February 2025 Archives

The DOGE Charade

Donald Trump and Elon Musk keep claiming that their scorched-earth approach to remaking the federal government is made necessary by the prevalence of fraud and waste. Musk’s DOGE attack-squad tabulates its progress on a Wall of Receipts that currently purports to have saved Uncle Sam $65 billion.

That number appears to have been plucked out of thin air. The savings for the 2,300 individual contracts listed on the site add up to only $9.6 billion, and even that amount is shaky. For example, the single biggest savings, $1.9 billion, is attached to a Treasury Department contract that is reported to have ended during the Biden Administration.

DOGE gives no details of any fraud it may have found in the contracts. That is not surprising, since it is impossible to have done a careful examination of that many contracts in such a short amount of time.

Large numbers of the contracts are linked to agencies the Trump Administration is in the process of dismantling. USAID accounts for 246 contracts with total purported savings of $4.2 billion. The Consumer Financial Protection Bureau has 404 listings with savings of $109 million. The Education Department, reported to be headed for the chopping block, has 119 contracts with supposed savings of $659 million.

It seems clear DOGE targeted those contracts because of the agency involved, not any evidence of misconduct. Among the remaining 769 contracts, there are many that seem to be targeted for ideological reasons. They include numerous awards whose descriptions refer to now-taboo areas such as DEI or environmental justice.

There are more than 100 listings for subscriptions, especially for expensive services such as Politico, Bloomberg Law, and Lexis Nexis. Those may not always be worth the cost, but there is nothing corrupt about the need for an agency to have good access to information.

Then there are listings for contracts that have not gone into effect. The second biggest saving amount, $318 million, is attached to an Office of Personnel Management pre-award. How can there be fraud when there is no contractor yet?

DOGE’s list also contains numerous entries with obvious errors. These include instances in which there are two links pointing to different contract awards, making it unclear which one is meant to be included. For example, there is a $149 million savings connected both to a contractor called Advanced Automation Technologies Inc. (for three assistants) and to Airgas USA for refrigerated liquid gases.

By pointing to DOGE’s sloppy work, I do not mean to deny the existence of contract fraud. The problem is that Musk’s people, whether through ignorance or design, are looking in the wrong places. They seem to be ignoring the types of large contractors that have repeatedly been found to have cheated federal agencies.

The classic examples are the big weapons producers. As of now, DOGE lists only $8 million in savings from Defense Department contracts—and those are mainly from DEI awards and subscriptions. The same is true for the Department of Health and Human Services, even though healthcare is a major source of contractor fraud.

What gets forgotten in the claims about fraud coming from Trump and Musk is that the federal government already had a robust system for fighting contractor misconduct. Audits were done by agency inspectors general—who have now been fired by Trump—and prosecutions were launched by the Justice Department using the False Claims Act. Over the past decade, the DOJ has collected about $30 billion in fines and settlements.

That is serious fraud fighting. What we see in DOGE is instead the illusion of an attack on corruption that serves as a smokescreen for the Trump Administration’s scheme to dismantle large portions of the federal government. It remains to be seen how long they can keep up the charade.

Behind the Chaos

Donald Trump and Elon Musk seem gleeful about the chaos they have unleashed on the federal workforce. Claims that the onslaught is designed to root out fraud and waste while promoting efficiency are spurious. The examples of waste offered by DOGE are usually erroneous or trivial, and there is nothing efficient about the way agencies are being ravaged. Nor does it make sense to fire inspectors general, the professionals most skilled at addressing corruption.

Is there any method to the madness? Behind the noise there seem to be two objectives. The first is a new form of deregulation. In the past, corporate-friendly administrations sought to diminish oversight of business by rescinding rules and changing laws.

Trump and Musk are instead trying to achieve those objectives by crippling regulatory bodies. This is happening in part by asserting full control over independent agencies and installing loyalists to oversee them. Even more aggressive is the effort to prevent the agencies from functioning by decimating their staff. Regulations don’t mean much if no one is available to investigate non-compliance and take enforcement action. The administration also seems to be testing whether it can get away with unilaterally closing entire agencies such as the Consumer Financial Protection Bureau without the consent of Congress. This is brute force deregulation.

