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The Department of Defense Contractors

Judd Legum

Dec 9

In his 1961 farewell address, President Dwight D. Eisenhower warned of the dangers of the military-industrial complex:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes.

At the time, the budget of the U.S. military was $48 billion. This fiscal year, the U.S. military budget is $738 billion, a rise that far outpaced the rate of inflation. If military spending had increased at the pace of inflation over the last 60 years, the current military budget would be about $414 billion.

Military spending accelerated dramatically during the Trump administration; more than $125 billion was added to the defense budget over 4 years. Notably, Trump's first three Defense Secretaries all previously worked for military contractors. Former Defense Secretary Mark Esper, who was fired by Trump in November, was a lobbyist for Raytheon. Esper's predecessor, Patrick Shanahan, spent three decades as an executive at Boeing. And Shanahan’s predecessor, Jim Mattis, served on the board of General Dynamics for four years before being nominated as Trump's first Secretary of Defense.

The election of Joe Biden was an opportunity to reset the relationship between the Pentagon and the contractors that are paid billions annually by the federal government. Instead, Biden nominated Lloyd Austin, a former general and current member of the Raytheon board.

Austin, who retired as a four-star general, has an unquestionably impressive resume. He was the commander of CENTCOM, and, before that, the battlefield commander who managed the complicated withdrawal of U.S. forces from Iraq. He reportedly has a strong desire "to avoid civilian casualties." Unlike other top generals, he has avoided the media spotlight and focused on his work. His nomination is also historic. Austin would be the first Black Secretary of Defense.

But it's also not an accident that Austin ended up on the board of Raytheon in 2016, a position which paid him $300,000 in annual compensation. In 2018, according to a report by the Project on Government Oversight (POGO), defense contractors employed 380 former "high-ranking Department of Defense officials and military officers" as "lobbyists, board members, executives, or consultants." The biggest defense contractors — General Dynamics, Northrup Grumman, Raytheon, Lockheed, BAE — all currently have multiple retired admirals and generals on their board.

POGO concluded that the "revolving door of Pentagon officials and senior military leaders seeking lucrative post-government jobs" ends up conflating "what is in the best financial interests of defense contractors—excessively large Pentagon budgets, endless wars, and overpriced weapon systems—with what is in the best interest of military effectiveness and protecting citizens."

Raytheon, in particular, has publicly advocated for the Biden campaign to maintain — and eventually increase — Trump's military spending levels. In a CNBC interview in late-October, Raytheon CEO Gregory Hayes said it was "ridiculous" to think that Biden would reduce military spending. Although Hayes said he expected defense budgets to remain relatively flat as the country deals with the pandemic, he called for increased budgets in the long term. "We have lost our technological edge to the Chinese and in some cases to the Russians and we’re going to have to invest more dollars into some of these new technologies if we’re going to be able to compete with these new threats," Hayes said.

Raytheon spends millions to influence the federal government. In the third quarter of 2020, Raytheon’s lobbying expenditures exceeded $2.85 million. This included $680,000 in payments to 19 different lobbying firms.

Austin's connection to Raytheon is unlikely to seriously endanger his chances at confirmation. A year ago, Esper was confirmed on a vote of 90-8, despite working as a lobbyist for Raytheon. Republicans and Democrats are willing to overlook these kinds of financial conflicts-of-interest.

Abandoning civilian control

Another issue with Austin's nomination as Defense Secretary is that he is not technically eligible for the job. "A person may not be appointed as Secretary of Defense within seven years after relief from active duty as a commissioned officer of a regular component of an armed force," according to federal law. Austin retired seven years ago.

What's the purpose of this law? It is grounded in the foundational principle that the military reflects, and is subordinate to, the will of the people. That is why the president is also Commander-in-Chief.

The specific law was passed in 1947, around the time the unified Department of Defense was created, and initially required a member of the military to be retired for 10 years before being appointed Secretary of Defense. (The time period was shortened to seven years in 2008.) It was based on a concern "that recently retired officers would be too cozy with their friends still on active duty." Ultimately, this could undermine the authority of the president and the rest of the civilian decision-making apparatus.

Austin, however, seems unlikely to resist the strategies of Biden and his civilian national security team at the White House. According to reports, Biden selected Austin in part because, unlike some high-ranking generals, he does not seek out the spotlight.

Congress can waive the requirements of the law, and did so to confirm Mattis in 2017. But Mattis was only the second time that Congress waived the law. And at the time some Democrats said it was a one-time exception they would not repeat. (The conventional wisdom was that Mattis would provide "adult supervision" for Trump.)

Senator Jack Reed (D-RI), a member of the Senate Armed Services Committee, supported the waiver for Mattis but said he would not support a waiver for any future nominees.

Congress has enacted an exception one time since the creation of the Department of Defense. And waiving the law should happen no more than once in a generation. Therefore, I will not support a waiver for future nominees. Nor will I support any effort to water down or repeal the statute in the future.

The waiver must also pass the House. In 2017, only 36 House Democrats supported a waiver for Mattis. Congresswoman Elissa Slotkin has already raised concerns about Austin's nomination, saying that "civil-military relations at the Pentagon definitely need to be rebalanced."

Democrats also referenced the issue in their 2020 party platform. "We will end the Trump Administration’s politicization of the armed forces and distortion of civilian and military roles in decision-making," the platform says.