The Defense Department & Wall Street

Behind the growing push to slash soldiers' pensions and other military costs is a little-known advisory group—stacked with Wall Street executives.

—By Adam Weinstein

 

With time fast running out for the so-called deficit supercommittee, the mammoth amount of government money spent on the military has become a prime target in Washington. But the main focus isn't on big-ticket weapons projects or expensive wars—it's on retirement benefits for the roughly 17 percent of soldiers, Marines, sailors, and airmen who have served 20 years or more in uniform. Currently the total cost of their benefits is about $50 billion a year.

Cuts to military pensions are "the kind of thing you have to consider," Defense Secretary Leon Panetta said in September. When President Obama unveiled his $3 trillion debt reduction plan the same month, it called GIs' benefits "out of line" with private employee retirement plans, saying the system was "designed for a different era of work." When Congress held a hearing on military retirements in October, Rep. Austin Scott (R-Ga.) promoted a cheaper 401(k)-style plan that would slash existing benefits for many troops. "I see nothing wrong with them being able to choose a different retirement plan," he said.

These ideas may sound like a bold new approach in an urgent moment—but in fact, the push for pension cuts and other corporate "reforms" at the Pentagon originates from an obscure advisory panel that has existed for a decade: the Defense Business Board. Its 21 members know little about military affairs, but they are rich in Wall Street experience, including with some of the biggest companies implicated in the 2008 financial meltdown. They are investment bank CEOs and CFOs, outsourcing experts, and layoff specialists who promote a corporate agenda of "behavior change" and "business solutions" in the military bureaucracy. The board proposes not only to slash and privatize military pensions, but also to have the Pentagon invest in oil futures, boost pay for its executives and political appointees, and make it easier for them to fire rank-and-file employees while scaling back those workers' collective-bargaining rights.

Indeed, "this sounds like what's being done now around the country with the public unions," affirms Charles Tiefer, a University of Baltimore law professor and defense contracting watchdog who's testified to Congress about the board's recommendations. The board was launched in 2001 by then Defense Secretary Donald Rumsfeld, who famously wanted to downsize the military and corporatize its management system. The essential reason it exists, Tiefer says, is so that "a pro-business attitude—especially on personnel issues—remains intact" inside the Pentagon.

While the board's ideas have enjoyed support on Capitol Hill over the years, it has made only a modest impact on policy. Now, the board's proposals—which they say represent "a culture of savings"—are gaining currency as politicians look to cut federal spending any way they can.

When the federal debt ceiling crisis was escalating in July, a report (PDF) from the board argued that paying soldiers and their families for 60 years after 20 years of service was "unsustainable," adding, "The 'Military Retirement' sacred cow is increasingly unaffordable." The board called for scrapping the system in favor of a mandatory 401(k)-style account whose savings could "be invested in higher yielding equities and bonds."

Over the years, the board has recommended a series of "cost-saving" measures that would channel large amounts of money to private-sector businesses.

The board's proposal would set aside 16.5 percent of a troop's base salary in a savings account to be invested in the markets. Assuming a modest annual return—hardly a safe assumption these days—the plan would still provide retired soldiers with far less money than what they are entitled to now. Critics say the proposal would also make it harder for the military to retain its most senior, most knowledgeable members. As Joe Davis, public affairs director for Veterans of Foreign Wars, put it in August: "Where will our future military leaders come from if people leave the service early because they're losing retirement money?"

It's a plan that even Rep. Joe Wilson (R-S.C.), chairman of the House subcommittee on military personnel (who's known for shouting "You lie!" at President Obama during his 2009 health care address to Congress), has called "radical…a very controversial proposal with immediate negative consequences for morale and combat readiness."

The head of the Defense Business Board's pensions task force, Richard Spencer, served as a Marine aviator in the 1970s. But more recently, he was the CFO of a web-based commodities and derivatives exchange that is under investigation in Europe for its trading in credit default swaps just before financial markets imploded in 2008. Prior to that job, Spencer worked "on Wall Street for 15 years where his responsibilities centered on investment banking services focusing on strategic advisory services and capital markets underwriting," according to his current biography on the Defense Business Board's website.

