Meet the Welfare Queens of the 1%: The Moochers Mitt Missed Work for the Pentagon

The PentagonThe Pentagon. (Photo: mindfrieze)Forget the laid-off workers, disabled veterans and elderly retirees. Pentagon contractors are far more dependent on taxpayers to pay their way than Mitt Romney’s fabled 47 percent; and rest assured, Mitt can count on their support.

Mitt Romney’s recently-exposed statement disparaging nearly half of all Americans as hopelessly dependent on government may actually make a valid point, however churlish it may seem on the surface. To be sure, the Republican presidential nominee was most likely denouncing purported scroungers and moochers like the unemployed person who rakes in a princely $293 a week on average from unemployment insurance, or the 60-percent disabled veteran who is dependent on government to the tune of $1009 a month.

But if Mr. Romney were to broaden his focus, he would find that there are welfare queens beyond his imaginings. In the last four years, Wall Street moguls such as Jamie Dimon and Lloyd Blankfein have reaped tremendous public scorn for their outsized paychecks, so their transgressions are not exactly a secret. At least in theory, however, bankers operate private enterprises not dependent on the taxpayer (that is, in good years when the government is not bailing them out). Their executive compensation – again, in theory – is a voluntary concession by shareholders. Whether, for that matter, a financial institution – the deposits of which are insured by the federal government – ought nevertheless to submit to executive compensation limits is an argument for another day.

After a tremendous response to his commentary on Truthout, Mike Lofgren has released a new book, “The Party Is Over.” In it he explores what he calls the “company town” of Washington DC, where “the company’s products are politics and military hardware.” Receive a copy from Truthout with a minimum donation of $35 – or a monthly donation of $15.

Also see: Goodbye to All That: Reflections of a GOP Operative Who Left the Cult; An Interview With Mike Lofgren, Author of “The Party Is Over”; How Republicans Went Crazy, Democrats Became Useless and the Middle Class Got Shafted.

That said, there is no dispute about the status of major Pentagon contractors, their utter dependency on government, and their outsized profiteering. Lockheed Martin, the largest contractor, receives about 85 percent of its revenues from US Government contracts. Government sales accounted for more than 90 percent of revenue to Northrop Grumman, the fourth largest contractor, during the last three years.

Unlike the cases of Dimon or Blankfein, I doubt one American in a thousand knows who Wes Bush is. The CEO of Northrop Grumman, he made over $26 million last year, exceeding JPMorgan Chase’s payout to Dimon, the highest paid bank CEO. In fact, the chiefs of the five largest Department of Defense (DoD) contracting firms hauled in $107 million combined, more than the top five bank CEOs (who limped in with a mere $75 million altogether). Yet somehow, this form of income redistribution through the medium of government manages to bounce off the consciousness of people like Romney and his supporters like Swedish peas off an Abrams tank.

Indeed, as I have argued more comprehensively elsewhere, the public rarely notices how much the DoD budget contributes to an upward redistribution of income from the many to the relatively few. The Washington, DC, suburbs are a notable example of this. At a time when median income and net worth have fallen nationally, income in DC’s surrounding counties has surged, with seven of the ten richest counties in the nation now lying in the Washington region.

While government employees are well-compensated, there are statutory limits to their pay, so they do not account for the explosion of 5,000-square-foot McMansions, gated communities, and similar gaudy excrescences in the capital’s outer suburbs. This phenomenon has gone hand-in-hand with the last decade’s explosion in the contracting out of government services and the huge and uncompetitive profit margins this process generates – particularly in DoD, but also Homeland Security and government-wide information technology.

Yet the peculiar sociology of the military-industrial complex paradoxically allows for a government-dependent population that disproportionately thinks of itself as small-government conservative and heavily votes GOP. This is particularly true in outer-suburban counties like Loudoun that are rural enough to maintain the illusion of a free Jeffersonian yeomanry among the many contractor personnel living on their sham estates in what was once Virginia’s horse country.

In addition, the Pentagon budget is a net drain on jobs nationally, rather than a net creator. A dollar spent on road building, health care or just about any other employment activity creates more jobs than a dollar appropriated to DoD. And while the military budget generates a few pockets of prosperity, such as the DC suburbs or San Diego, it draws money out of more congressional districts than it benefits.

It will be fascinating to see the howls of dismay from defense contractor executives if, on January1, 2013, Congress really does walk the country over the so-called “fiscal cliff” and the Pentagon budget faces cuts. And what would be their reaction to a modest proposal to cushion the blow to our troops in the field by forcing these executives to take a pay cut? Why should a company that receives more than, say, two-thirds of its revenue from government pay its executives more than the $400,000 annual salary that the President of the United States receives? Any more than that would simply demonstrate the kind of grasping dependency on taxpayers that Mr. Romney abhors.