Congress Just Voted To Let Trump Spend $1.4 Trillion, Much Of It On His Wasteful Corrupt Crap... And The Media Barely Said A Word About It

On Tuesday, the House voted on two bills-- basically an omnibus spending package, the annual last minute crappy spending bill ($1.4 trillion this time) that is always rumored to be, if unpassed, a harbinger of the end of the world. This time, because Trump said he wouldn't sign an overall bill, it was split between a domestic package (misleadingly named the National Law Enforcement Museum Commemorative Coin Act) and a military package (misleadingly named the (the DHS Cyber Hunt and Incident Response Teams Act). This is so people trying to figure out how their members of Congress voted, will never be able to find out. One thing about Pelosi (D) and McCarthy (R)-- they have always hated democracy. The domestic version passed 297 to 120, which saw 218 Democrats voting yes, along with 79 Republicans. Only 7 Democrats voted against it (along with112 Republicans).

The other half was more controversial for progressives. It passed 280-138 and I was very, very proud to see so many progressives just say no. Finally!

There were 75 Democrats who stood up to House leadership and voted no. Among them... these two dozen:

• AOC (NY)
• Ted Lieu (CA)
• Pramila Jayapal (WA)
• Ro Khanna (CA)
• Barbara Lee (CA)
• Jan Shakowsky (IL)
• Andy Levin (MI)
• Rashida Tlaib (MI)
• Jamie Raskin (MD)
• Joe Neguse (CO)
• Deb Haaland (NM)
• Chuy Garcia (IL)
• Ilham Omar (MN)
• Steve Cohen (TN)
• Jimmy Gomez (CA)
• Bonnie Watson Coleman (NJ)
• Nanette Barragán (CA)
• Raul Grijalva (AZ)
• Ayanna Pressley (MA)
• Judy Chu (CA)
• Al Lowenthal (CA)
• Jim McGovern (MA)
• Jared Huffman (CA)
• Mark DeSaulnier (CA)

Almost all the worthless freshmen stuck with the leadership on this, as did most of the Blue Dogs and New Dems. As did 130 Republicans, 62 voting no. Ted Lieu (D-CA) told us, when discussing the military bill, he "voted against this spending bill because I don't think it did enough to reign in the President's ability to transfer money to fund his stupid wall and other anti-immigrant practices. This is a balance of power issue. Congress has the power of the purse, the executive is supposed to execute the law, including our spending priorities."

Andy Levin explained his two votes-- one for and one against-- to his southeast Michigan constituents. Levin authored two amendments, a funding increase to the Commodity Supplemental Food Program and an amendment barring assistance to the Haitian armed forces.

Right after the vote, he wrote that he was proud to vote for the domestic priorities and international assistance funding package that includes so many wins for Macomb and Oakland Counties. The package includes my request to increase funding for CSFP, an essential nutrition assistance program for vulnerable seniors, and, for the first time in more than two decades, the House has allocated funding for gun violence research. The package also includes funding increases for some of my top priorities in Congress, including worker protection agencies and programs, life-saving medical research at the National Institutes of Health, Pell Grants that make college more accessible to low income families, the Supplemental Nutrition Assistance Program (SNAP) and a guarantee that those funds will be available in case of a government shutdown, increased funding for Registered Apprenticeship Programs, and more."

He also wrote that "Despite the many victories in the package, I wish there were more. I regret that my amendment to shift funds to the Department of Education watchdog agency was not included. Betsy DeVos has abandoned her duty to stand up for students and follow the law, and now more than ever, we must make sure our oversight agencies are fully equipped. There were also many important provisions included in the military spending package, like increased funding for research into the health effects of PFAS and PFOA exposure, a pay raise for federal employees, preservation of the 6-day postal service, and security assistance for Israel. However, the package allocates exorbitant funds for military spending and fails to place guard rails on the Department of Homeland Security, which has abused past funding with the intention of building the President’s wasteful and ineffective border wall. As a Member of Congress, I am charged to be a responsible steward of taxpayer dollars and a check on the Executive Branch. To meet those responsibilities, I voted against the military spending package."

I asked some of the 2020 congressional candidates how they would have voted. After Chicagoland Blue Dog voted yes on both, his progressive opponent, Marie Newman said, "I will say something positive about this bill: it restores funding of gun violence prevention research. However, it also, enables the ongoing inhumanity at the border and empowers the building of a ridiculous wall. I am disappointed by several things in this spending bill. My opponent is supportive of the wall, so it is easy to see why he so quickly voted yes."

Another Blue Dog, Tom O'Halleran (AZ), voted yes on both. His progressive opponent, Eva Putzova explained that "Our military spending is out of control and I would have not supported an additional $22 billion that goes straight into the pockets of private contractors. This not only translates into more willingness to engage in conflicts militarily but also has an incredibly detrimental impact on climate change. When my opponent takes money from the arms industry I’m not surprised he also legislates in their interest."

Most active duty service members seem to understand that Trump's policies reflected in the military spending bill are not to help them in any way. A brand new poll for the Military Times shows that Trump's approval in underwater among members of the Armed Forces.

When asked specifically about Trump’s handling of military issues, nearly 48 percent of the troops surveyed said they had an unfavorable view of that part of his job, compared to 44 percent who believe he has handled that task well. That marks a significant drop from the 2018 Military Times poll, when 59 percent said they were happy with his handling of military issues, against 20 percent who had an unfavorable view.

...Some of the shift in military sentiments could be linked to the firing of Mattis, who a year after his dismissal still enjoys an exceptionally high-- 86 percent-- favorability rating among all service members in the poll.

Trump’s replacement for Mattis, current Defense Secretary Mark Esper, does not inspire strong feelings one way or the other. Esper drew a 24 percent approval rating from troops and a 20 percent disapproval rating, with 56 percent saying they have no strong opinion of the Pentagon leader.

...When asked about Trump’s decision to use military construction funds to build his controversial southern border wall, 59 percent said they disapprove of his decision. More than half rated current U.S. relations with “traditional allies” like NATO as poor.

...Troops were split evenly on the ongoing impeachment proceedings in Congress. In the poll, 47 percent said they back the impeachment, 46 percent said they were opposed. That’s roughly the same breakdown as the rest of the American public.

