Another Major Scandal At The Copyright Office: $25 Million 'Fake Budget' Line Item

from the oops dept

On Monday, we published documents we obtained that revealed a massive amount of incompetence and waste at the Copyright Office. They had officially asked for $1.9 million on a technology modernization program, then spent $11.6 million on it without telling anyone about the ever-growing money pit, only to cancel the contract with the vendor last October with nothing to show for it. Oh, and throughout the process, it appeared that the Copyright Register misled both Congress and the Library of Congress.

It would appear that this is not the only time that the former Register of Copyrights, Maria Pallante, was found to be misleading Congress and the Library of Congress concerning the Copyright Office’s budget and monetary needs. In the recent markup for a bill in the House Judiciary Committee that would make change the Copyright Register position to be a Presidential appointment, rather than by the Librarian of Congress, Rep. Zoe Lofgren revealed that Pallante had apparently put in place a fake $25 million budget line item, asking the Librarian of Congress to testify under oath what it was for, despite it being made up. You can see the comments here or in the video below:

If you can’t watch that, here’s the relevant transcript, as stated by Lofgren. She was trying to add an amendment to the bill that would still allow the Librarian of Congress to fire the Register of Copyrights if necessary (under the bill presented, only the President can fire the Register).

This amendment allows the Librarian of Congress to remove the Register. This is an essential provision. How can you expect the Librarian — as mandated by law — properly supervise the Copyright Office when the Register is answerable to no one but the executive branch? And how do you truly supervise someone you can’t fire?

Now, what can a Librarian do if a Register is acting insubordinately, or giving fake budget request numbers. Unfortunately, this is not a hypothetical. While preparing the fiscal year 18 appropriations request, the Library noticed that a $25 million line item in the Copyright Office’s request didn’t add up. When questioned about this, Register Pallante stated that this number “was no big deal” — it was just a placeholder and they’d make adjustments after the money was appropriated.

In other words, the Copyright Office gave the Librarian fake budget numbers with the intention that she go testify in front of the Appropriations Committee to the need of these funds that was made up.

That’s fairly astounding. As far as I can tell, the “corrected” 2018 Copyright Office budget justification hasn’t been released yet, but the 2017 version shows that there were three line items that added up to a grand total of $74 million. A $25 million dollar “fake budget” item in the Copyright Office’s budget justification would represent somewhere around a third of the Office’s budget. That’s… incredible.

Once again, the conspiracy theories claiming that Google somehow had Pallante forced out are looking sillier and sillier. This is twice in one week that we’ve now come across stories of what appear to be serious problems with how the Copyright Office is managed — and these issues only came to light after the new Librarian of Congress started actually doing her job and looking into what was happening down at the Copyright Office, only to find it was a disaster of bad project management, wasted budgets and (apparently) “fake budget” line items.

And yet, for unclear reasons, Congress continues to rush quickly forward with this bill to block the Librarian of Congress from even appointing a new head of the Copyright Office. That bill was introduced just a couple of weeks ago and would drastically change how things have been done for over a century, with no clearly stated rationale. In fact, Congress had held no hearings on this bill. Instead, in a matter of a couple of weeks it is already trying to get the bill to the floor and voted on, perhaps without even knowing about these scandals at the Copyright Office that have remained hidden until now.

Given all of this, and the fact that this is only coming to light now that there’s a competent Librarian of Congress who’s actually doing her job, why does Congress want to take away the ability of the Library to actually oversee the Copyright Office? How does that make any sense at all?

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Comments on “Another Major Scandal At The Copyright Office: $25 Million 'Fake Budget' Line Item”

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That Anonymous Coward (profile) says:

Congress, doing everything our corporate sponsors need done.

We can’t have real people providing oversight that our contributors feel MIGHT be bad for them.
Just because its been run like crap & they lied all the time is no reason to allow it to be fixed.
We need to make them unanswerable to any oversight, because then we can truly embrace the corporate law.

It is a pity that Congress has no idea what copyright is, instead believing those paid to expand it to the detriment of the public who suffers when the terms are extended to protect imaginary profits.

ECA (profile) says:


For all the budgets that have NOT been evaluated or BALANCED in many years???
Anyone want to go after the Pentagon?? I think $25 million would be a Drop in the bucket..
(Long ago there was a video of Salary advances to congress and reps..I cant find it now. SOME in the millions)

HOW about we put congress and rep, on a HOURLY WAGE??

Our government has cut back Federal service to the point of Breaking..

