Trump Is Bankrupting Our Nation to Enrich the War Profiteers
http://www.truth-out.org/news/item/39712-trump-is-bankrupting-our-nation-to-enrich-the-war-profiteers
Trump Is Bankrupting Our Nation to Enrich the War Profiteers
Monday, March 06, 2017By Jonathan King and Richard Krushnic, Truthout | News Analysis
(Photo: Peter Guilliatt)
President Trump's calls for a military buildup are opening the fiscal floodgates for congressional hawks and defense industry contractors. On January 27, Trump signed an executive order setting in motion a "great rebuilding of the Armed Forces" that will include new ships, planes and weapons and the "modernization" of the US nuclear arsenal. Presently, more than half of this year's congressional budget -- some $610 billion of our income tax dollars -- is allocated to Pentagon accounts, including overseas military operations and nuclear weapons.
Though the details were scarce, we can expect the Trump order to align with the proposals of Sen. John McCain, chair of the Armed Services Committee. As reported in Politico, Senator McCain is now calling for large increases in this already bloated budget, to $640 billion for fiscal year 2018 -- $54 billion above the current budget projections. Adding in the $60 billion projected spending for Iraq, Afghanistan, Syria and other interventions could bring total Pentagon spending next year to more than $900 billion. The primary beneficiaries of such a buildup will be the large corporations that dominate weapons contracting.
This is likely to be more than 60 percent of the total congressional discretionary budget. For comparison, the National Institutes of Health budget, which funds biomedical research on all the diseases that afflict tens of millions of Americans, is about $33 billion, less than 3 percent of the congressional budget. By fiscal year 2022, defense appropriations would reach $800 billion.
Trump's tweets calling to limit the costs on the deeply troubled and over-budget F-35 Joint Strike Fighter have led to some optimism regarding his Pentagon spending plans. But mildly limiting the excessive profits to Lockheed Martin and their subcontractors, by tens or even hundreds of millions, is a very small effect when overall spending is increased by hundreds of billions.
Excessive Pentagon Spending Undermines the Civilian Economy
In addition to increasing the national debt, such a program will require cutting every sector of the civilian side of the budget -- housing, transportation, environmental protection, biomedical research, education and health care. For many years, caps on these programs have continued to weaken them. The current proposal will essentially bankrupt the federal contribution to the civilian side of the economy.
The longer-term effects on the national economy are often obscured but will be even more devastating. Weapons don't house us, don't clothe us, don't help us get to work and don't cure our diseases. Thus, in the long run, they drain resources away from productive investments, deeply undercutting the overall health of the economy.
Dangers of Nuclear Weapons "Modernization"
Perhaps the most dangerous effect of Trump's plan is the further modernization of the nuclear weapons triad. Great damage can be done with conventional weapons to people and their communities. But the increased investment in nuclear weapons increases the chances of inadvertent or intentional nuclear war. The resulting catastrophic damage to human society and to the planet will likely be irreversible. We share the concern with many defense experts, such as former Defense Secretary William Perry, that this modernization will increase the anxieties of Russia, China and other nations, and increase the chance of an accidental launch. The launching of the missiles from a single Trident class submarine would obliterate every major city in any adversary nation. If that nation were Russia, the retaliatory response, following in minutes to hours, would obliterate every city on the East Coast of the United States.
Rutgers Climate Scientist Alan Robock and his colleagues have shown that even a limited exchange -- for example between India and Pakistan -- would generate firestorms throwing enough soot and particles into the upper atmosphere to generate a nuclear winter, lowering the Earth's temperature and creating worldwide famine for decades following.
The Role of Weapons Contractors
We have previously argued that it is the guaranteed profits from nuclear weapons manufacture that leads contractors to resist nuclear disarmament and promote the concept of danger from abroad.
The profitability derives from three distinct aspects of such weapons contracts:
- First, they cannot be outsourced to lower cost suppliers, such as in China or Mexico, by congressional edict.
- Second, the contracts are cost-plus. That is, no matter what the companies spend on the manufacture, they are guaranteed a healthy profit on top. And, of course, the more they run up the costs, the more they make.
- And third, the contracts are screened from oversight, such as proper audits, by national security considerations.
