Module 02Required Complete the purple areas of the chart, and the.docx

Module 02Required: Complete the purple areas of the chart, and
the questions in the text boxes below.List the years in order of
most recent as year 1, next most recent as year 2, etc. Example:
If the most recent fiscal year was 2015, then replace Year 1
with 2015, replace Year 2 with 2014, and replace Year 3 with
2013.In the References box, include an APA reference for all
information retrieved, whether from the Tootsie Roll
websiteitself, specific forms (i.e. 10k) from the Tootsie Roll
website, or other outside sources.Instructions for citing a 10k or
Annual Report: http://rasmussen.libanswers.com/faq/32821 For
general APA help, visit the APA Guide:
http://guides.rasmussen.edu/apaTootsie Roll Industries
Inc.Income Statement201520142013Total
Revenue540,112543,525543,383Product Cost of Goods
Sold340,090340,933350,960Rental and Royalty
Cost889947937Total Gross
Margin199,133201,645191,486Selling, Marketing and
Administrative Expenses108,051117,722119,133Earnings from
Operations91,08283,92372,353Income
Taxes26,45128,43423,634Net Earnings66,12762,86060,849
Question 1: What is Tootsie Roll's Gross Profit Margin? (Hint:
Divide Total Gross Margin by Total Revenue). What does this
figure represent?
Gross profit margin= 36.632%
It shows the rate at which money is generated from sales after
substracting cost of goods sold
Question 2:What is Tootsie Roll's Profit Margin? (Hint: Profit
margin is calculated by dividing Net Earnings by Total Sales).
What does this figure represent?
profit margin=12.32%
Is shows the rate at which net profits are generated from sales

in a company
Question 3: What are Tootsie Roll's earnings per share in the
three years presented? (Hint: Check the income statement after
Net Earnings for this information.)
2013= 0.93
2014= 0.99
2015= 1.04
Question 4: According to note 1 in the Notes to the
Consolidated Financial Statements, how does Tootsie Roll
Industries, Inc. recognize revenue?
manufacture and sales of candy product
Question 5: Has Net Product Sales shown an increasing or
decreasing trend over the past three years? Interpret this trend.
Should this be a concern for the company? Why or why not?
The net trend has decreased over the past three years. There is a
concern for the future of this company due to its trend. This
might be due to increased competition in the industry or entry
of new firms into the market.
Question 6: Has the Net Earnings shown an increasing or
decreasing trend over the past three years? Interpret this trend.
Should this be a concern for the company? Why or why not?
Net earnings has increased for the past three years. The reason
being the company might have decrease the aftersales services,
expenses and the suppliers might have decreased the prices of
their products making the cost of goods sold.
Question 7: Compare the Net Product Sales trend and the Net
Earnings trend. Are these two items trending the same?
Interpret any differences and infer what those may mean in

relation to the company's operating decisions over the past three
years.
The net product sales has been decreasing and the net earnings
has been increasing.
This means that the company has been able to earn increasingly
despite decrease in sales. The cost of goods rom the suppliers
might have reduced. The company might have considered in
reducing expenses incured in the company.
References: (Hint! Citing a 10K and/or Annual Report:
http://rasmussen.libanswers.com/faq/32821 ; APA Guide:
http://guides.rasmussen.edu/apa )
https://www.last10k.com/sec-filings/tr/0001104659-13-
016402.htm#ITEM8FinancialStatementsandSupplementary
file:///H:/Annual%20Report%202015%20(pdf).pdf
Inc.Balance Sheet201920182017Cash and Cash
Equivalents138,960110,89996,314Investments100,44475,14041,
606Accounts Receivable Trade45,04449,77747,354Inventory
(Add: FG and WIP + RM & supplies
lines)59,08854,52454,827Total Current
Assets353,330304,046270,920Net Property, Plant and

Equipment188,455186,101178,972Goodwill73,23773,23773,237
Trademarks175,024175,024175,024Total
Assets977,864947,361930,946Accounts
Payable12,72011,81711,928Accrued
Liabilities41,61142,84945,157Total Current
Liabilities79,54461,39163,788Total Noncurrent Liabilities
138,671135,473133,354Total liabilities (Add total current liab +
total noncurrent)218,215196,864197,142Common
Stock26,96926,76726,361Class B Common
Stock18,25417,76717,285Retained
Earnings40,80933,76757,225Treasury
Stock1,9921,9921,992Total Equity759,649750,497733,804Total
liabilities and Shareholders Equity977,864947,361930,946
Question 1: Refer to Note 1 in the Notes to the Consolidated
Financial Statements. What method of depreciation does Tootsie
Roll Industries Inc. use for their property, plant and equipment?
The company uses a straight line of depreciation in valuation of
property, plant and equipment
Question 2: : Refer to Note 1 in the Notes to the Consolidated
Financial Statements. What method does Tootsie Roll Industries
Inc. use to value its inventory?
It uses LIFO methods in valuation of inventory
Question 3: Calculate Tootsie Roll Industry Inc's fixed asset
turnover and interpret it's meaning. Show your work. (Hint:
Fixed Asset Turnover is calculated as Net Earnings/ Net
Property, Plant and Equipment)
2015= net earnings/ fixed assets
= 66127/499535
= 0.1324
It shows the ability of the company to generate earnings from
fixed assets

