Tag Archives: Department of Energy

Our Real National Security Budget

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$2 Trillion, Here We Come.

Signe’s second toon du jour SIGN17e Military

By Andrew Cockburn

Source: Spoils of War

The Biden Administration has just published its proposed budget, generating copious commentary, much of it displaying a commensurate degree of misunderstanding, especially regarding our gargantuan national security spending. To get at the truth of the matter, I consulted my friend Winslow Wheeler, who has been observing the insalubrious intricacies of the budget process over the past fifty years as a senior aide to Senators from both parties as well as a senior analyst for the General Accounting Office and directing the Center for Defense Information.

The defense budget has just been posted by the administration is being described as approaching a trillion dollars. Is that accurate?  :

No. It’s actually a lot more than that. In fact it’s beginning to inch up on $2 trillion. 

How so?

The problem is that when most people look at the defense budget, they don’t count everything that we spend even for the Pentagon. But in addition to that, there are hundreds of billions of dollars outside of the Pentagon’s budget that we spend for national security. Things like the nuclear weapons activities in the Department of Energy; that’s $37 billion; $26 billion for retired military pensions and healthcare and $12 billion for the Selective Service, the National Defense Stockpile, and a strange and suspicious looking category for the international activities of the FBI in something called “Defense Related Activities.”

Do we have any idea what that last one is for?

It has always been classified. In the 50 years I’ve been watching the defense budget, it’s never been explained other than some occasional hints. One year they admitted to a lot of money being spent by the FBI in, wait for it, Taiwan, and so it’s very unclear exactly what this is, but it’s always counted as part of so-called defense related activities.  

The expenses that I have just been describing come to $970 billion, but that leaves out a lot.. Add in about $800 billion for the Department of Veterans Affairs, the State Department and its associated agencies, the Department of Homeland Security. And we know now from our Republican friends that border protection is a dire national security issue. Add all that together. Then you can calculate the share for the interest on the debt that we pay each year. All those activities I’ve just described come to 21% of all federal spending. Calculating in that percentage as a the amount it contributes to the debt burden gives you $254 billion.. And so you add all of that up together and you get $1.767 trillion.

Jesus Christ.  What about CIA and other intelligence spending?

All the intelligence agencies are in the Pentagon budget except for the intelligence agencies for the State Department, Coast Guard and  the Department of Homeland Security. Those are the few other things that are not in the Pentagon budget that are distributed in the other agencies that I’ve described.  When they last published the total amount for the intel budget it was over $120 billion, but it’s all embedded in these various agencies.

Since the budget was published, there’s been some wailing and lamentation that because of irksome spending restraints, this budget  actually represents a cut or at least restraint on defense spending. What’s your view on that?

Well, last yea the budget deal that then-Speaker Kevin McCarthy negotiated with the Democrats for the Pentagon allowed only a 1% increase in defense spending. But because of the screwy way that we actually calculate things, if you put together everything we spent just for the Pentagon without all those other items I mentioned, last year, it looks like we will have spent $968 billion, while for 2025, Biden’s requesting $921 billion. So yes, that’s a cut. But that doesn’t include the supplementals that Biden will request later this year for the Pentagon, for Ukraine, Israel, God knows what, that will get us back into competition with 2024. The reason why 2024 is higher than the Biden request is because it had 60 billion worth of emergency supplementals that Congress is about to approve and that money is counted in my total. But because of the broken accounting rules that we use for the budget, that money’s not counted when you calculate the deal that McCarthy made with the Democrats, and that’s emergency money that doesn’t count on budget cap.

For years we had the Overseas Contingency Operations defense spending, the so called war budget, which was the extra money the military got for actually fighting wars in Afghanistan and elsewhere. Are we getting back to that?

Yes.  The politically-derived budget caps don’t apply to that money.  And it’s a lot more than just for the wars; lots of billions for goodies for everybody added each year there. It’s all part of the hocus pocus ways that Congress allows itself to appropriate money so it can pretend that it’s using restraint, but actually is exploiting all kinds of loopholes to increase whatever cap or restraint they pretend that they’ve added to the defense budget.

What’s the next budgetary legislative stage that we’re going to endure?