3 agencies responsible for our Food, production harvest and Processing and restaurants.. can only cover 8% per year??

Checks and balances in this nation are …GONE..

About time we SETUP our own personal checks and balance, but HOW?

Anonymous Coward says:

Re: Re: Re:

Masnick hyperventilating about Lofgren’s angry comments that no one appeared to give any credit to is not a deflection. It’s descriptive, unlike Masnick’s claim that this is “another major scandal” at the USCO. Masnick just hates Pallante–and I’m sure the feeling is mutual. The only difference is that she would never personally attack Masnick because she’s a grown up.

Mike Masnick (profile) says:

Re: Re: Re: Re:

Masnick just hates Pallante–and I’m sure the feeling is mutual.

What a weird statement. I have no hatred for Pallante at all. I was happy when she got the job, as I thought she was much better suited for it than her predecessor, and I applauded large parts of her call for a great new copyright act (others parts I disagreed with). But on the whole, I had always thought she was a step up from at least the previous two Copyright Registers.

I have no hatred for her at all.

What’s shocking, though, are the revelations in these two stories. I find it odd that you seem to think that just because others ignore the scandal it means there is no scandal. What a weird concept. Objectively speaking, these two stories are a major scandal.

Anonymous Coward says:

Re: Re: Re:2 Re:

Sure, Mike. The person you called “copyright-maximalist-in-chief” is someone you really respect. And when you claimed she lied, that was you extending your respect. Don’t forget when you questioned how she could be Register given that she doesn’t “even understand copyright’s most basic purpose.” Your deep respect for her is palpable! You hate her, the MPAA, the RIAA, Valenti, etc. Basically anyone who doesn’t subscribe to your minority, narrow view on copyright.

My_Name_Here says:

Re: Re: Re:2 Re:

“What’s shocking, though, are the revelations in these two stories.”

I cannot believe for a moment that someone like yourself who is well versed in the workings of Washington would find fraud on two relative small line items. Moreover, the fraud on the 25 million isn’t misuse, rather it’s putting in a line item where there is no specific use for the money yet. That is old school Washington budget techniques.

The “scandal” as you call it is nothing more than another day in paradise.

If you want real scandals, consider that the Army fudged the numbers by Trillions… that is a major scandal. What you are pointing to is a single out of place pixel in a 15mp image.

Oh snap!

Anonymous Coward says:

Re: Re:

“It’s probably worth noting that nobody listened to Lofgren and the bill passed the committee by a vote of 27-1, with Lofgren as the lone dissent. I’m sure she’s scoring a lot of cred in the HJC with these accusations. Not.”

Trying to understand the point of your comment. You think the fact that others on the HJC ignored a fake $25 million budget items reflects poorly on Lofgren and not the 27 others on the HJC? Do explain.

Anonymous Coward says:

Re: Re: Re:

It’s a “major scandal” that was revealed a week ago, yet no one is talking about it. Some scandal. Hey, Lofgren also claimed that the term limits for the Librarian weren’t introduced until Hayden was nominated. It’s a conspiracy against women! Of course, the term limit idea was introduced before Hayden was nominated, and it wasn’t about her. Methinks Lofgren doth protest too much. What I think is that Masnick isn’t presenting the whole story, and there’s likely no scandal here at all. It’s just Lofgren freaking out over nothing and Masnick repeating it. Not the first time.

Anonymous Coward says:

Re: Re: Re: Re:

“It’s a “major scandal” that was revealed a week ago, yet no one is talking about it. Some scandal.”

Interesting to see that according to you, so long as no one talks about it, it’s not a real scandal. And when Masnick DOES talk about it, you attack him for it.

Funny that. It’s almost as if you will try extra hard to slam Masnick for actually reporting on this scandal BECAUSE you insist that so long as no one talks about it, it’s no scandal.

Anonymous Coward says:

Re: Re: Re:2 Re:

“Interesting to see that according to you, so long as no one talks about it, it’s not a real scandal. And when Masnick DOES talk about it, you attack him for it.”

If only Masnick is talking about it, it’s probably not a huge scandal. It’s much more likely to be yet another anti-copyright rant that he’s foaming at the mouth about but that isn’t based in reality. Are you new to TD?

My_Name_Here says:

Creating a new narrative

I know this post will be “moderated” and many won’t see it until a day or so later, but I think it’s worth putting here at least to get the point on the record.

