OLEAN -- Pretend it is three years ago, in the early summer of 2003, and you are among the good citizens happily celebrating "Mission Accomplished," as President George W. Bush labeled our apparent quick victory in Iraq a few weeks after Dubya's unilateral invasion of that country.
Pretend you had recently retired and had substantial 401(k) or IRA money to flip or reinvest (as indeed I did at the time, having recently retired from Gannett newspapers). Say you had a somewhat modest $60,000 retirement fund and you decided to plunk it all in stocks. Hey, Dubya said the economy was sound, right?
Instead of the highly touted dogs (Coca-Cola, Sun Microsystems, loser restaurant chains, somnolent utilities) that I lost a few bucks on, had you been prescient, and knowing what you know today, you might have bet the ranch on military-industrial stocks, or solid companies that -- if not outright makers of military equipment -- at least provided vital services for the Pentagon.
Let's say you bought $10,000 each worth of stock in, oh, Boeing and Lockheed Martin, another $10,000 each in Halliburton and Fluor (one of the world's largest construction and engineering companies), and the remainder in well-connected Big Oil, say Chevron and ExxonMobil. Say you reinvested the dividends and held onto the stocks for the intervening three years.
Today, you would have easily doubled your money and more -- your original investment would be worth at least $140,000. Mutual fund managers zoom to the top of the heap on that kind of performance -- hell, on a third of that kind of performance.
Longtime "Harper's Magazine" columnist Lewis H. Lapham makes similar observations (without the math) in the current September issue of that hard-questioning publication, in which he asks, "Who can say that the war in Iraq has proved to be anything other than the transformation of a godforsaken desert into a defense contractor's Garden of Eden?"
Lapham is viewed by the Pentagon as an old lefty crank, but he can still draw blood in a column and time and again has proved an accurate researcher.
He calculates about $1.5 billion a week "now flowing eastward out of Washington" goes for military support and rebuilding-of-Iraq efforts -- much of it in the form of no-bid, cost-plus contracts often immune from effective audit. Some of this taxpayer money has gone to at least two of the lucky firms listed above -- $12.3 billion to Halliburton and $3.7 billion to Fluor for Iraq reconstruction. (Halliburton gets another $5 billion-plus in other military support contracts.) Most of the largess seems to depend on the prime qualification that your company have insider status in the Bush administration specifically and Washington in general.
Halliburton, of course, is the mega-firm that Vice President Dick Cheney ran for five years (at total salary of $44 million) before ascending to No. 2. He was gifted with a $4.3 million golden parachute, 433,333 shares in stock options and $150,000 a year in retirement pay from the giant firm for his success.
Halliburton was one of the mammoth firms represented at the secret Energy Task Force meeting Cheney convened shortly after assuming office -- ostensibly to set Dubya's energy policy. So were ExxonMobil and Chevron. The Bush administration at first denied such a meeting took place, but a federal judge finally ordered Cheney to cough up the documents.
Nor has Halliburton's role in Iraq progressed without controversy. The Pentagon's Defense Contract Audit Agency (DCAA) nailed Halliburton for billing the government for 36 percent more meals than were actually served troops and for failing to justify $1.8 billion of $4.3 billion under one of the support contracts. Whistle-blowers coming home from Halliburton employment in Iraq have detailed kiting of costs such as $45 for a case of soda and $100 for doing a 15-pound bag of laundry. They've also detailed wasteful Halliburton practices such as simply ditching $85,000 trucks because of a mere flat tire.
Even Pentagon officials have rebelled. They fired Halliburton from a gasoline importation contract for fuel in Iraq and knocked 50 percent off the cost by having the traditionally tasked Defense Energy Support Center do the work itself. Similar savings were effected when meal provision was taken away from Halliburton and given a Kuwaiti company.
Even when Cheney was running the mega-firm, it bore close watch concerning government contracts. The General Accounting Office, the watchdog agency for Congress, found Halliburton inflating costs in the Balkans -- sometimes by cleaning military offices up to four times a day, sometimes by charging the taxpayers $86 for a sheet of plywood that cost Halliburton $14.
