Corporate America's War on Political Transparency

Friday, April 29, 2011 by CommonDreams.org
by Robert Weissman

Companies that bid for government contracts should disclose their campaign spending, in order to diminish the likelihood that contracts are a payoff for political expenditures.

The Obama administration has indicated that it plans to impose such a rule, through an executive order. Ideally, the rule would prohibit contractors and lobbyists from campaign spending, but a disclosure standard is a very positive if modest step.

The U.S. Chamber of Commerce, the trade association for big business, however, takes a somewhat different view.

"We will fight it through all available means," Bruce Josten, the chief lobbyist for the Chamber, told the New York Times. "To quote what they say every day on Libya, all options are on the table."

Other business lobbyists use less charged rhetoric* but echo Josten's stridency. "The President and his administration seem to be using the executive order powers for political purposes," says John Engler, president of the Business Roundtable, an association of major company CEOs. "The suggestion that federal procurement choices are the result of contributions is being seen as discouraging free speech by intimidating business donors."

Gosh, is it really a stretch to suggest that contractors think political donations help them obtain contracts? Did Lockheed really spend $16 million on campaign contributions over the last two decades -- divided fairly evenly between the two major parties (55-45 split for Republicans) -- for any other reason? Heck, the company spent $60 million over just the last five years on lobbying, primarily to affect how the government spends money.

This is a case -- there have been precious few -- where the President is going head to head with the Big Business lobby. It's up to us to help him stand strong for what's right. Go here to sign a petition urging President Obama to ignore the business pressure and issue the executive order requiring disclosure of contractors' election expenditures.

The need for such action is directly traceable to the Supreme Court's decision Citizens United v. FEC, which lifted restrictions on political spending by corporations, and paved the way for companies to make massive expenditures from their general treasuries to influence election outcomes. While companies are prohibited from making direct contributions to federal candidates, and while direct contributions from individual managers and employees of companies and their political action committees are publicly reported, it remains nearly impossible to trace most of the corporate political spending designed to curry favor and access with government officials. After Citizens United, corporations can now easily make secret and unlimited donations directly out of their corporate treasuries to "front" organizations like the U.S. Chamber of Commerce that then use the money for campaign expenditures.

Not only did Citizens United badly damage the functioning of our democracy, it invited a major uptick in corruption narrowly defined.

While government corruption comes in many forms, nowhere is it more prevalent than in government contracting. "Pay-to-play" deals are a form of government contracting abuse in which a business entity makes campaign contributions or expenditures on behalf of a public official in order to obtain preferential treatment in receiving government contracts. Occasionally, pay-to-play constitutes outright bribery for a government contract. More often, pay-to-play involves a contractor buying favoritism. The practice is widespread in local, state, and federal contracting but is usually kept well hidden due to inadequate monitoring of government contracting procedures. The pay-to-play system encourages fraud and abuse of power, prevents contracts from being awarded to businesses based on merit, wastes taxpayer dollars, and facilitates privatization and contracting out of services that otherwise could or should be provided by government agencies.

An example of pay-to-play abuse is the scandal surrounding impeached former Illinois Governor Rod Blagojevich. Charges against Blagojevich included a pay-to-play scheme in which he allegedly provided a lucrative highway contract to a contributor in exchange for a donation.

Short of a constitutional amendment to overturn Citizens United, the best way to prevent pay-to-play abuses is to bar contractors and lobbyists from political expenditures. Eight states, the Securities Exchange Commission and several local jurisdictions currently restrict government contractors from making campaign contributions to those responsible for issuing government contracts.

President Obama has proposed not restrictions on contractor spending, but mandatory disclosure, something many states already do. Under the proposed executive order, government contractors would have to report all bundled contributions from their executives and PACs, as well as any direct campaign expenditures or donations to front groups used for campaign expenditures.

For the Big Business lobby, even simple disclosure of contractor political spending is too much. If the public knows about corporate campaign expenditures, fears the U.S. Chamber and its allies, they may seek to hold companies accountable. Then, the argument goes, those companies might be deterred from making political expenditures and expressing their views. Welcome to the next step of illogic in a post-Citizens United world.

Even under Citizens United, however, disclosure rules, and rules aimed at prohibiting narrowly defined corruption, remain permissible.

The President's proposed executive order would not turn back the clock on Citizens United. That's going to take a constitutional amendment.

But deterring contractor corruption is a worthy goal in its own right.

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* Imagine for just a moment if a prominent political player from the left used language that could be interpreted as calling for drone attacks on a Republican president. This is of course not to say that Josten really means to urge violence, but his words are what they are. A firestorm would erupt if the script were flipped.

Blackwater: Can't Stop, Won't Stop

by Fouad Pervez  |  Friday, August 6, 2010 by Foreign Policy in Focus

Blackwater (rebranded as Xe and then Paravant in an effort to escape the negative publicity associated with their former name), recently received a $100 million contract from the CIA to secure its bases in Afghanistan. The State Department also awarded them $120 million to provide security for new diplomatic buildings, including consulates outside Kabul, giving the firm a total of $220 million in new contracts in Afghanistan. This seems remarkable, given the extremely negative image Blackwater has throughout the world. That people even know about a private security company is a bad sign in itself. Not surprisingly, CIA Director Leon Panetta had to go on the offensive to defend the contracts.

