Tag Archives: Defense contractors

How the Military Controls America, by Eric Zuesse

Defense policy generally has less to do with defense of the US proper, which could be achieved at a fraction of what’s currently spent playing global cop, and more with lining the pockets of military and intelligence contractors. It’s one reason the US can’t seem to win any of its wars. Winning would stop the gravy train. From Eric Zuesse at strategic-culture.org:

Unlike corporations that sell to consumers, Lockheed Martin and the other top contractors to the US Government are highly if not totally dependent upon sales to governments, for their profits, especially sales to their own government, which they control — they control their home market, which is the US Government, and they use it to sell to its allied governments, all of which foreign governments constitute the export markets for their products and services. These corporations control the US Government, and they control NATO. And, here is how they do it, which is essential to understand, in order to be able to make reliable sense of America’s foreign policies, such as which nations are ‘allies’ of the US Government (such as Saudi Arabia and Israel), and which nations are its ‘enemies’ (such as Libya and Syria) — and are thus presumably suitable for America to invade, or else to overthrow by means of a coup. First, the nation’s head-of-state becomes demonized; then, the invasion or coup happens. And, that’s it. And here’s how.

Because America (unlike Russia) privatized the weapons-industry (and even privatizes to mercenaries some of its battlefield killing and dying), there are, in America, profits for investors to make in invasions and in military occupations of foreign countries; and the billionaires who control these corporations can and do — and, for their financial purposes, they must — buy Congress and the President, so as to keep those profits flowing to themselves. That’s the nature of the war-business, since its markets are governments — but not those governments that the aristocracy want to overthrow and replace. The foreign governments that are to be overthrown are not markets, but are instead targets.  The bloodshed and misery go to those unfortunate lands. But if you control these corporations, then you need these invasions and occupations, and you certainly aren’t concerned about any of the victims, who (unlike those profits) are irrelevant to your business. In fact, to the exact contrary: killing people and destroying buildings etc., are what you sell — that’s what you (as a billionaire with a controlling interest in one of the 100 top contractors to the US Government) are selling to your own government, and to all of the other governments that your country’s cooperative propaganda will characterize as being ‘enemies’ — Iraq, Afghanistan, Syria, Yemen, etc. — and definitely not as being ‘allies’, such as are being characterized these corporations’ foreign markets: Saudi Arabia, EU-NATO, Israel, etcetera. In fact, as regards your biggest foreign markets, they will be those ‘allies’; so, you (that is, the nation’s aristocracy, who own also the news-media etc.) defend them, and you want the US military (the taxpayers and the troops) to support and defend them. It’s defending your market, even though you as the controlling owner of such a corporation aren’t paying the tab for it. The rest of the country is actually paying for all of it, so you’re “free-riding” the public, in this business. It’s the unique nature of the war-business, and a unique boon to its investors.

To continue reading: How the Military Controls America

 

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Trump’s National Defense Strategy: Something for Everyone (in the Military-Industrial Complex), by Danny Sjursen

Defense spending is dictated by policy. The many beneficiaries of the US’s global hegemony policy got what they wanted in Trump’s new national defense strategy. It won’t, however, make the US population any safer from foreign invasion than they are now (the US hasn’t been invaded for almost 200 years). From Danny Sjursen at tomdispatch.com:

Think of it as the chicken-or-the-egg question for the ages: Do very real threats to the United States inadvertently benefit the military-industrial complex or does the national security state, by its very nature, conjure up inflated threats to feed that defense machine? 

Back in 2008, some of us placed our faith, naively enough, in the hands of mainstream Democrats — specifically, those of a young senator named Barack Obama.  He would reverse the war policies of George W. Bush, deescalate the unbridled Global War on Terror, and right the ship of state. How’d that turn out?

In retrospect, though couched in a far more sophisticated and peaceable rhetoric than Bush’s, his moves would prove largely cosmetic when it came to this country’s forever wars: a significant reduction in the use of conventional ground troops, but more drones, more commandos, and yet more acts of ill-advised regime change.  Don’t get me wrong: as a veteran of two of Washington’s wars, I was glad when “no-drama” Obama decreased the number of boots on the ground in the Middle East.  It’s now obvious, however, that he left the basic infrastructure of eternal war firmly in place. 

Enter The Donald.