A cached version of Spencer's bio identifies the firms where he previously served: Goldman Sachs, Bear Stearns, and Merrill Lynch, three of the biggest Wall Street banks involved in the housing and credit collapse. Joining him in the board's vote to gut military pensions were the managing director of Accenture's defense industry portfolio; the chairman of HR consultant Convergys, "a leading outsourcing company"; the CEO of the Bank of Virginia; several high-profile investment bankers; and two Sears executives.

Over the years, the board has recommended a series of "cost-saving" measures that would channel large amounts of money to private-sector businesses. Its members have consistently advocated for the Pentagon to engage in fuel hedging—investing in oil futures to lock in a supposedly low cost for their long-term fuel needs. The board's fuel-hedging push was led by member Denis Bovin, who was a top investment banker for Bear Stearns until the firm went bust in late 2008. After consulting with energy giants BP and Shell, among others, Bovin's team concluded that the Department of Defense should invest based on rising oil prices, even while he conceded that "as a whole, DoD is not highly exposed to fuel price volatility." Such deals, he noted, would incur investment transaction costs of "$10 to $250 million per year." Even though no federal agency currently engages in fuel hedging, the board tasked Bovin with another study on oil futures last January.

The Defense Business Board was born in another American era, on September 10, 2001. That morning, Rumsfeld rose before a crowd of Pentagon workers to declare war on "an adversary that poses a threat, a serious threat" to the nation: "It disrupts the defense of the United States and places the lives of men and women in uniform at risk." He was speaking not of Russia or China or even international terrorism, but of the military's own bureaucracy. He announced: "We're establishing a Defense Business Board to tap outside expertise as we move to improve the department's business practices."

"Some of those ideas go way back," says Thomas Christie, a career defense analyst for multiple administrations who was called out of retirement by Rumsfeld in 2001 to help improve the Pentagon's weapons-buying process. Rumsfeld, Christie says, "just had a suspicion about the whole bureaucracy; he didn't trust it." But Rumsfeld did trust private enterprise, and the September 11 attacks only temporarily sidetracked his transformation efforts. By March 2002, the Defense Business Board held its first meeting, tasked with (among other things) achieving "a cost effective military" with private-sector employment practices and providing "civilian human resources faster, at a reduced cost and by taking advantage of the power of automated tools."

He couldn't have asked for a better group to help corporatize the Pentagon: Its original 19 members included the vice chairman of Bear Stearns; an ex-CEO of AOL; executives from PricewaterhouseCoopers and Deutsche Bank; a Goldman Sachs board member who would later land in hot water for a $1.7 million purchase of the company's stock; and Richard Perle, nicknamed the "Prince of Darkness," who gained notoriety as a Bush administration cheerleader for the Iraq War.

The leader of the board's supply chain task force was Gus Pagonis, a senior VP for Sears who, as an Army general had managed supply and logistics for the Gulf War, and whose son would hold a similar position in the second Iraq War. As the head of its "change management" task force, the board chose Dana Mead, a layoff king who titled his autobiography High Standards, Hard Choices: A CEO's Journey of Courage, Risk, and Change. As CEO of the Navy's largest shipbuilding yard in Virginia, he'd assured workers in 1994 that there'd be no layoffs; two years later, Mead had canned nearly 10,000 of the 29,000-person workforce and boasted to the New York Times that the yard was "now as efficient as any shipyard in the world." As a board member of Pfizer several years later, Mead would help secure a $83 million golden parachute for the pharmaceutical giant's outgoing CEO.

Mead's job was to help ease the Pentagon's transition to a corporate culture. In the board's view, one way to accomplish that was to start creating boardroom titles for military leaders; it recommended that Congress create a chief management officer, or CMO, to double-check admirals' and generals' business decisions. Congress approved, although the job remains open, with only a deputy CMO currently serving.

