BY ELLEN MITCHELL - 05/12/17 12:55 PM
EDT
Washington’s most influential defense trade
group is asking lawmakers to repeal or raise budget caps on defense spending
imposed by the 2011 sequester.
The Aerospace Industries Association
“strongly” urges lawmakers to repeal or raise the current Budget Control Act
caps on defense spending “and closely related infrastructure and innovation
programs" in a letter sent to the chairs and ranking members of the House
and Senate Budget committees.
Defense hawks have long complained about the
caps, saying they damaged the military to the point of crisis. President Trump
promised during the campaign to immediately repeal the caps for defense, and
his proposed $603 billion fiscal year 2018 base defense budget is $54 billion
above the caps.
“Repealing or raising the current caps will
better enable the aerospace industry to support servicemen and women, explore
the frontiers of space with confidence, and ensure a safe and efficient
commercial air transportation system,” AIA officials write in the letter,
sent Thursday and released Friday.
AIA also supports the proposals put forward
by Sen. John McCain’s
(R-Ariz.) January “Restoring American Power” white paper and the House Armed
Services Committee’s March 3 “views and estimates” letter. Both
documents called for a $640 billion base defense budget in fiscal year 2018.
Fiscal conservatives, however, argue that the
caps help control runaway spending.
“The constraints imposed by the Budget
Control Act, however well-intentioned, pose significant danger to our national
security, leave our troops less prepared to defeat looming threats, and limit
industry’s ability to invest in innovation and technology for the future,” AIA
officials write. “A stable, multi-year budget is needed to fund strategic
requirements, current operations and future modernization efforts.”
The letter is signed by Dennis Muilenburg,
chairman of the AIA chairman and chief executive of Boeing Co.; Thomas Kennedy,
AIA vice chairman and CEO of Raytheon; and AIA President and CEO David
Melcher.
Original post: thehill.com
The U.S. Military Budget Is Actually $250
Billion Higher Than Advertised -- Here's Why
May 06, 2017, 08:13:00 AM EDT By Rich
Smith, Motley Fool
Much has been said, and much ink spilled, over President Donald Trump's proposed $54 billion increase in defense spending for 2018 . But what would you say if I told you there's hidden spending in the defense budget already that's much bigger than the president's well-publicized increase?
Like... five times bigger.
Pulling the curtain on accounting quirks
Last month, IAC/InterActiveCorp website TheBalance.com published
a report explaining how what most people think of as "defense
spending" really reflects only a portion of what the U.S. actually spends
on defense and security.
Ordinarily, when we talk about defense
spending, we mean the Pentagon's base budget, which Trump wants to increase to
$574 billion in fiscal 2018. To keep that number as low as
possible, though, the Pentagon carves out spending on foreign wars into a
separate category called "overseas contingency operations." This is
because, in theory at least, wars are supposed to end at some point, and won't
need to be funded year to year.
What you don't know can cost you
Theory notwithstanding, supplemental
"OCO" spending has been funded to the tune of tens, and even hundreds
of millions of dollars every
year since 9/11 . Although accounted for separately, the OCO
budget constitutes a second integral part of how Congress funds our military --
and next year OCO are budgeted to consume another $64.6 billion worth of U.S.
tax dollars.
Nor do we spend OCO funds only through the
Pentagon. Turns out, $12 billion in additional overseas
contingency operations funding is channeled through the State Department and
Department of Homeland Security to finance their own anti-ISIS operations.
And even then we're not done. We find tens of
billions more in "hidden military spending" buried on the balance sheets
of other government agencies. Other sources of funds include:
- FBI
and Cybersecurity activities within the Department of Justice: Funded to
the tune of $9.5 billion
- The
National Nuclear Security Administration within the Department of Energy:
$13.9 billion
- The
State Department: $27.1 billion
- The
Department of Homeland Security: $44.1 billion
- The
Department of Veterans Affairs: $78.9 billion
Add it up, and we spend more than $250
billion on defense and security programs, on top of the Pentagon's $574 billion
base budget -- about 44% more than you may have thought we were spending.
What it means for investors
If you're like many investors, you may have
been at least vaguely aware that the U.S. spends money on the VA, on nuclear
weapons, and so on. But perhaps you assumed this spending was included in the
base defense budget? That would be the logical place to
account for these expenditures -- but it turns out that this is not what the
government does.
Instead, many of the less visible aspects of
the military-security-industrial complex have carved out their own individual
channels of funding, which are found in the categories described above. And
it's a bit surprising just how much money these corollary-to-defense activities
consume: $250 billion! That's enough money to buy 20 brand-new Ford- class
aircraft carriers every year -- a shockingly large sum.
But here's the thing: Just because Congress
doesn't go out of its way to advertise how much America's wars are costing the
taxpayer doesn't mean it's hiding the information, either.
The fact is, every day of the work week, the
U.S. Department of Defense lists -- for public review -- every single contract
of material size that it awards to its contractors, and how much those
contracts are worth. Just last month, for example:
- A $260.5
million contract awarded to Johnson & Johnson (NYSE:
JNJ) to supply the Defense Logistics Agency with "orthopedic
products." Over the course of just one year, Johnson & Johnson
will reap more than a quarter-billion dollars' worth of revenue from the
DLA -- and Johnson & Johnson could receive "option"
exercises extending this contract's duration for four more years.
- Three
separate contracts awarded to FedEx (NYSE: FDX)
, UPS (NYSE: UPS) , and Atlas Air Worldwide
Holdings (NASDAQ: AAWW) to perform "express small package
delivery services" for U.S. Transportation Command through Sept. 30,
2022. Over the course of these five years, FedEx and UPS can expect to
reap a total of $2.35 billion in revenue -- each -- while Atlas Air stands
to gain as much as $199 million.
- A
State Department program aiming to supply the Kurdish Peshmerga infantry
in Iraq with $295.6
million in small arms, trucks, and armored vehicles to assist its
fight against ISIS in Iraq and Syria.
All of this is part and parcel of what The
Balance calls the $250 billion in "hidden military spending" within
the federal budget. But it never really was a secret. You just
needed to know that it was out there to be found, and where to look for it.
And now you do.
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