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How the U.S. Military Undermines the American Economy

Photograph Source: Danny Myers, U.S. Air Force photo – Public Domain

On January 17, 1961, President Dwight Eisenhower gave his now-famous farewell address, warning the nation:

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.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

These remarkable words have never resonated with more truth then they do today. However, one critical paragraph of Eisenhower’s speech is often overlooked:

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.

Now, nearly six decades later, Eisenhower’s warning has become institutionalized.  Military spending not only strongly influences, if not shapes, corporate capitalism but might well pose a threat to the future of the nation’s economic development.

***

Eisenhower surly must be spinning in grave given how much influence the military industrial complex wields today.  In 1960, the military budget stood at $344 billion; today, the military complex, including the ever-growing intelligence apparatus, cost taxpayers over $1 trillion.

Military spending for the period October 1, 2019, through September 30, 2020, is at $989 billion and covers the Dept. of Defense, veterans’ benefits, international military assistance, nuclear weapons spending and military intelligence.

A 2018 Congressional Research Service (CRS) report notes that the “intelligence community” consisted of 17 components and its influence “is significant.”

In fiscal year FY2017 alone, the aggregate amount (base and supplemental) of appropriated funds for national and military intelligence programs totaled $73.0 billion ($54.6 billion for the NIP [National Intelligence Program], and $18.4 billion for the MIP [Military Intelligence Program]). For FY2018, the aggregate amount of appropriations requested for national and military intelligence programs totaled $78.4 billion ($57.7 billion for the NIP and $20.7 billion for the MIP).

The CRS notes, “there are 4 defense NIP programs, 8 non-defense NIP programs, and 10 MIP programs. Six U.S. intelligence community (IC) components have both MIP and NIP funding sources.”

Perhaps more alarming, a 2017 New York Times story drew attention to the influence of this taxpayer-funded and highly profitable enterprise.  “Roughly 10 percent of the $2.2 trillion in factory output in the United States goes into the production of weapons sold mainly to the Defense Department for use by the armed forces.”

Drawing upon data from the Bureau of Economic Analysis, the Times reminds readers that “public money flows to factory owners in many ways — often as a result of the frequent bidding by municipal governments to persuade a manufacturer to locate a factory in one community rather than another. … That outlay of taxpayer money is concentrated in eight sectors of manufacturing, including ammunition, aircraft, guided missiles, shipbuilding and armored vehicles.”  It states: “To put the matter graphically, factories in the United States churn out one rifle barrel for every nine auto fenders.”

The online journal, 24/7 Wall St. identifies the following top five military-funded corporations for 2017:

Lockheed Martin – it received $50.7 billion of its total $51.05 billion revenue; it supplies military aircraft, missiles, drones, fire control systems, helicopters, ships and space systems.

Boeing Co. – it received $23.36 billion of its total $93.39 billion revenue; it supplies the KC-46A tanker, the F/A-18 Super Hornet and Apache combat helicopter.

General Dynamics Corp – it received $15.34 billion of its total $30.97 billion revenue; it supplies Abrams main battle tank and information systems and technology.

Raytheon Company – it received $14.66 billion of its total $25.35 billion revenue; it supplies missile systems, radar, sensor and guidance systems as well as cybersecurity technology.

Northrop Grumman Corp. – it received $11.19 billion of its total $25.80 billion revenue; it operates in three main divisions: aerospace systems, mission system and technology services and supplies control systems for the F/A 18 (as a partner with Boeing), the B-2 bomber and the A-10 Warthog.

Insight into the top 5 intelligence-complex corporations is provided by financial data for 2017 from DataLab (with detailed breakdown per agency/function) and a 2016 analysis by The Nation:

Leidos Holdings – total contacts for $1.68 billion with military and NSA fo Leidos Innovations Corp. and Leidos Management Systems; merged with Lockheed Martin’s Information Systems & Global Solutions division of, the global military giant.

Booz Allen Hamilton – total contacts for $4.24 billion; it is partly owned by the Carlyle Group and Booz personnel “rapidly track high-value individuals” targeted by the US military in a system now “deployed, and fully operational in Afghanistan.”

