How Defense-Contractor CEOs Get Rich on the Taxpayers’ Dime

Here’s a question for you: How do you spell boondoggle?
The answer (in case you didn’t already know): P-e-n-t-a-g-o-n.
Hawks on Capitol Hill and in the U. S. military routinely justify increases in the Defense Department’s already munificent budget by arguing that yet more money is needed to ‘support the troops.’ If you’re already nodding in agreement, let me explain just where a huge chunk of the Pentagon budget — hundreds of billions of dollars — really goes. Keep in mind that it’s your money we’re talking about.
The answer couldn’t be more straightforward: it goes directly to private corporations and much of it is then wasted on useless overhead, fat executive salaries, and startling (yet commonplace) cost overruns on weapons systems and other military hardware that, in the end, won’t even perform as promised. Too often the result isweapons that aren’t needed at prices we can’t afford. If anyone truly wanted to help the troops, loosening the corporate grip on the Pentagon budget would be an excellent place to start.
The numbers are staggering. In fiscal year 2016, the Pentagon issued $304 billion in contract awards to corporations — nearly half of the department’s $600 billion-plus budget for that year. And keep in mind that not all contractors are created equal. According to the Federal Procurement Data System’s top 100 contractors report for 2016, the biggest beneficiaries by a country mile were Lockheed Martin ($36.2 billion), Boeing ($24.3 billion), Raytheon ($12.8 billion), General Dynamics ($12.7 billion), and Northrop Grumman ($10.7 billion). Together, these five firms gobbled up nearly $100 billion of your tax dollars, about one-third of all the Pentagon’s contract awards in 2016.

This post was published at Ludwig von Mises Institute on November 2, 2017.