Question 4: Calculate Tootsie Roll Industry Inc's accounts
receivable turnover for the most recent year and interpret its
meaning. Show your work. (Hint: Accounts Receivable
Turnover is calculated as Total Sales/Average Accounts
Receivable.)
2015= Total sales/account recevable
=536692/51010
=10.52
It shows the number of times the company collects its account
receivables
Question 5: Calculate Tootsie Roll Industry Inc's inventory
turnover ratio for the most recent year and interpret its meaning.
Show your work. (Hint: Inventory turnover ratio is calculated as
Product Cost of Goods Sold/Average Inventory.)
Inventory turn over= cog/inventory
=340090/62236
= 5.4654
It shows how many times a companies inventory are sold and
replaced in a year
Question 6: Has the total current assets amount show an
increasing or decreasing trend from one year to the next? What
account or accounts experienced the largest change? (Hint: To
find the amount of change, subtract the prior year amount from
the current year amount. Positive answers mean the account has
increased by that amount, negative answers mean the account
has decreased by that amount.)
Total current assets have shown an increase
Cash and cash equivalents have experience the largest change
among the current assets
Question 7: Is the amount of current liabilities more or less than
the long-term liabilities for the most recent year? What does the
result mean?
Current liabilities are less than long term liabilities
It means that the companies oporatioon relies most in long term
liabilities that short term liabilities
Question 8: Is the total stockholders' equity more or less than

total liabilities for the most recent year? What does the result
mean?
Total equity are more than total liabilities.
This means that the companies oporations relies on on its equity
mostly and not borrowings
Question 9: Calculate the debt ratio and current ratio for your
company for the most recent year. Generally speaking, what do
these ratios tell you? (Hint: Debt ratio is calculated as Total
Liabilities/Total Assets; Current ratio is calculated as Total
Current Assets/Total Current Liabilities.)
Debt ratio= Total Liabilities/Total Assets Current
ratio=Total Current Assets/Total Current Liabilities
=210,437/908,983 =
293,806/72,064
=0.231 = 4.077
Question 10: What is the main reason for the change in
stockholders' equity? What is the largest component of
stockholders' equity?
Change results in sales of stock and retained earnings
The largest component is contributed capital
Question 11: How many classes of common stock does the
company have? For each class, how many shares are authorized,
issued, and outstanding? (To find outstanding shares, subtract
any treasury stock for that class from the number issued to find
the number outstanding.)
2 classes of common stock..
Class A, 120,000 shares authorized and 37382 shares issued in
2015.
Class , 40,000 shares authorized and 23542 shares issued in
2015.
Question 12: Calculate the Return on Stockholder's Equity for
the most recent year and interpret its meaning. Show your work.
(Hint: Return on Stockholders Equity is calculated as Net
Earnings/Average Total Equity.)
2015= 66127/698548

= 0.0947
It shows how much profit a company generates from the money
invested by shareholders
References:
https://www.last10k.com/sfile:///H:/Annual%20Report%202015
%20(pdf).pdfec-filings/tr/0001104659-13-
Inc.Statement of Cash Flows201720182019201920182017Net
Earnings80,864568936492064,83956,80580,654Arrange the
numbers like this.Net Cash Provided by Operating
Activities42,973100929100221100,221100,92942,973Most
numbers are correct, only the yellow highlightedNet Cash Used
in Investing Activities(9,343)-44510-
15009(15,009)(44,510)(9,320)ones are incorrect 9/12Net Cash
Used in Financing Activities(56,881)-42353-
57187(57,187)(42,353)(56,881)Increase in Cash and Cash
Equivalents119,145967202802528,05314,567(22,807)Cash and
Cash Equivalents at Beginning of
Year63,82688283111287111,28796,720119,527Cash and Cash
Equivalents at End of
Year182,971185003139312139,340111,28796,720-Yes, correct,
we know because it starts with net income. 3/3The first sentence
is true for 2019 and 2018 but not 2017Okay expand on the
difference. One tells you earnings (difference between revenue

and expenses)The other tells you cash provided and used
(received & paid) Check the depreciation (inflow) and accounts
receivable and postretirement healthcare benefits (outflow)
amounts. 4/6Very good answer 6/6Yes, good observations
3/3Very good 6/6Now, locate the Auditors Report, titled
"Report of Independent Registered Public Accounting Firm."
Address the followingquestions related to this report.Yes,
correct 3/3Good work 3/3Auditors express opinions, 2/3No not
absolute 2/3Yes, reasonable 3/3Very good work reading the
auditor's report 3/3Which accounting firm in Chicago. 1/3Good
start. Please use APA format. 2/3
Question 1: Which method of reporting cash flows from
operations does the company use?
Indirect method
Question 2: Compare net earnings to the net cash provided by
operating activities. Explain why these two figures are
different. Are these two numbers trending in the same
direction? What is the largest adjustment item in the operating
section for the most recent year? The net income was lower
than the net cash from operating cash flows from each year.
The difference is due to the adjustments needed to convert the
total net earnings to the cash amount from operating activities.
other working capital is tha largest adjustment.
Question 3: What items in the investing section have created the
largest cash inflow? Largest cash outflow? Did investing
activities provide cash or use cash in each of the three years
presented? How can you tell?
sale and maturity available for sale securities have created the
larges cash inflow
Purchase from available for sale securities have created the
largest cash outflow
Investing activities brought more use of cash in the company..
this is shown by the diference between cash inflows and cash
outflows in investing activities.
Question 4: Did the financing activities provide cash or use

cash in each of the three years presented? What are the stock
repurchase trends of the company? What are the dividend trends
of the company?
Financial ativities provided use of cash.
Stock repurchase has been decreasing towards the positive
value.
divideds have been increasing towards the negative value
Question 5: Does the cash provided by operations cover the
amounts of cash used for both investing and financing
activities? What does this result mean for the overall amount of
cash in the company from the start of the year to the end of the
year? Has it increased or decreased? Should this be a concenr
for the company?
Cash provided by oporations covers investing and financing
activities
It means the overal amount of cash in the company is increasing
Question 1: Who is the letter addressed to?
To the Board of Directors and Shareholders of Tootsie Roll
Industries, Inc.
Question 2: What is management responsible for?
The managment is responsible for financial statements,
maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting.
Question 3: What is the auditor responsible for?
The auditor is responsible for examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating
the overall financial statement presentation
Question 4: Does the auditor give absolute assurance that the
financials are free of material error?
yes
Question 5: What is the level of assurance given by the auditor?
Reasonable
Question 6: What policies and procedures does a company's

internal control over financial reporting include?
(i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company.
(ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made
only in accordance with authorizations of management and
directors of the company.
(iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition
of the company’s assets that could have a material effect on the
financial statements.
Question 7: What audit firm signed the audit letter?
IL audit firm in Chicago
References:
https://www.last10k.com/sec-filings/tr/0001104659-13-
file:///C:/Users/INTELI~1/AppData/Local/Temp/62efbc9905519
2cb96e37d2cbd3f16b6.pdf
Module 06Required: Complete the purple cells for horizontal
and vertical analysis for Tootsie Roll Industries using the
following formulas: Vertical Analysis: (Financial Statement
item/base amount), where your base amount is Total Revenue
for the income statement and Total Assets for the balance sheet.
Horizontal Analysis: (Current year-base year)/base yearThen,
complete the purple cells in the financial ratios below. You will
use the analyses on this tab of the workbook to create your final
project. In the References box, include an APA reference for all

