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GAO’s Determination that Trump Broke the Law Raises the Stakes of Senate Exoneration

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Since Mick Mulvaney confessed to being in violation of the Impoundment Control Act back on October 17, I’ve been waiting for that fact to take on the constitutional import that it should in the impeachment process. Finally, today, on the day the Senate starts Trump’s trial, it has done so.

That’s because the Government Accountability Office, a nonpartisan body that works for both the Democratic majority House and the Republican majority Senate, has deemed DOD’s withholding of defense support for Ukraine illegal under the Impoundment Control Act.

GAO’s findings are modest. It does not get into whether Trump’s actual purpose for withholding the funds — which evidence suggests involved extorting Ukraine to produce dirt on Joe Biden — is legal or not. It accepts that Trump had a policy purpose for delaying the funds, without getting into what that policy was. But even on those terms — even if it was done for Trump’s cover story purpose of combatting corruption — GAO finds that withholding the funds was illegal.

As it lays out, Trump cannot simply ignore Congress’ appropriations. If he wants to act contrary to appropriations, he either has to ask Congress to cancel the funds — a rescission — or delay it for one of a narrow set of reasons. Both actions require notice to Congress.

Not only did Trump’s Office of Management and Budget not provide full notice to Congress, but since the funds were ultimately spent, the delay could only be considered a deferral, and the purpose OMB stated in the explanation they did offer does not fall under the acceptable purposes of a deferral.

An appropriations act is a law like any other; therefore, unless Congress has enacted a law providing otherwise, the President must take care to ensure that appropriations are prudently obligated during their period of availability.  See B‑329092, Dec. 12, 2017 (the ICA operates on the premise that the President is required to obligate funds appropriated by Congress, unless otherwise authorized to withhold).  In fact, Congress was concerned about the failure to prudently obligate according to its Congressional prerogatives when it enacted and later amended the ICA.  See generally, H.R. Rep. No. 100-313, at 66–67 (1987); see also  S. Rep. No. 93-688, at 75 (1974) (explaining that the objective was to assure that “the practice of reserving funds does not become a vehicle for furthering Administration policies and priorities at the expense of those decided by Congress”).

The Constitution grants the President no unilateral authority to withhold funds from obligation.  See B‑135564, July 26, 1973.  Instead, Congress has vested the President with strictly circumscribed authority to impound, or withhold, budget authority only in limited circumstances as expressly provided in the ICA.  See 2 U.S.C. §§ 681–688.  The ICA separates impoundments into two exclusive categories—deferrals and rescissions. The President may temporarily withhold funds from obligation—but not beyond the end of the fiscal year in which the President transmits the special message—by proposing a “deferral.”[4]  2 U.S.C. § 684.  The President may also seek the permanent cancellation of funds for fiscal policy or other reasons, including the termination of programs for which Congress has provided budget authority, by proposing a “rescission.”[5]  2 U.S.C. § 683.

In either case, the ICA requires that the President transmit a special message to Congress that includes the amount of budget authority proposed for deferral or rescission and the reason for the proposal.  2 U.S.C. §§ 683–684.  These special messages must provide detailed and specific reasoning to justify the withholding, as set out in the ICA.  See 2 U.S.C. §§ 683–684; B‑237297.4, Feb. 20, 1990 (vague or general assertions are insufficient to justify the withholding of budget authority).  The burden to justify a withholding of budget authority rests with the executive branch.

There is no assertion or other indication here that OMB intended to propose a rescission.  Not only did OMB not submit a special message with such a proposal, the footnotes in the apportionment schedules, by their very terms, established dates for the release of amounts withheld.  The only other authority, then, for withholding amounts would have been a deferral.

The ICA authorizes the deferral of budget authority in a limited range of circumstances:  to provide for contingencies; to achieve savings made possible by or through changes in requirements or greater efficiency of operations; or as specifically provided by law.  2 U.S.C. § 684(b).  No officer or employee of the United States may defer budget authority for any other purpose.  Id. 

