Trump Cheated His Donors-- And So Did His Doppelgängers... Now Watch Out For McKinsey

A couple of days ago, Maddow showed her audience how Trump was ripping off Republican contributors to his campaign. Awwwwww. We posted it before, but it's worth watching again. Take a look if you want the details of how he and his sleaze-ball campaign did it; his lackeys and imitators sure watched and they've been doing it too. One, James Kyle Bell, who ran the Keep America Great Committee, was arrested this morning, charged with scamming poor dumb Trumpers out of hundreds of thousands of dollars that he pocketed. Not a dime went to Trump or any other candidates, despite Bell's assertions that that was what the money was for.

The fish rots from the head

Lachlan Markay wrote that "The charge handed down this week against James Kyle Bell shows how brazen some efforts to monetize grassroots political enthusiasm can be. The charges came despite former President Trump being more proactive than many politicians in disavowing groups that falsely implied campaign affiliations to lure unwitting donors... The Justice Department accuses Bell, the man behind the Keep America Great Committee, of enlisting a digital fundraising firm to fraudulently appeal to Trump supporters to chip in on behalf of the Trump re-election effort."

  • The Keep America Great Committee's ads, website, and online donation page were largely copied from those belonging to Trump and other legitimate political groups, The Daily Beast reported last year.

  • None of the nearly $250,000 the KAGC raised actually went to supporting political candidates, prosecutors say. Instead, they say, Bell pocketed the money.

  • While duping unwitting donors, prosecutors say, Bell was also filing fraudulent applications for coronavirus relief loans. Four of his companies received more than $1 million from the scheme, according to prosecutors.

Trump's presidency was a boon for these kinds of scam PACs. This is what's left of the site:

This week, Matt Stoller warned of an entirely different-- and grander-- kind of different kind of scam-- the McKinsey brand of scam. The topic was "why Biden needs to keep McKinsey away from infrastructure money, and more broadly how America needs to take on government contractors and consultants if we ever want to have nice things again."

The New Deal or McKinsey. Pick One.
If there’s one striking feature of the Biden administration so far, it’s the rejection of Barack Obama’s policy framework by his own party. It is now the consensus that Obama’s lack of ambition led to Trump’s election. For instance, party leader Senator Chuck Schumer recently called the Obama stimulus a “mistake” and “a small measly proposal” on CNN, as a way of selling Biden’s much larger proposals.
Biden’s goal, and that of the Democratic Party that controls both houses, is to break from recent politics, and be “more like Franklin Delano Roosevelt (FDR) and the Congress of 1933, and less like Barack Obama and the Congress of 2009.” Biden wants to spend a lot, to go big, instead of the go small vision of Obama.
Last week, the Biden administration laid out a $2 trillion vision on infrastructure called the American Jobs Plan... It’s a bold vision. One important question is whether it’s actually possible to spend that amount of money on so many things without immense amounts of corruption or waste. The difference between FDR and Obama, after all, was not just spending amounts. Obama didn’t spend enough, but he did spend a lot. FDR, however, actually built things, whereas Obama’s stimulus money for, say, California’s high-speed rail, evaporated into a cloud of consultants. (A particularly mean joke was that FDR won WWII in less time than it took Obama to build Obamacare web sites that didn’t work.)
Biden isn’t inheriting a well-functioning government, so pushing $2 trillion through a battered public sector is going to lead to problems. To understand Biden’s challenge, we should go to the last time America had to build a bunch of infrastructure. In 2017, in Puerto Rico, hurricane Maria wiped out the island’s electric grid. If you want to know the nightmare scenario for Biden’s infrastructure plan, start there.
McKinsey: The Government’s Brain
...McKinsey helped ruin the U.S. spying apparatus with a bloated, failed contract. They helped run Trump’s U.S. Immigration and Customs Enforcement; ICE even hired McKinsey to write its own contract. McKinsey structured France’s terrible coronavirus response, and that of New York state. McKinsey is so brazen that it was caught by the GSA Inspector General for cheating the government out of $65 million. It didn’t seem to matter. In 2019, McKinsey worked for more than 15 federal agencies and departments, and 25 states.
This broad range of clients gives McKinsey a cartel-like relationships with the circle of law firms, investment banks, and fellow professional services firms involved in bankruptcies, infrastructure spending, and other specialized institutional work.
Joe Biden’s infrastructure plan is a good plan, in theory. We need to do a lot of what Biden wants to do. The problem is that every overpriced government contractor out there is gearing up to steal as much of the $2 trillion as they can. And they will try to steal it the way McKinsey has, by taking advantage of bad policy choices that turned the government into a sucker.
If Biden wants to make his plan functional, he should follow FDR’s model.