:We haven’t finished with 2024 yet, because Congress  has gotten into this habit of never passing budgets on time. And it also helps the Speaker of the House and the Majority Leader of the Senate discipline members so they don’t get out of the line on things. We do these things called continuing resolutions that keep the money flowing but only at the level approved in the previous year. And we’re in that situation for the Defense Department for 2024. Next week or the week after, they’re going to resolve that and pick a final total for 2024, which will include most, but probably not all of the emergency supplemental that Biden requested for Ukraine, Israel, Taiwan, and defense industrial base spending. So that number will become final in two or three weeks. We have barely begun on the 2025 consideration in Congress that will take the next three, four months and we’ll have another continuing resolution because they won’t pass things in time for the beginning of the fiscal year on October 1st, and we’ll go through this charade once again. And because this is an election year, it’ll be all that more sloppy, painful, and unappealing to observe.

Then when they do it, Chuck Schumer and whoever is the Speaker of the House will pat themselves on the back and say, ‘well, we’ve done a great job. Who says we can’t do anything. We just got the budget finally passed.’ But that will be months late yet again.

Are there items tacked onto the defense bills that have nothing to do with defense? 

Yes. There’s two bills. One is the National Defense Authorization Act, which is the bill that goes to the House and Senate Armed Services Committees. That’s a policy bill. It doesn’t make money actually available to be spent, but it pretends it does. It has lots of numbers in it; it’s a tar baby for all kinds of crazy stuff or politically driven stuff because the legislative process is so broken.  Members don’t have an opportunity to do stuff on the floor of the House and Senate and especially in the Senate because the Majority Leader exploits the rules to make amendments impossible. The National Defense Authorization Act is one of those bills where they actually get a chance to do amendments and they do all kinds of crazy stuff, lots of stuff that has absolutely nothing to do with national defense.  Last year they had 600 amendments for that bill.

Whew.

But they don’t really get debated. This is yet another way that the Majority Leader, Chuck Schumer, controls things. If you’re a Senator, you have to supplicate Schumer to get him to accept your amendment. That will then will get into a package that he’s blessed and it’ll be adopted wholesale by the Senate with perfunctory debate and members giving staff-written speeches about ‘this is a wonderful bill. It includes my important amendment to increase ice block cutting in Minnesota’ and all kinds of other crazy stuff. Every one of these will have been approved by Schumer or his agents as politically acceptable. If you are a dissenter and have a problem with how things are done in the Pentagon or anywhere else, you will not get Schumer’s blessing and your amendment will not be added to his package to be dumped into the National Defense Authorization Act, and you’ll be out in the cold. We go through essentially the same process with the appropriations bill, which is the one that actually makes the money available to all these agencies. Yet again, Schumer controls the process where if he likes the smell of your amendments and it’s okay with the prevailing political dogma that week or that month or for the last decade, it’ll get included. And if you have something that that Chuck Schumer doesn’t like, your amendment will be out in the cold.

Was it always like this?

When the Senate described itself as the world’s greatest deliberative body back in the 1970s and eighties, it would have a process where a bill would come up on the floor in the Senate, and the Senate took great pride in the fact that it had unlimited amendments, and you could offer an amendment on anything you wanted to all of these bills, whether it’s the National Defense Authorization Act or the FAA Authorization Act, and there would be a proper debate, and then the Senate would vote and the majority of those senators present in voting would prevail.

Today it’s a fundamentally broken process because of the automatic filibuster, which allows the party leaders to totally control things. Unless a Senator can somehow put together sixty votes to override a filibuster, Schumer and McConnell can simply prevent your amendment from even coming to the floor, let alone get debated. It’s also a corrupt process because if you legislate in ways that Chuck Schumer, or whoever is the leader, doesn’t like or your idea is a pain in the ass for the Democratic, or Republican, caucus, you will be on the outs.  Furthermore, Schumer, and McConnell control a large portion of the money that you need for your reelection campaign. And if you don’t behave yourself, you’ll be on the outs, not just on getting your amendment adopted, but you’ll be on the outs so far as getting any of his money is concerned. And for the money that he doesn’t directly control, he’ll be sending the message to the big political donors, ‘don’t give anything to Senator So and So. He’s not one of us; he’s not a good boy.’  That’s the way we do business these days.

Getting back to the defense bill, I saw an item this morning that the Navy is saying they all have to cut back Virginia class submarine production from two to one next year because of their terrible financially straitened circumstances. How do we read that?

