Part 8 (2/2)

It was at this moment that Rumsfeld called a rare ”town hall meeting” for Pentagon staff. The speculation began immediately: Was he going to announce his resignation? Was he going to try his hand at a pep talk? Was he belatedly trying to sell the old guard on transformation? As hundreds of Pentagon senior staff filed into the auditorium that Monday morning, ”the mood was definitely one of curiosity,” one staffer told me. ”The feeling was, How are you going to convince us? Because there was already a huge amount of animosity toward him.”

When Rumsfeld made his entrance, ”we politely stood up and sat down.” It rapidly became clear that this was not a resignation, and it most certainly was not a pep talk. It may have been the most extraordinary speech ever given by a U.S. secretary of defense. It began like this: The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America. This adversary is one of the world's last bastions of central planning. It governs by dictating five-year plans. From a single capital, it attempts to impose its demands across time zones, continents, oceans and beyond. With brutal consistency, it stifles free thought and crushes new ideas. It disrupts the defense of the United States and places the lives of men and women in uniform at risk.

Perhaps this adversary sounds like the former Soviet Union, but that enemy is gone: our foes are more subtle and implacable today.. . . The adversary's closer to home. It's the Pentagon bureaucracy.10 As Rumsfeld's rhetorical gimmick revealed itself, the faces in the audience went stony. Most of the people listening had devoted their careers to fighting the Soviet Union and didn't appreciate being compared to Commies at this stage in the game. Rumsfeld wasn't finished. ”We know the adversary. We know the threat. And with the same firmness of purpose that any effort against a determined adversary demands, we must get at it and stay at it. . . today we declare war on bureaucracy.”

He'd done it: the defense secretary had not only described the Pentagon as a grave threat to America but declared war against the inst.i.tution where he worked. The audience was stunned. ”He was saying we were the enemy, that the enemy was us. And here we were thinking we were doing the nation's business,” the staffer told me.

It wasn't that Rumsfeld wanted to save taxpayer dollars-he had just asked Congress for an 11 percent budget increase. But following the corporatist principles of the counterrevolution, in which Big Government joins forces with Big Business to redistribute funds upward, he wanted less spent on staff and far more public money transferred directly into the coffers of private companies. And with that, Rumsfeld launched his ”war.” Every department needed to slash its staff by 15 percent, including ”every base headquarters building in the world. It's not just the law, it's a good idea, and we're going to get it done.”11 He had already directed his senior staff to ”scour the Department [of Defense] for functions that could be performed better and more cheaply through commercial outsourcing.” He wanted to know, ”Why is DoD one of the last organizations around that still cuts its own checks? When an entire industry exists to run warehouses efficiently, why do we own and operate so many of our own? At bases around the world, why do we pick up our own garbage and mop our own floors, rather than contracting services out, as many businesses do? And surely we can outsource more computer systems support.”

He even went after the sacred cow of the military establishment: health care for soldiers. Why were there so many doctors? Rumsfeld wanted to know. ”Some of those needs, especially where they may involve general practice or specialties unrelated to combat, might be more efficiently delivered by the private sector.” And how about the houses for soldiers and their families -surely these could be done through ”public-private partners.h.i.+ps.”

The Defense Department should focus on its core competency: ”warfighting . . . But in all other cases, we should seek suppliers who can provide these non-core activities efficiently and effectively.”

After the speech, plenty of Pentagon staffers griped that the only thing standing in the way of Rumsfeld's bold vision of outsourcing the army was the small matter of the U.S. Const.i.tution, which clearly defined national security as the duty of government, not private companies. ”I thought the speech was going to cost Rumsfeld his job,” my source told me.

It didn't, and the coverage of his declaration of war on the Pentagon was spa.r.s.e. That's because the date of his contentious address was September 10, 2001. 10, 2001.

