War is Wonderful…If You’re a Weapons Maker

Friday, January 04, 2013

The wars in Afghanistan and Iraq put enormous strains on the United States, from impacting individual lives of Americans to draining the U.S. Treasury. But the conflicts had the opposite effect on the companies that armed the U.S. military.


From 2002 until 2011, the profits of the five largest defense contractors (Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon) “increased by a whopping 450 percent,” according to Lawrence J. Korb, senior fellow at the Center for American Progress.


Ten years ago, the profits of these five companies were $2.4 billion (adjusted for inflation) collectively. By 2011, their profits had soared to $13.4 billion. During the period in which the profits of weapons makers were going up 450%, the U.S. defense budget rose 55%. During the same time frame, the median annual income for American families actually went down almost 6%.


During earlier wars in American history, the government used to impose a “war tax” on contractors to ensure that they did not gain excessively from the misery of others fighting the conflict. But that wasn’t the case last decade, noted Walter Pincus at The Washington Post.


“My most radical idea—and it should have been done 10 years ago—is for an excess-profits tax on defense contractors while we have troops fighting overseas,” Pincus wrote. “As I have often noted, Afghanistan and Iraq are the first U.S. wars in which taxes were not raised to pay for the fighting. Instead, the cost has been put on a credit card.”

-Noel Brinkerhoff


To Learn More:

Excess-Profits Tax On Defense Contractors During Wartime Is Long Overdue (by Walter Pincus, Washington Post)

Defense Contractors’ Profits Can Weather Military Budget Cuts (by Lawrence J. Korb, Robert Ward, and Alex Rothman, Think Progress)

U. S. Weapons Industry Makes Too Much Profit from Pakistan to Reject its Government (by Noel Brinkerhoff and David Wallechinsky, AllGov)


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