Arms Merchants as Welfare Kings



GENERAL COLIN Powell, the only Republican who enjoyed freedom of speech at last week's GOP love fest in San Diego, hit a resonant chord in his opening night address when he assailed "corporate welfare" as an economic scourge that neither the Republicans nor the Democrats have been willing to confront.

But even the general slopped short of specifying the most egregious corporate welfare billionaires, and for good reason Like many retired senior officers. he could make a handsome living ad vising the arms industry the second largest welfare client in the nation how to wring even greater subsidies out of his former employer, the Pentagon

According to a revealing new study on the taxpayer costs of the U.S. arms trade, by William Hartung, a senior fellow at the World Policy Institute, taxpayer subsidies for American arms merchants hit $7.6 billion in 1995 That made the arms export industry the second largest government subsidy program in the nation, behind agricultural exports.

And while ag subsidies have been declining, weapons sales subsidies have risen steeply. Indeed, Congress last year created a brand new $15 billion government backed loan guarantee program for U.S. foreign arms sales, and the industry is lobbying hard to repeal hundreds of millions of dollars worth of arms sales ''taxes" that partially offset the subsidies.

The Clinton administration has been an even more aggressive promoter of subsidies to arms exporters than its Republican predecessors, if only because the big Mideast and Asian nations have become harder sells in the aftermath of the post-Gulf War weapons buying binge, which brought many of them to near financial ruin.

Hartung's accounting of the government's weapons sales force reveals the Pentagon alone employs 6,395 full time equivalent arms salesmen, up 7.5 percent since Clinton took office all acting on behalf of private arms firms.


Perhaps the most astonishing figures in Hartung's report are those on the financial returns of all this high-powered government salesmanship. Given the growing subsidies and the declining international market for multimillion dollar weapon systems, the annual weapons welfare tab now amounts to more than half the value of all U.S. foreign arms sales, which total around $12 billion.

Another way to look at that says Hartung, is that ''more than half of U.S. weapons sales through the end of the decade will be paid for by U.S. taxpayers ".

In turning not only the Pentagon but the State Department and even the Commerce Department into weapons sales forces, Clinton has shamelessly substituted an economic rationale for what used to be a purely geostrategic argument for peddling U.S. weapons abroad.

The billions spent on hawking foreign arms sales is sold to Congress and the public as basically an American jobs program. But the big foreign buyers arc no longer so naive. They've figured out how to get the weapons they want, the loans and outright U.S. grants to pay for them and the production facilities, technology and jobs that go into making them. The gimmick is called "offsets" various economic incentives, including coproduction, to buy American.

As a result, says Hartung, "U.S. arms deals now produce more jobs overseas than they do in the U.S. "

If job creation were really the object of the Pentagon's welfare largesse, there are far better ways to accomplish it. The $7.6 billion in weapons welfare could be used to transform America's real welfare program into a genuine jobs program, as opposed to human scrapheap implicit in the so-called ''welfare reform" bill the president has promised to sign.

It is estimated that such a sum, applied to housing, mass transit, education and health care, for instance, would generate an estimated net increase of more than 88,000 American jobs. Instead, during the first two years of the Clinton administration, the executives and shareholders of an increasingly small handful of arms exporting companies reaped $12.2 billion in foreign military sales contracts from their taxpayer employed pitchmen at the Pentagon and most of the jobs went overseas with the weapons.

When someone is allowed to stand up at a party nominating convention and assail this kind of self-defeating corporate welfare, American voters might start paying attention again .

Copyright © 1996. The Light Party.


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