USDA diversity training session included 'illegal immigrants' chant, group claims

The U.S. government paid a Chicago consultant hundreds of thousands of dollars to put on diversity training workshops that, according to one watchdog, included an exercise in which employees were told to chant "our forefathers were illegal immigrants." 

Conservative group Judicial Watch made the claim this week as it released a handful of documents pertaining to the program -- and alleged that the sessions ended up enforcing political views more than promoting tolerance. 

"Instead of being diversity-oriented or tolerance-oriented, it's more about adopting a mindset," said Lisette Garcia, a senior investigator with the group. "It seemed to go so far as to encourage illegal immigration." 

Judicial Watch began to investigate the sessions earlier this year after being approached by a tipster at USDA who was "offended" by them, Garcia said. Judicial Watch claims it has identified at least $200,000 spent by the USDA over the last two years on the company Souder, Betances & Associates. 

The USDA later confirmed that amount.   

The tipster, Garcia said, described one session in which the speaker led workers in chanting "our forefathers were illegal immigrants" while pounding on the table and getting others in the room to join in. 

"How does that fit into the USDA mission at all?" she said. "The price tag makes it more egregious." 

It's unclear how much total federal money was spent on these kinds of sessions at USDA and other agencies. Federal contract records show the Department of Defense has also contracted with the company, though it's unclear what that work entailed. The company's website says its clients include an array of federal departments, from Commerce to Energy and Interior, as well as USDA. 

"For over a decade Souder, Betances and Associates has been a leader in the field of diversity training and consulting," the company site says. 

The USDA did not confirm or dispute the anecdote from Judicial Watch about the illegal immigrant chant. However, in a statement to FoxNews.com, a USDA spokesperson stressed that the sessions were meant to foster diversity and were well-received by employees.   

"USDA offers a number of optional workshops and professional development opportunities in order to help employees better serve our customers," the statement said. "The Souder Betances & Associates sessions were designed to foster overall diversity awareness -- not to focus on any specific minority group -- and received positive feedback from employees across the department." 

A representative with Souder, Betances & Associates did not return a request for comment. 

Judicial Watch apparently has received little documentation from the USDA on the program, but it released an email exchange in which a USDA official discusses the "diversity intelligence advantage course" with an official from the Chicago firm. In one email from January, the USDA official asked about when he might be able to attend the course later in the year. 

Another email released by the group showed an analyst at USDA who handles record requests advising other records officers about the Judicial Watch request. The officer said that most would probably issue a "no records denial" but said because of the group's history of lawsuits "I want to at least say a USDA wide search for material was conducted despite ... knowing that most ... agencies will have no records." 

Judicial Watch later wrote in a letter to Agriculture Secretary Tom Vilsack that the email "reinforced the expectation of agency noncooperation."

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Obama, Romney battle over economic policies in first presidential debate

Mitt Romney took President Obama to task Wednesday night for an economy that has sputtered while moving millions onto government assistance, using his first general election face-off to chip away at the narrative that Obama’s presidency is working for the middle class.

Echoing the words of Vice President Biden earlier in the week, Romney said: “Under the president’s policies, middle-income Americans have been buried.”

Obama, though, sustained the drumbeat at their kick-off debate in Denver that his opponent is promising a return to failed policies that would boost the privileged and burden the working class. He slammed Romney for wanting to turn Medicare into a “voucher” system, repeal the federal health care overhaul and allegedly push a tax cut for top earners.

Each candidate strived throughout the 90-minute debate to appeal to the middle-class voters who likely will decide the election five weeks from now. While Romney accused Obama of pushing “trickle-down government,” Obama accused Romney of wanting to “double down on the top-down policies” that led to the financial crisis.

The debate, which focused exclusively on domestic matters, was heavy on policy details and light on zingers. It was one of three presidential debates set for October and marked Romney’s first opportunity to go toe to toe with the president.

The debate was tense at times, with the candidates standing just feet from each other and often cutting off the moderator, PBS' Jim Lehrer. Romney appeared to take a slightly more aggressive tone on stage, though the overall tenor of the debate marked a step back from what has become a bitter and nasty campaign in the closing weeks.

Each candidate came armed with studies and stats to bolster his respective position – but the central goal was to broaden their appeal before a national audience hurting for jobs and make the case for why their plans would boost growth.

Obama argued that the issue to consider is not “where we’ve been” but “where we’re going.”

“We’ve begun to fight our way back,” Obama said. He accused Romney of wanting to roll back regulations and implement tax cuts skewed toward the wealthy and reverse those gains.

But Romney, citing the millions who have gone on food stamps and hit the unemployment lines in the last four years, argued that “the status quo is not going to cut it.”