Feaver called that an interesting and potentially problematic finding, given that Trump will still be commander in chief if he is impeached by the House but acquitted by the Senate.

“I’m sure senior leaders won’t be happy seeing that half of them wanted him impeached, given the efforts to keep troops out of politics," Feaver said.

More than three-fourths of troops surveyed said they believe the military community has become more polarized in recent years, with about 40 percent saying they have seen significantly more division in the ranks.

Democratic socialist Heidi Sloan, who's in a tough campaign against wealthy and ethics-challenged used car salesman Roger Williams (R-TX), told us that, unlike him, she would have voted against the military funding bill as it now stands. "Once again our representatives have missed an opportunity to fight back against Trump's racist, wasteful border wall. It's no surprise that my opponent Roger Williams welcomed yet another increase in military spending, making the biggest chunk of our government budget even bigger while our veterans often lack decent housing and healthcare at home. I would have voted no on this bill in solidarity with the Progressive and Hispanic Caucuses, the immigrant community, and the working class. Our people deserve to be prioritized over military contractors and a racist's pet project."

Rachel Ventura, a member of the Will County Board, is running for Congress to represent a Chicagoland district held by New Dem Bill Foster, who voted for both bills. Ventura told us she wouldn't have. "I would have voted 'no' on the massive, $1.4 trillion dollar spending bill that included funding for Trump’s border wall, a ballooning pentagon budget that never seems to stop growing, and unchecked abuses in the detention centers at our southern border. If nobody has asked the all important first question about this $1.4 trillion spending bill, let me be the first; 'how are you going to pay for it?' Why is it when it comes to defense funding, wall building or the funding of private prisons on our southern border that we always have money. When it comes to climate or healthcare legislation Republicans and corporate Democrats always balk and ask how it would be paid for. Today I have an answer. The misguided $1.4 trillion spending bill is the best place to start cutting if we want to fund the priorities that most Americans have, healthcare, renewable energy and good paying jobs. As a future member of the progressive caucus I would have voted against funding Donald Trump’s radical agenda and stood with other progressive caucus members and the Hispanic Caucus. This blank check to Donald Trump allows him to continue with human rights abuses at the southern border by locking kids in cages and separating them from their families. Just last week we saw the video of a child dying in custody at the border. The fact that an additional $22 billion was added to our defense budget is unbelievable and reflects the misguided priorities of the current congressman. I understand that a government shutdown may have been the potential outcome, but I would argue that we could have maintained the diet-budget agreement, or the sequestration caps."

When Ro Khanna Speaks, It Matters-- We Need More Members Of Congress Like Him, Not Pointless Backbenchers

Ro Khanna's grandfather was arrested during the Indian independence movement and wound up sharing a British prison cell with Mahatma Gandhi. No doubt, that's from whom Khanna got the moxie to stand up yesterday in front of Congress and make this absolutely incredible speech opposing the NDAA-- which would be better named "the endless War and Corruption bill." I implore you to listen to what Khanna had to say. It's less than 2 minutes but it has enough in it to be worth an hour to every single American. In fact, please spread it around to your friends and relatives.

In the end, this miserable bill-- pushed by both Pelosi and McCarthy, an example of the pathetic leadership on both sides of the aisle-- passed 377-48. Only 41 Democrats voted NO, including Ro Khanna (CA), AOC (NY), Barbara Lee (CA), Rashida Tlaib (MI), Ilhan Omar (MN), Jamie Raskin (MD), Ayanna Pressely (MA), Pramila Jayapal (WA), Raul Grijalva (AZ), Andy Levin (MI), Joe Neguse (CO), Judy Chu (CA), Jan Schakowsky (IL), Steve Cohen (TN), Tulsi (HI), Bonnie Watson-Coleman (NJ), Jerry Nadler (NY), Chuy Garcia (IL)... So where were all the freshmen the DCCC elected last year? Voting with the GOP, of course. (By the way, there would have been 42 Democrats but Ted Lieu was recuperating in the hospital and unable to cast a vote.)

Hopefully, Austin progressive Mike Siegel will be #43 next time the NDAA comes up for a vote. Endless war and corruption is like a middle name for his GOP opponent, Michael McCaul. Right after McCaul's vote, Mike told us that "I stand with Rep. Khanna and the members of Congress who are willing to take a stand and oppose a blank check for military spending. We are facing a climate crisis, but these same people who support the defense budget ask 'how will we pay' for a Green New Deal. We are in a health care crisis and rural hospitals are closing, but we ask 'how will we pay' for Medicare for All. This vote shows how disingenuous the 'PayGo' tactic can be. Here in TX-10, Rep. McCaul will support cuts to basic nutritional assistance for starving Americans, in service of fiscal austerity, but he can’t be bothered to oppose a $120B increase in military spending. 'The Blob' is a third rail in DC politics, decades after Eisenhower’s admonition about the military industrial complex. We need a progressive movement to stand up to this warmongering, that not only sabotages international diplomacy, but also comes at the cost of a real safety net at home."

Columbus Ohio progressive candidate Morgan Harper is running against a corrupt establishment Democrat, Joyce Beatty, who backed the horrific Pentagon Budget. Afterwards, Morgan sent me a short note: "Why I would have voted ‘no’ on the defense bill that just passed in the House: This bill effectively gives permission for the U.S. to continue its endless wars. It also does nothing to curb the continued abuse of power by the Office of the President to engage in war without congressional approval. Democrats are touting the success of the compromise bill by citing such achievements as extended paid parental leave. To achieve this ‘win’ they accepted the creation of a ‘space force,’ which is nothing more than political fodder for the President’s base. However, this is just another example of Democrats simply not understanding strategy and being out-negotiated, as the President’s circle already wanted extended parental leave. Finally, there is no mention of how this will be paid for. Not only is this in clear opposition to Republicans’ pretend platform of ‘fiscal responsibility’, but also if we’re in the mood to pass spending bills without accounting for how they will be paid for, let’s start by addressing issues of actual importance like housing the homeless. This bill is nothing more than business as usual for Republicans and further evidence that many elected Democrats are no better."

  Arizona progressive Eva Putzova is an admirer of Ro Khanna's politics and see's the Defense Budget the same way he does. Right after the House backed the bill-- including her Blue Dog opponent, Tom O'Halleran-- she told us "The vote by the House of Representatives to approve a new defense budget of $738 billion dollars is a disgrace. It is now $120 billion dollars more than President Obama's last defense budget. This money could have been used to fund free public college for all Americans and many other civilian priorities. The budget also continues funding U.S military aid to the brutal Saudi war in Yemen and failed to impose limitations on Trump's ability to go to war with Iran. And it gives Trump his 'Space Force' which increase the likelihood of armed conflict with Russia and China in space! When I am elected to congress I will not vote for more war spending and profits for arms contractors like my opponent does, but will prioritize spending on universal healthcare, free public college, renewable energy, universal childcare, affordable housing, expanded public access to the internet, and other crucial, popular priorities."

Liam O'Mara, the progressive Democrat running for the Riverside County seat occupied by corrupt Republican Ken Calvert, told us that "This vote shows once again that Republicans and Democrats alike will continue to waste taxpayer dollars on endless wars, in large part as a hand-out to defence contractors, and irrespective of the cost in lives and the destruction of our world. A vote for Calvert is a vote to funnel more cash from the wallets of hard-working Americans, and into the coffers of Boeing, Raytheon, Lockheed Martin, etc. But it is also a vote to shift corrupt lobbyist cash from the defence industry into the hands of those same grasping Representatives. This is why there exists a bipartisan consensus on permanent war, and why we need a new progressive majority to end it."

Another California progressive Democrat, Kim Williams, a former U.S. diplomat, is running for the Central Valley seat occupied by hard core Blue Dog Jim Costa, a backer of the military industrial complex President Eisenhower warned the country about. Williams has other ideas. "While we are spending more than 60% of discretionary spending on war, roughly 3,000 Americans will die each year from a lack of healthcare, and half a million people will file bankruptcy because of medical debt. Nearly two decades of unending war has distracted the U.S. Government from other serious national security threats and diverted resources from domestic investments in education, healthcare and efforts to fight climate change-- all of which are essential to the health, safety, and well-being of everyone in the country. This is unsustainable and clearly not in our best interests."

Milwaukie, Oregon mayor Mark Gamba is running for a congressional seat held by one of the worst and most corrupt of all the Blue Dogs, Kurt Schrader, a cheerleader for the Republican agenda. "We are already spending more than the next 10 largest militaries in the world combined," said Gamba, "and yet, we are told it's crazy talk to consider providing secondary education for our population, or housing the homeless, or stopping climate chaos while lifting people out of poverty, because 'it will cost too much!!' We could completely accomplish the first two with the 120 billion difference between Obama's last military budget and this one, and we could take a hell of whack at solving climate chaos. I agree that our soldiers deserve a raise and I agree that our federal workers should have paid parental leave (although why that's attached to this bill is a completely different rant), but a Space Force? At what point do we stop funding endless wars and start paying for the real needs of Americans? I would have voted against the bill after the White House stripped out the bi partisan amendments that would end some of those endless wars."

Will County, Illinois progressive Rachel Ventura issued this statement right after the vote:

You have to wonder where the common sense was during the NDAA vote. It is unfathomable to me that Bill Foster voted “yes” for Donald Trump’s proposed space force that was included in the $738 billion National Defense Authorization Act (NDAA) legislation. I would have stood with the courageous Democrats who voted “no” on Donald Trump's space army and urged other members to stay focused on the real threat of climate change.



I can't believe that we are blowing billions of dollars on this hypothetical cartoon-like space war, and doing little to address the real crisis. The greatest threat to humanity right now is the climate crisis, and all of those lawmakers, including my opponent, are still funding perpetual war and now even an imaginary war.



Finally, it is sad that Democrats have lost their backbones and are bending to the whims of a man who is clearly unfit to lead this nation. They are undermining their own efforts at impeachment and legitimizing Donald Trump. It is embarrassing.

The New Bipartisanship: Members Of Congress From Both Parties Who Glory In Corruption Hate AOC

Trump and Pelosi make common cause: they both hate AOC

Friday, the 2020 National Defense Authorization Act (HR 2500) passed 220-197. Every Republican voted against it, along with 8 progressive Democrats (Earl Blumenauer, Adriano Espaillat, Barbara Lee, AOC, Ilhan Omar, Mark Pocan, Ayanna Pressley and Rashia Tlaib). The Republicans opposed it because it didn't allocate enough money to the Military Industrial Complex and because several amendments curtailed Trump's ability to abuse the Pentagon and the separation of powers. Many progressives opposed the bill’s $733 billion price tag, but agreed to support it if certain amendments pass, particularly the ones constraining Trump’s war powers.

There were dozens of amendments, some of which-- by Ted Lieu and Ro Khanna-- we've talked about in recent days. Most of the amendments offered by Democrats-- like Ted's and Ro's-- passed. But not the two offered by AOC. One would have kept Trump from sending troops to the border and another was meant to bar funds from keeping migrants in Department of Defense facilities, in effect turning them into concentration camps. Amendment 429 failed 179-241-- 52 Democrats joining all the Republicans to oppose it-- and Amendment 430 failed 173-245-- 58 Democrats joining all but one Texas Republican to oppose it.




