What do scientific experiments involving babies and robots have to do with excessively costly elementary schools and low-priced grocery stores for the elderly?

The answer is, these endeavors are all financed by the Department of Defense’s $629 billion annual budget, in what one Senator depicts as a spending free-for-all that adds to the federal deficit while diverting resources from genuine military needs.

The examples are cited in a 73-page report issued last week by Sen. Tom Coburn, R-Okla., that describes how cash-rich the Pentagon is and how distorted some of its spending priorities have become. “We highlight, as in every other agency, a lot of the stupid things that are happening,” said Coburn, a blunt-spoken family physician, at a press conference last week.

Coburn’s suggests that the massive infusion of public cash into the military budget over the past decade — it grew by two-thirds from 2000 to 2009 — has prompted some scientific researchers to treat the Defense Department’s budget like a piggybank to pursue questionable projects.

He mentions the Office of Naval Research’s recent effort to track how babies interact with robots, which concluded after much observation that “if you want to build a companion robot, it is not sufficient to make it look human … the robot must be able to interact socially.” The Pentagon defended the study, funded under a $450,000 grant, as necessary to “enhance and improve warfighter ability” to work with robots. But Coburn’s report called it a useless confirmation of “common sense,” with no connection to national security.

Coburn also noted that disease victims and medical specialists have pressured the Pentagon into spending more than a billion dollars annually for research that is often not related to injuries experienced on the battlefield, such as breast and prostate cancer. The Government Accountability Office concluded in a report last February that these programs are often poorly coordinated with civilian health agencies, and their administration by the Pentagon eats up around $45 million in overhead and management.

Overall, Pentagon spending for research and development now totals $73 billion, Coburn’s report states, an amount that exceeds the total spent for that purpose by all other federal agencies and includes much research that does not “enhance the technological superiority of our soldiers or improve the defense of our nation.”

His report also highlighted the fact that military ranks are now top-heavy with generals and admirals, pushing up defense costs by hundreds of thousands of dollars because each has a large retinue of aides. The current proportion is seven general officers for every 10,000 troops, two more than during the Cold War. “We almost now have an admiral for every ship in the Navy,” Coburn said.

Coburn also said the military is needlessly operating 64 schools on 16 military installations around the country, at a cost averaging $50,000 per student. The national average for other schools is $11,000 per student. According to the report, the Pentagon picks up the tab mostly out of inertia, continuing a practice begun when public schools were not as integrated as military families were. “People don’t join the Army because there’s a school on base,” Coburn noted.

Similarly, he urged the department to stop running a chain of 254 cut-rate grocery stores, known as commissaries, that mostly benefit military retirees and are often only a few blocks away from Safeway, Costco, or other stores. He said the Pentagon can save $9.1 billion over ten years by shutting them down.

The Pentagon should also keep its nose out of product development efforts being pursued by private industry or by other federal departments, Coburn’s report said, citing $1.5 million the military is spending to create more palatable beef jerky – on top of more than $600,000 being spent by others in the government.

Asked for comment, Lt. Col. Elizabeth Robbins, a Pentagon press officer, said “the DoD budget is aligned to strategic priorities we have identified to keep America safe and maintain the strongest military in the world.  Over the past several years we have redoubled our efforts to make better use of the taxpayer's defense dollar and meet our fiscal responsibilities.”

Coburn was frank in stating that his advocacy for spending military funds only on military functions may put him out of synch with his own party. “There is,” he said at a press conference, “a little problem in terms of the Republican Conference … having a blind eye on spending: ‘It’s OK to cut spending anywhere except the Defense Department.’”

Apparently referring to claims by House Republicans and Mitt Romney this year that the defense budget had been grievously cut by the Obama administration, Coburn said it is time to “undermine a little bit of the BS. There has been no real cuts yet to the Pentagon. There just hasn’t been the hoped-for, desired increases in spending, so therefore if we didn’t get the increase in spending, we call that a cut in Washington.”

Coburn, interestingly, does not sit on the Senate Armed Services committee, whose members generally depend on defense contractors to finance their political campaigns — a circumstance that may actually have given him clearer insights. But his report was mostly based on a dive into the defense budget by a legislative assistant named Jeremy Hayes, a former Army captain who colleagues say deeply understands the Pentagon’s proclivity for strange spending.

Waste and inefficiency in Pentagon spending was also targeted last week by a panel of four retired generals, a retired admiral, and ten other former officials and experts organized by the Stimson Center, a nonprofit research group in Washington. It concluded that the Pentagon could readily absorb as much as $550 billion in spending cuts over the next 10 years — the amount that would be required under a so-called “sequestration” law — “with acceptable levels of risk.”

Those cuts would include trims in the size of the Army, fewer air squadrons, and a smaller missile defense effort. But most of the reductions advocated by the panel could come from more efficient uses of manpower — including cutting the number of military officers doing civilian work, implementing new pay practices, and improving weapons contracting.

We can’t close without saying that our hands-down favorite, so to speak, among the Pentagon-funded work targeted by Coburn for downright foolishness was a UCLA anthropologist’s examination of whether men holding pistols are considered taller, stronger, and more masculine than those holding a range of other objects, such as caulking guns, drills, saws and paintbrushes. He found they were.

The study was financed by the Air Force’s Office of Scientific Research under a $681,387 grant, according to Coburn’s report. It’s hard to figure out the relevance to flying, unless someone in the service’s acquisition office is now planning to order images of pistol-packing men spray-painted onto the noses of fighter jets, perhaps on the theory that dogfight opponents might be scared off and costly air-to-air missiles conserved.

Protests can be expected soon from the home improvement industry’s Washington trade association, speaking up for caulk-wielding contractors.

Florida’s Senate approved a new set of ethics rules today that will strengthen the body’s conflict of interest guidelines. The vote marked the first action to emerge from a vocal push for ethics reform by the state’s incoming legislative leaders.

Senate President Don Gaetz, who took control during today’s organizational meeting, proposed the rules Monday after committing to reforms during the election season.

"I hope that's the first step in many steps we are able to take in the Senate and House when it comes to ethics," Gaetz told the Miami Herald, adding that he’d also like to strengthen the enforcement powers of the Florida Commission on Ethics, which oversees ethics rules. Gaetz joined the Senate in 2006 after a long career as a health care executive.

The rules require senators to take an ethics course every other year and bars them from voting on issues in which they have a conflict of interest — though it will be up to them to decide. Previously, senators were allowed to vote whether or not they judged themselves to have a conflict, and were not required to disclose the conflict until after voting. The new rules also specify that the measure extends to potential financial gain by family members and business associates.

“These reforms put more emphasis on public service rather than past rules that allowed private gain to go unchecked,” said Dan Krassner, executive director of the open-government group Integrity Florida, in a statement released Monday. In July, the group issued a report calling for stricter financial disclosure rules, citing previous reports from the Center for Public Integrity. The state received an overall grade of C- from the Center's State Integrity Investigation for corruption risk.

Rep. Will Weatherford, Florida’s new House Speaker, has also called for reforms. Earlier this month he revived a House subcommittee devoted to ethics and elections that had not met for six years.

If you want to compare the new with the old, the Tallahassee Democrat posted the relevant section of the rules.

“What can you do with a general, when he stops being a general?” crooned Bing Crosby in the 1954 movie “White Christmas.” “Who’s got a job for a general when he stops being a general?”

Alas, the answer, 58 years later, is now clear. Retired generals don’t open ski resorts in Vermont.  Instead, they hunker down in Washington as the paid employees of corporations that draw most of their income from the service branch in which the generals worked. Once there, they work to maintain a stream of funding from the public treasury.

The revolving door between government service and private companies for those with beribboned chests is now an entrenched feature of life in Washington, according to a new report from Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit government watchdog group.

Updating a 2010 Boston Globe report that documented the practice, CREW found that over the last three years, 70 percent of the 108 three-and-four star generals and admirals who retired “took jobs with defense contractors or consultants.”

What’s more, CREW found, some of these same retirees were then appointed to Pentagon advisory boards, such as the Defense Policy Board. The study did not cite examples of improper decision-making, but said the retired generals’ advice to the Pentagon may not be “unbiased,” due to their new financial interests.

The Pentagon’s rules only require a one-year wait before retired generals can contact former colleagues still at the Pentagon on behalf of their new employer. But even before that brief period ends, they can provide useful advice to new bosses about how to tap into fresh revenue streams and tip them on  upcoming contract opportunities.

As Sen. Claire McCaskill, D-Mo., put it during a 2009 hearing on Obama’s nomination of former Raytheon executive William Lynn to become the deputy secretary of defense, “it's an incestuous business, what's going on in terms of the defense contractors and the Pentagon and the highest levels of our military.”

The financial impact of these cozy relationships was studied this year by two political economists at the Swiss Economic Institute, who concluded after a rigorous examination of the Pentagon’s revolving door across six administrations that investors widely expected that hiring senior defense officials would produce higher profits.

