Tuesday, October 23, 2007


October 20, 2007
Your Money
Exotic I.R.A.’s: Leaving Stocks and Bonds Behind

BRIAN HARRIS makes a 30 percent annual return on his Roth individual retirement account, but his money is not invested in a soaring biotechnology stock or a hot currency fund.

Instead, Mr. Harris, a music teacher from Tucson, owns about 25 marimbas, xylophones and timpani. Using the money in his retirement account, Mr. Harris buys the instruments for less than $1,000 each. He then rents them to his students for up to $60 a month. The rental income flows straight back into the I.R.A.

“It’s a good way for me to have income without paying tax on it,” said Mr. Harris, 38, who played with the Tucson Symphony Orchestra for 12 years before turning to full-time teaching seven years ago.

It may be surprising, but it is true: No law dictates that retirement plans be invested in stocks, bonds and mutual funds. In fact, the government allows investors to put the money in their I.R.A.’s and Roth I.R.A.’s into almost anything, be it condominiums or airplanes. A growing number of Americans are doing just that, through so-called self-directed I.R.A.’s that steer clear of mainstream investments.

There are no official numbers on how much of the country’s $4.2 trillion in I.R.A. funds is invested in nontraditional assets, but four of the largest custodians of self-directed I.R.A.’s — Fiserv, Sterling Trust, Equity Trust and Entrust Administration — together manage about $15 billion in such accounts. They say the volume has soared in the last five years.

Growth is driven by two factors, said Jeff Desich, vice president of Equity Trust. Americans increasingly want to manage their own investments, and they are becoming more comfortable investing outside of stock and bond markets.

“After the tech bubble burst, many Americans saw a large portion of their retirement savings evaporate,” he said. “Many of them are saying, ‘I don’t want to be in this kind of situation, I want to know what my account is being invested in.’”

And, by middle age, many have amassed enough money in their retirement accounts to permit some experimentation.

Most self-directed I.R.A.’s are invested in real estate, like apartment buildings or warehouses, officials at the trust companies say. The rest end up as equity or debt investments in private companies, or in off-beat ways of generating rental income, like Mr. Harris’s musical instruments. Custodians say clients have invested in such diverse properties as private jets that can be leased out, race horses that generate prize income and bulls that are in demand among cattle breeders.

In addition to giving investors more control over their retirement savings, self-directed I.R.A.’s also carry the usual tax advantages that come with government-authorized retirement plans: traditional I.R.A. holders can defer tax payments on their profits until retirement, while Roth I.R.A. holders do not owe any tax on gains. Mr. Harris, for example, who set up his Roth I.R.A. with post-tax dollars, is not taxed on his rental income or any profits he makes if he sells an instrument.

But self-directed I.R.A.’s also pose significant risks. Investing in a marimba requires much more savvy than signing up for a mutual fund and letting professional money managers do their job.

“This is best for people who know what they’re doing,” said Ed Slott, a tax adviser and author of several books on retirement. “If you know real estate and you can treat it as a business, then that’s fine.”

Some financial advisers warn that self-directed I.R.A.’s make it difficult for investors to diversify well, arguing that it is safer, for example, to invest in real estate through a real estate investment trust rather than by buying a single condominium.

Most people manage that risk by putting only a portion of their retirement savings into self-directed I.R.A.’s. Mr. Harris, for example, invests 25 percent of his nest egg in musical instruments.

The biggest risk, however, is breaking the law. No single set of rules governs I.R.A.’s, as the Internal Revenue Service publishes new guidelines whenever a contentious tax case comes up. Individual investors may find it difficult to sort through years of rulings, which makes it especially crucial to hire a specialized accountant or lawyer.

Generally speaking, I.R.A.’s may not be invested in collectibles and life insurance. In addition, accountholders may not personally benefit from their investment in any way other than making legal withdrawals after the age of 59 ½. This means that you may not live in a house you bought with your I.R.A., or put rental income anywhere but back into the I.R.A. Finally, any transactions with a lineal family — like children, parents and grandparents — are prohibited. This means a couple cannot invest in a start-up owned by their son.

When the I.R.S. spots a violation, it shows little mercy, disqualifying the entire I.R.A., taxing it retroactively and imposing a 10 percent withdrawal penalty on account holders under the age of 59 ½.

Hugh Bromma, the chief executive of Entrust, says one client allowed her daughter to live in a condominium owned through her I.R.A. The government forced the client to liquidate the entire $750,000 account and charged her over $1 million in taxes and fines.

Those who know what they are doing, however, can handsomely bolster their retirement savings.

Neil Paulson, a retired lawyer from Orlando, Fla., with a multimillion-dollar I.R.A., says he makes a 15 percent annual return by renting out homes and issuing mortgages to homeowners in his community. Mr. Paulson said he opened a self-directed I.R.A. account after the Internet bubble burst.

“I felt I had to start taking control of my own future,” he said.

Anyone interested in self-directed I.R.A.’s should be prepared to spend time actively managing the investment, because the trust companies that administer the accounts offer few services beyond educating their clients about the rules and then managing cash flow.

Setting up an account is fairly easy. Investors fill out standard forms, transfer funds from an existing I.R.A. account, and then direct the custodian to wire money into various investments. Recurring income, like dividends or rent, flows into the I.R.A. automatically. Annual fees typically are $100 to $2,000, depending on the size of the account and the number of transactions processed.

Volunteering...for fee or for free?

For Love and a Little Money

BY the time Frederick A. O. Schwarz Jr. retired from Cravath, Swain & Moore in 2002, he was financially set. He was already an author, he already had a distinguished track record in public service and philanthropy and, of course, he was the great-grandson of a toy magnate.

So when Fritz Schwarz — the name he greatly prefers — joined the nonprofit Brennan Center for Justice at New York University Law School, he seriously considered volunteering his services. He decided against it, and negotiated a salary, albeit one below what a starting lawyer makes.

He never got a raise, and last year, when the Brennan Center ran into a budget crunch, he gave up his pay. But in principle, if no longer in principal, he thinks the salary made sense. “An organization and a person are simply more committed to each other when the person is paid,” he said.

Clearly, Mr. Schwarz has bought into the concept of paid volunteerism. The phrase may sound oxymoronic, but an ever-growing number of retirees and nonprofit executives say it is an apt description of the way modern retirees view nonprofit work. And while no one has gathered statistics on the tendency, experts say there is a good chance that the automatic link between doing good and working for nothing has been permanently severed.

“People used to say, ‘Here I am, what do you need done?’ ” said Deborah Russell, director of work-force issues for AARP. “Today’s retirees say, ‘Here’s what I do well, how can you use it, and what will you pay?’ ”

Economists, behavioral scientists and gerontologists point to multiple reasons behind the switch. For some retirees, economics ranks high on the list. People expect to live for many decades beyond retirement. Many started their families late, which means they may be financially responsible for children as well as aging parents. They may not want to continue full-time work at high-pressure jobs, and for many, unpaid volunteerism is simply not practical.