“We know that the path we’re taking is not working. It’s time for a new path,” Romney said.

He said Obama’s push to raise taxes on top earners amounts to a tax on the very small businesses needed for a robust economic recovery.

“You raise taxes and you kill jobs,” Romney said. “I don’t want to kill jobs in this environment.”

On taxes, though, Romney sought to wipe away the caricature that the Obama campaign has been drawing these last two years – of Romney as an out-of-touch millionaire who’s looking to make the rich richer with his tax cut plan.

Obama again argued Wednesday night that the Republican nominee is pushing a $5 trillion tax cut plan that would skew toward the wealthy. To offset that, Obama claimed, Romney would have to either add to the deficit or raise the burden on the middle class.

“It’s math, it’s arithmetic,” Obama said

Romney, though, insisted the 20 percent across-the-board rate cut he’s pushing is not nearly as sweeping as the president describes.

“I don’t have a $5 trillion tax cut,” Romney said. Further, he pledged to hold to his promise that it would be deficit-neutral and not hurt the middle class.

“There’ll be no tax cut that adds to the deficit. I want to underline that – no tax cut that adds to the deficit,” Romney said. He added: “I will not under any circumstance raise taxes on middle-income families.”

Romney addressed his tax plan after saying in an interview that one way to offset the rate cut would be to cap deductions at perhaps $17,000 – and have taxpayers choose what deductions they want to take. The details may have been meant to undercut the Obama campaign’s claims that he has not been specific.

The president, though, repeatedly hammered Romney at the debate for allegedly hiding the details of several plans – from his proposals for implementing tax reform to his plans for replacing “ObamaCare.”

“At some point I think the American people have to ask themselves, is the reason that Governor Romney is keeping all these plans to replace (the health care law) secret, because they’re too good?” Obama said sarcastically.

Obama adamantly defended the health care law, saying he’s warmed to the term “ObamaCare.” He denied that it was a “takeover” of health care and warned against repealing it as Romney wants to do. 

On taxes, Romney also knocked Obama for returning to a call for closing tax breaks for oil and gas companies as part of his deficit reduction plan. Romney said the $90 billion in aid to green energy companies amounts to “about 50 years’ worth of what oil and gas receives.” Still, Romney said, he’d be willing to put cutting the oil industry breaks “on the table” if overall rates go down.

Romney also had a quick retort when Obama suggested Romney wanted to cut education spending.

“Mr. President, you're entitled as a president to your own airplane and to your own house, but not to your own facts. All right, I'm not going to cut education funding,” he said.

The debate in Denver fell against the backdrop of a sputtering economic recovery and rising U.S. debt. While Romney used these factors to argue Obama does not deserve a second term, the president again made the case that he’s still cleaning up the mess from the prior administration and needs four more years to finish the job.

The campaigns carefully managed expectations in the run-up to the debate.

Obama's advisers claimed Romney arrived with practice from the primary season under his belt. Romney's advisers noted Obama was the only one on stage with any general election debate experience. 

But Romney’s campaign cranked up its attacks in advance of the faceoff. Republicans seized on a comment by Biden in North Carolina Tuesday in which he said the middle class has been "buried" over the last four years. Romney and running mate Paul Ryan pointed to the admission as proof of what they've been arguing all along.

Romney arguably had the most to gain out of Tuesday’s performance. Though competitive with Obama in national polls, he's been slipping in key battlegrounds. The debate was a chance for him to close that gap, and potentially benefit simply from being on the same stage as the president. 

The two candidates debate next on Oct. 16 and for the last time on Oct. 22. The only vice presidential debate is set for Oct. 11.

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DeMint joins national effort to keep feds from bailing out state pension systems

Illinois Democratic Gov. Pat Quinn is getting hit with a nationwide backlash over his suggestion that the federal government bail out the state employees’ pension program.

Critics have in the past several days pounced on the suggestion, made last year when Quinn, in announcing the state’s fiscal 2012, said part of Illinois' long-term effort to reduce the estimate $167 billion in under-funded liabilities would be to seek “a federal guarantee of the debt.”

Among those leading the charge is Republican Sen. Jim DeMint. The South Carolina senator has joined the Illinois Policy Institute’s national “No Pension Bailout” campaign -- an effort to stop Congress from attempting to rescue failing state and municipal pension plans.

“Our greatest concern is states will assume they can run their pension systems into bankruptcy and then turn to the federal government for bailout,” DeMint said Thursday.

He also suggested the problem is the result of state legislators trying for decades to win over voters through pension promises based “on accounting methods that would put any business in jail.”

The conservative policy group estimates the total amount of under-funded pension liabilities in states is at least $2.5 trillion, with Illinois leading the nation.

