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Industry Defense Committees

Congress: The Business of Politics

Industry and congressional committees maintain a relationship that appears to have a pay-to-play mentality. The defense industry and members of the defense oversight committees create and maintain a symbiotic relationship with a pay-to-play mentality. This type of relationship has resulted in a demand for more transparency in the allocation of federal defense funds. The House and Senate Armed Services Committees and the Appropriations Subcommittees on Defense have jurisdiction over a broad range of issues that impact the defense community. As a result members of these powerful committees and those who chair them attract large sums of campaign and Political Action Committee (PAC) money from U.S. defense contractors and those with ties to them. No other committees have benefited more from defense industry money than these four.

This paper will examine how members of these committees interact with defense contractors and the role both parties play in keeping business and politics intertwined. It will also explore how members use their influence and involvement on these committees to further industry agendas and whether or not member constituencies benefit from this relationship.

To examine the dynamics between members of the defense oversight committees and defense contractors I will use political contribution data from The Center for Responsive Politics’ OpenSecrets.org website. OpenSecrets.org is a nonpartisan research group that tracks money in politics. This data will be limited to the completed 2005-2006 election cycle and current 2008 cycle and will focus on the top contributors and recipients of defense money. I will also use FY 2008 Authorization and Appropriations Conference Reports to

Authorization-Appropriations Process

In order to discuss the relationship between the defense industry and the defense authorizing and appropriations committees it is necessary to have an understanding of the budget process these committees oversee. The preparation and passage of an annual defense budget can be complex. Integral to this process is the distinction between the defense authorization and defense appropriations process and the role of the defense oversight committees who oversee the defense budget. It is necessary to state that the budget process is not an exact science as authorizers and appropriators frequently alter procedure.

The 62 members of the House Armed Services Committee (HASC) and the 25 members of the Senate Armed Services Committee (SASC) are responsible for setting defense authorizations in the budget. These individuals establish defense policy and set funding levels for appropriations of new and existing federal agencies, activities and programs. The defense authorization bill they pass establishes, continues, or modifies agencies or programs and provides it with legal authority to operate. An authorization act may provide permanent, annual, or multi-year authorizations but still lack money to operate until it receives an appropriation.

The House Appropriations Committee (HAC) has 95 members, 15 of whom form the Defense Subcommittee (HAC-D), while the Senate Appropriations Committee (SAC) has 29 members, 19 of whom form the Defense Subcommittee (SAC-D). The HAC-D and SAC -D are responsible for line-by-line allocation of federal defense funds. The defense appropriations bill they pass is a type of budget authority. It provides funding to pay for programs that have already been "authorized" by Congress (in other words, they pay for policy that's already been made). However, the appropriators' function today has expanded and the Appropriations Committee frequently engages in policy decision making and management.

The federal fiscal year runs from October 1-September 30, however, the President starts the budget process the first Monday in February when he submits his budget request to the defense oversight committees (the authorization and appropriations committees). This request outlines the administration’s priorities for national defense in the coming year by suggesting spending levels for the various federal programs and agencies.

The President’s request is reviewed by the HASC and SASC who then hold hearings, hear testimony and consider changes to the President’s request. Subcommittees like Seapower and Strategic Forces then “mark-up” their portion of the bill, the process of analyzing legislation section by section and making changes, which then goes to the full committee for a vote. In order for legislation to become law the HASC and SASC must each pass an identical version of the defense authorization bill and issue an accompanying report outlining the bill’s provisions. The differences in both the HASC and SASC defense bill are reconciled in conference and a conference report is sent to each chamber for a final vote. The approved bill is then sent to the president to be signed into law as the National Defense Authorization Act (NDAA), the legislation by which Congress shapes its overall defense policy. If, for some reason, the President vetoes the bill it is returned to Congress where a two-thirds vote by both chambers is needed to override the veto or the process starts over until an agreed upon bill is passed.

After the authorizers have authorized appropriations for a fiscal year it is then time to allocate those funds. The HAC-D and SAC-D have jurisdiction over various defense activities, including, military procurement, research and development and maintenance and operation. The appropriations process they undertake is identical to the authorizing process. After the president submits his budget request the House and Senate budget committees adopt a budget resolution establishing their own spending ceilings and revenue targets. The HAC and SAC receive their spending ceilings from the budget resolution and distribute this funding among their respective subcommittees, providing each subcommittee with a spending ceiling. These subdivisions are referred to as the 302 (b) allocations. The HAC-D and SAC-D hold hearings, hear testimony and consider changes to the president’s request. The HAC-D and SAC-D “mark-up” their portion of the bill which is then reported to each chamber to be voted on by the entire appropriations committee. Upon approval by the full committee, the bill is sent to the floor for a vote by the House first, where appropriations bills typically originate, and then Senate. The differences in both the House and Senate bills are reconciled in conference and a conference report is sent to each chamber for a final vote before being sent to the president for signature. Once signed into law this bill is known as the Department of Defense Appropriations Bill. If however, the President vetoes the bill it is returned to Congress where a two-thirds vote by both chambers is needed to override the veto or the process starts over until an agreed upon bill is passed.

