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USA: Cash Poor Pentagon Continues Record Setting Spending Spree on Contractors


The disparity between spending on the arsenals of the future and the armies of today is great and growing.

by Tim WeinerInternational Herald Tribune
September 30th, 2004

Amid one of the greatest military spending increases in history, the Pentagon is starved for cash.

The United States will spend more than $500 billion on national security in the fiscal year beginning on Oct. 1. That represents a historic high-water mark, and it is creating boom times among defense contractors.

Yet the military says it has run $1 billion a month short over the past year paying for the basics of fighting the war in Iraq: troops, equipment, spare parts and training.

The disparity between spending on the arsenals of the future and the armies of today is great and growing.

The Pentagon will spend $144 billion in the coming year researching and building weapons for future wars, an all-time record. That is twice the annual cost of the wars in Iraq and Afghanistan, by most independent estimates.

The Pentagon says it has 77 major weapons programs under development. They include the $200 billion Joint Strike Fighter, a fleet of warplanes; the U.S. Army's $112 billion Future Combat System of networked weapons and communications; and the U.S. Navy's DD(X) warship, the world's first $10 billion destroyer.

Those 77 weapons systems have a collective price tag of $1.3 trillion. That is nearly twice what they were supposed to cost, and 11 times more than the annual bill for operating and maintaining the American military.

The spike in weapons spending is a bonanza for military contractors, almost all of which report surging profits and climbing stock prices. Pentagon contracts awarded to the defense industry's top 10 corporations reached $82.3 billion in 2003.

The rise in Pentagon spending is the greatest in 20 years, nearly matching the buildup that President Ronald Reagan initiated in the early 1980s.

But when it comes to fighting wars, the money has not flowed as freely.

In 1999, while running for president, George W. Bush proposed a new direction for national defense, away from an industrial era of cold-war planes, tanks and ships and toward an information era of wired, speedier, stealthier forces.

"As the public and investors became aware that Bush had a good chance of becoming president, defense stocks began going up right away," said Paul Nisbet of JSA Research in Newport, Rhode Island, who has analyzed the industry for 30 years.

But Bush and Defense Secretary Donald Rumsfeld soon faced a quandary.

"There is no question that we probably cannot afford every weapon system" in development, Bush said in August 2001. "This administration is going to have to winnow them down."

Would they rebuild the arsenal they had or skip forward to the next generation of weapons?

"On Sept. 10, 2001, Rumsfeld faced a totally invidious choice," said Gordon Adams, who oversaw national security spending at the Office of Management and Budget under President Bill Clinton. "The Pentagon planning system was in a crunch. The budget was in severe stress."

But the attacks of Sept. 11 "completely changed the planning horizon for defense," Adams said. "The floodgates opened. Everything was a priority."

The Pentagon will spend at least $420 billion in the coming year, not counting the costs of combat in Iraq and Afghanistan, which will run at least $72 billion and probably more, according to number crunchers in Congress. Add $32 billion for homeland security, and the bottom line comes to $524 billion.

The accelerating pace of spending is unlikely to slow much, no matter who wins the presidential election in November. Bush supports all 77 major weapons systems now under development; Senator John Kerry has said he would cut back on one, missile defense, which costs $10 billion a year.

Why is there plenty of money available for the weapons of the future but not enough for the troops at war today? Because, military experts say, one thing did not change after Sept. 11: the way the Pentagon and Congress pay for wars.

"We pay for war with supplementals," emergency requests to Congress, said Lieutenant Colonel RoseAnne Lynch, a Pentagon public affairs officer. "We do not budget for war."

Despite increases in weapons spending, the military still faced shortfalls of more than $12 billion over the past year for the myriad nuts and bolts of war: supporting troops, buying spare parts and maintaining equipment, according to the General Accountability Office, the budget watchdog of Congress.

"The military has been underreporting the actual costs of war in Iraq," said Adams, now director of security policy studies at George Washington University's Elliott School of International Affairs.





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