Lockheed Martin’s government contracts rival the operating budget of the State Department, writes William D. Hartung. And now it’s about to have company.
By William D. Hartung
When, in his farewell address in 1961, President Dwight D. Eisenhower warned of the dangers of the “unwarranted influence” wielded by the “military-industrial complex,” he could never have dreamed of an arms-making corporation of the size and political clout of Lockheed Martin. In a good year, it now receives up to $50 billion in government contracts, a sum larger than the operating budget of the State Department. And now it’s about to have company.
Raytheon, already one of the top five U.S. defense contractors, is planning to merge with United Technologies. That company is a major contractor in its own right, producing, among other things, the engine for the F-35 combat aircraft, the most expensive Pentagon weapons program ever. The new firm will be second only to Lockheed Martin when it comes to consuming your tax dollars — and it may end up even more powerful politically, thanks to President Donald Trump’s fondness for hiring arms industry executives to run the national security state.
Just as Boeing benefited from its former Senior Vice President Patrick Shanahan’s stint as acting secretary of defense, so Raytheon is likely to cash in on the nomination of its former top lobbyist, Mike Esper, as his successor. Esper’s elevation comes shortly after another former Raytheon lobbyist, Charles Faulkner, left the State Department amid charges that he had improperly influenced decisions to sell Raytheon-produced guided bombs to Saudi Arabia for its brutal air war in Yemen. John Rood, third-in-charge at the Pentagon, has worked for both Lockheed Martin and Raytheon, while Ryan McCarthy, Mike Esper’s replacement as secretary of the Army, worked for Lockheed on the F-35, which the Project on Government Oversight (POGO) has determined may never be ready for combat.
And so it goes. There was a time when Donald Trump was enamored of “his” generals — Secretary of Defense James Mattis (a former board member of the weapons-maker General Dynamics), National Security Advisor H.R. McMaster, and White House Chief of Staff John Kelly. Now, he seems to have a crush on personnel from the industrial side of the military-industrial complex.
As POGO’s research has demonstrated, the infamous “revolving door” that deposits defense executives like Esper in top national security posts swings both ways. The group estimates that, in 2018 alone, 645 senior government officials — mostly from the Pentagon, the uniformed military, and Capitol Hill — went to work as executives, consultants, or board members of one of the top 20 defense contractors.
Fifty years ago, Wisconsin Senator William Proxmire identified the problem when he noted that:
“the movement of high ranking military officers into jobs with defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation. It is a real threat to the public interest because it increases the chances of abuse… How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years away from retirement and have the example to look at of over 2,000 fellow officers doing well on the outside after retirement?”
In other words, that revolving door and the problems that go with it are anything but new. Right now, however, it seems to be spinning faster than ever — and mergers such as Raytheon-United Technologies are only likely to feed the phenomenon.
The Last Supper
The merger of Raytheon and United Technologies should bring back memories of the merger boom of the 1990s, when Lockheed combined with Martin Marietta to form Lockheed Martin, Northrop and Grumman formed Northrop Grumman, and Boeing absorbed rival military aircraft manufacturer McDonnell Douglas. And it wasn’t just a matter of big firms pairing up either. Lockheed Martin itself was the product of mergers and acquisitions involving nearly two dozen companies — distinctly a tale of big fish chowing down on little fish. The consolidation of the arms industry in those years was strongly encouraged by Clinton administration Secretary of Defense William Perry, who held a dinner with defense executives that was later dubbed “the last supper.” There, he reportedly told the assembled corporate officials that a third of them would be out of business in five years if they didn’t merge with one of their cohorts.
The Clinton administration’s encouragement of defense industry mergers would prove anything but rhetorical. It would, for instance, provide tens of millions of dollars in merger subsidies to pay for the closing of plants, the moving of equipment, and other necessities. It even picked up part of the tab for the golden parachutes given defense executives and corporate board members ousted in those deals.
