404 At The State Department

Error messages are an aggravating part of modern life, whether delivered by voice recordings or website redirections. But some failures go beyond aggravation.

Imagine running into the following: “We’re sorry. The United States of America is currently down due to a computer malfunction. Please try again later. We do not yet know how much later. Thank you.”

The wording is fictional, but the problem is real.

The Associated Press reported that the State Department’s database for issuing travel documents suffered a catastrophic, global crash beginning July 19. As a result, potentially millions of people waiting for U.S. passports and visas will have to continue waiting, with no end in sight.

State Department spokeswoman Marie Harf said the crash was not restricted to any country or document type, and that the issues created an “extensive backlog” of applications. The system, called the Consular Consolidated Database, reportedly crashed shortly after maintenance was performed. The cause is still unknown, as is the time frame for clearing the backlog the problem created.

While the entire country hasn’t been leveled by a technology failure – yet – federal computer disasters like this one are routine. The high-profile rollout failure of HealthCare.gov was one of the most visible to the public, but it was hardly an isolated case.

The IRS spent two decades and billions of dollars on its “Business Systems Modernization” program. The result is that taxpayers today can finally get their refunds issued electronically in a matter of days. Unfortunately, so can fraudsters. Criminals are running rampant, stealing taxpayer IDs, creating fictitious W-2s and claiming bogus refunds before the real taxpayers have a chance to file their returns. The IRS is quick to talk about how many fraudulent returns it catches; meanwhile, huge numbers get processed, costing the government over $5 billion last year (and putting the real taxpayers through months of hassle to get their returns processed and refunds issued).

Apparently, in the two decades it took to finish the program, nobody at the IRS anticipated that the Service would need to be able to verify basic information on returns before it could reliably issue refunds.

Banks that operated that way would be fined billions of dollars by federal regulators. But nobody, except the occasional designated scapegoat, ever gets fired from the federal bureaucracy for these kinds of screw-ups. Not now. Not ever.

Whose fault is the State Department’s computer crash? Chances are good that we will never know.

This cycle happens over and over in the federal government. Nobody is ultimately responsible for anything, so nobody ever has the authority or incentive to make sure the government operates even close to normal commercial standards. Administrations always blame Congress for failing to appropriate more money for systems modernization. But as fast as Congress authorizes more spending, the bureaucracy finds new ways to waste the additional money.

The Transportation Worker Identification Credential, commonly abbreviated TWIC, faced repeated delays and technical problems as the Department of Homeland Security attempted to roll out the program. As recently as this June, serious questions remained as to whether TWIC’s biometric cards were properly implemented and, if so, whether they provided any real value. A computer glitch recently blacked out air traffic control systems through a large portion of the Southwest; the Federal Aviation Administration promptly tried to assure the public that it was rolling out a fix. Sam.gov, a system for government contractors, took years and $181 million to get anywhere near functional, after a deeply frustrating and inadequate launch. The FBI’s “Virtual Case File” project had to be dumped entirely and started from scratch because the problems were so pervasive.

In fact, research by the Standish Group found that 94 percent of large federal information technology projects in the past decade failed, according to The New York Times. Some were costlier, took longer or worked less effectively than hoped; nearly half failed outright.

Taxpayers are often promised that public officials will make government run like a business. Businesses, however, operate under the discipline of the marketplace; they either get their act together or they fail. Government faces no such discipline, and the outcome of undisciplined spending is plain for everyone in the United States to see. Or outside the United States, for those who can’t get a visa to come here.

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About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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