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Aug 22 2013

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The F-35: Your Vote and Trillion Dollar Waste Supported by Democrats and Republicans

This entry is part 1 of 5 in the seriesDEMOCRACY AT THE CROSSROADS Series

 

 

F-35

The Wikipedia background on this photo states,“The U.S. Navy variant of the F-35 Joint Strike Fighter, the F-35C, conducts a test flight over the Chesapeake Bay. Lt. Cmdr. Eric “Magic” Buus flew the F-35C for two hours, checking instruments that will measure structural loads on the airframe during flight maneuvers.”
Photo: Copyright, US Navy, Public Domain.

 

The voting franchise is the holy grail of American democracy. And for that franchise, brother will fight against brother. States will battle against states. And for “the vote”, organizations from churches to think tanks, labor unions to lobbyists, and media outlets to multinational corporations will take action to educate, motivate, and participate in propaganda to corral their following.

While not explicitly prescribed in the original text of the U.S. Constitution, a number of Amendments (14th, 15th, 17th, 23rd, 24th, and 26th) protect citizens from measures designed to stymie the essential expression of democracy.

A number of profound shifts in policy and judicial actions have drawn our attention to America’s sometimes hostile experience with the voting franchise. Electronic voting created suspicions of powers in high places using high-tech means to throw elections. Voter ID law raise the specter of jim crow segregation tactics to disenfranchise minorities. And in June, the Supreme Court decision in Shelby County v. Holder struck down a key provision of the Voting Rights Acts, unleashing praise from the right and criticism from the left. The National Action Network [NAN] attached this decision to its rally-cry to convene a march in Washington during the 50-year Anniversary of the 1963 March on Washington for Jobs and Freedom, a pivotal influence on passage of the Civil Rights Act (1964) and the Voting Rights Act (1965). And more recently, an NAACP delegation took the issue of retrenchment in voting rights to the United Nations Human Rights Commission in Geneva, Switzerland as a part of a global awareness campaign.
  

GlobalDefenseSpending

Source: The Center for Arms Control and Non-Proliferation. http://armscontrolcenter.org/issues/securityspending/articles/2012_topline_global_defense_spending/

 Notwithstanding, a sole focus on technical issues related to voting avoids examination of the efficacy of the voting franchise itself in the context of myriad influences on government that transcend the ballot booth. One such influence is that of industry and the nature of industry to influence government solely for commercial interests. And none other more shapes government commitments, financial and otherwise, than defense. 

What Truman feared in the military industrial complex has come upon us. One-half of federal discretionary spending is earmarked for personnel, research, war systems, infrastructure, and related expenditures that evolve around our nation’s burgeoning defense commitments. Defense is notoriously bureaucratic. The nature of change is that these expenditures grow (as opposed to shrink) over time.  In FY 2013, that price-tag exceeded $627.2 billion. And despite what some might consider a worst case scenario decrease for budget cuts, defense spending is several times that of China; Russia, the UK, and other leading nations.
 

As with many bureaucracies, defense is riddled with waste and mis-management. And no other defense program more characterizes these systemic problems than the F-35 Lightning II stealth fighter jet program. The fifth generation of multi-role fighter jets comes with three variants: F-35A (conventional takeoff and landing); F-35B (short takeoff and vertical landing); and F-35C (carrier-based). The Pentagon commissioned the purchase of 2,443 F-35s to “… provide the bulk of its tactical airpower for the US Air Force, Marine Corps and Navy over the coming decades”. This massive procurement of advanced weapons systems is part of America’s “Global War”, largely directed against China, Russia, North Korea and Iran.” The Pentagon is positioning the the F-35 to replace predecessor fighter systems F-16A-10, pre-E/F Super Hornet F/A-18, and AV-8B. A casual consideration of the threats that confront America would conclude that the F-35 makes perfect sense. However, this conclusion ignores a number of serious issues that call into question the public investment being made in the F-35 program, particularly at a time of severe fiscal concerns facing our nation. Namely:

1. Program Cost. Cost for the F-35 consists of two components; initial procurement and a 35-year lifecycle maintenance. At the time of Lockheed Martin winning the F-35 contract, initial estimates were set at $1.51 trillion, or roughly $618 million per aircraft. The sheer scale of this program carries with it staggering social opportunity costs. As a society, we cannot evolve various other systems in our nation when military expenditures overwhelm our resources. 

For instance, a great debate is now underway in Washington regarding infrastructure. President Obama, unions, the US Chamber of Commerce, and large corporations such as The Carlyle Group are aligned around the idea of funding an infrastructure bank to kick-start what is essentially the privatization of our nation’s roads, bridges, ports, and other capital systems. President Obama frames the discussion around jobs. However, the plan has a number of concerns. Namely: higher cost of [private] capital; private sector “cherry picking” of some projects while ignoring others; moving our nation’s transit systems to regressive user-fee based that disproportionately harm low-income households; reliability problems with private firms as witnessed in Iraq rebuilding efforts.

