U.S. Gave $4.5 Billion To Ukraine For Debt Relief
October 2, 2023
The United States sent $4.5 billion to Ukraine so it could pay down its national debt, according to the U.S. Agency for International Development.
These funds, which were approved on a bipartisan basis by Congress, are being sent to “direct budgetary support to the Government of Ukraine to help alleviate the acute budget deficit” caused by the war in Ukraine. The funding will come in tranches, with the first payment of $3 billion in August.
USAID claims this debt reduction will “allow the Government of Ukraine to maintain essential functions to its people, including social and financial assistance to Ukrainians further pushed into poverty since the start of the war, children with disabilities, and internally displaced persons.” While these are laudable goals, the U.S. and other countries have already sent billions in humanitarian aid to Ukraine.
This is not the only money the U.S. has sent to Ukraine for budgetary support. This payment brings the total amount of budgetary support for Ukraine up to $8.5 billion. The World Bank, which is handling these transactions, is assuring the U.S. that “robust safeguards” are in place to “ensure accountability and transparency in the use of these funds.”
It’s ironic that the U.S. has the money to pay off other countries’ debts, but not its own, especially when the national debt stands at almost $33 trillion, and the U.S. debt to GDP ratio is at 120%. Since Covid-19 spending started, debt to GDP has been at some of the highest levels ever recorded.
While there may be compelling arguments to aid Ukraine with humanitarian and even military aid, it’s absurd to pay off another country’s debt before we pay off our own.
National Lab Had $160 Million In Questioned Costs
October 3, 2023
The Department Of Energy’s Fermi National Accelerator Lab in Illinois had $160 million in questioned costs in 2018, due to lost invoices, excessive reimbursements and holiday pay, according to a recent audit by the Department of Energy’s Inspector General.
The audit examined costs incurred by Fermi Research Alliance, LLC, the contractor that operates the lab near Batavia, Illinois. The lab is owned by the Department of Energy, and receives millions in funding from the federal government. It also recently received $260 million from the Inflation Reduction Act of 2022.
The audit found that costs claimed by the Fermi Research Alliance were not always allowable or reasonable. The inspector general questioned $160 million in indirect costs as unsupported, $15 million in subcontract costs as unresolved (pending audit), and $2.5 million as unsupported, unallowable, or unreasonable.
Specifically, the IG had many concerning findings. This includes Fermi Research Alliance losing over $2.4 million in vendor invoices, unreasonable subsistence reimbursements to visiting scientists and researchers in excess of $30,000, and excessive holiday pay exceeding $50,000. Fermi Research Alliance was also not in compliance with federal cost accounting standards.
The IG found that “These issues could result in the Department reimbursing [Fermi Research Alliance] for costs that were unallowable, not allocable, or unreasonable.”
This mismanagement directly impairs the mission of the Department of Energy, since these questionable expenditures could have gone towards further research efforts at the lab by purchasing more equipment or hiring more researchers.
This waste was completely preventable by enforcing accounting standards and frequently auditing to ensure they are met, but instead, lax oversight meant these issues went undiscovered for five years.
Michigan Gives $175 Million Grant To Chinese Company
October 4, 2023
Michigan awarded a $175 million grant to an energy company — owned and controlled by a China-based battery manufacturer with ties to the Chinese Communist Party — to build a massive battery manufacturing facility near a U.S. military base in Michigan, according to the Daily Caller.
The Daily Caller found Gotion, Inc of California, will be given $175 million of Michigan taxpayer funds to build a 550,000 square foot facility that has been touted by state officials like Gov. Gretchen Whitmer as a “global hub of mobility and electrification.”
Gotion, Inc is owned and controlled by Hefei Gotion High-Tech Power Energy Co., Ltd, a Chinese company that has previously tried to build factories near a Michigan U.S. National Guard facility called Camp Grayling. While these past projects failed, this time around, they received approval.