It is a strange historical footnote that CNN Evening News CNN Evening News on September 10 carried a short story under the headline ”Defense Secretary Declares War on the Pentagon's Bureaucracy” and that, the next morning, the network would report on an attack on that inst.i.tution of a distinctly less metaphorical kind, one that killed 125 Pentagon employees and seriously wounded another 110 of the people whom Rumsfeld had portrayed as enemies of the state less than twenty-four hours earlier. on September 10 carried a short story under the headline ”Defense Secretary Declares War on the Pentagon's Bureaucracy” and that, the next morning, the network would report on an attack on that inst.i.tution of a distinctly less metaphorical kind, one that killed 125 Pentagon employees and seriously wounded another 110 of the people whom Rumsfeld had portrayed as enemies of the state less than twenty-four hours earlier.12

Cheney and Rumsfeld: Proto-Disaster Capitalists

The idea at the heart of Rumsfeld's forgotten speech is nothing less than the central tenet of the Bush regime: that the job of government is not to govern but to subcontract the task to the more efficient and generally superior private sector. As Rumsfeld made clear, this task was about nothing as prosaic as tr.i.m.m.i.n.g the budget, but was, for its advocates, a world-changing crusade on a par with defeating Communism.

By the time the Bush team took office, the privatization mania of the eighties and nineties (fully embraced by the Clinton administration, as well as state and local governments) had successfully sold off or outsourced the large, publicly owned companies in several sectors, from water and electricity to highway management and garbage collection. After these limbs of the state had been lopped off, what was left was ”the core”-those functions so intrinsic to the concept of governing that the idea of handing them to private corporations challenged what it meant to be a nation-state: the military, police, fire departments, prisons, border control, covert intelligence, disease control, the public school system and the administering of government bureaucracies. The earlier stages of the privatization wave had been so profitable, however, that many of the companies that had devoured the appendages of the state were greedily eyeing these essential functions as the next source of instant riches.

By the late nineties, a powerful move was afoot to break the taboos protecting ”the core” from privatization. It was, in many ways, merely a logical extension of the status quo. Just as Russia's oil fields, Latin America's tele-corns, and Asia's industry had supplied the stock market with superprofits in the nineties, now it would be the U.S. government itself that would play that central economic role-all the more crucial because the backlash against privatization and free trade was spreading rapidly through the developing world, closing off other avenues for growth.

It was a move that brought the shock doctrine to a new, self-referential phase: until that point, disasters and crises had been harnessed to push through radical privatization plans after the fact, but the inst.i.tutions that had the power both to create and respond to cataclysmic events-the military, the CIA, the Red Cross, the UN, emergency ”first responders”-had been some of the last bastions of public control. Now, with the core set to be devoured, the crisis-exploiting methods that had been honed over the previous three decades would be used to leverage the privatization of the infrastructure of disaster creation and disaster response. Friedman's crisis theory was going postmodern.

At the vanguard of the push to create what can only be described as a privatized police state were the most powerful figures in the future Bush administration: d.i.c.k Cheney, Donald Rumsfeld and George W. Bush himself.

