Military

Six Degrees of Military Spending

Nearly everyone knows someone who gets paid by the Pentagon. That's why it's so hard to cut.

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The Department of Defense, with its 2.3 million workers, is the single largest employer in the United States. The defense industry, which is the main private-sector recipient of defense dollars, directly or indirectly employs another 3 million people. This, in a nutshell, is why it's so hard to cut government spending in general and military spending in particular.

The scope and reach of the government are far bigger than we think, explains John J. Dilulio of the National Academy of Public Administration in the Spring 2012 issue of National Affairs. It's more than just the money Washington spends or the people it employs. It's also the people in the private sector who live off that spending. It's the nonprofit organizations paid to help administer government programs. It's the contractors who run the programs, the contractors' sub-contractors, and so on.

Dilulio calls this interconnected mass "BIG PAP," short for "Big Inter-Government" and its "Private Administration Proxies." In 2012, for example, the Department of Defense shelled out $688 billion to cover, among other things, the salaries of some 801,000 civilian employees and 766,000 contractors. The Pentagon's BIG PAP therefore amounts to more people than the headcount of the active duty military. The biggest contractor, Lockheed Martin, hires an additional 40,000 subcontractors as well.

If you live in northern Virginia, the most military-heavy region of the state that receives more Pentagon money than any other, you almost certainly know someone who works for the Department of Defense or one of its contractors or sub-contractors, or who is married to someone else who does. While Virginia takes top dollar, a 2011 Congressional Research Service (CRS) report notes that the Defense Department is by far "the top federal employer in most states." It also employs "more than 90 percent of federal civilian employees in foreign countries." BIG PAP is everywhere.

The business of government is extremely lucrative. As The Washington Examiner's Tim Carney noted in a September column, the three counties in America that have a median income above $100,000 are all in northern Virginia, and seven of the 10 richest counties are all within commuting distance of the District of Columbia. As he concludes, "You can surmise where the wealth is coming from: the expanding federal government."

On average, federal employees are paid more than their counterparts in the private sector. A 2009 study by Chris Edwards, director of fiscal studies at the Cato Institute, found that the average federal civilian worker now earns twice as much in wages and benefits as the average private-sector worker. According to the CRS, the average 2010 salary in the federal government was $74,800, compared to a national average of $44,400 for all workers. The difference is even more pronounced within the military industry. A March 2012 report by the consulting firm Deloitte found that roughly 80 percent of aerospace and defense industry employment is paid for mostly by the government, and that in 2010 the average wage for their industry was $80,100.

The biggest military contractors end up relying on the Pentagon for the vast majority of their sales. According to USAspending.gov, the five top recipients of Defense Department contracts, loans, and loan guarantees are Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman. In 2010, the percentage of overall company sales that the federal government accounted for was, respectively, 60 percent, 82 percent, 63 percent, 88 percent, and 92 percent.

The money blasting out from Washington is notoriously—and predictably—misspent. Congress reliably fails to apply any kind of meaningful oversight over military spending, and it hasn't even managed to pass a budget since 2009. Individual members of Congress make things worse by pushing for whatever weapons system or aircraft engine that can be produced in their district, regardless of whether the Pentagon wants it.

The Hoover Institution economist David R. Henderson gives an example in a July 2012 Mercatus Center working paper: House Speaker John Boehner (R-Ohio) pushed to fund an alternate engine for the F-35 joint strike fighter over the objections of Defense Secretary Robert Gates (who said it "would be a waste of nearly $3 billion"), simply because the engine's manufacturer had "about 1,000 employees working on the engine in a facility near Cincinnati" at the time.

Extended periods of war solidify this pathology, knitting Pentagon contractors into the fabric of big government. A May 2011 CRS report noted that the Defense Department had more contractor personnel than uniformed personnel in Afghanistan and Iraq. It added that the department spent $11.8 billion on contracts in Afghanistan and surrounding countries in FY2010. Needless to say, these contractors are unlikely to consider the end of the conflict good for business.

Even when military contractors' profits have reached an all-time high, Congress seems committed to sheltering the companies from any budget cuts. Industry lobbying probably plays a role here. According to the Center for Responsive Politics, the U.S. defense and aerospace lobby doled out $24 million to political campaigns and committees during the 2008 campaign cycle and spent nearly $60 million on lobbying in 2011. Lockheed Martin alone spent $15 million in 2011 on its lobbying efforts, plus $2 million in political contributions. Boeing spent $16 million on lobbying the same year. 

