Sunday, September 9, 2012

Coporate Welfare, Defense Spending, And Real Threats To Our Security

The F35 is the poster child for corporate welfare boondoggling.  No wonder Lockheed Martin is numero uno on the corporate pig list.  Unfortunately, eight other countries are also providing billions in slop for this pig.

I haven't written too much about politics lately but it isn't because I'm averse to swimming in those particular toxic waters.  I wanted to wait until after the conventions.  I wanted to see if either party would mention some of the real glaring issues this country needs to address if we are ever to get serious about budgeting woes.  Neither party really gave much in the way of particulars as to how we might accomplish that other than to concoct a few sound bites about taxes and welfare spending.  Bill Clinton was the only speaker who came close to dealing in real numbers.

I decided to look at which corporations slopped the most at the Government trough, because it is the lobbyists from these corporations who have the most real political influence in the US.  The following list is from the 2010 list, compiled by the US General Services Administration, of the top 100 trough feeders.  I have chosen to list the top 10.  I didn't find it the least bit surprising 8 of the 10 are primarily defense contractors, and the companies not listed as defense, Oshkosh Trucks and UTC most certainly provide hardware and services for the military.

1 Lockheed Martin Corporation (NYSELMT) Aerospace and Defense $35,828,421,340.83

2 The Boeing Company (NYSEBA) Aerospace and Defense $19,486,294,255.83

3 Northrop Grumman Corporation (NYSENOC) Aerospace and Defense $16,797,921,451.22

4 General Dynamics Corporation (NYSEGD) Defense $15,249,055,811.75

5 Raytheon Company (NYSERTN) Aerospace and Defense $15,245,234,506.52

6 United Technologies Corporation (NYSEUTX) Conglomerate $7,721,459,648.98

7 L-3 Communications Holdings Inc. (NYSELLL) Communications and Defense $7,445,106,575.43

8 Oshkosh Truck Corporation (NYSEOSK) Trucks and Vehicles $7,243,489,906.25

9 SAIC Inc. (NYSESAI) Technology and Defense $6,796,280,361.66

10 BAE Systems plc (LSEBA.) Aerospace and Defense $6,561,185,112.84

The total defense budget for the US was an estimated 1.1 to 1.4 trillion dollars.  The variance is due to estimates paid in interest to foreign countries (China) for the Iraq and Afghanistan wars.  This figure also includes most of NASA's budget,  a huge chunk to the Department of Energy for nuclear weapons, Homeland Security, the NSA and other intelligence agencies, and Veterans Affairs and pensions.

Both political parties are actually calling for reduction in defense spending.  The Republicans about 12% and the Democrats 22%.  For me there were three really mind blowing statistics in the second linked article.  The first is I spend about 45% of my tax dollars on defense spending.  The second is that while the tonnage of the US Navy is down from the Cold War, it is still larger than the next 12 biggest navies combined, and 10 of those twelves navies belong to our allies. The third mind blower was this:

Again in 2011, the GAO could not "render an opinion on the 2011 consolidated financial statements of the federal government", with a major obstacle again being "serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable".

In December 2011, the GAO found that "neither the Navy nor the Marine Corps have implemented effective processes for reconciling their FBWT." According to the GAO, "An agency’s FBWT account is similar in concept to a corporate bank account. The difference is that instead of a cash balance, FBWT represents unexpended spending authority in appropriations." In addition, "As of April 2011, there were more than $22 billion unmatched disbursements and collections affecting more than 10,000 lines of accounting."

That last little line about the $22 billion in unmatched disbursement and collections?  Here's a way to comprehend what that really means.  In the same year 2010, the government spent 17 billion on TANF, or Temporary Assistance for Needy Families.  Which means the Navy and Marines are losing track of more money than we are spending on welfare assistance.  Gosh, I wonder why I didn't hear about this at either convention?