For Rumsfeld, the idea of applying ”market logic” to the U.S. military was a project that dated back four decades. It began in the early sixties, when he used to attend seminars at the University of Chicago's Economics Department. He had developed a particularly close connection with Milton Friedman, who, after Rumsfeld was elected to Congress at the age of thirty, took the precocious Republican under his wing, helping him to develop a bold free-market policy platform and tutoring him in economic theory. The two men remained close over the years, with Rumsfeld attending an annual birthday celebration for Friedman, organized every year by the Heritage Foundation's president, Ed Feulner. ”There is something about Milton that when I am around him, and talking to him, I feel smarter,” Rumsfeld said of his mentor when Friedman turned ninety.13 The admiration was mutual. Friedman was so impressed with Rumsfeld's commitment to deregulated markets that he aggressively lobbied Reagan to name Rumsfeld as his running mate in the 1980 election instead of George H. W. Bush-and he never did quite forgive Reagan for disregarding his advice. ”I believe that Reagan made a mistake when he chose Bush as his vice-presidential candidate,” Friedman wrote in his memoirs; ”indeed, I regard it as the worst decision not only of his campaign but of his presidency. My favorite candidate was Donald Rumsfeld. Had he been chosen, I believe he would have succeeded Reagan as president, and the sorry Bush-Clinton period would never have occurred.”14 Rumsfeld survived being pa.s.sed over as Reagan's running mate by throwing himself into his burgeoning business career. As CEO of the international drug and chemical company Searle Pharmaceuticals, he used his political connections to secure the controversial and extraordinarily lucrative Food and Drug Administration (FDA) approval for aspartame (marketed as Nu-traSweet); and when Rumsfeld brokered the deal to sell Searle to Monsanto, he personally earned an estimated $12 million.15 The high-stakes sale established Rumsfeld as a corporate power player, landing him seats on the boards of such blue-chip firms as Sears and Kel-logg's. His status as a former defense secretary, meanwhile, made him a score for any company that was part of what Eisenhower had called the ”military-industrial complex.” Rumsfeld sat on the board of the aircraft manufacturer Gulfstream and was also paid $190,000 a year as a board member of ASEA Brown Boveri (ABB), the Swiss engineering giant that gained unwanted attention when it was revealed to have sold nuclear technology to North Korea, including the capacity to produce plutonium. The nuclear reactor sale went through in 2000, and at the time Rumsfeld was the only North American on the ABB board. He claims to have no memory of the reactor sale coming before the board, though the company insists that ”board members were informed about the project.”16 It was in 1997, when Rumsfeld was named chairman of the board of the biotech firm Gilead Sciences, that he would firmly establish himself as a proto disaster capitalist. The company had registered the patent for Tamiflu, a treatment for many kinds of influenza and the preferred drug for avian flu.41 If there was ever an outbreak of the highly contagious virus (or the threat of one), governments would be forced to buy billions of dollars' worth of the treatment from Gilead Sciences. If there was ever an outbreak of the highly contagious virus (or the threat of one), governments would be forced to buy billions of dollars' worth of the treatment from Gilead Sciences.

The patenting of drugs and vaccines to treat public health emergencies remains a controversial subject. The U.S. has been epidemic-free for several decades, but when the polio outbreak was at its peak in the mid-fifties, the ethics of disease profiteering were hotly debated. With close to sixty thousand known cases of polio, and parents terrified that their children were going to contract the crippling, often fatal, disease, the search for a cure was frantic. When Jonas Salk, a scientist at the University of Pittsburgh, found it and developed the first polio vaccine in 1952, he did not patent the lifesaving treatment. ”There is no patent,” Salk told the broadcaster Edward R. Mur-row: ”Could you patent the sun?”17 It's safe to say that if you could patent the sun, Donald Rumsfeld would have long since put in an application with the U.S. Patent and Trademark Office. His former company Gilead Sciences, which also owns the patents on four AIDS treatments, spends a great deal of energy trying to block the distribution of cheaper generic versions of its lifesaving drugs in the developing world. It has been targeted for these activities by public health activists in the U.S., who point out that some of Gilead's key medicines were developed on grants funded by taxpayers.18 Gilead, for its part, sees epidemics as a growth market, and it has an aggressive marketing campaign to encourage businesses and individuals to stockpile Tamiflu, just in case. Before he reentered government, Rumsfeld was so convinced that he was on to a hot new industry that he helped found several private investment funds specializing in biotechnology and pharmaceuticals. Gilead, for its part, sees epidemics as a growth market, and it has an aggressive marketing campaign to encourage businesses and individuals to stockpile Tamiflu, just in case. Before he reentered government, Rumsfeld was so convinced that he was on to a hot new industry that he helped found several private investment funds specializing in biotechnology and pharmaceuticals.19 These companies are banking on an apocalyptic future of rampant disease, one in which governments are forced to buy, at top dollar, whatever lifesaving products the private sector has under patent. These companies are banking on an apocalyptic future of rampant disease, one in which governments are forced to buy, at top dollar, whatever lifesaving products the private sector has under patent.

