The deficits would grow down the road: “The agency estimates that the two bills together would cost about $32 billion more in 2019 than HR 3962 alone and that the combination of the two bills would increase the budget deficit in 2019 by $23 billion relative to current law,” CBO wrote. “Those increments would grow during the following decade.”

But today, CBO came back with a revision of its November 6 estimate of HR 3962, which had concluded that that bill, by itself, would result in a $109 billion deficit reduction over the 2010-2019 period. Now, according to the new estimate, CBO believes “the legislation would yield a net reduction in deficits of $138 billion over the 10-year period, correcting a mistake that CBO made in its earlier assessment of the impact of section 2581 of the legislation, which would establish the Community Living Assistance Services and Supports (CLASS) program.”

That would suggest that the budget impact of the two bills together would be $29 billion less severe over 10 years than stated in yesterday’s letter to Rep. Ryan, or $60 billion in deficits. More changes to come, undoubtedly.

Megan McArdle wrote earlier today for The Atlantic to explain why the two bills were likely to pass or fail together.

On its Directors Blog, the CBO today posted a summary of its letter to Senate Majority Leader Harry Reid (D-NV), in which the CBO gave its initial estimate of the bill’s budgetary impact.

However, GAO’s analysis of the data found “a range of significant reporting and quality issues that need to be addressed.” Examples of “erroneous or questionable data entries” found in GAO’s review:

(1) 3,978 reports that showed no dollar amount received or expended but included more than 50,000 jobs created or retained;
(2) 9,247 reports that showed no jobs but included expended amounts approaching $1 billion, and
(3) Instances of other reporting anomalies such as discrepancies between award amounts and the amounts reported as received which, although relatively small in number, indicate problematic issues in the reporting.

The report also said that “questions remain” about the 10 percent of recipients who failed to file reports by the October 30 deadline, and that full-time equivalent (FTE) calculations “were reported inconsistently even though significant guidance and training was provided by OMB and federal agencies.”

“While recipients in the states we reviewed generally made good faith efforts to report accurately, there is evidence, including numerous media accounts, that the data reporting has been somewhat inconsistent,” the report said. “Even recipients of similar types of funds appear to have interpreted the reporting guidance in somewhat different ways and took different approaches in how they developed their jobs data.”

The GAO also noted that while the recipient reports “do provide a real-time window on the results of Recovery Act spending,” the employment impact of the stimulus bill could not be measured on the basis of the recipient reported data alone:

“Even if the data quality issues are resolved, it is important to recognize that the FTEs in recipient reports alone do not reflect the total employment effects of the Recovery Act. As noted, these reports solely reflect direct employment arising from the expenditure of less than one-third of Recovery Act funds. Therefore, both the data reported by recipients and other macroeconomic data and methods are necessary to gauge the overall employment effects of the stimulus. The Recovery Act includes entitlements and tax provisions, which also have employment effects. The employment effects in any state will vary with labor market stress and fiscal condition, as discussed in this report.”

The GAO provides a valuable site covering its considerable responsibilities for oversight of the stimulus bill, including a subsection covering reported jobs data.

ProPublica’s efforts to guide users through the recovery site data earned a recommendation from OMB Watch, a partner in the Coalition for an Accountable Recovery, which said that although “access to the recipient reports is great (and rather historic),” searching the recovery site is “tedious” and the site’s help section “isn’t very helpful.” A week earlier, OMB Watch wrote about why the jobs count on Recovery.gov is an “unreliable indicator of the Recovery Act’s success, not only because its calculation is less than scientific, but also because it is just one component of the act’s impact on employment and lives of people in need.”

More recently, ABC News reported that the Recovery Accountability and Transparency Board, at the urging of the Office of Management and Budget, removed data on 60,000 jobs before the October 30 release of recipient reported data because, the Board said (pdf, 71kb), data on those jobs provided by recovery fund recipients “contained unrealistic data, including, but not limited to, unrealistic job data.”

The White House responded in a blog post to criticisms about that incident, as well as inaccuracies that did make it into the October 30 release, such as a report on jobs created in the non-existent 15th Congressional district in Arizona. “We fully agree with those who find the mistakes in the data frustrating – and we’ve been working with the Recovery Board to find the mistakes, and fix them,” wrote an administration official. But expectations that the data would be free of errors are “not realistic when 130,000 reports are being filed in a 10 day period,” and those errors shouldn’t obscure the transparency milestone the site has achieved: “What government program has ever even attempted to provide this sort of information, on this scale, this quickly?”

