The Boston Globe, March 6, 2008
CAYMAN ISLANDS – Kellogg Brown & Root, the nation’s top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven.
More than 21,000 people working for KBR in Iraq – including about 10,500 Americans – are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands.
The Defense Department has known since at least 2004 that KBR was avoiding taxes by declaring its American workers as employees of Cayman Islands shell companies, and officials said the move allowed KBR to perform the work more cheaply, saving Defense dollars.
But the use of the loophole results in a significantly greater loss of revenue to the government as a whole, particularly to the Social Security and Medicare trust funds. And the creation of shell companies in places such as the Cayman Islands to avoid taxes has long been attacked by members of Congress.
A Globe survey found that the practice is unusual enough that only one other major contractor in Iraq said it does something similar.
Paul Krugman: The Anxiety Election
Paul Krugman, The New York Times, March 7, 2008
Democrats won the 2006 election largely thanks to public disgust with the Iraq war. But polls — and Hillary Clintons big victory in Ohio — suggest that if the Democrats want to win this year, they have to focus on economic anxiety.
Some people reject that idea. They believe that this election should be another referendum on the war, and, perhaps even more important, about the way America was misled into that war. That belief is one reason many progressives fervently support Barack Obama, an early war opponent, even though his domestic platform is somewhat to the right of Mrs. Clinton’s.
As an early war opponent myself, I understand their feelings. But should and ought don’t win elections. And polls show that the economy has overtaken Iraq as the public’s biggest concern.
True, the news from Iraq will probably turn worse again. Meanwhile, a hefty majority of voters continue to say that the war was a mistake, and people are as angry as ever about the $10 billion a month wasted on the neocons’ folly.
Yet for the time being, public optimism about Iraq is rising: 53 percent of the public believes that the United States will definitely or probably succeed in achieving its goals. So anger about the war isn’t likely to be decisive in the election.
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