The Defense Business Board also champions corporate tactics on personnel issues. It calls for more and better-paid senior executives, while depriving middle- and lower-level Defense Department employees of basic job security. "We believe the DoD should have a leadership corps composed of senior executives, managers, professionals, and political appointees drawn from the best of America's diverse population," the board argued in 2002 in a "Human Capital Transformation" report. They proposed boosting the pay for upper-management positions in the department from $130,000 to $225,000. "The gap between what they can earn in service to their country and employment in the private sector is too great a sacrifice for them and their families," the board said. "No high-performing private organization aspiring to upgrade its management talent would permit such a situation to exist; neither should DoD."

The board further argued that individual Pentagon bosses should have the right to fire their subordinates without involving the workers' union, the American Federation of Government Employees: "Under the existing system of employment, individuals have rights not to be terminated without due process safeguards. But, in an organization charged with protecting the nation's interests and safety, no individual has the right to be maintained in his or her position."

In 2004, Rumsfeld got Congress to approve the National Security Personnel System (NSPS), a new HR policy that offered workers performance bonuses while giving supervisors more hiring and firing authority. The change "severely crimped the power of the unions to handle grievances and bargain collectively," says Tiefer, the University of Baltimore law professor.

A 2008 investigation by Federal Times found that the first round of bonus pay under the new policy had been riddled with iniquities. And a May 2009 investigation by the Pentagon itself found that employees previously making below $60,000 ended up making less under the policy—while workers with salaries above $80,000 ended up making more. In summer 2009, Congress killed funding for the National Security Personnel System, and the Obama administration considered ending it outright. But that August, after the pay system had lost virtually all of its defenders, the Defense Business Board issued a report saying it should be saved: "[T]he performance management system that has been created is achieving alignment of employee goals with organizational goals."

Union leaders called the board's opinion bunk. "A steady stream of DOD managers and supervisors have told us that NSPS is unfair, dishonest and effective," says John Gage, president of the American Federation of Government Employees. "We know that those under the NSPS system suffer from low moral and lower productivity."

The Defense Business Board also believed that one path to transforming military culture was to recruit more business-school graduates; they could "bring new ideas, energy and private sector management techniques to the Department of Defense," according to a board report. The board discussed the possibility of changing federal pay rules to hire MBAs at a senior pay grade, even with no military or workplace experience. One board member, David Walker, pointed out an obvious complication of hiring so many business school alums to run the military bureaucracy: "Most MBA candidates are not motivated by public service. This makes long-term retention very difficult."

Nevertheless, the board studied how companies like Bear Stearns, Goldman, General Electric, and McKinsey recruited MBAs, then recommended that the Pentagon start offering business school grads senior positions starting at $70,820 a year (which normally required two years of relevant experience). Rumsfeld loved the idea, but according to notes from a 2006 Defense Business Board meeting, an unnamed congressional opponent kept the MBA recruitment plan from being adopted.

If you wanted to search for ways to make the Pentagon's ponderous bureaucracy more efficient—an ambition nobody would disagree with—"why wouldn't you have a balanced task force?" Tiefer asks. A pro-business perspective could of course be a valuable component of such a task force, if it were balanced with alternative viewpoints. "If you want to make reforms, you have to offer some of the sweet along with the bitter," he says. But when it comes to the Pentagon's key advisory panel, "that's not what Rumsfeld set up, and it's what Obama didn't change."

The Defense Business Board operates under a renewable two-year charter; it was last renewed in early 2010. As the deficit battle consumes Washington, it appears to be capitalizing on an opportunity to exert more influence. "There was a left side and a right side to the defense establishment when Obama came in," Tiefer says. "The DBB represents the continuity of the right side."

If the congressional super-committee fails to come up with a deficit plan, it will trigger $600 billion in non-optional cuts to the military budget. Some in Congress have already vowed to never let that happen. But either way, Pentagon funds will be on the chopping block, and the designs of the Defense Business Board may be seen as more useful than ever. Even Christie, the conservative defense analyst, is wary of that. "We look askance at all that [corporate influence], particularly with respect to the uniformed military," he says. "This business, the MBA thing, it's for managers, not for war fighters."