CSRA – total contacts for $1.4 billion; its CSRA Information Service unit has a $10.4 million contract with the Army and — following a merger between CSC (which develops and manages the NSA’s classified internal-communications system) and SRA International (involved in intelligence, surveillance, and reconnaissance has close ties to the Air Force.

SAIC (Science Applications International Corporation) – total contacts for $3.6 billion with $906.5 million for the Army, $735.5/m for the Navy, $263.4/m for the Air Force, $94/m for the Defense Dept. and $547.8/m for Defense Logistics; recently acquired Scitor that manages satellites for the NSA and the National Geospatial-Intelligence Agency (NGA).

CACI – total contacts for $670.5 million; with $508.3 for the Army, $116.2 million for the Navy and other funding under different corporate names (e.g., CACI Federal, CACI Information Systems, CACI NSS, etc.) and recently acquired two companies doing extensive work for the NSA and the CIA: National Security Solutions (bought from L-3 Communications) and Six3 Intelligence Solutions.

Leading high-tech companies are seeking to get piece of the military-industry pork barrel. A contentious battle has broken out between Amazon, Google, Microsoft and Oracle over a $10 billion contract for what is known as the JEDI (Joint Enterprise Defense Infrastructure) program.  The Intercept reported that Oracle “provided new details to support its accusation that Amazon secretly negotiated a job offer with a then-Department of Defense official who helped shape the procurement process for a massive federal contract for which Amazon was a key bidder.”

However, while Amazon Web Services and Microsoft are the apparent two finalists for the deal, ProPublica revealed that the final contract announcement was supposed was put off because “President Trump expressed his skepticism over the deal.” Trump has sought to kill the deal because of his anger toward Jeff Bezos who owns The Washington Post that has been very critical of him.

***

The U.S. military victory in WW-II made the nation a global power; the Cold War with the former Soviet Union (SU) turned the nation – and military – into a superpower. The collapse of the SU in December 1991 propelled the U.S. into global hegemony.  This hegemony fostered two complementary developments.  First, it fostered relative stability that enabled globalization, a (relatively) secure finance-driven, global capitalist marketplace. Second, the U.S. military over-played its hand.

Over the last half-century, it became not simply a vast corporate industry but one seeking to maximize ever higher-priced technological solutions.  This has occurred as in nearly every major confrontation since the Korean War, U.S. military confrontations have ended in stalemate or defeat.  The U.S.’s bloated and inept military-intelligence fortress failed to predict – let alone foil – the 9/11 attacks.  And the follow-up campaigns in Afghanistan and Iraq have dragged on for 16 years.

Reflecting on the drone attack on Saudi Arabia’s oil field in a recent CounterPunch article, Patrick Cockburn observed, “the trump card for the US, Nato powers and Israel has long been their overwhelming superiority in airpower over any likely enemy.”  He then argues convincingly, “suddenly this calculus has been undermined because almost anybody can be a player on the cheap when it comes to airpower.”

A recent report by the U.S. Army War College’s Strategic Studies Institute, “At Our Own Risk: DoD Risk Assessment in a Post-Primacy World,” reports on the obvious: “the United States [is] entering or being in the midst of a new, more competitive, post-U.S. primacy environment. … Moreover, as such, the United States can no longer rely on unsophisticated combinations of raw political, economic, and military power to force outcomes in its favor.”

Bill Hartung, an authority on military spending, wrote in 2018, “the biggest economic challenge facing the United States today is how to organize an economic transition that would replace jobs and income generated by dysfunctional activities like overspending on the Pentagon and subsidizing polluting industries.”  His answer is very simple: “invest in virtually anything but buying more and more weapons and waging more wars and America will be better off.”

More articles by:

David Rosen is the author of Sex, Sin & Subversion:  The Transformation of 1950s New York’s Forbidden into America’s New Normal (Skyhorse, 2015).  He can be reached at drosennyc@verizon.net; check out www.DavidRosenWrites.com.

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