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  • US Military Contractors Celebrate Record High Profits and Stock Prices

    The business of war is more profitable than ever. -   September 5, 13
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    US Military Contractors Celebrate Record High Profits and Stock PricesJAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore.

    When Congress passed the budget cuts in 2011 known as the sequester, the CEOs of defense companies repeatedly warned of widespread job and wage losses resulting from the proposed cuts. But six months after the sequester officially kicked in, the seven major military contractors are celebrating record profits, and their stocks are near all-time highs. In addition, the future looks just as bright as their backlog of orders is nearly as large as the total $37 billion in defense cuts.

    Now joining us to discuss this is Dina Rasor. She's an investigator, journalist, author of several books. She writes the Solutions: Making Government Work column for truth out, but this year is Truthout's acting director executive director. Rasor been fighting waste while working for transparency and accountability in government for three decades.

    Thank you so much for joining us.


    NOOR: So, Dina, Congress sold the sequester to the American people as a shared sacrifice. Where is the burden of the sacrifice lain right now?

    RASOR: Well, as someone who's investigated the Pentagon for 30 years, you know, it's not surprising to me that the Pentagon's not--is not taking its equal amount of hits compared to other programs. There's a lot of reasons for that. One is that the Pentagon has something that, you know, Health and Human Services or other organizations don't have, and that is the ability to say, oh my gosh, you've got to give us money. [incompr.] all of these bad guys out there. If we don't have the max amount of money, you cut one dime, and you don't double our budget since 9/11, we're all going to die.

    And when you have that kind of thing and then on top of it the guys who sell the program to Congress, which isn't too hard to sell (and I'll get into that), are generals--and generals are basically paid bureaucrats, top-level paid bureaucrats, just like with the general administration or, you know, Medicare or anything else. But they're generals, and they have built this mystique around them with all kinds of brass, and they come up on the hill, and members of Congress don't--you know, it just doesn't look good form to beat up on a general for overrunning, screwing up, or whatever when he says, I always want the best for my boys, and we want to protect America, and I disagree with what you say but I will defend my life to make sure you have the right to say it. And they stick themselves with the troops. They put themselves in with the troops. And so, as a result it's very, very hard to cut defense contracts. And in this sequester, they want to cut readiness to protect the hardware. And it's always been that way. And they have a few ways they do that, which I'd be happy to go into.

    NOOR: Yeah. Absolutely. And before we do that, I want to touch upon what is being cut, which are programs such as Head Start and Meals on Wheels, which service as hundreds of thousands if not millions of low-income families and children across the country.

    RASOR: Yes, of course. And one thing you need to realize about the Pentagon is that they are protecting their hardware. They don't necessarily protects the troops. They don't necessarily, you know, protect and have good logistics. They've farmed that out to their own set of contractors. But you have to understand that everybody's in on this game except the taxpayers and the soldiers. And, you know, the Congress gets--the contracts in their districts means jobs. It's one of the worst things to do for jobs, much better to--more jobs if you do Head Start or Meals on Wheels. And what they do is that they have this, you know, pathos that you have to fund us. We will die if you don't. They loved the Cold War because they could say, oh, we have to have all these tanks to be able to go over the pass and and keep the Soviet Union from invading us, when we all knew that we were all probably just going to have a nuke--we were going to just completely nuke ourselves to oblivion. But they never had to lay their hand down.

    These most recent wars have got them all discombobulated, because these haven't been very successful wars. And they actually don't want to go to war. They would love to send out some of their fancy and expensive cruise missiles to Syria and then just make what we used to call blood rights. You want a little bit of blood rights. You want it a little bit to keep people all ooh and ah, we've got to protect ourselves. But a major all-out war? They didn't want to do or Iraq, they didn't want to do Afghanistan either, because they knew they had to lay their hands down, spend their money on logistics, spend their money on readiness, when actually the game, the moneymaking game in D.C. is to buy weapons, be a general that's the head of a giant weapons program and go retire to that defense contractor. And then the same with members of Congress. You go retire, work for defense contractors or become lobbyists for them. And so it's all part of that whole game.

    And when you try to--then people will say, well, look, we've got these 5 percent cuts that are supposed to happen in sequestration. The problem with that is is that they have so much money in these large hardware contracts that just flow along that you can't change. I mean, they're like a freight trains that just keep moving along and take a long time to stop.

    The other thing is the Pentagon cannot pass an audit. Never been able to. They keep putting it out. Well, we'll pass one in ten years. Then they come up on the ten years--we'll pass one in ten years.

    So there's an enormous amount of chaos in the contracting and where the money is, and the money is just sloshing around in there. And so it's really easy--when you have a 5 percent cut, it's really easy to take it out of readiness and not touch these hardware contracts.

    So, once you understand that hardware is king, and people--the things that actually do work in war, which are people and readiness and training, are on the chopping block, and also benefits, you know, for the soldiers, all those things. That hardware is king--that 5 percent cut is, you know, something that you can go down and pull open a drawer and petty cash the Pentagon.

    NOOR: Speaking of money and lobbying, the Center for Responsive Politics reports that the defense industry spends more than $100 million a year since 2005 and receives $1 billion per day in Pentagon contracts. What's your response to that?