Here, OMB did not identify—in either the apportionment schedules themselves or in its response to us—any contingencies as recognized by the ICA, savings or efficiencies that would result from a withholding, or any law specifically authorizing the withholding.  Instead, the footnote in the apportionment schedules described the withholding as necessary “to determine the best use of such funds.”  See OMB Response, at 2; Attachment.  In its response to us, OMB described the withholding as necessary to ensure that the funds were not spent “in a manner that could conflict with the President’s foreign policy.”  OMB Response, at 9.

The ICA does not permit deferrals for policy reasons.  See B‑237297.3, Mar. 6, 1990; B-224882, Apr. 1, 1987.  OMB’s justification for the withholding falls squarely within the scope of an impermissible policy deferral.  Thus, the deferral of USAI funds was improper under the ICA.

Moreover, the footnotes that OMB used in lieu of notifying Congress that Trump was blowing off Congress weren’t proper, either, GAO found. That’s because DOD continued to do what it needed to do to appropriate the funds (something that the bureaucrats at DOD did in part to execute the will of the President, but partly to cover their own ass). The only reason the funds were withheld was OMB’s order, which amounts to a reportable impoundment.

OMB asserts that its actions are not subject to the ICA because they constitute a programmatic delay.  OMB Response, at 7, 9.  It argues that a “policy development process is a fundamental part of program implementation,” so its impoundment of funds for the sake of a policy process is programmatic.  Id., at 7.  OMB further argues that because reviews for compliance with statutory conditions and congressional mandates are considered programmatic, so too should be reviews undertaken to ensure compliance with presidential policy prerogatives.  Id., at 9.

OMB’s assertions have no basis in law.  We recognize that, even where the President does not transmit a special message pursuant to the procedures established by the ICA, it is possible that a delay in obligation may not constitute a reportable impoundment.  See B‑329092, Dec. 12, 2017; B‑222215, Mar. 28, 1986. However, programmatic delays occur when an agency is taking necessary steps to implement a program, but because of factors external to the program, funds temporarily go unobligated.  B‑329739, Dec. 19, 2018; B‑291241, Oct. 8, 2002; B‑241514.5, May 7, 1991.  This presumes, of course, that the agency is making reasonable efforts to obligate.  B‑241514.5, May 7, 1991.  Here, there was no external factor causing an unavoidable delay.  Rather, OMB on its own volition explicitly barred DOD from obligating amounts.

GAO notes that the communications it got from DOD and OMB were insufficient. It also notes that State gave it nothing, as it tried to figure out whether that delay, too, broke the law.

As I noted back in October, first Trump refused to tell Congress what was going on with the funds, even though members of both parties, together, and both houses, together, asked. But then Trump exacerbated the crime by refusing to explain all this after the fact. It’s not just that Trump is withholding documentation from the impeachment inquiry. It’s also withholding documentation Congress is entitled to under its appropriation function.

In spite of the fact that a core part of the Republican brand is a claim to care about whether the Executive Branch spends money in the way Congress tells it to, this will likely not make a difference in the Senate impeachment process. Trump has flouted the power of the purse that is normally fiercely guarded by both parties in Congress. But the Republicans will still — even with this nonpartisan proof that Trump has screwed them over — vote not to remove him from office.

Which will mean, in doing so, Republican Senators will sanction even more unconstitutional acts from this President.

GAO Analysis Highlights Lab Samples Excluded in Sloppy FBI Anthrax Investigation

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As the last Friday before Christmas, late yesterday afternoon was the most obvious Friday news dump hour of the year, and the government didn’t disappoint. The Government Accountability Office released the results of a twenty-three month long study of the genetic analysis that was used to tie the material found in the anthrax attacks of 2001 to the laboratory of Bruce Ivins, whom the FBI concluded (pdf) was solely responsible for the attacks. The FBI’s conclusion is highly suspect for many reasons. On the science side, it is very unlikely that Ivins could have produced all of the attack material on his own and the detailed chemistry of the attack spores suggests that highly sophisticated materials and techniques unavailable to Ivins likely were used to prepare the attack material. Regarding that second point, note that even William Broad refers indirectly to the chemistry concerns in his New York Times article on the GAO report:

To the regret of independent scientists, the report made no mention of an issue beyond genetics: whether the spores displayed signs of advanced manufacturing. They have pointed to distinctive chemicals found in the dried anthrax spores that they say contradict F.B.I. claims that the germs were unsophisticated.