The current 2017 congressional military authorization calls for spending of some $350 billion over the next decade for upgrades of our nuclear weapons ($35 billion a year) -- land-based missiles in silos, long-range bombers and their bombs, new Trident submarines and upgraded Trident missiles and new nuclear-capable cruise missiles. The so-called "modernization" program that Trump supports will spend more than $1 trillion -- a thousand billion -- income tax dollars over the next 30 years.
Given that the Soviet Union no longer exists, that China has become a capitalist economy and that the major difficulties faced abroad are ISIS (also known as Daesh) and related groups, it is deeply questionable why the congressional budget still devotes tens of billions of dollars to Cold War-era nuclear weapons. Yet the Trump administration is proposing to spend a trillion dollars or more over the next three decades upgrading the US nuclear weapons triad.
Where does the pressure for these wasteful and provocative programs -- which almost certainly decrease national security -- come from? While military high command and the intelligence agencies also press for nuclear weapons upgrades, corporate profits derived from nuclear weapons contracts may be the most powerful driving force, supported by members of Congress with military research and development (R&D) and production facilities in their districts.
A closer look at Lockheed Martin, the largest weapons contractor in the world, reveals how this coupling between corporate profits and the continuation of nuclear weapons delivery programs operates.
Lockheed Martin Promotes Nuclear Weapons Upgrades and Potential Use
Corporations that contract with the Department of Defense (DOD) for nuclear weapons complex work do not report revenues and profits from this work separately from their other military work, although they do break up government work from civilian work, and sometimes break up military work from other government work. Hence, it is not possible to determine profits made from nuclear weapons complex work from the annual reports and Securities and Exchange Commission (SEC) filings of large military corporations. However, it is possible to estimate, and to demonstrate how a significant amount of military R&D and production not recorded as nuclear weapons work is in fact partially nuclear weapons work. The nuclear weapons work financed by the US Department of Energy (DOE) is (not surprisingly) carried out in a semi-secret insiders club that insulates it from public knowledge and oversight. The first contracts for the upgrading of the nuclear weapons triads have already been awarded -- one to Northrop Grumman -- for a new generation of long-range bomber. But the public remains in the dark as to how many tens of billions of their tax dollars will be spent on the project.
From 2012-2014, according to Lockheed Martin's 2014 annual report, the company realized an average of $46 billion a year in revenue, with an average of $3.2 billion in profits -- 7 percent of revenue, and a 76 percent return on $4.2 billion of investor equity. The annual report informs us that 59 percent of 2014 revenue came from the Pentagon. We know from other sources that $1.4 billion a year is coming from the DOE for operation of the Sandia nuclear weapons lab, and we are estimating that an additional $600 million a year is coming for DOE nuclear weapons complex work. Information in the annual report indicates that around $6.1 billion came from foreign military sales. This adds up to around $35 billion of military revenue, or 75.3 percent of total 2014 revenue. The single biggest revenue earner in recent years is the F-35 jet fighter, bringing in $8.2 billion, 17 percent of total corporation revenue, in 2014. (William Hartung's recent report describes additional aspects of Lockheed Martin's military business, and his book Prophets of War: Lockheed Martin and the Making of the Military Industrial Complex provides extensive background).
The only references to Lockheed Martin's nuclear weapons complex work in its 2014 annual report is a sentence noting provision of infrastructure and site support to the DOE's Hanford complex, and a phrase noting continuing work on the Trident missile. The words "nuclear weapons" never appear in the report.
Lockheed Martin's Nuclear Weapons Operations
In spite of the lack of mention in the annual report, Lockheed Martin is a partner with Bechtel ATK, SOC LLC and subcontractor Booz Allen Hamilton in Consolidated Nuclear Security LLC (CNS), in running the DOE Pantex Plant and the Y-12 Complex. Pantex does nuclear weapons life extension, dismantlement, development, testing and fabrication of high explosive nuclear warhead components. Y-12 stores and processes uranium, and fabricates uranium weapons components.
Lockheed Martin produced the Trident strategic nuclear missile for the 14 US Ohio-class nuclear submarines and for the four British Vanguard-class submarines. The 24 Tridents on each Ohio-class submarine each carry either eight or 12 warheads, all of them 20 to 50 times more powerful than the bombs dropped on Hiroshima and Nagasaki. Each warhead is capable of killing most of the people in any one of the world's largest cities -- either immediately or later, from radiation, burns, other injuries, starvation and disease. Lockheed MArtin is not producing new Trident missiles now, but it maintains and modifies them. Previously, Lockheed Martin and its subcontractors received $65 million for each of the 651 Trident missiles, in addition to the $35 billion in earlier development costs.