The list of continuing investigations into the firm's Middle East performance and that of its subsidiaries is too long to describe in this space.
Fluor is not much better. Fluor was charged with falsely claiming millions of dollars in costs on contracts with the Pentagon in 2001 -- two years before Dubya invaded Iraq -- and settled for $8.5 million paid back to the government. Fluor accumulated $8.5 billion in overseas engineering contracts with the federal government between 1990 and 2002, despite a track record that included paying a $3.2 million fine for "submitting heavily padded repair bills" for work on Navy bases after Hurricane Hugo.
Fluor, based in California, also is no cheapskate when it comes to oiling its relations with Congress and the White House. In the two runup years to the Iraq War -- 2001 and 2002 -- Fluor spent almost $1.4 million in lobbying those entities, according to The Center for Public Integrity. The company is so loaded with former government officials and wired Washington insiders that it resembles a federal agency in its own right.
David Marventano, staff director of the House Energy and Commerce Committee when the war started, was hired within days to work as a high-level Fluor official.
Kenneth J. Oscar, assistant secretary of the Army in charge of $35 billion worth of military procurements as recently as 2002, was hired by Fluor as vice president of "strategy and government services" before hostilities actually started.
Bobby Inman, a retired admiral, has been a Fluor board member since 1985. His government jobs? Director of the National Security Agency and deputy director of the Central Intelligence Agency.
Another CIA connection: Suzanne Woolsey, married to former CIA director R. James Woolsey, was a member of the board of trustees of a little-known arms consulting group that the Los Angeles Times reported "had access to senior Pentagon leaders directing the Iraq war."
Shortly after it started, she joined the board of directors of Fluor, which soon won a $1.6 billion contract as part of its total haul for reconstruction of Iraq.
Fluor's former chairman and CEO, Philip J. Carroll Jr., sports perhaps the most blatant conflict of interest. He is chairman of the board advising the Iraqi government's oil ministry. This despite the fact he receives more than $1 million in retirement benefits from Fluor and holds shares in the company worth about $34 million.
Now combine all this with a couple of -- to me -- odd public perceptions. Some 23 years ago, a New York Times-CBS News poll found the portion of Americans who believed it was "possible to start out poor in this country and become rich" stood at 57 percent. The same poll found those who believe this optimistic view today make up an impressive 80 percent of the public. Think of it, four out of every five Americans believe you can become rich in the United States today, despite little to start with.
Couple this with the statistics from the National Bureau of Economic Research for the same years -- 1983 and 2006. In the former, the percentage of United States income that went to the top 1 percent of American earners was a mere 9 percent. Today, that figure stands at 16 percent.
Think about that. About one-sixth of all the money made in this immense nation goes to a tiny 1 percent of the populace of earners. Bite that, Horatio Alger.
Why does the middle class have reason for such futile optimism in today's climate of corporate greed and intentional chasm-making between the economic classes? This is what scientists and shrinks call a "cognitive dissonance" -- a fancy way of saying your reasoning is based on vapor instead of facts.
The purpose of all this above is not to point out corruption per se in the beleaguered rebuilding of Iraq's infrastructure. That is almost old news in itself. The purpose is to reinforce Lapham's observation that corporate wealth and profit have a lot more to do with influencing current policy regarding Iraq than they ought to.
Not to put too fine a point on it, but how could Bush or Cheney or anyone else on the upper rungs of federal power make objective decisions on a costly and questionable war when they and their influential friends and colleagues are raking in the dough? The pressure to continue the march must be immense. Protecting Americans from terrorists is one thing -- having a piece of the action is another.
As Lewis Lapham concludes, "we live in a society that forgets ... that since the days of the ancient Romans it has been on their way to war that men have found the road to wealth."
| Niagara Falls Reporter | www.niagarafallsreporter.com | August 22 2006 |