Military spending produces inequality, a breakdown

Speaking Security Newsletter | Advisory Note for Organizers and Candidates, n°65 | 20 January 2021

Here’s one way the US military budget effectively functions as a self-propelled inequality machine.

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The federal discretionary budget mostly subsidizes militarism

About 40 percent of the money Congress decided to spend in (fiscal year) 2019 went to the private sector via government contracts. All told, $597 billion worth of federal contracts were awarded (a record high).

Of that, 68 percent ($404 billion) was given out by the Department of Defense (DOD) to buy weapons, equipment, and various services. Civilian agencies split the remaining 32 percent ($193 billion), including the Departments of Energy, Veterans Affairs, Health and Human Services, Homeland Security, State, Justice, Transportation, and Agriculture.

The top 5 federal contractors are all military contractors and ate $130 billion in taxpayer dollars in 2019

Revenue from public funds between these five firms was $129.6 billion, or 22 percent of all FY2019 federal government contract obligations.

^via Bloomberg

Corporate welfare

While military spending’s economic dividends are too exclusive to help out the working class, the current arrangement does work out quite well for the One Percent: from 2015-19, CEO pay at the top 5 federal contractors nearly surpassed half a billion dollars.

^Data source

Also here’s the CEO-to-median employee pay ratio for each company for 2019 (except Boeing, which refers to 2018 data), which also contributes to the whole inequality thing:

  • Boeing, 184:1 (meaning that Boeing’s CEO got paid 184x more than your average Boeing employee)

  • Northrop Grumman, 177:1

  • General Dynamics, 157:1

  • Lockheed, 200:1

  • Raytheon, 282:1

The wage ratio in the federal government is ~5:1.

Not for the working class, just paid for by the working class

In addition to corporate greed, another reason why military spending produces inequality is because it’s money not spent on social programs, which do reduce inequality.

For example, here are all the jobs lost from investing in defense over literally any other sector:

^Image from Heidi Garrett-Peltier, “War Spending and Lost Opportunities” March, 2019.

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Thanks for your time,

Stephen (@stephensemler; stephen@securityreform.org)

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