They found that American defense companies merely had to announce they had hired a top former Pentagon official to see their stock prices jump, a circumstance they observed in dozens of instances.  It was particularly evident in cases where the officials joined corporate boards or became top company executives during Democratic administrations, when strong government-corporate ties are generally scarce.

“It is hard to think of other reasons for higher expected returns than conflicts of interest,” said  the scholars, Simon Luechinger and Christoph Moser.

After the London Sunday Times published an article last month revealing that retired British general officers were helping defense firms obtain contracts and boost revenues, British defense minister Philip Hammond told reporters that he was contemplating banning the retirees from the ministry building and rewriting any contracts found to have been tainted by such connections.

No similar outrage has erupted on this side of the Atlantic.

Shoppers heading to Wal-Mart on Black Friday in search of deals will likely be met by protesting workers. The protestors, who are organized by the union-supported group OUR Walmart, are asking the nation’s largest private-sector employer for dependable schedules and full-time jobs for those who want them.

The existence of a global network of sham company directors, most of them British, can be revealed today.

The UK government claims such abuses were stamped out long ago, but a worldwide joint investigation by the International Consortium of Investigative Journalists, the Guardian, and BBC's Panorama, has uncovered a booming offshore industry that leaves the way open both for tax avoidance and the concealment of assets.

This is the first installment of ICIJ's worldwide research effort which will identify, country-by-country, thousands of the true owners of offshore companies.

One part of our research identified more than 19,000 companies who use a group of some 20 so-called nominee directors. The nominees play a key role in keeping hundreds of thousands of commercial transactions secret. They do so by selling their names for use on official company documents, whilst giving addresses in obscure locations all over the world.

Hiding behind nominee fronts are the real owners. They are of widely varying types, ranging from Russian oligarchs to perfectly legal but discreet speculators in the British property market. Their only common factor: the wish for secrecy.

Click through to ICIJ.org to continue reading.

Although it’s a few days past Thanksgiving, I’m still feeling grateful, even to much maligned federal employees. Last week bureaucrats at the Department of Health and Human Services did us a big favor by resisting pressure from insurance company executives. Those executives wanted to keep charging some of us more than others and to keep selling policies that offer far less coverage than we need.

HHS Secretary Kathleen Sebelius reaffirmed last week that starting in 2014, insurance firms will not be able to discriminate against us nearly as much as they can now because of our age, gender and health status. And they won’t be able to sell policies with deductibles that are unreasonably high and benefits that are dangerously skimpy.

Among the long-awaited Obamacare regulations from HHS were those that further define the “essential health benefits” that health plans must offer in the future and that limit the amount of money we will have to pay out of pocket if we get sick or injured.

Even though HHS did give the insurance industry some wiggle room on the essential benefits and the upper limits of deductibles they will be able to charge, the integrity of the reform law was protected.

This is important for everyone but especially for those of us who have been around a bit longer. Many of us are now uninsured. That’s because we can’t get coverage at any price due to preexisting conditions or can’t afford what’s available to us because of our age. HHS reassured us that not only will we be able to join the ranks of the insured, we’ll be able get policies that are actually worth buying.

Shortly after the HHS announcement, I checked to see what I would have to pay today for policies offered on the individual market where I live now (Pennsylvania) or lived previously (Tennessee). In Philadelphia, a UnitedHealth care policy with a $1,000 deductible and an annual cap of $3,000 on out of pocket expenses would cost me $769.66 a month, more than five times more than if I were still 21 ($150.64 a month). There are many folks my age who cannot afford to pay that much every month and still put food on the table.  

Philadelphia is a far more expensive place to live than Kingsport, Tennessee, where I grew up. So I expected the same level of coverage would cost me far less if I moved back to the Volunteer State. I was shocked to find that I would have to pay even more, regardless of my age. The policy would cost me $798.66 a month in Kingsport. It would cost a 21-year-old me $156.32 a month. It’s little wonder that the uninsured portion of the population in Tennessee (15.5 percent) is much higher than in Pennsylvania (10.9 percent).

But here’s the good news, locked in by these new regulations. The health reform law won’t let insurers charge me more than three times as much as 21-year-olds beginning in 2014 whether I live in Philadelphia, Kingsport or, for that matter, Kalamazoo.

Still, let’s not get too comfortable. The health insurance industry is not waving the white flag by any means. Karen Ignagni, president of America’s Health Insurers, said last summer that insurers would be spending the months before 2014 trying to “fix” the Affordable Care Act to make coverage more, well, affordable. The problem is that the insurers’ fixes would mean that coverage would continue to be out of reach for many of us.

After Sebelius announced the proposed new regulations, Ignagni said in a statement that “we remain concerned that many families and small businesses will be required to purchase coverage that is more costly than they have today.” 

Ignagni and I agree that some people will be required to enroll in plans that cost more. That’s because the junk policies insurers have been able to sell to unsuspecting Americans for years — policies with very limited benefits or outrageously high deductibles — will soon be outlawed. Policies that offer real protection understandably have higher premiums.

What Ignagni didn’t acknowledge in her statement is that millions of us will be eligible for subsidies to help us pay for coverage that has real value. That will help both the young and the not so young afford policies that are worth paying money for. Having worked in the insurance industry for many years, I have much more confidence in the bureaucrats at the Department of Health and Human Services than I do in the bureaucrats that work for the insurance industry.

Marijuana — it’s one of the primary reasons why California experienced a stunning 20 percent drop in juvenile arrests in just one year, between 2010 and 2011, according to provocative new research.

The San Francisco-based Center on Juvenile & Criminal Justice (CJCJ) recently released a policy briefing with an analysis of arrest data collected by the California Department of Justice’s Criminal Justice Statistics Center. The briefing, “California Youth Crime Plunges to All-Time Low,” identifies a new state marijuana decriminalization law that applies to juveniles, not just adults, as the driving force behind the  plummeting arrest totals.

After the new pot law went into effect in January 2011, simple marijuana possession arrests of California juveniles fell from 14,991 in 2010 to 5,831 in 2011, a 61 percent difference, the report by CJCJ senior research fellow Mike Males found.  

“Arrests for youths for the largest single drug category, marijuana, fell by 9,000 to a level not seen since before the 1980s implementation of the ‘war on drugs,’ ” Males wrote in the report, released in October.  

In November, as Males blogged recently, voters in Washington state and Colorado voted to legalize but regulate marijuana use, like alcohol, for people over 21. California’s 2010 law did not legalize marijuana, but it officially knocked down “simple” possession of less than one ounce to an infraction from a misdemeanor — and it applies to minors, not just people over 21. Police don’t arrest people for infractions; usually, they ticket them. And infractions are punishable not by jail time, but by fines — a $100 fine in California in the case of less than one ounce of pot.

“I think it was pretty courageous not to put an age limit on it,” said Males, a longtime researcher on juvenile justice and a former sociology professor at the University of California at Santa Cruz.

Arresting and putting low-level juvenile offenders into the criminal-justice system pulls many kids deeper into trouble rather than turning them around, Males said, a conclusion many law-enforcement experts share.

California’s 2010 law still makes it a misdemeanor for anyone over 18 to possess less than an ounce of pot on school grounds, Males noted. For an adult, that’s an offense punishable by a $500 fine, ten days in a county jail or both. A minor caught on school grounds with less than an ounce of marijuana is also guilty of a misdemeanor and faces a $150 fine for the first offense, a $500 fine for a second offense and commitment to youth detention for not more than 10 days.

Before the passage of the 2010 law, Californians caught with less than an ounce of pot were arrested by the thousands every year, ultimately facing a fine of $100 fine and, under certain conditions, referral to drug treatment or education. Many of those arrested were booked, others were released but required to appear in court. They could demand a trial. Strained courts had to take up time ordering diversion treatment programs — a waste of court resources, supporters of a reform said.   

Backed by the California District Attorneys Association, the new pot law — passed by state lawmakers — did away with prior requirements that pot offenders be referred to treatment and now allows them to pay a $100 fine akin to that for jaywalking. When Gov. Arnold Schwarzenegger signed the law, he noted that simple pot possession in California was already “an infraction in everything but name.”

Males said he suspects that many of the 5,831 marijuana arrests of juveniles in California last year may have occurred on school grounds. He doesn’t have data yet to check his theory, however.

In his police briefing, Males also notes that juvenile arrests in California were the lowest ever recorded since statewide statistics were first compiled in 1954. The decline, Males said, wasn’t due just to fewer marijuana arrests.

Drug-related juvenile arrests overall fell by 47 percent between 2010 and 2011. Violent crime arrests fell by 16 percent; homicide arrests by 26 percent; rape arrests by 10 percent; and property-crime arrests by 16 percent. Nationwide, according to the FBI Uniform Crime Reports, arrests of juveniles for all offenses decreased 11.1 percent in 2011 when compared with the 2010 number; arrests of adults declined 3.6 percent.

