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Wars Inc.

How to Stop War Profiteering

Weapons contractors are raking in billions from America’s support for Israel and Ukraine. It’s time to rein them in.

Last fall, President Joe Biden began using a phrase first deployed by Franklin D. Roosevelt a year before the bombing of Pearl Harbor. In a 1940 radio address, Roosevelt deemed the United States the “arsenal of democracy”: At the time, the United States wasn’t yet sending troops to Europe to repel the Nazis, but its industrial capacity was key to the fight against fascism. In February, while calling on Congress to pass a $95 billion military aid package for Israel, Ukraine, and Taiwan, Biden insisted that it was necessary to reaffirm the nation’s role as the “arsenal of democracy.” When the Senate approved the aid package in April, Biden insisted it was good foreign and domestic policy.

“While this bill sends military equipment to Ukraine,” he said in February, “it spends the money right here in the United States of America in places like Arizona, where the Patriot missiles are built; and Alabama, where the Javelin missiles are built; and Pennsylvania, Ohio, and Texas, where artillery shells are made.”

As it sold the legislation to skeptics in the House, the Biden administration pushed a familiar narrative: Military spending, which takes up more than half of the federal discretionary budget, helps boost the economy. His administration has even distributed a map showing which states benefit from weapons shipments to Ukraine.

But a huge portion of the $95 billion aid package, which was signed by Biden on April 24, will end up benefiting a handful of enormous arms manufacturers who spend millions lobbying Congress to ensure that federal military spending continues to flow. As Biden pushes Congress to send more weapons to Ukraine and Israel, calls for greater oversight and accountability into an industry that has become synonymous with waste, fraud, and corruption have grown louder.

Beginning in February, Senator Bernie Sanders has been leading the call to reinstate the World War II–era Truman Committee to investigate war profiteering and put an end to “corporate welfare.” A bipartisan congressional committee could, according to Sanders, “rein in defense contractors, closely oversee military contracts, and take back excessive payments.” He has made the Stinger missile the centerpiece in his case for more oversight.

Within the first 48 hours of Russia’s invasion, the missile became “the star of the show,” according to one executive at Raytheon. These missiles had been out of production for two decades, yet the United States has sent roughly 2,000 anti-aircraft Stingers from its stockpiles to Ukraine over the last two years. While one missile cost $25,000 in 1991, it costs taxpayers $400,000 to build today. Raytheon, now RTX Corporation, is its sole producer and stands to gain hundreds of millions of dollars in revenue as it ramps up Stinger production.

“These are companies that have one client, and that’s the U.S. government,” said Matt Duss, executive vice president of the Center for International Policy and a former foreign policy adviser to Sanders. “The enormous amount of money they’re extracting from taxpayers is a way into what needs to be a broader discussion about the dominance of our political system by wealthy interests.”

The Pentagon has failed six consecutive audits and has been unable to account for over half of its assets, yet Biden in December signed a defense bill of nearly a trillion dollars. But relatively little of this money is finding its way to workers—nor, for that matter, is it being spent on weapons production. Last year, the Defense Department released the first comprehensive review of contract financing since 1985 and found that cash paid to shareholders in dividends and stock buybacks was up 73 percent compared to the previous decade. At the same time, the industry has seen a steady decline in investments in research, development, or productive capacity. This is due, in part, to extreme consolidation in the industry.

In the last 30 years, the number of the Pentagon’s prime contractors has shrunk from 51 companies to just five. The Defense Department’s own reports have said that this consolidation poses a risk to national security. In March, Senator Elizabeth Warren and members of the Senate Armed Services Committee echoed these concerns in a letter to Defense Secretary Lloyd Austin, urging him to reform the industry’s mergers and acquisitions practices.

Austin is also an embodiment of the challenges that progressive lawmakers face in making substantive changes. Prior to assuming his role, Austin served as a board member for Raytheon, which also employed his predecessor, Mark Esper, as a weapons lobbyist. At least a dozen lawmakers “own stock or have some other direct financial investment in the defense industry,” according to the Project on Government Oversight. A 2022 report found that members of the Armed Services Committee traded more stocks than those of any other congressional committee.

The potential conflicts of interest posed by those who oversee defense policy and their investments in the defense industry further undermine the public’s faith in Congress, which now stands at the lowest it’s been since 2015.

In February, Representative Rashida Tlaib introduced a bill called the Stop Politicians Profiting From War Act to prohibit members of Congress or their spouses from owning or trading defense stocks, practices that raise urgent questions about the motivations behind legislative decision-making and budgetary priorities. “The American people deserve representatives who vote in the best interest of our country and our families, not their stock portfolios,” Tlaib said.

However, efforts to constrain defense contractors and address conflicts of interest within Congress have faced formidable obstacles in the past. Defense spending is embedded in nearly every congressional district and is guarded by a powerful lobby that has often successfully resisted even minor reforms.

Previous attempts to introduce transparency and meaningfully reduce military spending have so far been unable to pass Congress. Efforts to address war profiteering in the wake of America’s invasions of Afghanistan and Iraq went nowhere, even when pushed by moderate Democrats. But there are signs that the consensus on defense spending is breaking down.

In 2023, Senator Warren reintroduced the Stop Price Gouging the Military Act with bipartisan support, following a CBS investigation that found “contractors overcharge the Pentagon on almost everything.” The bill addresses loopholes in the acquisition process, ties financial incentives to performance, and increases transparency in pricing. Debates over defense spending have also emerged in recent years during budget negotiations.

Even without congressional support, the president has a significant amount of authority to direct his Cabinet to address issues of waste and abuse. Biden campaigned on ending the “forever wars” but is instead facing criticism for perpetuating the same patterns of opaque defense spending and circumvention of congressional oversight that characterized previous administrations.

Amid growing disillusionment with America’s role in Ukraine and Israel, public opinion reflects a bipartisan desire to address unchecked defense spending. A recent survey from Data for Progress found that an 80 percent majority of likely voters believe increases to the defense budget should be conditioned on the Pentagon’s ability to pass an audit. Several polls have found that an overwhelming majority support a ban on stock trading for members of Congress.

As Biden navigates these turbulent political waters, his administration’s ability to pivot from the rhetoric of democratic arsenals to tangible, equitable economic benefits will be critical. Public disapproval of Biden’s handling of foreign policy and the economy underscores the imperative to reassess budget priorities, rebuild trust in Congress, and present a vision of a government that prioritizes the welfare of the country over the interests of private companies. Biden would do well to listen to the oft-repeated advice handed down to him from his father: “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.”