The basic plan floated by Quinn would be for the federal government to rescue the pension program through buying the state’s bonds, which critics say are too financially risky to attract investors.  

Quinn said after announcing the budget that seeking the federal guarantee was only a precaution, then later called the related wording a “drafting error,” according the non-partisan Citizens Against Government Waste, which nevertheless gave the governor its September 2012 “Porker of the Month” award.

The governor’s office could not be reached for comment this weekend.

The Wall Street Journal’s editorial writers recently said: “Sooner or later, we knew it would come down to this since the Democrats who are running Illinois into the ground can’t bring themselves to oppose union demands.”

In addition, an editorial Tuesday in the Chicago Tribune argued that saving Illinois will “start a stampede of demands for equal treatment from other financially troubled states” with public pension debts ranging from $1 trillion to $25 trillion.

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Solar power company banks on loan, but skeptics question government investment in industry

The federal government is making another big bet on solar panel manufacturing with taxpayer money, hoping the third time will be the charm.

SoloPower held its grand opening Thursday in Portland, Ore., with speeches from local politicians and a ribbon-cutting. "It really revolutionizes rooftop applications, and it makes solar both easy and cost effective for nearly any commercial and industrial building worldwide," CEO Tim Harris said.

SoloPower closed on a guaranteed government loan of $197 million last August, about the time another solar panel manufacturer, Solyndra, filed for bankruptcy. The failure of Solyndra cost U.S. taxpayers more than a half-billion dollars.

The second solar panel maker that received a loan from the Department of Energy, Abound, is also now in bankruptcy. Based in Longmont, Colo., Abound spent $70 million of its green energy loan and next week will auction off its equipment in hopes of paying some of that back.

Industry analysts are not optimistic about SoloPower's prospects.

"It's questionable at this point," says Andrew Soare of Lux Research, "It's uncertain if solar power will be able to produce efficiently and economically at scale. It's something that has not been done yet, and it's still risky."

Soare points to the price advantage enjoyed by Chinese manufacturers which has helped them grab a majority of the U.S. market share. Chinese solar panels are about 30 percent cheaper than ones made in America. The Commerce Department is urging President Obama to slap a tariff on Chines imports.

But SoloPower doesn't view China as competitors because they make far different products. SoloPower manufacturers "thin film," flexible and lightweight panels that can be installed on large commercial and industrial rooftops.

Environmental groups continue to support the federal green power loan program.

"We're just on the cusp of a whole revolution," says Ross Macfarlane of Climate Solutions. "Many (companies) will fail, but the key ones will succeed and they're going to lead us."

But William Yeatman of the Competitive Enterprise Institute says the Energy Department's green loan program created with federal stimulus money has been a failure by any measure. Congress appropriated $4.5 billion for it. Solar panel bankruptcies alone have cost taxpayers $600 million and if SoloPower stumbles, the losses will go even higher. A fourth company, 1366 Technologies, received a $150 million loan but has not even built its manufacturing plant yet.

Yeatman has little faith in SoloPower: "It looks like it will fail for the same reasons as Solyndra."

Much of the debate following Solyndra's collapse has centered on government's role in emerging technologies. Green groups say government has supported the oil industry through tax breaks, so it's essential to help alternative fuels to wean us off carbon.

But John Charles of the Cascade Policy Institute said government just gets in the way.

"It's a terrible risk," Charles said. "This is a program that should not even exist, even if the risk was low. It is not a proper function of government to be a venture capital fund."

SoloPower expects to start spending the taxpayer money late this year.

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Private city in Honduras will have minimal taxes, government

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference. 

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong,  CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

“Our goal is to be the most economically free entity on Earth.”

- Michael Strong, CEO of MKG Group

Honduran leaders hope that the city will lead to an economic boom for the poverty-stricken country south of Mexico. The average income in Honduras is $4,400 a year.

“[It] will bring a lot of investment into the country [and be] a center for many employment opportunities for our people,” Honduran President Porfirio Lobo Sosa has said.

The laws in the city will be separate from those in the rest of Honduras. Strong said that the default law that will be enforced in the city will actually be based on Texas state law, which has relatively few regulations.

“It will be Texas law with more freedom of contract. Texas scores well on state economic freedom rankings,” he explained.

“Texas law is also very familiar to American business people, and it is very familiar to Hondurans, because a lot of Hondurans have gone there or have family there.”

Investors who think the city will do well will also be able to buy land there.

“There will be a free market in land,” Strong said.

The rules for immigrating to the city have yet to be finalized, but are expected to be loose.

“It will be designed to be very welcoming to those with a minimum threshold of skills or capital,” Strong said. However, businesses in the city will be required to employ a minimum proportion of native Hondurans – a requirement imposed at the outset by the Honduran government to ensure that the city’s benefits largely go to Hondurans.