Selective trusts and companies born in the British Virgin Islands have helped anonymous buyers snap up luxury properties in London and other UK locales.

Today we are setting out to demolish the wall of offshore secrecy that hides many UK property transactions.

In our joint investigation with The Guardian, we disclose the identities of some of the people secretly buying up Britain.

Our findings, covering nearly 60 sample premises, demonstrate the way the UK is turning into a property speculators' haven, thanks to tax loopholes and the secrecy offered by the British Virgin Islands. Anonymous buyers are taking over more and more blocks of luxury housing, particularly in London.

Some purchasers live abroad. Other buyers live in the UK itself while they build up property empires using these artificial structures.

Click through to ICIJ.org to continue reading.

Britain’s friendly regime of offshore secrecy has tempted an extraordinary array of post-Soviet billionaires to descend on London, sometimes to the sound of gunfire.

These billionaires justify their use of British-controlled secrecy jurisdictions because they say they must protect themselves from corporate predators and political enemies in their home countries.

Vladimir Antonov fled permanently to Britain after his father, Alexander, was gunned down in a Moscow street in 2009. Another associate, German Gorbuntsov, narrowly survived a volley of shots in London last March.

When Antonov bought a luxury yacht in Antibes, the Sea D, he was careful to register its ownership to an anonymous British Virgin Islands (BVI) entity, Danforth Ventures Inc.

He also got his hands on enough cash to try to take over the ailing Swedish car manufacturer Saab, though he did not take control. He did succeed for a while in owning Portsmouth FC, the even more ailing British football club.

Antonov is currently on bail in Britain. Lithuanian authorities are trying to extradite him for allegedly looting their collapsed bank Snoras, which he denies.

The allegation that oligarchs exploit Britain’s offshore secrecy regime to shift assets out of their own countries is not an uncommon one. Another refugee from the law is the Kazakh billionaire Mukhtar Ablyazov, who was last seen in February allegedly heading out of London on a coach to France.

Ablyazov has been sentenced to 22 months in jail for contempt of a UK court as the BTA Bank in Kazakhstan attempts to pursue his maze of offshore assets. The bank’s lawyers claim Ablyazov, who denies it, has made off with an astonishing £4 billion using BVI and Seychelles companies, nominee directors and layers of front-men.

Click through to ICIJ.org to continue reading.

A number of so-called nominee directors of companies registered in the British Virgin Islands (BVI) have connections to military or intelligence activities, an investigation has revealed.

In the past, the British arms giant BAE was the most notorious user of offshore secrecy. The Guardian in 2003 revealed the firm had set up a pair of covert BVI entities.

The undeclared subsidiaries were used to distribute hundreds of millions of pounds in secret payments to get overseas arms contracts.

Today the investigation by the International Consortium of Investigative Journalists and the Guardian uncovers the identities of other offshore operators.

Louthean Nelson owns the Gamma Group, a controversial computer surveillance firm employing ex-military personnel. It sells bugging technology to Middle East and south-east Asian governments.

Nelson owns a BVI offshore arm, Gamma Group International Ltd.

Gamma's spyware, which can be used against dissidents, has turned up in the hands of both Egyptian and Bahraini state security police, although Nelson's representative claims this happened inadvertently.

He initially denied to us that Nelson was linked to Gamma, and denied that Nelson owned the anonymous BVI affiliate.

Martin Muench, who has a 15 per cent share in the company's German subsidiary, said he was the group's sole press spokesman, and told us: "Louthean Nelson is not associated with any company by the name of Gamma Group International Ltd. If by chance you are referring to any other Gamma company, then the explanation is the same for each and every one of them."

After he was confronted with evidence obtained by the ICIJ/Guardian investigation, Muench changed his position. He told us: "You are absolutely right, apparently there is a Gamma Group International Ltd."

While unveiling an alternative to the DREAM ACT — but with no route to citizenship — Republican Sen. Jon Kyl of Arizona suggested that illegal immigrants brought here as children can easily get on a path to citizenship if they marry U.S. citizens. 

However, Kyl’s assumption, expressed at a Capitol press conference Tuesday, is wrong in practical terms.  A recent Center for Public Integrity and KQED public radio report detailed how penalties adopted by Congress in 1996 are ousting undocumented spouses of U.S. citizens for at least a decade, sometimes longer, when they try to obtain legal status based on marriages. 

Thousands of undocumented spouses have already found out the hard way that they may actually be forbidden from living in the United States as the result of their American partners’ efforts to sponsor them for legal permanent residency.

To finish the residency visa process, undocumented spouses must leave the United States and return to their home countries for an in-person interview with U.S. consular officials.  Once they are out of the United States, however, the undocumented spouses are officially told at their interviews that they are barred from re-entering the U.S. as a punishment for entering illegally in the past.  

Thousands of families have been split apart by these penalties, and are suffering severe economic and personal  hardship. Thousands of other couples are now too afraid to come forward to apply for residency as a result.

President Obama plans to allow some couples to first apply for hardship waivers that shorten penalties before the undocumented spouse has to go to that final interview — and get stuck abroad. But many thousands of couples are destined not to qualify because of the 1996 law’s tough mandatory penalties, as the Center piece explains.

Another Center piece further explains the narrow parameters of the current immigration system, and why illegal immigrants, young or old, realistically have no lines to get into in an effort to immigrate legally — as much as politicians insist that’s what they should do. 

Still, Kyl argued Tuesday that under  existing law, marriage to U.S. citizens is the surest path to citizenship for young immigrants who wouldn’t get that opportunity from a bill he’s filed along with Sen. Kay Bailey Hutchison, R-Texas, and Sen. John McCain, R-Arizona.

“As a practical matter,” Kyl said, “by definition these are young people. Realistically, young people frequently get married. In this country, the biggest marriage pool are U.S. citizens. A U.S. citizen can petition for a spouse to become a citizen in a very short period of time, around a year. So I don’t think it’s any big secret that a lot of people who might participate in this program (set up by his bill) are going to have a very quick path to citizenship if that’s the path that they choose.”

The Republican senators’ legislation, the Achieve Act, would allow youths to earn renewable but forever-limited legal status after finishing college or the military.  The bill wouldn’t open up a way to let them eventually earn, as the long-stalled DREAM Act would, permanent legal status – a green card. An immigrant must have a green card first, for a certain number of years, before he or she becomes eligible to apply for citizenship.

Kyl and Hutchison are retiring from the Senate this year, so they won’t be around  to fight for the Achieve Act, which they called a starting point to more negotiations over immigration reform.

A number of GOP leaders have argued that softening the GOP’s stand against all forms of amnesty is key if Republicans want to attract more Latino voters — who proved key to President Obama’s re-election victory.

Rep. Raul Grijalva, D-Ariz., said he wouldn’t support Kyl’s bill precisely because it fails to include a path to a green card and eventual citizenship, according to the Arizona Republic. While Grijalva said it was a good sign that some in the GOP want to return to negotiating immigration reform, he doesn’t think Latino voters will go for the limited-status concepts in the Achieve Act either.

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care.

But the Centers for Medicare and Medicaid Services has since paid out more than $3.6 billion to medical professionals who made the switch without verifying they are meeting the required quality goals, according to a new federal audit to be released today.

The Department of Health and Human Services Inspector General’s audit warns that the electronic records program is “vulnerable” to abuse and that officials should immediately “strengthen” oversight to protect tax dollars from being wasted.  

Many experts believe electronic health records hold great potential to keep people healthier. To achieve that goal, government officials insisted that doctors and hospitals receiving payments meet a lengthy checklist of quality standards, ranging from writing prescriptions electronically to recording immunization and smoking histories.

Yet it’s not clear if that’s happening because nobody checks to make sure. In a response included in the audit report, CMS Acting Administrator Marilyn Tavenner said that requiring medical professionals to prove they are meeting the quality requirements prior to cutting them a check would be burdensome and “significantly delay payments.”

Tavenner said that the agency plans to conduct some audits in the future and would then take steps to recover any improper payments. But the Inspector General opined that CMS should verify compliance first to avoid having to track down miscreants later, a much maligned practice sometimes referred to as “pay and chase.”

The shift from paper to digital medical records has enjoyed strong political support in Congress, though how best to pay for it—and who deserves the money— has been controversial. Funds for the conversion are part of the nearly $800 billion economic stimulus package passed by Congress in February 2009.

Last year, the Center for Public Integrity reported that about half the first batch of federal dollars went to providers who had converted to the technology long before the stimulus program was announced. A spokesman for Sen. Tom Coburn, R-Okla., called that an “inexcusable waste of taxpayer dollars,” saying it “makes no sense” for the government to “pay physicians for systems they already have.”

Criticism from Republicans in Congress has mounted in the wake of the Center’s "Cracking the Codes" series published in September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees—and strongly suggested that the rapid growth in the use of electronic health records and billing software has contributed to the higher charges.

