In 2007, BBC reported that a $1.2 Billion dollar US State Department contract for training Iraqi police had been so shoddily managed that auditors simply couldn’t tell how the money was spent. "Auditors have stopped trying to audit the programme because all the documents are in disarray and the government is trying to retrieve some of the money," BBC stated. The program was run by a private US contractor, DynCorp. Dyncorp insisted that the difficulties did not represent "intentional fraud" on their part. That was 2007.

Yesterday, a new report from the same auditor–the Special Inspector General for Iraq Reconstruction (Sigir)– was reported by BBC, again regarding this State Department contract to Dynacorp for Iraqi police training, but this time for $2.5 Billion. The contract is the largest ever let and managed in State Department history. From BBC:

But Sigir’s Stuart Bowen says in his report that weak oversight made the contract vulnerable to waste and fraud.

According to Mr Bowen’s report, for years the state department had only one person in Iraq monitoring invoices during the early stages of the DynCorp contract, despite the complexity of the paperwork.

This meant many invoices were not questioned and as a result there is "no confidence in the accuracy of payments of more than $1bn to DynCorp", the report says.

As has been widely reported, Obama’s recently announced and very narrowly focused budgetary freeze will not impact huge and mismanaged contracts such as this one at the State Department, but instead restricts spending on discretionary funding here at home.

So, while wasteful, poorly managed and potentially fraudulent spending can continue to be lavished unchecked on private corporate contractors and the police forces of Iraq and Afghanistan (even when they commit repeated auditing "irregularities"), our own communities are scrambling for funding for basic funding for such things as law enforcement:

ALBANY — With New York City’s fiscal health in the balance, Mayor Michael R. Bloomberg traveled to Albany on Monday to ask the Legislature’s help in stopping some of Gov. David A. Paterson’s proposed budget cuts, saying they were unfair, could cripple the city and would force him to layoff thousands of police officers and firefighters.

and schools:

METRO: Richmond County school board Vice President Alex Howard said a four-day school week should be considered for the rest of the school year. He said the change would offset funding cuts and extra furlough days. One day’s savings in transportation would be about $4,300, he said.

These two exerpted news stories are just two of thousands of similar news items all across America, from communities and states both large and small. All of them echo the same sad and increasingly desparate refrain from The Big Apple to Augusta Georgia–local and state communities struggling to fund even the most basic of services for the same American citizens who are unwillingly paying through the nose for a flood of mismanaged boondoggles overseas.

This is one of the classic hallmarks of American empire–the resources flow ever-outward in a fraudulent river of waste, while the taxpayers are told to tighten their belts here at home.

Remember that old urban legend about the bank robber Willie Sutton? When asked why he robbed banks, he is reputed to have said "Because that’s where the money is!" Obama might do well to take a page from Sutton’s Law. If you want to get serious about managing the national budget-go where the money is.

But don’t take my word for it, President Obama. Ask your own auditors and inspectors general. They’ll show you where the big money is. Here’s a hint for you. It won’t be in domestic discretionary spending.