Friday, May 14, 2021

That Plastic Toilet Seat Now Costs $10,000

SHORT TAKES: The Peoples' Vaccine Redux; A New Federal Reserve Board Chair?; Will More Garment Workers Die For Our Clothes?

Jonathan Tasini

May 13

LONG TAKE

I bet you didn’t know this: Each year, the Pentagon’s leaders review their budgets carefully, looking to save every taxpayer dollar by pushing away every greedy defense contractor seeking to pile up profits; every Pentagon rule prohibits “revolving door” scams, so that former Pentagon officials are barred from getting lucrative jobs with defense contractors and lining their pockets by using their insider connections. The entire Pentagon runs on a shoestring, not to mention every Pentagon office is always valuing peace over conflict.

I’m here all week, ladies and germs, and for my next comedic routine let me tell you about Ted Cruz’s embrace of truth, honesty and Democratic Socialism.

It is hard to overstate how deep a scam the Pentagon truly is. I tread on this topic today—one whose theme may seem familiar to many readers—for two reasons. First, Bernie Sanders, in his role as chairman of the Senate Budget Committee, held an extensive hearing yesterday called “Waste, Fraud, Cost Overruns, and Auditing at the Pentagon.”

Second, and more important: every year, like clockwork, we endure the squawking of the pearl-clutching “deficit hawks” from both parties (from Mitch McConnell to Fifth Columnist Joe Manchin) who demand that every social program be “paid for” (not by significantly raising taxes on the very wealth or corporations, of course) and cry and whine about deficit spending on behalf of education, child care, health care and climate change—you hear those cries now. But, the Pentagon is never held to that standard, and every devastating, immoral war ever paid for.

Ever.

The Pentagon gets a blank check. And the dollar figure on the check rises, unfailingly, each year, with virtually no debate—whether that check is signed by a Republican or Democratic President. In fact, Joe Biden’s first national security budget will rise to $753 billion, $715 billion of which will go to the Pentagon. And we aren’t even talking about the trillions of dollars that are always available, without a peep and never paid for, to fund wars, or extra money spent on top of the actual budgeted money for unforeseen military adventureism.

You may instantly have understood the title of this post: back in the 1980s, the $600 cost of a plastic toilet seat became the metaphor for Pentagon waste and fueled a sudden awakening about the stupendous torrent of taxpayer money being wasted. Today, that same plastic toilet seat costs $10,000—but don’t run home to rip off your own plastic toilets seats to auction them off on E-Bay because you need to be part of the deep web of defense contractor corruption to cash in (plus…you might need the seat later)

In this post, I want to stick mostly to, as Sanders described it, waste, fraud and cost overruns. But, let’s not ignore the huge elephant in the room: this huge war machine is the tool of U.S. military intervention across the globe, the sword used to impose American Exceptionalism and, more important, protect corporate interests in every corner of the planet—at great cost to human life. The *bi-partisan* belief in American superiority is the justification of the monumental waste of resources embedded in every annual Pentagon budget—a budget spawned by a web of corruption.

In fact, I should note the witnesses at the Sanders hearing did not argue for a true shift away from American Exceptionalism and U.S. global superiority. Rather, their vision is entirely about creating a more efficient, cost-effective way to, at best, have a smaller global footprint (I have linked to the draft testimonies that I reference here—which were provided to me in advance by Sanders’ staff—so folks can read each one in full). Fixing overpriced and ineffective weapons programs is not a progressive vision which should not rest on the idea that what we need are more “good deal” low-priced effective weapons.

That said, it’s important to understand the colossal waste of dollars because it helps get to the deep corruption, which I point out here later.

William D. Hartung, Director of the Arms and Security Program at Center for International Policy, laid out a piece of the bigger picture at Sanders’ hearing