My Related Posts:

Defense Industry Launches Propaganda Campaign

Defense Spending, Bogus Parts, Transnational Mergers

Defense Industry Launches Propaganda Campaign

Read: After the Deficit Committee, A New Propaganda Push from the War Profiteers

Now that the deficit committee failed, war profiteer CEOs are launching an all-out propaganda campaign to protect their profit margins. They and their allies in Washington are working to protect the massive, corruption-filled war budget by slashing social safety nets that help create jobs. This would be a disaster for our economy.

With the failure of the deficit committee, Congress must act to cut the bloated, corruption-filled war budget. War Costs' latest video shows that military spending actually costs jobs compared to other ways of spending the same money. Yet, incredibly, many elected officials are publicly contemplating shielding the military from cuts while slashing other programs far better at job creation. This is absolutely unacceptable.

Now is the time to make budget changes to put the most people back to work. The cuts to the military budget have to be your top priority. Use our tool to send Congress War Costs' latest video to make sure they understand the consequences of failing to make real cuts to the military budget: Send our petition to Congress: http://warcosts.com 

One Nation, Under Arms - by Todd S. Purdum

The private papers of the late George F. Kennan: Military spending had become a national addiction. “We could not now break ourselves of this habit,” Kennan wrote, “without the most serious of withdrawal symptoms. Millions of people, in addition to those other millions that are in uniform, have become accustomed to deriving their livelihood from the military-industrial complex. Thousands of firms have become dependent on it, not to mention labor unions and communities.”

American military spending accounts for 43 percent of all defense spending worldwide, 6 times the share of China, 12 times that of Russia. The U.S. Navy is larger than the next 13 navies combined. Overall, defense spending increased about 70 percent under George W. Bush.

That does not include what is spent by related agencies, such as the Department of Homeland Security, or by the myriad intelligence services. Despite the winding down of the wars in Iraq and Afghanistan, and recent talk in Washington about reining in military spending, the trend shows every evidence of continuing. Last spring, the Pentagon identified some $178 billion in potential savings and efficiencies through fiscal year 2016, but then proposed to keep $100 billion of it and redirect it to other programs.

The amorphous bogeyman of global terrorism has made the notion of significant adjustments in defense spending off limits. Officials who should know better—including Defense Secretary Leon Panetta, an old deficit hawk in his days as a congressman from California—warn of the dire consequences of potential cuts.

FULL ARTICLE:
http://www.vanityfair.com/politics/2012/01/Todd-Purdum-on-National-Security

Read my post: Defense Spending, Bogus Parts, Transnational Mergers

Defense Spending, Bogus Parts, Transnational Mergers, Outsourcing & Budget Cuts

Politics & Defense Contractors > CEO Pay & Corporate Taxes > American Taxpayers & Jobs

Bethesda, Maryland is just northwest of Washington, D.C. and is one of the most affluent and highly educated communities in the country. In 2009 Forbes ranked Bethesda second on its list of America's Most Livable Cities. Bethesda is also home to a number of corporate and government headquarters, such as the defense contractor Lockheed Martin. The three largest defense companies in the world are Lockheed Martin, Northrop Grumman and Boeing - the three powerhouses of American business.

Lockheed Martin is one of the world's largest defense contractors. In 2009 74% of its revenues came from military sales. It received 7.1% of the funds paid out by the Pentagon. It received $36 billion in government contracts in 2008 alone, more than any other company in history.

In 2010 Lockheed Martin's fourth-quarter net profits rose 19% to $983 million. Sales for the quarter rose 4.8% to $12.79 billion. The results were helped by a lower effective tax rate of only 22.5% (The latest earning report is here)

In January 2010 Northrop Grumman announced that it was also moving its headquarters to the Washington DC area. Wesley Bush, the new CEO of Northrop Grumman, stated that the company needed to be located closer to Capitol Hill lawmakers. Northrop Grumman's effective corporate tax rate for 2010 was only 21.5 percent.

In a press release, Citizens for Tax Justice declared that Boeing basically did not pay any U.S. corporate income taxes between 2008 and 2010, even as it reported around $10 billion in profits. Not one of the three largest defense contractors paid the actual 35% corporate tax rate.