The contracts are certainly problematic. But the real issue is not Blackwater itself, but U.S. military grand strategy.

From a financial aspect, it is not surprising that Blackwater got the contracts. For the CIA contract alone, Blackwater bid a full $26 million below the next lowest bidder, quite significant considering the contract was for $100 million. This low bid was made possible largely by the many huge contracts Blackwater received in Iraq. With close ties to the Bush administration, Blackwater was the 12th largest contractor in Iraq, even though it was not tasked to build embassies and roads. They pulled in almost $500 million between 2004 and 2006. They are the State Department’s most frequently used security contractor and get 90 percent of its money from the government, two-thirds of which are no-bid contracts. Thus, Blackwater built a comparative advantage over its rivals during the Bush years. This advantage, which the company still enjoys today, enables Blackwater to bid lower amounts since their profit margins are not as tight as other companies.

Garrisoning the Globe

However, the reason companies like Blackwater, even with their troubling histories, are in demand in the first place has to do with U.S. grand strategy. American foreign policy has become increasingly aggressive over the years, under both Republican and Democratic administrations. It is not just increased aggression, but increased residency — we keep a presence in more places than before. For instance, there are more than 850 U.S. military bases overseas, a number that does not include bases in Iraq, Afghanistan, or other sensitive locations. An all-volunteer army exacerbates the problem, as there are fewer troops to handle a larger mission. Engaged in two major conflicts in Iraq and Afghanistan and maintaining bases and troops in over 100 countries translates into serious military overstretch. American foreign policy from the 1940s on, especially toward Western Europe, has been consistently geared toward global hegemony. Instead of passing the buck to Western Europe at critical junctures when it would have been better and cheaper to do so, the United States undermined Western European efforts to gain military independence and autonomy during the Cold War because it was more concerned with global hegemony than the Soviet threat.

The United States seems unwilling to scale back its global military presence. The Obama administration’s National Security Strategy no longer explicitly opposes the rise of any real competitor. But the divergence with the Bush administration approach is somewhat cosmetic. Obama does call for a decrease in direct uses of power and acknowledges that America has no real rival, but does not rule out unilateral action and, more importantly, calls for a maintenance of the level of U.S. military superiority. More troops are necessary to keep up with the mission.

This is where private military contractors like Blackwater become important. These modern-day Hessians provide America a significant amount of needed foot soldiers. They come with other perks as well — they are often beyond the reach of military rules of law, allowing them greater discretion in inflicting disproportionate force to pacify areas. More significantly, increased Blackwater troops mean fewer official U.S. troops. Private military troops now outnumber U.S. troops in Afghanistan. The advantage of a private military to a political leader is the public cost. Military deaths play a significant role in American foreign policy. The rising troop deaths in Vietnam eventually turned the public against that war. However, if the soldiers are increasingly from private companies, public costs decline. Except for the occasional anomaly, such as the hanging of four Blackwater troops off a bridge in Fallujah, no news headlines announce the deaths of Blackwater soldiers.

But this increased U.S. military presence, so dependent on private contractors, has serious deleterious effects. The more troops, the more resistance. Tellingly, over 700 international relations scholars, who rarely agree on anything, opposed the Iraq War for this very reason: concern about negative ramifications of the U.S. military presence.

Blackwater Despite the Risks

Despite its horrific track record in Iraq, the connection between founder and former CEO Erik Prince and religious extremism, and the accusations that the company defrauded the federal government through phony billing, Blackwater might obtain a $1 billion contract from the U.S. government for work in Afghanistan next year. The comparative economic advantage Blackwater gained during the Bush administration explains why it's positioned to win more contracts. But the lack of change in the overall U.S. mission of global military primacy explains why private military contractors like Blackwater have the impact they have in the first place.

Congress has begun to express some reservations about the contracts. A federal commission established to study wartime contracting slammed State Department officials in a hearing over the $120 million contract they awarded to Blackwater. They were unable to get an answer from officials as to how Blackwater’s history in Iraq figured into the contract. Rep. Jan Schakowsky (D-IL), a strong Blackwater critic, strongly condemned the contract, wondering “why any branch of the government would decide to hire Blackwater, such a repeat offender. We’re talking about murder…a company with a horrible reputation that really jeopardizes our mission in so many different ways.” Senator Carl Levin (D-MI) and Representative Jim Moran (D-VA) have also been vocal about questioning Blackwater contracts.

However, the real test is whether these contracts are reversed and/or future contracts are given in a much more limited manner or with much greater scrutiny of private military companies. Except for the initial protests from several members of Congress, there has been no new congressional activity on the contracts — no hearings or investigations scheduled.

However, even if Congress does eventually act, it will have addressed only part of the problem. Without either a shift away from maintenance of America’s current global military superiority or from the current U.S. military presence in over 100 countries, there will be a serious problem of military overstretch. By either adopting a more defensive role as an offshore balancer, or significantly scaling back its global military presence, or both, the U.S. military could ameliorate its overstretch problem. Short of that, contractors like Blackwater provide political leaders a convenient “out” from the problem of a draft, which could generate a major public backlash. Because of their economic and political utility, private military contractors like Blackwater will continue getting contracts, regardless of their toxic baggage.