I do have to point out that the SNAP budget, otherwise known as food stamps is separate from TANF. It has gone up from about 32.9 billion in 2007, just as the Great Recession started to hit with it's massive increase in unemployment,  to an estimated 75 billion in 2011.  I don't think there is a better statistic to illustrate how much the Great Recession has hurt the American populace than this one.  

The politicians aren't really talking about this in any meaningful way, but we as a country have to decide where our priorities lie. It can't just be babbling about changes in medicaid/medicare, social security and welfare.  It also has to include our entire strategy for what constitutes our defense/security priorities in view of future challenges, and a rapidly changing world, because defense numbers are staggering.  That pretty F35 pictured at the top of this post is now estimated to cost over 1 trillion dollars for the initial purchase cost and lifetime operation of this one fighter system.  That's just one system.  We have a whole lot more of these systems and yet, we also have a crumbling infrastructure.  Seems to me jobs are jobs.  The government can create them by buying the engines of war or they can create them by fixing our very necessary infrastructure.

Some very smart people are suggesting the US's real security issue is it's unemployment level and escalating poverty. I happen to agree.


  1. "Some very smart people are suggesting the US's real security issue is it's unemployment level and escalating poverty. I happen to agree."

    I wonder if that's why we are witnessing the progessive militarization of our municipal police forces with the purchase of tanks, drones and other military style equipment? Just a bit unsettling to say the least...

    1. I've wondered that myself, and now drone manufacturers are pitching there wares to beef up the militarization of our police departments. It is all a bit unsettling.

  2. Blame Congress. Senators and Representatives want committees to chair and become partisans of their services to the detriment of overall military efficiency. Remember that DOD was willing to close hundreds of bases but the politicians were not. We do not need all the officers in the Joint Chiefs of Staff if their is only one military chain of command. We don't need competing recruiting services and their exhibition teams and TV budgets if there is only one service. We have known since McNamara about the communications, maintenance, and procurement inefficiencies caused by maintaining multiple military services and academies and rivalries.
    Tom in UCity

    1. I don't disagree Tom. We don't need competing services. We do need combat specialists of one sort or another, but they can all wear the same uniform with out impeding their efficiency.

      The F35 is actually a start in that direction since in it's three variations it's supposed to become the fighter for all services, Air Force, Navy, and Marines. The hang up right now is the vertical take off, or jump jet version. It has weight vs power issues. There's some other issues too, but the Air Force version is pretty much ready for production--at double of what it was supposed to cost.

  3. This is just the latest attempt to create a joint strike fighter, something begun by McNamara


  4. ...Seems to me jobs are jobs. The government can create them by buying the engines of war or they can create them by fixing our very necessary infrastructure. This is one of the reasons I walked away from calling myself a Conservative. I was told for years that capitalism is the greatest system for uplifting the living standards of mankind in history. My contention with that is that any human system is faulty and can be improved. I've gotten so miffed listening to GOP'ers tell me that stimulus programs like FDR'S New Deal didn't work and only prolonged the Depression that it took a WW2 to end it. So , essentially free market Capitalism can only find a use for everyone's time and skills only when our nation is engaged in warfare. Why can't Big Gubmint employ people to do other more productive things?

    OTOH, the Forbes 400 has seen more billionaires take up spots in its list in the last 20 years during a time of "free market" deregulation. Meanwhile, the eight hour day, the forty hour week, guaranteed retirement, the right to health care, etc. are all proving to be too “utopian” for the market to provide. Apparently, it's getting too expensive to keep elderly and disabled people from digging in dumpsters and eating cat food to live on like they used to before Social Security and Medicare.

    The other issue I see looming more is how artificial intelligence is replacing more occupations than the economy can create. Our whole idea of jobs and careers are being transformed.

    John Fremont

  5. By the time it gets through the pipeline we'll have a pretty plane with nothing for it to do. Unless it isn't already rendered obsolete by a $100,000 missile. According to Ryan, et al, these aren't really government jobs, even though they are commissioned by the government and paid for by the taxpayers. As long as there is money to be skimmed off the top by some nominally "private" enterprise, it's all good.