The 25 top United States companies paid more to their chief executives in 2010 than they did to the federal government in taxes, according to a study done by the Institute for Policy Studies. There's the top 1% of wealthy Americans (bankers, oil tycoons, hedge fund managers) and then there's the top 0.01% of wealthy CEOs who work for military contractors. (Read: War Profiteers). The top 2010 executive salaries in defense was:

• Lockheed Martin CEO Robert Stevens: $21.9 million. (2009 $20.4 million)
• Northrop Grumman CEO Wes Bush: $22.8 million.
• Boeing CEO James McNerney: $19.4 million.

And the vast majority of these CEO salaries were paid as stock-options and only paid a 15% capital gain tax on their personal earnings, while most middle-class incomes are taxed around 25%.

Lockheed Martin does work for more than two dozen government agencies including the Department of Defense and the Department of Energy, Department of Agriculture, and the Environmental Protection Agency.

Lockheed Martin is also involved in surveillance and information processing for the CIA, the FBI, the IRS, the National Security Agency (NSA), the Pentagon, the Census Bureau and the U.S. Postal Service. (Essentially involved in every aspect of an average American's life.)

But Lockheed Martin also ranks #1 on the 'contractor misconduct' database maintained by the Project on Government Oversight, a Washington-DC-based watchdog group. Since 1995, Lockheed Martin has agreed to pay $577 million to settle fifty-four instances of misconduct.

Lockheed Martin's lobbying expenditures in 2009 and 2010 exceeded $10 million in both years, and the Federal Election Committee reports it spent over $1 million in 2011 from its PAC fund, the Lockheed Martin Employees Political Action Committee.

(Below) April 01, 2006 - President George W. Bush sits next to Robert J. Stevens, president and CEO of Lockheed Martin at a trilateral meeting with their counterparts from Mexico and Canada at the North American Leaders' Summit in Cancun, Mexico. (AP photo by Charles Dharapak)

Obama - "The Corporate Warlord"

The Department of Defense last year told Congress of plans to sell up to $103 billion in weapons to overseas buyers, a staggering rise from an average of $13 billion a year between 1995 and 2005.

Defense giants like Lockheed Martin, Northrop Grumman and Boeing have been increasingly trying to peddle their wares to well-financed international customers, and they have a surprising ally: President Obama.

"Obama is much more favorably disposed to arms exports than any of the previous Democratic administrations," says Loren Thompson, a veteran defense consultant.

Or, as Jeff Abramson, deputy director of the Arms Control Association, puts it: "There's an Obama arms bazaar going on."

American-made arms are widely considered the best and most coveted weapons in the world. Obama is also backing a massive push to rewrite the rules that govern arms exports, a process that some say will reduce oversight of U.S. weapons sales (again, "jobs" will always be the selling point, even if those jobs go overseas).

he Federation of American Scientists - Highlighting U.S. government policies on arms exports and conventional weapons proliferation: Globalization and the U.S. Defense Department in the transnational mergers of defense corporations.

The recommendation to welcome transnational mergers addresses an urgent issue. A few large companies already dominate the American arms industry, and Europe's defense firms are rapidly consolidating as well. A single company was created when British Aerospace acquired General Electric's Marconi Electronic Systems, and it now monopolizes the U.K. defense industry

The pursuit of scale-based cost savings is usually the biggest driver for transnational mergers and acquisitions.

Economies of scale is a practical concept that may explain real world phenomena such as patterns of international trade, the number of firms in a market, and how firms get "too big to fail." The exploitation of economies of scale helps explain why companies grow large in some industries. It is also a justification for free trade policies, since some economies of scale may require a larger market than is possible within a particular country — for example, it would not be efficient for Liechtenstein to have its own car maker, if they would only sell to their local market. A lone car maker may be profitable, however, if they export cars to global markets in addition to selling to the local market. Economies of scale also play a role in a "natural monopoly."

But American corporations don't just export products, they've been exporting the factories to create their products, thus cutting domestic jobs for cheaper labor abroad, and saving on the cost of transport as well.

"Pentagon Seeks Mega-Mergers Between International Arms Corporations" - A United States government task force has released its final report to the public recommending globalization of the U.S. defense industry, even if it results in proliferation of conventional weapons.

