Yesterday’s “World Roundup” edition of Foreign Exchanges included a troubling story about the United States defense budget. While the country’s leaders are facing a national default in the face of the debt ceiling, all eyes are on the negotiations between House Speaker Kevin McCarthy and President Joe Biden to avoid national bankruptcy and a global economic catastrophe. It’s easy to get lost in the weeds about government spending – a complex and virtually impenetrable web of interlocking interests and commitments. Click here to read the entire newsletter.
When anyone mentions spending cuts, the focus is always on cutting “non-Defense discretionary funds” – which means the money that is subject to the annual appropriations process, with a carve-out for the military budget. The favored status accorded to the defense budget has origins in the Cold War and a reaction to the antiwar movement of the second half of the 20th century; the result has been an increasing imbalance between money spent on “the military” and on domestic spending – including everything from entitlements like Social Security, Medicare, Medicaid, and veterans benefits to things like infrastructure, national parks, and funding for every government agency that isn’t part of the Department of Defense.
President Eisenhower famously proclaimed against the “military-industrial complex in his farewell address to the nation at the end of his presidency in January of 1961. This is part of what he said:
Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But we can no longer risk emergency improvisation of national defense. We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security alone more than the net income of all United States corporations.
Now this conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence—economic, political, even spiritual—is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet, we must not fail to comprehend its grave implications. Our toil, resources, and livelihood are all involved. So is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together. (text from Wikipedia)
Eisenhower had the freedom to warn of such a development because of his unique position as a war-hero-turned-President. He could express his concerns without people immediately calling him a commie-pinko-traitor – which was an epithet too commonly applied to other people who raised similar concerns in the McCarthy-esque 1950s.
The section of the world roundup focused on this issue was based on a 60 Minutes episode about price gouging by weapons contractors that aired last Sunday, May 21. Here’s how the newsletter described the episode:
On Sunday night, “CBS 60 Minutes” aired an episode on price gouging by weapons contractors. Chronic overcharging by arms companies not only wastes money, but it also puts our security at risk by increasing the chances that weapons systems funded by the Pentagon will be overpriced, underperforming, and never fully ready for combat.
As the “60 Minutes” episode notes, a major contributor to price gouging is the fact that the arms industry is far more concentrated than it has ever been, due to a merger boom that started in the 1990s and has stepped up again in recent years, most notably with blockbuster deals like the 2020 Raytheon-United Technologies merger.
In the 1990s there were 51 major defense contractors. Now there are five. Those top five weapons contractors — Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman — split over $118 billion in Pentagon contracts in Fiscal Year 2022, or nearly one-third of all contracts issued by the Pentagon that year. These companies make most of the bombs, missiles, combat aircraft, helicopters, tanks, and other major weapons systems purchased by the U.S. government, which gives the Pentagon limited leverage when it tries to negotiate reasonable prices or hold contractors to account for shoddy work.
In addition to the problems posed by the industry’s near monopoly on weapons production, the Pentagon has made matters worse through lax oversight practices, including failing to gather adequate background information for price negotiations; using too many sole-source and cost-plus contracts; and failing to hold contractors accountable for cost overruns and poor performance.
This is a huge problem, exacerbated by a general public misunderstanding of how defense dollars are spent. Any effort even to examine military spending – to seek out fraud, waste, and abuse, for example – is attacked as misguided or even treasonous by people who are more interested in the blame game and their electoral prospects than they are by actual issues of national defense. After President Reagan’s 1981 tax cuts exploded the deficit in the 1980s, Congress passed a bill called “Graham-Rudman-Hollings,” which tried to force a kind of fiscal discipline on Congressional appropriations by “capping” spending increases to a certain percentage – but it exempted defense spending from these caps.
Reagan had declared the Soviet Union “the Evil Empire” and pledged to overcome America’s Vietnam-era-driven aversion to military spending by appeals to the need to defeat the only other global superpower. That was accomplished with the dissolution of the Soviet Union in 1991, which was driven by a number of facts that included the increased American military budget.
However, a funny thing happened after 1991: instead of patting ourselves on the back and then reducing military spending, we kept increasing the defense budget to serve as an ongoing deterrent to any nation that might have superpower aspirations. It is not too much of a stretch to claim that the Bush-era wars in Afghanistan and Iraq were spurred, in part, by the desire of the military establishment to remain relevant. Throughout history, the “Merchants of Death” theories about causes of war have thrived as nations have used their national treasure to achieve or retain regional or global hegemony. (See World War I as an example)
NOTE: I worked for two defense contractors during the 1980s, when our funding was booming because of Reagan’s budget. Million-dollar contracts were tossed around like toilet paper to Puerto Rican hurricane victims. With the money from one counter-terrorism project I worked on, a team from my company (including me) went to Grenada, Barbados, Costa Rica, and Guatemela to “investigate” security at their airports. During these tours, we were housed in luxurious digs and escorted around the country in armored vehicles escorted by local police. We saw what they wanted us to see. We came home and wrote a report about our findings – which included a recommendation that we be awarded “phase two” funding for this project. We were. The main product of this work, so far as I could see, was that we had more money to send our kids to college. National defense wasn’t improved by one iota.
On another contract, we were unable to “prove” what our client wanted to prove. So we applied for an extension of the contract so we had more time to tailor our results to the client’s interests. We were granted that extension.
REMINDER: This was in the same era during which Reagan was proclaiming against “Welfare Queens.” The defense budget was the ultimate Welfare Queen.
And don’t be confused by the “ we can’t cut the defense budget” rhetoric. The GOP is very supportive of the portions of the military budget that are “manly” – things that blow up shit, do whiz-bang things in Space, or allow their personnel to play James Bond. The GOP is fine with selling “excess” military equipment – last year’s tanks and so forth – to local police across the country, so that the beat cop can be equipped like Soviet Spetznaz. What they are not supportive of is the things they consider “woke” – better pay and benefits for troops and their families, better base housing, more human rotation schedules, any focus on diversity, for example.
In the era of an all-volunteer force, military leaders constantly tell them – with no apparent impact – that the only way they can recruit and retain members is by making the military a more desirable option for draft-age individuals. Recent surveys have shown that only about 15% of the draft-age population is even considering the military option in their future plans. A military that is disconnected from the American population is likely to become increasingly isolated and paranoid about its role in society. It’s not accidental that Fox has been the major news channel played on background on every American military post around the world.
When legislators like AOC or Katie Porter call attention to these problems, they are derided as un-American “socialists.” Voters adore simplicity, and the GOP rhetoric has worked to simplify things that are actually complex. We are all suffering from this. Not everything can fit on a bumper sticker or in a 15-second sound bite.
Terrific piece. We were talking to two Brits over pints about TFG and I raised the issue of the US defense budget and price gouging. Also talked about social programs and what regular walking-around people want and are happy with. ‘Course I was not one having a pint. I was the nerdy one. You know.