The Loophole That Lets Boeing Get Cozy With Congress

Boeing - El Segundo

The New York Times reports:

According to the Federal Aviation Administration, its decision was based solely on its evolving understanding of the evidence. But critics have suggested that the delay in joining the international consensus may have been the result, at least in part, of the close relationship that Boeing, a major political force in Washington and a large government contractor, has with American officials.

Boeing receives more federal money than any corporation other than Lockheed Martin, its main competitor in the defense contractor industry. Boeing took in over $23 billion in con tracts from the government in the 2017 fiscal year — near its annual average. (Just this fall, the company won a $9.2 billion contract to make a new generation of jets for the Air Force.)

Senator Elizabeth Warren publicly questioned whether the government had “put lives at risk” to protect Boeing’s bottom line. She and a bipartisan group of her colleagues requested congressional hearings to investigate.

In the Turning of the Twilight

In 1940, Congress passed a law barring individuals and firms from making federal campaign contributions while they negotiate or perform federal contracts. The intent was to prevent companies from trying to bribe politicians for lucrative deals and to prevent lawmakers from extorting money from companies with business before the government.

So how do campaign donations that appear to be connected with Boeing manage to avoid violating this law? The answer is a loophole, cemented in the law in the 1970s, that permits government contractors to set up “separate segregated funds,” or political action committees, to make political contributions using money typically pooled from the contractors’ executives and major shareholders. Such funds are legal even if the parent company pays for their operating and fund-raising costs. This exemption — whose ostensible justification is the free-speech rights of contractors’ employees — is why political action committees like Boeing’s can exist.

“It’s a huge loophole,” said Craig Holden, a government affairs lobbyist for Public Citizen who has helped states write pay-to-play laws more restrictive than the federal-level bans.

There is also, in effect, another even larger loophole for contractors looking to influence national politicians: the inaugural committee for a president-elect. Because inaugural committees are technically not connected to the political campaign, “all bets are off,” as Mr. Fischer put it. Boeing gave a million dollars to Mr. Trump’s inaugural committee — a giveaway now under scrutiny as a possible conflict of interest for the president.

Thanks to this maze of loopholes and legal niceties, federal contractors are able to effectively spend or direct the spending of money on political campaigns, despite the original intent of the law against contractor contributions. One clear result of this system is the widespread suspicion, warranted or not, of the government’s initial decision not to ground Boeing’s plane.

(click here to continue reading Opinion | The Loophole That Lets Boeing Get Cozy With Congress – The New York Times.)

Boing and Lockheed Martin and similar companies slurping up tax payer dollars is why Flint still doesn’t have clean water, why college education isn’t basically free, why millions of people don’t have health insurance, and so on. Corporate welfare is like a black hole, distorting our entire economy.

Wintry Moon Rise over Boeing

Defense Department subpoena sought Re Federal Savings Bank

The Federal Savings Bank
The Federal Savings Bank, West Loop, in the news again. 

Crain’s Chicago reports:

Two senior House Democrats are pushing to subpoena the Department of Defense on whether Trump administration officials considered nominating Chicago banker Stephen Calk as secretary of the Army after his small local bank made outsized loans to Donald Trump’s former campaign manager.

The request for a subpoena was made in a letter today—you can read it below—to U.S. Rep. Trey Gowdy, R-Texas, chairman of the House Oversight & Government Reform Committee, from the panel’s senior Democrat, Rep. Elijah Cummings of Maryland, and Rep. Stephen Lynch of Massachusetts, senior Democrat on the House Oversight subcommittee on national defense.

The two Democrats said the Defense Department hadn’t produced any of the documents they asked for, nor said when it would.

The letter referenced “extremely troubling reports that a banker named Stephen Calk may have made loans of up to $16 million to President Donald Trump’s campaign chairman, Paul Manafort, in exchange for promises to name him secretary of the Army.”

Calk’s Chicago-based lender, Federal Savings Bank, made a total of $16 million in loans to Manafort in December 2016 and January 2017. They were collateralized by homes in New York City, the Hamptons and Virginia.

At just $364 million in assets, Federal Savings Bank is far too small to be making loans of that size to a single borrower.

“Although Mr. Calk ultimately was not given a position with the department, reports that he was being considered for a high-level and highly sensitive national security position within the Trump administration as part of a quid pro quo with Mr. Manafort raise serious concerns that, completely apart from Special Counsel Robert Mueller’s investigation, warrant scrutiny by Congress,” the Democrats’ letter said.

They want to review all Defense Department documents and communications regarding a potential role for Calk, among other items.

(click here to continue reading Defense Department subpoena sought on Trump official – Government News – Crain’s Chicago Business.)