The other primary strategic nuclear weapon delivery vehicle is Boeing's land-based Minuteman III strategic missile, also with many warheads per missile. About 450 of them are in silos in Colorado and northern plains states. Lockheed Martin produced and continues to produce key systems for the Minuteman III, and plays a large role in maintaining them. It was awarded a $452 million contract for this work in 2014.
Lockheed's Sandia Subsidiary
Regarding the Pentagon's nuclear weapons upgrades planned for the next decade; particularly important is the role of Sandia National Laboratories (SNL). Outside of Albuquerque, New Mexico, this DOE lab's 10,600 employees make 95 percent of the roughly 6,500 non-nuclear components of all seven US nuclear warhead types. Components arm, fuse, fire, generate neutrons to start nuclear reactions, prevent unauthorized firing, preserve the aging nuclear weapons stockpile and mate the weapons to the missiles, planes and ships that deliver them to targets. Sandia Corporation LLC, wholly owned by Lockheed Martin, operates Sandia. The DOE is spending at least $1.4 billion a year on Sandia nuclear weapons work. The secret Lockheed Martin nuclear warhead assembly plant uncovered in Sunnyvale in 2010 is an extension of Lockheed Martin's Sandia operations. Again, none of this received any mention or revenue numbers in Lockheed Martin's 2014 annual report.
Lockheed Martin Used Pentagon Dollars to Lobby Congress for Nuclear Weapons Funding
One of the uses of the billions of dollars from these contracts is to recycle them back into lobbying the government to push for additional conventional and nuclear weapons spending, as reported by William Hartung and Stephen Miles. Of course, in addition, these funds are used to support a general environment of fear and insecurity, through contributions supporting hawkish think tanks. Technically, the federal government does not allow military contracting firms to use awarded funds to lobby Congress. Lobbying funds must come from other parts of the companies' businesses. In reality, this is a non-functional restriction, since profits from various business segments are fungible; that is, once they are profits, they are intermingled, so in reality, the firms can use the profits from military contracts to lobby Congress. But Lockheed Martin went ahead and spent military contract funds from 2008-2012 as part of the contract expenditures. It didn't even bother to book the lobbying expenditures as expenditures of profits. In 2015, the US Department of Justice required Lockheed Martin's Sandia subsidiary to repay $4.9 million of a Sandia contract award to the Pentagon that the firm had spent under the contract for lobbying of Congressman the DOE secretary and the secretary's family and friends.
Former Secretary of Defense William Perry's Warning
Former US Secretary of Defense William J. Perry, who served from 1994-1996, argues, "We are facing nuclear dangers today that are in fact more likely to erupt into a nuclear conflict than during the Cold War." He notes that the new US nuclear weapons modernization program and Russia's modernization program -- along with confrontations in Eastern Europe and the Middle East -- have begun a new nuclear arms race more dangerous than the Cold War. He sees "an imperative to stop this damn nuclear race before it gets underway again, not just for the cost but for the danger it puts all of us in."
Efforts to communicate to voters the role of weapons contractors in distorting national security policy are getting underway, following the lead of the European-based "Don't Bank on the Bomb" campaign. Last spring, the Cambridge City Council voted unanimously to request that the Cambridge pension funds divest from stocks in companies involved in the manufacture of nuclear weapons. Subsequently, the US Conference of Mayors passed a supporting resolution. These are small but important first steps in focusing attention on these corporate drivers of dangerous and costly nuclear weapons policies.
RICHARD KRUSHNIC
Richard Krushnic is a former real estate loan asset manager and housing and business contract analyst at Boston's Department of Neighborhood Development. He is currently involved in community development in Latin America and can be reached at rkrushnic@gmail.com.
JONATHAN KING
Jonathan King is a professor of molecular biology at MIT in Cambridge, Massachusetts, and chair of the Nuclear Abolition Committee of Massachusetts Peace Action. He can be reached at jaking@mit.edu.
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