HOPKINS: Washington Had A Financial Waste Problem Long Before Democrats’ Inflation Reduction Act. Here’s One Example
Coleman Hopkins on August 19, 2022
When the government in Washington spends hundreds of billions of dollars in one massive bill — as it just has in the misnamed “Inflation Reduction Act” — the financial waste, due to the enormity of the numbers involved, seems impossible to comprehend.
Yet sometimes looking at how bad one little program is can help to contextualize the extent of the broader fraud and waste within the whole grant. In this case, it is instructive to look at a portion of the money sent to the Department of Housing and Urban Development (HUD).
The aforementioned bill gives HUD nearly $1 billion to “improv[e] energy efficiency or water efficiency or climate resilience [in] affordable housing.” The funding itself will be allocated through the department’s Community Development Block Grant (CDBG) program, which is notorious for its inability to put substantive requirements on the use of the funds it allocates.
At the same time, in trying to claim that there is a resource in money, the bill also includes a major section for crony leases to Wind Farms off the coast of territories such as Guam, the US Virgin Islands and the North Mariana Islands — areas where some of the most egregious boondoggles in recent years have taken place.
To illustrate this point, consider the case of the U.S. Virgin Islands power authority, the Water and Power Authority (WAPA): it takes wind leases and the millions in federal tax dollars attached to them, while at the same time it cannot pay its debts, e.g., it still owes money to its creditor, Vitol. (Interestingly, despite the glut of cash available, the latest budget does not even begin to allocate money to repay the creditor.)
And that is to say nothing of the fact that WAPA received at least $75 million in HUD grants for generators which, more than two years on, have not been used because they have not even been connected to the power grid. This is because the USVI power authority procured the generators without first ensuring that they would be compatible with WAPA’s current power system. This is galling incompetence, and it is wasting money and inconveniencing real people.
All the while, as these costly generators sit idle, blackouts continue, the utility misuses employee pension contributions and frustrations as well as questions mount — though the WAPA CEO Andy Smith has refused to explain the delays and the general lack of transparency.
Any one of these problems individually — waste, fraud, lack of accountability, incompetence — would be an embarrassment; collectively, they are an outrage. But despite that, there is no urgency on the part of WAPA to address these issues. In fact, what is worse is that it is arrogantly demanding Washington fund its pricey transition to 100% solar energy.
The latest tranche of funding to HUD, which will go through its impotent CDBG program, should raise alarms for taxpayers that even more of their money will be mismanaged.
While these are problems with WAPA, one must not forget that all of this money was handed out by HUD in the first place, which has no capacity to oversee its use or to police its abuse. The bottom line is this: these HUD grants are inherently risky in large part because the agency itself has no power over them.
In my time at HUD, I quickly understood a well-known fact, namely that the agency was useless in these situations. The upshot is that bad government policy necessarily creates serious and asymmetric risks that are ultimately borne by taxpayers and creditors alike. In light of HUD’s ineptitude, it is necessary for other organizations to act as watchdogs that can in turn direct congressional pressure and inquiries towards the matter.
The Biden administration has made clear through its reckless spending that it does not care about the waste and fraud; it is equally obvious that the president does not believe that the performance WAPA on its existing projects should inform future grants, let alone put limits on its access to new, ever larger funds. This bad behavior is wholly unacceptable and eminently unprofessional.
Rather than give out massive, unqualified grants to monopiles which cannot pay their debts like WAPA which, Washington should follow the advice set out in a 2022 letter to Congress by the Taxpayers Protection Alliance and demand WAPA meet its existing financial obligations — which total nearly $400 million — and overhaul its approach to managing and executing its projects to avoid the all-too-common recurrence of similar issues in the future.
This is one of those rare instances in which being an ignorant and reflexive niggard pays off.
Anything short of the implementation of these reforms should be understood as proof that the grant is more waste than a resource, and that the larger bill is itself rotten.
Coleman Hopkins is a former adviser at the Department of Housing and Urban Development and currently works as a freelance communications consultant in Washington, D.C.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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