“About two-thirds of food-insecure households avoided substantial reductions or disruptions in food intake, in many cases by relying on a few basic foods and reducing variety in their diets,” the report said. “But 6.7 million households (5.7 percent of all US households) had very low food security – that is, they were food insecure to the extent that eating patterns of one or more household members were disrupted and their food intake reduced, at least some time during the year, because they couldn’t afford enough food.”

In 2008, the survey reported, 16.7 million children – 22.5 percent of children nationwide, up from 16.9 percent in 2007 – were living in food-insecure households, and the number of children who sometimes lacked enough to eat rose from just under 700,000 the year before to nearly 1.1 million (see Table 1B).

The report is based on an annual survey of 44,000 households conducted by the US Census Bureau as a supplement to the monthly Current Population Survey. Previous reports in the series are available from an ERS online briefing room.

Data on lenders in the October report showed that most had made progress in starting new trial modifications since September. CitiMortgage increased the percentage of its potentially eligible delinquent borrowers who had been given a loan modification from 33 percent through September to 40 percent by the end of October. Bayview Loan Servicing increased its ratio from 2 percent to 22 percent, and the figures reported by Litton Loan Servicing showed an increase from 12 percent to 22 percent over the same period.

Saxon Mortgage Services continued to lead the way, getting 44 percent of eligible borrowers into a trial modification. In raw numbers, Bank of America posted the most activity with nearly 137,000 modifications, but that number represented only 14 percent of its eligible borrowers.

A new feature in the October report is a state-by-state breakdown of active trial modifications, which showed that California had the most activity with more than 134,000 modifications under way, ahead of Florida where more than 82,000 were reported. Arizona, Illinois, and New York were also among the top five.

“The picture on wages is likely to get worse in 2009 – despite the beginning of a possible economic recovery,” the report said. “Compared to the annual average of 2008, the real wages in the first quarter of 2009 fell in more than half of the 35 countries for which recent data is available… The downward trend in wages raises some questions about the extent to which the consumption of workers and their families will be able to sustain aggregate demand for economic production once the effects of government rescue packages peter out.”

A release accompanying the report said the data showed that “both developed and developing countries have strengthened their minimum wages in recent years, reflecting the growing concerns about increasing inequality and low pay. While during past downturns concerns about the impact on labour costs were widespread, in the current crisis, a number of countries have adjusted their minimum wages upwards.” A sample of 86 countries showed that over 2007-08, exactly half “have increased minimum wages in real terms (i.e. by more than inflation figures), while the other half has allowed inflation to erode their real value,” the report said.

The new report is an update to the first Global Wage Report for 2008-09 issued a year ago (Executive Summary, pdf 62kb; full report, pdf 1.8mb). The next full report is due in 2010. The ILO also provides a minimum wages database, and the Global Wage Databases which accompanied both the 2008-09 report and the 2009 update are available as spreadsheets on the website of its Conditions of Work and Employment Programme.

Madoff stated that “Everything the SEC did prior to 2006 was a waste of time…”

Regarding two SEC Office of Compliance Inspections and Examinations (OCIE) investigators who questioned him in 2006:

Madoff stated that “they never even looked at my stock records” or did a “box count.” He said he was “astonished” that they didn’t ask for DTC (Depository Trust Company) records, and stated that only a regulator could get those records from DTC, and the SEC would “have to go to DTC.” He added that DTC does not have separate accounts for each customer, but rather, provides a global report, but stated that if they went to DTC, they would’ve seen his market-making position, and that it “would’ve been easy for them to see” the Ponzi scheme. Madoff stated that the SEC could’ve gone to counterparties, and if they had, they “would’ve seen it,” adding, “they didn’t do any of that.” He stated that “it’s the only thing to do,” and clarified, “If you’re looking at a Ponzi scheme, it’s the first thing you do.”

Regarding an investigation by SEC’s Division of Enforcement:

Madoff said it was “amazing to me” that he didn’t get caught during the Enforcement investigation, because they specifically asked him, “Are these securities at DTC?” They further pressed, “What is your account number.” He replied, “646.” Madoff stated that it was “obvious they thought that something was amiss.” He went on to say that when they asked for the DTC account number, “I thought it was the end game, over. Monday morning they’ll call DTC and this will be over… and it never happened.”