To insure the city against political change, the Honduran Legislature has agreed that a two-thirds majority will be required to interfere with the city.

MKG will invest $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast, said Juan Hernandez, president of the Honduran Congress. That first city would create 5,000 jobs over the next six months and up to 200,000 jobs in the future, Hernandez said.

Strong said construction could begin in months.

“First, we will build the critical infrastructure -- roads, water, power, sewers," Strong said. "In collaboration with the [Honduran] government, we will then create the city’s government system and the security, and 3 to 6 months after that we will build the first factories.”

The MKG Group city is the first to get approval, but Honduras plans to create other “free cities” as well.

The bill to allow the creation of such cities passed the Honduran Legislature nearly unanimously, by a vote of 126 to 1. But not everyone is on board with the project. Left-wing Hondurans have filed a complaint before the Honduran Supreme Court, arguing that the free cities project violates their constitution and treats “national territory as a commodity.”

The indigenous Garifuna people in Honduras also have protested the creation of free cities, saying that they are worried the cities will be built on their land.

Strong said that they need not worry.

“The media reports are full of inaccuracies. We're not even remotely close to [the Garifuna]. We're literally hundreds of miles away,” he said.

Additionally, the new city will be built on unoccupied land.

“We will be selecting unoccupied land so that everyone will be opting in by choice,” Strong said.

But some oppose the project being built anywhere in Honduras.

“I can't help but suspect that the promise of plenty of jobs is nothing but a Trojan horse,” Teofilo Colon Jr., who runs the Garifuna cultural group Being Garifuna, told FoxNews.com.

“The prospect of setting up a charter city, with its own laws, [that] is sovereign to itself and doesn't have to pay taxes, is a dubious one at best. It'd be tantamount to inviting pirates to come in and have free reign to essentially raid the country's resources/riches.”

The MKG Group says its plan, however, is not to take advantage of natural resources, but rather to attract entrepreneurs using good laws and low taxes.

Strong cited Hong Kong as a city that prospered under that model.

“Hong Kong’s poverty once was roughly on the level of Africa. Today it is one of the wealthiest places.”

Strong says that the same could happen in Honduras.

“We'll see Hondurans having more jobs, higher income, and more security than they've ever had.”

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State Department issues warnings in Sudan, Tunisia

WASHINGTON –  The State Department on Saturday ordered the departure of all family members and non-essential U.S. government personnel from its embassies in Sudan and Tunisia and warned U.S. citizens against any travel to the two countries due to security concerns over rising anti-American violence.

"Given the security situation in Tunis and Khartoum, the State Department has ordered the departure of all family members and non-emergency personnel from both posts, and issued parallel travel warnings to American citizens," said department spokeswoman Victoria Nuland.

In Tunisia, the warning advised Americans that the international airport in Tunis is open and encouraged all U.S. citizens to depart on commercial flights. It said Americans who chose to remain in Tunisia should use extreme caution and avoid demonstrations. On Friday, protesters climbed the walls into the U.S. Embassy in Tunis, torching cars in the parking lot, trashing the entrance building and setting fire to a gym and a neighboring American school that is now unusable.

In Sudan, the warning said that while the Sudanese government has taken steps to limit the activities of terrorist groups, some remain and have threatened to attack Western interests. The terrorist threat level remains "critical" throughout Sudan, the department said. It noted that U.S. officials are already required to travel in armored vehicles and to get permission to travel outside Khartoum, where crowds torched part of the German Embassy and tried to storm the U.S. Embassy on Friday.

A U.S. official said on Saturday that Sudan's government is holding up the deployment of an elite Marine team that the U.S. planned to send to Khartoum to boost security at the embassy.

Meanwhile, Secretary of State Hillary Rodham Clinton worked the phones on Saturday, calling top officials from seven countries to discuss the situation following a wave of protest and violence over an anti-Muslim film that has swept across the Middle East and elsewhere in recent days. An obscure, amateurish movie called "Innocence of Muslims" that depicts Muhammad as a fraud, a womanizer and a pedophile sparked the outrage.

On Tuesday, protesters in Egypt breached the walls of the U.S. Embassy in Cairo and then well-armed extremists attacked the U.S. Consulate in Benghazi, Libya, killing four Americans, including the U.S. Ambassador to Libya, Chris Stevens. Since then, protests over the video have spread to more than 20 countries in the Middle East, Africa and Southeast Asia. While most were peaceful, marches in several places exploded into violence, including Tunisia and Sudan.

Clinton on Saturday spoke to the prime minister of Libya, the president of Somalia, and the foreign ministers of Britain, Egypt, France, Saudi Arabia and Turkey, Nuland said.