Evidence of special coatings, they say, suggests that Dr. Ivins had help in obtaining his germ weapons or was innocent.

The GAO study was undertaken, in part, because of questions raised by the National Academies study released in 2011 and with special prompting by Representative Rush Holt, from whose district the letters likely were mailed. The GAO study focused on obtaining a better understanding of the validity of the genetic analysis that was carried out and the statistics underlying the conclusions reached.

For a refresher, a helpful illustration from the GAO report shows the underlying biology of the genetic analysis that was carried out in the Amerithrax investigation. Here we see photos of a typical colony of the Ames strain of Bacilus anthracis on an agar plate and four variant colony types that occurred at low frequency when the attack material was spread out on agar so that colonies arose from single cells of the overall population of bacteria that were present in the attack material:
morphs

DNA sequence analysis was employed to identify the changes that led to these variant colony shapes. The FBI then commissioned private laboratories to develop DNA-based tests (relying on polymerase chain reaction, or PCR, methodology) that could be used to screen the large bank of isolates of the Ames strain that the FBI had accumulated through a subpoena submitted to all 20 laboratories known to have isolates of the Ames strain. Developing these assays represented a new frontier in forensic genetics and it did not prove possible to develop tests for all of the mutations identified in the original DNA sequencing. In the end, four tests were developed by the four different contractors.

The Amerithrax report stated that of the 947 samples included in the final analysis, only eight showed all four of the DNA changes the tests were designed to detect. Seven of those samples came from the laboratory where Ivins worked (U.S. Army Medical Research Institute of Infectious Diseases, or USAMRIID) and one came from Batelle Memorial Institute in Columbus, Ohio. The FBI noted that there was a record of material being transferred from USAMRIID to Battelle, accounting for the sample found there.

The GAO analysis finds a number of significant issues with the FBI’s work: Read more →

GAO Catches DoD Changing Definitions to Claim Progress Training Afghans, Misses Real Risks

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Patrick Eddington pointed us toward a report (pdf) released yesterday by the GAO. The report is titled “Afghanistan Security: Long-standing Challenges May Affect Progress and Sustainment of Afghan National Security Forces”. GAO describes their reasons for the report (which is also Congressional testimony):

This testimony discusses findings from GAO reports and ongoing work that cover (1) progress reported and tools used to assess ANSF capability, (2) challenges affecting the development of capable ANSF, and (3) use of U.S. Security Force Assistance Advisory Teams to advise and assist ANSF.

The report does a very good job of catching the Defense Department redefining the highest category of ANSF capability in order to claim progress in the percentage of units that have achieved the highest level. However, as Eddington pointed out in his tweet, GAO falls far short of its second goal of enumerating the “challenges affecting the development of capable ANSF”, as the report is entirely silent on the two biggest hurdles faced: defections and green on blue killings.

Here is Reuters’ Missy Ryan describing the use of changed descriptors to claim progress:

The Pentagon’s decision to change the standards used to grade the success of Afghan police and soldiers, who are a centerpiece of U.S. strategy for smoothly exiting the war in Afghanistan, helped it present a positive picture of those forces’ abilities, a U.S. government watchdog reported on Tuesday.

“These changes … were responsible, in part, for its reported increase in April 2012 of the number of ANSF units rated at the highest level,” the Government Accountability Office said in a new report on Afghan national security forces, known as ANSF.

In a twice-annual report to Congress in April 2012, the Defense Department reported that Afghan police and soldiers “continued to make substantial progress,” classifying 15 out of 219 army units as able to operate ‘independently with assistance’ from foreign advisors. Almost 40 out of 435 police units got the same rating.

And what was the redefinition of terms that was used? Merely a slight change that completely negates its meaning:

“Key definitions used in capability assessments … have changed several times,” the GAO said. Its report said the Pentagon’s highest rating for Afghan forces had changed from ‘independent’ in early 2011 to ‘independent with advisors’ later that year.