“This generation worries about standards of living and health insurance, so it wants to maintain some income even when it gives back to society,” said Marc Freedman, the chief executive of Civic Ventures, a nonprofit group that specializes in geriatric issues. “So it has located that intersection between the spirit of volunteerism and the pay of work.”

But increasingly, even the wealthiest retirees insist on being paid for doing good. “Even a small check is a symbol that what they are doing really makes a difference,” said Ben Rosen, a management professor at the University of North Carolina’s Kenan-Flagler Business School. Mr. Freedman thinks that is particularly true of women. “Volunteer work used to be considered women’s work, so it is not surprising that career women reject the concept,” he said.

Greg O’Neill, director of the National Academy on an Aging Society, suggests yet another reason: paid workers are less likely to be assigned to licking stamps or ladling soup. “There’s still a huge mismatch between what retirees can do and what organizations offer them,” he said. Robert H. Frank, an economics professor at the Johnson School of Management at Cornell University, notes that several decades ago, the Peace Corps began insisting that even very poor communities provide housing for volunteers. “Until then, the local people reacted like, ‘Oh, we got a freebie,’ and paid no attention to the volunteers,” he said. “Savvy people have learned that they are used more intelligently when they are paid.”

That learning is rooted in the modern-day corporate environment, others note. “Modern organizations are leaner and more competitive than they used to be, and the idea that you get paid for performance, not just for showing up, has taken hold,” said Michael W. Morris, a management professor at the Columbia Business School.

Many retirees have learned, to their irritation, that what they give free is discounted as fluff.

Ten years ago, Fabianne Wolff Gershon, now a retired public relations executive, did a pro bono marketing plan for a local botanical garden. It was never carried out. “I made a mental note: If they had paid for the report, they would have taken it seriously,” Ms. Gershon said.

She now works three days a week, running a women’s entrepreneurship program for FEGS (formerly known as the Federation Employment and Guidance Service).

“I make maybe 6 percent of what I made in my own business,” Ms. Gershon said, but “because they pay me, they listen to me and appreciate me.”

Nonprofit executives say the reverse is also true: people who are paid work harder and seem more committed to their jobs. Thomas Scott, chief executive of the Lawrence County Community Action Partnership in New Castle, Pa., said he paid about $9.10 an hour to retirees who drive elderly and disabled people to doctor’s appointments. “Volunteerism works for a short project, but when you need people to show up consistently and on time, you’re better off paying them,” he said.

FEGS uses thousands of volunteers “to enhance our programs but not to run them,” said Gail A. Magaliff, its chief executive. Why not? “You can ask an employee to stay until 9 p.m. to get something done,” she said. “It’s harder to ask a volunteer.”

Retirees say she is on to something. G. Jean Hoppert, a retired engineer, runs technical education programs in Las Vegas for the nonprofit group First. She works about 100 hours a month, for about $900. “I’m donating most of that back to the program,” Ms. Hoppert said. “But I probably wouldn’t have made as large a commitment as a volunteer.”

This growing willingness to work hard for low pay has, perhaps inevitably, given rise to matchmaking services that place skilled retirees with a hankering to help in low-paying public service jobs.

ReServe, a New York City group, asks retirees to send résumés and specify interests — health care, say, or domestic violence or animal rights. ReServe matches the retirees with part-time jobs that pay $10 an hour. No retiree works more than 15 hours a week, so they do not receive pensions or benefits. The nonprofit organizations can pay the participants or can pay ReServe $14 an hour and let ReServe handle the payroll.

In just two years of operation, ReServe has placed about 275 people with about 110 nonprofits. It has joint programs with AARP and recently won a contract to place people with city agencies.

Claire Altman, ReServe’s executive director, said that almost three-quarters of participants are college graduates, and about 42 percent have master’s degrees. “For most of them, it is not about the amount they are paid but the fact that they are paid,” she said.

New York City’s Department for the Aging has begun using ReServe volunteers and is helping to place them with other city agencies as well. “The money helps lower-income adults, but it also forces the agencies to identify what skills they really need,” said Edwin Méndez-Santiago, the agency’s commissioner.

Mr. Freedman of Civic Ventures followed similar principles when he helped found Experience Corps in 1995 to place retirees in city elementary schools as mentors and tutors. Retirees work 15-hour weeks and earn $200 to $250 a month. Experience Corps tries to persuade schools to apply some of the money they raise from bake sales and such to the salaries.

“The stipends are big enough to serve as a contract and to cover out-of-pocket costs,” Mr. Freedman said. “And when the schools chip in, it increases the likelihood that they will use those people well and in serious roles.”

For retirees looking to explore new worlds, the services represent an easy, one-stop shop.

Vivian Landa, a retired Wall Street administrator, had always been fascinated by the criminal justice system. So ReServe got her a job with Bronx Community Solutions, which does job counseling for nonviolent criminals. Shirley A. Jones also spent most of her career in administrative work, but she loved being with children. Experience Corps placed her in a job in Harlem, tutoring four children for 45 minutes a day. The monthly stipend “comes in handy for car fare and lunch money,” she said, but her main incentive “is the confidence in those kids’ eyes when they finish the program.”

The groups also help retirees who want to stick with their former fields. A. Allan Korenberg, a retired education consultant, wanted to keep plying his trade, albeit at a more leisurely pace. ReServe placed him with Advocates for Children, a nonprofit group that has a grant from the Department of Probation to work with juvenile offenders. He works three days a week, from 9 a.m. to 3 p.m.

“I’m doing serious paid work on a luxury schedule,” he said. “I have a time sheet, I have responsibilities, I feel there are consequences if I don’t show up. I don’t feel like a retiree who’s killing time.”

Even private-sector employers are learning to harness that kind of attitude to their own philanthropy. I.B.M., for one, just started a program to retrain some of its retirees to teach math and science in public schools. And the Senior Lawyers Committee of the New York City Bar Association has recommended to law firms that they pay retired partners a vastly reduced salary to handle the firm’s pro bono obligations. “It would give the retirees a sense of dignity, and it would dignify the pro bono job,” said David N. Ellenhorn, chairman of the committee.

There is, of course, a potential downside to the trend. Once payment becomes the norm, fewer people are likely to volunteer their services free — which could be a problem in a budget crisis. And for the retirees themselves, getting paid may detract from the psychological satisfaction of doing good.

“So many studies show that external incentive systems take away from intrinsic enjoyment of an activity,” Professor Morris of Columbia warned. “Attaching payment to a job turns it into work.”

Then again, for the baby boomers, a generation that works for love as well as money, that might not be a bad thing.

Why Women Should Paint

Why Women Should Paint

From Judi Morales Gibson of Artista Creative Safaris
Seven reasons why every woman should express herself through art.

Even if you haven't painted since grade school, your artistic expression longs to be released, says Judi Morales Gibson, who is the Guest Services Manager for Artista Creative Safaris for Women (view website) as well as being a painter, surfer, Mehndi Body Artist, event planner, jewelry designer, seamstress, dancer, and Dexter's Mom. Here Judi gives seven reasons reasons she believes this so passionately.