With Libyan Prime Minister Mustafa Abushagur, Clinton spoke about the importance of bringing the consulate attackers to justice, Nuland said. The prime minister "expressed confidence that the attackers would be brought to justice, noting that the government was already starting to take action," she said.

With the Egyptians, Turks and Saudis, Clinton thanked them for their condemnations of the violence and spoke of the need to ensure security at diplomatic missions, Nuland said. Clinton and Egyptian Foreign Minister Mohamed Kamel Amr also "agreed that while the film may be offensive and reprehensible, it cannot be used as justification for violence," Nuland said.

Clinton's calls and the State Department travel warnings came as President Barack Obama paid tribute to the Americans killed in Benghazi in his weekly radio address and denounced the anti-U.S. mob protests that have followed.

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Most vulnerable casualty of DC tax battle may be orphans, foster kids

Amid talk of the “fiscal cliff” and how much wealthier Americans should pay the government, not much attention has been paid to the most vulnerable class of tax code casualties: orphans and foster kids desperately hoping to be placed in loving homes.

But among the so-called Bush tax cuts set to expire at the end of the year is a one-time adoption tax credit that can give families nearly $13,000 in aid for taking in a parentless child. Advocates fear that if the tax credit is not renewed, tens or even hundreds of thousands of kids will be left to fend for themselves.

“I wish the discussion of all the different taxes did not include this particular tax issue. It is support to families that are adopting, and doesn’t belong in the political mix.”

- Joe Kroll, executive director, North American Council on Adoptable Children

"Without the tax credit, thousands of parents who could not afford to do adoption would just simply not be able to adopt children," said Bill Blacquiere of Grand Rapids, Mich.,-based Bethany Christian Services.

The tax incentive, first written onto the Internal Revenue Service books in 1997, allows people who want to adopt children but don’t have the financial means to take in kids who might otherwise grow up in foster homes.

According to the National Council for Adoption, there are more than 100,000 children in foster care in the U.S., and millions more orphaned and abandoned children around the world. Cutting the tax credit for adopting these children will mean far fewer find homes, say advocates. The council has started a website, savetheadoptiontaxcredit.com, with the hope of building support for making it a permanent part of the tax code.

While both parties in Washington, as well as the White House, appear to support the adoption tax credit, the standoff over renewing a much broader package of tax cuts could doom it. Democrats want to make renewing the Bush tax cuts contingent on raising income taxes for people earning $250,000, while Republicans are adamantly opposed to anything that raises taxes above current levels.

Unless Congress acts to extend this tax credit, on Jan. 1, 2013, the only credit for adopting will apply to parents who take in special needs children from within the U.S. — and that credit will be for just $6,000.

The adoption tax credit, which adjusts annually for inflation, is $12,650 this year, down $710 from 2011. But what really hurts families with big hearts and tight budgets is that the credit is no longer refundable, according to Bankrate.com. That means it can help lower the tax bill, but once expenses are covered no excess credit can be claimed as a tax refund. That especially hurts poor families who may have little or no tax liability.

The National Council for Adoption wants to not only save the credit, but make it refundable, as it was in 2010 and 2011.

Joe Kroll, executive director of the North American Council on Adoptable Children, cited the case of the case of Todd and Mary Hankel, of St. Croix Fall, Wisc., as an example of how important it can be to be able to claim adoption expenses as a refund and not simply a credit. When seven siblings from a troubled Twin Cities family were put up for adoption in 2006, the Hankels stepped forward to adopt all seven in order to keep the kids together.

They were able to carry forward the tax credit against their expenses — which included building an addition on their house — until 2010, when the tax break became refundable and they got a check that helped them pay off a mortgage for the addition.

The Hankels are not wealthy, said Kroll, and neither are most people who make the decision to take in foster children.

“When you look at the numbers, you see that folks under $100,000 make up the bulk of the adoptions,” Kroll said. “It’s stunning how many families at lower income levels are adopting children.”

That’s why Kroll wishes the heated political debate about the Bush tax cuts did not include an incentive for helping otherwise helpless kids.

“I wish the discussion of all the different taxes did not include this particular tax issue,” Kroll said. “It is support to families that are adopting, and doesn’t belong in the political mix.”

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US credit rating under fire again, Moody's warns lawmakers on debt

America's credit rating is once again at risk. 

Moody's Investors Service said Tuesday that it would probably cut its triple-A rating on U.S. government debt by a notch unless congressional leaders can strike a budget deal in the coming months to bring down the deficit. 

"If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed," Moody's said in a press release Tuesday. "If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1." 

The threat comes after one of the other big three ratings firms, Standard & Poor's, downgraded the U.S. last year following the brawl in Washington over the debt ceiling. 