Gosh, the only way that DoD could show that the ANSF had increased the number of units rated at the highest level of capability was to redefine that highest level of capability. So, instead of “independent”, the most capable units are now “independent with advisors”, which is, you know, NOT independent. Read more →

Did GAO Deem Secret PATRIOT a Waste of Time?

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I noticed the same thing Charlie Savage did in this letter from Senators Wyden and Udall to Eric Holder complaining about the government’s secret interpretation of the PATRIOT Act. The Senators suggest that the secret program is not very useful.

We would also note that in recent months we have grown increasingly skeptical about the actual value of the “intelligence collection operation” discussed in the Justice Department’s recent court filing regarding the pending lawsuit. This has come as a surprise to us, as we were initially inclined to take the executive branch’s assertions about the importance of this “operation” at face value. We will provide more detail about this skepticism in a classified correspondence.

Their new-found skepticism about the program is rather interesting given that GAO recently completed a first-ever assessment of the FBI’s counterterrorism programs.

Thus, the Federal Bureau of Investigation had refused for years to submit to GAO oversight of its counterterrorism programs.  The Bureau contended that GAO had no authority to review the programs because they were funded through the intelligence budget.  Moreover, the FBI told Sen. Charles Grassley that the Office of Legal Counsel had ratified that position and supported its refusal to cooperate with GAO.

But that is now in the past.  The GAO recently completed a classified assessment of FBI counterterrorism programs with full cooperation from the FBI.  A public version of the report is expected to be released sometime in the spring.

I presume any GAO conclusions about the Secret PATRIOT program are just one factor contributing to Wyden and Udall’s skepticism. After all, Holder must know about the results of the GAO report by now, particularly if the document is being declassified (since that would require FBI’s involvement).

Nevertheless, it would be rather interesting if the long fight for real congressional oversight of intelligence programs led to increased skepticism about executive branch claims so quickly.

How the “Most Transparent Administration Ever” Worsens Transparency with Transparency Effort

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The Director of National Intelligence has floated a “shockingly bad” proposal on how much review GAO will be permitted within the intelligence community. According to Steven Aftergood, because the proposal defines the intelligence community broadly, it might result in the loss of GAO review in agencies like DOD and State.

The Director of National Intelligence has prepared a draft intelligence directive on access by the Government Accountability Office (GAO) to intelligence information, but it is “shockingly bad,” a congressional official said.

[snip]

The first draft of the new directive is said to reserve maximum discretion to the DNI, and to offer little practical assurance that GAO will get access to the information it needs.So, for example, the definition of intelligence information that may be withheld from GAO extends broadly to law enforcement, military and intelligence information related to national security.  GAO access is to be denied whenever it concerns information regarding “intelligence budgets or funding, or personnel information that… may reveal intelligence strategy, capabilities, or operations.”

“In other words, GAO cannot look at anything that involves money or people,” the congressional official told Secrecy News.  “Combine that with the sweeping, open-ended definition of intelligence and large chunks of the federal government suddenly vanish from [GAO] oversight– DOD, FBI, DHS, State Department, etc.”

Aftergood points out what I did several weeks ago: the intelligence agencies generally (with the exception of NRO), and NSA in particular, have completely ineffective accounting systems.

But when the Committee looked at NSA’s books in 2009, they were still a complete clusterfuck.

The NSA‘s annual financial report was the exception, in that it showed no apparent improvement. In particular, the Committee was concerned about the failed implementation of NSA‘s new financial system. An NSA Inspector General report found that this system was put into operation before it was adequately tested and that operators were not properly trained to use it. The NSA also made $7 million in duplicative invoice payments, and the agency could not successfully reconcile its financial books at the end of fiscal year 2008. Further, a July 2008 Army Finance Command report, referenced by the NSA IG, found that the NSA‘s accounting system was in violation of public laws, Treasury Department financial manuals, and DoD regulations, and was inconsistent with the Federal Managers Financial Integrity Act.

After SSCI cracked heads, the NSA claimed it had fixed the problems in June 2009. Only they hadn’t.

