Sam Pizzigati: War is wonderful for American military contractors

Raytheon headquarters in Waltham, Mass.

Via OtherWords.org

BOSTON

In the 21st Century, many of us are used to the murderous mass violence of modern warfare.

After all, we grew up living it or hearing about it. The 20th Century rates as the deadliest in human history — 75 million people died in World War II alone. Millions have died since, including a quarter-million during the 20-year U.S. war in Afghanistan.

But for our forebears, the incredible deadliness of modern warfare came as a shock.

The carnage of World War I — with its 40 million dead — left people scrambling to prevent another horror. In 1928, the world’s top nations even signed an agreement renouncing war as an instrument of national policy.

Still, by the mid-1930s the world was swimming in weapons, and people wanted to know why.

In the United States, peace-seekers followed the money to find out. Many of America’s moguls, they learned, were getting rich off prepping for war. These “merchants of death” had a vested interest in the arms races that make wars more likely.

So a campaign was launched to take the profit out of war.

On Capitol Hill, Senate Democrats set up a committee to investigate the munitions industry and named a progressive Republican, North Dakota’s Gerald Nye, to chair it. “War and preparation for war,” Nye noted in 1934, had precious little to do with “national defense.” Instead, war had become “a matter of profit for the few.”

The war in Afghanistan offers but the latest example.

We won’t know for some time the total corporate haul from the Afghan war’s 20 years. But Institute for Policy Studies analysts Brian Wakamo and Sarah Anderson have come up with some initial calculations for three of the top military contractors active in Afghanistan from 2016-2020.

They found that total compensation for the CEOs alone at these three corporate giants — Fluor, Raytheon and Boeing — amounted to $236 million.

A modern-day, high-profile panel on war profiteering might not be a bad idea. Members could start by reviewing the 1936 conclusions of the original committee.

Munitions companies, it found, ignited and exacerbated arms races by constantly striving to “scare nations into a continued frantic expenditure for the latest improvements in devices of warfare.”

“Wars,” the Senate panel summed up, “rarely have one single cause,” but it runs “against the peace of the world for selfishly interested organizations to be left free to goad and frighten nations into military activity.”

Do these conclusions still hold water for us today? Yes — and in fact, today’s military-industrial complex dwarfs that of the early 20th century.

Military spending, Lindsay Koshgarian, of the IPS National Priorities Project, points out, currently “takes up more than half of the discretionary federal budget each year,” and over half that spending goes to military contractors — who use that largesse to lobby for more war spending.

In 2020, executives at the five biggest contractors spent $60 million on lobbying to keep their gravy train going. Over the past two decades, the defense industry has spent $2.5 billion on lobbying and directed another $285 million to political candidates.

How can we upset that business as usual? Reducing the size of the military budget can get us started. Reforming the contracting process will also be essential. And executive pay needs to be right at the heart of that reform. No executives dealing in military matters should have a huge personal stake in ballooning federal spending for war.

One good approach: IIlinois Rep. Jan Schakowsky’s Patriotic Corporations Act.

Among other things, that proposed law would give extra points in contract bidding to firms that pay their top executives no more than 100 times what they pay their most typical workers. Few defense giants come anywhere close to that ratio.

War is complicated, but greed isn’t. Let’s take the profit out of war.

Boston-based Sam Pizzigati co-edits Inequality.org at the Institute for Policy Studies. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win.

Chris Powell: Military-industrial complex is fine with Conn. delegation

This building in the affluent Hartford suburb of Farmington, Conn., was United Technologies’ headquarters in 2015-2020.

— Photo by Daniel Pennfield

MANCHESTER, Conn

In his farewell address 60 years ago President Dwight D. Eisenhower warned against what he called "unwarranted influence, whether sought or unsought, by the military-industrial complex." Since he was a military hero, perhaps only Eisenhower could give such a warning during the Cold War without risking denunciation as a Communist.

But Eisenhower's warning has never been heeded, and President Biden, with his defense secretary, is essentially proclaiming the victory of the military-industrial complex. The new secretary is retired Army Gen. Lloyd Austin, who upon leaving the Army a few years ago joined the board of directors of military contractor and Waltham, Mass.-based Raytheon Technologies Corp., which recently acquired Connecticut-based United Technologies Corp. Austin will have to sell Raytheon stock he received for serving on the board. It may net him as much as $1.7 million.

Acknowledging what will be his continuing potential for conflict of interest, Austin pledges to avoid decisions involving Raytheon for a year. But this can't worry Raytheon much about its investment in the general, since the corporation plans to be doing government business a lot longer than that.

With Austin at Defense and former Federal Reserve Chair Janet Yellen becoming Treasury secretary after receiving at least $7 million in speaking fees from big banks and investment houses in the last three years, the federal government's two most lucrative agencies will have been securely captured by their primary beneficiaries.

With the exception of Sen. Richard Blumenthal, the members of Connecticut's congressional delegation -- all supposed liberals -- are fine with this exploitation. After all, the state is full of investment bankers and military contractors and what's good for them may be considered good for the state. As for the country, that's something else.