The most egregious case was surely that of Norman Augustine. The CEO of Martin Marietta, he would actually take over at the helm of the even more powerful newly created Lockheed Martin. In the process, he received $8.2 million in payments, technically for leaving his post as head of Martin Marietta. U.S. taxpayers would cover more than a third of his windfall. Then, a congressman who has only gained stature in recent years, Representative Bernie Sanders (I-VT), began to fight back against those merger subsidies. He dubbed them “payoffs for layoffs” because executives got government-funded bailouts, while an estimated 19,000 workers were laid off in the Lockheed Martin merger alone with no particular taxpayer support. Sanders was actually able to shepherd through legislation that clawed back some, but not all, of those merger subsidies.
According to one argument in favor of the merger binge then, by closing half-empty factories, the new firms could charge less overhead and taxpayers would benefit. Well, dream on. This never came near happening, because the newly merged industrial behemoths turned out to have even greater bargaining power over the Pentagon and Congress than the unmerged companies that preceded them.
Draw your own conclusions about what’s likely to happen in this next round of mergers, since cost overruns and lucrative contracts continue apace. Despite this dismal record, Raytheon CEO Thomas Kennedy claims that the new corporate pairing will — you guessed it! — save the taxpayers money. Don’t hold your breath.
Influence on Steroids
While Trump briefly expressed reservations about the Raytheon-United Technologies merger and a few members of Congress struck notes of caution, it has been welcomed eagerly on Wall Street. Among the reasons given: the fact that the two companies generally make different products, so their union shouldn’t reduce competition in any specific sector of defense production. It has also been claimed that the new combo, to be known as Raytheon Technologies, will have more funds available for research and development on the weapons of the future.
But focusing on such concerns misses the big picture. Raytheon Technologies will have more money to make campaign contributions, more money to hire lobbyists, and more production sites that can be used as leverage over members of Congress loathe to oppose spending on weapons produced in their states or districts. The classic example of this phenomenon: the F-35 program, which Lockheed Martin claims produces 125,000 jobs spread over 46 states.
When I took a careful look at the company’s estimates, I found that they were claiming approximately twice as many jobs as that weapons system was actually creating. In fact, more than half of F-35-related employment was in just two states, California and Texas (though many other states did have modest numbers of F-35 jobs). Even if Lockheed Martin’s figures are exaggerated, however, there’s no question that spreading defense jobs around the country gives weapons manufacturers unparalleled influence over key members of Congress, much to their benefit when Pentagon budget time rolls around. In fact, it’s a commonplace for Congress to fund more F-35s, F-18s, and similar weapons systems than the Pentagon even asks for. So much for Congressional oversight.
Theoretically, incoming defense secretary Mike Esper will have to recuse himself from major decisions involving his former company. Among them, whether to continue selling Raytheon-produced precision-guided bombs to Saudi Arabia and the United Arab Emirates (UAE) for their devastating air war in Yemen that has killed remarkable numbers of civilians.
No worries. Trump himself is the biggest booster in living memory of corporate arms sales and Saudi Arabia is far and away his favorite customer. The Senate recently voted down a package of “emergency” arms sales to the Saudis and the UAE that included thousands of Raytheon Paveway munitions, the weapon of choice in that Yemeni air campaign. A similar vote must now take place in the House, but even if it, too, passes, Congress will need to override a virtually guaranteed Trump veto of the bill.
The Raytheon-United Technologies merger will further implicate the new firm in Yemeni developments because the Pratt and Whitney division of United Technologies makes the engine for Saudi Arabia’s key F-15S combat aircraft, a mainstay of the air war there. Not only will Raytheon Technologies profit from such engine sales, but that company’s technicians are likely to help maintain the Saudi air force, thereby enabling it to fly yet more bombing missions more often.
When pressed, Raytheon officials argue that, in enabling mass slaughter, they are simply following U.S. government policy. This ignores the fact that Raytheon and other weapons contractors spend tens of millions of dollars a year on lobbyists, political contributions, and other forms of influence peddling trying to shape U.S. policies on arms exports and weapons procurement. They are, in other words, anything but passive recipients of edicts handed down from Washington.
As Raytheon chief financial officer Toby O’Brien put it in a call to investors that came after the murder of Washington Post columnist Jamal Khashoggi, “We continue to be aligned with the administration’s policies, and we intend to honor our commitments.” Lockheed Martin CEO Marillyn Hewson made a similar point, asserting that “most of these agreements that we have are government-to-government purchases, so anything that we do has to follow strictly the regulations of the U.S. government… Beyond that, we’ll just work with the U.S. government as they are continuing their relationship with [the Saudis].”