Previous coverage here and here  

How the Pentagon Screws Taxpayers Out of $170 Billion

On Leave
On Leave

I laugh at the number of times Defense Department spending is discussed during talks of deficits and tax burdens, and slashing the social insurance of our nation. Rarely, if ever, do either party of our political elites want to mention how many dollars are squandered without oversight, feeding the maw of our military…

Americans rarely think about these bases, let alone how much of their tax money—and debt—is going to build and maintain them. For Dal Molin and related construction nearby, including a brigade headquarters, two sets of barracks, a natural-gas-powered energy plant, a hospital, two schools, a fitness center, dining facilities, and a mini-mall, taxpayers are likely to shell out at least half a billion dollars. (All the while, a majority of locals passionately and vocally oppose the new base.)

How much does the United States spend each year occupying the planet with its bases and troops? How much does it spend on its global presence? Forced by Congress to account for its spending overseas, the Pentagon has put that figure at $22.1 billion a year. It turns out that even a conservative estimate of the true costs of garrisoning the globe comes to an annual total of about $170 billion. In fact, it may be considerably higher. Since the onset of “the Global War on Terror” in 2001, the total cost for our garrisoning policies, for our presence abroad, has probably reached $1.8 trillion to $2.1 trillion.

How Much Do We Spend?

By law, the Pentagon must produce an annual ” Overseas Cost Summary” (OCS) putting a price on the military’s activities abroad, from bases to embassies and beyond. This means calculating all the costs of military construction, regular facility repairs, and maintenance, plus the costs of maintaining one million US military and Defense Department personnel and their families abroad—the pay checks, housing, schools, vehicles, equipment, and the transportation of personnel and materials overseas and back, and far, far more.

The latest OCS, for the 2012 fiscal year ending September 30th, documented $22.1 billion in spending, although, at Congress’s direction, this doesn’t include any of the more than $118 billion spent that year on the wars in Afghanistan and elsewhere around the globe.

While $22.1 billion is a considerable sum, representing about as much as the budgets for the Departments of Justice and Agriculture and about half the State Department’s 2012 budget, it contrasts sharply with economist Anita Dancs’s estimate of $250 billion. She included war spending in her total, but even without it, her figure comes to around $140 billion—still $120 billion more than the Pentagon suggests.

Wanting to figure out the real costs of garrisoning the planet myself, for more than three years, as part of a global investigation of bases abroad, I’ve talked to budget experts, current and former Pentagon officials, and base budget officers. Many politely suggested that this was a fool’s errand given the number of bases involved, the complexity of distinguishing overseas from domestic spending, the secrecy of Pentagon budgets, and the “frequently fictional” nature of Pentagon figures. (The Department of Defense remains the only federal agency unable to pass a financial audit.)-PDF

Ever the fool and armed only with the power of searchable PDFs, I nonetheless plunged into the bizarro world of Pentagon accounting, where ledgers are sometimes still handwritten and $1 billion can be a rounding error. I reviewed thousands of pages of budget documents, government and independent reports, and hundreds of line items for everything from shopping malls to military intelligence to postal subsidies. 

(click here to continue reading How the Pentagon Spends $170 Billion | Mother Jones.)

Jimi 1961 Army
Jimi  Hendrix 1961 Army.jpg

If logic were part of the budget negotiations in Washington, the Pentagon would not be able to play such games. Why should taxpayers like you and me subsidize the military contractors who profit from bases in Kosovo? or wherever? If Medicaid and Medicare is on the table, why shouldn’t our insanely over-funded military budget be on the table too?

But don’t for a second think that that’s the end of our garrisoning costs. In addition to spending likely hidden in the nooks and crannies of its budget, there are other irregularities in the Pentagon’s accounting. Costs for 16 countries hosting US bases but left out of the OCS entirely, including Colombia, El Salvador, and Norway, may total more than $350 million. The costs of the military presence in Colombia alone could reach into the tens of millions in the context of more than $8.5 billion in Plan Colombia funding since 2000. The Pentagon also reports costs of less than $5 million each for Yemen, Israel, Uganda, and the Seychelles Islands, which seems unlikely and could add millions more.

When it comes to the general US presence abroad, other costs are too difficult to estimate reliably, including the price of Pentagon offices in the United States, embassies, and other government agencies that support bases and troops overseas. So, too, US training facilities, depots, hospitals, and even cemeteries allow overseas bases to function. Other spending includes currency-exchange costs, attorneys’ fees and damages won in lawsuits against military personnel abroad, short-term “temporary duty assignments,” US-based troops participating in exercises overseas, and perhaps even some of NASA’s military functions, space-based weapons, a percentage of recruiting costs required to staff bases abroad, interest paid on the debt attributable to the past costs of overseas bases, and Veterans Administration costs and other retirement spending for military personnel who served abroad.

Beyond my conservative estimate, the true bill for garrisoning the planet might be closer to $200 billion a year.

(click here to continue reading How the Pentagon Spends $170 Billion | Mother Jones.)