Did you know that today is the ninth anniversary of the start of the war in Afghanistan? Probably not. Earlier this year, the war in Afghanistan surpassed the Vietnam War as the longest war in American history, yet we had no idea.
Mentions of both the war in Afghanistan and the Iraq war have slipped out of the national conversation recently as we have been preoccupied with the economy and its various ills.
We don't discuss the importance of the wars nearly as much as we should. However, as a recent Bloomberg News article points out, we don't talk about the shady, behind−the−scenes workings of the wars enough either.
When a U.S. soldier dies in combat (this applies to the 5,000−plus soldiers that have been killed in combat, both in Iraq and Afghanistan), his beneficiary receives payouts from a government−organized life insurance plan. The Department of Veterans Affairs (VA), through the services of Prudential Financial, Inc., sends out the benefits to the policyholders.
When beneficiaries claim their money, they have a choice between a lump−sum payment and a gradual payment plan. The vast majority of beneficiaries select the lump−sum option. With this, Prudential opens a "retained−asset account," a kind of checking account from which the family can withdraw money.
Instead of sending families full payment, the company retains the money in its corporate account and invests it in mostly bonds and securities. As a result, Prudential has made returns as much as eight times higher than what it pays to holders of the accounts.
In what a The George Washington University professor has reportedly called a "lose−lose proposition for everyone but Prudential," the company is profiting from the taxpayer−funded death benefits owed to the families of servicemen and women.
Taxpayers didn't always pay for this. It was only in 1965 that the insurance lobby persuaded members of Congress to pass a law that made it mandatory for the government, which previously managed its own life insurance policies, to employ a private insurance company.
Under an amendment heavily supported by the Life Insurance Association of America, however, this private firm would not be responsible for any of the death benefits owed to soldiers killed in combat. This meant the government would be indemnifying the insurance company for payouts — something they themselves should be indemnifying. This twist of logic is now more evident than ever, 45 years after the VA gave a no−bid contract to Prudential. Since 2003, the government has given Prudential $1.7 billion to carry out this service. Ninety−five percent of this has gone into the retained−asset accounts, which lead to extraordinary profits for Prudential.
A private company should not profit off the deaths of soldiers in war. John Corcoran, the executive of the American Legion, expressed in 1965 that indemnification of this sort "is not a business transaction; it is the responsibility of the government." It's enough that over 5,000 American soldiers have perished in these seemingly endless wars. We as a country do not need, and should not support, private corporations like Prudential making excessively high profits on the deaths of our own soldiers.
Supporting your country is a courageous and laudable act; to preserve it, we must fight against the practices of war profiteering. To do so, Congress must enact legislation re−enlisting the government as the sole executor in soldiers' life insurance matters. Such a law must cut companies like Prudential out of this picture in order to restore the balance, taking power out of profit−seeking hands.
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Joshua Youner is a freshman who has not yet declared a major. He can be reached at Joshua.Youner@tufts.edu.