F35vsHypotheticalExpenditures

Consider the cost of projects themselves. Repair of all our nation’s problematic bridges would cost an estimated $140 billion. This is less than one-tenth of the F-35 system cost! Similar analyses can be made for school construction, development of science and technology centers, establishment of nuclear power facilities, upgrading water systems, putting in-place light rail systems across the country, and myriad other initiatives. Consequently, a public that takes lightly programs such as the F-35 forfeits its interest to enhance the quality of life in a wide range of areas.

Adjustments to the F-35 program bring the estimated cost to approximately $1.26 trillion. These adjustments, however, do not alter a basic concern that large-scale defense systems — only rationalized by doomsday international scenarios — effectively trade known societal challenges (e.g., energy, transportation, education) for far-fetched threats that some might consider scare tactics. The public receives a regular dose of looming forces that seek to upset the relative peace of ordinary Americans. Threat-level alerts formally create an environment of fear. And where the enemies are not active during a given time, labeling (e.g., Axis of Evil) magnify their images. all the while, the average citizen displaces energy, transportation, education, and other needs with a deep-seated fear that “they’re coming to get us”.

Taxpayers absorbing expensive defense programs while foregoing other priorities flourishes in a climate of fear. 

2. Technical Issues and Delays. Approaching seven years after the initial flight of the F-35 in December 2006, this aircraft system is plagued with a number of problems. In November 2011, a Pentagon study looked at the progress of the F-35 program in terms of operational effectiveness, sustainability, and mission capability. The study found 13 major design, performance, and safety problems in four technical categories [i]. While none of the identified programs precluded further production:

  • Five consequential issues lacked identification of a root cause, successful corrective action, and/or the solution was underway. This category included issues such as Integrated Power Package [IPP] reliability and maintenance difficulties;
  • Three consequences, such as higher than expected buffet loads (i.e., aircraft shaking) during high-speed maneuvers, were awaiting the outcome of test discoveries; and
  • Five issues, including thermal concerns and computer software bugs, posed moderate consequences and/cost, but cumulatively posed significant problems. 

Some defense systems experts note that the F-35 suffers from the same flaws that ultimately derailed the F-111 fighter program from its intended functions, including naval interception. That is, building fighters to simultaneously meet both Air Force and Navy (carrier operations) requirements is inherently problematic. 


“The problems exist in all these aspects. The final reason is that one piece of hardware has been required to perform so many tasks, but the requirements from the air force, navy and marine corps are different…”

Chen Hu(Chen), editor-in-chief of World Military Affairs magazine
April 14, 1013 interview with
Peng Kuang, Reporter
Global Times (GT) 


3. The Question of “Need”. In the interest of fiscal responsibility, new defense systems must emerge out of a single defining question: Do we need this new technology? Taxpayers ask this question in their personal lives on a regular basis when contemplating everything from an automobile purchase to pursuing a professional certification. Similarly, a prudent nation asks this question for all its activities, including defense. Vetting the need for significant investment in new defense capacity and capability considers competitor nation technology, looming domestic and foreign threats, obsolescence (i.e., scheduled innovation), and discovery/availability of new technological capabilities (e.g., GPS, unmanned aerial surveillance/delivery). For instance, one has to question in a world of increasing terrorism threats, whether the F-35 system is the appropriate centre of future US air power and strategy.   

Two Thirds Column

4. A “Too Big to Fail” Mentality. Despite being significantly over budget and behind schedule, the F-35 program receives continued support on Capitol Hill. Speaking at the Navy League’s annual Sea-Air-Space conference, Commandant Gen. James Amos stated, “There’s no alternative for the United States Marine Corps to the F-35B…”. Indifference about the serious problems with the F-35 was exemplified in a recent hearing of US Senate Appropriations Subcommittee on Defense convened to discuss the F-35 where only six of 19 SAC-D members took the topic serious enough to even attend. During the hearing, USAF Chief of Staff Gen. Mark Welsh gave testimony about the F-35’s strategic importance as the “the only viable option” that enables the US to retire its F-16 assets. The House Armed Services Committee [HASC] joined the Senate’s continued support by rejecting a bipartisan effort to scale-back federal commitment to the F-35 as past of the FY2014 National Defense Authorization Act [NDAA].