A strategy that ignores our most urgent challenges while overstating other risks wastes tens of billions of dollars while making us less safe. In terms of both short-term and longer-term threats to human lives we need to look at pandemics, the ravages of climate change, white supremacy and racial and economic injustice. The tools needed to address these challenges are not primarily military in nature. Our budget should reflect that reality.
In 2019, my organization issued a report from our Sustainable Defense Task Force – a group of former White House, Congressional and Pentagon budget officials, retired military officers, and think tank experts from across the political spectrum. We found we could save $1.2 trillion over the next decade by pursuing a more realistic strategy, avoiding unnecessary and counterproductive wars, putting diplomacy first in addressing regional challenges, adopting a deterrence-only nuclear posture, and cutting excess bureaucracy. Doing so would entail cutting peacetime overseas troop deployments by about one-third, from 180,000 to 110,000; reducing the size of our armed forces by 10% as we avoid future Iraq- and Afghan-style wars; forgoing the Pentagon’s $1.5 trillion nuclear modernization plan; and reducing the use of costly private contractors. Even with our proposed reductions, the United States would have by far the best-funded military in the world – more than two and one-half times what China spends and ten times what Russia spends.

The F-35 Joint Strike Fighter is today’s “toilet seat” poster child. Mandy Smithberger, Director of the Center for Defense Information Project On Government Oversight, explained at Sanders’ hearing [The bold in her comments are added]:

The F-35 was sold to the public as a relatively inexpensive fighter that would replace the A-10 and F-16 in the Air Force, the Harrier and F-18 in the Marine Corps, and the F-18 in the Navy. Each new plane would cost between $40 million and $50 million, and the total cost of developing and producing the aircraft would come to $200 billion. Twenty years later the costs have doubled, and the department is reviewing whether the program will be able to affordably meet our national security needs.
…When it comes to what the Pentagon buys, unnecessary complexity is certainly one of the biggest cost drivers. Much of the complexity in weapon systems is based on overly optimistic, and often self-serving, assumptions and promises from contractors about being able to trade technology for personnel. In the F-35 program, this complexity is one of the most significant challenges to resolving problems identified in testing and modernization of the fleet. In the end, it adds considerably to the cost of a program and harms national security.
….At the beginning of the F-35 program, the public image of the aircraft was that it would be “more Chevrolet than Porsche.” A lot has changed since then. The department’s own cost data shows each variant of the F-35 costs more than $100 million per aircraft. Testing remains incomplete, but Lockheed Martin has already delivered 365 F-35s to the military services, with taxpayers on the hook for 733 as of March 2021. The program’s high operational costs and its low availability rate raise serious concerns about whether we have enough F-35s available for combat in high-end conflicts.18
Rather than having a workhorse Chevy of a fighter jet, the chief of staff for the Air Force has indicated the F-35 is more of a Porsche to be used sparingly.

There is no big secret why all this happens, if you just follow the money—as Open Secret does so well. The story can be told in three charts.

This first chart tells a bi-partisan love affair—with the familiar use of red and blue to designate each party, and pink thrown in for “conservative groups” who act as megaphones for the defense industry. You can see the top players give quite generously without much concern about political affiliation; in fact, in the top five, only Lockheed Martin gives more to Republicans (slightly more).

The second chart below gives a sense of the scale of defense industry lobbying over just the last two decades:

And, finally, here are the top recipients of defense sector donations over a decade, including the second-ranking House Democrat, Steny Hoyer; the names below include several who are no longer in Congress but the point of the graph is to show that cashing a check from a big weapons manufacturer is a bi-partisan thing and those who have departed Congress (or departed the earth) have been replaced by plenty of folks who are ready to take cash from the defense industry.

Ah…and who helps make these deals and dole out the money? This is where money oils the corruption of the revolving door between government and the defense industry. Smithberger:

One of the largest drivers of increased spending is how the defense budget is often used for self- dealing and enrichment. Our defense budget should be based on what we need to keep our country safe. But too often conflicts of interest, particularly for senior Pentagon officials who go on to work for the defense contractors delivering goods and services to the government, are what drive the budget. In the most recent government review of this issue, a Government Accountability Office survey of contractors found that 52 contractors employed 2,435 former Department of Defense officials who had “previously served as generals, admirals, senior executives, program managers, contracting officers, or in other acquisition positions which made them subject to restrictions on their post-DOD employment.” POGO’s own 2018 investigation found that from 2008 to 2018 at least 380 high-ranking department officials and military officers became lobbyists, board members, executives, or consultants for defense contractors within two years of leaving public service. This revolving door results in the appearance (and in some instances, documented evidence) of officials confusing what is in the best interest of our national security with what is in the best financial interests of defense contractors—excessively large Pentagon budgets, endless wars, and overpriced weapon systems.

