D.C. Disconnect: Geek Squad Edition

Deep within the of bowels of the Defense Department is the secretive agency that invented the Internet, known as the Defense Research Projects Agency, aka DARPA, aka the Mad Scientist agency.

With its $3.2 billion budget, the agency is supposed to come up with wild, innovative ideas. Some of their inventions, like military drones, “work,” while others, like psychic CIA agents, robot hummingbirds and mind-bending wormholes, have earned the agency the reputaion of something of a hare-brained money pit.

One of its recent projects, something called the halfnium bomb, apparently ran into problems getting past the basic laws of physics.

President Obama himself recently showered major love on DARPA, hailing it as a source of cutting-edge technology.

At least one aspect of DARPA retains an infuriatingly old-fashioned quality – the reek of conflict-of-interest and nepotism.

Before she became head of the agency in 2009, Regina Dugan started a high-tech explosive detection company called RedX Defense, with her father and her uncle, the Project on Government Oversight reports. She served as CEO and president. Six months after she took over the DARPA, RedX, where her father now serves as CEO, landed a $400,000 contract with the agency, which was recently extended.

Dugan of course, disqualified herself from any decisions regarding her former company when she took over DARPA. The agency’s media office insisted there were no ethical issues with the contract because Dugan didn’t participate in awarding it.

POGO was less generous, and suggested in its understated way, “it surely must have come as a pleasant surprise to learn that DARPA’s contract management office had chosen the company she founded to do work for DARPA.”

Maybe it was a pleasant surprise for Dugan; it was unfortunately no surprise to taxpayers, who have grown way too accustomed to these kinds of shenanigans.

What Have You Done For General Electric Lately?

With your help, the company founded by Thomas Edison, the genius inventor, survived the nation’s worst recession in 80 years.

But billions in taxpayer-funded bailout relief and subsidies and paying zero federal taxes was not enough for General Electric.

The company wants more from you.

They want more subsidies, more dubious government contracts and more political power.

Business was terrible for a while, and GE’s credit division dragged the whole company down.

As result, 19,000 of the GE employees who had a job at the beginning of 2009 didn’t have one when the year ended. They joined the 4,000 GE employees who lost jobs the year before. For workers that still had jobs, the average salary was about $32,000 a year.

Things were tough at the top too.

CEO Jeffrey Immelt had to give up his bonus for the second year in a row, and was forced to limp along just on his annual compensation of nearly $10 million.

In 2008, Forbes magazine named Immelt one the U.S.’ 5 most overpaid bosses. For the past 6 years he’d been averaging $15 million a year.

Of course, before the economy crashed, CEO pay was through the roof in general. Getting on that most overpaid list wasn’t easy. Competition was stiff. Two of the other guys on the Forbes list made millions running their financial firms, Countrywide and Indymac, into the ground.

Taxpayers’ generosity helped ease the GE titans’ pain, allowing the company to take advantage of billions in subsidized loans and loan guarantees at such favorable interest rates that they amount to a massive government subsidy.

The company managed to eke out $11 billion in profits on $157 billion in revenue.

That’s when the Internal Revenue Service stepped in to ease GE’s burden. By the time the lawyers and accountants were done, you probably paid more taxes than GE did – unless you also happen to be Exxon.

GE didn’t issue a press release about most of those subsidies. Neither did the federal government. In fact, the Federal Reserve has fought to keep its subsidies of GE and other major corporations confidential. But they were forced to disclose the subsidies under the terms of the financial reform passed earlier this year.

It might have been made the Federal Reserve and GE uncomfortable if the public had known that GE’s CEO was sitting on the Fed’s board of governors while they were doling out low-interest loans to his company, an apparent and outrageous conflict of interest.

But your generosity to GE doesn’t stop with bailout and tax giveaways. As part of the 2009 stimulus package, the company got $24.9 million toward retooling an appliance factory in Kentucky, one of four plants GE is retooling in the government’s green technology initiative.

Like Immelt, the workers will have to adjust to lower pay. They’ll no longer make $20 an hour. Now they’ll be paid $13 an hour.

The company is returning to its roots in making appliances.

But the retooling comes too late for GE’s light bulb business, which was once a source of good jobs in Ohio. While it was borrowing taxpayers’ money in 2009, it was closing one such plant in Niles, Ohio – the fifteenth to close in the state since 1980. The new more energy efficient bulbs will be made in China.

As GE and others American firms were busy chasing short-term profits from the fancy financial products that eventually blew up the economy, they neglected the kinds of innovation that might have saved those jobs.

But General Electric has moved on, staking a big chunk of its future on a costly jet engine that the Defense Department says is wasteful and that it doesn’t want. So General Electric has been lobbying Congress to override the Defense Department. Maybe those that worked in the light bulb factories of Ohio could move to Washington and get jobs as lobbyists.  GE’s spending on lobbying has skyrocketed: from $4.54 million in the first quarter a year ago to $7.14 million in the first quarter of this year.

Meanwhile, while GE dukes it out in D.C., the company has informed the state of Massachusetts that if it  expects GE to limit layoffs of those working at an aircraft factory there, the state’s taxpayers are going to pay.

At the same time the state is facing a series of devastating budget cuts, GE is seeking a $25 million tax credit to help with the retooling of it plant in Lynn, which employs 3,000 people. The company’s already cut 600 jobs at the plant, without the tax credit, GE says, it will cut more. Usually states give tax credits for companies to create new jobs, not as a payoff to keep them from cutting existing jobs.

So here’s the latest innovation from GE. It has nothing to do with creating better, more energy-efficient products. GE has come up with a new way to put the squeeze on taxpayers.