Inc.Vertical AnalysisVertical AnalysisHorizontal
AnalysisIncome Statement201920182017201920182019-
2017Total Revenue527,113518,920519,289Product Cost of
Goods Sold329,102329,880326,411Rental and Royalty
Cost995867972Total Gross
Margin197,016188,173191,906Selling, Marketing and
Administrative Expenses127,802117,691121,484Earnings from
Operations69,21470,48270,422Income
Taxes20,56516,4013,907Net
Earnings64,83956,80580,654Interest
Expense220181144Vertical AnalysisVertical
AnalysisHorizontal AnalysisBalance
Sheet201920182017201920182019-2017Cash and Cash
Equivalents138,960110,89996,314Investments100,44475,14041,
606Accounts Receivable Trade45,04449,77747,354Inventory
(Add: FG and WIP + RM & supplies
lines)59,08854,52454,827Total Current
Assets353,330304,046270,920Net Property, Plant and
Equipment188,455186,101178,972Goodwill73,23773,23773,237
Trademarks175,024175,024175,024Total
Assets977,864947,361930,946Accounts
Payable12,72011,81711,928Accrued
Liabilities41,61142,84945,157Total Current
Liabilities79,54461,39163,788Total Noncurrent Liabilities
138,671135,473133,354Total liabilities (Add total current liab +
total noncurrent)218,215196,864197,142Common
Stock26,96926,76726,361Class B Common
Stock18,25417,76717,285Retained
Earnings40,80933,76757,225Treasury
Stock1,9921,9921,992Total Equity759,649750,497733,804Total
liabilities and Shareholders
Equity977,864947,361930,946Tootsie Roll
IndustriesTRITRICompetition or Industry Ratio**Ratio
BenchmarksFormulaYear 1Year 2The Hershey
CompanyLiquidity RatiosCurrent Ratio*Total Current
Assets/Total Current LiabilitiesGreater than 1.Acid Test

Ratio*(Cash & Cash Equivalents +Iinvestments + Accounts
Receivable Trade)/Total Current LiabilitiesIdeally greater than
1, but likely will be less than 1.Asset Management
RatioInventory Turnover*Product Cost of Goods Sold/Average
InventoryDepends on industry, higher is better(remember, Avg
Inv is beginning year inv + ending year inv, result divided by
2.)Solvency RatiosDebt ratio*Total Liabilities/Total
Assets78.56%Less than 67%Times Interest Earned
Ratio*Earning from Operations/Interest ExpenseHigher the
better, unless interest exp is 0.Profitability RatiosGross Profit
Percent*Total Gross Margin/Total Revenue45.36%Depends on
industry, higher is betterReturn on Net Sales*Net
Earnings/Total Sales14.38%Depends on industry, higher is
betterEarnings Per Share (EPS)**Locate in research (on
company income statement)Depends on company. Would want
to see stay stable or increase, not decrease.Market
AnalysisPrice Earning Ratio**Locate in research (on
Internet)Depends on company. Remaining steady is
good.Dividend Yield**Locate in research (on Internet)Depends
on company. Remaining steady is good.*Calculated by
Author**Located in research
References: (Hint! Citing a 10K and/or Annual Report:
http://rasmussen.libanswers.com/faq/32821 ; APA Guide:
http://guides.rasmussen.edu/apa )
5/11/20, 2:00 PMWhat does Donald Trump need for a successful
presidency? Bureaucrats. - The Washington Post
Page 1 of 4https://www.washingtonpost.com/news/monkey-
cage/wp/2016/11/14/what-does-donald-trump-need-for-a-
successful-residency-bureaucrats/
What does Donald Trump need for a
successful presidency? Bureaucrats.

Josh McCrain
President Trump, with White House chief of staff Reince
Priebus. (Evan Vucci/Associated Press)
The Trump administration’s first week has been characterized,
from both
left and right, as “shock and awe.” Among other abrupt changes,
the State
Department’s senior leadership team either resigned or has been
fired.
That gives us significant insight into how President Trump will
govern. Despite regular attacks on the bureaucracy during his
campaign,
Trump needs federal agencies to be fully staffed and competent
if he hopes
to succeed. Political science research suggests that his problems
are only
beginning.
http://www.joshuamccrain.com/
http://www.salon.com/2017/01/26/trumps-day-of-shock-and-
awe-amid-a-blizzard-of-executive-orders-the-loose-talk-on-
torture-is-deeply-chilling/
http://www.foxnews.com/opinion/2017/01/24/sean-hannity-
trump-mounts-shock-and-awe-campaign-on-dc.html
https://www.washingtonpost.com/news/josh-
rogin/wp/2017/01/26/the-state-departments-entire-senior-
management-team-just-resigned/?hpid=hp_hp-top-table-
main_rogin-
1210p:homepage/story&utm_term=.302bbd09cebd&tid=lk_inlin
e_manual_2&itid=lk_inline_manual_2
https://twitter.com/jimsciutto/status/824675990983110656
https://www.washingtonpost.com/news/powerpost/wp/2016/10/2
4/trump-links-federal-hiring-freeze-to-fighting-

