When Federal Contracts Turn Into Corporate Welfare

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http://www.commondreams.org/view/2013/10/05-2



When Federal Contracts Turn Into Corporate Welfare
by Michelle Chen
Published on Saturday, October 5, 2013 by In These Times

Where does the corporate bottom line end and the public interest begin? Through the voodoo economics of federal contracting, Washington's "partnerships" with private corporations have drained the public trust straight into the pockets of top corporate executives.

The progressive think tank Demos calculates in a new research report that private contractors have funneled up to $24 billion in federal funds into executive salaries. Yet, according to the analysis, the same system of contracted firms—from defense manufacturers to concession stands at national tourist sites—also employs hundreds of thousands of poverty-wage workers at the bottom.

Federal contractors are currently subject to a very loose limit on the amount of an executive's salary that can come directly from federal subsidies: about $763,000. Extrapolating from survey data on the top contractor executive salaries fromthe Government Accountability Office, Demos estimates the aggregate share of public money that is ultimately funneled into executive pay at $23.9 billion.

Besides taxpayers, those who stand to lose most from these skewed CEO pay schemes may be the low-wage laborers carrying out the actual work of the contract projects, such as repairing a school or building a bridge. These are the workers featured in another recent Demos analysis of contractors, showing that “an estimated 560,000 Americans employed by federal contractors were paid $12 an hour or less.”