He stated that in 2006, it was clear they asked about front-running because there were sweeps of the industry at that time for front-running. But in trying to discover a Ponzi scheme, he stated, “It’s very easy if you want. You must do a third party check. It’s absolutely a must.” He went on to add that “It’s Accounting 101 to look at DTC, do a box count” if you are looking for a Ponzi scheme.

Regarding a more rigorous exam conducted in 1992, when he was trading legitimately:

He said the SEC saw that the trades were real in 1992. When asked if the SEC did in later exams what they did in ‘92, would they have uncovered the Ponzi scheme? Madoff answered, “Absolutely.” He added, “There is no way they can avoid being criticized for not doing that in 2006.”

Regarding new SEC Chairman Mary Schapiro:

Madoff stated that Mary Shapiro (sic) was a “dear friend,” and that she “probably thinks I wish I never knew this guy.”

That June interview must have informed some of the recommendations included in Kotz’s September 29 memorandum (pdf, 5.0mb) reviewing the OCIE examinations.

Recommendation 27:
For significant issues such as whether trades have been executed and who has custody of assets, in the absence of third party (counterparties, custodians, etc.) documentation, the Office of Compliance Inspections and Examinations (“OCIE”) examiners should not simply rely on representations of BD (broker-dealer) or IA (investment adviser) personnel but should contact third parties directly. OCIE should provide guidance or training that clarifies for examiners circumstances that require such contact with third parties.

Recommendation 28:
The Office of Compliance Inspections and Examinations examination staff should be required to verify a test sample of trading or balance data with counterparties and other independent third parties such as Financial Industry Regulatory Authority, Depository Trust Company, or National Securities Clearing Corporation whenever there are specific allegations of fraud involved in an examination.

But this batch of records is for earlier visits, those occurring before September 15, for which records will only be made available in response to specific requests. The release explains that, with up to 100,000 visitors a month, those requests have turned up some “false positives,” such as William Ayers (not that William Ayers), a Michael Jordan or two, and several Michael Moores.

“changes in the approach to legal education have affected cost, particularly in the areas of faculty and staff. These changes include:
~ increased emphasis on hands-on clinical experiences, and smaller skills-based courses;
~ increased diversity of course offerings – e.g., international law and environmental law; and
~ increased student support – e.g., academic support, career services, and admissions support.”

Accreditation standards, by comparison, were “not a major driver” of higher costs, the study found. “Officials from more than half of the ABA-accredited schools we spoke with stated they would meet or exceed some ABA accreditation standards even if they were not required,” the report said. “School officials noted that the standards often follow market trends and changing approaches to legal education.”

“Officials at most of the ABA-accredited law schools we spoke with and student representatives reported that schools compete to attract students and faculty and to increase their US News and World Report ranking. This competition has had an impact on cost because:
~ Rankings are determined in part by such cost-related factors as per student expenditures, student-faculty ratio, and library resources.
~ According to law school officials, schools offer clinics and diverse elective courses to compete for students.
~ To attract the best faculty, school officials reported that they may offer higher salaries.”

The GAO study was first called for in a 2007 bill that sought to address the impact of heavy law school debt on the recruitment of new staff for prosecutor and public defender offices. In the Senate report for the bill, Senators Jon Kyl (R-AZ) and Orrin Hatch (R-UT) argued that the American Bar Association’s accreditation requirements were partly to blame for the onerous law school debt responsible for that recruitment gap. “For example, accreditation standards effectively raise faculty salaries; limit faculty teaching loads; require high numbers of full-time faculty rather than cheaper part-time adjuncts; and require expensive physical facilities and library collections,” they wrote. “The requirements probably cause law schools’ costs to more than double, increasing them by more than $12,000 per year, with many schools then passing the increased costs along to students by raising tuition.”

While that legislation never passed, the mandate for the GAO study was subsequently included in last year’s Higher Education Opportunity Act (PL 110-315).

The GAO study also investigated what factors, including accreditation, might affect minority access to law school. The study found that officials at most law schools “do not cite ABA accreditation standards as having an impact on minority access at their schools.”

African Americans represented a declining share of law school enrollments, from 7.5 percent in 1994-1995 to 6.5 percent in 2006-2007, while the share of Hispanics increased from 5.2 percent to 7.5 percent and the share of Asians and Pacific Islanders increased from 5.4 percent to 7.8 percent over the same period, according to Department of Education data reported in the study. “Most law school officials, students, and minority student group representatives we interviewed focused on issues such as differences in LSAT scores, academic preparation, and professional contacts, rather than accreditation standards, to explain minority access issues,” the report said.