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Article Artículo

Second USAID Contractor Suspended Following Caracol Housing Debacle

Caracol flood
Image from internal USAID document, caption reads: “Site flooding due to improper drainage”

On March 25, 2015, USAID suspended CEEPCO Contracting – which had been working on shelter programs in Haiti –from receiving further government contracts, pending the outcome of an ongoing investigation. CEEPCO joins Thor Construction, which was suspended in early February. The investigation concerns faulty construction practices related to 750 houses built in Caracol, Haiti by USAID. CEPR Research Associate Jake Johnston reported in February for VICE News:

CEEPCO's CEO is Harold Charles, a Haitian-American who was formerly one of the Haitian government's representatives to the Interim Haiti Reconstruction Commission (IHRC), run by Bill Clinton and meant to be in charge of the $10 billion in earthquake relief. The IHRC had initially approved the USAID shelter program back in December 2010.

Charles also enjoys a close, personal relationship with Haitian President Michel Martelly. In an interview in 2013, Charles said, "I do know and have very close friends up through the highest ranks of government," adding, "Martelly is a childhood friend of mine." One former government official in Haiti said in an interview, "this was seen as a deal that would please Martelly."

Despite the initial assessment in August, 2014 that revealed the construction problems, USAID extended CEEPCO's contract for work at other shelter sites in Haiti this past January. CEEPCO’s contract for the Caracol site was awarded without competition. A Freedom of Information Act (FOIA) request for the justification document is ongoing. A FOIA request for the initial assessment documenting the problems with the houses was recently responded to, but USAID withheld the entire document that was sought, citing the ongoing legal investigation.

Though the investigation continues, many thousands of Haitians continue to live in the poorly constructed houses. A contracting document from November, 2014, stated that repairs must be “carried out immediately in order to prevent possible harm to residents.” But it is unclear if meaningful remediation efforts have taken place.  An internal document reveals that many of the identified problems would require serious structural work to the houses.

In November, Tetra Tech, another U.S.-based firm, received a $5 million contract to oversee the repair efforts. The firm has been performing structural evaluations of the houses in anticipation of a future legal suit. One draft document, prepared by Tetra Tech and obtained by HRRW, details 29 instances “of material substitutions, field design changes, lack of quality assurance/quality control (QA/QC) and lack of quality workmanship.”

Jake Johnston / March 30, 2015

Article Artículo

It's Monday and Robert Samuelson Wants to Cut Social Security and Medicare

Yes, once again Robert Samuelson stresses the urgency of cutting Social Security and Medicare. It's the usual pox on both your houses story, but as usual he leaves his thumb on the scale. In discussing the Republicans' proposals to save money by cutting spending, he says that their budget saves $2 trillion over the next decade (@ 0.9 percent of GDP) by repealing Obamacare. This is not quite right. The Republican proposal repeals the spending in the program, but leaves most of the revenue that paid for the spending in place. 

In making the case for cutting Social Security and Medicare he suggests raising the retirement age to 69 or 70 over 15 years. By comparison, in 1983 the normal retirement age was raised from 65 to 67 over a 40 year period, so Samuelson is proposing a very abrupt increase in the retirement age. (The increase from age 66 to 67 is being phased in over the years 2016-2022, so Samuelson's rise would overlap with this rise.) More accurately, this should be thought of as a cut in benefits of almost 20 percent over a 15 year period. In addition, Samuelson also wants to raise the age of Medicare eligibility to 69 or 70, implying large increases in health care costs for people between age 65 and 70.

The median retiree will have virtually no income other than Social Security in retirement. The average Social Security benefit is a bit less than $1,300 a month, yet somehow Samuelson views these cuts as being progressive. He does also want to cut benefits for "wealthier" retirees. In order to get any notable savings it would be necessary to have a cutoff for benefit cuts at around $40,000 of non-Social Security income. This gives a whole new definition to the term "wealthier."

Dean Baker / March 30, 2015

Article Artículo

Deflation Due to Lower Commodity Prices Is Not a Problem (Except to Commodity Producers)

For some reason economics reporters and economists seem to have a really hard time understanding deflation. There are two lessons for today. First, we get the standard lesson: crossing zero means nothing, the problem is too low a rate of inflation.

As I've written a few thousand times, inflation is an aggregate measure that combines price changes of hundreds of thousands of goods and services. When the inflation rate gets near zero it means that than many of the price changes are already negative. Going from a near zero positive to a near zero negative just means a higher ratio of negative price changes to positive price changes (or the negative ones are larger). How can going from 45 percent negative price changes to 55 percent negative price changes be a disaster? That makes zero sense.

Furthermore, since these are all quality adjusted price changes it may not even be the case that prices are actually falling for the goods themselves. The price index for new cars in the United States is less than 3 percent above its 1998 level, yet the average new car costs considerably more in 2015 than it did in 1998. The difference is that the Bureau of Labor Statistics (BLS) attributes most of the price rise to quality improvements. The story would be even more dramatic with computers where BLS reports that prices have fallen by more than 95 percent since 1997. Does anyone believe that an economy faces disaster just because its cars and computers are getting better?

Dean Baker / March 29, 2015

Article Artículo

Colombia

Latin America and the Caribbean

World

Child Rapes and “Sex Parties” by US Forces are Latest to Tarnish Plan Colombia’s Image

Plan Colombia has been on the lips of many U.S. officials lately, who tout the 15-year-old plan as a model to stabilize the country and promote human rights and transparency. This week, two new reports alleged sexual exploitation by U.S. security forces in Colombia, underscoring the detrimental (and hypocritical) role of Plan Colombia and U.S. military and police presence in the region.  

A report [PDF]released Thursday by the U.S. Inspector General (IG) investigating the DEA found that DEA agents stationed in Colombia allegedly had “sex parties” with prostitutes bankrolled by drug cartels. This follows last month’s even more alarming report, commissioned to inform peace talk negotiations, that revealed sexual abuse of more than 54 young Colombian children at the hands of U.S. security forces between 2003 and 2007.

According to the IG report, Colombian police officers reportedly provided “protection for the DEA agents’ weapons and property during the parties.” It also states that “the DEA, ATF, and Marshals Service repeatedly failed to report all risky or improper sexual behavior to security personnel at those agencies” and expressed concern at the DEA’s general delay and unwillingness to comply with the investigation.

While the sex party report has garnered a fair amount of media attention, the Colombian report of sexual abuse has gone largely unmentioned. (Fairness and Accuracy in Reporting points out that, although the claims in have received some international attention, there has been almost no coverage of the claims in the U.S. media.) That report was commissioned by the Colombian government and the FARC in an attempt to determine responsibility for the more than 7 million victims of Colombia’s armed conflict. It reported that U.S. military personnel sexually abused 53 young girls, filmed the assaults, and sold the footage as pornographic material. In another instance, a U.S. sergeant and a security contractor reportedly drugged and raped a 12-year-old girl inside a military base. The alleged rapists, U.S. sergeant Michael J. Coen and defense contractor Cesar Ruiz, were later flown safely out of the country, while the girl and her family were forced from their home after receiving threats from “forces loyal to the suspects,” as Colombia Reports described them.

CEPR and Eileen O'Grady / March 27, 2015

Article Artículo

The Real Rate of Recovery, Part 5: Long-Term Unemployment
Many media outlets cite the official unemployment rate—the Bureau of Labor Statistics’ U-3 unemployment rate—when reporting on the recovery in the jobs market. This rate stood at 5.0 percent in December 2007 (the first month of the recession) and rose to

Kevin Cashman and Nicolas Buffie / March 26, 2015