Government Wasteful Spending Hits $98 Billion

November 18, 2009

CNBC

By Reuters

Improper payments by the U.S. government to people, firms and contractors rose sharply to $98 billion in fiscal 2009 and President Barack Obama plans new rules to clamp down, the White House said Tuesday.

Over half the mistakes were made in the Medicare and Medicaid programs, and although some of the deterioration reflected stricter measurement, it also showed the need for healthcare reform, Office of Management and Budget Director Peter Orszag told reporters.

Improper payments in the Medicare and Medicaid programs totaled $55 billion in fiscal 2009, according to documents provided by OMB.

Medicare covers healthcare for the elderly and some disabled, while Medicaid does the same for the poor.

Orszag said the error rate for payments under Medicare Advantage, where private insurers offer coverage to Medicare beneficiaries, jumped to 15 percent, or to $12 billion, in fiscal 2009. The error rate was 10 percent in fiscal 2008.

“This was not the result of methodological changes. This is one of the reasons why, as part of health reform, we believe there are crucial changes necessary to the Medicare Advantage program,” he said on a telephone conference call.

Obama has made overhaul of the $2.5 trillion U.S. healthcare industry his top domestic policy goal, pledging to expand medical coverage to millions of the uninsured and make healthcare more affordable.

Orszag stressed that tougher measurement, as well as higher government spending due to the recession, explained a big part of the jump in government waste.

The government made improper payments of $72 billion in the 2008 financial year. Fraud may also be partly to blame.

But Orszag stressed that the lack of tools to identify how much fell into this category made it impossible to estimate the size of the problem.

One exception to this rule was fraud connected with improper payments under unemployment insurance, which OMB said added up to around one-fifth of the $12 billion in improper payments in that program.

Obama will sign a new executive order within a week to improve transparency and to encourage people to play straight, Orszag said.

Part of this effort will aim to explore imposing penalties on anyone who knowingly gets an improper payment — for instance if they get paid twice for the same thing.

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Blackwater ‘Hired for CIA Plan’

August 20, 2009

BBC News

The CIA hired contractors from the US private security firm Blackwater as part of a secret programme to track and kill top al-Qaeda figures, reports say.

The New York Times quotes current and ex-government officials as saying Blackwater helped the CIA with planning, training and surveillance.

Several million dollars were spent on the programme but no militants were caught or captured, the report says.

Blackwater staff were used to guard US government personnel in Iraq from 2003.

But they were accused of using excessive force on a number of occasions, including the killing of 17 civilians in Baghdad in 2007.

The North Carolina-based firm has not had its licence to operate in Iraq renewed.

The company, which was founded by Erik Prince, has since been re-named Xe.

Lethal authority

The New York Times reports that the CIA did not have a formal contract with Blackwater for the programme to locate and kill senior members of al-Qaeda.

Instead, they had individual agreements with top officials in the firm, the paper goes on to say.

It is not clear whether the US spy agency planned to use Blackwater contractors to actually capture and kill the militants, or just help with the training and surveillance of the programme, the report says.

Meanwhile, the Washington Post reports that the assassination programme was initially launched in 2001 as a CIA-led effort to kill or capture top al-Qaeda figures using the agency’s paramilitary forces.

But in 2004, after briefly terminating the programme, the CIA decided to revive it using outside contractors, the Post quotes officials as saying.

Leon Panetta – who became director of the CIA under President Obama’s administration – is said to have learnt about the secret programme in June.

The next day he called an emergency meeting with congressional intelligence committees to tell them about its existence, and to say that it was being cancelled.

The New York Times quotes officials as saying the fact that the CIA used an outside company for the programme was a major reason Mr Panetta became alarmed and called the meeting.

Although some controversial work, including the interrogation of prisoners, has been outsourced in recent years, the fact that outsiders were used in a programme with “lethal authority” raised concerns about accountability in covert operations, officials were quoted as saying.

The House of Representatives’ intelligence committee is investigating whether the CIA broke the law by not informing Congress about the programme for eight years.

Democratic Senator Dianne Feinstein, chairwoman of the Senate intelligence committee, said last month that Mr Panetta told Congress former Vice-President Dick Cheney was behind the secrecy.

But some Republicans accuse the Democrats of trying to make political capital from the situation.

“I think there was a little more drama and intrigue than was warranted,” Representative Peter Hoekstra, the most senior Republican on the House intelligence committee, told the Times.

Click here for the full report from BBC News