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Spending Spotlight HighlightsSpending Spotlight Highlights

Tip of the Cronyism Iceberg

December 05, 2013

By: Akash Chougule

Cronyism exists throughout government. It harms healthy free-market competition and harms hardworking families. Federal government officials frequently dole out your tax dollars to well-connected friends and political allies in the form of grants, loans, subsidies, and more. As Bill Frezza wrote for Real Clear Markets, the beneficiaries of cronyism are “more than happy to help themselves to money from the public treasury.” For example, the $678 million contract for “Healthcare.gov” was given to a Canadian company, where a top executive- and wealthy political donor- just so happened to be a Princeton University classmate of Michelle Obama.

While this high-profile case has made national headlines, there are other instances of cronyism every day that go undiscovered and unreported. “Spending Spotlight,” the interactive new tool from Americans for Prosperity, allows concerned taxpayers to examine every inch of the federal checkbook, and see exactly how taxpayer dollars are being spent in their community.

Take, for example, the organization Action for Bridgeport Community Development. “ABCD, Inc.,” as it is known, is a 501(c)(3) nonprofit located in Bridgeport, Connecticut that administers the Head Start program in the Greater Bridgeport Area. “Spending Spotlight” shows that Action for Bridgeport Community Development has received roughly $35 million dollars in federal grants.

The executive director of ABCD, Charles B. Tisdale, also happens to be a well-known political figure and campaign donor with a history of community organizing. In 1977, Tisdale became director of a youth and community program in the federal Department of Housing and Urban Development. Shortly thereafter, President Carter appointed him Staff Director of another program at the White House, a position he held for three years. He returned to Bridgeport and became the head of Action for Bridgeport Community Development in 1995, and now directs the organization on a budget in excess of $30 million dollars.

Head Start has widely been considered a failure––an expensive one, at that. The program costs $7.3 billion dollars a year, and a study sponsored by the Department of Health and Human Services, which oversees Head Start, showed that any positive effects from the program disappear by the time children start school.

Worse for federal taxpayers, in 2011, ABCD was one of 122 programs designated for competition “because they had their licenses revoked, had fiscal or management issues preventing them from properly managing federal funds, or had deficiencies discovered in their on-site federal monitoring review,” according to HHS. Among the findings in HHS’s on-site monitoring review report were that ABCD “did not maintain written procurement in according with Federal regulations.” They failed to show they were not “purchasing unnecessary items” and failed to “perform an analysis of lease and purchase alternatives to determine which would be the most economical and practical procurement for the recipient and the Federal Government.” Undoubtedly, these are trends that lead to Head Start costing taxpayers more money than it cost to put a man on the moon.

Perhaps ABCD corrected all of its errors and submitted a brilliant re-application for funding. However, a closer look at Tisdale’s campaign donations would lead the casual observer to suspect otherwise. Already presumably well-connected as a former Carter appointee, Tisdale has donated $9,400 to federal campaigns since 2001. Recipients include both U.S. Senators from Connecticut, a $2,300 check to Obama for America, and almost $4,000 to New York Congressman Ed Towns alone. Ed Towns sits on the House of Representatives Energy and Commerce Committee’s Subcommittee on Health, which recommends funding appropriations for the Department of Health and Human Services.

Undoubtedly, it is difficult to draw a direct, definite connection between Tisdale’s clout and ABCD’s funding. Regardless, it is clear that the political class has the power to reward well-connected friends at taxpayers’ expense. It is stories that activists find that will expose cronyism in the federal checkbook, and ultimately make it clear that the American government does not have a revenue problem – it has a spending problem.

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