How a Secret Economy Fuels War

By John Dorschner

A fascinating new look at military spending shows how off-loading projects to private contractors has greatly increased costs to taxpayers — while hiding what’s really happening in the so-called Global War on Terrorism, which has cost $6.4 trillion since George W. Bush initiated it in 2001.

The revelations come from Heidi Peltier of Boston University in her essay, The Growth of the “Camo Economy” and the Commercialization of the Post-9/11 Wars, available at

In 2019, Peltier reports, $370 million — more than half the total defense-related discretionary spending — went to private contractors.


For years, conservatives pushed the idea of out-sourcing defense (and other government) spending as a way to cut costs, but in fact, Peltier writes, the trend greatly increased spending. She calls this the “Camo Economy… because the U.S. government has used the commercialization (often mislabeled “privatization”) of the military as camouflage, concealing the true financial and human costs of America’s post-9/11 wars. Regarding human costs, in 2019, there were 53,000 U.S. contractors compared to 35,000 U.S. troops in the Middle East. Since the U.S. invasion of Afghanistan in 2001, an estimated 8,000 U.S. contractors have died, in addition to around 7,000 U.S. troops.”

“Contractors” are a nice term when they’re fighting for your side. When they’re the enemy, they’re called “mercenaries.”


In theory, “privatization” lowers costs by competition among efficient private companies competing for the work. In fact, many of these contracts are “non-competitive” (45 percent in 2019). What’s more, many of the “competitive contracts” are “cost-plus,” which means that the contractors have no motivation for decreasing costs, because the company just tacks on a profit margin to whatever costs it runs up. From 2008 to 2019, the Department of Defense spent over $1.2 trillion on such cost-type contracts, Peltier reports.

One example: The military used to repair its own planes. Now Lockheed maintains and repairs the F-35s it sells the government (without competitive bid). Thanks to such sweetheart deals, Lockheed earned a stunning $8 billion profit in 2019, Peltier reports. The average salary at the heavily subsidized company is $115,375, which conservatives happily pay while decrying the waste of money on food stamps.

With these private contractors spending big bucks to lobby Congress, ($13 million in 2019 alone) “DoD’s use of contractors also contributes to unending war, enabling the continuation of conflict and the presence of U.S. DoD-related personnel, while creating the public impression (in the U.S., but not abroad) that the U.S. presence is diminishing. The camouflage provided by using contractors diminishes pressure to end a conflict. In this case, continual war may not be driven by contractors, but it is enabled by them,” Peltier writes.


The upshot is the establishment of a self-perpetuating war machine, she writes. Big-time contractors are often asked to assess Defense’s needs “which unsurprisingly led to the contractors recommending that the DoD should rely upon them more heavily.”

Other federal departments follow this pseudo “privatization” route, Peltier writes, but Defense does a lot more of it: 10 times as often as HHS or Transportation, for example.

All this increased Defense spending, Peltier writes, gives Congress two options: Increase the deficit or cut back on funding for other programs, such as healthcare for the poor or renewable energy subsidies. The defense deficit is already horrendous: By 2030, the debt expense of the war on terror will be greater than the initial military expenses.

Peltier suggests several reforms: “The first step would be to reduce military spending generally by ending the post-9/11 wars. As of January 2020, there are over 50,000 contractors working in Afghanistan, Iraq, Syria, and other Central Command areas, about half of whom are in Afghanistan.”

Note: Peltier’s study is part of the Costs of War project at Brown University: