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Cheney Takes Another Spin Around the Washington Revolving Door

by S. Leon Felkins, Major, US Army (Retired)

AMERICA'S PRIVATE ARMY IN BOSNIA

Pentagon efforts to keep the number of U.S. troops in Bosnia below 20,000 are raising eyebrows on Capitol Hill. Lawmakers are discovering that an army of civilians, contracted privately, has been deployed to augment the G.I.s. Brown & Root Inc., a Houston engineering firm, will supervise Balkan workers on projects like building pipelines and sewerage systems and is prepared to undertake the solemn task of readying the bodies of U.S. fatalities for shipment home. The Army's increasing dependence on civilian help is leading penny pinchers to wonder whether it is still necessary to budget $7 billion annually for the 300,000 reservists already trained and paid to do those jobs. It's all good for Brown & Root, which has pocketed around $250 million from the Pentagon for work in places like Somalia and Haiti. The firm is owned by the Dallas-based Halliburton Co. The man who runs Halliburton: Dick Cheney, who was Secretary of Defense when Brown & Root won the support-staff contract.
(emphasis added)

~ Hidden away on the back pages of the Feb.12, 1996, issue of Time Magazine

This wonderful example of the "Washington Revolving Door" will be the focal point of this essay with the intention of illustrating the problem in general.

Mr. Cheney Goes Around Again

Dick Cheney's swing around the door is classic "Revolving Door" strategy.

  • You get a high level position in the government
  • You put the wheels in motion for the awarding of huge contract or contracts for some service or products and/or you build friendships with those who can influence contract awards to you in the future
  • You take a high position in the company that is a potential recipient of these lucrative contracts
  • You remain a good friend to those in the government that were your associates to insure future contracts. You reward these friends with "political contributions", to the extent possible

Let's look at the first step.

Dick Cheney was born in Nebraska and grew up in Wyoming. After graduating with a political science degree in 1965, he started his career – essentially a political career – in the late 60s-early 70s with a series of low level jobs in the Nixon administration. At age 34, he became Chief of Staff for President Ford. He then managed to get elected to the position of Congressman from Wyoming and served for 6 terms (1978-1989). At that point, he became President Bush's Secretary of Defense where he stayed until 1993 (March 21, 1989-January 20, 1993 – a detailed bio is here. After doing his required one year in "Revolving-Door Purgatory"[Note 1] at the American Enterprise Institute for Public Policy Research (where he was a "Senior Fellow" and is wife is still a "Distinguished Fellow"), he became the CEO and Chairman of Halliburton Co. in 1995.[Note 2]

Now let us look at the second step.

How do you go about making sure your future employer who is waiting for you on the other side of the "revolving door" will receive large and lucrative contracts to compensate him for paying you an overblown salary? Of course, we cannot know the internal details but we can  look at the external facts.

While Cheney was Secretary of Defense, we had a few occasions wherein the USA felt compelled to go bomb or otherwise harass other countries. They were:

  • Invasion of Panama, "Operation Just Cause," December 19-20, 1989
  • War in The Balkans (Bosnia, Kosovo, etc.) 1990 to the present
  • Gulf War January 16 1990 - February 27, 1991
  • Somalia - in "Operation Restore Hope" December 9, 1992-March 26, 1993

While you may think that in these dust-ups the "bombees" may suffer some inconveniences, the exercises do provide a more entertaining evening news show for those of us in the USofA. Still, there is another rather important third feature of these modern "police actions" – a lot of money can be made. But to reap these large financial rewards, a close relationship between the defense contractor and the politicians (what Eisenhower called the "military/industrial complex") is required. Typically, modern wars are followed by occupation and the repairing of the damage from the "contingency" (military/government code word for military intervention, usually not an emergency). Companies like Brown & Root Inc. (B&R) are hired to go in and build and/or repair bases, bridges, utilities, roads, airports, etc. Now in a rational world, you would think that the country that just got whupped would be the one to pay for all this. Not so, the good old American Taxpayer voluntarily (income tax is voluntary, didn't you know) contributes the funds to pay these contractors.

