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Redistribution of wealth in the bipartisan budget agreement
Speaking Security Newsletter | Note n°208 | 8 June 2023
Since Joe Biden signed into law the bipartisan budget agreement — “Fiscal Responsibility Act of 2023” — he negotiated with House Speaker Kevin McCarthy (R-CA), aggressive marketing from the White House has followed, and for good reason: Damage control is needed.
The bill makes significant cuts to critical social programs. And more cuts are probably on the way. How is this possible? Because the bill just sets spending limits — there’s nothing stopping Congress from passing annual appropriations bills with even lower amounts. In other words, Biden negotiated a ceiling for social spending, but not a floor. His deal with McCarthy effectively gave budget hawks two bites at the apple.
The bill adds more work requirements to the Supplemental Nutrition Assistance Program (SNAP). Despite what Democratic partisans claim, the changes will shrink program participation (that’s always the purpose of red tape). People will be wrongly kicked off the program for bureaucratic reasons, much like what’s happening with Medicaid right now. Those who remain on the program will have less food aid to work with, thanks to Biden’s FY2023 budget slashing SNAP funding. (For more insight into the content of this legislation, I recommend this Lever article by David Sirota.)
While the bill applies austerity to programs for social welfare, it takes a wildly different approach to corporate welfare.
Socializing cost, privatizing profit
Biden says the bipartisan budget agreement is a reflection of his values. The bill makes it harder for poor and working class people to pay for groceries and access critical services, and easier for weapons companies to post record profits quite literally at the public’s expense.
If you compare Pentagon budget and contract data for fiscal years 2008 through 2022, you’ll find that during this 15-year stretch, the average share of annual military spending that went to the private sector was a little over 53 percent. The bipartisan budget agreement adopts Biden’s $886 billion Pentagon budget request for FY2024.
What does this mean for weapons companies? Based on the 15-year average, I estimate that $470 billion of that will be transferred to contractors, based on the 15-year average above. This is why Lockheed Martin’s CEO was celebrating after the bipartisan budget agreement passed the House.
Two weeks ago, 60 Minutes aired its investigation that found rampant price gouging by military contractors on “almost everything” the Pentagon buys each year. Your typical fixed-price military contract allows for private profits of 12-15 percent; contractors are actually securing profits of 40 to 50 percent. CEO pay at the big weapons firms routinely exceeds $20 million annually. The bipartisan budget agreement rewards this behavior by ensuring a record-setting amount of cash gets dumped on the arms industry. The bipartisan consensus in Washington has reached a new level of shamelessness.
^Alt text for screen readers: Military contractors can expect $470 billion from the bipartisan budget agreement in fiscal year 2024. The bill adopts Biden’s $886 billion military spending request. This chart has 17 columns that show total military spending from fiscal years 2008 to 2024. Each one of those columns is made up of two parts, the portion of military spending that went to contractors and the portion that didn’t. The projected contract values for fiscal years 2023 and 2024 are based on the share of military expenditures that were obligated to contractors from fiscal years 2008 to 2022, which was 53 percent. Data comes from Public Law 118-5, the Office of Management and Budget, the Bureau of Fiscal Service.