d.i.c.k Cheney, a protege of Rumsfeld's in the Ford administration, has also built a fortune based on the profitable prospect of a grim future, though where Rumsfeld saw a boom market in plagues, Cheney was banking on a future of war. As secretary of defense under Bush Sr., Cheney scaled down the number of active troops and dramatically increased reliance on private contractors. He contracted Brown Root, the engineering division of the Houston-based multinational Halliburton, to identify tasks being performed by U.S. troops that could be taken over by the private sector for a profit. Not surprisingly, Halliburton identified all kinds of jobs that the private sector could perform, and those findings led to a bold new Pentagon contract: the Logistics Civil Augmentation Program, or LOGCAP. The Pentagon was notorious for its multi-billion-dollar contracts with weapons manufacturers, but this was something new: not supplying the military with gear but serving as manager for its operations.20 A select group of companies was invited to apply to provide unlimited ”logistical support” for U.S. military missions, an extremely vague work description. Furthermore, no dollar value was attached to the contract: the winning company was simply a.s.sured that whatever it did for the military, it would have its costs covered by the Pentagon, plus a guaranteed profit- what is known as a ”cost plus” contract. These were the final days of the Bush Sr. administration, and the company that won the contract in 1992 was none other than Halliburton. As the Los Angeles Times Los Angeles Times s T. Christian Miller noted, Halliburton ”beat out thirty-six other bidders to win a five-year contract-not surprising perhaps, given that it was the company that drew up the plans.” s T. Christian Miller noted, Halliburton ”beat out thirty-six other bidders to win a five-year contract-not surprising perhaps, given that it was the company that drew up the plans.”

In 1995, with Clinton in the White House, Halliburton recruited Cheney as its new boss. While the Halliburton division Brown Root had a long history as a U.S. military contractor, under Cheney's leaders.h.i.+p Halliburton's role was to expand so dramatically that it would transform the nature of modern war. Thanks to the loosely worded contract that Halliburton and Cheney had crafted when he was at the Pentagon, the company was able to stretch and expand the meaning of the term ”logistical support” until Halliburton was responsible for creating the entire infrastructure of a U.S. military operation overseas. All that was required of the army was to provide the soldiers and the weapons-they were, in a way, content providers, while Halliburton ran the show.

The result, first on display in the Balkans, was a kind of McMilitary experience in which deploying abroad resembled a heavily armed and perilous package vacation. ”The first person to greet our soldiers as they arrive in the Balkans and the last one to wave goodbye is one of our employees,” a Halliburton spokesperson explained, making the company's staff sound more like cruise directors than army logistics coordinators.21 That was the Halliburton difference: Cheney saw no reason why war shouldn't be a thriving part of America's highly profitable service economy-invasion with a smile. That was the Halliburton difference: Cheney saw no reason why war shouldn't be a thriving part of America's highly profitable service economy-invasion with a smile.

In the Balkans, where Clinton deployed nineteen thousand soldiers, U.S. bases sprang up as mini Halliburton cities: neat, gated suburbs, built and run entirely by the company. And Halliburton was committed to providing the troops with all the comforts of home, including fast-food outlets, supermarkets, movie theaters and high-tech gyms.22 Some senior officers wondered what the strip-mailing of the military would do to troop discipline-but they too were enjoying the perks. ”Everything with Halliburton was gold-plated,” one told me. ”So we weren't complaining.” As far as Halliburton was concerned, keeping the customer satisfied was good business -it guaranteed more contracts, and because profits were calculated as a percentage of costs, the higher the costs, the higher the profits. ”Don't worry, it's cost plus,” was a saying made famous in Baghdad's Green Zone, but the deluxe war spending was pioneered during the Clinton era. In just five years at Halliburton, Cheney almost doubled the amount of money the company extracted from the U.S. Treasury, from $1.2 billion to $2.3 billion, while the amount it received in federal loans and loan guarantees increased fifteenfold. Some senior officers wondered what the strip-mailing of the military would do to troop discipline-but they too were enjoying the perks. ”Everything with Halliburton was gold-plated,” one told me. ”So we weren't complaining.” As far as Halliburton was concerned, keeping the customer satisfied was good business -it guaranteed more contracts, and because profits were calculated as a percentage of costs, the higher the costs, the higher the profits. ”Don't worry, it's cost plus,” was a saying made famous in Baghdad's Green Zone, but the deluxe war spending was pioneered during the Clinton era. In just five years at Halliburton, Cheney almost doubled the amount of money the company extracted from the U.S. Treasury, from $1.2 billion to $2.3 billion, while the amount it received in federal loans and loan guarantees increased fifteenfold.23And he was well rewarded for his efforts. Before taking office as vice president, Cheney ”valued his net worth at between $18 million and $81.9 million, including between $6 million and $30 million worth of stock in Halliburton Co. . . . Overall, Cheney was given some 1,260,000 Halliburton options, with 100,000 already used, 760,000 eligible to be redeemed and 166,667 to become valid this December [2000].”24 The push to expand the service economy into the heart of government was, for Cheney, a family affair. In the late nineties, while he was turning military bases into Halliburton suburbs, his wife, Lynne, was earning stock options in addition to her salary as a board member at Lockheed Martin, the world's largest defense contractor. Lynne's time on the board, from 1995 to 2001, coincided with a key period of transition for companies like Lockheed.25The Cold War was over, defense spending was dropping, and with nearly their entire budgets coming from government weapons contracts, these firms needed a new business model. At Lockheed and its fellow arms manufacturers, a strategy emerged to aggressively pursue a new line of work: running the government for a fee.