What does that end up costing? Smithberger:

Overcharges to the government have included paying $2,286 for a landing gear that should have cost $10; $71 for a pin that should have cost less than a nickel; and $8,124 for a bevel gear that should have cost $445

Open Secrets had a similar take:

In addition to spending millions, the defense industry makes use of one of the most well-connected lobbying corps in Washington, D.C. Seventy-three percent of the 663 lobbyists employed by defense companies in 2020 formerly worked for the federal government. These connections make for cozy relationships and highly useful contact lists. Overworked and underpaid congressional staffers can also hope that lucrative lobbying jobs await them at the same companies who come to them pushing their own agendas. No other sector has a higher percentage of lobbyists who also worked in the government.
A similarly cozy relationship exists between the industry and the Defense Department. In a 2018 report informed by the OpenSecrets revolving door database, the Project on Government Oversight found that 95 former Pentagon officials went through the revolving door to represent just the top five defense contractors in 2016. Our original research similarly finds hundreds of defense industry lobbyists with Defense Department backgrounds. Common career paths also take people through Congress, think tanks and defense companies with significant connections to decisions made in the Pentagon.
But the relationship between the industry and the Pentagon is only part of the story. The House and Senate Armed Services and Foreign Relations committees and the Defense Appropriations subcommittees examined here have seen at least 250 people pass through on their way to the private sector or vice versa in the last 30 years, a quarter of whom were officially registered lobbyists for defense companies or trade groups. Even more striking are the numbers for the staff of committee members. Nearly 530 people have worked for both a member of one of the six main defense related committees and as a lobbyist for defense companies. Some staffers straddle both groups, working for both the committee and a member of the committee, not infrequently at the same time.

Keep in mind that arming the U.S. military is just part of the honeypot. U.S. defense companies are the top five arms suppliers in the world, supplying weapons to almost 100 countries—and the global market share of the same companies is growing.

It’s a deep corrupt scam.

So, wrapping up: the reason to know all the above is (a) to show voters not like you that, just on the finances and use of taxpayer money, “national defense” is a corrupt enterprise, lining the pockets of a few powerful corporations and a network of lobbyists and (b) to be able to respond to the ridiculous “how will you pay for it” attacks against socially-beneficial spending—spending we should be doing regardless—with the simple rejoinder “let the Pentagon first show the way”.