In an Oct. 4 letter to Health and Human Services Secretary Kathleen Sebilius, four Republican House leaders asked federal officials to suspend the payments, arguing the program may be wasting billions of tax dollars and doing little to improve the quality of medical care.

The four members wrote that the program has failed to ensure digital systems can share medical information, a key goal. Linking health systems by computer is expected to help doctors do a better job treating the sick by avoiding costly waste, medical errors and duplication of tests.

From May 2011 to August of this year, Medicare paid about $3.6 billion to 74,317 medical providers and 1,333 hospitals that made the switch to electronic records. Doctors can receive as much as $44,000 each, while hospitals get a minimum of $2 million. Costs are expected to rise to $6.6 billion over the next four years.

According to the Inspector General’s audit, CMS lacks the tools to check whether many of the medical quality measures are being met. For instance, auditors said that CMS had no way to know whether doctors and hospitals were writing the required numbers of prescriptions electronically.

“CMS does not verify the accuracy of professionals’ and hospitals’ self-reported information prior to payment because data necessary for verifications are not readily available,” auditors wrote.

The Inspector General also noted that some of the problem may stem from software systems that can’t produce accurate quality assessments.

The report cited as an example a “report to customers” issued in February by GE Healthcare, a manufacturer of digital records systems. The notice said that two of its products could produce “inaccurate” quality reports and that it had notified CMS and its customers, and was working to correct the problem.

The new report said the Inspector General has audits underway to find out if some medical providers have been gaming the system. It did not say when those audits would be completed.

When six-term GOP incumbent Sen. Orrin Hatch of Utah faced the prospect of a mutiny from conservative activists, his allies within the pharmaceutical industry stepped in to help defend him.

New documents obtained by the Center for Public Integrity show that the drug lobby’s main trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), gave $750,000 in 2011 to Freedom Path, a nonprofit group that spent big to help Hatch win another term.

Despite his solid conservative credentials, Hatch drew a primary challenge from former state Sen. Dan Liljenquist in the 2012 election. Hatch out-fundraised the challenger by an 11-1 margin, but Liljenquist was helped by super PAC FreedomWorks for America, which reported spending nearly $1 million on anti-Hatch ads.

Filings with the Federal Election Commission indicate that Freedom Path spent at least $517,000 on ads designed to help Hatch’s electoral prospects, though Freedom Path board member Scott Bensing said the group’s spending was closer to $1 million.

The drug lobby’s donation was revealed on PhRMA’s newly filed Form 990 with the Internal Revenue Service, which covers the 2011 calendar year. Since the donation went to a nonprofit, it was not required to be reported to the Federal Election Commission.

PhRMA made contributions to several other politically linked nonprofits, including:

• $500,000 to “Montana Growth,” which appears to be a group that produced fliers and radio ads supporting a conservative candidate for the state Supreme Court;
• $264,500 to the American Legislative Exchange Council, a controversial organization made up of state lawmakers and corporate executives that creates “model legislation” for state legislatures;
• $250,000 to the liberal-aligned Citizens for Strength and Security;
• $200,000 to anti-tax crusader Grover Norquist’s Americans for Tax Reform;
• $40,000 to conservative think tank the Heritage Foundation; and
• $40,000 to the Utah Families Foundation, which Hatch helped start in the 1990s and still raises money for.

Freedom Path is a “front group set up to protect Orrin Hatch,” said Russ Walker, FreedomWorks’ vice president of political and grassroots campaigns.

“Orrin Hatch has always worked hard for the drug lobby,” Walker said. “He has always been an advocate for their positions.”

A spokesperson for Hatch did not respond to requests for comment.

But Dave Hansen, Hatch's campaign manager, said by law the campaign couldn't coordinate with Freedom Path.

"We had no contact with them," he said. "And did not know what they were doing, when they did it or where they got their funds from."

According to Bensing, Freedom Path seeks a “more accountable federal budget, a balanced budget amendment and less intrusive government.”

He said his organization has received money from about “eight to 10” contributors, totaling roughly $1.5 million since its launch last year. He declined to identify any of these backers. The group reported raising $850,000 in 2011 from two donors, according to an IRS document obtained by the Center for Responsive Politics.

Earlier this year, Liljenquist complained to The Salt Lake Tribune about the lack of information about Freedom Path.

“Organizations have just as much right as people to participate in politics, but there should be visibility on who is funding them and where that money is coming from," he said.

Federal rules only require Freedom Path, which is a 501(c)(4) “social welfare” nonprofit, to disclose its donors if a contribution is earmarked for a specific advertisement. Freedom Path officials says the group has not solicited money for particular ads.

Like Freedom Path, FreedomWorks operates a nonprofit wing that does not reveal its donors. The non-disclosing nonprofit also accounted for about 15 percent of the $15 million raised by its super PAC arm.

Friend of PhRMA

Hatch received more campaign contributions from the pharmaceutical industry than any other member of Congress in the 2011-2012 election cycle, some $448,000, according to the Center for Responsive Politics.

The 78-year-old lawmaker sits on the Senate Health, Education, Labor and Pensions Committee and is the ranking GOP member on the powerful Senate Finance Committee.

As far back as 1984, he authored legislation with Rep. Henry Waxman, D-Calif., that helped allow generic drugs to flourish but also gave brand-name pharmaceutical companies new powers to contest patent infringements by generics.

And he helped spearhead a successful effort to give pharmaceutical companies 12 years of exclusive rights to sell biologic drugs rather than the seven-year period favored by President Barack Obama during the health care reform debate.

Furthermore, his son, Scott Hatch, is a partner at a lobbying firm whose clients include PhRMA and drug-maker GlaxoSmithKline, though both Hatches have maintained that Scott does not lobby his father or his office.

PhRMA declined to respond to direct questions from the Center. Senior vice president Matthew Bennett said in a written statement that the group “often makes grants or charitable contributions to organizations that share PhRMA’s goals.”

PhRMA spent more than $14 million on lobbying in the first three quarters of this year and donated $185,500 to politicians via its PAC during the 2012 election cycle, including $6,000 to Hatch, federal records show.

In July, it also gave $50,000 to a joint fundraising committee that benefited three Democratic super PACs: Majority PAC, House Majority PAC and Priorities USA Action, which supported Obama’s re-election.

The new IRS filing further shows that PhRMA contributed $5,000 to the American Action Network, a conservative nonprofit headed by former Sen. Norm Coleman. That’s down significantly from the $4.5 million PhRMA donated to the group in 2010.

PhRMA officials declined to comment about whether the organization gave additional money to American Action Network in 2012.

Long-time ALEC member

PhRMA has provided financial support to the Republican-dominated American Legislative Exchange Council for years. Jeffrey Bond, a senior vice president at PhRMA, sits on ALEC’s “private enterprise board.”

The organization opposes policies that would allow U.S. consumers to buy prescription drugs from countries such as Canada at bargain prices and bring them back to the United States. It has also pushed model legislation aimed at countering proposals that advocate for government-mandated price controls on pharmaceuticals.

Meanwhile, in a seeming departure, the trade group gave a large contribution to an organization active in Montana’s Supreme Court election.

Montana Growth, whose address is listed as a mailbox at a UPS store in Washington, D.C., on the IRS form, appears to be the “Montana Growth Network,” which sought to influence the state’s nonpartisan judicial race. State District Judge Laurie McKinnon defeated Missoula public defender Ed Sheehy for an open seat on the high court, after attorney Elizabeth Best was knocked out during a contentious primary.

McKinnon was endorsed by the Montana Chamber of Commerce and Montana Farm Bureau, while the Montana Growth Network attacked Sheehy for a case in which he argued that the death penalty was unconstitutional.

The $500,000 donation was far more than the candidates raised in a state where contribution limits are among the lowest in the nation.

McKinnon, who won with about 56 percent of the vote, raised about $87,000 while Sheehy raised roughly $67,000, according to the nonpartisan National Institute on Money in State Politics.

Group’s origins questioned

In 2010, Hatch’s Republican colleague, Sen. Bob Bennett, was targeted by tea party-aligned activists and thwarted from winning a fourth term in the U.S. Senate. Hatch wanted to avoid a similar fate.

Bennett’s re-election was opposed by the anti-tax group Club for Growth as well as FreedomWorks, which is headed by former Republican House Majority Leader Dick Armey.

Freedom Path’s first ad was released in July of 2011. It touted Hatch and tea party-backed freshman Sen. Mike Lee, who bested Bennett in 2010, as “leading the fight in Washington to get spending under control,” though Lee had declined to endorse Hatch before the June primary.

Another ad in January championed Hatch as “leading the conservative charge to repeal Obamacare.” And one ad in March trumpeted the balanced budget amendment introduced by Hatch and Lee.

The group also produced several advertisements attacking Liljenquist.