Most of the AOC-hating Blue Dogs and New Dems opposed both amendments. Here's the whole list of the Democrats who voted against one or both of the AOC amendments-- in case you keep track of things like that (also included is each member's ProgressivePunch grade):

• Cindy Axne (New Dem-IA)- F
• Anthony Brindisi (Blue Dog-NY)- F
• Cheri Bustos (New Dem-IL)- F
• Gil Cisneros (New Dem-CA)- F
• Lacy Clay (MO)- B
• Emanuel Cleaver (MO)- C
• TJ Cox (CA)- F
• Angie Craig (New Dem-MN)- F
• Charlie Crist (Blue Dog-FL)- F
• Jason Crow (New Dem-CO)- F
• Joe Cunningham (Blue Dog-SC)- F
• Antonio Delgado (NY)- F
• Abby Finkenauer (IA)- F
• Jared Golden (ME)- F
• Josh Gottheimer (Blue Dog-NJ)- F
• Josh Harder (New Dem-CA)- F
• Kendra Horn (Blue Dog-OK)- F
• Steven Horsford (New Dem-NV)- F
• Crissy Houlahan (New Dem-PA)- F
• Marcy Kaptur (OH)- F
• Andy Kim (NJ)- F
• Conor Lamb (PA)- F
• Al Lawson (New Dem-FL)- F
• Susie Lee (New Dem-NV)- F
• Mark Levin (CA)- B
• Dave Loebsack (IA)- F
• Elaine Luria (New Dem-VA)- F
• Stephen Lynch (New Dem-MA)- F
• Ben McAdams (Blue Dog-UT)- F
• Lucy McBath (New Dem-GA)- F
• Joe Morelle (NY)- F
• Seth Moulton (New Dem-MA)- F
• Debbie Mucarsel-Powell (New Dem-FL)- C
• Stephanie Murphy (Blue Dog-FL)- F
• Tom O'Halleran (Blue Dog-AZ)- F
• Collin Peterson (Blue Dog-MN)- F
• Dean Phillips (New Dem-MN)- F
• Kathleen Rice (New Dem-NY)- F
• Max Rose (Blue Dog-NY)- F
• Harley Rouda (New Dem-CA)- F
• Mary Gay Scanlon (PA)- B
• David Scott (Blue Dog-GA)- F
• Terri Sewell (New Dem-AL)- F
• Mikie Sherrill (Blue Dog-NJ)- F
• Elissa Slotkin (New Dem-MI)- F
• Abigail Spanberger (Blue Dog-VA)- F
• Haley Stevens (New Dem-MI)- F
• Xochitl Torres Small (Blue Dog-NM)- F
• Lauren Underwood (IL)- F
• Jefferson Van Drew (Blue Dog-NJ)- F
• Sue Wild (New Dem-PA)- F
• Colin Allred (New Dem-TX)- F
• Salud Carbajal (New Dem-CA)- F
• Matt Cartwright (PA)- A
• Ed Case (Blue Dog-HI)- F
• Sean Casten (New Dem-IL)- F
• Henry Cuellar (Blue Dog-TX)- F
• Val Demings (New Dem-FL)- F
• Lizzie Fletcher (New Dem-TX)- F
• Vicente González (Blue Dog-TX)- F
• Jahana Hayes (CT)- A
• Katie Hill (New Dem-CA)- F
• Anne Kuster (New Dem-NH)- F
• Jim Langevin (RI)- C
• Tom Malinowski (New Dem-NJ)- F
• Chris Pappas (New Dem-NH)- B
• Scott Peters (New Dem-CA)- F
• Katie Porter (CA)- F
• Kurt Schrader (Blue Dog-OR)- F
• Kim Schrier (New Dem-WA)- F
• Jackie Speier (CA)- C
• Debbie Wasserman Schultz (New Dem-FL)- D
• Jennifer Wexton (New Dem-VA)- F

• Dan Lipinski (Blue Dog-IL)- F "present"

By the way, another reason conservatives voted against the Pentagon funding bill is because it includes an amendment by Jackie Speier reversing Trump's ban on transgender soldiers. That amendment passed 242-187, with 10 Republicans-- Susan Brooks (IN), Brian Fitzpatrick (PA), Trey Hollingsworth (IN), Will Hurd (TX), John Katko (NY), Tom Reed (NY), Elise Stefanik (NY), Steve Stivers (OH), Fred Upton (MI) and Greg Walden (OR)--voting with the Democrats for equality.

And then there's the good kind of bipartisanship-- working for the common good

And a nice little UPDATE from this morning, courtesy of Señor Trumpanzee's, the Internet's biggest troll-- although, please keep in mind that AOC was born in New York City, just like Trumpanzee, Ayanna Pressley was born in Cincinnati, one part of Ohio that voted against Trumpanzee in 2016 and Rashida Tlaib was born in Detroit, another part of the U.S. that had the good sense to firmly reject Trumpanzee in 2016.

And he's sure that Nancy would pay? Has she contradicted him?

And, by the way, an awful lot of people get the news from The View, which helps explain why so many voters are so misinformed and even stupid beyond redemption. It's not Fox News, of course, but it really is just as steeped in self-righteous ignorance.

If There Are No Consequences Commensurate With The Crime Of Treason, Wall Street Executives Will Keep Selling Us Out

Russia may have paid to get them in office, but China seems to be getting the most out of it

During Wednesday’s debate, the candidates were all asked to name the biggest single national security threat to the country. Few of them had the self-discipline to name just one, but almost all of then named China. Tim Ryan caught himself about to say China is “whipping” us everywhere, realized that might sound defeatist and changed it in mid-sentence into something that didn’t make any sense— “wiping us everywhere.” Last night, one of the moderators just phrased it as a what-to-do-about-China question.

This week Matt Stoller co-authored a piece for the American Conservative, America’s Monopoly Crisis Hits the Military, about how Wall Street greed has “decimated our defense industrial base and undermined our national security… [T]he destruction of America’s once vibrant military and commercial industrial capacity in many sectors has become the single biggest unacknowledged threat to our national security. Because of public policies focused on finance instead of production, the United States increasingly cannot produce or maintain vital systems upon which our economy, our military, and our allies rely.”

When national security specialists consider preparedness, they usually think in terms of the amount of money spent on the Pentagon. One of President Donald Trump’s key campaign promises was to aggressively raise the military budget, which he, along with Congress, started doing in 2017. The reaction was instant. “I’m heartened that Congress recognizes the sobering effect of budgetary uncertainty on America’s military and on the men and women who provide for our nation’s defense,” then-defense secretary Jim Mattis said. Budgets have gone up every year since.

Higher budgets would seem to make sense. According to the 2018 National Defense Strategy, the United States is shifting away from armed conflicts in the Middle East to “great power” competition with China and Russia, which have technological parity in many areas with the United States. As part of his case for higher budgets, Mattis told Congress that “our military remains capable, but our competitive edge has eroded in every domain of warfare— air, land, sea, space, and cyber.”