In his seminal 1971 article "The Theory of Economic Regulation," the Nobel-winning economist George Stigler noted that agencies eventually become captive of the very interest groups they were ostensibly designed to police. Writing regulation or even spending legislation requires in-depth industry knowledge, so federal agencies and lawmakers tend to hire directly from the very companies they must oversee or spend money on. 

The reverse is true too. In order to gain better access to their regulators and government funds, companies hire lobbyists who used to work for Congress or government agencies. Of the 408 lobbyists employed by the military industry to apply pressure on Congress, 70 percent used to work on Capitol Hill.

In the face of this relentless pressure to expand military spending, there are still reasons to be optimistic. In the 1990s, the only category that allegedly limited-government Republican lawmakers really ended up cutting was Pentagon spending, thanks to the peace dividend when the nation ramped down at the end of the Cold War. Perhaps we can manage at least that much this time around.  

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  1. As long as the politicians run around the world handing out defense commitments to every country they can find, then the Defense Department will use this as justification ever increasing spending.

    End our international defense welfare spending, end our military alliances, pull US troops back to the USA and we will no longer need to spend trillions on “defense” since we will no longer be trying to defend the world but only the USA.

  2. Military post closings have a huge effect on local economies. I know that in my area, if this place shuts down, it would affect most of the people here from government employees, military, and contractors. Even local businesses would fall and the housing market would collapse. Each of those contractors mentioned above have offices here in the city.

    But significant cuts must be made. Extending PCS stays would save a lot of transportation dollars. Shutting down several overseas installations would also go a long way to saving money.

    I know our command has been working diligently into cutting back costs, but I think some of their efforts are misguided. Of course, I don’t see the whole thing, just my little small piece.

    1. Your command cuts are meaningless, since they’re not cuts to the actual DoD budget – whatever you guys don’t spend will just get spent elsewhere.

      I mean meaningless in the big scheme of things; obviously it will suck for you when you don’t have enough parts to keep your fleet running.

      The DoD could easily cut huge swathes of its budget by mothballing a bunch of old, redundant, expensive to maintain weapon systems (F-16s, hummers, I’m sure the Navy has some useless toys), but Congress will not let them do so (mainly since the log chains and manufacturers are in their home districts.

      Also congress could easily cut the DoD budget, by just giving them less money – the military will figure out how to do everything they have to with less money, they’re just not going to do it until you actually stop giving them the money.

      1. Yep, they will spend every dollar they are given.

        September is always a bad month for wasteful federal spending. That is the end of the federal fiscal year so any money they have not spent yet will be spent on whatever they can think of because if they don’t spend it then its hard for them to request it next year.

        September is the month when all the new chairs, coffee pots, computers, etc show up in federal offices because they spent all the money that was still in their budget. Nothing gets returned to the taxpayer, it must all be spent and if someone does not spend it then they get in trouble from the higher ups.

        1. Its a mistake to believe that we get in trouble from the higher ups – or even that the budget will be reduced if we don’t spend it all.

          Granted, it *will* be spent somewhere, if not by you then someone else or it’ll go back into the general fund – no saving it for next year allowed.

          1. People try to spend every last dime of their budget or reprogram money to other areas to avoid getting fewer dollars in the next year.

            That is probably the biggest problem with how government budgets are handled. There is very little incentive to save tax payer money without reprogramming it elsewhere. Much of that problem comes with the culture and the budget process. No one wants to operate on a smaller budget than the year before.

            1. No one wants to operate on a smaller budget than the year before.

              There is a reason for this. Unforeseen (or unacknowledged) expenditures come up and getting authorization for a one-time budget variance is fucking impossible.

              When my boat went into an extended maintenance availability with a dual media discharge (basically we were replacing the resin bed for the primary coolant ion exchanger) there were several tools that we needed that had no other use than this once every 8-10 year evolution and it turned out we didn’t have them. These tools, even when ordered through GSA (as they have to be), were several thousand dollars and we didn’t have money in the division budget. The skipper wouldn’t reallocate some funds from the other divisions on the boat, but allowed us to apply for a variance, which was denied by Group (first), then NavSea when we appealed Groups denial.