5. Institutionalized Military Welfare. At the center of the F-35 policy problem is our reliance on military spending around which states and congressional districts build local economies. In the face of budget sequestration and base closings, Rep. Adam Smith [WA], HASC’s most senior Democrat member, best reflects this dilemma, “The one and only rule is, ‘my district can’t be reduced by anything,’ [which means] we wind up paralyzed…” 

Unfortunately, both policymakers and agency officials have few incentives to downsize military budgets. Corporations, in the form of defense contractors specifically, thrive as these budgets grow. The rippling effects of military spending create indirect stakeholders from legal firms that write contracts, to financial intermediaries that structure and manage transactions, to construction companies that build-out plants, to equipment manufacturers that sell assembling line robotics, to software engineering firms that design and install computing and communications capabilities. The industry footprint is as enormous as the expenditures themselves. And geographically, the economic footprint spans every state in our union, vesting legislators of both parties in this spending bonanza.
[pullquote align=”right” textalign=”right” width=”30%”]“[the F-35 program] was being targeted was either an oversight or a scare tactic, but it 
wasn’t a serious proposition that the entire program would be cancelled under any circumstances.”
Mackenzie Eaglen, Analyst

American Enterprise Institute
[/pullquote] 
The F-35 geographic footprint includes 47 states. Unfortunately, as defense budgets continue to absorb the lion’s share of our national resources, a series of cuts in federal procurement experts charged to watchdog spending (in the interest of the public) has weakened accountability pre- and post-procurement. Irrespective of technical problems and budget constraints, the very idea of cutting the F-35 (and programs like it) creates political rumblings that sends Washington into fire-fighting mold. Last month, Reuters reported leaks that indicated the Pentagon was considering cancellation of the F-35 program in response to budget cuts. According to Reuters, “Defense officials later stressed there were no plans to kill either program, noting that dismantling the F-35 program in particular would have far-reaching consequences for the U.S. military services and 10 foreign countries involved in the program, which is already in production.” Whether successful or not, a legislator faces certain demise to de-fund a program that props-up a local economy, particularly at a time that US gross domestic product grows at a sluggish two percent.

6. An Outdated Business Model that Forfeits Billions in Public Revenue. The F-35 underscores a fundamental flaw in the structure of large capital projects. Namely, under the current business model, taxpayers underwrite corporate research and development [R&D], while not participating in the commercial enterprises that result from this R&D. To contextualize this problem, note that Lockheed Martin plans to sell F-35 units to nine development partner nations — United Kingdom, Italy, Israel, Netherlands, Australia, Canada, Norway, Denmark, and Turkey. In addition, Japan has placed orders for the F-35 and Singapore is considering this technology. Analysts suggest that foreign sales will involve scaled-down technical capabilities and nation-specific access to certain F-35 functions and features. [ii][iii][iv][v][vi][vii][viii] 

Notwithstanding international involvement, the U.S. (and by inference, the U.S. taxpayer) is underwriting Lockheed Martin’s F-35 R&D. In this, we find overpricing on the front-end and significant forfeiture of public revenue on the back-end. In these and similar programs, the government and private corporations commit to four lifecycle phases: 1) concept where the framework of a problem and potential solution are established; 2) research and development where commitments are made to design and test solutions, programs set forth peripheral issues, and stakeholders articulate initial requirements for production; 3) production/construction where units are delivered to market; and 4) asset management, the extended period for troubleshooting, maintenance, and upgrades. Typically, suppliers shoulder the risks of pre-production stages, in-exchange for the prospects of realizing revenues/profits. A number of alternative models mitigate these risks, including:

  • Consortium development. Here, partners share pre-production risks/costs as well as future financial returns from commercial products and services. This approach is commonly pursued in pharmaceutical and biotechnology R&D;
  • Suppliers offer initial products at reduced rents. Economists cite that supplier receive lower “rents”  required in such transactions as an exchange for consumers to share the burden of initial offerings. New technologies often follow this course. Cable television gradually moved from higher-fee add-on “packages”. Automated Teller Machines [ATMs] were initially introduced by Chemical Bank and other financial institutions through free “bank” transactions, later evolving to fee oriented “interbank network” transactions. The same principle is the basis for consumers paying lower fees at barber and beauty school where the supplier is a developing talent. Conversely, US taxpayers are not receiving these lower initial costs, but rather underwrite new defense systems at high costs while contractors are working out technical problems. 
  • Customer absorb higher rents during R&D, but share in backend revenues. Here, transactions have a built-in conversion factor that effectively compensates customers for pre-production risks by sharing revenues once products god to market. Computer software firms. This model is the proposed underlying model for President Obama’s infrastructure bank that proposed public-private partnerships that enable corporations to generate long-term rents from usage-fee based roads, ports, and bridges. This model would make the government (and thus US taxpayers) beneficiaries of weapons systems sold to other nations.