In some cases, our competitive edge has not just been eroded, but is at risk of being— or already is— surpassed. The Chinese surge in 5G telecom equipment, which has dual civilian and military uses, is one example. China is making key investments in artificial intelligence, another area of competition. They even seem to be able to mount a rail gun on a naval ship, an important next generation weapons technology that the U.S. Navy has yet to incorporate.

And yet, the U.S. military budget, even at stalled levels, is still larger than the next nine countries’ budgets combined. So there’s a second natural follow-up question: is the defense budget the primary reason our military advantage is slipping away, or is it something deeper?

…[I]t wasn’t one of [our] adversaries that killed our telecommunications capacity, but one of our own institutions, Wall Street, and its pressure on executives to make decisions designed to impress financial markets, rather than for the long-term health of their companies. In 1996, AT&T spun off Bell Labs into a telecom equipment company, Lucent Technologies, to take advantage of investors’ appetite for an independent player selling high-tech telecom gear after Congress deregulated the telecommuncations space. At the time, it was the biggest initial public offering in history, and became the foundation of a relationship with financial markets that led to its eventual collapse.

The focus on stock price at Lucent was systematic. The stock price was posted daily to encourage everyone to focus on the company’s relationship with short-term oriented financial markets. All employees got a small number of “Founder’s Grant Share Options,” with executives offered much larger slugs of stock to solidify the connection. When Richard McGinn became CEO in 1997, he focused on financial markets.

Lucent began to buy up companies. According to two scholars, “The perceived need to compete for acquisitions became a ‘strategic’ justification for keeping stock prices high. This in turn demanded meeting or exceeding quarterly revenue and earnings targets, objectives with which Lucent top executives, led by the hard-driving McGinn, became obsessed.”

Lucent got even more aggressive. McGinn’s subordinate, an executive named Carly Fiorina, juiced returns with a strategy based on lending money to risky startups who would then turn around and buy Lucent equipment. Fiorina collected $65 million in compensation as the stock soared. And then, when the dot-com boom turned to bust, the company, beset by accounting scandals designed to impress shareholders and the financial markets, embarked on massive layoffs. CEO McGinn was among those laid off, but with a $12.5 million severance package—royal compensation for taking one of America’s strategic industrial assets down the road toward total destruction.

In the early 2000s, the telecom equipment market began to recover from the recession. Lucent’s new strategy, as Mottl put it, was to seek “margin” by offshoring production to China, continuing layoffs of American workers and hiring abroad. At first, it was the simpler parts of the telecom equipment, the boxes and assembly, but soon contract manufacturers in China were making virtually all of it. American telecom capacity would never return.

Lucent didn’t recover its former position. Chinese entrants, subsidized heavily by the Chinese state and using Western technology, underpriced Western companies. American policymakers, unconcerned with industrial capacity, allowed Chinese companies to capture market share despite the predatory subsidies and stolen technology. In 2006, French telecom equipment maker Alcatel bought Lucent, signifying the end of American control of Bell Labs. Today, Huawei, with state backing, dominates the market.

The erosion of much of the American industrial and defense industrial base proceeded like Lucent. First, in the 1980s and 1990s, Wall Street financiers focused on short-term profits, market power, and executive pay-outs over core competencies like research and production, often rolling an industry up into a monopoly producer. Then, in the 2000s, they offshored production to the lowest cost producer. This finance-centric approach opened the door to the Chinese government’s ability to strategically pick off industrial capacity by subsidizing its producers. Hand over cash to Wall Street, and China could get the American crown jewels.

The loss of manufacturing capacity has been devastating for American research capacity. “Innovation doesn’t just hover above the Great Plains,” Mottl said. “It is built on steady incremental changes and knowledge learned out of basic manufacturing.” Telecommunications equipment is dual use, meaning it can be used for both commercial and military purposes. The loss of an industrial base in telecom equipment meant that the American national security apparatus lost military capacity.

This loss goes well beyond telecom equipment. Talking to small manufacturers and distributors who operate in the guts of our industrial systems offers a perspective on the danger of this process of financial predation and offshoring. Bill Hickey, who headed his family’s metal distributor, processor, and fabricator, has been watching the collapse for decades. Hickey sells to “everyone who uses steel,” from truck, car, and agricultural equipment manufacturers to stadiums and the military.

Hickey, like many manufacturers, has watched the rise of China with alarm for decades. “Everyone’s upset about the China 2025 plan,” he told the American Conservative, referencing the current Chinese plan causing alarm among national security thinkers in Washington. “Well there was a China 2020 plan, 2016 plan, 2012 plan.” The United States has, for instance, lost much of its fasteners and casting industries, which are key inputs to virtually every industrial product. It has lost much of its capacity in grain oriented flat-rolled electrical steel, a specialized metal required for highly efficient electrical motors. Aluminum that goes into American aircraft carriers now often comes from China.

Hickey told a story of how the United States is even losing its submarine fleet. He had a conversation with an admiral in charge of the U.S. sub fleet at the commissioning of the USS Illinois, a Virginia-class attack submarine, who complained that the United States was retiring three worn-out boats a year, but could only build one and a half in that time. The Trump military budget has boosted funding to build two a year, but the United States no longer has the capacity to do high quality castings to build any more than that. The supply chain that could support such surge production should be in the commercial world, but it has been offshored to China. “You can’t run a really high-end casting business on making three submarines a year,” Hickey said. “You just can’t do it.” This shift happened because Wall Street, or “the LBO (leveraged buy-out) guys” as Hickey put it, bought up manufacturing facilities in the 1990s and moved them to China.

“The middle-class Americans who did the manufacturing work, all that capability, machine tools, knowledge, it just became worthless, driven by the stock price,” he said. “The national ability to produce is a national treasure. If you can’t produce you won’t consume, and you can’t defend yourself.”

The Loss of the Defense Industrial Base

But it’s not just the dual-use commercial manufacturing base that is collapsing. Our policy empowering Wall Street and offshoring has also damaged the more specialized defense base, which directly produces weaponry and equipment for the military.

How pervasive is the loss of such capacity? In September 2018, the Department of Defense released findings of its analysis into its supply chain. The results highlighted how fragile our ability to supply our own military has become.