corruption/?tid=a_inl&tid=lk_inline_manual_3&itid=lk_inline_
manual_3
https://www.washingtonpost.com/news/powerpost/wp/2016/10/1
9/newt-gingrich-tells-trump-make-it-easier-to-fire-government-
workers/?tid=a_inl&tid=lk_inline_manual_3&itid=lk_inline_ma
nual_3
Lawmaking is not just a process by which Congress passes a bill
and the
president signs it. Much of it relies on federal agencies. Their
rulemaking,
which accounts for 90 percent of all federal laws, is how much
policymaking
in the United States actually occurs. An incompetent,
understaffed
bureaucracy bodes poorly for effective governing.
Staffing key agency posts is already a difficult task. Officials in
President Bill
Clinton’s administration describe the appointment process as
“chaotic,”
“emotional” and “overwhelming,” according to David Lewis’s
research. It
looks as though Trump’s team is a living testament to these
challenges.
Research on presidential appointments around transitions shows
that, first,

presidents attempt to control agencies they don’t trust by
appointing loyal
partisans to middle-management positions. The key question is
then
whether these loyalists also have the requisite qualifications and
experience.
As Marissa Golden argues, career bureaucrats — those not
appointed by
the president — are willing to work with political appointees,
but the quality
of the appointees matters.
When presidents do appoint qualified people, some bureaucrats
may leave
because of ideological differences with their new boss, but not
because of
any deeply held concerns about the mission of the agency. But
appointing
less-qualified loyalists is a different matter. When presidents
seek to
politicize agencies via purely patronage appointments, agencies
will suffer
much more. Many career bureaucrats, believing that their
efforts will be
wasted under incompetent leadership pursuing objectionable
goals, leave
the agency for good.
The challenge confronting Trump is that many qualified
appointees — such
as Republicans who served under George W. Bush — publicly
opposed
https://www.amazon.com/Administrative-Law-Political-
Kenneth-Warren/dp/0813344565

https://www.amazon.com/Politics-Presidential-Appointments-
Bureaucratic-Performance/dp/0691135444
http://www.politico.com/story/2016/11/donald-trump-team-
rivals-231277
https://www.amazon.com/Motivates-Bureaucrats-Politics-
Administration-During/dp/0231106971
http://scholarship.law.duke.edu/faculty_scholarship/3663/
http://warontherocks.com/2016/03/open-letter-on-donald-trump-
from-gop-national-security-leaders/
Trump during the election. As a result, Trump’s transition team
is having
difficulty filling national security jobs.
Similarly, careerists in the Education Department and the
Justice
Department, observing the published lists of possible Cabinet
appointees,
are considering leaving en masse. A week before the election, a
survey of
federal workers found that only 65 percent would commit to
serving under a
Trump administration. The actual number is likely to be higher,
but empty
posts in the bureaucracy are still a cause for concern.

A large-scale exodus of career bureaucrats has serious
consequences for
policy outcomes. For example, according to work by Anthony
Bertelli and
David Lewis, the Federal Emergency Management Agency
under Bush
suffered from high turnover as a result of appointed executives
and the
inexperienced leadership of Michael Brown. In the months
immediately
before Hurricane Katrina in 2005, 17 of 46 FEMA policy
positions were
empty.
Another example involves the CIA. In 2004, as David Lewis
describes, the
Bush administration and congressional Republicans viewed the
CIA as
“dysfunctional” and a “rogue agency.” Bush appointed Porter
Goss as CIA
director with a clear mandate to hire loyal partisans to get the
agency in
line. Goss and his appointees told career CIA employees that
they needed
to support the administration and then froze out those who
disagreed. Mass
resignations quickly followed — among them 20 top managers,
including
the director of central intelligence and the executive director.
Bureaucratic agencies are pivotal actors in American
policymaking. For his
presidency to succeed, Trump’s transition team must reach out
to qualified
public servants and forgo any desire for revenge. It needs to
limit turnover

of career bureaucrats as much as possible.
http://www.thedailybeast.com/articles/2016/11/09/team-trump-
struggling-to-fill-national-security-jobs.html
http://www.politico.com/tipsheets/morning-
education/2016/11/education-department-could-see-brain-drain-
217343
https://lawfareblog.com/more-donald-trump-and-justice-
department
http://www.politico.com/story/2016/11/who-is-in-president-
trump-cabinet-231071
http://www.govexec.com/management/2016/10/just-65-percent-
feds-commit-staying-during-trump-
administration/132745/?oref=govexec_today_nl
http://jpart.oxfordjournals.org/content/early/2012/10/26/jopart.
mus044.short
http://www.politico.com/story/2016/11/trump-teams-revenge-
231222
If his administration fails at this, a wave of unqualified
partisans entering the
bureaucracy could damage some of our government’s most
resilient
institutions.
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5/11/20, 2:03 PMTHE 5TH RISK | Vanity Fair | September 2017
Page 1 of 39https://archive.vanityfair.com/article/2017/9/the-
5th-risk
O

THE 5TH RISK
A man who campaigned on abolishing the
Department of Energy, former Texas governor Rick
Perry, is now running the $30 billion agency. President
Trump has proposed slashing its budget, and its highly
skilled workforce has been devastated. Those familiar
with the D.O.E.'s key roles—from guarding the U.S.
nuclear arsenal to assessing the North Korean threat,
to protecting the electrical grid—are terrified.
MICHAEL LEWIS exposes the catastrophic risks the
White House is ignoring
Michael Lewis
n the morning after the election, November 9, 2016, the
people who ran the U.S. Department of Energy turned up
in their offices and waited. They had cleared 30 desks and freed
up 30
parking spaces. They didn't know exactly how many people
they'd host that
day, but whoever won the election would surely be sending a
small army
into the Department of Energy, and every other federal agency.
The
morning after he was elected president, eight years earlier,
Obama had sent
between 30 and 40 people into the Department of Energy. The
Department
of Energy staff planned to deliver the same talks from the same
five-inch-
thick three-ring binders, with the Department of Energy seal on
them, to the
Trump people as they would have given to the Clinton people.
"Nothing had
to be changed," said one former Department of Energy staffer.

