Too big to fail?
That’s been the key question asked of Wall Street’s biggest banks since the September 2008 collapse of Lehman Brothers, which sent shock waves through the global financial system and led to the worst recession this country has seen since the Great Depression.
But, there is another firm far from the circles of Wall Street for which that same question should be asked, says William Hartung, author of the new book Prophets of War. The subtitle of his book says it all: Lockheed Martin and the Making of the Military-Industrial Complex.
With $40 billion in annual revenue, Lockheed Martin is the single largest recipient of U.S. tax dollars. The company receives about $36 billion in government contracts per year. In 2008, $29 billion of that was for U.S. military contracts – a dollar figure 25% higher than its competitors Boeing Co. and Northrop Grumman.
What does that mean for you, the U.S. taxpayer? According to Hartung, each taxpaying household contributes $260 to Lockheed’s coffers each year!
All evidence enough that the company is "too big to fail", as Hartung tells Aaron in the accompanying clip.
A prime example of Washington looking out for Lockheed happened just last year when debate ensued over whether to continue the company’s grossly expensive F-22 stealth fighter program, says Hartung, who has covered the defense industry for years and is also the director of the Arms and Security Initiative at the New America Foundation.
The Pentagon eventually did suspend funds terminating Lockheed’s development of the F-22 Raptor, which has been the most costly fighter plane ever. But, at the same time the U.S. Defense Department cut off funds for the F-22, it added an additional $4 billion to the Lockheed’s F-35 fighter plane program. The government “basically took with one hand and gave back [to Lockheed] with the other,” says Hartung of a company that is the only major contractor of fighter planes for the U.S. Airforce.
Warning from the past
Two weeks from now marks the 50th anniversary of President Eisenhower’s famous “military-industrial complex” speech cautioning against “undue influence” from large and politically powerful defense companies. According to Hartung, Lockheed Martin epitomizes the exact threat Eisenhower warned about.
By now you might be wondering where the defense contractor’s remaining $7 billion in government contract goes. “They have got their fingers everywhere now,” Hartung tells Aaron. As outlined in his book, Lockheed does way more than produce military aircraft and weaponry. From the U.S. Census Bureau to the U.S. Postal Service to the Internal Revenue Service, “pretty much name a government agency and they are involved,” he says.
Despite Lockheed sheer size, its stronghold on so many government agencies is evidence enough that the company is “too big to fail.” “If the government becomes so dependent on [Lockheed], for many different activities it will be hard to hold them accountable if they underperform or if there is some sort of whiff of scandal.”
Bigger may not be better, but it's working
Hartung’s scathing criticism of Lockheed Martin comes from his belief that “they have not done the job well, often enough,” pointing to decades of cost overruns, a corporate history littered with corruption scandals and the fact that the company was one of the first ever to receive a federal bailout back in the 1970s.
When it comes down to it, Lockheed’s dominance – even with what some might call a checkered past – has much to do with the company’s ability to influence those in power, says Hartung. In 2009, it spent nearly $15 million on campaign contributions and lobbying fees -- the second highest amount for defense contractors.
Another key factor that has helped the defense contractor secure the most U.S. military contracts is the company’s ability to exploit the revolving door between Washington, the industry and itself, says Hartung. Not only has this led to the company having strong influence over those who hold the U.S. government's purse stings, many who are former Lockheed employees or board members, it has allowed the company to influence foreign policy decisions like pressing for war with Iraq.
In the publicity notes for the book, Hartung claims “Lockheed Martin has also funded right-wing think tanks that have done everything from press for war with Iraq to lobby for the “Star Wars” missile defense program.” He tells Aaron that they are using these think tanks to make the points that are “embarrassing to make themselves.”
Hartung acknowledges that “we need companies like Lockheed Martin to defend the country,” but he says that a lot more can be done to regulate the industry by setting “stricter accountability rules.”
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They are the work horse for the Government.
China launches aircraft carrier.