The report listed dozens of militarily significant items and inputs with only one or two domestic producers, or even none at all. Many production facilities are owned by companies that are financially vulnerable and at high risk of being shut down. Some of the risk comes from limited production capability. Mortar tubes, for example, are made on just one production line, and some Marine aircraft parts are made by just one company— one which recently filed for bankruptcy.

At risk is everything from chaff to flares to high voltage cable, fittings for ships, valves, key inputs for satellites and missiles, and even material for tents. As Americans no longer work in key industrial fields, the engineering and production skills evaporate as the legacy workforce retires.

Even more unsettling is the reliance on foreign, and often adversarial, manufacturing and supplies. The report found that “China is the single or sole supplier for a number of specialty chemicals used in munitions and missiles…. A sudden and catastrophic loss of supply would disrupt DoD missile, satellite, space launch, and other defense manufacturing programs. In many cases, there are no substitutes readily available.” Other examples of foreign reliance included circuit boards, night vision systems, batteries, and space sensors.

The story here is similar. When Wall Street targeted the commercial industrial base in the 1990s, the same financial trends shifted the defense industry. Well before any of the more recent conflicts, financial pressure led to a change in focus for many in the defense industry— from technological engineering to balance sheet engineering. The result is that some of the biggest names in the industry have never created any defense product. Instead of innovating new technology to support our national security, they innovate new ways of creating monopolies to take advantage of it.

…Fleecing the Defense Department is big business. [TransDigm’s] executive chairman W. Nicholas Howley, skewered by Democrats and Republicans alike in a May 2019 House Oversight hearing for making up to 4,000 percent excess profit on some parts and stealing from the American taxpayer, received total compensation of over $64 million in 2013, the fifth most among all CEOs, and over $13 million in 2018, making him one of the most highly compensated CEOs no one has ever heard of. Shortly after May’s hearing, the company agreed to voluntarily return $16 million in overcharges to the Pentagon, but the share price is at near record highs.

L3 Technologies, created in 1997, has taken a different, but also damaging, approach to monopolizing Defense Department contracts. Originally, it sought to become “the Home Depot of the defense industry” by going on an acquisition binge, according to its former CEO Frank Lanza. Today, L3 uses its size, its connections within the government, and its willingness to offer federal employees good-paying jobs at L3, to muscle out competitors and win contracts, even if the competitor has more innovative and better priced products. This practice attracted the ire of two Republican congressmen from North Carolina, Ted Budd and the late Walter Jones, who found in 2017 that L3 succeeds, in part, due to “blatant corruption and obvious disregard of American foreign interest in the name of personal economic profit.”

Like TransDigm, this isn’t L3’s first brush with trouble. It was temporarily suspended from U.S. government contracting for using “extremely sensitive and classified information” from a government system to help its international business interests. It was the subject of a scathing Senate Armed Services Committee investigation for failing to notify the Defense Department that it supplied faulty Chinese counterfeit parts for some of its aircraft displays. And it agreed to pay a $25.6 million settlement to the U.S. government for knowingly providing defective weapon sights for years to soldiers serving in Iraq and Afghanistan.

Yet, also like TransDigm, L3 has thrived despite its troubles. When the company was granted an open-ended contract to update the Air Force’s electronics jamming airplane in 2017, Lieutenant General Arnold Bunch outlined the Air Force’s logic at a House Armed Services Subcommittee meeting. L3, he said, is the only company that can do the job. “They have all the tooling, they have all the existing knowledge, and they have the modeling and all the information to do that work,” he said.

In other words, because L3 has a monopoly, there was no one else to pick. The system— a system designed by the financial industry that rewards monopoly and consolidation at the expense of innovation and national security— essentially made the pick for him. It is no wonder our military capacities are ebbing, despite the large budget outlays— the money isn’t going to defense.

In fact, in some ways, our own defense budgets are being used against us when potential adversaries use Wall Street to take control of our own Pentagon-developed technologies.

There’s no better example than China’s takeover of the rare earth metal industry, which is key to both defense and electronics. The issue has frequently made the front page during the recent trade war, but the seldom-discussed background to our dependence on China for rare earths is that, just like with telecom equipment, the United States used to be the world leader in the industry until the financial sector shipped the whole thing to China.

In the 1970s and 1980s, the Defense Department invested in the development of a technology to use what are known as rare-earth magnets. The investment was so successful that General Motors engineers, using Pentagon grants, succeeded in creating a rare earth magnet that is now essential for nearly every high-tech piece of military equipment in the U.S. inventory, from smart bombs and fighter jets to lasers and communications devices. The benefit of DARPA’s investment wasn’t restricted to the military. The magnets make cell phones and modern commercial electronics possible.

China recognized the value of these magnets early on. Chinese Premier Deng Xiaoping famously said in 1992 that “The Middle East has oil, China has rare earth,” to underscore the importance of a rare earth strategy he adopted for China. Part of that strategy was to take control of the industry by manipulating the motivations of Wall Street.

Two of Xiaoping’s sons-in-law approached investment banker Archibald Cox, Jr. in the mid-1990s to use his hedge fund as a front for their companies to buy the U.S. rare-earth magnet enterprise. They were successful, purchasing and then moving the factory, the Indiana jobs, the patents, and the expertise to China. This was not the only big move, as Cox later moved into a $12 million luxury New York residence. The result is remarkably similar to Huawei: the United States has entirely divested of a technology and market it created and dominated just 30 years ago. China has a near-complete monopoly on rare earth elements, and the U.S. military, according to U.S. government studies, is now 100 percent reliant upon China for the resources to produce its advanced weapon systems.

Wall Street’s outsized control over defense contracting and industry means that every place a foreign adversary can insert itself into American financial institutions, it can insert itself into our defense industry.

At an Armed Services Committee hearing in 2018, Representative Carol Shea-Porter talked about how constant the conflict between financial concentration and patriotism had been in her six years on the committee. She recounted a CEO once telling her, in response to her concern about the outsourcing of defense industry parts, that he “[has] to answer to stockholders.”

