types of securities. While some regulations may make sense, ones that stifle returns this substantially ought to be carefully considered.

Proxmire notes one reason for the poor returns is a conflict of interest between Treasury managers that want to keep interest rates on the national debt low by investing in low yield Treasuries, and the beneficiaries who want to see maximum returns.

Other policies were also in place that kept returns artificially low, like investing mostly in low yield “special issue” Treasuries. Even worse, Treasury officials admitted they did not have the technology to quickly and agilely invest in real time to score the best deals.

There were plenty of safe alternative investments that managers could have made to increase returns without taking unreasonable risks, but bureaucratic guidelines and red tape prevented Social Security recipients from getting higher returns that may have left the fund in a better place today.



New York Spent $1 Billion on Failed Tesla Solar Panel Factory

July 28, 2023


The State of New York spent about $1 billion on a factory to incentivize Tesla to do business in New York. Now, that factory is being leased for $1 a year, in what even state officials are calling a “bad deal” according to The Wall Street Journal.

Over the last decade, New York invested almost $1 billion in what was meant to be the largest solar panel factory in the Western Hemisphere at 1.2 million square feet. State-of-the-art equipment was purchased for $240 million, and owner Elon Musk said the factory could produce enough solar panels to cover 1,000 roofs each week.

Today, the company is averaging about 21 solar panel installations per week, and much of the factory is occupied by Tesla staff that have nothing to do with the solar energy unit. Most of the solar panel equipment has been sold off for a fraction of what it was bought for.

An analysis by New York State found the factory returned $0.54 cents for every subsidy dollar spent on the factory, and auditors have written down most of the investment. 

The ambitious promises of new manufacturing jobs quickly deteriorated, with New York amending the terms of the subsidy, pushing back deadlines and lowering the required number of jobs created 12 times. Tesla now reports it created 1,700 positions at the site, which considering the $1 billion investment, cost taxpayers about $588,000 each.

E.J. McMahon, a senior fellow at the Empire Center for Public Policy, said, “In terms of sheer direct cost to taxpayers, this may rank as the single biggest economic development boondoggle in American history.”

Handouts to mega corporations with little due diligence often end in disaster, and this foolish investment turned out to be a bad deal for New Yorkers.

The #WasteOfTheDay is presented by the forensic auditors at

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