Even Blumenthal's concern about Austin probably became a mere quibble. Federal law prohibits military officers from becoming defense secretary until they have been out of uniform for seven years, so Austin needed a waiver from Congress. Such waivers have been granted twice before. Blumenthal said that to uphold the principle of civilian control of the military, he opposed another waiver. But few other members of Congress objected to it, and Blumenthal and those others still had it both ways, voting against the waiver and then voting to appoint Austin once the waiver is granted.

Besides, with the Democrats in full control of the federal government, conflicts of interest and civilian control will barely register against the party's new highest objective in Cabinet appointments -- racial, ethnic and gender diversity. Austin is Black and so meets the decisive qualification.

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PAY AS YOU THROW?: The administration of Connecticut Gov. Ned Lamont seems to have determined that state government no longer can make any money by burning trash to generate electricity at the state Materials Innovation and Recycling Authority's facility in the South Meadows section of Hartford. Such generation apparently is now much more expensive than electricity generated from natural gas, and the facility's equipment already needs renovation estimated to cost more than $300 million.

So the authority plans to close the facility by July 2022, turning it into a trash-transfer depot and shipping to out-of-state dumps the trash now being burned. This is not only retrograde environmental policy; it likely will raise costs for the authority's 70 client towns. As a result the authority and the towns are discussing how to reduce their "waste streams" -- possibly by charging residents a fee for every bag of trash collected, a system called "pay as you throw."

There would be some sense to this, since it would cause people to take more responsibility for their trash, the packaging of what they buy, and recycling. But this also would increase the risk of illegal dumping, even as Connecticut's roadsides and city streets are already strewn with trash.

It might be best for state or federal sales taxes or fees to recover in advance the disposal costs of everything sure to wear out, as the state already does with beverage containers and mattresses and used to do with tires.

Government needs to teach people more about the trash issue. But all that roadside litter suggests that many people are unteachable slobs.

Chris Powell is a columnist for the Journal Inquirer, in Manchester, Conn.

Don Pesci: The coronavirus, King Ned and the Conn. economy

VERNON, Conn.

While Connecticut’s Democratic-dominated General Assembly was napping, Raytheon, formerly United Technologies (UTC), announced it was cutting 15,000 commercial aerospace jobs. The cuts will affect Pratt & Whitney and Collins Aerospace. Raytheon CEO Greg Hayes, who moved UTC’s headquarters to the Boson area following UTC’s merger with Raytheon, figures that it will take at least three years for the air travel business to recover.

According to the report, Raytheon had seen “aircraft and pentagon orders surging” before the move. The company said it had “planned to hire 35,000 workers over five years.” And now? Raytheon’s defense sector, Hayes said, is still strong – owing to Trump military procurements. However, as of Sept. 4, commercial air traffic was down about 45 percent globally. To save costs, airlines are “deferring maintenance,” which hurts Pratt & Whitney, based in East Hartford, Congressman John Larson’s bailiwick.

Two questions present themselves: 1) Are the airline restrictions that Gov. Ned Lamont deployed in Connecticut at least partly responsible for the job losses related to a reduction of airline traffic? And 2) Will politicians such as Larson suffer because of these policies?

The answer to 1) is: A policy that discouraged air travel through the imposition of unusual restrictions – passengers coming from restricted states were required to self-quarantine for 14 days if they had not submitted to a Coronavirus test – certainly does not help. And the answer to 2) is: Nothing short of a nuclear winter in gerrymandered districts such as Larson’s 1st District and Rosa DeLauro’s 3rd District may interrupt their political careers, although this year DeLauro, a fashion maven  who has spent nearly 40 years in Congress, has a worthy opponent in Republican Margaret Streicker.

The Lamont directives are not only unusual; they interrupt normal business activity, do not provide uniform continuity of political action, may be unconstitutional, and are whimsical and palliative rather than curative.

The real cure for political action that hurts entrepreneurial activity in Connecticut – how is any restaurant to survive when it is being ordered to reduce its seating by half? – is to put a halter on runaway gubernatorial directives. And this cannot be done in the absence of a General Assembly that has been put in “park” for the last half year. There are some faint indications that, at some point down the road -- possibly after the 2020 elections, during which all the seats in the General Assembly will once again be secure in Democratic hands -- the state may return to some sort of normalcy. The real threat facing Democrats is not that the Coronavirus will mutate into the Red Death, but rather that Democrats, who have refashioned Connecticut into a quasi-socialist wonderland, may lose their majority status in both houses of Connecticut's recumbent General Assembly.

The signs of the times, at least in Connecticut – no longer the pearl in New England’s crown -- suggest a continuation of ruinous business policies. Connecticut’s General Assembly – more properly a fistful of Democratic legislators, a rump legislature – has just extended Lamont’s extraordinary powers by five months. Those powers allow Lamont to open and shut Connecticut’s entrepreneurial valves at will, and businesses, we know, react with horror at uncertainty.

We may well ask for whom is this a problem? Qui bono? Who profits by it -- certainly not representative government? Among Connecticut journalists, only Chris Powell, for many years the managing editor of the Journal Inquirer, in Manchester, seems to be troubled by Connecticut’s highly unorthodox political arrangement. Powell suspects that Democratic-run government, rather than democratic government, is the principal beneficiary of the new, now nearly year-long constitutional re-configuration.

