Sunday, July 31, 2011

The "Entitlements" Folks

Now that it appears that Congress is getting ready to pass a compromise measure that allows for raising the debt ceiling, it's time to take a look at the fine print. The only problem is, the fine print seems to have been written in invisible ink.

The last piece of legislation that was passed in the kind of last minute frenzy we face right now was the USA Patriot Act, a bill that many members of Congress admit to never having read, and one that created the infrastructure for "homeland security" thereby increasing the federal deficit exponentially with a costly and abstract war on terror.

How many of those war on terror hawks back in 2001 would deny then-president, George W. Bush, the constitutional right to raise the debt ceiling? These same folks don't call Bush's wars, and frenetic military spending, "entitlements," but only grannie's prescription for reading glasses.

Okay, as the saying goes, don't shoot until you see the whites of their eyes. Well, we have seen the whites of their eyes, and we now have a good idea who's going to feel the gravest impact of any deficit reduction plan Congress pushes through at the last minute.

C-Span presented former House speaker, Nancy Pelosi's riveting speech to House last night in which she inveighed against Republicans, and a proposed plan to cut $2 trillion from the deficit by taking $1 trillion from spending programs. As Pelosi suggested, these cuts will result in the loss of Pell grants, and less opportunity for college for millions of young people. She's right. Education must not be on the table. That the House or the Senate should consider anything other than a clean bill requiring only that Congress sign off on raising the debt ceiling is in itself egregious.

Congressional deficit hawks who, with religious zeal, manage to confuse the need to raise the debt ceiling with a debate about deficit reduction are the ones who today are calling for spending cuts. Though Democrats in the House insist Social Security and Medicare aren't going to be touched, what other programs will be? Some say there will be more cuts to Defense, but how much, and starting when?

Even a cursory look at military contracts for 2010, as well as projected revenue from government contracts so far this year, shows not just gluttony, but the overreach of Defense.

One has only to look at the profit margins, and source of revenue for the ten top companies that have made billions of dollars from US government contracts over the past year alone to understand why there are still so many troops left both in both in Afghanistan, and Iraq.

CNBC's Web site lists the those ten companies. Northrop Gunman, which comes in at third place, had more than $16 billion in government contracts last year alone, and so far in 2011 more than $4 billion.

And, on finding out that the 2012 USAF budget includes cuts, Northrop Gunman increased the price of unmanned drones by more than 25% according to Bloomberg. There are now 77 aircraft costing $102 million each.

At the bottom of the top ten list, BAE, a British multinational defense contractor, was awarded $6.6 billion in defense contracts in 2010, which represents one sixth of its total 2010 revenue of nearly $37 billion. BAE has received more than $1.3 billion in defense contracts so far this year.

CNBC notes, too, that General Dynamics, a company squarely in the middle, in fifth place, was awarded nearly $15 billion in govenment contracts last year which accounts for nearly 50% of its total revenue for 2010. . GD manufactures arms, and tanks. This is one entitlement program that no one on the Hill wants to talk about seriously addressing, only Social Security, Education, and Medicare.

Even more of our taxpayer dollars were funneled to Raytheon, (RIN), headquartered in Waltham, Massachusetts. While they received roughly the same amount in 2010 defense contracts as General Dynamics, $15 billion, RIN has been awarded $4.3 billion so far in 2011, an increase of nearly 200% over the amount handed to Raytheon. Both Raytheon and General Dynamics get to boast that roughly half of their income for 2010 came from the Defense Department, and the US taxpayer. Let's hope, for their sake, their lobbyists in Washington aren't members of the choir calling for smaller government or they'll be out of work.

The contractors that made it to first and second place on CNBC's list of the ten companies that made billions off the US government are Boeing, of course, that is mainly known for manufacturing aircraft. In 2010, Boeing was awarded nearly $20 billion from Defense, and $6 billion so far this year, putting them in second place. In 2010, Boeing's total earnings came to $63.3 billion, with their Defense, Space, and Security Segment accounting for $63 billion.

Last but not least on the list and in first place is Lockheed Martin, a company that was given nearly $40 billion from Defense last year which accounts for more than 90% of its total 2010 revenue of a little less than $46 billion. This year so far, Lockheed Martin has received nearly $16 billion in contracts from the the US government, that's four times the amount Raython has gotten from Uncle Sam. Lockheed Martin, in Bethesda, Maryland, manufactures satellites, space vehicles, combat aircraft.

Crunching numbers: revenue strictly from government contracts in 2010 for the top ten companies combined totals $143.3 billion in 2010, and $42 billion in the first part of 2011.. Total revenue for these companies combined is nearly $360 billion. Yes, that's about a billion dollars a day for a year. Once again, in some instances, your tax dollars accounted for approximately half of all revenue these companies earned.

Yet, where is the public outrage over an entitlement program that lines the pockets of military contractors? Where are the deficit hawks, and why aren't they demanding an immediate withdrawal from Afghanistan, Iraq, Pakistan, Yemen, and any other country we're currently occupying, or in the process of occupying?

Oh, and yes, let's not forget Blackwater, now XE, and their mercenaries whose numbers are about equal to those of our troops. As Washington Technology reported back in 2007, XE was one of five companies to whom the Department of Defense's Counter-Narcotics Program awarded up to $15 billion in government contracts. Not surprisingly, some of the other companies included were Lockheed Martin, Raytheon, and Northrop Gunman.
The DoD gave Xe a $92 million contract just for air transport

In one year alone, 2011, the US government reportedly will spend close to $160 billion on wars in Afghanistan and Iraq, a whopping $107 billion on Afghanistan alone; And, as Nobel Laureate Joseph Stiglitz has suggested, the ultimate price tag for our combat operations may be somewhere around $3 trillion, but don't expect to see "austerity" measures to stop the hemorrhaging of taxpayer funds to this entitlement program.

But where are the calls in Congress to take some serious, and longterm measures to reduce defense spending? Savor the irony that some of those Democrats who now serve both in the House and in the Senate were likely college protestors against the war in Vietnam, but how many of them are standing up now, and demanding that the $1 trillion in spending cuts come from the Department of Defense? How many are speaking out about balancing our priorities instead of the budget, and eliminating the Department of Homeland Security, the NSA electronic surveillance marketeers, as well as investigating just who profits most from the prison-industrial complex we've now become?

And, consider this, the $1 trillion in spending cuts this deal would provide is over a ten year period, and is only a third of what these combined wars cost the treasury over the past decade.

Those who want to gut the safety net for the elderly, infirm, and poor are the same folks who put in place safety nut programs. It is they who pose the gravest risk to our national security, those who wish for the upper 2% to continue to prosper at the expense of 98% of the rest of us, those who call anything that does not belong to them an "entitlement."

We all know that any trimming of Defense in this bill will be largely cosmetic when compared with how much really needs to be cut. An article in the NYT notes that the deal in front of Congress today would cut $350 billion from defense over the next ten years, or $35 billion a year which is less than than Lockheed Martin got last year in government contracts.

Moreover, the deal nearing approval would give the Pentagon the option to decide how to implement the cuts. It is ludicrous to expect anything other than a gratuitous cut given our perpetual state of combat-readiness, so rather than making a serious effort to tackle spiralling costs, the bill currently before Congress essentially amounts to a giveaway to Republicans. Anything other than a clean bill to raise the debt ceiling without any strings attached is a capitulation, and unacceptable.