Making Money on Terrorism
The Bush Administration's
"Leave no defense contractor behind"
by William D. Hartung
The Nation magazine, February
We all know that Halliburton is raking
in billions from the Bush Administration's occupation and rebuilding
of Iraq. But in the long run, the biggest beneficiaries of the
Administration's "war on terror" may be the "destroyers,"
not the rebuilders. The nation's "Big Three" weapons
makers- Lockheed Martin, Boeing and Northrop Grumman-are cashing
in on the Bush policies of regime change abroad and surveillance
at home. New York Times columnist Paul Krugman was on target when
he suggested that rather than "leave no child behind,"
the slogan Bush stole from the Children's Defense Fund, his Administration's
true motto appears to be "leave no defense contractor behind."
In fiscal year 2002, the Big Three received
a total of more than $42 billion in Pentagon contracts, of which
Lockheed Martin got $17 billion, Boeing $16.6 billion and Northrop
Grumman $8.7 billion. This is an increase of nearly one-third
from 2000, Clinton's final year. These firms get one out of every
four dollars the Pentagon doles out for everything from rifles
to rockets. In contrast, Bush's No Child Left Behind Act is underfunded
by $8 billion a year, with the additional assistance promised
to school districts swallowed up by war costs and tax cuts.
The bread and butter for the Big Three
are weapons systems like the F-35 Joint Strike Fighter (Lockheed
Martin), the F/A-18 E/F combat aircraft (Boeing/Northrop Grumman),
the F-22 Raptor (Lockheed Martin/Boeing) and the C- 17 transport
aircraft (Boeing). Northrop Grumman is also a major player in
the area of combat ships, through its ownership of the Newport
News, Virginia and Pascagoula, Mississippi, shipyards. All three
firms are also well placed in the design and production of targeting
devices, electronic warfare equipment, long-range strike systems
and precision munitions. For example, Boeing makes the Joint Direct
Attack Munition (JDAM), a kit that can be used to make "dumb"
bombs "smart." The JDAM was used in such large quantities
in the wars in Iraq and Afghanistan that the company has had to
run double shifts to keep up with Air Force ~ demand.
The Bush nuclear buildup-large parts of
which are funded out of the Energy Department budget, not the
Pentagon-is particularly good news for Lockheed Martin. The company
has a $2 billion-a-year contract to run Sandia National Laboratories,
a nuclear weapons design and engineering facility based in Albuquerque.
Lockheed Martin also works in partnership with Bechtel to run
the Nevada Test Site, where new nuclear weapons are tested either
via underground explosions-currently on hold due to US adherence
to a moratorium on nuclear testing-or computer simulations. Late
last year, Congress lifted a long-standing ban on research into
so-called "mini-nukes"- nuclear weapons of less than
five kilotons, about one-third the size of the Hiroshima bomb.
It also authorized funds for studies on a nuclear "bunker
buster" and seed money for a multibillion dollar factory
to build plutonium triggers for a new generation of nuclear weapons.
These new investments will be presided over by Everet Beckner,
a former Lockheed Martin executive who now heads the National
Nuclear Security Administration's nuclear weapons complex.
The Big Three are also poised to profit
from President Bush's plan to colonize the moon and send a manned
mission to Mars, both of which are stalking horses for launching
an arms race in space. Boeing and Lockheed Martin were already
well positioned in the military-space field through major contracts
in space launch, satellite and missile defense work, plus a partnership
to run the United Space Alliance, the joint venture in charge
of launches of the space shuttle. Northrop Grumman bought into
the field through its acquisition of TRW, a major space and Star
Wars contractor. The new presidential commission charged with
fleshing out Bush's space vision is being chaired by Edward "Pete"
Aldridge, the Pentagon's former Under Secretary of Defense for
Acquisition and a current member of Lockheed Martin's board of
directors. Meanwhile, over at the Air Force, the under secretary
in charge of acquiring space assets is Peter Teets, a former chief
operating officer at Lockheed Martin. His position was created
in accordance with the recommendations of the Commission to Assess
US National Security Space Management and Organization, an advisory
panel that published its blueprint for the militarization of space
just as Bush was taking office. The group, which included representatives
of eight Pentagon contractors, was presided over by Donald Rumsfeld
until he left to take up his current post as Bush's Defense Secretary.
Rumsfeld has been dutifully implementing the commission's recommendations
The Big Three are also wired into numerous
other sources of federal contracts for everything from airport
security to domestic surveillance, all in the name of fighting
what the White House now calls the GWOT (Global War on Terrorism).
The $20 billion-plus total that Lockheed Martin receives annually
is more than is spent in an average year on the largest federal
welfare program, Temporary Assistance for Needy Families, a program
that is meant to provide income support to several million women
and children living below the poverty line. Under Bush and company,
corporate welfare trumps human well-being every time.