              We ended up stealing the tools from another boat.

    2. Except that the places that are most hurt by military base closures only got to be that size by depending on servicing the military bases – a dependency made possible by political interference in basing decisions.

      Its why Groton is still open even though it makes faaar more sense to move those 18 subs and the school down to VA.

      And that dependency is no more a valid reason to not close/consolodate facilities than the moving/closing of any other large industry that dominates an area.

      1. Some bases do need to be closed, but, still will affect the local economy. I’m not arguing against BRACs.

        Some of my helicopter unserviceables come out of Groton, though.

        1. The problem with BRAC is that it only covers bases in the US.

          Foreign bases cost even more to maintain and also are used to justify US involvement in conflicts around the world.

          1. You probably don’t want to know about the schools that DOD operates overseas for all the families. Yes, the families that taxpayers pay to live overseas with the servicemember. Oh, did I mention that DoD schools can’t overseas screen for medical conditions due to the ADA or won’t enforce vaccinations as a condition of employment?

            1. Well, I have no problem with having families go over there. People are sometimes gone for 2 years or more at a time. They’d be moved around more if they did not have their families with them. But I do think tours should be extended to probably 5 years or even more, especially for civilian employees. Let them stay there indefinitely if they choose. It costs tens of thousands of dollars to move a family overseas.

    3. Don’t think of it ending jobs in government employ. Think of it as freeing resources for the productive private economy.

  3. Do we really need to make a new name for it? Just call it what Eisenhower called it. The military industrial complex.

  4. Here’s some bullshit I found looking at Wiki’s defense budget page.

    1. The fucking Air Force gets more money than the Navy. Fuckers

    2. Why are we paying 11.4 bil to roll out the F-35 *and* a further 2 bill for modernization/procurement of the F/A-18 – the plane the 35 is replacing?

    1. Because the F-35 is behind schedule, overbudget and still not operational so they need to keep the F/A-18 flying or they won’t have any planes.

      They should call the F-35 the Triple McNamara. McNamara came up with the F-111 which was going to be a land based airforce plane taking off and landing from mile long airstrips and a carrier based navy plane taking off and landing from a aircraft carrier. In the end after spending much money they managed to get the airforce version to work but cancelled the navy version.

      The F-35 is suppose to be

      F-35A- a land based airforce plane taking of and landing on mile long runways

      F-35B – a vertical takeoff marine plane

      F-35C- a sea based navy plane taking off and landing from carriers

      So while McNamara only tried to get one plane operate in two very different ways, the F-35 is suppose to do three.

      1. The warfighter has one requirement… the people in charge have another. See the development of the Bradley Fighting Vehicle. It was originally just supposed to be an APC. Today it is still armored, but light on the personnel carrier. Yes, you can transport troops, but not as many as originally required by the warfighter. And they did not need or want all the equipment that came on it. We have a tank. It’s called the M1 Abrams.

        1. I have never understood vehicles like the Bradley. Its not a good light tank and its not a good armored personnel carrier.

          If you want an armored vehicle that goes out in the open and shoots then you want something with better armor, better gun and a smaller target. If you want something to carry infantry then you want something that can carry you standard infantry squad and drop them off to fight.

          1. What are you talking about, it’s an exceptional product of committee thinking.

        2. Maybe you aren’t old enough to remember where the Abrams came from. It was the same over-priced, corporate-welfare, commitee-designed POS project as the F-35.

          1. Are there any weapon systems that weren’t like that?

    2. Seeing as I work in aviation, aviation parts cost a hell of a lot more than boat and ground parts. The consequences of a catastrophic failure are much greater for aviation than ground or even water. People can’t fly, but they can float.

      1. Except that a *ship* is pretty expensive to procure, maintain, and operate.

        Though I’m really complaining because the AF gets maids in their barracks and busboys in their galleys and I was lucky to get hot water.

        1. You’re AF info is a bit stale. Been in 18 yrs and never seen maids in barracks…

    3. 2. I’m sure the Boeing plant is in the state of someone who sits on one of the Defense committees.

    4. Aviation fuel is expensive, and the USAF uses a shitload of it. Thankfully most of the USN ships & boats are nuclear powered. Oh, the USAF needs new flat screens and pretty golf courses too.