James Clapper Continues to Express Willingness to Allow GAO to Review Intelligence

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I have been pretty critical of Obama’s appointment of James Clapper to be Director of National Intelligence. And while I still have my concerns about Clapper’s close ties to the Intelligence Industrial Complex, I am heartened by Steven Aftergood’s report that Clapper continues to express a willingness to allow GAO to review intelligence functions.

DNI James R. Clapper expressed a considerably narrower view of what should be off-limits to GAO [than then National Security Advisor James Jones did in a letter sent in May] in public remarks (pdf) earlier this month:  “I am more concerned or sensitive about GAO getting into what I would consider sort of the core essence of intelligence – that is, evaluating sources and methods, critiquing national intelligence estimates, doing this sort of thing, which I think strikes at the very essence of what the intelligence committees were established to do.”Even so, he suggested that individual GAO staff members could also pursue such highly sensitive matters if this was formally done under direction of the intelligence committees:

“Now, [if] they want to have the GAO assist, detail GAO staff to – if they have the subject matter experts – to the committees. I think that’s fine as long as it’s done under the auspices of the committees when you’re getting at the core essence of what intelligence is and does,” Gen. Clapper said.

Well see when DNI submits its guidance on GAO oversight to Congress next May. But I applaud, at least thus far, Clapper’s sustained willingness to allow Congress to rely on GAO’s skills as it tries to conduct oversight of the intelligence community.

Update: Typo in headline fixed.

GAO Audits and Poppy Bush’s Covert World

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Steven Aftergood has an important update on the continuing saga of whether or not GAO can conduct investigations of intelligence activities. He explores the source of current restrictions on GAO review: a 1988 OLC opnion written by Douglas Kmiec.

The current dispute between the Obama Administration and some members of Congress over whether to strengthen oversight of intelligence programs by the Government Accountability Office is rooted in a 1988 opinion from the Justice Department Office of Legal Counsel (OLC), which held that GAO access to intelligence information is actually barred by law.

In 1988, the GAO requested access to intelligence files concerning Panama as part of an investigation of U.S. policy towards Panamanian leader Manuel Noriega.  In response to an inquiry from the National Security Council, the Office of Legal Counsel issued an opinion (pdf) stating that the GAO was not entitled to the requested records on Panama and Noriega.  Not only that, but the opinion (written by Acting OLC head Douglas W. Kmiec) concluded categorically that “GAO is precluded by the Intelligence Oversight Act from access to intelligence information.”

Today, the FBI cites that 1988 opinion to justify its refusal to permit GAO to perform a review of the FBI counterterrorism program and other matters previously studied by GAO.

The 1988 OLC opinion “has had a broad negative impact on our access to information at the FBI and several other agencies that are part of the intelligence community,” wrote Acting Comptroller General Gene L. Dodaro in a recent letter (pdf).

Aftergood goes on to explore the troubling current use of this 1988 opinion protecting raw intelligence to protect more function-oriented reviews of Executive Branch counter-terrorism activities.

But I couldn’t get by the multiple levels of irony of the OLC opinion itself.

The OLC opinion was written in response to a June 23, 1988 letter asking to what extent GAO could investigate whether Executive Branch foreign policy making adequately accounted for the illegal activities of top foreign officials like Manuel Noriega.

This memorandum is in response to your request for the opinion of this Office on whether, or to what extent, the Administration has a legal basis for declining to cooperate with the pending General Accounting Office (“GAO”) investigation concerning U.S. foreign policy decisions with respect to Manuel Noriega. In its June 23, 1988 letter to the National Security Council, GAO described the nature and purpose of the investigation: In order to evaluate whether “information about illegal activities by high level officials of other nations may not be adequately considered in U.S. foreign policy decisions . . ., the General Accounting Office is undertaking an initial [*2] case study of how information about General Noriega was developed by various government agencies, and what role such information played in policy decisions regarding Panama.” As stated in the National Security Council’s response to GAO of July 13, 1988, representatives of GAO have made it clear that GAO’s “three areas of interest [are] intelligence files, law enforcement files, and the deliberative process of the Executive branch, including internal communications and deliberations leading to Executive branch actions taken pursuant to the President’s constitutional authority.”