The Defense Science Board’s Task Force on Globalization and Security (DSB) is a 27-member appointed board, composed mostly of Department of Defense and private industry representatives (i.g. Lockheed Martin, Northrop Grumman and Boeing). It encourages the Pentagon to facilitate transnational mergers of defense corporations in order to avoid eventual conflicts with European countries over global arms market shares.

Overall, the DSB task force advocates reducing Department of Defense’s role in controlling arms exports, and holds little or no confidence in multilateral arms control agreements. The DSB recommends that the Pentagon automatically allow the export of military equipment, except when the United States is the sole possessor of the technology.

READ: America's Hottest Export: Weapons - By Mina Kimes - February 24, 2011 - CNN (No escape from outsourcing).

Defense board sounds louder alarm about foreign software development - Defense relies heavily on commercial off-the-shelf and custom-built software developed in countries such as India, China and Russia, so it can quickly and cheaply take advantage of the latest advances designed for global markets, rather than relying solely on U.S. developers.

But software developed in foreign countries and used by the Defense Department and other agencies puts federal information systems at serious risk of being hacked and compromised, according to a recent report issued by Defense's top advisory board.

The report (Mission Impact of Foreign Influence on DoD Software) by a Defense Science Board (DSB) task force, warns that "globalization of software development where some U.S. adversaries are writing the code that [Defense] will depend upon in war creates a rich opportunity to damage or destroy elements of the war-fighter's capability."

A Thorough Analysis from Stanford University: THE U.S. DEFENSE INDUSTRY AND ARMS SALES

November 2011 - Lockheed Martin, Northrop Grumman and Boeing - BOGUS PARTS! - "Counterfeit goods are a clear and present danger and a threat to our troops. There is a flood of counterfeits and it is putting our military men and women at risk and costing us a fortune."

• Senate committee calls contractors to task for phony military parts
• Officials: Fake weapons parts 'ticking time bomb'
• Should contractors get blamed for counterfeit parts?

Confronting the Nation's Fiscal Policy Challenges

Author: Douglas W Elmendorf; CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC
Pages: 50
Report Date: 13 Sep 2011
Full Report - Number A284945

The federal government is confronting significant and fundamental budgetary challenges. If current policies are continued in coming years, the aging of the population and the rising cost of health care will boost federal spending, as a share of the economy, well above the amount of revenues that the federal government has collected in the past. As a result, putting the federal budget on a sustainable path will require significant changes in spending policies, tax policies, or both. The task of addressing those formidable challenges is complicated by the weakness of the economy and the large numbers of unemployed workers, empty houses, and underused factories and offices. Changes that might be made to federal spending or tax policies could have a substantial impact on the pace of economic recovery during the next few years as well as on the nation's output and people's income over the longer term.

CBO's 2011 Long-Term Budget Outlook

Author: CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC
Pages: 109
Report Date: JUN 2011
Full Report - Number A261545

This Congressional Budget Office (CBO) report presents the agency's projections of federal spending and revenues over the coming decades. Under current law, an aging population and rapidly rising health care costs will sharply increase federal spending for health care programs and Social Security. If revenues remained at their historical average share of gross domestic product (GDP), such spending growth would cause federal debt to grow to unsustainable levels. If policymakers are to put the federal government on a sustainable budgetary path, they will need to increase revenues substantially as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches. In keeping with CBO's mandate to provide objective, impartial analysis, this report makes no recommendations.

Reducing the Deficit: Spending and Revenue Options

Authors: Peter Fontaine; Theresa Gullo; Holly Harvey; Tom Bradley; Kim Crawley; Jean Hearne; Jeffrey Holland; Sarah Jennings; Sam Papenfuss; CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC

