And Oil Company Executives Reap Windfalls
From Iraq War
By Naomi Spencer
15 September 2006
World Socialist Web
September 11, 2001, and the Bush administration’s initiation of the “war on
terror,” inequality in the US has grown at a rapid rate and to grotesque proportions.
The criminal nature of war on Iraq is reflected in every facet of American life,
least surprisingly of all in the enormous fortunes of the ruling elite. Indeed,
the current war, the most privatized in history, is viewed by a wide range of
corporate executives and investors as an open-ended outsourcing opportunity.
Congress has appropriated more than $314 billion thus far for
the illegal invasion and occupation of Iraq, largely at the expense of infrastructure,
education, and other basic requisites for modern life at home. The massive government
expenditures and cuts in vital social programs that characterize the US war
economy, however, far from fostering restraint on the part of big business,
have paved the way for shameless price gouging, corporate windfalls, tax cuts,
pension-gutting and pay cuts for average workers in the US.
Results of “Executive Excess 2006,” the thirteenth annual chief
executive officer compensation survey by the Institute for Policy Studies (IPS),
underscore the fact that the war has benefited a very few to the detriment of
the broad mass of the population, both domestically and internationally.
Business Week estimates that in 1980 the ratio of US executive
to worker pay was 42-to-1. IPS found that by 1990 the CEO-worker pay gap had
grown to 107-to-1. In the period following 1990, one dominated by unprecedented
deregulation and globalization, executive pay soared while workers’ wages by
and large stagnated, generating a pay gap of 411-to-1. “If the minimum wage
had risen at the same pace as CEO pay since 1990,” the report notes, “it would
be worth $22.61 today, rather than the actual $5.15.” Similarly, average worker
pay would be more than $108,000 in 2005, rather than $28,314.
After 9/11, pay levels of defense and energy CEOs soared.
According to the IPS, CEOs of the top 34 defense contractors saw their average
compensation double, from $3.6 million in 2002 to $7.2 million in 2005. Since
September 11, these 34 executives have pocketed a combined total of nearly a
billion dollars, which the IPS estimates would be “enough to cover the entire
wage bill for more than a million Iraqis for a year.” Average defense CEO pay
was 308 times the pay received by a deployed US Army private in 2005, $25,000.
George David, CEO of Black Hawk helicopter manufacturer United
Technologies, raked in over $200 million between 2002 and 2005, making him the
highest paid defense executive. In 2004, David took in $88.3 million in pay
and stock options; last year his pay was $31.9 million, still the top defense
executive. Boeing CEO W. James McNerney Jr. was not far behind in 2005, with
The sharp rise in executive pay is directly tied to Pentagon
budget increases. Last year alone, government expenditures for military contracts
totaled $269 billion. As the ISP points out, the excessive funds have accelerated
“the virtual revolving door between the Pentagon and private contractors.” Former
Defense Secretary William S. Cohen, for example, resigned in 2001 to become
a lobbyist for the defense industry.
Divestitures in military health care contributed to the enormous
profits of managed care company Health Net and the fortunes of its top executives.
CEO Jay Gellert hauled in over $28 million between 2002 and 2005, a 1,134 percent
increase in compensation over the four years prior to war. Gellert is the defense
executive posting the biggest pay increase in the IPS survey.
Health Net holds contracts to provide health services to active
military personnel as well as mental health counseling and care of wounded troops—profiteering
driven by the huge numbers of injuries. The company’s profits have increased
by 26 percent since 2003, primarily due to a “risk-sharing” arrangement with
the federal government, whereby the Pentagon makes up the difference for costs
past the threshold of solvency. If not for this subsidization of contracting,
the IPS estimates, Health Net would be running in the red.
The Pentagon has also outsourced intelligence collecting,
paramilitary-style training, and management of unsavory and illegal detention
facilities. The second-biggest executive pay increase went to Anteon International
CEO George Kampf, whose company is responsible for training Coalition troops
in prisoner interrogation techniques. According to the financial watchdog
group CorpWatch, many of the interrogators working at facilities infamous for
torture, including Guantánamo and Abu Ghraib, received their training through
Anteon. CEO Kampf’s annual pay package rose from $600,000 before September 11,
2001, to $9 million last year.
The US oil industry has also conspicuously benefited from the
war in Iraq, at the expense of the lives tens of thousands of Iraqis and the
livelihoods of millions. Within the US, ordinary workers are struggling with
drastically higher retail gasoline and residential fuel prices.
Meanwhile, chief executives at the fifteen largest American oil
companies have received record pay in the years since the “war on terror” was
According to the IPS, these top CEOs claimed an average $32.7
million in compensation last year, 518 times the annual wage of an average oil
industry worker. The highest paid executive was William Greehey of top refiner
Valero Energy, with $95.2 million. The lowest-paid oil industry worker for which
the Bureau of Labor Statistics keeps statistics, a site construction worker,
would have to work for 4,279 years before earning as much as CEO Greehey made
Greehey was followed by Occidental Petroleum executive Ray R.
Irani, who took in $84 million, and outgoing ExxonMobil CEO Lee Raymond, who
reported $69.7 million. Together, the top 15 saw average pay increases of more
than 50 percent in 2005 over 2004.
The Center for Responsive Politics, which tracks lobbying and
contributions, reported that the oil industry contributed more than $2.6 million
to the reelection campaign of George Bush in 2004. The next highest contribution,
worth $305,610, was to the pro-war campaign of Democratic opponent John Kerry.
Along with a number of predominantly Southern Republican senators who received
large sums from the industry, Bush and Kerry have promoted legislation to serve
the interests of big oil, including unserious environmental policies emphasizing
voluntary compliance and incentives, deregulation, and in the longer term, conquest
of the Middle East.
Last year, ExxonMobil recorded $36 billion in profits, the largest
Like all major oil companies in the aftermath of Hurricane Katrina, ExxonMobil
seized on the destruction of the Gulf Coast and the damage to rigs and refineries
in the region as a pretense for extreme gouging. CEO
Raymond, called to testify before Congress in the face of public outrage, denied
profiteering and defended the record profits. He reiterated two persistent lies:
that salaries enjoyed by the upper crust were hard earned and justly deserved,
and that price hikes were the uncontrollable result of supply and demand.
At the end of the year, Raymond retired, taking nearly $70 million
with him for 2005. A few months later, he was awarded a retirement package—including
a million dollar consulting contract, security, car and driver, use of a corporate
jet, and nearly a quarter million dollars in country club fees—reportedly worth
nearly $400 million.
Overall in 2005, the oil industry netted over $140 billion, more
than three-quarters of which went to the top five oil companies. So far 2006
has been yet another record-breaking year. ExxonMobil’s second quarter profits
were $10.36 billion, 36 percent higher than those of the same period last year.
With so much market share and so much of a critical resource
dominated by a handful of corporations, oil companies can effectively shape
the market to maximize their profits. The working class is held hostage with
arbitrary price increases and artificially suppressed supplies. Currently
the Energy Information Administration estimates that American refineries are
operating at an average 86 percent capacity, resulting in gasoline production
rates of 24 million fewer barrels per day than a year ago.