The GAO investigation, then, would have been a part of Congress’ (and, to a significant extent, John Kerry’s) larger attempt to investigate BCCI and Noriega and CIA involvement in the drug trade. Just as importantly, the request and the August 16, 1988 response would have taken place in the shadow of a Presidential election that would result in Poppy Bush’s election. Read more →

Nancy Pelosi: How Dare the Administration Say they Would Veto Intelligence Reform?

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In a an interview with me on intelligence reform on Saturday, Speaker Pelosi suggested that the White House should either accept real reform of the oversight function–including some version of House amendments on GAO review of intelligence programs and expanded intelligence briefing beyond the Gang of Four–or accept full responsibility if anything goes wrong with its intelligence programs, because the intelligence committee (or at least the House intelligence committee) cannot exercise effective oversight under the current rules.

Recent coverage on the intelligence reform routinely points out that Speaker Pelosi refuses to budge on these two issues. But it rarely explains why Pelosi is so adamant about these reforms. In our interview, Pelosi (and Jan Schakowsky, who was in the room) laid out some of the reasons: Pelosi discussed the times when Gang of Four members were briefed but could not tell others (including an oblique discussion of the games CIA played with their briefings of her on torture). Schakowsky reminded Pelosi that Congress did not know the intelligence “justifying” the Iraq War. The Speaker also described a time when expanding numbers of House staffers were read into a topic only briefed to the Gang of Four, even while the members of the committee were not briefed. Pelosi mentioned the investigation Schakowsky’s subcommittee did, which concluded that CIA had failed to inform the Intelligence Committee of five major incidents. Schakowsky described the resource and expertise limitations on the committee and explained how GAO could alleviate that. Pelosi described an unevenness between the way the White House treats non-compartmented intelligence requests from the Senate and the House–including deciding to prevent specific members from seeing particular intelligence.

And both women described the absurdity by which a quarter-million contractors can get Top Secret clearance but the members of Congress selected to conduct oversight over Executive Branch intelligence activities (including, in an ideal world, over those very same contractors) couldn’t get access to the same information the contractors got.

Pelosi and Schakowsky seemed thoroughly frustrated with the joke that has become of intelligence oversight, particularly since the Bush Administration found a bunch of new ways to game the system and now the Obama Administration has threatened to veto House efforts to eliminate the ways Bush succeeded in gaming the system.

And of course, we discussed all these complaints in the context of last week’s WaPo series and what Pelosi calls the “Leviathan” of the intelligence contracting world, in which, right now, Congress can’t conduct cost analysis of contractors or measure the efficacy of the outsourced programs.

Now, I’m pretty sympathetic with the frustration with the arrogance of Administrations that refuse to share information.

Nancy Pelosi: Now, not having to do with the difference between ranking and regular members, when I became Ranking Member, I was in the room all the time and this and that oh my god and then you can’t and members are taking votes and you’re thinking, ‘You don’t even know what you’re voting on.’

[snip]

So but if you’re a Senator–and this is why the Senate doesn’t mind that much–if you’re a Senator and you want to go and get any information on intelligence–I’m not talking about highly compartmented–

Marcy Wheeler: Wiretapping and interrogation…

Pelosi: Well, it just depends on what they might be at any given time. I’m just talking about intelligence information. Intelligence. You’re a Senator [knocks on table] Here it is. You’re a House member, you have to have a vote of the Committee.

Schakowsky: Yes you do.

Pelosi: … to get it. Which you may or may not get. And which the Administration may or may not approve, depending on who it is and the rest of that. Read more →

Obama’s Intelligence Leaders: For GAO Oversight Before They Were Against It

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Yesterday, we talked about how Rahm Emanuel opposed indefinite detention before he started working for it with Lindsey Graham.

Today, Steven Aftergood shows that Obama’s two intelligence heads, Leon Panetta and Dennis Blair, supported GAO oversight of intelligence activities before–presumably–they supported yesterday’s veto threat of GAO oversight.

As a Congressman in 1987, Leon Panetta actually introduced a measure to give GAO oversight authority over the CIA.