"They'd be
done always with the intention that, either party wins, nothing
changes."
https://archive.vanityfair.com/authors/michael-lewis
5th-risk
By afternoon the silence was deafening. "Day 1, we're ready to
go," says a
former senior White House official. "Day 2 it was 'Maybe
they'll call us?' "
"Teams were going around, 'Have you heard from them?' "
recalls another
staffer who had prepared for the transition. " 'Have you gotten
anything? I
haven't got anything.' " "The election happened," remembers
Elizabeth
Sherwood-Randall, then deputy secretary of the D.O.E. "And he
won. And
then there was radio silence. We were prepared for the next day.
And
nothing happened." Across the federal government the Trump
people
weren't anywhere to be found. Allegedly, between the election
and the
inauguration not a single Trump representative set foot inside
the
Department of Agriculture, for example. The Department of
Agriculture has
employees or contractors in every county in the United States,

and the
Trump people seemed simply to be ignoring the place. Where
they did turn
up inside the federal government, they appeared confused and
unprepared.
A small group attended a briefing at the State Department, for
instance,
only to learn that the briefings they needed to hear were
classified. None of
the Trump people had security clearance—or, for that matter,
any
experience in foreign policy—and so they weren't allowed to
receive an
education. On his visits to the White House soon after the
election, Trump's
son-in-law, Jared Kushner, expressed surprise that so much of
its staff
seemed to be leaving, "ft was like he thought it was a corporate
acquisition
or something," says an Obama White House staffer. "He thought
everyone
just stayed."
Even in normal times the people who take over the United
States
government can be surprisingly ignorant about it. As a longtime
career civil
servant in the D.O.E., who has watched four different
administrations show
up to try to run the place, put it, "You always have the issue of
maybe they
don't understand what the department does." To address that
problem, a
year before he left office, Barack Obama had instructed a lot of

5th-risk
knowledgeable people across his administration, including 50 or
so inside
the D.O.E., to gather the knowledge that his successor would
need in order
to understand the government he or she was taking charge of.
The Bush
administration had done the same for Obama, and Obama had
always been
grateful for their efforts. He told his staff that their goal should
be to ensure
an even smoother transfer of power than the Bush people had
achieved.
That had proved to be a huge undertaking. Thousands of people
inside the
federal government had spent the better part of a year drawing a
vivid
picture of it for the benefit of the new administration. The
United States
government might be the most complicated organization on the
face of the
earth. Two million federal employees take orders from 4,000
political
appointees. Dysfunction is baked into the structure of the thing:
the
subordinates know that their bosses will be replaced every four
or eight
years, and that the direction of their enterprises might change
overnight—
with an election or a war or some other political event. Still,

many of the
problems our government grapples with aren't particularly
ideological, and
the Obama people tried to keep their political ideology out of
the briefings.
"You don't have to agree with our politics," as the former senior
White
House official put it. "You just have to understand how we got
here. Zika, for
instance. Y>u might disagree with how we approached it. Y>u
don't have to
agree. Y)u just have to understand why we approached it that
way."
How to stop a virus, how to take a census, how to determine if
some foreign
country is seeking to obtain a nuclear weapon or if North
Korean missiles
can reach Kansas City: these are enduring technical problems.
The people
appointed by a newly elected president to solve these problems
have
roughly 75 days to learn from their predecessors. After the
inauguration, a
lot of deeply knowledgeable people will scatter to the four
winds and be
forbidden, by federal law, from initiating any contact with their
replacements. The period between the election and the
inauguration has
5th-risk

T
the feel of an A.P. chemistry class to which half the students
have turned up
late and are forced to scramble to grab the notes taken by the
other half,
before the final, "ft's a source of a lot of the dysfunction in
government,"
says Max Stier, who runs the nonpartisan Partnership for Public
Service,
which, over the past decade, has become perhaps the world's
expert on
U.S. presidential transitions. "The wheel comes off the bus at
the start of
the trip and you never get anywhere."
wo weeks after the election the Obama people inside the
D.O.E. read in the newspapers that Trump had created a
small "Landing Team." According to several D.O.E. employees,
this was led
by, and mostly consisted of, a man named Thomas Pyle,
president of the
American Energy Alliance, which, upon inspection, proved to
be a
Washington, D.C., propaganda machine funded with millions of
dollars from
ExxonMobil and Koch Industries. Pyle himself had served as a
Koch
Industries lobbyist and ran a side business writing editorials
attacking the
D.O.E.'s attempts to reduce the dependence of the American
economy on
carbon. Pyle says that his role on the Landing Team was
"voluntary," adding

that he could not disclose who appointed him, due to a
confidentiality
agreement. The people running the D.O.E. were by then
seriously alarmed.
"We first learned of Pyle's appointment on the Monday of
Thanksgiving
week," recalls D.O.E. chief of staff Kevin Knobloch. "We sent
word to him
that the secretary and his deputy would meet with him as soon
as possible.
He said he would like that but could not do it until after
Thanksgiving."
Trump's people "mainly ran around the building
insulting people," says a former Obama official.
A month after the election Pyle arrived for a meeting with
Energy Secretary
Ernest Moniz, Deputy Secretary Sherwood-Randall, and
Knobloch. Moniz is
5th-risk
T
a nuclear physicist, then on leave from M.I.T., who had served
as deputy
secretary during the Clinton administration and is widely
viewed, even by
many Republicans, as understanding and loving the D.O.E.
better than any

person on earth. Pyle appeared to have no interest in anything
he had to
say. "He did not seem motivated to spend a lot of time to
understanding the
place," says Sherwood-Randall. "He didn't bring a pencil or a
piece of paper.
He didn't ask questions. He spent an hour. That was it. He never
asked to
meet with us again." Afterward, Knobloch says, he suggested
that Pyle visit
one day each week until the inauguration, and that Pyle agreed
to do it—but
then he never showed up, instead attending a half-dozen
meetings or so
with others. "It's a head-scratcher," says Knobloch. "It's a $30-
billion-a-
year organization with about 110,000 employees. Industrial
sites across the
country. Very serious stuff. If you're going to mn it, why
wouldn't you want
to know something about it?"
here was a reason Obama had appointed nuclear physicists
to run the place: it, like the problems it grappled with, was
technical and complicated. Moniz had helped lead the U.S.
negotiations
with Iran precisely because he knew which parts of their
nuclear-energy
program they must surrender if they were to be prevented from
obtaining a
nuclear weapon. For a decade before Knobloch joined the
D.O.E., in June
2013, he had served as president of the Union of Concerned
Scientists. "I
had worked closely with D.O.E. throughout my career," he says.

