Budget fight pits hawk against the Pentagon
Leslie Wayne/NYT NYT
Wednesday, July 23, 2003
'Buy American' bill riles arms industry
There is no better friend of the Pentagon than Duncan Hunter, chairman of the House Armed Services Committee. A conservative and a hawk on defense, Hunter has long been someone the military could count on to push its dream projects through Congress.
So there is considerable dismay, and some outright consternation, over sweeping "buy American" provisions that Hunter inserted into the House version of legislation authorizing the coming year's Pentagon budget. Countries that failed to help the United States in the Iraq war, he argues, should not enjoy the spoils of American military contracts.
That view has set Hunter on a collision course with his many friends at the Pentagon and among American military contractors who buy everything from microprocessors to jet engines and airplane wings overseas. Hunter's proposal would cut back sharply on the foreign content allowed in American military goods. It also includes a laundry list of items - from fuses to machine tools to airplane tires - that only American companies could supply.
Opposition to Hunter is so fierce that the defense secretary, Donald Rumsfeld, has said he will recommend that President George W. Bush veto the entire $400 billion 2004 Pentagon budget if Hunter does not back down. According to a White House statement, Hunter's proposals are "burdensome, counterproductive and have the potential to degrade U.S. military capabilities."
Such harsh words hardly faze Hunter, a 12-term California Republican and former army ranger, who is joined by other conservative House members and a number of small companies and unions that might benefit. In spite of the power - and fury - of his opponents, Washington analysts say Hunter will most likely get some of what he wants. "If the American worker is going to pay for the defense of the free world," Hunter said in an interview, "he should participate fully in the manufacture of military goods. This is a warning shot, a red flag. We need to have domestic sources for critical military components. No one argues with that. We just differ in the details." This Washington tale is rich in ironies. An administration that has been criticized for a go-it-alone attitude towards foreign affairs is now promoting more global military trade and claiming, in the White House statement, that Hunter's efforts would "undermine our efforts to promote cooperation with our allies."
Meanwhile, the military contractors who have lavishly contributed to Hunter's political campaigns over the years are now finding that they have helped elect someone who is working against their interests - and their ability to buy from cheaper foreign suppliers.
Foreign governments have weighed in as well, especially the British - whose contractors would be lumped in with the rest of the world, despite Britain's stalwart participation in the Iraq war. In a letter to Rumsfeld, the British defense secretary, Geoff Hoon, called the proposal "potentially very damaging" and said it "would seriously undermine our ability to work together."
Such cross-border programs as the Joint Strike Fighter, a $200 billion joint venture by the United States and Britain to build a new fighter jet and sell it globally, would be jeopardized. Other programs would be equally hard to unscramble - for instance, the army's new light armored vehicle, the Stryker, designed in Switzerland and being assembled in Canada for a U.S. company.
On Capitol Hill, taking on Hunter is a delicate matter, especially for military contractors. Besides his pro-military credentials, his committee controls the Pentagon purse strings and wields enormous power over how billions in military contracts are awarded.
The military industry instead is taking its case to John Warner, the Virginia Republican who is chairman of the Senate Armed Services Committee. Some 25 chief executives of military contractors - among them Boeing, Lockheed and Raytheon - met with Warner last week to lobby in what they felt was a more sympathetic forum. The version of the Pentagon budget that the Senate passed on Thursday does not include buy-American provisions - in fact, it has language making it easier for U.S. military contractors to buy from six allies: Britain, Australia, Spain, the Netherlands, Sweden and Norway. The two measures are now before a House-Senate conference committee whose members include Hunter and Warner. With little fanfare and no public hearings, the buy-American proposals were inserted into the House version of the Pentagon budget last May. Besides requiring that some military goods be made only in America, the provisions that Hunter is championing would raise domestic content requirements for Pentagon purchases to 65 percent from 50 percent - a substantial increase on multibillion-dollar contracts. It would also become more difficult to purchase certain specialty metals - particularly titanium - from foreign suppliers, in this case Russia.
Not everyone opposes Hunter. The steel industry and the steelworkers union, the machine tool industry, apparel and footwear manufacturers, some electronics makers and American shipbuilders have voiced support. So has the 20-member House defense industrial base caucus, which advocates for small manufacturers.
one has a rigorous estimate of what the buy-America provisions could cost taxpayers. But it certainly would be in the many billions of dollars.The Pentagon is pulling out all the stops. An internal Pentagon analysis said Hunter's proposal would have "catastrophic effects."
The machine tool provisions alone - replacing foreign with American tooling - would cost $7 billion to $10 billion in the next five years or so, the analysis estimated. Some military production lines would have to be shut down, the analysis said, costing 46,000 jobs until domestic machine tool capacity increases. At one Raytheon plant in Texas, for instance, 95 percent of the machine tools used to assemble missiles are foreign-made. Foreign-content reductions would "jeopardize dozens of programs," according to the Pentagon. For instance, British engines and propellers are used in the C-130J transport. "The reason we are taking this seriously is because the unintended consequences of this legislation are so egregious," said Suzanne Patrick, deputy undersecretary of defense for industrial policy. "Our biggest concern is that the defense industrial base be able to supply quality equipment to our war fighters currently and in the future."
The New York Times