The Cost of Doing Business

Walter Pincus analyzes one of the contracts that Henry Waxman is looking at to determine how much more Blackwater’s mercenaries are costing us than a law-abiding US soldier. Pincus notes that Petraeus makes roughly $493 a day. This doesn’t appear to include benefits; figuring benes make up 1/3 of someone’s compensation–which in the private sector is often about right, but in the military is probably too small–then Petraeus might cost us, the taxpayer, $750 a day. That’s for our top commander in Iraq, $750 a day.

And here’s how a Blackwater employee gets charged:

Average day-to-day personnel, $600/day salary paid by Blackwater
Blackwater bills Regency, $850/day for operators
Regency bills ESS an average of $1100/day for all types of employees
ESS charges Halliburton which charges the US based on a per-meal basis (I’m going to go out on a limb and guess that Halliburton has some profit worked into this)

A married Iraqi sergeant serving in Iraq makes about $170/day [updated for clarity].

No wonder Bush needs another $200 billion. He’s outsourcing the actual fighting of this war to forces that cost six times as much as it would if our military still did the fighting.

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  1. katie jensen says:

    And why has congress not demanded to have an accounting of these monies. To me this is the most ludicrous of all. Does congress really believe that the american people don’t care how this money is being spent? My god!!

    This is active passivism at it’s finest. Fear rules the day and will destroy our country.

  2. …. says:

    a group of mercenaries in the iraqi peoples country killing and murdering iraqis, paid for by the american people… sounds good doesn’t it? and when terrorism it to american shores, americans will wonder why it happened???? geez, i hope americans are less apathetic when it happens, and not just over the money blackwater has cost them.

  3. rukus says:

    I thought that it was apparent from the beginning of this war and this administration. The U.S. government is run to provide welfare for the big corporations and the rich and mighty.

    Now that is the welfare that needs reforming.

  4. says:

    meanwhile the usa is positioning itself to bomb iran.. destroying one cuontry isn’t enough apparently.. the revolutionary guard is listed as a terrorist organization according to a majority of american politicians, but any amendments to blackwaters activities is out of bounds… it would be laughable if it wasn’t so sickening.

  5. mk says:

    Blackwater and other contractors are cheap in the only thing that Bushco cares about — political capital, the ability to continue this insane foreign policy.
    Yeah, this all costs a whole lot of funny money and our children’s and grandchildren’s future.
    But otherwise, if uniformed military were doing all the contractor jobs, we’d have a draft. And I don’t think we’d continue to have this war for long.
    Enronizing the war and its cost out into the ozone means we can continue with our volunteer armed forces and National Guard — at least for now, which is the only timeframe these guys care about.

  6. Anonymous says:

    I really think it is worth considering reporter Jeremy Scahill’s observation about the contractors: â€â€¦the Pentagon is useless to politicians because it doesn’t make campaign ’contributions’. But when you take a big chunk of that enormous military budget and give it to private companies, you free it up to come back (some portion of it) to politicians every campaign season.â€

    Fits the current pattern inside the Beltway — rob the people blind; blunder on.

  7. Boo Radley says:

    What are the Democrats thinking? They are HELPING the GOP maintain the appearance of being stronger on national defense, without having to pay the political price of bringing back the DRAFT.

  8. Mary says:

    Plus, none of that includes the costs for the hookers for Congressmen. *g* TPMuckraker says Geragos wants to keep the prosecutors from talking about dirty stuff like hookers.

    Hell, given the things DOJ lawyers have been DEFENDING in court (kidnapping, disappeared children, torture, human trafficking with Afghan warlords, etc.) they were looking forward to cleaning up their act by only talking about hookers.

  9. darclay says:

    I’m sure that Libby Dole and Burr are just thrilled that they can say how much money they are making for our state except I am sure that there is a tax exemption somewhere to keep the business in N.C. I also bet that our esteemed Senators are touting how finacially responsible they are to their constituents being republican, JUST think how much the Democrats would be spending.

  10. Jodi says:

    emptywheel

    you are correct that benefits are greater. The military is on a basic 20 year service cycle, and then retire at 1/2 pay at any age, and after 30 years retire at 3/4 pay at any age, and now days they can get more with a complex formula.

    However what you are not factoring in is one great advantage of contract workers. When the job is over then they can be cut loose. You don’t have to hold on to them til they retire. You don’t have to keep the base available, and the equipment for them repaired.

    If you bring 10,000 contract fighters in for 3 years it is cheaper than 10,000 soldiers for 20 plus years.

    However the longer this accursed war goes on, the less the cost advantage. And worse still the loss of life on all sides.

  11. Anonymous says:

    Well Jodi at least a significant part of your point disappears if you consider the contractors are being paid 4-10 times as much as standard military.

  12. darclay says:

    Jodi I think history has proven that mercenaries tend to dirft off in bands creating havoc after their jobs are over.