Who are these stockholders that CEOs are so compelled to answer to? Oftentimes, China. Jennifer M. Harris, an expert in global markets with experience at the U.S. State Department and the U.S. National Intelligence Council, researched a recent explosion of Chinese strategic investment in American technology companies. She found that China has systematically targeted U.S. greenfield investments, “technology goods (especially semiconductors), R&D networks, and advanced manufacturing.”

The trend accelerated, until the recent flare-up of tensions between the United States and China. “China’s foreign direct investment (FDI) stock in the U.S. increased some 800% between 2009 and 2015,” she wrote. Then, from 2015 to 2017, “Chinese FDI in the U.S. …climbed nearly four-fold, reaching roughly $45.6 billion in 2016, up from just $12.8 billion in 2014.”

This investment runs right through Wall Street, the key lobbying group trying to ratchet down Trump’s tough negotiating posture with the Chinese. Rather than showing concern about the increasing influence of a foreign power in our commerce and industry, Wall Street banks have repeatedly followed Archie Cox down the path of easy returns.

In 2016, J.P. Morgan Chase agreed to pay a $264 million bribery settlement to the U.S. government for creating a program, called “Sons and Daughters,” to gain access to Chinese money by selectively hiring the unqualified offspring of high-ranking Communist Party officials and other Chinese elites. Several other banks are under investigation for similar practices, including Citigroup and Goldman Sachs, who, not coincidentally, hired the son of China’s commerce minister. It appears to have worked out for them. In 2017, Goldman Sachs partnered with the Chinese government’s sovereign wealth fund to invest $5 billion Chinese government dollars in American industry.

In short, China is becoming a significant shareholder in U.S. industries, and is selectively targeting those with strategic implications. Congresswoman Shea-Porter’s discovery that defense industry CEOs aren’t able to worry about national security because they “[have] to answer to shareholders” was disturbing enough. But the fact that it potentially translates as CEOs not being able to worry about national security because they have to answer to the Chinese should elevate the issue to the top of our national security discussion. This nexus of China, Wall Street, and our defense industrial base may be the answer to why our military advantage is ebbing. Even when American ingenuity can thrive, too often the fruits go to the Chinese.

In short, the financial industry, with its emphasis on short-term profit and monopoly, and its willingness to ignore national security for profit, has warped our very ability to defend ourselves.

How Did We Get Here?

Believe it or not, America has been here before. In the 1920s and 1930s, the American defense industrial base was being similarly manipulated by domestic financiers for their own purposes, retarding innovation and damaging the nation’s ability to defend itself. And American military readiness was ebbing in the midst of an increasingly dangerous world full of rising autocracies.

Today it might be artificial intelligence or drones, but in the 1930s the key military technology was the airplane. And as with much digital technology today, while Americans invented the airplane, many of the fruits went elsewhere. The reason was similar to the problem of Wall Street today. The American aerospace industry in the 1930s was undermined by fights among bankers over who got to profit from associated patent rights.

In 1935, Brigadier General William Mitchell told Congress that the United States didn’t have a single plane that could go against a “first-class power.” “It is a disgraceful situation and is due,” he said, “for one thing, to this pool of patents.” The lack of aerospace capacity reflected a broader industrial problem. Monopolists refused to invest in factories to produce enough steel, aluminum, and magnesium for adequate military readiness, for fear of losing control over prices.

New Dealers investigated, and by the time war broke out, the Roosevelt administration was in the midst of a sustained anti-monopoly campaign. The Nazi war machine, like China today, gave added impetus to the problem of monopoly in key technology-heavy industries. In 1941, an assistant attorney general for the antitrust division, Norman Littell, gave a speech to the Indiana State Bar Association about what he called “The German Invasion of American Business.”

The Nazis, he argued, used legal techniques, like patent laws, stock ownership, dummy corporations, and cartel arrangements, to extend their power into the United States. “The distinction between bombing a vital plant out of existence from an airplane and preventing that plant from coming into existence in the first place [through cartel arrangements],” he said, “is largely a difference in the amount of noise involved.”

Nazis used their American subsidiary corporations to spy on U.S. industrial capacity and steal technology, such as walkie-talkies, intertank and ground-air radio communication systems, and shortwave sets developed by the U.S. Army and Navy. They used patents or cartel arrangements to restrict the production of stainless steel, tungsten-carbide, and fuel injection equipment. According to the U.S. military after the war, I.G. Farben, the Nazi chemical monopoly, had influence over American production of “synthetic gas and oils, dyestuffs, explosives, synthetic rubber (‘Buna’), menthol, cellophane, and other products,” and sought to keep the United States “entirely dependent” on Germany for certain types of electrical equipment.

The Nazis took advantage of an industrial system that was, like the current one, organized along short-term objectives. But seeing the danger, New Dealers attacked the power of financiers through direct financing of factories, excess profits taxes, and the breaking of the power of the Rockefeller, Dupont, and Mellon empires through bank regulation and antitrust suits. They separated the makers of airplanes from airlines, a sort of Glass Steagall for aerospace. During the war itself, antitrust chief Thurman Arnold, and those he influenced, sought to end international cartels and loosen patent rules in part because they allowed control over American industry by the Nazis.

After the war, the link between global cartels and national security vulnerabilities was a key driver of American trade and military strategy. America pursued globalization, but with two differences from the form we have today. First, strategists sought to prevent the recurrence of global cartels and monopolies. Second, they sought to become industrially intertwined with allies, not rivals. While multinational corporations stretched across the West, they did not locate production or technology development in Moscow or among strategic rivals, as we do today in China.

Domestically, anti-profiteering institutions and rules protected against corruption, especially important when the defense budget comprised a large chunk of overall American research and development. The Defense Department’s procurement agency— the Defense Logistics Agency— was enormously powerful and oversaw procurement and supply challenges. The Pentagon had the power to force suppliers of sole source products— contractors that had monopolies— to reveal cost information to the government. The financial health of defense contractors mattered, but so did value to the taxpayer, a skilled defense industrial workforce, and the ability to deliver quality products to aid in national defense.