For all his half-baked tweets, insults, and boasts, as well as his refusal to readanything of substance on issues of war and peace, some of candidate Trump’s foreign policy ideas seemed far saner than those of just about any other politician around or the previous two presidents.  I mean, the Iraq War was dumb, and maybe it wasn’t the craziest idea for America’s allies to start thinking about defending themselves, and maybe Washington ought to put some time and diplomatic effort into avoiding a possibly catastrophic clash or set of clashes with Vladimir Putin’s Russia.

Unfortunately, the White House version of all this proved oh-so-familiar.  President Trump’s decision, for instance, to double down on a losing bet in Afghanistan in spite of his “instincts” (and on similar bets in Somalia, Syria, and elsewhere) and his recently published National Defense Strategy (NDS) leave little doubt that he’s surrendered to Secretary of Defense James Mattis and National Security Advisor H.R. McMaster, the mainstream interventionists in his administration.

To continue reading: Trump’s National Defense Strategy: Something for Everyone (in the Military-Industrial Complex)

The ‘Merchants of Death’ Survive and Prosper, by Lawrence Wittner

There’s never been a better time to be in the arms business. From Lawrence Wittner at antiwar.com:

During the mid-1930s, a best-selling exposé of the international arms trade, combined with a U.S. Congressional investigation of munitions-makers led by Senator Gerald Nye, had a major impact on American public opinion. Convinced that military contractors were stirring up weapons sales and war for their own profit, many people grew critical of these “merchants of death.”

Today, some eight decades later, their successors, now more politely called “defense contractors,” are alive and well. According to a study by the Stockholm International Peace Research Institute, sales of weapons and military services by the world’s largest 100 corporate military purveyors in 2016 (the latest year for which figures are available) rose to $375 billion. US corporations increased their share of that total to almost 58 percent, supplying weapons to at least 100 nations around the world.

The dominant role played by US corporations in the international arms trade owes a great deal to the efforts of US government officials. “Significant parts of the government,” notes military analyst William Hartung, “are intent on ensuring that American arms will flood the global market and companies like Lockheed and Boeing will live the good life. From the president on his trips abroad to visit allied world leaders to the secretaries of state and defense to the staffs of US embassies, American officials regularly act as salespeople for the arms firms.” Furthermore, he notes, “the Pentagon is their enabler. From brokering, facilitating, and literally banking the money from arms deals to transferring weapons to favored allies on the taxpayers’ dime, it is in essence the world’s largest arms dealer.”

In 2013, when Tom Kelly, the deputy assistant secretary of the State Department’s Bureau of Political Affairs was asked during a Congressional hearing about whether the Obama administration was doing enough to promote American weapons exports, he replied: “[We are] advocating on behalf of our companies and doing everything we can to make sure that these sales go through. . . and that is something we are doing every day, basically [on] every continent in the world . . . and we’re constantly thinking of how we can do better.” This proved a fair enough assessment, for during the first six years of the Obama administration, US government officials secured agreements for US weapons sales of more than $190 billion around the world, especially to the volatile Middle East. Determined to outshine his predecessor, President Donald Trump, on his first overseas trip, bragged about a $110 billion arms deal (totaling $350 billion over the next decade) with Saudi Arabia.

To continue reading: The ‘Merchants of Death’ Survive and Prosper

2017 Was a Banner Year for the Arms Industry, by Harry Blain

Here is reassuring news if you were worried about Lockheed-Martin or General Dynamics’ ability to meet their payrolls. From Harry Blain at antiwar.com:

Arms companies have had a good year.

The top 100 learned in July that their annual revenues amounted to a healthy $364.8 billion, with American companies – as usual – dominating. While the military itself has suffered several calamities – the apparent murder of a Green Beret by two Navy SEALs in Mali in June, the deadly crash of the U.S.S. John McCain near Malaysia in August, the killing of four Special Forces troops in Niger in October, – the contractors have thrived.

The author of The Art of the Deal has helped.

$110 billion from Saudi Arabia, $2.4 billion from austerity-ravaged Greece, $1.4 billion from Taiwan – all these deals have been set in motion by the Trump White House. Even if they’re not completely fulfilled, as can often be the case in such an opaque and unpredictable market, the financial outlook for America’s arms companies will keep making other (less lethal) industries look like mom-and-pop stores.

“Last time I checked they were on our side”

But the real victory is political. One voice at the top of the Pentagon is, in the long run, far more valuable than a big, new F-35 contract – and this is where President Trump has been so useful to the makers and sellers of weapons.

