Sequester: A Two-Year Competitive Advantage for the Military-Industrial Complex

Remember how, before the election, Lockheed threatened to send out layoff notices to all its employees just before the election because sequestration might force it to layoff 10,000 employees?

Here’s the actual state of affairs for defense contractors:

The biggest defense companies’ share value has soared faster than the stock market since sequester spending cuts began on March 1.

While the S&P is up 3.7 percent and the Dow Jones industrial average has risen 4.3 percent, Boeing has jumped 9.6 percent, Lockheed Martin is up 8.3 percent. Northrop Grumman has climbed 6.1 percent and Raytheon is up 6 percent.

[snip]

No major defense layoffs tied to the sequester have been announced under the Worker Adjustment and Retraining Notification (WARN) Act, despite predictions during the heat of the 2012 presidential campaign when companies pressed Congress to turn off the automatic cuts.

[snip]

Defense experts say the sequester will inflict pain on the defense sector, but the pace of the cuts will not help contractors make their case. “There are real impacts here on national security from what this is going to do to the defense industrial base, but it’s not this year, it’s not even next year — and will anyone be listening by the time those effects become evident?” said Todd Harrison, a defense budget analyst at the Center for Strategic and Budgetary Assessments.

And all that’s before you consider the $334 MLockheed itself got before the sequester just to protect the F-35 program.

So while actual government employees are dealing with cuts and other resources are being cut, the defense industry still has a year before they’re going to feel the pinch.

This was all predictable (I’m pretty sure DDay laid it all out, back in the day). But it’s nice to know the parts of our economy that DC really care about — the warmaking, campaign donating ones — are still doing swimmingly under austerity.

Marcy has been blogging full time since 2007. She’s known for her live-blogging of the Scooter Libby trial, her discovery of the number of times Khalid Sheikh Mohammed was waterboarded, and generally for her weedy analysis of document dumps.

Marcy Wheeler is an independent journalist writing about national security and civil liberties. She writes as emptywheel at her eponymous blog, publishes at outlets including the Guardian, Salon, and the Progressive, and appears frequently on television and radio. She is the author of Anatomy of Deceit, a primer on the CIA leak investigation, and liveblogged the Scooter Libby trial.

Marcy has a PhD from the University of Michigan, where she researched the “feuilleton,” a short conversational newspaper form that has proven important in times of heightened censorship. Before and after her time in academics, Marcy provided documentation consulting for corporations in the auto, tech, and energy industries. She lives with her spouse and dog in Grand Rapids, MI.

3 replies
  1. peasantparty says:

    I’m praying for a MIC bubble burst.

    It really is degrading that the biggest part of a country’s GDP is war machinery.

  2. 4jkb4ia says:

    Footnote:

    The military side of Boeing does in fact coin money, but the stock has gone up as far as it has because the Dreamliner problem looks fixable. Boeing can also sell planes to every other government on the planet that has money.

  3. 4jkb4ia says:

    2nd footnote:

    When my sister-at-the-CBO came home for the stone unveiling, her comment was that $85 billion of the sequester does hurt the economy, but it is only $85 billion. Congress not being able to pass a budget! For the whole year! so that no one knows if they can get a grant or not may be more harmful.

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