The most successful application of this technique is in the Balkans. These people have been at war forever and are very likely to continue that way, no matter what anyone does. A perfect setup! We can bomb, we can invade, and then we can patch and build with the generous contribution of the American Taxpayers. And so it is.

"Former Secretary of Defense Dick Cheney's Brown and Root and other megaconstruction outfits that will be cashing in for years rebuilding what NATO bombs and Serbian ethnic cleansing blew down," from "Peace is Blowing in the Wind," May 12, 1999, by Colonel David Hackworth.

So, now Cheney goes to step #3, and takes a job with a contractor who used to make a nice income building oil field installations but now sees where much more can be made "rebuilding war-torn countries." In no time at all, B&R is the number one contractor in this business and it appears that their services will be needed indefinitely.

As far as step #4, his selection as Bush's VP Candidate confirms that his ties to the existing political power elite is very strong. In fact, he may just be headed for yet another swing around the revolving door. He, Bush and others are spreading the propaganda that we have a "decimated military" and they promise to build it up (we spend more on our military than all the rest of the countries in the world combined!), if elected. More military equals more opportunities for "police actions" around the world which means even more opportunity for "charitable" reconstruction of any areas we destroy.

Well, how well has this bit of staged profiteering paid off for Cheney and Halliburton? Let us look at the record (what we can find – the government is a little shy about making such information easily accessible).

A clean, comfortable dining facility is just one of many quality of life improvements for U.S. soldiers serving in Bosnia.
SOURCE

Apparently B&R has had contracts in support of the various "contingency" areas (i.e., Somalia, Panama, Rwanda, Haiti, Bosnia, Kosovo)[Note 3] the US has gotten involved in since at least as early as 1992. A GAO report, "Contingency Operations: Opportunities to Improve the Logistics Civil Augmentation Program (Letter Report, 02/11/97, GAO/NSIAD-97-63)", listing the usual but tiresome overruns, is available online. The costs of this program, called "Logistics Civil Augmentation Program" (LOGCAP), have, of course, increased substantially (due to such unforeseen things as having to pay Hungary a Value Added Tax (VAT) of $18 million and having to fly the needed plywood over from the USA at a cost of "$85.98 per sheet"). A quote about Bosnia will give you the drift: "LOGCAP cost estimates for the Bosnian mission have increased substantially. The Army's latest revised estimate of $461.5 million exceeds its original estimate of $350.2 million by $111.3 million, or 32 percent." (as of late 1996)

The way it used to be - Korea, Jan., 1952. SOURCE

B&R is almost exclusively the recipient of these contracts. They are with the troops from initial landing to departing, doing the work that troops used to do themselves. I quote:

"When troops deployed into the theater in December 1995, little infrastructure remained in the war-ravaged region. Tent camps were quickly set up, using military and contractor resources, with a simple focus of just getting the troops out of the mud." (my emphasis – in the old days, troops had to put up their on tents!)

Or course, this is not without cost. Now the troops have to protect the civilians in addition to looking after their own butts! Which can be a real pain due to the usual undisciplined nature of civilians.

In an article by Lieutenant Colonel Darrel A. Williamson, USAR, it is reported that Brown & Root is so well entrenched with the government that in 1997 they were awarded a follow-on contract over DynCorp, even though DynCorp was the lowest bidder. Highly unusual.

Support Contract in the Balkans

"The Operation Joint Forge logistics support services contract (DACA78-99-D-0003) was awarded Feb. 19 to the firm, Brown & Root Services of Houston, Texas. The one-year contract, with four one-year option periods that can be awarded at the government's discretion, will become effective on May 28, 1999," according to the US Army Corps of Engineers. Initial award amount is $10,000,000 with ceiling amounts of $180,000,000 per year (a "cost-plus-award-fee" contract).

Impact of these large American operations on the Native Culture

Space does not allow a digression into this issue which is very interesting in its own right. The American contractors, i.e., B&R, do employ local laborers and therefore do provide jobs. However, the other side is that they are sometimes a little overbearing. For an interesting take on this from the Bosnian side, see this article about B&R's dumping of septic waste in their rivers and moraines.