SHORT TAKES

I’ve been following the whole saga of Big PHARMA’s control over the COVID-19 vaccine (here, for example), and the huge international campaign to get a waiver of COVID vaccine patents which recently appeared to bear fruit when the U.S., bowing to grassroots pressure, agreed to support a global waiver (Germany is now a fly in the ointment on that). Jayati Ghosh, executive secretary of International Development Economics Associates and a member of the Independent Commission for the Reform of International Corporate Taxation, writes about what else needs to be done:
The next step is to push for concrete measures to facilitate the transfer of knowledge and technology. From Canada to Bangladesh, many potential vaccine producers with the required facilities have so far been denied the licences and technical know-how to proceed. Not a single pharmaceutical company has joined the World Health Organization’s voluntary facility for sharing technology, the Covid-19 Technology Access Pool (C-TAP).
Governments in the US, Europe and elsewhere, having given large subsidies to develop the approved vaccines, can and should press the companies to share the knowledge that public money helped provide. We know this can be done, because the Biden administration has already persuaded Johnson & Johnson to share its technology with Merck to boost domestic production of its single-dose vaccine. Surely the other companies that have benefited from public support could be pressed to do the same with producers around the world.
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There is some chatter bubbling up about whether the current chair of the Federal Reserve Board, Jerome Powell, should be given a second term—or should a more progressive person be put in the position. I’m not entirely sure how “progressive” any Fed chair would be—breaking news, it ain’t going to be a Democratic Socialist.
So, here’s a short Q and A on this topic between yours truly and Dean Baker, senior economist at the Center for Economic and Policy Research and one of the most knowledgeable, long-time progressive Fed “watchers”:
JT: There now seems to be a debate, coming mainly from progressives, about whether Jerome Powell should get another term as Fed chair. You don’t have to love the guy or the Fed per se but that seems like misplaced energy. Should he get another term? Or put another way, if someone more progressive was Fed chair what else would s/he have done that Powell hasn’t done?
Dean Baker: Powell could have been stronger on regulation of the financial sector. But to my view, this is dwarfed in importance by the Fed's impact on employment through its monetary policy. A different Fed chair might have raised rates aggressively to keep unemployment from falling below 4.0 percent, or even 4.5 percent. Many economists insisted that unemployment rates that low would lead to serious problems with inflation. As a result of Powell's policy of deliberately trying to get a tight labor market, millions more people were working before the pandemic than would have otherwise been the case and these people were disproportionately Black, Latino, and people with criminal records.
I consider regulation by the Fed far less important than its role in monetary and macro policy. I may differ from many folks on the left in this respect. I don’t think the Great Recession was the result of failing to pay attention to obscure segments of the financial market acting recklessly. I think it was the result of failing to see a housing bubble that was driving the economy, the evidence for which was as clear as can be in the quarterly GDP numbers.
I think regulation is important, but for a totally different set of reasons:
1) The game-playing in the financial sector is a pure waste from an economic standpoint -- it is the equivalent of digging holes and filling them up again;
2) Some people obviously get very rich from this game-playing, which is a major source of inequality
3) Some of the game-playing is predatory, such as subprime mortgages and car loans. we need to crack down on this.
But we do have other regulatory agencies that can make up for the Fed's failings in these areas, and nothing comes close to the Fed's impact on the macroeconomy, where we are potentially talking about millions of jobs and the ability of tens of millions of workers to get pay increases.
JT: What I mean by misplaced energy is: wouldn’t it be better to focus on a broader critique of the Fed and push for Congress to enact long-term changes?
DB: Some blamed Powell for not doing anything on climate and also not making concessionary lending to cities with troubled finances. It would be nice if the Fed could do this, but clearly Congress did not intend to give the Fed these powers. This isn’t a legal question. It doesn’t matter one iota if the Fed had the legal authority to take these steps. Had Powell done so, he would have immediately had every Republican in Congress down his throat, as well as many Dems, in addition to Trump. They would almost certainly move quickly to explicitly strip this authority and quite possibly further limit the Fed in its ability to conduct monetary policy.
Anyhow, if we want to see progress in these areas, it will have to come through Congress and actions by the executive branch. It will not come about through backdoor actions at the Fed.
JT: And what would those say 3 top changes be?
DB: I would say strengthening the language on the Fed having a mandate to promote full employment. Also, we should make all twelve regional bank presidents appointees of the president, subject to congressional approval.
[JT: Ok, so, I got two!!! To elaborate on Dean’s point last answer on mandate: the Federal Reserve Board is charged to promote price stability AND full employment—and mostly the Fed has given very short shrift to full employment]
Do you remember Rana Plaza? You should—you might be wearing a piece of clothing made in the Rana Plaza complex. On April 24th 2013, the Rana Plaza building collapsed with thousands of people inside—at least 1,134 people died and thousands more were injured. I wrote about this many times at the Working Life blog (here, here and here, for example). Rana Plaza was the worst industrial disaster the garment industry had ever seen—and it was entirely preventable if there had been any concern for the lives of the workers.
So, why raise this now? In the wake of the disaster, there was a strong outcry from workers’ advocates globally and pressure brought to bear against the big clothing brands—because, after all, the clothing companies are the ones that outsource the work to dangerous factories where workers make a pittance. From that pressure came the “Accord on Fire and Building Safety in Bangladesh”, a framework that made hundreds of factories a bit safer by requiring a basic set of standards and some enforcement. That Accord is now set to expire at the end of May.
As the Clean Clothes campaign says quite correctly at this site dedicated to keeping the Accord in place:
If the Accord agreement is not renewed, the safety of over two million workers in 1,600 garment factories currently covered by the Accord, will be left in the hands of a voluntary Corporate Social Responsibility (CSR) initiative. Voluntary initiatives have in the past been unable to prevent mass casualties, and it is therefore completely irresponsible to fall back on trusting a non-enforceable initiative to prevent a next Rana Plaza collapse.
Brands must sign a new international binding agreement which should contain the possibility to expand the Accord model to other countries where garment workers are facing unsafe working conditions, similar to those in the pre-Rana Plaza situation in Bangladesh.
Keep your eyes on this. I will.