How Powerful Are the Military-Industrial Combines?
When it comes to lobbying the Pentagon and Congress, size matters. Major firms like Lockheed Martin, Boeing, and Raytheon can point to the jobs they and their subcontractors provide in dozens of states and scores of Congressional districts to keep members of Congress in line who might otherwise question or even oppose the tens of billions of dollars in government funding the companies receive annually.
Raytheon — its motto: “Customer Success Is Our Mission” — has primary operations in 16 states: Alabama, Arkansas, Arizona, California, Colorado, Florida, Indiana, Kentucky, Massachusetts, Michigan, Minnesota, New Mexico, Pennsylvania, Rhode Island, Texas, Utah, and Virginia. That translates into a lot of leverage over key members of Congress and it doesn’t even count states where the company has major subcontractors. The addition of United Technologies will reinforce the new company’s presence in a number of those states, while adding Connecticut, Iowa, New York, and North Carolina (in other words, at least 20 states in all).
Meanwhile, if the merger is approved, the future Raytheon Technologies will be greasing the wheels of its next arms contracts by relying on nearly four dozen former government officials the two separate companies hired as lobbyists, executives, and board members in 2018 alone. Add to that the $6.4 million in campaign contributions and $20 million in lobbying expenses Raytheon clocked during the last two election cycles and the outlines of its growing influence begin to become clearer. Then, add as well the $2.9 million in campaign contributions and $40 million in lobbying expenses racked up by its merger partner United Technologies and you have a lobbying powerhouse rivaled only by Lockheed Martin, the world’s largest defense conglomerate.
Eisenhower’s proposed counterweight to the power of the military-industrial complex was to be “an alert and knowledgeable citizenry.” And there are signs that significant numbers of individuals and organizations are beginning to pay more attention to the machinations of the arms lobby. My own outfit, the Center for International Policy, has launched a Sustainable Defense Task Force composed of former military officers and Pentagon officials, White House and congressional budget experts, and research staffers from progressive and good-government groups. It has already crafted a plan that would cut $1.2 trillion from the Pentagon budget over the next decade, while improving U.S. security by avoiding unnecessary wars, eliminating waste, and scaling back a Pentagon nuclear-weapons buildup slated to cost $1.5 trillion or more over the next three decades.
The Poor People’s Campaign, backed by research conducted by the National Priorities Project of the Institute for Policy Studies, is calling for a one-year $350 billion cut in Pentagon expenditures. And a new network called “Put People Over the Pentagon” has brought together more than 20 progressive organizations to press presidential candidates to cut $200 billion annually from the Department of Defense’s bloated budget. Participants in the network include Public Citizen, Moveon.org, Indivisible, Win Without War, 350.org, Friends of the Earth, and United We Dream, many of them organizations that had not, in past years, made reducing the Pentagon budget a priority.
Raytheon and its arms industry allies won’t sit still in the face of such proposals, but at least the days of unquestioned and unchallenged corporate greed in the ever-merging (but also ever-expanding) arms industry may be coming to an end. The United States has paid an exorbitantly high price in blood and treasure, as have countries such as Afghanistan and Iraq, for letting the military-industrial complex steer the American ship of state through this century so far. It’s long past time for a reckoning.
William D. Hartung, a TomDispatch regular, is the director of the Arms and Security Project at the Center for International Policy and the author of “Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex.”
This article is from TomDispatch.com.
The MIC is national socialism in a nutshell.
Kudos to all the people and groups who want to reduce the wildly bloated military budgets. Only persistent public pressure will bring down the grossly excessive military spending.
To raise an old question – if military people can work for a salary why can’t the defense industry also be non-profit? It wouldn’t be socialism as the “means” of producing weapons would not be owned by the Federal Government.
When I was a wee lad, I noticed how Proxmire stood out from the maddening crowd of politicians. Oh it would do us well to have a Proxmire today, compared to a Chuck Schumer who has reds under his desk and in his mirror.
