The Politics of Pentagon Profiteers and the Truth about Jobs

The author is the Director of Public Policy for POGO (Project On Government Oversight)

The big Pentagon contractors have been trying to scare lawmakers, the public, and the troops with dramatic claims that there will be massive job losses. For nearly a year, these contractors and their lobbyists have likened potential cuts in the Pentagon budget to the sky falling [1].

Their threats to send layoff notices—right in time for the November elections—have been admonished [2] from [2] many [2] corners [3] — and is among the more desperate political stunts of recent memory. But just to be sure they’ve got the attention of all candidates, they’ve cooked up hyperbolic job loss numbers based on convenient, if completely faulty assumptions [4] —these are available by state or congressional district, don’t you know.

Some are taking the bait. Certain [5] members of Congress [6] have been parroting these scaremongering talking points during town halls and other events this month during the congressional recess. In their very scary “sequestration roadshow” they are talking about jobs, but fail to mention some essential information [1] about how exactly these contractors have been living large on the largess of taxpayer dollars. 

What you won’t hear in these fact-free events [7] is that even under the deepest proposed cuts—the unlikely budget sequestration—the Pentagon’s base budget will still be larger than it was in 2006, according to the Congressional Budget Office [8]—and all military personnel would be exempt. Lest we forget, in 2006 we were at the height of the wars in Iraq and Afghanistan. The Pentagon was spending more than at any time during the Vietnam War and nearly as much as it spent during the height of the Cold War. 

POGO’s Ben Freeman took a closer look at the jobs picture [9], and found that back in 2006, the nation’s top defense contractors employed thousands more than they do now. That’s right, together the top five defense contractors have been cutting jobs while getting more and more taxpayer dollars. In 2011, the top 5 Pentagon contractors received 10 percent more from taxpayers than they did in 2006, but employed fewer people.

Take the behemoth Pentagon contractor Lockheed Martin which threatened to send layoff notices to its employees because of sequestration, but has led the way in cutting jobs while its government contracts soared. Lockheed Martin received $10 billion more taxpayer dollars in 2011 than it did in 2006. Yet, Lockheed Martin employed 17,000 fewer people in 2011 than it did in 2006.
 
So why haven’t the big Pentagon contractors employed more Americans as they have taken in more taxpayer dollars and made record profits? It looks like more money does not mean more jobs. There is other analysis [10] that shows [3] defense contractors shouldn’t be our go-to job creators.

If Pentagon contractors really will need to tighten their belts, they should start at the top. Contractor executive pay is out of sight, on par with Wall Street execs. Again, we did some digging and found that the average compensation package of a CEO at the top five defense contracting firms was about $21.5 million last year [11]. The typical CEO of an S&P 500 company received less than half of that last year—$9.6 million in total compensation.

Contrast that with the $45, 230 that the average worker in the U.S. earned last year [12]. That means CEOs at top Pentagon contracting companies were paid more in a single day than the average American worker was paid all of last year. In fact, the Pentagon could pay the salary of 335 soldiers with the money from just one contractor CEO or perhaps save 268 defense and aerospace industry jobs. Fat chance, said the fat cat.

Of course, all of this noise about jobs is generated through millions of dollars funneled to campaigns [13] and lobbying to protect the record profits of these big Pentagon contractors [14]—supplied primarily by taxpayer dollars.

Shouldn’t we instead be talking about how to make America safer and stronger? National security begins with economic security, and we aren’t going to get there by continuing to throw taxpayer dollars at outdated defense strategies and profit-hoarding by the Pentagon contractor lobby. Most Americans and organizations [15] with diverse ideologies and agendas [16] agree that to get there we must rein in the runaway spending at the Pentagon.

Few think sequestration is the right policy, but it’s time to end the hype and scare tactics. It’s time for members of Congress to stop catering to the Pentagon profiteers and instead work for sensible solutions for more economic and national security.