There’s two things going on there. One is that the Navy has requested a gigantic ship-building budget, something like $45 billion. The problem is that navy ships are so expensive these days that you can’t fit much dirt into that bag. Those submarines are about $3 billion apiece. Aircraft carriers, and we’re paying for two more, are about $13 billion apiece. They have a brand new ‘low cost’ frigate that’s getting into production this year. Those come in at $1 billion apiece. When you have ships that cost these amounts, even with a gigantic budget, like $45 billion, you can’t buy many of them. The second thing that’s going on is the Navy is tickling the system. They’re saying, ‘Oh dear, we can only afford one sub this year because we’re so stretched running. And isn’t that just terrible?’ So they’re tickling Congress where it feels good, and they’re saying, ‘okay, when you add money, add money for another submarine.’

So does that mean the budget will grow beyond what the President has asked for?

The Biden request is a floor, not a ceiling.

And the other game that goes on is they are actually limited in a relative sense in the billions of dollars that they can add on each year. So the staff on the appropriations committee and the two armed services committees, they go looking for things to cut in the accounts in the Pentagon budget where nobody’s paying much attention. So they can then plow that money back into the stuff that the Navy wants for these submarines, or that Senator X, Y, or Z wants for a research and development program that just happens to be performed in his, or her, state and just happens to be from that company that gave him a healthy political contribution last year.  One of the things the staffs love to cut is training money for the Air Force and others,  because they’ll declare the request to have been excessive. They’ll add that few hundred million dollars to the pot for goodies that members of Congress want. An added problem, of course, is that the Air Force is already way, way behind on trending hours for pilots, and that account needs more money, not less money. There are all kinds of other games that the staff at these committees play to pretend they’re taking out unuseful money, and paying for the oh, so wonderful ideas that members of Congress want for their special requests.

Thank you. At least we’ve been warned.

The Ultimate All-American Slush Fund

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How A New Budget Loophole Could Send Pentagon Spending Soaring Even Higher

By Julia Gledhill and William D. Hartung

Source: TomDispatch

On June 3rd, President Joe Biden signed a bill into law that lifted the government’s debt ceiling and capped some categories of government spending. The big winner was — surprise, surprise! — the Pentagon.

Congress spared military-related programs any cuts while freezing all other categories of discretionary spending at the fiscal year 2023 level (except support for veterans). Indeed, lawmakers set the budget for the Pentagon and for other national security programs like nuclear-related work developing nuclear warheads at the Department of Energy at the level requested in the administration’s Fiscal Year 2024 budget proposal — a 3.3% increase in military spending to a whopping total of $886 billion. Consider that preferential treatment of the first order and, mind you, for the only government agency that’s failed to pass a single financial audit! 

Even so, that $886 billion hike in Pentagon and related spending is likely to prove just a floor, not a ceiling, on what will be allocated for “national defense” next year. An analysis of the deal by the Wall Street Journal found that spending on the Pentagon and veterans’ care — neither of which is frozen in the agreement — is likely to pass $1 trillion next year.

Compare that to the $637 billion left for the rest of the government’s discretionary budget. In other words, public health, environmental protection, housing, transportation, and almost everything else the government undertakes will have to make do with not even 45% of the federal government’s discretionary budget, less than what would be needed to keep up with inflation. (Forget addressing unmet needs in this country.)

And count on one thing: national security spending is likely to increase even more, thanks to a huge (if little-noticed) loophole in that budget deal, one that hawks in Congress are already salivating over how best to exploit. Yes, that loophole is easy to miss, given the bureaucratese used to explain it, but its potential impact on soaring military budgets couldn’t be clearer. In its analysis of the budget deal, the Congressional Budget Office noted that “funding designated as an emergency requirement or for overseas contingency operations would not be constrained” by anything the senators and House congressional representatives had agreed to.

As we should have learned from the 20 years of all-American wars in Afghanistan and Iraq, the term “overseas contingency” can be stretched to cover almost anything the Pentagon wants to spend your tax dollars on. In fact, there was even an “Overseas Contingency Operations” (OCO) account supposedly reserved for funding this country’s seemingly never-ending post-9/11 wars. And it certainly was used to fund them, but hundreds of billions of dollars of Pentagon projects that had nothing to do with the conflicts in Iraq or Afghanistan were funded that way as well. The critics of Pentagon overspending quickly dubbed it that department’s “slush fund.”

