More Bush abuses: Phony 9/11 Loans

A Texas golf course, a Nevada tanning salon and an Illinois candy shop were among small businesses that may have improperly received U.S. subsidized loans intended for firms hurt by the September 11 attacks, an internal government watchdog has found.

The Small Business Administration's inspector general said in a report made public on Wednesday that in 85 percent of the sample of loans it reviewed, a company's eligibility to receive the money through the program could not be verified.

A leading Senate Republican called for further investigation, but the Small Business Administration said the program was properly implemented.

The one-year, $4.5 billion Supplemental Terrorist Activity Relief, or STAR, program offered loan guarantees to small businesses adversely affected by the September 11 attacks.

However, the Small Business Administration had failed to properly oversee lenders to make sure that only eligible borrowers obtained STAR loans, the watchdog's report found.

Money may have gone to businesses that were not adversely impacted by the terrorist attacks of September 11th or their aftermath, wrote Robert Seabrooks, assistant inspector general for auditing.

Congress authorized the program in January 2002, and set aside $75 million to cover potential defaults. The program was operated through the Small Business Administration's main loan-guarantee program and the loans were made by participating banks. In all, 8,201 loans were approved totaling $3.7 billion, but only 7,058 were actually paid out.

Of 42 STAR-loan recipients interviewed by the inspector general's office, just two said they were aware they had obtained a such a loan. In cases where eligibility could not be established, 25 of 34 borrowers interviewed stated they were not adversely affected by the attacks, the report said.

The report's examples included the Texas golf course, whose owner was cited by a lender as saying people were more interested in staying home and watching the attack on television than playing golf. However, the course was owned by someone else when the attacks took place and the justification for the $480,000 in loan guarantees did not apply to the new owner, the report said.

The tanning salon's lender blamed the September 11 attacks for hurting the Las Vegas casino industry which employed many of the salon's customers.

However, the inspector general found the salon's business had grown by 52 percent in 2001 and 32 percent in 2002 and said there was no evidence the owner could not borrow outside of the program. The SBA guaranteed $437,000 in loans to the salon, which were used to expand.

The Illinois candy shop received $21,250 in guarantees but could not back up its claim that the attacks had delayed the shop's opening, the report said.

Senate Small Business Committee Chairwoman Olympia Snowe, a Maine Republican, said her panel would look into the program.

If abuses are discovered, many questions must be answered by the parties involved, beginning with how and why was this allowed to happen, she said in a statement.

SBA said it has told lenders it will not honor guarantees on defaulted loans that fail to document the September 11 link.

SBA implemented the STAR program as Congress intended, Administrator Hector Barreto said in a statement.

The inspector general said it appeared qualified borrowers were not shut out of STAR loans.

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And you're the one who has issues..severe anger management issues. You've been up and down this board throwing hissy fits, one right after another, being rude, crude, angry and obnoxious to anyone who dares to disagree with you, and you even had the audacity to suggest to someone (who has put up with your crap and tried to discuss issues with you) that they have anger issues. YOU are the one with an obvious anger problem. You act like a 3-year-old who is throwing a tantrum because she can't get her way. You're the one who is phony. You must have a pitiful personal life, and it must really suck to be YOU because you are obviously miserable.

House OKs budget bill cutting $50 billion in aid
Medicaid, food stamps, student loans take a hit

Washington -- House Republicans, after weeks of negotiations, narrowly passed a budget bill early Friday to cut $50 billion from Medicaid, food stamps, student loans and other programs over the complaints of Democrats that Congress is squeezing students, the elderly and the poor to pay for tax cuts for the rich.

The House approved the bill 217-215, after GOP leaders agreed to demands from moderate Republicans to jettison a measure to drill in the Arctic National Wildlife Refuge in Alaska and to slightly reduce proposed cuts to food stamps.

Still, the vote was so politically sensitive that House leaders didn't begin debate until 10 p.m. Thursday and didn't pass the measure until nearly 2 a.m. -- when most news reporters gone and only a few C-SPAN junkies could witness the fiery floor action. No Democrats voted for the bill, and 14 Republicans opposed it.

House Democratic leader Nancy Pelosi of San Francisco said in a floor speech that cutting money for Medicaid, child support enforcement and foster care as the House prepares to vote on $70 billion in tax cuts was a sin.

Republicans are launching an attack on America's children, on America's families, Pelosi said. They are also launching an attack on America's middle class, all of this to give tax cuts to the wealthiest people in our country.