I find this story and the previously overhyped “massive amount of incompetence” story interesting not because of the problems that it points to, but how these are being used to build a new Techdirt narrative when it comes to copyright.

I think the very first thing it points to is a new tack on copyright as a whole. It’s odd to say, but I think that Mike Masnick may have finally figured out that copyright isn’t going to go away by legal challenge or by changing the laws. Copyright is not only the product of the US constitution, it’s also subject, part, and parcel of many trade agreements and international understandings. It’s a standard, normal concept for almost all of the world. Copyright exists in no small part because it makes sense in legal terms. I really do feel like Mike has finally realizes that pushing for reforms, changes, or trying to reverse the ratchet of copyright duration is not going to work out.

I also think that the there is a solid understanding that, outside of a few players in Washington (like Wyden), most of the critters will at best listen politely to Mike and his ilk and then ignore them soundly. There are many, many, many more pressing issues than copyright. As we move further and further into the knowledge and information economy, copyright plays a bigger factor in supporting US industry. It’s really hard to overcome that basic concept, and most politicians will not waste their time trying.

So we now get to see a pretty hard pivot from Techdirt. The “bad copyright” stories get to be sparse on the ground, but now we are dealing with political attacks – budget, personalities, “she’s lied”, and attempts to write a new narrative about massive waste and lies about budgets. While there is waste and there are lies (or at least dishonest parts), they pale in scale when put up against other government agencies or even the budget of the library of congress.

As an example, the massive waste on the IT system was 11 million or so – over 5 years. 2 million a year. Yes, it’s bad that 2 million was wasted each year, but that is 0.3% or so of the total budget for the library of congress (which was 700 or so million, if I read correctly, but anyone can correct me if they like). Put another way, the government spent nearly 4 trillion in 2016, so the 2 million is 0.00005% of the total budget. Put yet another way, it’s about the cost to the taxpayers for two of Donald Trump’s Golf weekends in Florida.

So the hard pivot is interesting, and I can see how the narrative is being built. The idea I gather is to discredit the copyright office to the point where perhaps the people in charge will change, and maybe with some luck some anti-copyright types will get in. If not, wash rinse, repeat until you get what you like.

The attempt to build a narrative is impressive. But like anything, once the process is spotted, the end product isn’t as likely to be swallowed whole.

Anonymous Coward says:

Re: Creating a new narrative

Every time you post about this magical moderation and how nobody engages you only really makes you look narcissistic and in possession of an over-inflated sense of self-importance.

For all the money the IP industry is widely touted to bring in, and the importance that IP is apparently supposed to mean for the country, you’d think that they might spend the money on actually competent individuals. Yet your copyright offices and performance right organizations keep getting staffed by quacks, cheats who abscond away with the money, or both.

And again, you tout that “small potatoes” claim like it’s some unassailable truth. So the IP industry can afford to have idiots wasting its money, but asking copyright trolls to hold off suing John Does is too much monetary damage at stake. Telling indeed.

I also find it funny that you suddenly bring up the army. I’ll agree that armies in general are pretty damn wasteful, it’s just surprising to hear it from a blindly faithful authoritarian like you. Or maybe because it’s the army, and not the police phallus you like to worship with your mouth so much.

Anonymous Coward says:

Not quite what you think

You are intermingling budget submissions and talking papers.

The actual budget submission for the Library of Congress are far more detailed than the talking papers you linked. This, for example, is the actual FY 2017 submission from the Library of Congress that provides detailed budgets, some descriptions, and justifications.

These numbers usually get “synopsized” in talking papers, or in this case, the written statement of testimony supporting the real budget request. This statement is the one you linked,

It should be accurate, sure. But it’s not the budget document that Congress approves, it’s really just a discussion paper. As budgets are being adjusted within departments, these talking papers are prepped, and then adjusted *after* the real budget documents are changed. Then staff are scrambling to make sure all old copies are thrown away, etc.

In this case, Congress is right about picking at the error in testimony, but the Librarian is also correct in saying that it’s a place holder. It’s not there for Congress to approve. It’s there to answer questions about the line items. Some staffer probably just screwed up and didn’t transcribe a number from one document to the other.

Right now, it’s easy for Congress to snatch this up and use it to flog the Librarian. But the rest of us should remember that’s just a political ploy, because Congress should remember that in the bigger scheme, the Librarian is correct, it doesn’t really matter, it’s not what Congress is approving, and it is subject to simple human error. Lofgren should be looking at the actual, detailed budget submission and making sure that it’s what’s being approved.

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