Tag Archives: Defense contractors

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

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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

Former Bush Official Just Confirmed That Our Wars Are for Corporate Interests, by Claire Bernish

From Claire Bernish at theantimedia.org:

(ANTIMEDIA) United States — “I think Smedley Butler was onto something,” Col. Lawrence Wilkerson, former George W. Bush administration heavyweight, told Salon in an exclusive interview.

Major General Smedley Butler earned the highest rank in the U.S. Marine Corps, accumulating numerous accolades as he helped lead the United States through decades of war. He later became an ardent critic of such militarism and imperialism.

War is a racket,” Butler famously said, and Wilkerson — who has also turned critical of U.S. imperialist policy — agrees with and admires the esteemed Marine.

Wilkerson, who served as chief of staff to former secretary of state, Colin Powell, has grown tired of “the corporate interests that we go abroad to slay monsters for.”

Of the profiteering scheme that wars have come to embody, Wilkerson quoted Butler:
“Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”

Noting Butler’s brief but accurate characterization of what Eisenhower called the military-industrial complex, Wilkerson added that today’s war machine “is more pernicious than Eisenhower ever thought it would be.”

The willingness of such weapons and military equipment corporations to excuse the transgressions of repressive and abusive regimes in the Middle East and Asia for the sake of profit, Wilkerson asserted, stands as evidence Eisenhower underestimated the extent the to which the problem would manifest.

To continue reading: Former Bush Official Just Confirmed That Our Wars Are for Corporate Interests