Why Women Should Paint: Reason 1
Women are aesthetic by nature. A woman will notice the subtle colors of an Anjou pear, and use it as inspiration to redecorate a room. She will buy a bolt of fabric just because the color moves her, and worry about how to use it later. A woman will tear a picture of a garden from a magazine, just to post it on her refrigerator.

Why Women Should Paint: Reason 2
Women instinctively recognize and capture beauty, and when given the chance, will express her own intuitive energy. Women recognize and embrace the emotion that beauty ignites, and are drawn to colors based on their emotional needs. It's why they buy yellow flowers to cheer themselves up, or add a bright scarf to an outfit.

Why Women Should Paint: Reason 3
Women can communicate and express themselves without words. A mother expresses love with bedtime lullaby, a grandmother expresses her confidence by wearing a feathered purple hat, and a toddler expresses her fearlessness by coloring on the living-room wall. Even though no words are spoken, her message is clear.

Why Women Should Paint: Reason 4
Women naturally have a great sense of color and light, which is why they get to choose the new house color. Not only that, they are fearless about personal expression. Just give them some time, mental space and tools to create, then stand back. Women are more willing to break the rules set by the standard of the day. They have a natural instinct for doing things differently, which is why they can make a Halloween costume out of a pillow case or turn a farmhouse door into a coffee table.

Why Women Should Paint: Reason 5
Women understand the Japanese aesthetic of wabi-sabi, the ability to see beauty in things that are imperfect. They stop to admire an intricate rusty gate, the complexity of a darkened pre-storm sky or old chair with paint chipped away, exposing it's history of previous colors. Beauty is everywhere, and women notice it.

Why Women Should Paint: Reason 6
As they get older, women become less afraid to act on impulse. A 65-year-old women explains: "At my age, I can be as crazy as I want to be". Amazingly, we are born with that freedom and openly express it in early childhood. Eventually things like peer pressure and the "status quo" stifle it in adolescence. If only we could maintain that freedom throughout our adulthood, just imagine our potential over a lifetime. Women should not have to wait until their sixties to rediscover themselves. It's time to let their creativity run free.

Why Women Should Paint: Reason 7
In the end, women use creative expression to make the world more beautiful. Even simple things like a bowl of green apples on a table or flower pot with sprouting daffodils emotes beauty, which in turn makes the world a happier place. That's perhaps the best reason for women to paint.

What Stops Women from Painting?
So with all this natural instinct, what keeps women from painting? Typically, it's intimidation, fear of failure, and the lack of trust in her own aesthetic. Rigid art styles like figure drawing or still-life painting, force students reproduce an image, which can be difficult and limiting. Thankfully, there are abstract painting styles, which allow artists to freely express themselves, discover their own natural style and essentially 'color outside the lines'.

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October 22, 2007, 6:59 am
Five Easy Ways to Go Organic
Got organic milk? (Tony Cenicola/The New York Times)

Switching to organic is tough for many families who don’t want to pay higher prices or give up their favorite foods. But by choosing organic versions of just a few foods that you eat often, you can increase the percentage of organic food in your diet without big changes to your shopping cart or your spending.

The key is to be strategic in your organic purchases. Opting for organic produce, for instance, doesn’t necessarily have a big impact, depending on what you eat. According to the Environmental Working Group, commercially-farmed fruits and vegetables vary in their levels of pesticide residue. Some vegetables, like broccoli, asparagus and onions, as well as foods with peels, such as avocados, bananas and oranges, have relatively low levels compared to other fruits and vegetables.

So how do you make your organic choices count? Pediatrician Dr. Alan Greene, whose new book “Raising Baby Green” explains how to raise a child in an environmentally-friendly way, has identified a few “strategic” organic foods that he says can make the biggest impact on the family diet.

1. Milk: “When you choose a glass of conventional milk, you are buying into a whole chemical system of agriculture,'’ says Dr. Greene. People who switch to organic milk typically do so because they are concerned about the antibiotics, artificial hormones and pesticides used in the commercial dairy industry. One recent United States Department of Agriculture survey found certain pesticides in about 30 percent of conventional milk samples and low levels in only one organic sample. The level is relatively low compared to some other foods, but many kids consume milk in large quantities.

2. Potatoes: Potatoes are a staple of the American diet — one survey found they account for 30 percent of our overall vegetable consumption. A simple switch to organic potatoes has the potential to have a big impact because commercially-farmed potatoes are some of the most pesticide-contaminated vegetables. A 2006 U.S.D.A. test found 81 percent of potatoes tested still contained pesticides after being washed and peeled, and the potato has one of the the highest pesticide contents of 43 fruits and vegetables tested, according to the Environmental Working Group.
Go organic with kid favorites like peanut butter. (Lars Klove/The New York Times)

3. Peanut butter: More acres are devoted to growing peanuts than any other fruits, vegetable or nut, according to the U.S.D.A. More than 99 percent of peanut farms use conventional farming practices, including the use of fungicide to treat mold, a common problem in peanut crops. Given that some kids eat peanut butter almost every day, this seems like a simple and practical switch. Commercial food firms now offer organic brands in the regular grocery store, but my daughter loves to go to the health food store and grind her own peanut butter.

4. Ketchup: For some families, ketchup accounts for a large part of the household vegetable intake. About 75 percent of tomato consumption is in the form of processed tomatoes, including juice, tomato paste and ketchup. Notably, recent research has shown organic ketchup has about double the antioxidants of conventional ketchup.
Organic apples are readily available. (The New York Times)

5. Apples: Apples are the second most commonly eaten fresh fruit, after bananas, and they are also used in the second most popular juice, after oranges, according to Dr. Greene. But apples are also one of the most pesticide-contaminated fruits and vegetables. The good news is that organic apples are easy to find in regular grocery stores.

For a complete list of Dr. Greene’s strategic organic choices, visit Organic Rx on his website.


The Comedian Dick Cheney Speaks of Torture! (and his next target, Iran)

For Immediate Release
Office of the Vice President
October 21, 2007

Vice President's Remarks to the Washington Institute for Near East Policy
Lansdowne, Virginia

photos Photos

11:22 A.M. EDT

VICE PRESIDENT CHENEY: Thank you very much, Roger. Thanks for the kind words, and thank all of you for the welcome this morning. I've been looking forward to have the opportunity to join the conference.

It's been my privilege, as Roger mentioned, over the years to address the Washington Institute a number of times. In fact, most of you knew me long before anyone called me, Darth Vader. (Laughter.) I've been asked if that nickname bothers me, and the answer is, no. After all, Darth Vader is one of the nicer things I've been called recently. (Laughter.)

Vice President Dick Cheney delivers remarks at the Washington Institute for Near East Policy's annual Weinberg Founders Conference, Sunday, Oct. 21, 2007, in Lansdowne, Va. The Weinberg Founders Conference brings together scholars, diplomats, journalists and experts from around the globe for nonpartisan discussions on issues surrounding U.S. Middle East policy. White House photo by David Bohrer All of us do know each other rather well, and I see some good friends in the audience. And I, in particular, want to thank your president, Howard Berkowitz, Chairman Fred Lafer, and Chairman Emeritus Mike Stein, and Vice President Wally Stern. I also want to thank Barbi Weinberg, who is not here but whose work has been invaluable. She has the respect of all of us.