Ultimately, Hatch prevailed, capturing about two-thirds of the vote.

During the contested primary election, all that was known about Freedom Path was its leadership, which has ties to the National Republican Senatorial Committee and former Sen. John Ensign, R-Nev.

In addition to Bensing, the group’s board members include GOP operative Mark Emerson.

Bensing is a lobbyist at the firm SB Strategic Consulting, whose clients include the Nevada Department of Transportation, Station Casinos in Las Vegas and Zuffa LLC, the parent company of the Ultimate Fighting Championship.

He previously worked as Ensign’s chief of staff and as the executive director of the NRSC.

Emerson, meanwhile, previously worked for Hatch and served as Ensign’s chief of staff in the U.S. House of Representatives. He once was the executive director of the Utah Republican Party.

During the campaign, Freedom Path also hired the consulting firm November Inc., which is headed by Mike Slanker, a former NRSC operative and Ensign aide.

Sheila Krumholz, the executive director the Center for Responsive Politics, said PhRMA’s $750,000 contribution to Freedom Path allowed the drug lobby to claim some credit for Hatch's victory, “without being directly linked to the outside group's expenditure if he'd lost.”

Rick Hasen, a professor at the University of California-Irvine law school, added that voters should have been informed of the donation because it would have helped them judge the “credibility of the ads.”

“Groups adopt anodyne names like ‘Freedom Path’ which reveal nothing to voters about who is really behind [their] political advertising,” he said. “Voters may have liked or not liked that Sen. Hatch's election was being supported by the pharmaceutical industry, but they should have known about it.”

The Environmental Protection Agency imposed a new penalty for wrongdoing against the BP oil company on Nov. 28, but it may fall heavily on the Defense Department, an unflaggingly loyal client that has kept buying fuel from BP since the company’s errors caused its well to disgorge nearly 5 million barrels of oil into the Gulf of Mexico in 2010.

The agency’s order temporarily bars new contracting with the oil giant by all federal agencies, although it does not interrupt existing government contracts, including the many large ones it has with the military. It also leaves the door open for BP to prove that it has reformed itself enough to requalify for federal contracts at some point in the future.

But the Pentagon might find itself scrambling if the ban is prolonged, since BP has been the military’s principal single fuel supplier for years and collected billions of dollars for fuel used by U.S. forces in the Middle East and elsewhere, a practice that drew criticism from lawmakers on Capitol Hill and others.

“When someone recklessly crashes a car, their license and keys are taken away,” Rep. Ed Markey (Mass.), the senior Democrat on the Natural Resources committee, said in a prepared statement yesterday. “Suspending BP’s access to contracts with our government is the right thing to do.”

EPA acted two weeks after the corporation entered guilty pleas in federal court to 14 criminal counts, including manslaughter, related to the spill. It was not a speedy decision, however, since EPA employees began considering a contracting ban years ago in response to a BP oil spill in 2006 and a refinery explosion in 2005.

“Do we want to do business with this foreign corporation, which has a horrendous record of chronically violating U.S. law?” former EPA attorney Jeanne Pascal told The Washington Post in 2010. “You have to look at the overall behavior pattern,” said Pascal, who had reviewed BP’s potential debarment from federal contracting even before its oil rig exploded in 2010, because of a spill in 2006 and a refinery explosion in 2005.

Pascal has said the military’s interest in sticking with BP proved an insurmountable obstacle to earlier sanctions. The company providing 10.35 percent of the total amount purchased by the Defense Logistics Agency in fiscal 2011, for example, in contracts worth approximately $1.4 billion. The military’s purchases declined only a bit in fiscal 2012, to $1.1 billion, according to the government’s federal contracting website– apparently reflecting the diminished tempo of US forces in Iraq and Afghanistan.

Michelle McCaskill, the logistics agency spokeswoman, said yesterday that “DLA Energy's procurements are competitive in nature and DLA anticipates receiving offers from other suppliers to fill future requirements.”  

In London, the company noted that it had already turned over a 100-page document supporting its fitness to receive federal contracts. “As BP’s submissions to the EPA have made clear, the company has made significant enhancements since the accident,” including a reorganization and change of leadership, its statement said. A New York-based publicist for the firm said it had no comment about its dealings with the Defense Department.

MIRA LOMA, Calif. – Walmart will be named a defendant today in an ongoing federal lawsuit alleging wage theft from mostly immigrant Latino contract workers at a warehouse complex in this Los Angeles suburb.

The move officially draws the nation’s largest retailer into a case in which it had, heretofore, been tangentially involved – and raises questions about the human cost of Walmart’s tightly controlled supply chain, which relies heavily on contractors and subcontractors.

“Walmart employs a network of contractors and subcontractors who have habitually broken the law to keep their labor costs low and profit margins high,” Michael Rubin, one of the lawyers for the Mira Loma workers, contended in a written statement to the Center for Public Integrity and the Center for Investigative Reporting. “We believe Walmart knows exactly what is happening and is ultimately responsible for stealing millions of dollars from the low-wage warehouse workers who move Walmart merchandise.”

Rubin said Thursday that the legal team had notified Walmart it would be named in the lawsuit today in court in Los Angeles.

The class-action lawsuit, filed in October 2011, accuses the owner of the Mira Loma warehouse complex, Schneider Logistics Transloading and Distribution, and two staffing agencies of cheating contract workers out of pay.

In an email Thursday, a Walmart spokesman said, "We disagree with [Rubin's] characterization. While we have a set of quality standards that must be met, the third party service providers we utilize are responsible for running their day-today business. They manage their people completely independent of us."

In a statement earlier this month, the company said “some workers at third party logistics facilities that we use have raised some concerns about their work environment.

“Even though the workers aren’t employed by us, we take these types of allegations very seriously,” the statement said. “The fact is, we hold our service providers to high standards and want to ensure that workers throughout our supply chain are treated with dignity and respect.”

Walmart officials planned to begin audits of warehouses such as Schneider “within days,” according to the statement. “In the meantime, company representatives have made multiple visits – including some that were unannounced – to the facilities where the bulk of the concerns have been raised.”

The lawsuit alleges that Schneider and staffing agencies Premier Warehousing Ventures LLC and Impact Logistics Inc. conspired to “cover up the extent of their wrongdoing by failing to keep mandatory payroll records, falsifying records of hours worked and compensation owed, and concealing, denying and/or misrepresenting to the workers the amount of their earnings and on what basis these earnings were calculated.”

The staffing agencies have agreed to pay a collective $450,000 in fines and back wages to settle citations issued by California labor officials, who raided the warehouse the same month the lawsuit was filed last year. Schneider, which was not cited by the state, said in a statement that it “played no role in determining the rate or method of pay” that led to the violations.

By adding Walmart – the warehouse’s only customer – to the lawsuit, lawyers for the workers are seeking to prove that the company pressured Schneider to hold down costs by underpaying subcontractors who loaded semi-trailers with goods destined for Walmart stores. As many as 1,800 workers in Southern California could receive back pay and damages as a result of the case, and the impacts could be felt in other warehouse centers as well.

Schneider employee David Acosta, among the more than 200 plaintiffs in the lawsuit, questions whether Walmart could have been oblivious to the problems in Mira Loma – which he and other workers describe as long, unpredictable hours and unpaid wages.

“Walmart is responsible,” Acosta said in an interview. “They want to wipe their hands clean of the situation. But they make or break contractors.”

One Walmart employee has an office in the Schneider warehouse and participates in daily operational meetings and audits, court documents allege. The employee was deposed Tuesday by the workers’ lawyers; the decision on whether to add Walmart to the lawsuit hinged partly on that deposition.

‘Pervasive labor abuses’

This is not the first time Walmart’s outsourcing has come under scrutiny. In a report last June, the National Employment Law Project, a New York-based legal and policy-analysis center, alleged “pervasive labor abuses” within Walmart’s supply chain.

“These worker rights violations are largely the product of Walmart’s signature and aggressive practice of ‘outsourcing’ elements of its warehousing, transportation, and goods-delivery systems to companies that, in turn, often further subcontract the work to still other entities or individuals,” the report says.

The Mira Loma warehouse has been on regulators’ radar for more than a year.

Responding to worker complaints about inaccurate pay stubs, investigators with the California Division of Labor Standards Enforcement raided the complex Oct. 12, 2011. The agency cited Schneider’s two labor suppliers at the time, Premier and Impact, for failing to provide employees with statements detailing the hours they had logged, their hourly pay, deductions and other wage-related information. The state proposed a $601,000 penalty against Premier, $499,000 against Impact.

Premier and Impact were using an indecipherable “group piece-rate” system to compensate workers, investigators found. Workers say they virtually always lost money in the arrangement, compared to what they would have made had they been paid by the hour.

“We found that workers were being denied the very basic right to know what they had earned for the work that they were doing,” California Labor Commissioner Julie Su, who ordered the raid, said in an interview. “We found that workers were being denied minimum wage, were not being paid overtime hours.”