Have any of you ever tried to make a modern fighter jet? How about a combat ship, or a satellite? Do you think there are any hostile countries that might want to hurt us? What would you do if they put carriers off the coast and unloaded thousands of soldiers into the US? Its very easy to scoff at a price if you have never had to design and build something that worked better than any other product in the world. Any child can complain about the cost of a space craft. If you hate the protection you get, maybe you should leave? How about Somalia? Its probably cheap there, you could save 260 bucks a year?
Shut 'em down!.....Corruption is too obvious..and we don't need defense....unless we are hated...and why would that be the case?????
The global organized criminals, the international bankster gangsters, the servants of Satan, have murdered, lied, extorted, bribed, stolen and used every conceivable criminal method to take over positions of power, authority, leadership and ownership in governments, corporations, businesses, religions, media, education and all aspects of life everywhere throughout America and the world. It is all about power and greed. The American people are being plundered and impoverished by illegal and oppressive Satanic IRS taxation and the Satanic Federal Reserve money scams to support the Kingdom of Satan world-wide. The gullible American people are funding illegal, senseless, contrived wars, genocides, assassinations, overthrowing governments, indoctrination and dumbing down of children, poisonous vaccinations and inoculations chemtrails, poisonings of water/ air/food/soil/plants/animals and humans everywhere throughout America and the world. The Satanists intend to own and control everyone and everything on this planet through a scientific dictatorship, using very advanced technology to spy on and murder anyone who opposes their totalitarian military police-state world government. These servants of Satan have evil, deceit and treachery honed to an art and a science.
Tech Ticker: Good clip! Keep up the good work! Aspects of corporate lobbying and legislation favoring such lobbies are mentioned here-- I love the content in this clip. Such corporations are a necessary evil/good to maintain a strategic advantage over military opponents and support/entice alliances with friendly nations. An excellent business model, in my opinion. There should be more such "protected" industries to permit full employment in the U.S by nationalizing (classifying them as "secret"-- cannot outsource) certain technologies as vital to economic security.
This clip is a great plug for the author's book.
Pres Eisenhower was correct about the Military Industrial Complex (MIC) when he commented on it in 1961. However I would argue that it is much less applicable now. In the Semiconductor biz for example, in rhe 1960's, Government related programs accounted for the majority of demand for these devices. Today with the advent of portable computing applications, cell phones and a wide array of consumer applications , Military useage accounts for <1% off world wide demand for semiconductors. The industry (and we the consumer) actually benefited from the Military's involvement and investment in this industry, as it drove R&D when the industry was in its infancy and we all benefited from it as consumers later on. The other thing to keep in mind is before the end of the Cold War there were exponetially more defense contractors than there are now. (Remember Martin Marietta, McDonald/Douglas, Ford Aerospace , Unisys and Motorola (to name a few) . These companies either exited the Defense biz altogher or were aquired into bigger defense entities because defense spending was correctly reduced in the 90s after the cold war, and the market for defense related products could not support the Cold War supplier base. There is a much smaller footprint of large defense contractors now. Lockheed is successful here partly because it is good at serving its number 1 customer. If you have ever done biz with the US govt its not a easy chore. There is a host of compliancy issues from spec compliance to certified pricing justification (many of these a ordinary business doesnt have to deal with and dont want to deal with) . Lockheed has buildings full of people that are experts at such contract compliance. (One might argue that the govt should not be so difficult to do business with , but that is just the reality that Lockheed has to deal with ) . On the corruption issue, Lockheed hasnt been the most visible one of late, the most notorious one has been Boeing, they hired a high ranking Air Force procurement officer upon her retirement and it was revealed that Boeing had provided her with a implied job offer before she left the Ahr Force. The recent Tanker award to Boeing was scuttled a few years ago due to corrupt practices. Lockheed isnt perfect, but as the beneficary of a mostly peaceful world, Im glad there are contractors that are willing to put up with the US Govt's @#$% on a large scale to support our defense industry .
this is just a question, can another country purchase some of these planes or weapons.
To people who hate the Space Shuttle or other NASA programs:
Dumb! We get all the benefits of R&D on space programs, light weight materials, advanced electronics in computers/phones/cars, etc...you have no idea what you are saying...the benefits of the space shuttle outweigh most defense contractor programs 100 fold.
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