Arms Industry Ramps Up Lobbying Efforts As Budget Battles Continue
June 4, 2015
William Hartung and Stephen Miles / Huffington Post
Despite budget caps imposed by Congress to rein in runaway Pentagon spending, weapons makers' profits have soared. A Bloomberg analysis finds gains among the four largest weapons firms -- excluding Boeing, which has substantial commercial work -- have risen more than eight times higher than the gains achieved by the Standard and Poor's 500 Industrials Index. First quarter results for Lockheed Martin, Northrop Grumman and General Dynamics indicate that this trend is continuing.
(June 1, 2015) -- Breaking news! Nearly four years after budget caps imposed by Congress began to modestly rein in runaway spending at the Pentagon, the sky hasn't fallen. In fact, none of the dire predictions of Pentagon contractors -- from mass layoffs to a collapse of the US military -- have come true.
Instead, weapons makers' profits have soared, employment has increased nationwide, and Congress is busily cooking up budget gimmicks to violate its own spending caps and return to record spending levels.
To separate fact from fiction in the hysteria around the Pentagon's budget, let's look at how we got here. Ever since the Budget Control Act of 2011 put caps on Pentagon spending, weapons manufacturers have been issuing dire warnings about their ability to survive in a more constrained budget environment.
Four years later, big contractors like Lockheed Martin, Northrop Grumman and General Dynamics are doing just fine. Their doomsday scenarios were a lobbying tactic, not a reflection of reality.
A report filed late last year by Bloomberg News noted that defense industry profits are "soaring" and that major defense companies are "reaping record rewards for shareholders."
A Bloomberg analysis of the defense industry put gains among the four largest weapons firms -- excluding Boeing, which has substantial commercial work -- at over eight times the gains achieved by the Standard and Poor's 500 Industrials Index. First quarter results for Lockheed Martin, Northrop Grumman and General Dynamics indicate that this trend is continuing.
These are impressive results, and the arms lobby is working overtime to make sure their profits remain high for years to come. The industry made over $25 million in campaign contributions in 2013/2014, and they have carefully targeted these donations to have the greatest impact.
The industry has been particularly generous to House Armed Services Committee chair Rep. Mac Thornberry (R-TX). According to figures gathered by the Center for Responsive Politics, in 2013-2014 Lockheed Martin and its employees were Thornberry's top donors, at a total of over $75,000. They weren't alone -- six of Thornberry's top ten donors were from the defense industry.
In what is surely just a coincidence, Thornberry has just pushed a new defense acquisition bill through the House that has the industry's fingerprints all over it. One industry lobbyist even bragged that there were "10 provisions of Chairman Thornberry's Agile Acquisition bill that had some kind of direct or indirect lineage from our recommendations."
If passed into law, the industry-friendly bill would weaken the Pentagon's critically important independent testing office, make it easier to enter into cost-plus contracts, and allow contract awards to ignore the lowest cost bidder. All of these changes would hand money to industry at the expense of the taxpayer. But when you let contractors write the law themselves, this outcome shouldn't come as a surprise.
Even as the industry attempts to influence current House Armed Services Committee chair Mac Thornberry, his predecessor in the post, Buck McKeon, has set up shop as a defense industry consultant. His first contract is with Aerojet Rocketdyne Corporation, to help them win a contract to produce engines for the rockets used to launch military satellites.
McKeon has also registered to do work for MBDA, a European-based defense conglomerate that specializes in the production of precision guided missiles. These companies are no doubt just the first two in a long list of defense contractors that McKeon will be helping to squeeze more money out of the Pentagon.
Not satisfied with just influencing those already holding office, contractors are also trying to influence those hoping to become Commander in Chief.
A new organization called Americans for Peace Prosperity and Security (APPS) is hard at work in New Hampshire and Iowa, and plans to set up shop in South Carolina as well. On the surface, APPS looks like just another organization attempting to inject their point of view into the presidential campaign.
But when Lee Fang of the Intercept dug a little deeper, he found that the board of APPS included seven members with ties to the defense industry, including Raytheon board member Stephen Hadley and former BAE executive and Republican political activist Walt Havenstein.
The group will hold candidate forums in which it attempts to goad candidates into taking hawkish, pro-industry positions. It will also arrange a series of one-on-one meetings between candidates and APPS board members.
One area where the arms lobby has been particularly effective is in keeping alive weapons systems that the Pentagon no longer needs or wants. For example, two years ago the Obama administration decided to retire the Northrop Grumman Global Hawk surveillance plane, in part because of its hefty price tag of over $200 million per aircraft and its high operating costs.
Two years later, after an aggressive lobbying campaign on by Northrop Grumman, the company is slated to receive $4 billion over the next five years to modernize Global Hawks so they can stay in the force for years to come. The turnaround prompted Foreign Policy's Paul McLeary to note that it's "Funny what a little congressional lobbying can do to a defense program, ain't it?"
The sad history of the past few years reminds us once again that aggressive lobbying and influence peddling is what is truly driving much of the national security decision-making in Washington, DC.
While Congress seeks to find a solution to allegedly 'deep cuts' in Pentagon spending (really just a slight adjustment), the truth is that spending decisions are not being driven by what will keep America safe, what will protect our men and women in uniform, and what will meet our actual defense needs. Instead, the Pentagon's contractors are rigging the game to protect their massive profits. You can't solve that problem by throwing more money at it.
The only solution is to stop feeding the monster, cut off the cash, and finally stand up to runaway spending at the Pentagon. The Pentagon doesn't need more money. It needs to be forced to do what's in the nation's interest, not the interest of weapons makers and contractors.
William Hartung is Director of the Arms and Security Project for the Center for International Policy. Stephen Miles is the Advocacy Director of Win Without War.
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