The Defense Lobby Under the Obama Administration: Following an extraordinary year, the status quo marches on.
The US is coming out of a tumultuous year; we spent 2008 engaged in the most expensive election in history while our economy was simultaneously falling apart. Following an extraordinary year throws a bit of a kink into typical, linear analyses, but noting that the American defense industry is still financing on par with the years leading up to last years record-breaking performances, one can conclude that these companies a) know that lobbying dollars are high-return investments and b) have weathered the economic and electoral storms very well.
The Bush administration ushered in a period of plenty for defense manufacturing contractors. Between 1999 and 2009, the defense budget roughly doubled, many of those funds going towards rebuilding efforts, tossing gobs of money into cold-war-era weapons to prepare to do battle with cold-war-era foes at a time when we were fighting groups of insurgents whose most effective weapons were (and are) simply known as Improvised Explosion Devices.
The prospect of the election in 2008 briefly offered the possibility
for a divergent course. Unfortunately, though, this hope was quickly
extinguished, due, in part, to aggressive campaign donations and
lobbying from the defense industry.
Hillary Clinton, despite not even earning the primary victory in the Democrat party, still won nearly $400,000 in defense industry contributions during last years election. Through the primaries, she was the leading recipient of defense dollars, Democrat or Republican, and her final defense fundraising total amounted to well over half of what Republican nominee, John McCain, raised from this sector over the entire election cycle (~$700,000).
Obamas contributions from the defense industry ultimately topped $1 million, which amounts to a relatively small portion of the $700 million in funds he amassed over the life of the election. McCain, who opted into the public financing option for the election, still raised nearly $400 million total. These numbers mean that direct defense industry donations made up a mere .175% of McCains donated funds and .143% for Obama. These percentages are underwhelming, but the aforementioned donations only made up about 10% of total defense industry donations in 2008. The industry spread another $20 million through smaller-budget congressional races across the nation, making friends with other political decision makers who ultimately hold the purse strings to any budget the president might submit.
The defense industry enjoys high returns for its investments because its casts a wide net with campaign donations and follows up with separate lobbying efforts. While defense companies donated $23.7 million to federal campaigns last year, the total lobbying amount for the same year was just short of $150 million! The $23 million in campaign contributions would rank 14th* among OpenSecrets.orgs Top Industries Giving to Members of Congress, 2008 Cycle, if the three defense industries (aerospace, electronics, and miscellaneous) listed by that source were combined into one entity, similar to insurance, real estate, or health professionals. Defense ranked 9th,overall, among lobbying sectors, following health, finance, energy, communication, transportation, and other special interests.
9th and 14th places arent exactly overwhelming positions, but that isnt limiting impressive returns on the industrys political investments. In the 2010 Department of Defense budget request, an early indicator of what the results of the 2008 election will yield for campaign contributors, there are some $200 billion potentially available to the defense industry: $13.5 billion for military construction, $78.6 billion for research, development, testing, and evaluation and $107.4 billion for procurement projects. These funds do not include the billions available to the industry for work on sustaining the American nuclear weapons arsenal nor does it take into account the billions for contractors on the battlefield in Iraq and Afghanistan.
To put the amount of funds available to defense profiteers into perspective, that nearly $200 billion, only a fraction of American military spending, is roughly equal to four times what the White House has requested for the Department of State, the agency in charge of diplomatic relations with the rest of the world!
For political investments of under $200 million, the defense industry is granted access to $200 billion in contracts! The amount of money needed to gain influence with those who hold government purse strings is embarrassingly small compared to the amount of money at stake. And, as this years budget continues to show, for defense industries, its an investment well worth making.
Weathering the Storm
One of the benefits of being a government contractor of any variety is that, in hard economic times, government spending is one of the first tools used to attempt to get the economy back on firm footing. Companies with strong ties to government contracts have the benefit of doing business with a customer that can set its own rules; borrowing at will and even producing currency, if needed.
Indeed, strong ties to government contracts likely kept many of defense companies in the black through this difficult recession. In addition to the perks of having a customer that cannot go bankrupt, the recession has played nicely into the defense industrys hands, as jobs (read: political currency) arguments carry extra weight during this time. The defense industry has long spread its work across as many congressional districts as possible. For instance, the F-22 is made in 44 out of 50 US states, the C-17 in 42! Interestingly, though, while these ties have proven to be an asset for the industry, they have proven to be a liability as well.
Less than 100 days into Obamas presidency, his secretary of defense, Robert Gates announced that his department must consistently demonstrate the commitment and leadership to stop programs that significantly exceed their budget or which spend limited tax dollars to buy more capability than the nation needs.
With that, he announced plans to reduce or cut several high budget items from the defense budget including canceling the F-22 raptor and the VH-71 presidential helicopter, allowing the C-17 Cargolifter program to end, and reducing missile defense and future-combat-systems spending, among other high profile moves.
In the same speech, he outlined how the defense budget request would still be four percent higher than the previous years, but, judging the response from contractors and conservative pundits that is still ringing, five months later, one would get the impression that the secretary had requested that we stop spending money on the military all-together. This, of course couldnt be further from the truth.
Boeing, whose defense-systems headquarters are in my hometown of St Louis, appears to be especially vulnerable to several of Gates proposed changes; this company has connections to four of the five programs I mention above. But it is also a major manufacturer of weapons the defense secretary continues to be a big supporter of, particularly Unmanned Aerial Vehicles, or Drones.
Gates, if he was sincere about his call to reign in waste, did a bad job of initiating the haggling that has ensued following his initial funding request. That, or he significantly underestimated the political might that could be wielded by the defense industry at will.
Immediately following his announcement, the wheels of the mighty military-industrial-congressional complex began rolling. Opinion pieces came (and continue to come) out declaring that this budget will leave our nation vulnerable to attack. In St Louis, the media, labor, and politicians, some of whom cannot even agree on which way to get to our famous Arch, all piled together onto small stages in support of programs that Secretary Gates wanted to change or end.
Perhaps Gates simply didnt want to bite off more than he could chew, though; he and Obama have had to struggle to keep even their modest pruning job in-tact. More C-17s and F-18s than they requested have been snuck into legislation from both the House and Senate, as have funds for additional spending on some of the more questionable aspects of the missile defense program.
As reported by Bloomberg.com, President Barack Obama said he will veto defense spending legislation if Congress includes funding for purchases that he said are not needed. This is an encouraging sign, but one must wonder how much political capital the president is willing to wager on a handful of items within a popular defense bill as he tries to push more controversial issues such as healthcare and environmental reform through a stubborn Congress.
Regardless of the presidents veto threats, it appears that the best-case scenario leaves us with a still-growing military budget. Things dont look too gloomy for the defense industry. While they have suffered a few bruises over the past few months, with the right combination of lobbying, donations, and political maneuvering, their fundamental structure appears to have weathered the storms of an election and simultaneous recession quite nicely. Their work and profits roll on as do the efforts of the anti-war-profiteer activist.