Forward Observer: The Bent Rules

In 1988, Gregory Craig and William Lynn worked together as legislative assistants for Sen. Edward Kennedy, D-Mass. Back then, Craig earned $37,375 a year and Lynn $23,734.

This year, President Obama appointed Craig as his White House counsel, a job which paid $172,200 a year during the Bush administration.

One of Craig's first official acts as White House counsel was to recommend that Obama waive his ballyhooed rules against employing lobbyists in his administration so that Lynn, Craig's old Senate colleague and a former registered lobbyist for the defense contractor Raytheon, could become the deputy secretary of defense at $177,000 a year under inherited pay scales.

So much for Obama's vows during his presidential campaign to break up the old boy network in Washington and not bring lobbyists into his administration.

The contradiction between what Obama promised and what he did prompted Sen. John McCain of Arizona, his Republican rival for the presidency last year, to declare on the Senate floor during the brief debate on Lynn's nomination: "It is disappointing that President Obama, who pledged continuously throughout the campaign to change the culture of Washington and the influence of lobbyists, then almost immediately chose to nominate several individuals, including Mr. Lynn, who required a waiver. Obviously, the American people were promised one thing but delivered another."

McCain also decried Lynn's lack of "any extensive managerial experience" to manage the biggest business in the world. Lynn is obviously no David Packard, the industrialist who ran Hewlett-Packard before serving as deputy Defense secretary to Melvin Laird from 1969 through 1971.

But McCain, citing election results, ended up joining 92 other senators in voting to confirm Lynn for the No. 2 post at the Pentagon.

Largely obscured in the political dust kicked up by Obama's stretch-sock approach to his newly minted ethics rules were the substantive questions raised by Senate Finance ranking member Charles Grassley about Lynn's commitment to getting taxpayers maximum bang for their defense bucks.

Grassley produced letters and documents to back up his argument that while chief Pentagon bean-counter, Lynn didn't count the beans at all well. The mainstream media and all but three of his Senate colleagues turned a deaf ear to such Grassley findings as these:

• In 1998, when Lynn was the Pentagon's chief financial officer, its comptroller, he wrote that "I am very troubled" by Grassley's detailed findings that accounting practices under Lynn's supervision were not only loose but crooked. Lynn did not dispute Grassley's findings and promised reforms.
• "While [Defense Secretary William] Cohen and Chief Financial Officer Lynn both assured me over and over that they were taking steps to tighten internal controls, I am shocked to say they were already quietly moving in the opposite direction," Grassley said. "They were busy pushing other policies to weaken and undermine internal financial controls" at the Pentagon.

One such loose practice tolerated by Cohen and Lynn, Grassley said, was paying bills under $2,500 without bothering to get a receipt. Pentagon bureaucrats tried to find the receipts later. "Sometimes receipts were found under pay-and-chase, sometimes not," Grassley said on the basis of an investigation by the Administrative Oversight Subcommittee he formerly chaired. "This is how the Department of Defense ended up with not $2,500 here and there but with billions of dollars in what they refer to as unmatched disbursements."

"On Feb. 2, 1998, when Mr. Lynn was chief financial officer," Grassley said. "[Defense] Secretary Cohen asked the Senate for legal authority to pay bills without receipt with no dollar limit. Now that is pretty high up in the department that you are deciding that we ought to have a policy to pay bills without receipts and to do it not with a $2,500 limit but with no dollar limit. It was touted, can you believe it, as a measure to 'streamline' the DoD payment process. Fortunately, the Congress rejected this absurd and misguided legislative proposal."

Grassley said that Lynn, despite being the official in position to vet the no receipt proposal, at first told him that he could not recall where he had stood on the issue back in 1998. "This seems like a real cop-out," Grassley complained. Lynn on Feb. 9 wrote Grassley that "I was not involved in the process" that led to Cohen's plan to pay contractors without getting receipts.

"Defense Finance and Accounting Service payment policies practiced on Mr. Lynn's watch left the barn door wide open to fraud and outright theft of the taxpayers' dollars," Grassley charged. "The Government Accountability Office, which provided excellent support all the way through my investigation, fully agreed with this assessment."

Lynn as deputy secretary of Defense will be like the lawyer in the back room doing the heavy lifting while his boss, Defense Secretary Robert Gates, will be out front trying to sell Obama's defense program to Congress and citizens in this country and abroad.

Will this duo make good on Obama's promise of last week to reform "the defense acquisition process so that taxpayers dollars are not wasted?" Or will that promise, like the ones Obama made about changing the culture of Washington and not giving former lobbyists powerful jobs in his administration, blow up on the pad? Obama's launch of his ethics rules is not encouraging.