The extension of arbitrary gubernatorial directives allow Democrats to claim hero status at both ends of the politically caused pandemic. Through the imposition of fickle gubernatorial powers, the governor saves us from a fate worse than death; and, by calibrating the business closures, he appears to be saving us from the economic pandemic he and his Democrat do-nothing compatriots in the General Assembly have caused. The German critic Karl Krauss once described Freudian psychology as “the disease it purports to cure.” Similarly, the inscrutable and lawless Lamont business shutdown is the disease he and other heroic Democrat legislators are now purporting to cure – by partly opening the businesses they have closed through dubious constitutional means.  

Lamont is not up for re-election in 2020, but all the members of Connecticut’s General Assembly will be on the political chopping block next month.. So Lamont is content to take the political thwacks for the time being; the memories of average Connecticut voters are short-lived, and any autocratic directive issued by Lamont, both in the recent past and for the un-foreseeable future, will not bear the fingerprints of Democrat legislators, many of whom will be left unpunished in the coming elections.

It is doubtful that any directive issued by “King Ned” will benefit anyone but autocratic politicians. All such directives destroy creative solutions by restricting normal business decisions to a governor who cannot be corrected by either the legislative or judicial branches of government. A deliberative legislature may produce far superior solutions than those forcibly imposed by Lamont and his close advisers on the entire state, no corner of which is now represented by members of the General Assembly pretending that they are doing their jobs.

Most recently, the Hartford Symphony has furloughed all of its musicians; restaurants are closing; the workforce at Pratt & Whitney will be reduced; principals and superintendents of public schools lack uniform direction from a government that appears to be operating on the throw of dice; and at some point down the line an exhausted public, frustrated and powerless, will turn against its self-appointed benefactors.

There are two incalculable benefits in hitting bottom: 1) the bottom marks the end of the downward fall, and 2) those who hit bottom know that the way up lies in an opposite direction.

Don Pesci is a Vernon-based columnist.

Sarah Anderson: Defense contractors and the joys of war profiteering

Raytheon headquarters, in Waltham, Mass.

From OtherWords.org

Experts predict as many as a million people could die if the current tensions lead to a full-blown war. Millions more would become refugees across the Middle East, while working families across the U.S. would bear the brunt of our casualties.

But there is one set of people who stand to benefit from the escalation of the conflict: CEOs of major U.S. military contractors.

This was evident in the immediate aftermath of the U.S. assassination of a top Iranian military official on January 2. As soon as the news reached financial markets, these companies’ share prices spiked.

Wall Street traders know that a war with Iran would mean more lucrative contracts for U.S. weapons makers. Since top executives get much of their compensation in the form of stock, they benefit personally when the value of their company’s stock goes up.

I took a look at the stock holdings of the CEOs at the top five Pentagon contractors (Lockheed Martin, Boeing, General Dynamics, Raytheon and Northrop Grumman).

Using the most recent available data, I calculated that these five executives held company stock worth approximately $319 million just before the U.S. drone strike that killed Iranian leader Qasem Soleimani. By the stock market’s closing bell the following day, the value of their combined shares had increased to $326 million.

War profiteering is nothing new. Back in 2006, during the height of the Iraq War, I analyzed CEO pay at the 34 corporations that were the top military contractors at that time. I found that their pay had jumped considerably after the September 11 attacks.

Between 2001 and 2005, military contractor CEO pay jumped 108 percent on average, compared to a 6 percent increase for their counterparts at other large U.S. companies.

Congress needs to take action to prevent a catastrophic war on Iran. De-escalating the current tensions is the most immediate priority.

But Congress must also take action to end war profiteering. In 2008, John McCain, then a Republican presidential candidate, proposed capping CEO pay at companies receiving financial bailouts. He argued that CEOs relying on taxpayer funds should not earn more than $400,000 — the salary of the U.S. president.

That commonsense notion should be extended to all companies that rely on massive taxpayer-funded contracts. Sen. Bernie Sanders, for instance, has a plan to deny federal contracts to companies that pay their CEOs excessively. He would set the CEO pay limit for major contractors at no more than 150 times the pay of the company’s typical worker.

Currently, the sky’s the limit for CEO pay at these companies — and the military contracting industry is a prime offender. The top five Pentagon contractors paid their top executives $22.5 million on average in 2018.

CEO pay restrictions should also apply to the leaders of privately held government contractors, which currently don’t even have to disclose the size of their top executives’ paychecks.

That’s the case for General Atomics, the manufacturer of the MQ-9 Reaper that carried out the assassination of Soleimani. Despite raking in $2.8 billion in taxpayer-funded contracts in 2018, the drone maker is allowed to keep executive compensation information secret.

We do know that General Atomics CEO Neal Blue has prospered quite a bit from taxpayer dollars. Forbes estimates his wealth at $4.1 billion

War is bad for nearly everyone. But as long as we allow the leaders of our privatized war economy to reap unlimited rewards, their profit motive for war in Iran — or anywhere — will persist.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and co-edits Inequality.org.