Well before the Thanksgiving break, the Senate had already confirmed that the new No.2 at the Pentagon will come from the executive council of Boeing; and the new Army undersecretary from the vice presidency of Lockheed Martins F-35 sustainment program.

The new undersecretary of defense for acquisition, technology, and logistics – a central role in deciding what the Pentagon purchases and from whom – comes from the very top job at Textron Systems, the 16th largest arms company in the world. On November 15, Raytheon didn’t miss out on the action, with its vice president of governmental relations confirmed as Army Secretary.

In all of these cases, notwithstanding a smattering of tough questions, senators haven’t thought twice. By margins of 89-6, 92-7, and simple voice votes, these confirmations have been anything but grillings.

 

To continue reading: 2017 Was a Banner Year for the Arms Industry

The Scandal of Pentagon Spending, Your Tax Dollars Support Troops of Defense Contractor CEOs, by William Hurting

Nothing regular readers of SLL don’t already know, but the grisly details are infuriating. From William D. Hartung at tomdispatch.com:

Here’s a question for you: How do you spell boondoggle?

The answer (in case you didn’t already know): P-e-n-t-a-g-o-n.

Hawks on Capitol Hill and in the U.S. military routinely justify increases in the Defense Department’s already munificent budget by arguing that yet more money is needed to “support the troops.”  If you’re already nodding in agreement, let me explain just where a huge chunk of the Pentagon budget — hundreds of billions of dollars — really goes.  Keep in mind that it’s your money we’re talking about.

The answer couldn’t be more straightforward: it goes directly to private corporations and much of it is then wasted on useless overhead, fat executive salaries, and startling (yet commonplace) cost overruns on weapons systems and other military hardware that, in the end, won’t even perform as promised.  Too often the result isweapons that aren’t needed at prices we can’t afford.  If anyone truly wanted to help the troops, loosening the corporate grip on the Pentagon budget would be an excellent place to start.

The numbers are staggering.  In fiscal year 2016, the Pentagon issued $304 billionin contract awards to corporations — nearly half of the department’s $600 billion-plus budget for that year.  And keep in mind that not all contractors are created equal. According to the Federal Procurement Data System’s top 100 contractors report for 2016, the biggest beneficiaries by a country mile were Lockheed Martin ($36.2 billion), Boeing ($24.3 billion), Raytheon ($12.8 billion), General Dynamics ($12.7 billion), and Northrop Grumman ($10.7 billion). Together, these five firms gobbled up nearly $100 billion of your tax dollars, about one-third of all the Pentagon’s contract awards in 2016.

And remember: the Pentagon buys more than just weapons.  Health care companies like Humana ($3.6 billion), United Health Group ($2.9 billion), and Health Net ($2.6 billion) cash in as well, and they’re joined by, among others, pharmaceutical companies like McKesson ($2.7 billion) and universities deeply involved in military-industrial complex research like MIT ($1 billion) and Johns Hopkins ($902 million).

The real question is: How much of this money actually promotes the defense of the country and how much is essentially a subsidy to weapons makers and other corporations more focused on their bottom lines than giving the taxpayers value for their money?

To continue reading: The Scandal of Pentagon Spending, Your Tax Dollars Support Troops of Defense Contractor CEOs

Defense Contractors on Cloud 9, by Wolf Richter

One sector of the economy is doing very well. From Wolf Richter at wolfstreet.com:

The backdrop: Money. More than ever before. 

The Senate is expected to pass by a wide margin a $700-billion defense bill today. When it comes to extravagant military spending, Congress is relentlessly bipartisan, and all bickering stops, as long as the bacon gets spread to every district and state.

“The 1,215-page measure defies a number of White House objections, but Trump hasn’t threatened to veto the measure,” the Washington Post mused. “The bill helps him honor a pledge to boost military spending by tens of billions of dollars.”

So who gets this money?

It’s going to get spread around, but defense contractors are going to get a chunk of it, and they’ve been on cloud 9 all year. Their shares – fired up by plenty of saber-rattling – have mostly soared from all-time high to all-time high.

