Weapons Welfare Uncovered

Weapons Welfare Uncovered

National Security,  | Quick Take
Jul 9, 1996  | 3 min read | Print Article

Uncle Sam handed out $7.6 billion in subsidies in 1995 to help U.S. defense companies sell their weapons abroad, according to a report released in June by the World Policy Institute. This makes arms sales subsidies the second largest spending program for a business in the federal budget, after agricultural price supports.

The report, entitled Welfare for Weapons Dealers: The Hidden Costs of the Arms Trade and written by William D. Hartung, provides a comprehensive analysis of the billions of federal dollars provided to major defense companies such as Lockheed Martin and McDonnell Douglas. The subsidies help private weapons manufacturers promote, market and finance their highly profitable foreign arms sales.

Even as Congress declares its intention to balance the budget, it has actually increased its unnecessary hand-outs to profitable defense companies to help boost their overseas sales. Federal subsidies for arms exports jumped from $7 billion in FY1994 to $7.6 billion in FY1995, an increase of 8.5%. U.S. foreign arms sales were valued at approximately $12 billion in 1995. More than half of that ended up being funded by U.S. taxpayers, not foreign customers.

The report details the direct and indirect ways that the industry receives subsidies. For example, the federal government pays more than $26 million a year for international air and trade shows, a figure that is 26 times greater than the official cost estimate provided to Congress by the Pentagon.

As with other corporate welfare handouts, the subsidies benefit only a few top companies. In 1992 and 1993, the top 15 arms exporting companies received $12.2 billion in foreign military sales contracts from the Pentagon. The top two recipients were Lockheed Martin, with $2.8 billion and McDonnell Douglas with $2.6 billion.

Hartung and his associate Jennifer Washburn have written on arms sales subsidies for numerous newspapers and magazines including The New York Times, The Washington Times, The Journal of Commerce and The Progressive.

For more information, or to purchase the report, call the World Policy Institute at (212) 229-5808.

Corporate Welfare Fireworks

Taxpayers forked over $300,000 to Walt Disney Inc. to improve its fireworks displays according to a new series in The Boston Globe. The three-part series, which began July 7, highlights this and other examples of corporate welfare which add up to $150 billion each year. To read the series on-line, and participate in a poll, visit http://www.boston.com, keyword: corporate.

RELATED ARTICLE
The Farm Bill Divide