During a House Oversight and Reform Committee hearing, one Democrat questioned defense firms access to coronavirus stimulus money.
From the halls of Congress to late-night television, cries to cut the Pentagon’s budget are becoming louder as the White House prepares another coronavirus stimulus package and the November elections loom.
Progressive Democrats, led by Sen. Bernie Sanders, I-Vermont., and Reps Mark Pocan, D-Wisconsin, and Barbara Lee, D-California, introduced amendments to the fiscal 2021 National Defense Authorization Act that would levy a 10 percent cut to the Pentagon’s $740 billion budget. The lawmakers proposed to put the $74 billion “to invest in communities that have been ravaged by extreme poverty, mass incarceration, decades of neglect and the Covid-19 pandemic.”
While the legislation failed in both the Senate and the House, calls to cut Pentagon spending have increased among far-left Democrats in recent months. If Democrats keep control of the House and win the Senate and White House, progressive voices would be poised to draw real blood from the Pentagon's bottom line.
During a House Oversight and Reform Committee about the F-35 Joint Strike Fighter, Rep. Katie Porter, D-California, questioned defense firms’ access to CARES stimulus funding.
“Why should the taxpayer foot the bill to help Lockheed Martin at this time?” she asked a Lockheed executive.
The CARES Act — which lawmakers passed in March, as the pandemic was beginning to ravage the New York City and Pacific Northwest regions — authorized the Pentagon to reimburse companies to recoup money they used to keep employees working amid the pandemic. But Congress did not appropriate any funds for the purpose.
The Pentagon is believed to have asked the Office of Management and Budget for $10 billion to $15 billion to cover those costs in the fourth stimulus bill being negotiated by the White House and Congress.
Meanwhile, executives from most of the biggest U.S. defense firms have lobbied Congress, the White House and Pentagon to appropriate the funds. Executives have warned that without the money, the Pentagon could be forced to cut weapon buys, which they say would lead to layoffs throughout the sector.
“Contractors clearly perceive imminent ‘Fourth Stimulus’ package, as the ‘last stagecoach out-of-Dodge City,’ before the turbulent November Election,” defense analyst Jim McAleese wrote in a July 20 note to clients.
Lockheed and other defense companies that have little commercial revenue have been able to weather the coronavirus much better than companies with a hefty commercial aerospace business.
While the CEOs of most of the major defense firms have signed letters asking for billions of dollars in taxpayer money to cover coronavirus expenses, Northrop Grumman is the exception.
Northrop CEO Kathy Warden offered a clue during the company’s April 29 first-quarter earnings call why her name is not alongside her fellow CEOs. In April, she said the company had realized savings from its acquisition of Orbital ATK.
“[A]s we look at this year, we have some increased COVID-19 related cost, as any company does as we do more of the safety protocols, cleaning, social distancing,” Warden said. “And we fully expect…that we can offset those through other cost reduction measures that we anticipate taking this year.”
Northrop reports its second-quarter earnings next week.
Lockheed on Tuesday raised its financial outlook for 2020 saying the company would make between an additional $750 million and $1 billion more in sales than it anticipated in January. Lockheed plans to make between $63.5 billion and $65 billion in 2020. Barrons dubbed the company a “pandemic star” for earning $3.5 billion in profits amid coronavirus.
“Use your 15 percent increase in profit to pay to protect your workers during Covid,” Porter said. “Why are we footing the bill to help a company that’s having an uber profitability moment, that is a ‘pandemic star.’”