By Anna Merlan
By Roy Edroso
By Carolyn Hughes
By Chuck Strouse
By Albert Samaha
By Anna Merlan
By Steve Weinstein
By Tessa Stuart
The numbers were staggering: $3400 for a sumo-wrestling outfit, $16,000 for a corporate golf membership, $38,000 in cash advances for lap dances. All were part of a $101 million shopping spree made with "government purchase cards," the U.S. military's version of corporate credit cardsanother made-for-media scandal of reckless Defense Department spending.
But throughout congressional hearings on the topic in July, the real scandal with the military's other piece of plastic, the Government Travel Card (GTC), went ignored by the mainstream press, despite the fact that the card has plunged thousands of ordinary servicemen and servicewomen into debt so deep that the Pentagon is busy garnishing the wages of its own soldiers. And the only military commander known to raise hell about the schemea lone air force colonel based in the Midwesttells the Voicethat blowing the whistle on the GTC ruined her career.
Lower in the ranks, the damage has been considerable. U.S. soldiers in Afghanistanordered to don't leave home without their GTCshave found themselves stranded in the desert without a dime because their credit was suddenly cut off, according to a May 29 report in the Military Times, leaving families behind in a nasty catch-22: Swallow the debt, or borrow more money to pay the bills so their credit wouldn't be ruined.
Concocted by Congress in 1998, the GTC was designed to privatize the accounting of federal travel expenses and touted to save taxpayer money. (It also reaps huge fees by the financial conglomerates that issue the cards.) It works like this: Servicepeople are ordered to apply for personal GTCsinterest-free credit cards issued exclusively by the Bank of America. Instead of requesting vouchers or getting cash to pay for travel expenses, servicepeople pay up front with the their own GTC cardsessentially floating interest-free loans to the government. As a result, they have to submit expense reports and wait for reimbursements.
But reimbursements often come late, according to a recent report issued by the General Accounting Office, which means the GTC bills aren't always paid on time and servicepeople are getting branded as "delinquents." The GAO found "substantial" delays in reimbursements; in one command unit, for example, the California National Guard failed to pay its personnel within a month 61 percent of the time, and of those payments, 42 percent were inaccurate.
Just in the past year, the names of more than 10,000 military personnel have been reported to national credit bureaus as "credit risks," according to the Military Times. Instead of changing the mechanics of the travel card system, however, the DOD and the bank have only tightened their grip on cardholders; since October, the Pentagon has garnished over $19.5 million from military paychecks to pay off "delinquent" GTC bills, according to DOD accountants.
"It's totally unbelievable," says Ed Mierzwinski, consumer banking advocate at the U.S. Public Interest Research Group. "The notion that you're forced into a contractone where you can't pay your bills on timeand the Pentagon takes it out of your paycheck is outrageous." Military personnel have even less cushion than civilians: Annual pay for an E-2 private is between $11,000 and $14,000.
"It's a pathetic situation when soldiers are forced to buy into a system that's likely to screw them personally," says Danielle Brian, executive director of the Project on Government Oversight, a D.C. group. "This is just another example where the Pentagon has conjured up a scam with a favorite contractor. The desperate rush to privatization has a million warts."
By putting the burden of bookkeeping on its servicepeople and the bank, the Bank of America claims that the Pentagon has saved anywhere from $100 million to $450 million a year in administrative costs. Meanwhile, Bank of America has acquired an entire new fleet of captive consumers: more than 1.4 million servicemen and servicewomen ordered by law to use the card for every travel expense till 2008.
Pentagon officials contend that the program is beneficial to both taxpayers and servicemen. Consumer advocates laugh.
"In no way can this be characterized as a pro-employee program," says Stephen Brobeck, executive director of the Consumer Federation of America. "For any government agency to insist that its employees obtain a personal credit card only shifts the cost and risk on its employees. It's highly inappropriate."
More unsettling, the GTC program may turn out to be highly illegal. All employees of the executive branch are required to apply for them; all servicepeople are ordered to do it. But using a military order to force a serviceman or servicewoman into a private contractagainst his or her willis a clear violation of basic contract law, according to handful of military and constitutional legal scholars.
Moreover, they argue, forcing military personnel to personally front the government money for travel expenses and subject their personal "creditworthiness" to the whims of the Pentagon's sluggish accounting system could potentially violate private property rights, which are protectedeven for servicepeopleunder the Fifth Amendment.
"There are serious legal and moral concerns with a government agency ordering a member of the military to sign a private contract," says Philip Cave, a class-action lawyer who specializes in military law. "In the big scheme of things, this policy may seem like small potatoesuntil you're the individual involved."