America’s Favorite Subsidy Game
Are share prices of U.S. defense contractors suffering? Trust the Pentagon to come to the rescue.
February 18, 2000
It’s budget time again in Washington, D.C. As in years past, the media is full of stories about what the White House and Congress hope to spend taxpayer dollars on … and why. In fact, last week we learned that the Pentagon — ten years after the end of the cold war — still wants to use more than a fifth of the $291 billion it has requested for a spending spree on new tanks, jetfighters and other weapons systems.
Normally, we would not give that much thought to such a request. After all, the United States is now the world’s lone superpower — and the country historically spends huge amounts to develop and procure new weapons. And what military does not want an abundance of the latest gizmos, including a new aircraft carrier?
Of course, this being peacetime, we would nonetheless expect the Pentagon to wax creative in defense of its request. But while we thought we had heard just about every possible justification for military expenditures, we were still surprised to see the Washington Post explain the military’s request in the following terms:
“Now the Pentagon is arguing that spending needs to be increased because of the shaky health and poor stock performance of big defense contractors …”
We’re not so naïve that we fail to realize that big procurements of weapons requires big money to be paid to big defense contractors. But until now, we had assumed that doing so was — notwithstanding the pork barrel projects of the U.S. Congress — all in keeping with the simplest reading of the preamble to the U.S. constitution:
“[To] provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity …”
Now it seems that even the Pentagon has caught the stock market fever that has swept the nation. Just as the Pentagon used to watch the skies for signs of Soviet attack, we wonder if — somewhere deep in the bowels of the Pentagon — there isn’t someone keeping an alert eye on a ticker tape of stock prices for Lockheed Martin, General Dynamics and Raytheon.