The nation-building follies

Mar. 16, 2013 @ 12:51 PM

Wednesday, America will mark the 10th anniversary of the invasion of Iraq. That colossal mistake -- more than 100,000 killed in a war over nonexistent WMDs -- has cost America dearly: nearly 4,500 troop fatalities, and more than three-quarters of a trillion dollars.

Sixty billion of that sum has gone to rebuild Iraq. ("You break it, you own it," as Colin Powell famously said.) According to the final report from Stuart Bowen -- the inspector general overseeing Iraqi reconstruction -- much of that outlay, too, has been a colossal waste.

Hundreds of projects that were started years ago now sit unfinished and abandoned. Others that have been finished hardly seem worth the cost -- e.g., a $108-million waste treatment facility in Fallujah that will serve only 9,000 homes. The voluminous report is filled with details such as those concerning Anham, a defense contractor that billed the federal government $80 for a 4-inch PVC plumbing elbow -- which is "5,574% more than a competitor's offer of $1.41."

Small wonder, then, if audiences applaud at President Obama's frequent assertion that "it is time to focus on nation-building here at home" -- to "take the money we're no longer spending at war" and use it "to rebuild America."

Sounds great in theory. Just one small problem, though: America's record at domestic nation-building isn't much better.

Take disaster relief. Ten months after Katrina devastated New Orleans in 2005, The New York Times reported that reconstruction efforts had led to "one of the most extraordinary displays of scams, schemes, and stupefying bureaucratic bungles in modern history, costing taxpayers up to $2 billion ... in fraud and waste." That sum represented "nearly 11 percent of the $19 billion spent to date." Even worse, the GAO estimated "as much as 21 percent" of direct aid to victims "had been improperly distributed."

"The blatant fraud, the audacity of the schemes, the scale of the waste -- it is just breathtaking," lamented Maine Sen. Susan Collins at the time. There was more to come. By 2009, the FBI reported upwards of 1,300 people had been indicted on Katrina-related offenses -- and more indictments were still rolling in.

But waste, fraud and abuse are not limited to emergencies. Improper payments for Medicare alone total $60 billion a year -- as much as the U.S. has shelled out in Iraqi reconstruction grants over the past decade. Even more remarkable, the $60 billion tab for improper payments is five times what the experts once predicted the entire Medicare program would cost. In 1967, forecasters expected Medicare to cost a mere $12 billion by 1990, according to Veronique de Rugy of George Mason University's Mercatus Center. The real 1990 cost was $98 billion -- and today it is five times that.

Such wild overruns are not at all unusual. Doesn't anything ever come in on time and under budget? Sure. It happens. But De Rugy cites an exhaustive, 20-nation study by Danish researchers that shows nine out of 10 public projects blow past original cost estimates.

And sometimes, all the taxpayers get for the voluminous sums is a giant goose egg. The Obama administration's bad bet on Solyndra will cost taxpayers more than a half-billion dollars, for instance. And that's chump change compared with the Carter administration, which sank $88 billion (almost a quarter- trillion, in today's dollars) into the ill-fated Synthetic Fuels Corporation.

Liberals harp on the military boondoggles, holding them up as proof of the perfidy inherent in the military-industrial complex. Conservatives gloat over social-welfare fraud, treating it as proof that the entire system is a scam to rip off hard-working taxpayers. The larger truth is more sobering: Metastasis in government programs does not obey partisan boundaries.

In trying to explain what happened in Iraq, inspector-general Stuart Bowen last week said the reconstruction effort "grew to a size much larger than was ever anticipated," and "not enough was accomplished for the size of the fund expended." You could say the same about the federal government itself.

Bowen's report contains excerpts from interviews with those who were involved in the reconstruction of Iraq, such as Qubad Talabani, the son of Iraqi president Jalal Talabani: "You think if you throw money at a problem, you can fix it," Talabani says. It also quotes Deputy Secretary of State Thomas Nides: "Those in Iraq who developed and implemented the rebuilding program intended well, but good intentions don't always produce good results."

Maybe he should put that in a memo to the president. Because the lessons learned in Iraq should lead to a greater degree of humility when Washington contemplates its next big nation-building project -- whether overseas, or right here at home.

MCT Information Services