These are some of the biggest defense contractors and their shares year-to-date as of this morning:

  • Rockwell Collins (COL), to be acquired by United Technologies: $130.90, up 40.6% YTD
  • United Technologies (UTX) is gobbling up Rockwell, got beaten down 8% since July, and is the exception: $113.04, up a measly 3.1% YTD
  • Boeing (BA), after implementing a series of big layoffs in the US: $253.51, up 61% YTD
  • Northrop Grumman (NOC): $274.23, up 16% YTD
  • Orbital (OA) jumped 20% this morning to $132.60, up 48% YTD
  • Raytheon (RTN) $183.06, up 26% YTD
  • Lockheed Martin (LMT) $303.74, up 19.8% YTD
  • Honeywell International (HON) $137.50, up 18.4% YTD

Orbital jumped 20% this morning after the announcement that Northrop Grumman would acquire it for $134.50 a share, in a deal valued at $9.2 billion including the assumption of $1.4 billion in net debt.

This deal comes after Wall Street had been clamoring for a breakup of Northrop. For Wall Street, which gets big-fat fees off these transactions, it’s either breakup or acquisition, often in cycles.

To continue reading: Defense Contractors on Cloud 9

The Pentagon’s Real $trategy, by Andrew Cockburn

The warfare state is also a welfare state, but the welfare queens are publicly listed defense and intelligence contractors, their lobbyists and other henchpeople, and the legions who revolving-door between the private and public sector divisions of the complex. From Andrew Cockburn at tomdispatch.com:

These days, lamenting the apparently aimless character of Washington’s military operations in the Greater Middle East has become conventional wisdom among administration critics of every sort. Senator John McCain thunders that “this president has no strategy to successfully reverse the tide of slaughter and mayhem” in that region. Anthony Cordesman of the Center for Strategic and International Studies bemoans the “lack of a viable and public strategy.” Andrew Bacevich suggests that “there is no strategy. None. Zilch.”

After 15 years of grinding war with no obvious end in sight, U.S. military operations certainly deserve such obloquy. But the pundit outrage may be misplaced. Focusing on Washington rather than on distant war zones, it becomes clear that the military establishment does indeed have a strategy, a highly successful one, which is to protect and enhance its own prosperity.

Given this focus, creating and maintaining an effective fighting force becomes a secondary consideration, reflecting a relative disinterest — remarkable to outsiders — in the actual business of war, as opposed to the business of raking in dollars for the Pentagon and its industrial and political partners. A key element of the strategy involves seeding the military budget with “development” projects that require little initial outlay but which, down the line, grow irreversibly into massive, immensely profitable production contracts for our weapons-making cartels.

If this seems like a startling proposition, consider, for instance, the Air Force’s determined and unyielding efforts to jettison the A-10 Thunderbolt, widely viewed as the most effective means for supporting troops on the ground, while ardently championing the sluggish, vastly overpriced F-35 Joint Strike Fighter that, among myriad other deficiencies, cannot fly within 25 miles of a thunderstorm. No less telling is the Navy’s ongoing affection for budget-busting programs such as aircraft carriers, while maintaining its traditional disdain for the unglamorous and money-poor mission of minesweeping, though the mere threat of enemy mines in the 1991 Gulf War (as in the Korean War decades earlier) stymied plans for major amphibious operations. Examples abound across all the services.

Meanwhile, ongoing and dramatic programs to invest vast sums in meaningless, useless, or superfluous weapons systems are the norm. There is no more striking example of this than current plans to rebuild the entire American arsenal of nuclear weapons in the coming decades, Obama’s staggering bequest to the budgets of his successors.

Taking Nuclear Weapons to the Bank

These nuclear initiatives have received far less attention than they deserve, perhaps because observers are generally loath to acknowledge that the Cold War and its attendant nuclear terrors, supposedly consigned to the ashcan of history a quarter-century ago, are being revived on a significant scale. The U.S. is currently in the process of planning for the construction of a new fleet of nuclear submarines loaded with new intercontinental nuclear missiles, while simultaneously creating a new land-based intercontinental missile, a new strategic nuclear bomber, a new land-and-sea-based tactical nuclear fighter plane, a new long-range nuclear cruise missile (which, as recently as 2010, the Obama administration explicitly promised not to develop), at least three nuclear warheads that are essentially new designs, and new fuses for existing warheads. In addition, new nuclear command-and-control systems are under development for a fleet of satellites (costing up to $1 billion each) designed to make the business of fighting a nuclear war more practical and manageable.

To continue reading: The Pentagon’s Real $trategy