Federal Money

Each year the federal government spends hundreds of billions of dollars on defense.

All federal spending is classified as either mandatory or discretionary spending. Mandatory spending is money that must be spent in specific amounts and is not controlled by annual decisions of Congress. Social Security and Medicare are considered mandatory spending, they must be paid each year and their cost is based on the amount of individuals enrolled and the benefits they are entitled to. Discretionary spending is money that the government is not required to spend and is controlled through the annual appropriations process. Defense spending is considered discretionary; the amount spent each year is dependent on Presidential and Congressional priorities.

According to the Office of Management and Business, total Discretionary spending for FY 2008 is approximately $941 billion. Of this, the Department of Defense (DoD), who has the largest budget of any government agency in the discretionary budget, had a base budget of $479.5 billion, the basic level needed to keep the DoD in readiness.

In Fiscal Year 2008 the HASC and SASC set authorization limits for defense appropriations at $696 billion, the HAC and SAC appropriated $479.5 billion for DoD programs. With some $479 billion in funding and additional in supplementals still pending for the Global War on Terrorism (GWOT), it stands to reason that defense contractors are chomping at the bit for a piece of DoD’s proverbial pie. As a result, most defense industry political contributions are made to members of the House and Senate Armed Services Committees who influence defense policy and the House and Senate Appropriations Committees and Defense subcommittees who oversee and allocate federal defense funds.

The Department of Defense, members of congress and contractors all have a vested interest in funding new defense programs and maintaining funding for current ones. With the U.S. currently fighting, what James Carafano referred to as “the long war against terrorism”, in Afghanistan and Iraq, supplying the U.S. military with superb gear and equipment is essential and can be both costly and competitive. Also, millions of people in the Unites States are employed by the defense industry in administrative, professional, technical, and manufacturing roles. They support their families with the revenue generated by this industry and all of them live in congressional districts that benefit from industry dollars. In addition, contractors are accountable to their shareholders and as such it is incumbent upon them to secure funding for their products and services.

Boeing, Lockheed Martin, Northrop Grumman, General Dynamics and Raytheon were the top five defense contractors in the U.S. based on 2007 sales and revenue. Contractors, because of the nature of their work, have nurtured relationships with members and staff of the defense oversight committees moreso than other congressional committees. Money, employees, expertise and lobbyist Contractors are four fundamental resources they can utilize to influence members of congress. Money in the form of PAC contributions are raised from eligibile employess within the organization on behalf of the organization’s defense interest and donated to candidates who share their views or agendas. Eligible employees can choose to give personal contributions in addition to voting if they reside in a member’s district. Having in- depth knowledge and expertise about their programs gives contractors credibility and allows them to provide vital knowledge and education to members on particular issues and programs. Finally, lobbying, in addition to financial support, is perhaps one of the most popular and widely used resources contractors have at their disposal. Therefore, they employ lobbyist within their organizations and also hire outside lobbying firms to help educate and influence members. Lobbying and contributing to a member's campaign has become a tool to gain access to lawmakers so contractors can educate them on issues and the numerous programs available to the military. This method is particularly effective because it allows members to listen and learn about issues or programs from multiple contractors and make decisions based on what they’ve learned.

Due to the nature of their work, contractors have nurtured relationships with members and staff of the defense oversight committees moreso than other congressional committees. Lobbyist, the corporate worlds link to the political world, facilitate a meeting of these two minds. Visiting and communicating with members and staff, contributing PAC money, hosting congressional tours of facilities and hosting fundraisers on a members behalf are tools to educate and interact with committee members and establish and maintain good working relationships with their offices.

When the DoD begins its defense acquisition search this relationship will be paramount to demonstrating industry capabilities and conveying federal needs. Committee members frequently tour plants, shipyards and facilities where military equipment and hardware are manufactured. During such tours, contractor expertise is invaluable as members are briefed on program capabilities, progress and issues. This aspect of the corporate/political relationship is what….