The country is once again headed for a debt-ceiling showdown, with Moody's predicting the country will run up against the ceiling "around the end of this year." Any potential downgrade is not likely until at least next year. 

House Speaker John Boehner, reacting to the latest warning, called on Congress to take major steps to reform the tax code, cut spending and overhaul entitlements. 

"Today's warning by Moody's underscores the point we have been making all year: the threat to American jobs comes not from action on our debt, but from inaction on our debt," he said. 

Lawmakers, though, are unlikely to do much until after the November election, when the balance of power in Washington is more clear.

Moody's said the firm will wait for a budget deal -- or the collapse of one -- before determining the U.S. credit rating. 

The big wild card in the near-term concerns the so-called "fiscal cliff" -- the slew of tax hikes and spending cuts set to take effect in January 2013 unless Congress averts them. 

Ironically, Moody's said one of the few ways the U.S. could maintain its current status, of triple-A with a "negative outlook," would be if Congress actually lets those tax hikes and spending cuts happen. 

But even that doesn't guarantee a sterling credit score. Going over the "fiscal cliff" would help close the deficit, but the flip side is it could destabilize the economy. And Moody's said it would need evidence the economy could "rebound" before returning the U.S. rating to triple-A and "stable." 

Boehner expressed doubt Tuesday that much of anything could be done to avert the tax hikes and spending cuts -- potentially good news for the budget, but bad news for the economy. 

"I'm not confident at all," Boehner said. 

The Ohio Republican reminded reporters that the House has passed legislation to both avoid the automatic, across-the-board cuts next year and to renew the Bush era tax rates for one year as well. Republicans warned of the impact of the impending cuts on the military and implored Senate Democrats to act to avoid them. 

The Senate, however, has deadlocked over taxes and failed to address the across-the-board cuts, known as a sequester in Washington parlance. 

The Associated Press contributed to this report.

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EXCLUSIVE: Long-awaited 'Furious' report places blame on ATF, Justice

Dozens of senior-level U.S. government officials turned a blind eye to public safety as they pursued an ill-conceived and poorly managed investigation into gun trafficking in Mexico, according to a long-awaited inspector general's report on Operation Fast and Furious.

Portions of the Justice Department IG report, which has not been made public, were obtained exclusively by Fox News Channel.

The report and accompanying accounts cite a failure in leadership and a lack of accountability and oversight up and down the chain of command at the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Justice Department itself and other offices. It says many senior executives knew the U.S. was helping traffic guns to Mexico that killed people but did nothing to stop it.

"We found no evidence in Operation Fast and Furious that the ATF or the (U.S. attorney's office) attempted at any point during the investigation to balance the risks to the public safety against the long-term benefits of identifying trafficking networks and participants," the draft report says.

Fast and Furious was the anti-gunrunning sting that helped send some 2,000 assault weapons to Mexico under the guise of stopping illegal trafficking. The operation ended only after the death of Border Patrol Agent Brian Terry -- two of the weapons associated with the investigation were found at his murder scene.

Much of the blame in the report is directed at three ATF managers: Phoenix Agent in Charge Bill Newell, Supervisor Dave Voth and Case Agent Hope MacAllister. 

Their attorneys claim they've been scapegoated. Debra Roth, an attorney for MacAllister, wrote to Inspector General Michael Horowitz that the report "fails to account for the abdication of oversight, guidance and responsibility by ATF headquarters and Main Department of Justice regarding the implementation of what is in essence a strategy to combat an international criminal enterprise."

The documents obtained by Fox News, while incomplete, provide an early glimpse into the finger-pointing that will follow the expected release later this week or early next week of the complete IG report. Attorney General Eric Holder has said the report, which will be scrutinized on Capitol Hill, will provide him the basis to discipline or fire those found most culpable.

While the report blames Newell and Voth for poor judgment, attorneys for the two say higher-ups and the entire ATF chain of command were aware of everything they did.

Both men recall a detailed briefing Voth delivered to senior ATF and DOJ staff in Washington on March 5, 2010. In a Power Point presentation, attended by at least two deputy attorneys general, Voth explained how the operation was run and how almost two-dozen largely unemployed men bought 1,026 assault weapons with $650,000 in just over four months, then smuggled the guns to Mexico while under surveillance.

"Following the briefing ... Mr. Voth received accolades from his superiors. No one in ATF leadership or at Main Justice raised any concerns with Mr. Voth about the direction of the investigation. If anything, they were encouraging him," Voth attorney Joshua Levy said. 

Attorneys for the three contend that the report's conclusion that the strategy for Fast and Furious was hatched in Phoenix is not true. MacAllister's attorney claims that it was "part of the overall ATF Southwest Border strategy to deal with an international criminal enterprise engaged in firearms trafficking."