A fragmented base of contractors and subcontractors ensured redundancy and competition, and a powerful federal apparatus with thousands of employees with expertise in pricing and negotiation kept prices reasonable. The Defense Department could even take ownership of specialized tooling rights to create competition in monopolistic markets with specialized spare part needs— which is precisely where TransDigm specializes. This authority and expertise had been carefully cultivated over decades to provide the material necessary to equip American soldiers for World War II, the Korean and Vietnam wars, and the first Gulf war.

In the 1980s, while Ronald Reagan allowed Wall Street free rein elsewhere in the economy, he mostly kept Wall Street from going after the defense base. But scholars began debating whether it made sense to have such a large and expensive negotiating apparatus to deal with contractors, or if a more “cooperative” approach should be taken. Business consultants argued that the Pentagon could save money if it would simply be “a better customer, by being less adversarial and more trusting” of defense contractors.

With the end of the Cold War, these arguments found new resonance. Bill Clinton took the philosophical change that Reagan had pushed on the civilian economy, and moved it into the defense base. In 1993, Defense Department official William Perry gathered CEOs of top defense contractors and told them that they would have to merge into larger entities because of reduced Cold War spending. “Consolidate or evaporate,” he said at what became known as “The Last Supper” in military lore. Former secretary of the Navy John Lehman noted, “industry leaders took the warning to heart.” They reduced the number of prime contractors from 16 to six; subcontractor mergers quadrupled from 1990 to 1998. They also loosened rules on sole source— i.e. monopoly— contracts, and slashed the Defense Logistics Agency, resulting in thousands of employees with deep knowledge of defense contracting leaving the public sector.

Contractors increasingly dictated procurement rules. The Clinton administration approved laws changing procurement, which, as the Los Angeles Times put it, got rid of the government’s traditional goals of ensuring “fair competition and low prices.” They reversed what the New Dealers had done to insulate American military power from financiers.

The administration also pushed Congress to allow foreign imports into American weapons through waivers of the Buy America Act, and demanded procurement officers stop asking for cost data. Mass offshoring took place, and businesses could increase prices radically.

This environment attracted private-equity shops, and swaths of the defense industry shifted their focus from aerospace engineering to balance sheet engineering. From 1993 to 2000, despite dramatic declines in Cold War military spending and declines in the number of workers in the defense industrial base and within the military, defense stocks outperformed the S&P.

Today, the American defense establishment quietly finds itself in the same predicament it did in the 1930s. Despite spending large amounts of money on weapons systems, it often gets substandard equipment. It is dependent for key sources of supply on business arrangements with potentially hostile powers. The problem is so big, so toxic, and so difficult that few lawmakers even want to take it on. But the increasingly obvious danger of Chinese power means we can no longer ignore it.

The Fix

Fortunately, this is fixable. Huawei’s predatory pricing success has shown policymakers all over the world what happens when we don’t protect our vital industrial capacity. Last year, Congress strengthened the Committee on Foreign Investment in the United States, the committee that reviews foreign investment and mergers. The Trump tariffs have begun forcing a long-overdue conversation across the globe about Chinese steel and aluminum overcapacity, and Democrats like Representative Dan Lipinski are focused on reconstituting domestic manufacturing ability.

Within the defense base itself, every example— from TransDigm to L3 to Chinese infiltration of American business— has drawn the attention of members of Congress. Representatives Ted Budd and Paul Cook are Republicans and Representatives Jackie Speier and Ro Khanna are Democrats. They are not alone. Democratic Senator Elizabeth Warren and Representative Tim Ryan have joined Khanna’s demand for a TransDigm investigation.

Moreover, focus on production is bipartisan. One of the most ardent opponents of consolidation in the 1990s is current presidential candidate Bernie Sanders, who in 1996 passed an amendment to block Pentagon subsidies for defense mergers, or what he called “Payoffs for Layoffs.” On the other end of the spectrum, Trump has refocused national security and trade officials on the importance of domestic manufacturing.

Defense officials have also become acutely aware of the problem. In a 2015 briefing at the Pentagon, in response to questions about Lockheed’s acquisition of Sikorsky, then secretary of defense Ash Carter emphasized the importance of not having “excessive consolidation,” including so-called vertical integration, in the defense industry because it is “[not] good for the defense marketplace, and therefore, for the taxpayer and warfighter in the long run.” Carter’s acquisition chief, Frank Kendall, also noted the “significant policy concerns” posed by the “continuing march toward greater consolidation in the defense industry at the prime contractor level” and the effect it has on innovation.

American policymakers in the 1990s lost the ability to recognize the value of production capacity. Today, many of the problems highlighted here are still seen in isolation, perhaps as instances of corruption or reduced capacity. But the problems— diminished innovation, marginal quality, higher prices, less redundancy, dependence on overseas supply chains, a lack of defense industry competition, and reduced investment in research and development— are not independent. They are the result of the financialization of industry and of monopoly. It’s time for a new strategic posture, one that puts a premium not just on spending the right amount on military budgets, but also on ensuring that financial actors don’t capture what we do spend. We must begin once again to recognize that private industrial capacity is a vital national security asset that we can no longer allow Wall Street to pillage. By seeing the problem in its totality, we can attack the power of finance within the commercial and defense base and restore our national security capacity once again.

There are many levers we can use to reorder our national priorities. The Defense Department, along with its new higher budgets, should have more authority to promote competition, break up defense conglomerates, restrict excess defense contractor profits, empower contracting officers to get cost information, and block private equity takeovers of suppliers. Congress could reinstate the authority of the Defense Department to simply take ownership of specialized tooling rights to create competition in monopolistic markets with specialized spare part needs, a power it once had.

In the commercial sector, rebuilding the industrial base will require an aggressive national mobilization strategy. This means aggressive investment by government to rebuild manufacturing capacity, selective tariffs to protect against Chinese or foreign predation, regulation to stop financial predation by Wall Street, and anti-monopoly enforcement to block the exploitation of market power.

Policymakers must recognize that industrial capacity is a public good and short-term actors on Wall Street have become a serious national security vulnerability. While private businesses are essential to our common defense, the public sector must once again structure how we organize our national defense and protect our defense industrial base from predatory finance. For several decades, Wall Street has been organizing not just the financing of defense contractors, but the capabilities of our very defense posture. That experiment has been a failure. It is time to wake up, before it’s too late. 

Pig on the Wing