There is a reason why they call them Beltway Bandits, that species of defense consultants, contractors and assorted think tankers who shrewdly facilitate contracts and support for the industry, wielding influence over legislative agendas and politicians on the Hill. Like the bandits of our pop-culture past, they wear “masks,” so everything looks proper, straightforward.
Think tanks are non-profit, for example, but they are often associated with political action committees (PACs) under a different shingle. Ex-generals and admirals serve as vice presidents or board members for defense contractors or as heads of industry associations, not for their sage experience but as non-registered lobbyists and skid greasers for the companies’ Washington interests. The associations themselves are masks, storefronts really, for fielding political funds and battalions of lobbyists who fight for appropriations and contracts on the Hill every day. Much has been written about these “pay to play” machinations but too much is invested on both sides of the political aisle to put an end to them.
From time to time what’s underneath the mask is exposed and tactics change. A couple of years ago, it was reported that more than 100 ex-generals and admirals had taken jobs as paid “mentors” within the services, even though many had extensive ties to the defense industry. Nonexistent disclosure requirements hid the fact that these “mentors” were advising the services on weapons systems and other contracts near and dear to their private employers’ hearts. Once exposed, former Secretary of Defense Robert Gates put in new disclosure rules. As a result, the number of mentors has decreased from 158 to 20 as of 2011, according to USA Today.
All told, the Washington Beltway very much resembles the intro to the old “Tales from the Darkside” TV series: there is another Washington just below the surface, “which is just as real, but not as brightly lit” as the one most visible to the public eye.
That is why it was so bombastically audacious for “military analyst” Loren Thompson, CEO of the non-profit Lexington Institute (which gets funding from defense contractors), and CEO of the for-profit Source Associates, which represents defense contractors seeking access on Capitol Hill, to write a column for Forbes this week called “Five Reasons The Defense Industry Is Still A Better Investment Than Other Sectors.”
Thompson’s read on defense industry stock is a lesson in pure venality and cynicism: global turmoil and war keep the the industry humming and stock prices jumping. Market domination by a few big fish and the Pentagon’s insatiable appetite for expensive new things insulate the real players from serious downturns, making their stock an attractive bet, too. And “the politics” — we cannot forget that. Here is Thompson’s cringe-worthy take:
Although military contractors complain endlessly about the drawbacks of doing business with a political system, there are also big benefits. The Pentagon is relatively insensitive to price increases and Congress tries to protect jobs at defense facilities even when performance is sub-par. So the defense industry is insulated from market forces in a way that few other industries can ever hope to be.
This political aspect to the business is especially important in protecting U.S. defense contractors from foreign competition at home. The Pentagon tells a good story about welcoming foreign suppliers, but the simple truth is that most overseas companies can’t get past the cultural and security barriers. Trade treaties exempt military purchases from most of the rules applied to other international transactions, and thus U.S. arms merchants seldom need to worry about foreign competition on their home turf. Imagine how General Motors would be doing if it operated under those conditions.
Translation: thanks to all of the lobbying and “consulting” by Thompson and his ilk (Harper’s took an expert crack at Thompson in 2010), politicians are too fat with contributions and too paralyzed with fear they’ll be labeled “soft on defense” to hold the line on spending or to cancel major projects. Furthermore, the MIC (military-industrial complex) has been designed such that there is a little piece of the industry in nearly every state and congressional district, making it that much more difficult for lawmakers to make a stand.
We know all this, but it’s near revolting to hear Thompson coyly spin it as a plus for investors, especially when we know he is working for the industry he is writing about!
So, when it suits (and when the price is right), Thompson will shout from the rooftops that the industry is essentially suckling from the breast of the federal government, with entitlements other American industries do not enjoy. But he can easily shift gears to play the wailing Cassandra over looming defense cuts.
As Spencer Ackerman, one of the few national security journalists who “gets” the darkside, and who works for a publication (Wired) that isn’t afraid to talk about it, pointed out in April, “[The Lexington Institute] is probably the defense industry’s favorite Beltway think tank. If there’s big defense dollars at stake on a project, Lexington’s experts will reliably write thousands of words about why national security will suffer unless the Pentagon sees the project through.”
Over the summer, Thompson wrote a particularly deplorable op-ed in which he asked that the defense industry not get “short shrift” for its role in the death of Osama bin Laden:
So I’m not going to criticize Obama’s backers for highlighting a clear-cut victory in what used to be called the global war on terror. But I am going to complain about the player that wasn’t invited to their victory celebration: the defense industry. No doubt about it, the president took a big risk that paid off, the SEALS deserve their commendations and the intelligence community regained its reputation for world-class sleuthing. But would any of this have been possible without the secret technology provided by the defense industry?
Uh, yes, says Ackerman:
Yes, the SEALs had impressive gear for the raid, from stealth helicopters to powerful satellites. But if you gave, say, me every piece of equipment that the SEALs had, I regret to inform you that bin Laden would still be alive. Louisville Slugger did not win last year’s World Series. Mario Manningham’s cleats did not keep him in bounds for one of the greatest receptions in Super Bowl history….
But Thompson is not working for Louisville Slugger, he goes to work each day with one client in mind, the defense industry. When he wrote his latest piece for Forbes, he had that client in mind, too.
That’s what they call a shill — a Beltway Bandit. This time, without the mask. We know the face of this creature, and it is not pretty.