U.S. Expects to Lose at Least $500 Million on Bankrupt Trucking Company
August 28, 2023
Trucking giant Yellow recently filed for bankruptcy due to rising labor costs and expensive debt. Unfortunately, taxpayers may take a hit after Yellow received a $729.2 million CARES Act loan that it only partially repaid before bankruptcy, according to The Wall Street Journal.
The Journal cited Treasury reports from July 1st that showed Yellow had only repaid $230 million in principle of its $729.2 million loan, along with another $68 million in interest payments. That means the government may lose $500 million from the loan.
To help guarantee the loan, the Treasury also took a 30% equity stake in the company, which it could end up losing pending bankruptcy proceedings.
The funds were disbursed in two tranches, with more than $300 million going toward paying off pre-existing business expenses and more than $400 million to pay for equipment.
The loan was made as part of a CARES Act program to keep critical supply chains running. Since Yellow had done some shipping for the military, it technically qualified for the loan. Now, the loan has come under scrutiny by both Republicans and Democrats, and there have been at least three government investigations into the circumstances surrounding the loan, according to the Journal.
A Congressional investigation found that while rank-and-file Pentagon officials recommended Yellow should not qualify for this loan, then-Treasury Secretary Steve Mnuchin called then-Secretary of Defense Mark Esper, who determined that Yellow would receive the funding.
Unfortunately, it’s unlikely the government will receive its full repayment, as the Treasury is third in line after other creditors to recover their loans in bankruptcy proceedings, and the assets that were bought with the loans have likely lost value.
Yellow should not have qualified for this program, and large spending programs open the doors to interference and malfeasance when they don’t contain detailed guidelines on who qualifies for funding.
$313,000 to Study Why Kids Like Japanese Comic Books
August 29, 2023
The National Foundation on the Arts and the Humanities is spending over $313,000 to study why minority children in the U.S. like manga, a genre of Japanese comic books, according to the Washington Free Beacon.
The funding goes to Queens College Graduate School of Library and Information Studies for a three-year study on why young Black, indigenous, and people of color enjoy reading manga. Additionally, the Free Beacon reported, “The grant is aimed at closing the ‘knowledge gap’ for librarians who are ‘unfamiliar’ with manga and to identify manga titles popular with teenagers.”
The funding is part of the Laura Bush 21st Century Librarian Program, which is meant to, “develop a diverse library and archival workforce” and “reduce equity gaps and address issues of diversity, equity, and inclusion” in libraries, according to the Free Beacon.
Queens College will partner with Manga in Libraries, which has in the past promoted books about transgender characters and bestiality, according to the Free Beacon.
There is no value in studying this. If Manga books are popular among kids, then libraries should carry more of them. Understanding the reason why is immaterial, and spending hundreds of thousands to do it doesn’t solve or ameliorate any racial disparities. In terms of closing the librarians’ knowledge gap, a librarian might be able to ascertain which books kids are enjoying by how often they are checked out.
There are hundreds of ways to promote libraries and reading to children, but spending over $313,000 doesn’t promote reading, make librarians more knowledgeable, or solve any of the litany of problems our country faces.
Oregon Drug Treatment Hotline Cost $7,000 Per Call
August 30, 2023
In 2020, Oregon voted to decriminalize the possession and use of almost all drugs. Now, addicts do hard drugs in the open, and a treatment hotline has so far cost taxpayers $7,000 per call, according to The Economist, putting the spending at $1.4 million.
The Associated Press reported Oregon was “awash in treatment funds after decriminalizing drugs,” adding the state has allocated $265 million to recovery centers. The funding came from taxes levied on the sale of marijuana. Sadly, the rollout of these funds has been slow, with only $184 million distributed as of May 26.
Despite this massive funding, The Economist reported that “…help seems hard to come by.” The overdose death rate in Oregon almost doubled since 2019, twice the national average.
The New York Times has reported on the horrid conditions on the streets of Portland, including needles and humans feces littering the streets, drug addicts using drugs at all times of the day, and violent addicts in tents beating other homeless people with baseball bats.
One program that has been particularly costly and unsuccessful is the treatment hotline. Meant to be a resource for addicts to call for help after receiving a citation for using drugs, The Economist found that in its first two years of existence, fewer than 200 people called the hotline, and fewer than 40 callers were interested in treatment. That put its cost to taxpayers at $7,000 per call.
Throwback Thursday: HUD Spent $2,800,000 Private Road to Entertainment Spa
August 31, 2023
Throwback Thursday!
In 1985, the Department of Housing and Urban Development spent over $1 million – worth $2.8 million in 2023 dollars – on a private road to an entertainment spa in Pittsburg that underdelivered on its spending promises.
Sen. William Proxmire, a Democrat from Wisconsin, awarded HUD his Golden Fleece Award for this disastrous project.
Proxmire found that the entertainment spa was awarded a $530,000 grant, along with $370,000 in loans and $155,000 in other funding as part of an Urban Development Action Grant program, which was meant to help local governments fund economic development initiatives. Funding was supposed to come with the caveat that the businesses receiving it would make a firm financial commitment to invest in their business as well.
The entertainment spa has promised to invest over $3.5 million of its own money on a sightseeing boat, a shuttle, and an entertainment dock as a condition of the funding. Unfortunately, a HUD audit found that these financial commitments weren’t met.
The audit found that the firm didn’t make any of the investments it promised to, though it did manage to spend the $1 million the government provided first.
Proxmire noted that this is often the case with grant programs encouraging economic development. While the goals are often laudable, it’s difficult to ensure money is being put to good use, leading to rampant waste and abuse.
While grants requiring additional funding by private entities are good at ensuring companies have skin in the game, it’s also important to ensure those private funds are used before the government funds are spent.
State to Spend $50,000 to Study Why Colombians Come to America
September 1, 2023
The State Department’s U.S. Mission to Colombia is planning to spend up to $50,000 to survey Colombians on why they want to come to America.
The grant recipient should “study and help us better understand why Colombians are increasingly migrating to the United States irregularly” and find ways to improve U.S. marketing campaigns to dissuade immigrants from coming, according to a recent grant listing.
The notice cites that it wants “clearer data” on why there is irregular migration to the U.S. instead of anecdotal stories. To do this, it requests the grant recipient “interview hundreds of would-be migrants or recently returned migrants to understand who they are and why they’re on the move.”
Some simple research shows why some Colombians may be inclined to leave. According to the World Bank, 39.3% of the population lives in poverty, with extreme income inequality, where 6.6% of the country lives on less than $2.15 per day, while 7.4% doesn’t have access to standard sanitation. This is in tandem with inflation of 27.8% for food, as well as natural disasters that have affected over 750,000 residents.
It’s no mystery why residents in a country ranked 75th in GDP per capita would be interested in emigrating to the country ranked 8th on the same scale. While $50,000 is relatively small compared to other grants the U.S. gives out, it’s still an unnecessary waste of money.
The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com.