In the mid-nineties, Lockheed began taking over information technology divisions of the U.S. government, running its computer systems and a great deal of its data management. Largely under the public radar, the company went so far in this direction that, in 2004, The New York Times The New York Times reported, ”Lockheed Martin doesn't run the United States. But it does help run a breathtakingly big part of it. . . . It sorts your mail and totals your taxes. It cuts Social Security checks and counts the United States census. It runs s.p.a.ce flights and monitors air traffic. To make all that happen, Lockheed writes more computer code than Microsoft. reported, ”Lockheed Martin doesn't run the United States. But it does help run a breathtakingly big part of it. . . . It sorts your mail and totals your taxes. It cuts Social Security checks and counts the United States census. It runs s.p.a.ce flights and monitors air traffic. To make all that happen, Lockheed writes more computer code than Microsoft.4226 It made for a powerful husband-and-wife team. While d.i.c.k was steering Halliburton to take over the infrastructure of warfare abroad, Lynne was helping Lockheed to take over the day-to-day running of government at home. At times husband and wife found themselves in direct compet.i.tion. In 1996, when the state of Texas announced that corporations could bid to run its welfare program-a contract worth up to $2 billion over five years- both Lockheed and the IT giant Electronic Data Systems, which boasted d.i.c.k Cheney as a board member, bid on the contract. In the end, the Clinton administration intervened and halted the auction. Though it was generally an enthusiastic supporter of outsourcing, deciding who was eligible to receive welfare was determined to be an essential role of government, not suitable for privatization. Both Lockheed and EDS cried foul, as did the governor of Texas, George W. Bush, who thought privatizing the welfare system was a terrific idea.27 George W. Bush didn't distinguish himself as governor in too many ways, but there was one area in which he excelled: parceling out to private interests the various functions of the government he was elected to run - especially security-related functions, a preview of the privatized War on Terror he would soon unleash. Under his watch, the number of private prisons in Texas grew from twenty-six to forty-two, prompting The American Prospect The American Prospect magazine to call Bush's Texas ”the world capital of the private-prison industry.” In 1997, the FBI launched an investigation into a jail in Brazoria County, forty miles outside Houston, after a local television station aired a videotape of guards kicking unresisting inmates in the groin, shooting them with stun guns and attacking them with dogs. At least one of the violent guards in the video was wearing the uniform of Capital Correctional Resources, a private company contracted to supply guards for the prison. magazine to call Bush's Texas ”the world capital of the private-prison industry.” In 1997, the FBI launched an investigation into a jail in Brazoria County, forty miles outside Houston, after a local television station aired a videotape of guards kicking unresisting inmates in the groin, shooting them with stun guns and attacking them with dogs. At least one of the violent guards in the video was wearing the uniform of Capital Correctional Resources, a private company contracted to supply guards for the prison.28 Bush's enthusiasm for privatization was in no way dampened by the Brazoria incident. A few weeks later, he had what appears to have been an epiphany when he met Jose Pinera, the Chilean minister who had privatized social security during the Pinochet dictators.h.i.+p. This is Pinera's description of the meeting: ”By his concentrated focus, his body language [and] his relevant questions, I knew immediately that Mr. Bush had fully understood the essence of my idea: that Social Security reform could be used both to provide a decent retirement and to create a world of worker-capitalists, an owners.h.i.+p society. ... He was so enthusiastic that at the end he whispered in my ear with a smile, 'Go and tell all this to my little brother in Florida. He will also love it.' ”29 The future president's commitment to auctioning off the state, combined with Cheney's leaders.h.i.+p in outsourcing the military and Rumsfeld's patenting of drugs that might prevent epidemics, provided a preview of the kind of state the three men would construct together-it was a vision of a perfectly hollow government. Though this radical program did not form the centerpiece of Bush's campaign for the presidency in 2000, there were hints of what was in store: ”There are hundreds of thousands of full-time federal employees that are performing tasks that could be done by companies in the private sector,” Bush said in one campaign speech. ”I will put as many of these tasks as possible up for compet.i.tive bidding. If the private sector can do a better job, the private sector should get the contract.”30