  13. Boo Radley says:

    â€You don’t have to hold on to them til they retire.â€

    Wow, are you naive. If the military does not like/want someone they make it miserable for them, until they retire/resign. If that does not work, they court martial them with trumped up evidence. They don’t â€hold on†to anyone they don’t want.

  14. Anonymous says:

    Boo – don’t forget about this weekend’s story about how thousands are being dumped, without benefits, for having â€mental problems†that the military suddenly considers â€pre-existingâ€.

  15. Jodi says:

    bzmaz,

    I said for â€3 years.†The model using emptywheel’s numbers of 6 times pay breaks down over longer periods of time.

    There is something I didn’t mention deliberately, but I will spell it out now. The Blackwater men are highly skilled soldiers or security operatives, much more so than the ordinary troops.

    Many for example are ex-Seals, and others of the most effective fighters the US and other countries have had.

    We can’t just recruit more soldiers even with a bonus, and end up quickly with fighters of that caliber.

  16. Boo Radley says:

    Jodi, which â€Jodi†are you? You don’t sound at all like the â€Jodi†who was looking forward to romping in the surf with her â€hero†or the â€Jodi†who left her copy of ANATOMY OF DECEIT at â€grandma’s.â€

    â€We can’t just recruit more soldiers even with a bonus, and end up quickly with fighters of that caliber.â€

    ROFLMAO.

    Yo, Jodi’s stand in, it’s called a draft. Selective service does not pay a BONUS. Chicken hawks, like you, are understandably petrified of it.

  17. darclay says:

    Yo, Jodi’s stand in, it’s called a draft. Selective service does not pay a BONUS. Chicken hawks, like you, are understandably petrified of it

    So was our esteemed â€The Decider†and his other brother Dick!

  18. Anonymous says:

    Even assuming that these â€fighters of that caliber†were trained as special ops and seals, and certainly not even close to all of them could be, it strikes me that the ones who leave the military for the higher pay are truly the trigger happy mercenary types who are in it for the money and themselves, not duty and country. Precisely the shoot em up types we have seen.

  19. mk says:

    And if you need a report on a Blackwater incident, who ya gonna hire?
    Blackwater, of course.
    It’s not incompetence alone that characterizes this administration. It’s total and deliberate flouting of the one key requirement for government (or business, for that matter): oversight.
    Or as my Dad used to say, over and over and over, â€Quis custodiet ipsos custodes?â€
    Thank God for Henry Waxman and for investigative reporting and for blog writers like those here who understand that basic need.

  20. prostratedragon says:

    Of course, the ulitmate issue for a democracy under law in using its own soldiers versus using mercs is accountability, which for a society such as we used to have here is a value well ahead of cost, or flexibility (wish uh had muh â€flexibility†font on that one), or any other purely instrumental value. We should want soldiers who answer to us, first, and then maybe we do some optimizing within that space.

    Somebody else on-line was talking about that today, but it’s really folk wisdom. I’ve been thinking about it for a while, and am saying it here.

  21. Ishmael says:

    A private army of mercenaries is as great a threat to the sovereignty of the United States as it is to Iraq, although the Iraqis (for now) bear the immediate and deadly consequences. The Framers saw the dangers of a standing army to a democratic society, and took steps against one, but are there any legal bases for the disbanding of a Praetorian Guard answerable to the Chimperor (or whoever may decide to become Emperor)?

  22. Anonymous says:

    Whoa. It gets worse. Check out this new NYT piece:

    http://www.nytimes.com/2007/10…..vd5GnF23Jw

    â€The report also raised questions about the cost-effectiveness of using Blackwater forces instead of United States troops. Blackwater charges the government $1,222 per day per guard, “equivalent to $445,000 per year, or six times more than the cost of an equivalent U.S. soldier,†the report said.

    The incident involving “a drunken Blackwater contractor†arose when the employee killed a bodyguard for the Iraqi vice president, Adil Abd-al-Mahdi, in December 2006. State Department officials allowed Blackwater to take the shooter out of Iraq less than 36 hours later.

    Then the State Department charge d’affaires recommended that Blackwater make “a sizable payment†and an “apology†in an effort to “avoid this whole thing becoming even worse,†the report went on. The State Department official suggested a $250,000 payment to the guard’s family, but the department’s Diplomatic Security Service said that was too much and could cause Iraqis to “try to get killed.†In the end, $15,000 was agreed upon. â€

  23. phred says:

    Jodi — I’m guessing you have never worked as a defense contractor. In my experience, they are never â€cut looseâ€, they just switch companies if the company loses the contract to someone else. I once worked with people who worked for multiple companies without ever physically leaving their desk. One look at the government budget will show you that nothing of substance has been â€cut loose†from the defense budget in a long long time.

    I agree with prostratedragon that the real problem with mercenaries is it makes people within a democracy more casual about warfare. Citizens are much more likely to find another solution to a political problem, if it one’s own life or the life of family members on the line. A recent book on ancient Greece attributed the demise, at least in part, of its second period of democracy on the use of mercenaries. They bankrupted themselves and ultimately could not defend themselves against the forces they had created.