Oh, the rabbit hole goes WAY, WAY deeper I fear. $21 TRILLION dollars are missing and unaccounted for, most from the DoD. And when a concerned US patriot (as in this interview below), a professor of finance, trys to get answers, there is dead silence from the Department of the Treasury and DoD comptrollers. Seriously, where is the outrage? These are almost unimaginable numbers folks.
I think you got it right. The timing of this merger which would never happen with a Warren or Sanders presidency will enable escalation of political influence by lobbyists and of course, ensuring that at least one component of every weapon system will be made in each of the 435 congressional districts to ensure support for future DOD budgets.
As Rob Urie points out on CounterPunch, the true extremists here are not the Squad. They are the Rep/Dem duopoly who promote our obscene nuclear war machine to the tune of trillions, and who piously intone the absurdities justifying it. They are leading us to rapid oblivion: All of humankind and its artifacts, a failed experiment. Back to the drawing board, Evolution!
the politicians who question this madness are discredited as disloyal or delusional
the killing economy goes on until its companion neocon foreign policy blows up the world unless it bankrupts us first
it will not end well
It’s basically the same as it always was: go against those with the most power, end up with your head on a stick. “Truth” is a PR term as it has been for hundreds of years – if not longer.
One and one half percent of the Military Budget would give everyone free college. Of course that is called “pie in the sky” socialism. Could we end endless Wars (6.2 Trillion and counting for THE WAR ON TERROR, which has increased terror) and invest in a future educated work force. Of course not, an educated workforce MIGHT NOT be docile workers and citizens.
Maybe in 2020 the Democrats could nominate someone who would take back “our” government. VOTE PROGRESSIVE (and that ain’t Joe Biden).
Nothing will change unless the two-horse race (or two wings of the same bird) political system changes. The Democrats won’t bring about any major changes, just like if they do get in the Republicans won’t be there to “taking back “our” government” either.
(For the record I’m not an American, but the countries I live in/have lived in have the same problems, e.g. the UK, NZ and Oz., as do many so called democracies… how did that happen?)
1. The restoration of democracy requires isolating all of its institutions from economic influence.
That includes eliminating the revolving doors, and bribes via shell corporations and political parties.
Politicians and their relatives and associates must be monitored for life, with heavy penalties for bribes.
Strong controls must isolate mass media from economic or political control, and ensure viewpoint balance.
The restoration of democracy requires controls that we cannot even advocate, because it is too late.
2. Moving the MIC budget to productive uses may be easier if the people are moved with it.
About 80% of the MIC can be re-purposed to construction projects, domestic and foreign.
A US version of BRI through Mexico and Central/South America could link local development projects.
But that wouldn’t promote Israeli land thefts, or give a sense of personal dominance to ignorant thugs.
LA Times, 6 days ago: [my edits re-order paragraphs] The $41.9 million had been destined for Guatemala and Honduras, two of three countries in Central America’s so-called Northern Triangle, an impoverished and violence-ridden region that accounts for the majority of migrants now fleeing to the United States. [but they are]being diverted [to] go to Guaido and his faction, the memo said, to pay for their salaries, airfare, “good governance” training, propaganda, technical assistance for holding elections and other “democracy-building” projects.
And Guaido groupies have shortage of money for some reasons.
The Telegraph, 5 days ago:
Venezuelan opposition leader Juan Guaido has launched an investigation after two members of his team allegedly stole money destined to help deserting Venezuelans soldiers in Colombia.
The pair, Kevin Rojas and Rossana Barrera – sister-in-law of opposition politician Sergio Vergara, Mr Guaido’s right-hand man – are accused of taking the money designated for supporting Venezuelans in the Colombian border town of Cucuta and blowing it on hotels, clubs, designer clothes and cars.
There were some stories months ago that “opposition” promised lodging and salaries to defecting Venezuelan soldiers, and then the few hundreds of naive defectors were given ca. 100 bucks each and were booted out of motels after a week. Another story was about Guaido crony in Cucuta who died of drug overdose, apparently slipped to him by a prostitute. But now we can be happy that a boondoggle in Honduras (seems no traces of positive effects there) will moved further away from our border, “democracy building” in Colombia, from where the pre-fabricated pieces of “democracy” will (??) be eventually moved to the intended destination in Venezuela.