I've gained much from the wisdom of many in the room today; people like Dennis Ross and, of course, Rob Satloff, as well as from the many other analysts who've been affiliated with the Washington Institute. I'm proud to say your former deputy director, John Hannah, is now my Assistant for National Security Affairs. And you can't have him back yet. John and his staff are on duty night and day, and with his leadership, they're doing a tremendous job.

I'm pleased to be among the many participants in the conference, a group that includes your key noter, Walid Jumblatt, from Lebanon. I've met with Mr. Jumblatt on a number of occasions, and I admire the courageous stand he's taking for freedom and democracy in his home country. (Applause.)

This is a period of great consequence for the Middle East, and, as always, the Washington Institute, under Rob Satloff's leadership, is providing a forum for calm, nonpartisan, rigorous discussion. For 22 years, you've brought clear and careful thinking to bear on some of the most complex and vital issues of the age. You've provided a venue for many fine scholars, and you've hosted countless forums for the sharing of ideas and discussions. It's an enormously productive enterprise, and your work is more relevant and useful today than ever before. All of us respect the Washington Institute for its high standards of research, study and insight. And so, for both myself and for the President, I want to congratulate the men and women of the Institute on the exceptional work that you do each and every day.

You're focused on many of the same matters that make up a good deal of our time in the White House, starting with the intelligence briefing that I have with the President every morning. In nearly every category of national interest, what happens in the Middle East is of direct concern to the people of the United States. The region is home to important allies, valued friends and trading partners. Its resources and commercial routes are at the very heart of the global economy. Its history and its holy sites have deep meaning to hundreds of millions of people in many, many countries. And, of course, across the broader Middle East -- from the Sinai Peninsula to the Arabian Sea, to the Iraqi desert, to the mountains of Afghanistan -- many thousands of our fellow Americans are on military deployments.

As a nation of influence and ideals, the United States has been engaged in the Middle East for generations. Our goal is peace among its many nations, and a lasting stability that benefits all the world. And the stability we seek is not the kind that simply keeps a lid on things. Real stability, long-term stability, depends on giving men and women the freedom to conduct their own affairs and to choose their own leaders. This, we believe, offers the only real chance of resolving the underlying problems of the region, and of lifting the hopes of all who live there. As President Bush has said, so long as the Middle East "remains a place where freedom does not flourish, it will remain a place of stagnation, resentment and violence ready for export."

The ideological struggle that's playing out in the Middle East today -- the struggle against radical extremists -- is going to concern America certainly for the remainder of our administration, and well into the future. On September 11th, 2001, we suffered a heavy blow, right here at home, at the hands of extremists who plotted the attacks from an outpost thousands of miles from our shores. Since that terrible morning, Americans have properly called this a war. For their part, the terrorists agree. The difference is they began calling it a war a good many years prior to 9/11. And they've been waging that war with clear objectives, aggressive tactics, and a strategy they want to carry out at any cost.

They've stated their objectives. The terrorists want to end all American and Western influence in the Middle East. Their goal in that region is to seize control of a country so they have a base from which they can launch attacks and wage war against governments that do not meet their demands. Ultimately they seek to establish a totalitarian empire through the Middle East, and outward from there. They want to arm themselves with chemical, biological or nuclear weapons; they want to destroy Israel; they intimidate all Western countries; and to cause mass death here in the United States.

The tactics, of course, are familiar to all the world: suicide attacks, car bombs, beheadings, messages of violence and hatred on the Internet, and the hijackings of 9/11. And the strategy is clear, as well: Through acts of stealth and murder and spectacular violence, they intend to frighten us and to break our will; to hit us again and again until we run away. It's not easy for a civilized society to comprehend evil like that of Osama bin Laden or Zawahiri. It shocks us to hear such men exhorting other people's sons to "join a caravan" of so-called martyrs, proclaiming that heaven favors the merciless and murder is the path to paradise.

They've chosen this method because they believe it works, and they believe the history of the late 20th century proves the point. During the 1980s and '90s, as terror networks began to wage attacks against Americans, we usually responded, if at all, with subpoenas, indictments, and the occasional cruise missile. As time passed, the terrorists believed they'd exposed a certain weakness and lack of confidence in the West, particularly in America.

Dr. Bernard Lewis explained the terrorists' reasoning this way: "During the Cold War," Dr. Lewis wrote, "two things came to be known and generally recognized in the Middle East concerning the two rival superpowers. If you did anything to annoy the Russians, punishment would be swift and dire. If you said or did anything against the Americans, not only would there be no punishment; there might even be some possibility of reward, as the usual anxious procession of diplomats and politicians, journalists and scholars and miscellaneous others came with their usual pleading inquiries: 'What have we done to offend you? What can we do to put it right?'" End quote.

Not surprisingly, the terrorists became more ambitious in their strikes against American interests, choosing ever bigger targets, racking up a higher body count. In Beirut in 1983, terrorists killed 241 of our servicemen. Thereafter, the U.S. withdrew from Beirut. In Mogadishu in 1993, terrorists killed 19 Americans, and thereafter, the U.S. withdrew its forces from Somalia. This emboldened them still further, confirming their belief that they could strike America without paying a price, and more than that, they concluded that by violence they could even change American policy.

We had the bombing of the World Trade Center in New York in 1993; the attack on U.S. facilities in Riyadh in 1995; the murder of servicemen at Khobar Towers in 1996; the attack on our embassies in Kenya and Tanzania in 1998; and, of course, the attack on the USS Cole in Yemen in 2000; ultimately, September 11th and the loss of nearly 3,000 lives inside the United States in the space of a few hours.

In a violent world, the safety of distance was suddenly gone. And with grave new dangers directly in view, the strategic situation changed fundamentally. From the morning of 9/11, we have assumed correctly that more strikes would be attempted against us. So we have made enormous changes to harden the target and to better prepare the nation to face this kind of emergency. We've reorganized the government to protect the homeland, and put good people in charge of big responsibilities. One of them is Judge Michael Mukasey, who presided over the trial of the Blind Sheikh and has a profound grasp on the work at hand. Judge Mukasey had his confirmation hearing this past week. He did a superb job. I believe he'll make an outstanding Attorney General.

But we cannot protect the nation, much less win a war, by simply bracing for another attack or by seeking the guilty afterwards. The President made a decision to marshal all the elements of strategic power to confront the extremists, to deny them safe haven, and above all, to deny them the means to wage catastrophic attacks. We've also made clear that in the post-9/11 era, regimes that harbor terror and defy the demands of the civilized world should be held to account before it's too late.

One of the best weapons against terrorism is good intelligence, information that helps us figure out the movements of the enemy: the extent of the network, the location of their cells, the plans they're making, and the methods they use to hit the targets they want to hit. Information of this kind is the hardest to obtain, but it's worth the effort in terms of the plots averted and the lives that are saved. So our government has taken careful but urgent steps to monitor the communications of our enemies and to get information from the ones that are apprehended.