Stop the Real Steal
Roosevelt’s first major infrastructure battle was over Muscle Shoals in Alabama, the great hydroelectric resource. The Morgan interests and the electric utility magnates wanted that resource privatized for their use. Roosevelt said no, and had the government directly build the Tennessee Valley Authority, a publicly owned and operated electric utility for much of Appalachia. TVA was part of a package of reforms to constrain and control Wall Street, to end what FDR called the ‘informal economic government of the United States.’
Over the rest of the New Deal, FDR transformed the physical plant of the country, and spent a lot of money on infrastructure. But Roosevelt first made sure Wall Street had little say over how public money or public resources were spent. Public institutions got bigger and more competent, and the financiers and monopolists lost power. One key result is that the government could do big things. During World War II, military procurement officers had immense capacity and power, imposing tight control over contractors, and ensuring that there were at least a dozen competitors for each major weapon system. They could peer into the books of contractors, and even claw back excessive profits.
America used this governing capacity for decades, constructing the national highway system, winning the space race, deploying the polio vaccine, landing on the moon and building the internet, and running the project Sematech in the 1980s to address foreign threats to semiconductors.
In the 1990s, however, Bill Clinton’s “Reinventing Government” initiative killed the public capacity Roosevelt had constructed. Clinton encouraged the big prime defense contractors to merge, shrinking them from over 100 to just 5 firms. Clinton’s procurement initiative, led by Steve Kelman, invented a whole new vocabulary for ways to let contractors steal. The details get complex, but the gist was a ‘light touch’ approach to negotiating by the government. Procurement officers stopped making hard-nosed demands for better prices, and were stripped of the ability to look at the books of the contractors to make sure there weren’t excess profits.
Government began using a new set of contracts to get rid of competition and negotiating in contracting; today, agencies can just order stuff from pre-approved contractors without doing much negotiating. Procurement officers don’t have to write a full-blown solicitation with clear specifications, and contractors no longer have to put together a real proposal. There’s very little competition in any of it. And contractors are eager to make the system even worse, with some asking for Biden to stop requiring them to list any prices at all when selling to the government.
This kind of buying system - no prices, no transparency, no competition - is precisely the opposite of what firms like Amazon, Walmart, and other ‘power buyers’ do to wring efficiency from their suppliers. Walmart, for instance, goes into excruciating detail to learn everything about its suppliers, making detailed demands about every facet of every product, including price. Unlike the government, Walmart acts like a monopoly buyer, and demands value for its money.
The problem isn’t just that Uncle Sam gets ripped off. The net effect of encouraging laziness and monopoly throughout the government procurement process is poorly thought out initial requirements, which of course results in bloated costs and failed projects later on. If you half-ass an initial proposal, the cost will explode when you’ve built half of it, and find out you’ve built it wrong. This problem is pervasive throughout America; New York City, for instance, is on the verge of collapse, and infrastructure costs in the U.S. are laughably expensive. (I did a bunch of interviews with people in construction to find out why, and the best explanation I got was because American public officials tend to change requirements a lot more in the middle of projects.)
All of this boils down to hiring capable people as procurement officers, demanding they be aggressive in negotiating with contractors, and breaking up large firms so there is competition over the government’s business. It also means no longer using firms like McKinsey, because such firms don’t actually offer any value.