Consequences of "Perfect Payments"

I posted earlier on making a perfect payment system. Forgot to add--one consequence of the system is that it reduces the number of bureaucrats needed. Is that bad? Not if you're a taxpayer. But if you're in a county seat in a rural county that's been losing population for decades and fighting for every person, it's not good.

Shock, Shock--Democrats Renege on Promise

The worldly-wise Washington cynic is not surprised by this article in the Post .
The most important recommendation of the 9/11 commission was for Congress to redo its oversight structure. Currently there are the House and Senate Intelligence committees to provide oversight, but there are also subcommittees of Ways and Means and Senate Appropriations who provide the money. So Negroponte, Hayden, et.al. have 4 different bodies to deal with. The commission recommended a consolidation, the Democrats during the campaign promised to implement all the recommendations (which the Republicans had failed to do), but now they're backing off. Why--because someone would lose power.

Getting Congress to reorganize itself is almost hopeless. The structure of committees overseeing USDA still reflect struggles back in Theodore Roosevelt's day. Maybe someday people will realize how little effective oversight Congress provides. And maybe someday people will live to 110. Bet on the latter before the former.

Is Iraq in a Civil War?

This post was started several days ago. Meanwhile the discussion of whether Iraq is in a civil war has only accelerated. Lehrer News Hour had a discussion last night. Both the Times and Post have pieces today on the issue. The Post in particular has some good points on the relation between language and reality: If you call it a "civil war", that might tell potential participants it's time to pick up weapons and fight. On the other hand, if you don't call it "civil war" you run the risk of losing credibility. (On that point, I'm reminded of Vietnam in February 68. The administration had been optimistic for years. When Tet came, they lost most of their credibility among the center. This was true even though the military would say that Tet was a defeat for the Viet Cong/North Vietnam. Lesson: Words matter, just as reality does.)

John Hinderaker at Powerline posts on Iraq statistics, arguing the situation is not as bad as the media says and does not constitute a civil war. (See also here.) His arguments have included the idea that the casualty rate is less than in the U.S. Civil War, that most of the country is peaceful except for Baghdad, and that the violent death rate in Bagdad is close to or only a small multiple of the murder rate in American cities at some times.

I'd make some counter arguments:
1 The Iraq population today is about 26.7 million; the US population in 1860 was 34.3 million. Over the course of the Civil War, the killed in action averaged 3,846 a month, the October Iraq figure was 3706. See this LSU site on the Civil War.
2 Lincoln in the Gettysburg Address famously said: "We draw deep comfort from the fact that in July of this year, the country was peaceful except for small areas around Vicksburg, Mississippi and Gettysburg, Pennsylvania."
3 Lawyer Hinderaker should realize violent deaths within a legal system, however much the criminal justice system was challenged in DC in the past, damage the social fabric much less vigilante justice than the sort of militia violence we see in Iraq.

An additional note: I bolded "killed" because it helps my argument. Most of the deaths in the Civil War were from disease, not bullets. Whether the appropriate comparison for Iraq is KIA or military deaths is debatable, but I'd lean to KIA.

Attempting the Perfect Payment System

How do you make payments perfectly? My metaphor is you work upstream--to have perfect water at the mouth of the river you need to work your way up the river cleaning as you go, then work on major tributaries and then the minor ones. For example, how do I make perfect payments to my power company?

I started out long ago by reading the bill, getting my checkbook, writing the amount into a check and signing it. There were multiple sources of error: I could forget to pay the bill; I could fail to complete the check; I could misread the amount; I could lose the envelope on the way to the mailbox, my writing could be illegible so the check wouldn't be accepted.

A big step in improvement came as I bought a PC and Quicken software (and as Quicken made their yearly improvements in software). The software reminded me that the payment was due and ensured that I completed all the entries.

The next step was electronic payments--I could cut out the mail and send the payment electronically, thus cutting out the dedicated public servants of the USPS.

Then electronic billing--I can receive the bill electronically. And the final step is automatic payment by authorizing the power company's computer to deduct the amount from my checking account. (I've not taken the last two steps yet, but I expect to.)

FSA/USDA has followed a similar route from its beginning in the New Deal. The sequence was roughly: typing checks based on manually prepared payment documents with humans calculating the amounts; typing them in OCR font so the carbons could be sent to Kansas City for scanning and validity checking; having a computer print them; going upstream by getting the farm, crop, and producer share data into the computer to compute the amounts and print the checks; the next tributaries were getting data like payment limitation allocations and sod/swamp and "person" determination data into the computer after the forms were signed and determinations made so the computer could validate eligibility and handle special cases (claims and assignments). That's about where we were when I retired.

The problem with the 10 percent of "improper" (or as I prefer "defective" payments) is that the manually prepared supporting documentation, the forms the farmer signs to affirm his or her compliance with certain provisions or the accuracy of information, were found to be incomplete or inaccurate (at least, that's my understanding). So how does the agency go upstream from here?

[The following may well be erroneous, given the time I've been away.) The key is FSA's move to Internet (technically intranet) based software to update farmer data. Instead of an FSA employee showing the farmer how to complete a form, then updating the computer to reflect the completion (the current process), now the farmer could complete the form on line so software can ensure that she makes all entries and the data can be captured without human action. Theoretically FSA could have had their employees completing the forms on the county computer, which would at least ensure that they were completely and consistently filled out. But that's not much bang for the buck unless you can flow the completion of the form into the payment process.

Note however there's still the problem of matching "reality" with what's in the computer which is designed based on pictures in our head. Just because we have a consistent set of data in the computer that passes all validity checks and seems to match what Congress wrote into the legislation does not ensure a match with what's happening on the farm and nor that the program helps the farmer and his community.