    RASOR: I'm not surprised. Back in the 1980s when we were trying to do the--they wanted to buy more C-5 cargo planes, I got a hold of a lobbying plan. And this lobbying plan was done by Lockheed. But what it did is it had the secretary of defense and everybody lined up. The secretary of defense and some members of Congress who wanted these in their districts and Lockheed all work together, and they had these meetings. And Lockheed was writing the draft for the secretary of defense or the secretary of the Air Force to go up on Capitol Hill and read Lockheed's draft on why we absolutely had to have this airplane. So they have outside lobbyists, they have inside lobbyists. And this lobby plan was amazing, and it kind of showed.

    And you should also know that the Pentagon purposely put subcontractors in every state and every important congressional district. So what you do is, you know, like, you'll have a weapons system. I've actually seen maps in the United States where they will point how many jobs are in each district. And that's how they buttonhole these people. So it really comes down to jobs and then the members of Congress who vote for it, which are Democrats and Republicans. I hate to say the Democrats. One of the people that would never vote against a defense electronics contract, even if it was good or bad, was Ted Kennedy, because Massachusetts was defense electronics. And so as a result you have all these people went into this, and they rationalize it, making it feel good that we are defending the United States, when the place is just awash with overruns, fat, fraud, waste build into contracts year after year after year.

    And I've never seen a politician that has ever tackled the Pentagon and succeeded. Their popularity goes way up, but eventually the Pentagon is just so massive that and is such a giant force of money and power and fear and warmongering and contractors and close retirement jobs that it is a scary being.

    NOOR: So, Dina, what you describe I totally agree with, yet opinion polls consistently show, you know, as recent as 2012, that overwhelming majorities of Democrats, Republicans, and independents all favor deep military cuts.

    RASOR: Well, yeah, everyone says they want to do that. And yet whenever it comes down to it, the Pentagon and the generals have a very, very good job of wedding themselves, wedding this fat, wasteful bureaucracy who really does not put the soldier first, but they wed themselves to the troops. And so a lot of times people say, well, you know, I don't want to cut if it means we're not going to get the right kind of helmets for the troops. But I've been doing investigations to show that helmets are inferior. And so they wed themselves to troops instead of to the hardware. And whenever that doesn't work, then you start--you know, you have to have a new bogeyman. And, unfortunately, you know, there's a lot of scary people out there, and so they keep doing it. So the public and the members of Congress will always say they want to get waste, fraud, and fat out of the Pentagon until it's their waste, fraud, and fat. And I can tell you that I've also worked on lawsuits with whistleblowers to try to regain money back to the Pentagon from contractors who are defrauding the government. And we found the DOD is the hardest one to do, because they are so wedded for their contractors that even when you catch them in fraud, they stand behind the contractor and not the people who are trying to get the money back to the government. And so when you look at that, that they are hand-in-hand like that, the line between the contractors and the Pentagon is completely blurred. They're working side-by-side. They hire people in, you know, just the same way as Snowden was working with the CIA. They, DOD--I should say CIA and the NSA--the DOD has contractors overseeing other contractors. And yet they may be doing another project together outside. So this line is blurred. So when everybody says they want a cut, they really want a cut. The only way I ever got anything to cut is when in the 1980s we looked at spare parts. And when people began to see the $435 hammer, the $7,600 coffee brewer, they're like, wait, wait, wait, wait, wait; how did this happen? And we said, wait, you've just got to understand that these items which you know are grossly overpriced are using the same pricing formula as that airplane. So, you know, this hammer that goes to this airplane has the same markup. And once that happened, we actually were able--the public was so outraged by the spare parts and it became such a national joke, we actually got a defense budget freeze in middle of the Reagan administration. But the Pentagon recovers. You know, they recover, they start going, and they start building back up. And until we expose this game, this game of chaos accounting, so that you can't find out where the fraud is--you know, how do you find fraud when the books are a disaster, when you don't know where your money is, when you can't an audit? And so this money is--you have to think of it as sloshing. You know, they talk about slush funds. These are slosh funds. I mean, this money is sloshing around and being moved around. And so they cut the things that are really actually important to national defense, and that is training, readiness, logistics, you know, things like that, and they put it into hardware. Hardware is so easy to sell. You take that member of Congress out there, and he sees that beautiful jet flying out there, that F-35, which is nothing but a bunch of spare parts flying in close formation--you know, in other words, each part of that F-35 is as overpriced or worse than that hammer. And so once you start seeing that--but it's so easy to sell the weapons. The weapons, oh, it's--they are going to make us safe. The weapons are going to make it so we can hit things and we won't kill a lot of people. I can tell you right now, they will tell you--they used to say in the Cold War that cruise missiles can hit the men's room in the Kremlin if they wanted to. Now, cruise missiles are not that accurate, and they still do huge amount of collateral damage. So when they were saying drones and cruise missiles aren't causing collateral damage, they do. They're not nearly as accurate--the testing about it is all buggered up, and then they classify it so you can't find out. But it's a game that I've been trying to explain for 30 years that the public and everybody keeps falling into. And when we have a war, we go into that mode of wanting to do the best for our troops, 'cause we see these guys coming home with arms and legs blown off and we feel terrible that they've done this sacrifice for us.

    NOOR: Thank you so much for joining us.

    RASOR: Thank you. Happy to do it.

    NOOR: Thank you for joining us on The Real News Network.


    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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