Sen. Daniel Akaka (D-HI), Rep. Anna Eshoo (D-CA) and others have repeatedly argued that the GAO could usefully supplement the intelligence oversight process without detracting anything.  “It is Congress’s responsibility to ensure that the IC carries out its critical functions effectively and consistent with congressional authorization. For too long, GAO’s expertise and ability to engage in constructive oversight of the IC have been underutilized,” Sen. Akaka said last year.

In 2008, Sen. Akaka chaired a Senate Homeland Security and Governmental Affairs subcommittee hearing (at which I testified [pdf]) on the feasibility and utility of GAO intelligence oversight.  “Congress must redouble its efforts–that is what we are trying to do–to ensure that U.S. intelligence activities are conducted efficiently, effectively, and with due respect for the civil rights and civil liberties of Americans, and I will work to see that it does,” Sen. Akaka said then.

Amazingly, an earlier version of the proposal for an expanded GAO role in intelligence oversight was introduced in 1987 by then-Rep. Leon Panetta, who is now the Director of the Central Intelligence Agency.

According to Rep. Panetta’s proposed “CIA Accountability Act of 1987″ (pdf) (H.R. 3603 in the 100th Congress), “Notwithstanding any other provision of law, the Comptroller General [who directs the GAO] shall audit the financial transactions and shall evaluate the programs and activities of the Central Intelligence Agency” either at his own initiative or at the request of the congressional intelligence committees.

And during his confirmation hearings, Blair was open to the possibility of GAO oversight as well.

At the January 22, 2009 confirmation hearing (pdf) of Adm. Dennis C. Blair to be Director of National Intelligence, Adm. Blair also acknowledged a role for GAO in intelligence oversight.

Sen. Ron Wyden asked him: “If the GAO is conducting a study at the direction of one of the intelligence committees using properly cleared staff, will you give them the access they need to do their work?”

Adm. Blair replied: “Senator, I’m aware that the direction of GAO studies and the terms of them are generally subject to talk between the two branches of government for a variety of reasons, and subject to having those discussions, ultimately I believe the GAO has a job to do and I will help them do that job.”

But, along with Obama’s opposition to investigating the Amerithrax investigation, he is now threatening to veto legislation that advocates just this kind of oversight.

GAO: Advanced Hybrids May Not Be Best Way for GM to Rebound

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picture-98.pngThere’s a lot of good information (and bleak news) in this GAO report on GM’s and Chrysler’s efforts to become viable again–including this picture that shows the key relationships in the industry and the credit that underlies each of those relationships.

But I wanted to point to GAO’s explanation of something I’ve often argued–to much skepticism here and elsewhere. Investing heavily in new technologies like hybrids may hurt GM’s efforts (certainly in the short term) to become more viable.

In a section addressing the things that GM and Chrysler aren’t doing to achieve viability, GAO warns that advanced technology vehicles don’t have the return on investment GM needs to become profitable again.

Several panelists noted that not only is developing advanced technology vehicles expensive, but also the return on the investment in those vehicles can be low because the initial demand for new technologies can be slow to develop. For example, the Toyota Prius was on the market for 10 years before reaching 1 million units sold. According to our panel, given the high development costs and low initial demand, especially if gasoline prices remain relatively low, these new vehicles are not likely to generate a profit for several years. Thus, changing the companies’ product mix to include more advanced technology vehicles may not be the best way to improve the financial bottom line in the short term. Furthermore, at least one panelist questioned whether the necessary energy infrastructure, such as electrical outlets to charge batteries, will be available to support these new technologies. Without adequate infrastructure, consumers will be reluctant to purchase these new advanced technology vehicles. GM officials acknowledged these challenges but indicated that the company decided to continue investing in advanced technologies even during the current financial crisis because they need this technology in their fleet to help meet federal fuel economy standards in the future. In addition, GM officials said they are planning for higher oil prices than current futures market expectations, in order to make GM’s plan more robust against oil price volatility. [my emphasis]

Now, frankly GM is right to remain committed to the Volt even given such challenges. The Prius took a long time to become profitable, but the halo effect Prius has had on Toyota’s overall brand is one of the main reasons people believe a company that invested heavily, strategically, in the Tundra is all about gas efficiency.

But I wanted to point out Read more →