Premier – which no longer contracts with Schneider – and Impact agreed to pay $175,000 and $140,000 in fines, respectively, to settle the cases. In addition, Premier will pay $75,000 in back wages to 151 workers; Impact will pay $60,000 to 283 workers.

Neither Premier nor Impact responded to emails and phone calls seeking comment. In its statement, Schneider said it was unaware of the violations prior to the raid.

“Our contracts clearly indicate that the vendors are exclusively responsible for the material aspects of the employment, including hiring, discipline, onsite management, training, determining rates of pay, timekeeping and compliance,” Schneider said.

California’s Su said she brooks no tolerance for employers who exploit low-wage, immigrant workers. Her views were hardened in the mid-1990s, when, while working as a lawyer with the Asian-Pacific American Legal Center in Los Angeles, she represented 72 garment workers from Thailand who had been kept behind barbed wire and under armed guard at an apartment complex in suburban El Monte. She sued the shop owner and won more than $4 million in back wages for the encaged Thai workers – as well as a group of Latino workers who sewed in a “front shop” and were being shorted on pay.

“We have seen in many industries that this type of subcontracting can give rise to really horrible labor abuses,” Su said. “There becomes a question about who’s ultimately responsible for the workers and who has the legal obligation to ensure that labor laws are complied with.”

The construction of mega-warehouses near Interstate 10, east of Los Angeles, began in the late 1990s. Today, similar clusters of blocks-long buildings anchor sections of Chicago, northern New Jersey and other urban areas. Some serve only Walmart; others have multiple customers.

Mistreatment of workers in these facilities is endemic, a product of fierce competition for contracts with Walmart and other retailers, said Juan De Lara, an assistant professor of American studies and ethnicity at the University of Southern California who has researched the industry. “Walmart essentially distances itself from conditions inside these warehouses,” De Lara said.

In interviews and written declarations, current and former workers at Schneider said they were required to perform various tasks for which they were not paid. They might be called to work and told to wait for hours in case they were needed, they said, only to be sent home without pay. Those who complained were told, “If you don’t like it you can hit the door,” Impact worker Juan Chavez said in a declaration.

Jesus Sauceda, 33, worked construction until the weak economy forced him out of a job. He went to work for Impact in Mira Loma in late 2011 and said he was surprised at the conditions in the Schneider warehouse. “Everything you do, they want more,” Sauceda said. “I’d rather work outside in the heat.”

Sauceda injured his shoulder while lifting a box – a warehouse worker might move as many as 4,000 a day, he says – and has seen co-workers get hurt as well because “they don’t have the time to work properly. One guy’s back is messed up; he’s always in pain, always taking painkillers.”

“When there’s a problem with pay or working conditions, a company like Schneider will hand it off to the staffing agency,” said Guadalupe Palma, a director of Warehouse Workers United, an advocacy group funded largely by the labor consortium Change to Win. “The workers are bounced between the warehouse and the agencies and the problem never gets resolved. They get terminated if they’re injured or complain about hours missing from their paychecks.”

U.S. District Judge Christina Snyder, who is presiding over the lawsuit, has made several rulings favorable to the plaintiffs. In February, for example, Snyder blocked the termination of about 100 Premier workers, who were absorbed by Schneider.

The judge issued an order in December 2011 that effectively ended the piece-rate system and forced the two temp agencies to pay hourly wages, maintain accurate payroll records and disclose on each paystub how pay was calculated.

Neither of these rulings touched Walmart directly. But, lawyer Rubin asserts, the retailer “is responsible for the ultimate plight of the workers.”

A nonprofit group in Montana that supported a conservative state Supreme Court candidate was not the recipient of a $500,000 donation from the nation’s top drug lobby as suggested earlier this week and probably wouldn’t accept the money even if it were offered.

“I’ve never raised a dime from a pharmaceutical company,” said Republican state Sen. Jason Priest, a board member and former executive director of the Montana Growth Network, which produced radio advertisements and mailings during the election.

“Guys like PhRMA, they want more government,” he said. “They want all this ‘Obamacare’ stuff, all these health care exchanges, the expansion of Medicaid and things that I don’t like.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) gave $500,000 to a nonprofit group called “Montana Growth,” as the Center for Public Integrity reported this week.

Records appeared to indicate the funding went to the only “Montana Growth” that reported any spending to Montana’s Commissioner of Political Practices this year — Priest’s “Montana Growth Network.”

The Montana Growth Network actually resides in the state while “Montana Growth,” the true recipient of the drug lobby’s donation, lists its address as a mailbox in a UPS store in Washington, D.C.

The Center was able to track down the recipient of the funds by tracing a federal identification number that showed that “Montana Growth” was formerly known as “Economy Forward.” Records indicate its directors are Jessica Bradley and Carrie Schuyler of the Democratic-aligned public relations firm Hilltop Public Solutions, which has offices in D.C., New York and Billings, Mont.

Little is known about the group, but Internal Revenue Service documents indicate that the drug lobby’s contribution supplied the bulk of its funding.

Documents obtained by the Center for Public Integrity show that Montana Growth raised just over $816,000 in 2011.

Its expenses included $275,000 on “grassroots and grasstops consulting” and $70,000 for research on “important issues facing the state of Montana to [help] better inform advocacy efforts.”

It also transferred $40,000 to a liberal-leaning group called “America Votes,” which like Montana Growth, is a “social welfare” nonprofit under Section 501(c)(4) of the U.S. tax code. This year, America Votes reported spending about $47,000 to the Federal Election Commission for telephone calls supporting President Barack Obama and Sen. Bob Casey, D-Pa., in October.

When the Center for Public Integrity called the D.C. office of Hilltop Public Solutions to inquire about Montana Growth, an intern who answered the phone said, “We don’t take calls for that group here.”

Schuyler, via email, directed the Center to “contact@bigskygrowth.org” — bigskygrowth.org is a Web domain name that was created Friday, shortly after the public relations firm was contacted by the Center, according to a website registry report.

An unattributed reply came back that stated: “Thank you for your questions.  It is the organization's policy to not publicly comment on its advocacy or budget.”

In a 2010 IRS filing, Economy Forward reported spending nearly $175,000 on television ads that praised Senate Majority Leader Harry Reid, D-Nev., ahead of his contentious re-election fight. The ads urged viewers to call Reid and ask him to back a specific legislative proposal.

That year, Economy Forward raised just shy of $176,000 — all of which came from another social welfare nonprofit called the “Citizens for Strength and Security Action Fund,” as previously reported by ProPublica.

For its part, Citizens for Strength and Security Action Fund, also called the CSS Action Fund, received $2.5 million in 2010 directly from PhRMA, as the Center for Public Integrity first reported earlier this year.

Hilltop Public Solutions works primarily with Democrats in races across the country. Hilltop’s founder, Nicholas Baldick, has been involved with every Democratic presidential campaign since 1992, including serving as John Edwards’ national campaign manager in 2004, according to the group’s website.

Other Hilltop clients have included Washington D.C. Mayor Vincent Gray and U.S. Sen. Jim Webb of Virginia.

Press officials at PhRMA declined to answer questions about the contribution.

Andrea Fuller and Alexandra Duszak contributed to this report.

I’ve written before about the tight relationships between health insurance companies and organizations that claim to represent the interests of small employers, specifically the U.S. Chamber of Commerce and the National Federation of Independent Business.

Those two groups have accepted hundreds of millions of dollars over the past two decades from the insurance industry in an effort to kill or weaken health reform initiatives designed to protect consumers, including those who work for small businesses.

The Chamber was the insurers’ organization of choice to derail Obamacare. During 2009 and 2010, America’s Health Insurance Plans —the major industry trade group— funneled more than $100 million of policyholders’ money to the Chamber’s anti-reform advertising campaign.

A decade ago, the NFIB did much of the insurers’ bidding. AHIP and a handful of big insurers bankrolled a front group called the Health Benefits Coalition to block a patients’ bill of rights that enjoyed bipartisan Congressional support. NFIB’s current president, Dan Danner—who was the group’s chief lobbyist at the time—was the Health Benefits Coalition’s lead spokesman.

More recently, the NFIB has been playing a similar role for yet another group that purports to represents small businesses, the Stop the HIT (health insurance tax) Coalition. Insurers are using that group as part of its campaign to get Congress to repeal an Obamacare provision that imposes a fee on some insurance policies. Revenue from the fee will help subsidize coverage for millions of low-income folks who are currently uninsured.

And now, insurers have turned once again to the Chamber, this time to wage a behind-the-scenes campaign aimed at state insurance commissioners. If they succeed, insurers will be able to sell a highly profitable insurance product to a highly targeted group of small employers—those with mostly young and healthy workers. By buying this product—stop-loss insurance—those small employers would be able to avoid using the planned state  insurance exchanges to obtain coverage for their workers.