The second objective is to create opportunities for government contractors. Despite the attempt to depict many government functions as redundant or unnecessary, many of the activities being targeted for large-scale staff reductions are not really expendable. By drastically reducing head count, Trump and Musk are creating conditions under which agencies will have no choice but to outsource more work to the private sector.

It is telling that amid all its fabricated charges about waste and abuse, DOGE focuses very little on the major source of fraud in the federal government: dishonest contractors. When it is functioning normally, the Justice Department spends a good portion of its time going after these companies. Violation Tracker documents 4,000 cases brought under the False Claims Act resulting in more than $60 billion in penalties. And those are just the cases in which the contractor got caught.

At times, Musk targets contracts, but they are usually small outlays related to now-taboo areas such as DEI and environmental justice. If he were serious about addressing fraud, he would be singling out large corporations such as Booz Allen and Centene that have been involved in major false claims cases. Companies such as these are presumably being shielded because they are the ones to which agencies will turn for help in performing the functions their diminished staffs can no longer handle.

In some cases, the DOGE offensive may be paving the way not just for outsourcing but for complete privatization. Among the functions said to be candidates for private sector takeover are FEMA disaster relief, NOAA’s National Weather Service, and the Education Department’s student loan program.

There is nothing new, of course, about presidential efforts to reduce business oversight and increase outsourcing. What’s different is the lawless way Trump and Musk are pursuing these aims. And then there’s the added scandal in the fact that Musk personally stands to gain so much from weakened enforcement and expanded contracting.

It is not yet clear how the DOGE juggernaut can be stopped, but for now it is helpful to look behind the theatrics and see whose interests are being served.

A Boon for Bribery

The new Trump Administration has eliminated another significant form of corporate oversight through an executive order suspending enforcement of the Foreign Corrupt Practices Act. With a stroke of his Sharpie, Trump has in effect decriminalized bribery by multinational corporations.

A statement accompanying the order claimed the step was needed to “save our country” and that “every policy must be geared toward that which supports the American worker, the American family, and businesses, both large and small, and allows our country to compete with other nations on a very level playing field.”

This is classic MAGA double-speak, trying to make the case that a policy benefiting large dishonest corporations serves the interests of workers, families, and small firms.

That reference to a level playing field is also misleading. Trump tries to give the impression that the U.S. is the only country that prosecutes bribery. In fact, other countries are also active in policing the practice.

In Violation Tracker Global, we document dozens of cases brought by authorities outside the United States. For example, in 2020 Airbus agreed to pay over 2 billion euros to resolve allegations brought by French prosecutors relating to foreign bribery. In 2017 Rolls-Royce paid over 500 million pounds to resolve a bribery case brought by the UK’s Serious Fraud Office. The Brazilian government has collected the equivalent of several billion dollars through an anti-corruption campaign known as Operation Car Wash.

In numerous large FCPA cases, the U.S. Justice Department worked in concert with prosecutors in other countries. That’s true of the Airbus and Rolls-Royce cases mentioned above as well as investigations of other companies such as ABB Ltd, BAE Systems, and Goldman Sachs.

What Trump also seems to be ignoring is that the Justice Department and the SEC have brought many cases against foreign companies. In fact, of the 122 FCPA cases in the U.S. version of Violation Tracker linked to a large parent, more than half involve firms headquartered abroad. Fifteen of the 20 largest penalties were paid by foreign defendants. By suspending FCPA enforcement, Trump is helping foreign corporations much more than domestic ones.

The final fallacy is the idea that the FCPA has been a substantial burden on corporations. Although the DOJ handles foreign bribery cases as criminal matters, it routinely allows companies to sign deferred prosecution and non-prosecution agreements—leniency arrangements under which they pay a penalty but do not have to enter a guilty plea. More than 80 percent of all FCPA cases have included one of these agreements.