In the days following 9/11, the President authorized the National Security Agency to intercept terrorist-linked international communications that have one end in the United States and the other end overseas. This is the very kind of communication that was going on prior to the attack on America, and the 9/11 Commission was rightly critical of the government's inability to uncover links between terrorists at home and terrorists abroad. It's called connecting the dots, and in times like these, it's critical to protecting the American people.

The program has been falsely referred to as domestic surveillance. It is not domestic surveillance; it is international surveillance. It is limited in scope to surveillance associated with terrorists. It is carefully conducted. The information obtained is used strictly for national security purposes. It's been carried out with the utmost regard for the civil liberties of American citizens. Appropriate members of Congress have been briefed into the program from the very beginning. Indeed, I have personally conducted many of those briefings. This program has, without question, helped to detect and prevent possible terrorist attacks against the United States.

We're also asking Congress to update the Foreign Intelligence Surveillance Act, or FISA. The law was written nearly 30 years ago, before the age of the Internet and disposable cell phones. Some read the law to require that legal protections meant only for people in the United States should now apply to terrorists overseas. That left a huge gap in the kinds of intelligence we could gather. We were missing a lot, so we asked Congress to fix the problem. Congress did the right thing, but they also wrote some fine print into that law. The FISA revisions they approved are set to expire on the first of February, some 103 days from now. We're asking Congress to renew the FISA revisions as soon as possible.

Members of Congress are also well aware that some companies are now facing multi-billion dollar lawsuits merely because they are believed to have assisted in the effort to defend the United States after 9/11. We're asking Congress to grant liability protection to those companies. Without that protection, the lawsuits carry the risk of laying state secrets in front of our enemy. And that's not a risk we ought to be taking in the middle of a war.

It's worth remembering a few things that the President told Congress and the country in his speech on September 20th, 2001. He said, "The thousands of FBI agents now at work in this investigation may need your cooperation, and I ask you to give it." He asked Americans for patience in a long struggle. And he said the fight against terror would involve not one battle, but a lengthy campaign, including perhaps "dramatic strikes, visible on TV, and covert operations, secret because they're successful -- and secret even in success."

Most everyone understood this when the memory of 9/11 was still fresh. Most everyone understood that it would be a luxury and a fantasy to suppose that we could answer terrorism without going on the offensive against the terrorists themselves. Because we've been focused, because we've refused to let down our guard, we've gone now more than six years without another 9/11. No one can promise that there won't be another attack; the terrorists hit us first and they are hell-bent on doing it again.

We know this because of their public declarations and because of the intelligence we've gathered through monitoring and, yes, through interrogations. There's been a good deal of misinformation about the CIA detainee program, and unfair comments have been made about America's intentions and the conduct of America's intelligence officers. Many of the details are understandably classified. Yet the basic facts are these. A small number of high-value detainees have gone through the program run by the CIA. This is different from Guantanamo Bay, where select captured terrorists are sent and interrogated by the Department of Defense according to the Army Field Manual. The CIA program involves tougher customers and tougher interrogations.(editor's note...hahahahaha..)

The procedures are designed to be safe, legal, in full compliance with the nation's laws and our treaty obligations. They've been carefully reviewed by the Department of Justice. The program is run by highly trained professionals who understand their obligations under the law. And the program has uncovered a wealth of information that has foiled specific attacks, information that has on numerous occasions made the difference between life and death.

The United States is a country that takes human rights seriously. We do not torture. We're proud of our country and what it stands for. We expect all who serve America to conduct themselves with honor. And we enforce the rules. Several years ago, when abuses were committed at Abu Ghraib -- a facility having nothing to do with the high-value detainee program -- when those abuses came to light, Americans were mortified and rightly outraged. The wrongdoers were arrested, prosecuted and punished, as justice demanded. America is a fair and decent country, and President Bush has made it clear, both publicly and privately, that our duty to uphold the laws and standards of this nation admits no exceptions in wartime. As he put it, "We are in a fight for our principles, and our first responsibility is to live by them."

The war on terror is, after all, more than a contest of arms and more than a test of will. It is also a battle of ideas. To prevail in the long run, we have to remove the conditions that inspire such blind, prideful hatred that drove 19 men to get onto airliners to come kill us. Many have noted that we're in a struggle for the "hearts and minds" of people in a troubled region of the world. That is true and it should give us confidence. Outside a small and cruel circle, it's hard to imagine anybody being won over, intellectually or emotionally, by random violence, the beheading of bound men, children's television programs that exalt suicide bombing, and the desecration of mosques. The extremists in the Middle East are not really trying to win hearts and minds, but to paralyze them, to seize power by force, to keep power by intimidation, and to build an empire of fear.

We offer a nobler alternative. We know from history that when people live in freedom, have their rights respected and have real hope for the future, they will not be drawn in by ideologies that stir up hatreds and incite violence. We know, as well, that when men and women are given the chance, most by far will choose to live in freedom. That's the cause we serve today in Afghanistan and Iraq -- helping the peoples of those two nations to achieve security, peace, and the right to chart their own destiny. Both peoples face attack from violent extremists who want to end democratic progress and pull them back toward tyranny. We are helping them fight back because it's the right thing to do, and because the outcome is important to our own long-term security.

When historians look back on the especially difficult struggle in Iraq, I think they'll regard recent events in Anbar province to have been deeply significant to the broader effort. Local residents and tribal leaders, Sunni Muslims, are rising up against al Qaeda, sick of the violence and repulsed by the mindless brutality of al Qaeda. Proud of their local traditions and culture, and serious about their Islamic faith, the people of Anbar now see al Qaeda as the enemy, and they've worked with Iraq and American forces to drive the terrorists from their cities. It's still dangerous in the province. The terrorists recently killed one of the sheikhs who had been a leader in the fight against al Qaeda. But that fight goes on, and America's support will not waver.

Our new offensive strategy in Iraq -- led by General Petraeus and Ambassador Crocker and backed up by a surge in forces -- is producing good results. Even though we have more troops carrying out perilous missions, our casualty rates are down. Many al Qaeda sanctuaries have been wiped out. Our military has seized the initiative, and conditions in the country are getting better.

President Bush has made clear that America's word is good, and our nation will do its part to keep Iraq on the road of freedom, security and progress. And we expect Iraq's national government to press much harder in the work of national reconciliation to match the kind of cooperation now taking place at local and provincial levels. We'll continue, as well, our intensive effort to train Iraqi security forces so that over time Iraqis can take the lead in protecting their own people. Progress has been uneven at times and the National Police especially need improvement. But Iraq's army is becoming more capable. And because there's now a greater degree of cooperation from local populations, Iraqi forces are better able to keep the peace in areas that have been cleared of extremists.

We have no illusions about the road ahead. As Fouad Ajami said recently, Iraq is not yet "a country at peace, and all its furies have not burned out, but a measure of order has begun to stick on the ground." Iraq won't become a perfect democracy overnight, but success will have an enormous positive impact on the future of the Middle East, and will have a direct effect on our own security, as well. The only illusion to guard against is the notion that we don't have to care about what happens in that part of the world, or to think that when we took down Saddam Hussein our job was done.