Gotion’s CEO, Li Chen, is a member of the Chinese People’s Political Consultative Conference, a part of the Chinese Communist Party that works to advance China’s overseas influence campaigns, according to the Daily Caller.
The new facility will be built a mere 90 miles from Camp Grayling, a large U.S. National Guard facility that hosts “live-fire combat training exercises”, according to its website.
Governments should give priority to America- based and owned companies. There are plenty of American battery manufacturers that could have been awarded this grant instead. Moreover, the government should be especially leery of giving tax dollars to adversarial countries like China, who’s attempts at espionage on American soil are well documented.
This project is at best a wasteful transfer of American tax dollars to a Chinese owned entity, and at worst a substantial threat to American national security.
Throwback Thursday: NASA System Has Cost Overruns Of Billions
October 5, 2023
In 1981, NASA’s Tracking Data Relay and Satellite System saw scheduling delays of over three years and cost overruns of between $500 million and $1 billion – worth between $1.7 billion and $3.4 billion in 2023 dollars.
Sen. William Proxmire, a Democrat from Wisconsin, gave NASA his Golden Fleece Award for this gross mismanagement of a critical program.
According to Proxmire, NASA’s Inspector General flagged these cost overrun concerns in an internal memo, noting the 10-year lease costs of the system had risen from estimate of $841.8 million to $2.2 billion.
The cost overruns were partially due to delays in NASA’s Space Shuttle Program, which in turn delayed the launch of the satellite system. Proxmire noted the Space Shuttle delays cost taxpayers $1 million per day, and was expected to cost at least $100 million in total.
The other cause of the steep overruns stems from NASA’s decision to lease the system instead of buying it, due to a lack of appropriations. Financing the delayed deployment of this system cost $689 million in interest payments, an increase of 220% over the original estimate.
Other adjacent problems quickly added up, including a radio frequency technology issue that cost $75 million to fix. The litany of issues that added up to the massive increase in cost led Proxmire to deem this project “over-priced, over-weight, over-sold, and over-due.”
To add insult to injury, the company NASA leased the expensive technology from received federally made and guaranteed loans, meaning the government backed the creation of this technology, only to later have to pay to use it.
Cost overruns and delays like this are unacceptable in any context, but it is especially painful when they are going toward critical technological projects.
Failed Combat Ship Program Could Cost $100 Billion or More
October 6, 2023
The U.S. Navy has wasted billions on a failed class of ships that are now being rapidly decommissioned after embarrassing mechanical breakdowns and ridicule from Naval officers. The lifetime cost of this program could top over $100 billion, according to ProPublica.
The saga began in the early 2000s, when Naval officials, backed by defense contractor lobbyists, pushed the Navy to develop a new class of ships, called Littoral Combat Ships, which would be smaller and nimbler ships that would be suitable for deployment in coastal, or littoral, waters.
Unfortunately, costs quickly ballooned. ProPublica reports the ships were originally supposed to cost no more than $220 million each, but the cost soon rose to about $500 million apiece. Lockheed Martin and General Dynamics both won contracts to build these ships, but prioritized speed over quality.
After development and deployment, these ships were plagued by mechanical failures, with ProPublica reporting that, “Sailors and officers complained they spent more time fixing the ships than sailing them.”
Now, the Navy admits this class of ships, “does not provide the lethality or survivability needed in a high-end fight,” and that it “needs a more ready, capable, and lethal fleet.” As a result, these ships are being decommissioned, with one of them, the USS Milwaukee, decommissioned a few weeks ago, just eight years after its initial commission.
A retired Government Accountability Office analyst, John Pendleton, told ProPublica that the lifetime cost of the Littoral Combat class of ships may amount to over $100 billion. For all this investment, Pendleton told ProPublica, “In the end, the taxpayers get fewer than 30 limited-survivability, single-mission ships.”
This botched program shows why the Pentagon’s $816 billion budget deserves more scrutiny, and why more spending by the Pentagon doesn’t equate to a safer United States.
The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com.