As the debt ceiling proposal agreed upon by President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) went through the usual sausage-making machinations of the legislative process, there was one aspect of the whole thing that simply cried out for comment: Lindsey Graham.
Now, now. Hold your tongue!
It seems the Republican senator from South Carolina went into hysterics over funding for defense.
Some things to know first. Defense spending accounts for 12% of all federal spending and nearly half of discretionary spending. Total discretionary spending — for both defense and nondefense purposes — is typically only about a third of the annual federal budget, according to the nonprofit Peter G. Peterson Foundation, a think tank that focuses on America’s fiscal challenges.
The debt ceiling agreement capped the defense budget for fiscal 2024 at $886 billion. Nondefense spending will get over $703 billion.
That $886 billion is a 3.3% increase over this year’s funding. Graham found that unacceptable, because the increase was lower than the rate of inflation.
“The biggest winner of the Biden defense budget is China,” Graham claimed, “because they’ll have a bigger navy.” According to Graham, Biden’s defense budget would reduce the number of U.S. Navy ships from 298 to 291 while China plans to increase its navy by nearly a third.
My goodness ― seven fewer ships in a face-off with China? I think we’ll be fine.
The U.S. Pacific Fleet comprises 200 ships, about 60% of the U.S. Navy. The U.S. and China have been rattling sabers lately ― particularly over Taiwan, the world’s leading producer of advanced microchips. CIA intelligence believes China may try to take back the island by force by 2027.
Will the U.S. Navy be ready to respond if need be? “Rapidly,” Admiral Samuel Paparo, commander of the Pacific Fleet, told CBS News. “We’re ready.”
Now, why would anyone take the word of a highly decorated four-star admiral and commander of the U.S. Pacific Fleet when we have the military expertise of Lindsey Graham, who served as an attorney in the JAG Corps?
Thanks for your service, Senator, but I think most of us would put our money on the naval pilot and Top Gun graduate with over 6,000 hours of flight time and operational commands of strike groups and Carrier Air Wings throughout the Pacific.
But how will our military ever keep up if its funding falls below the inflation rate?
Pretty simple: Stop getting gouged by defense contractors.
The Defense Department pays corporate contractors anywhere from $300 billion to, according to some reports, more than $500 billion each year.
But anyone who knows how to use Google can find case after case after case of defense contractor fraud. Some examples are so obscene as to leave you slack-jawed. Forget that “$600 hammer” story from the 1980s (a myth, by the way). This drive pin cost $46 back in 2019. Price the Pentagon paid? $4,361.
That’s a profit margin of 9,400%.
In 2007, twin sisters pleaded guilty to defrauding the Defense Department of $20.5 million. In one memorable instance, they sold two 19-cent washers for $998,798. One sister, faced with the prospect of prison, died by suicide instead. The other sister blamed the whole scam on her dead twin.
Do you suppose Lindsey Graham caught wind of this scandal? He should have. It happened in South Carolina, his home state.
It’s estimated that defense contractor fraud bilked at least $150 billion in taxpayer funds for the wars in Iraq and Afghanistan.
In 2019, the Government Accountability Office found that the Defense Department faced “several types of financial and nonfinancial fraud and national security risks posed by contractors with opaque ownerships.” The contractors were using shell companies to gouge DoD, in some cases, to conceal that the work was really being done by foreign-based companies. Contracts typically require that such materials be made in the United States.
In 2013, for example, the owner of Allied Components, a military hardware supplier, pleaded guilty to providing F-15 fighter aircraft parts that were not only defective and nonconforming (which grounded dozens of fighter aircraft), but also made in India.
That’s right: Allied bought products at “made in India” prices and sold them to the military at “made in America” prices.
Anyone hear from Senator Graham on this little tidbit of news?
It gets better... or worse. Not only do such backdoor deals result in contractors receiving contracts they weren’t allowed to get, but it’s also a security risk, since foreign manufacturers might gain access to sensitive government information or military installations.
Where was Lindsey?
His Senate colleagues have found the time to decry defense contractor fraud. Just last year, Sen. Elizabeth Warren (D-Mass.) introduced the Stop Price Gouging the Military Act, noting how the Pentagon paid $71 for a pin that cost less than a nickel, and $80 for a drainpipe segment that cost just $1.41. So far, the bill has gone nowhere.
Perhaps Graham might have read Sen. Chuck Grassley’s 2019 op-ed in the Military Times. “Year after year,” the Iowa Republican wrote, “Congress shovels more money into the Pentagon’s coffers. Those funds are meant to ensure that our military is the best in the world. Instead, they’re squandered to the tune of hundreds of millions of dollars.”
Wonder if Lindsey stopped by Grassley’s office and congratulated him on the piece. “Nice job, Chuck.”
A 2011 DoD report prepared for Sen. Bernie Sanders (I-Vt.) revealed that even after hundreds of defense contractors pleaded guilty to defrauding the U.S. military over the past decade, they went on to receive new Pentagon contracts to the tune of $1.1 trillion.
“Virtually every major defense contractor in this country has, for a period of many years, been engaged in systemic, illegal, and fraudulent behavior, while receiving hundreds and hundreds of billions of dollars of taxpayer money,” Sanders said at the time.
If you’re old enough, you’ll remember the DoD price-gouging scandals of the 1980s: the $435 hammer, the $600 toilet seat, the $7,622 coffee brewer, a $387 flat washer, a $469 wrench, the aluminum ladder for $74,165, the ashtray for the bargain-basement price of just $659.
An FBI investigation uncovered what was tantamount to insider trading, which seems appropriate for the “Greed is Good” 1980s. The bureau popped more than five dozen contractors, consultants and government officials, including military personnel, who exchanged bribes from contractors for insider info on procurement bids that helped some of the nation’s largest military contractors win lucrative weapons systems deals.