What the heck – Everybody does it

The "Revolving Door" problem has been around a long time – possibly from the beginning of the country – but has grown enormously with the growth of the "military-industrial" complex, during and after WWII. It has grown at an even far greater rate in recent years with the large increase in federal control and statism. It operates at all levels of the government. From the President and Congress on down to the military officers and the civil servants. Some examples:

Executive Branch
Of course employees of the Executive Branch are not shy about taking lucrative jobs in industry when their services are no longer needed by the White House. Some notable examples:

Spiro Agnew, forced to resign Vice President, later worked as a consultant to South Korean firms ("Korean Scandal, or American Scandal?). Richard Holbrooke (then Under-Secretary of State for East Asia), also participated in that scandal.

According to Martin L. Gross in his book, The Political Racket, both Michael Deaver and Lynn Nofziger got into some ethics difficulties when they became lobbyists. He further mentions that Susan Thomases, Hillary Clinton's personal lawyer, lobbies for Puerto Rican companies and Morgan and Company.

The Feb. 22, 2000 edition of the Washington Post reports: "Shortly before his December 1996 retirement, then-CIA Director John M. Deutch negotiated for himself a no-fee consultant contract that enabled him to keep at his homes three agency computers on which he had stored highly classified information, according to officials familiar with a report by the CIA's inspector general."

According to Martin Gross, William Colby also became a registered "Foreign Agent" after his retirement from the CIA. Obviously, their unlimited access to the secrets of the world, make their services extremely valuable!

Congress (and their aides)
A large percentage of the members of Congress and their aides become lobbyists or "consultants" when they are removed from office. In fact, even if the removal is because of unethical activity or even a criminal conviction, they still take a lucrative position with the "K Street" crowd. Some examples follow:

Ex-Congressman (and Ex-Con) Dan Rostenkowski
Rostenkowski is president of Danross Associates, consultants in "legislative and governmental affairs." According to the Beloit Daily News, Dan, ". . . once one of the most powerful men in Washington, is out of prison, hanging out his consultant's shingle and looking for work." He is doing well.  

A Congressional Aide
Consider the well known case of Ann Eppard, formerly an aide to Bud Shuster of Pennsylvania, the chairman of the powerful House Transportation and Infrastructure Committee. I quote the following from page 53 of the book, The Buying of Congress by Charles Lewis:

"Ann Eppard, an aide to Shuster for more than two decades, has been indicted by a federal grand jury for allegedly receiving $230,000 in illegal payments and with embezzling $27,500 from Shuster's campaign committee. She resigned as his chief of staff in late 1994. Within weeks, she became a lobbyist for several interests with business before the Transportation Committee. In so doing, she hit the jackpot: Ann Eppard Associates took in more than $1 million in its first year, including more than $600,000 from transportation clients. As The Washington Monthly and others reported, thanks to Eppard and Shuster, such companies as Federal Express Corporation and Frito-Lay, Inc., were exempted from regulations on mid-weight delivery trucks, over the objections of truck-safety advocates. Carnival Cruise Lines, also thanks to Eppard and Shuster, got a "technical amendment" added to a Coast Guard reauthorization bill that would shield cruise companies from lawsuits by women raped aboard their ships unless the women had also incurred 'substantial physical injury'."

Finally, for a nice summary of the transit from Congresscritter to Lobbyist, see the 60 Minutes transcript. There, Morley Safer interviews and/or talks about the likes of Thomas Hale Boggs Jr., Barney Frank, George Mitchell, Bob Packwood, Bob Dole [Note 4] – a small but representative sampling of their colleagues (128 at that time) who are now lobbyists!

Military and NASA
While there are thousands who move back and forth between the Military/NASA branches of the government and industry every year, one example will have to suffice here due to limitations of space and the reader's tolerance.

Before he was Secretary of Defense, Caspar Weinberger was a top executive at Bechtel, which does massive engineering projects for the Pentagon and foreign clients like Saudi Arabia.

Final Thoughts

Cheney's "Revolving Door" exercise illustrates a phenomenon of our society that, while lacking somewhat in ethics, is more or less accepted as part of the status quo of the form of government we have. It is no better or no worse than the rest of the lobbyist driven government. Modern political philosophy has grudgingly come around to the concept that the "Public Choice" scholars have promoted that politicians and government employees are selfishly motivated. Given that apparent fact, it is a rather straightforward conclusion that the operators in this sphere of government/industry interaction would set themselves up for the most lucrative rewards they can get. This will often require moving back and forth from one side to the other for maximum rewards.

