Ripoff CEO Pay for Private Contractors: the Budget ‘Waste’ Deficit Hawks Never See
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Americans don’t like the idea of their tax dollars making anybody rich. That’s why TV ads bashing members of Congress for voting themselves pay raises flood our airwaves every campaign season.
But if you really want to find people profiteering off our tax dollars, don’t look at Congress. Look into the “private” sector -- at executives like Ralph Shrader, the CEO of Booz Allen Hamilton, a consulting company that gets 98 percent of its revenue from the federal government.
Shrader took home $4.2 million last year. The top five Booz Allen execs together pocketed just under $20 million. They averaged 23 times what members of Congress take home.
Or consider Howard Lance, the top exec at Harris, a Florida company that took in $2.2 billion in federal contracts last year for projects like overhauling the billing at veterans hospitals. Lance has collected, over the past five years, $46.1 million for his CEO labors, over 50 times congressional pay during that same time span.
And we certainly shouldn’t overlook Robert Stevens, the chief exec at Lockheed Martin, the top federal contractor of them all. Stevens made $20.4 million last year running a company that takes in 84 percent of its revenue from the U.S. government. A member of Congress would have to serve 58 two-year terms to make that much.
This list -- of private sector execs currently making fortunes from public sector tax dollars -- could go on quite a bit longer. Federal contracting has become a mammoth operation. In 2009 alone, the top 100 private purveyors of public services gobbled up $130 billion in federal contracts.
But you don’t have to grab a government contract to profiteer off tax dollars. A hefty number of corporate concerns have developed highly lucrative business plans that exploit our tax dollars indirectly. For-profit institutions of higher “learning” have evolved this exploitation into a morally indefensible art form.
For-profit colleges have been around, of course, for generations, but mostly at the margins of higher education. Two decades ago, less than 1 percent of college students attended for-profit institutions.
That figure has since multiplied over tenfold. The secret to the for-profit higher ed sector’s success: Corporate educational empires like the Apollo Group, operator of the University of Phoenix, aggressively recruit low-income students who qualify for federal student loans.
The students use these loans to pay their tuition. But many never graduate, and many of those who do don’t have the skills they need to make enough money to pay back their loans. So they default -- and taxpayers get stuck with the tab.
The top execs at these for-profit education corporations, in the meantime, get rich. Last week, a Bloomberg news report documented, for the first time ever, the incredible extent of these riches. Top execs at the nation’s biggest 15 for-profit colleges, notes the new Bloomberg report, have together pocketed $2 billion since 2003 selling off shares from their personal stashes of company stock.
Nine of these execs took in windfalls over $45 million each.
The vice-chair of the Apollo Group, Peter Sperling, cashed out an amazing $574.3 million. He currently owns a $20 million estate in California’s Santa Barbara and a “neoclassical villa and guest house” in San Francisco worth $47 million.
“For-profit colleges,” says Columbia University education analyst Henry Levin, “are reaching into the public trough to finance luxurious lifestyles at the expense of people who are going to have to pay back loans.”
All this feeding at the public trough, we need to keep in mind, comes at a time when local and state government budget cuts have public colleges and universities laying off faculty, raising tuition, and axing academic programs.