Here’s why that’s important. Because of the way the Affordable Care Act is written, by avoiding the exchanges those small businesses would be exempt from having to comply with many of the most important consumer protections in the health law.

It’s complicated—so complicated that unless you are a reader of obscure insurance industry newsletters, you’ve probably never heard about this, even though it has the potential to cause the collapse of the exchanges and completely circumvent to intent of Congress. The intent of Congress was to make coverage more affordable and available to all of us, not just the young and healthy.

The key to this fight are those state insurance commissioners. Their organization, the National Association of Insurance Commissioners, just wrapped up its fall meeting in Washington, where consumer advocates were pitted against lobbyists for big insurers and their old friend, the Chamber of Commerce. The Chamber has taken the lead in pressuring the NAIC to make it easy for insurers to sell stop-loss coverage to small businesses wanting to avoid many of the ACA’s consumer protections. Those protections aren’t a small matter; they would, among other things, prohibit insurers from charging people higher premiums because of their gender, age and health status. Buying stop-loss coverage would also allow employers to largely side-step any regulation at the state level.

So what is stop-loss coverage? Most small businesses that offer coverage buy policies from insurers that assume the risk of paying medical claims when workers get sick or injured. If a small employer buys a stop-loss policy, the small employer theoretically assumes the risk, but only to a point. If a worker becomes seriously ill, the employer would pay a certain, previously negotiated amount; only after that would the stop-loss  insurer start paying.  

This would be an almost irresistible deal for small employers with mostly young, healthy male workers. And chances are the stop-loss insurer wouldn’t even consider selling the same policy to employers with young female and older male workers. So those employers would be the ones left to shop for coverage on the state exchanges. That’s crucial—but not only because the situation would treat different people differently; it’s also essential that the exchanges attract younger healthier people who get sick less in order to keep coverage for others affordable.

Leading the effort on behalf of insurers at NAIC meetings on this issue has been the Illinois Chamber of Commerce—not surprising when you look at its board, which includes WellPoint, UnitedHealthcare, Humana and Cigna, one of the biggest sellers of stop-loss insurance.

Consumer advocates won an early victory when an NAIC subcommittee this summer recommended that the organization update a 1995 Model Act that would help protect the integrity of the ACA by raising the threshold of insurance risk that an employer would have to assume before stop-loss coverage could kick in. In Washington last week, however, another NAIC committee, swayed by the Illinois Chamber and insurers, refused to go along, at least for now. It punted by asking yet another committee to gather more information.

While that was a setback for consumers, it at least gives advocates more time to make their case. Stay tuned for more. This crucial behind-the-scenes war is far from over.

The Pentagon’s budget is almost assuredly going down in coming years, under heavy pressure from those who wish to trim the federal deficit and see the agency – whose budget increased by two-thirds over the last decade – as a ripe target. But it looks like a specific type of weaponry,  the nation’s stockpile of nuclear warheads, is also headed down, with Barack Obama’s reelection.

This is not a great surprise. Obama promised in a 2009 speech in Prague, after all, that the U.S.-Russian arms control treaty he was then negotiating “will set the stage for further cuts.” But the administration’s planning was not detailed publicly before the election to avoid creating controversy.

Now that the voting is past, a group of independent advisers to Secretary of State Hillary Clinton has publicly urged her to consider pursuing an informal accord with Russia aimed at lowering the number of nuclear weapons the two countries might deploy under existing treaties. Its report, issued Nov. 27, has also acknowledged official support for deeper cuts inside the administration.

The idea of an informal agreement would essentially sidestep the need to obtain formal congressional approval for cuts deeper than those authorized in a 2011 U.S.-Russian arms treaty known as New Start. The accord, which caps strategic deployments by both countries at 1,550 warheads, was approved by around a three-quarters margin in both legislatures, but only after months of political debate.

The department’s International Security Advisory Board includes some defense and military heavyweights, such as former defense secretary William Perry, former nuclear weapons laboratory director Michael Anastasio, former generals Montgomery Meigs and Frank Klotz, former national security adviser Brent Scowcroft, and former deputy energy secretary Charles Curtis. Two former Republican congressmen, Terry Everett and Douglas Bereuter, are also members, as well as 16 others.

In a bow to the current fiscal debate in Washington, the report noted that lower agreed limits on the number of nuclear warheads would allow both countries to forgo “costly or destabilizing modernization efforts.” In Russia, those efforts include the development of a new land-based missile capable of carrying nuclear warheads to U.S. soil, a weapon system that conceivably could be scrapped if Washington agreed to trim its arsenal, according to the panel.

The report did not detail which weapons might be scrapped or what the associated savings might be. But the Stimson Center, a nonprofit group in Washington, estimated this summer that the United States will spend $352 billion to $392 billion on strategic nuclear offensive forces over the next decade.

As an alternate idea, the report said that Washington and Moscow could promise to accelerate their compliance with the New START treaty limits, slated to take full effect in 2018. Doing so would allow the United States to speed up its withdrawal of warheads and launchers from existing forces, but would not necessarily remove the Russian incentive to modernize its missile force (Russia has around 50 fewer warheads deployed right now than the treaty allows, while the United States has 172 more than the limit.

Parallel but informal U.S. and Russian nuclear reductions have been undertaken before, most notably in the early 1990’s when both sides promised to eliminate some short-range and ship-borne nuclear weapons. “Russia is not believed to have fulfilled all of their unilateral pledges,” the report acknowledged.

The report said that the Pentagon and State Department officials consulted by the group, including deputy assistant secretary of defense for nuclear policy Brad Roberts, had embraced the idea “that the military missions required of nuclear weapons can be achieved with lower force levels.”

Senior officials have affirmed this view in the last week, with one saying that the idea of reaching an informal accord – or even taking unilateral steps – is now being given a hard look in internal discussions about the next four years.

Now that the secret is out, conservative critics on Capitol Hill have begun to take aim. Sen. Jon Kyl (R-Ariz.), the Senate majority whip and a critic of the New START agreement who is retiring from Congress in a month, last Friday introduced an amendment to the defense authorization bill that would express the “sense of the Senate” that any further U.S.-Russian agreement to limit nuclear arms could only be achieved through a treaty requiring Senate approval. No vote had occurred as of the time this was written.

By now images of the April 2010 Gulf oil spill are indelible: The rig engulfed in smoke, oil gushing into the ocean, beaches stained on the coast. These images defined the largest environmental disaster in U.S. history — and sealed BP PLC’s reputation as a corporate polluter.

But two weeks before the Deepwater Horizon rig exploded, killing 11 workers and spewing millions of gallons of oil into the Gulf of Mexico, BP was spewing a different kind of pollution — in a major case that has received far less attention.

This case involved dirtying the air around its refinery in Texas City. Throughout most of April and May of 2010, the Texas refinery belched massive amounts of pollutants — toxic chemicals including benzene, toluene and hydrogen sulfide — from a towering flare designed to burn only during emergencies. The single “emissions event,” as BP reported it to the state, triggered by an equipment breakdown, lasted 959 hours and 30 minutes — or 40 days.

“The release went so long,” said Bruce Clawson, of Texas City’s emergency response division, which tracks such incidents. “We’ve never had a release go that long before.”

Now two years later, with the Gulf spill legal maze including $4.5 billion in fines, corporate guilty pleas to 14 criminal charges and an Environmental Protection Agency ban of the company from new government contracts, the so called “40-day Release” case churns slowly ahead, with a $500 billion lawsuit pending in Texas District Court.

Overshadowed by the spill, this litigation is also proving tangled for BP. As many as 47,830 residents, plant contractors, and nearby workers — more than the population of Texas City — are suing BP in multi-district legal proceedings based on “symptoms classically associated with exposure to benzene and other toxic chemicals that have been released by BP,” the suit alleges. Symptoms range from headaches and dizziness to nose bleeds and sore throats, mostly suffered in the immediate aftermath of the leak, their lawyers said.

BP disputes those contentions. In a six-paragraph statement to the Center for Public Integrity, the company downplayed the severity of the emissions, pointing out that neither its own fence-line monitors nor ambient air monitors stationed throughout Texas City detected elevated levels of benzene or other chemicals.

“We do not believe that any negative health impacts resulted from flaring at BP’s Texas City refinery during this period,” BP said.

To environmentalists, the legal case carries deep significance.

“This case is huge,” said Matthew Tejada, of the environmental group Air Alliance Houston. Too often, he contends, refiners calculate that it’s cheaper to pay a fine than to make long term fixes. He calls it “the cost of doing business in Texas.”

If plaintiffs successfully hold BP accountable for the 40-day release, Tejada believes, “It’d be a sea change for the way that industry calculates its actions.”

Prompted by the incident, the EPA is now investigating whether BP’s flaring techniques, in general, comply with the federal Clean Air Act.