The theory is that leniency deals will incentivize companies to clean up their practices to avoid a future conviction, yet in some cases DOJ has allowed repeat offenders a second leniency agreement rather than lowering the boom.

In some cases, the DOJ takes the leniency process a step further and resolves FCPA cases through a process called declination. This typically occurs when prosecutors want to reward a company for cooperating with an investigation. The firm agrees to disgorge the profits it received from the illegal activity, and the DOJ essentially drops the case. The most recent example of this occurred in August, when the Boston Consulting Group agreed to disgorge about $14 million related to profits from contracts received as the result of improper payments to government officials in Angola.

All these forms of leniency have not satisfied large corporations, which have complained about the FCPA ever since it was enacted in the wake of widespread revelations of foreign bribery in the 1970s. Now they have finally gotten their wish from a president who serves the interests of big business while pretending to be an economic populist.

Putting Military Families at Risk

I don’t recall Donald Trump saying during the presidential campaign that he planned to make his supporters helpless against predatory lenders and financial scam artists, but that is apparently what he is about to do at the Consumer Financial Protection Bureau. Trump has ousted CFPB director Rohit Chopra, a zealous champion of consumer protection, and given control of the agency to Scott Bessent, the former hedge fund manager who is already serving as Treasury Secretary.

Bessent’s first act was to order a halt to all activities at the CFPB, including rulemaking and enforcement. He issued a statement saying: “I look forward to working with the CFPB to advance President Trump’s agenda to lower costs for the American people and accelerate economic growth.” Translation: I will slash regulation and perpetuate the myth that reduced oversight works to the benefit of consumers.

The firing of Chopra and freezing of CFPB activities come as welcome news to major financial institutions and fly-by-night operators, both of which have sought to neutralize the agency ever since it began operation in 2011. The agency was also a frequent target of criticism from Congressional Republicans, who hated the fact that the law creating the CFPB provided that the director could only be removed for cause. In 2020 the conservative majority of the Supreme Court threw out that provision, meaning that the director could be removed at will by the President.

As shown in Violation Tracker, the CFPB has over its life collected more than $17 billion in fines and settlements, much of which has gone to affected consumers in the form of restitution. The cases, numbering more than 250, have involved a wide range of financial misconduct, from the Wells Fargo bogus account scandal to the deceptive practices of for-profit colleges.

Let’s focus on one subset of cases in which the CFPB has been especially active: cases brought against lenders that prey on military families. The agency has collected more than $146 million in penalties in a dozen such cases. A big share of that total comes from a $92 million settlement reached in 2014 with Colfax Capital and Culver Capital, also known as Rome Finance. The case, brought in cooperation with 13 state attorneys general, accused Rome Finance of luring servicemembers with the promise of instant financing on expensive electronics but then masked the finance charges with inflated prices in marketing materials and later withheld key information on monthly bills. Richard Cordray, CFPB’s director at the time, stated: “Rome Finance’s business model was built on fleecing servicemembers.”

In 2023 the CFPB found that TMX Finance, known as TitleMax, violated the Military Lending Act by extending prohibited title loans to military families, often charging nearly three times more than the 36% annual interest rate cap. The agency said TitleMax tried to hide its unlawful activities by, among other things, altering the personal information of military borrowers to circumvent their protected status. The CFPB also found that TitleMax increased loan payments for borrowers by charging unlawful fees. The agency ordered the company to pay more than $5 million in consumer relief and a $10 million civil money penalty.

Large financial institutions have also been called out by the CFPB for cheating military families. U.S. Bank and one of its nonbank partner companies, Dealers’ Financial Services, were required to return about $6.5 million to servicemembers for failing to properly disclose all the fees charged to participants in the companies’ Military Installment Loans and Educational Services auto loans program, and for misrepresenting the true cost and coverage of add-on products financed along with the auto loans.

Those who would eliminate or defang the CFPB—especially those who take every opportunity to express their support for the troops–should be made to made to acknowledge that their actions will make military families, as well as millions of others, more vulnerable to financial predators.