So, prepare yourself for “Slush Fund II” (coming soon to a theater near you). This time the vehicle for padding the Pentagon budget is likely to be the next military aid package for Ukraine, which will likely be put forward as an emergency bill later this year.  Expect that package to include not only aid to help Ukraine fend off Russia’s ongoing brutal invasion but tens of billions of dollars more to — yes, of course! — pump up the Pentagon’s already bloated budget.

Senator Lindsey Graham (R-SC) made just such a point in talking with reporters shortly after the debt-ceiling deal was passed by Congress. “There will be a day before too long,” he told them, “where we’ll have to deal with the Ukrainian situation. And that will create an opportunity for me and others to fill in the deficiencies that exist from this budget deal.”

Senate Majority Leader Chuck Schumer (D-NY) made a similar point in a statement on the Senate floor during the debate over that deal. “The debt ceiling deal,” he said, “does nothing to limit the Senate’s ability to appropriate emergency/supplemental funds to ensure our military capabilities are sufficient to deter China, Russia, and our other adversaries and respond to ongoing and growing national security threats.”

One potential (and surprising) snag in the future plans of those Pentagon budget boosters in both parties may be the position of House Speaker Kevin McCarthy (R-CA). He has, in fact, described efforts to increase Pentagon spending beyond the level set in the recent budget deal as “part of the problem.” For the moment at least, he openly opposes producing an emergency package to increase the Pentagon budget, saying:

“The last five audits the Department of Defense [have] failed. So there’s a lot of places for reform [where] we can have a lot of savings. We’ve plussed it up. This is the most money we’ve ever spent on defense — this is the most money anyone in the world has ever spent on defense. So I don’t think the first answer is to do a supplemental.”

The Massive Overfunding of the Pentagon

The Department of Defense is, of course, already massively overfunded. That $886 billion figure is among the highest ever — hundreds of billions of dollars more than at the peak of the Korean or Vietnam wars or during the most intensely combative years of the Cold War. It’s higher than the combined military budgets of the next 10 countries combined, most of whom are, in any case, U.S. allies. And it’s estimated to be three times what the Chinese military, the Pentagon’s “pacing threat,” receives annually. Consider it an irony that actually “keeping pace” with China would involve a massive cut in military spending, not an increase in the Pentagon’s bloated budget.

It also should go without saying that preparations to effectively defend the United States and its allies could be achieved for so much less than is currently lavished on the Pentagon.  A new approach could easily save significantly more than $100 billion in fiscal year 2024, as proposed by Representatives Barbara Lee (D-CA) and Mark Pocan (D-WI) in the People Over Pentagon Act, the preeminent budget-cut proposal in Congress. An illustrative report released by the Congressional Budget Office (CBO) in late 2021 sketched out three scenarios, all involving a less interventionist, more restrained approach to defense that would include greater reliance on allies. Each option would reduce America’s 1.3-million-strong active military force (by up to one-fifth in one scenario). Total savings from the CBO’s proposed changes would, over a decade, be $1 trillion.

And a more comprehensive approach that shifted away from the current “cover the globe” strategy of being able to fight (though, as the history of this century shows, not always win) wars virtually anywhere on Earth on short notice — without allies, if necessary — could save hundreds of billions more over the next decade. Cutting bureaucracy and making other changes in defense policy could also yield yet more savings. To cite just two examples, reducing the Pentagon’s cohort of more than half-a-million private contract employees and scaling back its nuclear weapons “modernization” program would save significantly more than $300 billion extra over a decade.

But none of this is even remotely likely without concerted public pressure to, as a start, keep members of Congress from adding tens of billions of dollars in spending on parochial military projects that channel funding into their states or districts. And it would also mean pushing back against the propaganda of Pentagon contractors who claim they need ever more money to provide adequate tools to defend the country.

Contractors Crying Wolf

While demanding ever more of our tax dollars, the giant military-industrial corporations are spending all too much of their time simply stuffing the pockets of their shareholders rather than investing in the tools needed to actually defend this country. A recent Department of Defense report found that, from 2010-2019, such companies increased by 73% over the previous decade what they paid their shareholders. Meanwhile, their investment in research, development, and capital assets declined significantly. Still, such corporations claim that, without further Pentagon funding, they can’t afford to invest enough in their businesses to meet future national security challenges, which include ramping up weapons production to provide arms for Ukraine.

