Friday, December 13, 2013

Buying America's Department of Defense

Apparently, spending at the Department of Defense is untouchable.  With cuts galore, the recent agreement has left the Pentagon with a 4.4 percent “raise” in 2014, reaching a total of just over $600 billion.  One would have to ask “Why?”.

I think that I may have the answer.  Let’s start by looking at one major American defense contractor, Raytheon, manufacturer of the Tomahawk cruise missile.  Let’s open by looking at a few statistics about the Tomahawk:

Unit Cost:  

1.) Current Production Cost: $500,000
2.) Average Unit Cost: $1.4 million ($569,000 in FY 1999 dollars)
3.) Total Program Cost: $11,210,000,000


Raytheon Missile Systems of Tucson, Arizona

1.) 2003 - Raytheon - $1.6 billion for 2200 missiles
2.) 2006 - Raytheon - $346 million for 473 missiles plus 65 submarine torpedos (Royal Navy)
3.) 2009 - Raytheon - $207 million for 207 missiles
4.) 2012 - Raytheon - $338 million for 361 missiles

That's a total of $2.491 billion heading to Raytheon for a total of 3306 Tomahawk Block IV missiles at an average cost of $755,290 each over the 10-year period.  Apparently, there are really big bucks involved when it comes to building and supplying high tech flying military objects!

Now, let's look at what Raytheon has been up to on the political front according to Open Secrets:

In 2012, Raytheon spend $7.45 million on lobbying, putting them in 54th place out of 4374 lobbyists.  As you can see on this bar graph, that's about on par from the totals spent in the period from 2009 to 2011 but up from the earlier part of the new millennium:

Interestingly, one of the issues that Raytheon lobbied on was the Bill that would have amended the Internal Revenue Code of 1986 that would see an extension of the allowance for bonus depreciation for certain business assets (i.e. a means to reduce the level of corporate tax owing).

Not surprisingly, Raytheon has been a heavy hitter when it comes to donating to individuals that sit on various Congressional Committees during elections, particularly the Armed Services Committee.  In 2012, Raytheon's PAC spent a total of $385,850 on the House ($140,400 for the Democrats and $245,450 for the Republicans) and a total of $142,350 on the Senate ($24,500 for the Democrats and $117,850 for the Republicans).  

As an aside, the folks sitting on the Armed Services Committee are considered to be key to maintaining access to government contracts.  Just in case you wondered, here is a listing of the sectors of the economy that contributed to Members of this Committee during the 2014 election cycle:

Thus far in this cycle, the 58 House Members on the Committee received an average of $35,103 from Raytheon's PAC and $2,338 from Raytheon's individual donors.

Now, how did the Presidential candidates benefit from Raytheon's largesse during the 2012 election cycle?  Raytheon donated a total of $2,227,950 to all candidates, $780,785 to Leadership PACs and $416,514 to political parties.  Mitt Romney was to top individual recipient, raking in $143,806 from Raytheon.  Barak Obama received "only" $89,788 from Raytheon, putting him in second place overall.  Howard P. "Buck" McKeon (R - Calif) and Chairman of the House Armed Services Committee also benefitted from Raytheon's generosity to the tune of $24,000, putting him in fourth place among Raytheon's chosen few.

Perhaps all of these lobbying and donating fun and games have, after all, not been in vain.  When you have the nation’s key decision makers in your back pocket, the outcome of any vote on cutting the Department of Defense budget is pretty much a given.

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