America has no intention of abandoning our friends, of permitting the overthrow of a democracy, and allowing a country of 170,000 square miles to become a staging area for further attacks against us. (Applause.) Tyranny in Iraq was worth defeating, and democracy in Iraq is worth defending. We're going to complete the mission so that another generation of Americans doesn't have to go back and do it again.

Success in Iraq will confirm our good intentions in the Middle East more than words alone ever could. Especially in a region of such great strategic importance and so many dashed hopes, commitments are credible only if they're backed up by deeds. The United States, and certainly this administration, has shown a willingness not just to proclaim great objectives, but to work and sacrifice to achieve them.

George W. Bush is the first President to call for a two-state solution, with Israel and Palestine living side by side in peace and security. He has announced a meeting to be held in Annapolis later this year to review the progress towards building Palestinian institutions, to seek innovative ways to support further reform, to provide diplomatic support to the parties, so that we can move forward on the path to a Palestinian state. Secretary Rice just made her most recent journey to the Middle East to lay the groundwork to support movement toward the establishment of such a state.

We are, of course, hopeful and greatly concerned about the future of Lebanon, which will elect a president in coming weeks. The United States supports the democratic aspirations of the Lebanese people, and we have done so through difficult years of the Cedar Revolution. Lebanon has shaken off years of Syrian occupation, and many courageous democracy advocates have stepped forward at great personal risk. Through bribery and intimidation, Syria and its agents are attempting to prevent the democratic majority in Lebanon from electing a truly independent president.

Lebanon has the right to conduct the upcoming elections free of any foreign interference. The United States will work with free Lebanon's other friends and allies to preserve Lebanon's hard-won independence, and to defeat the forces of extremism and terror that threaten not only that region, but U.S. countries [sic] across the wider region.

Across the Middle East, further progress will depend on responsible conduct by regional governments; respect for the sovereignty of neighbors; compliance with international agreements; peaceful words, and peaceful actions. And if you apply all these measures, it becomes immediately clear that the government of Iran falls far short, and is a growing obstacle to peace in the Middle East.

Given the recent appearance by the Iranian President in New York City, no one can fail to understand the nature of the regime this man represents. He has called repeatedly for the destruction of Israel; has spoken of his yearning for a world without the United States. Under their current rulers, the people of Iran live in a climate of fear and intimidation, with secret police, arbitrary detentions, and a hint of violence in the air. In the space of a generation, the regime has solidified its grip on the country and grown ever more arrogant and brutal toward the Iranian people. Journalists are intimidated. Religious minorities are persecuted. A good many dissidents and freedom advocates have been murdered, or have simply disappeared. Visiting scholars who've done nothing wrong have been seized and jailed.

This same regime that approved of hostage-taking in 1979, that attacked Saudi and Kuwaiti shipping in the 1980s, that incited suicide bombings and jihadism in the 1990s and beyond, is now the world's most active state sponsor of terror. As to its next-door neighbor, Iraq, the Iranian government claims to be a friend that supports regional stability. In fact, it is a force for the opposite. As General Petraeus has noted, Iran's Quds Force is trying to set up a "Hezbollah-like force to serve its interests and to fight a proxy war against the Iraqi state and coalition forces in Iraq." At the same time, Iran is "responsible for providing the weapons, the training, the funding and, in some cases, the direction for operations that have indeed killed U.S. soldiers."

Operating largely in the shadows, Iran attempts to hide its hands through the use of militants who target and kill coalition and Iraqi security forces. Iran's real agenda appears to include promoting violence against the coalition. Fearful of a strong, independent, Arab Shia community emerging in Iraq, one that seeks religious guidance not in Qom, Iran, but from traditional sources of Shia authority in Najaf and Karbala, the Iranian regime also aims to keep Iraq in a state of weakness that prevents Baghdad from presenting a threat to Tehran.

Perhaps the greatest strategic threat that Iraq's Shiites face today in -- is -- in consolidating their rightful role in Iraq's new democracy is the subversive activities of the Iranian regime. The Quds Force, a branch of Iran's Islamic Revolutionary Guard Corps, is the defender of the theocracy. The regime has used the Quds Force to provide weapons, money, and training to terrorists and Islamic militant groups abroad, including Hamas; Palestinian Islamic Jihad; militants in the Balkans; the Taliban and other anti-Afghanistan militants; and Hezbollah terrorists trying to destabilize Lebanon's democratic government.

The Iranian regime's efforts to destabilize the Middle East and to gain hegemonic power is a matter of record. And now, of course, we have the inescapable reality of Iran's nuclear program; a program they claim is strictly for energy purposes, but which they have worked hard to conceal; a program carried out in complete defiance of the international community and resolutions of the U.N. Security Council. Iran is pursuing technology that could be used to develop nuclear weapons. The world knows this. The Security Council has twice imposed sanctions on Iran and called on the regime to cease enriching uranium. Yet the regime continues to do so, and continues to practice delay and deception in an obvious attempt to buy time.

Given the nature of Iran's rulers, the declarations of the Iranian President, and the trouble the regime is causing throughout the region -- including direct involvement in the killing of Americans -- our country and the entire international community cannot stand by as a terror-supporting state fulfills its most aggressive ambitions. (Applause.)

The Iranian regime needs to know that if it stays on its present course, the international community is prepared to impose serious consequences. The United States joins other nations in sending a clear message: We will not allow Iran to have a nuclear weapon. (Applause.)

The irresponsible conduct of the ruling elite in Tehran is a tragedy for all Iranians. The regime has passed up numerous opportunities to be a positive force in the Middle East. For more than a generation, it had only isolated a great nation, suppressed a great people, and subjected them to economic hardship that gets worse every year. The citizens of Iran deserve none of this. They are the proud heirs of a culture of learning, humanity and beauty that reaches back many centuries. Iranian civilization has produced shining achievements, from the Persian Book of Kings, to the poetry of Rumi and Khayyam, to celebrated achievements in astronomy and mathematics, to art and music admired on every continent. The Iran of today -- a nation of 70 million, a majority of them under the age of 30 -- is a place of unlimited potential. And the Iranian people have every right to be free from oppression, from economic deprivation, and tyranny in their own country.

The spirit of freedom is stirring in Iran. The voices of change and peaceful dissent will not be silent. We can expect to hear more from the courageous reformers, the bloggers, and the advocates of rights for women and ethnic and religious minorities, because these men and women are more loyal to their country than to the regime. Despite the regime's anti-American propaganda, the Iranian people can know that America respects them, cares about their troubles, and stands firmly on the side of liberty, human dignity and individual rights. America looks forward to the day when Iranians reclaim their destiny; the day that our two countries, as free and democratic nations, can be the closest of friends.

It's been given to us, ladies and gentlemen, to live in an era crowded with decisive events, and we've had to face challenges that no generation would choose for itself. All of you know those challenges better than most, and you've devoted time, energy and intellect to the great issues confronting the Middle East today. In all your discussions, and in all that lies ahead, you can be certain that our country will stay engaged in the Middle East, making the hard choices and providing the kind of leadership that makes this world a better place. We accept that responsibility for the sake of our own security and in service to our founding ideals. And as long as America continues to lead -- steady in the face of the adversaries and firm in the defense of freedom -- this young century will be a time of rising hopes, and of advancing peace.