Members of the defense oversight committees get most of their campaign contributions from industries in their home districts and defense contractors who focus on the member's committee assignments. Based on data collected from OpenSecrets.org, in the 2005-2006 election cycle, members of the HASC, SASC and HAC-D were the top recipients of contributions from PACs and individuals in the defense industry, receiving more than $2 Million. Members of the HAC-D, and HASC were the top recipients of defense PAC money receiving more than $1 Million for their campaigns. Congressmen John Murtha, Ike Skelton, Jim Moran, Bill Young, Silvestre Reyes and John Cornyn collectively received contributions totaling $238,500 from the five top contractors in the 2008 election cycle. These members

2006 Election Cycle

Defense: Top 6 PAC Recipients

Source: OpenSecrets.org

Defense: Top 6 Recipients-PAC & Individual Money

Source: OpenSecrets.org

2008 Election Cycle

Defense: Top 6 PAC Recipients

Source: OpenSecrets.org

Defense: Top 6 Recipients-PAC & Individual Money

Source: OpenSecrets.org

The real power in Congress is wielded by the “Cardinals”, the folks who chair the various appropriations subcommittees (or the “College of Cardinals as they are collectively referred to) and members of the Appropriations Committee. The root of the Appropriations Committee's power is its ability to allocate discretionary funds, often times refered to as the power of the purse. The twelve appropriations bills they pass funds federal agencies and ensures the governments continued operation. The “Cardinals”, because of the power they wield over the budget have considerable influence and therefore a seat on the Appropriations Committee is the most coveted committee assignment of all. It is given as a reward for loyal service to one's party, and is traditionally one of the benefits of seniority.

John Murtha, a Democrat from Western Pennsylvania and chariman of the House Appropriations Subcommittee on Defense, is arguably one of the most influential “Cardinals” and a powerful member of the House of Representatives. Congressman Murtha is a respected veteran, politician and a longtime supporter of the defense industry. He also plays an important role in keeping the defense industry and politics intertwined.

As chairman of the Appropriations Subcommittee on Defense, Murtha has final say on appropriation requests made by other members of his subcommittee. He also has the ability to insert targeted spending measures into a bill (sometimes referred to as "pork barrel spending"). “Pork barrel spending” or “earmarks” is the designation of federal funds for projects intended to benefit particular constituents or campaign contributors. According to Taxpayers for Common Sense, a nonpartisan Washington group, Mr. Murtha has steered at least $600 million in earmarks to his district in the past four years. The nonprofit group estimates he's sent $2 billion or more to his district since joining the appropriations committee. Murtha also secured xxxamount in earmarks for contractors like…..

Murtha’s support of a well-funded defense industry is paying off for him and the Democratic Party.  According to OpenSecrets.org in 2006 Murtha was the top recipient of defense industry money in Congress, receiving $395,000 for his campaign. Every year, Murtha holds two fundraisers for his campaign: a dinner in February and a breakfast in the fall, both events are widely attended by defense industry officials. Murtha has been a member of congress for 34 years and

In the past, contractors have contributed heavily to members of the Republican Party, who have a reputation for being strong on defense, but when it comes to competing for federal contracts, they understand the importance of supporting members of both parties.

According to Opensecrets.org, Lockheed Martin, General Dynamics, Boeing Company, Northrop Grumman and Raytheon were the top five defense industry contributors to federal political candidates in 2006.

Bibliography

Thomas: Legislative Information on the Internet

Congressional Record

Congressional Quarterly

FY 2008 National Defense Authorization Act House Conference Report

FY 2008 National Defese Appropriations Act House Conference Report

Congress Reconsidered, 8^th Edition 2005, Lawrence Dodd and Bruce Oppenheimer

Congress and Its Members, 11^th Edition 2007, Roger Davidson, Walter Oleszek, Frances Lee

More than Money, 1st Edition 2006, Richard M.M. Skinner

The Cardinals of Capitol Hill: The Men and Women Who Control Government Spending, 1^st Edition 1993, Richard Munson

Northrop Grumman Annual Report, 2007

Lockheed Martin Annual Report, 2007

Boeing Company Annual Report, 2007

Raytheon Compnay Annual Report, 2007

General Dynamics Annual Report, 2007

The Center For Responsive Politics, OpenSecrets.org

Notes:

2006 Revenues and Sales:

Boeing-$61.5 Billion

Lockheed Martin-$39.6 Billion

Northrop Grumman-$30.2 Billion

General Dyanmics-$24.1 Billion

Raytheon-$20.3 Billion

2007 Revenues and Sales:

Boeing-$66.4 Billion

Lockheed Martin-$42 Billion

Northrop Grumman-$32 Billion

General Dyanmics-$27.2 Billion

Raytheon-$21.3 Billion

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