Analysis: Both Parties Always Serve the Military-Industrial Complex

by Connor Freeman | May 30, 2023

https://libertarianinstitute.org/news/analysis-both-parties-always-serve-the-military-industrial-complex/

In 2023, despite skyrocketing inflation and debt, as well as rising sociopolitical divisions, leadership among both Republicans and Democrats will always agree that substantially more US taxpayer money, never less, should be poured into the military-industrial complex, according to an analysis by journalist Judd Legum.

Case in point, the debt ceiling agreement established between the Joe Biden administration and House Speaker Kevin McCarthy caps military spending at a record $886 billion, exactly matching Biden’s mammoth budget request.

The GOP was seeking large increases in military spending and would only entertain cuts in non-military expenditures. The agreed upon war budget represents a 3.3% increase over the current year. The tentative deal still needs to make its way through Congress, where hawks will fiercely oppose any and all military spending caps.

Half of that money will go to defense contractors, with Raytheon, Boeing, Lockheed Martin, Northrop Grumman and General Dynamics receiving the lion’s share. Some of those industry giants are currently ensnared in a massive “price gouging” scandal, with a bipartisan group of senators demanding an investigation at the Pentagon’s highest levels.

Legum noted the lack of any “peace dividend” after the disastrous 20-year war and occupation in Afghanistan. “This military spending increase has occurred even as Biden ended the war in Afghanistan, the military’s longest-running and most costly foreign intervention… Each year, the costs go up dramatically,” he wrote.

The journalist went on to explain that the US has added more than $300 billion to the military budget over the last eight years alone. In 2015, the Pentagon budget was $585 billion. Half of that obscene increase in war spending and profiteering has been bylined by the Biden administration. Legum continued:

(Had military spending kept pace with inflation, [it] would still be less than $700 billion annually.) Biden has added nearly $150 billion to the military budget since 2021, the last budget approved by President Trump. The budget of the Pentagon now exceeds “the budgets for the next ten largest cabinet agencies combined.“ In 2020, Lockheed Martin received $75 billion in government contracts, more than 1.5 times the budget of the entire State Department.

Last year, the United States spent more on its military than the next 10 highest-spending countries combined.

A recent report on CBS’ 60 Minutes saw former Pentagon officials, contract negotiators and insiders accuse American arms dealers of “astronomical price increases” and “unconscionable” fraud.

In particular, the CBS report cites Shay Assad, a 40-year veteran contract negotiator who says military-industrial complex behemoths, such as Lockheed and Raytheon, overcharge for everything from “radar and missiles … helicopters … planes … submarines… down to the nuts and bolts.”

The cited experts described those practices, as well as the accompanying rampant unaccountability, as the culmination of bureaucratic decisions made in the immediate aftermath of the Cold War.

In the early 1990s, ostensibly to reduce costs, the DoD “urged defense companies to merge and 51 major contractors consolidated to five giants.” That drastically reduced competition and put the big five industry “giants” in an extremely advantageous position. The War Department “has few options today, and the defense contractors know it,” Legum wrote.

Assad clarified the effects of this centralization of power: “In the [1980s], there was intense competition amongst a number of companies. And so the government had choices. They had leverage. We have limited leverage now,” he said. “The problem was compounded in the early 2000s when the Pentagon, in another cost-saving move, cut 130,000 employees whose jobs were to negotiate and oversee defense contracts.”

Retired Pentagon auditor Mark Owen bluntly told CBS that this is “not really a true capitalistic market because one company is telling you what’s going to happen. [It’s a] monopoly.”

The report highlighted the fact that, before the clamp-down on competition, a shoulder-fired Stinger missile, produced by Raytheon, cost $25,000 in 1991. Now that Washington is subsidizing the provision of so many Stingers to Ukraine, as well as Taiwan, the weapon is now priced at more than $400,000. This is an “eye-watering” seven-fold increase, even when accounting for inflation and interim technological advancements.

Lockheed and Boeing were found to have yielded an over 40% profit on sales of PAC-3 surface-to-air missiles to Washington and its allies. Assad explained the companies saw a windfall of hundreds of millions on the deals over seven years, and “based on what they actually made, we would’ve received an entire year’s worth of missiles for free.”

The DoD also “caught Raytheon making what they called ‘unacceptable profits’ from the Patriot missile defense system by dramatically exaggerating the cost and hours it took to build the radar and ground equipment.”

Assad demonstrated to the 60 Minutes host how an oil pressure switch was selling for over $10,000, when he claimed the device should cost just $328. Asked about the huge discrepancy, the former official responded “Gouging. What else can account for it?”

What amount to bribes to Congress from defense contractors have also helped to fuel the problem. As Legum detailed, the military-industrial complex spent $2.5 billion on lobbying over the last two decades. “During that period, defense contractors employed an average of 700 lobbyists – more than one lobbyist for every member of Congress.”

However, some senators confined their criticisms to the contractors. In a letter to the Pentagon chief, they said such firms are “dramatically overcharging the Department and US taxpayers while reaping enormous profits, seeing their stock prices soar, and handing out massive executive compensation packages.”

The lawmakers charged that these “companies have abused the trust government has placed in them… exploiting their position as sole suppliers for certain items to increase prices far above inflation or any reasonable profit margin.”