You’d think Congress would have responded to protect the taxpayer from all that waste, fraud and abuse. But members have spent decades accepting millions of dollars in donations from these contractors.
Graham, in his own sort of way, has indirectly received defense contractor donations. The corporations don’t donate the money. Rather, individuals affiliated with the contractors do the donating: Boeing, Honeywell, Lockheed Martin, Northrop Grumman, General Electric, AM General, Raytheon.
So with all these donations to various lawmakers, what have the contractors gotten in return? Legislation that allows them to control pricing and corner the market.
For example, a law passed in 2016 practically guarantees that defense contractors never have to lower prices. The 2016 National Defense Authorization Act included a provision that locks the Pentagon into a price. If they overpay once for a part, they’ll overpay again and again.
That provision turned defense contracting into a perennial cash register, ensuring that contractors could continue to overcharge American taxpayers ad infinitum.
Where was Lindsey? He voted to pass it. Warren and Sanders did not.
If Senator Graham missed out on all these shenanigans, he could’ve caught up by watching “60 Minutes” last month. The CBS program conducted a six-month investigation to find that price gouging by U.S. defense contractors is as rampant as ever.
“The gouging that takes place is unconscionable,” Shay Assad told anchor Bill Whitaker. Everything from big-ticket items like jets, ships and missiles to “an oil pressure switch that NASA used to buy,” Shay said, holding the switch. NASA paid $328 for it. Cost to the Defense Department? “We paid over $10,000 for it.”
Assad spent 40 years in the weapons procurement business, first for the defense contractors (he was executive vice president and chief contract negotiator for defense giant Raytheon in the 1990s). Later, switching sides, he became the Defense Department’s most senior and awarded contract negotiator.
The Pentagon, he said, overpays for almost everything.
Assad is known by his former defense industry associates as “the most hated man in the Pentagon” for his relentless scrutiny of their pricing practices. As an example, he pointed to the Patriot weapons system, a linchpin of air defenses for the U.S., NATO, Ukraine and Taiwan. In 2015, Assad ordered a review and found that Lockheed Martin and its subcontractor, Boeing, overcharged the Pentagon and U.S. allies by hundreds of millions of dollars for the Patriot’s PAC-3 missiles.
How much profit? It should have been around 12% to 15%, according to Assad. Instead, it was closer to 40%.
“Based on what they actually made,” Assad said, “we would’ve received an entire year’s worth of missiles for free.”
And this is the point. It’s the larger point in all the price gouging. Such corruption not only hurts taxpayers; it also hurts the military, our nation’s military readiness and the soldiers themselves. For what the Pentagon paid, it could have bought two to three times as many PAC-3 missiles. Or parts, or hardware, or enough bullets for a Marine to put in his clip.
The nation’s military readiness isn’t the concern. It’s getting everything it needs. The real issue is that it could fulfill those needs at half the cost if the Pentagon’s fiduciary readiness were at all adequate.
“That accountability system is broken in the Department of Defense,” Assad said.
No wonder. In the early 2000s, the Defense Department cut 130,000 employees whose jobs were to negotiate and oversee defense contracts. These employees were the Pentagon’s government watchdogs, but the department was convinced it could rely on contractors to do what was in the best interests of our military and the taxpayers who pay for it. With all that had gone before, how could anyone at the Pentagon think they could trust the contractors to do business honestly?
Yet here is Rep. Ken Calvert, chairman of the House appropriations committee’s defense subcommittee, who in February suggested the government could save $125 billion over the next five years by not replacing civilian DoD workers who leave the department. Two years earlier, Calvert, a California Republican, had introduced legislation requiring the Defense Department to cut 100,000 employees from its civilian workforce by 2025.
You’d think Calvert, a member of the House since 1992, would know a little something about relying on private contractors to perform oversight on weapons programs.
It’s unclear how many of those employees would be part of the acquisitions workforce, but how is this any different from Republicans complaining about the debt ceiling and government funding while demanding to deny funding to the IRS to collect money from tax cheats? It’s no different an irony than the Pentagon thinking it wise to save money by eliminating the people whose job is to prevent price gouging.
But wait, there’s more. Government agencies are required to submit annual audits to Congress. The Defense Department’s financial records were in such shambles that Congress had to hire a third party to audit their books. Examining financial transactions between 1998 and 2015, the auditors found that a mind-boggling $21 trillion couldn’t be accounted for — not documented, not traceable, not explainable.
The entire federal budget in 2015: $3.5 trillion.
That isn’t to say the $21 trillion in government money was definitely misused. But there’s no way to determine if it was spent legitimately. No one will ever know.
And Lindsey Graham? He’s worried about the rate of inflation.
I’m not trying to shock you, dear reader. You already know this sort of thing happens, and has been happening for decades. The question I have, the question we all should have, is: Where was Lindsey Graham? Or any of the rest of those windbags in the House Freedom Caucus who screamed about bloated federal spending while demanding that people have a job to qualify for government assistance because they don’t make enough as it is to buy food?
You tell ’em, kids! Clearly, that’s a higher priority than complaining about $10,000 parts that cost $5 in an auto store.
How can we say “support the troops” when the troops get so little support compared to the contractors who make billions? Is it too much to ask that maybe the contractors donate some of their profits to support the troops to increase their pay while in service and their pensions in retirement, see they don’t end up homeless, and provide a full spectrum of health care services from treatment to rehab to counseling and community support?
I support a strong military, but I’ll bet we could get one, the same one we have now, for half the cost if only the corruption would stop. A strong military is one thing; a wasteful one is something else. What’s needed are lawmakers willing to bite the bullet — so to speak — and see that our money is spent more wisely.
Or maybe all these defense contractors just need to go woke. That’ll fix things.
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