Spying for Dollars: Military Contractors and Security Firms Reap Huge Profits

02-14-2010 • Tom Burghardt

The Obama administration is seeking to increase the obscenely bloated U.S. Defense Department budget to a whopping $708 billion for fiscal year 2011, 3.4% above 2010's record level, The Wall Street Journal reported.

While the overall budget deficit will balloon to a staggering $1.6 trillion in 2011, the result of massive tax cuts for the rich, declining revenues, a by-product of capitalism's economic meltdown, imperial adventures abroad and general corporate malfeasance (the old tax-dodge grift), the administration plans to cut $250 billion over three years from non-military "discretionary spending" on domestic social programs.

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It is no small irony that despite stark budget figures and an even bleaker future for the American working class, Washington Technology reported January 28 that the "29 largest publicly traded defense contractors increased their use of offshore subsidiaries by 26 percent from 2003 to 2008."

Citing reports by the Government Accountability Office (GAO), journalist Alice Lipowicz disclosed that the "subsidiaries helped the contractors reduce taxes, in part by avoiding Social Security and Medicare payroll taxes for U.S. workers hired at the foreign subsidiaries."

Considering that the Pentagon hands out some $396 billion annually to contractors, outsourcing everything from "in theatre" construction in places like Afghanistan and Iraq to pricey "intelligence analysts" at secret state agencies, cash not spent on payroll taxes by dodgy firms slices another hole into the already-shredded social safety net.

Amongst the largest firms cited in GAO's 2008 report, updated inJanuary 2010, Oracle Corp., operates in 77 tax havens; Boeing Co., 38; Dell Inc., 29; BearingPoint Inc., 28; Computer Sciences Corp., 21; Fluor Corp., 34; General Dynamics, 5; Harris Corp., 13; Hewlett-Packard, 14; Honeywell International, 7; ITT Corp., 18; L-3 Communications, 15; Sprint Nextel, 7.

Many of the firms are heavily-leveraged in the lucrative "homeland security" market and provide technology and "cleared" intelligence analysts, many of whom jumped ship from government service for richer, if more dubious employment, to a host of secret state agencies including the CIA, DIA, NSA as well as ultra-secretive outfits engaged in global satellite surveillance such as the National Reconnaissance Office (NRO) and the National Geospatial-Intelligence Agency (NGA).

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