Thank you very much. (Applause.)

END 11:58 A.M. EDT

Homeland Security for the "Homeland"..California?

Governor calls up Guard, asks Bush for military support
10/22/07 16:50:02
Gov. Arnold Schwarzenegger is calling up 1,500 National Guard troops to deploy to the Southern California wildfires.

He's also asking President Bush to authorize San Diego-area military forces to begin coordinating to provide cots, first-aid equipment and possibly personnel to aid evacuees and firefighters.

Adam Mendelsohn, a spokesman for the governor, said Schwarzenegger talked to the president twice, and was told the Bush administration will start working on the request for military support.

White House spokeswoman Jeanie Mamo confirmed that Schwarzenegger spoke with Bush on Monday afternoon and said Air Force and naval posts in the area were ready to help.

"We'll continue to work with the governor's office on the needs," Mamo said.

Earlier Monday, flames forced dozens of California National Guard troops to evacuate their barracks along the Mexican border. Guardsmen also were helping U.S. Border Patrol agents to evacuate threatened areas.

The Guard's fleet of firefighting helicopters, however, was grounded due to high winds.

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AP Photo
AP Photo/Charles Dharapak

AP correspondent Jerry Bodlander reports the head of a House panel says Blackwater may owe millions.

Statement of Blackwater USA CEO Erik D. Prince Before House Oversight Hearing Oct. 2, 2007

WASHINGTON (AP) -- The Democratic chairman of a House watchdog committee said Monday that Blackwater USA violated tax laws and may have defrauded the government of millions of dollars, a charge the embattled security firm said is groundless.

Rep. Henry Waxman, who chairs the Committee on Oversight and Government Reform, released a March letter from the Internal Revenue Service that states the company's classification of a security guard as an independent contractor, instead of company personnel, was "without merit."

Under U.S. law, companies must pay Social Security and other federal taxes on their employees. But unlike other security companies operating in Iraq, Blackwater says the guards it trains, equips and deploys to Iraq and elsewhere are independent contractors hired directly by the federal government.

"By classifying its armed guards and other personnel as independent contractors instead of employees, Blackwater has apparently evaded withholding and paying these taxes," Waxman, D-Calif., wrote in a letter to Blackwater chief Erik Prince.

Waxman's charge comes as the company is struggling to salvage its reputation after a string of security incidents involving its guards, including a September shooting that left 17 Iraqis dead.

U.S. and Iraqi officials are negotiating Baghdad's demand that Blackwater be expelled from the country within six months, and American diplomats appear to be working on how to fill the security gap if the company is phased out.

Secretary of State Condoleezza Rice has agreed to testify before Waxman's committee on Thursday.

Blackwater spokeswoman Anne Tyrrell said in an e-mail statement to The Associated Press that the company has appealed the IRS ruling and that no final determination has been made. Further, she said, the U.S. Small Business Administration has told the company that Blackwater security guards do not have to be classified as company employees.

"It is unfortunate that the chairman has relied upon a one-sided description of the issue to color public perception without all the facts being presented," Tyrrell said.

An IRS spokeswoman declined to comment on the case, as is custom to protect privacy.

Waxman has been investigating Blackwater's business dealings for several weeks, including whether the State Department unfairly awarded Blackwater a noncompetitive contract and if its guards took control of two Iraqi military aircraft without permission.

According to the House Democrat, the IRS' finding was the result of an inquiry filed by a Blackwater guard. The guard later agreed not to discuss the matter with anyone, including politicians or public officials, in exchange for receiving compensation owed to him by Blackwater, Waxman said.

The worker's nondisclosure agreement, also released by Waxman on Monday, is "evidence that Blackwater has tried to conceal the IRS ruling and the evasion of taxes from Congress and law enforcement officials," he said.

The primary factor in determining whether a worker is an employee or independent contractor is the degree of control the business has over its worker. Incorrectly classifying a worker could mean steep penalties for the company, including a $25,000 penalty if the IRS determines an appeal is frivolous or groundless.

In its March letter to Blackwater, the IRS noted the company paid all of the guard's travel expenses and signed a written agreement detailing the type of work required.

"A worker who is required to comply with another person's instructions about when, where and how he or she is to work is ordinarily an employee," the IRS stated in the letter.

In testimony before Waxman's committee earlier this month, Prince said Blackwater was not trying to avoid legal responsibilities but rather wanted to give its guards more control of their schedule.

"We provide the trained person with the right equipment, the right training, the logistics to get them in and out of theater," Prince said. "When they get to Iraq or they get to Afghanistan, they work for the State Department."

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October 23, 2007
Reports Assail State Dept. on Iraq Security

WASHINGTON, Oct. 22 — A pair of new reports have delivered sharply critical judgments about the State Department’s performance in overseeing work done by the private companies that the government relies on increasingly in Iraq and Afghanistan to carry out delicate security work and other missions.

A State Department review of its own security practices in Iraq assails the department for poor coordination, communication, oversight and accountability involving armed security companies like Blackwater USA, according to people who have been briefed on the report. In addition to Blackwater, the State Department’s two other security contractors in Iraq are DynCorp International and Triple Canopy.

At the same time, a government audit expected to be released Tuesday says that records documenting the work of DynCorp, the State Department’s largest contractor, are in such disarray that the department cannot say “specifically what it received” for most of the $1.2 billion it has paid the company since 2004 to train the police officers in Iraq.

The review of security practices was ordered last month by Secretary of State Condoleezza Rice, and it did not address the Sept. 16 shooting involving Blackwater guards, which Iraqi investigators said killed 17 Iraqis. The Federal Bureau of Investigation is leading a separate inquiry into that episode.

But in presenting its recommendations to Ms. Rice in a 45-minute briefing on Monday, the four-member panel found serious fault with virtually every aspect of the department’s security practices, especially in and around Baghdad, where Blackwater has responsibility.

The panel’s recommendations include creating a special coordination center to monitor and control the movement of armed convoys through areas under the command of the American military, which has long complained that contractors operate independently in the field.

The report also urged the department to work with the Pentagon to develop a strict set of rules on how to deal with the families of Iraqi civilians who are killed or wounded by armed contractors, and to improve coordination between American contractors and security guards employed by agencies, like various Iraqi ministries.

“They don’t have the right communications, they don’t have the right procedures in place, and you’ve got people operating on their own,” said one official who has been briefed on the report but who spoke on the condition of anonymity because it has not been released yet. “This is not up to the degree it should be.”

Sean McCormack, a State Department spokesman, said Ms. Rice would closely examine the report’s findings and recommendations and consult with Defense Secretary Robert M. Gates on what steps to take.

Mr. Gates, who is traveling overseas this week, is pressing for the nearly 10,000 armed security contractors now working for the United States government in Iraq to fall under a single authority, most likely the American military, in an effort to bring the contractors under tighter control.

State Department officials say they have already tightened controls over Blackwater by sending State Department personnel as monitors on Blackwater convoys in and around Baghdad, and by mounting video cameras on Blackwater vehicles.