One would think that with the military
budget at $400 billion and counting-up from $300 billion when
Bush took office- all would be well in the land of the military-industrial
behemoths, especially since the Pentagon budget is only one opportunity
among many. (The budget of the Department of Homeland Security
is $40 billion and counting, and the wars in Afghanistan and Iraq
have racked up $200 billion in emergency spending to date, over
and above normal Pentagon appropriations.)Yet in my discussions
with industry representatives at the June 2003 Paris Air Show
as well as in their recent behavior, I have detected an unmistakable
sense of desperation, a sense that even this embarrassment of
riches may not be enough to stabilize these massive companies.
On the desperation front, Boeing is head
and shoulders above its rivals. After losing the highly touted
"deal of the century''-the $300 billion F-35 Joint Strike
Fighter program- to its rival Lockheed Martin in 2001, the company
took a huge hit to its commercial-airliner business when a* travel
plummeted in the wake of the September 11 attacks. A bailout was
in order, and the company pulled out all the stops to create one
in the form of a deal that would have required the Air Force to
lease 100 Boeing 767s for use as aerial refueling tankers. As
initially crafted, the deal would have cost $26 billion over a
decade, $5 billion more than it would have cost to buy the planes
outright. Behind it was a group that included Senator Ted Stevens,
who used his clout as chair of the Senate Appropriations Committee
to insert an amendment into the Pentagon's budget specifically
requiring the lease arrangement; Secretary of the Air Force James
Roche, a former VP at Boeing's sometime partner Northrop Grumman,
Boeing senior vice president of Washington operations Rudy deLeon,
a former top official in Bill Clinton's Pentagon; and House Speaker
Dennis Hastert. Like most pork-barrel projects, the deal was a
mix of strategic thinking and self-interest. Roche made no bones
about the fact that part of the point was to throw some money
Boeing's way so that it would remain healthy. What you and I might
call a "bailout," folks in the Pentagon call "maintaining
the defense industrial base."
Boeing used every possible lever to get
the deal done. It hosted a fundraiser in Seattle for Stevens at
which Boeing executives threw $22,000 into his campaign coffers.
It enlisted Hastert, who had wooed the company to move its headquarters
to his home state of Illinois, to weigh in directly with President
Bush. Representative Todd Tiahrt, whose Wichita district includes
the Boeing plant that would retrofit the 767s for use as tankers,
raised the issue so often with Bush that the President nicknamed
him "Tanker Tiahrt." Members from Washington State,
home of Boeing's main production complex, also lobbied vigorously.
Defense Policy Board member and Rumsfeld pal Richard Perle wrote
an op-ed in favor of the deal for the Wall Street Journal- but
only after Boeing had invested $20 million in Trireme, a Perle
investment firm. Boeing sponsored the 2001 annual dinner of the
Jewish Institute for National Security Affairs, a neocon redoubt
with which Under Secretary of Defense Douglas Feith was closely
associated before joining the Administration. The honorees were
the secretaries of the three military services: The Air Force's
Roche, Navy Secretary Gordon England (formerly of General Dynamics)
and Army Secretary Thomas White (formerly of Enron). The host
for the evening was Boeing Washington office head Rudy deLeon.
For once all this influence-peddling may
go for naught. The deal is on hold thanks to relentless questioning
by Senator John McCain, who has denounced it from the beginning
as "war profiteering," and persistent public pressure
by good-government groups. The last straw was the revelation that
Boeing offered Air Force acquisition official Darleen Druyun a
job while she was negotiating the lease deal with the company.
Boeing isn't the only corrupt weapons
company; it's just the one that was too desperate for a short-term
payoff to cover its tracks. Rumsfeld's preference for industry
executives and ideologues of the Perle/Feith variety has created
an ethically challenged, politically tone-deaf environment that
needs to be opened up to public scrutiny and reform. Some steps
are under way. The Pentagon's Inspector General is investigating
all Boeing contracts that Druyun was involved in. The Senate Armed
Services Committee will hold hearings on the Boeing deal, and
McCain has promised hearings on the Pentagon-industry "revolving
Much more needs to be done. At the height
of World War II, Senator Harry Truman made a name for himself
by uncovering profiteering and fraud at companies providing supplies
for the war effort. Given the high political and economic stakes
in the war on terror, a comparable investigation is in order now.
Whether the work is being done in Iraq, Washington or points in
between, contracts involving US national security should be opened
to true competitive bidding. Profits should be limited and the
books of contractors doing the public's business should be open
and available for inspection. Politicians and bureaucrats who
are lining their pockets under the guise of fighting terrorism
should face criminal penalties, not symbolic fines. The public
should demand that all candidates for the presidency and Congress
renounce campaign contributions from companies involved in the
rebuilding of Iraq, the war in Afghanistan or any of the other
far-flung outposts of Bush's war on terrorism.
The culture of cronyism that allows arms-industry
executives to pull down multimillion-dollar compensation packages
while wounded veterans are shunted into makeshift medical wards
has to end. Getting rid of George W. Bush and his gang of neocon
profiteers is an excellent place to start. But it's only a start.
William D. Hartung a senior research fellow
at the World Policy Institute at the New School, is the author
of How Much Are You Making on the War, Daddy? A Quick and Dirty
Guide to War Profiteering in the Bush Administration (Nation Books),
from which this article is adapted.