But House Speaker Dennis Hastert, R-Ill., responded that the proposed cuts were needed to rein in the growth of federal spending on health care and other programs.

Medicaid is growing at a 7.3 percent growth rate per year, Hastert said. It has been growing for years. Is there a better way to do it? Is there a more efficient way to do it? Should we find some reforms to make it better? Yes, we should.

The House bill also would split the Ninth Circuit Court of Appeals in San Francisco, a goal of conservatives who have long complained the court is too liberal. But the breakup of the appellate court, which covers the country's Western region including federal cases that arise in California, is not part of the Senate budget bill. Sen. Dianne Feinstein, D-Calif., and senior members of the Senate Judiciary Committee are seeking to strip it from the final package.

The battle over the budget reconciliation bill now moves to a joint House-Senate conference committee, where lawmakers will have to make several critical decisions, including:

-- Will the final budget bill allow oil drilling in the Arctic National Wildlife Refuge?

The Senate version would allow drilling, but a group of House Republican moderates has pledged to oppose any final bill that would open the Alaskan wildlife refuge for development.

-- How deeply will lawmakers cut student loans?

The House bill would cut student loan programs by $14.3 billion, while the Senate version cuts them by $8.8 billion. The Congressional Budget Office has estimated the House bill would cause a typical college student with the average of $17,000 in student loans to pay an additional $5,800 in interest and fees over the length of the loans.

-- Will some legal immigrants lose their food stamps?

The House bill would cut off 220,000 people from food stamps by allowing legal immigrants to qualify for the food aid after seven years, instead of the current five years. The Senate bill does not cut food stamps, and moderate lawmakers are urging that it be dropped from the final budget package.

-- How will the cuts affect Medicaid recipients?

The House bill calls for $11.4 billion in cuts to Medicaid, while the Senate bill trims spending by only $4.3 billion. The House bill also would allow co-payments to rise over time with inflation and would deny Medicaid nursing home benefits to people with $750,000 in home equity.

-- Will child support enforcement be cut?

The House bill would slash funding for child support enforcement by $4.9 billion. The Senate did not include any cuts to child support enforcement.

-- Will Medicare be cut?

The Senate voted to eliminate $5.4 billion in subsidies for some regional insurance companies that agreed to participate in President Bush's Medicare prescription drug program. The House bill does not cut the subsidies.

Congress watchers expect that lawmakers are likely to split the difference between the House's $50 billion in cuts over five years and the Senate's $35 billion in trims. But the negotiations will be difficult for GOP leaders. Conservatives, especially in the House, have been pushing for deeper cuts. Republican moderates plan to lobby to restore funding for some programs.

House Republicans argue the heated rhetoric over the budget bill's effects is overblown because many cuts are simply limiting the growth rate of certain federal programs. For example, the proposed cuts to Medicaid would lower the annual growth rate in spending on the program from 7.3 percent to 7 percent.

But Democrats complained the cuts hit the wrong targets, including students struggling to pay for college. The Congressional Budget Office estimates the bill would increase costs to students and families by $8 billion, including nearly $5.5 billion in costs when students consolidate loans.

You're hurting the students of this nation, Rep. George Miller, D-Martinez, told Republicans in an angry floor speech. You're putting their families in debt. You're piling on the interest rates. You ought to be ashamed of it.

E-mail Zachary Coile at zcoile@sfchronicle.com.

So, let's see. I know that I have been known to lapse into a coma from time to time, but haven't we been here before - making subprime loans in order to stimulate sales and to hell with what happens next?

Someone correct me if I'm wrong, please, but I'm having such a strange sense of deja vu here.

"Anyone in my office involved with a leak will be fired" to "Anyone who is found guilty of leaking," I figured he had a handle on what the decision is going to be by the special prosecutor, who, incidentally, was appointed by BUSH.

A year ago the U.S. Army Corps of Engineers proposed to study how New Orleans could be protected from a catastrophic hurricane, but the Bush administration ordered that the research not be undertaken. After a flood killed six people in 1995, Congress created the Southeast Louisiana Urban Flood Control Project, in which the Corps of Engineers strengthened and renovated levees and pumping stations. In early 2001, the Federal Emergency Management Agency issued a report stating that a hurricane striking New Orleans was one of the three most likely disasters in the U.S., including a terrorist attack on New York City. But by 2003 the federal funding for the flood control project essentially dried up as it was drained into the Iraq war. In 2004, the Bush administration cut funding requested by the New Orleans district of the U.S. Army Corps of Engineers for holding back the waters of Lake Pontchartrain by more than 80 percent. Additional cuts at the beginning of this year (for a total reduction in funding of 44.2 percent since 2001) forced the New Orleans district of the Corps to impose a hiring freeze. The Senate had debated adding funds for fixing New Orleans' levees, but it was too late.

