{"id":2413,"date":"2013-10-28T10:50:56","date_gmt":"2013-10-28T16:50:56","guid":{"rendered":"http:\/\/peaceeconomyproject.org\/wordpress\/?p=2413"},"modified":"2013-10-28T10:50:56","modified_gmt":"2013-10-28T16:50:56","slug":"defense-contractors-profit-despite-sequestration-and-shutdown","status":"publish","type":"post","link":"https:\/\/peaceeconomyproject.org\/wordpress\/defense-contractors-profit-despite-sequestration-and-shutdown\/","title":{"rendered":"Defense Contractors Profit Despite Sequestration And Shutdown"},"content":{"rendered":"

by\u00a0Hayes Brown<\/a>, Think Progress
\nclick here for original article<\/a><\/p>\n

Defense contractors have managed to not only stay afloat but also thrive in a climate of government closure and massive cuts to the Pentagon\u2019s budget, continuing to\u00a0rake in billions upon billions<\/a>\u00a0of dollars in profits.<\/p>\n

Under the terms of sequestration, the Department of Defense is slashing budgets left and right, with about $41 billion cut in 2013 alone. That hasn\u2019t prevented the major defense contractors \u2014 including Lockheed Martin and Northrop Grumman \u2014 to continue to post huge profits according to\u00a0Bloomberg<\/a>. Northrop Grumman in particular has had a surprisingly good year, showing a 56 percent increase in the price of its shares. In the third quarter, Northrop\u2019s net income grew to $497 million, compared to $459 million for the same period last year.<\/p>\n

Even companies that aren\u2019t performing as well are still seeming to be doing just fine under sequestration so far as profits go. General Dynamics, which is the third-largest provider of services to the federal government, saw its shares on the New York Stock Exchange drop slightly after announcing its profit forecast for the rest of the year. Despite that, the company still saw a net income of $651 million in the third quarter, up from $600 million at the same point last year.<\/p>\n

The continued success of these companies\u00a0matches the predictions<\/a>\u00a0of CAP experts Lawrence Korb and Alex Rothman last year, though the sequestration vehicle has been\u00a0less discriminating<\/a>\u00a0about military cuts than many security experts would have preferred. The defense industry spent a\u00a0large amount of time and capital<\/a>\u00a0last year hyping the threat that not just sequestration but any cuts to the military budget would have on their industries, even as experts expressed their doubts in the claims.<\/p>\n

Sequestration also hasn\u2019t prevented contractors from\u00a0being paid far more<\/a>\u00a0than their federal employee counterparts. The Office of the Director of National Intelligence\u00a0recently reported<\/a>\u00a0that the intelligence community pays contractors 1.66 times as much as a federal employee for the same work. An analysis from the Pentagon earlier this month also found that the Pentagon could save millions if it would only\u00a0reduce the payout<\/a>\u00a0to some contractors to only as much as President Obama\u2019s salary.<\/p>\n

Despite that amount of overpay still present, and the\u00a0overinflated threat<\/a>to the overall economy the industry said would result from sequestering the military budget, the growing profits of these contracting firms may be coming at a cost to the workers who make up the companies. Lockheed Martin \u2014 the top government contractor \u2014 on Tuesday announced that it cut 600 workers last week from its Mission Systems and Training unit, after furloughing approximately 2,400 workers during the shutdown. Since the sequester took effect, firms like Lockheed have been able to cut costs and \u201cfrankly, downsize in some cases,\u201d Marion Blakey, president and CEO of the Aerospace Industries Association,\u00a0said on Bloomberg Television<\/a>, in order to keep investors happy.<\/p>\n

And while companies may be increasing their shareholders\u2019 pay-off at the end of the year, sequestration has managed to hinder national security in other ways. In June of this year, the Defense Department announced that it would be unable to\u00a0perform routine background checks<\/a>\u00a0on security clearance holders in light of budget cuts. Meanwhile, the Pentagon said in June that if sequestration is not lifted before 2014,6,000 workers<\/a>\u00a0could see themselves unemployed, while another 650,000 civilian defense workers began\u00a0experiencing furlough days<\/a>\u00a0running from July through September.<\/p>\n","protected":false},"excerpt":{"rendered":"

by\u00a0Hayes Brown, Think Progress click here for original article Defense contractors have managed to not only stay afloat but also thrive in a climate of government closure and massive cuts to the Pentagon\u2019s budget, continuing to\u00a0rake in billions upon billions\u00a0of dollars in profits. Under the terms of sequestration, the Department of Defense is slashing budgets […]<\/p>\n","protected":false},"author":1,"featured_media":2414,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[8],"tags":[],"class_list":["post-2413","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/peaceeconomyproject.org\/wordpress\/wp-content\/uploads\/2013\/10\/grumman-nyt-555x291.jpg?fit=260%2C291&ssl=1","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts\/2413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/comments?post=2413"}],"version-history":[{"count":2,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts\/2413\/revisions"}],"predecessor-version":[{"id":2416,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts\/2413\/revisions\/2416"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/media\/2414"}],"wp:attachment":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/media?parent=2413"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/categories?post=2413"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/tags?post=2413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}