September 11 and the Civil Service Comeback

As Bush and his cabinet took their posts in January 2001, the need for new sources of growth for U.S. corporations took on even greater urgency. With the tech bubble now officially popped and the Dow Jones tumbling 824 points in their first two and half months in office, they found themselves staring in the face of a serious economic downturn. Keynes had argued that governments should spend their way out of recessions, providing economic stimulus with public works. Bush's solution was for the government to deconstruct itself-hacking off great chunks of the public wealth and feeding them to corporate America, in the form of tax cuts on the one hand and lucrative contracts on the other. Bush's budget director, the think-tank ideologue Mitch Daniels, p.r.o.nounced, ”The general idea-that the business of government is not to provide services, but to make sure that they are provided-seems self-evident to me.”31 That a.s.sessment included disaster response. Joseph Allbaugh, the Republican Party operative whom Bush put in charge of the Federal Emergency Management Agency (FEMA)-the body responsible for responding to disasters, including terrorist attacks-described his new place of work as ”an oversized ent.i.tlement program.” That a.s.sessment included disaster response. Joseph Allbaugh, the Republican Party operative whom Bush put in charge of the Federal Emergency Management Agency (FEMA)-the body responsible for responding to disasters, including terrorist attacks-described his new place of work as ”an oversized ent.i.tlement program.”32 Then came 9/11, and all of a sudden having a government whose central mission was self-immolation did not seem like a very good idea. With a frightened population wanting protection from a strong, solid government, the attacks could well have put an end to Bush's project of hollowing out government just as it was beginning.

For a while, that even seemed to be the case. ”September 11 has changed everything,” said Ed Feulner, Milton Friedman's old friend and president of the Heritage Foundation, ten days after the attack, making him one of the first to utter the fateful phrase. Many naturally a.s.sumed that part of that change would be a reevaluation of the radical antistate agenda that Feulner and his ideological allies had been pus.h.i.+ng for three decades, at home and around the world. After all, the nature of the September 11 security failures exposed the results of more than twenty years of chipping away at the public sector and outsourcing government functions to profit-driven corporations. Much as the flooding of New Orleans exposed the rotting condition of public infrastructure, the attacks pulled back the curtain on a state that had been allowed to grow dangerously weak: radio communications for the New York City police and firefighters broke down in the middle of the rescue operation, air traffic controllers didn't notice the off-course planes in time, and the attackers had pa.s.sed through airport security checkpoints staffed by contract workers, some of whom earned less than their counterparts at the food court.33 The first major victory of the Friedmanite counterrevolution in the United States had been Ronald Reagan's attack on the air traffic controllers' union and his deregulation of the airlines. Twenty years later, the entire air transit system had been privatized, deregulated and downsized, with the vast majority of airport security work performed by underpaid, poorly trained, nonunion contractors. After the attacks, the inspector general of the Department of Transportation testified that the airlines, which were responsible for security on their flights, had skimped significantly to keep costs down. The ”counterpressures in turn manifested themselves as significant weaknesses in security,” he told the Bush-convened 9/11 Commission. A longtime Federal Aviation Authority security official testifed before the commission that the airlines' approach to security was ”decry, deny and delay.”34 On September 10, as long as flights were cheap and plentiful, none of that seemed to matter. But on September 12, putting $6-an-hour contract workers in charge of airport security seemed reckless. Then, in October, envelopes with white powder were sent to lawmakers and journalists, spreading panic about the possibility of a major anthrax outbreak. Once again, nineties privatization looked very different in this new light: Why did a private lab have the exclusive right to produce the anthrax vaccine? Had the federal government signed away its responsibility to protect the public from a major public health emergency? It didn't help that Bioport, the privatized lab in question, had failed a series of inspections and that the FDA wasn't even authorizing it to distribute its vaccines at the time.35 Furthermore, if it was true, as media reports kept claiming, that anthrax, smallpox and other deadly agents could be spread through the mail, the food supply or the water systems, was it really such a good idea to be pus.h.i.+ng ahead with Bush's plans to privatize the postal service? And what about all those laid-off food and water inspectors-could somebody bring them back? Furthermore, if it was true, as media reports kept claiming, that anthrax, smallpox and other deadly agents could be spread through the mail, the food supply or the water systems, was it really such a good idea to be pus.h.i.+ng ahead with Bush's plans to privatize the postal service? And what about all those laid-off food and water inspectors-could somebody bring them back?