  24. Alyx says:

    …tsk tsk tsk, that is just disgusting…I did not realize that Haliburton turns around and charges the USA….I kinda thought it was coming off the top of their profits. Geez are we a country of loosers or what…it get’s worse every day. After watching â€Walking with Cavemen†yesterday on Discovery…I wish our brains never did get bigger….geesh! We certainly have made a mess and a mockery of civilization. Key word CIVIL. sigh…..

  25. seamus says:

    Alyx, everything is on the taxpayer dime in Iraq. I believe that there are more contractors in Iraq than there are US troops, and a whole lot of them are doing what soldiers used to do, cooking, cleaning, weapons and equipment repair, truck drivers. A big reason that the costs keep rising is outsourcing the jobs that the troops used to do, and for a whole lot less. Makes no sense at all, fiscally or in terms of morale. Troops do not like seeing all those highly paid contractors, knowing the cost, and also knowing how poorly the contracts are serviced.

  26. Prabhata says:

    I dislike war so much, that I find the payment to mercenaries the best deterrent against wars because their cost is a better barometer of the economic cost to the nation. The cost for future services that soldiers and their families will receive for their physical and mental injuries are rarely included in the equation that calculates the cost of a war. The high cost of mercenaries should sober up taxpayers who believe that a nation can wage war on the cheap.

  27. sylviesolze says:

    Numbers to Think About:

    An E-6 with 8 years of service earns:$ 2,744.10 base pay. While in Iraq he/ she will also receive Family Separation Pay, $250; BAS $279.98; Hostile Fire Pay $225 and, if he/ she is married and lives off post, will receive Basic ; Allowance for Housing, at $1574.00. (I calculated this on the 21005 zip code, for Aberdeen Proving Ground.

    (For military pay, see http://www.dfas.mil/army2/mili…..rts-cc.pdf ; for BAS see http://perdiem.hqda.pentagon.m…..ahsrch.pl.)

    This comes out to $169 per day, averaged over 30 days.

    Walter Pincus points out that the average per-day pay to personnel Blackwater hired was $600. Yes, there is $431 per month differential here. But remember what soldiers get that contractors do not. Soldiers pay a minimal monthly fee (used to be under $30) and get SGLI valued at $500,000. (estimated.) Most contractors are not covered by life insurance in war zones, unless they purchase it themselves, which is prohibitively expensive even for those who are not in an operational/ security position. When a soldier dies in the course of active duty, his/ her dependents receive varying degrees of monthly pay, for a number of years; again, not so in the case of contractors. If a soldier is disabled, he will receive disability pay, for life; contractors do not, again, unless they have purchased specialized and expensive insurance given the high-risk environment they work in. Defense-Based Act (DBA) insurance is usually covered by a company, but not always, and in any case, is highly problematic when it comes to making claims.

    Of course, having just returned from Iraq myself, I can tell you that security contractors often have a much higher quality of life than the average infantry patrolmen; but then again, so do Special Forces types. Another luxury contractors have is that they can quit and leave Iraq at any time, despite having a contract, unlike soldiers. Then again, they can get fired at any time (soldiers do not get â€firedâ€), and also, contracts can get cancelled or not renewed. Finally, many security types only work for two months on, one month off. Soldiers get one term of leave and one RR in Qatar on a military base in Doha.

    Really, I am not sure that it is clear cut as to whom is getting the better deal, a US soldier or a Blackwater employee. As to all of the other murky issues as to the cost to taxpayers and non-monetary issues that I feel are quite serious for various reasons…I will remain silent for the moment.

    My suggestion is for the Department of State to beef up its RSOs and start handling security internally. They could easily do so through the 3191 process, though I am not sure anyone understands how bureaucratic State is, and really, how truly risk averse they are with their personnel, even RSOs. Apparently they believe it is better to risk a contractor’s life.

  28. Anonymous says:

    Just a quick note…a cost differential of 6x does not really mean that you break even after 6x as long. That is, 3 years of a 6x mercenary is not the same cost as 18 years of a GI.

    Due to the magic of discounting to the present, and using the current yield on 30 year treasuries as the discount rate (4.79%), paying 3 years of a 6x mercenary is the same cost as 35 years of a GI.

  29. Jodi says:

    sylviesolze is correct and backs up what I have said.

    And this is even more to the point.
    The great majority of Staff Sgts (E-6) would not be hired by Blackwater. They would not be acceptable to the Customers (State Dept.) They want a tried and true shooter. A Special Ops guy with talent and experience is what they want.

    Second as pointed out in the Committee the State Department really doesn’t want to go around in a Military Convoy of Humvees and Tanks. That sort of goes against the idea of Diplomacy unless you want the old â€Gunboat Diplomacy.â€