Photo by Pixabay
As Pentagon spending has soared over the years, the role of military contractors in shaping the U.S. defense landscape has come under intense scrutiny. There is an intricate relationship between defense contractors, political campaign donations, and Pentagon spending.
Here are seven things to know about war money.
A significant portion of the massive military budget flows into the coffers of military contractors, who provide the equipment, technology, and services required by the U.S. military.
Advocates for spending more on the military seem bipartisan. Mitch McConnell agreed with President Joe Biden upping aid to Ukraine. According to McConnell, in the long run it will benefit the U.S. not in terms of political flex but monetarily. He claims that giving more money to Ukraine “rebuilds our industrial base,” C-Span reported.
During an interview with CBS’ “Face the Nation,” McConnell contended that “a significant portion” of the more than $61 billion aimed at helping Ukraine would be spent domestically to replenish American stockpiles. “A significant portion of it is being spent in the United States in 38 different states replacing the weapons that we sent to Ukraine with more modern weapons,” he said and added, “We are rebuilding our industrial base. The Ukrainians are destroying the army of one of our biggest rivals. I have a hard time finding anything wrong with that.”
A startling revelation is that a considerable chunk of Pentagon contracts is awarded to just five major corporations: Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman.
Lockheed Martin, for instance, received a staggering $75 billion in Pentagon contracts in fiscal year 2020, which surpasses the entire budget of the State Department and the Agency for International Development, according to the Watson Institute for International and Public Affairs at Brown University.
To maintain their prominence, weapons manufacturers have spent over $2.5 billion on lobbying over the past two decades, according to the Watson Institute. The staggering figure equates to employing over 700 lobbyists each year over the past five years. In essence, this means that there is more than one lobbyist for every member of Congress, highlighting the immense influence these corporations exert over political decision-making.
One concerning aspect of the relationship between military contractors and the government is the potential for abuse. Numerous companies have capitalized on wartime conditions, and sometimes it’s through overcharging the government. In 2011, the Commission on Wartime Contracting in Iraq and Afghanistan estimated that waste, fraud, and abuse had cost the U.S. government between $31 billion and $60 billion.
Defense contractors are known for generously contributing to political campaigns and committees. This financial support often influences the stances of lawmakers when it comes to defense policy, further deepening the integration of the military-industrial complex into the political landscape.
In April 2022, during congressional discussions over the allocation of new weapons and military assistance to Ukraine, Raytheon Technologies, one of the nation’s major defense contractors, gave out more than $51,000 in contributions to members of Congress and partisan political committees, Business Insider reported.
According to a disclosure submitted to the Federal Election Commission, Raytheon Technologies donated to over 30 congressional campaigns, as well as various leadership political action committees and national party committees. Throughout that month, as Raytheon Technologies made these financial contributions to lawmakers, legislators were engaged in deliberations on more than ten Ukraine-related bills. The Senate went on to approve a $40 billion military and humanitarian support package for Ukraine.
While defense stocks often experience a boost after military conflicts, these gains are typically short-lived. For instance, following Russia’s invasion of Ukraine, defense stocks surged, but these gains were soon reversed.
After Russia invaded Ukraine in February 2022, the iShares defense ETF went up by 5 percent, with Lockheed Martin and Northrop Grumman’s shares soaring about 20 percent. However, within six months, these stocks reverted, losing most of their gains.
“If the war remains confined between Israel and Palestinians, it’s likely that the markets will forget about it after a few days,” Raffi Boyadjian, an analyst at XM, told CNN.
Photo by Pixabay: https://www.pexels.com/photo/5-soldiers-holding-rifle-running-on-white-sand-during-daytime-87772/
