Where Are All the Fiscal Conservatives?

The party of small government and fiscal responsibility claims it has no choice but to cut funding for Medicare and Medicaid, violence against women programs, women's health services, battered women's shelters, an elderly nutrition plan, programs for veterans and student loans, but it could care less about the billions being stolen in Iraq. More than $50 billion has gone to private contractors hired to guard bases, drive trucks, feed and shelter the troops and rebuild the country we bombed.

How is the money being spent? Tonight's 60 Minutes took a look:

When U.S. troops entered Baghdad in the spring of 2003, there was no electricity, widespread looting and little evidence of postwar planning. With the American military stretched to the limit, the Pentagon set up the Coalition Provisional Authority (CPA) to govern the country under Ambassador Paul Bremer, who began hiring private companies to secure and rebuild the country.

There were no banks or wire transfers to pay them, no bean counters to keep track of the money. Just vaults and footlockers stuffed with billions of dollars in cash.

"Fresh, new, crisp, unspent, just-printed $100 bills. It was the Wild West," recalls Frank Willis, who was the No. 2 man at the Coalition Provisional Authority's Ministry of Transportation.

The money was a mixture of Iraqi oil revenues, war booty and U.S. government funds earmarked for the coalition authority. Whenever cash was needed, someone went down to the vault with a wheelbarrow or gunny sacks.

"Those are $100,000 bricks of $100 bills and that's $2 million there," Willis explains, looking at a photo of brick-shaped stacks of money wrapped in plastic. "This, in fact, is a payment that we made on the 1st of August to a company called Custer Battles."

Willis says the bricks of money were also sometimes referred to as footballs "...because we passed them around in little pickup games in our office," he says laughing.

Asked if he has any evidence that the accounting system was a little loose, Willis says, "I would describe it as nonexistent."

According to the report, the $2 million was given to Custer Battles to provide security at Baghdad International Airport.

The company had been started by Scott Custer, a former Army Ranger and Mike Battles, an unsuccessful congressional candidate from Rhode Island who claimed to be active in the Republican Party and have connections at the White House. They arrived in Baghdad with no money. Yet within a year they landed $100 million in contracts.

Complaints about the performance of Custer Battle began immediately. "And the contract looked to me like something that you and I would write over a bottle of vodka," Ballard says. "Complete with all the spelling and syntax errors and annexes, to be filled in later. They presented it the next day, and they got awarded a $15 million contract."

Despite numerous complaints, the Coalition Authority gave Custer Battles a glowing review and gave them a contract to supply logistical support for a program to replace Iraq's currency.

Meantime, Custer Battles set up sham companies in the Cayman Islands to fabricate phony invoices totaling nearly $10 million of work, when the actual cost was $4 million.

How is the Republican-controlled government dealing with these abuses to Iraqis and American taxpayers?

To date, the only action taken against them has been a one-year suspension from receiving government contracts; it has since expired.

"I think what's happening over there is an orgy of greed here with contractors," says North Dakota Sen. Byron Dorgan.

He is the chairman of the Democratic Party Policy Committee, and says Custer Battles is small potatoes compared to behemoths like Halliburton and its subsidiary, Kellogg, Brown and Root (KBR), which have collected half of all the money awarded to contractors in Iraq, and, according to Department of Defense auditors, have over-billed taxpayers more than a billion dollars.

Dorgan's committee has held hearings and heard testimony that Halliburton has overcharged for meals, and fuel and gouged taxpayers on items like hand towels.

"Instead of buying a white towel, which would be $1.60, this company said, 'No, no, no. Put, embroidery our logo on it. Five bucks,' " says Dorgan. "So, what's the difference? Well, the American taxpayer's gonna pay the bill."

Halliburton says the towels were embroidered to keep them from being stolen or lost, and that allegations it over-billed by a billion dollars are exaggerated. But Dorgan says none of this is being seriously investigated.

He says he has called for full, congressional inquiries into alleged abuses by Halliburton and other contractors, but they have been defeated by the Republican majority in straight party line votes.

Republicans are too busy ripping Democrats for revealing a secret to the enemy: we wiretap phone calls.

For more on Custer Battles, click here.