It is even difficult to write a satire on beneficent foreign activities of USA.
Yes, it is amusing that US administrations so dedicated to “democracy” care so little for foreign peoples as to “donate” only weapons, and only to anti-democratic forces, and never consider actually helping those countries economically, preferring to leave them in ruins after genocides. The rich have the same intentions for the People of the United States.
It goes without saying that this merger will sail through the absurdly named “regulatory” process. The bribes are already spread around in thick slabs into greasy hands, the stock market is set to ignite in a volcano of profit for a tiny group of the obscenely rich and the popping the corks on exorbitantly priced champagne bottles will echo through the corridors of psychopathic heaven.
There is no stopping the juggernaut of out of control corporate greed that speeds toward the destruction of the planet. Meanwhile, the corporate elites in the government will praise capitalism as the greatest system in the greatest country in the world. The corporations have their icy fingers at the throat of a White House, Congress and the courts in the US that no longer have any legitimacy.
Looking to the two-party dictatorship to produce the next hope and change charlatan is a fool’s errand. Both big-business parties are co-opted by an oligarchy that shelters the most retrograde and criminal elements of the entire planet. We must stop pleading for the dominant class to rein in the greed, wars and stupidity that are the hallmarks of an illegitimate government.
The working class cannot win a violent conflagration against the rogue state. We must use cunning and stealth with boycotts, general strikes and sabotage that kills the system of greed and exploitation that spreads its tentacles across the globe.
Well said, Eddie. I would like to see recent examples of “cunning and stealth with boycotts, general strikes and sabotage that kills the system of greed.” It appears to me that the US is in for a century of increasing isolation and economic decline, after which a series of depressions due to corruption may finally bring the exploited into poverty and activism.
The US/NWO is made up of these Conglomerate Corporations and with the Federal Reserve printing all the money they want – without any checks or balances – it will continue to grow. Remember when the USG went after Gates/Microsoft for ” monopolizing ” his Intel conglomerate ? LOL – it all ended with Gates giving the USG – a super back door to the CIA, Intel agencies and giving every other swingin dic the key. Lockheed Martin is the State Dept. – it hires the Embassy staff to fit the CIA offices that live there. The freemason/illuminati/Zios got the US by the nuts until – they give it up. Sorry.
No better use for all that money???
Thank you Mr Hartung for this exceedingly depressing, but hardly surprising, information.
One can only conclude, and not in any new way, that the country is ruled by hypocritical psychopaths, who along with HRC, cackle at the thought of all of those who are killed by our bombs, shells, depleted uranium and what have you; they cackle not only because they are heartless, immoral and unethical buggers but more so because they are making oodles of boodle for themselves and their cronies by doing so. And they cover their cackles, most of the time, with the shoddy two-faced curtains of “humanitarian intervention,” “bringing democracy to this or that authoritarian regime” garbage.
Lobbying needs to be recognized for what it is: “legitimized” bribery and corruption; and outlawed because it is this – the buying of power. And all elections in this country need to be freed from corporate, foundation and like body monies. They should be funded simply by taxation (and if the corporate capitalist ruling elites want to “contribute” then they should fork out the taxes) and television time be granted to what in the UK used to be openly called “party political broadcasts.”
And the Pentagon and the nuclear stockpile here need to shrink tremendously. If they are, as they declare themselves to be, Defense then there is no need for the behemoth that either presently is. None.
The world needs a “Social Welfare Industrial Complex.” The problem is that the likes of all social institutions have been attacked as stepping stones to Stalinism and Maoism. When government power is used improve society with basic human needs: Housing, Food Security, Education, Health Care, Environmental Stewardship, and Retirement Security all the people “win.” Contrary to the Von Mises/Hayek/Rand libertarians theories, there are plenty of successful examples of governments in the world striking a balance between economic sectors that are best served by centralized non-profit agencies and economic sectors best served by private industry.
