Ripping off taxpayers is the name of the game

In 1941, Senator Harry S. Truman declared, “I have never yet found a contractor who, if not watched, would not leave the government holding the bag.”

Truman was right. Over the years, American taxpayers have been swindled out of billions of dollars. In fact, if there is any absolute maxim by which the federal government seems to operate, it is that the American taxpayer always gets ripped off.

For example, it was recently discovered that in January 2005, $8.8 billion of American tax dollars sent to Iraq for reconstruction were unaccounted for. It’s no small wonder that such a large amount of money is nowhere to be found.

According to congressional testimony by Paul Bremer, who was once in charge of reconstruction of Iraq, the U.S. government had sent record payouts to the tune of $4 billion of taxpayer money in cold, hard cash to Baghdad on giant pallets aboard military planes. Rep. Henry Waxman zeroed in on the absurdity of the government’s actions when he asked, “Who in their right mind would send 363 tons of cash into a war zone?”

The pallets of cash were just a drop in the bucket. The U.S. government sends billions of taxpayer dollars each year to so-called government contractors, much of which is never accounted for, with the remainder often spent on obscure pet projects.

Indeed, federal spending on government contracts has been on the rise for decades, soaring from $207 billion in 2000 to about $400 billion last year.

This unprecedented level of government issuance of contracts to private companies is not only fueled by the war in Iraq, domestic security and Hurricane Katrina, but also by a philosophy that encourages outsourcing almost everything the government does.

Many government officials claim that using private enterprise instills efficiency and savings for the U.S. government and the U.S. taxpayer. However, the truth is that the government’s dependence on corporate America breeds corruption and undermines basic notions of our representative democracy. Much of this is due to a lack of congressional oversight. As Rep. Waxman noted, “There has been no cop on the beat. And when there is no cop on the beat, criminals are more willing to engage in crimes.”

Take Iraq, for example. According to the Boston Globe, “American contractors swindled hundreds of millions of dollars in Iraqi funds, but so far there is no way for Iraq’s government to recoup the money.”

Millions of dollars of U.S. rebuilding funds have also been wasted. For example, a $43 million government contract to build a residential camp for Iraqi police trainers resulted in a camp that includes an Olympic-size swimming pool, which has never been used. $36.4 million was supposedly spent by U.S. officials on armored vehicles, body armor and communications equipment, but it can’t be accounted for. And approximately 80 percent of the $21 billion earmarked by the U.S. government for Iraqi reconstruction has already been spent, but very little can be found to show for it.

Equally disturbing is the way many of these government contracts are issued. Rather than requiring private companies to compete for government projects through the traditional bidding process, many are awarded no-bid contracts, the end result of aggressive lobbying campaigns.

As the New York Times reports, “The most successful contractors are not necessarily those doing the best work, but those who have mastered the special skill of selling to Uncle Sam. The top 20 service contractors have spent nearly $300 million since 2000 on lobbying and have donated $23 million to political campaigns.”

In fact, the biggest federal contractor in the nation, Lockheed Martin, receives more federal money than the Departments of Justice or Energy.

In the end, these contractors never have to compete with other companies over who can do the best job for the best price, and they still get paid with taxpayer funds. It’s a win-win situation for them and a complete loss for the taxpayer.

As usual, we’re not putting America first, and it’s the taxpayer who is feeling the pinch.

Constitutional attorney and author John W. Whitehead is founder and president of The Rutherford Institute. He can be contacted at johnw@rutherford.org. Information about The Rutherford Institute is available at www.rutherford.org.