Words & Reality, Civil War and Improper Payments

Got an email from a friend who still works at FSA asking why I hadn't commented on the improper payments at USDA. I was tempted to give a flip but true answer--that I was struggling with a post on whether Iraq was now in a "civil war" (do a Google on "Iraq civil war") and couldn't spend time on a mere $2.8 billion in "improper payments".

But the common theme here is the imperfect relation between the physical reality and the pictures in our head as evoked by the words we use. (See Walter Lippmann's "Public Opinion".) When Libby Quaid of AP writes the government "acknowledged improper payments", the headline writer who wants the hottest and sexiest title he can justify uses the stronger "admits", and some people discussing the piece on Yahoo jumped to waste, corruption, etc. etc. because they know the government and/or Bush is wasteful, corrupt, inefficient. Similarly, with Iraq each group has its own take on what constitutes a "civil war" and how closely or remotely the situation in Iraq matches that picture.

From what I've seen, "defective payments" would have been a better term, but "erroneous" is in the law and "improper" is being used as a synonym by the enforcing agencies.

Now, what's the relation to reality? That's a long story, because the legislators who wrote the laws authorizing the payments had pictures in their heads of farmers and how the programs should operate. (I hope they had more accurate pictures than I did when I wrote rules for them: I used to always use a farm with 100 acres of corn and a 100-bushel yield, just because it was easy to understand.) The short answer is that some of the payments that are not identified as "improper" are really fraudulent, while most of the "improper" but "defective" payments are not fraudulent.

[More to follow]

Google Docs & Spreadsheets--Free Ad

Just got into the Google beta Docs & Spreadsheets software. Seems good--my wife may possibly use the spreadsheet because she's treasurer of her knit group. I may use it to organize some of my genealogical research. I forget how I created a Google account, but it's worthwhile to do it.

Truthiest Thing in Today's Post re Holidays

"social anxiety decreases IQ" from a piece in the magazine on christmas parties. My drop must have been 50 points.

Happy Thanksgiving (and check Washington Monthly for cat blogging)
and Buddy's bemusings for a livelier take (except for Bailey).

My First Use of YouTube (Go--Big Red)

I've been slow to get to YouTube, but this was irresistible. (The "fifth-down game with Dartmoutn in 1940.)

GOPR, Kinsley, and the Capitalist Hidden Toy Game

I invented GOPR (good old populist rage) yesterday, and revisit it today, inspired by Michael Kinsley's tirade today in the Post against capitalism. Kinsley takes off from the recent craze for leveraged buyouts to argue the capital markets don't work--witness the fact that companies have 3 different prices/values--one today's value as expressed in stock price; one the (slightly higher) price that people are willing to pay to take the company private through a buyout; and the final the much higher price asked when the company returns to public markets. It's good, Kinsley is always good, and seems convincing.

But I'm not convinced.

What Kinsley misses is the capitalist hidden toy game. For example, back in time (maybe late 60's) the craze was for conglomerates--assembling companies under one roof added value. That lasted for a while, then the conventional wisdom decided that more conglomerates were failures and they needed to be split up. That's just an example of the constant churn of capitalist deals. Remember GM used to own EDS? Sears owned a stock brokerage? GE owned many things, until Jack Welch decided he only wanted to be 1 or 2 in a field? Even today, Altria (i.e. Phillip Morris) is preparing to spin off Kraft Foods. But that's just one side. On the other you have the whole merger and acquisitions area of finance; so popular that it's known as M&A and doesn't have to be defined in stories.

It's the old story of boys and their toys. You hide a boy's toy for a while, then bring it back out and it seems new and different and worth more. There's nothing more attractive than a "deal", whether it's taking a company private, doing an IPO, doing a merger, or doing a spin off. Each is a "deal", a deal to publicized, exploited, envied, finagled, conned. It's all a part of "finance", which good old populists love to rage against.

The "Goldilocks" Options in Iraq

I've been reading "Dereliction of Duty, Johnson, McNamara, the Joint Chiefs of Staff, and the Lies that Led to Vietnam". (It's good, but I've not completed it yet.).

The author says after the Nov. 1964 election the administration set up a committee to develop options. It came up with three. From page 182:

Momentum formed behind Option C. George Ball observed that the committee had developed options on the 'Goldilocks principle'. Option A was 'too soft,' Option B was 'too hard,' and Option C was 'just right'.

Monday's Post has a lead article by Thomas Ricks beginning:

"The Pentagon's closely guarded review of how to improve the situation in Iraq has outlined three basic options: Send in more troops, shrink the force but stay longer, or pull out, according to senior defense officials.

Insiders have dubbed the options "Go Big," "Go Long" and "Go Home." The group conducting the review is likely to recommend a combination of a small, short-term increase in U.S. troops and a long-term commitment to stepped-up training and advising of Iraqi forces, the officials said."

One of the three authors of the review Ricks discusses: Col. H. R. McMasters, the author of "Dereliction of Duty". (As a captain, McMasters led an armored cavalry troop in a significant early battle of the Gulf war. He then went off to study and teach history at West Point, writing his book as a major. In the current war, he commanded armored cavalry at Tall Afar, and briefed in January on the results of his operation (Secretary Rice was promoting this as a model operation.)

Of course, the Goldilocks principle is well accepted in bureaucracy. When developing an options paper, you always include options more extreme than the one you favor. Option C in the Vietnam War was not a wise course; hopefully "Go Long" will be a better choice.