"I thought I
knew and understood the agency. But when I came in I thought,
Holy cow."
Deputy Secretary Elizabeth Sherwood-Randall has spent her 30-
year
career working on reducing the world's supply of weapons of
mass
destruction—she led the U.S. mission to remove chemical
weapons from
Syria. But like everyone else who came to work at the D.O.E.,
she'd grown
accustomed to no one knowing what the department actually
did. When
she'd called home, back in 2013, to tell them that President
Obama had
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nominated her to be second-in-command of the place, her
mother said,
"Well, darling, I have no idea what the Department of Energy
does, but
you've always had a lot of energy, so I'm sure you'll be perfect
for the role."
The Trump administration had no clearer idea what she did with
her day
than her mother. And yet, according to Sherwood-Randall, they
were
certain they didn't need to hear anything she had to say before

they took
over her job.
Pyle, according to D.O.E. officials, eventually sent over a list
of 74 questions
he wanted answers to. His list addressed some of the subjects
covered in
the briefing materials, but also a few not:
"The risks of mistakes being made and lots of
people being killed is increasing dramatically."
Can you provide a list of all Department of Energy employees
or contractors
who have attended any Interagency Working Group on the
Social Cost of
Carbon meetings?
Can you provide a list of Department employees or contractors
who
attended any of the Conference of the Parties (under the United
Nations
Framework Convention on Climate Change) in the last five
years?
That, in a nutshell, was the spirit of the Trump enterprise. "It
reminded me
of McCarthyism," says Sherwood-Randall.
It says a great deal about the mind-set of career civil servants
that the
D.O.E. employee in charge of overseeing the transition set out
to answer
even the most offensive questions. Her attitude, like the attitude
of the
permanent staff, was We are meant to serve our elected masters,

however
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odious they might be, "When the questions got leaked to the
press, she
was really upset," says the former D.O.E. staffer. The only
reason that the
D.O.E. did not serve up the names of people who had educated
themselves
about climate change, and thus exposed themselves to the wrath
of the
new administration, was that the old administration was still in
charge: "We
aren't answering these questions," Secretary Moniz had said,
simply.
After Pyle's list of questions wound up on Bloomberg News, the
Trump
administration disavowed them, but a signal had been sent: We
don't want
you to help us understand; we want to find out who you are and
punish you.
Pyle vanished from the scene. According to a former Obama
official, he was
replaced by a handful of young ideologues who called
themselves "the
Beachhead Team." "They mainly ran around the building
insulting people,"
says a former Obama official. "There was a mentality that
everything that

government does is stupid and bad and the people are stupid and
bad,"
says another. They allegedly demanded to know the names and
salaries of
the 20 highest-paid people in the national-science labs overseen
by the
D.O.E. They'd eventually, according to former D.O.E. staffers,
delete the
contact list with the e-mail addresses of all D.O.E.-fimded
scientists—
apparently to make it more difficult for them to communicate
with one
another. "These people were insane," says the former D.O.E.
staffer. "They
weren't prepared. They didn't know what they were doing."
"We had tried desperately to prepare them," said Tarak Shah,
chief of staff
for the D.O.E.'s $6 billion basic-science program. "But that
required them to
show up. And bring qualified people. But they didn't. They
didn't ask for
even an introductory briefing. Like 'What do you do?' " The
Obama people
did what they could to preserve the institution's understanding
of itself. "We
were prepared for them to start wiping out documents," said
Shah. "So we
prepared a public Web site to transfer the stuff onto it—if
needed."

5th-risk
T he one concrete action the Trump administration took
before Inauguration Day was to clear the D.O.E. building of
anyone appointed by Obama. Even here it exhibited a bizarre
ham-
handedness. For instance, the Trump White House asked the
D.O.E.'s
inspector general to resign, along with the inspectors general of
the other
federal agencies, out of the mistaken belief that he was an
Obama
appointee. After members of Congress called to inform the
Trump people
that the inspectors general were permanent staff, so that they
might remain
immune to political influence, the Trump people re-installed
him.
But there was actually a long history of even the appointees of
one
administration hanging around to help the new appointees of the
next. The
man who had served as chief financial officer of the department
during the
Bush administration, for instance, stayed a year and a half into
the Obama
administration—simply because he had a detailed understanding
of the
money end of things that was hard to replicate quickly. The
C.F.O. of the
department at the end of the Obama administration was a mild-
mannered
civil-servant type named Joe Hezir. He had no particular
political identity

and was widely thought to have done a good job—and so he
half-expected
a call from the Trump people asking him to stay on, just to keep
the money
side of things running smoothly.
The call never came. No one even let him know his services
were no longer
required.
Not knowing what else to do, but without anyone to replace
him, the C.F.O.
of a $30 billion operation just up and left.
This was a loss. A lunch or two with the chief financial officer
might have
alerted the new administration to some of the terrifying risks
they were
leaving essentially unmanaged. Roughly half of the D.O.E.'s
annual budget is
5th-risk
T
spent on maintaining and guarding our nuclear arsenal, for
instance. Two
billion of that goes to hunting down weapons-grade plutonium
and uranium
at loose in the world so that it doesn't fall into the hands of
terrorists. In just