Pages: 257
Report Date: MAR 2011
Full Report - Number A804545

The Congressional Budget Office (CBO) regularly issues a compendium of budget options to help inform federal lawmakers about the implications of possible policy choices. This volume--one of several reports that CBO produces regularly for the House and Senate Committees on the Budget--presents more than 100 options for altering federal spending and revenues. Nearly all of the options would reduce federal budget deficits. From 1983 to 1997, the reports in this series were titled Reducing the Deficit: Spending and Revenue Options. In 2000, at a time of budget surpluses, the title was changed to Budget Options. This volume returns to the earlier title because the budgetary context has shifted dramatically since 2000. The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees. The options discussed in this report stem from a variety of sources, including legislative proposals, various Administrations' budget proposals, Congressional staff, other government entities, and private groups. The options are intended to reflect a range of possibilities rather than to provide a ranking of priorities or a comprehensive list. The inclusion or exclusion of a particular policy change does not represent an endorsement or rejection by CBO. In keeping with CBO's mandate to provide objective, impartial analysis, this report makes no recommendations. Some previous reports in this series grouped spending options according to budget function (the 20 programmatic categories into which the government's activities are frequently divided).

* Storming Media is a private, independent reseller of Pentagon and other US federal government reports.

Research: The Joint Committee on Taxation: U.S. Congress

Military-Industrial Complex Speech, Dwight D. Eisenhower, 1961 - "We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations. This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist."

Outsourcing Jobs Now Affects Our National Defense

American corporations with government contracts in our defense industry have profited from outsourcing to Chinese suppliers and getting bogus parts in return. How is it even remotely sane for us to buy anything, much less in defense and security, from a committed military and commercial adversary?

So far it's cost taxpayers $7.5 billion.

Why are American corporations even building electronic gizmos such as iPods in China with slave labor, knowing full well that the Chinese government hacks our computers in the defense department, commits industrial espionage, are involved with counterfeiting (both products and currency), has devalued their currency against ours, and continually engages in unfair trade practices against us?

Not to mention that China has backed two wars against us (Korea and Vietnam) that led to the deaths of over 100,000 American soldiers.

Why? Because we sold them U.S. Treasury bonds? Default on the bastards!

Why are American corporations even building factories in China and hiring Chinese workers at all? Isn't that about as un-American as cutting off taxpayer subsidies to big profitable oil companies that don't pay taxes?

READ: "U.S. Senators say China supplying bogus weapons parts" Full Story at Reuters

PASS THIS ON!

GOP - "Cut Medicare, not Bombs!"

Tit-for-tat, a rag-tag collection of terrorists called al-Qaeda has had a much more efficient "defense" budget than the most powerful military that ever existed on the planet Earth...both in terms of cash expenditures and in lives lost.

Nearly 3,000 victims and 19 hijackers died in the 911 attacks. The United States, with a "defense" budget of nearly $700 billion-a-year allocated to the "defense" industry (which doesn't include our nuclear arsenal and instead, is budgeted under the Department of Energy), has cost the Americans taxpayers $7 trillion to kill Osama Bin Laden - - - and it has also cost us the lives of over 6,026 (to date) brave and patriotic American soldiers.

Who's been getting more "bang-for-their-buck"?

Is the vast U.S. military industrial complex giving the hard-working (and unemployed) American taxpayers a fair bang for its buck? Why does America maintain hundreds of military bases and hundreds of thousands of soldiers all over the world, pumping billions of U.S. dollars into foreign economies? Who's our enemy and from who are we defending our shores? A handful of 16-year-old Somali pirates? What's the real threat, and how is $700 billion-a-year accomplishing our "defense"?

Is this what American taxpayers were referring to regarding waste, fraud, and abuse in government spending? Or were the Republican voters referring to Social Security and Medicare when voting in last November's elections? After all, the Republican leadership has been claiming that that's why the voters had sent them to Washington...to "cut government spending". Or did those voters really mean obscene congressional salaries?

The U.S. "defense" budget makes up almost half of our annual spending, most of which goes to making American corporations ever more profitable at the expense of our infrastructure and the weakening and further erosion of our social programs. Our American society, and our culture as a whole, suffers for this. We can no longer welcome the tired, the poor, and the huddled masses, yearning to breathe free....because America can no longer afford them.

Yet, in all the debates over the debt ceiling and the national budget, Republicans have consistently targeted Social Security, Medicare, and other programs that the majority of us rely on when we become disabled, sick, or too old to work any longer.

