The Obama Watch

There He Goes Again

How the Obama Administration prevents real oversight.

By and 3.7.12

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No one would suggest cutting the budget of a city's police force by 50% while the population remains essentially unchanged. Then why did the Obama Administration slash the money available to the Inspector General's Office (IG), the police force at the Corporation for National and Community Service (CNCS), by almost 50% while leaving CNCS's allocation almost unchanged?

There can be only one reason: CNCS is a pet agency of the Obama Administration, and these cuts are its latest move to torpedo independent oversight of CNCS. By law, the IG is responsible for scrutinizing that agency's operations to uncover, and thus prevent, fraud, waste, and abuse. Slashing the IG's budget means career auditors and investigators must be let go, and is thus a simple way to limit IG's ability to "interfere" with the operations of CNCS and its grantees.

In contrast to its last two fiscal years' appropriation of $7.6 million, the IG received a surprising budget cut of almost 50% to only $4 million for the fiscal year beginning October 1, 2011. Worse, because it was not announced until mid-December, the IG assumed that the normal $7.6 million appropriation would continue and spent about half of the reduced budget during the first quarter. The result: the IG auditors and investigators, aware that they will be terminated due to required reductions-in-force, are all looking for jobs elsewhere.

As Senators Collins, Enzi, and Grassley wrote in a publicly issue letter last month days ago, "This cut will profoundly affect the Inspector General's ability to conduct meaningful oversight and ensure that [CNCS] is appropriately using taxpayer funds," and "It is vital that Inspectors General have the funding necessary to carry out their important mission."

The Administration's slashing of the IG's budget cannot be attributed to any desire by this Administration merely to reduce spending. If that had been the motive, it would have reduced the CNCS budget in the same proportion. It did not; CNCS received an appropriation of $1.9 billion, reflecting a minuscule 3% reduction from prior years. This fact and the history of this Administration's treatment of this IG's office requires the conclusion that this cut was meant to target and emasculate the IG.

CNCS, the umbrella agency that runs programs like AmeriCorps and VISTA, needs careful scrutiny. Much of its appropriation goes out the door as grants. Without IG oversight of both CNCS and its grantees, misuse is likely. The IG, with its auditors and investigators, makes sure that CNCS and its recipients follow the law, and that taxpayer money is not lost through fraud, waste, or abuse.

In 2002-2003, CNCS doled out more money for AmeriCorps scholarships than Congress authorized, forcing it to suspend further operation of that program. In 2008, it quickly spent its appropriation like a drunken sailor, resulting in a near violation of the Anti-Deficiency Act. That led the then-Democratic majority of the relevant subcommittee of the House Appropriations Committee to request an oversight report from the IG.

More recent CNCS history makes clear that the Administration and CNCS Management reject IG "interference" with CNCS's free-wheeling spending for its pet projects, whether or not in accordance with law. This Administration fired this article's authors, then respectively the Inspector General (Walpin) and the Special Assistant to the IG (Park), for supporting career auditors and investigators who uncovered fraud and waste by CNCS grantees who were then politically protected by this Administration. Two examples:

In its dealings with Sacramento, California-based St. Hope Academy, and its principal, Kevin Johnson, a political friend of the President, CNCS put politics ahead of the protection of taxpayer money. An IG investigation established that St. Hope totally misused an $850,000 grant from CNCS: AmeriCorps members -- mostly young volunteers -- did not do the tutoring for which the grant was made. Instead, they were improperly used to man political rallies and employed for Johnson's personal needs, such as washing his car and chauffeuring him. In addition, there were allegations that Johnson sexually harassed at least two of the young AmeriCorps volunteers in his charge. The IG recommended that both St. Hope and Johnson be held liable to refund the entire $850,000 grant. And, Johnson and another St. Hope official were temporarily suspended from receiving grants and other Federal funds.

After Johnson was elected Mayor of Sacramento, substantial pressure was imposed on the IG and CNCS to settle the matter. The IG insisted that what was essentially a theft of nearly a million dollars of taxpayers' money should not be swept under the rug. Ultimately, the Administration and CNCS went behind the IG's back; they worked with the Acting U.S. Attorney in Sacramento, who wanted the permanent appointment from the Obama Administration, to sign a settlement that freed Johnson of any responsibility or liability. St. Hope's agreement to repay about $400,000 -- about half of what the Government was due -- was subterfuge and worthless because St. Hope was insolvent.

Another IG Report addressed the Teach-For-America program at the City University of New York (CUNY) that employed nearly 2,000 AmeriCorps volunteers, each of whom was placed in a New York inner-city public school. To prevent political backdoor earmarks to pet projects, the law requires that grants like these be made only to fill a community's unmet needs. These teachers applied and were accepted for the teaching positions before CUNY even asked them to become AmeriCorps members. CUNY, thus, used the program as an improper way of tapping into CNCS grant funds. CUNY compounded its misfeasance by mishandling the grant funds it got. For that reason, IG recommended that CNCS recover more than $16 million and halt further similar grants.

The IG's St. Hope and CUNY reports made CNCS and these grantees so unhappy that they ran to the Obama White House for help. In July 2009, Norman Eisen, then of the White House Counsel's office, called IG Walpin and gave him an hour to resign or be fired. Eisen totally ignored the statutory prohibition on such instantaneous firing. When Walpin refused to leave his career staff in the lurch, he was fired. Park's termination followed.

The White House rewarded both Eisen, a long-time Obama friend, and Alan Solomont, the CNCS Board President and Obama fundraiser. Solomont was appointed Ambassador to Spain. Eisen was appointed Ambassador to the Czech Republic. Eisen wasn't Senate confirmed, however, until after he acknowledged the falsity of the some "facts" he had told a Senate investigation of the IG firing. For example, Eisen had told the investigators that the White House did a full investigation before firing Walpin and that the CNCS Board unanimously supported Walpin's firing. Neither statement was correct.

We understand that career investigators and auditors who remained at the IG after we were fired have recently uncovered current wrongdoing in certain other pet grantees. The Administration can't fire these career government employees, so it slashed the IG appropriation, knowing that would result in cutting IG staff to the bone, and preventing continuation of IG scrutiny of those grantees. As the three Senators wrote in their letter, this appropriation cut will cause the IG "to discontinue all ongoing investigations of waste, fraud and abuse of taxpayer resources."

The lesson to honest public servants: don't investigate friends or political supporters of this President, or you will be terminated. Hardly a lesson to be applauded.

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About the Author

Gerald Walpin was Inspector General at the Corporation for National and Community Service (CNCS), after nomination by President George W. Bush and Senate confirmation. He served until fired by President Obama.

About the Author
Jack Park is an attorney with the Atlanta law firm Strickland Brockington Lewis LLP.