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Tomgram: Harris, Stimpson, and Freeman, The Military-Industrial Jobs Scam

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This article originally appeared at TomDispatch.com. To receive TomDispatch in your inbox three times a week, click here.

Imagine this for a moment: the bipartisan debt and budget bill just passed by the House of Representatives and the Senate will soon become the law of the land. In the next two years, that means, American taxpayers will spend a staggering $1.48 trillion (yes, trillion) on the U.S. military, the wars it fights, and the weaponry it wields. That's more than half -- $178.6 billion more, in fact -- of all projected discretionary government spending ($2.78 trillion) for those same two years. President Trump is already cheering -- or rather tweeting his congratulations. As Pentagon expert William Hartung wrote recently of the future military budget, "The proposed figures are higher than spending at the height of the Vietnam and Korean Wars, and substantially more than the high point of the Reagan buildup of the 1980s."

And keep two things in mind: the Trump administration asked for more money for the Pentagon ($750 billion in the upcoming budget alone) and even those sums don't cover the taxpayer dollars -- significantly more than a trillion of them -- that will go into funding the complete U.S. national security state, including its many intelligence agencies and the Department of Homeland Security. And keep in mind as well that staggering numbers of such dollars -- in 2017, the Costs of War Project at Brown University estimated them at $5.6 trillion -- have already been dumped into this country's remarkably unsuccessful wars on "terror" across the Greater Middle East and North Africa; wars that, almost 18 years later, from Afghanistan to Somalia, never seem to end. And don't forget either that so much of the rest of the money goes into what President Dwight D. Eisenhower quaintly called "the military-industrial complex" -- specifically, companies like Lockheed Martin that produce howlingly over-priced weaponry like the F-35 Joint Strike Fighter, the most expensive weapons system in history (and one that may never work as promised in actual combat).

For all of this, the payback to the American people is, of course, jobs from an industry that creates them like no other. Or does it? Today, TomDispatch regular Ben Freeman and two of his colleagues at the Center for International Policy, Nia Harris and Cassandra Stimpson, weigh in tellingly on this very subject -- and perhaps you won't be surprised to learn that, in return for your government not funding, say, infrastructure or education as they should be, American workers are getting nothing short of a genuine dirty deal. Tom

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More Money, Fewer Jobs
The Stubborn Truth About Employment and the Defense Industry
By Nia Harris, Cassandra Stimpson, and Ben Freeman

A Marilyn has once again seduced a president. This time, though, it's not a movie star; it's Marillyn Hewson, the head of Lockheed Martin, the nation's top defense contractor and the largest weapons producer in the world. In the last month, Donald Trump and Hewson have seemed inseparable. They "saved" jobs at a helicopter plant. They took the stage together at a Lockheed subsidiary in Milwaukee. The president vetoed three bills that would have blocked the arms sales of Lockheed (and other companies) to Saudi Arabia. Recently, the president's daughter Ivanka even toured a Lockheed space facility with Hewson.

On July 15th, the official White House Twitter account tweeted a video of the Lockheed CEO extolling the virtues of the company's THAAD missile defense system, claiming that it "supports 25,000 American workers." Not only was Hewson promoting her company's product, but she was making her pitch -- with the weapon in the background -- on the White House lawn. Twitter immediately burst with outrage over the White House posting an ad for a private company, with some calling it "unethical" and "likely unlawful."

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None of this, however, was really out of the ordinary as the Trump administration has stopped at nothing to push the argument that job creation is justification enough for supporting weapons manufacturers to the hilt. Even before Donald Trump was sworn in as president, he was already insisting that military spending was a great jobs creator. He's only doubled down on this assertion during his presidency. Recently, overriding congressional objections, he even declared a national "emergency" to force through part of an arms sale to Saudi Arabia that he had once claimed would create more than a million jobs. While this claim has been thoroughlydebunked, the most essential part of his argument -- that more money flowing to defense contractors will create significant numbers of new jobs -- is considered truth personified by many in the defense industry, especially Marillyn Hewson.

The facts tell a different story.

Lockheed Locks Down Taxpayer Dollars, While Cutting American Jobs

To test Trump's and Hewson's argument, we asked a simple question: When contractors receive more taxpayer money, do they generally create more jobs? To answer it, we analyzed the reports of major defense contractors filed annually with the U.S. Securities and Exchange Commission (SEC). Among other things, these reveal the total number of people employed by a firm and the salary of its chief executive officer. We then compared those figures to the federal tax dollars each company received, according to the Federal Procurement Data System, which measures the "dollars obligated," or funds, the government awards company by company.

We focused on the top five Pentagon defense contractors, the very heartland of the military-industrial complex, for the years 2012 to 2018. As it happened, 2012 was a pivotal year because the Budget Control Act (BCA) first went into effect then, establishing caps on how much money could be spent by Congress and mandating cuts to defense spending through 2021. Those caps were never fully adhered to. Ultimately, in fact, the Pentagon will receive significantly more money in the BCA decade than in the prior one, a period when the American wars in Afghanistan and Iraq were at their heights.

In 2012, concerned that those caps on defense spending would cut into their bottom lines, the five top contractors went on the political offensive, making future jobs their weapon of choice. After the Budget Control Act passed, the Aerospace Industries Association -- the leading trade group of the weapons-makers -- warned that more than one million jobs would be at risk if Pentagon spending were cut significantly. To emphasize the point, Lockheed sent layoff notices to 123,000 employees just before the BCA was implemented and only days before the 2012 election. Those layoffs never actually happened, but the fear of lost jobs would prove real indeed and would last.

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Consider it mission accomplished, since Pentagon spending was actually higher in 2018 than in 2012 and Lockheed received a sizeable chunk of that cash infusion. From 2012 to 2018, among government contractors, that company would, in fact, be the top recipient of taxpayer dollars every single year, those funds reaching their zenith in 2017, as it raked in more than $50.6 billion federal dollars. By contrast, in 2012, when Lockheed was threatening its employees with mass layoffs, the firm received nearly $37 billion.

So what did Lockheed do with those additional $13 billion taxpayer dollars? It would be reasonable to assume that it used some of that windfall (like those of previous years) to invest in growing its workforce. If you came to that conclusion, however, you would be sorely mistaken. From 2012 to 2018, overall employment at Lockheed actually fell from 120,000 to 105,000, according to the firm's filings with the SEC and the company itself reported a slightly larger reduction of 16,350 jobs in the U.S. In other words, in the last six years Lockheed dramatically reduced its U.S. workforce, even as it hired more employees abroad and received more taxpayer dollars.

So where is all that additional taxpayer money actually going, if not job creation? At least part of the answer is contractor profits and soaring CEO salaries. In those six years, Lockheed's stock price rose from $82 at the beginning of 2012 to $305 at the end of 2018, a nearly four-fold increase. In 2018, the company also reported a 9% ($590 million) rise in its profits, the best in the industry. And in those same years, the salary of its CEO increased by $1.4 million, again according to its SEC filings.

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Tom Engelhardt, who runs the Nation Institute's Tomdispatch.com ("a regular antidote to the mainstream media"), is the co-founder of the American Empire Project and, most recently, the author of Mission Unaccomplished: Tomdispatch (more...)
 

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