The backlash against the pro-corporate consensus only deepened in the face of new scandals like that of Enron. Three months after the 9/11 attacks, Enron declared bankruptcy, leading thousands of employees to lose their retirement savings while executives acting on insider knowledge cashed out. The crisis contributed to a general plummeting of faith in private industry to perform essential services, especially when it came out that it was Enron's manipulation of energy prices that had led to the ma.s.sive blackouts in California a few months earlier. Milton Friedman, aged ninety, was so concerned that the tides were s.h.i.+fting back toward Keynesianism that he complained that ”businessmen are being presented in the public as second-cla.s.s citizens.”36 While CEOs were falling from their pedestals, unionized public sector workers-the villains of Friedman's counterrevolution-were rapidly ascending in the public's estimation. Within two months of the attacks, trust in government was higher than it had been since 1968-and that, remarked Bush to a crowd of federal employees, is ”because of how you've performed your jobs.”37 The uncontested heroes of September 11 were the blue-collar first responders-the New York firefighters, police and rescue workers, 403 of whom lost their lives as they tried to evacuate the towers and aid the victims. Suddenly, America was in love with its men and women in all kinds of uniforms, and its politicians-slapping on NYPD and FDNY baseball caps with unseemly speed-were struggling to keep up with the new mood. The uncontested heroes of September 11 were the blue-collar first responders-the New York firefighters, police and rescue workers, 403 of whom lost their lives as they tried to evacuate the towers and aid the victims. Suddenly, America was in love with its men and women in all kinds of uniforms, and its politicians-slapping on NYPD and FDNY baseball caps with unseemly speed-were struggling to keep up with the new mood.

When Bush stood with the firefighters and rescue workers at Ground Zero on September 14-what his advisers call ”the bullhorn moment” -he was embracing some of the very unionized civil servants that the modern conservative movement had devoted itself to destroying. Of course he had to do it (even d.i.c.k Cheney put on a hard hat in those days), but he didn't have to do it so convincingly. Through some combination of genuine feeling on Bush's part, and the public's projected desire for a leader worthy of the moment, these were the most moving speeches of Bush's political career.

For weeks after the attacks, the president went on a grand tour of the public sector-public schools, firehouses and memorials, the Centers for Disease Control and Prevention-embracing and thanking civil servants for their contributions and humble patriotism. ”We have gained new heroes,” Bush said in a speech, praising not only emergency services personnel but teachers, postal employees and health care workers.38 At these events, he treated work done in the public interest with a level of respect and dignity that had not been seen in the United States in four decades. Cost-cutting was suddenly off the agenda, and in every speech the president gave, he announced some ambitious new public program. At these events, he treated work done in the public interest with a level of respect and dignity that had not been seen in the United States in four decades. Cost-cutting was suddenly off the agenda, and in every speech the president gave, he announced some ambitious new public program.

