Hillary Rodham Clinton - Wall Street Journal (August 6, 2008)

No Crisis Is Immune From Exploitation Under Bush

By HILLARY RODHAM CLINTON
August 6, 2008; Page A15

Tucked away on the Cayman Islands sits Ugland House, an unassuming, nondescript building of modest scale and size. However, according to a recent report by the Government Accountability Office (GAO), this five-story office building is home to more than 18,000 corporate entities, nearly half of which have U.S. ties.

In the past few years, the number of corporations flocking to places like the Cayman Islands to evade U.S. taxes has exploded. One of these companies, former Halliburton subsidiary KBR, has used offshore tax havens to avoid paying hundreds of millions of dollars in federal taxes. To no one's surprise, instead of cracking down on KBR, the Bush administration has rewarded the company in April of this year with a 10-year, $150 billion contract in Iraq.

There appears to be no crisis, tragedy or disaster immune from exploitation under the Bush administration. The examples of the waste, fraud and abuse are legion -- from KBR performing shoddy electrical work in Iraq that has resulted in the electrocution of our military personnel according to Pentagon and Congressional investigators, to the firing of an Army official who dared to refuse a $1 billion payout for questionable charges to the same company. In another scam, the Pentagon awarded a $300 million contract to AEY, Inc., a company run by a 22-year-old who fulfilled an ammunition deal in Afghanistan by supplying rotting Chinese-made munitions to our allies.

But the fraud and waste are not limited to the war. In the weeks after Hurricane Katrina, for example, FEMA awarded a contract worth more than $500 million for trailers to serve as temporary housing. The contractor, Gulf Stream, collected all of its money even though they knew at the time that its trailers were contaminated with formaldehyde.

While touting fiscal responsibility, President Bush and his administration have lined the pockets of political cronies like Halliburton and Blackwater. While calling for earmark reform, the president has allowed no-bid and questionable contracting throughout the federal government to dwarf earmark spending by a 10-to-1 ratio.

If we're going to get serious about putting our nation's fiscal house in order, let's talk about putting an end to billions in no-bid contract awards to unaccountable contractors. Let's talk about the number of lucrative contracts and bonuses being paid for duties never performed, promises never fulfilled, and contracts falsely described as complete. And let's talk about reforming the federal contracting system so that we can take on the real waste, fraud and abuse in our federal government.

I've proposed a comprehensive overhaul to root out corruption in no-bid contracts and other shady deals. Reforms must include the following:

- Instead of rewarding companies that exploit tax shelters and incorporate in tax havens, let's ban the federal government from contracting with companies that hide profits offshore.

- We should put in place safeguards so that contracts are awarded to responsible companies that abide by the law and complete the work they're hired to do.

- Let's put a stop to the disgraceful practice of giving bonuses to contractors for work never performed, which has been allowed to happen in Iraq and throughout the federal government according to the GAO and inspectors general.

- We need to increase transparency and competition in the contracting system, and to stop the ideological privatization of critical governmental functions.

In 1941, as the U.S. mobilized and entered World War II, then Sen. Harry Truman proposed and chaired the Senate Special Committee to investigate the National Defense Program. Over the course of three years, Truman set about investigating a president of his own party in order to discover and eliminate wasteful and fraudulent spending. By some estimates, the "Truman Committee" saved the American people some $15 billion -- more than $165 billion in today's dollars.

Truman took on the war profiteers because he understood that when the lives of Americans hang in the balance, we cannot afford to misuse even a single dollar. In the Democratic Congress, we've proposed a new Truman Committee to address the waste, fraud and abuse in Iraq and Afghanistan that has already taken place, a proposal stymied by the president and his allies. And my proposal would prevent waste, fraud and abuse in future contracting.

Of course, we need far more than a Truman Committee. We need the Truman spirit in the White House, where the buck finally stops.

Mrs. Clinton is a Democratic senator from New York.