War Profiteering

In his recent article for World Socialist Web Site, Jack Crosse (“60 Minutes” exposé reveals massive Pentagon price-gouging) anticipates that the likely outcome of the current debt ceiling negotiations will leave Biden’s record $1 trillion Pentagon budget well alone (even though it represents a 3 percent increase over the previous year) and that there will be no increase in taxes on corporations or the rich “while outlays for Medicaid, food stamps, welfare, education, housing, job training, public transit and the environment will be substantially cut”.

As I myself have recently argued one extraordinary feature of the disparity between the US/EU and Russia in NATO’s proxy war with Russia over Ukraine is that the collective west has been spending trillions of dollars on defense over the past two decades yet has comparably little to show for it in actual conflicts, if we recall the fiasco of the US withdrawal from Afghanistan, its failure to achieve about regime-change in Syria, or Iran (not that I am advocating for such regime changes) and the gruesome mess of the final oucomes that it left behind following its invasion and occupation of Iraq, NATO’s overthrow of Ghadaffi’s regime in Libya and, now, in the unfolding horror of Ukraine.

Yet Russia has been a very modest defense spender in this period. Even now, on the precipice of a world war, Russia spends only $80 billion as against US expenditure of $1 trillion.

And when we say that the US is “spending” one trillion dollars we dont really know whether that is indeed the case, whether it is not in fact spending a great deal more. We dont know, because of the continuing inability of the US government to properly audit the accounts of the Department of Defense, in a continuing scandal that goes back to the strange ruminations on this state of affaris by Donald Rumsfeld on the eve of 9/11, and long before that. The published figures don’t begin to address the real wealth expenditure that is represented by the Incubus of the military industrial complex, more lavishly described by Ray MacGovern as the MICIMAT (military industrial congressional, intelligence, media and think thank complex): an expenditure that is essentially non-productive or, in other words, produces nothing other than weapons whose purpose is to destroy the value of others (sometimes to stimulate demand for re-provision from US suppliers) and to rob the resources necessary, the potential of the US, to be a force for good in the world and for its own people.

This non-productive wealth is misleadingly folded into calculations of US gross domestic product. Yet the US is running out of weapons, its ability to run its proxy state of Ukraine (which, as Colonel Douglas Macgregor brutally but accurately notes, is now owned by the US/NATO to all intents and purposes) is fragile, and its most advanced weapons, including nuclear, hypersonic missile and electronic warfare technology appears to be lagging behind those of Russia. Among the factors that would help account for this state of affairs, therefore, is the disparity in the value of what money actually buys in the US defense industry as against the value of what it actully buys in countries like Russia and China.

In his WSWS article Crosse illustrates this point with reference to a recent CBS “60 Minutes” exposé. The program featured a former director of defense pricing and contracting at the Department of Defense who had previously spent 22 years at Raytheon and who accused the Pentagon of overpaying for “almost everything.” In illustration he refered to two oil switches on which one, with cabling, was purchased by NASA for $328, while the other, without cabling, was purchased by the Pentagon for over $10,000. In 1991, a new missile for the shoulder-mounted Stinger missile cost $25,000, whereas today the same missile, supplied only by Raytheon, costs over $400,000. In another example, the Department of Defense had paid a subcontractor $119 million for parts that previously sold for $28 million. The same contractor raised the price of a valve needed for the Apache helicopter during the Iraq war by 40 percent to $1,830. The price for that same valve in 2018, was “almost $12,000.”

The Pentagon has itself contributed to the formation of oligopolistic markets by pressing in 1993 for military companies to merge, leading to a consolidation of 51 companies to five, and by reducing by half the workforce that is required to supervise the work of negotiating and monitoring military contracts.

In the period 2010-2019 the five major US weapons makers—Lockheed Martin, Boeing, Raytheon, General Dynamics and Northrop Grumman spent 6.4% of their revenue on dividends and share buybacks and less than 6% on R&D. In 2021 they received over $116 billion in Pentagon contracts and paid their top two dozen executives a total of $287 million. The CEOs of the five companies commanded a combined salary of over $104 million in 2021, 466 times the average salary of a US worker. Weapons makers have spent $2.5 billion on lobbying since the launching of the “War on Terror” in 2001. They employ over 700 lobbyists per year to lobby Congress, many of whose members own shares in weapons industry.