the past eight years the D.O.E.'s National Nuclear Security
Administration
has collected enough material to make 160 nuclear bombs. The
department
trains every international atomic-energy inspector; if nuclear
power plants
around the world are not producing weapons-grade material on
the sly by
reprocessing spent fuel rods and recovering plutonium, it's
because of
these people.
The D.O.E. also supplies radiation-detection equipment to
enable other
countries to detect bomb material making its way across
national borders.
To maintain the nuclear arsenal, it conducts endless, wildly
expensive
experiments on tiny amounts of nuclear material to try to
understand what
is actually happening to plutonium when it flSSionS, which,
amazingly, no
one really does. To study the process, it is funding what
promises to be the
next generation of supercomputers, which will in turn lead God
knows
where.
he Trump people didn't seem to grasp, according to a
former D.O.E. employee, how much more than just energy
the Department of Energy was about. They weren't totally
oblivious to the
nuclear arsenal, but even the nuclear arsenal didn't provoke in
them much
curiosity. "They were just looking for dirt, basically," said one

of the people
who briefed the Beachhead Team on national-security issues. "
'What is the
Obama administration not letting you do to keep the country
safe?' " The
briefers were at pains to explain an especially sensitive aspect
of national
security: the United States no longer tests its nuclear weapons.
Instead, it
relies on physicists at three of the national labs—Los Alamos,
Livermore,
and Sandia—to simulate explosions, using old and decaying
nuclear
materials.
5th-risk
I
This is not a trivial exercise, and to do it we rely entirely on
scientists who go
to work at the national labs because the national labs are
exciting places to
work. They then wind up getting interested in the weapons
program. That
is, because maintaining the nuclear arsenal was just a by-
product of the
world's biggest science project, which also did things like
investigating the
origins of the universe. "Our weapons scientists didn't start out
as weapons

scientists," says Madelyn Creedon, who was second-in-
command of the
nuclear-weapons wing of the D.O.E., and who briefed the
incoming
administration, briefly. "They didn't understand that. The one
question they
asked was 'Wouldn't you want the guy who grew up wanting to
be a
weapons scientist?' Well, actually, no."
In the run-up to the Trump inauguration the man inside the
D.O.E. in charge
of the nuclear-weapons program was required to submit his
resignation, as
were the department's 137 other political appointees. Frank
Klotz was his
name, and he was a retired three-star air-force lieutenant
general with a
Ph.D. in politics from Oxford. The keeper of the nation's
nuclear secrets had
boxed up most of his books and memorabilia just like everyone
else and was
on his way out before anyone had apparently given the first
thought to who
might replace him. It was only after Secretary Moniz called a
few senators
to alert them to the disturbing vacancy, and the senators phoned
Trump
Tower sounding alarmed, that the Trump people called General
Klotz, on the
day before Donald Trump was inaugurated as the 45th president
of the
United States, and asked him to bring back the stuff he had
taken home
and move back into his office. Aside from him, the people with
the most

intimate knowledge of the problems and the possibilities of the
D.O.E.
walked out the door.
t was early June when I walked through those same doors, to see
what was going on. The D.O.E. makes its home in a long
rectangular cinder-block-like building propped up on concrete
stilts, just off
5th-risk
the National Mall. It's a jarring sight—as if someone had
punched out a
skyscraper and it never got back on its feet. It's relentlessly
ugly in the way
the swamps around Newark Airport are ugly—so ugly that its
ugliness
bends back around into a sneaky kind of beauty: it will make an
excellent
ruin. Inside, the place feels like a lab experiment to determine
just how little
aesthetic stimulation human beings can endure. The endless
hallways are
floored with white linoleum and almost insistently devoid of
personality.
"Like a hospital, without the stretchers," as one employee put it.
But this
place is at once desolate and urgent. People still work here,
doing stuff that,
if left undone, might result in unimaginable death and

destruction.
By the time I arrived the first eighth of Trump's first term was
nearly
complete, and his administration was still, largely, missing. He
hadn't
nominated anyone to serve as head of the Patent Office, for
instance, or to
run FEMA. There was no Trump candidate to head the T.S.A.,
or anyone to
run the Centers for Disease Control. The 2020 national census
will be a
massive undertaking for which there is not a moment to lose and
yet there's
no Trump appointee in place to run it. "The actual government
has not really
taken over," says Max Stier. "It's kindergarten soccer. Everyone
is on the
ball. No one is at their positions. But I doubt Trump sees the
reality.
Everywhere he goes everything is going to be hunky-dory and
nice. No one
gives him the bad news."
At this point in their administrations Obama and Bush had
nominated their
top 10 people at the D.O.E. and installed most of them in their
offices.
Trump had nominated three people and installed just one,
former Texas
governor Rick Perry. Perry is of course responsible for one of
the D.O.E.'s
most famous moments— when in a 2011 presidential debate he
said he
intended to eliminate three entire departments of the federal
government.

Asked to list them he named Commerce, Education, and... then
hit a wall.
"The third agency of government I would do away with ...
Education ... the ...
5th-risk
ahhhh... ahhh... Commerce, and let's see."
As his eyes bored a hole in his lectern, his mind drew a blank.
"I can't, the
third one. I can't. Sorry. Oops." The third department Perry
wanted to get rid
of, he later recalled, was the Department of Energy. In his
confirmation
hearings to run the department Perry confessed that when he
called for its
elimination he hadn't actually known what the Department of
Energy did—
and he now regretted having said that it didn't do anything
worth doing.
The question on the minds of the people who currently work at
the
department: Does he know what it does now? D.O.E. press
secretary
Shaylyn Hynes assures us that "Secretary Perry is dedicated to
the
missions of the Department of Energy." And in his hearings,
Perry made a
show of having educated himself. He said how useful it was to

be briefed by
former secretary Ernest Moniz. But when I asked someone
familiar with
those briefings how many hours Perry had spent with Moniz, he
laughed
and said, "That's the wrong unit of account." With the nuclear
physicist who
understood the D.O.E. perhaps better than anyone else on earth,
according
to one person familiar with the meeting, Perry had spent
minutes, not hours.
"He has no personal interest in understanding what we do and
effecting
change," a D.O.E. staffer told me in June. "He's never been
briefed on a
program—not a single one, which to me is shocking."
Since Perry was confirmed, his role has been ceremonial and
bizarre. He
pops up in distant lands and tweets in praise of this or that
D.O.E. program
while his masters inside the White House create budgets to
eliminate those
very programs. His sporadic public communications have had in
them
something of the shell-shocked grandmother trying to preside
over a
pleasant family Thanksgiving dinner while pretending that her
blind-drunk
husband isn't standing naked on the dining-room table waving
the carving
knife over his head.

