White Collar Welfare: What It’s Like to Work for the Federal Government

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Shannon O’Toole, according to the author’s biography on Amazon, “worked extensively to identify fraud in multiple government programs. She received countless accolades and honors for her achievements and finally the prestigious HUD Secretary’s Award for her work.”

The talented Ms. O’Toole was a single mother needing a job when she showed up at the FDIC, which she describes as a “disorganized, flying-by-the-seat-of-your-pants atmosphere that seemed to permeate the place.” While she bore the brunt of untangling complicated real estate assets and readying them for sales, O’Toole was reminded again and again that government is not efficient or fair, as she was passed over for promotions by friends of one misogynist boss after another.

Her account, Washington Siren: A Woman’s Journey Through Scathing Scandals, Lies, and Secrets Inside the FDIC, HUD, IRS and Other Agencies, with a Love Story that Survives it All, written, for some reason in the 3rd person, chronicles O’Toole’s long career of Sisyphean frustration with government bureaucracy.

At publication date, 2017, her National Government Lien Recovery Program hadn’t gone anywhere despite having the potential to raise trillions of dollars for the US Treasury, if implemented.

However, as Ludwig von Mises explained in his 1944 book Bureaucracy,

The bureaucrat is not free to aim at improvement. He is bound to obey rules and regulations established by a superior body. He has no right to embark upon innovations if his superiors do not approve of them. His duty and his virtue is to be obedient.

As she works for the RTC (Resolution Trust Company) she comes face-to-face with competing government and private contractor factions fighting to sell the foreclosed properties from failed S & Ls. “There just seem to be layers and layers of oversight personnel, all watching but doing nothing.”

One of her co-workers explained that the RTC’s property management division was desperately keeping SAMDA contractors in place. “They’re trying to build an empire out of managing the assets and don’t want the sales department to dispose of anything. If Thomas can make a proposal to Washington DC for hiring more staff, his grade and pay go up because his empire increases.”

In the for-profit world this wouldn’t make sense, but, this is government. Mises wrote in Omnipotent Government,

Only to bureaucrats can the idea occur that establishing new offices, promulgating new decrees, and increasing the number of government employees alone can be described as positive and beneficial measures.

Because contractors were paid a fee based upon the value of the assets they managed, they wanted to hold them as long as they could. And, the contractors’ overseers at the RTC didn’t want the assets sold because that would put them out of their jobs.

Of course, the result was billions in government waste. “I’ve seen laziness at the FDIC and some waste but nothing like this,” O’Toole told a colleague. “This is beyond reason. It’s just plain crazy.”

His reply was one the author would hear often. “It’s just plain politics.”

“Bureaucratic management is management of affairs which cannot be checked by economic calculation,” wrote Mises.

If O’Toole pushed back, she was met with rules and regulations. “We must all accept that FIRREA is the founding legislation for the RTC, and that FIRREA instructs us to use outside fee contractors to manage all the properties from the failed savings and loans,” one of her superiors announced at a meeting.

Again, Mises from Bureaucracy,

They are no longer eager to deal with each case to the best of their abilities; they are no longer anxious to find the most appropriate solution for every problem. Their main concern is to comply with the rules and regulations, no matter whether they are reasonable or contrary to what was intended. The first virtue of an administrator is to abide by the codes and decrees.

O’Toole writes evocatively about union protected government employees disappearing from their jobs for weeks and sometimes years at a time. At one point, she was ready to retire, but the OPM (Office of Personnel Management) couldn’t tell her what her monthly check would be due to outdated computer systems.

Working for HUD and FHA during the Obama administration, the author couldn’t believe that the mandate to soften mortgage underwriting standards came down from DC, despite the nation still working through the rubble of the 2008 mortgage crisis.

She writes that government work is “a world of processes, not profits,” and that some of her friends call federal employment “White Collar Welfare.”

Through research, O’Toole determined the government places liens on properties for unpaid taxes. However, the government, she found, never followed up after being notified the properties in question were being transferred.

Thus, the liens fall by the wayside and the government is left to chase tax avoiders through garnishments and court actions. O’Toole tried desperately to obtain data on the number of, and total amount of liens placed by the IRS, on a state-by-state basis. The tax collector demurred, citing privacy concerns, despite O’Toole not asking for individual taxpayer information, just the aggregate numbers.

Libertarians might knowingly chuckle about all of this government nonsense, except, the Democratic presidential candidates are advocating that this same government completely take over the healthcare system.

A chilling thought after reading O’Toole’s memoir.

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