But is that necessarily bad and even if it is, would we want to change it?
Addressing the first issue, we have to look at the minuses and pluses.

On the minus side, we reasonably believe that when the "revolving door" option is exercised by someone, we taxpayers may end up paying for government purchased services and materials that we probably don't need. We may even pay more money for this stuff we don't need than could have been paid with a more honest environment.

This cost is not trivial – those that exercise the privileges of the "Revolving Door" are often doing very well financially – at the expense of the taxpayers. Lobbyists can make nearly a million dollars a year or more. Of course, CEO's do even better. This is part of the cost of doing business in the USA and is paid for by the consumers/taxpayers.

Finally, there is the disturbing possibility that this intimacy between the government and industry, with the occasional swapping of positions, may be injurious to the health and welfare of citizens of these "contingency" areas. What I am saying is, I think there may be some profiteering going on.

On the plus side, there is surely some merit in making use of the talent and experience gained by an individual while working the other side of the fence. Cheney's experience in Congress has legitimate value to any large company in these times for they all must deal with the government. And it goes the other way too.

As far as "would we want to change it?" – well, yes. For even if we of the libertarian persuasion are reluctant to interfere with personal choices, the situation is clouded when the government is involved. For example, I strongly believe in the free market, but I recognize that when the government subsidizes some industries and responds lovingly to "rent-seeking" companies, the market is no longer fair and it may be necessary to impose some controls.

And so it is with the "Revolving Door". It needs to have a little sand poured in the bearings.

Notes:

Note 1: I'm referring to the timid legal requirement that a government employee is forbidden to work in a company for one year (or two, whatever) that he/she has had direct contractual relationships with while working for the government. Attempts to tighten up the law and to remove its vagueness have failed miserably simply because the legislator's hearts are just not in it! The subject is complicated and voluminous which precludes its discussion here.

Note 2: One has to wonder what are the qualifications for becoming a CEO? You would think that the position of CEO in a large multinational organization such as Halliburton, would require a great deal of demonstrated capability in managing large profit making operations. Cheney had been in politics his entire career. He has never managed any profit making enterprise. Puzzling. Unless you consider that his connections in Washington were so valuable that all other factors were insignificant or could be handled in some other way.

Note 3: Hungary is also a site of extensive operations by B&R as it is the designated staging site for the Balkans.

According to the February 20, 2000 issue of the Washington Post even Iraq may be involved in Halliburton's operations and Cheney's interests. A quote from this "must read" article:
"As secretary of defense during the Persian Gulf War, Richard B. Cheney played a key role in the U.S.-led military coalition that forced Iraq to retreat from Kuwait. But as chief executive officer of Halliburton Co., a Dallas-based maker of oil equipment, Cheney recently held a major stake in Dresser-Rand and Ingersoll-Dresser Pump Co., two American players in the reconstruction of Iraq's oil industry."
(Space does not permit exploring the issue here, but this Post article mentions another prime example of a sleazy "revolving-door" execution – former CIA director, John M. Deutch's move to Schlumberger Ltd., a company actively soliciting business from Iraqi's President Saddam Hussein to service his oil rigs.)

Note 4: An amusing anecdote from the book, Washington on $10 Million a Day, by Ken Silverstein:
"Just as illuminating of Washington's bipartisan nature is the case of Bob Dole. During the 1996 presidential campaign, he told voters he would "go home" if he was defeated in his bid for the presidency. Most people thought Dole was referring.g to Russell, Kansas, but it turned out that the senator-who did after all serve for more than three decades in the capital and resided for a great deal of that time at the Watergate Hotel had Washington in mind. After his defeat, Dole took up residence at Verner, Liipfert, Bernhard, McPherson and Hand, one of the most staunchly Democratic firms in the beltway. His colleagues there include George Mitchell, the one-time Democratic senate majority leader, and Lloyd Bentsen, the former Texas senator and treasury secretary under Bill Clinton."
 
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