”The twin demands of a sagging economy and an urgent new war on terrorism have transformed the philosophical heart of President Bush's agenda,” confidently declared John Harris and Dana Milbank in The Was.h.i.+ngton Post The Was.h.i.+ngton Post eleven days after the attacks. ”A man who came to power offering himself as an ideological descendant of Ronald Reagan has emerged nine months later as something closer to an heir of Franklin D. Roosevelt.” They further observed that ”Bush is working on a large economic stimulus package to stave off recession. He said a weak economy needs its pump primed by government with a big infusion of money-a basic precept of Keynesian economics that was at the heart of FDR's New Deal.” eleven days after the attacks. ”A man who came to power offering himself as an ideological descendant of Ronald Reagan has emerged nine months later as something closer to an heir of Franklin D. Roosevelt.” They further observed that ”Bush is working on a large economic stimulus package to stave off recession. He said a weak economy needs its pump primed by government with a big infusion of money-a basic precept of Keynesian economics that was at the heart of FDR's New Deal.”39

A Corporate New Deal

Public p.r.o.nouncements and photo ops aside, Bush and his inner circle had no intention of converting to Keynesianism. Far from shaking their determination to weaken the public sphere, the security failures of 9/11 reaffirmed their deepest ideological (and self-interested) beliefs-that only private firms possessed the intelligence and innovation to meet the new security challenge. Although it was true that the White House was on the verge of spending huge amounts of taxpayer money to stimulate the economy, it most certainly was not going to be on the model of FDR. Rather, Bush's New Deal would be exclusively with corporate America, a straight-up transfer of hundreds of billions of public dollars a year into private hands. It would take the form of contracts, many offered secretively, with no compet.i.tion and scarcely any oversight, to a sprawling network of industries: technology, media, communications, incarceration, engineering, education, health care.43 What happened in the period of ma.s.s disorientation after the attacks was, in retrospect, a domestic form of economic shock therapy. The Bush team, Friedmanite to the core, quickly moved to exploit the shock that gripped the nation to push through its radical vision of a hollow government in which everything from war fighting to disaster response was a for-profit venture.

It was a bold evolution of shock therapy. Rather than the nineties approach of selling off existing public companies, the Bush team created a whole new framework for its actions-the War on Terror-built to be private from the start. This feat required two stages. First, the White House used the omnipresent sense of peril in the aftermath of 9/11 to dramatically increase the policing, surveillance, detention and war-waging powers of the executive branch-a power grab that the military historian Andrew Bacevich has termed ”a rolling coup.”40 Then those newly enhanced and richly funded functions of security, invasion, occupation and reconstruction were immediately outsourced, handed over to the private sector to perform at a profit. Then those newly enhanced and richly funded functions of security, invasion, occupation and reconstruction were immediately outsourced, handed over to the private sector to perform at a profit.

Although the stated goal was fighting terrorism, the effect was the creation of the disaster capitalism complex-a full-fledged new economy in homeland security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state, both at home and abroad. The economic stimulus of this sweeping initiative proved enough to pick up the slack where globalization and the dot-com booms had left off. Just as the Internet had launched the dot-com bubble, 9/11 launched the disaster capitalism bubble. ”When the IT industry shut down, post-bubble, guess who had all the money? The government,” said Roger Novak of Novak Biddle Venture Partners, a venture capitalism firm that invests in homeland security companies. Now, he says, ”every fund is seeing how big the trough is and asking, How do I get a piece of that action?”41 It was the pinnacle of the counterrevolution launched by Friedman. For decades, the market had been feeding off the appendages of the state; now it would devour the core.

Bizarrely, the most effective ideological tool in this process was the claim that economic ideology was no longer a primary motivator of U.S. foreign or domestic policy. The mantra ”September 11 changed everything” neatly disguised the fact that for free-market ideologues and the corporations whose interests they serve, the only thing that changed was the ease with which they could pursue their ambitious agenda. Now, rather than subjecting new policies to fractious public debate in Congress or bitter conflict with public sector unions, the Bush White House could use the patriotic alignment behind the president and the free pa.s.s handed out by the press to stop talking and start doing. As The New York Times The New York Times observed in February 2007, ”Without a public debate or formal policy decision, contractors have become a virtual fourth branch of government.” observed in February 2007, ”Without a public debate or formal policy decision, contractors have become a virtual fourth branch of government.”42 Rather than meet the security challenge posed by September

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