And the Republican's proposed cuts also affects millions of U.S. military war veterans as well; but no Republican cuts were ever proposed in government contracts going to American corporations who provide for the vast military industrial complex. (and another reason why soldiers keep re-enlisting during a jobless recession; to avoid unemployment and being subjected to Republican cuts in unemployment benefits).

Republicans, whose economic and tax policies under George W. Bush has displaced millions of American workers and has directly caused our budget revenue shortfalls, has also targeted programs like Medicaid and food stamps for those who lost their jobs during the Great Recession because of those same Republican policies (such as Gramm-Leach-Bliley Act).

In addition to this Republican refusal to heed a former Republican President's warning (Dwight D. Eisenhower), in which he says: "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex." - - - the Republicans have done just the opposite, and have become too dependent on these very corporations (defense contractors) for their political campaign funding.

If these defense contractors (American corporations) have full control of the political influence in the Republican Party, and because the U.S. Supreme Court affirmed in the case Citizens United v. Federal Election Commission, that these very same corporations cannot be limited in funding political broadcasts in candidate elections, and also have the same First Amendment rights as HUMAN citizens, then this can never change.

The Republicans will ALWAYS vote to further fund profitable American corporations at the expense of deep cuts to government services that millions of every-day Americans rely on and need for their very survival. But then again, the Democrats have been no better...always caving in like disgraceful wimps to the Republican blackmailers, hostage-takers, and thugs. (When I was a kid, I once thought that "good" always triumphs over "evil". Just like Republican voters, children can be so naive. I know, I was once a Republican too.)

Republican leaders within their party do this for no other reason other than to keep their own taxpayer-funded government jobs. As a member of congress taking in $174,000-a-year, and receiving very generous perks in addition to the best healthcare that money can buy, and a retirement pension that would make any labor union member blush like a virgin, I too might sell out the American people for my own personal gain...just like the big investment bankers did.

That's why the Republicans lie so much...yes, LIE, telling us things like: "We don't have a revenue problem (taxes), we have a spending problem (Social Security)." How do I know when a Republican is lying to me? It's easy. When I see their damn lips move!

That's why, for several decades, the Republicans have also insisted on continuing corporate welfare for companies making record profits - - - such as BIG OIL, tobacco subsidies, and no-bid contracts in the "defense" industry. The Republicans are essentially OWNED by American corporations, bought and paid for, and can't be relied upon to watch out for the best interests of ordinary working, unemployed, sick, elderly, disabled, or poor American citizens. The GOP only cares about the interests of their political campaigne contributors - - - such as the uber-wealthy, CEOs, and the now-well-known Wall Street bankers.

We don't need more aircraft carriers or submarines or nuclear missiles. What we need is a "defense" from the Republican "offense" in their class war against the middle-class and poor. We already have 20 aircraft carriers (of all classes), Russia has 1, China almost has 1, and al-Qaeda has ZERO. So why should we build more, instead of feeding our poor, paying our teachers, and fixing our roads? Even the Republicans need roads.

Icon of the American Empire - The Navy likes to call the big Nimitz Class carriers "4.5 acres of sovereign and mobile American territory"...how many more of these do unemployed Americans need to protect their interests? They won't protect them from Republican politicians.

We have Met the Enemy... and He is Us

"Our real enemies are not those living in a distant land whose names or policies we don't understand; the real enemy is a system that wages war when it's profitable, the CEOs who lay us off our jobs when it's profitable, the insurance companies who deny us health care when it's profitable, the banks who take away our homes when it's profitable. Our enemies are not several hundred thousands away. They are right here in front of us." - Mike Prysner 

* Full disclosure: I come from a military family (Air Force, Air Force Reserve, Marines, and Navy) and have lived on several military installations. There is no more noble a profession that serving in our armed forces. The men and women who serve are exceptional in every sense of the word. They make untold sacrifices on behalf of our country and I admire and respect each and every one. I'm strong on defense, but I'm not for wasteful government spending that is not needed for defense at all, but instead used by corporations to enrich themselves through "emerging markets". Too many times Americans soldiers are sacrificed by our politicians, not for "defense", but for corporate profits. This has always been the case in human history...profiteers investing in wars.