The 40-day flare

On April 6, 2010, a fire erupted inside the “100-J” compressor in the Texas City refinery’s ultracracker unit. Sparked by a seal failure, the flame forced engineers to shut down what amounts to a crucial pollution-control device. Rather than stop production to make repairs, managers opted to burn off the gases through an emergency flare. It lasted 40 days.

By May 16, when the flaring stopped, the refinery had pumped out at least 513,795 pounds of more than 20 distinct chemicals — including 17,372 pounds of benzene, 37,520 pounds of nitrogen oxides, and 190,866 pounds of carbon monoxide, BP informed the state that June.

“A conscious decision was made to flare knowing it was against the law and contrary to the operating permit,” asserts Tony Buzbee, liaison counsel for the plaintiff steering committee, who has taken 50 depositions of BP executives so far.

BP notified the state of an emissions event the day after it began, on April 7, as required by law. Texas City residents only learned of the 40-day release after the fact. Clawson, the city’s emergency response chief, remembers getting a phone call from a BP press officer around the time the company filed its final report; the officer told him the event had lasted a month, and caused some exceedances.

“Telling us after the fact is not really helpful,” said Clawson, who believes he would have classified the leak as a “level three” — the highest alert — because it was, in his words, “impacting us severely.”

“Obviously,” he explains, “they exceeded the state standards reported. It’s logical to assume it impacted the city.”

Just how much BP surpassed the standards has become a central issue in the lawsuit. Plant supervisors calculated air emissions released during the 2010 event by assuming the flaring had destroyed 98 percent of the pollutants, a regulatory requirement. Lawyers for the plaintiffs are challenging that rate and citing a 2007 study by government regulators on “difficult to measure” emissions sources at the Texas City refinery.

In 2007, BP had allowed state and federal regulators to conduct an advanced form of emissions testing on three of its refinery flares and other pieces of equipment. The EPA found that one of them — the ultracracker flare — burned pollution at a rate “considerably worse than expected.” In some instances, the EPA found, the actual emissions from the ultracracker flare during the testing turned out to be six times greater than the amount reported by BP.

By BP’s own accounting, the ultracracker flare ended up spewing almost 98 percent of all the pollution in the 40-day release.

“That means BP under-calculated its emissions,” contends Jim Tarr, a chemical engineer hired by lawyers for the plaintiffs. He said the difference between an efficiency rate of 98 percent and one of 50 percent, the lowest rate EPA found, can translate into orders of magnitude — 25 times more for any single component.

“That’s not a tiny difference by any stretch of the imagination,” Tarr adds.

BP defends its calculations. In its statement, the company said the poor performance of the ultracracker flare occurred only “at very low flow rates, conditions not normally seen in refinery operations,” which differ from those of the 40-day release. After the regulators’ study, BP said, engineers calibrated the flare’s instruments and subjected it to “performance testing.” Passing those tests, the flare went back into service in 2009.

“We have multiple bases for concluding that the flared hydrogen steam was well combusted (with greater than 98% efficiency) during the April/May 2010 flaring event,” BP wrote.

Yet internal company emails obtained through discovery in the lawsuit show that, in the months before the refinery’s release, BP’s environmental team was still discussing the ultracracker flare’s “poor destruction efficiency,” as measured in the 2007 tests.

One BP environmental specialist, in an April 8, 2009, email, cited the flare’s “old flare tip design” as a possible reason. Three months before the release, in a January 4, 2010, email, the same specialist said “under low flare gas flow rate conditions … combustion efficiency may be (significantly) below acceptable values.”

“They knew exactly what they were doing,” said plaintiffs’ lawyer John Powell.

Other company documents show the 100-J compressor long having problems. Internal BP emails note that employees made repeated requests to upgrade the compressor, to no avail. Some BP engineers lamented that their past recommendations had fallen on deaf ears.

“I wish the project people who had fought us and justified overruling us were still here today to feel our pain,” one engineer wrote on April 15, 2010. “I sure hope they get good bonuses for F#$%ing [sic] us over.”

“It just reminds me of a saying,” another employee replied. “‘The bitterness of poor quality will be remembered long after the joy of a low price is forgotten.’ ”

Six months before the release, those same emails reveal, the Texas City refinery experienced a strikingly similar flaring event, again sparked by the 100-J compressor. This emissions event lasted 28 days, from November to December 2009, and released almost as many toxic chemicals. Back then, the company reported spewing 54,312 pounds of pollutants into the air. In depositions, BP supervisors acknowledged under-reporting the release by more than 300,000 pounds.

BP declined to specifically address Center questions about the earlier emissions event, or about the emails gathered during the lawsuit.

Buzbee, the counsel in the leak litigation, believes the two events reflect a pattern of conduct that proves, in his words, “BP doesn’t give a rat’s behind.”

Regulators have also raised questions. In 2010, the Texas attorney general sued BP for multiple violations of the Texas Clean Air Act, alleging “a pattern of unnecessary and unlawful emissions events” at the refinery — 72 in all from 2005 until that year. When the 40-day release occurred, the AG’s office filed a second suit. Both enforcement cases pegged BP’s “poor operation and maintenance of the refinery” as the cause of the leaks. By November 2011, BP had agreed to pay a fine of $50 million to settle the cases.

The first bellwether case involving six plaintiffs, half chosen by BP, half by the plaintiff steering committee, is slated for trial in September 2013.

Lawyer Buzbee, who previously won a multi-million-dollar verdict against BP, predicts a legal tussle, perhaps ending in a settlement. “I don’t believe BP will allow me to try this case,” he adds.

The company, which intends to sell its Texas City refinery to Marathon Oil for $2.5 billion, said it will continue to fight the leak litigation. BP vows to “defend the lawsuits brought against it concerning this matter.”

Assistant U.S. Secretary of Education for Civil Rights Russlynn Ali has quietly stepped down following an active four-year tenure devoted to changing attitudes about school discipline and improving access to college-prep classes for minorities.

Ali submitted a sweeping progress report late last month outlining her division’s accomplishents. Her office has focused heavily on investigating allegations of suspensions and expulsions that have disproportionately affected students of color.

The division has also focused on investigating  complaints that some schools fail to place minority students in advanced classes, and do not even offer advanced courses students need to qualify for college.

Ali and Education Secretary Arne Duncan have often argued that cutting suspensions and keeping kids in class is critical to boosting graduation rates and  preparing students to compete in a global economy.

Over the past four years, Ali’s office has received nearly 29,000 complaints of alleged rights violations, a 24 percent increase over the previous four-year period under the administration of George W. Bush.

More than half the complaints were related to treatment of disabled students; about 26 percent were related to race or national origin and another 14 percent were related to gender. 

The report also says that Ali’s office closed some  28,500 complaints through various means, including resolution agreements.

According to the new report, Ali’s office found various examples of discipline inequities.

For example, in one unnamed school, a white student was assigned detention for violating a cell phone policy while a black student with a similar disciplinary history was given a one-day suspension for the same infraction. 

In another unnamed school, a white student accused of using profanity was given detention, while a black student was suspended for one day for a similar infraction.

And in a third school, a pushing incident between two students resulted in a white student getting a three-day in-school suspension while a  Native American student was arrested and given a 10-day out-of-school suspension.

During her tenure, Ali also issued strong guidelines for investigating sexual-abuse allegations on college campuses; some higher education officials felt the guidelines went too far. Ali also produced guidelines for managing allegations of bullying and gender-related discrimination at schools.

In the wake of investigations, Ali’s office has struck agreements with districts small and large requiring  administrators to take action addressing inequities. The new report includes a map of investigations across the country.

Some agreements require districts to work on reducing the numbers of students from particular groups—such as African-American boys—that are removed from classrooms as a disciplinary measure. Others, including one in the Los Angeles Unified School District, also require administrators to beef up academic offerings in disadvantaged schools.

Ali’s office said it was monitoring school police citations in Los Angeles following after publication of a report by the Center for Public Integrity and KPCC public radio.  The stories—based on an analysis of school police   records—found that school police citations for minor infractions, especially for fights and tardiness, have been highly concentrated in middle schools in Los Angeles’ lowest-income and minority neighborhoods.

Parents in Los Angeles complained that school administrators were too quick to involve police in minor discipline matters, and police were too quick to cite children in certain schools.

During Ali’s tenure, her office has strengthened a national record of school statistics— the National Civil Rights Database Collection—which features detailed information about student achievement, access to classes and discipline. 

The improved database is an objective tool for measuring how students are treated, Ali has said. 

“Data alone do not constitute a violation of the civil rights laws,” Ali’s new report says, “but large disparities in the rate of disciplinary sanctions imposed on students of different races give rise to concerns about the school environment and, in some cases, possible discrimination.”

After analyzing the national data, Ali’s office found that African-American students were more than three-and-a-half times more likely to be suspended or expelled compared to their white peers.  The office also found that one in five African-American boys receives at least one out-of-school suspension, more than any other group of students.