      1. JP8 (aviation fuel) is also used by tanks and HMMWVs. They wanted one standard fuel. So we use that fuel for Aircraft and ground vehicles. Fantastic, huh?

      2. uh no, the only nukes are the Subs and the carriers, the rest of the navy is all powered by either Diesel, Natural Gas, or a combination of the two.

        1. Don’t forget the cruisers. Yes, the majority of USN ships are diesel but the carriers, subs, and cruisers run on nuclear saves a lot of diesel fuel.

          1. None of the current cruisers are nuclear powered. We only ever had 9 and the last was stricken in 98.

      3. Uh, hardly any of our ships are nuclear powered – just the carriers and the subs. All the other ships are conventionally fueled.

        1. Sounds like you chose to enter the wrong service. 😉

          1. Oops. That should have been under your other post.

            Edit function. GGGRRRR!

          2. I’d take the USN over the USAF any day of the week and twice on Sunday

      4. Thankfully most of the USN ships & boats are nuclear powered.

        Ummm.

        No, most of them are powered by diesel. Lots and lots of it.

        The USAF has a bigger budget because it has always had better politician/generals.

      5. Yeah, the navy does use diesel but still doesn’t consume fuel like the USAF.

        http://www.airspacemag.com/mil…..evice=ipad

  5. In many cases military contractors are jobs programs for people exiting the military.

    1. So are government jobs.

  6. Well now that jsut makes a ll kinds of crazy sense dude.

    http://www.PrivacyRules.tk

  7. As someone who works in the private sector far away from Washington, DC, I have noticed that nearly all B2B companies do business with the government. Despite my moral issues with working for the government, it’s impossible to avoid them. Several of my company’s clients are primarily government contractors, including our largest client.

    1. That’s the problem, the government is so big and its fingers are in so many pies that its hard to avoid being part of the tax spenders system even if you want too.

      1. But I guess that the people who run government think that is a feature, not a bug.

  8. I’m pretty sure I wrote a wordy and horrible blog post a couple of years ago pointing this out. I’m also pretty sure I emailed it to editors at reason. What I’m most sure of is that nobody ever read it.

    1. Here’s the link. Not Blog whoring, just backing up claim.

      I think that should do it.

      1. wait, here’s the other one: http://whatyoualreadyknow.blog…..force.html

  9. In the 1990s, the only category that allegedly limited-government Republican lawmakers really ended up cutting was Pentagon spending, thanks to the peace dividend when the nation ramped down at the end of the Cold War. Perhaps we can manage at least that much this time around.

    The difference between coming out of the Cold War and coming out of Iraq/Afghanistan is that after the cold war the equipment wasn’t decimated by 10 years of wartime operation. I wouldn’t count on a “peace dividend” this time around.

  10. March 2012 report by the consulting firm Deloitte found that roughly 80 percent of aerospace and defense industry employment is paid for mostly by the government

    This is probably what I hate most about being an aerospace engineer. I just wanted to work on cool shit like rockets and spacecraft and jets. Instead I’m just a glorified wellfare king. I wish I could get a job with Spacex, but at this point they’re probably not interested in hiring someone like me. Thank God I’m not clinically depressed. If I were it would be enough to make me want to open a vein and be done with it.

  11. Isn’t the F-35 a ludicrously expensive, functionally redundant piece of shit whose intended roles could easily be fulfilled by upgraded variants of Cold War-era craft?

    1. Isn’t the F-35 a ludicrously expensive…

      Yes.

      …functionally redundant…

      No.

      …piece of shit…

      No.

      whose intended roles could easily be fulfilled by upgraded variants of Cold War-era craft?

      The roles are currently fulfilled, because essentially every aircraft being used as glorified bomb ferries. Given that technology marches on and the Russians and Indians are working on vastly more advanced aircraft keeping old aircraft in inventory because they get the current job done isn’t very wise.

      The aircraft should be replaced, but the mechanism of procurement of new weapons is badly broken and needs to be replaced.

      The obvious solution is how things used to be done:

      “We need X type system that must be capable of:

      a.
      b.
      c.
      d.

      And have a /unit acquisition cost not to exceed Y.

      Make it happen private sector.”

      Funding and budgeting for research to be done by the company that wins the bid and priced into the acquisition cost.

