Saturday, September 10, 2005

Shovelling Money Out The Door

And so it begins again. Like the reconstruction of Iraq, the reconstruction of the American South is shaping up to be a pork-barrel of herculean proportions where the locals will be giving short shrift and table crumbs and corporate friends of the politically powerful will vaccuum up the bulk of the profits.

"They are throwing money out, they are shoveling it out the door," said James Albertine, a Washington lobbyist and past president of the American League of Lobbyists. "I'm sure every lobbyist's phone in Washington is ringing off the hook from his clients."

Following on yesterday's announcement that Bush has suspended, by executive order, the law that requires employers to pay the locally prevailing wage to construction workers on federally financed projects in parts of Louisiana, Mississippi, Alabama and Florida comes the news that the first contracts for reconstruction work have been awarded. There are no surprises for me in the awards.

At least two major corporate clients of lobbyist Joe Allbaugh,President George W. Bush's former campaign manager and a former head of the Federal Emergency Management Agency, have already been tapped to start recovery work along the battered Gulf Coast.

One is Shaw Group Inc. and the other is Halliburton Co. subsidiary Kellogg Brown and Root. Vice President Dick Cheney is a former head of Halliburton. Bechtel National Inc., a unit of San Francisco-based Bechtel Corp., has also been selected by FEMA to provide short-term housing for people displaced by the hurricane. Bush named Bechtel's CEO to his Export Council and put the former CEO of Bechtel Energy in charge of the Overseas Private Investment Corporation.

Kellogg Brown & Root received $29.8 million in Pentagon contracts to begin rebuilding Navy bases in Louisiana and Mississippi. Shaw said on Thursday it has received a $100 million emergency FEMA contract for housing management and construction. Shaw also clinched a $100 million order on Friday from the U.S. Army Corps of Engineers.

Please not also that the justification for suspension of the Davis-Bacon Act is supposedly that it will save taxpayers' money. The contracts awarded so far are all "Indefinite Delivery/Indefinite Quantity" contracts. awarded on a no-bid basis. The bill can rise above the amount awarded without oversight and further work can be given without a new contract - all without ensuring the firms picked for the contracts are the most competitive. It's an open license to profit gouge, as Halliburton and Betchel know from their experiences in Iraq. Pentagon audits released in June showed $1.03 billion in "questioned" costs and $422 million in "unsupported" costs for Halliburton's work in Iraq, and it's a pretty sure bet that none of the money saved by lowering wages will be passed on to the government and thence to you, the tax-payer.

Its no wonder the New York Times today called the suspension of the Davis-Bacon Act a "shameful proclamation":

By any standard of human decency, condemning many already poor and now bereft people to subpar wages - thus perpetuating their poverty - is unacceptable. It is also bad for the economy. Without the law, called the Davis-Bacon Act, contractors will be able to pay less, but they'll also get less, as lower wages invariably mean lower productivity.

The ostensible rationale for suspending the law is to reduce taxpayers' costs. Does Mr. Bush really believe it is the will of the American people to deny the prevailing wage to construction workers in New Orleans, Biloxi and other hard-hit areas? Besides, the proclamation doesn't require contractors to pass on the savings they will get by cutting wages from current low levels. Around New Orleans, the prevailing hourly wage for a truck driver working on a levee is $9.04; for an electrician, it's $14.30.

Oh, and just so we can be clear on why these firms get special favors, here are links that show not only campaign donations and top political recipients but also lobbying expenditures by Halliburton, by the Bechtel Group and Shaw Group. In the cases of Shaw and Betchel at least, this is certainly bi-partisan pork.

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