The panel was led by Patrick F. Kennedy, the State Department’s director of management policy. The other members were Eric J. Boswell, a former diplomat and intelligence office and a former head of the bureau of diplomatic security; J. Stapleton Roy, a former ambassador to China and Indonesia; and George Joulwan, a retired four-star Army general.

While the panel’s review focused on work overseen by the Bureau of Diplomatic Security at the State Department, the second report, focusing on DynCorp, was an audit carried out by the Special Inspector General for Iraq Reconstruction, and it focused on another department office, the Bureau of International Narcotics and Law Enforcement Affairs.

The audit said that until earlier this year the State Department had only two government employees in Iraq overseeing as many as 700 DynCorp employees. The result was “an environment vulnerable to waste and fraud,” the audit said.

Stuart W. Bowen Jr., the chief of the Office of the Special Inspector General for Iraq Reconstruction, said in an interview that while the department had made “significant strides” in scrutinizing payments to DynCorp in the past year, the police training contract “appears to me to be the weakest-staffed, most poorly overseen large-scale program in Iraq.”

He added that “when you put two people on the ground to manage a billion dollars, that’s pretty weak.”

The contract gave DynCorp the job of building police training facilities and deploying hundreds of police trainers to instruct a new Iraqi police force.

Developing a police force was considered central to stabilizing Iraq, but the effort, led first by the State Department and then by the Defense Department, has been criticized by administration opponents as well as by the bipartisan commission on the war led by James A. Baker III and Lee H. Hamilton.

The State Department said it had improved monitoring of DynCorp, but in a letter to auditors department officials said that it would still take “three to five years” to reconcile fully the payments made to the company during the first two years of the training contract, beginning in February 2004.

As a sign of the confusion, the State Department reported to auditors that as part of its work in Iraq, DynCorp had purchased a $1.8 million X-ray scanner that was never used and spent $387,000 to house company officials in hotels rather than in existing living facilities.

Then, later, the State Department said those costs were actually incurred in Afghanistan, according to the audit. State Department officials say they have always said the spending occurred in Afghanistan.

Senator Joseph I. Lieberman of Connecticut said the special inspector general has shown, once again, “how vulnerable the federal government is to waste when it doesn’t invest up front in proper contract oversight.” He added, “This scenario is far too frequent across the federal government: we spend billions of dollars for goods and services with no oversight plans in place and hope and pray that an audit will identify any mistakes later.”

Thomas A. Schweich, the acting director of the law enforcement bureau, said it had increased staffing in October 2006 and had thoroughly checked all DynCorp invoices since then. He said a detailed review of all DynCorp spending was under way. “We put more people in place,” he said, referring to three additional staff members sent to Iraq to oversee DynCorp. “We have put together a team of 11 people to review historical invoices.”

A review of DynCorp’s spending over the past year identified $29 million in overcharges by DynCorp, including $108,000 in business travel, according to a State Department letter in response to Mr. Bowen’s auditors. A separate review by the Defense Contracting Audit Agency found that DynCorp had billed for $162,869 of labor hours “for which it did not pay its workers.”

Gregory Lagana, a DynCorp spokesman, said the amounts involved were small fractions of the $1.2 billion paid to DynCorp since 2004. He said that if DynCorp filed an erroneous charge the company would reimburse it, adding that DynCorp had already reimbursed the State Department for $72,000.

“There was no intentional misbilling,” Mr. Lagana said. “It could be just a documents problem.” He said that the company initially struggled with some record-keeping, but that it had informed the government whenever it found errors. “We fully acknowledge that we have some problems with invoicing,” he said. “It’s something we’re working really hard to clean up.”

In a letter to Ms. Rice on Monday, Representative Henry A. Waxman of California, the Democratic chairman of the House Oversight and Government Reform Committee, accused the department of failing to respond to a request the committee made in March for DynCorp-related documents. Mr. Waxman, whose committee is investigating the department’s oversight of both DynCorp and Blackwater, demanded that the department send him the records by Nov. 2.

“The police training program is a critical component of the administration’s efforts to bring stability to Iraq,” Mr. Waxman wrote. “It is a matter of serious concern that this critical initiative appears to have been so poorly managed.”

Officials and auditors said the law enforcement bureau that handled the DynCorp contracts was overwhelmed when large police training programs were begun in Afghanistan and Iraq.

A senior State Department official said the bureau was not equipped to handle such large contracts. “You have a perfect storm of bad events,” said the official, who requested anonymity because he was not authorized to comment publicly. “You have huge amounts of money passing through an organization that is being retooled as it’s running the race of its life.”

John M. Broder contributed reporting.

TORTURE...We Do It, Why Not YOU?

General claims Bush gave 'marching orders' on aggressive interrogation at Guantanamo
10/22/2007 @ 1:34 pm
Filed by Nick Juliano

New book says US uses 'methods of the most tyrannical regimes'

More than 100,000 pages of newly released government documents to demonstrate how US military interrogators "abused, tortured or killed" scores of prisoners rounded up since Sept. 11, 2001, including some who were not even expected of having terrorist ties, according to a just-published book.

In Administration of Torture, two American Civil Liberties Union attorneys detail the findings of a years-long investigation and court battle with the administration that resulted in the release of massive amounts of data on prisoner treatment and the deaths of US-held prisoners.

"[T]he documents show unambiguously that the administration has adopted some of the methods of the most tyrannical regimes," write Jameel Jaffer and Amrit Singh. "Documents from Guantanamo describe prisoners shackled in excruciating 'stress positions,' held in freezing-cold cells, forcibly stripped, hooded, terrorized with military dogs, and deprived of human contact for months."

Most of the documents on which Administration of Torture is based were obtained as a result of ongoing legal fights over a Freedom of Information Act request filed in October 2003 by the ACLU and other human rights and anti-war groups, the ACLU said in a news release.

The documents show that prisoner abuse like that found at Abu Ghraib prison in Iraq was hardly the isolated incident that the Bush administration or US military claimed it was. By the time the prisoner abuse story broke in mid-2004 the Army knew of at least 62 other allegations of abuse at different prisons in Iraq and Afghanistan, the authors report.

Drawing almost exclusively from the documents, the authors say there is a stark contrast between the public statements of President Bush and then-Defense Secretary Donald Rumsfeld and the policies those and others in the administration were advocating behind the scenes.

President Bush gave "marching orders" to Gen. Michael Dunlavey, who asked the Pentagon to approve harsher interrogation methods at Guantanamo, the general claims in documents reported in the book.

The ACLU also found that an Army investigator reported Rumsfeld was "personally involved" in overseeing the interrogation of a Guantanamo prisoner Mohammed al Qahtani. The prisoner was forced to parade naked in front of female interrogators wearing women's underwear on his head and was led around on a leash while being forced to perform dog tricks.

“It is imperative that senior officials who authorized, endorsed, or tolerated the abuse and torture of prisoners be held accountable," Jaffer and Singh write, "not only as a matter of elemental justice, but to ensure that the same crimes are not perpetrated again.”