Horowitz said late last week that he expects the full report to be released later this week or early next. He is currently scheduled to testify in front of the House Oversight and Government Reform Committee next Wednesday.

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Exclusive: UN Still Has Ties That Bind With Bloody Assad Regime

As the Syrian government of President Bashar al-Assad accelerates its ferocious military campaign against its own people, the United Nations Development Program, the U.N.'s flagship anti-poverty agency, is still intimately linked to institutions that keep the Assad family’s grip on power -- and that conduct surveillance and may be conducting cyber-warfare against those protesting the brutal regime.

One of the UNDP's partners in its elaborate development schemes for the battered nation -- now suspended due to Assad’s onslaught -- is the Syrian Computer Society (SCS), an organization created by Assad’s older brother and run by Assad himself until he assumed the presidency in 2000. In a 2007 U.N. report, the society was hailed as “the main and most widely used private provider of Internet services” in the country -- and a participant in major collaborations involving information and communications technology (ICT) with the Assad government dating back for years.   

The computer servers and other (ICT) installed in U.N. offices in Syria, which operate at www.un.org under the auspices of the United Nations Development Program (UNDP),  are hosted at an Internet address owned by SCS. 

Sharing the same Society-owned  IP address as  www.un.org  are a flock of Syrian government departments, clearly identified by their “.gov.sy” listings, many of which have also worked in close partnership with UNDP for years.

CLICK HERE FOR THE IP ADDRESS INFORMATION

Other U.N. organizations, including the U.N. relief agency known as UNHCR -- which is deeply involved in aiding refugees from the Assad reign of terror -- are hosted at another website address also owned by the Society.

According to a UNDP press spokesman, the agency’s relationship to the Syrian Internet provider is purely routine: “We contracted SCS services because it was the only organization with the required infrastructure and technical support able to provide Internet services.” He added that “servers hosted at UNDP’s Country Office in Syria are protected by a firewall system.”

Similar points were made by a spokesman for UNHCR.

In fact, in at least 79 of 166 UNDP country offices around the world, the organization bypasses local Internet services by using private -- and more secure --VSAT satellite transmissions for its Internet communications . The Syria office is not among the 79, though such services are readily available in the Middle East.

According to the UNDP spokesman, UNDP “has moved” to a VSAT system, but according to information on UNDP’s procurement website, the bidding for such a global system for UNDP seems to be ongoing.

CLICK HERE FOR UNDP’S VSAT BIDDING NOTICE

Despite the claims that the relationship with SCS is nothing out of the ordinary, a cloud of puzzles still surround it, starting with the different and directly contradictory answers provided by the same UNHCR spokesman on two consecutive days when asked to explain a financial riddle. 

Why, according to U.N. procurement records for 2010 and 2011, did the relief agency uniquely show the “location of the supplier” -- meaning the location of the payment – for “computer services” from  SCS  not, as other U.N. agencies did, in Syria but in Switzerland?

According to the first answer, the payments were merely made through UNHCR’s Swiss headquarters bank to “save costs and improve efficiencies.”  The next day the spokesman added an update: forget that.

“UNHCR pays SCS locally in Syria and not through HQ Bank accounts in Switzerland as UNHCR complies with the necessary restrictions on international banking transactions,” the spokesman said.  “There were no payments via Switzerland.”

The fact that two separate annual compilations of U.N. spending for two separate years showed the SCS supplier payments going to Switzerland, in computer-assembled statistical reports that also record numerous UNHCR payments -- in Syria -- for other goods and services used in Syria, is apparently “an error.”

CLICK HERE FOR THE PROCUREMENT RECORDS

Similar mind-bending might be required to consider SCS as no more than an ordinary Internet services provider.

As far back as 2009, the Paris-based organization Reporters Without Borders,  which has called Syria “one of the world’s most repressive countries toward Internet users,” put SCS on a list of “Internet enemies,” and charged that SCS  “can intercept emails and therefore monitor dissidents,” something that the regime had been doing for at least two previous years, tracking cyber-protesters  through their IP addresses.

Also in 2009, in confidential State Department cables later published by the rogue website Wikileaks, U.S. diplomats relayed concerns from American relief organizations that unauthorized SCS employees were being placed in their offices without permission, in order, the diplomats said, to “keep tabs” on the grassroots aid groups as popular hostility to the Assad regime deepened.

More recently, allegations have surfaced in the human rights blogosphere that members of the so-called Syrian Electronic Army -- pro-regime hackers who have taken down or defaced news websites with cyber-attacks, or used them to spread disinformation about Assad’s opposition -- might have ties to SCS. These ties have never been fully demonstrated, says Paul Rosenzweig, a visiting senior fellow at the Heritage Foundation and a former deputy assistant secretary for policy in the Department of Homeland Security.