of 39https://archive.vanityfair.com/article/2017/9/the-
5th-risk
M eanwhile, inside the D.O.E. building, people claiming to be
from the Trump administration appear willy-nilly,
unannounced, and unintroduced to the career people. "There's a
mysterious kind of chain from the Trump loyalists who have
shown up inside
D.O.E. to the White House," says a career civil servant. "That's
how
decisions, like the budget, seem to get made. Not by Perry." The
woman
who ran the Obama department's energy-policy analysis unit
recently
received a call from D.O.E. staff telling her that her office was
now occupied
by Eric Trump's brother-in-law. Why? No one knew. "Yes, you
can notice the
difference," says one young career civil servant, in response to
the obvious
question. "There's a lack of professionalism. They're not very
polite. Maybe
they've never worked in an office or government setting. It's not
hostility so
much as a real sense of concern with sharing information with
career
employees. Because of that lack of communication, nothing is
being done.
All policy questions remain unanswered." The D.O.E. has a
program, for
example, to provide low-interest loans to companies to
encourage risky
corporate innovation in alternative energy and energy efficiency

The loan
program became infamous when one of its borrowers, the solar-
energy
company Solyndra, was unable to repay its loan, but, as a
whole, since its
inception in 2009, the program has turned a profit. And it has
been
demonstrably effective: it lent money to Tesla to build its
factory in Fremont,
California, when the private sector would not, for instance.
Every Tesla you
see on the road came from a facility financed by the D.O.E. Its
loans to
early-stage solar-energy companies launched the industry. There
are now
35 viable utility-scale, privately funded solar companies— up
from zero a
decade ago. And yet today the program sits frozen. "There's no
direction
what to do with the applications," says the young career civil
servant. "Are
we shutting the program down?" They'd rather not, but if that's
what they
are going to do, they should do it. "There's no staff, just me,"
says the civil
5th-risk
B
servant. "People keep bugging me for direction. It's got to the

point I don't
care if you tell me to tear the program down. Just tell me what
you want to
do so I can do it intelligently." Another permanent employee, in
another wing
of the D.O.E., says, "The biggest change is the grinding to a
halt of any
proactive work. There's very little work happening. There's a lot
of
confusion about what our mission was going to be. For a
majority of the
workforce it's been demoralizing."
Over and over again, I was asked by people who worked inside
the D.O.E.
not to use their names, or identify them in any way, for fear of
reprisal.
"People are heading for the doors," says Tarak Shah. "And that's
really sad
and destructive. The best and the brightest are the ones being
targeted.
They will leave fastest. Because they will get the best job
offers."
There might be no time in the history of the country when it was
so
interesting to know what was going on inside these bland
federal office
buildings—because there has been no tune when those things
might be
done ineptly, or not done at all. But if you want to know how
the D.O.E.
works—the problems it manages, the fears that keep its
employees awake
at night, the things it does you just sort of assume will continue
being done

—there's no real point in being inside the D.O.E. Anyone who
wants a blunt,
open assessment of the risks inherent in the United States
government now
has to leave it to find it.
The First Risk
y the tune I reached John MacWilliams's kitchen table, in
Quogue, Long Island, I knew about as much about the D.O.E.
as he had when he'd started there, back in 2013. Mac Williams
had spent a
lot of his life pursuing and obtaining a place in the world that
he actually
hadn't wanted. In the early …
No plagiarizing and do NOT upload to TURNITIN.
Please respond to each of the four short response questions
posted below. Your answers
should be short, focused, and complete, ranging from one to
three paragraphs. Please make
sure to answer each specific part of every question. Successful
answers will provide details
and context that support your arguments and explain your
position to the readers. You may
also want to provide real world examples taken from the
readings, lectures, group discussions,
or your own independent thinking. These illustrations can be
from the course materials or your
own ideas. Providing this context and being able to apply the
material to YOUR OWN
understanding of politics really shows us that you have
mastered the material. Do not use

outside materials.
Assigned materials:
• American Government, Chapter 15: The Bureaucracy
https://openstax.org/books/american-government-2e/pages/15-
introduction
• McCrain, Josh. 2017. “What does Donald Trump need for a
successful presidency?
Bureaucrats.” The Washington Post’s The Monkey Cage.
• McCrain, Josh. 2017. “What does Donald Trump need for a
successful presidency?
Bureaucrats.” The Washington Post’s The Monkey Cage.
• American Government, Chapter 13: The Courts
introduction
• American Government, Chapter 10: Interest Groups and
Lobbying
introduction
1. Who controls the bureaucracy? How do they do so? How
does this competition affect the
bureaucracy? Why and when do elected officials delegate power
to the bureaucracy?
2. How do judges decide cases? Highlight several types of
factors that contribute to their
rulings. Why are the courts often considered the weakest
branch? Why might this be

wrong?
3. Highlight the types of benefits politicians and bureaucrats
receive from interest groups.
What is the pluralist defense of interest groups? What might
undermine this perspective?
Why might it not be so bad?
4. Describe the difference between insider and outsider
lobbying tactics. What types of
interest groups generally use each? Under what circumstances
will one by more impactful
than the other?
introduction
introduction
introduction

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