The New Orleans Times-Picayune, which before the hurricane published a series on the federal funding problem, and whose presses are now underwater, reported online: No one can say they didn't see it coming ... Now in the wake of one of the worst storms ever, serious questions are being asked about the lack of preparation.

The Bush administration's policy of turning over wetlands to developers almost certainly also contributed to the heightened level of the storm surge. In 1990, a federal task force began restoring lost wetlands surrounding New Orleans. Every two miles of wetland between the Crescent City and the Gulf reduces a surge by half a foot. Bush had promised no net loss of wetlands, a policy launched by his father's administration and bolstered by President Clinton. But he reversed his approach in 2003, unleashing the developers. The Army Corps of Engineers and the Environmental Protection Agency then announced they could no longer protect wetlands unless they were somehow related to interstate commerce.

In response to this potential crisis, four leading environmental groups conducted a joint expert study, concluding in 2004 that without wetlands protection New Orleans could be devastated by an ordinary, much less a Category 4 or 5, hurricane. There's no way to describe how mindless a policy that is when it comes to wetlands protection, said one of the report's authors. The chairman of the White House's Council on Environmental Quality dismissed the study as highly questionable, and boasted, Everybody loves what we're doing.

My administration's climate change policy will be science based, President Bush declared in June 2001. But in 2002, when the Environmental Protection Agency submitted a study on global warming to the United Nations reflecting its expert research, Bush derided it as a report put out by a bureaucracy, and excised the climate change assessment from the agency's annual report. The next year, when the EPA issued its first comprehensive Report on the Environment, stating, Climate change has global consequences for human health and the environment, the White House simply demanded removal of the line and all similar conclusions. At the G-8 meeting in Scotland this year, Bush successfully stymied any common action on global warming. Scientists, meanwhile, have continued to accumulate impressive data on the rising temperature of the oceans, which has produced more severe hurricanes.

In February 2004, 60 of the nation's leading scientists, including 20 Nobel laureates, warned in a statement, Restoring Scientific Integrity in Policymaking: Successful application of science has played a large part in the policies that have made the United States of America the world's most powerful nation and its citizens increasingly prosperous and healthy ... Indeed, this principle has long been adhered to by presidents and administrations of both parties in forming and implementing policies. The administration of George W. Bush has, however, disregarded this principle ... The distortion of scientific knowledge for partisan political ends must cease. Bush completely ignored this statement.

In the two weeks preceding the storm in the Gulf, the trumping of science by ideology and expertise by special interests accelerated. The Federal Drug Administration announced that it was postponing sale of the morning-after contraceptive pill, despite overwhelming scientific evidence of its safety and its approval by the FDA's scientific advisory board. The United Nations special envoy for HIV/AIDS in Africa accused the Bush administration of responsibility for a condom shortage in Uganda -- the result of the administration's evangelical Christian agenda of abstinence. When the chief of the Bureau of Justice Statistics in the Justice Department was ordered by the White House to delete its study that African-Americans and other minorities are subject to racial profiling in police traffic stops and he refused to buckle under, he was forced out of his job. When the Army Corps of Engineers' chief contracting oversight analyst objected to a $7 billion no-bid contract awarded for work in Iraq to Halliburton (the firm at which Vice President Cheney was formerly CEO), she was demoted despite her superior professional ratings. At the National Park Service, a former Cheney aide, a political appointee lacking professional background, drew up a plan to overturn past environmental practices and prohibit any mention of evolution while allowing sale of religious materials through the Park Service.

On the day the levees burst in New Orleans, Bush delivered a speech in Colorado comparing the Iraq war to World War II and himself to Franklin D. Roosevelt: And he knew that the best way to bring peace and stability to the region was by bringing freedom to Japan. Bush had boarded his very own Streetcar Named Desire.

Sidney Blumenthal, a former assistant and senior advisor to President Clinton and the author of The Clinton Wars, is writing a column for Salon and the Guardian of London.

More Bush abuses: Phony 9/11 Loans

House OKs budget bill cutting $50 billion in aid Medicaid, food stamps, student loans take a hit

House OKs budget bill cutting $50 billion in aid
Medicaid, food stamps, student loans take a hit