“Plausible. Likely,” he told Fox News. “Can you call it proven? No.”

The main point, though, he notes, is that “everything in Syria is under the government’s thumb.”

For his part, a UNDP spokesman said, in reply to questions from Fox News, that “UNDP has not been officially informed of any complaints by NGOs regarding surveillance activities by SCS.  SCS does not have free access to UNDP premises.”

But there are connections between the Syria Computer Society and other Syrian institutions that are accused of more sinister intentions than spying and prying.

Also hosted at the IP address shared with UNDP is the Commercial Bank of Syria (CBS), a state-owned financial institution that has been under U.S. Treasury sanctions since 2006 for terrorist-related money laundering. On its website, www.cbs-bank.sy, CBS denies the money-laundering charges.

For the past year, however, the bank  has also been under U.S. Treasury sanctions for something even more alarming: alleged financial ties to Syrian and North Korean  organizations involved in ballistic missile production and creation of  “unconventional” weapons of mass destruction, as well as ties to Iranian banks linked to that country’s own nuclear proliferation program.

 CLICK HERE FOR THE 2011 U.S. TREASURY ANNOUNCEMENT 

Additional sanctions against the bank were levied by the European Union in October 2011,  in a bid -- so far unsuccessful -- to stem the “appalling and brutal campaign the Syrian regime is waging against its own people,” according to the European Union’s top foreign affairs official, Catherine Ashton.

Along with electronic ties, there is a human link between the sanctioned bank and the Syrian Computer Society.

According to website information obtained by Fox News, a  computer expert named Ghassan Fallouh, who is also a prominent academic at Syria’s International University for Science and Technology, has served on the boards of both institutions since 2010, and on the board of the Syrian Computer Society since 2006.

Fallouh’s university resume says that he also served from 1999 to 2004 as a “consultant to the UNDP for the [Syrian] Central Bank.”

CLICK HERE FOR FALLOUH’S RESUME

Questions to Fallouh about the Syrian Computer Society, sent by Fox News on August 16, had not been answered by the time this article was published.

According to UNDP’s spokesman, “UNDP has no commercial relationship with CBS.”

Whatever the connections between SCS and other organs of the regime, experts argue, the Syrian Computer Society is much more than an Internet host for the U.N., the Assad government and alleged financiers of weapons of mass destruction.

It is an important “tool of the regime,” according to David Schenker, head of the program on Arab Politics at the Washington Institute for Near East Policy, a prominent bipartisan think tank, and a former adviser on Syrian affairs to then-Defense Secretary Donald Rumsfeld.

“When Assad came to power, he was the Internet president,” Schenker says.  “He was setting the stage for how enlightened he would be. He made an effort to burnish the modern nature of the new regime,” with SCS as part of the effort.

Now, Schenker says, “we know he had no intention whatsoever of doing this.”

In the now-savage environment of Syria’s expanding  civil war, the relationship between the U.N. and its cyber-host raises additional questions about UNDP’s long relationship with Assad, and the organization’s strategy of “national execution” of its programs in dangerous corners of the developing world.

That strategy makes the government itself the chief implementer of social programs created with UNDP technical assistance and supervision, and builds intertwining financial and work relationships between the world body’s representatives on the ground and key ministries and institutions that ultimately help to ensure the regime’s control.

It also apparently made UNDP consider the Syrian Computer Society  as a “partner” of UNDP and a formal member of Syrian “civil society” in a planned six-year program  to help transform Syria under Assad, from a Soviet-style centrally planned economy to a “people-centered social-market economy,” in UNDP’s phrase.

A version of a so-called “country program document” for Syria covering 2007-2011 (and later extended to 2012), was distributed to UNDP’s 36-country supervisory Executive Board on April 26, 2006, prior to their June meeting . A record of  Executive Board decisions posted after the group’s subsequent  meeting in September 2006,  show that the body “took note” of the report -- U.N.-speak for passed it without making changes.

SCS  is listed in an appended “results and resources framework” to that document as a private sector partner in two central UNDP initiatives, to improve “structures and climate for trade, investment and competitiveness,” and likewise improve “employment environment and opportunities for skills enhancement for the under- and unemployed, especially women and youth.”

CLICK HERE FOR THE RESULTS AND RESOURCES FRAMEWORK.

According to the country program itself, the plan had also been approved by the Syrian government in February 2006.

According to UNDP’s spokesman, however, “although it was mentioned in UNDP’s results and resources framework, no agreement was made with SCS. Accordingly, the UNDP Syria country office has never had any development-related agreement with SCS.”

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