This MIC merger can only lead to a larger stranglehold on the American taxpayer and more world violence- terrorism brought to places like Syria, Yemen, Northern Africa, South America, and countless other places as a simple function of cartel capitalism. The “product” or “inventory” of defense corporations needs to be either stockpiled or used up (and stockpiles are bad for business… so, likely those few who profit from the industry will use their power to sell, sell, sell.
The American industrial worker, corporate layoff-ee, and farmer has been told (when their jobs were lost) to adapt and find a new means of contributing to society. Adaptation and innovation in response to market, social, environmental, or technological changes is one of the key philosophical underpinnings of market capitalism. Yet, too-big-to-fail entities bypass the supposed “self-regulating” consequences of a free market.
Ironically, the “winners” of cartel capitalism will ruin the entire system and the genuine good that it can do for a free society.
And the winners are!!! Oil & Gas, Insurance, Wall St, Pharmaceuticals, Big Food (Monsanto, Cargill), Amazon, Google, FB, and the Military Industrial Complex!!
Does anyone see a way out of this… the control by a handful of elites and the monster industries they represent?
We have history’s worst imperialist aristocracy, and none of the tools of democracy to reform it. A strong Russia-China axis of combined socialist-market economics could provide the model for reform. After a century of increasing isolation and decline, a series of depressions due to corruption may finally bring the exploited into real poverty and activism. Anything bad that happens to the US until then is good for the US in the long run.
Mergers are somewhat irrelevant. We can have a mother-saw model with a dozen piglet sucking the tits, or she-bear model with two-three much larger cubs. At the end of the day, the total procurement funds are limited by budgetary contingencies, and already bloated several times beyond necessary.
Taxpayer taking care of merger costs or not makes minute difference in the procurement budget exceeding 100 billion. If anything, the number of “top posts” that companies can offer to Pentagon alumni gets smaller after a merger, but the number of “important posts” is the same. Ditto with lobbying and campaign contributions.
I never heard about companies lobbying against each other on important points. Say, makers of conventional arms carping that the nuclear program is a waste with its chase for a mirage of secure first strike instead of simple maintaining the store of weapons that is much larger that the needs of MAD with some minimal improvements AND treaties against an arms race of anti-missile systems against more elusive attack weapons etc. This is a bottomless pit that can swallow any funds thrown into it.
And the description of the conventional mission of the military is absurdly expansive (and expensive) as well. This two-headed absurdity is cemented by Atlantic consensus bolstered by think tanks, government alumni in academia and, of course, lobbyists.
Yet back on January 17 1961 many a citizen after hearing Ike’s MIC farewell warning thought the ‘Kansas Cyclone’ General Ike had grown soft in his old years.
Here is an article that looks the compensation packages for the Chief Executive Officers of America’s largest defense contractors :
If it weren’t for the unfettered generosity of American taxpayers and Washington’s endless war stance, these individuals would be much less wealthy.
While Trump’s preoccupation with military “toys” is disconcerting, it is hardly out of line with his predecessors. The bipartisan INCREASE in the military budget over that requested by Trump, the incompetence and lies that gave us Afghanistan and Iraq (rather than a simple policing operation required by 9/11) under Bush/ Cheney, the 500,000 children killed by sanctions under Madeline Albright and Bill Clinton an invasions of Russia’s shere of interest in Yugoslavia (while ignoring genocide in Rwanda), Obama’s expansion of the wars to Yemen, Syria, Libya, Sudan and Somalia, and his National Emergencies including Venezuela and the Ukraine (where he set up a NAZI government) and Hillary’s support of a military coup in Honduras (not called a “coup” as that automatically cut off funding). So far the bumbling, bellowing Trump with his deranged henchmen (which he frequently ignores) has failed to start more wars, and if not for the DNC, Hillary and the MSM, would have detente with Russia by now. If his bluster and saber-rattling continues to avoid the expansion of military adventures that happened under Obama/Hillary, the world will be a better place. Unlikely given those around him and America’s warmongering bloodlust in general, but we have even seen threats of “No War in Iran!” by Congress (a positive anti-Trump move); were these people all asleep under Obama?
Yeah, good luck with that. When I think about this the only thing that I can think is the tune with the line in it – There’s a hole in daddy’s arm where all the money goes…..