CBO Fingers Waxman As Source of False Information

Congressman Henry Waxman's office is the source of the false information about how much Blackwater security contractors in Iraq are paid. That's not simply this blogger's view - it's a statement in a new Congressional Budget Office (CBO) report on private contractors in Iraq. The Senate Budget Committee commissioned the report.

During October 2, 2007 hearings, the staff of House Oversight and Government Reform Committee Chairman Waxman prepared a memorandum to committee members, stating that Blackwater security personnel in Iraq were costing $455,000 per person per year, "over six times more than the cost of an equivalent US soldier." Blackwater CEO Erik Prince sharply disputed the figure, which several congressmen - including and especially Waxman - repeated during the hearing and in subsequent interviews with the media.

Waxman made the statements as part of a favor he did for a trial lawyer who stands to make millions by discrediting and suing Blackwater. The liberal website ProPublica.org says Waxman's strategy is to discredit the company to "make it ineligible for future federal contracts."

The New York Times, Washington Post and other news outlets uncritically repeated the misleading figures, adding to the falsehood by stating that the figure was what the individual contractors were being paid. This blog reported on the falsehood on the day of the hearing. nearly a year ago.

The CBO report, issued last month, points directly to the source of the falsehood. In footnote 22 of page 14 of the report, the CBO said that the critics' "figures appear to come from a memorandum to members of the House Committee on Oversight and Government Reform, Additional Information About Blackwater USA (October 1, 2007), http://oversight.house.gov/documents/20071001121609.pdf."

"Those figures, however, are not appropriate for comparing the cost-effectiveness of contracting the security function or performing it using military personnel," according to the CBO. The $455,000 a year figure comes from a daily billing rate of $1,222 a day. "The figure of $1,222 a day represents the contractor's billing rate, not the amount paid to the contractor's employees. The billing rate is greater than the employee's pay because it includes the contractor's indirect costs, overhead, and profit," the CBO said. This cannot be compared to what a U.S. soldier costs the taxpayer because of many other costs involved.

The CBO backs up Prince's contention at the 2007 hearing that the costs include equipping and supplying the security personnel, and paying for equipment damaged or destroyed by insurgents or the US military. That equipment includes several helicopters the company lost to hostile fire. It is not possible to insure helicopters in war zones; Blackwater pays for the losses out of its profit and overhead.

It is rare for the CBO - an independent, nonpartisan auxiliary of Congress - to point to congressmen or congressional staff as the sources of misleading information, so the observation in the report is particularly important.