Neither of the above options are afforded U.S. taxpayers who bear the burden of R&D that ultimately benefits corporations. And because these options are not explored, taxpayers pay artificially high preeproduction costs, purchase units that lack a discount in-exchange for underwriting R&D, and forfeit revenues from long-term commercial sales. From Lockheed Martin’s perspective, the F-35 is a win-win proposition. Citizens pay for its R&D program, but the corporation reserves the rights to latter stage domestic and foreign sales.

Could one or more alternatives have been required in the F-35 program and others like it? Yes. For instance, the U.S. government could adopt a consortium R&D approach that enables the private sector to collaboratively underwrite more or all of pre-production costs, with conditional commitment to purchase [a minimum number of] units upon demonstrated R&D success. Alternatively, the U.S. could structure such transactions as an equity investor in the same way that our nation bailed-out the automobile industry. As an investor, the U.S. would receive lower pricing on its purchases of the F-35 and receive royalties from foreign sales. In either case, taxpayers would stand to win.
 

So, what does the F-35 stealth fighter system have to do with my voting rights or the power of my vote?

The answer to this question goes back to the above graph of F-35 versus hypothetical expenditures. It is unlikely that ordinary citizens would attach the F-35’s importance to spending in excess of one trillion dollars. Absent personal financial benefits from being involved in defense contractor industry, it is inconceivable that a problematic aircraft system trumps other taxpayer concerns such as restoring/growing urban centers, improving our transit systems, and delivering future generations to move America to the top of science and technology as a core economic strategy are more pressing for our nation’s standing in the world. And one can reasonably expect that taxpayers would prefer alternative business models — whether those discussed above or others — that would make commitments for defense systems such as the F-35 more financially feasible.

And yet, our voting franchise is ill-equipped to make Washington’s priorities our priorities. Indeed, legislatures and corporations on the government dole design into their implementation of expensive federal spending programs bureaucratic incentives that separate policy from the concern of John Q. Citizen. Beyond the intimidating technical jargon shared by defense bureaucrats and policymakers during congressional hearings, these matter need not a West Point or Citadel education. The common sense that people apply to their household affairs, small businesses, community organizations, and corporate responsibilities also apply here. Taxpayers deserve value from their public investments. However, value is an enemy of lobbyists, legislators influenced by special interests, and powerful corporations (e.g., defense contractors) that stand to realize billions and billions of dollars.

Given the sheer scale of public commitments for the 35-year F-35 program, organizations such as the National Action Network and NAACP cannot simply concentrate on voter ID laws that hide the real challenges to democracy. The most optimistic electoral climate does not begin to address the kinds of issues raised in the F-35 program — a program supported by Democrats and Republicans, alike. These trans-party issues transcend our voting franchise. In other words, the voting franchise and the outcome of our elections have no consequence.

Therefore, the public cannot allow itself to be herded down an electoral course that only looks at issues such as voter ID requirements. Voter laws become political fodder for the right to galvanize its base and for the left to scare into mobilization its base. Both political parties and their proxies (e.g., AEI, NAN, NAACP, Tea Party, etc) avoid the real questions before the average voter. And that is this, “If both Democrats and Republicans in Washington respond to special interests and big-ticket wasteful spending, what changes in the our electoral process does anyone really believe will bring ordinary concerns to the forefront of national politics?”

 

Until we confront this question in an honest manner, much of what we think about the voting franchise reflects more of the myths of democracy than of its promises. 

 

 


 

RELATED SOURCES: 

i.  F-35 Joint Strike Fighter Concurrency Quick Look Review, DoD , Nov2011.
[attachments size=small label=doctitle fields=”title,size,type,date” docid=15345]

ii.  “Lockheed sees increased Singapore interest in F-35 fighter.” Reuters, 9 November 2012. Retrieved: 24 February 2013. 

iii. “F-35 Global Partnerships.” Lockheed Martin. Retrieved: 31 October 2012.

iv. Dudley, Richard. “Program Partners Confirm Support for F-35 Joint Strike Fighter.” Defence Update, 5 March 2012. Retrieved: 18 March 2012.

v.  “Israel plans for second F-35 squadron.” United Press International, 27 February 2012. Retrieved: 18 March 2012.

vi. “US Lockheed Martin F-35 chosen as Japan fighter jet.” BBC News, 20 December 2011. Retrieved: 20 December 2011.

vii. Fukue, Natsuko. “U.S.-made F-35 is chosen for ASDF.”[dead link] Japan Times, 21 December 2011, p. 1.

viii. Wall, Robert, “Lockheed Dismisses Korea F-35 Schedule Issue.”[dead link] Aviation Week. 21 February 2012.

 

 

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Permanent link to this article: http://kennethdprice.com/2013/08/22/your-vote-trillion-dollar-waste-supported-by-democrats-and-republicans/

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