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Ike Was Right
Stephen Pizzo, October 15, 2003
Talk about sticker shock. The condition of the country was far worse than anyone dared imagine. Engineers released their findings this September and, using a grammar school grading system, they assigned grades to describe the state of disrepair they found.
The country's roads got a D+. Aviation infrastructure got a D. Schools a D minus. Wastewater treatment facilities, a D. Dams, a D. Hazardous waste storage a D+. And, even though the nation is a major oil producer, the energy sector got a D+.
In all, the experts said it would take more than $1.6 trillion over the next five years to bring the country's infrastructure up to modern standards.
Oh, wait. I bet you thought I was talking about Iraq.
No. The report I am citing was released this September by the American Society of Civil Engineers and it described the condition of America's infrastructure. In it, the ASCE warned that America's critical infrastructure was "crumbling" and ongoing neglect would add $300 billion a year to the repair bill. The ASCE recommended the creation of an emergency White House commission to start dealing with the problem.
Yet the same week ASCE released its report, President Bush asked Congress to quickly approve an additional $87 billion in emergency funding—for Iraq—of which around $22 billion would be used to repair and upgrade Iraq's infrastructure. (That figure has since been trimmed to around $20 billion in Congress.) The president made no mention of the ASCE's report and no additional money was requested for United States' infrastructure.
There are all too many obvious ironies in this. When George W. Bush campaigned for office his disdain for "nation building" knew no bounds. It wasn't America's business, he said, to run around the world fixing broken nation-states at American taxpayer's expense.
Once in office, key Bush supporters decided the President was wrong about that. The business of nation building could be very good business indeed.
So now hundreds of billions of U.S. tax dollars are flowing to a handful of large, well-connected U.S. companies, not to repair and improve America's communication, transportation, education or energy infrastructure, but those of Iraq and Afghanistan. This is nothing less than the very military-industrial complex President Dwight Eisenhower famously warned against before leaving office.
The U.S. companies getting the bulk of Iraq/Afghanistan infrastructure contracts can be counted on one mutilated hand; Bechtel, Halliburton, SAIC, Fluor. Virtually all the prime contracts were issued on a no-bid basis. (Try that with any large domestic infrastructure project and the unions and taxpayer right's groups would be all over the administration like flies on camel dung.)
So, as you bump your way to work today on pothole-studded streets understand that the cost of your new suspension is a small price to pay for the smooth 1,200-kilometer highway being built in Afghanistan on a $300 million contract to U.S. engineering firm Louis Berger Group.
Then there's the $240 million earmarked to improve Iraq's roads and bridges. And, even as the Bush administration fights subsidies for Amtrak, another $303 million in U.S. funds is going to upgrade Iraq's railroads. Bechtel will oversee much of this work.
Ironically, on the same day the ASCEs released their infrastructure report, the Edison Electric Institute released its report on the state of the nation's electrical grid - which had recently gotten everyone's attention with a major northeast/Midwest blackout. The EEI told the Bush administration that in order to meet demand, "capital investments in upgrades and new transmission lines must increase from the current level of $3 billion annually to $5.5 billion annually over the next ten years."
In other words, an additional $25 billion is needed to keep America's lights on.
Instead the president requested $5.5 billion—the first installment—to begin modernizing Iraq's power grid, a job that Iraq's U.S. Administrator L. Paul Bremer says may cost up to $13 billion. Then there's fixing Iraq's water systems—another $16 billon. Bechtel is the prime contractor on those jobs, too.
The contrasts continue. According to federal housing officials, the government will only be able to fund 5,000 new public housing units this year. Meanwhile the administration has earmarked $470 million to create 20,000 public housing units in Iraq. Another $40 million will go to building 275 new schools in Iraq and provide teachers and supplies to 12,500 schools. Prime contractors for these Iraqi programs are U.S. companies, Bechtel and Creative Associates.
Ten years ago, President Bill Clinton pushed legislation to put more cops on the street. The Bush administration has since eliminated all direct funding for street cops. Now, with money short and so many military reservists—many of whom are cops in civilian life—on active duty, cities and counties find themselves dangerously short of police, fire and other first responders.
Nevertheless, while American law enforcement goes begging, the administration has been generous in letting contracts to rebuild Iraq's civil and military policing. There is the $2 billion to build a new Iraqi army and another $470 million to fund civilian police, judges, courts and related law enforcement services. U.S.-based DynCorp and its parent company, Computer Sciences Corp., are the prime contractors here. Heavy contributors to President Bush and the Republican Party, the company has provided police training and other security services to the Pentagon in other hot spots as well, including Bosnia where DynCorp employees were accused of running a sex ring involving under-age girls.
And then of course, there is Halliburton. The "no-bid contract" trend started when Dick Cheney served as Secretary of Defense under President George H.W. Bush. Cheney hired Halliburton subsidiary, Brown & Root Services (now Kellogg, Brown & Root), paying the company nearly $4 million to study how the defense department might cut costs by privatizing much of its non-combat activities.
Apparently the advice he got for our $4 million was to hire Brown & Root. Under the new scheme all those troublesome and time-consuming open bids would be eliminated and replaced with an open-ended contract with KBR. The program, approved by Cheney, is called the Logistics Civil Augmentation Program (LOGCAP). The Pentagon describes LOGCAP's no-bid contracts as "cost-plus-award-fee, indefinite-delivery/indefinite-quantity service."
Shortly after LOGCAP went into effect the election of Bill Clinton freed Dick Cheney to pursue other interests and he became CEO of Halliburton. Most of Halliburton's defense work now comes through KBR's LOGCAP contract, which has made KBR the de facto quartermaster for the US Army.
Among other things, U.S. taxpayers are paying KBR to:
* Provide housing for 100,000 soldiers in Iraq;
* Repair oil facilities in Iraq;
* Build enenmy prisioner of war camps in Iraq and Afghanistan;
* Provide logistical support for David Kay's Iraqi Survey Group searching for Iraq's illusive weapons of mass destruction;
* KBR was hired to build 400 new prison cells at Guantanamo Bay, Cuba, to house captured Taliban fighters.
Let me conclude by making an observation. Conservatives are correct when the praise the opportunity-creating power of the free-enterprise system. But the Defense Department's privatization of huge chunks of its operations out to a handful of very large, very well-connected companies is crony capitalism. This is walking right into the tar pit that Eisenhower had warned against half a century ago.
Did Bechtel, Halliburton and the others engineer America's wars in Afghanistan and Iraq? No, of course not. That would be too cynical and simplistic. But, these firms are opportunists and they have the connections to profit in wartime.
And so we are left to ponder. America's infrastructure is a mess and getting worse. Instead of spending the additional $25 billion needed to repair it, the administration is handing nearly the same amount in contracts out to a small number of U.S. companies to repair Iraq's infrastructure instead. Had that money been allocated for U.S. infrastructure the contracts would have been, by law, subject to open bidding and would therefore have been divvied up among hundreds of companies, small and large, across the country. In the old days, they called that a domestic economic stimulus plan.
For more information on some of the companies mentioned above, check this Misleader.org report.
Stephen Pizzo is a financial journalist who lives in Sebastapol, California.
This commentary was first published on TomPaine.com on October 10, 2003 and is reprinted with permission.