In reality, however, the financial data suggests that they simply chose to reward their shareholders over everything and everyone else, even as they experienced steadily improving profit margins and cash generation. In fact, the report pointed out that those companies “generate substantial amounts of cash beyond their needs for operations or capital investment.” So instead of investing further in their businesses, they choose to eat their “seed corn” by prioritizing short-term gains over long-term investments and by “investing” additional profits in their shareholders. And when you eat your seed corn, you have nothing left to plant next year.

Never fear, though, since Congress seems eternally prepared to bail them out. Their businesses, in fact, continue to thrive because Congress authorizes funding for the Pentagon to repeatedly grant them massive contracts, no matter their performance or lack of internal investment. No other industry could get away with such maximalist thinking.

Military contractors outperform similarly sized companies in non-defense industries in eight out of nine key financial metrics — including higher total returns to shareholders (a category where they leave much of the rest of the S&P 500 in the dust). They financially outshine their commercial counterparts for two obvious reasons: first, the government subsidizes so many of their costs; second, the weapons industry is so concentrated that its major firms have little or no competition.

Adding insult to injury, contractors are overcharging the government for the basic weaponry they produce while they rake in cash to enrich their shareholders. In the past 15 years, the Pentagon’s internal watchdog has exposed price gouging by contractors ranging from Boeing and Lockheed Martin to lesser-known companies like TransDigm Group. In 2011, Boeing made about $13 million in excess profits by overcharging the Army for 18 spare parts used in Apache and Chinook helicopters. To put that in perspective, the Army paid $1,678.61 each for a tiny helicopter part that the Pentagon already had in stock at its own warehouse for only $7.71.

The Pentagon found Lockheed Martin and Boeing price gouging together in 2015. They overcharged the military by “hundreds of millions of dollars” for missiles. TransDigm similarly made $16 million by overcharging for spare parts between 2015 and 2017 and even more in the following two years, generating nearly $21 million in excess profits. If you can believe it, there is no legal requirement for such companies to refund the government if they’re exposed for price gouging.

Of course, there’s nothing new about such corporate price gouging, nor is it unique to the arms industry. But it’s especially egregious there, given how heavily the major military contractors depend on the government’s business. Lockheed Martin, the biggest of them, got a staggering 73% of its $66 billion in net sales from the government in 2022. Boeing, which does far more commercial business, still generated 40% of its revenue from the government that year. (Down from 51% in 2020.)

Despite their reliance on government contracts, companies like Boeing seem to be doubling down on practices that often lead to price gouging. According to Bloomberg News, between 2020 and 2021, Boeing refused to provide the Pentagon with certified cost and pricing data for nearly 11,000 spare parts on a single Air Force contract. Senator Elizabeth Warren (D-MA) and Representative John Garamendi (D-CA) have demanded that the Pentagon investigate since, without such information, the department will continue to be hard-pressed to ensure that it’s paying anything like a fair price, whatever its purchases.

Curbing the Special Interest Politics of “Defense”

Reining in rip-offs and corruption on the part of weapons contractors large and small could save the American taxpayer untold billions of dollars. And curbing special-interest politics on the part of the denizens of the military-industrial-congressional complex (MICC) could help open the way towards the development of a truly defensive global military strategy rather than the current interventionist approach that has embroiled the United States in the devastating and counterproductive wars of this century.

One modest step towards reining in the power of the arms lobby would be to revamp the campaign finance system by providing federal matching funds, thereby diluting the influential nature of the tens of millions in campaign contributions the arms industry makes every election cycle. In addition, prohibiting retiring top military officers from going to work for arms-making companies — or, at least, extending the cooling off period to at least four years before they can do so, as proposed by Senator Warren — would also help reduce the undue influence exerted by the MICC.

Last but not least, steps could be taken to prevent the military services from giving Congress their annual wish lists — officially known as “unfunded priorities lists” — of items they want added to the Pentagon budget. After all, those are but another tool allowing members of Congress to add billions more than what the Pentagon has even asked for to that department’s budget.

Whether such reforms alone, if adopted, would be enough to truly roll back excess Pentagon spending remains to be seen. Without them, however, count on one thing: the department’s budget will almost certainly continue to soar, undoubtedly reaching $1 trillion or more annually within just the next few years.  Americans can’t afford to let that happen.