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The Military-Industrial Complex Is Failing Us |
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Dear reader, |
"It takes money to kill bad guys." |
So argued War Secretary Hegseth yesterday. |
He was responding to reports that his department will request of Congress $200 billion to continue killing Iranian bad guys. |
The initial six days of killing Iranian bad guys cost over $11.3 billion alone. Thus we can conclude that the cost of killing bad guys — to date — exceeds $33.9 billion. |
Yet work, evidently, remains outstanding. We must kill additional bad guys. |
And so you have the War Department's $200 billion request of Congress. |
Whither the Military-Industrial Complex |
Yesterday media members asked President Trump why the War Department required so much additional monies to scotch the Iranian menace. |
After all, the president has claimed that the conflict is nearing conclusion. His response: |
For a lot of reasons… We are being very judicious. We want to have vasts amounts of ammunition, but it was taken down by giving so much to Ukraine. |
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Just so. Yet to requisition ammunition is not to manufacture ammunition. |
The United States industrial base is but a fraction of its former bulk. |
In the 1990s the United States defense industry boasted some with 51 prime contractors. |
And today? That number is six. |
The industry simply lacks the capacity to rapidly and drastically expand production. |
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You Can't Just Wave a Magic Wand |
A drastic surge in defense production would require the construction of additional facilities, loads of freshly trained employees and supply chain expansion, for example. |
None of it can be conjured at a stroke. It would be the work not of months — but of years. |
Consider the production of air defenses missiles, presently undergoing severe depletion in the Middle East. |
Reports Time: |
After meeting with major defense contractors at the White House this month, Trump said the companies had agreed to "quadruple" production of "exquisite" weapons, a term of art referring to sophisticated and expensive systems that can repel ballistic missile attacks, such as Patriot missile batteries and Terminal High Altitude Area Defense (THAAD) interceptors… |
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In January, the Pentagon signed agreements with Lockheed Martin to increase annual production of both products, with Patriot interceptor production set to increase from 600 to 2,000 and THAAD interceptor production to quadruple from 96 to 400. But ramping up factory production on those lines could take years. |
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Years! It is said that when seconds count, the police are minutes away. |
Well, in the seconds and minutes that missiles are coming in, air defense — evidently — is years away. |
The Russian Military-Industrial Complex |
Let us compare, briefly, the arms production systems of the United States and Russia. |
By United States standards, by corporate standards, the state-owned Russian defense production system is vastly inefficient. |
In peacetime, Russia maintains vast factory complexes devoted to arms production. They squat dormant, the machines languish idle and the workers are off producing plowshares, not swords. |
It all "just sits there" in idle neglect — until it is required. |
And when it is required? |
When Russia's conflict with Ukraine commenced in 2022… Russia unlocked the factory doors, blew the dust from the machinery, summoned the workers… and got the assembly lines jumping. |
That is why, for example, Russian artillery shell production outproduces all of NATO — the United States included — by some 3.5:1. |
It is also why each shell Russia produces it produces at a fraction of the price of the Western nations. |
Meantime, my agents inform me that the Russian factories churn out arms in quantities truly dizzying. |
The U.S. Military-Industrial Complex Is Designed to Make Money — Not War |
Let us next consider the United States "military-industrial complex." |
Unlike Russia's. the corporations that compose America's are profit-seeking concerns. |
And no profit-seeking corporation would take aboard the Russian model. |
That is, no profit-seeking corporation would sit upon idle factories and lax production capacity. |
The gods of efficiency must be served — as must their profit-seeking shareholders. |
And so the United States arms manufacturers are constructed for boutique, custom production that rewards shareholders. |
They are not constructed for mass war production. |
They lack all surge capacity. Thus their business model does not meet the requirements of war. |
It is simply not profitable. It is especially not profitable under the existing budgetary processes of Congress. |
Perverse Incentives |
Here is Politico: |
Spending constraints since 2011… have led Congress to issue budgets largely through annual continuing resolutions, which undercuts efforts to begin multi-year commitments and contracts necessary that would allow companies like Lockheed to boost missile production. |
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The current wait time for a new Hellfire missile is between two and three years from the time it's ordered, according to the Department of Defense. The wait for a Javelin missile is about three years. |
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All of this has saddled Lockheed Martin and other companies with two mandates that are in opposition: If it wanted to dramatically increase its missile output and speed up deliveries, the company would need to invest billions of dollars to boost supply chains and hire workers. |
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But this would cut into free cash flow and could hurt its profits, making the company less attractive to investors. |
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"Too Small to Surge" |
Continues Politico: |
"The American military suffers from munitions shortages across almost every weapons category," wrote Michael Brown, the former director of the Pentagon's Defense Innovation Unit. |
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The current defense industry — the largest and most expensive in American history — is now "too small to surge," leaving U.S. armed forces and allies short of the materiel they need. |
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It's a startling statement considering that the five top U.S. defense companies reported a combined $216.7 billion in revenue in 2024, according to the trade magazine DefenseNews. |
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It is indeed a startling statement. |
It Takes More Than Money to Kill Bad Guys |
And so the War Department can request its $200 billion. It can even request $500 billion or some other enormity. |
Congress may even sign the enormous cheque. |
Yet if the cupboards are bare, the cupboards are bare. |
And restocking them will require years and years under present arrangements. |
Yes, Secretary Hegseth, it takes money to kill bad guys. |
Yet more importantly, it requires actual armaments. |
And the United States is presently depleting them far more rapidly than it can replace them. |
I hazard its foes know it well. |
Brian Maher |
for Freedom Financial News |
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