      1. ABSOLUTELY correct and SPOT on analysis Redman.

    2. Ludicrously expensive – Yes
      Redundant – mostly, The AF already has the F-22 (and really doesn’t want the less capable F-35), The Navy *does* need a replacement to the F-18(at some point, its certainly not urgent) but an F-22 modified and strengthened for carrier ops would do the job (and the naval version of the F-35 isjust a modified AF version), and the Marines need a Harrier replacement. But the F-35 is ludicrously over-powered for some of their requirements and way over-complicated for a craft that is intended to be operated from dirt roads.

      Roles filled by upgraded variants . . . – essentially the F-35 is intended to be those upgraded variants in one common package that reduces logistics costs across the services.

      It’ll probably end up working as well as the V-22.

      1. The F-22 and the F-35 are NOT interchangeable. The F-22 was designed as an air-to-air system. Its extremely limited air-to-ground capability was an afterthought and done for political reasons. The F-35 was specifically designed for the ground attack role. It has a limited offensive air-to-air capability compared to the F-22. The two were designed to complement each other, not replace the other.

  12. I hope I’m not alone on this premise. I’m not ready to tell my older loved ones to buckle down and accept SS cuts while we are paying for an industry that Cato tells me we can easily cut $1.2 tril over the next decade. http://www.cato.org/publicatio…..-restraint

    1. I’m not ready to tell my older loved ones to buckle down and accept SS

      I am, fuck your older loved ones, why don’t YOU foot the bill for their care?

      120 billion is pocket lint compared to SS spending. It should be cut also, but your stupid proposition somehow implies that cutting $120B from the defense discretionary budget will make SS solvent. It won’t, so GFY.

    2. Sounds like we have a Paultard in our midsts..

      Oh yeah, fuck you, cut Social Security.

  13. Abolish the standing federal army and rely on state National Guard units for initial ground defense, and the Army Reserve for the unlikely event of an invasion of the USA.

    Close all the foreign military bases of the USA.
    Mothball all the ships and planes not needed to defend the American coastlines and airspace.

    Seems like we could save a half or trillion or so in short order, and per year, not per decade, without making the country any less safe. It may even be more so, when we stop provoking potential enemies.

  14. This same argument can be made about any government jobs. Especially to explain why minorities in America love big government – at a time in history when they could not get equal treatment in hiring practices, they found a welcome home in government jobs, and a “path to the middle class”. Just like many Americans found that through the Pentagon. Which is why the GOP can never cut military spending, and why the DP can never cut any other spending. Everybody knows someone who works for a school district, or a city hall job, or a prison guard, or administration of some function of government.

  15. The Pentagon needs to be demolished, or turned into apartments. Get rid of the army. Its a breeding ground for future defense contractors. The National Guard can do their job just fine. The Coast Guard needs to be put in charge of NOAA. Put the Marines dept directly back into the Navy. Give the Navy a 100 billion to build some new ships and submarines to actually protect the shipping channels and American boundaries. Cut the Air Force by getting rid of the useless projects and get back to making badass planes and pilots.

    How about the Service Academies? Gut’em all. I bet most of you don’t even know that 100million+ is spent every year on the US Merchant Marine Academy!
    State military academies and ROTC produce much better soldiers and leaders at a much lower cost. Service Academies are for slugs who start sucking on the Fed’s titties at age 18 and don’t stop until they retirement age at their last K-Street job.
    Our Navy and Coast Guard are actually crumbling, this is not Neo con speculation. Our ships are a joke compared to most European Countries…and we’re the country bordered by two, massive oceans!

    1. Oh, and really shrink the number of active duty personnel. For example, those new Navy Ships can be manned by naval reserves, with each reservist spending 2-5 weeks aboard a year.

    2. On second thought, really gut the Air Force too. They have become very similar to the Army in terms of being bloated. We should have a primarily Naval Military. Put some anti missile systems on some cruisers and have them patrol the US coastline.

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  20. Military post closings have a huge effect on local economies. I know that in my area, if this place shuts down, it would affect most of the people here from government employees, military, and contractors. Even local businesses would fall and the housing market would collapse. Each of those contractors mentioned above have offices here in the city.
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    But significant cuts must be made. Extending PCS stays would save a lot of transportation dollars. Shutting down several overseas installations would also go a long way to saving money.

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